Suzlon Energy has stuck to its operating profit margin target of 15 percent for this fiscal. The guidance appears conservative considering that the operating profit margin last year was 17.4 percent. Also considering that it expects a substantial increase in revenues this year, and hence better operating leverage.
“15% is the right number to take and the standard number guidance for the entire year and we don’t see any exception for FY18,” Chalasani said during a conference call with analysts on May 19.
Suzlon is on the path to recovery after tackling a default some years ago and headwinds in the wind power market. It has reduced debt by 37 percent to Rs 9920 crore in the last couple of years.
The management expects the company to expand market share of the Indian wind power market. Of the 6,000 MW capacity likely to be commissioned in 2017-18, the management expects to wrest a 40% share. It had a 32 percent market share in the 5,502 MW wind power capacity commissioned in the country last year and 26% of the 3,415 MW market the year before that.
Suzlon currently has an outstanding order book of 1,331 MW in wind power and 231 MW in solar. This does not include the orders in its forging and maintenance businesses.
Speaking to Moneycontrol, Group CFO Kirti Vagadia said the company was largely done with its capacity expansion. So capital expenditure—around Rs 300 crore--for 2017-18 would largely be around maintenance. The company now has a 3,600 MW capacity in India and a 600 MW unit in China under a 25:75 joint venture in that country.
Vagadia also said the company was on track to taking its subsidiary Suzlon Global Services public this year. Suzlon Global has a two-notch higher debt rating than that of its parent. Suzlon is looking to dilute a minority stake in its subsidiary.