Suzlon auditors express concern over financial health of debt-laden company

Suzlon auditors have expressed concern over the financial health of the wind turbine maker as it faces liquidity issues and is yet to make payments to its lenders and vendors.

In a review report submitted with stock exchange, the auditors - S R Batliboi and Co LLP and SNK & Co - said, "The unaudited standalone financial results of the company indicate that it has overdue amounts payable to vendors and lenders and has been facing liquidity issues."

The auditors added that these conditions along with other matters indicate the existence of a material uncertainty that could cast a significant doubt about the company's ability to continue as a going concern.

Debt-laden Suzlon last week posted consolidated net loss of Rs 6,538.68 crore for the third quarter as against loss of Rs 1,075.25 crore in the corresponding period a year ago. Total income declined marginally to Rs 4,977.18 crore during the October-December quarter as against Rs 5,052.2 crore in the third quarter of FY14.

Suzlon Group chairman Tulsi Tanti had attributed the loss during the quarter to sale of its overseas subsidiary Senvion.

"The huge loss during the quarter is on account of the notional loss to the extent of around Rs 6,000 crore on the sale of our overseas subsidiary Senvion last month," Tanti had said.

Last month, Suzlon sold Senvion to Centrebridge Partners LP for Rs 7,200 crore as part of its strategy to hive off non-core businesses and reduce debt burden of more than Rs 17,000 crore.

Last week, Suzlon signed definitive pacts with Dilip Shanghvi Family and Associates (DSA) for equity investment of Rs 1,800 crore in the company amounting to 23-per cent stake. DSA also announced an open offer on Monday to acquire 26-per cent stake in Suzlon at Rs 18 per share aggregating to Rs 2,837 crore.

Post allotment, DSA shareholding will be 23 per cent shares (based on current shareholding) while the Tanti Family will hold 24-per cent shares.

Management control will remain with the Tanti family by virtue of pooling arrangement for voting. "All the strategic initiatives are extremely crucial and will pave the way for our growth. These bold steps will strengthen our capital structure permanently enabling significant de-leveraging and liquidity to ramp up volumes rapidly," Tanti had said.

Both Suzlon and Sanghvi will form a joint venture to develop 450 MW with farm, a move that will mark the latter's foray into the renewable energy business.