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Suzlon Energy Ltd.

BSE: 532667 Sector: Engineering
NSE: SUZLON ISIN Code: INE040H01021
BSE LIVE 10:09 | 12 Dec 13.83 -0.04
(-0.29%)
OPEN

13.80

HIGH

13.93

LOW

13.75

NSE 09:54 | 12 Dec 13.85 0
(0.00%)
OPEN

13.85

HIGH

13.90

LOW

13.75

OPEN 13.80
PREVIOUS CLOSE 13.87
VOLUME 576688
52-Week high 22.25
52-Week low 12.80
P/E 11.62
Mkt Cap.(Rs cr) 7,357
Buy Price 13.83
Buy Qty 68055.00
Sell Price 13.86
Sell Qty 55026.00
OPEN 13.80
CLOSE 13.87
VOLUME 576688
52-Week high 22.25
52-Week low 12.80
P/E 11.62
Mkt Cap.(Rs cr) 7,357
Buy Price 13.83
Buy Qty 68055.00
Sell Price 13.86
Sell Qty 55026.00

Suzlon Energy Ltd. (SUZLON) - Chairman Speech

Company chairman speech

Dear Stakeholders

We began Financial Year 2015-2016 (FY16) with our sights set on one goal alone –rapid ramp up of volumes in order to achieve a turnaround of our Company. We havesuccessfully implemented our growth strategy in the last twelve months and we now bear theresults of our efforts.

SUZLON ACHIEVES TURNAROUND BACK IN PROFIT

The end of FY16 marked the period when we stepped back into black. The fiscal periodcame to a close on a net profit of Rs. 483 crores. We achieved this by focusing ourefforts to ramp up volumes maintaining tight control on fixed costs and increasing ourorder intake. Our endeavour to reduce debt and interest cost as well as improve networking capital has reinforced stakeholder confidence. In

FY16 consolidated net debt was brought down to Rs. 8452 crores from Rs. 14570 croresin the previous year.

This was combined with an annual sales volume of 1131 MW which was an increase of over149% over previous year. These efforts have enabled us to surpass the industry growth ratein India which stood at approximately 48%. We aim to increase our growth at a pace higherthan the industry average with a bid to further expand our 26% market share andmaintaining our consolidated leadership position in the domestic market.

We have already begun to strengthen our management team to support our growth planswith two recent inductions J.P. Chalasani and Rakesh Sarin.

J.P. Chalasani has rich experience in the power sector and is renowned for his peopleleadership and project management skills. He joined us as CEO of Suzlon Group.

On the other hand Rakesh Sarin who brings vast global experience in energy hasjoined us as CEO of international business and global services. Both these leaders havealready implemented changes to further drive innovation and growth leading to higherproductivity and human capital enhancement. We have also ensured that the leaders ofSuzlon remain motivated through extensive workshops with world renowned management gurusorganised on a periodical basis to facilitate implementation of global best practices atthe workplace.

On the manufacturing front we have re-started two manufacturing facilities atPondicherry for the production of Nacelle Hub Nacelle cover and Nose cone and alsoexpanded our blade manufacturing facility at Bhuj Gujarat.

Another importan to achievement of this financial year is the implementation of ourplan to expand our renewable energy portfolio by venturing into the solar space.

FROM ‘WIND ENERGY’ TO ‘RENEWABLE ENERGY’

As planned we have successfully made our transition from wind energy to renewableenergy through our foray into solar. Our business model for solar energy complements ourexpertise in wind and leverages our two decades of experience relationships and network.As a result we have positioned ourselves as one of the few turnkey solutions providers inthe sector offering concept to commissioning solutions. This covers the entire spectrum ofactivities functions and relationships that make possible the successful completion andmaintenance of every solar power project right from site identification technology designand selection EPC (construction of solar parks) system integration and lifecycle assetmanagement (service). Needless to say customers choosing Suzlon as their solar energyprovider will receive the advantage of Suzlon’s value chain. Hence we believe we arebest placed in the sector to form long term business partnerships.

Our asset-light business model for solar is advantageous as it allows us to outsourceequipment supply to strategically chosen Original Equipment Manufacturers (OEMs) whilealso giving us the advantage of minimum capital investment low fixed cost and high volumepotential in projects as well as service contracts.

This approach is what has led to the signing of PPAs for 280 MW of solar power projectsin Telangana and

Maharashtra. As we continue to further expand our product portfolio we will focus onwhat we believe to be the backbone of our organisation and its growth – R&D andtechnology.

WIND-SOLAR HYBRID

There is huge opportunity in this area given the complementary cycles of generation andthe better utilization of the installed infrastructure. However a dedicated policy forhybrid is still awaited and we believe it will take a 1-2 years for this opportunity totranslate into commercial scale.

