August 2, 2013

Suzlon Group Q1 FY14: Trending towards normalization

  • Revenues of Rs 3,851 cr / ~US$ 649 mn
  • Consolidated EBIT of Rs (482) cr / US$ (81) mn
  • Operations ramping up at Suzlon Wind: 219 MW sold in Q1 FY14, against 250 MW for full-year FY13
  • Continuing progress on Project Transformation

          Group OpEx down by 31% Q-o-Q
          Manpower rationalization continues
          Working capital reduced to 11.4% from 13.6% at Q4 FY13
         Aggressive focus on further optimization continues

Pune: Suzlon Group, the world’s fifth largest* wind turbine maker, on Friday, August
2 nd 2013, announced its results for the first quarter (Q1) of financial year 2013-14.

Mr Tulsi Tanti, Chairman – Suzlon Group, said: “This has been a progressive
quarter for the Suzlon Group. We regained some of our lost momentum and began
to see results from the Group’s ongoing focus on key priorities. This is reflected in
the uptick in performance at the Suzlon Wind level, and REpower continuing to
deliver a respectable performance despite a very challenging marketplace.

“Looking at the markets, India continues to regain momentum, returning from a 50
per cent drop in the last fiscal. In other key emerging as well as developed markets,
for example Australia, Canada, Europe, South Africa, we continue to see positive

“While we expect this year to continue to be challenging, we are confident that our
mid-to-long-term outlook remains strong.”

Mr Kirti Vagadia, Group Head of Finance, said: “On the operational front I am
pleased to note that real progress has been achieved. While our financial
performance was impacted by the exceptional depreciation of the Rupee, and we
incurred one-time costs related to restructuring at REpower, we achieved steady
progress on key operating indicators.

“With a total focus on execution we delivered near-normal volumes, compared to
historic performance, at the Suzlon Wind-level. However, as Q1 is also the lowest
volume quarter in a fiscal for our business, resulting in an under-absorption of fixed
costs having a negative impact on the bottom-line.“It is important to note that we continue to bring down fixed costs, and therefore our break-even point. We have achieved a 31 per cent reduction in our operating
expenses as compared to the last quarter, we continue to bring down the working
capital-to-sales ratio to 11.4 per cent at the end of Q1, from 13.6 per cent in the last
quarter. Our non-critical asset divestment program continues to be on track.

“There remains a lot of work to be done but this performance gives us the confidence
that, with the continuing support of our lenders, customers, suppliers and key
stakeholders, we are on the right road to business normalization.”

Key updates

? Suzlon Wind delivered an improved performance, with 219 MW sold over the
first quarter of FY14, a 46 per cent increase over volumes in Q1 of the last
fiscal and a full 88 per cent of total volumes achieved in FY13. The business
saw continuing traction in core markets including India, Brazil and South
Africa, and significant interest from other emerging markets.

? REpower completed key projects over the quarter including the 122 MW
Zuidlob windfarm, REpower’s largest onshore project till date, and the 325
MW ‘Thornton Bank’ offshore windfarm. The successful completion of the
‘Thornton Bank’ offshore project, one of the world’s largest offshore
windfarms, underscores REpower’s leadership position in the offshore space.
The Company maintained its focus on cost reduction and improving efficiency
through right-sizing, improving production efficiency, eliminating cost
redundancies and maximizing synergies.

? Global Service (OMS): The vertical continued its strong growth, delivering
53 per cent growth in Q1 FY14 compared to the same period in the last fiscal.
With best-in-class availability and a near 100 per cent renewal track record,
the vertical secured a service order backlog of US$ 4 bn over a five-year

? Business efficiency: The company, under ‘Project Transformation’, further
reduced working capital to 11.4 per cent of sales, operating expenditure by
31 per cent quarter-on-quarter, and continued to rationalize manpower at the

? One-time costs: The Company’s financial performance was impacted by
non-routine costs, including notional foreign exchange losses totalling
approximately Rs 155 cr / US$ 26 mn, due to the extraordinary depreciation
of the Rupee against the US Dollar and the Euro. The Company also booked
exceptional costs for its restructuring program of Rs 136 cr / US$ 23 mn.

? Orderbook: The consolidated Group orderbook stood at 5.36 GW,
approximately INR 41,947 cr / US$ 7.1 bn in value, with an intake of 356 MW
over Q1 FY14.

The management of the Company, as a precautionary measure, excluded
from the orderbook a US project totalling 200 MW due to non-movement of
this order.

? Non-critical asset sale: This previously announced initiative to divest
approximately US$ 400 mn of non-critical assets continues to be on track.

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

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Dharini Mishra
Tel: +91 (20) 67025000