suzlon energy ltd share price Management discussions


Global renewable energy market and outlook

Global market outlook

FY22 was a very unpredictable year due to global uncertainties arising in geopolitics and global economic trade. The year witnessed events like soaring fossil fuel prices, disruption of supply chains, concern around rising global temperatures, risks and uncertainties arising from the current war situation. As a result the nations and economies focused more on planning and seeking long term energy security, price stability and national resilience with respect to their energy sectors. The world today believes that renewables can go a long way to help us reduce risks arising from disruptions in the energy market from the aforementioned events. In order to reduce the emissions and reach the target of limiting the global average temperature increase by the end of the present century to 1.50C relative to the pre-industrial levels, major commitments were made by various nations at COP26 in Glasgow. These announcements have raised the target for renewable energy opportunities across all nations and economies and will be a major boost for investment in renewable sector. As an immediate target to achieve the above mentioned goals, the share of renewable energy across the globe in terms of the electricity generation must increase to 65% by 2030 as compared to 26% in 2019. The worldwide renewable capacity should increase by 8,000 GW in this decade. The onshore wind installation is estimated to reach the levels of 3,000 GW by 2030 and around 6,170 GW by 2050. Wind would need to supply 24% of total electricity produced by 20301 In current scenario, renewable power has already become one of the cheapest source of new electricity generation. The weighted average levelized cost of electricity (LCOE) of newly commissioned utility scale solar PV projects fell by 85% during the decade 2010-20, onshore wind in the same period fell by 56% and o shore wind by 48%1. Today solar and wind technologies fall in the range of or even undercut the LCOE when compared to new fossil-fuel based power plants.

Global wind energy outlook

In CY21, 93.6 GW of new wind power capacity was added worldwide with a growth of 12.4% over the cumulative installed capacity till CY20 bringing the total wind capacity to 837 GW worldwide2. Despite new installations being 1.8% lower than the last year, CY21 marked the second highest year ever in terms of wind installation in the history of wind power.

Market status – O the total new installations of 93.6 GW, new installed onshore capacity stood at 72.5 GW in CY21 which brings the cumulative onshore capacity to 780 GW. It was a record growth year for o shore wind with more than 21.1 GW of installed capacity, which is three times more than the previous year and the highest ever recorded o shore installation. With this the total installed o shore wind capacity reached to the level of 57.2 GW.

The top five markets in terms of new installations in CY21 were China, USA, Brazil, Vietnam and UK. Combined together they accounted for 74.25% of new wind installations.3 Region wise APAC & Europe were the largest contributor to new installation in CY21.

1 https://www.irena.org/publications/2022/Mar/World-Energy-Transitions-Outlook-2022 2 https://gwec.net/global-wind-report-2022/ 3 https://gwec.net/global-wind-report-2022/

In terms of total installed wind capacity in the world today, the top five contributors are China, USA, Germany, India and Spain. These countries together account for more than 72% of the worlds total installed wind power.

With more than 69 GW of onshore wind capacity awarded globally in CY21, which was twice the capacity awarded in the CY20, the wind energy sector has shown resilience even during the uncertain times over the last two years. China has led the way by awarding a total of 50.6 GW of onshore wind capacity in CY21 followed by Spain, India, South Africa and Germany. The global wind installations have increased with a CAGR of more than 12% over past 5 years.3

Indias performance

Recovery in the Indian wind market was expected in CY21 post the first wave of COVID-19, however second wave of the pandemic during the period of April 1, 2021 – June 15, 2021 led to a slow down across the sector. Despite the challenges, annual installation increased by 30%.4 More than 1.4 GW of wind was installed, exceeding the 1.1 GW of installations during CY20.

The second wave of COVID-19 had a sluggish effect on the wind industry. This led to disruptions, causing delay in the supply of critical components further affecting project schedules. Industrial oxygen was also diverted for medical consumption affecting the entire manufacturing industry in India, including wind. Due to this, progress was observed only in second half of 2021. By end of the year, a total 2.7 GW of onshore and 1.95 GW4 of hybrid auctions were awarded by Indian states and central agencies.

India is one of the largest energy consumer in the world. Coal fi red energy is a major source of energy in the country. Coal today contributes to 51% of total installed capacity mix, as compared to 53% in CY20. Solar installation is the second major contributor with 13% of total capacity, followed by Hydropower at 12% and Wind power at 10%. The Renewable Energy Sources (RES) that includes Small Hydro Projects, Biomass Gasifi er, Biomass Power, Urban & Industrial waste power, Solar and Wind energy accounts for 27.5% of total installed capacity, up from 25% in the previous year.5 Many steps were taken by Indian policymakers for boosting the renewable sector in India. A blanket time extension of 7.5 months was provided to renewable energy projects due the disruptions caused by the second wave of COVID-19. Other policy measures which would boost and support the renewable sector in India include extension of waiver of Interstate Power Transmission System (ISTS) charges for renewable projects commissioned by June 2025, new innovative auction model for round the clock and hybrid generation, introduction of a new trading platform for green energy in the form of Real-Time-Market platform/Green Day Ahead Market and Green-Term Ahead Market.4 Targets set by India at COP26 to increase the non-fossil energy capacity to 500 GW while ensuring that 50% of the total energy demand is met through green energy sources by 2030, to reduce carbon emissions and to achieve net-zero by 2070 have further strengthened the confi dence towards the growth of renewable sector in the country.4

