Suzlon Reports Strong H1 Earnings Growth

Mumbai: Suzlon Energy Limited (SEL), the world’s fifth leading and India’s largest wind turbine manufacturer, and subsidiary companies reported accelerated growth in the first half of FY2006-07, ended September 30, 2006. The company reported a strong 120.06% growth in total revenues to INR 3155.91 crore over corresponding period of the previous year. Profit After Tax grew by 32.58% to INR 333.10 crore and diluted EPS by 18.42% to INR 11.44. SEL's consolidated order book stood at INR 6,637.87 crores.

"I am very pleased to report that our performance as a group in the first half of FY2006-07 is very strong and on track. Our order book clearly reflects our coming of age as a mature, reliable and technologically sound global supplier," Mr. Tulsi R. Tanti, Chairman and Managing Director of Suzlon Energy Ltd., stated.

Suzlon took major strides in the first half of FY2006-07 - in terms of people, capturing major orders, completing important projects, and initiating new ones -

Markets:

Suzlon reported a strong consolidated order book position of 1,443.30 MW translating to INR 6,637.87 crores in value; with 205.95 MW of value INR 824.16 Crores in domestic orders; and 1,237.35 MW of value INR 5,813.71 crores in international orders.

The company also received a new order (included in stated order book) for 40 units of the S64 - 1.25 MW wind turbine, translating to 50 MW of wind turbine capacity, from China, deliveries for which are slated for FY2007-08. With this order, Suzlon has an order book position of 183 MW in China.

The company’s export market grew to include Brazil, Italy and Portugal, in addition to Suzlon’s established market presence in Australia, China, South Korea and USA. New orders in the first half of the year came from China, Europe and Latin America with break through orders totaling 61 MW from Italy & Portugal, and a 225 MW order from Brazil. Suzlon also received major repeat orders from its US customers - signing a contract to supply 247 MW in new capacity to John Deere Wind Energy (JDWE) and 105 MW of wind turbine capacity to Edison Mission Group (EMG).

These orders take JDWE’s wind portfolio from Suzlon to over 500 MW and EMG’s wind portfolio from Suzlon to 400 MW; a clear testament to Suzlon’s capability and reliability as partner.

Manufacturing:
As part of its international growth strategy, Suzlon Energy Limited plans to support international markets with dedicated manufacturing capacity in key geographies. New manufacturing facilities in China and USA started production on schedule in September, and commenced deliveries to projects in October 2006.

The integrated wind turbine manufacturing facility in Tianjin, China has a capacity of 600 MW and employs around 300 people. The rotor blade manufacturing facility at Pipestone, Minnesota has a capacity of 600 MW and around 200 employees. With this, Suzlon’s global manufacturing capacity reaches 2,700 MW, up from the 1,500 MW.

Acquisition:
Suzlon completed the acquisition of Hansen Transmissions, the world’s second largest manufacturer of wind turbine gearboxes. The provisional unaudited consolidated results of Hansen show Sales of INR 752 Crore and EBIDTA of INR 98.20 Crore for the first half of FY2006-07.

CapEx:
The company put in motion CapEx plans of INR 1,500 crores for manufacturing capacity addition.

A Forging and Machining unit is planned for a capacity of 70,000 MT, with a capital outlay of INR 250 Crores. The products planned from this plant will be Tower Flanges, Gear Rims, Ring Gears and Bearing Rings, and components for Gearboxes and Generators. The plant is slated for completion by Q2 FY2007-08.

A Foundry unit is planned for a capacity of 120,000 MT, with a capital investment of about INR 500 Crores. The facility will manufacture wind turbine components including Yaw Base, Hubs, Rotor Shafts, Bearing Housings and Gearbox components. The plant is slated for completion by Q3 FY2007-08. These state-of-the-art facilities are designed to be future-ready and will be among the most advanced facilities of their kind once complete.

An integrated wind turbine manufacturing facility is planned near Udipi, Karnataka in proximity to the New Mangalore Port. The facility will provide dedicated manufacturing capacity for the export market. The facility is planned for capacity of 1,500 MW, with a capital investment of about INR 750 Crores. The facility is slated for completion by Q1 FY2007-08.

With completion of this facility, Suzlon’s total production capacity will go to 4,200 MW, up from the present 2,700 MW of manufacturing capacity worldwide.

Suzlon is also in the process of setting up Asia’s first Rotor Blade Test facility at Vadodara, Gujarat. There are only two such facilities in existence in the world today, the first at the TU-Delft University, Netherlands and another at NREL, USA. The facility, with a planned investment of INR 30 crores will be established with technical collaboration with Knowledge Center WMC, a unit of the TU-Delft University.

The state-of-the-art facility, slated for completion by June 2007, will be capable of carrying out a variety of wind turbine blade testing operations, including lifecycle tests and destructive tests.

Work is on track for capacity addition at Hansen Transmissions in Belgium, to raise the current wind gearbox capacity of 3,200 MW to 5,800 MW.

People Power:
Suzlon demonstrated growth not only in revenues, but also in it most vital resource - human capital. Suzlon’s strength climbed to over 8,600 people from 12 nationalities in India and around the world.

Suzlon recognizes people as its most valuable asset and is keenly focused on building a culture of innovation and excellence to drive sustainable growth. The company’s Corporate Learning Center provides training and learning opportunities for employees across all functions and levels, and has imparted training to over 700 engineers and 1,500 employees from non-technical functions.

Products:
Suzlon’s product development strategy focuses on developing solutions to meet diverse customer needs across the world. The company added two new products to its lineup - the S52 - 600kW and the S82 - 1.5 MW wind turbines - customized to suite investment needs of customers in Asia, and the particular wind and climatic conditions of the region. Speaking on the direction of the company’s product development program, Mr. Tulsi Tanti said: "Our R&D effort focuses on increasing reliability, and enhancing the aerodynamic efficiency of turbines, resulting in reduced cost-per-kWh. We believe turbine cost, technology and size are important factors in expanding the market wind energy by making it possible to harness what used to be unviable locations, and opening up the market to customers with a smaller investment capacity."

Awards and Recognition:
Suzlon received recognition from across forums in FY2006-07, starting with the inclusion in the prestigious S&P CNX Nifty Index on the National Stock Exchange.

Suzlon was recognized by the World Institute for Sustainable Energy as the Best Wind Turbine Manufacturer in India, and for the Best CSR Program in the sector at the Wind India 2006 conference.

The company was recognized with the ‘IPO of the Year’ honor at the Global Renewable Energy Forum, backed by Euromoney and Ernst & Young.

Suzlon received recognition from SAP in its Award for Customer Excellence 2006, for best implementation of Enterprise Resource Planning systems in its sector.

Suzlon also received the ENPower Award 2006 for Project Management, at the POWER India 2006 Conference, backed by PowerStream, in association with the India-Tech Foundation.

Global Wind Market:
Demand continued to outstrip supply in the first half of FY2006-07. The global wind energy industry clocked its cumulative installations at 66,869 MW in September, up from 59,247 MW in January 2006. With the demand for energy continuing to outstrip supply and the seasonal swings in the wind sector gradually being ironed out, the industry remains confident of the growth forecast of over 20%.

At an individual market level, the US continued to lead the rest of the world, breaching the 10,000 MW barrier with an addition of over 1,400 MW so far this year. Key markets like China, India and Portugal showed tremendous promise growing at over 20%. India saw installations of over 660 MW in the first half of FY2006-07, and saw progress at the policy level with various State Electricity Regulatory Commissions bringing in the Renewable Portfolio Standards to promote renewable energy in the country.

Source : Equity Bulls

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