Sector volatility hurts Suzlon profits
Suzlon Energy reported its lowest quarterly profit in a year as India’s support for auction mechanism to build wind energy projects slowed orders.
The profit of 490.8 million rupees (Dh28.1m) during the usually quiet fiscal first quarter compared with a loss of 2.6 billion rupees in the year-ago period, according to a filing to the Indian stock exchange late Friday. The previous three quarters each provided profit over 2bn rupees.
India in February started the first auctions for wind-energy capacity, where developers bid against each other for contracts to build projects. That both brought down the cost of renewables and unsettled companies accustomed to more predictability on what price they would be paid under the earlier feed-in-tariff regime.
“The transition from feed-in-tariffs to competitive bidding has created temporary volatility in terms of volume and margins,” said the chief executive JP Chalasani .
The government’s shift in incentives comes at a delicate time for Suzlon, based in Pune, which has been struggling to exit a debt restructuring program after its 2012 default on US$209 million of dollar-denominated convertible bonds.