Curious case of M/s Suzlon: The Wind Mill Co.

- Listed in stock market in Sept 2005.
- Issued Rs.10 Face Value share at Rs.500 Premium : Rs.510 is the allotment price.
- Issue was oversubscribed 45 times.
- Wind Mill company - Alternate energy source - Logical for stock to catch up market fancies.
- On listing day, stock touched Rs.600
- In October 2007, stock was split from face value of Rs.10 to FV of Rs.2.
- So typically, an IPO alloted share would now have a holding coast of Rs.102 ( 510/5 )
- Suzlong contined to rally on to hit a peak of Rs.2300 in Jan 2008.
- After American Banking Crisis, everything came down - suzlon also came down - Nothing to wonder.
- But in the subsequent recovery, majority of bluechip stocks recovered, but Suzlon continued to fall.
- Promoter has pledged 99.92% of his shares.
- Today the stock price is Rs.8.
- Stock trading at 70% discount to its book value.
- Recently secured Corporate debt restructuring package worth Rs.12050 Crores. Promoter infused Rs.125 crores out of total obligation of Rs.250 crores towards CDR.
- Subsidary : RE Power systems ES, Germany. RE Power reported growth of 33% in revenue and Euro 2.2 billion in FY 2013 as profit
- RE Power's consodidated orders on hand is US$ 7.5 billion.
- But the cash with RE Power is ring fenced and cannot be used to reduce debt at group level.

Moral of Suzlon Saga for Investors:
1) The kind of rally would have tempted any seasoned investor.
2) The beauty of Investment success lies partly with investing and partly with profit booking.
3) Investors could have booked profit with contention. IPO investors against cost price of Rs.102, could have sold it at Rs.500 or Rs.1000. But remaining invested costed them dearly, and the stock today trades at Rs.8 : 92% erosion of capital - not including the norminal risk free rate of return.
4) And the fact is many investors, after investing forget the invested cost and donot keep track of their investment porfolio. It is necessary that they keep reviewing their investments on quarterly basis and take appropriate investment decisions.