1. Corporate Information
Suzlon Energy Limited (''SEL'' or the ''Company'') is a public company
domiciled in India and incorporated under the provisions of the
Companies Act, 1956 (the ''Act''). Its shares are listed on two stock
exchanges in India. The Company is primarily engaged in the business of
manufacturing of wind turbine generators(''WTGs'')and related components
of various capacities.
Basis of preparation
The financial statements of the company have been prepared in
accordance with generally accepted accounting principles in India
(Indian GAAP). The company has prepared these financial statements to
comply in all material respects with the accounting standards notified
under the Companies (Accounting Standards) Rules, 2006, (as amended)
and the relevant provisions of the Companies Act, 1956. The financial
statements have been prepared on an accrual basis and under the
historical cost convention; except in case of assets for which
provision for impairment is made and revaluation is carried out.
The accounting policies adopted in the preparation of financial
statements are consistent with those of previous year, except for the
change in accounting policy explained below.
2. Scheme of Arrangement and Restructuring for Merger and De-merger
a. The Company implemented a Scheme of Arrangement and Restructuring
(''Scheme''). The ''Appointed Date'' fixed for this purpose was April
1,2010. The following were the salient features of the Scheme.
- De-merger and consequent transfer of (a) Power Generation Division
of Suzlon Towers And Structures Limited (''STSL''), a wholly owned
subsidiary (''WOS'') of the Company to Suzlon Engitech Limited, another
WOS of the Company; and (b) Project Execution Division of Suzlon
Infrastructure Services Limited (''SISL''),a WOS of the Company to Suzlon
Gujarat Wind Park Limited, another WOS of the Company.
- Amalgamation of STSL and SISL with the Company after giving effect to
the above-mentioned de-merger and consequent transfer of their
b. During the year, the Scheme has been sanctioned by the Hon''ble High
Court at Gujarat vide Order dated August 10,2011and Hon''ble High Court
of Judicature at BombayvideOrderdatedSeptember02,2011.
Accordingly, all the assets and liabilities of Power Generation
Division of STSL and Project Execution Division of SISL are considered
to be transferred and vested with Suzlon Engitech Limited and Suzlon
Gujarat Wind Park Limited (''Resulting Companies'') respectively,
Resulting Companies have issued equity shares to the shareholder of STS
Land SISL and thereafter both the companies, viz., STSL and SISL
(''Transferor Companies'') have been amalgamated with the Company
(''Transferee Company'') on appointed date i.e. with effect from April
1,2010 as per the Scheme.
c. Amalgamation of STSL and SISL with the Company has been accounted
for under the Pooling of Interest Method (Amalgamation in the nature
of Merger) as prescribed by Accounting Standard 14 - Accounting for
Amalgamations. Accordingly, all the assets, liabilities and reserves
of STS Land SISL (after the de-merger of Power Generation Division of
STSL and Project Execution Division of SISL as per the Scheme) as at
April 1, 2010 have been taken over at their book values. The inter se
holding of the shares of the Transferor Companies held by the
Transferee Company is cancelled. Loan and advances and other dues
outstanding between Transferee Company and Transferor Companies are
cancelled. After giving above mentioned effect, the difference between
the excess Of the book value of the assets over the book value of
liabilities and reserves is adjusted to Capital Reserve and the excess
of the book value of the liabilities and reserves over the book value
of the assets is adjusted to General Reserve.
d. The net impact of incomes accruing and expenses in curried by the
Transferor Companies from the appointed date i.e. April 1, 2010 to
March 31, 2011 is directly made to statement in profit and loss shown
under Note 6 Reserves and Surplus. The incomes accruing and expenses
incurred by the Transferor Companies from April 1, 2011 till the date
of High Court Order have been incorporated in the statement of profit
and loss drawn for the current financial year, as the Transferor
Companies carried on the existing business in trust on behalf of the
Company and all the vouchers, documents, etc. for that period were made
in the name of the Transferor Companies i.e. STS Land SISL
e. Pursuant to the Scheme of Arrangement and Restructuring, no new
shares have been issued by the Transferee Company to the share holders
of the Transferor Companies since the Transferor Companies are Wholly
Owned Subsidiaries of the Transferee Company and on account of the
scheme being effective, the shares of Transferor Companies as held by
the Transferee Company have got cancelled.
f. In view of the a foresaid amalgamation, the figures of current year
are not comparable to those of the previous year.
