Suzlon Energy acquired German wind turbine manufacturer Repower in 2007 for $1.8 billion. The acquisition brought together Repower's strong research and development, technology teams, and access to European markets with Suzlon's vertically integrated supply chain, global market reach, manufacturing base, and financial resources. The combination created what was intended to be a global leader in wind power solutions with the largest product portfolio and ability to deliver high growth and margins. However, Suzlon struggled after the 2008 financial crisis, facing debt issues and weak market demand exacerbated by the acquisition debt load and problems integrating Repower.

1. Suzlon Energy Acquisition of
Repower

2.  Indian textile manufacturer Tulsi Tanti founded Suzlon in
1995.
 To avoid having to rely on India’s notoriously unpredictable
and expensive electric power grid to power his family’s textile
operations.
 After commissioning two wind turbines, Tanti discovered that
wind energy was an even better business than textiles.
 IPO in 2005, 43 times oversubscribed
 Market Capitalization (1,297,228,341*8.85)
Rs.11480470817.8

3. Steps of Suzlon in Global
Markets
 In 1996 Tanti secured the rights from German turbine
manufacturer, Sudwind, to sell its turbines in India. But before receipt
of his first order, Sudwind went bankrupt. Seizing the opportunity, Tanti
bought the global rights to Sudwind machines, hired the
manufacturer’s engineers, and acquired its research and development
centre in Germany.
 In 2003 internationalized its operations through securing a contract
with DanMar & Associates for a 24-turbine wind farm in Minnesota and
targeted the Sillicon valley.
 In 2006, Suzlon bought Hansen Transmissions, a Belgian
manufacturer of wind turbine gearboxes
 In 2007, Suzlon purchased REpower, a German manufacturer of large
wind turbines, for $1.8 billion.

5.  REpower is a German wind turbine company founded in
2001, which was subsequently acquired in December 2009
by Suzlon Energy Ltd.
 Its product range comprises several types of turbines with rated
outputs of between 1.5 and 6.15 megawatts. It created the 5M, in
2005. REpower's 1.5-megawatt range of turbines is one of the most
successful turbines in its class.
 In 2002 REpower launched its 2-megawatt range, currently popular
in series of production.
 REpower is one of the leading players in the fast-growing worldwide
wind energy sector, specializing in high output turbine technology
particularly suitable for offshore turbines.
 REpower has established a strong presence in a number of key
European markets and is pursuing promising development plans in
China, India and the USA.

6.  In May 2007 Suzlon Energy of India acquired the majority
shareholding in REpower for €1.3 billion.
 The deal was structured in such a manner to allow Suzlon to
purchase Martifer's stake (22%) within two years for a fixed price
of €265 million.
 Suzlon's total investment of approximately US$ 1.6 billion gives it
a holding of 66%, with the next largest shareholder being Martifer
of Portugal.
 Suzlon subsequently strengthened its position by buying the
remaining 30% Areva stake in June 2008 for more than
€350 million.
 Areva went on to purchase the majority holding in 5MW rival,
Multibrid.
 In 2009 Suzlon raised its share to 92% of REpower.[As of 31

7. Impact of Acquisition on Share price

8. Share Price Movement since IPO

9. Share Price Movement 2007

10. Rationale Behind the Acquisition
 The combination brings together strong R&D, excellent
technology teams and access to European markets with a
vertically integrated supply chain, global market reach, strong
technology and manufacturing base and financial muscle
 The combination promises to be a technology powerhouse
capable of delivering and sustaining high growth with high
margins
 The REpower –Suzlon combination has the potential to become
the world leader in wind power solutions
 The partnership will create the most reliable product with the
best life cycle cost

11. Key Financial Ratios* Mar '07 Mar '06 Mar '05 Mar '04 Mar '03
Investment Valuation Ratios
Face Value 10 10 10 10 10
Dividend Per Share 5 5 4 10 5
Operating Profit Per Share (Rs) 43.28 32.62 53.4 60.05 45.26
Profitability Ratios
Operating Profit Margin(%) 23.14 24.75 24.2 18.48 16.56
Gross Profit Margin(%) 22.72 25 23.45 17.31 17.03
Net Profit Margin(%) 19.41 21.28 18.62 18.14 12.5
Return on Long Term Funds(%) 32.63 31.89 43.24 28.58 16.75
Liquidity And Solvency Ratios
Current Ratio 1.49 2.47 1.43 1.4 1.74
Quick Ratio 2.4 2.05 1.59 1.57 1.87
Debt Equity Ratio 0.31 0.12 0.54 0.59 0.31
Long Term Debt Equity Ratio 0.04 0.07 0.27 0.3 0.19
Debt Coverage Ratios
Interest Cover 14.09 22.61 14.04 7.53 10.06
Total Debt to Owners Fund 0.31 0.12 0.54 0.59 0.31
Management Efficiency Ratios
Inventory Turnover Ratio 3.98 3.49 3.92 3.99 4.05
Debtors Turnover Ratio 3.03 3.35 3.86 2.81 1.44
Fixed Assets Turnover Ratio 14.07 15.32 12.41 7.48 5.84

12. Ratio Analysis of Suzlon Mar '12 Mar '11 Mar '10 Mar '09 Mar '08
Investment Valuation Ratios
Face Value 2 2 2 2 2
Operating Profit Per Share (Rs) 4.85 1.51 -1.26 5.77 10.71
Profitability Ratios
Operating Profit Margin(%) 12.55 6.16 -5.57 11.92 23.09
Gross Profit Margin(%) 9.89 2.56 -9.18 10.55 21.85
Net Profit Margin(%) -7 -3.95 -37.89 -6.34 20.09
Return On Capital Employed(%) 8.62 3.35 -0.71 6.52 16.21
Return On Net Worth(%) -9.19 -2.74 -25.3 -7.24 20.39
Liquidity And Solvency Ratios
Current Ratio 0.87 1.31 1.14 0.82 1.46
Quick Ratio 1.07 1.91 2 2.19 2.12
Debt Equity Ratio 1.17 0.99 1.36 1.13 0.44
Long Term Debt Equity Ratio 0.82 0.81 1.02 0.53 0.29
Debt Coverage Ratios
Interest Cover 1.29 0.78 -0.14 2.39 12.97
Total Debt to Owners Fund 1.17 0.99 1.36 1.13 0.44
Management Efficiency Ratios
Inventory Turnover Ratio 4.87 4.5 4.67 5.45 4.71
Debtors Turnover Ratio 2.4 1.65 0.91 1.8 2.63
Fixed Assets Turnover Ratio 4.56 3.57 2.97 8.91 9.65
Total Assets Turnover Ratio 0.58 0.33 0.27 0.53 0.7

13.  Ever since September 2008, when the financial crisis struck,
Suzlon had faced an uphill struggle to even stay afloat.
 Suzlon was grappling with a product recall crisis, an over-
leveraged balance sheet.
 A messy acquisition of German wind energy major REpower
Systems.
 A spate of senior level exits
 As credit markets froze, the market for wind turbines all but
dried up.
Reasons behind Suzlon’s slowdown

14. Future Prospects
 Rising Demand for Electricity. Global warming
become a warm issue and trend is shifting towards
green and clean energy projects, Suzlon has the
future.
 The Suzlon has very high correlation with the
Industrial production. So Suzlon is eagerly waiting
for breakthrough from recession.

15. THANK YOU!!