India's Suzlon flies high on wind energy

By Sunrita Sen May 2, 2007, 14:13 GMT

New Delhi - Indian wind power major Suzlon Energy is flying high on the global demand for renewable energy.

Suzlon began with a 3.34 megawatt (MW) wind farm project in India's western Gujarat state in 1995. Today, in the space of just 12 years, it is the world's fifth-largest wind turbine manufacturer with a market share of 6 per cent.

A successful takeover of German company REpower, for which it bid earlier this year, will make Suzlon one of the world's three top players in the wind energy sector.

The story of Suzlon's growth is quite remarkable. Its founder Tulsi Tanti, 49, moved into the wind power business by sheer chance.

Frazzled by the erratic power supplies and rising energy costs at his textile mill in Gujarat, Tanti set up two windmills in 1990 with turbines imported from German company Suedwind.

Tanti found the windmills provided a reliable source of energy and were much cheaper than conventional energy, the costs of which kept rising. They were also more environmentally friendly.

Seeing huge potential, Tanti decided to exit his textile business and set up a company specializing in wind power solutions.

Along with three siblings, he sold some family property and raised 600,000 dollars to set up Suzlon Energy in 1995. Today Suzlon runs Asia's largest wind farm in Maharashtra state and has installed capacities in the United States, Brazil, Australia and China and a market capitalization of 8 billion dollars.

The company, based in the southern city of Pune, was listed on the Indian stock exchange in 2005. It has an annual turnover of 867 million dollars and orders worth 1.7 billion dollars in its kitty, according to latest company figures. It posted growth of between 90 to 140 per cent over the past thee years.

Tanti today is one of the richest men in India with a personal net worth of over 3.7 billion dollars, according to Forbes magazine.

Seventy per cent of Suzlon's shares are owned by Tanti and his siblings, but the company is managed by professionals around the globe. It has a staff strength of 9,500 belonging to 12 nationalities, global headquarters in Denmark and manufacturing units in the US, Belgium and China besides India.

Suzlon's success has much to do with its positioning as a low-cost producer with top-class design and technology, and its competence in providing end-to-end solutions. The Indian government's policy of tax breaks for alternative energy was a key element in powering Suzlon.

When Suzlon's initial turbine supplier Suedwind folded due to financial difficulties in 1997, the company took over its manpower to start R&D centres and manufacturing of turbines. Subsequently, Suzlon acquired a rotor blades manufacturer in the Netherlands.

In 2005, it acquired Belgium-based gearbox specialist Hansen Technologies for 565 million dollars, one of the largest acquisitions by an Indian firm. This largely completed the wind solutions supply chain and positioned Suzlon for its next leap forward.

It is with this leap in mind that Suzlon made a bid for REpower in February. 'Strategically, this acquisition would accelerate our growth in Europe,' Tanti said while announcing the bid. Europe accounts for 40 per cent of the global wind power market.

Suzlon is in competition with French nuclear-power giant Areva for REpower. The bidding is due to end on May 4.

But even if Suzlon fails to get REpower, its growth trajectory is undoubted.

Wind power accounts for less than 4 per cent of energy generated in India, but the government has been pushing renewable energy given rising prices of fossil fuels and growing consciousness of the environmental damage they cause.

Suzlon has 45 per cent of market share and, according to Tanti, huge prospects for growth in an energy-hungry country. 'India has wind energy potential of 45,000 MW,' Tanti said in an interview with news magazine India Today.

But it is the overseas sales that have been behind its recent growth. Out-of-India sales rose from about 8 per cent in 2004 to over 70 per cent in 2006. Orders have been coming from Australia, China, South Korea, Brazil, Italy and Portugal.

According to experts, the global wind energy industry has been growing at 27 per cent a year for the past five years. They predict that the global installed capacity for wind power, currently estimated to be about 62,000 MW, is set to double by 2009.

And Suzlon seems poised to ride the wind on this demand.

'The opportunity is global mainly because driving sustainable economic growth and mitigating the effects of climate change through clean, renewable energy sources are the need of the hour,' said Tanti. 'And we have leveraged ourselves to tap into market opportunities all over the world.'