When Suzlon Energy began taking over Western wind energy businesses, the world woke up to Indian wind power capabilities. Here was a company that boasted of an enormous track record in India and had an excellent bottom-line backed by a healthy stock market performance. Unfortunately the euphoria was short lived as Suzlon began reporting losses and got embroiled in crisis after crisis which caused its stock to nosedive from over Rs. 400 per share to near face value threshold at Rs. 12 per share in a period of five years.
A combination of factors including the global financial crisis led to Suzlon’s troubles in 2009 and it was not before the middle of 2011 that the company managed to overcome losses and regain profitability. However, the stock market refuses to buy its success story resulting in its stock still lying buried near the face value threshold at around Rs. 12 per share. This is despite the fact that the company still boasts of an impressive order book valued at over USD 7 billion. The previous government’s policies also didn’t help energize investor confidence on wind energy businesses.
The new government came to power with the stated aim of maximizing the utilization of renewable energy including wind power and announced a slew of policies that would become effective within a year. One such policy is the integrated single window policy aimed at developing offshore wind energy which has tremendous potential in India. Not one to let opportunities slip out, Suzlon didn’t waste time in announcing that it plans to set up a 300 MW offshore wind farm for a pilot project and went on to initiate the techno-economic study of the proposed project.
The completion of the study is expected to coincide with the government’s announcement of the integrated single window policy by next year as Suzlon wants to be the first off the blocks in harnessing offshore wind energy in India. The company is serious about forward integration involving setting up of wind farms and operating them. Its German subsidiary Senvion has the capability to make large sized offshore wind turbines and this will give Suzlon the necessary edge when it enters the fray in the Indian offshore wind energy segment.
It is apparent that the improved scenario for renewable energy in India is going to rub off on investor perception of the industry which remained cagey till May 2014 as India barely added 2 GW of renewable power in the year. With the new government resolving to increase that fivefold, the sector has suddenly come to the center-stage of the Indian economy. A significant part of India’s economic development as envisaged by this government will depend on sustainable and affordable energy sources and this is where the country’s huge renewable energy potential will chip in.
Suzlon already enjoys the redoubtable reputation of being the fifth largest wind turbine maker in the world and with its well-thought out integration into wind farm installation and management, the company has already positioned itself suitably for a larger role in the sector, globally. Suzlon has already installed 8,500 MW of the total wind power capacity of about 22,000 MW in India. After Gujarat, where the Suzlon story effectively began, the company began betting big in Madhya Pradesh and has announced further mega investment plans in the state.
The company now intends to develop another 2,000 MW of wind power capacity in the state at a cost of Rs. 15,000 crores. For a profit-making company with such formidable technological capabilities and a massive order book, it won’t be long before its market capitalization begins to look better. One of the reasons for the lackluster performance of its share in the market was the unpromising industry scenario before the new government came in with the stated objective of giving a major boost to the sector.
(Dev K Dutta has been following developments in the renewable energy sector as a freelance journalist since the year 2000. He has always held that this is one of the next big sectors that will drive the growing Indian economy in the near future. He likes to share and receive views and opinion on this vital sector. )
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