Table of Contents

Contents

Graphs and Charts Tables

Table 1 Table 2 Table 3 Table 4 Table 5

Suzlon Oversea Bond Issue

Suzlon was stated on 10th April 1995 by Mr. Tulsi Tanti with Sudwind G b! "ind#ra$ttanla%en &s 'ollaboration. (t was listed on 19 th )'tober 2005 at a pri'e nearly 30* abo+e the issue pri'e. Sin'e its e,isten'e- the 'o pany has e,panded into +arious re%ions by a'.uisitions. Two a/or a'.uisition ade by the 'o pany are !ansen Trans ission (nternational o$ 0el%iu - a leadin% %ear anu$a'turer $or wind turbines and 12power Syste s o$ Ger any- a wind turbine anu$a'turer with 'apability to a#e o$$shore wind turbines. To a'.uire the - Suzlon has spent nearly 1s. 13-000 3rs. These a'.uisitions ha+e been done /ust be$ore 2004 $inan'ial 'risis. Sin'e then the 'o pany has entered into losses and was not able to re'o+er $ro it. This ade the 'o pany di$$i'ult to pay oney to its lenders. )$ the total debtlenders ha+e a%reed to re'ast a debt o$ 1s. 9-500 3rs as a part o$ 351 alon% with so e 'o+enants. )ne a on% the is to in'rease the shareholder6s 'apital. The 351 does is not appli'able $or the $ore, loans. So the 'o pany is $or'ed to raise $und $or repayin% the . )+er the last $i+e years the shareholdin% o$ the pro oters has redu'ed $ro 75* to 44* and at the sa e ti e the lenders ha+e 'on+erted the interest payable into e.uity whi'h a ount to 32.1* o$ total e.uity. The 351 by the 'onsortiu was led by S0(. As per the a%ree ent the 'o pany was supposed to
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raise 1s. 5000 3rs or has to sell 1epower whi'h is 'onsidered as one /ewel in the Suzlon %roup. All these ade the 'o pany6s ar#et 'apitalization to 8440 illion $ro a pea# o$ 819.33 billion. 3urrently Suzlon is the (ndia6s leadin% turbine anu$a'turer and $i$th in the world. (t has presen'e a'ross all the 'ontinents and has an installed 'apa'ity o$ 23-000M" and has an order boo# o$ 5.37G" +alued at 89.1 billion.

Industry Scenario
As per the Global "ind 2ner%y 3oun'il :G"23;- wind ener%y industry would not be li ited to de+eloped nations. (t is obser+ed that a/or de+elopin% 'ountries li#e (ndia- 3hina and also <atin A eri'an 'ountries. 2+en then it is i portant $or the 'urrent a/or ar#ets to re'o+er $ro the down turn. G"23 esti ates that the industry would re'o+er $ro the lows and would ha+e an a+era%e %rowth rate o$ 11* $ro 2014=2019. This %rowth rate is 'onsidered to be less than %rowth rate obser+ed o+er the past de'ade. At this %rowth rate the ar#et $or wind ener%y would be 71G" in the year 2019 a#in% total installed 'apa'ity to be 537G". 0ut Suzlon esti ates that the annual installation would %row at a 3AG1 o$ 4* a#in% an annual installation o$ 57G" in the year 2019. They attribute this ainly to the di$$i'ulties in $inan'in%. The industry would start ha+in% a positi+e %rowth rate $ro the 3>14. 1enewal o$ ?rodu'tion Ta, 3redit :?T3; an in'enti+e $or wind ener%y in @SA has led to the in'rease in de and- also the in'rease in the $eed in tari$$ in (ndia and %rowth prospe'tus in 3hina would help the industry to %row. Mu'h o$ the %rowth in wind ener%y would 'o e $ro o$$shore wind te'hnolo%y. This o$$shore wind ener%y tapped $ro installin% the wind turbines in lar%e water bodies. This has a hu%e potential and it is esti ated that this wind ener%y is 9 ti es the 2urope ener%y de and. 3urrently 90* o$ the total o$$shore installations are in the northern 2urope. (t is e,pe'ted to %row at a 3AG1 o$ 24* $or ne,t $i+e years. 1epower6s 7MA o$$shore turbine ran#s a on% the ost power$ul o$$shore wind turbine in the world to 'ater this %rowin% ar#et. This a#es 1epower to be an i portant asset in the 'o pany.

