Suzlon Energy Seeks Debt Succour Again, as Feb 28 Deadline looms

India’s top wind energy player Suzlon Energy is running out of time to serve its immediate debt obligation that is due on February 28, 2022. It’s precisely three weeks from here. According to the presentation made to the joint lender’s forum, India’s largest wind energy player has an estimated debt obligation of Rs 882 crores till September, 2022 for which it had applied with the lenders to approve ‘one time settlement’ proposal by December 31, 2021. This is yet to be approved.

In the said presentation Suzlon Energy says that it fears if the debt payment process is not complete by February 28, a downturn in the business cycle can render the operations unsustainable for the company.

In the past, Suzlon’s net worth has already declined to negative. “Under existing structure, the company cannot sustain any potential bad cycle in future – very challenging to meet total debt obligations (sustainable + unsustainable) without growth,” the presentation to lender’s forum said.

Interestingly, the firm reported a standalone net profit of Rs 37.69 crore in the quarter ended December 2021 as against net loss of Rs 117.07 crore during the previous quarter ended December 2020. Sales rose 70.33% to Rs 1596.87 crore in the quarter ended December 2021 as against Rs 937.52 crore during the previous quarter ended December 2020.

Suzlon’s FY21 Annual Report says that the company’s total borrowings stood at Rs 6,859 crore. The presentation also discloses that the wind energy player had approached Power Finance Corporation (PFC) and its subsidiary Rural Electrification Corporation (REC) to underwrite Rs 4,200 crore of its debt. This itself was to be approved before December 31, 2021. Suzlon Energy said in the presentation, “REC and PFC come in with specialized knowledge about the power sector and would be better placed to address the specific needs of the company.”

At the end of the quarter ending on December 31, 2021, the Group’s net worth was negative at Rs 3,356 crore with an additional obligation to repay the principal amount to the lenders, including Rs 450 crore, falling due on June 30, 2022. At the end of the last quarter, Suzlon had mentioned, “These events and conditions indicated a significant doubt on the Group’s ability to continue as a going concern on the balance sheet date. The management has plans to meet the financial obligations in the foreseeable future through various options such as cash flows from operations by way of execution on the pipeline orders in hand, future business plans, realisation of trade receivables and financial assets, sale of non-core assets and conversion of share warrants.”