Company Analysis Report

On

Suzlon Energy

By,
Sudhakar Ghanta
MBA 1st year
JBREC
Introduction
 Introduction
The Company was incorporated in 1995 by Tulsi Tanti.

Tulsi Tanti was primarily in the textile business and was introduced to
wind energy through a wind power project that he had commissioned for his
textile factory.
The Company entered into a technical collaboration agreement in 1995 with
a German company, Sudwind GmbH Windkrafttanlagen to source the latest
technology for the production of WTGs in India.
The parties entered into a fresh agreement dated September 30, 1996, under
which Sudwind proposed to share technical knowhow relating to 0.27 MW,
0.30 MW, 0.35 MW, 0.60 MW and 0.75 MW WTGs in consideration for
royalty to be paid on the basis of each WTG sold over the course of five
years from the date of this agreement.
SWSL, a subsidiary of the Company, was incorporated in 1998 with the
objective of providing O&M for wind power projects set up by the
Company.
Suzlon Energy A/S, a wholly owned subsidiary of the Company was
incorporated in August, 2004 to supervise the international marketing
activities of the Company.
Cannon Ball Wind Energy Park-I, LLC ("Cannon Ball") was incorporated
as a limited liability company in July, 2002 for the purpose of setting up a
wind power project in North Dakota, USA. Cannon Ball is a wholly owned
subsidiary of SWECO which is a subsidiary of Suzlon Energy A/S.
 Vision

➢ To be the technology leader in the wind industry

➢ To be among the top three wind energy companies in the world
➢ To be the most respected brand and preferred Company for all stake
holders
➢ To be the best team and best place to work
➢ To be the fastest growing and most profitable Company in the sector
Board of Directors
 Board of Directors

Name Designation
Mr. Tulsi R Tanti e Chairman and Managing director
Mr. Ashish Dhawan Independent Director
Mr. Pradip Kumar Khaitan Independent Director
Mr. V Raghuraman Independent Director
Mr. Ajay Relan Independent Director
Mr. Girish R Tanti Whole Time Director
Mr. Toine van Megen Chief Executive Officer
Mr. Robin Banerjee Chief Finance Officer
Mr. Sumant Sinha Chief Operating Officer
Mr. Hemal A Kanuga Co. Secretary & Compl. Officer
Awards

Awards
➢ Minister for Non-Conventional Energy Sources Vilas Muttemwar and his
Ministry has been honoured with the World Wind Energy Award-2005 for
"Outstanding Achievements in Favourable Policies for Wind Energy".
By the World Wind Energy Association (WWEA).

➢ Suzlon Energy, India’s leading and the world’s fifth largest

wind power solutions company, has been awarded the
Euromoney and Ernst & Young Global Renewable Energy
Award for ‘M&A of the Year’ for the successful acquisition of
REpower Systems AG of Germany.

➢ Suzlon Corp. (Pune, India) was recently awarded U.S.

Environmental Protection Agency (EPA) recognition for
implementing a program from Ashland Distribution

➢ . The company received the EPA's "Design for the

Environment" formulator initiative award in recently
Products
 Products

✔ Wind Turbine Generators ‘Above 1MW up to 2MW’

✔ Wind Turbine Generators ‘Above 2MW’
✔ Wind Turbine Generator ‘Upto 1MW’
✔ Wind Turbine Generator
Competitors
 Main Competitors

➢Bharat heavy electrical limited

➢Reliance infrastructure

➢Nuclear power corporation of India

➢Tata powers
 Ratio Analysis

Introduction to Ratio Analysis

Introduction:-
A ratio is a simple mathematical expression. It is a number expressed in
terms of another number, expressing the quantitative relationship between the two.
Ratio analysis is the technique of interpretation of financial statements with the
help of various meaningful ratios. Ratios do not add to any information that is
already available, but they show the relationship between two items in a more
meaningful way. They help us to draw certain conclusions. Comparison with
related facts is the basis of ratio analysis. Ratios may be used for comparison in
any of the following ways.
• Comparison of a firm with its own performance in the past.
• Comparison of one firm with another firm in the industry.
• Comparison of one firm with the industry as a whole.
• Comparison of an achieved performance with pre-determined standards.
• Comparison of one department of a concern with other departments.

Meaning of Ratio Analysis:-

Ratio analysis is one of the techniques of financial analysis where ratios
are used as yardstick for evaluating the financial condition and performance of a
firm. Analysis and interpretation of various accounting ratios gives a skilled and
experienced analyst a better understanding of the financial condition and
performance of the firm then what he could have obtained only through a identify
of financial statements.
In other words of Robert Anthony, “Ratio is simply one number
expressed in terms of another”.

