Suzlon’s Net Losses Rose to $26.92 Billion in FY 2020 Amid Historically Low Installations

Pune-based wind turbine-maker Suzlon Energy, in its annual earnings report for the financial year (FY) 2020, reported that its losses during the year had widened due to falling revenues and lower sales volumes amidst the COVID-19 crisis.

FY 2020:

Net losses during the year widened to ₹26.92 billion (~$362.3 million) during FY 2020 from ₹15.37 billion (~$206.8 million) a year earlier, according to the company’s earnings release.

Suzlon also reported a 46.5% fall in its gross profit to ₹10.60 billion (~$142.7 million) from ₹19.80 billion (~$266.5 million) last year. It reported a 41.1% drop in net revenue to ₹29.33 billion (~$394.7 million) in FY 2020 from ₹49.78 billion (~$669.9 million) the previous year, citing historically low installation volumes during the year.

The wind turbine maker’s net volumes fell to 59 MW during the year, down drastically from 496 MW in the previous year, and cited this as the reason for the tumble in net revenue.

The company’s earnings before interest, taxes, depreciation, and amortization (EBITDA) turned negative during the year and stood at ₹4.23 billion (~$56.9 million). EBITDA was positive in FY 2019 at ₹2.8 billion (~$37.6 million).

“It was a highly challenging year where the market remained restricted to very low volumes, and the country witnessed only 20% capacity utilization. Suzlon has installed 350 MW in FY20 despite working capital constraints and the Debt Restructuring process,” Suzlon Group CEO J.P. Chalasani said.

Q4 2020:

During the quarter ended March 31, 2020 (Q4 2020) the company’s net volumes dipped to 11 MW from 147 MW, gross profit slipped about 53.1% to ₹2.20 billion (~$29.6 million) from ₹4.69 billion (~$63.11 million), while net losses widened to ₹8.34 billion (~$112.2 million) from ₹2.95 billion (~$39.7 million) – all compared to the same quarter in the previous year (Q4 2019).

Suzlon reported that its EBITDA during Q4 2020 turned negative, as well, and stood at ₹1.5 billion (~$20.2 million), compared to a positive EBITDA of ₹150 million (~$2 million) in Q4 2019.

Suzlon noted that the low volumes impacted financial performance during the quarter.

“In FY 2020, our debt restructuring and working capital constraints continued to impede our operations, and that is reflected in our performance. Our losses at EBIDTA level are primarily because the WTG (Wind Turbine Generator) business was almost at a standstill resulting in under-absorption of overheads and certain non-recurring costs,” said CFO Swapnil Jain.

According to a recent statement issued by the company, Suzlon completed restructuring its debt with the unanimous approval from its secured lenders. Its term debt reduced substantially, with an interest rate of 9% per year, repayable over ten years, starting July 01, 2020. The company further added that the balance debt of secured consortium lenders had been replaced by 0.01% of optionally convertible debentures and 0.0001% compulsorily convertible preference shares of its subsidiary redeemable or convertible in 20 years.

In 2019, the company sold two of its solar subsidiaries to Ostro Energy, a wholly-owned subsidiary of independent power producer, ReNew Power. The two subsidiaries are Shreyas Solarfarms Limited (Shreyas Solar) and Aalok Solarfarms Limited (Aalok Solar).

The Suzlon Group currently has over 12.8 GW of wind projects in India, accounting for over 35% of the country’s total wind installations, according to the company’s website.

Previously, it was reported that the revenue of the company for Q1 FY 2020 came to ₹8.33 billion (~$117 million). The reported net loss of the company in the same period was ₹3.37 billion (~$47.34 million). The company had said that it continued to witness a sectoral slowdown, owing to the prolonged industry transition to the bidding regime and policy uncertainty in a few states.