2. The Company has certain foreign currency convertible bonds
(''FCCBs'') having an aggregate face value of USD 389.04 Million (Rs
1,979.24 crore) due for redemption in June 2012 and October 2012. The
redemption value of these FCCBs on respective redemption dates would
aggregate to approximately USD 568.96 Million (Rs 2,894.58 Crore). In
order to meet the redemption obligations, the management is actively
pursuing various options, which include raising of additional finance
in the form of debt, high yield bonds, equity etc. Discussions on each
of these options is in process and the management is confident that the
Company will be able to generate the required funds for redemption
within the agreed period. Accordingly, the above results have been
prepared on the basis that the Company is a going concern, and no
adjustments are considered necessary in the values of the assets and
liabilities of the Company.
On July 12, 2010, the Company raised Rs 1,188.39 crore pursuant to a
Rights Issue of equity shares. The Company allotted 188,633,322 equity
shares of Rs 2 each at a premium of Rs 61 per equity share on a rights
basis to the existing equity shareholders of the Company in the ratio
of 2 equity shares for every 15 fully paid-up equity shares held by
then existing equity shareholder son the record date.
On receipt of shareholders'' approval by way of Postal Ballot, on
November 16, 2010, the Company issued and allotted 31,992,582 Equity
shares of Rs 2 each at a price of Rs 60 per share on preferential basis
to ''IDFC Trustee Company Ltd. A/c IDFC Infrastructure Fund 3 A/c IDFC
Private Equity Fund III'' (IDFC PE) as a consideration for acquisition
of 41,254,125 equity shares of Rs 10 each in SE Forge Limited (SEFL), a
subsidiary of the Company. Consequent to acquisition of IDFC PE''s stake
in SEFL, SEFL became a wholly owned subsidiary of the Company.
b. Terms/rights attached to equity shares
The Company has only one class of equity shares having a par value of
Rs 2 each. Each holder of equity shares is entitled to one vote per
share except for the underlying depository shares held against the
Global Depository Receipts (''GDRs'').
Holders of the GDRs have no voting rights with respect to the Equity
shares represented by the GDRs. Deutsche Bank Trust Company Americas
(the ''Depositary''), which is the shareholder on record in respect of
the equity shares represented by the GDRs ,will not exercise any voting
rights in respect of the equity shares against which GDRs are issued,
unless it is required to do so by law. Equity shares which have been
withdrawn from the depositary facility and transferred on the Company''s
register of members to a person other than the Depositary, ICICI Bank
Limited (the Custodian) or a nominee of either the Depositary or the
Custodian may be voted by the holders thereof.
As regard the shares, which did not have voting rights as on March 31,
2012 are GDRs - 793,099 (equivalent shares 3,172,396) and as on March
The Company declares and pays dividends in Indian rupees. The dividend
proposed by the Board of Directors is subject to approval of the
shareholders in the ensuing Annual General Meeting.
In the event of liquidation of the Company, the holder of equity shares
will be entitled to receive remaining assets of the Company, after
distribution of all preferential amounts. The distribution will be in
proportion to the number of equity shares held by the shareholders.
In addition, the Company has issued 2,573,500 shares (March 31, 2011
3,740,500 shares) during the period of five years immediately preceding
the reporting date on exercise of options granted under the employee
stock option plan (ESOP) wherein part consideration was received in the
form of employee services.
d. Shares reserved for issue under options
For details of shares reserved for issue under the employee stock
option (ESOP) plan of the Company, please refer note no 28.
For details of shares reserved for issue on conversion of FCCBs, please
refer note no 7(II) for terms of conversion / redemption.
Note a:**The shareholding of Tanti Holdings Private Limited for the
financial year ended on March 31, 2012 includes shares held by Sanman
Holdings Private Limited which has since been merged with Tanti
Holdings Private Limited by virtue of orders passed by the Honorable
High Courts. The scheme has become effective from the appointed date
i.e. April 1,2010.
Note b: As per records of the Company, including its register of
shareholders/ members and other declarations received from shareholders
regarding beneficial interest, the above shareholding represents both
legal and beneficial ownerships of shares.
I. Details of security
The Company along with its Indian subsidiaries, collectively referred
as Suzlon Entities executed a debt consolidation and refinancing
arrangement (the ''Arrangement'') on February 5, 2010 with a consortium
comprising of various banks and financial institutions (''Consortium'')
lead by the State Bank of India as the Facility Agent and SBI Cap
Trustee Company Limited as the Security Trustee.