India wind energy outlook

India is one of the worlds fastest growing country in terms of energy demand growth with demand expected to double by 2030. Massive new installations are expected in upcoming years to meet this demand. Three–quarters of new power generated will be derived from wind and solar, of which 100 GW will exclusively come from new wind installations, taking Indias total wind installation to 140 GW by 2030.6

In FY22, wind capacity that came online was highest in Gujarat (647.4 MW), followed by Tamil Nadu (258.3 MW), Karnataka (192.3 MW) and Maharashtra (12.5 MW). Currently Tamil Nadu has the highest total operational wind capacity of 9.8 GW, closely followed by Gujarat (9.2 GW), Karnataka (5.1 GW), Maharashtra (5 GW), Rajasthan (4.3 GW), Andhra Pradesh (4 GW) and Madhya Pradesh (2.5 GW)8. Almost half of Indias total demand for power comes from 21 states, all these states are defi cient in wind resources. Previously the non-windy states were unable to procure wind power but the introduction of central auctions and the provision for the inter-state transmission has provided access of wind based energy to these states. A total of 9 to 13 GW of installations is expected as a result of demand arising from these states.6 At COP26 in November 2021, Indias announcements strengthened confi dence in the countrys renewable energy commitments. Prime Minister Narendra Modi announced a multi-pronged approach to support climate action: 500 GW of non-fossil fuels energy capacity by 2030; 50% renewables in the energy mix by 2030; reduction of total carbon emissions by 1 billion tonnes between 2021 and 2030; reduction of the emissions intensity of the economy by 45%; and achievement of net zero by 2070. Globally, India ranks fourth in Installed wind capacity with 40.3 GW as of March 2022. Indias installed renewable energy capacity stood at 156.6 GW up to FY229, representing 39.2% of the overall installed power capacity, renewable energy sources with 109.9 GW and 46.7 GW from the large hydropower, while wind accounts for 10.1% of this. To further realise its 2030 climate commitments, the Ministry of New and Renewable Energy (MNRE) has estimated that 140 GW of wind energy capacity is needed by 2030. To meet Indias 2030 target of 500 GW of Renewable Energy including 140 GW from wind energy, there is an opportunity to examine the vast, untapped onshore and o shore wind resources. Across the country, the National Institute of Wind Energy (NIWE) has assessed more than 302 GW of onshore wind potential at 100-meter hub height and nearly 695.5 GW of onshore wind potential at 120-meter hub height10.

With the introduction of non-solar Renewable Purchase Obligations (RPO), 14 major demand driving states of India which lack wind resources can now procure wind through central auctions. The RPO for these states vary within a range of 6-9% which would result in new energy demand of approximately 10 GW through wind energy11. These dynamics will act in favour of wind industry in the near future.

Products and technology

Growing wind industry has led to increasing demand of wind turbines globally further leading to increase in competition in the market. Lower tari s and availability of cheaper sources of power like solar energy has made it necessary for the wind turbines manufacturers to invest in research, development and product innovation. With a strong knowledge base and experience of more than 27 years, Suzlon has always prioritized and focussed on enhancing its product portfolio. Over the years, Suzlon has made consistent efforts to build a strong customer base across the globe and established a great relationship. Our robust technology has enabled us not only to achieve the designed life, but also increases the turbine life beyound its design life with necessary refurbishments. Our current product portfolio includes –

• S120-140 (6-7% higher energy yield over S111)

• S133-140, 160 (27-33% higher energy yield over S120)

Recently, Suzlon announced its new wind turbine model – S144 that will come with a larger rotor diameter and higher energy yield compared to the existing models. Suzlon also installed Indias tallest wind turbine, S133-160 meters in Suvardha, Gujarat. These consistent developments are a reflection of the groups focus towards developing products optimized to meet the market demand, investing in R&D and ensuring world class technology and products for the customers.

Key initiatives and priorities

In FY22 Suzlon made a good recovery on wind installations. In FY23, major focus for Suzlon will be regain the top-spot as the market leader in the Indian wind industry. Company also focusses on expanding its wings in hybrid (wind and solar) space. The key priorities and initiatives that will help us to grow as envisioned are as follows:

• To provide best-in-class service spanning across the entire lifecycle of wind energy projects

• To regain the market leadership position with an improved market share

• To reduce LCOE through better technology and products more specific to the market conditions

• To optimize cost through value engineering and improved e ciencies across the value chain

• To continuously beat the market benchmark and achieve best machine availability

• To help improve e ciencies and better yields for our customers

6 https://gwec.net/india-wind-outlook-towards-2022-looking-beyond-headwinds/

8 https://www.indianwindpower.com/pdf/Statewise-Monthwise-Wind-Power-Installations-2021-22.pdf 9 https://powermin.gov.in/en/content/power-sector-glance-all-india 10 https://mnre.gov.in/wind/o shore-wind/ 11 https://gwec.net/india-wind-outlook-towards-2022-looking-beyond-headwinds/

Business risks and mitigation

Suzlon Group has an active risk mitigating strategy that allows it a fairly wholesome view of the internal and external environment in order to proactively address challenges, to the best extent possible. Key elements of the program are summarized below:

A. Operational risks:-

Technology risk: Research & Development has been the key focus in Suzlon. With in-house technology and design capabilities, Suzlon has developed a comprehensive portfolio of products ranging from sub-MW and multi MW turbines. Suzlon aims to develop innovative technology that would allow it to operate successfully in the Indian market with the transition from (Feed-in-Tari ) FIT regime to auction based regime, the price pressure has been increasing consistently which has paved way for wind turbine manufacturers to come up with innovative and cost effective solutions. The Group has always emphasized and worked towards making consistent efforts towards cost reduction across components and bringing efficiency in overall project lifecycle.

