2010

B Prasad PGPM/0911/014

2009-2011

SUZLON WIND ENERGY

International

Academy

of

Management

&

Entrepreneurship

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Suzlon Wind Energy

Limitations of the Report

Here two main management‟s functions namely MARKETING and FINANCE are handled from the company‟s head office situated in Mumbai so due to lack of information everything is not disclosed yet maximum cooperation was extended Trade secrets which are to be kept confidential were not disclosed yet maximum co-operation was extended.

Introduction

COMPANY INFORMATION Board of directors Tulsi R Tanti Chairman and Managing director Girish R Tanti Whole Time Director Ashish Dhawan Independent Director V Raghuraman Independent Director Pradip Kumar Khaitan Independent Director Ajay Relan Independent Director

Company Secretary Hemal.A.Kanuga Registered Office “Suzlon”, 5, Shrimali Society Near Shri Krishna Complex, Navrangapura Ahmedabad-380 009 Corporate Office 5th,Floor Godrej Millennium 9,Koregaon Park Road, Pune-411 001

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Branch Offices Bangalore Chennai Coimbatore Hyderabad Lucknow Indore Jaipur Kolkata Mumbai Madurai New Delhi Rajkot Surat Tiruvananthapuram Vadodara

Background of Suzlon

Suzlon has completed 25 years journey from farming to wind farming. The seed of Suzlon was sown in the year 1978. Tulsi Tanti, a visionary, an entrepreneur, a leader, a motivator completed his graduation in the year 1978. The wide portfolio managed by Suzlon from 1978 to 1985 is as follows

Cold storage Ice factory Saree Painting Construction Stock Market

History of Suzlon

The Suzlon story began in 1995 with just 20 people; and in a little over a decade has become an epic. A company of over 13,000 people, operations across the America, Asia, Australia and Europe, fully integrated manufacturing units on three continents, sophisticated R&D capabilities and market leadership in Asia, ranked 5th in terms of global market share.The seeds of the idea that became Suzlon was sown by Mr. Tanti‟s venture into the textile industry just as it began in its booming years.

Faced with soaring power costs, and with infrequent availability of power hitting his business hard - Mr. Tanti looked to wind energy as an

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alternative. His first brush with wind energy was as a customer, having secured two small-capacity wind turbine generators to power his textile business. Many regarded this venture as foolhardy, with the capital expenditure for the wind turbines exceeding his textile business itself! But he had his sights on more than the immediate, having already seen the potential of wind power and the global opportunities in the field. Moving quickly, he set forth to acquire the basic technology and expertise to set up Suzlon Energy Limited - India‟s first home-grown wind technology company.

Suzlon began with a wind farm project in the Gujarat state of India in 1995 with a capacity of just 3 MW and has, at the end of 2007, supplied over 6,000 MW world over. Suzlon has grown more than 100% annually and registered a 108% growth, in the financial year ended 2007 - over twice the industry average - in a supply restricted environment.

Milestone of Suzlon

1986-1990 Sulzer Synthetics Project Size : Rs.110 lacs

Capacity : 500 MT 15th August, 1987 Textile Plant at Ankleshwar Commisioned

Plant commissioned in record time

Only the third of its kind in India 1990-1995 New Company Rechristened SUZLON 1992- Group Decides to go Public 1995-2000 Establishment of SUZLON ENERGY LIMITED Technology partner identified in Germany- SUDWIND October,1995- Agreement with SUDWIND finalized for manufacturing 350 kW machine in India. Trendsetter- Suzlon becomes a Tendsetter when 250 250 kW was the maximum size in the market, they Launched 350 kW. 2006-2007 Suzlon commissions it first 1500KW Wind Turbine Generator in Tamil Nadu. 2007-2008 The ISO/IEC 27001:2005 certification is awarded 2007-2009 To Suzlon Energy limited by Bureau Veritas Certification

(India) Pvt limited.The ISO/IEC 27001 standard is an information security management system (ISMS) standard published in October 2005 by theInternational

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Organization for Standardization (ISO) and the International Electrotechnical Commission (IEC).

