Suzlon Energy Ltd · NSE:SUZLON
Suzlon Energy — 9M FY18 Earnings Presentation
44 slides from Suzlon Energy's earnings presentation, Feb 9, 2018
Slide 1: Suzlon Energy Limited 9M FY18
Suzlon Energy Limited 9M FY18 09 February 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: Key Highlights
Key Highlights Strong Volume Visibility New Product Development Over 7.5 GW Bids Announced S111 140 Proto Installed Auctions likely to be completed before Mar’18 ~44% estimated PLF Suzlon Outperformance Healthy Order Backlog ₹ 6,056 Cr. Revenues in 9M FY18 1,132 MW# Order Backlog 13.7% EBITDA Margin
Slide 4: Financial Performance, Debt Overview, Industry Outlook
Financial Performance Debt Overview Industry Outlook Technology Suzlon Strengths Detailed Financials 4
Slide 5: Outperformance Despite Transition Period Impact
Outperformance Despite Transition Period Impact Performing Better than Industry Industry Performance Suzlon Performance Industry Best Wind Volumes Total India Wind Commissioning (MW) Suzlon Revenues (₹ Cr.) • Pan India Presence (9M FY18) (9M FY18) • Pan Segment Presence -70% -21% 1,923 7,700 Largest
Slide 6: Achieving Volumes Even During Industry Standstill
Achieving Volumes Even During Industry Standstill Leveraging our Pan India - Pan Segment Presence >1.2 GW Suzlon Delivery Volumes (MW) 316 844 60 161 256 116 412 101 Solar 86 683 Wind 326 Q1 FY18 Q2 FY18 Q3 FY18 9M FY18 Full Year FY18 >19% of total volumes from Solar >20% wind volumes from Captive,
Slide 7: Accelerated Term Debt Reduction
Accelerated Term Debt Reduction ₹ ~797 Cr.* Debt Reduction Vs ₹ ~211 Cr. Scheduled since Mar’16 Rupee Term Loan (₹ Cr.) SBLC Backed AERH Debt (US$ M) Other FX Debt (US$ M) ₹ -234 Cr. US$ -73 M US$ -15 M 3,094 647 45 626 2,877 2,859 36 574 30 Mar-16 Mar-17 Dec-17 Mar-16 Mar-17 Dec-17* Mar-16 Mar-17 D
Slide 8: Stringent Focus on Fixed Cost Optimization
Stringent Focus on Fixed Cost Optimization Fig. in ₹ Cr. Continuous Improvement in Expense Ratio Manpower Expenses Other Expenses* (Mostly Fixed in Nature) (Semi Variable in Nature) Against 21% Revenue Decline -22% -24% 767 1,204 602 913 9M FY17 9M FY18 9M FY17 9M FY18 Against 86% Revenue Increase -
Slide 9: Net Working Capital
Net Working Capital Fig. in ₹ Cr. Increase in NWC due to liability reduction rather than asset build-up + 413 3,544 3,131 - 471 - 883 9,549 9,078 6,417 5,534 Reduction in Current Assets Reduction in Current Liabilities Temporary Increase due to PPA uncertainty • Project delivery suspended until full
Slide 10: Stable Service Revenue Insulated from Business Cycles
Stable Service Revenue Insulated from Business Cycles Wind AUM more than double the 2nd Largest player Operations and Maintenance Revenues (₹ Cr.) 14+ GW of Assets under Management (AUM) +2.0% ― 11+ GW in India; 3+ GW Overseas 1,314 1,340 ― Largest O&M player out of India Internal 99 111 100% re
Slide 11: Q3 FY18 Result Snapshot
Q3 FY18 Result Snapshot Lower Gross Margins being offset by Operating Leverage & Cost Efficiency Revenues (₹ Cr.) EBITDA (₹ Cr. & %) +220 bps +86% +131% 2,204 247 1,187 107 9.0% 11.2% Q2 FY18 Q3 FY18 Q2 FY18 Q3 FY18 11 Performance despite temporary industry standstill
Slide 12: 9M FY18 Result Snapshot
9M FY18 Result Snapshot (₹ Cr.) Particulars 9M FY18 9M FY17 Unaudited Unaudited Revenue 6,056 7,700 Transition Period Impacted Volumes Gross Profit 2,344 3,452 Primarily due to Revenue Mix Gross Margin 38.7% 44.8% Employee Expenses 602 767 Result of Ongoing Optimization Efforts Other Expenses (net)
Slide 13: Order Backlog
Order Backlog Firm Order Book (MW) 60 323 256 670 677 Solar 130 70 (Incl. ~160 MW recd. post Q3) Wind 540 607 Op. Order Book Framework to Q3 Deliveries Closing Order Book Firm + New Intake Framework Agreements (FWA) Backed by Advance 185 MW Converted to Firm PPA Signed & Ratified Backed by Adv
