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Notes to Accounts of Suzlon Energy Ltd.

Mar 31, 2016

1. Corporate Debt Restructuring (''CDR'')

During the financial year ended March 31, 2013, Suzlon Energy Limited (''SEL'') along with its 8 identified domestic subsidiaries collectively referred to as the ''Borrowers'' and individually as the ''Borrower'', had restructured various financial facilities (restructured facilities) from the secured CDR lenders under the Corporate Debt Restructuring Proposal. Pursuant to approval of CDR Package by the CDR Empowered Group (''CDR EG''), the implementation of the CDR package was formalised upon execution of Master Restructuring Agreement (MRA) between the CDR Lenders and Borrowers during the financial year ending March 31, 2013. The MRA inter-alia covers the provisions to govern the terms and conditions of restructured facilities. Suzlon Global Services Limited (SGSL) was also included as Borrower under the CDR package during financial year ended March 31,2015.

The key features of the CDR package are as follows:

a. Repayment of Restructured Term Loans (''RTL'') after moratorium of 2 years from cut-off date in 32 structured quarterly instalments commencing from December 2014 to September 2022. The moratorium period of 2 years has expired on September 30,2014.

b. Conversion of various irregular / outstanding / devolved financial facilities into Working Capital Term Loan (''WCTL'') and the repayment terms of which are in similar to that of RTL with enabling mandatory prepayment obligations on realisation of proceeds from certain asset sale and capital infusion.

c. Restructuring of existing fund based and non-fund based working capital facilities, subject to renewal and reassessment everyyear.

d. Unpaid interest due on certain existing facilities on cut-off date, interest accrued during the moratorium period on RTL and WCTL and interest on fund based working capital facilities for certain period were to be converted into Funded Interest Term Loans (''FITLs'') and which were to be converted into equity shares of the Company.

e. The rate of interest on RTL, WCTL, FITL and fund based working capital facilities were reduced to 11.00% per annum with reset option in accordance with MRA.

f. Waiver of existing events of defaults, penal interest and charges etc. in accordance with MRA.

g. Contribution of Rs 250.00 Crore in SEL by promoters, their friends, relatives and business associates as stipulated, conversion of existing promoter''s loan of Rs 145.00 Crore into equity shares/CCDs at the price determined in compliance with Securities and Exchange Board ofIndia.

Other key features of the CDR Package are:

a. Right of Recompense to CDR Lenders for the relief and sacrifice extended, subject to provisions of CDR Guidelines and MRA and;

b. SEL to issue equity shares in lieu of sacrifice of the CDR Lenders for the first three years from cut-off date at the price determined incompliance with Securities and Exchange Board of India, if exercised by CDR lenders.

In case of financial facilities availed from the non-CDR Lenders, the terms and conditions shall continue to be governed by the provisions of the existing financing documents.

During the financial year ended March 31, 2015, the restructuring proposal with Power Finance Corporation (''PFC'') which is a non-CDR lender was approved by CDR EG. As per the terms of restructuring, the PFC has converted certain portion of interest accrued into FITLI and FITLII. Repayment of outstanding term loan would be in accordance with terms and conditions similar to those of RTL, whereas repayment of FITLI would be made in 32 equal quarterly instalments and should be co-terminus with RTL. Repayment of FITL II would be made in 12 quarterly instalments from December 2022 to September 2025. To give effect to the restructuring a bilateral agreement between the Borrower and PFC was entered into on August 12,2015.

2. Recompense

Suzlon Energy Limited and its certain specified subsidiaries (collectively ''the Group'') and the CDR lenders executed a Master Restructuring Agreement (''MRA'') during the financial year ending March 31, 2013. The MRA as well as the provisions of the Master Circular on Corporate Debt Restructuring issued by the Reserve Bank of India, gives a right to the CDR lenders to get a recompense of their waivers and sacrifice made as part of the CDR Proposal. The recompense amount payable by the Group is contingent upon the exit by the Borrowers which is inter-alia dependent upon improved financial performance and various factors, the outcome of which currently is materially uncertain. Further, as mentioned in Note 4 to the financial statements, the Borrowers have an obligation to issue equity shares in lieu of the sacrifice for the first three years from cut-off date. In case of CDR lenders who have exercised the right for issuance of equity shares for the first three years and to whom the equity shares have been issued, as a part of recompense, the cost is amortised over the period of sacrifice and the cost amortization is completed by March 31,2016. Incase of CDR lenders who have not exercised this right, the recompense amount due to the date of this balance Sheet is not ascertainable.

3. Sale of Senvion SE

On January 22, 2015, AE Rotor Holding B.V. a step-down wholly owned subsidiary of the Company and its subsidiaries signed a binding agreement with Centerbridge Partners LP, USA to sell 100% stake in Senvion SE. The closing was subject to customary closing conditions which got concluded on April 29, 2015. Accordingly, the Company has made an impairment provision of Rs 426.69 Crore (Rs 5,920.00 Crore) in the value of investments in an overseas subsidiary and disclosed the same under exceptional items.

4. Proposed merger

The Board of Directors of the Company have approved the Composite Scheme of Amalgamation and Arrangement between SE Blades Limited ("SEBL"), Suzlon Wind International Limited ("SWIL"), SE Electricals Limited ("SEEL"), Suzlon Structures Limited ("SSL") with Suzlon Energy Limited ("SEL") and their respective shareholders and creditors ("the Scheme") under Sections 391 to 394 of the Companies Act in its meeting held on April 27, 2016. Pursuant to the proposed Scheme SEBL, SWIL and SEEL shall amalgamate with the Company, and tubular tower manufacturing division of SSL shall be de-merged and merged with the Company. The approval of this Scheme by the Board of Directors was duly reported on the stock exchanges. The Scheme and all the related documents shall be uploaded on the Company website in line with the SEBI Circular no. CIR/CFD/CMD/16/2015 dated November 30,2015. This Scheme is subject to the approval of the Honourable High Court of Gujarat and is yet to be filed with the SEBI and subsequently with the High Court of Gujarat. The Company shall duly follow the directions of the Honourable High Court of Gujarat.

5. Post employment benefits

The Company has a defined benefit gratuity plan. Every employee who has completed five or more years of service is eligible for gratuity. Gratuity is computed based on 15 days salary based on last drawn salary for each completed year of service. The scheme is partially funded with an insurance company in the form of a qualifying insurance policy.

6. Operating leases

a. Premises

The Company has taken certain premises under cancellable operating leases. However there is no escalation clause. Each renewal is at the option of lessee. There are no restrictions placed upon the company by entering into these leases. The total rental expense under cancellable operating leases during the period was Rs 9.50 Crore (Rs 6.30 Crore). The Company has also taken certain other premises under non-cancellable operating lease agreement. The lease rental charge during the year is Rs 0.44 Crore (Rs 0.44 Crore) and maximum obligations on long-term non-cancellable operating lease payable as per the rentals stated in respective agreement are as follows:

b. Premises given on lease:

During the year, the Company has entered into commercial lease of certain premises. These leases are of cancellable nature and there are no restrictions placed upon the Company by entering into these leases. Lease rental income recognised in statement of profit and loss for the period is Rs 6.73 Crore (Rs 4.35 Crore).

7. Segment information

As permitted by paragraph 4 of Accounting Standard-17 (AS -17), ''Segment Reporting'', if a single financial report contains both consolidated financial statements and the separate financial statements of the parent, segment information need be presented only on the basis of the consolidated financial statements. Thus, disclosures required by AS 17 are given in consolidated financial statements.

8. The table below provides the summary of transaction and outstanding balances between the Company and the Investor Group as referred to in Note 8(i)(b) to the financial statements. The Company based on legal opinion believes that the Investor Group, severally or jointly, does not exercise significant influence on the Company and hence the members of the Investor Group are not a related party in accordance with AS-18 ''Related Party Disclosure''. However, as a matter of abundant caution following disclosure is being made:

The loan taken from Aditya Medisales Limited is pursuant to the working capital agreements executed with the Investor Group. The Company and its subsidiaries has also obtained support from Lakshdeep Investments & Finance Private Limited in relation to fund based and non-fund based facilities availed of, pursuant to the said working capital agreements.

The Company had executed a term sheet for setting up of a joint venture entity with the investor group with an objective to develop wind power projects as an independent power producer.

9. The employee benefits expense and other expenses includes expenses of Rs 11.48 Crore (Rs 7.24 Crore) pertaining to research and development and quality assurance expenses.

10. Derivative instruments and unhedged foreign currency exposure

a. Derivative instruments

Forward contract outstanding as at balance sheet date:

EUR Nil USD Nil (Sell EUR398,385,213) (Buy USD 455,433,364) Hedge for forex loans and receivables

EUR Nil USD Nil (Sell EUR386,614,787) (Buy USD 425,824,935) Hedge for forex investments

USD Nil (Sell USD 455,433,364) Hedge for forex loans and receivables

USD Nil (Sell USD412,566,635) Hedge for forex investments

Sell USD 55,000,000 (USD Nil) Hedge of forex USD payables

Sell USD 29,520,000 (USD Nil) Hedge of forex USD borrowings

39. Disclosure required under Sec 186(4) of the Companies Act, 2013

For details of loans and guarantees given to related parties refer Note 32 and Note 36.

For details of securities provided on behalf of borrowers under the CDR package refer Note 4 and Note 10(I). For details of investments made refer Note 15.

11. Deferral of exchange differences

The Company has, consequent to the notification issued by the Ministry of Corporate Affairs on December 29, 2011 giving an option to the companies to amortise the exchange differences pertaining to long term foreign currency monetary items up to March 31, 2020 (from March 31, 2012 earlier), adopted the said option given under paragraph 46A of Accounting Standard 11. Accordingly, the Company has revised the amortisation period for such items to the maturity of the long term foreign currency monetary items (all before March 31,2020).

Net foreign exchange loss aggregating Rs 112.66 Crore (Rs 271.32 Crore) on long term foreign currency monetary items has been adjusted in the foreign currency monetary item translation difference account during the year. Further, foreign exchange loss aggregating Rs 74.20 Crore (Rs 95.19 Crore) have been amortised during the year.

12. Prior year amounts have been reclassified wherever necessary to conform with currentyear presentation. Figures in the brackets are in respect ofthe previous year.


Mar 31, 2015

1. Corporate information

Suzlon Energy Limited (''SEL'' or the ''Company'') having CIN: L40100GJ1995PLC025447 is a public company domiciled in India. Its shares are listed on two stock exchanges in India. The Company is primarily engaged in the business of manufacturing of wind turbine generators (''WTGs'') and related components of various capacities.

2. Basis of preparation

The financial statements of the Company have been prepared in accordance with generally accepted accounting principles in India (Indian GAAP). The Company has prepared these financial statements to comply in all material respects with the accounting standards notified under section 133 of the Companies Act 2013 read together with paragraph 7 of the Companies (Accounts) Rules 2014. The financial statements have been prepared on an accrual basis and under the historical cost convention, except in case of assets for which provision for impairment is made and derivative instruments which have been measured at fair value.

The accounting policies adopted in the preparation of financial statements are consistent with those of previous year, except for the change in accounting policy explained below.

3. Corporate Debt Restructuring (''CDR'')

During the financial year ended March 31, 2013, Suzlon Energy Limited (SEL) along with its 7 identified domestic subsidiaries collectively referred to as the ''Borrowers'' and individually as the ''Borrower'', had restructured various financial facilities (restructured facilities) from the secured CDR lenders under the Corporate Debt Restructuring Proposal. Pursuant to approval of CDR Package by the CDR Empowered Group (''CDR EG''), the implementation of the CDR package was formalised upon execution of Master Restructuring Agreement (MRA) between the CDR Lenders and Borrowers during the financial year ending March 31, 2013. The MRA inter-alia covers the provisions to govern the terms and conditions of restructured facilities. Suzlon Global Services Limited was included as Borrower under the CDR package.

The key features of the CDR package are as follows:

a. Repayment of Restructured Term Loans (''RTL'') after moratorium of 2 years from cut-off date in 32 structured quarterly instalments commencing from December 2014 to September 2022. The moratorium period of 2 years has expired on September 30, 2014.

b. Conversion of various irregular/outstanding/devolved financial facilities into Working Capital Term Loan (''WCTL'') and the repayment terms of which are in similar to that of RTL with enabling mandatory prepayment obligations on realisation of proceeds from certain asset sale and capital infusion.

c. Restructuring of existing fund based and non-fund based working capital facilities, subject to renewal and reassessment every year.

d. Unpaid Interest due on certain existing facilities on cut off date, interest accrued during the moratorium period on RTL and WCTL and interest on fund based working capital facilities for certain period were to be converted into Funded Interest Term Loans (''FITLs'') and which were to be converted into equity shares of the Company.

e. The rate of interest on RTL, WCTL, FITL and fund based working capital facilities were reduced to 11% per annum with reset option in accordance with MRA.

f. Waiver of existing events of defaults, penal interest and charges etc. in accordance with MRA.

g. Contribution of Rs 250.00 Crore in the SEL by promoters, their friends, relatives and business associates in lieu of bank sacrifice in the form of equity shares/CCDs including conversion of existing promoter''s loan of Rs 145.00 Crore into equity shares/CCDs at the price determined in compliance with Securities and Exchange Board of India.

Other key features of the CDR Package are:

a. Right of Recompense to CDR Lenders for the relief and sacrifice extended, subject to provisions of CDR Guidelines and MRA and;

b. SEL issued equity shares in lieu of sacrifice of the CDR Lenders for the first three years from cut off date at the price determined in compliance with Securities and Exchange Board of India, if demanded by CDR lenders.

In case of financial facilities availed from the non-CDR Lenders, the terms and conditions shall continue to be governed by the provisions of the existing financing documents.

During the year ended March 31, 2015, the restructuring proposal with Power Finance Corporation (''PFC'') which is a non-CDR lender was approved by CDR EG. As per the terms of restructuring, the PFC has converted certain portion of interest accrued into FITL I and FITL II. Repayment of outstanding term loan will be in accordance with terms and conditions similar to those of RTL, whereas repayment of FITL I will be made in 32 equal quarterly instalments and shall be co-terminus with RTL. Repayment of FITL II will be made in 12 quarterly instalments from December 2022 to September 2025.

