Suzlon Energy decodes turnaround after six years

Suzlon Energy has declared financials for the Q4Y16 on May 30. The company has witnessed a turnaround in its financials during last financial year after a prolonged six years of overall net loss. Its revenue has increased by 69 per cent to Rs 8259 crore in FY16 on a yearly basis. Suzlon Energy’s market share from India segment business stands at 26 per cent in FY16 against 19 per cent in FY15. The company’s management is looking forward to increase its market share in India to 40 per cent by FY17 to once again gain the leadership position. On segmental front, Suzlon Energy has earned about 90 per cent from core business segment and 10 per cent from its services segment as of FY16.

Tulsi Tanti, MD of Suzlon Energy further explains how company has managed to achieve a turnaround in FY16. The company had charted out its capital expenditure plans, and liability management by converting part of the debt into FCCB bonds, strategic assets divestment. These measures helped the company to manage its working capital to ensure steady execution of order book. Suzlon Energy’s delivery of its order book stands at 1.1 times to total order book lying in the books which further mirrors improvement of the company as a whole. The company’s breakeven point has improved from 1600 MW to 1000 MW in FY16. The company is planning to reduce per kilowatt -hour by 30-40 per cent in coming term.

The Make in India initiative will lead to increase in small and medium enterprises industry growth at a faster pace. The companies from various sectors such as textile, automobile, food processing and cold storage which focus on low cost energy to deliver growth will be affected the most. Hence, the renewable industry will be boosted in terms of demand.

Suzlon Energy is heading towards new vertical of Solar turnkey projects and also is entering into hybrid wind-solar implementation. The company’s management has set a target to raise renewable energy generation from India, now at 9.5 GW to 25 GW in coming five years.

Suzlon Energy has total 100 per cent backward manufacturing base for its wind mill business. The company has installed one R&D centre in Europe during FY16. It has also launched its new prototype S111-120 turbine and started implementation from FY17. The new wind turbine has a target of achieving 40 per cent Plant Load Factor (PLF). Now, the company has PLF of about 25 - 30 per cent. The new turbine will lead to increase in Suzlon Energy’s yield of energy production in near term.

Suzlon Energy’s management will be focusing on Indian segment for next five years in order to bank on the opportunity and demand of the renewable energy in the country. Tulsi Tanti is expecting India’s renewable energy, specifically wind sector to grow at a pace of 30 per cent annually and forecasts that it will outperform the industry growth in coming quarters. The second big market for the company is US which is growing. The US government has also announced five-year clear energy policy which will enable the industry to grow at a good momentum.

Suzlon Energy’s focus is to increase captive power projects in Maharashtra from its current 2 per cent to 10 per cent. Meanwhile, the company has about 10 per cent captive power plants in place, in Tamil Nadu and Gujarat.

Suzlon Energy manufactures and sells wind turbine generators (WTGs) and related components of various capacities. The company operates through three segments viz. sale of WTG; foundry & forging; and others. It has an international presence across 19 countries in Asia, Australia, Europe, Africa and North and South America.