Slide 14: Financial Performance, Debt Overview, Industry Outlook
Financial Performance Debt Overview Industry Outlook Technology Suzlon Strengths Detailed Financials 14
Slide 15: Term Debt Profile
Term Debt Profile (Excl. FCCB) 31st Dec’17 5 year Maturity Profile • After considering US$ 52 M paid in Feb’18 ₹ 3,648 Cr.* • Balance debt current bullet maturity of March 2018 SBLC Backed AERH Debt (US$ 574 M) • SBLC facility lenders consented to SBLC extension till 2023 • RBI approval received (₹
Slide 16: July 2019 FCCB Series Overview
July 2019 FCCB Series Overview (US$ Mn) FCCB Principal Value 31% of opening bond balance converted in 9M FY18 547 No. of Shares (Crs.) Current Outstanding 532 299 Pending Conversion 67 Post Full Conversion 599 248 (₹ 1,133 Cr.*) 76 172 Conversion Details Price (Per Share) ₹ 15.46 Exchange Rate ₹ 60.
Slide 17: Working Capital Debt
Working Capital Debt Temporary increase in WC debt in line with NWC Net Working Capital (Rs. Cr.) -865 +1,059 3,544 3,131 2,485 • Temporary Build-up due to transition period 1,619 ‒ Projects awaiting regulatory clarity ‒ Q4 Execution to enable reduce NWC Dec’16 Mar’17 Sep’17 Dec’17 • To substantiall
Slide 18: Financial Performance, Debt Overview, Industry Outlook
Financial Performance Debt Overview Industry Outlook Technology Suzlon Strengths Detailed Financials 18
Slide 19: Wind Emerging As Most Competitive Source Of Power
Wind Emerging As Most Competitive Source Of Power Tariff Levels (₹ /unit) India APPC 3.48 NTPC Avg. Coal Plant Tariff (FY17 ) Gujarat State Bidding (Sep’17) Gujarat State Bidding (Dec’17) 3.18 2.65 2.43 Coal Solar Wind Equipment Domestic / Imported Largely Imported “Made in India” Fuel Domestic / Im
Slide 20: Government Strongly Committed to Wind
Government Strongly Committed to Wind MNRE Wind Bidding Roadmap Clear demarcation between wind and non wind states • Mandatory RPO compliance by both wind and non wind states 10 GW 10 GW Larger Scale Bidding 8 GW • Bid Quantity doubled to 2 GW under SECI III & SECI IV • Individual Project Size Cap 3
Slide 21: Wind Auctions Gathering Momentum: Over 7.5 GW Visibility
Wind Auctions Gathering Momentum: Over 7.5 GW Visibility Bidding Completed Pending (Estimated Timeline) SECI 1 SECI 2 SECI 3 SECI 4 1,050 MW 8 months 1,100 MW 4 months 1 months 2,000 MW 2,000 MW PPA Signed PPA Signed Feb 2017 Aug 2017 Oct 2017 Dec 2017 Feb 2018 Mar 2018 Tamil Nadu Gujarat Maharashtr
Slide 22: Poised To Become A 10+ GW Annual Market
Poised To Become A 10+ GW Annual Market India Annual Wind Market Potential Size and Segmentation 1-2 GW 2-3 GW 10-15 GW 8-10 GW Central Auctions State Auctions Captive / PSU Annual Market High Level of Bidding Activity Ongoing already Central Level Auctions > 6 GW State Level Auctions > 1.5 GW SECI
Slide 23: 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 24: Suzlon Best Positioned in Auction Regime
Suzlon Best Positioned in Auction Regime 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 • Higher
Slide 25: Other Initiatives by Government under Consideration
Other Initiatives by Government under Consideration Tapping Retail Demand: <25 MW projects • Minimum project size for bidding is 50 MW • Retail investors unable to participate • Govt. considering to continue Feed in Tariff regime for <25 MW projects Wind Solar Hybrid • MNRE / SECI to build a pilot p
Slide 26: Suzlon Strategy & Focus Areas
Suzlon Strategy & Focus Areas Ensuring Scale Ensuring Profitability and Cash Flows • Gaining Bidding Market Share • Technology Focus ‒ Sites / Pipeline build-up ‒ New product development ‒ Tie ups with strong customers ‒ Shortened product development cycle ‒ Low cost value engineering for enhancing
