Suzlon Energy Ltd · NSE:SUZLON
Suzlon Energy — Q1 FY19 Earnings Presentation
42 slides from Suzlon Energy's earnings presentation, Aug 4, 2018
Slide 1: Suzlon Energy Limited Q1 FY19
Suzlon Energy Limited Q1 FY19 04 August 2018
Slide 2: Disclaimer
Disclaimer • This presentation and the accompanying slides (the “Presentation”), which have been prepared by Suzlon Energy Limited (the “Company”), have been prepared solely for information purposes and DOES not constitute any offer, recommendation or invitation to purchase or subscribe for any secu
Slide 3: FY19 Outlook: Another Challenging Year
FY19 Outlook: Another Challenging Year Outlook at FY18 end Transitional Delays 6-9 months for stabilization May’18: CERC released connectivity procedure Evacuation approval delays in completed bids 7.5 GW auctions concluded Jul’18: Connectivity granted to completed bids backlog Bids in pipeline temp
Slide 4: Bidding Delays: Elongation Of Transition Phase
Bidding Delays: Elongation Of Transition Phase Original Bid Auction Pipeline MW RfS Date Revised Bid Date Date May ’18 June’18 (EOI submission) Offshore (EOI) 1,000 April ’18 (EOI Date) Bid date to be Announced Cancelled; Gujarat II 1,000 Feb ’18 June ’18 New Bid to be Announced NTPC 1,200 Mar ‘18 J
Slide 5: Systemic Issues Getting Resolved
Systemic Issues Getting Resolved Volume Regulatory Framework Evacuation ͯ Slow pace of bidding ͯ Lack of central bidding guidelines ͯ Lack of evacuation clarity ISSUES ͯ 8 months between first 2 auctions ͯ Minimal state bids ͯ Delay in project execution ͯ No states signing PPAs ͯ Postponement of auc
Slide 6: Strong Bid Pipeline Giving Visibility Of Upto FY21
Strong Bid Pipeline Giving Visibility Of Upto FY21 Bid Volumes (MW) Commissioning Volumes (MW) To be commissioned between FY19-FY21 Industry Commissioning Volume Outlook 20,860 12,000 To be Announced 3,000 Announced 10,360 8,000 Already Concluded 7,500 3,000 Cumulative Bids to be concluded by FY19 F
Slide 7: FY19 Guidance: Operational Guidance Presently Withdrawn
FY19 Guidance: Operational Guidance Presently Withdrawn While medium term to long term outlook continue to remain positive, In light of near term market uncertainties, we withdraw our operational guidance Revenue ₹ 12,000 – 13,000 Cr. EBITDA Margin Around 14% However, we continue to maintain our deb
Slide 8: Financial Performance
Financial Performance Debt Overview Industry Outlook Technology Suzlon Strengths Detailed Financials 8
Slide 9: Wind Volumes: Low Volumes Due To Back Ended Auctions In FY18
Wind Volumes: Low Volumes Due To Back Ended Auctions In FY18 (MW) 326 155 Q1 FY18 Q1 FY19 FiT Order Book Executed FY19 Volumes to be back ended • Auction regime setting in • 6 GW of auctions concluded in H2 FY18 • Last leg of High tariff FiT regime • 12-18 months execution Timelines • Rush to capita
Slide 10: Result Snapshot
Result Snapshot (₹ Cr.) Particulars Q1 FY19 Q1 FY18 FY18 Unaudited Unaudited Remarks Audited Revenue 1,272 2,571 8,075 Primarily due to low volume Gross Profit 489 1,008 2,959 Gross Margin 38.5% 39.2% 36.6% Employee Expenses 194 201 805 Other Expenses (net) 218 332 1,006 EBITDA (Pre FX) 77 475 1,149
Slide 11: Consistent Reduction In Net Working Capital
Consistent Reduction In Net Working Capital Fig. in ₹ Cr. 3,543 -1,143 To be further optimization under auction regime 2,780 • Reduced regulatory uncertainty 2,401 • Elongated execution schedule • Smoothened out quarterly volumes • Large scale project size • Make to Order Q3 FY18 Q4 FY18 Q1 FY19 11
Slide 12: Stable Service Revenue Insulated From Business Cycles
Stable Service Revenue Insulated From Business Cycles Operations and Maintenance Revenues (₹ Cr.) ~15 GW of Assets under Management (AUM) ― ~12 GW in India; ~3 GW Overseas 452 457 ― 2nd Largest O&M player in India Power Sector, after NTPC Internal 32 31 100% renewal track record in India ― Every
Slide 13: Largest Backlog In India Wind Industry
Largest Backlog In India Wind Industry Particulars Capacity Remarks SECI IV and MH Bids PPA yet to be signed Auction based Order Book 1,018 MW (100% certainty of signing) Retail, Captive, PSU & IPP 116 MW Backed by advance, Not dependent on PPAs Wind Firm Order Book 1,134 MW ASP ₹ 5.84 Cr. / MW ~1.8
Slide 14: Debt Overview
Financial Performance Debt Overview Industry Outlook Technology Suzlon Strengths Detailed Financials 14
