Suzlon Energy Ltd · NSE:SUZLON
Suzlon Energy — Investor Presentation (January 2010)
55 slides from Suzlon Energy's investor presentation, January 2010
Slide 1: Suzlon Energy Limited Investor Presentation
Suzlon Energy Limited Investor Presentation January 2010
Slide 2: Disclaimer
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 securit
Slide 3: Contents
Contents • Recent updates • Industry overview • Suzlon overview • Business updates • Q2 FY10 updates • Additional financial information 3
Slide 4: Company update
Company update • New repeat orders of 143MW for Suzlon – USA: 21MW (10 X S88-2.1MW) from Juhl Wind – Australia: 42MW (20 X S88-2.1MW) from Infigen Energy – India: • 21MW (14X S82-1.5MW) from Gujarat Alkalies & Chemicals Ltd • 27MW (4 X S82-1.5MW and 10 X S88-2.1MW) from ITC Ltd • 32MW (15 X S88-2.1M
Slide 5: Global policy regime update
Global policy regime update • India moving towards long term feed-in tariffs, renewable energy certificates and nation-wide renewable portfolio mandates • USA: Incentives announced under the ARRA now being rolled out – Improves viability of projects and reduces financing burden – Improves credit pro
Slide 6: Indian market headed towards maturity
Indian market headed towards maturity • Overhaul of policy framework underway, will greatly increase renewable penetration – Prime Minister’s National Action Plan on Climate Change (NAPCC) advocates national level RPS target of 15% by 2020, starting at 5% by 2010 – CERC notifies tariff regulations f
Slide 7: Contents
Contents • Recent updates • Industry overview • Suzlon overview • Business updates • Q2 FY10 updates • Additional financial information 7
Slide 8: Wind: a promising renewable energy source
Wind: a promising renewable energy source Fastest growing renewable energy source (a) (a) Potential to power the future Critical Success Parameters Wind Energy Status 100% 1 3 52 Cost Competitiveness ✔ 90% (Median cost - EUR 65 / MWh) 36 80% ✔ 4 Established Base (Total of 122 GW capacity 111 by 2008
Slide 9: Compelling industry growth dynamics
Compelling industry growth dynamics Concern Demand Catalysts • Kyoto Protocol: CO2 emissions to reduce by 5.2% of 1990s levels by 2012 Climate Change • EU RE law: 20% from RE by 2020 Zero carbon and • US: 28 States with 10% to 20% RPS mandates solution Global Warming • China RE law: 15% by 2020 from
Slide 10: 2004-08: Strong historical growth
2004-08: Strong historical growth Industry growth in last 5 years 28,190 GR: 28% CA Supplied MW 19,791 15,016 11,542 8,154 2004 2005 2006 2007 2008 • Renewed interest in the US: energy security, employment generation and economic stimulus • Strong policy support in EU: climate change • Growth in Asi
Slide 11: Medium-term market dynamics
Medium-term market dynamics • De-growth in industry’s sales in 2009 followed by rebound in 2010 – Slowdown visible in US and Europe markets in 2009 – China may be major growth market • Pricing pressure and raw material cost decline • Availability of debt funds for new wind power projects has reduced
Slide 12: 2009-13: Industry demand forecast
2009-13: Industry demand forecast Industry growth in next 5 years 58,520 3% AGR: 2 51,390 C MW Forecast 43,820 36,640 30,625 2009 2010 2011 2012 2013 • 2009 projects in the US and Europe to be largely supplied from existing backlogs • Medium term growth in US market to be driven by Economic Stimulus
Slide 13: Contents
Contents • Recent updates • Industry overview • Suzlon overview • Business updates • Q2 FY10 updates • Additional financial information 13
Slide 14: Company overview
Company overview Amongst Top 5 Wind Turbine Manufacturers Globally (2008) Enercon Suzlon Gamesa 12.0% 10.0% 9.0% • End-to-end solution provider Repower 3.3% • No. 1 supplier to Indian market for last 10 years Siemens 6.9% • Global Player in terms of GE Wind 18.6% Sinovel 5.0% • Markets and products
Slide 15: Suzlon: Strategy
Suzlon: Strategy Suzlon’s Vision Suzlon’s Mission • Technology leadership in the Wind sector • To contribute to sustainable development of Wind • Be among the top 3 wind companies in all the Energy sector through an integrated product key markets of the World design and manufacturing strategy • Be t
Slide 16: Integrated R&D and design capabilities
Integrated R&D and design capabilities ► Integrated product, component and system design under one organization Results in high reliability and – Global resource pool for quicker design, development and credibility among Customers upgrade ► Developed own MW and multi-MW WTG models and rotor blades P
Slide 17: Key competitive advantage: Vertical integration
