Suzlon Energy Pvt. Ltd.

SUBMITTED BY :
GROUP 4
 SUZLON ENERGY LIMITED : THE COMPANY

Suzlon Energy is India`s largest wind-energy provider, with Over 13,000 people in 33 countries

Operations across the Americas, Asia, Australia and Europe Fully integrated supply chain
with manufacturing facilities in three continents

It provides total solutions in Wind Power Generation with cohesive integration of

consultancy, design,manufacturing, installation, operation and maintenance services

Market leader in Asia, Suzlon Market Share (Combined with RE power) rose to9.8%
thereby making Suzlon 5th largest wind turbine manufacturing company in the world

Sophisticated R&D capabilities in Belgium, Denmark, Germany, India and The Netherlands
 Differentiating Factor

Turnkey (end-to-end) solutions

Vertical Integration
Global Integration
Focus on QM and Health, Safety and Environment
Customized products as per needs of individual customers
Low cost producer, top-class design
Focus on Key High Growth Markets
Growth through M&A
In-house manufacturing of critical components such as rotor blades, towers and control
systems with control over the design and technology of gearboxes (Hansen) and generators
(Elin)
Strong track record in EPC delivery across the world; constructed some of the worlds
largest wind farms with capacities ranging from 200 MW to over600 MW
Strong balance sheet and the highest recurring end-year EBITDA margin in the wind industry
(20%)
Defined strategic focus
 Repower : THE COMPANY

REpower is one of the leading players in the fast-growing worldwide

wind energy sector

specializing in high output turbine technology particularly suitable

for offshore turbines

The management of the company has forecasted revenues of EUR

450 million for 2006

REpower has established a strong presence in a number of key

European markets

pursuing promising development plans in China, India and the USA

 Rationale Behind the Acquisition
REpower and Suzlon will together form the best team in the global wind energy industry;
The partnership will create the most reliable product with the best life cycle cost

The REpower Suzlon combination has the potential to become the world leader in wind
power solutions

The combination promises to be a technology powerhouse capable of delivering and

sustaining high growth with high margins

The combination brings together strong R&D, excellent technology teams and access to
European markets with a vertically integrated supply chain, global market reach, strong
technology and manufacturing base
 Problems and Challenges
The unforeseen challenges that came along with the acquisition REPOWER
are among the toughest that Tulsi Tanti has ever faced.

Tanti operated his company Suzlon has entered the market

well how ever, he is currently with the big fishes in the field they have never really focused
facing growth and performance of wind turbine solutions and on the R&D department; inflow
crisis after the possession of the competitors are all set to of debt has become insufficient
repower as he is finding it hard give a fierce competition and and very expensive after the
to maintain 50% annual growth Suzlon find sit hard to match up collapse of Lehman brothers.
target to their (global competitors)
standards

Problem statement
 Extensive product line
End to End Solutions
Vertical Integration and Amalgamation

STRENGTHS Market leadership in India and Global

Presence
Growth higher than the industry rate
Expanding internationally while
maintaining manufacturing in India

Management Structure
Capital Intensive
WEAKNESSES

Overseas Business
Lack of proper R& D
Considered to be a non-serious player
 Intense competition
Overdependence on US for sales
Foreign Exchange risk
Threats Increasing interest rates
non-availability of debts due to the
collapse of Lehman brothers

Favorable tax exemptions from

companies
Opportunities Untapped offshore market
Steady source of demand due to a
shift towards green power
 Integration of Suzlon with Repower : Problems

REpowers finances are ring-fenced, which means that Suzlon cannot use the cash reserves the
. German subsidiary has to pay off the debt.

Suzlons heavy reliance on REpower can be seen from the fact that the German subsidiary
accounts for more than half of its order book at the end of October. The group has an order
book of nearly Rs. 37,000 crore ($6.5 billion), of which the India business accounts for 27
per cent, international business 16 per cent and REpower 57 per cent.

Suzlon is discussing with its lenders, as part of its corporate debt restructuring package, to
take over the loans REpower has obtained from German banks and include them in the CDR.
REpower had, earlier this year, obtained a 750 million loan from a couple of German banks
 Porters Five Forces Analysis
.
Buyer Power Threat of Substitutes
(Moderate):There are Supplier Power (High): (Moderate to High):
very few potential High demand for Other renewable
buyers, they are composites and energies, Price
sensitive to pricing and backward integration by substitution from
power purchase key players. conventional sources,
structure. falling oil and gas prices.

Industry Rivalry
Entry Barriers (High): (Moderate to
Investment costs in High):There are high
technology, Quality costs, competitive
control standards and pricing and large or
Lack of experience. global players
 WHAT SHOULD SUZLON DO ?

REpower had a strong offshore presence, which Suzlon should tap. REpower is a
technology leader in Europe and controls about 10 per cent of the German
market. the lenders are convinced that the business is operationally viable and that it
is a matter of time before the developed economies pick up. Suzlon will be in a
stronger position to capitalize on this

The company should re-worked its strategy so that REpower will focus on the
developed economies of Europe and the US, Suzlon will concentrate on the emerging
markets, which include Brazil, India, China, West Asia and North Africa

Tanti is a hands-on person and if Suzlon is to grow and remain strong, he has to bring
in more senior management talent and also learn to delegate responsibilities. The
challenge will also be managing so many cultures and helping them work as one team

Though It is ranked fifth in the world after its acquisition but has compromised on
high growth and margins. Suzlon should look to get its growth back
 CONCLUSION

During recession, the company The situation exacerbated when

The scenario in overall energy
was spending about 40% of its the company defaulted on $221
sector has not been very bright
revenues on inventories, loans million worth of foreign currency
since recession putting an
and advances etc. which was convertible bonds (FCCBs) the
additional pressure on the
highly unsustainable; lot of biggest ever default by an Indian
companies
M&As post-recession company

Overall financial health of the

The share price has taken a hit
company is not very good and
and investors have lost
strong measures must be
confidence in Suzlon
initiated from the management
Thank You