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Suzlon

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  • 1. SUZLON:POWERING A GREENER TOMORROWSuzlon Energy Limited (Suzlon) was established in 1995 by Tulsi Tanti and isheadquartered in Pune, India. It came into picture because of depletion of conventionalenergy resources like coal and oil and ever increasing pollution levels caused by thecombustion of these fossil fuels .The concerns led to the thought of some environmentalfriendly sources of power and energy. Such a situation led to beginning of journey ofSuzlon into renewable sources of energy industry. The company along with itssubsidiaries engages in designing, developing and manufacturing of wind turbinegenerators and related components like rotor blades, control panels, nacelle cover,tubular towers, Generators and gearboxes. Further, the company also provides forconsultancy, design, manufacturing, installation, operation and Maintenance services aswell as involved in wind resource mapping, identification of suitable sites and technicalplanning of wind power projects. It started journey with small projects to supply windturbine generators for a 3.34 MW wind farm project in Gujarat. It got its first internationalsale order in U.S.A. from Dan Mar & Associates to supply 24 turbines. The companyprincipally operates in India, China, The Americas, Europe, New Zealand, South Korea,South Africa and Australia. Suzlon, a major force in Global Wind Industry (Ranked 5thWorldwide) by installed capacity. It provides end-to-end power solutions. The companyholds nearly 10.5% share in the global market. Now, the company has the totalproduction capacity of over 3000 MW. Currently it has a combined manufacturing baseof 2,700MW of annual capacity, and is undertaking an aggressive expansion program toexpand its base to 5,700 MW of capacity in FY2009.Milestones:The Company obtained the official non-exclusive, nontransferable license for themanufacturing, marketing, dealing and servicing of APX-60 type blades from the trusteeof Aerpac B.V upon its liquidation, for consideration of Euro 200,000 with an agreementthat was entered into between the trustee of Aerpac B.V and theCompany dated June 4,2001. This license is valid for an indefinite period. The growth story so far is as follows:1998: Company installed first wind turbine in Maharashtra Satara district.2000: Commissioned 50MW wind turbine generator at Vankhusavade in Maharashtra.2001: Formation of subsidiaries with Suzlon wind Energy Corp, USA and Suzlon Energy.2002: First export order i.e. First Wind Turbine in the USA.2003: Representative office in Beijing, China.2005: Korean Order for a 150 MW for the Jeju Wind Farm Project2006: 200MW Wind Farm Project for Australia Gas & Light Company.In March 2006, it acquired Hansen Transmissions, the worlds second largest turbinegearbox maker, for US$585mn.
  • 2. 2007: 400 MW deal with PPM Energy of Portland, USA. Acquired German wind turbinecompany RE Power. In June 2007, Suzlon finally saw off French nuclear group Areva ina hard fought battle for Repower, paying US$1.9bn for its German rival.2009: Market entry into Sri Lanka with an order to supply 10 MW of wind turbinecapacity to a project developed by Senok Wind Power Pvt. Ltd. Looking at the option tostart business operations in the Canadian market in 2010.Strengths: • Skill Amalgamation • Cost Reduction • Reverse outsourcing • End to End Solutions • Vertical Integration and Amalgamation • Market leadership in India and Global Presence • Integrated Business Model • Good Innovations and Research & Development • Human Resources • The Electricity Act, 2003, specifies that a minimum percentage of power generation should come from non-conventional energy Sources.Weakness: • Management Structure entirely dependent on Tanti Brothers. • Capital Intensive • Overseas Business • Operational Risk • Foreign Cash Conversion • Growth in Assets overweighting Growth in Profits • Basic Infrastructure and problem from LocalsOpportunities: • Environmental and Government initiatives • Favorable tax exemptions • Steady source of demand • Untapped offshore Market • Green Power RevolutionThreats: • Intense competition • Over dependence on US for business • Foreign Exchange Risk • Technology Risk • Decreasing Price of crude • Interest rate increase in loans • Further Cancellation of orders
  • 3. Clientele: Name CountryMSPL LTD. IndiaBajaj Auto Ltd IndiaTATA Group IndiaRELIANCE Group IndiaEdison Mission Group U.S.AJohn Deere Wind Energy U.S.ATierra Energy U.S.AMaestrale Green Energy ItalyTechnologies Energeticas Sa PortugalAyen Energy Company TurkeySIIF Energy BrazilAustralia Gas & Light AustraliaCompetitors:Gamesa (Spain)Vestas (Spain)Enercon (Germany)GE Wind (USA)Global Wind Energy ETF (USA)Nordex (Netherlands)GoldWind (China)Clipper Windpower (UK)Bhel (India)GE Wind Energy (US Subisidiary,India)Enercon (India) Ltd.Vestas Wind Technology India Pvt. Ltd.NEPC India Ltd.Market ShareCONCLUSION from experts:At this price, stock is having very low downside risk. The entire Negative has beendiscounted in the price. Investor with low risk Appetite could start accumulating thisstock. Investors can initiate fresh long positions at the dips around the level of 55.
  • 4. Currently the share price of Suzlon stands at rs.58.50 If the investors are holding thestock, can remain invested. We expect a return of 50-70% from this level.

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