Business Model
Suzlon alon% with its subsidiaries is en%a%ed in desi%nin%- de+elopin% and anu$a'turin% o$ wind turbine %enerators and related 'o ponents su'h as rotor blades- 'ontrol panels- na'elle 'o+er- tubular towers- %enerators and %earbo,es. The 'o pany also pro+ides 'onsultan'y $or desi%n- anu$a'turin%- installation- operation and aintenan'e o$ wind $ar s. (t is also in+ol+ed in wind resour'e appin%identi$i'ation o$ suitable sites and te'hni'al plannin% o$ wind power pro/e'ts. Suzlon6s +erti'al inte%ration has been its su''ess dri+er.

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Suzlon has positioned itsel$ as an inte%rated solution pro+ider o$ ser+i'es related to wind ener%y in the %lobal ar#ets. 3o pany also pro+ides a$ter sale )BM :operations B aintenan'e; ser+i'es $or "TGs supplied by it. The asso'iate 'o panies o$ Suzlon a'.uire sites identi$ied by it $ound suitable $or wind ener%y pro/e'ts- whi'h are then sold or leased to its 'usto ers- and underta#es the te'hni'al i ple entation o$ wind $ar s- in'ludin% in$rastru'ture de+elop ent- supply and installation o$ "TGs and 'onne'tion to power %rids. 3urrently Suzlon 2ner%y <td is the lar%est wind turbine %enerator :"TG; anu$a'turer in Asia and alon% with 12power- its ar#et share ha+e in'reased to 12.3* thereby a#in% it the third lar%est wind turbine anu$a'turin% 'o pany in the world. (t 'ontributes 30* o$ %lobal wind turbine business. The 'o pany has %lobally so $ar supplied wind turbines to %enerate 4-000 M" o$ ele'tri'ity and has installed pro/e'ts to %enerate ore than 4-400 M" o$ ele'tri'ity based on wind ener%y. (ts operations are spread a'ross $i$teen 'ountries and $i+e 'ontinents. Ad+anta%esC
1. Allows 'usto ers to bene$it $ro

'ost e$$e'ti+eness and e'ono ies o$ s'ale in

wind $ar .
2. ?ro+ides hassle $ree solutions to 'usto ers 3. ?ro+ides %reater 'ontrol o+er e,e'ution ti e 4. 3ontrol o$ +alue 'hain $ro

plannin% to

aintenan'e

5. <e+era%e e,perien'e a'ross wind ener%y +alue 'hain

Capital Expenditure
Year Capex crores) 2008 (in 747.4 7 2009 434.4 9 2010 929.5 4 2011 901.3 2 2012 451.2 5

Table

Graphs & Charts

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The abo+e %raph depi'ts the 'apital e,penditures in'urred by Suzlon $ro year 2004 to 2012. There has been a in'reasin% trend in the 'apital e,penditures but started de'reasin% $ro 2011 durin% whi'h the 'apital e,penditure de'reased $ro 920 'rores to 451 'rores appro,i ately. 5urin% 2004- the hi%h 'apital e,penditure is due to the additions to the %ross blo'# 'o prisin% %oodwill arisin% out o$ 'onsolidation o$ 1epower and addition due to a'.uisition o$ 1epower. )ther additions to $i,ed assets pri arily arose out o$ 'apitalization o$ new S2D $a'ilities. 3apital wor# in pro%ress also was hi%h on a''ount o$ new plants bein% established. (n 2009- the in'rease in 'apital e,penditure is due to the 'apitalization o$ Suzlon6s new 'a pus &)ne 2arth6 and non in'lusion o$ !ansen assets. (n 2010- the in'rease is due to a'.uisition o$ additional sta#e in 1epower and a'.uisition o$ balan'e 50* sta#e in 1epower ?ortu%al E Siste as 2olios. Fet additions was also due to plant and a'hinery and te'hnolo%y related desi%ns. (n 2011- the redu'tion is due to the sale o$ one do esti' subsidiary.

Suzlon Energy evenues

The re+enues $ro operations o$ Suzlon power and its subsidiaries $ro 2012 is shown in the table belowC >ear Sales 2009 13799.4 3 2004 27041. 9 2009 20719.7 7 2010 19499.1 3 2011 21042.3 9 2012 14943.1 4 year 2009=

Table
The +ariation in sales +alues o+er years 2009=2012 'an be obser+ed 'learly in %raph shown belowC

Graphs & Charts

Suzlon power has seen a +aryin% sales %rowth durin% this period- whi'h is ainly due to i pa't o$ 2004=$inan'ial 'risis. 2 battled 'o panies hit by 2004=$inan'ial 'risis 'ut ba'# on their e,pansion plans and $ew 'o panies went ban#rupt- this lead to de'rease in de and $or ener%y re.uire ents ulti ately leadin% to sales drop in Suzlon sales re+enues.

