Suzlon gets short-circuited

Suzlon Energy fell to Rs.2.15 from yesterday’s close of Rs.2.58. It has now recovered a bit to Rs.2.42. Its 52-week low stands at Rs.2.06 and 20% LC for today is at Rs.2.07.

The company’s net loss widened for the quarter at Rs.777 crore v/s loss of Rs.627 crore (YoY). Revenue slipped 32% at Rs.803 crore.

The company said, “The sector is witnessing issues on project execution due to some policy issues but there has been some healthy growth in installations over the last year. Wind capacities added in India in H1 2019-20 was at 1,304 MW as compared to 569 MW in H1 2018-19. Our operations are at a sub-optimal level due to liquidity challenges being faced by the company. We remain focused on cost optimisation across the board including cost of goods sold (COGS) and fixed costs.”

In Q1FY20, the company had managed to bring down the losses to Rs.337 crore mainly on the back of lower expenses, which declined to Rs.1178 crore from Rs.1866 crore (YoY). But in Q2FY20, expenses rose once again (YoY) to Rs.1551 crore though, QoQ it remained lower.

Things became tough for the company after the Modi Govt shifted to auctions in 2017 as the preferred method to install wind projects. This put a restriction on orders for domestic turbine manufacturers while operational costs soared and so did completion from global players.