4. Recompense

Suzlon Energy Limited and its certain specified subsidiaries (collectively ''the Group'') and the CDR lenders executed a Master Restructuring Agreement (''MRA'') during the financial year ending March 31, 2013. The MRA as well as the provisions of the Master Circular on Corporate Debt Restructuring issued by the Reserve Bank of India, gives a right to the CDR lenders to get a recompense of their waivers and sacrifice made as part of the CDR Proposal. The recompense amount payable by the Group is contingent on various factors including improved performance of the Company and many other conditions, the outcome of which currently is materially uncertain. Further, as mentioned in Note 4 to the financial statements, the Borrowers have an obligation to issue equity shares in lieu of the sacrifice for the first three years from cut-off date, if demanded by CDR lenders. In case of CDR lenders who have exercised the right for issuance of equity shares, the cost is amortised over the period of sacrifice. In case of CDR lenders who have not exercised this right, the recompense amount due to the date of this balance sheet is not ascertainable.

5. Restructuring of foreign currency convertible bonds

On June 17, 2014, the Company entered into consent solicitation memorandum, with representative of the bond holders. As per consent solicitation memorandum, bond holders had given consent that if the requisite majority of the bond holders pass the resolution, then Company can issue new bonds to replace existing FCCB liability, redemption premium, coupon interest and default interest on FCCBs.

On July 15, 2014, pursuant to the approvals received from RBI, the CDR EG, the holders of the existing bonds and the Board of Directors of the Company, the Company approved the allotment of restructured bonds amounting to USD 546.92 Million to the holders of the existing bonds in accordance with the terms of the consent solicitation memorandum and applicable laws and regulations. Pursuant to the consent solicitation memorandum, the restructured bonds will mature on July 16, 2019 and the existing 0% October 2012 Series, 7.5% October 2012 Series and 0% July 2014 Series would cease to exist. In respect of the existing USD 175 Million 5% April 2016 Series, USD 146.20 Million of the principal amount have also been substituted by the restructured bonds and USD 28.80 Million of the principal amount remain outstanding. In view of this the foreign currency monetary item translation difference account (''FCMITDA'') relating to restructured bonds of 5% April 2016 Series amounting to Rs 103.43 Crore has been charged off in the statement of profit and loss and disclosed under exceptional items.

6. Sale of Senvion SE

On January 21, 2015, AE Rotor Holding B.V. a step-down wholly owned subsidiary of the Company and its subsidiaries signed a binding agreement with Centerbridge Partners LP, USA to sell 100% stake in Senvion SE, for consideration of Euro 1,000 Million and future earn out of up to Euro 50 Million. Post regulatory and customary clearance, the deal has been concluded on April 29, 2015. Accordingly, the Company has made an impairment provision of Rs 5,920.00 Crore in the value of investments and disclosed the same under exceptional items. The future earn out of EURO 50 Million is not considered as part of sale consideration as it is subject to conditions.

7. Going Concern

The matter of emphasis reported by the auditors in the previous several quarters on account of uncertainty of the Company to continue as going concern has been resolved due to various positive developments, primarily on account of sale of Senvion SE aggregating to Euro 1,000 Million and preferential allotment to investor group aggregating to Rs 1,800 Crore. These developments have infused sufficient liquidity in the business of the Company which was earlier lacking and accordingly, the uncertainty of the Company to continue as going concern is resolved.

8. On March 29, 2014, the Company had sold its Operation and Maintenance ("OMS") Business Undertaking to one of its subsidiaries, Suzlon Global Services Limited (''SGSL'') (formerly SISL Green Infra Limited) on a slump sale basis. Accordingly, the financial statement as at and for the year ended March 31, 2015 are to that extent not comparable with the financial statements of the prior periods presented.

b. Terms/rights attached to equity shares

The Company has only one class of equity shares having a par value of Rs 2 each. Each holder of equity shares is entitled to one vote per share except for the underlying depository shares held against the Global Depository Receipts (''GDRs'').

Holders of the GDR have no voting rights with respect to the equity shares represented by the GDRs. Deutsche Bank Trust Company Americas (the ''Depository''), which is the shareholder on record in respect of the equity shares represented by the GDRs, will not exercise any voting rights in respect of the equity shares against which GDRs are issued, unless it is required to do so by law. Equity shares which have been withdrawn from the Depository facility and transferred on the Company''s register of members to a person other than the Depository, ICICI Bank Limited (the ''Custodian'') or a nominee of either the Depository or the Custodian may be voted by the holders thereof.

As regard the shares which did not have voting rights as on March 31, 2015 are GDRs – 2,114,631 / (equivalent shares – 8,458,524) and as on March 31, 2014 are GDRs – 1,791,178 / (equivalent shares – 7,164,712).

The Company declares and pays dividends in Indian rupees. The dividend proposed by the Board of Directors is subject to approval of the shareholders in the ensuing Annual General Meeting.

In the event of liquidation of the Company, the holder of equity shares will be entitled to receive remaining assets of the Company, after distribution of all preferential amounts. The distribution will be in proportion to the number of equity shares held by the shareholders.

d. Shares reserved for issue under options

For details of shares reserved for issue under the employee stock option (ESOP) plan of the Company, Note 31(b), under heading of "Closing balance".

For details of shares reserved for issue on conversion of FCCBs, refer Note 12(II)(a) for terms of conversion/ redemption.

For details of shares reserved for issue on conversion of Funded Interest Term Loan into equity shares or compulsory convertible debentures and issue of equity shares in lieu of sacrifice of the CDR Lenders, refer Note 4(d) for terms of conversion. The shares were issued during the current year. There are no shares reserved for issue under options as at the balance sheet date.

For details of shares reserved for issue on conversion of existing promoter loans and promoter contribution in lieu of bank sacrifice and to certain vendors, refer Note 4(g). The shares were issued during the current year. There are no shares reserved for issue under options as at the balance sheet date.

For details of shares reserved for issue to an Investor Group, refer Note 10(ii) for terms of issue.

- The Company on February 13, 2015 signed a Shareholder Agreement ("agreement") with an Investor Group in terms of which the Investor Group agreed to subscribe to 100 Crore equity shares at the rate of Rs 18 per shares aggregating to Rs 1,800 Crore. This is in addition to shares to be acquired under an Open Offer under SEBI takeover regulations. Subsequent to the year-end and pending completion of the Open Offer, the Company has allotted 100 Crore equity shares to this Investor Group in terms of approval granted by the Competition Commission of India vide its letter dated May 01, 2015.The key important terms of the Agreement with the Investor Group are as follows;

- Right to appoint Directors till the time the shareholding percentage of the Investor Group is in excess of 5 %. The percentage holding of the investor group shall be calculated excluding further issue of equity shares to third parties, except right issues.

- There are certain decisions specified in the Agreement which need a Unanimous Vote of the Investor Group and the Promoter in writing.

- The Investor Group has irrevocably agreed that it will exercise voting rights, including at General Meetings or Board Meetings, in accordance with the recommendations provided by the Main Promoter (except for Unanimous vote items where it will have sole discretion) with a view to ensuring that the control of the Company in all respects including control over management and day to day operations shall remain with the Promoters.

- The Investor Group and the Promoters of the Company shall be considered as ''persons acting in concert'' under regulation 2(1)(q) of the SEBI Takeover regulations based on the Voting Arrangement.

- If the Promoters decide to transfer any of their shareholding in the Company, they shall first offer these to the Investor Group.

- If the Investor Group decide to transfer any of their shareholding in the Company, they shall first offer these to the Promoter Group.

- The Investor Group shares shall be subject to a lock-in period applicable under applicable regulations or one-year whichever is later.

(iii) Issue of shares post March 31, 2015

Apart from the amount shown as share application money as on March 31, 2015, the Company issued 0.75 Crore equity shares at Rs 15.46 each aggregating to Rs 11.60 Crore to bondholders, post March 31, 2015.

I. The details of security for the secured loans are as follows:

(i) In case of financial facilities from CDR lenders in accordance with MRA and non-CDR lenders, RTL, WCTL, FITL aggregating Rs 5,281.11 Crore (Rs 5,301.24 Crore) of which Rs 3,355.12 Crore (Rs 5,070.93 Crore) classified as long- term borrowings and Rs 1,925.99 Crore (Rs 230.31 Crore) classified as current maturities of long-term borrowings, fund based working capital facilities of Rs 2,013.65 Crore (Rs 1,768.48 Crore) and non fund based working capital facilities are secured by first pari passu charge on all chargeable present and future tangible/intangible movable assets of each of the Borrowers, first charge on all chargeable present and future immovable assets (excluding the identified properties) of each of the Borrowers, first charge on all present and future chargeable current assets of each of the Borrowers, first charge over Trust and Retention Account (''TRA'') and other bank accounts of the Borrowers, pledge of equity shares held by SEL in its 8 Indian subsidiaries which are forming part of the Borrowers, negative lien over the equity shares held by SEL in SE Forge Limited, pledge on shares of Suzlon Energy Limited, Mauritius (''SELM'') held by SEL, negative lien over the equity shares of certain overseas subsidiaries of SEL held by its step down overseas subsidiaries, pledge of certain equity shares of SEL held by its promoters, personal guarantee of the managing director of SEL and limited personal guarantee of one director of SSL.

In addition to above, the loans outstanding as on March 31, 2014, were secured by pledge of shares of certain overseas subsidiaries held by SEL''s step down overseas subsidiaries including pledge of shares of Senvion SE and guarantee by an overseas subsidiary. Post April 29, 2015, the pledged shares and guarantee are ceded from the charge.

ii) Rs 174.78 Crore (Rs 210.85 Crore) secured by way of priority repayment against the specific receivables being financed by certain lenders along with sharing of securities under CDR Package and personal guarantee of the managing director of SEL and limited personal guarantee of one director of SSL.

iii) Rs 408.53 Crore (Rs 236.45 Crore) secured by way of priority repayment against the specific receivables being financed by a lender along with sharing of securities under CDR Package and personal guarantee of the managing director of SEL.

iv) Rs 150.00 Crore (Rs Nil) secured by way of priority repayment on pari passu basis against the specific receivables being financed by a lender and a pari passu charge on the stock and receivables pertaining to specific projects with the lenders for the facility mentioned in point (v) below.

v) Rs 681.00 Crore (Rs Nil) secured by way of priority repayment on pari passu basis against the specific receivables being financed by a lender and a pari passu charge on the stock and receivables pertaining to specific projects with the lender for the facility mentioned in point (iv) above, corporate guarantee of a company and pledge of shares of a company.

vi) Vehicle loan of Rs 0.62 Crore (Rs Nil), of which Rs 0.62 Crore (Rs Nil) classified as current portion of long term borrowings is secured against vehicle under hire purchase contract.

II. Foreign currency convertible bonds

Pursuant to the approval of its Board of Directors, CDR EG, RBI and bond holders of each of its outstanding FCCB series, the Company successfully restructured each of its existing FCCB series, wherein, 100% of USD 200 Million 0% October 2012 bonds, USD 20.80 Million 7.5% October 2012 bonds and USD 90 Million 0% July 2014 bonds got fully substituted by the new FCCBs on July 15, 2014 and thus ceased to exist. In respect of USD 175 Million 5% April 2016 series, USD 28.80 million in principal value remain outstanding; the remaining holders opted to substitute their existing bonds with the new foreign currency convertible bonds.

* includes expenditure booked under various expenditure heads by their nature.

** This includes amount of Rs 52.09 Crore towards prior period expenses.

Performance guarantee (''PG'') represents the expected outflow of resources against claims for performance shortfall expected in future over the life of the guarantee assured. The period of performance guarantee varies for each customer according to the terms of contract. The key assumptions in arriving at the performance guarantee provisions are wind velocity, plant load factor, grid availability, load shedding, historical data, wind variation factor etc.

Operation, maintenance and warranty (''O&M'') represents the expected liability on account of field failure of parts of WTG and expected expenditure of servicing the WTGs over the period of free operation, maintenance and warranty, which varies according to the terms of each sales order.

Liquidated damages (''LD'') represents the expected claims which the Company may need to pay for non-fulfilment of certain commitments as per the terms of the respective sales/purchase contracts. These are determined on a case to case basis considering the dynamics of each contract and the factors relevant to that sale.

*On February 13, 2015, the Company entered into a Share Subscription Agreement ("SSA") for preferential allotment of equity shares to an investor group. The Company has received funds amounting to Rs 1,800 Crore as part of this process on May 14, 2015 and allotment of shares was completed on May 15, 2015. The agreement was irrevocable and binding and the shareholder approval for the same was obtained on March 19, 2015. Further, only Competition Commission of India (CCI) approval was pending as at March 31, 2015 which was subsequently obtained on May 1, 2015. Accordingly, as at March 31, 2015, the Company has recognised share application money receivable in the financial statements with a corresponding credit to share application money account.

**Interest includes interest receivable from Suzlon Global Services Limited of Rs 148.64 Crore (Rs Nil) on consideration for sale of business undertaking.

***The Company incurs expenditure on development of infrastructure facilities for power evacuation arrangements as per authorization of the State Electricity Boards (''SEB'')/Nodal agencies in Maharashtra and Tamil Nadu. The expenditure is reimbursed, on agreed terms, by the SEB/Nodal agencies. In certain cases, the Company recovers the cost from customers in the ordinary course of business. The cost incurred towards development of infrastructure facility inventory is reduced by the reimbursements received from SEB/Nodal agencies and the net amount is shown as ''Infrastructure Development Asset'' under other current assets. The excess of cost incurred towards the infrastructure facilities net of reimbursement received from SEB/Nodal agencies/customers is charged to statement of profit and loss as infrastructure development expenses. Other assets include Rs 385.13 Crore (Rs 366.63 Crore) towards infrastructure development which is similar in nature of power evacuation inventory.

b. WTG''s

Assets given on lease :

During the year ended March 31, 2014, the Company had sold some of its WTG''s which were let out on operating lease earlier. The lease charges were on the basis of net electricity generated and delivered. Lease rental income recognised in statement of profit and loss for the period is Rs Nil (Rs 2.60 Crore) and depreciation charged to statement of profit and loss is Rs Nil (Rs 1.00 Crore).

c. Premises given on lease:

During the year, the Company has entered into commercial lease of certain premises. These leases are of cancellable nature and there are no restrictions placed upon the Company by entering into these leases. Lease rental income recognised in statement of profit and loss for the period is Rs 4.35 Crore (Rs Nil).

