Suzlon 'very comfortable' with current debt level

 India's wind turbine maker Suzlon Energy has not ruled out selling its stake in Hansen Transmissions just yet despite pressure on the company to reduce its debt, chairman Tulsi Tanti said at the weekend. Tanti said the world's third-largest wind turbine maker, behind Denmark's Vestas and Spain's Gamesa, is very comfortable with its current net debt level. "The debt part of the problem is over," Tanti, who founded the company in 1995, told Reuters in an interview. Debt worries have weighed on Suzlon's stock price, and the company sold 35 percent of Hansen for around $370 million last November, issued equity, increased operational efficiency and reduced its working capital to cut its net debt by 17 percent to 97.6 billion rupees ($2.20 billion) by the end of May. "All these initiatives have given a good level to our debt. 

The comfort is there. Now we can say things are very comfortable," Tanti said. The company's leveraging has worried investors ever since it bought Belgium's Hansen, a London-listed wind turbine gearbox manufacturer, in 2006 and built up a 91 percent stake in Germany's REpower in the following two years. Analysts say that Suzlon may have to sell its remaining 26 percent stake in the Belgian company to further reduce its leveraging. But Tanti said the company can afford to wait until it obtains the right price. "We are not interested in selling the stake immediately, because that is not a requirement. 

At the appropriate time, when we get the right valuations, we will think of an exit. Currently it is not needed and there is no plan to do it," he said. "The operational efficiency we are focusing on to reduce fixed costs will give savings and cash generation and reduce our working capital cycle. So there is additional liquidity available which we can use for further growth," he added After years of rapid growth, the wind power industry has suffered from weak demand during the financial crisis. 

With demand seen flat in the United States in the next two years due to slow regulatory change, Suzlon expects growth to come from markets like India and China. The company, whose order book stood at nearly $5 billion in August, is also looking at other emerging markets, particularly in Latin America, where it is a market leader in Brazil with an installed capacity of around 400 megawatts. 

"In Brazil a new auction has just been completed for 1.8 gigawatts, and many of our existing and new clients have made bids using our products, so we are quite optimistic on getting a lot of good orders from the auction," Tanti said. He added that Suzlon also expects to obtain orders from Chile, Argentina, Uruguay and Mexico "in the near future, with delivery and execution expected to take place in 2012".