A ratio may be expressed in two ways:

Times:- When one value is divided by another, the unit used to express the
quotient is termed as TIMES.
Percentage:- If the quotient obtained is multiplied by hundred, the unit of
expression is termed as PERCENTAGE.

Advantages of Ratio Analysis:-

• Ratio analysis simplifies the understanding of financial statements.
• Ratios bring out the inter relationship among various financial figures and
bring to light their financial significance. Ratio analysis is a device to
analysis and interprets the financial health of the enterprise.
• Ratios contribute the significantly towards effective planning and
forecasting. A study of trend in the past works as a helpful guide of the
future.
• Ratios facilitate inter firm and intra firm comparisons. They bring out the
strengths, weakness and efficiency of the firms and departments.
• Ratios serve as effective control tools. They also facilitate establishment of
a standard costing system and budgetary control.

Types of Ratio:-
Ratios are classified into several types they are:
➢ Liquidity {or short term solvency} ratios.
➢ Leverage {or capital structure or long term solvency} ratios.
➢ Turn over {or Activity or performance} ratios.
➢ Profitability ratios.

1. Liquidity or Short term Solvency Ratio

Liquid ratios measure the ability of the firm to meet its current obligations.
A firm should ensure that it does not suffer from lack of liquidity, and also does
not have excess of liquidity. The failure of the company to meet its obligations due
to the lack of sufficient liquidity will result in poor creditworthiness, loss of
creditors, confidence or even in legal tangles resulting in closure of the company.
A very high degree of liquidity is also bad; idle assets earn nothing. The firm’s
funds will be unnecessarily tied up in the current assets. Therefore it is necessary to
strike a proper balance between high liquidity and lack of liquidity.
A .Current Ratio Or Working Capital Ratio:
Current ratio is the ratio of current assets to current liabilities. Current
assets are such assets that are expected to be realized in cash or sold or consumed
during the normal operating cycle of the business o with one year, whichever is
longer. They include cash in hand and at bank, bills receivable, net sundry debtors,
stock of raw materials, finished goods and work in progress, prepaid expenses,
outstanding incomes, accrued
incomes and short term or temporary investments. Current liabilities are liabilities
that are to be repaid with in a period of one year. They include bills payable,
sundry creditors etc...
Any installment of a long term liability payable within the next 12 months is also
current liability.

A Current ratio of 2:1 is usually considered as ideal. If current ratio is less than 2, it
indicates that the business does not enjoy adequate liquidity. However, a high
current ratio of more than 3 indicates that the firm is having idle funds and has not
invested them properly. If a business has an undertaking with its bankers to meet
its working capital requirements at short notice, a minimum current ratio 0f 1:33 is
expected.

B .Quick Ratio:
Quick ratio is a ratio of quick assets to quick liabilities. Quick assets
are assets that can be converted into cash very quickly without much loss. Quick
liabilities are liabilities which have to be necessarily paid within one year. All
current assets, except stock and prepaid expenses, are also quick assets. All current
liabilities, except bank over draft are current liabilities.

2. Liquidity or Short term Solvency Ratio

The short term creditors like bankers and suppliers of raw materials are
more concerned with the firm’s current paying ability. Different type of leverage
ratios are as follows:

A .Debt-Equity Ratio:
It reflects the relative claim of creditors and shareholders against the
assets of the business. Debts usually refer to long term liabilities. Equity includes
equity and preference share capital and reserve.

A debt- equity ratio of 2:1 is considered ideal. A firm with a debt-

equity ratio of less than 2 or less exposes its creditors to relatively lesser risks. A
firm with a high debt equity ratio exposes its creditors to a greater risk.
B .Proprietary Ratio:
 It expresses the relationship between net worth and total assets. A high
proprietary ratio is indicative strong financial position of business. Higher the ratio
the better it is.

C .Fixed Assets Ratio:

This ratio indicates the mode of financing the fixes assets. It
is calculated as

D .Interest Coverage Ratio:

This is used to indicate whether a business is earning
sufficient profits to pay the interest charges. I t is calculated as

3 .Activity Ratio or Turnover Ratio:-

 Activity ratios measure the efficiency or effectiveness with which a firm
manages its resources or assets. They calculate the speed with which various
assets, in which funds are blocked up, get converted into sales. The significant
activity ratios or turn over ratios are;
A .Inventory Turnover Ratio:
It is calculated as

B .Inventory Holding Period:

It is calculated as

C .Working Capital Turnover Ratio:

This Ratio Is Defined As

D .Fixed Assets Turnover Ratio:

It is defined as
4 .Profitability Ratio:-
This ratio measures the profitability of a concerned. Generally they
are calculated either in relation to sales or in relation to investment. The various
profitability ratios are discussed below. They are
A. Gross Profit Ratio:
It reveals the result of trading operations of business. In other
words, it indicates to us the profitability of the core activity of the business. It is
calculated as

B .Operating Ratio:
It expresses the relation between expenses incurred for running the
business, and the resultant net sales. It is calculated as

C .Earning Per Share:

It is the earnings accruing to the equity shareholder on everyone
held by him.
It is calculated as
Financial Analysis
Report of
The Company

Financial Analysis
Ratios 2005 2006 2007 2008
Current Ratio 2.32 2.98 3.37 2.73
Quick Ratio 1.59 2.05 2.40 2.12
Debt-Equity Ratio 0.44 0.13 0.33 0.46
Proprietary Ratio 0.84 0.90 0.94 0.97
Earning Per Shares 42.80 28.57 37.65 9.31
Ratio
Working Capital 2.08 1.55 1.54 1.58
Turnover Ratio
Fixed Assets Turnover 9.44 10.53 10.36 9.65
Ratio
Stock Turnover Ratio 3.96 3.56 3.96 4.70
Inventory Holding Period 90.90 101.12 90.90 76.59
Days Days Days Days
Gross Profit Ratio 22.17 23.54 21.78 21.85
Operating Ratio 24.20 24.75 23.15 23.09
Interest Coverage Ratio 9.26 15.88 11.09 10.44
 Interpretation

Interpretation
1. Liquidity or Short term Solvency Ratio
A .Current Ratio:-

Importance: It indicates the firms short term solvency position. A ratio of

2:1 is considered as ideal. If the ratio is less than one the firm faces problems in
meeting its short term obligations. Hence it is so important for every
organization.

Formula:

Ratios 2005 2006 2007 2008

Current Ratio 2.32 2.98 3.37 2.73

Ratio:

Interpretation: The Ratio is satisfy because it is more than

2:1.The Current Assets of the company is increased from 4994.61 to 6954.47
and Current liabilities are increased from 1501.98 to 2582.05 by which the ratio
is decreased as compare to the last year. In 2007 the ratio is 3.37 and in 2008 it
becomes to 2.73.
B .Quick Ratio:-

Importance: As stock may not be converted in to cash quickly we can not

measure the firm’s efficiency in meeting its obligations. Quick ratio is more
accurate method than Current ratio and is more useful. The ideal ratio is 1:1.

Formula:

Ratios 2005 2006 2007 2008

Quick Ratio 1.59 2.05 2.40 2.12

Ratio:
 Interpretation: The ratio is satisfy because it is more then the ideal ratio. The
Current liabilities are increased and Current assets is increased but after
deducting the inventory in ratio is little bit decreased. In 2007 the ratio is 2.40
and in 2008 it becomes 2.12.

2. Liquidity or Short term Solvency Ratio

A .Debt-Equity Ratio:-

Importance: It indicates the relationship between the long term loans and
share holders funds. So it is much important in the view of invester. It gives the
information about the relation between the owners funds to the share holders
funds. There’s no ideal ratio.

Formula:

Ratios 2005 2006 2007 2008

Debt-Equity Ratio 0.44 0.13 0.33 0.46

Ratio:
 Interpretation: The ratio is satisfy because it is less the 2:1. There is a 2 times
increased in share holders funds as compare to the last year and Rs 1948.1cr
increase in long term debt, which effect on the ratio. In 2007 the ratio is 0.33
and in 2008 it becomes 0.46.

B .Proprietary Ratio:-

Importance: It indicates relation between the assets and its long term debts
and other investments.

Formula:
 Ratios 2005 2006 2007 2008

Proprietary Ratio 0.84 0.90 0.94 0.97

Ratio:

Interpretation: The ratio is satisfy because it is less the 1. In 2007 net worth
of the company is 4550.46cr and 2008 it becomes 9722.79. In 2007 the Fixed
assets are 4849.95cr and in 2008 it is 10032.40. As you see the amount of Fixed
Assets and Net Worth is increasing in a proportionate rate, that’s why the ratio
becomes 0.97 from 0.94.

C .Fixed Assets Ratio:-

Importance: It tells about the barrowing power of the company on fixed

assets. The is less than one.

Formula:
 Ratios 2005 2006 2007 2008

Fixed Assets Ratio 9.44 10.53 10.36 9.65

Ratio:

Interpretation: There is a increase in the company sales which is good sign

for a company. And increased in fixed assets from 481.18 to 646.85 in 2008,
which is effects on the ratio. In 2008 the ratio is 10.36 and in 2008 it becomes
9.65.

