Suzlon Energy Limited, founded in the year 1995, is a leading wind power company. It has presence in 21 countries in the continents of America, Asia, Australia and Europe. It has emerged as the third largest wind power supplier. The year 2009–10 proved to be a disappointing year for Suzlon as it suffered its first full year loss. The economic downturn had a significant impact on lowering demand—and therefore the relative price—of energy. During these difficult times, the company’s management of cash is depicted in the cash flow statements for the year 2008–09 and 2009–10 as follows. 

Cash Flow Statement for the Year Ended 31st March

Questions for Discussion

1. For the year 2009, the company earned a profit before tax of ₹ 432.96 crore but its cash flow from operating activities was negative (−₹ 391.17 crore). In the next year, the company suffered a loss (−₹ 799.67 crore) but the cash flow from operating activities was positive ( ₹ 2,423.62 crore). Identify the main reasons for the same.

2. What has happened to debtors’ position in the year 2009 and 2010?

3. Indentify and analyse major uses of cash towards investing activities.

4. Analyse the major financing activities of Suzlon during 2009 and 2010. 

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Particulars Cash flow from operating activities Profit/(loss) before tax and exceptional items Adjustments for: Depreciation/amortization Interest income Interest expenses Provision for operation, maintenance and warranty Provision for performance guarantee Provision for liquidated damages Exchange differences, net Other adjustments Operating profit before working capital changes Movements in working capital (Increase)/decrease in sundry debtors (Increase)/decrease in inventories (Increase)/decrease in loans and advances (Increase)/decrease in margin money deposit Increase/(decrease) in current liabilities and provision Cash generated from operations Direct taxes paid (net of refunds) Net cash generated from operating activities before exceptional items Exceptional items paid Net cash (used in)/generated from operating activities Cash flow from investing activities Purchase of fixed assets Proceeds from sale of fixed assets Investments in subsidiaries Sale/Redemption of Investments in subsidiaries Inter-corporate deposits repaid/(granted) Loans granted to subsidiaries Repayments received from subsidiaries Interest received Dividend received Net cash used in investing activities Cash flow from financing activities Share application money received/refunded Proceeds from issuance of global depository receipts Proceeds from issuance of share capital including premium Debenture, zero coupon convertible bond and share issue expenses Proceeds from issuance of debentures Proceeds from long-term borrowings Proceeds from issuance of zero coupon convertible bonds Payment towards buy-back of FCCB Expenses incurred towards buy-back/extinguishment of FCCB Repayment of long-term borrowings Proceeds from short-term borrowings, net Interest paid Dividend paid Tax on dividend paid Net cash generated from financing activities Effect of exchange difference on cash and cash equivalents Net increase in cash and cash equivalents Cash and cash equivalents at the beginning of the year Cash and cash equivalents at the end of the year 2010 (799.67) ( in Crore) 126.27 (222.79) 653.59 99.58 119.25 54.48 41.55 11.02 83.28 1,760.80 585.82 55.53 11.55 (65.61) 2,431.37 (7.75) 2,423.62 2,423.62 (219.96) 1.68 (990.24) 34.21 (3,491.98) 1837.60 220.76 11.40 (2,596.53) (94.96) 522.97 0.12 (16.38) 2,781.42 452.64 (200.13) (104.88) (99.36) (2,023.57) (646.02) 571.85 (0.57) 398.37 70.95 469.32 2009 432.96 99.16 (122.43) 380.12 143.05 281.79 155.65 0.63 (15.56) 1,355.37 (1,443.93) 99.60 (220.25) (45.18) 449.30 194.91 (64.41) 130.50 (521.67) (391.17) (288.67) 1.40 (2,678.71) 389.53 (35.78) (2,373.27) 1,273.83 123.13 5.36 (3,583.18) 95.00 6.94 (5.05) 300.00 590.00 (41.96) 2,861.02 (365.89) (149.83) (24.39) 3,265.84 0.23 (708.28) 779.23 70.95