Suzlon Energy Ltd · NSE:SUZLON
Suzlon Energy — Investor Presentation (August 2009)
45 slides from Suzlon Energy's investor presentation, August 2009
Slide 1: Suzlon Energy Limited Investor Presentation
Suzlon Energy Limited Investor Presentation August 2009
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 Developments • Industry overview • Suzlon Overview • Business updates • Q1 FY10 updates • Annexes 3
Slide 4: Recent Developments
Recent Developments • Liquidity needs addressed through long-term fund infusion: USD 202 mln – Issuance of Global Depository Receipts (GDRs) for USD 108 mln (21st July 2009) • Listed Li d on Luxembourg L b Stock S k Exchange E h • 14.6 mln GDRs issued at price of USD 7.40 per GDR • Convertible into
Slide 5: Recent Developments
Recent Developments • Steady improvement in policy support to renewables especially for wind – Indian State of Rajasthan announces new PPA rates for wind energy • Revised from Rs.3.60 – 3.89 p per kWh to Rs.4.28 – 4.50 p per kWh • Follows recent favourable policy announcements from Gujarat, Tamil Na
Slide 6: Contents
Contents • Recent Developments • Industry overview • Suzlon Overview • Business updates • Q1 FY10 updates • Annexes 6
Slide 7: Wind: a promising renewable energy source
Wind: a promising renewable energy source Fastest growing renewable energy source (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 end
Slide 8: Compelling industry growth dynamics
Compelling industry growth dynamics Concern Demand Catalysts • Kyoto Protocol: CO2 emissions to reduce by 55.2% 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
Slide 9: 2004-08: Strong historical growth
2004-08: Strong historical growth Industry growth in last 5 years pplied MW 28,190 19,791 15,016 Sup 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 Asia: demand
Slide 10: Medium-term market dynamics
Medium-term market dynamics • De-growth in industry’s sales in 2009 followed by rebound in 2010 – Slowdown expected in US and Europe markets in 2009 – China mayy be major j growth g market • Pricing pressure and raw material cost decline • Availability of debt funds for new wind power projects has r
Slide 11: Long term story still intact
Long term story still intact • USA: President Obama approves $787 bn stimulus package (American Recovery and Reinvestment Act) – $70 bn assigned for renewable energy industry includes tax incentive and government spending p g – Regulations for Cash Grant in lieu of ITC announced • EU: Parliament and
Slide 12: 2009-13: Industry demand forecast
2009-13: Industry demand forecast Industry growth in next 5 years 58,520 51,390 orecast 43,820 MW Fo 36,640 30,625 2009 2010 2011 2012 2013 • Medium term ggrowth in US market to be driven byy Economic Stimulus package p g • Strong directive for increasing renewable energy penetration to drive Europe
Slide 13: US Stimulus Package: Growth opportunity for wind
US Stimulus Package: Growth opportunity for wind • Tax incentives – Multi year extension of Production Tax Credit (PTC) till 31st Dec 2012 – Investment Tax Credit (ITC) @ 30% on value of project – Optional cash grant benefit equal to 30% of a project's cost in lieu of tax credits – Advanced Energy M
Slide 14: Contents
Contents • Recent Developments • Industry overview • Suzlon Overview • Business updates • Q1 FY10 updates • Annexes 14
Slide 15: Company overview
Company overview Amongst Top 5 Wind Turbine Manufacturers Globally (2008) Enercon Suzlon Gamesa 12.0% 10 0% 10.0% 9 0% 9.0% • E dt End-to-end d solution l ti provider id 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% 18.6% Sino
Slide 16: 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 Long-term term service suppo
Slide 17: Group snapshot
Group snapshot 91%(a) 61.3%(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% g
Slide 18: 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 R d cost through h h moving supplyl chain h partially ll to low l
