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Suzlon Energy Ltd.

BSE: 532667 Sector: Engineering
NSE: SUZLON ISIN Code: INE040H01021
BSE 00:00 | 03 Dec 7.01 -0.07
(-0.99%)
OPEN

7.02

HIGH

7.25

LOW

6.96

NSE 00:00 | 03 Dec 7.00 -0.05
(-0.71%)
OPEN

7.05

HIGH

7.10

LOW

6.95

OPEN 7.02
PREVIOUS CLOSE 7.08
VOLUME 6690593
52-Week high 9.45
52-Week low 3.46
P/E
Mkt Cap.(Rs cr) 6,240
Buy Price 0.00
Buy Qty 0.00
Sell Price 0.00
Sell Qty 0.00
OPEN 7.02
CLOSE 7.08
VOLUME 6690593
52-Week high 9.45
52-Week low 3.46
P/E
Mkt Cap.(Rs cr) 6,240
Buy Price 0.00
Buy Qty 0.00
Sell Price 0.00
Sell Qty 0.00

Suzlon Energy Ltd. (SUZLON) - Chairman Speech

Company chairman speech

Dear Stakeholders

According to the Global Trends In Renewable Energy Investment reportthe global deployment of wind and solar projects reached a new record level in 2019 as184 GW of new Renewable energy capacity excluding hydro was added in 2019 representinga 12% annual increase. Falling costs and a push to zero emissions energy sources presentednew opportunities for the Renewable energy sector which attracted investment to the tuneof $282.2 billion in 2019.

The Global Renewable Energy sector is on the threshold of a revolutionit is expected that the next decade will be the one that shall help renewable energy togrow to its full potential. Moreover today clean energy is also amongst the mostaffordable energies which shall benefit the sector at large and certainly pitchesrenewable energy to be a mainstream energy source especially in the post pandemicscenario where there is a focus on sustainable living and reducing emissions.

Wind Energy - Global Outlook

In 2019 60.4 GW of new wind energy capacity was installed taking thecumulative global installations to 651 GW at the end of CY19 an increase of 10% comparedto 2018. Market-based mechanisms drove this growth with more than 40 GW of wind capacitybeing auctioned worldwide. China US UK India and Spain continue to be the top fivemarkets accounting for 70% of new capacity.

GWEC's Global Wind Report estimates 355 GW of new capacity will beadded in the next five years taking the global installed capacity to over 1000 GW byCY24. We could see around 71 GW of wind energy added each year.

Wind Energy - India Outlook

With 2.3 GW installed in CY19 India was the second leading country inthe Asia-Pacific region after China which installed 26.2 GW. India is the world'sfourth-largest onshore wind market by installations with 37.5 GW of wind capacity as ofCY19 and has the potential for more than 695 GW at 120 metres. Today wind energy accountsfor 10.1% of overall installed power capacity in India and 44% of renewable energycapacity in the country. The ever-increasing demand for energy in India can no longer bemet through traditional energy sources alone. Renewable energy must be a major part of thesolution because it can meet the demand in a cost-effective and sustainable manner whileat the same time achieving broader socioeconomic objectives and manage climate changeconcerns.

Recently installations of wind power in India has decelerated and themarket was greatly constricted last year with only 2.3

GW installed in 2019. Several factors have led to the decline in theinstallation including issues related to market transition grid land availability andpayment delays for renewable projects. However a lot of work has been done by theindustry and the government to resolve these issues.

I strongly believe that the worst is behind us not just as a companybut as a sector as well. Despite a prolonged transition wind energy in India is at aninflection point today. Policy issues are being ironed out and the market is now on a pathto recovery and tenders from earlier auctions are yet to close making order intakepromising. Efforts towards grid infrastructure and land allocation are being strengthenedin order to resolve the execution challenges facing India's wind market. The recentannouncement by the Power ministry to extend waiver of InterState Transmission System(ISTS) charges and losses on supply of power generated from wind sources until 30thJune 2023 will provide a boost to the sector. The next five years will see a huge positivemomentum in the wind industry at a holistic level.

Suzlon - FY20 Performance

Liquidity constraints and the ongoing debt restructuring processimpeded Suzlon's operations and affected our FY20 performance. In spite of the testingtimes Suzlon commissioned 350 MW in FY20 which speaks volumes of our strong technical andproject execution capabilities built over two decades of experience in the Indian market.

We continued to get orders from marquee customers who demonstratedfaith in our products and technology despite of financial challenges faced by the Company.

Our Operation and Maintenance Services (OMS) business continued todeliver strong performance while achieving 96.6% machine availability for our customers.We were also successful in adding 88 MW of third party business to our OMS fleet. It washeartening to note that all our sites were operational and working despite severalchallenges for generation of electricity throughout the lockdown period to serve thenation. Today we are the custodians of over 12.8 GW of wind energy assets under service inIndia making us the 2nd largest Operations and Maintenance Company in theIndian power sector. We also have around 2.5 GW of wind assets under service in theinternational markets.

Our forging and foundry business - SEForge has shown excellentperformance by developing sizeable third party business and has achieved significantgrowth in the export business reducing its dependence on the parent company for business.

Key Corporate Initiatives

In FY20 the management was relentlessly working on the Debt ResolutionPlan for the Company and has successfully managed to close it with unanimous approval fromLenders and Bondholders. I would like to thank all our Shareholders for having faith inthe Company and whole heartedly supporting all the resolutions clearing the path forcompletion of our Debt Restructuring process.