Supply chain risk: Manufacturing a wind turbine requires proper planning of supply chain including procurement of resources. Many critical components like gearbox, bearings, converter and blades have a long ramp-up duration which would inhibit agility. The Group has worked to create alternative sources through the expansion of the vendor base, localization and standardization of certain components to ensure timely availability of the critical components and keep the costs of procurement under control. Most of components cost is linked to cost of underlying commodity like steel, copper, infusion system, glass fabric etc. and to such extent, the Group carries risk of fluctuations in commodity rates. However CY21 saw the second highest number of installations with 93.6 GW wind projects being executed globally- creating a pressure on the wind component supply chain. COVID-19 pandemic and geo-political disturbances continued to add to the supply chain disruptions that led to hindrances in the timely component availability thereby affecting the cost and schedule. Apart from this, CY21 also saw the freight cost going up multiple folds further adding to the cost. The Group has been working consistently towards developing alternate vendors and getting long term mutual commitments for delivery as a measure to reduce the pressure on the existing supply chain.

Project execution risk: Wind industry in India in the recent past had witnessed struggle in project execution due to delay in arranging land and evacuation approvals. Other risks associated with the project life cycle include extreme climatic and environmental conditions, timely availability of grid capacity for evacuation, availability of suitable land resources and timely execution of project activities by subcontractors etc. The Group undertakes regular monitoring of project progress in light of the agreed plan to ensure timely completion of the project.

Business volume risk: The transition from feed-in-tari (FIT) to the auction regime affected the business adversely. Last few years saw wind tari s going as low as 2.43 per unit that has now moved upward in recently concluded SECI Tranche XI wind auction for 1,200 MW at tari of 2.69 per unit. The Group is regularly monitoring the progress and working with customers to minimize the risk and is focussed towards ramping up the supply and providing quality output to customers.

B. Financial risk:-

Sizable debt repayment obligations: Pursuant to debt refi financing concluded on May 24, 2022, the Company has been able to replace the 16 lenders consortium led by State Bank of India with another 2 lenders consortium led by REC Limited. The new lenders with specialised knowledge on the sector, have better understanding on the operational requirements of the Company. However, the terms of refinanced debt require the Company to repay sizable debt amount within twelve months from the date of disbursement. The sizable portion of this repayment is linked with monetisation of few non-core assets and additional capital raising, which may get delayed due to reasons beyond direct control of the Company. However the Company is taking various steps and actions in order to ensure the debt obligation is met on time.

Availability of adequate working capital: The Wind Turbine Generator (WTG) business is working capital intensive and thus sizeable non-fund based working capital limit is required for execution of WTG orders. Currently, the Company operates with a limited availability of working capital, which restricts progressive revenue growth. Until the Company is able to arrange adequate amount of working capital limit on permanent basis, the Company may face risk of losing orders or execution delays.

Poor financial position of distribution companies: Electricity distribution companies in several states of India are still reeling under financial distress. While the Company does not have any direct commercial relationship with these distribution companies, indirectly it could still have material adverse effect on our business volume, results of operations and future cash flow. Any such di culties or instability of such distribution companies in general could create an adverse market perception and thus possibly could lead to adverse impact on our business.

High level of infl ation in India: Infl ation rates in India have remained volatile in recent years and such volatility may continue further. India has experienced high level of infl ation compared to developed countries in the recent past. This could cause further rise in the cost of raw material, other direct costs and overheads leading to decline in profits. High fluctuations in infl ation rates may make it more di cult for us to accurately estimate or control our costs. The Company may not be able to pass any such resultant increase in cost to our customers either entirely or partly. This may adversely affect our business and financial condition. Rising infl ation could also lead to corrective measures resulting to interest rate hike, which may adversely impact the Company due to high financial exposure.

C. COVID-19 risk:-

FY22 saw second and third wave of the COVID-19 outbreak that resulted in slowing down of economic activities nationwide and globally further leading to supply chain disruptions. Many countries including India were forced into a complete or partial lockdown and the same had an adverse impact on the business operations of the Group; impacting our operations as well as projects and services at site. However key activities of the group has been classified under Essential services [Power] category, basis which we have been able to mitigate this risk to a significant extent and ensure power is being supplied to the grid.

Management Assurance team, consisting of in-house team members and co-sourced partners, undertakes independent reviews of risks, controls, operations and procedures, identifying control and process gaps and recommending business solutions for risk mitigation. The Group runs in-house Risk and Misconduct Management Unit which supports management to assess, evaluate, strengthen and institutionalise value system from the standpoint of ethical business practices. Complaints received under whistle-blower policy are evaluated on a regular basis. The Audit Committee of the Board periodically reviews the Companys management audit reports, audit plans and recommendations of the auditors and managements responses

Corporate Social Responsibility

In the FY22, Suzlon Foundation (SF), the corporate social development arm of Suzlon Group, continued to catalyse the social development ecosystem through its unique impact model ‘SUZTAIN. The Foundation, with its philosophy of creating

‘Sustainable Development for Sustainable Economy, ensures that Suzlon Group integrates sustainability into its core business strategy. The Foundations four main goals thus have evolved from its in-depth understanding of both, the business and the social ecosystem.

