Institute of Management Technology, Nagpur

Submitted to: Dr. V.K. Singh

Group Members: Hardik Gupta
Raghav Bhatter
Varnika Goel
Yash Choudhary

ABSTRACT
The largest wind turbine manufacturer in India and fifth largest in the world in 2009 Suzlon
Energy was found in 1995. It grew rapidly by satisfying the needs of polyester
manufacturing in India and then grew to meet the demand of energy of other manufacturers.
It expanded globally strategically through achieving vertical integration by providing end to
end solutions. Suzlons growth was hampered by global economic slowdown and the team
has been bought together to identify the global opportunities and build a strategy to capitalize
on those opportunities.

INTRODUCTION
Suzlon India Limited is one of the leading manufacturers of Wind Turbine generators
(WTG), founded in 1995 and headquartered in Pune, India. Currently the company is ranked
as the worlds fifth largest wind turbine supplier, in terms of cumulative installed capacity
and market share. Its global spread extends across Asia, Australia, Europe, Africa and North
and South America. The company develops and manufactures technologically advanced
WTGs with an emphasis on high performance and cost-efficiency. Suzlons multidimensional approach to value engineering and cost reduction provides competitive
advantage to its customers. It offers a comprehensive product portfolio, ranging from submegawatt onshore turbines at 600 kilowatts to the worlds largest commercially available
offshore turbine at 6.15 MW, with a vertically integrated, low-cost, manufacturing base.

WHY WAS SUZLON ENERGY FORMED?

Suzlon Energy was formed to carry on business of manufacturing, producing, processing,
generating, accumulating, distributing, transferring, preserving, mixing, supplying,
contracting, as consultants, importers, exporters, buyers, sellers, assemblers, hirers, repairers,
dealers, distributors, wholesalers, retailers, jobbers, traders, agents, brokers, representatives,
collaborators, of merchandising, marketing, managing, leasing, renting, utilizing of
electricity, steam, power, solar energy, wind energy, biomass energy, geothermal energy,
hydel energy, tidal and wave energy, and other conventional, non-conventional and renewal
energy sources, waste treatment plants of all kinds and equipment thereof in India and outside
India.

MILESTONES ACHIEVED
Suzlon Energy achieved various milestones from the time it was formed. Some of the
milestones achieved are as follows:

2002-03
First wind turbine was commissioned in USA
Suzlon Enerys S60-1000 KW capacity model was certified by Center of Wind
Energy Technology

2003-04

 Installation mark of 600 MW was crossed

Mr. Tulsi Tanti won the prestigious award World Wind Energy Award
Representative office in Beijing was opened

2004-05
Crossed 1 GW installation mark
2 MW Wind Turbine Generators dedicated by Smt. Jayalalitha
Ranked 9th in the world by BTM Reports
Suzlon Energy Denmark was incorporated

2005-06
Crossed 50% market share in India
Came up with IPO of 29.34 million shares which was a great success
Framework Agreement was signed with Edison Mission Group for 157.5 MW

2006-07
Commissioned its first 2.1 MW capacity turbine in Australia
Commissioned first Wind Turbine Generator in China

2007-08
Secured co-operation agreement with Areva
Completed its first FCCB issue for USD 300 million

2008-09
Suzlon Energy Ltd is certified ISO/IEC 27001:2005 compliant by Bureau Veritas
Certification (India) Pvt. Ltd.

2009-10
Suzlon Group crosses 20 GW in global installations
Completed S8X testing successfully

Suzlon Energy Limited, the worlds fifth-biggest wind-turbine maker failed to

redeem $175.8 million of zero-coupon notes and $32.8 million of 7.5 percent
bonds due and marked India's largest convertible bond default.
As a result, Suzlon lost the tag of India's Largest Turbine maker for the first
time and also issued shares to the lenders.

Why Did Suzlon Fail?

Almost 99% of Promoters stakes is pledged and hence the promoter has little
interest in the company. High Level Debt accompanied by severe losses further
hampered the prospects of the company. Also, Bad M&A Practices resulted in
further poor performance.
Investors Confidence in the company took a battering when the shares of the
company fell by more than 96% starting January 2008. Failed Acquisitions,
high debt and poor competitive environment eroded has the shareholders
wealth in Suzlon Energy. The company has had to divest its non-core assets,
which is a flip side of the acquisition it did earlier.
With Business becoming tough and with high level debts, the company has
failed to insulate its financials.
With an investment cash of Rs. 11,000 crore, Suzlon has much more debt
than what is a safe level given its net worth. Ironically, it is more than the
money locked in Inventory and Receivables.
The recession of 2008 was not taken seriously by Lehman Brothers and the
company failed to realized the gravity of the situation. Most of them were used
to a situation where demand for wind turbines far outstripped its supply.
With No Orders coming from Europe and North America, the company's
growth stopped. Huge investments were needed in wind farms with lack of
orders, Suzlon again took a battering. Also, given that Suzlon's reputation had
taken a major hit that year due to blade failure, the doom was inevitable.
This is what pushed the Board of Suzlon to look beyond the western giants and
explore new markets. This resulted in falling back to India-a country which was
unaffected by 2008 global meltdown-and shutting down its plant in U.S.A.
However, this wasn't easy. Suzlon did not have a product range to cater to a
country like India where small and medium wind farms required a different set
of turbine altogether.

However, in the urgency to expand globally, Suzlon misread the due diligence
process. Although the demand supply gap was high and attractive, new products
still needed a certain level of testing and Suzlon failed miserably at this.

In a country like India, where individuals focus more on setting up wind farms
rather than running it, due to tax benefits given on capex, Suzlon did not see the
need to do a proper due diligence and paid a heavy price later on as a result.
Biggest Shock for Suzlon came when Suzlon-supplied blades started developing
cracks across various installations at Edison Mission Energy and John Deere in
the US. This controversy took its toll on Suzlons order book and a huge
amount of orders were cancelled.

Mistakes
Improper due diligence combined with the rapid urge of expansion let down
the company.
High Debts proved to be a big burden on cash flows of the company and more
debts was taken to service older debts and eventually the promoters ended up
pledging 99% of their shares.
Lastly, instead of rectifying it's mistake during the blade crisis, Suzlon started
blaming the western media for acting biased against an Indian Company.