Slide 27: Financial Performance, Debt Overview, Industry Outlook
Financial Performance Debt Overview Industry Outlook Technology Suzlon Strengths Detailed Financials 27
Slide 28: Continuous New Product Development
Continuous New Product Development First 12 Months PLF ~20% ~5-6% Higher Energy Yield Higher Energy Yield ~35% PLF ~42% PLF ~44% PLF (Est.) LCOE reduction LCOE reduction S97-120 S111-120 S111-140 June’14 Mar’16 Aug’17 Prototype Installation Dates 28 Tallest all steel hybrid tower offering in India
Slide 29: S111-140: Most Competitive Across Suzlon 2.1 MW Series
S111-140: Most Competitive Across Suzlon 2.1 MW Series • 17% higher hub height enables: ‒ Accessing better wind profile; ‒ Increasing the attractiveness / viability of the low wind sites ‒ Unlocking unviable sites • Award winning tubular-lattice tower: ‒ Enables to achieve higher hub height at optim
Slide 30: 2.1 MW Series: Proven Platform with >100,000,000 Operating Hours
2.1 MW Series: Proven Platform with >100,000,000 Operating Hours Higher energy yield Lower cost of energy Sustains Lower Tariffs >70% Increase in Energy Yield S88-80 S9X – 80/90/100 S97-120 S111-90 S111-120 S111-140 >5.7 GW >2.3 GW >1.0 GW >680 MW 10 MW 1st Turbine Installed till date Installed till
Slide 31: Taking Leadership in Offshore
Taking Leadership in 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 ‒ 1
Slide 32: 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 33: Financial Performance, Debt Overview, Industry Outlook
Financial Performance Debt Overview Industry Outlook Technology Suzlon Strengths Detailed Financials 33
Slide 34: 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 34 End-to-end service provider with strong presence across value chain & customer segments
Slide 35: Increasing Market Share in Growing India Market
Increasing Market Share in Growing India Market India Commissioning Volumes (MW) 37% 24% 19% 19% 26% 32% +61% 5,502 1,779 +48% -19% 3,415 3,179 900 1,161 2,312 2,077 1,721 442 403 3,723 415 2,515 2,018 1,870 1,306 1,674 FY12 FY13 FY14 FY15 FY16 FY17 Suzlon Others Suzlon Market Share Source: MNRE 35
Slide 36: 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’17) # of Turbines MW <= 1 MW 1,678 777 >1 MW < 2 MW 4,268 5,774 =>2 MW 2,258 4,742 Total 8,204 11,293 2.0 GW • 35% -
Slide 37: Suzlon's Global Presence
Suzlon’s Global Presence As on 31st Dec 2017 2 5 2 1 North America 6 3 1 2,779 MW 4 Asia 3 5 12,434 MW South America Europe 806 MW 508 MW 4 South Africa Australia 139 MW 764 MW 6 37 Suzlon’s strong relationships across regions positions it well Map not to scale. All data, information, and map is pro
Slide 38: 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 39: Financial Performance, Debt Overview, Industry Outlook
Financial Performance Debt Overview Industry Outlook Technology Suzlon Strengths Detailed Financials 39
Slide 40: Consolidated Income Statement
Consolidated Income Statement Particulars Q3 FY18 Q2 FY18 Q3 FY17 9M FY18 9M FY17 FY17 (₹ Cr.) Unaudited Unaudited Unaudited Unaudited Unaudited Audited Revenue from operations 2,204 1,187 3,316 6,056 7,700 12,693 Less: COGS 1,519 630 1,859 3,712 4,248 7,543 Gross Profit 685 557 1,457 2,344 3,452 5,
Slide 41: Consolidated Net Working Capital
Consolidated Net Working Capital (₹ Cr.) 31st Dec’17 30th Sep’17 31st Dec’16 Inventories 3,590 4,518 3,747 Trade receivables 3,565 3,131 3,517 Loans & Advances and Others 1,923 1,900 1,989 Total (A) 9,078 9,549 9,253 Sundry Creditors 2,515 3,390 3,823 Advances from Customers 1,505 1,616 1,427 Provis
Slide 42: 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 43: 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 44: Thank You
CIN of Suzlon Energy Ltd - L40100GJ1995PLC025447 THANK YOU 44