Powering a greener tomorrow for Suzlon, therefore involves responsible management of its financial, natural, social, human, and physical capitals. Suzlon focuses on creating sustainable value by benefiting the planet and society while enhancing its market performance. This approach of conducting responsible business has resulted in cost saving, improved stakeholder relationships, and better risk management. Through its Corporate Social Responsibility (CSR) and Sustainability strategy, Suzlon is committed to achieving the UN- Sustainable Development Goals (SDGs), UN Global Compact Principles, and National Voluntary Guidelines (NVGs) since 2008. Suzlon with its measurable, impactful and self-sustaining CSR activities, aims at supporting rural and underprivileged communities to become self-reliant. The SUZTAIN CSR model evolved from a provider-benefi ciary to a partnership approach. It considers all the key stakeholders to plan, implement, monitor and support village level sustainable development interventions. This model focuses on tracking, monitoring, measuring and evaluating Suzlon CSR Programs. Following are the goals:

Long term goal - To empower village institutions and bring collectivism in means the villages.

Mid-term goal – This involves the ‘Zero programs specifically designed to address the needs of disadvantaged communities like senior citizens, children under fi ve, local civic environment, specially-abled and vulnerable adolescent girls

Short term goal - Integrated development activities for community that address the immediate requirements of the society.

Suzlon believes in receiving periodic feedback from the community for all the need-based programs. Hence the grievances are addressed systematically through the community grievance redressal mechanism that exists in all the locations. During FY22, Suzlon conducted over 3,582 impactful CSR activities and touched lives in 555 villages reaching over 30,00,000 villagers and 10,00,000 households. The CSR activities are focused on six key areas - Environment, Empowerment, Health, Livelihood, Education and Civic Amenities. These activities were undertaken in consultation with communities and in collaboration with 73 institutions such as Government, private and corporate foundations. Additionally, Suzlons CSR programs received 2.06 Crore of co-funding from other stakeholders like employees, customers and community members.

Key achievements:

1. Environment:

During FY22, Suzlon Foundation planted 29,061 trees of 63 different local species. The fruit, fodder, and shade giving trees, horticulture and agroforestry plants enrich the biodiversity, enhance health, and improve livelihoods. Almost 60% of plants survived due to committed caretakers and well-defi ned monitoring plans. 200 Tree guard protection were provided for the survival of roadside trees. 500 trees were planted with less water by using drip irrigation system. Through water and soil moisture conservation activities Suzlon conserved 26, 59,039 cubic meters of water mainly in the drought prone areas. Suz-HOOK, developed to bring behavioural change in the rural households under the ‘Zero Garbage programme, resulted in the collection and recycling of 2,083 kgs of plastic waste. Under ‘Zero Sparrow Deaths programme Suzlon installed 10,444 bird conservation units like nests, water troughs and bird feeders, benefiting 49,531 birds. ‘Save the sparrows campaign was launched and 930 stakeholders participated with 1,718 bird conservation activities being carried out that benefited 5,770 birds of various species.1,355 stakeholders were involved in 87 activities in the World Environment Day celebrations. 2,508 kgs of recyclable waste materials were converted into innovative products like Library Cupboard, Roof for house, dustbin, bird nest and bird feeder. These are useful for students, birds and people. Over 27,000 villagers benefited from the increase in water availability due to water conservation and recharge structure based interventions like check dam repair, bore-well recharge, and pond desilting. In Karnataka, LED (Light Emitting Diode) bulb support for street light and Solar Home UPS (Uninterruptible power supply) was provided.

4,331 cloth bags were provided to the villagers and shop keepers to avoid plastic bag usage. 119 dustbins were placed to collect 5 kgs of garbage per month benefitting more than 11,000 villagers.

2. Empowerment:

Suzlon had formed over 500 VDCs (Village Development Committee) and due to the pandemic there was a need for renewed efforts in strengthening the village development committees (VDC) in 8 states of India. Focus was given to selected VDCs on priority. In a structured manner, these have aligned with the 7-stage empowerment process and also VDC meetings have been conducted. After ascending to stage four, 59 VDCs have started livelihood activities like palm craft, agro-service centre, music system rental, construction tool rental, computer training centre, traditional grain seed sale and tailoring unit etc. 53 out of 59 VDCs (90%) are in a profitable stage and will soon be able to contribute financially to the village development. Suzlon firmly believes that these VDCs will soon start working towards sustainable development of the villages after Suzlon Foundation exits, to focus on other strategic needs. Additionally, Suzlon has consistently worked towards empowering rural women to make them financially and socially independent through the Self Help Groups (SHG). The purpose of this initiative is to improve womens participation and development. This will further enable the upliftment of their families and villages. This year, Suzlon supported over 1,500 SHG women members through SHG awareness and training sessions. 10 villagers were trained in RO plant management in Andhra Pradesh. Exposure visit for 27 SHG Leaders was organised to learn a new innovation in Gujarat State. 11,030 volunteers were trained regarding awareness about available resources under Government schemes in Gujarat. 74 SHG members participated in leadership training. 12,135 Villagers were aware of the status of their village happenings due to installation of 33 notice boards in the Gujarat State. Due to 14 sound systems installed in the villages in Gujarat state, there was increase in community mobilization.

