Suzlone Energy

1. Presentation on
Rescuing Distressed Companies
Suzlon Energy Limited
CA. Salil Mishra
CA. Rakhee Garg
CA. Rohit Kr. Modani
CA. Pawan Gattani
CA. Vikesh Bansal
CA. Bineet Sundriyal

2. Contents
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Growth of Indian Wind Energy Market
Company Profile
Financial Profile
Key Highlights of H1 FY 14
Why Restructuring was/is required
Highlights of Restructuring Scheme (CDR)
Benefits of Restructuring
Recent Positive Developments in Wind Energy
Way Forward in Restructuring

3. Growth of Indian Wind Energy Market
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In FY 2010-11, India added over 2300 MW of new capacity to emerge as world’s 3rd
largest market, behind China and USA
Cumulatively, India is 5th biggest market in the world with over 14 GW of
commissioned wind energy capacity
Market grew almost three fold in size over the last 6 years
Estimated wind power potential between 48 – 100 GW
2005
4388 MW
1995
470 MW
2000
1170 MW
March 2011
14000+ MW
Growth of wind energy in India
* CWET & MNRE estimates 48GW but industry experts believe it could be up to 100 GW

4. Company Profile
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Incorporated in 1995, IPO in 2005, Suzlon Group is today ranked as world’s 5th
largest wind turbine supplier.
International
Company
with
presence
in
markets
across
Asia, Australia, Europe, Africa and North & South America with over 20,000 MW of
wind energy capacity.
Installed Capacities in 30 countries and Operations across 32 countries with
employee strength of over 13,000.
Comprehensive product portfolio – from sub-megawatt on-shore turbines at 600
Kilowatts (KW), to the world’s largest commercial 6.15 MW offshore turbine – with
a vertically integrated, low-cost, manufacturing base.
Headquartered at Suzlon One Earth in Pune, India – the Group comprises Suzlon
Energy Limited and its subsidiaries, including REpower Systems, Germany and
stakes in erstwhile subsidiary companies in Belgium and China.

5. Global footprint : 6 continents, 32 countries
Cumulative group installed base of more than 16,000 MW accounts for
~9% of global installations backed by robust sales infrastructure
(Figures in MW)
Europe installations
Germany
1,968
France
1,160
UK
548
Others
1,345
Total
Germany
5,021
Belgium
Turkey
Canada
UK
China
France
N. America
Canada
4
USA
Total
Portugal & Spain
2,991
2,995
Italy
Japan
Nicaragua
Sri Lanka
S. America
Brazil
Nicaragua
Total
India
384
63
447
Total
Asia
Brazil
REpower
China
985
Japan
Suzlon
118
India
Sri Lanka
Total
5
Both
1: As on March 2011; Includes all installed and SCADA connected systems; 2. REpower installation from 2001 onwards
Australia
6,218
10
7,333
743

6. Presence in India
Footprint in India
 #1 position and leading market
share of in India for 13 years
consecutively
 Installed base of more than
20,000 MW
 Four mega size wind farms
including Asia’s largest wind
farm at Kutch (Gujarat)
Dhule wind
farm in
Maharashtra
700+ MW &
expanding…
Wind farms in
Karnataka;
total capacity
more than 490
MW &
expanding…
 40 wind farms across 8 states
Farms at Soda-Mada,
Sadiya and Pohra in
Rajasthan with a total
capacity of 400+ MW
& expanding…
Sankaneri wind farm
in Tamil Nadu
Over 650 MW &
expanding…
 World class manufacturing
facilities catering to leading
world markets

8. Financial Profile (Stand Alone)
Sales Turnover Vs Net Profit
8,000.00
6,000.00
4,000.00
2,000.00
0.00
-2,000.00
-4,000.00
Sales Turnover
2007-08
6,871.99
2008-09
4,358.66
2009-10
3,505.72
2010-11
7,254.47
2011-12
6,945.13
2012-13
1748.11
Net Profit
1319.79
-539.96
-1238.69
-260.49
-498.77
-2842.97

9. Financial Profile (Consolidated)

10. Key Highlights of H1 FY 14
Operations:
Total revenues at Rs 4,769 Crs in Q2 FY14; 23.8% QoQ growth
 Suzlon wind volumes @ 220 MW; First half volumes at @ 440 MW
Group EBITDA excluding FX is positive @ Rs 39 Crs
Order inflow of 395 MW in 2Q; aggregating to order inflow of 751 MW in H1
Launched 3.0M122- new low wind speed product variant for Canada/Low wind sites
Entry in Uruguay market with first order of 65 MW
RE Power installations crosses 5,000 WTGs; Group installations at ~22.5 GW
Assets Sale
China unit – divested 75% stake to a JV with a strong local partner

