Suzlon Energy Limited Chandra M Verma  PGPM508_56 07/28/09
<ul><li>Global Wind Turbine Market </li></ul><ul><li>Impact of Financial Meltdown </li></ul><ul><li>Snapshot – Suzlon Ener...
<ul><li>Crisis Deepens in 2009, early 2010 </li></ul><ul><li>Long‐Term Forecast: Annual MW added rises to over 60 GW by 20...
•  De-growth in industry’s sales - Slowdown in US and European markets in 2009 - China may be major growth market •  Prici...
<ul><li>Products: </li></ul><ul><li>Control equipment </li></ul><ul><li>Gearboxes </li></ul><ul><li>Nacelle covers </li></...
<ul><li>Diffusion of knowledge </li></ul><ul><li>Acquired the technical know-how through licenses and purchasing of smalle...
Top Tier Turbine OEMs •  Vestas •  GE Energy •  Gamesa Eólica •  Enercon GmbH •  Siemens Wind Power •  Acciona Windpower •...
Porter Five Forces
 
• Develop next-generation products with focus on improving efficiency/cost-per-kWh • Increasing production capacity and st...
<ul><li>Integrated Business Model </li></ul><ul><li>Allows customers to benefit from cost efficiencies and economies of sc...
<ul><li>Research and Development – Best of all World </li></ul><ul><li>Vertical Integration </li></ul><ul><li>Right produc...
<ul><li>Expanding Global Presence </li></ul><ul><ul><ul><li>Australia - Sustainable and internationally competitive renewa...
<ul><li>Transition to being a global supplier </li></ul><ul><li>Suzlon has negative operating leverage  </li></ul><ul><li>...
<ul><li>Sustained R&D efforts </li></ul><ul><li>Synergize with Repower </li></ul><ul><li>Reduction of inventory levels and...
 
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Business Strategy of Suzlon Energy Ltd.

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Business Strategy of Suzlon Energy Ltd.