This Debt Restructuring has eased the pressure on our cash flowssignificantly and given us headroom for ramping up business operations. We have reducedour fixed cost steeply and brought down the interest costs by more than 70%. This hasresulted in substantial reduction in the break-even point from pre-restructuring levelsensuring a long term sustainable business case. It improves our overall competitiveness inthe market place. With fresh equity infusion the capital structure of the company hasimproved and creates a stronger balance sheet allowing us to focus on ramping upexecution of our order book of 867 MW (As on quarter ended 30th June2020) toensure sustainable growth.

Several initiatives were undertaken alongside the debt restructuringprocess to revamp the organization for long-term sustainability and profitability. Amassive reorganisation of the business and operating models was executed in line with thenew market paradigm to set us up for success and give us the competitive advantage in thecoming years. Another critical initiative was the Fixed Cost and resources optimisationacross the board which resulted in massive cost reduction helping bring down ourbreak-even point further.

Technology and Innovation: Setting the Standard

At Suzlon we have always stressed the importance of technology andinnovation in the renewable energy sector. We firmly believe that technology andinnovation will remain the catalyst that will drive renewable energy growth. SubsequentlyResearch and Development (R&D) remain the cornerstone of Suzlon's success in itspursuit of harnessing energy through renewable sources.

At Suzlon we continuously strive to innovate with a focus on reducingthe Levelised Cost of Energy (LCoE) year on year. We introduced the 3 MW product serieswith the S133 turbine in India with the aim of making more and more low wind sites viableand increasing generation. Turbines of the 3 MW series including the S133 were set up inTamil Nadu and Gujarat over a year ago and are showing very encouraging performance. Therecently launched S133-160 mts is the tallest WTG in India expected to deliver ~23 - 25%higher generation over the S120 and will be the best product for the next generation ofwind energy power plants.

Moreover to meet the growing demands of digitalization Suzlon hasdeveloped a number of value-added services such as Supervisory Control and DataAcquisition (SCADA) system Condition Monitoring System (CMS) Preventive Maintenance (PM)mobile app Drone based inspection that enable us to maximize turbine efficiency andavailability by leveraging big data technologies.

The Group continues to focus on R&D with an aim to develop nextgeneration technologically advanced and innovative products that offer reduced LevelisedCost of Energy (LCoE) for our customers. Our world-class technology and rich experience inthe wind sector enables us to have a very strong and diverse customer base making us thepreferred partner of choice.

Suzlon CSR

Suzlon is committed towards achieving the UN Sustainable DevelopmentGoals UN Global Compact Principles and National Voluntary Guidelines (NVGs) from 2008.CSR remains an integral component of our strategy to give back to the communities where welive and operate through dedicated sustainable practices. Through the Suzlon FoundationSuzlon's CSR arm we have reached over 900 villages and touched 1300000 lives byvarious initiatives such as providing clean drinking water medical care child educationprograms selfhelp groups. This year the Foundation undertook over 9000 activities thatfocussed on Environment Empowerment Health Livelihood Education and Civic Amenitiesand impacted over 83000 lives.

This year Suzlon received multiple awards such as the CII-ITCSustainability Awards 2019 - Commendation for Significant Achievement in Corporate SocialResponsibility and Suz-HOOK got recognised as compelling and promising Innovation underINK@WASH (Innovations and New Knowledge in Water Sanitation & Hygiene) platform byCentre for Energy Environment Urban Governance and Infrastructure DevelopmentHyderabad. We are proud of what we have been able to accomplish as we strive to developresources responsibly and create lasting value for communities.

Wind Energy to Power Aatmanirbhar Bharat

The Wind energy industry is supporting the Government's vision of‘Make in India' by championing the cause and is truly ‘Aatmanirbhar'with over 90% localization and the complete supply chain set up in India. The Indian Windindustry has set up 45 manufacturing units with a scalable annual capacity of 10000 MWout of which 6000 MW is with Suzlon alone. This supply chain is supported by over 4000SMEs producing wind turbine components across the value chain. This installed capacity canbe easily scaled to not just service India's increasing wind energy requirements butalso enable the country to develop an export economy of more than 5000 MW and become aGlobal Manufacturing hub for Wind Turbines and O&M services.

The Future is Bright

India's commitment to Renewable Energy remains intact and we stronglybelieve that the long-term fundamentals of the wind energy industry are sound. TheGovernment has set a target to achieve 60% of India's installed electricitygeneration capacity from clean sources and aims to achieve 510 GW of renewable energycapacity by 2030. Today Wind energy is competitive with other sources of energy and hasemerged as a mainstream energy source. Post the Covid-19 crisis Government willprioritise health and economic recovery there will also be an opportunity for cleanenergy transition as part of coping strategies and support measures to revive the economy.Renewable Energy will remain the catalyst to support and stimulate the global economy aswe recover from the Covid-19 pandemic.

We need to convert ‘crisis into an opportunity' during thistime of economic slowdown any cost-reducing proposition is the smarter alternative andRenewable energy delivers cheaper and cleaner electricity.

With tough times behind us going forward Suzlon is well positioned tocapitalize on the market opportunities with superior technology project executionexperience spanning over two decades new generation turbines offering higher energyyield presence across the entire value chain vertically integrated operations andbest-in-class service capabilities.

Our focus for FY21 remains to maintain our leadership position in Indiaand ensure sustainable growth of the Company in line with the expectations of ourstakeholders while creating a long term asset for our shareholders. I am confident thatour vast experience in renewables technological prowess and competitive competencieswill enable us to consolidate our market leadership.

I would take this opportunity to thank all our stakeholders andespecially our shareholders for the unrelenting support and trust you all have bestowed onSuzlon. Our journey towards creating a greener tomorrow would not be possible without you.

We at Suzlon are fully committed towards sustainable social economicand ecological development for creating a better world for the future generation and powera greener tomorrow!

Stay Safe & Healthy.
Best wishes
Tulsi R. Tanti

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