3. Health:

During FY22, total 19,649 patients were treated. 7,316 women were reached under different health initiatives, 1,531 patients were covered under health camps. The provision of kitchen gardens for 21 households enabled access to healthy and nutritious vegetables. 11 Mattresses were provided to Orphanage for better comfort. 180 women received Electric Cooktop support resulting into drudgery reduction. Distribution of Government approved sanitary pads to 337 women & reusable cloth pad distribution to 805 women enabled access to feminine hygiene products in Gujarat State. In Gujarat, Open Gym support facilitated 230 children to perform various types of exercises resulting in better health status. In Gujarat state, Suzlon treated 560 patients through supply of Vitamin C & Zinc as a preventive action promoting better heath. Also awareness and counselling sessions on personal hygiene and sanitation were conducted for students in Andhra Pradesh and Anganwadi Health Awareness Sessions were conducted for pregnant women in Andhra Pradesh, Telangana and Rajasthan state. Blood pressure and sugar diagnostic camps were conducted for villagers in the Karnataka state

4. Livelihoods:

This year Suzlon has focused on farmers under the livelihood initiatives reaching over, 6,855 farmers. 9,602 horticulture plants were provided to 1,100 farmers. Agriculture pipeline support was given to 120 farmers in Maharashtra. This resulted in 2,00,000 litres of increased water availability. 70 farmers in Maharashtra yielded 20,000 kgs fodder through fodder development for better health and production from cattle. In Madhya Pradesh income increased for 20 farmers due to Front line demonstration plots. In Madhya Pradesh and Karnataka 154 farmers cultivated green fodder for increase in milk production. 112 villagers / SHG members benefitted under tailoring unit as Income Generation activity through SHG/VDC in Gujarat, AP and Tamil Nadu. 5,231 farmers produced over 2,00,000 kg manure and thereby were able to increase their income due to Liquid decomposer support. Cumulative income increased for 24 VDC by 2.50

Lac through various VDC Income Generation activities as they had already reached stage 4 of the VDC empowerment milestone. 2,298 animals were treated through vaccination and 750 livestock animals fed by fodder distribution. 500 SHG members supported for Networking of SHG products through common commerce platform in Tamil Nadu state. In Kutch 49 village women & 8 prisoners (under rehabilitation program) revived Kala Cotton spinning Craft based Livelihood, a traditional craft and sustained the traditional craft practices and 85 village women participated through an intervention to make new goods from waste plastic. Also capacity building of 278 embroidery crafts women for working with commercial markets in villages of Lakhpat region was done to sustain embroiderers and their rich craft heritage. Sewing Machine support was provided to 25 women as livelihood support. Two Sewing machine centres with 30 sewing machines were established for tailoring training for over 600 women. 25 women were provided Groundnut Oil Processing Machine support to process 200 kgs of groundnut oil in Gujarat.

5. Education:

During FY22, 16,466 students were supported through various activities. 56 students benefitted with better posture due to supply of school benches. 748 students stood much to gain from school furniture and fi xtures.

In Gujarat, 676 students learned computer skills. Education kits consisting of notebooks and accessories were provided to 5,161 students. In Karnataka 2 students were provided bicycle support for timely transportation to school. 765 students in Andhra Pradesh and Gujarat received better knowledge through school awareness program.

6. Civic amenities:

Light Emitting Diode (LED) blubs were provided to 300 households, 60 LED bulb support was provided for street lights, 5 solar street lights, two solar lighting for school benefitting 60 students and solar home UPS was supported to 51 families. Due to this, there was a saving of over 2,70,000 hours of conventional energy. 10,950 cubic meter of water was made potable for drinking purpose for 30 fi re service department personnel in Andhra Pradesh. 10,000 cubic meter of drinking water was made available for 200 villagers in Block Development O ce through installation of fully automatic drinking water cooler in Gujarat. 5,000 cubic meter water became available through fully automatic drinking water cooler for 1,500 villagers in Gujarat. Paucity of water storage structures was reduced for 72 villagers and 20 cubic meter water available through water tank installation in Gujarat. 3,000 cubic meter water became available Water tank Installation in school for 60 students in Gujarat. In Andhra Pradesh 9,000 cubic meters water was made available for 70 villagers through bore well pump installation. 19 cubic meter of water was made potable for drinking purposes in Andhra Pradesh through RO plants benefitting 25 villagers.

Health status of 3,000 patients was monitored through tablet computer support to 2 Primary Health Centres (PHCs) at Gujarat. 2,237 youths are using sports kits. 65 Anganwadis received equipment support covering 1,582 children. Community shed was constructed in Gujarat for get-togethers of villagers for one village benefitting 1,105 villagers. Play material kit was provided for 45 children at Anganwadi (child care centre) in Gujarat. 854 innovative products out of waste conversion were found to be useful by households, students, and birds. 3 closed-circuit television. (CCTV) cameras were installed in 3 police stations to detect the crime/ accidents on roads. 61 specially abled persons were supported with interventions like hearing machine, wheel chair, small shops, walking crutches and stick etc. for better quality of life.

They also received livelihood support in the form of sewing machine, cow, goat and bu alo

Cow shed was constructed for 300 cows in Gujarat. Goushala Support-Trolley for food was provided in Madhya Pradesh that benefited 1,200 cows

7. Response to disasters:

During the pandemic and the intermittent lockdown, activities to prevent the spread of coronavirus disease (COVID-19) and mitigate its impacts were implemented. During this year over 43,000 villagers received COVID-19 Control Kit support, which consists of hand sanitizer, hand gloves, pulse Oxi-meters and Temperature Screening Guns, Masks along with awareness sessions about this pandemic were conducted frequently. 937 persons were tested in PHC in Gujarat through COVID-19 Rapid Antigen kits that were provided and also Laboratory testing equipment support (AGD SEMI AUTO ANALYSER) was provided to Ayush Seva Sansthan Hospital Pandhro catering to the poor to conduct tests of COVID-19 and other patients. Refrigerator was provided to Health Department Gujarat to store different types of medicines to treat COVID-19 patients. 20 personal protective equipment (PPE) kits were provided to sanitary workers in Tamil Nadu. Training was provided to women for making Reusable cloth sanitary pads & reusable masks resulted that resulted in increase in income. Reusable cloth masks were also distributed to 6,630 villagers. 357 women benefitted under Revolving Fund support for Providing Reusable Sanitary Pads.

