Suzlon shares fall 3% as Sun Pharma's Shanghvi terminates investor agreement

Shares of Suzlon Energy tumbled over 3% in opening trade on Wednesday after Sun Pharmaceutical Industries' promoter Dilip Shanghvi and his associate companies terminated shareholders' agreement with the firm that was signed in February 2020. Dilip Shanghvi and his associate companies collectively held a 7.4% stake in Suzlon at the end of the June quarter of FY24, as per exchange data. Back in 2015, Shanghvi had acquired a 23% stake in Suzlon Energy for ₹1,800 crore. 

In February 2020, Suzlon's board approved a proposal to revamp its ₹12,785 crore debt, which it owed to financial creditors, led by State Bank of India (SBI). As per the debt restructuring plan, promoters and associates proposed to infuse equity up to ₹400 crore by way of issuance of equity shares or compulsory convertible debentures (CCD). The board had also cleared an enabling resolution to issue equity shares or equity-linked instruments amounting to ₹1,000 crore for raising funds. Dilip Shanghvi’s associate companies such as Shanghvi Finance Pvt. Ltd., Aditya Medisales Ltd., and others were issued shares under this scheme.

Later in October 2022, Shanghvi also participated in Suzlon’s ₹1,200-crore rights issue.

Snapping two sessions gaining streak, Suzlon Energy shares opened 3% lower at ₹25.19 against the previous closing price of ₹25.98 on the BSE. In the early trade, the largecap stock declined as much as 3.4% to ₹25.10, while the market capitalistion slipped to ₹34,545 crore.

The share price of Suzlon, one of India’s leading renewable energy solutions providers, touched a 52-week high of ₹27 on August 31, 2023, and a 52-week low of ₹6.60 on October 13, 2022.

In a post-market hour regulatory filing on Tuesday, Suzlon Energy said, “This is to inform that Dilip Shanghvi and Associates (the Investor Group) who had entered into an amended and restated shareholders’ agreement dated 28th February 2020 with the promoters / promoter group of the company and the company, have informed the company and the other shareholders, who are party to the agreement, that the investor group has decided to terminate the agreement in accordance with the terms of the agreement.”

“There would not be any impact on the operations of the company on account of the termination of the agreement,” it added.

Following the termination of the agreement, Hiten Timbadia, the investor group’s nominee director on the board of the company, has also resigned as director of the company with effect from September 26, 2023.

In a separate filing, Dilip Shanghvi said that they will continue as investors in the company, even though they have taken a decision to terminate the formal shareholder’s agreement signed in 2015.

“We support the management’s plan to aggressively grow the business as well as their efforts towards regaining market share. The company has seen a turnaround under a challenging environment, which is a positive sign,” said Dilip Shanghvi on behalf of Dilip Shanghvi Family and Associates.

“We continue to be excited about the future and prospect of wind energy and its importance in achieving the net-zero objectives of our prime minister and the government,” he said.

DISCLAIMER: The views and opinions expressed by investment experts on fortuneindia.com are either their own or of their organisations, but not necessarily that of fortuneindia.com and its editorial team. Readers are advised to consult certified experts before taking investment decisions.