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Suzlon Energy Limited
for a Brighter & Greener Tomorrow
2
Disclaimer
•This presentation and the accompanying slides (the “Presentation”), which have been prepared by Suzlon Energy Limited (the “Company”), have been prepared solely for information purposes and do not constitute any offer, recommendation or invitation to purchase or subscribe for any securities, and shall not form the basis or be relied on in connection with any contract or binding commitment whatsoever. No offering of securities of the Company will be made except by means of a statutory offering document containing detailed information about the Company.•This Presentation has been prepared by the Company based on information and data which the Company considers reliable, but the Company makes no representation or warranty, express or implied, whatsoever, and no reliance shall be placed on, the truth, accuracy, completeness, fairness and reasonableness of the contents of this Presentation. This Presentation may not be all inclusive and may not contain all of the information that you may consider material. Any liability in respect of the contents of, or any omission from, this Presentation is expressly excluded.•Certain matters discussed in this Presentation may contain statements regarding the Company’s market opportunity and business prospects that are individually and collectively forward-looking statements. Such forward-looking statements are not guarantees of future performance and are subject to known and unknown risks, uncertainties and assumptions that are difficult to predict. These risks and uncertainties include, but are not limited to, the performance of the Indian economy and of the economies of various international markets, the performance of the wind power industry in India and world-wide, competition, the company’s ability to successfully implement its strategy, the Company’s future levels of growth and expansion, technological implementation, changes and advancements, changes in revenue, income or cash flows, the Company’s market preferences and its exposure to market risks, as well as other risks. The Company’s actual results, levels of activity, performance or achievements could differ materially and adversely from results expressed in or implied by this Presentation. The Company assumes no obligation to update any forward-looking information contained in this Presentation. Any forward-looking statements and projections made by third parties included in this Presentation are not adopted by the Company and the Company is not responsible for such third party statements and projections.•No offering of the Company’s securities will be registered under the U.S. Securities Act of 1933, as amended (the “Securities Act”). Accordingly, unless an exemption from registration under the Securities Act is available, the Company’s securities may not be offered, sold, resold, delivered or distributed, directly or indirectly, into the United States or to, or for the account or benefit of, any U.S. Person (as defined in regulation S under the Securities Act). •The distribution of this document in certain jurisdictions may be restricted by law and persons into whose possession this presentation comes should inform themselves about and observe any such restrictions.
3
• Company overview
• Key highlights
• Strategy
Contents
4
Suzlon10.5%
Vestas22.8%
Enercon14.0%
Repower^3.3%
Gamesa15.4%
GE Wind16.6%
Siemens7.1%
Others10.3%
Suzlon: Overview
Market Share as of December 31, 2007Source: BTM Consult ApS – March 2008
Amongst the Top 5 Wind Turbine Manufacturers Globally (2007) Amongst the Top 5 Wind Turbine Manufacturers Globally (2007)Amongst the Top 5 Wind Turbine Manufacturers Globally (2007)
Integrated Business ModelIntegrated Business Model
• End-to-end solution provider• No. 1 supplier to the Indian market for the last 9 years• Truly Global Player in terms of
• Markets and products• Wind turbine and component manufacturing and
R&D capability• Broad wind turbine product portfolio
Wind resource assessment & land
acquisition
Wind resource assessment & land
acquisition
Access roads, power evacuation,
grid interconnection and power lines
Access roads, power evacuation,
grid interconnection and power lines
WTG & Component design, development and manufacturing
