IC Mangal, CEO-Global OMS, Suzlon, just hours before the sudden demise of the company’s Founder and CMD Tulsi Tanti on October 1, spoke about the company's forthcoming rights issue and debt reduction plan. In an interaction with Business Today at Suvarda, Gujarat, Mangal said that the company is set to make a comeback after facing huge challenges during the past 10-15 years. Edited excerpts:
Business Today: What kind of equity dilution you see ahead of the company's Rs 1,200 crore rights issue?
IC Mangal: As you know, the pricing of this right issue is around Rs 5 per share. The face value of the share is Rs 2 with a premium of Rs 3. The company will issue up to 240 crore partly paid-up equity share for cash. The dilution will be around 24 per cent.
BT: Shares of the company have failed to perform in the past 10-12 years. What challenges did the company face during these years?
Mangal: Suzlon has never faced any major issue in terms of the technology and in terms of the product. All the products the company introduced in India are operating very successfully. On the customer side, we have around 1,800 to 1,900 customers across the country right from Kashmir to Kanyakumari and from Odisha to Gujarat. All of them are satisfied with the performance of our assets. We also have good investments on the vendor side, and on the employee side everything has been very good.
So, the challenge has basically come due to some changes in the policy. The second was a sudden meltdown in the global market in 2009. That time, we were going full throttle in Indian market as well as in the international market. Looking at the growth of the total renewable industry during 2006-2009, we planned huge expansions internationally in the US, European market, Australia and China market.
We also did some acquisitions during the boom period and they were very strategic and useful for Suzlon. However, due to the unforeseen events in 2009, the international growth stopped suddenly. And as a result, whatever acquisitions we had made, we were not able to make full use of them. That's why we had certain debt piling up on the company.
With the strong vision of our chairman Tulsi Tanti and with the support of the new policy and the regulatory framework and our customers, we are seeing the company is coming back on track. At present, we have 13,500 megawatt turbines across India and almost 6,000 megawatt turbines globally. Every single turbine is running and operating perfectly.
BT: What is your message to existing shareholders as you are going to bring rights issue on October 4? Why should they go for it?
IC Mangal: You have kept your faith and trust on Suzlon so far. In every crisis whether it is because of policy change, global meltdown or global financial crisis, there was no fault of the company. Management and promoters always stand with the company. My message to shareholders is that the worst is behind us. With a vision of our Prime Minister Narendra Modi to have 500 gigawatt of renewable energy by 2030, it opens a huge opportunity.
BT: The company has managed to reduce the debt from Rs 17,000 crore in FY 15 to less than Rs 5,000 crore at present. What is your plan as far as debt is concerned?
IC Mangal: As I said earlier, most of the debt was taken during 2007-2009 for acquisitions and because of financial crisis we were not able to utilise resources at full potential that time. As a result, the debt piled up. However, whatever acquisitions we had made like RE Power and Hansen, among others, we sold them back. Whatever money we received from that, it has been paid back to the lenders. That is how we have managed to reduce our debt from Rs 17,000 crore to the current level. Now the major portion of rights issue will also be utilised to repay debt. Going forward, the management has a very clear plan related to further reduction in the debt levels. I can say the current debt on Suzlon is at very sustainable level.
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