8. Employee volunteering and employee giving:

During FY22, Suzlon through its CSR employee volunteering and giving program brought some solace to the families of employees who lost their sole bread winners; eased the burden of medical expenses of others su ering from Cancer & COVID-19; financially supported family members of deceased employees due to COVID-19 pandemic through Suz-COVI-19 funds; Initiated rehabilitation support to 200 women/girls rescued from tra cking by providing essential daily use items; enhanced access to Computer based e-learning system transforming learning for rural students; brought hope and mobility to the specially-abled people with suitable devices.

5,878 Suzlon employees participated in various CSR initiatives by contributing 45,262 person hours. 683 employees contributed a total of 55.31 Lac through 1,320 instances of voluntary donation towards social and environmental initiatives. The employees and families donated towards crowd funding to generate resources to purchase and donate computers to 2 needy village schools.

Additionally, 240 employees, part of 18 business teams including International business, 4 vendor teams have donated directly at the point of intervention. Support was provided for the rehabilitation of 9 fl ood affected employees of August 2019 by creating livelihood options through interventions like Sewing Machine, Flour Mill machine etc. 5 sewing machines were supported to enhance sewing skills and thereby to increase livelihood opportunities for Orphanage girls.

In Tamil Nadu, education support was provided by financial help from employees of Suzlon, Germany, for the education of 10 children of COVID-19 victims.

Highlights of consolidated results: A. Assets

1. Property, plant and equipment, investment properties and intangible assets

Rs in Crore
Particulars March 31, 2022 March 31, 2021
Property, plant and equipment 774 804
Right-of-use assets 134 131
Capital work-in-progress 15 104
Investment properties 31 33
Intangible assets (including goodwill) 121 198
Intangible assets under development 4 4

a. During the year, property, plant and equipment of 105 Crore and intangible assets of 40 Crore were capitalized as compared to 19 Crore and 47 Crore respectively in the previous year. b. Capital work-in-progress primarily includes building, and plant and machinery under construction. c. Investment property consists of certain officepremises given on lease and considered at deemed costs. d. Intangible assets comprises of design and drawings, goodwill, SAP and other software. WDV of the same stood at 121 Crore as compared to 198 Crore. e. Capital commitments for property, plant and equipment stood at 27 Crore as compared to 19 Crore in the previous year.

2. Financial assets

Rs in Crore
Particulars Non-current Current Total
March 31, 2022 March 31, 2021 March 31, 2022 March 31, 2021 March 31, 2022 March 31, 2021
Investments 0^ 0^ - - 0^ 0^
Trade receivables - - 1,377 1,190 1,377 1,190
Cash and cash equivalents 94 223 500 263 594 486
Loans - - 1 21 1 21
Other financial assets 170 179 121 176 291 355
Total 264 403 1,999 1,649 2,263 2,052

There is net increase in financial assets of 211 Crore during the year of which there is increase in trade receivables and cash and cash equivalents of 187 Crore and 108 Crore respectively. Increase in trade receivable is due to increase in volume. There has been reduction in loans and other financial assets of 20 Crore and 64 Crore respectively.

3. Non-fi financial assets

Rs in Crore
Particulars Non-current Current Total
March 31, 2022 March 31, 2021 March 31, 2022 March 31, 2021 March 31, 2022 March 31, 2021
Inventories - - 2,208 2,173 2,208 2,173
Other assets 29 54 811 970 840 1,024
Current tax asset, net - - 1 6 1 6
Total 29 54 3,020 3,149 3,049 3,203

^ Less than 1 Crore

There is net reduction in non-fi financial assets by 154 Crore, due to increase in inventories by 35 Crore; reduction in other assets by 184 Crore primarily on account of adjustment of vendor advances against invoices and utilisation of GST input credit against liabilities and reduction of 5 Crore in current tax asset, mainly due to re-grouping against provision for tax.

B. Equity and liabilities

1. Equity share capital

Rs in Crore
Particulars March 31, 2022 March 31, 2021
Authorized share capital 11,000 9,200
Issued share capital 1,847 1,705
Subscribed and fully paid-up share capital 1,843 1,702

There is an increase in subscribed and fully paid-up share capital of 142 Crore pursuant to issuance of equity shares upon conversion of compulsory convertible debentures (‘CCD) and issuance of equity shares to foreign currency convertible bonds (‘FCCB) bondholders pursuant to conversion of FCCB.

