October 30, 2013

Suzlon Group Q2: Operational performance improving

  • Q-on-Q improvement:
              o Revenues at Rs 4,769 cr/~US$ 777.3 mn for Q2 FY14 vs. Rs 3,851 cr / ~US$ 627.7 mn for Q1 FY14
              o EBITDA at Rs (31) cr/~US$ (5) mn in Q2 FY14 vs. Rs (302) cr/~US$ (49.2) mn for Q1 FY14
              o Q2 FY14 EBITDA (excluding forex loss) at Rs 39 cr/~US$ 6.3 mn
  •  Project Transformation delivering: Opex reduced by 38% YoY; Net working capital down to 9.9% of sales
  •  China-subsidiary 75% divestment completed
  •  New market entry: Maiden order of 65 MW in Uruguay


Pune: Suzlon Group, the world’s fifth largest* wind turbine maker, on Wednesday,
October 30th 2013, announced its results for the second quarter (Q2) of financial year
2013-14.

Mr Tulsi Tanti, Chairman – Suzlon Group, said: “Despite significant challenges our
business is improving steadily.

“As part of our strategic initiatives, we have strengthened our product portfolio, adding a
new turbine variant designed specifically for low wind sites in developed economies; we
secured entry into Uruguay, one of the most promising Latin American markets; and,
divested 75 per cent of our China subsidiary, converting it into a joint venture which
helps us maintain a foothold in the world’s largest market.

“Looking ahead, we see an evolving – but promising – market for wind energy
worldwide; and with the actions we are taking, we see a sustainable outlook for
Group in the long term.”

Mr Kirti Vagadia, Group Head of Finance, said: “While we continue to progress
on the operational front, we reported a significant net loss primarily driven by lower
volumes, the impact of the depreciating Rupee, and restructuring costs. We are,
however, pleased to report a positive EBITDA (net of forex) in Q2 after five quarters.

“We continue our focus on increasing volumes while optimizing fixed costs, opex and
working capital, which will enable us to improve our financial performance.

“We believe we are on the way to recovery, and while this has taken longer than
envisaged, with the support of our key stakeholders we are on our way to achieve
this.”

Key updates

Performance: Suzlon Wind achieved volumes of 220 MW for the second quarter for
FY14, aggregating first half volumes of 440 MW. REpower achieved revenues of EUR
388.8 mn in Q2 FY14, compared with EUR 332.6 mn in Q1 FY14, with volumes
impacted by lower demand from the US market. REpower also crossed a major
milestone with the commissioning of its 5,000th turbine.

 New product: REpower launched a 60 Hz turbine variant – the 3.0M122 – designed
specifically for low wind sites in developed economies. This turbine draws on the
successful 3XM platform to deliver a lower cost of energy.

? Business efficiency: The company continued to work towards optimizing its Working
Capital ratio, with a focus on realizations, leaner inventory cycles, and expediting
order execution, taking the ratio down to 9.9 per cent of sales at Q2 FY14, compared
to 13.6 per cent at Q4 FY12. Consolidated operating expenses were reduced by 38
per cent compared to Q2 FY13 with stringent cost control measures in place.
Manpower optimization also continued under Project Transformation.

? Exceptional / One-time costs: One time Group-wide restructuring costs, under
Project Transformation, stood at Rs. 67 cr / US$ 10.9 mn, and losses due to
unfavourable currency fluctuations added Rs 70 cr / US$ 11.41 mn.

? Orderbook: The consolidated Group orderbook stood at 5.1 GW, approximately Rs
43,834 cr / US$ 7.1 bn in value, with an intake of 395 MW over Q2 FY14.

? Global service (OMS): The Group is operating a turbine fleet of over 22,500 MW,
delivering availability (uptime) levels consistently meeting and exceeding the industry
average. The vertical achieved 50 per cent year-on-year growth over H1, and secured
a service order backlog of US$ 2.8 bn over a five-year horizon.

? New market entry: Suzlon Group won its first order in Uruguay – one of the most
promising wind markets in Latin America – for 65 MW project. The project is being
developed by Rouar S.A., a unique joint venture between UTE – Uruguay’s stateowned
utility, and Brazilian utility Eletrobras.

? Asset sales: Suzlon Group completed the divestment of 75 per cent stake in its
China manufacturing subsidiary for US$ 28 mn. The joint venture model serves a dual
strategy by allowing the company to migrate to an asset light model in China, while
maintaining a presence in this important market.

? FCCB: The Company continues to be in active, solution-oriented dialogue with
FCCB-holders, their advisors, and our senior secured lenders.

Notes to the Editor:
  • ? The management of the Company, as a precautionary measure, excluded from the orderbook an India project totalling 86.1 MW due to non-movement of this order.
  • ? *BTM Consult ApS – A part of Navigant Consulting – World Market Update
  • ? US$ 1 = INR 61.35
  • ? Suzlon Group guidance remains suspended.

Contact Us

Murlikrishnan Pillai
Tel: +91 (20) 67025000
E-mail: ccp@suzlon.com