  1. 1. Suzlon Energy Limited Chandra M Verma PGPM508_56 07/28/09
  2. 2. <ul><li>Global Wind Turbine Market </li></ul><ul><li>Impact of Financial Meltdown </li></ul><ul><li>Snapshot – Suzlon Energy Ltd. </li></ul><ul><li>Growth Story – Suzlon Energy Ltd. </li></ul><ul><li>Competitors </li></ul><ul><li>Porter’s Five Force Industry Analysis </li></ul><ul><li>SWOT </li></ul><ul><li>Corporate Strategy </li></ul><ul><li>Business Strategy </li></ul><ul><li>Global Strategy </li></ul><ul><li>Challenges </li></ul><ul><li>Recommendations </li></ul>
  3. 3. <ul><li>Crisis Deepens in 2009, early 2010 </li></ul><ul><li>Long‐Term Forecast: Annual MW added rises to over 60 GW by 2020 </li></ul><ul><li>CDM would be a driver for the market </li></ul><ul><li>Opportunity in Onshore wind market </li></ul><ul><ul><li>Brazil, Chile Pushing Latin America Wind Forward </li></ul></ul><ul><ul><li>State‐Driven Project Tenders in Egypt and Morocco Lift regional growth </li></ul></ul><ul><li>Offshore Wind Market </li></ul><ul><ul><li>Europe and UK Offshore wind market is growing </li></ul></ul><ul><ul><li>Untapped potential in North America ( United States, Canada) and Asia Pacific ( China, India ) </li></ul></ul><ul><li>New manufacturing facilities are coming up </li></ul><ul><li>Favorable policies can play key role </li></ul>Source : RENEWABLES GLOBAL STATUS REPORT | 2009 Update Source : RENEWABLES GLOBAL STATUS REPORT | 2009 Update
  4. 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. 5. <ul><li>Products: </li></ul><ul><li>Control equipment </li></ul><ul><li>Gearboxes </li></ul><ul><li>Nacelle covers </li></ul><ul><li>Rotor blades </li></ul><ul><li>Towers </li></ul><ul><li>Wind turbine generators </li></ul><ul><li>Services: </li></ul><ul><li>Installation services </li></ul><ul><li>Operation and maintenance services </li></ul><ul><li>Site identification and development </li></ul><ul><li>Wind resource mapping </li></ul>• 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. 6. <ul><li>Diffusion of knowledge </li></ul><ul><li>Acquired the technical know-how through licenses and purchasing of smaller wind technology companies </li></ul><ul><li>Resource mobilization </li></ul><ul><li>Leveraged factor costs - availability of low costs resources, labour and other infrastructural facilities </li></ul><ul><li>Vertical Integration </li></ul><ul><li>To reduce supply chain bottlenecks and ensure quicker delivery to customers </li></ul><ul><li>Mergers and Acquisitions </li></ul><ul><li>complementing its key strengths </li></ul><ul><li>synergistic with its operations, and </li></ul><ul><li>have manageable integration risks </li></ul>
  7. 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. 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
  10. 11. <ul><li>Integrated Business Model </li></ul><ul><li>Allows customers to benefit from cost efficiencies and economies of scale in wind farm </li></ul><ul><li>Provides hassle free solutions to customers </li></ul><ul><li>Provides greater control over execution time line </li></ul><ul><li>Control of value chain from planning to maintenance </li></ul><ul><li>Leveraging experience across wind energy value chain </li></ul>
  11. 12. <ul><li>Research and Development – Best of all World </li></ul><ul><li>Vertical Integration </li></ul><ul><li>Right product for the right market </li></ul><ul><li>Presence in high growth markets </li></ul>
  12. 13. <ul><li>Expanding Global Presence </li></ul><ul><ul><ul><li>Australia - Sustainable and internationally competitive renewable energy industry </li></ul></ul></ul><ul><ul><li>USA – It has outpaced Germany in terms of capacity </li></ul></ul><ul><ul><li>China - Favorable policies & targets </li></ul></ul><ul><ul><li>Foray into new markets – Brazil and Sri Lanka </li></ul></ul><ul><ul><li>India – Robust domestic demand </li></ul></ul><ul><li>Global Manufacturing Capacity </li></ul><ul><ul><li>Manufacturing facilities in India, China, USA, and Germany </li></ul></ul><ul><ul><li>Suzlon has acquired forging and foundry capacity in India </li></ul></ul><ul><li>Global Acquisitions </li></ul><ul><ul><li>Hansen Transmission </li></ul></ul><ul><ul><li>Plugs critical gap in suzlon’s supply chain (gearbox - longest lead time) </li></ul></ul><ul><ul><li>Develops long term growth driver in terms of wind and industrial gearbox business </li></ul></ul><ul><ul><li>REpower Systems AG </li></ul></ul><ul><ul><li>Entry into large European markets </li></ul></ul><ul><ul><li>Complimentary product portfolio - offshore technology </li></ul></ul><ul><ul><li>Improve REpower margins through synergy </li></ul></ul><ul><ul><li>Capitalize on know-how and brand equity </li></ul></ul>
  13. 14. <ul><li>Transition to being a global supplier </li></ul><ul><li>Suzlon has negative operating leverage </li></ul><ul><li>- high start up costs for manufacturing facilities </li></ul><ul><li>- increased freight cost </li></ul><ul><li>Growth has been fragmented among a growing number of smaller, more dispersed markets </li></ul><ul><li>2. Increased uncertainty on Order Intake – Technology Issues </li></ul><ul><li>Blade crack issue - Incremental order intake from US will be challenging </li></ul><ul><li>Order sizes have shrunk - Credit availability, which could impact demand </li></ul><ul><li>3. Large capacity + Weak demand = Margin Pressure </li></ul><ul><li>Industry majors are adding ~13,000MW </li></ul><ul><li>- pricing power will shift towards wind farm developers </li></ul><ul><li>- supply exceeding demand in the medium term </li></ul><ul><li>Working Capital Management </li></ul><ul><li>Huge inventory hold-up   </li></ul><ul><li>Poor collections </li></ul>
  14. 15. <ul><li>Sustained R&D efforts </li></ul><ul><li>Synergize with Repower </li></ul><ul><li>Reduction of inventory levels and focus on improving collections </li></ul><ul><li>Focus on offshore markets </li></ul><ul><li>Special attention to Chinese market </li></ul><ul><li>Leveraging on cost advantage (through backward integration and control on the supply chain) </li></ul><ul><li>Diversify into other renewable technologies like Solar PV and Biomass </li></ul>

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