Professional Documents
Culture Documents
Strategic Mangement
Riddhima Agarwal 02
Gargi Datta
13
AvinashLobo 34
Sumit Kumar
35
Nikhar Shah 55
Suzlon Energy Limited
A Major Force in the Global Wind Industry (Ranked 5th
Worldwide)*
* by capacity installed
Company Vision
“ To be a technology leader, to be among the top 3 wind energy
companies in the
acumen to exceed
sector”
Company Mission
“To pursue technological advancement and combine innovation,
providing end-to-end
maximum value
People Strength
1997: Det Norse Veritas (DNV) certifies Suzlonwith the coveted ISO 9001/2
2002: First Export Order, Its First Wind Turbine in the USA
2005: Korean Order for a 150 MW for the Jeju Wind Farm Project
2006: 200 MW Wind farm Project for Australia Gas & Light Company
7
Industry Overview and
Analysis
Global wind Industry
In 2006, over 15 GW of new wind power capacity was installed worldwide
Installed Capacity
Cumulative Capacity
Global wind turbine
flow
Global Market
Reverse Outsourcing
Dependence on U S markets
(PTC) till 31st Dec 2009 only, creating uncertainty for wind
farm developers
• Presently the company is running an order book backlog of 817MW (Rs 4,000
crores)
•Suzlon will have to increase the capacity of its plants from 1.5MW - 2MW to
3.5 MW
- 4 MW to compete with its global peers
•Inspite of rising inputs the company enjoys pricing power which is indicated
by the continuous price increases over the past few quarters
Operational Efficiency
•The total assets are growing at a faster rate compared to EBIT. Hence
there is a continuous decrease in ROTA
•The company has tried to improve the ROTA through sale and leaseback
however:
•Sale and leaseback of land highly limited due to regulations and multiple
ownerships
•Cancellable lease on WTGs
•Lease rentals not fixed but dependent on the output
•On further analysis we find the figure of sundry debtors in the doubtful
category, is increasing YOY
Operational Analysis
Six units of Suzlon Energy were downgraded from stable to negative by crisil on basis of high D/E
and the impact of global slowdown
Increased borrowings to fund acquisition of Hansen in FY07 raised debt equity and led to a dip in
interest coverage and DSCR
Loan book increased sharply. However, borrowing cost dipped due to low cost borrowings on
account of ZCCB
Financial Leverage -
Impact
Profitability Analysis
•ROCE has seen a decline inspite of YOY growth in
PAT due to increases YOY capex for capacity
building
•Also PAT has been affected by increased costs of
shipping and loss in unhedged forex exposure and
credit crunch
•There has also been exceptional expenses to
Growth in NW:
•The company raised INR 21.8 bn through a follow-
on offer of equity to selected QIBsat an issue price
of INR 1,917 per equity share of INR 10
•The effective 100% holding in Hansen, a
subsidiary, was diluted during the year to71.3%
which led to a gain of INR 12.0 bn
•Investments increased to INR 31.4 bn in FY08 as
against INR 0.2 bn in FY07 due to investments in
REpower.
•Cash and bank balances stand at INR 69.6 bn in
FY08 as compared to INR 15.4 bn in FY07. The
increase was mainly due to increase in term
deposits with banks, placed from QIP, Hansen IPO
Profitability Analysis
The decline in profitability has been a concern in
Control inventory
Better collection
Improve COGS
In the Market
Financial performance
Value to share holders
Profitability
Stock price
Leverage
Ratings
Opportunities
Over dependence on US
Technology risk
growth
Strategies Going Ahead
Future strategies
•Continuing Rapid Growth
•Being in the profitable sectors - US and Europe
•Manage risks of over dependence
•Improve value to share holders
•Improve operational efficiency
•Manage Backlogs
•Improve Industrial Relationships
•Solar Energy
75
Conclusion
76
In Focus