WTG & Component design, development and manufacturing
EPC, project execution, installation,
commissioning & O&M
EPC, project execution, installation,
commissioning & O&M
ConceptualizationConceptualization InfrastructureInfrastructure Equipment supplyEquipment supply ServicesServices
^ REpower supply figuresare preliminary
5
Entry into large European markets of Germany, the UK and France
Complementary product portfolio with presence in offshore wind energy market
Improve REpower margins and accelerate REpower volumes through Suzlon’s supply chain linkages
Capitalize on REpower’s design and development know-how and brand equity
✚
Suzlon investment : REpower
Transaction RationaleTransaction Rationale
Transaction OverviewTransaction Overview
ó Suzlon successfully concludes bid to acquired REpower
ó Share Purchase Agreement with Martifer for its approx. 22% stake;
ó Controls or influences voting rights of approx. 90% through vote pooling agreement with Martifer
ó Deal financed by:
– Loan repayable up to 7 years
– Convertible bond issues totaling US$500 mn
– Follow-on equity offering proceeds (proposed utilization)
6
Suzlon acquisition : Hansen
SuzlonHansen
ó Plugs a critical gap in Suzlon’s supply chain– Gearbox, one of the longest lead-time products
in WTG value chainó Develops a long-term growth driver in form of Wind
and Industrial gearbox business of Hansen Transmissions
ó Strategic acquisition of 100% equity of world’s leading gearbox and drive train manufacturer in May 2006
ó Consideration of € 431 mn for acquisition of ~100% stake in Hansen Transmissions
ó Hansen IPO successfully completed raising approx. €440 mn for 27.1% dilution
ó Hansen stock [HSN] listed on London Stock Exchangeó Post IPO holding of Suzlon 71.3%
Amongst top 5 wind energy
players globally
2nd largest globally in wind gearboxes
7
90% *
Suzlon: snapshot
14,300 (Gearbox MW) 1,7005,700Total Capacity Post Expansion (MW)
8,000 (Gearbox MW) 4503,000Expansion Planned (MW)
1,850 +1,150 +13,500 +Employee Base
Low to Medium capacity WTGs (350 kW – 2.1 MW)
2,700
India, the USA, China, Australia, Europe, Latin America with 10.5% global market share
5th Largest globally in Wind energy sector
Medium to High capacity WTGs (1.5 MW – 5 MW)
1,250
Europe, China (mainly Germany with 10% market share)
Recognized technology leader with strong presence in Europe
Product Portfolio
Current Capacity (MW)
Geographical Presence
WTG Gearbox (500 kW – 6 MW; 160 – 3,500 kNm)
7,300 (Gearbox MW)
2nd Largest globally in Wind gearboxes **
Europe, India, South Africa, USA
* Suzlon had acquired nearly 67.2% stake and controls or influences 90% through vote pooling agreement with Martifer** Post Hansen’s listing on LSE, the public holds approx. 28.7%of its issued share capital
71.3% **
8
• Company overview
• Key highlights
• Strategy
Contents
Key Highlights
Robust Order Book Position
Robust Order Book Position
Experienced Management Team
Experienced Management Team
Compelling Global Wind Industry
Dynamics
Compelling Global Wind Industry
Dynamics
Presence in Key global Markets
Presence in Key global Markets
Highest Level of Vertical IntegrationHighest Level of Vertical Integration
Broad Product Offering with In-
house R&D, Design capabilities
Broad Product Offering with In-
house R&D, Design capabilities
10
Pioneering end-to-end Wind Power solutions
• Allows customers to benefit from cost-efficiencies and economies of scale in wind farms
• Avoids need for customers to undertake cumbersome wind farm development process
• Provides greater control over execution timeline
• Control on value chain from planning to maintenance stages
• Leverages Suzlon’s deep experience across Wind energy value chain
* Land acquisition business is mostly operated through associate concerns, not part of Suzlon value chain
11
Vertical integration
Forgings &Machining BladesGearbox Panels Generator Tower
Significant expansion by FY09 in Belgium, China and India
Partial demand met through Hansen facilities in Belgium in Europe
✔
120,000 MT foundry & machining facility by Q3FY09
---
✔
Partial demand met through in-house facilities in India
Partial demand met through in-house facilities in India
Partial demand met through in-house facilities in India, China
Complete demand met by in-house production located in India, China & the US
---Existing Facility
Proposed Facility/ Expansion
