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No change in control at Suzlon, says group chairman Tusli Tanti

With two big ticket deals within a month, Suzlon group chairman Tulsi Tanti has raised enough cash to reduce debt and plan for future growth. In an interview with Aneesh Phadnis, Tanti says he will remain in control of the company even after selling 23% stake in Suzlon to Sun Pharmaceutical founder Dilip Shanghvi.

Can you explain the deal rationale and the structure? Totally how much are Dilip Shanghvi and family investing ?

We have been working on correcting the capital structure of the company by increasing the equity and reducing debt. The last two years our focus was largely on liability management and hence Suzlon was unable to tap business opportunities. Dilip Shanghvi family and associates are investing Rs 1,800 crore. The infusion is being made in a single tranche and they will get 23% shares in Suzlon Energy on a preferential basis. Further, they will also help the company to get non-fund working capital facilities from the banks , which is required for projection execution. We are also forming a joint venture for developing a 450 MW wind farm.

There are so many companies in the renewable energy space. Why did Dilip Shanghvi choose Suzlon?

Suzlon is a global player and we have a lot of potential. The equity investment will help support growth. Dilip Shanghvi has expressed interest to invest in renewables and it is about social commitment too. 

Dilip Shanghvi and family will own 23% shares in Suzlon while you will hold 24% in the company. Are you prepared to give up management control?

Shanghvi family is a passive investor. We remain in management control by virtue of pooling arrangement for voting. We will continue to run the company but Shanghvi family will get one seat on the board.

Why is the development of the wind farm being carried out by a separate joint venture and not by Suzlon itself?

Suzlon has not invested in wind farms and that is not our core area. We will create a joint venture to develop the 450 MW wind farm. The total investment would be around Rs 3,200 crore and both sides will put in Rs 400 crore each as equity and the rest will be raised as project finance. We are yet to select sites.

What will be your priorities now?

We hope to conclude both the transactions (Shanghvi family stake purchase in Suzlon and sale of Senvion to Centrebridge private equity) by March end. In last few years Suzlon grew business in 32 countries, made large acquisitions and sold them. The focus now is on profitable growth and we hope to return to profit in FY16. There is lot of business potential in emerging markets. Prime Minister Narendra Modi too is pushing for renewable energy and about $ 200 billion dollar investment is expected to come in next five years.

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