Company

Analysis of
Suzlon Energy
Limited

Submitted to:-

Submitted By:-

Dr Praveen Gupta

Ankit Joshi(056)

Akshat Sharma(057)
Abhijit Nanda(058)
Keshav Agiwal(059)
Aniruddha Dutta(060)

INDEX
SR NO

PARTICULARS

COMPANY PROFILE

INDUSTRY PROFILE

SWOT ANALYSIS

IFE/EFE MATRIX

SUPPLY CHAIN

PORTERS 5 FORCES MODEL

PESTEL ANALYSIS

BCG MATRIX

GE-9-MATRIX

10

REFERENCES

COMPANY PROFILE
Founded in 1995 by Tulsi Tanti, Suzlon is a vertically integrated wind power company
headquartered in Pune, Maharshtra. Suzlon engages in the manufacture and sale of wind turbine
generators in the America, Asia, Australia and Europe. The companys products include drive
systems, annular generators, grid connecting systems as well as towers and foundations
comprising tower constructions, tubular steel towers precast concrete towers, and foundation
constructions. Suzlon began journey to the forefront of the wild energy industry with a small but
significant project to supply wind turbine generators for a 3.34 MW wind farm project in
Gujarat, India. In little over a decade, Suzlon has grown to rank as the world 5 leading and India
the and Asia leading manufacturer of wild turbine, with over 2000 MW of wind turbine capacity
supplied in India and across the world of USD 675 million, CFS FY 2006, with current order
book exceeding USD 1.7 billion. Technology- Suzlon today develops and manufactures
technologically advanced, high-performance and cost- efficient wild turbine, to meet the diverse
need customers all around the world. In India, Suzlon offers customer end-to-end wind energy
solutions, including wind resource mapping site identification, site development and installation,
and finally operation & maintenance services. This allows Suzlon to offer Indian customer
economies of scale, and eliminates the need for customer involvement in the complex process of
wind far m development.
Formerly ranked as the world's fifth largest wind turbine supplier, it has since then dropped out
of the Global top ten ranks as of 2014. The company claims to have over 14,800 MW of wind
energy capacity installed globally, with operations across 19 countries and a workforce of over
7,000.In 2003 Suzlon set up its first office in Beijing. In the states of Tamil Nadu, Maharashtra
and Gujarat, Suzlon's installation base is over 1,000 megawatts each (Over 1GW). Corporate
such as the Bajaj Group, the Birla Group, MSPL, DLF, the Tata Group, the Reliance Group, the
ITC Group, L&T, as well as public sector companies like GSPL, HPCL, Indian Railways,
Rajasthan Mines & Minerals, GACL, GSPC, GSFC, Indian Oil, ONGC and State Bank of India
(SBI, Nuclear Power Corporation of India Limited (NPCIL), NALCO, GAIL, Vedanta Group
(HZL), DLF Group, amongst others, have chosen Suzlon for their wind power projects.
The company is listed on the National Stock Exchange of India (NSE: SUZLONEQ) and on the
Bombay Stock Exchange (BSE: 532667).

