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AN ASSIGNMENT ON

“A SWOT ANALYSIS OF SUZLON ENERGY


LIMITED”

Submitted to:
MISS KULVEEN KAUR ANAND
HOD, Department of Finance,
VISWASS.

Submitted by:
MR. SANTOSH KUMAR SAHOO
MFC IInd Year
Roll No. 19

VIVEKANANDA INSTITUTE OF SOCIAL WORK AND SOCIAL


SCIENCES
237, Bapuji Nagar,
Bhubaneswar-751009

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“A SWOT ANALYSIS ON SUZLON ENERGY LIMITED”

CONTENTS

CHAPTER-1 ABOUT SUZLON ENERGY


CHAPTER-2 SWOT ANALYSIS: AN OVERVIEW
CHAPTER-3 SWOT ANALYSIS OF SUZLON ENERGY

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CHAPTER: 1
ABOUT SUZLON ENERGY

INTRODUCTION

Suzlon's wind energy business traces its roots back to the


incorporation of Suzlon Energy Limited in 1995 by the venture of Mr. Tulsi
R. Tanti. The company along with its subsidiaries engages in designing,
developing and manufacturing of wind turbine generators and related
components such as rotor blades, control panels, nacelle cover, tubular
towers, generators and gearboxes. Further, the company also provides
consultancy, design, manufacturing, installation, operation and maintenance
services as well as is involved in wind resource mapping, identification of
suitable sites and technical planning of wind power projects. The company
principally operates in India, China, The Americas, Europe, New Zealand,
South Korea, South Africa and Australia. Suzlon has since grown to become
the world's fifth leading wind turbine manufacturer with 10.5% of global
market-share and the leading manufacturer in Asia and India. The company
has registered 100% year-on-year growth for the past five consecutive years,
achieving leadership in India and then becoming the leaders on the global
stage. Suzlon is today a leading force on the wind energy stage, generating
revenues of USD 2,311 million in FY08 and supplying over 7,000 MW of
wind turbine capacity around the world. In just over a decade since Suzlon
was born, the company has grown to over 14,000 people around the world
with operations in over 21 countries across five continents. The company
has forged ahead with an ethos of innovation in everything that it does. This

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has led to pioneering approaches and offerings such as a fully vertically-
integrated value chain, leveraging local expertise and global experience, an
'end-to-end solutions' model and highly customized products – all
contributing to make Suzlon the highest-growth, highest-margin wind
turbine maker in a highly competitive environment. Suzlon's design,
manufacture, operations and maintenance services have been certified as
ISO 9001:2000 by Det Norske Veritas. It has a strong presence in the BSE
as well as a part of S&P CNX Nifty Index (NSE) that shows investors’
satisfaction towards the company and the stability of its stock in the
financial market.

VISION

Its vision is,

• To be a technology leader in the wind industry

• To be among the top three wind energy companies in the world

• To be the most respected brand

• To be the best team and place to work at

• To be the fastest growing and most profitable business

MISSION

The Suzlon Foundation is aligned to the vision of the Suzlon Group of


Companies:

 having a minimal impact on the natural environment

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 enabling local communities to develop their potential
 empowering employees to be responsible civil society members
 committing ourselves to ethical business practices that are fair to all
the stakeholders

So that we can collectively contribute towards creating a better world for all.

PHILOSOPHY

The philosophy that Suzlon follows are;

• To be a company that serves society with sustainable wind-power on a


commercial scale with a focus on continuously increasing efficiency
and reliability of our wind turbines.

• To always be committed to a life-long relationship with customers and


work towards total customer satisfaction.

• To lay importance on bettering our quality, safety and environmental


standards.

• To build partnerships with all stakeholders; employees, customers,


vendors, service providers, local communities and governments.

• To conduct business only with the highest standards of ethics.

• To contribute to the reduction of use of fossil fuels by reducing our


carbon footprint in all our operations.

BOARD OF DIRECTORS

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The Board of Directors, as repositories of corporate powers, act as a
guardian to the Company, as also the protectors of shareholders’ interests.
The Board of the Company represents the finest blend of knowledge and
experience.

This apex body comprises the following:

Tulsi R. Tanti
Chairman & Managing Director

Girish R. Tanti
Executive Director

Ashish Dhawan
Independent Director

V. Raghuraman
Independent Director

Pradip Kumar Khaitan


Independent Director

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Ajay Relan
Independent Director

CONCLUSION

Going forward in the new realities of our economic environment,


Suzlon is working closely with all industry stakeholders to bridge the crisis
in the credit markets and the overall global slowdown. While the wind
energy industry will also see an impact of the slowdown, the sector's
fundamentals drivers remain strong. The finite supplies of fossil fuels, the
threat of climate change and policy measures to drive the growth of
renewable energy, will all be key to driving steady growth in the renewable
energy space – and making renewable sources a bigger part of the world's
energy matrix. Therefore, without any hesitation the stability and growth
prospects of this Suzlon Energy can be easily forecasted both fundamentally
and technically.

