Suzlon Energy to hit markets on Sep 23

Suzlon Energy Ltd will hit the capital market on September 23 for raising upto Rs 1500 crore (Rs 15 bilion) to expand its domestic manufacturing facilities and set up new plants in the US and China.

The Pune-based wind energy company is also open to building strategic alliances and acquisitions as part of its growth strategy, Girish Tanti, director international business development said.

He, however, said there were no specific projects at present and the company would consider offers for alliances and acquisitions on a case-by-case basis.

Suzlon is offering 2.934 crore equity shares of Rs 10 each, having a price band of Rs 425 to Rs 510. At the lower end of the price band, the company would mop up Rs 1246.950 crore (Rs 12.46 billion) and at the upper end it would garner Rs 1496.34 crore (Rs 14.96 billion).

The funds from the issue will be used for setting up and expansion of manufacturing facilities in India, capitalisation of subsidiaries and construction of a new corporate head office in Pune among others, he said.

Post-issue, the promoters holding in Suzlon would come down to 69.78 per cent from 76.94 per cent at present. Sixty per cent of the net issue would be allocated on a discretionary basis to QIBs, 10 per cent to non-institutional investors and the balance 30 per cent to retail investors.

The issue, which would remain open for bidding from September 23 to September 29, would be listed in the Bombay Stock Exchange and the National Stock Exchange.

The company would invest Rs 100 crore (Rs 1 billion) in its proposed US subsidiary and Rs 220 crore (Rs 2.2 billion) for China to manufacture blades for wind turbine generator, he added.

The government's changing the depreciation rate for the year 2003-04, combined with slow market growth and the delay in commissioning of 1.25 MV project in Maharashtra state, completed only in August 2002, were cited as the main reasons for the company's decline in income and profit in the financial year ended March, 2003, Kirti Vagadia, corporate finance head said.

He added that the company on an average spent Rs 60 crore (Rs 600 million) every year on research and development. Girish Tanti said the country had a potential to generate almost 45,000 MV of Wind energy, but currently was just using 3,000 MV.

Out of the total produce of 392 MV of Suzlon Energy, the company uses 312 MV for its domestic consumption and 80 MV for export, he said.