INDUSTRY PROFILE
The development of wind power in India began in the 1986 with first wind farms being set up
in coastal areas of Maharasahtra (Ratnagiri), Gujarat (Okha) and Tamil Nadu (Tuticorin) with 55
kW Vestas wind turbines. These demonstration projects were supported by MNRE. The capacity
has significantly increased in the last few years. Although a relative newcomer to the wind
industry compared with Denmark or the United States, India has the fourth largest installed wind
power capacity in the world. In 2009-10 India's growth rate was highest among the other top four
countries.
As of 30 June 2016 the installed capacity of wind power in India was 27,151 MW, mainly spread
across South, West and North regions. East and North east regions have no grid connected wind
power plant as of March, 2015 end. No offshore wind farm utilizing traditional fixed-bottom
wind turbine technologies in shallow sea areas or floating wind turbine technologies in deep sea
areas are under implementation. However, an Offshore Wind Policy was announced in 2015 and
presently weather stations and LIDARs are being set up by NIWE at some locations.
Wind in India are influenced by the strong south-west summer monsoon, which starts in MayJune, when cool, humid air moves towards the land and the weaker north-east winter monsoon,
which starts in October, when cool, dry sir moves towards the ocean. During the period march to
August, the winds are uniformly strong over the whole Indian Peninsula, except the eastern
peninsular coast. Wind speeds during the period November to march are relatively weak, though
higher winds are available during a part of the period on the Tamil Nadu coastline.
A notable feature of the Indian program has been the interest among private investors/developers
in setting up of commercial wind power projects. The wind power generation capacity in India is
49,130 MW as per the official estimates in the Indian Wind Atlas (2010) by the Centre for Wind
Energy Technology (C-WET). The potential is calculated with respect to 2 per cent land
availability at windy locations and pertains to a 50 meter hub height level of the wind turbines.
Presently large wind turbines with higher hub height in the range of 80-100 meter with large
rotor diameters up to 120 m are available in the Indian market. Conceding technological
advancement and higher wind speeds at higher hub heights, the potential of 49,130 MW at 50
meter level if extrapolated at 80 meter standard hub height, the projected wind potential using the
same land availability will be in the order of 1,02,788 MW (not officially declared owing to lack
of validation). As on March 31, 2015 a total of about 23439.26 MW of commercial projects have
been established until.

SWOT ANALYSIS
Strengths
Integrated Business Model:
Suzlon energy limited is having an integrated business model that they dont have to go to other
suppliers for raw products. They have very good vertical integration for supporting their
production activities. So they dont have to be dependent for supplies and till the end of 3rd
quarter of this year they were planning for integration which they were not having till now.

In-house Technology and Design Capabilities:

They are having enough in-house technology development capabilities as they have skilled
employees so they can design their products on their own. They dont have to go to other
outsider experts for designing the product.

Market leadership in India and Global presence:

It is the only company of India which is having a global presence and as its a market leader it
can have benefits of its band image.

Prudent acquisitions and alliances:

Suzlon has entered into very prudent acquisition which is helping it for increasing its main
strength of vertical integration as well as it provides chance of global expansion also. For
example suzlon has acquired Hansen which was the worlds second largest manufacturer of gear
boxes.

Global Production:
Suzlon has a global presence. It is at fifth rank in the world for generating wind energy. It
produces the products which can be used globally, though it is not that much technically
developed compared to other global players, but its products can work at global level also.
Pricing Power:
As suzlon is the market leader in India it can drive the price and others will follow it. But its now
necessary for it to produce and sale at low cost and the product must be cost effective, because
new global players are entering into the market.

Diversified Product Line:

Suzlon is producing each type of wind turbines working in India. So its not lacking in production
in India, but at global level it is not providing full range of products and has to lose its customers
who need diversified range of products.

Weaknesses
Operational risk:
Suzlon as a market leader dont have that much efficient operation management team. We can
say this because there are many complaints of customers regarding their operating staffs, who
provides after sale services and it is also lacking up to some extend in operating the business, so
proper implementation of strategies is lacking.

Growth in Assets overweighing Growth in Profits:

Since last few years suzlon has focused more on integration. So it goes for acquisition and
backward integration which blocks its investments in assets, thus its growth rate of profit has
declined. So compared to growth in assets the growth in profit is low, which is not favorable for
the firm.

Stock price:

When companys stock price is more than its book value it can be considered a good sign for
investors, but currently due to the sharp fall in market its stock prices has fallen below the book
value, while other competitors share price has not declined their book value.

Ratings:
Before some time only moody a credit rating agency has downgraded suzlon energy limited due
to its financial weakness. They have also found the improper operation management at Suzlon.