Slide 19: Suzlon and Hansen: Synergies
Suzlon and Hansen: Synergies • Hansen is an independently managed company – Transactions between Hansen and Suzlon are on arm’s length basis • Supply chain management – Plugs g a gap g p in Suzlon’s supply pp y chain for gearbox g and technology gy – Key components of gear boxes would be sourced out
Slide 20: 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 M f ffacilities l – 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
Slide 21: Business update: Performance of acquisitions
Business update: Performance of acquisitions Hansen Transmissions* REpower Systems* Parameter ((EUR mln)) Q1 FY 2009- Q1 FY 2008- FY 2008-09 Q1 FY 2009- Q1 FY 2008- FY 2008-09 10 09 10 09 Sales 136 139 609 301 232 1,209 EBIT (2) 15 64 11 10 77 EBIT Margin % (1.5%) 10.9% 10.5% 3.7% 4.2% 6.3% * As per
Slide 22: End-to-end wind power solutions
End-to-end wind power solutions Tata • Allows customers to benefit Power Wind resource mapping from cost-efficiencies cost efficiencies and economies of scale in wind farms Bajaj Auto Site Identification • Avoids need for customers to undertake cumbersome wind farm development Essel Land acquisition
Slide 23: Integrated R&D and design capabilities
Integrated R&D and design capabilities ► Integrated product, component and system design under one organization – Global resource pool for quicker design, development and upgrade Results in high reliability and ► Developed own MW and multi-MW WTG models and rotor blades credibility among Customers ►
Slide 24: Strong international client base in key markets
Strong international client base in key markets Europe (b) & South US China Australia / NZ America Total in 2008: 8,358 MW Total in 2008: 6,246 MW Total in 2008: 619 MW Total in 2008: 4,910 MW Installations ((a) Forecast in 2009-13: Forecast in 2009-13: Forecast in 2009-13: Forecast in 2009-13: Tota
Slide 25: 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, Head - HR Counsel Mr.Ishwar Mangal Mr.Andris Cukurs Mr.Dan Hansen Mr.Erik W. Pedersen Mr.Paulo Fernando Soares Head- India Head
Slide 26: Suzlon: Strategy
Suzlon: Strategy Suzlon’s Vision Suzlon’s Mission • Technology gy leadership p in the Wind sector • To contribute to sustainable development p 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
Slide 27: Contents
Contents • Recent Developments • Industry overview • Suzlon Overview • Business updates • Q1 FY10 updates • Annexes 27
Slide 28: Business update: Summary
Business update: Summary • Lower volumes at Suzlon Wind level resulted in operating loss – Back-ended volumes in current fiscal • However, H international i t ti l orders d haveh resumed d • Reduction in working capital intensity – Cash release from working capital visible • Blade retrofit program n
Slide 29: Business update: Detailed order book
Business update: Detailed order book Orders as New Sales in Q1 Orders as Sales in Sales in Region on 25/6/09 Orders FY10 on 30/7/09 FY09 FY08 India 75 49 58 66 749 975 USA 647 -- 65 582 989 593 China 488 98 -- 586 249 134 ANZ 132 -- -- 132 430 143 Europe 105 13 -- 118 166 298 S.America 17 -- -- 17 1
Slide 30: Business update: NOWC reduction in progress
Business update: NOWC reduction in progress • Suzlon Wind Business: – Gradual reduction in working capital intensity – Inventories level stabilizing – Receivables level decreasing steadily Net Operating Working Capital in Rs. As on 30th Jun As on 31st Mar As on 31st Dec Crores (Unaudited) 2009 2009
Slide 31: Business update: Blade retrofit nearing completion
Business update: Blade retrofit nearing completion •No fresh provisions necessary for retrofit and replacement in Q1 FY 2009-10 Provisions in Rs. Crores (unaudited) Particulars FY08 FY09 Q1 FY10 Total Retrofit and replacement 122 222 -- 344 Availability compensation 20 189 -- 209 Total 142 411 -- 55