The entities covered under the arrangement includes Suzlon Energy
Limited (''SEL''), Suzlon Towers and Structures Limited (''STSL'')**,
Suzlon Infrastructure Services Limited (''SISL'')**, Suzlon Structures
Limited (''SSL''), Suzlon Power Infrastructure Limited (''SPIL''), Suzlon
Generators Limited (''SGL''), Suzlon Gujarat Wind Park Limited (''SGWPL''),
SE Electricals Limited (''SEEL''), Suzlon Wind International Limited
(''SWIL''), SE Blades Limited (''SEBL''), Suzlon Engitech Limited (''SENL'')
(hereinafter collectively referred to as the ''Suzlon Entities'' or
Individually as the ''Borrower'').
** refer note 3forScheme of Arrangement and Restructuring for Merger
a. Term loans from banks and financial institutions of Rs 3,348.00
Crore (Rs 3,201.71 Crore) of which Rs 3,034.20 Crore (Rs 3,073.64
Crore) has been classified as long term borrowing and Rs 313.80 Crore
(Rs 128.07 Crore) as current maturities of long term borrowings, and
working capital facilities from banks of Rs 1,888.76Crore(Rs1,175.51
Crore) availed under debt consolidation and refinancing arrangement are
secured by first charge on all present and future tangible/intangible
movable assets of each of the Borrowers, first charge on all present
and future immovable assets (excluding the identified properties) of
each of the Borrowers, first charge on all present and future
chargeable current assets of each of the Borrowers, first charge over
Trust and Retention Account (TRA) of the Borrowers, pledge of equity
shares held by SEL in its 10 Indian subsidiaries forming part of the
Suzlon Entities, pledge on equity shares of certain overseas
subsidiaries held by step down overseas subsidiaries of SEL including
REpower Systems SE (RE power), pledge of certain equity shares of SEL
held by it''s promoters, guarantee of overseas subsidiary, personal
guarantee of the managing director of SEL and limited personal
guarantee of director of SSL.
b. Term loan from others of Rs 2.21 Crore (Rs 5.64 Crore), of which Rs
Nil (Rs 1.94 Crore) has been classified as long term borrowing and Rs
2.21 Crore (Rs 3.70 Crore) classified as current portion of long term
borrowing, is secured by specific term deposit.
c. Vehicle loan of Rs 0.21 Crore (Rs Nil), of which Rs 0.07 Crore has
been classified as long-term borrowing and Rs0.14 Crore classified as
current portion of long term borrowing is secured against vehicle under
hire purchase contract.
d. Working capital loans from banks aggregating to Rs 1,888.76 Crore
(Rs 1,175.52 Crore) are also part of debt consolidation and refinancing
arrangement. Accordingly all the securities mentioned in 7(I)(a) above
are also extended to the working capital facilities.
II. Foreign currency convertible bonds
a. Initial terms of issue
On June 11, 2007 the Company made an issue of zero coupon convertible
bonds aggregating USD 300 million (Rs 1,223.70 Crore) [Phase I bonds]
and, on October 10, 2007, the Company made another issue of zero coupon
convertible bonds aggregating USD 200 million (Rs 786.20 Crore) [Phase
II bonds]. Further on July 24, 2009, the Company made an issue of zero
coupon convertible bonds aggregating USD 93.87 million (Rs 452.64
Crore) at an issue price of 104.30% of the principal amountofUSD90.00
million. [Phase III bonds]
The key terms of these bonds at the time of issue were as follows:
b. Restructuring of Phase I and Phase II bonds
i. During the year 2009-10,theCompany restructured Phase I and Phase
II Zero Coupon Convertible Bonds with an approval of the Reserve Bank
of India (''RBI'') wherein the bondholders were offered the following
options as part of the restructuring;
(a) Buy back of bonds @ 54.55% of the facevalue of US$ 1000 perbond.
(b) Issue of new bonds (''Phase I New Bonds'' in case of Phase I Bonds
and ''Phase II New Bonds'' in case of Phase II Bonds) in place of old
bonds at a fixed ratio of 3:5 (60 cents to dollar) bearing a coupon of
7.5 per cent per annum, payable semi-annually. Unless previously
redeemed, converted or purchased and cancelled, the Company will redeem
each Phase I New Bond at 150.24 per cent of its principal amount and
each Phase II New Bond at 157.72 per cent of its principal amount on
the relevant maturity date. The conversion price is set at Rs 76.68 per
share. These bonds do not have any financial covenants and are of the
same maturity as the old Phase I and Phase II bonds.