9. Segment information

As permitted by paragraph 4 of Accounting Standard-17 (AS-17), ''Segment Reporting'', if a single financial report contains both consolidated financial statements and the separate financial statements of the parent, segment information need be presented only on the basis of the consolidated financial statements. Thus, disclosures required by AS-17 are given in consolidated financial statements.

b. Other related parties with whom transactions have taken place during the year:

i. Entities where Key Management Personnel (''KMP'') / Relatives of Key Management Personnel (''RKMP'') have significant influence:

Sarjan Realities Limited, Aspen Infrastructures Limited, Shubh Reality (South) Limited, Tanti Holdings Private Limited, Suzlon Foundation, Girish R. Tanti (HUF), Suruchi Holdings Private Limited, Sugati Holdings Private Limited, Synew Steel Limited, Salene Power Infrastructure Limited, Samanvaya Holdings Private Limited, PT Wind Energy, Synefra Infrastructures Limited, SE Freight & Logistics India Pvt. Ltd, Sugati Beach Resort Pvt. Ltd, Spectra Management Consultancy Private Limited, Indian Wind Energy Association, Windforce Management Services Private Limited, Suzlon Green Power Ltd and Sandla Wind Project Private Limited

ii. Key Management Personnel of Suzlon Energy Limited:

Tulsi R. Tanti,Kirti J Vagadia, Amit Agarwal and Hemal Kanuga.

iii. Relatives of Key Management Personnel of Suzlon Energy Limited:

Rambhaben Ukabhai, Jitendra R. Tanti, Sanyogita P. Tanti, Nidhi T. Tanti, Vinod R. Tanti and Girish R. Tanti.

iv. Employee funds:

Suzlon Energy Limited – Superannuation Fund.

Suzlon Energy Limited – Employees Group Gratuity Scheme.

Note: The Company has given various letter of supports, which otherwise is not a guarantee, towards financing operations of its domestic and overseas subsidiaries and maintaining their financial creditworthiness, as and when required during the last fiscal year; the amount of which are not determinable as at Balance Sheet date

10. Contingent liabilities

March 31, 2015 March 31, 2014

Guarantees given on behalf of subsidiaries in respect of loans / guarantee granted 251.14 847.79 to them by banks / financial institutions

Tax related matters pending in appeal* 104.82 88.18

Compensation payable in lieu of bank sacrifice refer Note 5 281.93

Others 14.18 16.94

* includes demand from tax authorities for various matters. The Company / tax department has preferred appeals on these matters and the same are pending with various appellate authorities. Considering the facts of the matters, no provision is considered necessary by management.

A few law suits have been filed on the Company and few subsidiaries of the Company by some of their suppliers for disputes in fulfilment of obligations as per supply agreements. Further, few customers of the Company has disputed certain amount as receivable which the Company believes is contractually not payable. These matters are pending for hearing before respective courts, the outcome of which is uncertain. The management has provided for an amount as a matter of prudence which it believes shall be the probable outflow of resources.

The Company along with other borrowers has provided securities to secure Stand-by Letter of Facilities ("SBLC") facilities of USD 655.41 Million issued for securing covered bonds issued by AE Rotor Holding B.V. a wholly owned subsidiary. The borrowers are also obliged to provide corporate guarantee of USD 117.45 Million in relation to above SBLC to certain lenders.

11. Disclosure required under Sec 186(4) of the Companies Act, 2013

For details of loans and guarantees given to related parties refer Note 34 and Note 36.

For details of securities provided on behalf of Borrowers under the CDR package refer Note 4 and Note 12(I).

For details of investments made refer Note 17.

12. Deferral of exchange differences

The Company has, consequent to the notification issued by the Ministry of Corporate Affairs on December 29, 2011 giving an option to the companies to amortise the exchange differences pertaining to long term foreign currency monetary items up to March 31, 2020 (from March 31, 2012 earlier), adopted the said option given under paragraph 46A of Accounting Standard 11. Accordingly, the Company has revised the amortisation period for such items to the maturity of the long term foreign currency monetary items (all before March 31, 2020).

Net foreign exchange loss aggregating Rs 271.32 Crore (gain of Rs 227.35 Crore) on long term foreign currency monetary items has been adjusted in the foreign currency monetary item translation difference account during the year. Further, foreign exchange loss aggregating Rs 95.19 Crore (loss of Rs 23.18 Crore) have been amortised during the year. FCMITDA relating to restructured bonds of 5% April 2016 Series amounting to Rs 103.43 Crore has been charged off in the statement of profit and loss and disclosed under exceptional items.

13. Prior year amounts have been reclassified wherever necessary to conform with current year presentation. Figures in the brackets are in respect of the previous year.


Mar 31, 2014

1. Corporate information

Suzlon Energy Limited (''SEL'' or the ''Company'') is a public company domiciled in India and incorporated under the provisions of the Companies Act, 1956 (the ''Act''). Its shares are listed on two stock exchanges in India. The Company is primarily engaged in the business of manufacturing of wind turbine generators (''WTGs'') and related components of various capacities. During the year, on March 29, 2014, the Company sold its operation and maintenance business undertaking to one of its subsidiaries, Suzlon Global Services Limited (SGSL) on a slump sale basis, as part of its strategic reorganisation and its initiatives for realising business efficiencies.

Basis of preparation

The financial statements of the Company have been prepared in accordance with generally accepted accounting principles in India - "Indian GAAP". The Company has prepared these financial statements to comply in all material respects with the accounting standards notified under the Companies (Accounting Standards) Rules, 2006, (as amended) and the relevant provisions of the Companies Act, 1956 read with section 133 of the Companies Act 2013 and General Circular No.8/2014 dated April 04, 2014 issued by the Ministry of Corporate Affairs. The financial statements have been prepared on an accrual basis and under the historical cost convention, except in case of assets for which provision for impairment is made.

The accounting policies adopted in the preparation of financial statements are consistent with those of previous year.

2. Corporate debt restructuring:

During the financial year ended March 31, 2013, the Company along with its 7 identified domestic subsidiaries viz : Suzlon Structures Limited (''SSL''), Suzlon Power Infrastructure Limited (''SPIL''), Suzlon Generators Limited (''SGL''), Suzlon Gujarat Wind Park Limited (''SGWPL''), SE Electricals Limited (''SEEL''), Suzlon Wind International Limited (''SWIL'') and SE Blades Limited (''SEBL'') hereinafter collectively referred to as the ''Borrowers'' and individually as the ''Borrower'', had availed various financial facilities from the secured lenders under the Corporate Debt Restructuring Proposal, which was approved by the CDR Empowered Group (''CDR EG''). The Master Restructuring Agreement (''MRA'') between the Borrowers and the CDR Lenders has been executed, by virtue of which the restructured facilities are governed by the provisions specified in the MRA having cut off date of October 01, 2012.

The key features of the CDR Proposal are as follow:

a. Repayment of Restructured Term Loans (''RTL'') after moratorium of 2 years from cut off date in 32 structured quarterly instalments commencing from December 2014 to September 2022.

b. Conversion of various irregular/outstanding/devolved financial facilities into Working Capital Term Loan (''WCTL''). Repayment of WCTL after moratorium of 2 years from cut off date in 32 structured quarterly instalments commencing from December 2014 to September 2022, subject to mandatory prepayment obligation on realisation of proceeds from certain asset sale and capital infusion.

c. Restructuring of existing fund based and non fund based financial facilities, subject to renewal and reassessment every year.

d. Interest accrued but not paid on certain financial facilities till cut off date shall be converted into Funded Interest Term Loan (''FITL''). The interest payable on RTL and WCTL during moratorium period of 2 years from cut off date shall also be converted to FITL. FITL shall be considered as convertible facilities which shall be converted into equity shares or compulsorily convertible debentures (CCDs) in accordance with MRA.

e. The rate of interest on RTL, WCTL, FITL and fund based working capital facilities shall be 11% with reset option in accordance with MRA.

f. Waiver of existing events of defaults, penal interest and charges etc in accordance with MRA.

g. Right of Recompense to CDR Lenders for the relief and sacrifice extended, subject to provisions of CDR Guidelines and MRA.

h. The Company to issue equity shares in lieu of sacrifice of the CDR Lenders for the first three years from cut off date at the price agreed in compliance with Securities and Exchange Board of India, if demanded by CDR Lenders.

i. Contribution of Rs 250.00 Crore in the Company by promoters, their friends, relatives and business associates in lieu of bank sacrifice in the form of equity shares / CCDs including conversion of existing promoter''s loan of Rs 145.00 Crore into equity shares / CCDs at the price agreed in compliance with Securities and Exchange Board of India.

In case of financial facilities availed from the non-CDR Lenders, the terms and conditions shall continue to be governed by the provisions of the existing financing documents.

Expenditure on restructuring and refinancing of earlier financial facilities aggregating Rs 70.86 Crore has been charged off and disclosed under exceptional items during the financial year ended March 31, 2013.

During the year ended March 31, 2014, pursuant to approval of CDR EG, the borrowers approached CDR and non-CDR lenders seeking financial assistance to bridge the shortfall in working capital facilities assessed during preparation of CDR Proposal, by offering priority repayment against the specific receivables being financed by them along with sharing of securities under CDR Package, and accordingly the Company has availed loans against project specific receivables.

During the year ended March 31, 2014, the Company agreed a restructuring proposal with Power Finance Corporation (''PFC'') which is a non- CDR lender, subject to CDR EG approval. As per the restructuring, the Company converted certain portion of interest accrued to FITL - I and FITL – II. Repayment of outstanding term loan and FITL - I to PFC shall be in accordance with the CDR proposal and MRA. Repayment of FITL – II shall be made in 12 quarterly instalments from December 2022 to September 2025.

4. As per the MRA executed by the Borrowers and the CDR lenders during the financial year ended March 31, 2013 as well as the provisions of the Master Circular on Corporate Debt Restructuring issued by the Reserve Bank of India, give a right to the CDR Lenders to get a recompense of their waivers and sacrifices made as part of the CDR Proposal. The recompense payable by the borrowers is contingent on various factors including improved performance of the borrowers and many other conditions, the outcome of which currently is materially uncertain and hence the proportionate amount payable as recompense has been treated as a contingent liability. Further, as mentioned in Note 3 to the financial statement, the Company has an obligation to issue equity shares in lieu of the sacrifice for the first 3 years from cut-off date, if demanded by lenders. In case of lenders who have exercised this right the value of equity shares issued has been shown as equity share capital/share application money received, and this cost is amortised over the period of sacrifice. In case of lenders who have not exercised this right, the amount has been shown as contingent liability. The aggregate outstanding sacrifice made by CDR Lenders as per the MRA is approximately Rs 281.93 Crore (Rs 103.06 Crore) for the Company and Rs 365.33 Crore (Rs 129.32 Crore) for the borrowers.

3. The Company defaulted in repayment of amounts aggregating approximately USD 209 million (Rs 1,250.44 Crore) in respect of its unsecured FCCBs which were due in October 2012 ("October 2012 FCCBs"). This default triggered a cross default under the Company''s other existing unsecured FCCBs aggregating USD 90 million (Rs 539.24 Crore) and USD 175 million (Rs 1,048.51 Crore), (which otherwise were due in 2014 and 2016 respectively) (the "2014 and 2016 FCCBs") and accordingly these triggered potential acceleration of payments, if were demanded by a specified proportion of the 2014 and/or 2016 FCCB holders. The Trustees for the 2014 and 2016 FCCB holders have not issued any acceleration notice in respect of the 2014 and 2016 FCCBs and accordingly USD 175 million (Rs 1,048.51 Crore) has been classified as non-current liability. The Company also has overdue amounts payable to creditors and certain lenders as at March 31, 2014.

On May 03, 2014, the Company entered into a standstill agreement with an adhoc committee of FCCB holders for a cashless exchange of its existing October 2012 FCCB''s, 2014 FCCB''s and 2016 FCCB''s. The new FCCB''s are expected to have maturity period of five years and a conversion price of Rs 15.46. Further, the new FCCB''s will be interest bearing and no premium will be payable on redemption. However this agreement is subject to various approvals, including approval of Reserve Bank of India. The Company is in the process of restructuring of FCCBs. The Company is also taking various other steps to reduce costs, improve efficiencies to make its operations profitable and to arrange sufficient funds for its operations. Pending the final outcome of restructuring, though there exists material uncertainty these financial statements have been prepared on the basis that the Company will continue as a going concern, and no adjustments have been made to the carrying values or classification of assets and liabilities.

4. On March 29, 2014, the Company sold its Operation and Maintenance ("OMS") Business Undertaking to one of its subsidiaries, Suzlon Global Services Limited (''SGSL'') (formerly SISL Green Infra Limited) on a slump sale basis as part of its strategic reorganisation and its initiatives for realising business efficiencies for a consideration of Rs 2,000.00 Crore based on a valuation done by an independent firm of valuers. The amount receivable from SGSL aggregating Rs 2,000.00 Crore has been shown under "Other assets" in the Balance sheet, and the gain on sale of this division aggregating Rs 1,922.92 Crore has been shown as "Exceptional items" in the statement of profit and loss. The financial statement as at and for the year ended March 31, 2014 are to that extent not comparable with the financial statements of the prior periods presented.

b. Terms/rights attached to equity shares

The Company has only one class of equity shares having a par value of Rs 2 each. Each holder of equity shares is entitled to one vote per share except for the underlying depository shares held against the Global Depository Receipts (''GDRs'').

