15 August 2019: An offer from a potential investor is critical for wind turbine maker Suzlon Energy Ltd. to repay lenders and continue as a going concern, its auditor Deloitte Haskins & Sells LLP said in a review report Wednesday.
The offer envisages infusion of additional equity in Suzlon and a waiver of some of the amount due to lenders and bond holders. Based on that, a one-time settlement has been proposed to lenders, the auditor said.
“Improvement of liquidity condition is contingent upon fructification of the offer,” Deloitte said. “Such events are not within the control of the group.”
Suzlon, which reported a first-quarter loss of ₹335 crore ($47 million) Wednesday, missed repaying $172 million on notes due in July. In addition, the company and certain subsidiaries have defaulted on repayment of loans and interest aggregating nearly ₹1,300 crore as of June 30, according to the auditor.
Over the past two years, India’s shift to auctions for building wind projects from an earlier fixed-tariff program has squeezed orders and pressured profit margins of turbine makers. The company is also losing ground to foreign competitors such as Vestas Wind Systems A/S and Senvion SA.
Last week, a $1.2 billion settlement plan, backed by Denmark’s Vestas was said to be proposed to Suzlon’s lenders, Bloomberg reported.
Post default, the company’s operations are at a sub-optimal level, Suzlon’s group Chief Financial Officer Kirti Vagadia said in a separate press release. The management is working toward debt resolution, fixing the capital structure and exploring various funding options, he said.
A Suzlon spokeswoman declined to comment on the auditor’s report.