Sun’s Shanghvi reported in talks with Tanti for Suzlon stake

Sun Pharmaceuticals founder Dilip Shanghvi and Tulsi Tanti of Suzlon Energy are in advanced talks for a multi-layer deal to eventually give the pharma baron's family a stake in the debt-laden wind turbine maker.

According to an Economic Times report, people familiar with the development said a key player in the deal is Shanghvi's brother-in-law Sudhir Valia, who is a director in Sun Pharma as well as Lakshdeep Investments & Finance, which will provide Rs4,000 crore which Suzlon will use to meet its working capital requirements.

In a separate transaction, these sources said the Tusli Tanti-owned company would take over solar panels firm PV Power Tech, which is controlled by Shanghvi's son Aalok, through a stock deal that would result in the Shangvi family acquiring stake in Suzlon. Aalok heads the international marketing division of Sun Pharma.

Both these transactions are dependent on Suzlon first repaying Rs6,000 crore to State Bank of India. The turbine maker will make this payment from the recent Rs7,200-crore sale of its German arm, Senvion SE, formerly REpowear (See: Suzlon in €1-bn pact with Centerbridge to sell subsidiary Senvion SE).

Sun Pharma declined comment. "We have no comments to offer on these queries," a spokesman said while Suzlon said it won't react to "market speculation".

If the deal materialises, it will help Shanghvi, India's richest man after Mukesh Ambani, expand into the wind energy sector. It will also help Suzlon cut its heavy burden of debt of Rs17,300-crore. The deal will enable Suzlon to enter the solar energy sector, which is a key priority of the Narendra Modi government.

Suzlon does not manufacture any solar power equipment yet, but it said at the recent Vibrant Gujarat summit that it plans to set up 500 MW of solar capacity in the state.

Suzlon, in the last few years, has been grappling with a sharp slowdown in both local and global turbine sales due to the economic downturn, removal of tax concessions for wind power in India, high interest burden and stiff competition from Chinese companies; and consequently its debt pile has been rising.

Suzlon had defaulted on repayments in 2012. Its rising interest burden pushed the company into corporate debt restructuring.

The government has substantially revised its earlier solar energy target of achieving 20,000 megawatts of capacity by 2022 to 100,000 MW. It also plans to put in place 60,000 MW of wind power capacity by then.