July 31 (Bloomberg) -- Suzlon Energy Ltd., India's biggest maker of wind-turbine generators, advanced in Mumbai trading after reporting higher margins in first-quarter group profit.

Margins in the three months ended June 30 rose to 15 percent from 7 percent a year earlier and pretax profit climbed to 7 million rupees ($165,000) per megawatt from 3.8 million rupees, billionaire Chairman Tulsi Tanti told reporters in Mumbai today. Prices of wind turbines were increased by 3 to 4 percent, he said.

Suzlon has gained from rules in Europe and North America that require a greater amount of energy to be obtained from clean sources. The European Union agreed in January that the region will get 20 percent of its power consumption from carbon-free sources by 2020. China has rolled out a plan requiring 15 percent of energy consumption to be met from renewable sources by 2020.

``We're looking at Europe for growth in the next quarter,'' Tanti said in an interview today. ``The overall economic slowdown won't hurt renewable energy companies, which will continue to grow by 20 to 25 percent in the next five years.''

Suzlon, which expects to grow at double the industry rate, gained 4.45 rupees, or 2 percent, to 223.1 rupees in Mumbai trading after rising 5.6 percent. The shares have fallen 42 percent so far this year compared with a 29 percent decline in the benchmark Sensitive Index of the Bombay Stock Exchange.

Currency Loss

Net income fell to 13.5 million rupees in the first quarter from 188.9 million rupees a year earlier, Ahmedabad-based Suzlon said in a release today. Revenue increased 43 percent to 28.34 billion rupees.

Suzlon reported a foreign-exchange loss of 1.64 billion rupees from overseas borrowings of $500 million after using the funds to buy shares in European rival Repower Systems AG.

``Since these are Euro-denominated assets, accounting for any rupee-dollar translation loss on the borrowing is one-sided and entirely notional,'' Tanti said.

``Unresolved issues'' at a South Korean customer's site led to a reversal of sales of 650 million rupees, which cut first- quarter profit by 110 million rupees, Suzlon said.

The sale of seven wind turbine generators of 2.1 megawatts each to the South Korean customer was accounted for in the previous year, the company said in the e-mailed statement.

Suzlon has been dogged by concern that blade defects may prompt customers to cancel orders. Last month, a unit of Edison International, California's largest utility owner, declined to take delivery of 150 turbines after complaining that it received faulty equipment, Suzlon said.

The company set aside 5.9 billion rupees to compensate Edison and John Deere Wind Energy for cracked blades, Chief Financial Officer Kirti Vagadia said on July 10. No additional provisions are being made to repair blades, Tanti said today.

Suzlon has in hand orders worth 164.9 billion rupees for turbines to generate 3,040 megawatts. The company will execute, 1,532 megawatts in the U.S., 566 megawatts in China, 405 megawatts in Europe, 268 megawatts in Australia and 267 megawatts in India, Tanti said.

The company sold turbines to generate 338.25 megawatts in the first quarter compared with 317.3 megawatts a year earlier.

To contact the reporter on this story: Archana Chaudhary in Mumbai at achaudhary2@bloomberg.net.

Last Updated: July 31, 2008 07:32 EDT