Wind-Solar Hybrid has multiple benefits to offer. One does not have to duplicate costssuch as land and evacuation infrastructure. And most importantly Suzlon has an edge dueto its existing development pipeline and infrastructure and national wide operations andmaintenance strength.

R&D FOR TECHNOLOGY DEVELOPMENT

Research and Development (R&D) has been the backbone of Suzlon since its inception.We have established four R&D centres across the world to capitalise on expertise andexperience indigenous to particular regions. In FY16 we established the Blade ScienceCentre at Vejle Denmark with a view to capitalise on the technology expertise of theregion.

The centre will work on the development of aerodynamics pitch control systems smartcontrols and new structures.

This centre demonstrates our growing research base that will enable us to achieve theinnovation required to unlock the true potential of renewable energy. Through technologyadvancement we aim at lowering the Levelised Cost of Energy (LCoE) until we achieve adesired 20% reduction in five years.

We took one more step in this journey of technological advancement with theinstallation of our newest product from our 2.1 MW range the S111 120m prototype atNaliya Gujarat. This is the latest variant of our successful S97 120m and S111 90mproducts which combines the larger blade of S111 with the higher hub height and hybridtower of S97. The S111 120m showcases our ability to make low wind sites viable increaseefficiency and enable energy security affordability and reliability.

The S97 120m wind turbine with hybrid tower recently won the prestigious Golden Peacockaward in the category of Eco-Innovation. The S97 120m is an innovation unique to theclimatic and economic environment of the Indian wind energy market. Its prototypeinstalled at Kutch Gujarat in November 2014 achieved a Plant Load Factor (PLF) of 35%higher than the Indian industry average in similar conditions by approximately 10%. Theresult of predominantly indigenous design the S97 120m was developed within a record timeof 13 months against a regular development time of 24 months.

The hybrid tower combining a lattice and tubular tower offers the customer advantagesof a taller hub height greater stability larger rotor diameter and reduced cost. It alsocombines a larger swept area for the blade with large blade size thereby increasing thewind captured and the potential energy generation. We have already received an encouragingresponse for the product reiterating customer faith in our portfolio and projectexecution capability.

Additionally we have dedicated efforts on wind farm management technology to controlthe complete park. We will develop the ability to tailor not only the individualturbine’s performance with smart pitch control but also to optimize the downstreamwake-effect of all turbines in the park from any wind angle.

SERVICE: AN IMPORTANT PART OF OUR CUSTOMER EXPERIENCE

At Suzlon we offer the advantage of lifetime support to our customers therebyestablishing a partnership that goes beyond the installation and commissioning of windturbine generators (WTG). The operations maintenance and service (OMS) division offersSUzlon REliability (SURE services) which is Suzlon’s assurance of dependability atevery stage of investment.

This range of services offers support to ensure smooth functioning of all WTGs. Animportant aspect of OMS is the best-in-class Supervisory Control and Data Acquisition(SCADA) system. Designed with TIA 942 with

TIER 3 availability the SCADA system connects each WTG to Suzlon monitoring centres inPune- India Chicago- USA and Melbourne- Australia. The SCADA service enables real timemonitoring of WTGs expedites troubleshooting and notification facilitates dataacquisition and analysis for predictive maintenance all with secured access.

S UZ LO N F O UN D AT I O N : C SR T HAT I S ENTRENCHED WITHIN THE BUSINESS

The Suzlon Foundation continues to touch the lives of people around our project siteswith the unique CSR model that it employs. We believe that CSR should be an integral partof every aspect of our business.

Suzlon’s operations including those of the Suzlon Foundation are guided by thephilosophy of sustainable social economic and ecological development. This translatesinto action at the grass roots level not to just offer support but to facilitatesustainability as a way of life. Suzlon Foundation is actively involved in all activitiesand carries them out in collaboration with carefully chosen

NGO partners. At the end of the past year Suzlon has implemented CSR programs in 668villages reaching out to over one million local populace across 8 states and Union

Territory of Daman.

This number will continue to rise as our market reach increases aided by the fact thatrenewable energy has today become a mainstream source of energy globally.

RENEWABLE ENERGY: GLOBAL OUTLOOK AND

OPPORTUNITY

The renewable energy sector achieved numerous landmarks in 2015. Global investmentstood at US$329 billion surpassing the previous highest of US$318 billion achieved in2011. We live in a new era of clean energy growth that can fuel a future of opportunityand greater prosperity for every person on the planet. Governments businesses andinvestors around the world are realising that the progression to low-emissionclimate-resilient growth is inevitable beneficial and already under way.