11. Key Highlights of H1 FY 14
Project Transformation:
Working capital further rationalized to 9.9% of sales, against 13.6% as on March’13
Monetization:
Divested 75% in the China based manufacturing facility
Total realization - $28M (Rs. ~173 crs)
Business Performance:
Achieved 220MW in Q2FY14 (440MW in H1FY14) against ~250MW annual sales in
entire FY13 at Suzlon wind
Performance continues to be impacted due to lower volumes
RE Power performance on track

12. Key Highlights of H1 FY 14
Progress achieved in reducing fixed costs through project transformation :
Non recurring Group-wide restructuring costs under Project Transformation – Rs. 67 Crs
Net results after tax impacted by
Forex losses due to unfavorable currency fluctuations – Rs 70 Crs
Key Action Taken
Stringent cost control measures in place
Rationalizing travel and consulting expenses
Rationalized office and factory space

13. Why Restructuring was/is required
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High Cost Debt (15%-16%) & Foreign Currency Loans accumulated in the Company for
acquisitions amounting to Rs. 10,500 Crs for RE Power, Germany and Rs. 2,500 Crs in
Hansen, Belgium.
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The Company launched its heavier turbines without conducting crucial test for
exploiting demand-supply gap and the blades cracked – same resulted in $ 10 Crs as
expenses for repairing of the turbine blades.
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US based customer Edison Mission refused to make payment of Rs. 1,081 Crs due to
technical default in turbines.
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The Company took term loans for 3-5 years whereas the Business Model for Wind
Farm Revenues/Returns was for longer period 13-15 years.
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Inability to repatriate cash from German Subsidiary (RE Power) due to Ring Fencing
rule in Germany & Objection by the Bankers of the Subsidiary Company.
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The foreign bond holders refused extension of loan resulting in default in loan
repayment by the Company in Oct 2012 (Rs. 1,300 Crs).
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Working Capital Shortage in the Company as the banks were not lending further the
Company was unable to execute the order book with the Company ($ 7.1 Bn).

14. Why Restructuring was/is required
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Global slow down in Wind Energy Industry due to Global Crisis in 2008.
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Penalties were being levied on the Company for the delay in execution of Projects.
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Synergies envisaged from RE Power’s acquisitions did not yield immediate results.
Company is incurring losses in the last 3 financial years & has huge debts – both
domestic & international. The same has resulted in weak financial position.
There were losses due to FX Fluctuation on the Foreign Currency Loans.
Operating Revenues reduced from Rs. 7K Crs to Rs. 1.7K Crs).
Operational Cost – RM cost was 75% of Revenues in 2012-13 as against 65% in 201112. Total Operational Cost was 99% of Revenues in 2012-13 as against from 80% in
2011-12.
In the Standalone Suzlon – there are Operational Inefficiencies with RM cost being
97% of Revenues in 2012-13 as against 65% in 2011-12. Total Operational Cost was
173% of Revenues in 2012-13 as against 87% in 2011-12.
Significant cash flows from operations have been utilized for payment of bank dues
and therefore the Suzlon and its domestic subsidiaries have insufficient money
(shortage of working capital) to continue operations.
Roll-back of rules related to Generation Based Incentives (GBI) & Accelerated
Depreciation in India.
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15. Highlights of Restructuring Scheme (CDR)
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The CDR Proposal was recommended by SBI, the lead lender (Rs. 3,500 Crs) and the
same was approved by the CDR Lenders (Total of 19 banks).
Suzlon was looking at recasting Rs. 11,000 crore of its Rs. 14,568 crore domestic
loans (as of the September quarter) – the final restructuring was for Rs. 9,600 Crs.
The Banks have provided 2 years moratorium for the principal repayment and termdebt interest payments.
The interest rate on the term loan has been reduced by 3% i.e. from 14% to 11%.
The banks have also provided 6 months moratorium on the working capital.
The interest during the 2 year moratorium period (Rs. 1,500 Crs) would be
converted into equity.
Additional working capital facility of Rs. 1,800 Crs provided for Operations.
Equity infusion by the Promoter group of Rs. 250 Crs and conversion of unsecured
loan by Promoter Group of Rs. 145 Crs into Equity.
IDBI infused Rs. 550 Crs in the Company by allotment of Preference Equity Shares
against the sacrifice of interest on term loan.