Holders of the GDR have no voting rights with respect to the equity shares represented by the GDRs. Deutsche Bank Trust Company Americas (the ''Depository''), which is the shareholder on record in respect of the equity shares represented by the GDRs, will not exercise any voting rights in respect of the equity shares against which GDRs are issued, unless it is required to do so by law. Equity shares which have been withdrawn from the Depository facility and transferred on the Company''s register of members to a person other than the Depository, ICICI Bank Limited (the ''Custodian'') or a nominee of either the Depository or the Custodian may be voted by the holders thereof.

As regard the shares, which did not have voting rights as on March 31, 2014 are GDRs – 1,791,178 / (equivalent shares – 7,164,712) and as on March 31, 2013 are GDRs – 1,023,173 / (equivalent shares – 4,092,692).

The Company declares and pays dividends in Indian rupees. The dividend proposed by the Board of Directors is subject to approval of the shareholders in the ensuing Annual General Meeting.

In the event of liquidation of the Company, the holder of equity shares will be entitled to receive remaining assets of the Company, after distribution of all preferential amounts. The distribution will be in proportion to the number of equity shares held by the shareholders.

d. Shares reserved for issue under options

For details of shares reserved for issue under the employee stock option (ESOP) plan of the Company, Note 28(b), under heading of "Closing balance".

For details of shares reserved for issue on conversion of FCCBs, refer Note 9 (II) (a) for terms of conversion / redemption.

For details of shares reserved for issue on conversion of Funded Interest Term Loan into equity shares or compulsory convertible debentures and issue of equity shares in lieu of sacrifice of the CDR Lenders, refer Note 3(d) for terms of conversion.

For details of shares reserved for issue on conversion of existing promoter loans and promoter contribution in lieu of bank sacrifice and to certain vendors, refer Note 3(i).

I. The details of security for the secured loans are as follows:

(i) In case of financial facilities from CDR lenders in accordance with MRA and non-CDR lenders, RTL, WCTL, FITL aggregating Rs 5,301.24 Crore (Rs 4,964.31 Crore) of which Rs 5,070.93 Crore (Rs 4,725.25 Crore) classified as long term borrowing and Rs 230.31 Crore (Rs 239.06 Crore) classified as current maturities of long term borrowing, fund based working capital facilities of Rs 1,768.48 Crore (Rs 1,543.33 Crore) and non fund based working capital facilities are secured by first pari passu charge on all chargeable present and future tangible/intangible movable assets of each of the Borrowers, first charge on all chargeable present and future immovable assets (excluding the identified properties) of each of the Borrowers, first charge on all present and future chargeable current assets of each of the Borrowers, first charge over Trust and Retention Account (''TRA'') and other bank accounts of the Borrowers, pledge of equity shares held by SEL in its 7 Indian subsidiaries which are forming part of the Borrowers, negative lien over the equity shares held by SEL in SE Forge Limited, pledge on shares of Suzlon Energy Limited, Mauritius (''SELM'') held by SEL, pledge of shares of certain other overseas subsidiaries held by SEL''s step down overseas subsidiaries including pledge of shares of Senvion SE ("Senvion"), negative lien over the equity shares of certain overseas subsidiaries of SEL held by its step down overseas subsidiaries, pledge of certain equity shares of SEL held by its promoters, guarantee of an overseas subsidiary, personal guarantee of the managing director of SEL and limited personal guarantee of one director of SSL.

(ii) Vehicle loan of Rs Nil (Rs 0.06 Crore), of which Rs Nil (Rs 0.06 Crore) classified as current portion of long term borrowing is secured against vehicle under hire purchase contract.

(iii) Rs 447.30 Crore (Rs Nil) secured by way of priority repayment against the specific receivables being financed by certain lenders along with sharing of securities under CDR Package.

b. Recent development

On May 03, 2014, the Company entered into a standstill agreement with an ad-hoc committee of FCCB holders for a cashless exchange of its existing Phase II, Phase II (new), Phase III and Phase IV bonds for a new proposed FCCB. The new FCCB''s are expected to have maturity period of five years and a conversion price of Rs 15.46. Further, the new FCCB''s will be interest bearing and no premium will be payable on redemption. However, this agreement is subject to various approvals, including approval of Reserve Bank of India.

c. Redemption premium

The Phase II, Phase II (new), Phase III and Phase IV bonds are redeemable subject to satisfaction of certain conditions mentioned in the respective offering circular and hence have been designated as monetary liability.

During the year ended March 31, 2014, the Company provided for the proportionate redemption premium of Rs 110.95 Crore (March 31, 2013: Rs 208.13 Crore) by adjusting the same against the securities premium account. Following are the scheme-wise details of the redemption premium as of the year end date:

Performance guarantee (''PG'') represents the expected outflow of resources against claims for performance shortfall expected in future over the life of the guarantee assured. The period of performance guarantee varies for each customer according to the terms of contract. The key assumptions in arriving at the performance guarantee provisions are wind velocity, plant load factor, grid availability, load shedding, historical data, wind variation factor etc.

Operation, maintenance and warranty (''O&M'') represents the expected liability on account of field failure of parts of WTG and expected expenditure of servicing the WTGs over the period of free operation, maintenance and warranty, which varies according to the terms of each sales order.

Liquidated damages (''LD'') represents the expected claims which the Company may need to pay for non-fulfilment of certain commitments as per the terms of the respective sales/purchase contracts. These are determined on a case to case basis considering the dynamics of each contract and the factors relevant to that sale.

The figures shown against ''Utilisation'' represent withdrawal from provisions credited to statement of profit and loss to offset the expenditure incurred during the year and debited to statement of profit and loss.

4.2 Other assets

*The Company incurs expenditure on development of infrastructure facilities for power evacuation arrangements as per authorization of the State Electricity Boards (''SEB'')/Nodal agencies in Maharashtra and Tamil Nadu. The expenditure is reimbursed, on agreed terms, by the SEB/Nodal agencies. In certain cases, the Company recovers the cost from customers in the ordinary course of business. The cost incurred towards development of infrastructure facility inventory is reduced by the reimbursements received from SEB/Nodal agencies and the net amount is shown as ''Infrastructure Development Asset'' under other current assets. The excess of cost incurred towards the infrastructure facilities net of reimbursement received from SEB/Nodal agencies/customers is charged to statement of profit and loss as infrastructure development expenses. Other current assets include Rs 366.63 Crore as at March 31, 2014 towards infrastructure development which is similar in nature of power evacuation inventory.

5. Post employment benefits

The Company has a defined benefit gratuity plan. Every employee who has completed five or more years of service is eligible for gratuity. Gratuity is computed based on 15 days salary based on last drawn salary for each completed year of service. The scheme is funded with an insurance company in the form of a qualifying insurance policy.

The estimated future salary increase considered in actuarial valuation, takes into account the effect of inflation, seniority, promotion and other relevant factors such as supply and demand in the employment market. The overall expected rate of return on plan assets is determined based on the market prices prevailing as on balance sheet date, applicable to the period over which the obligation is to be settled.

d) Fair value of the options

The Company applies intrinsic value based method of accounting for determining compensation cost for Scheme II to Scheme XIII. Following are the details of the amounts that would have been charged to the statement of profit and loss, rate per option, and20 c1o4st ESPS per option calculated based on ''Black-Scholes'' Model.

6. Capitalisation of expenditure

During the year, the Company has not capitalised any expenses in connection with the self-manufactured assets. Consequently, expenses disclosed under the respective notes are net of amounts capitalised by the Company.

7. Segment information

As permitted by paragraph 4 of Accounting Standard-17 (AS - 17), ''Segment Reporting'', if a single financial report contains both consolidated financial statements and the separate financial statements of the parent, segment information need be presented only on the basis of the consolidated financial statements. Thus, disclosures required by AS 17 are given in consolidated financial statements.

b. Other related parties with whom transactions have taken place during the year:

i. Entities where key management personnel (''KMP'')/relatives of key management personnel (''RKMP'') have significant influence:

Sarjan Realities Limited, Aspen Infrastructures Limited, Shubh Realities (South) Limited, Tanti Holdings Private Limited, Suzlon Foundation, Girish R. Tanti (HUF), Suruchi Holdings Private Limited, Sugati Holdings Private Limited, Synew Steel Limited, Salene Power Infrastructure Limited, Samanvaya Holdings Private Limited and Synefra Infrastructures Limited.

ii. Key management personnel of Suzlon Energy Limited:

Tulsi R. Tanti

iii. Relatives of key management personnel of Suzlon Energy Limited:

Jitendra R. Tanti, Nidhi T. Tanti, Vinod R. Tanti* and Girish R. Tanti

iv. Employee funds:

Suzlon Energy Limited – Superannuation Fund.

Suzlon Energy Limited – Employees Group Gratuity Scheme.

* Resigned as whole time director and continues to be a non-executive director w.e.f. June 01, 2012. Transactions entered into after June 01, 2012 have been disclosed as transactions with the relatives of KMP.

8. Contingent liabilities

March 31, 2014 March 31, 2013

Guarantees given on behalf of subsidiaries in respect of loans granted to them 847.79 861.44 by banks/financial institutions

Tax related matters pending in appeal* 88.18 82.83

Compensation payable in lieu of bank sacrifice 281.93 103.06

Others 16.94 11.55

* includes demand from tax authorities for various matters. The Company / tax department has preferred appeals on these matters and the same are pending with various appellate authorities. Considering the facts of the matters, no provision is considered necessary by management.

A few law suits have been filed on the Company and few subsidiaries of the Company by some of their suppliers for disputes in fulfilment of obligations as per supply agreements. The matters are pending for hearing before respective courts, the outcome of which is uncertain. The management has provided for an amount as a matter of prudence which it believes shall be the probable outflow of resources.

The borrowers have provided certain security in relation to Stand-by Letter of Credit ("SBLC") issued by lenders for securing covered bonds issued by AE Rotor Holding B.V. a wholly owned subsidiary. The Borrowers are also obliged to provide corporate guarantee of USD 117.45 Million in relation to above SBLC to certain lenders.

9. Deferral of exchange differences

The Company has, consequent to the notification issued by the Ministry of Corporate Affairs on December 29, 2011 giving an option to the companies to amortise the exchange differences pertaining to long term foreign currency monetary items up to March 31, 2020 (from March 31, 2012 earlier), adopted the said option given under paragraph 46 of Accounting Standard 11. Accordingly, the Company has revised the amortisation period for such items to the maturity of the long term foreign currency monetary items (all before March 31, 2020).

Net foreign exchange gain aggregating Rs 227.35 Crore (loss of Rs 189.39 Crore) on long term foreign currency monetary items has been adjusted in the foreign currency monetary item translation difference account during the year. Further, foreign exchange loss aggregating Rs 23.18 Crore (Rs 165.47 Crore) have been amortised during the year.

10. Prior year amounts have been reclassified wherever necessary to confirm with current year presentation.

11. Figures in the brackets are in respect of the previous year.


Mar 31, 2013

1. Corporate information

Suzlon Energy Limited (''SEL'' or the ''Company'') is a public company domiciled in India and incorporated under the provisions of the Companies Act, 1956 (the ''Act''). Its shares are listed on two stock exchanges in India. The Company is primarily engaged in the business of manufacturing of wind turbine generators (''WTGs'') and related components of various capacities.

Basis of preparation

The financial statements of the company have been prepared in accordance with generally accepted accounting principles in India (Indian GAAP). The company has prepared these financial statements to comply in all material respects with the accounting standards notified under the Companies (Accounting Standards) Rules, 2006, (as amended) and the relevant provisions of the Companies Act, 1956. The financial statements have been prepared on an accrual basis and under the historical cost convention; except in case of assets for which provision for impairment is made.

The accounting policies adopted in the preparation of financial statements are consistent with those of previous year.

2. Corporate debt restructuring:

Suzlon Energy Limited (''SEL''), Suzlon Structures Limited (''SSL''), Suzlon Power Infrastructure Limited (''SPIL''), Suzlon Generators Limited (''SGL''), Suzlon Gujarat Wind Park Limited (''SGWPL''), SE Electricals Limited (''SEEL''), Suzlon Wind International Limited (''SWIL'') and SE Blades Limited (''SEBL'') are hereinafter collectively referred to as the ''Borrowers'' and individually as the ''Borrower'', who have availed various financial facilities from the secured lenders.

At the request of the Borrowers, the Corporate Debt Restructuring Proposal (''ÇDR Proposal'') of the Borrowers was referred to Corporate Debt Restructuring Cell ("CDR Cell") by the consortium of senior lenders led by the State Bank of India. The CDR Proposal as recommended by State Bank of India, the lead lender and approved by lenders who are members of CDR Cell hereinafter referred to as the ''CDR Lenders'' was approved by CDR Empowered Group (''CDR EG'') on December 31, 2012 and communised vide Letter of Approval dated January 23, 2013, as amended/modified time to time. The cut off date for CDR Proposal was October 01, 2012. The Master Restructuring Agreement (''MRA'') between the Borrowers and the CDR Lenders has been executed, by virtue of which the restructured facilities are governed by the provisions specified in the MRA having cut off date of October 01, 2012.

The key features of the CDR Proposal are as follow:

Repayment of Restructured Term Loans (''RTL'') after moratorium of 2 year from cut off date in 32 structured quarterly instalments commencing from December 2014 to September 2022.

Conversion of various irregular/outstanding/devolved financial facilities into Working Capital Term Loan (''WCTL''). Repayment of WCTL after moratorium of 2 year from cut off date in 32 structured quarterly instalments commencing from December 2014 to September 2022, subject to mandatory prepayment obligation on realisation of proceeds from certain asset sale and capital infusion.

Restructuring of existing fund based and non fund based financial facilities, subject to renewal and reassessment every year.

Interest accrued but not paid on certain financial facilities till cut off date shall be converted into Funded Interest Term Loan (''FITL''). The interest payable on RTL and WCTL during moratorium period of 2 years from cut off date also shall be converted to FITL. FITL shall be considered as convertible facilities which shall be converted into equity shares or compulsorily convertible debentures in accordance with MRA.