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Garyin% trend in the sales %rowth o$ Suzlon ener%y 'an be seen in the table %i+en belowC >ear Sales Growt h 2004 90.77 * 2009 2010 2011 2012 =11.10*

=20.94* =13.29* 19.92*

Table
The +ariation in sales %rowth $i%ures o+er years 2004=2012 'an be obser+ed 'learly in %raph shown belowC

Graphs & Charts

Contribution of E!o"er to Suzlon Energy sales

12?ower- one o$ the a/or subsidiaries o$ Suzlon power- has a si%ni$i'ant i pa't on the sales o$ Suzlon ener%y sin'e its a'.uisition in 2009. The sales 'ontribution o$ 12?ower to Suzlon 2ner%y is shown in table belowC >ear Sales in (F1 2004 7704.5 7 2009 9125.00 2010 4502.00

Table

The sales 'ontribution o$ 12?ower o+er 2004=2010 is shown in %raph belowC

Graphs & Charts

The 'ontribution o$ 12?ower to Suzlon 2ner%y sales is shown in %raph belowC

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Graphs # Charts

Scope of the organization

Suzlon has presen'e in any parts o$ the world a#es the 'o pany to ha+e 'urren'y ris#. The 'o pany has the a,i u share in (ndia and has a/or 'o petition $ro other %lobal players li+e Gestas et'. The wind ener%y %eneration 'apa'ity in (ndia would be'o e ore than .uadruple by 2020 to 49G" $ro e,istin% 14G". 3onsiderin% the lo'al presen'e and %ood te'hnolo%y $ro 1epower the 'o pany 'ould 'apture a/or ar#et share in (ndia. Also (ndia ha+in% hu%e water ass surroundin% it and the 1epower e,pertise in the o$$shore wind ener%y would help the 'o pany to %row at a $aster rate. These are on the positi+e side $or the 'o pany %rowth in near $uture. At the sa e ti e it is i portant to 'onsider the 'urrent s'enario o$ the 'o pany. The 'o pany is in losses $or last $i+e years and $a'in% di$$i'ulty to repay the debt whi'h it has raised $or a'.uirin% 1epower and !ansen Trans ission. (n the year 2012 the 'o pany has de$aulted in H330 whi'h has i pa'ted the 'redibility o$ the 'o pany. 3urrently the 'o pany is a#in% e$$orts to ana%e its wor#in% 'apital to support its stron% order boo#. (n order to repay the $ore, loans the 'o pany is plannin% to sell its non='ore assets whi'h are +alued at 8400 illion and 95* o$ its sta#e in its 3hina anu$a'turin% unit :Suzlon 2ner%y Tian/in <td;. 3onsiderin% the 'urrent s'enario and the support $ro the 'o pany to re%ain its na e in the wind ener%y. the (ndian ban#s ay help

The 'o pany has 'reated a spe'ial purpose +ehi'le in Fetherlands 'alled A2=1otor holdin% 0.G. This 'o pany anu$a'tures wind turbines throu%h its subsidaries.

Co$pany %c&uisition of Epo"er

Suzlon has a'.uired two a/or 'o panies- they are !ansen Trans ission and 1epower. Suzlon has a'.uired 27* share in !asen Trans ission throu%h A2=1otor !oldin% 0.G. Also Suzlon has a'.uired 95* sta#e in 1epower thou%ht A2=1otor !oldin% 0.G. A2=1otor !oldin%s is established in 2001 in Fetherlands. This
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a'.uisition was ade by the 'o pany to a''ess the 1epower te'hnolo%y and sin'e the Ger an law does not allow it in the interest o$ inority shareholder. So A2=1otor !oldin% 0.G 'o pleted the a'.uisition to 100* in Septe ber 2011. (nitially Suzlon has +alued 1epower to 81.9 billion dollars. This was ainly $unded throu%h debt issue. 0ut due to the un'ertain e'ono i' 'onditions the 'o pany was not able to pay the interest to the lenders and has de$aulted. 2,'ept the $ore, loans- rest o$ the loans ha+e been restru'tured under 351 but strin%ent nor s ha+e been applied on the . So the 'o pany has pre+ented any de$ault on these loans. As per the 351 the 'o pany has to raise nearly 81 billion in the ne,t three years either throu%h sale o$ share or any other asset. Hor the loans whi'h ha+e been de$aulted are partly repaid by sellin% 95* o$ sta#e in its 3hina ar . 2+en a$ter 351 S0(- whi'h is the a/or lender- has supported the issue o$ 5ollar 5eno inated bonds by Suzlon throu%h its subsidiary A2=1otor !oldin%s 0.G. Suzlon has raised nearly 8749 illion dollars throu%h its Fetherland6s subsidiary A2=1otor !oldin%. The 'o pany has other options in raisin% the oney li#e sellin% the sta#e in the parent 'o pany- listin% the 12power- issuin% the debt in <o'al 'urren'y- sellin% o$ non='ore assets. These three options are not ad+isable in the 'urrent ar#et s'enario.

