Suzlon Energy, India’s biggest maker of wind-turbine generators, quashed a Wall Street Journal report that REpower has rejected its prototype for blades for a China-based project.
“Suzlon has not delivered any blades to REpower. Those blades are still in the prototype phase of the manufacturing process, which includes rigorous testing of the blades’ ability to perform reliably and safely,” a company release said.
The Wall Street Journal report, citing unnamed people familiar with the matter, said REpower Systems has rejected Suzlon’s prototype for initial blades for a project in China as they did not meet REpower’s quality standards.
Shares of Suzlon ended down 18.3% at Rs 56.15 on the Bombay Stock Exchange on Thursday.
Suzlon shares had plunged 84% last year as some US customers cancelled orders after the company’s blades cracked.
However, Sumant Sinha, chief operating officer, Suzlon Energy, said there were no blade concerns. “Our products are good and reliable,” he said.
“In this particular project, we are a component supplier for REpower wherein it is their design and their standards. They are also training our men,” Sinha said. “We have to forward them our prototypes and, based on their requirements, they suggest changes to it. This is a normal party-supplier relationship and takes place every time an order is to be executed,” he added.
Sinha said since the blade design was REpower’s, the manufacturing process required Suzlon to adjust the specifications and processes of existing manufacturing facility in Tianjin, China, to meet the REpower design specifications.
Sinha said the issues in the China project related to late delivery and not technical capabilities. He said the company is working vigorously on blade-prototype testing for the remainder of the China project, after which it hopes to move to full-scale production.
He added that Suzlon will only commence serial manufacturing and delivery of blades after it completes this prototype phase and can guarantee the quality of the product.
Besides, Sinha said, the value of order for the said project is very small and the “issue is not material.”
Meanwhile Bloomberg reported that, Suzlon, which currently holds 74% in REpower, is seeking to reschedule payments to Portugal’s Martifer SGPS SA for buying its 22.4% stake in the German firm.
“We are in discussions with Martifer to come up with a mutually acceptable payment schedule, which may or may not be different from the current schedule,” Sinha said.
The company, which plans to use its own cash and debt to make the payment, won’t need to borrow money if it gets more time.
“That will take the stress away from the system and then we can make the payment completely from internal accruals,” Sinha said. “If they don’t agree, we have to be prepared to make the payment. From our side, we’re prepared.”
Suzlon needs to pay 30 million euros ($40 million) this month and 175 million euros in May to Martifer, the company said in a statement to the Bombay Stock Exchange on December 16. Suzlon will own about 91% in Hamburg-based Repower after completing the transaction.
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