The rate of interest on RTL, WCTL, FITL and fund based working capital facilities shall be 11% with annual reset option in accordance with MRA.

Waiver of existing events of defaults, penal interest and charges etc in accordance with MRA.

Right of Recompense to CDR Lenders for the relief and sacrifice extended, subject to provisions of CDR Guidelines and MRA.

The Company to issue equity shares in lieu of sacrifice of the CDR Lenders for the first three years from cut off date, if demanded by CDR Lenders.

Contribution of Rs 250 Crore in the Company by promoters in lieu of bank sacrifice in the form of equity shares / CCDs including conversion of existing promoter''s loan of Rs 145 Crore into equity shares / CCDs.

In case of financial facilities availed from the non-CDR Lenders, the terms and conditions shall continue to be governed by the provisions of the existing financing documents.

Expenditure on restructuring and refinancing of earlier financial facilities has been charged off and disclosed under exceptional items.

3. The Borrowers and the CDR Lenders executed a MRA during the year. The MRA as well as the provisions of the Master Circular on Corporate Debt Restructuring issued by the Reserve Bank of India, give a right to the CDR Lenders to get a recompense of their waivers and sacrifices made as part of the CDR Proposal. The recompense payable by the borrowers is contingent on various factors including improved performance of the borrowers and many other conditions, the outcome of which currently is materially uncertain and hence the proportionate amount payable as recompense has been treated as a contingent liability. The aggregate present value of the outstanding sacrifice made/ to be made by CDR Lenders as per the MRA is approximately Rs 597.98 crore for the Company and Rs 747.87 crore for the borrowers.

4. The Company defaulted in repayment of amounts aggregating approximately USD 209 million (Rs 1,133.10 Crore) in respect of its unsecured FCCBs which were due in October 2012 ("October 2012 CCBs"). This default triggers a cross default under the Company''s other existing unsecured FCCBs aggregating USD 90 million (Rs 488.63 Crore) and USD 175 million (Rs 950.12 Crore), (which otherwise fall due in 2014 and 2016 respectively) (the "2014 and 2016 FCCBs") and accordingly these trigger acceleration of payments, if demanded by a specified proportion of the 2014 and/or 2016 FCCB holders. The Trustees for the 2014 and 2016 FCCB holders have not issued any acceleration notice in respect of the 2014 and 2016 FCCBs and accordingly USD 265 million (Rs 1,438.75 Crore) has been classified as non-current liability. The Company also has overdue amounts payable to creditors and certain lenders as at March 31, 2013. The Company is in negotiations with the FCCB holders and is working on various solutions with them to ensure settlement of their dues. The Company is also taking various steps to reduce costs and improve efficiencies to make its operations profitable. Pending the final outcome of negotiations, though there exists material uncertainty these financial statements have been prepared on the basis that the Company will continue as a going concern, and ''therefore no adjustments have been made to the carrying values or classification of assets and liabilities. ^

5. Segment information

As permitted by paragraph 4 of Accounting Standard-17 (AS - 17), ''Segment Reporting'', if a single financial report contains both consolidated financial statements and the separate financial statements of the parent, segment information need be presented only on the basis of the consolidated financial statements. Thus, disclosures required by AS 17 are given in consolidated financial statements.

6. Contingent liabilities

March 31, 2013 March 31, 2012

Guarantees given on behalf of subsidiaries in respect of loans granted to them 861.44 3,259.08

by banks/financial institutions

Tax related matters pending in appeal* 82.83 41.70

Compensation payable in lieu of bank sacrifice 103.06

Others 11.55 5.79

* includes demand from tax authorities for various matters. The Company / tax department has preferred appeals on these matters and the same are pending with various appellate authorities. Considering the facts of the matters, no provision is considered necessary by management.

A few law suits have been filed on the Company and few subsidiaries of the Company by some of their suppliers for disputes in fulfilment of obligations as per supply agreements. The matters are pending for hearing before respective courts, the outcome of which is uncertain. The management has provided for an amount as a matter of prudence which it believes shall be the probable outflow of resources.

The borrowers have provided certain security in relation to Stand-by Letter of Credit ("SBLC") issued by lenders for securing covered bonds issued by AE Rotor Holding B.V. a wholly owned subsidiary. The Borrowers are also obliged to provide corporate guarantee of USD 117.45 Million in relation to above SBLC to certain lenders.

7. Deferral of exchange differences

The Company has, consequent to the notification issued by the Ministry of Corporate Affairs on December 29, 2011 giving an option to the companies to amortise the exchange differences pertaining to long term foreign currency monetary items up to March 31, 2020 (from March 31, 2012 earlier), adopted the said option given under paragraph 46 of Accounting Standard 11. Accordingly, the Group has revised the amortisation period for such items to the maturity of the long term foreign currency monetary items (all before March 31, 2020).

Net foreign exchange loss aggregating Rs 189.39 Crore (Rs 217.69 Crore) on long term foreign currency monetary items has been adjusted in the foreign currency monetary item translation difference account during the year. Further, foreign exchange loss aggregating Rs 165.47 Crore (Rs 91.62 Crore) have been amortised during the year.

8. Prior year amounts have been reclassified wherever necessary to conform with current year presentation.

9. Figures in the brackets are in respect of the previous year.


Mar 31, 2012

1. Corporate Information

Suzlon Energy Limited ('SEL' or the 'Company') is a public company domiciled in India and incorporated under the provisions of the Companies Act, 1956 (the 'Act'). Its shares are listed on two stock exchanges in India. The Company is primarily engaged in the business of manufacturing of wind turbine generators('WTGs')and related components of various capacities.

Basis of preparation

The financial statements of the company have been prepared in accordance with generally accepted accounting principles in India (Indian GAAP). The company has prepared these financial statements to comply in all material respects with the accounting standards notified under the Companies (Accounting Standards) Rules, 2006, (as amended) and the relevant provisions of the Companies Act, 1956. The financial statements have been prepared on an accrual basis and under the historical cost convention; except in case of assets for which provision for impairment is made and revaluation is carried out.

The accounting policies adopted in the preparation of financial statements are consistent with those of previous year, except for the change in accounting policy explained below.

2. Scheme of Arrangement and Restructuring for Merger and De-merger

a. The Company implemented a Scheme of Arrangement and Restructuring ('Scheme'). The 'Appointed Date' fixed for this purpose was April 1,2010. The following were the salient features of the Scheme.

- De-merger and consequent transfer of (a) Power Generation Division of Suzlon Towers And Structures Limited ('STSL'), a wholly owned subsidiary ('WOS') of the Company to Suzlon Engitech Limited, another WOS of the Company; and (b) Project Execution Division of Suzlon Infrastructure Services Limited ('SISL'),a WOS of the Company to Suzlon Gujarat Wind Park Limited, another WOS of the Company.

- Amalgamation of STSL and SISL with the Company after giving effect to the above-mentioned de-merger and consequent transfer of their respective division.

b. During the year, the Scheme has been sanctioned by the Hon'ble High Court at Gujarat vide Order dated August 10,2011and Hon'ble High Court of Judicature at BombayvideOrderdatedSeptember02,2011.

Accordingly, all the assets and liabilities of Power Generation Division of STSL and Project Execution Division of SISL are considered to be transferred and vested with Suzlon Engitech Limited and Suzlon Gujarat Wind Park Limited ('Resulting Companies') respectively, Resulting Companies have issued equity shares to the shareholder of STS Land SISL and thereafter both the companies, viz., STSL and SISL ('Transferor Companies') have been amalgamated with the Company ('Transferee Company') on appointed date i.e. with effect from April 1,2010 as per the Scheme.

c. Amalgamation of STSL and SISL with the Company has been accounted for under the "Pooling of Interest Method (Amalgamation in the nature of Merger)" as prescribed by Accounting Standard 14 - Accounting for Amalgamations. Accordingly, all the assets, liabilities and reserves of STS Land SISL (after the de-merger of Power Generation Division of STSL and Project Execution Division of SISL as per the Scheme) as at April 1, 2010 have been taken over at their book values. The inter se holding of the shares of the Transferor Companies held by the Transferee Company is cancelled. Loan and advances and other dues outstanding between Transferee Company and Transferor Companies are cancelled. After giving above mentioned effect, the difference between the excess Of the book value of the assets over the book value of liabilities and reserves is adjusted to Capital Reserve and the excess of the book value of the liabilities and reserves over the book value of the assets is adjusted to General Reserve.

d. The net impact of incomes accruing and expenses in curried by the Transferor Companies from the appointed date i.e. April 1, 2010 to March 31, 2011 is directly made to statement in profit and loss shown under Note 6 Reserves and Surplus. The incomes accruing and expenses incurred by the Transferor Companies from April 1, 2011 till the date of High Court Order have been incorporated in the statement of profit and loss drawn for the current financial year, as the Transferor Companies carried on the existing business in "trust" on behalf of the Company and all the vouchers, documents, etc. for that period were made in the name of the Transferor Companies i.e. STS Land SISL respectively.

e. Pursuant to the Scheme of Arrangement and Restructuring, no new shares have been issued by the Transferee Company to the share holders of the Transferor Companies since the Transferor Companies are Wholly Owned Subsidiaries of the Transferee Company and on account of the scheme being effective, the shares of Transferor Companies as held by the Transferee Company have got cancelled.

f. In view of the a foresaid amalgamation, the figures of current year are not comparable to those of the previous year.

2. The Company has certain foreign currency convertible bonds ('FCCBs') having an aggregate face value of USD 389.04 Million (Rs 1,979.24 crore) due for redemption in June 2012 and October 2012. The redemption value of these FCCBs on respective redemption dates would aggregate to approximately USD 568.96 Million (Rs 2,894.58 Crore). In order to meet the redemption obligations, the management is actively pursuing various options, which include raising of additional finance in the form of debt, high yield bonds, equity etc. Discussions on each of these options is in process and the management is confident that the Company will be able to generate the required funds for redemption within the agreed period. Accordingly, the above results have been prepared on the basis that the Company is a going concern, and no adjustments are considered necessary in the values of the assets and liabilities of the Company.

On July 12, 2010, the Company raised Rs 1,188.39 crore pursuant to a Rights Issue of equity shares. The Company allotted 188,633,322 equity shares of Rs 2 each at a premium of Rs 61 per equity share on a rights basis to the existing equity shareholders of the Company in the ratio of 2 equity shares for every 15 fully paid-up equity shares held by then existing equity shareholder son the record date.

On receipt of shareholders' approval by way of Postal Ballot, on November 16, 2010, the Company issued and allotted 31,992,582 Equity shares of Rs 2 each at a price of Rs 60 per share on preferential basis to 'IDFC Trustee Company Ltd. A/c IDFC Infrastructure Fund 3 A/c IDFC Private Equity Fund III' (IDFC PE) as a consideration for acquisition of 41,254,125 equity shares of Rs 10 each in SE Forge Limited (SEFL), a subsidiary of the Company. Consequent to acquisition of IDFC PE's stake in SEFL, SEFL became a wholly owned subsidiary of the Company.

b. Terms/rights attached to equity shares

The Company has only one class of equity shares having a par value of Rs 2 each. Each holder of equity shares is entitled to one vote per share except for the underlying depository shares held against the Global Depository Receipts ('GDRs').

Holders of the GDRs have no voting rights with respect to the Equity shares represented by the GDRs. Deutsche Bank Trust Company Americas (the 'Depositary'), which is the shareholder on record in respect of the equity shares represented by the GDRs ,will not exercise any voting rights in respect of the equity shares against which GDRs are issued, unless it is required to do so by law. Equity shares which have been withdrawn from the depositary facility and transferred on the Company's register of members to a person other than the Depositary, ICICI Bank Limited (the "Custodian") or a nominee of either the Depositary or the Custodian may be voted by the holders thereof.

As regard the shares, which did not have voting rights as on March 31, 2012 are GDRs - 793,099 (equivalent shares 3,172,396) and as on March 31,2011areGDRs-1,064,641(equivalentshares-4,258,564).

The Company declares and pays dividends in Indian rupees. The dividend proposed by the Board of Directors is subject to approval of the shareholders in the ensuing Annual General Meeting.

In the event of liquidation of the Company, the holder of equity shares will be entitled to receive remaining assets of the Company, after distribution of all preferential amounts. The distribution will be in proportion to the number of equity shares held by the shareholders.

In addition, the Company has issued 2,573,500 shares (March 31, 2011 3,740,500 shares) during the period of five years immediately preceding the reporting date on exercise of options granted under the employee stock option plan (ESOP) wherein part consideration was received in the form of employee services.

d. Shares reserved for issue under options

For details of shares reserved for issue under the employee stock option (ESOP) plan of the Company, please refer note no 28.

For details of shares reserved for issue on conversion of FCCBs, please refer note no 7(II) for terms of conversion / redemption.

Note a:**The shareholding of Tanti Holdings Private Limited for the financial year ended on March 31, 2012 includes shares held by Sanman Holdings Private Limited which has since been merged with Tanti Holdings Private Limited by virtue of orders passed by the Honorable High Courts. The scheme has become effective from the appointed date i.e. April 1,2010.

Note b: As per records of the Company, including its register of shareholders/ members and other declarations received from shareholders regarding beneficial interest, the above shareholding represents both legal and beneficial ownerships of shares.

I. Details of security

The Company along with its Indian subsidiaries, collectively referred as "Suzlon Entities" executed a debt consolidation and refinancing arrangement (the 'Arrangement') on February 5, 2010 with a consortium comprising of various banks and financial institutions ('Consortium') lead by the State Bank of India as the Facility Agent and SBI Cap Trustee Company Limited as the Security Trustee.

The entities covered under the arrangement includes Suzlon Energy Limited ('SEL'), Suzlon Towers and Structures Limited ('STSL')**, Suzlon Infrastructure Services Limited ('SISL')**, Suzlon Structures Limited ('SSL'), Suzlon Power Infrastructure Limited ('SPIL'), Suzlon Generators Limited ('SGL'), Suzlon Gujarat Wind Park Limited ('SGWPL'), SE Electricals Limited ('SEEL'), Suzlon Wind International Limited ('SWIL'), SE Blades Limited ('SEBL'), Suzlon Engitech Limited ('SENL') (hereinafter collectively referred to as the 'Suzlon Entities' or Individually as the 'Borrower').

