Suzlon to sell SE Forge, other assets

MUMBAI: Tulsi Tanti-led Suzlon Group plans to raise Rs 2,500 crore by selling its Vadodra-based forging unit, SE Forge, and other assets, as the world's fifth largest wind turbine maker looks to reduce its debt. Suzlon, which has hired SBI Capital Markets to find buyers for its assets, is close to sealing a deal for SE Forge, said people familiar with the matter.
The latest plan comes close on the heels of Tanti selling a 23% stake in the company to pharma tycoon Dilip Shanghvi for Rs 1,800 crore. Earlier, Suzlon had sold its Germany unit, Senvion, for euro 1 billion.
Suzlon has put on block a dozen non-critical assets, including land parcels, office spaces and other component businesses to raise Rs 2,500 crore, said people quoted above. A major portion of this amount is expected to come from the sale of its subsidiary SE Forge alone, said one of the persons. In 2008, when IDFC Private Equity acquired a 17% stake in SE Forge, the company was valued at Rs 2,300 crore. But now Suzlon may find it difficult to get the same valuation for its forging subsidiary because of the debts on its books. A buyer for SE Forge has been identified and the deal is most likely to be announced soon, said another person.

A Suzlon Group spokesperson said, "The sale of non-core assets is part of the company's strategic initiative to deleverage the balance sheet." He, however, didn't specify the assets for sale.
At present, Suzlon's domestic debt stands at Rs 8,900 crore, which is being restructured through a corporate debt restructuring process. Its foreign debt comprises $436 million FCCB, which has been restructured with a 5-year maturity in 2019-20. Another $647 million of credit enhancement bonds will mature in 2018.
Investment advisor S P Tulsian believes that the company may turn around in FY16 as its interest payment will be halved from Rs 2,000 crore that it pays now.
"The government's ambition to generate 1 lakh megawatt of renewable energy by 2020 will provide a huge opportunity to Suzlon for future growth," said Tulsian.
Suzlon shares on BSE closed 1.5% down at Rs 26.6 in a weak Mumbai market on Wednesday, valuing the firm at Rs 9,414 crore.