2. Other equity

Particulars March 31, 2022 March 31, 2021
Equity component of compound financial instruments 14 92
Capital reserve 23 23
Capital reserve on consolidation 0^ 0^
Capital redemption reserve 15 15
Legal and statutory reserve 1 1
General reserve 917 917
Securities premium 9,611 9,563
Capital contribution 6,273 6,273
Share application money, pending allotment - 13
Money received against share warrants 232 232
Retained earnings (21,873) (21,677)
Foreign currency translation reserve (582) (497)
Total (5,369) (5,045)

^ Less than 1 Crore a. Equity component of compound financial instruments

The reduction in equity component of compound financial instruments is attributable to conversion of FCCB, detailed explanation on which is given in Note 20.7 of the consolidated financial statements. This instrument has been split between equity and liability by primarily valuing the liability portion without equity conversion options. The balance between instrument value and liability component has been the value of equity conversion options.

b. Securities premium

The securities premium account stood at 9,611 Crore as compared to 9,563 Crore in the previous year. The increase of 48 Crore is on account of conversion of CCD and FCCB.

c. Capital contribution

The resultant gain arising on extinguishment of existing debt and fair value of financial instruments issued as per the terms of Resolution plan is transferred to capital contribution since the Lenders have potential exercisable participative rights. Detailed explanation on implementation of Resolution Plan is given in Note 23 of the consolidated financial statements. The amount continues to remain the same.

d. Share application money, pending allotment

During the year, the Company received conversion instructions from FCCB bondholders for USD 2.031 Million out of USD 2.163 Million into equity shares of the Company and balance USD 0.132 Million have lapsed and accordingly stands cancelled. Refer Note 20.7 of consolidated financial statements.

e. Money received against share warrants

Pursuant to implementation of Resolution plan, 49,85,88,439 fully paid share warrants of 2/- each convertible into 1 equity share of a face value of 2/- each were issued to Lenders at an aggregate consideration of

16/- i.e. at 1/- for each Lender in the previous year and continues to remain there. These warrants were recorded at fair value of 4.65 per share and credited to other equity.

f. Foreign currency translation reserve (FCTR)

The change in FCTR is due to exchange fl fluctuation resulting from translation of the accounts of overseas subsidiaries into reporting currency of the parent company i.e. INR.

3. Financial liabilities a. Borrowings

Total borrowings stood at 6,390 Crore as compared to 6,859 Crore in the previous year. The reduction in borrowings of 469 Crore is net of, conversion of FCCBs, charge of non-cash interest on financial instruments amounting to ~ 355 Crore and repayment of the borrowings amounting to 723 Crore.

Rs in Crore
Particulars Non-current Current Total
March 31, 2022 March 31, 2021 March 31, 2022 March 31, 2021 March 31, 2022 March 31, 2021
Secured 5,513 5,838 27 175 5,540 6,013
Unsecured 79 189 - - 79 189
Total 5,592 6,027 27 175 5,619 6,202
Current maturities of long-term borrowings - - 771 656 771 656
Grand Total 5,592 6,027 798 831 6,390 6,858

Total borrowings stood at 6,390 Crore as compared to 6,858 Crore in the previous year. The reduction in borrowings is on account of sizeable repayment of the borrowings. b. Other financial liabilities

Rs in Crore

Particulars Non-current Current Total
March 31, 2022 March 31, 2021 March 31, 2022 March 31, 2021 March 31, 2022 March 31, 2021
Trade payables - - 1,840 1,582 1,840 1,582
Lease liabilities 58 55 17 12 75 67
Other financial liabilities 22 22 363 357 385 379
Total 80 77 2,220 1,951 2,300 2,028

Trade payables stood at 1,840 Crore as compared to 1,582 Crore in the previous year. The increase is on account of increased volumes and better credit terms with suppliers.

4. Other liabilities and provisions

Rs in Crore
Particulars Non-current Current Total
March 31, 2022 March 31, 2021 March 31, 2022 March 31, 2021 March 31, 2022 March 31, 2021
Contract liabilities - - 477 405 477 405
Other liabilities 0^ 1 81 88 81 89
Provisions 130 83 484 538 614 621
Total 130 84 1,042 1,031 1,172 1,115

a. Contract liabilities (advance from customers) stood at 477 Crore as compared to 405 Crore in the previous year. b. Provisions stood at 614 Crore as compared to 621 Crore in the previous year. c. Other liabilities stood at 81 Crore as compared to 89 Crore in the previous year.

C. Cashfl ow

Net cash generated from operating activities is 1,302 Crore. Net cash used in investment activities is 18 Crore. Net cash used in financing activities is 1,045 Crore which comprise of repayment of long-term borrowings of 575 Crore, payment of short-term borrowings of 148 Crore, payment of interest and other borrowing cost of 322 Crore.

D. Results of operations

Rs in Crore
Particulars March 31, 2022 March 31, 2021
Revenue from operations 6,520 3,295
Other operating income 62 51
Other income 22 20
Total income 6,604 3,366
Cost of goods sold 4,332 1,577
Employee benefits expense 545 553
Finance costs 735 996
Depreciation and amortisation expense (including impairment losses) 260 258
Other expenses 815 681
Total expenses 6,687 4,066
Profi t/ (loss) before exceptional items and tax (83) (700)
Exceptional gain/ (loss) (83) 805
Tax expense (167) (5)
Share of profit/ (loss) of associate and joint ventures (10) 3
Net profit/ (loss) for the year (177) 104

Principal components of results of operations

1. Revenue from operations

Revenue from operations stood at 6,520 Crore as compared to 3,295 Crore in the previous year, an increase by 98%. The increase is mainly due to volumes pickup post restructuring.

2. Cost of goods sold (‘COGS)

Increased business volume is primarily from WTG business. There is wide difference between % age of COGS for WTG business and OMS business. As a result, COGS as a percentage to revenue from operations would appear high at 66.4% during the year as compared to 47.9% in the previous year. The increase is partly attributable to exponential rise in commodity prices and logistics cost across the value chain.