** refer note 3forScheme of Arrangement and Restructuring for Merger and De-merger.

a. Term loans from banks and financial institutions of Rs 3,348.00 Crore (Rs 3,201.71 Crore) of which Rs 3,034.20 Crore (Rs 3,073.64 Crore) has been classified as long term borrowing and Rs 313.80 Crore (Rs 128.07 Crore) as current maturities of long term borrowings, and working capital facilities from banks of Rs 1,888.76Crore(Rs1,175.51 Crore) availed under debt consolidation and refinancing arrangement are secured by first charge on all present and future tangible/intangible movable assets of each of the Borrowers, first charge on all present and future immovable assets (excluding the identified properties) of each of the Borrowers, first charge on all present and future chargeable current assets of each of the Borrowers, first charge over Trust and Retention Account ("TRA") of the Borrowers, pledge of equity shares held by SEL in its 10 Indian subsidiaries forming part of the Suzlon Entities, pledge on equity shares of certain overseas subsidiaries held by step down overseas subsidiaries of SEL including REpower Systems SE ("RE power"), pledge of certain equity shares of SEL held by it's promoters, guarantee of overseas subsidiary, personal guarantee of the managing director of SEL and limited personal guarantee of director of SSL.

b. Term loan from others of Rs 2.21 Crore (Rs 5.64 Crore), of which Rs Nil (Rs 1.94 Crore) has been classified as long term borrowing and Rs 2.21 Crore (Rs 3.70 Crore) classified as current portion of long term borrowing, is secured by specific term deposit.

c. Vehicle loan of Rs 0.21 Crore (Rs Nil), of which Rs 0.07 Crore has been classified as long-term borrowing and Rs0.14 Crore classified as current portion of long term borrowing is secured against vehicle under hire purchase contract.

d. Working capital loans from banks aggregating to Rs 1,888.76 Crore (Rs 1,175.52 Crore) are also part of debt consolidation and refinancing arrangement. Accordingly all the securities mentioned in 7(I)(a) above are also extended to the working capital facilities.

II. Foreign currency convertible bonds

a. Initial terms of issue

On June 11, 2007 the Company made an issue of zero coupon convertible bonds aggregating USD 300 million (Rs 1,223.70 Crore) [Phase I bonds] and, on October 10, 2007, the Company made another issue of zero coupon convertible bonds aggregating USD 200 million (Rs 786.20 Crore) [Phase II bonds]. Further on July 24, 2009, the Company made an issue of zero coupon convertible bonds aggregating USD 93.87 million (Rs 452.64 Crore) at an issue price of 104.30% of the principal amountofUSD90.00 million. [Phase III bonds]

The key terms of these bonds at the time of issue were as follows:

b. Restructuring of Phase I and Phase II bonds

i. During the year 2009-10,theCompany restructured Phase I and Phase II Zero Coupon Convertible Bonds with an approval of the Reserve Bank of India ('RBI') wherein the bondholders were offered the following options as part of the restructuring;

(a) Buy back of bonds @ 54.55% of the facevalue of US$ 1000 perbond.

(b) Issue of new bonds ('Phase I New Bonds' in case of Phase I Bonds and 'Phase II New Bonds' in case of Phase II Bonds) in place of old bonds at a fixed ratio of 3:5 (60 cents to dollar) bearing a coupon of 7.5 per cent per annum, payable semi-annually. Unless previously redeemed, converted or purchased and cancelled, the Company will redeem each Phase I New Bond at 150.24 per cent of its principal amount and each Phase II New Bond at 157.72 per cent of its principal amount on the relevant maturity date. The conversion price is set at Rs 76.68 per share. These bonds do not have any financial covenants and are of the same maturity as the old Phase I and Phase II bonds.

(c) Consent fee of USD15 Million to be paid across both the series, for those bondholders who consent to the relaxation of covenants.

As a result of the restructuring, the outstanding position of the foreign currency convertible bonds is as follows:

ii. On April 29, 2010, the Company convened meetings of Bondholders of each of the series, who approved the respective proposed resolutions. Accordingly post receipt of regulatory approvals, the Company changed the conversion price of the Phase I bonds from Rs 359.68 per equity share to Rs 97.26 per equity share and for Phase II bonds from Rs 371.55 to Rs 97.26 per equity share, subject to adjustments in accordance with terms and conditions of the bonds. The floor price for Phase I and Phase II bonds was revised to Rs 74.025 per equity share. The fixed exchange rate was changed to 1USD=Rs 44.60 from 1USD=Rs 40.83 for Phase I bonds and 1USD=Rs 39.87 for Phase II bonds. The Company incurred Rs 37.28 Crore towards consent fee to bondholders and other cost and disclosed under exceptional items in the statement of profit and loss for the year ended March 31,2011.

c. Issue of New Bonds during the year

On April 12, 2011, the Company made an issue of 875, 5% Foreign Currency Convertible Bonds of USD 200,000 each due 2016 ('Phase IV Bonds') for a total consideration of USD 175.00 million (Rs 776.83 Crore), the key term of which are as follows:

i. convertible by the holders at any time on and after May 23, 2011 but prior to close of business on April 6, 2016. Each bond will be converted into 165,108.3133 fully paid up equity shares with face value of Rs 2 per share at an initial conversion price of Rs 54.01 per equity share of Rs 2 each at a fixed exchange rate conversion of Rs 44.5875 = USD 1.

ii. redeemable in whole but not in part at the option of the Company if less than 10 percent of the aggregate principal amount of the Bonds originally issued is outstanding, subject to satisfaction of certain conditions.

iii. redeemable on maturity date April 13,2016at 108.70% of its principal amount, if not redeemed or converted earlier.

The Company has incurred Rs 13.09 Crore during the year on account of issue expenses towards the issue of Phase IV Bonds which have been adjusted against securities premium

d. Redemption Premium:

The Phase I, Phase II, Phase I Knew, Phase II New, Phase III and Phase IV bonds are redeemable subject to satisfaction of certain conditions mentioned in the respective offering circulars and hence have been designated as a monetary liability.

As of March 31, 2011, the management believed that the redemption of the likelihood of bonds could not be ascertained; hence the redemption premium of Rs 579.21 Crore was shown as a contingent liability in the financial statements as of and for the year ended March 31, 2011. However, during the year ended March 31, 2012 the Company has provided for the proportionate redemption premium of Rs 930.57 Crore by adjusting the same against the securities premium account. Following are the scheme-wise details of the redemption premium as of the year end date:

*includes expenditure booked under various expenditure heads by their nature.

The provision for performance guarantee ('PG') represents the expected outflow of resources against claims for performance shortfall expected in future over the life of the guarantee assured. The period of performance guarantee varies for each customer according to the terms of contract. The key assumptions in arriving at the performance guarantee provisions are wind velocity, plant load factor, grid availability, load shedding, historical data, wind variation factored.

The provision for operation, maintenance and warranty ('O&M') Represents the expected liability on account of field failure of parts of WTG and expected expenditure of servicing the WTGs over the period of free operation, maintenance and warranty, which varies according to the terms of each sales order.

Provision for liquidated damages ('LD') represents the expected claims which the Company may need to pay for non fulfillment of certain commitments as per the terms of the sales order. These are determined on a case to case basis considering the dynamics of each sales order and the factors relevant to that sale.

The figures shown against 'Utilization' represent withdrawal from provisions credited to statement of profit and loss to offset the expenditure incurred during the year and debited to statement of profit and loss.

3. Operating leases

a. Premises

The Company has taken certain premises under cancellable operating leases. The total rental expense under cancellable operating leases during the period was Rs 13.25 Crore (Rs 8.65 Crore). The Company has also taken furnished/unfurnished offices and certain other premises under non-cancellable operating lease agreement. The lease rental charge during the year is Rs 5.76 Crore (Rs 1.27 Crore) and maximum obligations on long-term non-cancellable operating lease payable as per the rentals stated in respective agreement are as follows:

b. WTG's Assets given on lease (Windmills):

The Company has let out some of its Windmills on operating lease. The lease charges are on the basis of net electricity generated and delivered. The said lease is non-cancellable during the primary lease period i.e. for the first five years and extendable for another five years unless any of the party decides to discontinue the same and the details of the same areas under:

4. Capitalization of expenditure

During the year, the Company has capitalized the following expenses of revenue nature in connection with the self-manufactured assets Consequently, expenses disclosed under the respective notes are net of amounts capitalized by the Company.

5. Segment information

As permitted by paragraph 4 of Accounting Standard-17 (AS-17), 'Segment Reporting', if a single financial report contains both consolidated financial statements and the separate financial statements of the parent, segment information need be presented only on the basis of the consolidated financial statements. Thus, disclosures required by AS-17 are given in consolidated financial statements.

6. Related party disclosures

As per Accounting Standard -18 (AS-18) - 'Related Party Disclosure', as notified by the Rules, the disclosures of transactions with the related parties as defined in the accounting standard are given below:

*Liquidated in current year.

**In liquidation as on March 31, 2012

*** De-merged and merged (refer note 3 for Scheme of Arrangement and Restructuring for Merger and De-merger.) #Merged with Suzlon Energy GmbH

b. Other related parties with whom transactions have taken place during the year:

I. Associate:

ZF Wind Power Antwerp NV (earlier Hansen Transmission International NV) (ceased to be an associate w.e.f. October 1,2011)

ii. Entities where key management personnel ('KMP')/relatives of key management personnel ('RKMP') have significant in fluence:

Sarjan Realities Limited, Synefra Engineering & Construction Limited, Shubh Realities (South) Private Limited, Tanti Holdings Private Limited, Suzlon Foundation, Girish R.Tanti (HUF), Suruchi Holdings Private Limited, Sugati Holdings Private Limited, Synew Steel Limited, Salene Power Infrastructure Limited,

iii. Key management personnel of Suzlon Energy Limited:

Tulsi R.Tanti,Vinod R.Tanti*

iv. Relatives of key management personnel of Suzlon Energy Limited:

Jitendra R.Tanti, Nidhi T.Tanti, Girish R.Tanti**

v. Employee funds:

Suzlon Energy Limited-Superannuation Fund.

Suzlon Energy Limited - Employees Group Gratuity Scheme.

* Appointed as whole time director w.e.f November 01, 2010. Transactions entered into before such appointment have been disclosed As transactions with the relatives of KMP.

** Resigned as whole time director and continues to be a non-executive director w.e.f. July 30, 2011. Transactions entered into after July 30, 2011 have been disclosed as transactions with the relatives of KMP* Resigned as whole time director and continued as non-executive Director w.e.f. July 30,2011

Note: The Company has given various letter of supports, which otherwise is not a guarantee, towards financing operations of its overseas subsidiaries and maintaining their financial creditworthiness, as and when required during the last fiscal year; the amount of which are not determinable as at Balance Sheet date.

7. Contingent liabilities March 31, 2012 March 31, 2011

Guarantees given on behalf of subsidiaries in respect of loans granted to them 3,259.08 3,302.75 by banks/financial institutions

Premium on redemption of convertible bonds (refer note 7(II)) - 579.21

Claims against the Company not acknowledged as debts* - 41.95

Income tax matters pending in appeal** 41.70 21.96

Others 5.79 3.84

* includes claims raised on the Company by vendors of goods, which have not been accepted by the Company as liabilities.

** includes demand from income-tax authorities for various matters. The Company / tax department has preferred appeals on these matters and the same are pending with various appellate authorities. Considering the facts of the matters, no provision is considered necessary by management.

8. Deferral of exchange differences

The Company has, consequent to the notification issued by the Ministry of Corporate Affairs on December 29, 2011 giving an option to the companies to mortise the exchange differences pertaining to long term foreign currency monetary items up to March 31, 2020 (from March 31, 2012 earlier), adopted the said option given under paragraph 46 of Accounting Standard 11. Accordingly, the Group has revised the amortization period for such items to the maturity of the long term foreign currency monetary items (all before March 31,2020).

Net foreign exchange gains aggregating Rs 217.69 Crore (gain of Rs 136.90 Crore) on long term foreign currency monetary items has been adjusted in the foreign currency monetary item translation difference account during the year. Further, foreign exchange loss aggregating Rs91.62 Crore (gain of Rs 3.50 Crore) have been amortized during the year.

9. Figures in the bracket sare in respect of the previous year.


Mar 31, 2011

1. Exceptional Items

The details of exceptional items aggregating to Rs 37.28 crore (Rs 439.02 crore) are as below:

(a) Loss on account of amortization of foreign exchange losses on all convertible bonds aggregating Rs Nil (Rs 162.34 crore) which includes Rs Nil (Rs 120.06 crore) being losses on Phase I bonds and Phase II bonds cancelled due to buy back and exchange.

(b) (Gain)/loss on restructuring and refinancing of financial facilities aggregating Rs 37.28 crore (gain of Rs 248.76 crore) pertaining primarily to net gains arising from the buy-back and exchange of Phase I and Phase II bonds after offsetting various costs incurred in connection with the buy-back and exchange including consent fees, expenses of merchant bankers, etc.

(c) Diminution, other than temporary, of the value of investments in certain subsidiaries aggregating Rs Nil crore (Rs 525.44 crore).

2. During the year the Company has recognised deferred tax asset of Rs 55.64 crore on its brought forward losses of Suzlon Energy Limited. The Company believes that the recognition of deferred tax asset satisfies the conditions of virtual certainty prescribed under Accounting Standard – 22, Accounting for Taxes on Income as notified by the Companies (Accounting Standards) Rules, 2006 (as amended).

