Suzlon Energy Annual Report

Suzlon Energy’s (Suzlon) ROAE (adjusted) before exceptional items was at 20.2%,despite return on net operating assets (RNOA) before exceptional items being at 14.2%(ROE analyser analyses the difference).Declining RNOA, from 36% in FY06 to 14% in FY08, has led to ROAE dipping from 42%in FY06 to 20% in FY08. Cost of goods sold (as a percentage of sales) increased from 60% of sales in FY07 to65% in FY08, due to change in geographical mix in which it operates, undertaking ofwind turbine generator (WTG) erection, installation and commissioning of project activities, and changes in product mix. Unhedged foreign currency exposure (net liabilities) as at March 31, 2008, was INR 7.2bn. The company has recognised foreign exchange gain of INR 258 mn in FY08 (loss ofINR 333 mn in FY07) out of which INR 195 mn is unrealised gain. With INRdepreciating 13% against USD since March 2008, future profits will be impacted. During the year, Suzlon reported exceptional expenses of INR 1.5 bn (net of tax). Itincludes a provision of INR 1.2 bn made to resolve the blade crack issue in some of itsS88 turbines in the US and Portugal