Slide 32: Business update: Focused operating cost reduction program
Business update: Focused operating cost reduction program Various cost optimisation measures initiated for alignment of cost base to current environment and to support EBITDA margins and cash flows •Identified key levers where cost reduction is possible COGS •Renegotiating contracts with suppliers f
Slide 33: Business update: Exceptional items significantly lower
Business update: Exceptional items significantly lower INR Crs. Particulars Q1 FY10 (a) Q1 FY09 (a) FY09 Blade retrofit provisions -- -- 222 Availability related to blade cracks -- 26 190 Other MTM (Gain) / Loss -- 58 354 Subtotal (Operational) -- 84 766 FCCB MTM (Gain) / Loss 20* 20 145 131* 131 FC
Slide 34: Business update: Financial leverage
Business update: Financial leverage (a) INR Crs. As at 30th June 2009 As at 31st March 2009 Particulars SEL Wind Consol. Group SEL Wind Consol. Group Gross Debt 13,085 15,987 12,452 14,870 Cash 862 2,157 1,359 3,070 Net Debt 12,223 13,829 11,093 11,800 (a) Unaudited • Inter-corporate p deposit p fro
Slide 35: FY 2009-10: Year of consolidation
FY 2009-10: Year of consolidation • Balance sheet management – Focus on debt reduction • Exploring various strategic financing options • Repayment R obligations bli i off fixed fi d maturity i loans l – Acquisition loan: EUR 129 million in FY10 (Rs.874 crs. at INR 67.52 / EUR 1) – Capex loans: Rs.23
Slide 36: Contents
Contents • Recent Developments • Industry overview • Suzlon Overview • Business updates • Q1 FY10 updates • Annexes 36
Slide 37: Consolidated financial results
Consolidated financial results (Suzlon Wind + SE Forge + Hansen + REpower*) Particulars Q1 FY10 Unaudited Q1 FY09 Unaudited FY09 Audited Sales 4,153 3,118 26,082 Raw Material cost 2,911 1,790 16,857 Gross Profit 1,241 1,328 9,225 Gross Profit margin 29.89% 42.60% 35.37% Manpower cost 592 423 2,166 O
Slide 38: Consolidated financial results: Quarter-on-quarter
Consolidated financial results: Quarter-on-quarter Q1 FY10 (Unaudited) Q1 FY09 (Unaudited) Particulars Suzlon SE Forge Hansen REpower Suzlon SE Forge Hansen REpower S l MW Sales 123 338 Sales 1,164 17 925 2,066 2,087 -- 911 255 Raw Material cost 830 8 537 1,567 1,375 -- 416 125 Gross Profit 334 10 3
Slide 39: Consolidated financial results: Quarter-on-quarter (contd.)
Consolidated financial results: Quarter-on-quarter (contd.) INR Cr. Q1 FY10 (Unaudited) Q1 FY09 (Unaudited) Particulars Suzlon SE Forge Hansen REpower Suzlon SE Forge Hansen REpower Sales MW 123 338 EBITDA (173) (6) 49 130 303 -- 205 40 EBITDA margin -14.83% -33.76% 5.31% 6.29% 14.51% -- 22.47% 15.5
Slide 40: Suzlon Wind business: WTG revenue by geography
Suzlon Wind business: WTG revenue by geography (a) Q1 FY10 Sales Q1 FY10 Sales FY09 Sales FY09 Sales Region (MW) (Rs.Crs) (MW) (Rs.Crs) India 58 436 749 4,420 USA 65 431 989 5,229 China -- -- 249 1,104 ANZ -- 137 431 2,519 Europe & ROW -- 160 374 2,624 T t l Total 123 1 164 1,164 2 790 2,790 15 896
Slide 41: Contents
Contents • Recent Developments • Industry overview • Suzlon Overview • Business updates • Q1 FY10 updates • Annexes 41
Slide 42: Consolidated financial results: Year-on-year
Consolidated financial results: Year-on-year 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 -- 1,236 -- Gross
Slide 43: Consolidated financial results: Year-on-year (contd.)
Consolidated financial results: Year-on-year (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% 15.01% -- 14.58% -- In
Slide 44: Suzlon Wind business: Capex program
Suzlon Wind business: Capex program (a) INR Crs. Balance Investments Investments Commercialization Particulars Budget Planned up to FY09 in Q1 FY10 / completion date Capex Integrated WTG unit 865 642 5 69 H1 FY09 Forging, Foundry and d Machining M hi i units i 1 100 1,100 901 17 23 H2 FY09 Suzlon Ca
Slide 45: Thank you
Thank you For inquiries: investorrelations@suzlon.com 45