Suzlon Energy shares plunge 5% on concerns over corporate governance standards

Suzlon Energy Ltd shares fell 5 per cent in Monday's trade as an Independent Director at the company Marc Desaedeleer resigned from the directorship of the company with effect from June 8. Desaedeleer, in his resignation letter, said there were several situations where the corporate governance standards applied by Suzlon Energy did not meet his expectations. This included a lack of openness and transparency in communications.

Following the development, Suzlon Energy shares fell 5 per cent to hit a low of Rs 47.35 on BSE. Desaedeleer said he did send a note to the company covering the situations with the hope the information could be used in a constructive way.

Suzlon Energy CEO in an  analyst meet said the issues raised by the Independent Director were 'soft' in nature and process-oriented, which he said would be implemented in due course. The management also reiterated that all legal and financial disclosures have been fully complied with, as per regulations.

The  emphatic assurance of maintaining good corporate governance from management during the post-resignation conference call complimented by the favourable macros, improving pace of execution and still a healthy board composition  made JM Financial keep maintaining its ‘BUY’ rating on the stock with a target price of Rs 54 (based on a 30x FY26E EPS).

"This is to further inform that Mr. Marc Desaedeleer is not a director in any Indian listed entity. This is to further confirm that based on the resignation letter of Mr. Marc Desaedeleer, there is no other material reason for resignation other than the one provided. The company sincerely appreciates the support extended by Mr. Marc Desaedeleer to the company during his association with the company. This is for your information as also for the information of your members and the public at large," Suzlon Energy said in a note.

Suzlon Energy shares surged 25 per cent in the last one month and 226 per cent in the last six months.

In a note dated May 31, Suzlon Energy said on account of a typographical mistake in the standalone and the consolidated statement of cash flows, few figures were changed. It clarified that there was no impact in the standalone and consolidated balance sheet, the statement of profit & loss and the consolidated segment results submitted to the stock exchanges and/or published in the newspapers in terms of Regulation 33 of the Listing Regulations.