Business Strategy of Suzlon Energy Ltd.
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Business Strategy of Suzlon Energy Ltd.

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Business Strategy of Suzlon Energy Ltd. Presentation Transcript

  • 1. Suzlon Energy Limited Chandra M Verma PGPM508_56 07/28/09
  • 2.
    • Global Wind Turbine Market
    • Impact of Financial Meltdown
    • Snapshot – Suzlon Energy Ltd.
    • Growth Story – Suzlon Energy Ltd.
    • Competitors
    • Porter’s Five Force Industry Analysis
    • SWOT
    • Corporate Strategy
    • Business Strategy
    • Global Strategy
    • Challenges
    • Recommendations
  • 3.
    • Crisis Deepens in 2009, early 2010
    • Long‐Term Forecast: Annual MW added rises to over 60 GW by 2020
    • CDM would be a driver for the market
    • Opportunity in Onshore wind market
      • Brazil, Chile Pushing Latin America Wind Forward
      • State‐Driven Project Tenders in Egypt and Morocco Lift regional growth
    • Offshore Wind Market
      • Europe and UK Offshore wind market is growing
      • Untapped potential in North America ( United States, Canada) and Asia Pacific ( China, India )
    • New manufacturing facilities are coming up
    • Favorable policies can play key role
    Source : RENEWABLES GLOBAL STATUS REPORT | 2009 Update Source : RENEWABLES GLOBAL STATUS REPORT | 2009 Update
  • 4. • De-growth in industry’s sales - Slowdown in US and European markets in 2009 - China may be major growth market • Pricing pressure and raw material cost decline • Availability of debt funds • Deal sizes have shrunk • Latent demand strong but subdued due to funding uncertainty • Implementation of stimulus packages in various large markets awaited - demand resurgence should take hold • Slow improvement in orders being placed industry-wide in current year • Delays in funding and implementation of incentive programs can result in risk to projected growth
  • 5.
    • Products:
    • Control equipment
    • Gearboxes
    • Nacelle covers
    • Rotor blades
    • Towers
    • Wind turbine generators
    • Services:
    • Installation services
    • Operation and maintenance services
    • Site identification and development
    • Wind resource mapping
    • Company founded 1995 in India • 5th largest wind turbine supplier world wide • Presence across 5 continents and 14 countries • 15,000 employees – installed 5600 MW+ • R&D in Germany and Holland • Production facilities in India, China, Belgium and USA • End-to-end supplier of high quality wind turbines • Extended product programme and technologies through acquisition of Repower and Hansen Transmissions
  • 6.
    • Diffusion of knowledge
    • Acquired the technical know-how through licenses and purchasing of smaller wind technology companies
    • Resource mobilization
    • Leveraged factor costs - availability of low costs resources, labour and other infrastructural facilities
    • Vertical Integration
    • To reduce supply chain bottlenecks and ensure quicker delivery to customers
    • Mergers and Acquisitions
    • complementing its key strengths
    • synergistic with its operations, and
    • have manageable integration risks
  • 7. Top Tier Turbine OEMs • Vestas • GE Energy • Gamesa Eólica • Enercon GmbH • Siemens Wind Power • Acciona Windpower • REpower Systems AG • Goldwind Science and Technology • Sinovel Wind Co • Nordex AG • Dongfang Turbine
  • 8. Porter Five Forces
  • 9.  
  • 10. • Develop next-generation products with focus on improving efficiency/cost-per-kWh • Increasing production capacity and strengthening vertical integration • Augmenting Management Bandwidth • Strong focus on driving global growth • Moving up Value Chain with comprehensive end-to-end solutions
  • 11.
    • Integrated Business Model
    • Allows customers to benefit from cost efficiencies and economies of scale in wind farm
    • Provides hassle free solutions to customers
    • Provides greater control over execution time line
    • Control of value chain from planning to maintenance
    • Leveraging experience across wind energy value chain
  • 12.
    • Research and Development – Best of all World
    • Vertical Integration
    • Right product for the right market
    • Presence in high growth markets
  • 13.
    • Expanding Global Presence
        • Australia - Sustainable and internationally competitive renewable energy industry
      • USA – It has outpaced Germany in terms of capacity
      • China - Favorable policies & targets
      • Foray into new markets – Brazil and Sri Lanka
      • India – Robust domestic demand
    • Global Manufacturing Capacity
      • Manufacturing facilities in India, China, USA, and Germany
      • Suzlon has acquired forging and foundry capacity in India
    • Global Acquisitions
      • Hansen Transmission
      • Plugs critical gap in suzlon’s supply chain (gearbox - longest lead time)
      • Develops long term growth driver in terms of wind and industrial gearbox business
      • REpower Systems AG
      • Entry into large European markets
      • Complimentary product portfolio - offshore technology
      • Improve REpower margins through synergy
      • Capitalize on know-how and brand equity
  • 14.
    • Transition to being a global supplier
    • Suzlon has negative operating leverage
    • - high start up costs for manufacturing facilities
    • - increased freight cost
    • Growth has been fragmented among a growing number of smaller, more dispersed markets
    • 2. Increased uncertainty on Order Intake – Technology Issues
    • Blade crack issue - Incremental order intake from US will be challenging
    • Order sizes have shrunk - Credit availability, which could impact demand
    • 3. Large capacity + Weak demand = Margin Pressure
    • Industry majors are adding ~13,000MW
    • - pricing power will shift towards wind farm developers
    • - supply exceeding demand in the medium term
    • Working Capital Management
    • Huge inventory hold-up  
    • Poor collections
  • 15.
    • Sustained R&D efforts
    • Synergize with Repower
    • Reduction of inventory levels and focus on improving collections
    • Focus on offshore markets
    • Special attention to Chinese market
    • Leveraging on cost advantage (through backward integration and control on the supply chain)
    • Diversify into other renewable technologies like Solar PV and Biomass
  • 16.