Losses widened at Indian wind group Suzlon, as its auditor said the company remains under “severe liquidity stress” that may cast significant doubt on its ability to continue as a going concern.
Suzlon – which described its own debt situation as “unsustainable” – owes about $1.5bn, and is currently battling to reach a restructuring agreement with lenders, who are considering a plan put forward.
In the meantime Suzlon – which defaulted on $172m of bond repayments in July – “has also defaulted in making payments” to trade creditors said a report attached to its latest financial results by auditor Deloitte, Haskins and Sells.
“Certain overdue creditors have issued notices to the Parent and certain subsidiaries under the Indian Bankruptcy Code and few have filed insolvency proceedings against the Parent with the National Company Law Tribunal (NCLT),” said the auditor, adding that earlier offers by potential investors have now been withdrawn. Those offers were reported, but never confirmed, to have come from OEM Vestas and investor Brookfield.
“The aforesaid conditions indicate severe liquidity stress, and consequentially, existence of a material uncertainty that may cast a significant doubt about the Group's ability to continue as a going concern,” said the accountants, before adding that the group's management was “reasonably confident” about its financial restructuring plan succeeding.
Suzlon’s commercial position continued to show the strain of its financial woes, with a second-quarter loss of 7.8bn ($108m) rupees for the three months ending September, widening from a year earlier 6.27bn rupees, as CEO JP Chalasani admitted Suzlon’s “operations are at a subdued level with minimal allocation of funding as we are trying to fix our capital structure”.
But Chalasani insisted there is still all to play for for Suzlon in the Indian wind market, which is struggling to emerge from a tough few years caused by policy challenges and factors such as land availability and grid access, pointing to the company's big service fleet and a 1.5GW order book.
The Suzlon CEO said: “Our operation and maintenance services business continues to deliver strong profitability and high machine performance for the customers, surpassing industry benchmarks.
“India is expected to be a relatively high -volume market once the transitional problems and policy uncertainty are addressed. We continue to work determinedly for a sustainable long term debt resolution plan with our consortium of lenders, to preserve the value of the company.”