Presence (Current/ Planned)
✔✔✔✔✔
Capacity expansion by Q2FY09 in India
70,000 MT forging & machining facility by Q3FY09
India Rotor Blade unit to be completed by Q2FY09
Panel unit at Coimbatore, India to be completed by Q2FY09
Planned expansion in India to be completed by 4Q FY09
Wind Turbine Generator (“WTG”) Supply Chain
• Wind Industry facing supply chain bottlenecks
• Long lead time of production in key components such as Bearings, Gearbox, Forging materials
• Critical Competitive Advantage with• Better control over time, cost & quality• Long-term service support to customers• Turbine technology integration• Faster product rollout
Integration
Foundry &Machining
12
Integrated R&D and design capabilities
► Integrated product, component and system design under one organization
– Global resource pool for quicker design, development and upgrade
► Developed own MW and multi-MW WTG models and rotor blades
► Potential high-capacity onshore and offshore WTGs expertise through REpower
► Recognized technological leadership in Gearboxes (Hansen)
► In-house development expertise in key components
Wind Turbine R&D in Germany
Rotor blade R&D in The Netherlands
Product & process
engineering in India
Innovation Centre
in Europe*
Engineering Centre
in India*
WTGs and WTG Component Design, Development, Upgrade & Customization
Technology Campus
in Germany@
* Planned facilities
Results in high reliability and credibility among Customers
Plans to invest significant resources for R&D during the
next 5 years
Gearbox R&D
in Belgium
@ 50:50 Joint venture with REpower Systems AG
13
USA • Rotor blade production unit
Europe & South America• Gearbox production in
Belgium
Note: Europe includes Denmark, France, Italy, Portugal, UK, Netherlands, Turkey Americas includes United States, Canada* CAGR growth over 2008-12 based on BTM, 2007, March 2008 report
Australia & New Zealand
India• Distributed manufacturing
facilities
China• Integrated manufacturing
facility at Tianjin
•Acclaimed growth in Indian market
•Presence in 8 windy states with over 30 wind farms
USA Europe and South America
India China
Global presence in highVolume, growth markets
18724 MW
14794 MW
7845 MW
5875 MW
29.04%
17.89%23.83%
48.46%
14
International clientele
China•Shandong Luneng•Guohua•Datang•Honiton•Jingneng
USA•John Deere Credit•Edison Mission Group•PPM Energy•Horizon Wind•Tierra Energy
Brazil• SIIF Energies do Brasil Ltda
(SIIF) • Servtec Instalacoses
Australia / NZ• Australia Gas & Light• TrustPower• Renewable Power Ventures Pty Ltd. • Pacific Hydro
Italy:•NeoAnemos Srl
Portugal:•Techneira S.A•Energi Kontoret
Spain:•Iniciativas Energetitas•Eólia Renovables group•Spanish Savings Bank Unicaja
Turkey•Ayen Enerji
15
Suzlon: high standards of growth
3,841
7,986
13,679
FY06 FY 07* FY 08*
1,882
1,296
884
FY06 FY07* FY08*
1,030
864
760
FY06 FY07* FY08*
SalesSales EBITDAEBITDA PATPAT
INR Cr.
CAGR 88.7%
CAGR 16.4%
CAGR 47.5%
* - Includes Hansen
16
• Company overview
• Key highlights
• Strategy
Contents
17
• Technology leadership in the Wind Energy Space
• Be among the top 3 wind companies in all the key markets of the World
• Be the global leader in providing profitable end-to-end wind power solutions
• Be the “Stakeholders’ Choice” Company
• To contribute to sustainable development of the Wind Energy sector through an integrated product design and manufacturing strategy
• To increase the contribution of wind power to meet global energy demand
• To create a better, greener tomorrow for all
Suzlon: Strategy
Vertical integrationVertical integrationR&Dand
Innovation
R&Dand
Innovation
• Strategic focus on customer needs
• End-to-end solutions
• Strategic focus on customer needs
• End-to-end solutions
Focus on High growth
markets
Focus on High growth
markets
Improvingcost efficiency
Improvingcost efficiency
Growth acceleration
Growth acceleration
Suzlon’s Vision Suzlon’s Mission
Strategy
A Look at the Windfarm
Thank you
Global Wind Industry - An Anemometer!
• The Context
• The Winds that Blew By
• Crystal Gazing: The Winds Ahead
• The Head Winds
• Harvesting the Winds
Structure of the Presentation
The Context
The Inconvenient Truth is…Global Warming has arrived!
Endangered Maldives due to Rising sea levels
Increasing floods / draughts due to extreme weather conditions
Devastating Tycoons like Katrina
Sources of GHG EmissionsWhat matters the most?