Key competitive advantage: Vertical integration • Wind Industry facing supply chain bottlenecks • Critical Competitive Advantage with • Long lead time of production in key • Better control over time, cost & quality components such as Bearings, Gearbox, Integration • Long-term service support to cust
Slide 18: End-to-end wind power solutions
End-to-end wind power solutions Tata • Allows customers to benefit Power Wind resource mapping from cost-efficiencies and economies of scale in wind farms Bajaj Auto Site Identification • Avoids need for customers to undertake cumbersome Essel wind farm development Leverage Land acquisition (a) Mini
Slide 19: Strong international client base in key markets
Strong international client base in key markets Europe & South US China Australia / NZ America 2008 total: 8,358 MW 2008 total: 6,246 MW 2008 total: 619 MW 2008 total: 9,474 MW Installations (a) Forecast Forecast Forecast Forecast Total 2009-13: 52,000 MW 2009-13: 42,800 MW 2009-13: 3,950 MW 2009-13
Slide 20: Group snapshot
Group snapshot 91%(a) 26.06%(b) 5th Largest globally in Wind energy Recognized technology leader with 2nd Largest globally in Wind sector strong presence in Europe gearboxes (b) India, the US, China, Australia, Europe, Europe, China (mainly Germany with Geographical Presence Latin America with 9.0%
Slide 21: Suzlon and REpower: Synergies
Suzlon and REpower: Synergies • Accelerate REpower’s volumes and improve margins through Suzlon’s supply chain linkages – Supply of rotor blades, gear box, generator, control panel, forging and casting parts, converters etc. – Reduce cost through moving supply chain partially to low cost manufacturi
Slide 22: Suzlon and Hansen: Relationship
Suzlon and Hansen: Relationship • Hansen is an independently managed company – Transactions between Hansen and Suzlon are on arm’s length basis • Suzlon now holds 26.06% stake in Hansen Transmissions – 35.22% stake sold to institutional buyers on 19th November 2009 – Suzlon continues to be represent
Slide 23: SE Forge Limited: Component business development
SE Forge Limited: Component business development • IDFC PE invested Rs.400 cr. for 17.1% stake in Sept. 2008 • Manufacturing facilities – 70,000 MT p.a. forging and machining unit in Vadodara, western India • 42,000 rings of 5m diameter, largest in India • High precision forging and machining capabi
Slide 24: Experienced management team
Experienced management team Board Members Group Executive Council CEO’s Office Mr.Kirti Vagadia Mr.Tulsi Tanti Mr.Sumant Sinha Mr.Girish Tanti Group Supervisory CMD COO ED Counsel Mr.Ishwar Mangal Mr.Andris Cukurs Mr.Dan Hansen Mr.Erik W. Pedersen Mr.Paulo Fernando Soares Head- India Head - USA Head
Slide 25: Contents
Contents • Recent updates • Industry overview • Suzlon overview • Business updates • Q2 FY10 updates • Additional financial information 25
Slide 26: Business update: Summary
Business update: Summary • Progress on various issues • Business review • Guidance • Debt management exercise – Hansen sale process – Refinancing • Financing environment • Organisational transformation exercise 26
Slide 27: Business update: Progress on various issues
Business update: Progress on various issues • Debt liability management post-October 2009 – Repaid acquisition loan of approx. USD 780 million (gross debt reduction of 15%) – Partially monetized ownership in Hansen Transmissions by raising GBP 297 million through sale of 45.33% stake, aimed at absol
Slide 28: Suzlon Wind Business: Review at H1 FY 2009-10
Suzlon Wind Business: Review at H1 FY 2009-10 • Sales volumes in FY 2009-10 are highly skewed towards H2, especially Q4, as guided earlier – This trend has further strength over the course of Q2 – Due to this unprecedented variability, quarterly margins will be highly volatile and have little compar
Slide 29: Business update: Performance of acquisitions
Business update: Performance of acquisitions Hansen Transmissions* REpower Systems* Parameter (EUR mln) H1 FY 2009- H1 FY 2008- FY 2008-09 H1 FY 2009- H1 FY 2008- FY 2008-09 10 09 10 09 Sales 286 295 609 610 530 1,209 EBIT (2.3) 31 64 31 23 77 EBIT margin % (0.8%) 10.6% 10.5% 5.0% 4.3% 6.3% * As per
Slide 30: Business update: Guidance
Business update: Guidance • Continuing impact of financial crisis – Push back of deliveries against firm contracts, however no cancellations expected – Supply guidance for FY 2009-10 being revised downwards • 1,900 – 2,100 MW expected for full year • Customer push back resulting in spillover of supp
Slide 31: Business update: Debt management exercise
Business update: Debt management exercise • In the current challenging industry environment we have planned to manage our debt through various initiatives: – De-leverage our balance sheet through asset sale – Refinance our existing debt 31
Slide 32: Business update: Debt management exercise (contd.)
