According to reports, After agreeing to sell German unit Senvion for $1 billion, Suzlon Chairman Tulsi Tanti says he was compelled to sell the business, which the company bought in 2007 for $1.4 billion, for strategic reasons as he was faced with high debt at a time when growth prospects are bright. Edited excerpts from his interview with Shuchi Srivastava:
Earlier you resisted the idea of selling Senvion. What triggered the move now?
This deal was required purely for strategic reasons as we were faced with the classic conflict of high debt growth and exponential growth expectations in emerging markets like India, Brazil and China and even the US, which we could not adequately target due to an acute liquidity crunch. Now we are in a comfortable position as we can pay our lenders and have some cash to invest in targeting emerging markets.
Did you undervalue an asset that you described as a marquee asset?
It might look like a 25% haircut but actually, due to the positive currency movements and the price of the offshore wind farm technology that has been transferred to us, the overall haircut is only in the range of 5%, especially if you factor in the additional $50 million we can get if we meet the mutually discussed milestones.
What about your lenders, how much debt will you be retiring?
Of the Rs 7,200 crore that should be hitting our accounts by March-end this year, around Rs 6,000 crore will be immediately transferred to our lenders. Also, this cash infusion will now make us eligible for long-term funding from banks which can adequately support our business plans.
You are very excited about the Indian and emerging markets. Please elaborate.
The overall market dynamics have changed in India, Brazil and China dramatically now, especially as wind power tariffs have become very competitive.