Boosted by growing climate change awareness the sector is expected to leave itsprevious year’s records behind in 2016. Leading the transition from fossil fuels torenewable sources are the developing nations including India and China among others. Therenewable industry recorded a growth of 18% CAGR in 2015 and is expected to attractUS$5.86 trillion worth of investment between 2014-2035. (Source: IEA World EnergyInvestment Outlook; 2014)

This poses massive growth potential for the sector in India as well as for Suzlonwhich plays a pivotal role in shaping the country’s renewable energy footprint. Withthe government’s commitment to install 175 GW of renewable energy by 2022 and toreduce carbon emissions by 30% to 35% and increase renewables to 40% of the energy mix by2030 made at COP21 India is set to truly expand its renewable energy portfolio. Thedemand for renewable energy in the country is also high with production getting anoticeable boost through the ‘Make in India’ initiative.

The government has also strived to facilitate the growth of renewable energy throughthe establishment of a positive policy and business environment. As a result we witnessedannual installations of 3415 MW in FY15-16 higher than ever before and 48% higher thanthe previous year. The industry is expected to grow at a rate of 30% annually and mayeven surpass this on the back of the positive policies. Suzlon is expected to grow at arate higher than the market.

The Supreme Court ruling that supports Renewable Purchase Obligation (RPO) compliancethe Renewable Generation Obligation (RGO) Green Corridor inter-state transmissioncharges waiver inclusion of renewable energy in the priority lending sector UDAY schemewhich gives state utilities stronger credibility to invest in renewable energy andapproval of National Off-shore Policy which has opened up 7600 km of coastline foroff-shore wind energy generation projects have all positively affected the environment andestablished a US$200 billion opportunity.

With our product range unique business model and best-in-class services we arepoised to capitalise on the opportunity in the renewable energy market and will grow at arate higher than the industry. Foreign investment in the industry is also on a rise and wehave proven ourselves to be a preferred choice for potential partners over the past manyyears. We can also expect this trend to continue as we consolidate our position as apivotal player in the Indian market and then move to other focus markets and strengthenour international footprint.

RENEWABLE ENERGY: FROM ALTERNATIVE TO MAINSTREAM

Renewable energy so far considered to be an alternative to the conventional fuelsource has now progressed into becoming a mainstream energy source. This shift is drivenby the improved cost efficiency of wind energy sources with the help of advancements intechnology combined with an increasing focus on climate change which is leading peoplecompanies and countries to consume energy from more efficient sources. There is anincreased awareness about penalising the emitters of greenhouse gases. At the same timewe are witnessing technological advancement and reduced technology costs which enablesrenewable energy to be accessed even in rural areas.

To facilitate the desirable and sustainable growth of renewable energy sourcesGovernments around the world have put into place a positive and supportive policyframework. The mainstream position of renewables is evidenced in the global installationsduring 2015 which stood at 64 GW wind energy and 57 GW solar energy.

The world now adds more renewable power capacity annually than it adds (net) capacityfrom all fossil fuels combined. By the end of 2015 renewable capacity in place was enoughto supply an estimated 23.7% of global electricity with hydropower providing about 16.6%.Infact renewable energy has witnessed this growth at a time when the price of fossilfuels is falling. Infact from the total 200 GW of energy installed in the previous year120 GW came from renewables. Contributing to 60% of energy installed renewables haveestablished themselves as a preferred choice for power. This gives the sector a verypositive outlook and its players an unprecedented opportunity.

LOOKING AHEAD

Aligned with the ‘Make in India’ initiative and the green commitments of theIndian Government we aim to install 20 GW in the next six years. This is more than ourinstallations till date but this achievement is well within reach. We have established amulti-promged strategy that covers R&D manufacturing and design as we endeavour tomeet our goals. We plan to invest Rs. 200 crore for the setup of manufacturing facilitiesin Rajasthan Andhra Pradesh and Madhya Pradesh.

Our focus areas include R&D to harness technology and reduce Cost of Energy (CoE)increase Plant Load Factor (PLF) and make low wind sites viable ramp up volumes expandour presence in focused markets realize business efficiencies introduce new generationproducts enable digitalisation to enhance services and further optimize capitalstructure. We are also working on setting up utility- scale GW size renewable projects.With our foray into solar energy we have already expanded our portfolio and presence. Weare confident that with our plans and strategies we are well on the way to achieving ourvision of becoming one of the best renewable energy companies of the world.

Our successful turnaround is evidenced in the positive figures on which we closed thefinancial year. Now we aim at gaining momentum on this path of profitability. The supportof all our stakeholders including but not limited to our investors customers bankerssuppliers employees and government bodies has been pivotal to this achievement. Isincerely thank all of you for your unwavering trust and look forward to your continuedpatronage as we continue to work towards powering a greener tomorrow.

Best Wishes
Tulsi R Tanti