1; Sta#e Sale in ?arent 3o panyC 3onsiderin% the de'rease in the sto'# pri'e

o+er the last $i+e years a#es the sta#e sale by the 'o pany is not ad+isable. 3urrently the 'o pany share pri'e is 2* o$ the pea# +alue. Also 'onsiderin% the hu%e a ount o$ order boo# +alue and the e,pe'ted in'rease in %rowth rate in the wind ener%y ar#et would in'rease the share pri'e in $uture. Also the pro oter6s shareholdin% has been diluted $ro 75* to 40*. So any $urther sale in the 'o pany sto'# ay redu'e its sta#e. (t is also obser+ed that (ndian 'urren'y has hi%hly depre'iated whi'h would a ne%ati+e $or repayin% $ore, loans.
2; <istin% o$ 1epowerC This is one o$ the %ood options the 'o pany has to a+oid

raisin% o$ $urther debt. Also 1epower has hu%e order boo# +alue whi'h a#es the 'o pany attra'ti+e. (n addition 7MA whi'h is an o$$shore wind ener%y turbine is 'onsidered to be one o$ the best a on% its 'o petitors. 0ut the 2uropean ar#ets ha+e not yet re'o+ered. This 'an be used as a last resort.
3; (ssuin% o$ 5ebt in <o'al 'urren'yC Already the 'o pany has under %one

restru'turin% whi'h has been appro+ed by (ndian lenders. So it ay be di$$i'ult and 'ost o$ debt will be hi%her. (n addition the depre'iation o$ 1upee would also ha+e ne%ati+e i pa't while repayin% $ore, loans.
4; Sellin% o$ Fon='ore assetsC Suzlon has identi$ied nearly 8400

illion worth o$

non='ore assets and is plannin% to sell the

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5; (ssue o$ 5ebt in $orei%n 'urren'y throu%h its subsidiaryC Suzlon holds sta#e in

the $orei%n 'o panies throu%h its Fetherland6s subsidiary A2=1otor holdin% 0.G. So in the year 2013 Suzlon was able to raise 8749 illion by issuin% bonds bearin% 4.99* 'oupon and %uaranteed by S0(. This does not 'urren'y ris# and lower 'oupon rate. The bonds ha+e also been issue at par. Thus a#in% >TM e.ual to 4.99* whi'h is $ar less than the >TM :9.5*; o$ the zero 'oupons whi'h has been issue in the year 2009.

Currency Fluctuation impact !epreciation" Sta#e Sale in ?arent 3o pany

Interest Rate

#$ility to issue at premium

!ecrease in promoter sta%e in parent company +es

&est 'ption currently a(aila$le

)egati(e

)*#

)o

)o

,isting of R-po.er Issue de$t in local currency /elling non0 core assets Foreign currency de$t issue

)*#

)*#

)o

)o

)o

)egati(e

+es

)o

)o

)o

)egati(e

)o

)*#

)*#

+es

)o

+es

)o

)o

+es

Table

Oversea Bond Issue

Suzlon has be'o e the $irst (ndian 'o pany under 351 to issue o+ersea bonds. These bonds ha+e been issue to repay the $ore, loan whi'h is aturin% in 2014 and 2017 with +alues 8290 illion in ea'h year. Also as per the 351- the 'o pany has to raise 81 billion. 2,posure o$ loans by a/or ban#s are- State 0an# o$ (ndia has the hi%hest e,posure at1s 3-400 'rore- $ollowed by (50( at 1s 2-200 'rore. ?F0 has lent
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1s 400 'rore while <(3 has pro+ided 1s 550 'rore. The total o+er sea loans as on Ianuary 2013 is 1s 3000 3rs. "ith these 'hallen%es and the support o$ S0(- the lar%est lender- Suzlon was able to issue dollar deno inated bonds throu%h its Fetherland6s subsidiary A2=1otor holdin% 0.G. S0( has stood as %uarantor $or the potential bond buyers whi'h were 'arryin% a 'oupon rate o$ 4.99* whi'h were rated as 0aa2 by Moody6s. This oney has been raised to repay the H330 whi'h are aturin% in the year 2014 and 2017. This has %i+en te porary relie$ to the 'o pany whi'h has been $a'in% 'ash 'run'h.

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