The Name-SUZLON

SUZ- Vision of Intellectuals LON- Financial Support This means Vision of intellectuals combined With financial resources to transform an idea into reality.

Vision Statement

To be the technology leader in the wind energy industry. To be among the top 3 wind energy companies in the world. To be the most respected brand and preferred company for all

stakeholders To be the best team and best workplace. To be the fast growing and most profitable company in the sector.

Mission

Minimum 20% Net Margin Minimum 50% Asian market share Minimum 60% Indian market share Minimum 25% Global market share Minimum 40% Growth.

Credentials & Accolades

ISO 9001:2000 Certified Inhouse stringent quality control and audit Type certification by Germanischer Lloyd, Germany Type certification C-WET India/RISO Denmark All major components suppliers are ISO 9001 certified Third party International inspection for components and Assemblies Approved by Indian Ministry of Non-conventional Energy

Sources(MNES) SUZLON had collaborated with the German Wind energy leader

Sudwind for bringing in the state-of art technology World Wind Energy Award 2003 for extraordinary achievements in

the dissemination of the wind energy in India.

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The foundation of Indian Industry and Economists have given the “Corporate Excellence Award 2005”. The award is for “Life Time Achievement” for “Best Renewable Energy Man of the decade” to Shri Tulsi.R.Tanti

“Champions of Composites Technologies” awarded by Composite center International For Outstanding Contribution in application of Composites materials and development of composite technology

“Business Leadership Award 2002” by Solar Energy Society of India. Suzlon awarded the “Manufacturer of the Year” at the Wind India

Conference 2006 by the Power Stream Journal. Suzlon is awarded the “SAP Ace Award-2006 for the „Best Discrete

Sector Implementation‟ in the Engineering and Construction Category.

Suzlon is awarded the „ENPOWER Award-2006for Project Management & Energy Efficiency and Sustainability by the India Tech Foundation and Power stream Journal.

Corporate Social Responsibilities

Eradicate extreme poverty and hunger Achieve universal primary education Promote gender equality and empower women Reduce child mortality Improve maternal health Combat HIV/AIDS, malaria and other diseases Ensure environmental sustainability Develop a global partnership for development Soil and water conservation

Financial Highlights

(Suzlon Energy Limited and its subsidiaries)

Particulars 2007-08 2006-07 2005-06 2004-05

Sales 13,679.43 7,985.73 3,841.03 1,945.48

Profit After Tax 1,030.10 864.03 759.50 365.34

Equity Dividend (%) 50 50 50 60

Net Worth 8,101.31 3,422.08 2,734.60 904.28

Earning Per Share

(Rs)

7.07 5.99 5.55 2.87

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1,942.483,841.03

7,985.73

13,679.43

0.00

5,000.00

10,000.00

15,000.00

2004-05 2005-06 2006-07 2007-08

Sales-Rs crore

365.34

759.5864.03

1,030.10

0.00

500.00

1000.00

1500.00

2004-05 2005-06 2006-07 2007-08

Profit After Tax- Rs crore

60

50 50 50

40

50

60

70

2004-05 2005-06 2006-07 2007-08

Equity Dividend (%)

904.28

2,734.603,511.08

8,101.31

0.001000.002000.003000.004000.005000.006000.007000.008000.009000.00

2004-05 2005-06 2006-07 2007-08

Net Worth-Rs crore

2.87

5.55 5.997.07

0

2

4

6

8

2004-05 2005-06 2006-07 2007-08

Earnings per share-Rs

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Overview of Wind Industry

The Emergence of Wind Energy During the last few decades a number of governments have started to increase their focus on clean and renewable energy sources. Having committed themselves to substantially decrease their greenhouse gas emissions, governments have seen wind power as a promising technology with the potential of solving many of the environmental and energy problems facing especially the industrialized countries. The growth of wind energy has been fuelled by this increased awareness of both public and private parties in environmentally friendly energy technology .In the late 1970s the increased awareness of environmental issues led to the strong anti nuclear power movement at the same time as an energy supply crisis led to greater focus being put on sustainable energy such as solar and wind energy. As a result of this changing attitude towards renewable energy, wind power has been the most rapidly growing renewable energy source over the last decade (Figure 1). Despite this high growth, wind energy development has been obstructed