Business update: Debt management exercise (contd.) • Endeavour to reduce absolute debt level: – Monetized 35.22% stake in Hansen Transmissions – Realized GBP 224 million through placement of 236 million depository interests at a price of 95 pence per depository interest – Suzlon now owns 26.06% of a
Slide 33: Business update: Debt management exercise (contd.)
Business update: Debt management exercise (contd.) •Refinancing of debt: INR Cr. Balance as on 30th Balance as on Balance as on Debt type September 2009 30th June 2009 31st March 2009 Acquisition loans 3,097 3,253 3,402 FCCBs 2,304 1,864 2,536 Capex loans 1,143 1,190 1,187 Working Capital loans 5,75
Slide 34: Business update: Debt management exercise (contd.)
Business update: Debt management exercise (contd.) • Rationale: Refinancing of debt – Challenging industry environment necessitates rationalisation of debt structure from a long term perspective – Realignment of security arrangement among various lenders – Sufficient flexibility on timing of monetiz
Slide 35: Business update: Debt management exercise (contd.)
Business update: Debt management exercise (contd.) • Details of ongoing refinancing exercise – Repayment of acquisition loans of approx. USD 780 million • Repaid part of acquisition loan through proceeds from Hansen stake sale • Balance repaid through new USD-denominated facility from SBI – Refinanc
Slide 36: Business update: Financing environment for Wind
Business update: Financing environment for Wind • Funding slowly picking up pace – US-based lenders have restarted project funding with deal sizes of USD 100 million individually – Tax equity transactions have restarted – Leading Europe-based developers have raised / are planning to raise from the m
Slide 37: Business update: Achieving Collective Excellence
Business update: Achieving Collective Excellence* Project ACE – Strengthen Suzlon’s competitive position in a changing external landscape – Optimize operational efficiencies to achieve excellence – Enhance concept-to-delivery model for evolving marketplace; – Address immediate fiscal challenges and
Slide 38: Business update: Achieving Collective Excellence
Business update: Achieving Collective Excellence* World class Suzlon 1 Building excellence 5 Business model and People Go to Market Key enablers for business excellence excellence Immediate concerns 2 4 3 Product Finance and performance controls excellence Order to cash excellence process excellence
Slide 39: Contents
Contents • Recent updates • Industry overview • Suzlon overview • Business updates • Q2 FY10 updates • Additional financial information 39
Slide 40: Q2 FY 2009-10 result update
Q2 FY 2009-10 result update INR Cr. Q2 FY10 Q2 FY09 Change H1 FY10 H1 FY09 Change Particulars Unaudited Unaudited Unaudited Unaudited Consolidated Revenue 4,793 6,921 (31)% 8,946 10,039 (11)% Suzlon Wind Business Revenue 1,868 4,182 (55)% 3,031 6,268 (52)% MW Volume 283 727 (61)% 406 1,065 (62)% • S
Slide 41: Consolidated financial results
Consolidated financial results (Suzlon Wind + SE Forge + Hansen + REpower) INR Cr. Q2 FY10 Q2 FY09 H1 FY10 H1 FY09 FY09 Particulars Unaudited Unaudited Unaudited Unaudited* Audited Sales 4,793 6,921 8,946 10,039 26,082 Raw Material cost 3,220 4,661 6,132 6,451 16,857 Gross Profit 1,573 2,260 2,814 3
Slide 42: Consolidated financial results: Quarter-on-quarter
Consolidated financial results: Quarter-on-quarter INR Cr. Q2 FY10 (Unaudited) Q2 FY09 (Unaudited) Particulars Suzlon SE Forge Hansen REpower Suzlon SE Forge Hansen REpower Sales MW 283 727 Sales 1,868 11 1,032 2,059 4,182 - 1,028 1,947 Raw Material cost 1,367 6 570 1,443 2,870 - 462 1,527 Gross Pro
Slide 43: Consolidated financial results: Quarter-on-quarter (contd.)