CHAPTER: 2
SWOT ANALYSIS: AN OVERVIEW

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Introduction
A SWOT analysis may sound like a form of mission planning for
James Bond. But, SWOT simply stands for: Strengths, Weaknesses,
Opportunities, and Threats. It is a business tool available in the tool box of
any small business owner. However, running a business forces one to focus
on the issues and fires burning today, not tomorrow; this plays an important
role to satisfy this requirement.

A SWOT analysis is a planning technique used to understand the


Strengths, Weaknesses, Opportunities, and Threats involved in a project or
in a business. It involves stating the objective of the business or project and
identifying the internal and external factors that are either supportive or
unfavourable to achieving that objective. SWOT is often used as part of a
strategic or business planning process, but can be useful in understanding an
organisation or situation and decision-making for all sorts of situations.

The Concept

The concept of SWOT analysis came from the research conducted


at Stanford Research Institute from 1960-1970. The background to
SWOT stemmed from the need to find out why corporate planning
failed. The research was funded by the fortune 500 companies to find
out what could be done about this failure. The Research Team were
Marion Dosher, Dr Otis Benepe, Albert Humphrey, Robert Stewart,
Birger Lie.

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Any organisation undertaking strategic planning will at some point
assess its own strengths and weaknesses. When combined with an inventory
of opportunities and threats in the organisation’s external environment, the
organisation is effectively making a SWOT analysis, that is it is establishing
its current position in light of its Strengths, Weaknesses, Opportunities and
Threats.

While most of the analysis is subjective, the SWOT can provide


multiple benefits to the business. These benefits can include:

• Insight into where the business can focus to grow.

• Understand the industry structure by using a SWOT in the business


plan.

• Focus the advertising and marketing on areas that will give a


competitive advantage in the marketplace.

• The foresight to see looming threats and react proactively.

Applications and when to use it

A SWOT analysis can be used for:

• workshop sessions

• brainstorm meetings

• problem solving

• planning

• strategic planning

• product evaluation
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• competitor evaluation

• personal development planning and decision making

In case of a business organization a SWOT analysis can be used to assess:

• a company (its position in the market, commercial viability, etc)

• a method of sales distribution

• a product or brand

• a business idea

• a strategic option, such as entering a new market or launching a new


product

• a opportunity to make an acquisition

• a potential partnership

• changing a supplier

• outsourcing a service, activity or resource

• an investment opportunity

The SWOT model

A SWOT analysis process generates information that is helpful in


matching an organisation or group’s goals, programs, and capacities to the
social environment in which it operates. The ‘SWOT’ itself is only a data
capture exercise. Its is a subjective assessment of data which is organized by
the SWOT format into a logical order that helps understanding, presentation,
discussion and decision-making.

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There are four dimentions of the model namely Strengths,
Weaknesses, Opportunities and Threates. The four dimensions are a useful
extension of a basic two heading list of pro's and con's. The following
explanation represents it in a better way.

Strengths:

Depict the positive tangible and intangible attributes, internal to an


organisation and within the organisation’s control. These may include;

• Advantages of proposition?

• Capabilities?

• Competitive advantages?

• USP's (unique selling points)?

• Resources, Assets, People?

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• Experience, knowledge, data?

• Financial reserves, likely returns?

• Marketing - reach, distribution, awareness?

• Innovative aspects?

• Location and geographical?

• Price, value, quality?

• Accreditations, qualifications, certifications?

• Processes, systems, IT, communications?

• Cultural, attitudinal, behavioural?

• Management cover, succession?

Weaknesses:

These narrate the internal factors within an organisation’s control that


detract from the organisation’s ability to attain the desired goal. Which areas
might the organisation improve?

These may include;

• Disadvantages of proposition?

• Gaps in capabilities?

• Lack of competitive strength?

• Reputation, presence and reach?

• Financials?

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• Own known vulnerabilities?

• Timescales, deadlines and pressures?

• Cashflow, start-up cash-drain?

• Continuity, supply chain robustness?

• Effects on core activities, distraction?

• Reliability of data, plan predictability?

• Morale, commitment, leadership?

• Accreditations, etc?

• Processes and systems, etc?

• Management cover, succession?

Opportunities:

These attributes forecast the external attractive factors that represent


the reason for an organisation to exist and develop. What opportunities exist
in the environment, which will propel the organisation? Identify them by
their ‘time frames’.