100 mins of operationFrom power station
1,615 tCO2
100 days of leaks from achilled foods plant
205 tCO2
100 cow’s bio-waste in one year
309 tCO2 100 cars in city
over one year
540 tCO2
Electric Power 31%
Fossil Fuel & Transportation
25%Agriculture
12%
Industrial Process
17%
Waste Disposal 15%
Renewable Energy Get the best of both the worlds
Sustainable EnvironmentCurtails further GHG emissions
Lowers carbon footprint
Pollution-free, clean and green
Helps conserve depleting fossil
fuels stock
Sustainable EconomyUses naturally ‘renewable’ sources of fuel
Techno-commercially viable & proven
CDM project activity
Favorable policies & fiscal incentives
The Winds that Blew By
26
• Installations in 2007 : 19,791 MW (32% YoY growth)
• Cumulative installations: 94,005 MW in Dec ‘07
Cumulative installed capacity in MW Cumulative installed capacity in MW Cumulative installed capacity in MW
Source : BTM Consult ApS World Market Update 2007* Average growth over 2004 2007
94,005
74,306
59,399
47,912
40,301
CY03 CY04 CY05 CY06 CY07
CAGR 24.1%
Riding the High Winds
1,617
1,667
3,100
3,287
5,244
India
Germany
Spain
China
USA 35.7%
97.0%
21.2%
37.8%
10.2%
Average Growth *2007 Capacity Addition (in MW) 2007 Capacity Addition (in MW)2007 Capacity Addition (in MW)
Global Wind Power StatusCumulative MW by end of 2001, 2004 & 2007
0
10,000
20,000
30,000
40,000
50,000
60,000
Europe USA Asia Rest of World2001 (24,927 MW) 2004 (47,912 MW) 2007 (94,005 MW)Source: BTM Consult ApS - March 2008
Growth across Continents
28Source : American Wind Energy Association
BTM Consult ApS World Market Update 2006
The Drivers ~ Tail Winds
Price Hedging and Cost
Competitiveness
Price Hedging and Cost
Competitiveness
• Improvement in yields (cost/ kWh) • Cost / kWh of generation: US$ 0.03 - 0.06• Wind Energy directly competing with conventional power• Frozen lifecycle power cost for utilities
• Improvement in yields (cost/ kWh) • Cost / kWh of generation: US$ 0.03 - 0.06• Wind Energy directly competing with conventional power• Frozen lifecycle power cost for utilities
Global Warming and
Climate Change
Global Warming and
Climate Change
Æ Kyoto Protocol: CO2 emissions to reduce by 5.2% of 1990s levels by 2012• EU Proposal for Directive: 20% from RE by 2020• USA: 22 States with 10% to 20% RPS mandates• China targets 100,000 MW from RE by 2020• India: 10 States with 2% to 10% RPO mandates
Æ Kyoto Protocol: CO2 emissions to reduce by 5.2% of 1990s levels by 2012• EU Proposal for Directive: 20% from RE by 2020• USA: 22 States with 10% to 20% RPS mandates• China targets 100,000 MW from RE by 2020• India: 10 States with 2% to 10% RPO mandates
Energy SecurityEnergy Security• Hedge against geopolitical risks - secured supply• No risk of fuel price volatility• Socially, ecologically and economically sustainable
• Hedge against geopolitical risks - secured supply• No risk of fuel price volatility• Socially, ecologically and economically sustainable
Increased Electricity Demand
Increased Electricity Demand
• Energy - key to economic growth in developing countries•- Need to tap all available resources
• Wind’s global electricity generation contribution expected to increase from 0.82% in 2006 to 3.4% in 2030
• Energy - key to economic growth in developing countries•- Need to tap all available resources
• Wind’s global electricity generation contribution expected to increase from 0.82% in 2006 to 3.4% in 2030
Zero Carbon Solution
Zero Carbon Solution
National ResourceNational
Resource
Abundant ResourceAbundant Resource
Zero Fuel Cost
Zero Fuel Cost
ConcernConcern DemandDemand CatalystsCatalysts
Snap-shot
• Asia Pacific – High growth in China & India contributing to the success & the growth story of Asia Pacific
• USA/ Canada continue their growth pace
• Latin America & Middle East catching up
• Steady growth from European markets
• On-shore Continues to dominate in the short run, Off-shore has great potential
• Re-Powering to add business, especially in matured markets
Increasing Turbine & Project Size
Average Turbine
size is increasing
YoY, to maximize
Wind Potential
Global AverageWind project size
is increasing
Domination by Utilities and IPPs
• Major shift in ownership of wind assets
Source: Global Energy Outlook Report 2007 by Greenpeace International, European Renewable Energy Council (EREC)
Wind Energy & CDM Benefits
Crystal Gazing: The Winds Ahead
• Growing global energy demand
• Limited existing resources; high cost of new resources
• High energy needs for India and China
• Increasing per capita energy consumption
6.8%
9.8%
Source: Energy Information Administration (EIA)
Global Energy Demand
Energy as Oil Equivalent (MTOE)*
• The world energy requirement will continue to grow• Developed nations and BRIC economies will be major contributors for demand• Other Renewables (incl Wind and Solar) will grow most rapidly
MTOE = Million Tonnes of Oil Equivalent
Renewable: The Untapped Potential
• Amongst Other Renewables, Wind and Solar have the largest untapped potential (excluding Biomass)
The Wind Forecast
Global Wind Power ForecastCumulative MW by end of 2007 & Forecast 2012
0
20,000
40,000
60,000
80,000
100,000
120,000
140,000
Europe USA Asia Rest of World
2007 (94,005 MW) 2012 (287,940 MW)Source: BTM Consult ApS - March 2008
Global Wind Power ProjectionsCumulative MW - Forecast 2012 & Prediction 2017
0
50,000
100,000
150,000
200,000
250,000
Europe North America Asia Rest of World
2012 (287,940 MW) 2017 (690,994 MW)Source: BTM Consult ApS - March 2008
Cumulative Global Wind Power DevelopmentActual 1990-2007 Forecast 2008-2012 Prediction 2013-2017
0
100,000
200,000
300,000
400,000
500,000
600,000
700,000
1990 2007 2012 2017
MW
Prediction Forecast Existing capacitySource: BTM Consult ApS - March 2008
2020 & Wind Energy!
