Suzlon is an example of a perfect storm affecting a bold Indian company attempting establish itself in a frontline industry independently. To summarize: they grew in the 2000s wind power boom, bought German firm REpower for $1.5 billion in 2009, were unable to keep investing in growth as demand and financing collapsed post crash, defaulted on their foreign currency bonds, and finally got to the point where they decided to divest of the REpower (now Senvion) stake:
Suzlon's Senvion sale to shrink its size by 65%
Suzlon Energy’s reported sale of German subsidiary Senvion to private equity fund Centerbridge will reduce the Pune-based company’s annual sales in India to about Rs 3,000 crore. For FY14, Senvion contributed Rs 13,759 crore, or 65 per cent of the consolidated revenue.
The sale will, however, help the company repay lenders and focus on the Indian market, say analysts. The sale follows a series of debt defaults by Suzlon, which took the company to near-bankruptcy, as demand for its products collapsed and finance costs soared.
In 2009, Suzlon acquired Senvion, earlier known as REpower, for ^1.5 billion. However, it was unable to make money from the acquisition, as complaints of faulty products increased, resulting in lower sales and profits. The company has not recorded profits since 2012-13. In 2012, Suzlon defaulted on its foreign currency bonds. Later, these were restructured, with most lenders taking a haircut.
“With the Senvion sale, the company has managed to get out of a financial mess. What Suzlon will be left with is a big question, as its domestic operations are not a big deal,” said an analyst.
On Tuesday, Suzlon’s shares at Rs 17.64 on the BSE, up 0.9 per cent, as investors waited for an announcement on the sale.
“The Suzlon’s REpower takeover did not go well from the beginning. The company took too many loans and mismanaged the takeover. It was like a small fish trying to eat a very large one. No wonder the company soon started defaulting on loans. The sale of Senvion will be like a fire sale,” said the analyst quoted earlier.
This is where China benefits from state backed companies, where the state eats early losses and funds expansion and technological acquisition.
PMO ordered 60 changes to green clearances, environment ministry delivered on most
The Prime Minister's Office (PMO) ordered 60 amendments to green clearance norms from the Union environment, forests and climate change ministry in September 2014. By the end of January, Environment Minister Prakash Javadekar and his team delivered on most of these. Some that needed more than just tweaking of executive orders are likely to be carried out through legislative amendments that the ministry is working upon.
The Environment Protection Act, 1986, is especially amenable to substantial changes through executive orders. The law provides power to the Centre to completely change norms and procedures through simple notifications and guidelines that can be done by executive fiat.
Even in the United Progressive Alliance regime, the PMO, then headed by Manmohan Singh, had at times asked for changes to the regulations for easing clearances for industry, though not so many as has been asked by the PMO under Narendra Modi. Some of these changes were carried out by the environment ministry, then under various ministers, but at times, the ministers also got back, disagreeing with the PMO and noting some of the changes would not help environmental conservation.
The PMO documents from September and the series of amendments to regulations and norms carried out subsequently show the ministry under this has followed the instructions from the top more closely.
The changes demanded and delivered include doing away with environmental clearance for industries inside Special Economic Zones, ports and National Investment and Manufacturing Zones. It also asked that the ministry's statutory expert appraisal committees (EAC) not be allowed to question the site location of industry once the preliminary terms of reference for studying the environmental impact is finalised.
It asked that an EAC's powers to ask for additional studies from project proponents be stopped once the developers have committed to standard prescriptions. It also asked that the expert committee appraising thermal and hydropower projects not put additional conditions while clearing projects and stick to the ones mandated by the ministry or standard norms.
The PMO instructed that in case industries change their production processes after environmental clearances, they should not be asked to go through the clearances again, as long as they certify that their pollution levels would remain the same. These, the PMO asked, should be verified through 'third party agencies'.
It also said, "The environment ministry may consider the proposal of duly reducing the duration for baseline data monitoring from the present three months (other than monsoon season) to 30 days." Such baseline data is collected and used to prepare a comprehensive environmental impact assessment report, on the basis of which the ministry's expert committee reviews the project. Additionally, the PMO said the mandatory public hearings could be conducted by someone other than the state pollution control board, where the public hearings could not be organised for reasons beyond the control of project developers.
On forest clearance, the PMO ordered 18 changes. One of these said in case forestland has already been diverted for projects, if any additional facilities come up, developers should not be asked to secure fresh forest clearances under the Forest Conservation Act, 1980. It also asked preliminary surveys for projects in wildlife parks and sanctuaries be allowed by state officials and were not to be brought to the Centre for clearance as long as no trees were cut.
The PMO also ordered that while granting forest clearance, the statutory Forest Advisory Committee (FAC), which appraises projects, not put any conditions for state governments and restrict the terms to those the project developer can deliver. It also recommended that "FAC may be advised not to include any condition on project cost-related CSR (corporate social responsibility) expenditure as this is the mandate of other ministry. This may be duly clarified."
On wildlife, the PMO said an inter-ministerial group be formed to prepare a petition to be put before the Supreme Court. The petition is to ask the Court that state wildlife boards and national wildlife boards be allowed to give clearances to projects in national parks and sanctuaries according to the original Wildlife Protection Act provisions and not follow the additional conditions that the apex court has put over years. This has not been done so far.
The PMO also asked the ministry to ensure common studies and processes for all clearances, whether at state or central levels. These are under process. The states have been recently asked not to link their environmental clearances to a project developer's access to a power connection.
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