Suzlon Energy Ltd. has recently unveiled its strategic restructuring plans, which involve the merger of its wholly-owned subsidiary, Suzlon Global Services, with the parent company. Additionally, Suzlon intends to transfer its project business to one or more wholly-owned subsidiaries through a slump sale basis.
Scheme of Amalgamation
The board of Suzlon Energy Ltd. has approved the scheme of amalgamation, which entails the merger of Suzlon Global Services, a wholly-owned subsidiary, with the parent company. This move aims to streamline operations and enhance efficiency within the organization.
Project Business Transfer
In addition to the merger, Suzlon plans to transfer its project business to one or more wholly-owned subsidiaries. This transfer will be executed on a slump sale basis, facilitating the efficient management and allocation of resources within the Suzlon group.
Capital Reorganization
As part of the restructuring exercise, Suzlon will undertake a capital reorganization through a Scheme of Arrangement. This reorganization involves the reclassification and transfer of general reserve to retained earnings of the company. Furthermore, Suzlon Energy Ltd., Mauritius, another wholly-owned subsidiary, will also be merged with the parent company.
Maintaining Shareholding Pattern
Suzlon reassures stakeholders that there will be no change in the existing shareholding pattern of the company post-restructuring. This commitment aims to provide stability and continuity to investors amidst the restructuring process.
Rationale Behind Restructuring
Suzlon cites several factors driving the restructuring exercise, including:
- Strengthening the company’s financial position
- Achieving unified contracting processes
- Eliminating inter-company outstanding debts
- Enhancing resource utilization efficiency
- Streamlining group structure for optimal resource allocation
- Improving operational efficiency in Wind Turbine Generation and Operations and Maintenance (OMS) businesses
- Sharing best practices in sustainability, safety, health, and environment across the organization.
Financial Performance
According to brokerage firm Anand Rathi, Suzlon achieved a net cash position for the first time since the financial year 2006 during the first nine months of the financial year 2024. The brokerage attributes this positive performance to Suzlon’s robust O&M portfolio and the introduction of new products in the Wind Turbine industry.
Market Performance
Despite experiencing a surge of over 200% in 2023, shares of Suzlon have seen a more modest increase of 8% so far in the current year. This indicates a stable performance trajectory for the company amidst its restructuring initiatives.
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