16. Highlights of Restructuring Scheme (CDR)
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Waiver of existing events of defaults, penal interest and charges etc.
To issue equity shares in lieu of sacrifice of the CDR Lenders for the first three years
from COD, if demanded by CDR Lenders.
Extension of maturity date of convertible bond (Rs. 2,013 Crs) by 45 days.
Suzlon would sell the non core assets/divest key subsidiaries as under and use the
proceeds to prepay debt servicing obligations.
Brand value of “Suzlon” would be explored as additional security for lenders.
Trimming its work force by 20% by the end of the fiscal year through March 2013.
Besides all this there would not be any additional Term Loan taken by the Company.

17. Benefits of Restructuring
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Reduction in the Interest Rate of 3% (from 14% to 11%).
Moratorium Period of 2 Years on Principal and Interest Payments.
Conversion of various irregular/outstanding/devolved financial facilities into
working capital term loan.
Additional need based Working Capital provided.
Infusion of Equity to provide stronger financial stability.
Increase in Net Worth & EBITDA.
Waiver of existing events of defaults penal interest & charges.
The Company has sold stakes in the Belgium Subsidiary – Hansen.
The Company has sold stake in the Chinese Subsidiary for Rs. 170 Crs and retained
25% stake in the JV for having presence in Chinese Market. The cash is yet to come.

18. Recent Positive Developments in Wind Energy
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There have been tariff increased for wind power by few states –
Rajasthan, Gujarat, Tamil Nadu and AP.
The Generation Based Incentive (GBI) Scheme has been revived in India.
CERC has given guidelines requiring renewable energy target of 15% by 2020.
EU also has targets for achieving 20% energy through renewable resources and
announced stimulus packages for the same.
Copenhagen Summit has put renewable energy in the spotlight with committed
long-term funding of $ 100 bn per year by 2020 – the same would create
opportunities for global players such as Suzlon in Renewal Energy.
Estimated potential of ~ 50 GW, largely untapped.
Currently 2 GW annual market, likely to grow to 4 GW size.
Repower has launched “3.0MW 122 meter rotor, 60 hertz” specially designed for
the low wind site for the developed countries. This segment offers the big
opportunity as high and medium wind sites are used up in these markets.
Dedicated Ministry and Established Regulatory Framework.
Aggressive targets & commitment under Government’s National Action Plan
(NAPCC)

19. Working Capital Management
Components
Rs./Crs
Inventories
5,264
Trade Receivable
2,732
Due from Customer
2,936
Gross Working Capital
10,932
Less: Creditors/Advance
from Customer
Efficient Receivable Management by Bill
discounting, Factoring and Forfeiting
Availment of suppliers credit & Buyers
credit to increase the credit period
8,601
Net Working Capital
Recommendations
2,331
Advantage
Current Cost of borrowings
11% to 16%
Proposed Cost of Borrowing
3% to 5%
Rs 180 crs saving in
interest cost annually

20. Currency Risk Management
What went wrong ?
Total Unhedged Exposure as on 31.03.2013
Rs. 14, 718 crs
Impact on P& L
Fx loss of Rs. 307 crs booked
Recommendations
1. To have a Risk Management Policy (RMP)
2. To Hedge the exchange risk by taking forwards
3. To take Interest rate swap (IRS) to hedge the interest rate risk

21. Other Internal Restructuring Measures
1. Rationalising the head counts (Rightsizing the man power. Total man power in
Suzlon & RE Power is 12,366. Employee cost for 2012-13 was Rs. 2,133 Crs
(Previous year Rs. 2,009 Crs)
2. Reduction of Operating Expenses required further.
[3% increase Operating Expenses in 2012-13 – Rs. 18,077 Crs (PY Rs. 17,529 Crs)].
[13% decrease in Revenue in 2012-13 – Rs. 18,914 (PY Rs. 21,359 crs)]
3. Sale of Non critical assets (Estimated revenue $ 400 million)
A
Sale of Pondicherry Plants
B
Sale of Mangalore SEZ
C
Sale of Stake in SE Forge
D
Sale of US based Blade Plant
E
Sale of Chinese Suzlon Energy
4. FCCB Restructuring of $ 265 Million (Active dialogue with bondholders & their
advisors)

22. Restucturing of RE Power
Proposal 1
Merger of Suzlon with RE Power.
Hindrance : RE Power’s local banks are believed to be blocking the merger.
Way forward : Replace the local banks with Indian lenders . With Indian bank as lender
company can go ahead with merger. The merged entity can bring back the huge cash
balance of Rs. 1,700 Crs.
Proposal 2
Sale of stake in Repower
Hindrance : Suzlon considers this as critical asset. Does not want to sale it.
Way forward : The most workable option for the company to become debt free. Start
the process by listing the Company in London Stock Exchange by Issue of shares/stake
offloading by Suzlon.

