According to reports, Suzlon Energy Ltd is exploring the possibility of listing its subsidiary Suzlon Global Services in order to pare its parent’s debt, an official familiar with the development told Moneycontrol. Suzlon Global Services is a wholly-owned company of Suzlon Structures, which in turn is 100 percent owned by Suzlon Energy. “The IPO will make Suzlon Global debt-free,” the official said, adding the company could look to raise Rs 2,000 crore via the issue. The official said Suzlon Global would use the money raised via the IPO to repay its loans to Suzlon which could then use that money to repay its own loans.
“The operation and maintenance services are like an annuity business. It is non-cyclical and generates steady cash flows,” the official said. Suzlon Global has a debt of around Rs. 1,300 crore, much of which is owed to Suzlon Energy, according to the official. Suzlon did not respond to the mail sent to it by Moneycontrol on the matter.
The company is yet to appoint merchant bankers for the issue which will likely comprise only fresh shares. Suzlon Global was earlier known as SISL Green Infra. Every turbine that Suzlon sells in India is under its service-fold. “The services and maintenance business that Suzlon Global is into has great potential.
There’s thousands of mega watts of solar and wind capacity coming up in India and abroad,” the official said. Suzlon Global made a loss of Rs 329.96 crore on operating revenues of Rs 904.24 crores in 2015-16. Its EBITDA was Rs 258.56 crore. “Next year, the EBITDA should be Rs 400-500 crore,” the official said. At the end of December, Suzlon Energy had a gross term debt of Rs 7,594 crore and net term debt of Rs 6,538 crore.
Its working capital and short-term debt was Rs 3,167 crore. The Pune-based maker of wind turbine generators earlier directly owned 98 percent stake in Suzlon Global. It transferred that stake in 2015-16 to Suzlon Structures with an eye on fund-raising in the future, according to Suzlon Energy’s 2015-16 annual report.