(c) Consent fee of USD15 Million to be paid across both the series, for
those bondholders who consent to the relaxation of covenants.
As a result of the restructuring, the outstanding position of the
foreign currency convertible bonds is as follows:
ii. On April 29, 2010, the Company convened meetings of Bondholders of
each of the series, who approved the respective proposed resolutions.
Accordingly post receipt of regulatory approvals, the Company changed
the conversion price of the Phase I bonds from Rs 359.68 per equity
share to Rs 97.26 per equity share and for Phase II bonds from Rs
371.55 to Rs 97.26 per equity share, subject to adjustments in
accordance with terms and conditions of the bonds. The floor price for
Phase I and Phase II bonds was revised to Rs 74.025 per equity share.
The fixed exchange rate was changed to 1USD=Rs 44.60 from 1USD=Rs 40.83
for Phase I bonds and 1USD=Rs 39.87 for Phase II bonds. The Company
incurred Rs 37.28 Crore towards consent fee to bondholders and other
cost and disclosed under exceptional items in the statement of profit
and loss for the year ended March 31,2011.
c. Issue of New Bonds during the year
On April 12, 2011, the Company made an issue of 875, 5% Foreign
Currency Convertible Bonds of USD 200,000 each due 2016 (''Phase IV
Bonds'') for a total consideration of USD 175.00 million (Rs 776.83
Crore), the key term of which are as follows:
i. convertible by the holders at any time on and after May 23, 2011
but prior to close of business on April 6, 2016. Each bond will be
converted into 165,108.3133 fully paid up equity shares with face value
of Rs 2 per share at an initial conversion price of Rs 54.01 per equity
share of Rs 2 each at a fixed exchange rate conversion of Rs 44.5875 =
ii. redeemable in whole but not in part at the option of the Company
if less than 10 percent of the aggregate principal amount of the Bonds
originally issued is outstanding, subject to satisfaction of certain
iii. redeemable on maturity date April 13,2016at 108.70% of its
principal amount, if not redeemed or converted earlier.
The Company has incurred Rs 13.09 Crore during the year on account of
issue expenses towards the issue of Phase IV Bonds which have been
adjusted against securities premium
d. Redemption Premium:
The Phase I, Phase II, Phase I Knew, Phase II New, Phase III and Phase
IV bonds are redeemable subject to satisfaction of certain conditions
mentioned in the respective offering circulars and hence have been
designated as a monetary liability.
As of March 31, 2011, the management believed that the redemption of
the likelihood of bonds could not be ascertained; hence the redemption
premium of Rs 579.21 Crore was shown as a contingent liability in the
financial statements as of and for the year ended March 31, 2011.
However, during the year ended March 31, 2012 the Company has provided
for the proportionate redemption premium of Rs 930.57 Crore by
adjusting the same against the securities premium account. Following
are the scheme-wise details of the redemption premium as of the year end
*includes expenditure booked under various expenditure heads by their
The provision for performance guarantee (''PG'') represents the expected
outflow of resources against claims for performance shortfall expected
in future over the life of the guarantee assured. The period of
performance guarantee varies for each customer according to the terms
of contract. The key assumptions in arriving at the performance
guarantee provisions are wind velocity, plant load factor, grid
availability, load shedding, historical data, wind variation factored.
The provision for operation, maintenance and warranty (''O&M'')
Represents the expected liability on account of field failure of parts
of WTG and expected expenditure of servicing the WTGs over the period
of free operation, maintenance and warranty, which varies according to
the terms of each sales order.
Provision for liquidated damages (''LD'') represents the expected claims
which the Company may need to pay for non fulfillment of certain
commitments as per the terms of the sales order. These are determined
on a case to case basis considering the dynamics of each sales order
and the factors relevant to that sale.
The figures shown against ''Utilization'' represent withdrawal from
provisions credited to statement of profit and loss to offset the
expenditure incurred during the year and debited to statement of profit
3. Operating leases
The Company has taken certain premises under cancellable operating
leases. The total rental expense under cancellable operating leases
during the period was Rs 13.25 Crore (Rs 8.65 Crore). The Company has
also taken furnished/unfurnished offices and certain other premises
under non-cancellable operating lease agreement. The lease rental
charge during the year is Rs 5.76 Crore (Rs 1.27 Crore) and maximum
obligations on long-term non-cancellable operating lease payable as per
the rentals stated in respective agreement are as follows:
b. WTG''s Assets given on lease (Windmills):
The Company has let out some of its Windmills on operating lease. The
lease charges are on the basis of net electricity generated and
delivered. The said lease is non-cancellable during the primary lease
period i.e. for the first five years and extendable for another five
years unless any of the party decides to discontinue the same and the
details of the same areas under:
4. Capitalization of expenditure
During the year, the Company has capitalized the following expenses of
revenue nature in connection with the self-manufactured assets
Consequently, expenses disclosed under the respective notes are net of
amounts capitalized by the Company.