3. Foreign Currency Convertible Bonds

(a) Initial terms of issue

On June 11, 2007 the Company made an issue of zero coupon convertible bonds aggregating USD 300 million (Rs 1,223.70 crore) [Phase I bonds]. Further, on October 10, 2007, the Company made an additional issue of zero coupon convertible bonds aggregating USD 200 million (Rs 786.20 crore) [Phase II bonds] and on July 24, 2009, the company made an additional issue of zero coupon convertible bonds aggregating USD 93.87 million (Rs 452.64 crore) at an issue price of 104.30% of the principal amount of USD 90.00 million.

(b) Restructuring of Phase I and Phase II bonds

i. During the year 2009-10 , the Company restructured Phase I and Phase II Zero Coupon Convertible Bonds with an approval of the Reserve Bank of India ('RBI') wherein the bondholders were offered the following options as part of the restructuring;

- Buyback of bonds @ 54.55% of the face value of US $ 1000 per bond.

- Issue of new bonds ('Phase I New Bonds' in case of Phase I Bonds and 'Phase II New Bonds' in case of Phase II Bonds) in place of old bonds at a fixed ratio of 3:5 (60 cents to dollar) bearing a coupon of 7.5 per cent per annum, payable semi-annually. Unless previously redeemed, converted or purchased and cancelled, the Company will redeem each Phase I New Bond at 150.24 per cent of its principal amount and each Phase II New Bond at 157.72 per cent of its principal amount on the relevant Maturity Date. The conversion price is set at Rs 76.68 per share. These bonds do not have any financial covenants and are of the same maturity as the old bonds.

- Consent fee of USD15 Million to be paid across both the series, for those bondholders who consent to the relaxation of covenants.

ii. On April 29, 2010, the Company convened meetings of Bondholders of each of the series, who approved the respective resolutions proposed to them. Accordingly post receipt of regulatory approvals, the Company changed the conversion price of the Phase I bonds from Rs.359.68 per equity share to Rs.97.26 per equity share and for Phase II bonds from Rs.371.55 to Rs.97.26 per equity share, subject to adjustments in accordance with terms and conditions of the bonds. The floor price for Phase I and Phase II bonds has been revised to Rs.74.025 per equity share. The fixed exchange rate was changed to 1USD=Rs 44.60 from 1USD=Rs 40.83 for Phase I bonds and 1USD=Rs 39.87 for Phase II bonds. The Company has incurred Rs.37.28 crore towards consent fee to bondholders and other cost and disclosed under exceptional items for the year ended March 31, 2011.

(c) Redemption Premium:

The Phase I, Phase II, Phase I New, Phase II New, and Phase III bonds are redeemable subject to satisfaction of certain conditions mentioned in the offering circular and hence have been designated as monetary liability.

In the opinion of the management, the likelihood of redemption of these bonds cannot presently be ascertained. Accordingly no provision for any liability has been made in the financial statements and hence the proportionate premium has been shown as a contingent liability. The Company has adequate securities premium to absorb the proportionate premium on redemption as at March 31,2011.

4. The Company is in the process of seeking the required statutory and regulatory approvals, for implementing a Scheme of Arrangement and Restructuring (SOA). The following are the salient features of the SOA:

I. De-merger and consequent transfer of (a) Power Generation Division of Suzlon Towers And Structures Limited ('STSL') a wholly owned subsidiary (WOS) of the Company to Suzlon Engitech Limited another wholly owned subsidiary (WOS) of the Company and (b) Project Execution Division of Suzlon Infrastructure Services Limited ('SISL') a wholly owned subsidiary (WOS) of the Company to Suzlon Gujarat Wind Park Limited another wholly owned subsidiary (WOS) of the Company.

II. Amalgamation of STSL and SISL with the Company after giving effect to the above-mentioned de-merger and consequent transfer of their respective division.

The 'Appointed Date' fixed for this purpose is April 1, 2010. This SOA is subject to sanctions u/s 391 and 394 of the Companies Act, 1956 by the respective Honourable High Courts. Since the SOA is yet to be implemented, the financial statement does not contain any effect on account of this SOA

5. Suzlon Energy Limited ('SEL' or 'the Company') along with its 10 Indian subsidiaries, collectively referred as "Suzlon Entities" executed a debt consolidation and refinancing arrangement (the 'Arrangement') on February 5, 2010 with a consortium comprising of various banks and financial institutions ('Consortium') lead by the State Bank of India as the Facility Agent and SBI Cap Trustee Company Limited as the Security Trustee.

The entities covered includes Suzlon Energy Limited ('SEL'), Suzlon Towers and Structures Limited ('STSL'), Suzlon Infrastructure Services Limited ('SISL'), Suzlon Structures Limited ('SSL'), Suzlon Power Infrastructure Limited ('SPIL'), Suzlon Generators Limited ('SGL'), Suzlon Gujarat Wind Park Limited ('SGWPL'), SE Electricals Limited ('SEEL'), Suzlon Wind International Limited ('SWIL'), SE Composites Limited ('SECL'), Suzlon Engitech Limited ('SENL') (hereinafter collectively referred to as the 'Suzlon Entities' or individually as the 'Borrower').

The details of security for the secured loans are as follows:

(i) Term loans from banks and financial institutions of Rs 3,214.59 crore (Rs. 2,373.37 crore) and working capital facilities from banks and financial institutions of Rs 1,175.51 crore (Rs. 1,508.38 crore) availed under debt consolidation and refinancing arrangement are secured by first charge on all present and future tangible/intangible movable assets of each of the Borrowers, first charge on all present and future immovable assets (excluding the identified properties) of each of the Borrowers, first charge on all present and future chargeable current assets of each of the Borrowers, first charge over Trust and Retention Account ("TRA") accounts of the Borrower, pledge of equity shares held by SEL in its 10 Indian subsidiaries forming part of the Suzlon Entities, pledge on equity shares of certain overseas subsidiaries held by step down overseas subsidiaries of SEL including Repower Systems AG ("REPower"), pledge of certain equity shares of SEL held by it's promoters, guarantee of overseas subsidiary, personal guarantee of the managing director of SEL and limited personal guarantee of director of SSL.

(ii) Term loan from others of Rs. 5.64 crore is secured by specific FD against it.

6. Other Notes

(a) On July 12, 2010, the Company raised Rs 1,188.39 crore pursuant to a Rights Issue. The Company allotted 188,633,322 equity shares of Rs 2 each at a premium of Rs 61 per equity share on a rights basis to the existing equity shareholders of the Company in the ratio of 2 equity shares for every 15 fully paid-up equity shares held by the existing equity shareholders on the record date. The primary objective of the rights issue was to discharge certain existing loans availed by the Company from its promoters. Consequently, loans of Rs 1,175.00 crore along with accrued interest of Rs 12.38 crore were discharged by conversion into equity shares of the Company.

(b) On receipt of shareholders' approval by way of Postal Ballot, on November 16, 2010, the Company issued and allotted 31,992,582 equity shares of Rs 2 each at a price of Rs 60 per share on preferential basis to 'IDFC Trustee Company Ltd. A/c IDFC Infrastructure Fund 3 A/c IDFC Private Equity Fund III' (IDFC PE) as a consideration for acquisition of 41,254,125 equity shares of Rs 10 each in SE Forge Limited (SEFL), a subsidiary of the Company. Consequent to acquisition of IDFC PE's stake in SEFL, SEFL became a wholly owned subsidiary of the Company.

(c) On April 12, 2011, the Company has made an issue of 5% Foreign Currency Convertible Bonds due 2016 for a total amount of USD 175.00 million (Rs.776.83 crores). The initial conversion price is set at Rs.54.01 per share and the same is subject to adjustments in certain circumstances.

(d) Net foreign exchange gains aggregating Rs 136.90 crore (gain Rs 62.88 crore) on long term foreign currency monetary items have been adjusted in the foreign currency monetary item translation difference account during the year. Further, foreign exchange gains aggregating Rs 3.50 crore (Rs 202.99 crore) have been amortised during the year.

(e) Creditors include acceptances of Rs 448.75 crore (Rs 454.58 crore).

(f) Expenditure amounting to Rs 2.89 crore (Rs 1.42 crore) and Rs 1.58 crore (Rs 1.56 crore) pertaining to employee remuneration and benefits; and operating and other expenditure respectively, being expenditure incurred in connection with the construction of certain self manufactured assets have been deducted from the respective expenditure heads and have been capitalised under appropriate asset heads.

(g) The Company incurs expenditure on development of infrastructure facilities for power evacuation arrangements as per authorization of the state electricity boards (SEB)/nodal agencies. In certain cases the expenditure is reimbursed, on agreed terms, by the SEB/nodal agencies and in certain other cases the Company recovers it from the customers. Where the expenditure is reimbursed by the SEB/nodal agency, the cost incurred is reduced by the reimbursements received and the net amount is charged to profit and loss account. Where an arrangement is entered into with customers for power evacuation charges, the proportionate direct cost computed on per mega watt basis is netted off from the amount charged to customers and the net deficit/(surplus) is charged / credited to profit and loss account. The deficit/surplus from infrastructure development across all SEBs / nodal agencies is shown under "infrastructure development expenses" or "other income" as the case may be. Indirect expenses not directly relatable to power evacuation are charged to the respective account heads in profit and loss account.

7. Operating leases

(a) Premises

The Company has taken certain premises under cancellable operating leases. The total rental expense under cancellable operating leases during the period was Rs 8.65 crore (Rs 11.74 crore). The Company has also taken furnished/unfurnished offices and certain other premises under non-cancellable operating lease agreement. The lease rental charge during the year is Rs 1.27 crore (Rs 8.15 crore) and maximum obligations on long–term non-cancellable operating lease payable as per the rentals stated in respective agreement are as follows:

(b) WTG's

The Company has taken WTGs on non-cancellable operating lease, chargeable on per unit basis of net electricity generated and delivered. The lease amount would be determined in the future on the number of units generated. Lease rental expense for the period is Rs 2.50 crore (Rs 2.45 crore).

Sublease rental income recognised in the statement of profit and loss account for the period is Rs 2.41 crore (Rs 2.45 crore).

8. Post employment benefits

The Company has a defined benefit gratuity plan. Every employee who has completed five or more years of service is eligible for gratuity. Gratuity is computed based on 15 days salary based on last drawn salary for each completed year of service. The scheme is funded with an insurance company in the form of a qualifying insurance policy.

The estimated future salary increase considered in actuarial valuation, takes into account the effect of inflation, seniority, promotion and other relevant factors such as supply and demand in the employment market. The overall expected rate of return on plan assets is determined based on the market prices prevailing as on balance sheet date, applicable to the period over which the obligation is to be settled.

9. Provisions

The provision for performance guarantee ('PG') represents the expected outflow of resources against claims for performance shortfall expected in future over the life of the guarantee assured. The period of performance guarantee varies for each customer according to the terms of contract. The key assumptions in arriving at the performance guarantee provisions are wind velocity, plant load factor, grid availability, load shedding, historical data, wind variation factor etc.

The provision for operation, maintenance and warranty ('O&M')represents the expected liability on account of field failure of parts of WTG and expected expenditure of servicing the WTGs over the period of free operation, maintenance and warranty, which varies according to the terms of each sales order.

Provision for liquidated damages ('LD') represents the expected claims which the Company may need to pay for non fulfilment of certain commitments as per the terms of the sales order. These are determined on a case to case basis considering the dynamics of each sales order and the factors relevant to that sale.

10. (a) Contingent liabilities

Particulars As at March 31,

2011 2010

Guarantees given on behalf of subsidiaries in respect of loans 3,302.75 2,371.67 granted to them by banks/financial institutions

Premium on redemption of convertible bonds 579.21 377.22

Claims against the Company not acknowledged as debts* 41.95 42.24

Income tax matters pending in appeal 21.96 12.71

Others 3.84 2.79

*Claims against the company not acknowledged as debts include claims raised on the company by vendors of goods, which have not been accepted by the company as liabilities.

The Company is a co-guarantor towards loan granted to its subsidiaries.

11. Related party disclosure

As per Accounting Standard - 18 (AS 18) - 'Related Party Disclosure', as notified by the Rules, the disclosures of transactions with the related parties as defined in the accounting standard are given below:

a. List of related parties and nature of relationships where control exists

Name of the party I Nature of relationship

AE Rotor Holding B.V. Subsidiary company

Age Parque Eolico El Almendro S.L Subsidiary company

Cannon Ball Wind Energy Park-1, LLC Subsidiary company

PowerBlades GmbH Subsidiary company

PowerBlades SA Subsidiary company

Rep Ventures Portugal S.A. Subsidiary company

REpower Australia Pty Ltd. Subsidiary company

REpower Benelux b.v.b.a. Subsidiary company

REpower Betriebs - und Beteiligungs GmbH Subsidiary company

REpower Systems Inc. (Canada) Subsidiary company

REpower Diekat S.A. Subsidiary company

REpower Espana S.L. Subsidiary company

REpower Geothermie GmbH Subsidiary company

REpower Investitions - und Projektierungs GmbH & Co. KG Subsidiary company

REpower Italia s.r.l Subsidiary company

REpower North (China) Ltd. Subsidiary company

REpower Portugal - Sistemas Eolicos, S.A. Subsidiary company

REpower Systems GmbH (earlier known as Einundzwanzigste Subsidiary company

Vittorio Verwaltungs GmbH)