D .Interest Coverage Ratio:-

 Importance: Shows the relation between the interest to be paid and profits,
the ratio is low we’ve to pay off the loans in order to retain profits.

Formula:

Ratios 2005 2006 2007 2008

Interest Coverage Ratio 9.26 15.88 11.09 10.44

Ratio:

Interpretation: There is a increase in PBT from 1119.58 to 1506.96 and

increase in Fixed interest charges 101.47 in 2007 and 139.61 in 2008 by which
there is a change in the ratio. In 2007 the ratio is 11.09 its decreased to 10.44 in
2008.
3 .Activity Ratio or Turnover Ratio:-
A .Inventory Turnover Ratio:-

Importance: By determining this ratio we can know the cost of goods sold,
with this we can restrict our CGS.

Formula:

Ratios 2005 2006 2007 2008

Inventory Turnover 3.96 3.56 3.96 4.70

Ratio

Ratio:
 Interpretation : The Cost of good sold is increased from 3232.47 to 4226.99
and the Average stock remains higher as compare to the last year which effect
on the ratio. Last year the ratio is 3.96 and it increased to 4.70.

B .Inventory Holding Period:-

Importance: As it dealing with the stock remained in the godown to be sold

the cost will go on increase , hence by this ratio we can know and can increase
our efforts of sales and decrease this ratio.

Formula:

Ratios 2005 2006 2007 2008

Inventory Holding 90.90 Days 101.12 90.90 Days 76.59

Period Days Days

Ratio:
 Interpretation: Due to increase in the Stock Turnover ratio, the holding
period days are decreased which is good for the company. In 2007 the holding
period is 90.90 and In 2008 it becomes to 76.59.

C. Working Capital Turnover Ratio:-

Importance: Explains about the net sales in relation to current assets and
liabilities, which can determine the target of sales.

Formula:

Ratios 2005 2006 2007 2008

Working Capital 2.08 1.55 1.54 1.58

Turnover Ratio
 Ratio:

Interpretation: There is a increase in the sales from 5380.37 to 6926.01 and

increase in the Work in Capital from 3492.63 to 4372.42. As compare to the last
year the proportion of work in capital and in net sales is slightly changed that’s
why the ratio is increased little bit.

D .Fixed Assets Turnover Ratio:-

Importance: It gives us details about the turn over/ profit with the given
fixed assets (efficiency of fixed assets utilization)

Formula:
 Ratios 2005 2006 2007 2008

Fixed Assets Turnover 9.44 10.53 10.36 9.65

Ratio

Ratio:

Interpretation: Due to decreased in the fixed assets the ratio is decreased

then previous year. We will try to increased the fixed assets to increased the
ratio. In 2007 the ratio is 3.89 and in 2008 its becomes to 2.70.

4 .Profitability Ratio:-
A .Gross Profit Ratio

Importance: It tells about the profit due to sales, so that we can put efforts to
increase profits.
 Formula:

Ratios 2005 2006 2007 2008

Gross Profit Ratio 22.17 23.54 21.78 21.85

Ratio:

Interpretation: The Gross Profit is increased by 52cr and Sales are increased
by 1045cr which effects on the ratio. The ratio is 21.78 in 2007 and 21.85 in
2008.

B .Operating Ratio:-
Importance: By this ratio we can control our operating expenses.

Formula:

Ratios 2005 2006 2007 2008

Operating Ratio 24.20 24.75 23.14 23.09

Ratio:

Interpretation: For calculating the Operating Ratio we have to add the

operating expenses in Cost of Goods Sold. The operating expenses are
increased slightly by which the ratio is decreased. Last year the ratio is 23.14
and in 2008 it becomes to 23.09.
C .Earning Per Share:-

Importance: It is useful for the long term investors. From the past earning
investers make decisions. No ideal ratio.

Formula:

Ratios 2005 2006 2007 2008

Earning Per Share 42.80 28.57 37.65 9.31

Ratio:

Interpretation: In Year 2007 the company EPS is 37.65 it’s decreased to

9.31 in 2008. The profit was decreased due to financial crises in the market in
2008.
Recent Changes
 Recent Changes
2008

Suzlon Energy Ltd has appointed Mr. Sumant Sinha as Chief Operating
Officer (COO) with effect from August 01, 2008.
The Company has splits its face value from Rs10/- to Rs2/-.

2009

Suzlon Energy Ltd has informed BSE that Suzlon Energy Australia Pty
Ltd., a step-down wholly owned subsidiary of Suzlon Energy Ltd has
entered into an agreement with AGL Energy Ltd for supply of 54 units of
Suzlon's S88-2.1 MW wind turbine generators translating to 113.4 MW
capacity in Australia in 2009.