Suzlon rides the tide

Sarosh Bana

Once heavily in debt, Suzlon Energy Limited, the world’s fifth largest wind turbine supplier, is setting its finances in order.

Headquartered in Pune, a city not far from Mumbai, Suzlon was one Indian company that not only bore the brunt of the economic slowdown of 2008, but had been taking time to emerge from the shadows.

Within the last three months alone – between 22 October 2011 and 18 January 2012 – the company secured 151 MW in new orders worldwide. These firm orders went to Suzlon’s German subsidiary, REpower Systems, the wind turbine company founded in Hamburg in 2001.

Indicating that these orders highlighted the strong competitive positioning the Suzlon Group enjoyed across all key wind markets worldwide, Suzlon Group chairman Tulsi Tanti says that his organisation offers the most “comprehensive solutions to customers the world over with its range of products and solutions, from onshore to offshore, and encompassing all wind regimes”.

The projects include several wind farms in Germany featuring REpower’s latest turbine models 3.4M104 and 3.2M114, with 3.4 and 3.2 MW of rated power respectively. Other orders with turbines of the MM92 or MM82 type are destined for wind farms in Germany, the UK, France, Belgium, Canada and the U.S.

REpower chief executive officer Andreas Nauen notes that the orders underscore the continuing momentum in the wind market worldwide, particularly in developed markets in Europe and North America - which REpower is focusing on: “Looking ahead, we expect a year of continuing growth for the Group backed by our robust technology and service offerings, and extensive track record,” he adds.

Suzlon’s global spread extends across Asia, Australia, Europe, Africa and North and South America, with over 18,000 MW of wind energy capacity installed in 28 countries, operations across 32 countries, a workforce of over 13,000 and revenues of approximately US$5 billion.

Apart from the overseas orders, Suzlon Energy also bagged 166.3 MW of new orders in India worth Rs935 crore over a two-month period between 22 October and 22 December 2011. The orders were from a mix of customers that included public sector enterprises; as well as large, small and medium corporates; and ranged from as small as 0.6 MW to 20 MW. The product mix was primarily S82-1.5 MW and S88-2.1 MW turbines.

Suzlon’s product portfolio ranges from sub-megawatt (600 kilowatts) onshore turbines to one of the world’s largest commercial 6.15 MW offshore turbines, with a vertically integrated, low-cost manufacturing base. This
6.15 MW turbine is produced by REpower, a major player in wind turbine technology, particularly offshore. The Hamburg firm has around 2,500 employees and about 3,000 wind turbines operating worldwide.

Recently, Suzlon gained US$187 million (Rs890 crore) by divesting its 26.06 per cent stake in wind gearbox manufacturer Hansen Transmissions International NV of Belgium to Germany’s ZF Friedrichshafen AG. The transaction was concluded by AE-Rotor Holding BV (Suzlon’s step-down wholly-owned Dutch subsidiary) with ZF last July. AE accepted the offer made by ZF for the entire issued share capital in Hansen Transmissions at 66 pence per share.

Suzlon Energy’s chief financial officer Robin Banerjee noted that this transaction marks an important step towards deleveraging and strengthening Suzlon’s balance sheet. His company had acquired Hansen in 2006 and had driven its growth by expanding capacity in Asia and making it a more cost-efficient player.

Both the Hansen divestment and the continuing REpower “squeeze-out” process are key to Suzlon’s long-term strategy. The cash raised by Suzlon from its Hansen equity sale will be used towards reducing its debt and buying out minority shareholders in REpower Systems. Suzlon had acquired a 95 per cent share in REpower in December 2009.

It has set the cash compensation for the transfer of shares in REpower from minority shareholders at €142.77 per no-par value share. This amounts to €63 million (Rs398 crore) for the 5 per cent stake purchase. A successful completion of these proceedings will result in REpower becoming a step-down, wholly-owned subsidiary of Suzlon.

“Looking at our markets, we continue to see strong growth in India, Germany, France, UK, Canada and the offshore segment, reflected in our extremely strong US$6.5 billion (Rs32,300 crore) order book position for 4,734 MW,” says Tanti. “As a Group, we see sustained momentum with our diversified geographic footprint, and a customer base primarily comprised of large utilities and independent power producers.”

Sarosh Bana is India correspondent for Renewable Energy Focus magazine.

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