Figure 1: Growth of renewable energies. Source: Wong (2005) with high investment cost, market failures and substantial opposition by established energy incumbents. Even though the cost of wind energy has fallen rapidly it is still higher than that of conventional energy (Figure 2). For these reasons substantial government involvement in the industry development has been seen as necessary. This has mainly been done through government supported R&D for the initial development and government subsidization and incubation strategies. However, implementing a successful technology policy 1 in an emerging industry is problematic because of the high degree of uncertainty. As has been pointed out by authors such as Maskell (1996) and Lundvall and

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Tomlinson (2000, 2002), the benchmarking or copying of already successful technology policies is not likely to reap substantial benefits. Even though the imitations of the policies are successful, the outcome will differ because the policies and institutions interact with firms and are rooted in distinct national and industrial settings. Given these difficulties, it is remarkable that India has in a relatively few years managed to position itself as one of the leading nations in wind energy.

Figure 2: Generating cost of wind energy and conventional power. Source: Wong (2005)

Industry Structures and Developments

Top Ten Suppliers In 2007 % of the incremental capacity 19,791 MW

VESTAS(DK) 22.8%

GE WIND(US) 16.6%

GAMESA (ES) 15.4%

ENERCON(GE) 14.0%

SUZLON(Ind) 10.5%

Others 10.5%

SIEMENS(DK) 7.1%

ACCIONA (ES) 4.4%

GOLDWIND(PRC) 4.2%

NORDEX(GE) 3.4%

SINOVEL(PRG) 3.4%

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CLIENTS OF SUZLON ENERGY LIMITED INDIA 160MW, 5% CHINA 586MW, 17% SOUTH AMERICA 214MW, 6% USA 1,910MW, 55% EU 267MW, 8% AUSTRALIA 317MW, 9%

Global shift towards renewable energy

Increasing energy demand Global GDP growth 4- 5%, double digit growth in India and China 1.6 billion people globally living without electricity currently Global net electricity consumption expected to increase by 42% by

2015 1,600 GW of new generation capacity required by 2015

GAMESA (ES), 15.40%

ENERCON(GE), 14.00%

SUZLON(Ind), 10.50%

SIEMENS(DK), 7.10%

ACCIONA (ES), 4.40%GOLDWIND(PRC), 4.20%

NORDEX(GE), 3.40%

SINOVEL(PRG), 3.40%Others, 10.50%

VESTAS(DK), 22.80%

GE WIND(US), 16.60%

INDIA,160MW 5% CHINA,

586MW, 17%

SOUTH AMERICA,214MW 6%

USA,1,910MW 55%

EU,267MW, 8%

AUSTRALIA,317MW, 9%

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Increase in cost of energy Uncertainty in oil and gas availability and prices Geopolitical disturbances Logistics challenges and costs in transporting fossil fuels

Global shift towards Renewable Energy (RE) sources Record investment for new capacity addition in 2005: US$ 38

billion Wind is second- largest RE source and commercially most viable

option Wind – a mega trend in RE markets Wind energy harnessed by ~ 70 countries 19 countries globally installed >100 MW each in 2006 Wind penetration 2006 : 74 GW installed, potential to reach 455

