- New accounting standards mean forex are realized all at once
- Currency movement reduced income by 900 million rupees
Suzlon Energy Ltd. posted loss of 2.6 billion rupees ($39 million) for the first quarter of the financial because of a decline in the rupee and financial costs, which the company said could not be spread out over a period of time under new accounting standards.
The Indian wind turbine maker’s revenue fell 37 percent to 16.5 billion rupees in the first quarter ending June 30 from 25.9 billion rupees in the same quarter last year, when the company reported a profit of 10 billion rupees, according to a filing to the stock exchange on Wednesday.
Suzlon said its former German manufacturing unit Senvion was fully divested in April 2015 and that the first-quarter results for the previous fiscal year include one month of Senvion’s performance. That made the two periods “not directly comparable," the company said.
The decline of India’s currency between April and June accounted for foreign exchange loss of 900 million rupees after the refinancing of $590 million of debt in April, Chief Financial Officer Kirti Vagadia said by phone.
“Under the new accounting standards, the foreign exchange loss incurred for refinancing of $590 million foreign currency convertible bonds had to be reported in the first quarter instead of being spread over maturity period, unlike under previous standards," Vagadia said.
Under the new accounting standards, the financial liability for corporate debt restructuring had to be treated as liability instead of contingent liability. That added 120 million rupees to the loss, he said.
Suzlon defaulted on $209 million of dollar-denominated convertible bonds four years ago and is working to finish a corporate debt restructuring program before March 31.
The first quarter of the financial year is usually a quiet one for wind turbine makers, with Suzlon getting about 10 percent to 15 percent of its annual volume.
The company in the first quarter of current fiscal delivered 204 megawatt, little changed from last year’s level. It had an order book of nearly 1,205 megawatt as of June 30.
Suzlon has 15.5 gigawatts of wind installations globally, of which 9.5 gigawatts are in India.