Suzlon net up 29% but loses margin power

BS 200 SCORECARD

Wind energy major Suzlon Energy today reported a net profit of Rs 172.72 crore for the third quarter of FY07, a 29 per cent growth over the year-ago figure of Rs 134.02 crore.

The company reported a robust top line of Rs 1913.8 crore for the quarter, up 117 per cent from Rs 880.6 crore for the previous corresponding quarter.

The company reported earnings before interest, tax and amortisation (EBITA) of Rs 782 crore for the third quarter, while it stood at Rs 255 crore for the previous corresponding quarter.

Analysts, however, said that EBITA growth year-on-year has fallen from 17 per cent last year for December quarter to 13.3 per cent this quarter.

Suzlon shares were down over 5 per cent at Rs 1,204.75 , after hitting an intra-day low of Rs 1195 on the Bombay Stock Exchange.

Tulsi Tanti, chairman and managing director, said around 1 per cent of the margin loss was attributable to the hike in raw material costs, orders in transit were to account for 2.2 per cent of the margin loss, while the rupee's appreciation against the dollar accounted for one per cent of the margin loss.

Margins were also under pressure for the second consecutive quarter owing to increased staff costs, other costs (from Hansen's non-wind business). Suzlon's consolidated order book stood at Rs 7,716.23 crore, with Rs1,544.31 crore in domestic orders, and Rs 6,171.93 crore in international orders. Analysts said that given the order size raw material costs were comparatively under control.

Suzlon Energy said, as part of its long-term plans of having independent manufacturing units for various components of a wind turbine generator (WTG), it has realigned its operations and has commenced sale of tubular towers through one of its wholly owned subsidiaries.

Accordingly, sales realisations and gross margins for standalone results during the quarter ended December 31, 2006 are to that extent not comparable with the standalone results of prior periods presented, the company added.