GW by 2016

Key growth drivers for wind energy

Cost Competitiveness • Improvement in yields (cost/ kWh) by average 3% annually • Cost / kWh of generation: US$ 0.03 - 0. 06 • Wind Energy directly competing with conventional power Climate Change /Global Warming • Kyoto Protocol: CO 2 emissions to reduce by 5.2% of 1990s levels by 2012 • EU declaration: 20% from RE by 2020 • US: 21 States declared 10% - 20% RPS • China RE law: 5% by 2010 and 10% by 2020 from RE Energy Security • Hedge against geopolitical risks - local and secured supply • No risk of fuel price volatility, frozen cost of power for utilities • Socially, ecologically and economically sustainable growth Increased Electricity Demand • Energy - key to economic growth in developing countries (India, China etc. welcome all energy sources to bridge gap) • Wind‟s global contribution expected to increase from 0. 82% in 2006 to 4.04% in 2016 Cost Competitiveness • Improvement in yields (cost/ kWh) by average 3% annually • Cost / kWh of generation: US$ 0.03 - 0. 06

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• Wind Energy directly competing with conventional power Wind Energy: Robust growth

Annual installations in 2006 : 15,016 MW

31% YoY growth Cumulative installations reached : 74,306 MW

in 2006 Top 5 markets in 2006: MW YoY Growth % USA : 2, 454 26.7 Germany : 2, 233 12.0 India : 1, 840 41.9 Spain : 1, 587 15.8 China : 1, 334 104.7

Cumulative installed capacity in MW

Global Wind: High Growth Scenario

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Key differentiators…

Vertically integrated manufacturer Product Existing Expansion Turbine India, China India Rotor Blades India, China, US India Gear Box Belgium Belgium ,India, China Generator India India, China Control System India, China India Tower India India Foundry & Forging India Manufacturing Capacity

End-to-end wind energy solutions provider in India

Infrastructure development

• Wind resource assessment • Land acquisition

• Evacuation facilities / substations

Technology development WTG and Component manufacturing

Project construction and execution

• Installation and erection •Commissioning

Operations & maintenance

• Lifetime services

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Group Management Team

Group Management

Team

Technology

Product Development

Technical services

Innovation

Manufacturing

Nacelle

Rotor Blades

Tower

Generator

Gear box

Forging, Foundry & Machining

Sales & Project

India

International

USA

Europe/RoW

China

Aus/Nz

Group Management Staff Function

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Material Flow Chart

Customer Requirement

Demand Creation (SAP)

MRP Run (SAP)

Purchase

Requisition

Planned Orders

Purchase Order

Material Receipt

Quality Inspection

Stock updation

Production

Order

Material Issue

Material In Process

(Consumption)

Convert

Finished Good

Quality

Inspection

Packing

Dispatch

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Production Planning and Control Department

Production planning and control department is the mediation between marketing and production department. There is ABP (annual business plan) given by the marketing department in the month of March for whole year production. Thereafter, they prepare other sub plans based on the requirements of their customers. Their customers are from USA, Australia, and Europe. On the basis of this plan PPC department prepares other plan and that is circulated to different departments like purchase, production stores, materials, accounts etc, then the approval is taken from all these departments. Requirements of the customer vary because of the varying frequency requirements of different locations.

PPC department mainly see that the requirement of customers are fulfilled by manufacturing the required orders. Firstly the demand is uploaded in the SAP R3 then according to the type of materials that is A,B,C the purchase requisition is created. For “A” type of materials “SNP” is created and for B,C “MRP” is created.

According to the purchase requisition (PR) created in SAP purchase order is created (PO).As per the purchase order the materials are imported from the vendors which undergo the quality inspection.

PPC department also does the function of

Materials follow-up

Rejected materials SAP report preparation

Replacement of the rejected materials

Suzlon’s major vendors include

Luoyang- China

Hansen -Belgium

Lang -German

Giva -Switzerland

Schaeffler- Germany

PPC department is an intermediate between plant and engineering department.

The total strength of this department is of about 9-10 members, those are junior engineers. The department is operated under the supervisory of Mr. R.B Patil who sits in the head office (Pune). Under the guidance of

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Mr.Ashutosh Thorat (Manager Purchase Planning) the engineers working at the Daman plant Unit V report.

