Shanghvi said his investment was based on the assessment that within the renewable-energy sector Suzlon had “the product and the future pipeline, which will allow them to grow.”
Over the past two years, India’s shift to auctions for building wind projects from an earlier fixed-tariff program increased competition among suppliers, diluting Suzlon’s market share and putting pressure on its profit margin. The company is losing ground to competitors such as Vestas Wind Systems A/S and Senvion SA, according to Bloomberg NEF.
Ratings assessor Care Ratings Ltd. cut the long-term bank facilities of Suzlon to defaultfrom BB in April after it was unable to meet a repayment obligation to its lenders. The company has $172 million in foreign-currency, convertible bonds due in July. .
The company’s market value plunged to Rs 33 billion on Wednesday from a high of 109 billion rupees, a few weeks after Shanghvi announced the investment.