Suzlon Energy chairman Tulsi Tanti said the sale of its German subsidiary Senvion, which accounted for half of the group's revenues, would help the residual business grow at a faster pace.
In an exclusive interview with CNBC-TV18, Tanti said the company would use Rs 6,000 crore of the Rs 7,200 crore proceeds to repay debt towards Indian banks and said the remaining Rs 1,200 crore would be plowed into the company as equity. Tanti further said that the company had offered holders of its foreign currency convertible bonds an option to convert about Rs 3,000 crore of debt into equity at a price of about Rs 16 per share. “In all, this would bring down our debt from Rs 16,500 crore to Rs 7,500 crore,” he said, adding that another Rs 4,000 crore worth of its debt was in the form of bullet bonds to be repaid in 2019 (non-redeemable with face value payable at maturity). “As a result, we now have only Rs 3,500 crore of working capital debt.”
As a result of the Senvion transaction, Suzlon’s overall interest cost would be cut in half, from Rs 1,600 crore to Rs 800 crore. Tanti also looked to assuage the market’s concerns that hiving off Suzlon would leave the residual company without any major operations and said infusion of additional equity, along with exposure to its “high growth” home and emerging markets would help the company turn profitable in the next financial year.
profitabel im nächsten Finanzjahr (das endet im März 2016 !)
transcript of Tulsi Tanti's interview with Latha Venkatesh and Sonia Shenoy on CNBC-TV18. following here....
Suzlon’s business will remain as it is. We have technology centres in Europe we have manufacturing bases in India and China and we have nearly 14,000 MW running installed capacity in nearly 20 countries. So all this will continue.
Latha: What will your revenues be post the Senvion sell? What were Suzlon’s revenues were before sale of Senvion?
A: The revenue was 50-50 [between Senvion and the remaining part of the business]. Last two years, our volumes were low because of non-availability of funds and we are in the CDR process. Now we have liquidity and going forward, we will have better volumes and revenues. Secondly, Suzlon is [now] operating in a more profitable market compared to Europe. So we have good potential. In 2009, we were running at 3,000 megawatt levels, we will now grow very fast grow because we have great capacity of production and project capability. We can leverage. The bottleneck was only a liquidity constraint.
Latha: What about your losses, at the moment you are running losses of about Rs 2,500 crore, what will your loss be next year?
A: Next financial year, there will be no loss. That is why we are doing this transaction.
Latha: You will return to a profit? Are you saying all your losses will be wiped out? A: Next financial year we are 100 percent making a profit because there is a reduction of 50 percent of interest cost and at the same time our volumes will increase because of availability of liquidity. It will make us a more profitable company. We will make profit next year.
Sonia: Can you tell us exactly how much interest will you be saving per annum from now on?
A: Currently our interest is Rs 1,600 crore on a full year basis. It will reduce by half, at Rs 800 crore. Out of Rs 7,200 crore, we will pay Rs 6,000 crore to Indian banks while Rs 1,200 crore will go towards growing our operations. At the same time, for Rs 3,000 crore worth of foreign currency convertible bond (FCCB) holders, we have provided an opportunity to convert to equity. This way, Rs 16,500 crore debt will come down to Rs 7,500 crore and the interest cost will go down 50 percent.
Latha: Have your lenders agreed to this deal?
A: Lenders are very much happy because they are getting Rs 6,000 crore from the proceeds and it will substantially reduce our debt. FCCB holders will be also comfortable as they will get the opportunity to convert into stock and company will be comfortable because now we have Rs 1,200 crore liquidity. On top of that, banks are giving us more working capital facilities. As a result, we will able to get higher growth business in domestic and international markets.
Latha: We had bankers telling us earlier in the day that they were unsure that Suzlon will be able to sustain and pay up its debt after Senvion goes out. Bankers told us that they were not sure that you would be able to sustain the debt you will have given that your revenues will be much lower.
A: That is not true because you have to understand the financial numbers: Rs 16,500 crore minus Rs 6,000 crore minus Rs 3,000 crore FCCB.
The balance is Rs 7,500 crore. Out of that Rs 4,000 crore is a covered bond, which I have to pay in FY2019, there is no principal payment required for the next three-four years and the balance remaining is Rs 3,500 crore which is working capital debt.
Sonia: You told us about the liquidity that you have. How much funds will you need now to ramp up your domestic business now that Senvion is out?
A: If it is available, Rs 1,200 crore is good enough to grab the domestic 40 percent market and growth in the international market. Because of the current debt situation bank is not in position to provide you the more non-und facilities. By paying this Rs 6,000 crore to all my lenders, they will be very comfortable to give me additional non-fund facilities which will help me to ramp up my volume more fast. We do not require the cash, we require the more non-funds....
A: So, we have to do also our shareholder approval, lenders approvals and other regulatory approvals, which we required nearly 45-60 days and the buyer has required the antitrust approvals and other compliance point of view and the general regulations they required 45 days. We are expecting by end, the second-third week of March, we will receive the money.
I don't require to pay anything to the Senvion, there is some communication gap. We will receive all the cash of USD 1 billion. On top of that I will get the 15 million euros as earn out based on the certain performance and top of that I am getting the offshore technology licence.
Sonia: You told us about the order book that currently stands at about 1,500 megawatts. Can you give us an indication of what exactly your revenues for the next year will be ex-Senvion for the listed entity now?
A: I cannot give the forecast.
A:The domestic market is growing from the current year to next year almost 40 percent -50 percent growth will come and we are targeting 40 percent market share for the domestic market. The particular geographies which we are targeting are in US and all emerging economy market it is in the 20 percent growth outside India. We will increase our business on those markets but our high priority will remain over the next financial year India first and then we can expand more business outside India in our existing geographies......
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