Suzlon Energy, one of the global wind energy major turned in 56% fall in consolidated revenue for the quarter ended Sep 2017 to Rs 1193.06 crore. Lower sales together with 1140 bps crash in operating profit margin to 9% has dragged the operating profit down by 81% to Rs 106.97 crore. The other income was up by 13% to Rs 21.75 crore and thus the PBIDT was down by 78% to Rs 128.72 crore. As operating profit for the quarter is not good enough to cover the interest the PBDT was a loss of Rs 196.04 crore as against a profit of Rs 283.41 crore in corresponding previous period. The depreciation was lower by 14% to Rs 79.21 crore. The forex loss was Rs 99.04 crore compared to an profit of Rs 59.92 crore in corresponding previous period. Thus the PBT after forex loss but before EO was a loss of Rs 374.29 crore compared to a profit of Rs 251.11 crore in corresponding previous period. The EO income for the quarter was Rs 454.29 crore compared to nil in the corresponding previous period. Spurred thus, the PBT after EO was a profit of Rs 80.50 crore, a fall of 68%. The taxation was down by 16% to Rs 0.82 crore and thus the PAT was down by 68% to Rs 79.68 crore. The share of loss from associate was higher by 41% to Rs 9 crore and the minority interest was share of profit of Rs 2.58 crore (against nil in previous quarter) and thus the net profit was down by 72% to Rs 68.10 crore. With other comprehensive expense stand higher at Rs 230.26 crore compared to mere Rs 11.14 crore of expense in corresponding previous period. Thus the total comprehensive income was a loss of Rs 162.16 crore compared to a profit of Rs 232.61 crore in corresponding previous period.
- Sale was lower hit by industry transition to PPA based orders. Segment revenue of WTG was down by 73% to Rs 608.52 crore. The segment revenue of foundry was down by 41% to Rs 73.10 crore and that of O&M services was down by 6% to Rs 429.66 crore. The segment revenue of others jumped by 356% to Rs 148.66 crore.
- EBIT was a loss of Rs 71.28 crore compared to a profit of Rs 526.64 crore in the corresponding previous period. This was largely due to sharp loss of Rs 164.22 crore registered by WTG segment for the quarter compared to a profit of Rs 448.57 crore in the corresponding previous period. The segment profit of foundry & forgings was down by 85% to Rs 4.65 crore. However despite lower sales the O&M services registered 77% growth in segment profit to Rs 72.52 crore. Similarly the others turned in a segment profit of Rs 15.77 crore, a jump of 144%.
- Operating profit margin crashed by 1140 bps to 9.0% and that is largely due to sharp rise in all cost heads. While material cost as % to sales net of stocks was higher by 190 bps to 59.9%, the staff cost was higher by 440 bps to 12.9%. The cost of traded goods was up by 520 bps to 5.2% and OE was up by modest 30 bps to 15.4%. On lower sales and crash in OPM the operating profit was down by 81% to Rs 106.97 crore.
Half yearly performance
Sales for the period were down by 12% to Rs 3869.30 crore. Higher sales and 170 bps contraction in OPM has resulted in 21% fall in OP to Rs 582.17 crore. After accounting for higher OI, higher interest and lower depreciation, the PBT before forex loss and EO was a loss of Rs 168.41 crore compared to a loss of Rs 5.06 crore in the corresponding previous period. The forex loss was Rs 141.47 crore compared to a gain of Rs 2.50 crore in corresponding previous period. The EO income was Rs 454.79 crore compared to nil for corresponding previous period. Spurred thus the PBT after EO was a profit of Rs 144.91 crore compared to a loss of Rs 2.56 crore in corresponding previous period. The taxation was a provision of Rs 1.57 crore, a fall of 68%. Thus the PAT was a profit of Rs 143.34 crore compared to a loss of Rs 7.50 crore in the corresponding previous period.
Share of loss from associate was up by 104% to Rs 24.82 crore. The minority share of profit is Rs 1.34 crore as against nil in the corresponding previous period. Thus the net profit after MI was up a profit of Rs 117.18 crore compared to a loss of Rs 19.65 crore in corresponding previous period. The other comprehensive expense net of tax was up by 188% to Rs 237.98 crore. Thus the total comprehensive loss was up by 18% to Rs 120.80 crore.
Management Comment
J P Chalasani, Group CEO, Suzlon, said, "Indian wind industry is in transition from FiT to competitive bidding mechanism. Indian government's commitment to Renewable Energy remains intact and we strongly believe that the long term fundamentals of the wind industry are sound. This transition has a temporary impact on installations in FY18, due slow beginning of bidding and delay in regulatory approvals. However, we are confident that the industry is likely to regain its momentum with 6 GW+ volume expected in FY19. It will soon migrate towards a 10 GW market size. With the newly discovered tariff, Wind is competitive with respect to other sources of energy and has emerged as a mainstream energy source. Going forward, we are well positioned to capitalize on the market opportunities with our superior technology, project execution experience spanning over two decades, new generation turbines offering higher energy yield, presence across the entire value chain, vertically integrated operations and best-in-class service capabilities."
Kirti Vagadia, Group Head of Finance, Suzlon Group said, "The advent of bidding has led to a temporary uncertainty due to the transition from the FiT regime. We have focused on cost optimization across the board including COGS, fixed costs and interest, in order to become more competitive in this changed market scenario. With strong project pipeline and customer tie ups, we are confident of quickly ramping up volumes and execution to meet the expanded market requirements. Our priorities are to continue to ramp up volumes, build strong order backlog, optimize costs across the board, and maintain disciplined working capital level."
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