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Suzlon shareholders’ wealth plunges by Rs 41 billion in a year

According to reports, investors in debt-laden Suzlon Energy saw their wealth erode by a staggering Rs 4,100 crore in less than a year, as value of the wind turbine maker’s shares more than halved from its 52-week high of Rs 39.10.

Shares of Suzlon Energy, which has failed to get more time to repay overseas debt worth USD 221 million, has taken a severe beating in the past many months.

The scrip that touched the 52-week high of Rs 39.10 on October, 2011 has since then tumbled to close at Rs 15.90 on October 12, 2012 on the BSE.

The steep slide in value of Suzlon shares has resulted in investors’ wealth plunging by Rs 4,123 crore in a year.

While the company’s market capitalisation currently stands at Rs 2,826 crore, it was valued at Rs 6,949 crore when Suzlon shares touched 52-week high last year.

The price of Suzlon shares reached a 52-week low of Rs 14.75 on August 31 this year.
One of the world’s largest wind turbine makers, Suzlon is grappling with high debt levels, sluggish market conditions and stiff competition in recent times.

On Thursday, Suzlon scrips plummeted over five% in intra-day trading in the wake of bondholders rejecting a proposal to extend the time to repay USD 221 million debt.

The shares slumped over five% to Rs 15.70 before paring the losses to close at Rs 16.20, still down 2.11% on that day. On Friday, it shed another 1.8%.

The wind turbine maker has a debt burden of USD 2.2-2.3 billion. Suzlon is one of the major Indian companies to default on debt obligations.

The company’s Foreign Currency Convertible Bonds (FCCBs) worth USD 220.8 million (about Rs 1,172 crore) were maturing on October 11 and the company was hoping to get bondholders’ nod for more time to repay the debt.

Suzlon had issued USD 200 million Zero Coupon Convertible Bonds and USD 20.8 million 7.5% Convertible Bond. The company on September 18 had sought extension for redeeming these bonds.

“We are continuing our engagement with bondholders and expect to have an acceptable  solution at the earliest,” Suzlon Group Chief Financial Officer Kirti Vagadia had said on Thursday.

Regarding bondholders’ refusal to extend repayment period, Ambit Capital said in a report that it does not bode well for the company’s financial position and hence is negative even for the equity shareholders.

Meanwhile, State Bank of India, which has a total exposure of Rs 3,500 crore to Suzlon, had said the entity should look at leveraging the balance-sheet of its German subsidiary REpower.

Suzlon posted a loss — after shares in associates’s profit and minority interest — of Rs 848.97 crore at the end of June 2012 quarter.

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