This department also undertakes the activity of retrofitting that is incase of unavailability of the key components the order is fulfilled by assembling the other components at place and the key components are assembled later at the site of installation or mounting. Retrofitting is carried out for cost effectiveness as well.

PPC is an operating department. It is the nerve system of the entire productive system,

The following chart would explain the importance of this department in Suzlon Energy Ltd.

(Product structure/design documents)

(Manufacturing

documents)

(Assembled products)

(Finished goods)

R & D department

(Product design)

PPC department

Manufacturing depts..

-fabrication

-Assembly

Final inspection and

acceptance testing

Distribution to customer

through channels of

distribution

Marketing dept

Purchase and

stores dept

Maintenance

dept

Industrial

engineering dept

Inspection and

Quality control dept

Packing and dispatching

of finished goods

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Production Process (Assembling Process)

± Yaw Assembly o Yaw base cleaning o Mounting of Gear RIM o Mounting of Plates o Yaw drives fitting o Fabrication component fitting

± Girder Assembly

o Girder fittings o Fabrication component fitting

± Gear box Assembly

o Fitment of Rotor shaft o Fixing of Gear Box Assembly into Yaw Base o Fixing of Filter Unit and Lubrication Unit

± Bearing assembly o Rotor shaft cleaning o Bearing housing cleaning o Assembly of bearing housing into rotor shaft

± Generator Assembly o Mounting of Generator and alignment

± Panel preparation (Pitch and Control)

± Nacelle cover wiring assembly o Fixing of panels o Cabling

± Testing of Nacelle

± Nacelle cover fitting Third Party Inspection

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Quality department team structure

Purchase Department

The purchase department plays a very important role in SUZLON because purchasing has its effect on every vital factor concerning the manufacture, quality, cost, efficiency and prompt delivery of good to customers. Its function is to procure materials, supplies, services, machines and tools at the most favorable terms consistent with maintaining the desired standard of quality.

The functions of this department include:ss

Vendor development

Invoice parking

Invoice posting

The main function of the purchasing department is First is register suppliers. Second is placing the purchase order.

REGISTRATION OF SUPPLIERS:-

- The suppliers are send the registration from - The respective buyers are identified.

Assistant

manager(Electical)

Senior engineer

(Mechanical/Composite)

Jr.engineer (Mechanical) Jr.engineer (Electronics)

Senior manager

(Yogesh Sharma)

Mechanical,

Electrical,

Electronics

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- Scrutinize the information provided by supplier - Arrange for a visit by concerned personnel if necessary. - Forward the recommendation to the plant head for decision regarding

approval. - Include the name of approved suppliers in the list of suppliers. Once the suppliers are registered then the orders are placed with them

Purchasing information and Track on Raw Material inventory:-

- Receive monthly production plan from production planning and control department and information about the stocks from the stores department.

- Estimate the order to be placed. - Prepare purchase order giving details of schedule, quantity price,

description of items, and important quantity requirement. - Ensure that purchase orders are reviewed for adequacy and approved

by before release to supplier.

Commercial Department

The main functions carried out by this department are as follows MIS Insurance Monitoring Variance Analysis Statutory Audit Inventory Management Dispatch Documentation Cash Management Payment Management Invoice Verification Job Work Reconciliation

The total strength of this department is of 3 people who with great responsibility handle the smooth working of its department. It is a service type of department. The functions carried out by this department can be described as under MIS In this various reports from SAP are prepared for submission to management. These reports include reports like Stock Analysis Report Consumption Variance Report Production Dispatch Report