Improper working capital management:

Earlier suzlon was financially strong company, but this downturn in economy has brought
company in a critical situation. And suzlon is also facing this problem because of improper
working capital management. Many experts also think that Suzlon has paid more for its Hansen
acquisition.

Weak Strategic financial management:

Suzlon when expand its business through RE power it has signed contract that suzlon will pay
EURO 65 million in December 2017, EURO 30 million in april 2019, and final payment of
EURO 175 million will be paid in May 2019. We can see that the cost of acquisition is too high
and it has been provided that Suzlon will arrange this payments from external sources as well as
from working capital, if it will pay through cut in WC it will directly affect companys
performance at domestically as well as globally.

Opportunities
Environmental awareness:
Now-a-days environmental awareness has been increased among the population of India, they
have started saving energy and reducing the pollution, this factor is favorable for the wind power
energy as its an option to thermal power, which is also responsible for polluting the
environment, so wind energy is having benefit of no pollution as it produces pollution free wind
energy. And suzlon is market leader in India in this sector which is the back-up force for it.

Government initiatives:
As govt. has also understood importance of natural resources, govt. is in favor for wind energy,
which uses wind and provide pollution free energy. Govt. of India is supporting firms providing
wind energy and suzlon is the main player of Indian market it can gain advantage of govt.
initiatives. Govt. is also providing tax exemption on their earnings and also providing subsidies
for encouraging investment in backward areas of society to generate employment.

Untapped Offshore market:

Till now none of the Indian player other than Suzlon has gone for global expansion. So it can
have advantage of covering untapped offshore market as an Indian player. Suzlon is also having
strong financial back-up compared to its competitors in Indian market.

Steady source of demand:

As awareness of wind energy is increasing and people understood the importance of renewable
energy sources, which is cost effective also leads to steady growth in demand.

Vast coast lines of India and low cost:

India is known as a country of sea, due to this we are having a vast coast lines. As wind is the
main force for generating wind energy and its not possible without good coast lines. And as India
is having big coast lines it can be a favorable factor for this industry. Suzlon in India is the most
effective user of sources among domestic players, so it is a favorable factor for it.

Threats
Intense competition:
Govt. of India has approved FDI limits upto 74%. This can be a favorable factor for the whole
industry, but for Suzlon its a threat, because it is a market leader, but its technology efficiency is
not up to the mark compared to global giants like vastas, so entry of global players will affect the
Suzlon.

Foreign exchange risk:

As Suzlon is having a global presence there is default risk of exchange rate fluctuation. As we
mentioned in economic factors also that the exchange rate is fluctuating highly since last couple
of years it has become more risky for Suzlon to do business globally.

Technology risk
Earlier technology was not obsolescence fast, but now technological development is very fast
and new technology is been introducing to the market very fast. So the company has to
implement the new developed technologies to compete in the market where it is having more
corporate customers who generally know the product very well before using it.

Objections to Wind Power:

The main objections to wind power stem from other environmental costs. Many wind parks are
shut down for part of the year because of bird migration patterns and numerous turbine-related
bird deaths. Furthermore, turbines take up land; though larger turbines produce more power, they
also take more land to operate safely and effectively, and since any man-made installation can
have adverse effects on terrestrial ecosystems, hardcore environmentalists may object to the
installation of wind parks, lobbying the government to look for other sources of energy.
Obviously, the oil and coal industries will lobby against government subsidization of clean
energy sources; given the enormous financial resource base of these industries, effective
lobbying could greatly reduce the amount of government support given to the wind power
industry.

