ZF, Belgrave Investment, Odisha mining baron pick up stakes in Suzlon

German gearbox manufacturer ZF, foreign portfolio investor (FPI) Belgrave Investment Fund and Odisha mining baroness Indrani Patnaik are among those who have picked up small stakes in Suzlon Energy, helping the company bring in fresh equity of ₹363.50 crore, required by the lenders as part of a debt restructuring plan.

The e-voting for the resolutions for allotting shares and compulsorily convertible debentures (CCDs) to investors as well as raising the authorised capital of the company and conversion of lenders’ debt into equity, ended today.

The equity infusion of ₹363.50 crore appears to be practically crowd-funded, with over a hundred associates of Suzlon (customers, vendors, service providers) chipping in with funds.

Promoter Tulsi Tanti, who is also the Chairman and Managing Director of Suzlon Energy, through Tanti Holdings Pvt Ltd, is bringing in ₹100 crore. But the list of investors — including the family and associates of the other promoter, Dilip Shanghvi of Sun Pharma — is 165-entry long. Equity shares are to be allotted to these persons and entities at a price of ₹2.45 a share of face value of ₹2.

Notable investors

The notable investors include ZF, which sells gearboxes to Suzlon (and had bought Suzlon-owned gearbox manufacturing company Hansen, in 2011). It has now put in ₹12 crore.

Belgrave Investment Fund, which has stakes in Electrosteel Castings, its group company Srikalahasthi Pipes, and Lakshmi Vilas Bank, has put ₹13.5 crore into Suzlon. A company called Amrik Singh & Sons Crane Services Pvt Ltd, which offers cranes on hire for erecting wind turbines, has invested ₹25 crore.

Several customers of Suzlon have chipped in, too. Indrani Patnaik, whose Patnaik Minerals Pvt Ltd is an owner of wind power, has pumped in ₹20 crore, guar gum producer Rajasthan Gum Pvt Ltd ₹10 crore, Giriraj Enterprises, which sells air coolers ₹15 crore. Among listed companies, basmati rice exporter KRBL Ltd and power transmission infrastructure builder Techno Electric, both of whom own wind power assets, have put in ₹5 crore each.

Shanghvi’s son-in-law and companies owned by him and his entities are picking up equity shares for ₹15 crore and CCDs for another ₹15 crore.

The ₹363.50 crore of equity infusion and another ₹50 crore of funds through the issue of CCDs were among the conditions set by the lenders before they agreed to restructure the company’s debt. As on December 31, 2019, Suzlon Energy had ₹11,463 crore of rupee debt on its books.

Promoters’ (Tanti and ‘bodies corporate’ owned by him) holdings are set to fall from 19.79 per cent to 17.17 per cent after the allotment of shares, though the promoters would own 147 crore shares, 40 more than before the allotment. Shanghvi and his associates, however, come under ‘non-promoters’.

‘Suzlon will be back’

Speaking to BusinessLine on Saturday, Tanti said Suzlon will be “back in the market” with an order book that will keep it busy for the next 18 months. A corporate presentation of the company dated February 2020 said Suzlon has orders for 857 MW worth ₹4,399 crore.

Tanti said Suzlon had begun working with both customers and vendors and would get active as soon as the lockdown ends.

Tanti, who is also the Chairman of the Indian Wind Turbine Manufacturers Association, noted that a number of favourable developments put the industry on a solid foundation. He pointed out that the cap on tariffs has been removed, easing the pressure on prices to turbine manufacturers. The proposed ₹90,000-crore liquidity injection into electricity distribution companies would enable them to pay their dues to energy companies, which in turn would give room to the energy companies to pay the turbine manufacturers and place more orders, he observed.

He was also confident that the government would waive inter-State transmission charges (₹1.5 a kWhr), paving the way for energy companies to sell to customers directly. (Such ‘open access’ sales have always been more remunerative.) Furthermore, the government has approved viability gap funding for Central public sector companies to install up to 12 GW of wind power plants.

However, due to the pandemic, Tanti expects wind installations of only 2 GW in FY 21, against 1,580 MW in FY20. The market would improve to 3-4 GW next year, but will soar to bigger numbers from the year after next, he said.

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