Slide 15: Term Debt Profile
Term Debt Profile (Excl. FCCB) 31st Mar’18 30th Jun’18 Back Ended Maturity Profile ₹ 3,693 Crs. ₹ 3,881 Crs. (₹ Cr.) SBLC Backed AERH Loans 65% (US$ 569 M) (US$ 569 M) 4,654 Increase only due to FX; No change in US$ value ₹ 431 Crs. ₹ 441 Crs. Other FX Term Debt FY19-22 Repayments: 35% (US$ 66 M) (U
Slide 16: July 2019 FCCB Series Overview
July 2019 FCCB Series Overview (US$ Mn) FCCB Principal Value 547 No. of Shares (Crs.) Current Outstanding 532 Pending Conversion 67 375 Post Full Conversion 599 (₹ 1,213 Cr.*) 172 Conversion Details Price (Per Share) ₹ 15.46 Exchange Rate ₹ 60.225 Jul’14 Conversions Till June’18 Jun’18 16 69% FCCBs
Slide 17: Industry Outlook
Financial Performance Debt Overview Industry Outlook Technology Suzlon Strengths Detailed Financials 17
Slide 18: Strong Visibility On Growth For India Wind Market
Strong Visibility On Growth For India Wind Market Feed-in-Tariff + Captive / PSU / Retail Auction + Captive / PSU / Retail 10.6 GW commissioned in last 3 years 23.0 GW in next 3 years (MW) 12,000 8,000 5,502 3,415 3,000 1,766 FY16 FY17 FY18 FY19E FY20E FY21E Source: MNRE Source: Internal Estimates K
Slide 19: Largest Order Volume Share In Auctions Concluded Till Date
Largest Order Volume Share In Auctions Concluded Till Date Auction Wise Order Wins for Suzlon (MW) 1,413 126 285 500 250 252 SECI I SECI II SECI III SECI IV State Bids Total → ~97% volumes won through “Pre Bidding” tie up → ~98% volumes under full turnkey scope → ~92% volumes from Large Utility Comp
Slide 20: ~5 GW Announced Pipeline For Wind Solar Hybrid
~5 GW Announced Pipeline For Wind Solar Hybrid Announced Pipeline • Wind Solar Hybrid Gaining Traction 2.5 GW Hybrid ‒ 14th May 2018: Wind Solar Hybrid Policy issued by MNRE (New Hybrid) ‒ 25th May 2018: Scheme for 2,500 MW Wind Solar Hybrid Sanctioned; Bidding Guidelines Issued 1 GW Wind (in existi
Slide 21: Poised To Become A 10+ GW Annual Market
Poised To Become A 10+ GW Annual Market India Annual Wind Market Potential Size and Segmentation 10 – 12 GW 8 – 10 GW 1 - 2 GW 1 GW Central Auctions State Auctions Captive / PSU / FiT Total Annual Market “India plans to auction 10 GW of wind energy for the next 10 years”, MNRE Secretary, Anand Kumar
Slide 22: Positive Aspects Of Competitive Bidding
Positive Aspects Of Competitive Bidding Until FY17 FY19 onwards Pan India Demand Demand from Wind States only (Wind + Non Wind States) FiT + Incentive Regime Auction based / Market Based pricing (High tariff uncertainties) (Reduced uncertainties) (Reluctance from DISCOM) (Most competitive source of
Slide 23: Suzlon Best Positioned In All Market Segments
Suzlon Best Positioned In All Market Segments Auction Regime – Path Ahead Reduced Risk Profile • Reduced Counterparty Risk • Reduced grid risk • 25 years PPA Lower Cost of Capital Lower Power Cost • Lower Cost of Debt + • Longer Maturity Profile • Lower Cost of Equity Technology Market Expansion • H
Slide 24: Other Emerging Opportunities For Growth
Other Emerging Opportunities For Growth Offshore • National offshore policy already notified • Suzlon has commissioned 1st Offshore Met Station 1 GW Expression of Interest • Offshore Advantage: Higher PLF due to high wind power density and shallow 5 GW water depth enables lower cost in terms of proj
Slide 25: Technology
Financial Performance Debt Overview Industry Outlook Technology Suzlon Strengths Detailed Financials 25
Slide 26: New Turbines Launched In FY18: Pushing Technology Boundaries
3 New Turbines Launched In FY18: Pushing Technology Boundaries S111-140 S120-140 S128-140 2.1 MW 2.1 MW 2.6 – 2.8 MW India’s Tallest Wind Turbine India’s Largest 2.1 MW Turbine India’s Largest Rotor Diameter Proto Commissioned Aug’17 Proto Status Date Proto Status Date S120-105 Commissioned Jun ’18
Slide 27: S120: Accelerate Near Term Competitiveness Of Current Platform
S120: Accelerate Near Term Competitiveness Of Current Platform Site Installation underway SB59 Main Mould 2 installed at Bhuj SB59 Blades being sent to site • Proto Commissioning: Q2 FY19 • Rated Capacity: 2.1 MW Site Installation underway S120 Nacelle Assembly at Plant • Rotor Diameter: 120M • Towe
Slide 28: S128 – 2.6 - 2.8 MW: Readying For The Future