TOWS MATRIX

IFE/EFE MATRIX
Internal factor evaluation
Strengths

Weigh

Rate

Weighted

t
Integrated business model

Score

0.09

0.36

0.09

0.27

Market leadership in India and Global presence

0.08

0.24

Prudent acquisitions and alliances

0.08

0.32

Global Production

0.06

0.12

Pricing Power

0.05

0.05

Diversified Product Line

0.05

0.1

Operational risk

0.08

0.24

Growth in Assets overweighing Growth in Profits

0.1

0.2

Stock price

0.06

0.12

Ratings

0.08

0.24

Improper working capital management

0.1

0.4

Weak Strategic financial management

0.08

0.24

In-house Technology and Design Capabilities

Weakness

2.9

External factor evaluation

Opportunities

Weigh
t

Rate

Weighted
score

Environmental awareness

0.1

0.3

Government initiatives

0.1

0.2

Untapped Offshore market

0.11

0.22

Steady source of demand

0.09

0.09

Vast coast lines of India and low cost

0.12

0.48

Intense competition

0.12

0.36

Foreign exchange risk

0.12

0.48

Technology risk

0.14

0.56

Threats

Objections to Wind Power

0.1
1

SUPPLY CHAIN

0.2
2.89

PROTERS 5 FORCES MODEL

Bargaining Power of Supplier

Towers are very costly as it accounts for 26.3% of the total cost and its partial demand is met by
in house production but in that it is going for expansion by year 2009, but upto that time it has
depend upon other supplier, the cost of rotor blades account for 22.2% and for the rotor blades
it's complete demand is met by in house production located in India, China and U.S so for that it
does not have to depend on any supplier. Gear box manufacturing costs 12.9 % and also it is
manufacture by only two companies and from that one is acquired by suzlon itself but for the
partial demand it has depend on only one supplier so in this case bargaining power of supplier is
high. In the case of generators there are many manufactures and also many companies are
specialized in it. Moreover it account for only 3.44% of the total cost and in yr 2009 it is going
for expansion so in this case bargaining power of supplier is moderate to low. Thus overall we
could say that the switching cost is moderate to low.
Bargaining power of Buyer
Buyer demand is weak with very few potential buyers and sellers are scrambling to secure the

market. Buyers are well informed regarding the prices, costs and products and sensitive to
pricing. Buyers cannot easily go for backward integration. Thus overall the bargaining power of
buyer could be considered to be between low to moderate
Threat of new entry
Brand Preference: There is a clear brand preference in the wind energy industry it could be
understood by the market share of the company. The market share of Suzlon is 48%, Enercon is
27.6% and NEG- Micon it is 11.9 %. Thus overeall there are 3 companies which shares 87.51 %
of the industry, Even in the remaining 12.5 % 5.54% is of Vestas. Thus the clearly the customer
have brand preference of this four companies compare to other brand. Thus for new competitors
the threat to enter the industry is high.
Exit barriers: Exit barriers in this Industry are very much high because it required a huge
investment to start the business and the payback period is also long about 8 years. So for every
player its not easy to exit from this highly capital intensive Industry. So due to that the threat
from new entrance is low.
Capital Requirement: The capital requirement in the wind turbine industry is very high. To set up
manufacturing facilities of rotor blades set of 350 set is 65 crores. Similarly to set up a gear box
unit it requires 100 million dollars. Thus the potential entry of the new company is low.
Access to distribution channels: all the companies are using direct distribution channel, hence it
is not possible for a new entrants to access the distribution channel of other company. In this case
also the potential entrant is low.
Threat of substitute products
Other renewable technologies
Price substitution from conventional sources
In this case the threat from substitute product is between medium to high. But the operating cost
is higher in the substitute product compare to the wind power. Also the procurement of the raw
material is an important factor for the company like Biogases co-generation, Biomass gasifiers
and water-to-energy. Where as in case of small hydro power and solar photo voltaic the cost is
higher than the wind turbine. Thus the overall we could say that the wind turbine is a unique
product and the substitution from the substitute product is low. Thus overall threat from
substitute product is b/w Medium to high.
Threat of existing rivalry
Oligopoly market: Suzlon is market leader in wind energy having 48% stake followed by
enercon having 27.6% and then NEG-Micon with 11.9% stake. So if one company changes its

strategy than it is immediately followed by other companies. So from that we can say that rivalry
among competitors is strong.
Differentiation: Suzlon has differentiated itself and got the benefit of vertical integration through
backward integration in terms of in house production that is done by its own subsidiaries and in
the form of services having end to end solution that is from selection of sites to setting a wind
farm according to the requirement of the customer. So from this we can say that the rivalry
among competitors is moderate to low.

