Suzlon Energy, which is facing consumer complaints of faulty blades supplies, has shelved plans of setting up a tower manufacturing facility and suspended the process to increase its stake in REpower of Germany, in the context of the current financial turmoil.
The board of Suzlon Energy, which met on Thursday, has decided to drop the plan to invest in new tower manufacturing facility. This decision will reduce the wind energy major's capital expenditure by around Rs 700 crore (Rs 7 billion).
In another development, Suzlon and REpower have jointly agreed to suspend the process of negotiation of domination agreement for the time being, which will further delay the timetable for integration of the assets, said chairman and managing director Tulsi R Tanti.
Suzlon currently holds 66 per cent stake in the Hamburg-based REpower. The company is also in the process of buying out the 22.48 per cent stake held by Portugal's real estate group Martifer SGPS SA in REpower. Suzlon acquired REpower two years ago for about Rs 7,314 crore (Rs 73.14 billion).
"We are also in discussion with our partner Martifer on the purchase of shares in REpower and will be taking forward the acquisition on a mutually agreed timeline. We were supposed to complete the deal by December 15 this year and they have a bank guarantee till May 2009," said Tanti.
Last week, Suzlon dropped its Rs 1,800-crore (Rs 18 billion) rights issue to fund the acquisition. "We are looking at alternate options. Suzlon and Martifer will jointly announce the details at an appropriate time," said Tanti. Suzlon has cash reserves of about Rs 1,700 crore (Rs 17 billion).