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Expense Analysis Report and the like. Insurance Monitoring It aims to arrange survey of incidences It coordinates with insurance cell for paper work It further monitors status of claim lodged. Variance Analysis In this field of work commercial department prepares report of Variance Analysis on monthly basis. It also highlights and rectifies the errors in materials issue It aims to get the report audited from external auditors. Statutory Audit In this function it sees to it that various reports are prepared as per recommended audit. It then presents the reports in front of auditors and satisfies queries raised Inventory management In this function of commercial department it monitors materials movements happen in the plant. It defines SAP for new transaction. It facilitates material handling and management for smooth functioning of plant. Dispatch Documentation In this it verifies the documents received from Logistics department. It prepares delivery challan (DC) & necessary document for removal of materials from plant. It further keeps record of documents prepared. Cash Management Here it carries out activities like collection of cash from bank Disbursement of cash. Recording of transaction in SAP It ensures cash availability and matching of physical versus book cash.

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It coordinates with HO for cash requirement. Payment Management Here it prepares payment advice and forwards the same to the HO. It keeps track of check received and disbursed. It keeps an eye on follow up for payments. Invoice Verification In this task it verifies terms and conditions mentioned in invoice with PO and GRN. It further undertakes the entry of invoice in SAP It further keeps record of invoices forwarded. Job Work Reconciliation In this it prepares the statement of materials sent and consumed by job worker.

Reconciliation of materials consumed by Job worker against standard consumption.

Parking of job work invoices in SAP. Record Maintenance.

Research and Development

Sound research and development is the key to technology leadership. The Product

Technology Division provides comprehensive research and development solutions lending all necessary technical support to the organization. Comprising of India and Europe‟s most renowned wind energy engineers, our R&D team combines global experience of varied wind regimes with in-depth knowledge of available turbine technologies. Backed by technological expertise of Europeans and hands-on knowledge of Indians SUZLON produces some of the most efficient, robust and reliable wind turbines available in the world today. The Wind Turbine Generator research and development centres are based at Rostock and Berlin, Germany.

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Suzlon Energy GmbH carries are R&D with its focus on innovation, to design world class Wind Turbines. The designing team‟s prime objective is to provide technological leadership to Suzlon in collaboration with our manufacturing, installation and maintenance teams around the world.

Marketing Department

Our global team spread across four continents brings the world‟s best practice and local expertise together to fuel continous growth and propel expansion in high potential markets. At suzlon we combine global experience with local expertise to maximize techno-economic value for our clients.

Business Model

SUZLON provides turnkey solution in wind power generation business by integrating ; Design Manufacturing Installation Operation Maintenance Financial assistance Erection & commissioning

Marketing Incorporates Scheduled Service Functions Preventive maintenance(Quaterly/ Half yearly/yearly) Breakdown maintenance Generation Security Liaison

SWOT ANALYSIS

STRENGTHS Strong management team

Global production platform and access to an integrated manufacturing base.

Track record of executing large-scale wind power projects In-house technology and design capabilities

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Cost-efficient manufacturing and supply-chain

Operations and maintenance expertise

Focus on providing “integrated solutions” wind energy packages to customers in India.

WEAKNESS

Lack of availability of space for warehousing OPPORTUNITY:

Global warming awareness has created sense of responsibility towards saving the environment among world corporate and public. Which is major factor for growth of companies like SUZLON

Government policies towards non-conventional energy make companies product more affordable and viable as far as Return on investments are concerned

THREATS:

The demand for wind power projects is primarily dependent on the demand for electricity

The viability of wind power projects is dependent on the price at which they can sell electricity

The viability of wind power,and wind power projects is dependent on wind patterns.

Wind power cannot be considered as base load source of electricity

Wind resource

Assessment

&

land

Access roads,

Power evacuation

& grid

Interconnection

&

power lines

WTG & com-

Ponents

design,

development

EPC project

Execution

Installation

comissioning

conceptualization infrastucture Equipment supply Services

Integrated Business Model

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Conclusion

In a giant company like Suzlon which is fastest growing in wind sector, work is carried out in a very systematic, sophisticated & technical manner.

Today‟s world is full of competition, which has become more prominent and distinct in this period of globalization and thus each aspect of the company needs attention to survive, retain and grow in the market.