PESTEL
Renewable energy is still at a nascent stage in India.

POLITICAL - SUZLON has entered into hybrid energy as well, which is combination of wind
and solar, both.
Tanti believes it hybrid is the future.
Suzlon energy aims at the customer who installs their panels and wind mills, and now
government has reduced the tax benefits from 80% to 40% now, which forces SUZLON to bag
more orders aggressively from Independent power producers(IPPs).
Indian government has ambitious plans of producing 100GW of solar energy and 60GW of wind
energy by 2022.
Also aims 40% power needs by renewable energy by 2030.
During climate change talks PM Narendra Modi also pledged to double the investment in clean
energy in next 5 years.

ECONOMICAL- Suzlon energy ventured Germenys REpower and invested 1.4 billion euros
which led to debt issues.
Still 8000 crore debt is left, which is manageable and company is in comparatively safe position.
Tantis stake has reduced from 52% to 20% in course of paying debts.
Sold REpower for 1billion euros in 2015, now named as Senvion.
Current stock price of SUZLON energy is INR 15.75 and it was highest in 2008 of INR 453.

SOCIAL- it is being accepted by indian society and government is supporting environment

friendly and renewable sources of energy.
But being in a nascent stage as of now, much more improvements in technology has to be done
to make it a household source of energy.

TECHNOLOGICAL- Suzlon is investing in new technologies like:

BLADE TECHNOLOGY
ASYNCHRONOUS GENERATOR
GRID MANAGEMENT
ROTAR BLADE CONCEPT
DIRECT DRIVE
ANNULAR GENERATOR

ENVIRONMENTAL There is not any adverse effect on global environment by wind energy manufacturing
The whole system is pollution free and eco-friendly
India and China is going to be the biggest seller of carbon credit so
t h a t m o s t o f t h e companies initiatives for using wind turbine to get more carbon credit
Fossil fuels are likely to reach their maximum potential, and their price will
become higher than other renewable energy options so wind turbine
manufacturers have large market to serve

With declining trend of cost and increase in the scale of wind turbine
manufacturing, wind promises to become a major power source globally in the
first few decades of the new millennium
S NO

DESCRIPTION

1
2
3
4
5

SUBSTITUTE OF COAL
SULPHUR-DI-OXIDE
NITROGEN OXIDE
CARBON-DI-OXIDE
PARTICULATES

TOTAL SAVING IN 000

TONS
18330800
297896
206222
45827000
24632

LEGAL - Windmill installed by one person effects the downwind reaching to neighbours
windmill, these cases has raised a legal aspects towards, where can windmill be installed, what
height and what angle and what are other documentation done before installing one.
Legal guidelines have been laid to tackle the situations.

BCG MATRIX
MANUFACTURE

MARKET SHARE

SUZLON ENERGY LTD

ENERCON INDIA LTD
NEG-MILCON INDIA PVT
LTD
VESTAS RRB INDIA LTD
NEPC
OTHERS

48.24
27.59
11.66

RELATIVE MARKET
SHARE
1.7488
0.5719
0.2417

5.43
2.38
4.69

0.11257
0.04933
0.0972

Industry growth: 35% CAGR

Implication for Suzlon

The suzlon should follow stay-on-offensive strategy because as per the past industrial
experience it had been found that the company which stay ahead then rivals can maintain
their leadership position (Star Position).

Another strategy should be followed is to keep their price reasonable (which is being
currently followed).

The company should also invest in increasing capacity to be ahead in the market. The
company should also invest in R&D and new technology.