Consolidated financial results: Quarter-on-quarter (contd.) INR Cr. Q2 FY10 (Unaudited) Q2 FY09 (Unaudited) Particulars Suzlon SE Forge Hansen REpower Suzlon SE Forge Hansen REpower Sales MW 283 727 EBITDA (149) (12) 65 229 428 (8) 227 68 EBITDA margin (8.0%) (112.7%) 6.3% 11.1% 10.2% - 22.1% 3.5% I
Slide 44: Group Wind Business Orders in CY 2009
Group Wind Business Orders in CY 2009 • New order confirmations during CY 2009 – Suzlon International new orders: 656 MW • 287 MW from Australia • 199 MW from China • 63 MW from USA • 97 MW from Europe • 10 MW from Sri Lanka – Suzlon India new orders: 520 MW (announced orders only) • REpower order c
Slide 45: Suzlon Wind business: Firm order book
Suzlon Wind business: Firm order book Orders as New Sales in Q2 Orders as Sales in Sales in Region on 30/7/09 Orders FY10 on 30/10/09 FY09 FY08 India 66 186 129 123 749 975 USA 582 -- -- 582 989 593 China 586 -- 112 475 249 134 ANZ 132 -- 19 113 430 143 Europe 118 84 23 179 166 298 S.America 17 -- -
Slide 46: Suzlon Wind business: NOWC reduction in progress
Suzlon Wind business: NOWC reduction in progress • Suzlon Wind Business: – Gradual reduction in working capital intensity – Inventories level stabilizing – Receivables level decreasing steadily INR Crs. Net Operating Working Capital in Rs. As on 30th As on 30th Jun As on 31st As on 31st Crores (Unau
Slide 47: Financial leverage
Financial leverage (a) INR Crs. As at 30th Sept. 2009 As at 30th June 2009 As at 31st March 2009 Particulars SEL Wind (a) Consol. SEL Wind (a) Consol. SEL Wind (a) Consol. Group (a) Group (a) Group Gross Debt 13,477 16,541 13,085 15,987 12,452 14,870 Cash 952 2,780 862 2,157 1,359 3,070 Net Debt 12,
Slide 48: Contents
Contents • Recent updates • Industry overview • Suzlon overview • Business updates • Q2 FY10 updates • Additional financial information 48
Slide 49: Consolidated financial results: Year-on-year
Consolidated financial results: Year-on-year INR Cr. H1 FY10 (Unaudited) H1 FY09 (Unaudited) Particulars Suzlon SE Forge Hansen REpower Suzlon SE Forge Hansen REpower* Sales MW 406 1,065 Sales 3,031 28 1,957 4,125 6,268 - 1,939 2,202 Raw Material cost 2,197 13 1,107 3,010 4,244 - 878 1,652 Gross Pro
Slide 50: Consolidated financial results: Year-on-year (contd.)
Consolidated financial results: Year-on-year (contd.) INR Cr. H1 FY10 (Unaudited) H1 FY09 (Unaudited) Particulars Suzlon SE Forge Hansen REpower Suzlon SE Forge Hansen REpower* Sales MW 406 1,065 EBITDA (322) (18) 114 359 731 (8) 432 108 EBITDA margin (10.6%) (64.0%) 5.8% 8.7% 11.7% - 22.3% 4.9% Int
Slide 51: Consolidated financial results: Historic financial performance
Consolidated financial results: Historic financial performance INR Cr. FY09 (a) (unaudited) FY08 (b) (unaudited) Particulars Suzlon SE Forge Hansen REpower Suzlon SE Forge Hansen REpower Sales MW 2,790 2,311 Sales 15,897 17 3,994 7,125 11,467 -- 2,405 -- Raw Material cost 10,481 3 1,939 5,288 7,813
Slide 52: Consolidated financial results: Historic financial performance (contd.)
Consolidated financial results: Historic financial performance (contd.) INR Cr. FY09 (a) (unaudited) FY08 (b) (unaudited) Particulars Suzlon SE Forge Hansen REpower Suzlon SE Forge Hansen REpower Sales MW 2,790 2,311 EBITDA 1,589 (29) 768 565 1,721 (8) 351 -- EBITDA margin 9.99% -- 19.22% 7.93% 15.0
Slide 53: Suzlon Wind business: WTG revenue by geography
Suzlon Wind business: WTG revenue by geography (a) H1 FY10 H1 FY10 FY09 Sales FY09 Sales FY08 Sales FY08 Sales Region Sales Sales (MW) (Rs.Crs.) (MW) (Rs.Crs.) (MW) (Rs.Crs.) India 187 1,279 749 4,420 976 5,572 USA 65 539 989 5,229 593 2,289 China 112 537 249 1,104 134 455 ANZ 19 298 430 2,519 143 1
Slide 54: Suzlon Wind business & SE Forge: Capex program
Suzlon Wind business & SE Forge: Capex program (a) INR Crs. Investments Investments in Planned Commercialization Particulars Budget up to FY09 H1 FY10 Capex / completion date Integrated WTG unit 865 642 9 65 H1 FY09 Forging, Foundry and Machining units 1,100 901 29 11 H2 FY09 Suzlon Campus 361 230 2
Slide 55: Thank you
Thank you For inquiries: investorrelations@suzlon.com 55