These can be;

• Market developments?

• Competitors' vulnerabilities?

• Industry or lifestyle trends?

• Technology development and innovation?

• Global influences?
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• New markets, vertical, horizontal?

• Niche target markets?

• Geographical, export, import?

• New USP's?

• Tactics - surprise, major contracts, etc?

• Business and product development?

• Information and research?

• Partnerships, agencies, distribution?

• Volumes, production, economies?

• Seasonal, weather, fashion influences?

Threats:

These reflect the external factors beyond the organisation’s control


which could place the organisation mission or operation at risk. The
organisation may benefit by having contingency plans to address them if
they should occur. It is required to classify them by their severity and
probability of occurrence.

The threats may be in the following aspect:

• Legislation could impact.

• Environmental effects would favour larger competitors.

• Existing core business distribution risk.

• Market demand very seasonal.

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• Retention of key staff critical.

• Could distract from core business.

• Possible negative publicity.

• Vulnerable to reactive attack by major competitors.

It is important to note the strengths and weaknesses are intrinsic value-


creating skills or assets, or the lack of, relative to competitive forces.
Opportunities and threats are external factors which are not created by the
organisation, but emerge as a result of the competitive dynamics caused by
future gaps in the market.

Internal factors

Strengths Weaknesses
Negative or
Positive factors Opportunities Threats potential to be
External factors negative

Advantages of SWOT Analysis

SWOT Analysis is widely popular and applicable in case of any


venture only because of its advantages as it;

• Simple four box framework.

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• Facilitates an understanding of the strengths and weaknesses of the
organisation.

• Encourages the development of strategic thinking.

• Enables a management team to focus on strengths and build


opportunities.

• Can enable an organisation to anticipate future business threats and


take action to avoid or minimise their impact.

• Can enable an organisation to spot business opportunities and exploit


them fully.

• Flexible.

Disadvantages of SWOT Analysis

Though SWOT Analysis has a number of merits, still it suffers from


the following disadvantages:

• Some users over simplify the amount of data used for decisions – it is
easy to use scant data.

• To be effective this process needs to be undertaken on a regular basis.

• The best reviews require different people being involved each having
a different perspective.

• Access to quality internal data sources, this can be time consuming


and politically difficult (especially in more complex organisations –
parent company etc).

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• The pace of change makes it increasingly difficult to anticipate
developments that may affect an organisation in the future.

• The risk of capturing too much data is that it may make it difficult to
see the wood for the trees and lead to ‘paralysis by analysis’.

• The data used in the analysis may be based on assumptions that


subsequently prove to be unfounded (good and bad).

• Lacks detailed structure – so easy to miss key-elements.

As far as identifying actions from SWOT issues is concerned, it all very


much depends on the reasons and aims for using SWOT, and also the
authority/ability to manage others, whom by implication of SWOT's breadth
and depth, are likely to be involved in the agreement and delivery of actions.

CHAPTER: 3
SWOT ANALYSIS OF SUZLON ENERGY

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The SWOT Analysis of Suzlon Energy is explained below through the four
indicators:

STRENGTHS OF SUZLON

1. Integrated business model

Suzlon Energy Ltd. Is having an integrated business model that they don’t
have to go to other suppliers for raw products. They have very good vertical
integration for supporting there production activities. So they don’t have to
be dependent for supplies.

2. In house technology and design capabilities

They are having enough in-house technology development capabilities as


they have skilled employees so that they can design their products of their
own. They don’t have to go to outsider experts for designing the products.

3. Market leadership in India and global presence

It is the only company of India which is having a global presence and as it is


a market leader it can have benefits of its brand image.

4. Prudent acquisitions and alliances

Suzlon has entered in to very prudent acquisition which is helping it for


increasing its main strength of vertical integration as well as provides chance
of global expansion also.

For example: It has acquired HANSEN which was the worlds second largest
manufacturer of gear boxes.

5. Global Production

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As Suzlon has a global presence, it produces the products which can be used
globally. Though it is not that much technically developed as compared to
other global players, but its products can work at global level also.

6. Pricing Power

As Suzlon is the market leader in India, it can drive the price and others will
follow it. But , it is now necessary for it to produce and sell at low cost and
the production must be cost effective, because new global players are
entering in to the market.

7. Diversified Product line

Suzlon is producing each type of wind turbines working in India. Ithas a


wide range of products that has been sufficiently designed to cope with the
specific conditions and to that give optimum results.

8. Sophisticated and modernized research and development


facilities

9. Highly qualified and energetic work force

WEAKNESSES OF SUZLON

1. Operational Risk

Suzlon as a market leader don’t have that much efficient operation


management team. We can say this because there are many complaints of
customers regarding their operating staffs who provide after sales service
and it is also looking up to some extent in operating the business. So proper
implementation of strategies is lacking.