Suzlon should go for promotional activities which are very less at this point of time.
Because now the govt. had increase the limit of FDI many global players are entering into
the market. They are also having technological advantages over Indian firms. Though
Suzlon is market leader its market share is declining.

The company should now focus more on technological developments rather than
integration because the company has now enough vertical integration to support them,
but the technology which is latest to the market can help them to make more cost
effective products, in which the company is lacking up to some extent.

Here the main threat for Suzlon is from the global players because they are more cost
effective while at domestic level company is not facing much competition and Suzlon has
covered half of the market alone.

Company should also go for more global expansion so that it can have global presence
and can also have advantage of new markets.

GE-9 MATRIX
COMPETITIVE STRENGTH
Suzlon
Business
Strength
Relative
share

Enercon

NEPC

Weig
ht

Ratin
g

Scor
e

Ratin
g

Scor
e

Ratin
g

Scor
e

0.16

1.12

0.48

0.16

0.12

0.96

0.72

0.60

Market

Cost
efficiency
over competitors

Ability to handle
competition

0.12

0.96

0.84

0.36

Vertical
integration

0.15

1.35

1.20

0.45

Brand Image

0.18

1.44

0.9

0.90

Profitability
relative
competitors

0.14

1.26

0.98

0.7

Efficient supplychain in India

0.13

1.04

0.65

0.26

Total

1.00

8.13

5.77

3.43

INDUSTRY ATTRACTIVENESS
Wind turbine Industry
Industry Attractiveness

Weight

Rating

Score

Market size & Projected growth

rate

0.11

0.77

Intensity of competition

0.05

0.4

Emerging opportunities & threats

0.07

0.49

Environmental factors

0.12

0.96

Industry profitability

0.10

0.60

Industry uncertainty & business

risk

0.04

0.2

Resource requirements

0.12

0.24

Inventory management

0.11

0.55

Research
activities

0.07

0.49

Influence on supply chain

0.13

0.36

Acquisition of land

0.02

0.08

Total

1.00

Social, political, regulatory and

and

development

5.14

Implications for GE-9 cell matrix:

Suzlon is the market leader in India, and its market share is 48% which has been declined
from 51%. Reasons for declining its market share can be entry of global players increase
the competition, less cost effectiveness than global players, lacking in domestic R&D etc.
Now as a market leader in India and as its market share is declining it will concentrate
more on holding its position and will try to catch more market share by becoming
technically forwarded and cost effective compared to other global players.
For holding its position suzlon is now acquiring firms globally, for example acquisition of
Hansen a second largest producer of gear box in the world, RE power in Europe. Here
Suzlon is also enjoying market image of the acquired firms in different nations.

Now Enercon is the second largest company in terms of market share with 27% market
share and is also having global presence, but in India because of brand image of Suzlon it
is not getting enough business.
Enercon is also integrating itself like Suzlon and trying to grab more and more maket
share through cost effectiveness and technical improvements where Suzlon is lacking.
NEPC is the second largest domestic player after Suzlon in India but having th market
share compared to Suzlon. It is trying to increase its funds for vertical integration and for
adopting new technologies to get competitive advantage. But its image in market is not
that much effective as compared to Suzlon.

REFERENCES

www.gwec.net
www.indiawindpower.com
www.suzlon.com
www.indexmundi.com
www.renewingindia.org
www.awea.org

www.goidirectory.nic.in
www.cwet.com
www.indianwindturbine.com
www.globalwindenergycouncil.com
www.ministryofrenewableenergy.com
www.ireda.com
www.mnec.gov.in
www.wikipedia.com
www.vestas.com
www.enercon.com
www.neg-micon.com
www.geda.com
www.mckinsey.com
www.kpmg.com
www.ey.com
www.getco.com
www.guvnl.com
www.nseindia.com
Global Wind Energy Council report 2015.
Suzlon investors annual report 2015
Directory Indian Wind Power 2016