300 GW
80 GW
48GW
0
50
100
150
200
250
300
350
1990
1995
2000
2005
2010
2015
2020
2025
2030
180 GW
Cumulativecapacity(Τargets 80 /180 / 300GW)
Real data
1.8-3.6%
0%Offshore
12%3%Wind Energy
35%15%Electricity
20%8.5%RES
20202005
To meet the RES targets wind has to contribute
180 GW by 2020
39
2.5
3.5
4.5
5.5
6.5
Nuclear CCGT Coal Steam IGCC Wind
(US
cen
ts/ k
Wh)
Wind-Renewable Energy Source: You Can Bet On!
125
227
4
82
36
56
1
4
50% 60% 70% 80% 90% 100%
1990
2004
Biomass & Waste Wind Geothermal Solar
Source: IEA WEO 2006 / BTM Consult ApS WMU 2006
Source: IEA WEO 2006 * Generation in TWh
✔(5 times present global energy
usage, 7 times electricity usage)
✔(72 TW potential estimated globally at 80m hub height)
✔(19.8 GW capacity addition in
2007)
✔(3-6 cents/kWh)
Wind Energy Status
Magnitude
Resource Availability
Established Base
Cost Competitiveness
Critical Success Parameters
Wind: Cost competitive with conventional powerWind: Cost competitive with conventional powerWind: Cost competitive with conventional power
Fastest growing renewable energy source*Fastest growing renewable energy source*Fastest growing renewable energy source*
Potential to power the futurePotential to power the futurePotential to power the future
Source: BTM Consult ApS WMU 2007 and Journal of Geophysical Research, 2005 : Stanford University
The Head Winds
The Wind Breakers
Onshore
Offshore
Infrastructure
Projects
Manpower
Ship Availability
Capital/Finance
Components
20152014201320122011201020092008
These temporary bottlenecks will restrict the growth of the Wind Industry
Hurricane, Cyclone or Twister?
• Current melt-down in the global financial markets has literally taken the wind out of our Sales– Almost non-existent liquidity
– Higher costs of funds
– Dampening of investment sentiments
• Everyone is conserving cash for a rainy tomorrow. Cash is King!
• Corporates are deferring even essential Capital Expenditure Plans, what to talk of investing in Wind
Old Friends…
• Wind is renewable energy source, but windy sites are not!
– Technology up-gradation to harness available Windy Sites
• Wind Power ~ ‘Terrorist’ Power
– Creates serious issues in Grid Management due to its infirm nature
• Increasing Capital Cost of Wind Turbine (Cost/MW)
– Reversal of Trends due to falling input costs
• Shortage of Critical Components
• Off-shore installations are still too expensive and hence less viable
– Infrastructure & transmission related issues
Harvesting the Winds
Way Forward
• Treat Renewable as PART of Power Sector and hence AT PAR with Power Sector
• Continually bring down WTG and Project Costs• Improve Technology and Enhance Productivity• Invest in Energy Storage devices and Energy Forecasting• Innovative Financing
- Better availability of Funds- Lower Costs- Longer Maturities
• Governments to implement time bound RPOs
People: Challenges and Opportunities
• Exponential growth of the industry ~ competent & committed personnel
– Young professional eager to work in the RE Industry
– Creation of ‘Green Jobs’
• White collar Greens – technology, research, corporate, Legal/IPR etc
• Blue collar Greens – manufacturing, installation, commissioning etc
• Need to proactively develop Capacity and Ability for the Industry
– Introduction of ‘Chairs’ in university and grants for deserving candidates pursuing RE studies
– Initiate development of manpower required for the Offshore Industry
– International labor laws, multicultural sensitivities and multiple languages
7 Ps to Success
• Passion & Pride• Perseverance• Patience• Planning• Preparedness• Pragmatism
Add PRAYERS for Good Luck PROFITS will follow….
We have to harvest the Winds in our WTGs to…
Power a Greener Tomorrow