Here’s all you need to know about Suzlon Energy’s ₹1,200 crore rights issue after founder Tulsi Tanti’s death
Suzlon Energyis the fifth largest wind turbine maker in the world, and the company has come up with a ₹1,200 crore rights issue.
- The company intends to use the proceeds of the rights issue to pare its debt and interest, apart from meeting other corporate requirements.
Tulsi Tantiwas the pioneer of renewable energy in India – and with him now gone, Suzlon Energy’s rights issue could be at risk.
The rights issue is the latest in Suzlon Energy’s attempts to trim its debt – its total borrowings stood at ₹6,800 crore in FY21. Earlier this year, its lenders agreed to convert a part of their loans to equity, increasing their stake in the company to 35%.
However, just as
In an exchange filing earlier today, the company confirmed that it is going ahead with the rights issue, with the promoters announcing they will fully subscribe to their rights entitlement.
Suzlon could be a ‘good candidate’ for other green energy players
Shrikant Chouhan, head of equity research (retail) at Kotak Securities, remains optimistic about the company’s fortunes despite the demise of Tanti, who was the keyman of Suzlon Energy and its face, too.
“Rights issues may turn out to be good for the company because right now the investors are ready to infuse money and the confidence building is also there. If they get proper response from investors then I think the company will start doing well,” he told Business Insider India.
Suzlon Energy could also be on the radar of other green energy companies.
“Since there is a focus of the government on clean or green energy, Suzlon Energy will be a good candidate in the future for anyone to take over or to buy or consolidate,” Chouhan added.
What might be of concern to investors, though, is that the company’s financials don’t inspire a lot of confidence.
From its peak of ₹21,000 crore in revenue in 2012, Suzlon’s topline fell 7 times to ₹3,000 crore in 2020. In this period, the company reported a cumulative loss of over ₹19,800 crore.
However, it has slowly started clawing back after hitting the bottom in 2020. 2021 saw its topline grow by 12%, but the most important improvement was in the bottomline – Suzlon reported a profit of ₹105 crore after reporting a loss of ₹2,700 crore in 2020.
In 2022, Suzlon’s topline nearly doubled, while it remained in the black in terms of profits.
Its shares, however, entered the death spiral over a decade ago, falling by over 200 times from the peak of ₹425 to ₹1.95 in 2019. Whether the rights issue will help the company bounce back or will it just bail out the lenders, only time will tell.
India’s ‘wind man’
Tulsi Tanti is often called the pioneer of renewable energy and the ‘wind man’ of India. He founded Suzlon Energy in 1995 and the company now has 19.4GW wind energy capacity with a 33% market share in India. It’s present in 31 countries around the world, including R&D centres in Germany, Netherlands, Denmark, among others.
At the time, the renewable energy space was dominated by international players which offered expensive and complicated technologies.
With the renewable energy industry taking off now – Adani and Ambani, India’s richest men, have committed billions of dollars to it – Tanti quipped that the time is now right, and that Suzlon entered the business two decades early.
While the future seems hazy right now, Tanti’s journey from a textile businessman to a renewable energy pioneer is one of ingenuity and intrigue.
Textiles to renewable energy – and the makings of Adani
Tanti’s first tryst with entrepreneurship was in the textiles industry. He set up Sulzer Synthetics in 1987 along with his siblings, in typical baniya spirit.
Soon, to support textile manufacturing, Tanti set up a captive wind energy unit that allowed him to reduce his energy costs, but like his fellow Gujarati Adani, he expanded his wind energy unit from being a captive source to an actual business of its own.
He set up Suzlon Energy in 1995, and the next 10 years created a billionaire out of a textile businessman. Suzlon hit the capital markets with an IPO in 2005 to raise ₹1,500 crore, but the renewable energy business had enough excitement around it that the issue was oversubscribed 15 times.
Suzlon’s success even helped Citigroup Venture Capital – a private equity firm and part of Citigroup at the time – reap handsome rewards. The firm invested $22 million and cashed out $400 million, with $300 million worth of stake still in its kitty.
Suzlon used these funds to make some quick acquisitions – it scooped up Belgium-based Hansen Transmissions which made gearboxes, aiming for backward integration. Later, it acquired Germany-based REpower Systems, surprising global bankers and wind energy players.
On the other hand, Suzlon’s debt kept piling up even as the company’s market cap soared to ₹68,000 crore in 2009.
If this sounds familiar, it is because it’s true – while Tanti had the makings of Gautam Adani, he never quite managed to tide over the debt concerns despite multiple restructurings.
The REpower acquisition sent Suzlon’s debt soaring from ₹5,100 crore to ₹17,000 crore, forcing Tanti to hit reset on debt restructuring multiple times. He did eventually manage to sell REpower for a €500 million loss in 2015, but that was after eight years of servicing debt.
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