Union Bank classifies Suzlon Energy's loan account as NPA; other banks may follow suit
Other lenders to Suzlon Energy include Bank of India, Bank of Baroda, Central Bank of India, IDBI Bank and Punjab National Bank; the bad loan tag will force all of them to make provisions for their respective exposures
- Jul 22, 2019,
- Updated Jul 22, 2019 10:39 AM IST
Wind turbine major Suzlon Energy Ltd's financial woes continue to mount. A week after defaulting on the payment of outstanding bonds worth Rs 1,182 crore, its loan account with the Union Bank of India has been classified as a bad loan. The Tulsi Tanti-led company had reported a net loss of Rs 6,494 crore in the March quarter on a standalone basis.
Sources in the know told Mint that Union Bank updated the status of the account as non-performing in the RBI's Central Repository of Information on Large Credits (CRILC) database in the quarter ended June 30, after repayments were delayed by over 90 days. CRILC is a borrower level supervisory dataset with a threshold in aggregate exposure of Rs 50 million. Worse, the buzz is that more banks are likely to follow suit as the stressed wind turbine maker struggles with its debt pile. The company boasted a consolidated net term debt of Rs 7,761 crore and a working capital debt of Rs 3,380 crore by the end of FY19.
The downfall of Suzlon, which grew as the world's fifth largest wind turbine maker with revenues of over Rs 26,000 crore in 2008-09, is a classic case of aggressive global expansion without reading future business prospects. The 2008 global financial downturn sucked away a lot of the company's fortunes and though it managed to subsequently recover and once again manage a strong order book, the global financial slowdown in 2018 again threw a spanner in the works. Soon raw material prices, including steel prices, rose and many orders were postponed.
The shift to auction-based capacity additions - from the earlier system of feed-in tariffs - and the resultant disruption to the market also caught Suzlon Energy, as well as other stakeholders, off-guard. As a result of the change, wind capacity additions in India dropped to multi-year low of 1,523 MW in the last fiscal, down over 72 per cent from 5,500 MW in FY17. Suzlon Energy's debt binge and its inability to move in time on stake sales and asset monetisation to reduce the debt pile, only made matters worse.
The company now has to worry about its looming debt schedule - in FY20, Suzlon has to pay back Rs 1,928 crore, Rs 835 crore in FY21, Rs 926 crore in FY22 and Rs 4,483 crore in FY23 and beyond.
(Edited by Sushmita Choudhury Agarwal)
Also read: TVS launches India's first ethanol-based motorcycle Apache RTR 200 Fi E100 at Rs 1.2 lakh
Also read: BT Buzz: Debt laden Suzlon stares at stake sale to stay afloat
Wind turbine major Suzlon Energy Ltd's financial woes continue to mount. A week after defaulting on the payment of outstanding bonds worth Rs 1,182 crore, its loan account with the Union Bank of India has been classified as a bad loan. The Tulsi Tanti-led company had reported a net loss of Rs 6,494 crore in the March quarter on a standalone basis.
Sources in the know told Mint that Union Bank updated the status of the account as non-performing in the RBI's Central Repository of Information on Large Credits (CRILC) database in the quarter ended June 30, after repayments were delayed by over 90 days. CRILC is a borrower level supervisory dataset with a threshold in aggregate exposure of Rs 50 million. Worse, the buzz is that more banks are likely to follow suit as the stressed wind turbine maker struggles with its debt pile. The company boasted a consolidated net term debt of Rs 7,761 crore and a working capital debt of Rs 3,380 crore by the end of FY19.
The downfall of Suzlon, which grew as the world's fifth largest wind turbine maker with revenues of over Rs 26,000 crore in 2008-09, is a classic case of aggressive global expansion without reading future business prospects. The 2008 global financial downturn sucked away a lot of the company's fortunes and though it managed to subsequently recover and once again manage a strong order book, the global financial slowdown in 2018 again threw a spanner in the works. Soon raw material prices, including steel prices, rose and many orders were postponed.
The shift to auction-based capacity additions - from the earlier system of feed-in tariffs - and the resultant disruption to the market also caught Suzlon Energy, as well as other stakeholders, off-guard. As a result of the change, wind capacity additions in India dropped to multi-year low of 1,523 MW in the last fiscal, down over 72 per cent from 5,500 MW in FY17. Suzlon Energy's debt binge and its inability to move in time on stake sales and asset monetisation to reduce the debt pile, only made matters worse.
The company now has to worry about its looming debt schedule - in FY20, Suzlon has to pay back Rs 1,928 crore, Rs 835 crore in FY21, Rs 926 crore in FY22 and Rs 4,483 crore in FY23 and beyond.
(Edited by Sushmita Choudhury Agarwal)
Also read: TVS launches India's first ethanol-based motorcycle Apache RTR 200 Fi E100 at Rs 1.2 lakh
Also read: BT Buzz: Debt laden Suzlon stares at stake sale to stay afloat