REpower Systems Polska Sp.zo.o Subsidiary company

REpower S.A.S. Subsidiary company

REpower Systems Scandinavia AB Subsidiary company

REpower Systems AG Subsidiary company

REpower UK Ltd. Subsidiary company

REpower USA Corp. Subsidiary company

REpower Wind Systems Trading (China) Ltd. Subsidiary company

REpower Windpark Betriebs GmbH Subsidiary company

RETC Renewable Energy Technology Centre Subsidiary company

RPW Investments SGPS,SA Subsidiary company

Renewable Energy Contractors Australia Pty Ltd Subsidiary company

RiaBlades S.A. Subsidiary company

SE Composites Limited Subsidiary company

SE Drive Technik GmbH Subsidiary company

SE Electricals Limited Subsidiary company

SE Forge Limited Subsidiary company

SE Solar Limited Subsidiary company

SISL Green Infra Limited Subsidiary company

Sure Power LLC Subsidiary company

Suzlon Blade Technology B.V. Subsidiary company

Suzlon Energia Elocia do Brazil Ltda Subsidiary company

Suzlon Energy (Tianjin) Limited Subsidiary company

Suzlon Energy A/S Subsidiary company

Suzlon Energy Australia Pty. Ltd. Subsidiary company

Suzlon Energy Australia RWFD Pty Ltd Subsidiary company

Suzlon Energy Australia CYMWFD Pty Ltd Subsidiary company

Suzlon Energy B.V. Subsidiary company

Suzlon Energy GmbH Subsidiary company

Suzlon Energy Korea Co., Ltd. Subsidiary company

Suzlon Energy Limited, Mauritius Subsidiary company

Suzlon Engitech Limited Subsidiary company

Suzlon Generators Limited Subsidiary company

Suzlon Gujarat Wind Park Limited Subsidiary company

Suzlon Infrastructure Services Limited Subsidiary company

Suzlon North Asia Ltd Subsidiary company

Suzlon Power Infrastructure Limited Subsidiary company

Suzlon Rotor Corporation Subsidiary company

Suzlon Structures Limited Subsidiary company

Suzlon Towers and Structures Limited Subsidiary company

Suzlon Wind Energy A/S Subsidiary company

Suzlon Wind Energy BH Subsidiary company

Suzlon Wind Energy Bulgaria EOOD Subsidiary company

Suzlon Wind Energy Corporation Subsidiary company

Suzlon Wind Energy Equipment Trading (Shanghai) Co., Ltd. Subsidiary company

Suzlon Wind Energy Espana, S.L Subsidiary company

Suzlon Wind Energy Italy s.r.l. Subsidiary company

Suzlon Wind Energy Limited Subsidiary company

Suzlon Wind Energy Nicaragua Sociedad Anonima Subsidiary company

Suzlon Wind Energy Portugal Energia Elocia Unipessoal Lda Subsidiary company

Suzlon Wind Energy Romania SRL Subsidiary company

Suzlon Wind Enerji Sanayi Ve Ticaret Limited Sirketi Subsidiary company

Suzlon Wind Energy South Africa (PTY) Ltd Subsidiary company

Suzlon Windenergie GmbH Subsidiary company

Suzlon Wind International Limited Subsidiary company

Suzlon Windpark Management GmbH Subsidiary company

Tarilo Holding B.V. Subsidiary company

Valum Holding B.V. Subsidiary company

Ventipower S.A. Subsidiary company

WEL Windenergie Logistik GmbH Subsidiary company

Windpark Blockland GmbH & Co KG Subsidiary company

Windpark Olsdorf Watt Gmbh & Co. KG Subsidiary company

b. Other related parties with transactions have taken place during the year:

(I) Associates:

Hansen Transmission International NV

(ii) Entities where key management personnel ('KMP') / relatives of key management personnel ('RKMP') have significant influence:

Sarjan Realities Limited, Synefra Engineering & Construction Limited, Tanti Holdings Private Limited, Suzlon Foundation, Girish R. Tanti (HUF), Sanman Holdings Private Limited, SE Energy Park Limited, Suruchi Holdings Private Limited, Sugati Holdings Private Limited, Synew Steel Limited, Salene Power Infrastructure Limited (formerly known as Sarjan Infrastructure Finance Limited)

(iii) Key management personnel of Suzlon Energy Limited:

Tulsi R. Tanti, Girish R. Tanti, Vinod R. Tanti *

(iv) Relatives of key management personnel of Suzlon Energy Limited:

Jitendra R. Tanti, Nidhi T. Tanti

(v) Employee funds:

Suzlon Energy Limited – Superannuation Fund.

Suzlon Energy Limited – Employees Group Gratuity Scheme.

* He is RKMP till October 31, 2010 and appointed as a whole-time director of the company with effect from 1st November 2010.

12. Additional information pursuant to the provisions of paragraphs 3, 4B, 4C, 4D of part II of schedule VI of the Companies Act, 1956.

b. Licensed and installed capacities and production

Licensed capacity - The products manufactured and sold by the Company i.e., WTG's and components have not been included in the list of mandatory items, which require a license under the New Industrial Policy in terms of Notification no. S.O.477 (E) dated 25th July, 1991; and hence, licensing requirements are not applicable to the products manufactured by the Company.

Installed capacity - The installed capacities are not precisely ascertainable, given the nature of operations, changes in product mix and utilisation of manufacturing facilities and hence, have not been disclosed.

13. Segment reporting

As permitted by paragraph 4 of Accounting Standard-17 (AS - 17), 'Segment Reporting', if a single financial report contains both consolidated financial statements and the separate financial statements of the parent, segment information need be presented only on the basis of the consolidated financial statements. Thus, disclosures required by AS 17 are given in consolidated financial statements.

14. Prior year amounts have been reclassified wherever necessary to conform with current year presentation. Figures in the brackets are in respect of the previous year.


Mar 31, 2010

Nature of operations

Suzlon Energy Limited (SEL or Suzlon or the Company) is engaged in the manufacture of wind turbine generators (WTGs) of various capacities and its components.

1. Employee Stock Option Scheme

The Company has provided various Employee Stock Option Schemes to its employees. During the year ended March 31, 2010, the following schemes were operational:

The weighted average share price during the year ended March 31, 2010 was approximately Rs. 87.83 (Rs. 89.65) per share.

Fair value of options

The Company applies intrinsic value- based method of accounting for determining compensation cost for Scheme I, Scheme II, Scheme III and Scheme IV. Following are the details of the amounts charged to the profit and loss account, rate per option, and cost per option calculated based on Black-Scholes Model.

If the Cost per option was calculated based on the Black-Scholes model, the loss after tax would have been higher by Rs. 18.15 crore (Rs. 1.55 crore).

Consequently the basic and diluted earnings/(loss) per share after factoring the above impact would be as follows:

2. Post employment benefits

The Company has a defined benefit gratuity plan. Every employee who has completed five or more years of service is eligible for gratuity. Gratuity is computed based on 15 days salary, based on last drawn salary for each completed year of service. The scheme is funded with an insurance company in the form of a qualifying insurance policy.

* The contribution made by the employer during the year was Rs. 2.01 crore (Rs. 2.48 crore), of which Rs. 2.01 crore (Rs. 2.36 crore) was paid towards approved fund and Nil (Rs. 0.12 crore) was towards OYRGTA premium. The Company expects to contribute Rs. 2.01 crore (Rs. 2.36 crore) to its defined benefit gratuity plan in 2010-11. The actual return on plan assets during the year was Rs. 0.61 crore (Rs. 0.28 crore).

The estimated future salary increase considered in actuarial valuation, takes into account the effect of inflation, seniority, promotion and other relevant factors such as supply and demand in the employment market. The overall expected rate of return on plan assets is determined based on the market prices prevailing as on balance sheet date, applicable to the period over which the obligation is to be settled.

3. Other notes

a) Global Depository Receipts (GDRs) issued during the year

On July 24, 2009, the Company raised USD 108.04 million (Rs. 522.97 crore) through issuance of 14,600,000 GDRs representing 58,400,000 equity shares of Rs. 2 each at a price of Rs. 89.55 per equity share of Rs. 2 each. The issue price of each GDR is USD 7.40 and the GDRs are listed on the Luxembourg Stock Exchange and were admitted for trading on London Stock Exchange. The holders of GDR do not have voting rights with respect to the shares represented by the GDRs, but are entitled to dividends on those shares. The Company has incurred Rs. 11.07 crore during the year on account of issue expenses towards the issue of Global Depository Receipts which have been adjusted against Securities Premium.

b) Debt Consolidation and Refinancing Arrangement

Suzlon Energy Limited along with some of its Indian subsidiaries, collectively referred as "Suzlon Entities" have executed a Debt Consolidation and Refinancing Arrangement (the Arrangement) on February 5, 2010, with a consortium comprising of various banks and financial institutions ("Consortium") lead by the State Bank of India as the Facility Agent and SBI Cap Trustee Company Limited as the Security Trustee.

As per the Arrangement, the Consortium has sanctioned a consolidated loan amount and based on business requirements, SEL has drawn down various facilities of rupee term loans, fund based working capital facilities and non-fund based working capital facilities. The Arrangement also covers the earlier sanctioned loans/debentures, which have either been continued or converted into a new loan facility, as the case may be.

The Company has incurred an amount of approximately Rs. 119.55 crore, as consultancy and processing charges in regard to the Arrangement, the cost of which will be amortised over the tenure of respective facilities.

c) Creditors include acceptances of Rs. 454.58 crore (Rs. 406.37 crore).

d) Expenditure amounting to Rs. 1.42 crore (Rs. 3.61 crore) and Rs. 1.56 crore (Rs. 6.22 crore) pertaining to employee remuneration and benefits; and operating and other expenditure respectively, being expenditure incurred in connection with the construction of certain self manufactured assets have been deducted from the respective expenditure heads and have been capitalised under appropriate asset heads.

e) The Company incurs expenditure on development of infrastructure facilities for power evacuation arrangements as per authorization of the state electricity boards (SEB)/nodal agencies. In certain cases, the expenditure is reimbursed, on agreed terms, by the SEB/nodal agencies and in certain other cases, the Company recovers it from the customers. Where the expenditure is reimbursed by the SEB/nodal agency, the cost incurred is reduced by the reimbursements received and the net amount is charged to profit and loss account. Where an arrangement is entered into with customers for power evacuation charges, the proportionate direct cost computed on per mega watt basis is netted off from the amount charged to customers and the net deficit/(surplus) is charged / credited to profit and loss account. The deficit/surplus from infrastructure development across all SEBs / nodal agencies is shown under "infrastructure development expenses" or "other income" as the case may be. Indirect expenses not directly relatable to power evacuation are charged to the respective account heads in profit and loss account.

f) Net foreign exchange gains aggregating Rs. 62.88 crore (losses Rs. 531.28 crore) on long-term foreign currency monetary items have been adjusted in the foreign currency monetary item translation difference account during the year. Further, foreign exchange losses aggregating Rs. 202.99 crore (Rs. 132.02 crore) have been amortised during the year.

The Directors are covered under the Companys scheme for gratuity along with the other employees of the Company. The proportionate amount of gratuity attributable to directors is not ascertainable, and therefore, not included above.In view of the losses made during the year, the managerial remuneration paid is in excess of the limits specified in Section II of Part II of Schedule XIII to the Companies Act, 1956. The Company is in the process of making an application to the Central Government for necessary approval u/s 198 of the Companies Act, 1956, after obtaining re-approval of the shareholders.

*Claims against the Company not acknowledged as debts include claims raised on the Company by vendors of goods, which have not been accepted by the Company as liabilities.

The Company is a co-guarantor towards loan granted to its subsidiaries

b. Licensed and installed capacities and production

Licensed capacity - The products manufactured and sold by the Company, i.e., WTGs and components have not been included in the list of mandatory items, which require a license under the New Industrial Policy in terms of Notification No. S.O.477 (E) dated 25th July, 1991; and hence, licensing requirements are not applicable to the products manufactured by the Company.

Installed capacity - The installed capacities are not precisely ascertainable, given the nature of operations, changes in product mix and utilisation of manufacturing facilities and hence, have not been disclosed.

4. Related party disclosures

As per Accounting Standard - 18 (AS 18) – Related Party Disclosures, as notified by the Rules, the disclosures of transactions with the related parties as defined in the accounting standard are given below:

* During the year ended March 31, 2010, AE Rotor Holding B.V. a wholly owned subsidiary of the Company sold 35.22% of equity stake in Hansen Transmissions International NV ("Hansen") on November 24, 2009. Consequently, the holding of the Company along with its wholly owned subsidiary, in Hansen has reduced to 26.06% and the status of Hansen has changed from a subsidiary to an associate. Accordingly for the purpose of the reporting related party disclosures, Hansen and its subsidiaries have been treated as subsidiaries till November 2009 and from December 2009 onwards only Hansen (excluding its subsidiaries) has been considered and disclosed as an "associate" for related party disclosures pursuant to provisions of Accounting Standard 18 – Related Party Disclosures.

b. Other related parties with whom transactions have taken place during the year

i) Entities where key management personnel (KMP)/relatives of key management personnel (RKMP) have significant influence –

Sarjan Realities Limited, Synefra Engineering & Construction Limited (Formerly Suzlon Infrastructure Limited), Shubh Realty (South) Private Limited, Tanti Holdings Private Limited (Formerly Tanti Holdings Limited), Suzlon Foundation, Girish R. Tanti (HUF), Sanman Holdings Private Limited, SE Energy Park Limited,

ii) Key management personnel of Suzlon Energy Limited Tulsi R. Tanti, Girish R. Tanti

iii) Relatives of key management personnel of Suzlon Energy Limited Vinod R. Tanti, Jitendra R. Tanti

iv) Employee funds

Suzlon Energy Limited – Superannuation Fund

Suzlon Energy Limited – Employees Group Gratuity Scheme.

- amount below Rs. 0.01 crore

- Reimbursement of expenses relates to amount payable to subsidiaries on account of guarantee and warranty obligations arising out of WTG sale

Note: Certain subsidiaries and group companies have been allowed to make free of charge use of SAP software and office premises owned by the Company.

a. All the above balances of loans are excluding accrued interest aggregating Rs. 192.23 crore (Rs. 2.88 crore) and are payable on demand/as per agreement.

b. No loans have been granted by the Company to any person for the purpose of investing in the shares of Suzlon Energy Limited or any of its subsidiaries.

c. Loans and advances to companies under the same management, as per the provisions of Section 370 (1B) of the Companies Act, 1956.

5. Segment reporting

As permitted by paragraph 4 of Accounting Standard-17 (AS - 17), Segment Reporting, if a single financial report contains both consolidated financial statements and the separate financial statements of the parent, segment information need be presented only on the basis of the consolidated financial statements. Thus, disclosures required by AS 17 are given in consolidated financial statements.

6. Prior year amounts have been reclassified wherever necessary to conform with current year presentation. Figures in the brackets are in respect of the previous year.

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