5. Segment information
As permitted by paragraph 4 of Accounting Standard-17 (AS-17), ''Segment
Reporting'', if a single financial report contains both consolidated
financial statements and the separate financial statements of the
parent, segment information need be presented only on the basis of the
consolidated financial statements. Thus, disclosures required by AS-17
are given in consolidated financial statements.
6. Related party disclosures
As per Accounting Standard -18 (AS-18) - ''Related Party Disclosure'', as
notified by the Rules, the disclosures of transactions with the related
parties as defined in the accounting standard are given below:
*Liquidated in current year.
**In liquidation as on March 31, 2012
*** De-merged and merged (refer note 3 for Scheme of Arrangement and
Restructuring for Merger and De-merger.) #Merged with Suzlon Energy
b. Other related parties with whom transactions have taken place
during the year:
ZF Wind Power Antwerp NV (earlier Hansen Transmission International
NV) (ceased to be an associate w.e.f. October 1,2011)
ii. Entities where key management personnel (''KMP'')/relatives of key
management personnel (''RKMP'') have significant in fluence:
Sarjan Realities Limited, Synefra Engineering & Construction Limited,
Shubh Realities (South) Private Limited, Tanti Holdings Private
Limited, Suzlon Foundation, Girish R.Tanti (HUF), Suruchi Holdings
Private Limited, Sugati Holdings Private Limited, Synew Steel Limited,
Salene Power Infrastructure Limited,
iii. Key management personnel of Suzlon Energy Limited:
Tulsi R.Tanti,Vinod R.Tanti*
iv. Relatives of key management personnel of Suzlon Energy Limited:
Jitendra R.Tanti, Nidhi T.Tanti, Girish R.Tanti**
v. Employee funds:
Suzlon Energy Limited-Superannuation Fund.
Suzlon Energy Limited - Employees Group Gratuity Scheme.
* Appointed as whole time director w.e.f November 01, 2010.
Transactions entered into before such appointment have been disclosed
As transactions with the relatives of KMP.
** Resigned as whole time director and continues to be a non-executive
director w.e.f. July 30, 2011. Transactions entered into after July 30,
2011 have been disclosed as transactions with the relatives of KMP*
Resigned as whole time director and continued as non-executive Director
w.e.f. July 30,2011
Note: The Company has given various letter of supports, which otherwise
is not a guarantee, towards financing operations of its overseas
subsidiaries and maintaining their financial creditworthiness, as and
when required during the last fiscal year; the amount of which are not
determinable as at Balance Sheet date.
7. Contingent liabilities March 31, 2012 March 31, 2011
Guarantees given on behalf of
subsidiaries in respect of
to them 3,259.08 3,302.75
Premium on redemption of
convertible bonds (refer
note 7(II)) - 579.21
Claims against the Company not
acknowledged as debts* - 41.95
Income tax matters pending
in appeal** 41.70 21.96
Others 5.79 3.84
* includes claims raised on the Company by vendors of goods, which have
not been accepted by the Company as liabilities.
** includes demand from income-tax authorities for various matters. The
Company / tax department has preferred appeals on these matters and the
same are pending with various appellate authorities. Considering the
facts of the matters, no provision is considered necessary by
8. Deferral of exchange differences
The Company has, consequent to the notification issued by the Ministry
of Corporate Affairs on December 29, 2011 giving an option to the
companies to mortise the exchange differences pertaining to long term
foreign currency monetary items up to March 31, 2020 (from March 31,
2012 earlier), adopted the said option given under paragraph 46 of
Accounting Standard 11. Accordingly, the Group has revised the
amortization period for such items to the maturity of the long term
foreign currency monetary items (all before March 31,2020).
Net foreign exchange gains aggregating Rs 217.69 Crore (gain of Rs
136.90 Crore) on long term foreign currency monetary items has been
adjusted in the foreign currency monetary item translation difference
account during the year. Further, foreign exchange loss aggregating
Rs91.62 Crore (gain of Rs 3.50 Crore) have been amortized during the
9. Figures in the bracket sare in respect of the previous year.