Suzlon Energy Ltd. (SUEL), the Indian wind-turbine maker that defaulted on bonds, reported a narrower loss in the fiscal second quarter as a cost-reduction program that included 3,000 job cuts began to show results.
The net loss shrank to 7.82 billion rupees ($128 million) in the three months through September from 8.08 billion rupees a year earlier, the Pune-based company said today in an e-mailed statement. Expenses dropped 17 percent to 50.4 billion rupees.
“More or less we are done” with job cuts, Group Chief Financial Officer Kirti Vagadia said by telephone. “We are right-sized.”
The biggest turbine makers, including Denmark’s Vestas Wind Systems A/S (VWS), are poised to report their first profit in years after cutting at least 9,000 jobs globally and shuttering plants. Turbine prices, which fell by a quarter from their peak amid overcapacity, are forecast to rise for the first time since 2009, according to researcher Bloomberg New Energy Finance.
Suzlon has slashed travel and consulting expenses and reduced office and factory space to rein in spending. That’s helping it make turbines more efficiently, according to Vagadia, who said working capital as a percentage of sales fell to 9.9 percent from 13.6 percent a year earlier.
“We’re on the way to recovery,” the CFO said, acknowledging that its return has taken longer than expected.
Obstacles remain, including a debt load totaling 17 billion rupees as of Sept. 30, which burdens the company with interest payments. Vagadia said Suzlon is “not very far from a solution” with bondholders after failing to pay $209 million in India’s biggest convertible-note default in October 2012.
It’s too early for Suzlon to approach NRG Energy Inc. (NRG:US) about recovering a $217 million payment for turbines supplied to Edison International (EIX:US) for an Illinois wind farm in 2009, Vagadia said. NRG Energy agreed this month to buy most of the assets of Edison International’s bankrupt wind unit.
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