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Suzlon posts consolidated net loss in Q2

Posted by Yogesh on Friday, 31 October, 2008

* Suzlon posts Q2 loss on consolidated basis

* Provision for faulty blades, forex losses hurt

* Working on deal to increase REpower stake

MUMBAI, Oct 31 (Reuters) – Indian wind turbine maker Suzlon Energy Ltd’s posted a September quarter loss as earnings were hit by foreign exchange losses, and said it had set aside $10 million to fix a problem with some turbine blades.

Chairman Tulsi Tanti said Suzlon, the world’s No. 5 wind turbine maker, was working out a new payment schedule to increase its controlling stake in Germany’s REpower after it cancelled a $360 million rights issue earlier this week.

Tanti expected Suzlon and its units RePower and Hansen Transmissions to grow by 35 to 40 percent in the fiscal year to March 2009, outperforming industry growth of 20 percent, although the company said its order book had fallen.

On Monday, the company suspended a rights issue worth up to 18 billion rupees ($360 million), the proceeds of which it would use to partly fund the purchase of a further stake in REpower from Portugal’s Martifer and other minority shareholders.

Suzlon had struck a deal in September to buy Martifer’s 22.48 percent stake in RePower, which would have taken its holdings to 90 percent by December.

“We are in negotiation with the management of Martifer, and based on that, the new repayment schedule will come between December to May,” Tanti told reporters, adding Suzlon would explore the options to procure funds when they were required.

In an report citing unnamed sources on Thursday, the Business Standard said Suzlon was in talks to sell a 5-8 percent stake to raise the funds to complete the deal. Suzlon declined to comment on the report.

Suzlon said excluding REpower and Hansen Transmissions (HSNT.L: Quote, Profile, Research, Stock Buzz), another offshore unit, it posted a consolidated net loss of 1.3 billion rupees ($26.3 million) in the September quarter, compared with 3.75 billion rupees net profit a year-ago, Total income rose to 41.82 billion rupees from 31.37 billion.

It said outstanding order book stood at 140.52 billion rupees, compared with 164.9 billion rupees at the end of July.

Suzlon said currency losses on outstanding foreign loans and hedging were 2.3 billion rupees in the quarter. Tanti said the company had hedged about half of its exports.

The company said its second-quarter EBITDA margin declined to 10.5 percent from 14.0 percent in the first quarter.

Producers of renewable energy equipment such as Suzlon were riding a boom as high oil prices and climate change concerns prompted countries to crackdown on greenhouse emissions, but the credit crisis is forcing developers to re-think projects.

The company said it had dropped plans to invest 6.69 billion rupees in in a tower manufacturing facility.

It set aside 477.7 million rupees for restoration of faulty wind turbines and blade failures in the United States, and Tanti said a retrofit programme would be completed by May 2009.

In June, a unit of Edison International had cancelled orders for 150 turbines following cracks in blades.

Suzlon shares fell 39.2 last Friday after news large blade had broken on a U.S. turbine it supplied. They fell 3.8 percent to 44.45 rupees on Friday, and are down 88.5 percent in 2008.

Suzlon shares fell 29.5 percent in the September quarter, compared with a 4.5 percent drop in the benchmark index .BSESN. Source Reuters

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One Response to “Suzlon posts consolidated net loss in Q2”

  1. […] Producers of renewable energy equipment such as Suzlon were riding a boom as high oil prices and climate change concerns prompted countries to crackdown on greenhouse emissions, but the credit crisis is forcing developers to re-think … Suzlon posts consolidated net loss in Q2 « NaAtMaD – News and … […]

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