According to reports, the global economic turmoil has taken the wind out of the sails of renewable energy companies worldwide. Investments have slowed, as have new orders, and investors are feeling winded
For instance, shares of Suzlon Energy Ltd., India’s largest wind turbine maker by sales, are trading at 19.25 rupees ($0.35), down 66% from their 52-week high of 55.8 rupees.
Foreign institutional investors have almost halved their shareholding to 5.55% at the end of June from 10.4% at the end of March after Suzlon reported losses for the full year on high interest costs and foreign currency losses.
The turbulent times are now blowing through the compensation of the company’s top managers, too. Founder and Chairman Tulsi Tanti has taken a hefty salary cut of 14.62 million rupees ($265,151), reducing his total payout to 5.38 million rupees for the year ended March 31, 2012, the company’s annual report to shareholders showed. The salary includes retirement benefits.
Director Vinod Tanti’s salary has been slashed by 6.6 million rupees to 5.38 million rupees, according the annual report.
“Since the company has incurred losses for the financial year 2011-12, the excess remuneration beyond the limits specified…has been recovered from the executive directors and accordingly the remuneration paid to executive directors after the refund of excess amount stands reduced,” the annual report said.
A spokesman for Suzlon declined to comment on the salary cut. However, he pointed out that Mr. Tanti didn’t accept any remuneration for the financial year ended March 2010 and March 2011 as part of his personal commitment to restoring the organization to a position of strength.
Suzlon owes lenders and investors about $2 billion. Its business has suffered with the removal of certain tax-breaks for wind power producers in India as well as the oversupply of cheaper products from China.
Creditors also are worried about the company’s maturing debt obligations. It has to repay $358 million to its bondholders on July 27 after getting an extension and must repay another $209 million in October.
In other words, it will likely take more than an executive pay cut to restore investor interest.
“This doesn’t help at all,” said one analyst at a Mumbai-based brokerage, who tracks the stock. “They need to find ways to make the business viable and that can happen only if they get more and more orders to cover fixed costs.”