3. Employee benefits expense

Employee benefits expense continues to remain under control. The same has marginally reduced to 545 Crore from 553 Crore in the previous year.

4. Finance cost

Finance cost has reduced to 735 Crore as compared to 996 Crore in the previous year. The reduction in cost is mainly due to repayments of loans during the year.

5. Depreciation and amortisation expense (including impairment losses)

Depreciation and amortisation stood at 260 Crore as compared to 258 Crore in the previous year. There is no significant change as compared to previous year.

6. Other expenses

Other expenses (excluding exchange differences) has increased to 877 Crore as compared to 677 Crore in the previous year. The increase is primarily on account of increase in the production and sales volumes. The exchange differences gain stood at 61 Crore as compared to exchange loss of 4 Crore in the previous year.

7. Profit / (loss)

The consolidated EBITDA before exchange differences is 828 Crore as compared to 539 Crore in the previous year. The consolidated EBITDA after exchange difference is 889 Crore as compared to EBITDA of 534 Crore in the previous year. The same can be attributed to continued good operating performance in OMS despite Covid 19, higher sales volumes in WTG business, fixed cost reduction and operational e ciencies. Similarly consolidated EBIT stood at 630 Crore as compared to 276 Crore in the previous year.

Loss before tax and exceptional item stands at 83 Crore as compared to 700 Crore in the previous year. There is gain in exceptional items of 83 Crore during the year as compared to 805 Crore in the previous year. Net loss after tax stands at 166 Crore as compared to profit of 100 Crore in the previous year. Share of loss of joint venture is 10 Crore as compared to profit of 3 Crore in the previous year.

As a result of the foregoing factors, net loss for the year stands at 177 Crore as compared to net profit of 104 Crore in the previous year.

E. Key financial ratios

Particulars March 31, 2022 March 31, 2021
Debtors turnover ratio@ 5.08 2.58
Inventory turnover ratio@ 1.98 0.75
Interest coverage ratio@ 0.90 0.29
Current ratio* 1.20 1.27
Debt-equity ratio* (1.79) (2.02)
Operating profit margin (%) * 13.64 16.22
Net profit margin (%)$ (2.71) 3.14
Return on net worth (%)$ 4.96# (3.05)

* There is no significant change (i.e. change of more than 25% as compared to the immediately previous financial year) in the key financial ratios.

@ Revenue growth along with improved liquidity and efficiency in working capital has resulted in improvement of ratio.

$ The operating profit has increased in the current year. However, ratios for the current year are appearing deteriorated as compared to the last year on account of tax charge in the current year and exceptional gains in the previous year.

# Since there is loss during the year and negative net worth, the ratio appears to be positive.

Detailed explanation of ratios

1. Debtors turnover ratio

The above ratio is used to quantify a Companys effectiveness in collecting its receivables or money owed by customers. It is calculated by dividing turnover by average trade receivables.

2. Inventory turnover ratio

Inventory turnover is the number of times a Company sells and replaces its inventory during a period. It is calculated by dividing cost of goods sold by average inventory.

3. Interest coverage ratio

The interest coverage ratio measures how many times a Company can cover its current interest payment with its available earnings. It is calculated by dividing earnings before interest and tax (‘EBIT) by interest cost.

4. Current ratio

The current ratio is a liquidity ratio that measures a Companys ability to pay short-term obligations or those due within one year. It is calculated by dividing the current assets by current liabilities.

5. Debt-equity ratio

The ratio is used to evaluate a Companys financial leverage. It is a measure of the degree to which a Company is financing its operations through debt versus wholly owned funds. It is calculated by dividing a Companys total debt by its shareholders equity.

6. Operating profit margin

Operating profit margin is a profitability ratio used to calculate the percentage of profit a Company generates from its operations. It is calculated by dividing the EBITDA by turnover.

7. Net profit margin

The net profit margin is equal to how much net profit is generated as a percentage of revenue. It is calculated by dividing the net profit for the year by turnover.

8. Return on net worth

It is a measure of profitability expressed in percentage. It is calculated by dividing the net profit for the year by shareholders equity.

Cautionary statement

Suzlon Group has included statements in this discussion, that contain words or phrases such as "will", "aim", "likely result", "believe", "expect", "will continue", "anticipate", "estimate", "intend", "plan", "contemplate", "seek to", "future", "objective", "goal", "project", "should", "will pursue" and similar expressions or variations of such expressions that are "forward-looking statements". All forward-looking statements are subject to risks, uncertainties and assumptions that could cause actual results to differ materially from those contemplated by the relevant forward-looking statement. Important factors that could cause actual results to differ materially from the Suzlon Groups expectations include:

• Variation in the demand for electricity;

• Changes in the cost of generating electricity from wind energy and changes in wind patterns;

• Changes in or termination of policies of state governments in India that encourage investment in power projects;

• General economic and business conditions in India and other countries;

• Suzlons ability to successfully implement its strategy, growth and expansion plans and technological initiatives;

• Changes in the value of the INR and other currencies;

• Potential mergers, acquisitions or restructurings and increased competition;

• Changes in laws and regulations;

• Changes in political conditions;

• Changes in the foreign exchange control regulations;

• Changes in the laws and regulations that apply to the wind energy industry, including tax laws

For and on behalf of the Board of Directors
Tulsi R.Tanti
Place : Pune Chairman and Managing Director
Date : May 25, 2022 DIN: 00002283