Wind turbine major Suzlon Energy Ltd has defaulted on the payment of outstanding bonds worth Rs 1,182 crore ($172 million) due to Foreign Currency Convertible Bondholders (FCCBs). In a statement to the stock exchanges, the wind energy major said the payment was due on July 16 but the company failed to do so. The Pune-based wind major, which had a consolidated net term debt of Rs 7,761 crore and a working capital debt of Rs 3,380 crore by the end of 2018-19, was struggling to raise these funds. "The company is working on a holistic solution for its debt and continues to be in discussions with various stakeholders in relation to its outstanding debt (including the bonds)," said Suzlon.
Suzlon has defaulted on its bond payment at a time when the company, headed by Tulsi Tanti, is in talks with Canadian investment major Brookfield to a sell a majority stake. Notably, discussions are on between Suzlon and Brookfield for a one-time settlement plan with creditors to restructure outstanding bank loans, and Brookfield may come up with a binding offer by July end.
In FY20, Suzlon has to pay back Rs 1,928 crore, Rs 835 crore in FY21, Rs 926 crore in FY22 and Rs 4,483 crore in FY23 and beyond. But, the biggest issue is despite an impressive order book of over 2 Gigawatt (1320 MW firm orders and 700 MW PPA signed and ratification awaited and Letter of Intent for another 100 MW), its financials are in dire straits. For 2018-19, its net revenue was Rs 4,978 crore, much lower than the Rs 8,075 crore a year ago, primarily due to low volumes. For the same period, the net losses stood at Rs 1,527 crore in FY19, much worse than Rs 377 crore a year ago. In April, Care Ratings downgraded Suzlon's ratings on its long-term banking facilities to D from BB.
Before this, the company had defaulted on its foreign currency convertible bonds (FCCBs) worth $221 million (Rs 1,517.8 crore) in October 2012 despite failed attempts with FCCB holders for a four-month extension. The company faced a similar crisis of the shortage of working capital to execute a large pipeline of orders (then nearly $7.7 billion and a majority of orders were from the sold-off subsidiary REpower). It had posted losses for three consecutive years. Despite a few paybacks, the company's debt had swelled to over Rs 10,000 crore. That forced the company to seek a bailout from lenders via Corporate Debt Restructuring (CDR).
The green energy sector firm had reported a net loss of Rs 6,494 crore in the March quarter on a standalone basis. After the previous day close of 4.8, Suzlon Energy Ltd stock opened at 4.7 on Tuesday and closed down at 4.6.
Edited by Manoj Sharma