Suzlon Energy Ltd., India's largest wind-turbine maker, may cut jobs
and sell bonds this year after reporting its second-biggest quarterly
loss since at least 2007 as costs rose. The company's shares fell to a
record low.
Suzlon plans to pare fixed costs by 20
percent this fiscal year by “reducing manpower and operational
expenditures,” Chief Financial Officer Kirti Vagadia said in a phone
interview today. The company’s shares closed down 4 percent at 17
rupees.
Suzlon, which has lost money for three
consecutive years, faces repaying debt and boosting orders as industry
competition grows. Demand for turbines is forecast to lag in China and
the U.S., the world’s largest wind markets, and a global supply glut has
driven down the price of machines by 23 percent since 2009, according
to data compiled by Bloomberg.
The Pune-based company plans a foreign
currency-denominated, high-yield bond issue of as much as $500 million
in the third quarter, Vagadia said. The company must redeem $142.2
million of convertible notes maturing on Oct. 11, according to data
compiled by Bloomberg.
“We’re bringing more efficiency to the
organization,” Vagadia said from Mumbai, declining to identify how many
jobs may be cut or from which division. A lack of working capital
constrained Suzlon’s ability to carry out orders in the first quarter
ended June 30, Suzlon said yesterday after reporting a quarterly loss of
8.5 billion rupees ($153 million).
Debt Obligations
The chief financial officers at the Suzlon group
and the company’s German Repower Systems SE unit quit earlier this year,
leaving Vagadia and another internal hire to fill the positions.
To meet debt obligations, Suzlon has borrowed
$300 million from banks and liquidated non-critical assets, including
two Indian wind farms in April and a Chinese factory. The company
redeemed $360 million of convertible notes on July 27, the last day of a
45-day extension it had requested of bondholders while it raised money
from lenders.
Suzlon has “already identified” sources of funds
to meet its October bond obligations and expects to raise working
capital this quarter, Vagadia said.
Other asset sales may include “certain component
manufacturing businesses,” he said. Suzlon’s SE Forge Ltd. unit makes
metal castings and forgings used in wind turbines.
Copyright 2012 Bloomberg
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