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Suzlon Energy net falls on replacement costs and currency

Suzlon Energy net falls on replacement costs and currency
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First Published: Sun, Jun 28 2009. 09 53 PM IST
Updated: Sun, Jun 28 2009. 09 53 PM IST
New Delhi: India’s biggest maker of wind-turbine generators, Suzlon Energy Ltd, said fiscal fourth quarter profit fell 10% because of the replacement of defective blades and losses from currency options.
Net income declined to Rs410 crore in the three months ended 31 March from Rs460 crore a year earlier, the Ahmedabad-based company said in a statement on its website on Sunday. Revenue rose 86% to Rs9,210 crore.
Suzlon lost sales last year after some blades supplied by the company cracked and customers in the US cancelled orders. The replacements for customers will be completed in mid-August, two months behind schedule, the company said on Sunday.
“We don’t expect any more provisioning for the blade retrofit programme,” Sumant Sinha, chief operating officer, told reporters in Mumbai on Sunday. “We had to hedge to protect our inflows. We had based our calculations on the basis of a strengthening rupee but it went the other way.”
Suzlon shares gained 5% to Rs123.50 in Mumbai trading on Friday. The stock fell 84% last year on concern its equipment was faulty.
The Indian rupee fell 21% against the dollar in the 12 months to 31 March, according to data compiled by Bloomberg.
The company had set aside Rs100 crore on its blade replacement plan and Rs140 crore on mark-to-market losses on foreign exchange contracts in the fiscal fourth quarter. That compares with Rs180 crore for the replacement and a loss of Rs23 crore on foreign exchange bets a year earlier.
Revenue will remain flat this year, Sinha said.
“The company received some orders and expects some more,” Chintan Mewar, an analyst at Finquest Securities Pvt. Ltd, who has an outperform rating on the stock, said before the earnings announcement. “That doesn’t solve the problem as it needs a substantial order flow. Orders from the US and India are important.”
Suzlon completed the acquisition of Hamburg-based Repower Systems AG on 6 June after the founders, chairman Tulsi Tanti’s family, sold 4% of the company’s equity on 25 May to help raise funds to buy the stake from Portugal’s Martifer SGPS SA. The company now owns 91% of Repower.
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First Published: Sun, Jun 28 2009. 09 53 PM IST