The rising cost, limited supply and environmental concerns of traditional fuels like oil, gas and coal are forcing the energy hungry world to look at alternative ways to generate electricity and provide a long-term solution.
Supply constraints and rising prices have brought the emphasis on alternative sources like wind, solar, etc for power generation globally as well in India.
A prime beneficiary of this trend is Suzlon Energy, which combined with Germany-based REpower, is the third-largest wind power solutions provider globally.
Suzlon's move to integrate backwards, expand capacities and tap high growth markets will help post robust growth rates in the coming years.
The company has a fully integrated business, which provides consultancy, site development, design, manufacturing and maintenance services, in the wind-power space.
Since globally wind power is a big market, the company has been continuously spreading its reach and manufacturing facilities, and as a result it is now present across different markets including fast growing ones like US, Europe and China.
Along with REpower (a 66 per cent subsidiary of Suzlon), the company commands a global market share of 13.9 per cent in CY 2007 as compared to 7.7 per cent (stand alone) in CY06. The company also maintained its leadership in India with around 58 per cent market share.
High growth & potential
The growing presence in other markets and favourable industry trend is also reflected in the company’s strong revenue growth; consolidated turnover (including acquisitions) grew at a CAGR of 91.6 per cent from Rs 1,942 crore in FY05 to Rs 13,679 crore in FY08.
The global wind power capacities have grown at a CAGR of 24 per cent over the last five years to 94,005 mw in CY07. The trend is expected to continue and the industry is expected to grow at 22 per cent annually till 2011. This growth will primarily come from markets like China, India, Europe and the US.
According to National Development and Reform Commission of China, wind power generation capacity in China is expected to increase to 100,000 mw by 2020, as compared to about 4,000 mw in 2007. The potential in India is also huge. The potential of wind power is pegged at 45,000 mw as compared to the current installed capacity of about 8,000 mw.
Expansion mode
Considering these opportunities, the company has taken many proactive organic and inorganic steps to strengthen its supply chain and improve its technological capabilities.
Suzlon is increasing its equipment manufacturing capacities from 2,700 mw currently to 5,700 mw, which will be fully ramped up by March 2009.
Besides, the company's earlier acquisition REpower will be leveraged in many ways including widening the product portfolio, improving technological capabilities and enhancing presence in various global markets (especially Europe and China).
In addition to this, Suzlon has formed a JV with REpower for R&D, which would further facilitate access to superior technology. Also, as REpower is expanding its capacities from 1,250 mw to 1,700 mw by December 2008, it will lead to higher volumes for the com |