23. Thank You

24. Conclusion – Way Forward
Operational:
• Divestment/Stake Sale in Key Subsidiaries and Non-Core Assets.
• Working with EU Banks for relaxation of restrictions on repatriation from Germany.
• Replacement of EU Banks by Indian Bank for allowing repatriation from Germany.
• Continued focus on reduction of headcount (450 in H1 FY 14 + 2,500 in FY 13).
• Continued focus on reduction in cost (38% opex cost has reduced year on year).
• Rationalisation of Working Capital (currently reduced to 9.9% of sales)
• Continued R&D efforts for remaining market leaders in technology.
Financial:
• Asset Restructuring.
• Foreign Currency Loan Restructuring.
• Attracting PE Investor.
• Refinancing of NFB WC facility at RE Power from new lenders.
• Leveraging on cost advantage (through backward and vertical integration)

25. Customer’s in India
Customer
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Over 1,500 customers in
India from across the
industry sectors &
geographies.
Customer mix comprising
of small/medium
businesses, large
corporates, PSUs etc.
High Repeat Customer
reflected – 45% share.
New
Business
45%
55%
FY10-11 Orders Distribution by MW
MW*
Project Type
DLF Group
217.50 PPA
Hindustan ZInc
50.70 PPA
MSPL Group
137.50 PPA
Techno Electric
110.45 PPA
RSMML
91.3 PPA
Tata Group
88.65 PPA
Ruchi Group
87.90 PPA
Gujarat NRE Coke
87.50 PPA
GACL
83.75 EWA
Aditya Birla Group 75.00 PPA
Bajaj Auto Group
68.00 EWA
Green Infra (IDFC)
64.00 PPA
GSPC
61.50 EWA
G. N. Agrawal
52.20 PPA
ONGC
51.00 EWA
Ramco Group
48.10 EWA
Reliance Group
45.00 PPA
ITC Group
41.20 EWA
K S Oils Group
32.80 PPA
Indian Oil
21.50 EWA
Indian Railways
10.50 EWA
Repeat
Business
* Cumulative MW commissioned as of 31st March 2011
Project States
Guj., Raj, TN
Raj, Ktk
Mah., Ktk
TN, Ktk
Raj
Mah
Guj, MP, Mah, Raj, TN
Guj
Guj
Mah
Mah
Mah., TN
Guj
KN, Mah, TN, Raj
Guj
Guj., Ktk, TN
Mah
Mah, TN
Guj, MP, Raj., TN
Guj
TN

26. Cash Flow Statements (Stand Alone)
Cash Flow Statement
Particulars
CASH FLOW FROM OPERATING ACTIVITIES
CASH FLOWFROMINVESTING ACTIVITIES
Investments in subsidiaries
Loans granted to subsidiaries
Others
CASH FLOWFROMFINANCING ACTIVITIES
Proceeds from issuance of Global Depository Receipts
Proceeds from long term borrowings
Premium Paid on FCCB
Repayment of FCCB
Proceeds from issuance of zero coupon convertible bonds
Proceeds from short-term borrowings, net
Proceeds from issuance of debentures
Interest paid
Payment towards buy-back of FCCB
Repayment of Long Term Borrowings
Others
NET INCREASE IN CASH AND CASH EQUIVALENTS
Add: Acquiriing on account of Merger
Cash and cash equivalents at the beginning of the year
Cash and cash equivalents at the end of the year
2008
481
481
2009
-391
-391
2010
2,424
2,424
2011
762
762
2012
544
544
2013
283
283
-4,114
-1,746
1,914
-3,947
-2,679
-2,373
1,469
-3,583
-990
-3,492
1,886
-2,597
-147
-2,127
1,522
-752
-1,505
-2,213 -2,519
2,540 3,327
-1,177
808
2,010
-125
2,101
3,986
521
590
2,861
300
-365
-120
3,266
-709
523
2,781
453
-2,024
-646
-200
-315
572
399
994
-708
-578
-58
-351
-340
259
779
779
71
71
470
470
129
956 1,918
- -630
- -1,371
642 -345
-727
-118 -197
-13 -588
740 -1,214
107 -123
26
129
262
262
139