S128 – 2.6 - 2.8 MW: Readying For The Future S120 – 2.1 MW • Rotor Diameter: 128m ‒ Country’s largest ‒ New carbon fibre blade enabling better aerodynamic profile • Hub height: up to 140 • 33% greater swept area ‒ Country’s largest • 20-22% higher energy yield ‒ New Hybrid concrete tower • Reduced L
Slide 29: Focus On Reducing LCOE
Focus On Reducing LCOE Higher energy yield Lower cost of energy Sustains Lower Tariffs >70% Increase in Energy Yield S97-120 S111-90 S111-120 S111-140 S120 S128 29 Over 4,500 turbines of 2.1 MW platform across 17 countries
Slide 30: Pioneer In India Offshore
Pioneer In India Offshore Support Platform Offshore LiDAR • India’s 1st Private Far Offshore Met Station ‒ Opportunity to harness India’s 7,600km coastline ‒ Government plans to auction 5 GW of Offshore project next year • State of Art Installation ‒ 16km from the Shore Powered Through Solar ‒ 11m W
Slide 31: Global In-House R&D Capabilities
Global In-House R&D Capabilities Suzlon Technology Locations: Hamburg - Development & Integration Hamburg - Certification Germany Rostock - Development & Integration Rostock - Design & Product Engineering - Innovation & Strategic Research Hengelo The Netherlands Hengelo - Blade Design and Integratio
Slide 32: Suzlon Strengths
Financial Performance Debt Overview Industry Outlook Technology Suzlon Strengths Detailed Financials 32
Slide 33: Suzlon Strengths In India Wind Market
Suzlon Strengths In India Wind Market Full Turnkey Solution Pan India Presence Provider Strong Customer Technology Leadership Relationship Best In Class Service 22+ Years Track Record Capabilities 33 End-to-end service provider with strong presence across value chain & customer segments
Slide 34: Surpassed 11 GW Wind Energy Installations In India
Surpassed 11 GW Wind Energy Installations In India Ranked No. 1 in Renewables Sector Largest fleet under Operation and Maintenance fold in India Ranked No. 2 in Power Sector (31st Mar’18) # of Turbines MW <= 1 MW 1,678 777 >1 MW < 2 MW 4,268 5,774 =>2 MW 2,557 5,368 Total 8,503 11,919 2.0 GW • 35% -
Slide 35: Suzlon's Global Presence
Suzlon’s Global Presence As on 31st June 2018 2 5 2 1 North America 6 3 1 2,779 MW 4 Asia 3 5 12,948 MW South America Europe 806 MW 508 MW 4 South Africa Australia 139 MW 764 MW 6 35 Suzlon’s strong relationships across regions positions it well Map not to scale. All data, information, and map is pr
Slide 36: USA PTC Volume: ~500 MW Pipeline Created For 100% PTC Projects
USA PTC Volume: ~500 MW Pipeline Created For 100% PTC Projects Production Tax Credit (PTC) Extension: Huge Volume Opportunity • PTC in USA extended until 2019 with benefits stepping down every year before phase out • In order to qualify, projects only need to start construction and make a minimum 5%
Slide 37: Detailed Financials
Financial Performance Debt Overview Industry Outlook Technology Suzlon Strengths Detailed Financials 37
Slide 38: Consolidated Income Statement
Consolidated Income Statement (₹ Crs.) Q1 FY19 Q1 FY18 FY18 Particulars Unaudited Unaudited Audited Revenue from operations 1,272 2,571 8,075 Less: COGS 783 1,563 5,116 Gross Profit 489 1,008 2,959 Margin % 38.5% 39.2% 36.6% Employee benefits expense 194 201 805 Other expenses (net) 218 332 1,006 Ex
Slide 39: Consolidated Net Working Capital
Consolidated Net Working Capital (₹ Cr.) 30th Jun’18 31st Mar’18 31st Dec’17 Inventories 2,923 3,026 3,590 Trade receivables 2,720 2,990 3,565 Loans & Advances and Others 1,749 1,620 1,923 Total (A) 7,392 7,636 9,078 Sundry Creditors 2,627 2,527 2,515 Advances from Customers 935 932 1,505 Provisions
Slide 40: Key Accounting Policies – Revenue Recognition And Order Booking
Key Accounting Policies – Revenue Recognition And Order Booking Opening Order Book • Sales (WTG Revenue Recognition) (-) Sales during the period ‒ WTG revenue is recognised upon transfer of risks and rewards to the buyer of complete WTG viz: Nacelle, Blade and Tower. (+) Order Intake during the • Or
Slide 41: Key Accounting Policy: Maintenance Warranty Provisions
Key Accounting Policy: Maintenance Warranty Provisions Maintenance Warranty Provisions Accounting Policy: ― Comprise of provisions created against maintenance warranty issued in connection with WTG sale Created when revenue from sale of wind turbine is recognized ― Provisions estimated based on
Slide 42: Thank You
CIN of Suzlon Energy Ltd - L40100GJ1995PLC025447 THANK YOU 42