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2. Growth in Assets diminishing Growth in Profits

Since last few years, Suzlon has focused more on integration. So it has gone
for acquisition and backward integration which blocks its investments in
assets. Thus its growth rate of profits has declined. So, compared to growth
in assets the growth in profits is low which is not favourable for the firm.

3. Unsupportive Stock Prices

When a company’s stock price is more than its book value, it can be
considered as a good sign for investors, but currently due to the unfavour
market conditions Suzlon’s stock prices has fallen below the book value,
while other competitor’s share prices has not declined below than their book
value.

4. Unfavourable Ratings

Before sometime, only Moody, a credit rating agency has down-graded


Suzlon Energy Limited due ti its financial weaknesses. They have also found
the improper operation management at Suzlon.

5. Improper Working capital Management

Earlier Suzlon was a financially strong company. But the previous down-
turn in the world economy has brought the company in a critical situation.
And Suzlon is also facing this problem because of improper working capital
management. Many experts also think that Suzlon has paid more for its
HANSEN acquisition.

6. Weak Strategic Financial Management

Suzlon when expanded its business through RE Power, it has signed a


contract that Suzlon will pay 65 million Euro in December 2007, 30 million

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Euro in April 2009 and final payment of 175 million Euro will be paid in
May 2009. It can be found out that the cost of acquisition is too high and it
has been provided that Suzlon will arrange this payments from external
sources as well as from working capital which directly affects companies
performance domestically as well as globally. Such lacuna in appropriate
and timely decision making in finance is the biggest weakness of Suzlon.

OPPORTUNITIES FOR SUZLON

1. Environmental Awareness

Now a days environmental awareness has been increased among the


population of India. They have started saving energy and trying to reduce
pollution. This factor is favourable for the wind power energy as its an
option to thermal power, which is also responsible for polluting the
environment. So wind energy is having benefit of no pollution as it produces
pollution free wind energy. And Suzlon is the market leader in India in this
sector which is the backup force for it. Therefore, there is a high growth
opportunity for Suzlon in future horizon.

2. Government Initiatives

As government has also understood the importance of natural resources, the


govt. is in favour for wind energy which uses wind and provide pollution
free energy. Govt. of India is supporting firms those provide untraditional
energy. As a part of this industry suzlon can gain advantage of govt.
initiatives. Govt. is also providing tax exemption on their earnings and also
providing subsidies for encouraging investment in backward areas of society
to generate employment.
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3. Untapped Offshore Market

Till now none of the Indian player other than Suzlon has gone for global
expansion. So it can have advantage of covering untapped offshore market
as an Indian player. Suzlon is also having strong financial backup compared
to its competitors in Indian market.

4. Steady Growth in Demand

As awareness of wind energy is increasing and people understood the


importance of renewable energy sources which is cost effective, this leads to
steady growth in demand giving an opportunity to business more.

5. Vast coastlines of India and low cost

In India we have a vast coastal line which is very supportive to establish


wind mills at lower cost. So this can be a favourable factor for this industry
as well as will give an ample opportunity to Suzlon to extract more from this
natural presence.

THREATES TO SUZLON

1. Intense Competition

The govt. of India has approved FDI limits up to 74%. This can be a
favourable factor for the whole industry, but for Suzlon it is a threat. Though
it is a market leader, its technology efficiency is not up to the mark as
compared to global giants like VASTAS. So entry of global players will
affect Suzlon a lot.

2. Foreign Exchange Risk

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As Suzlon is having a global presence, there is default risk of exchange rate
fluctuations. As the exchange rates are fluctuating highly since last couple of
years, it has become more risky for Suzlon to do business globally.

3. Technology Risk

Earlier technology was not become obsolete so fast, but currently


technological development is very fast and new technology is been
introducing in to the market very fast. So the company has to implement the
new developed technology to compete in the market where if is having more
corporate customers who generally know the product very well before using
it.

4. Objections to Wind Power

The main objection to wind power is due to other environmental costs.


Many wind parks remain shut-down for a part of the year because of bird
migration patterns and numerous turbine related bart-deaths. Furthermore,
turbines take up lands; though larger turbines produce more power, they also
take more land to operate safely and effectively, and since any man-made
installation can have adverse effects on terrestrial ecosystems. Hardcore
environmentalists may object to the installation of wind parks, lobbing the
govt. to look for other sources of energy. Obviously, the oil and coal
industries will lobby against govt. subsidization of clean energy sources.
Basing on this industry, effective lobbying could greatly reduce the amount
of government support given to the wind power industry.

CONCLUSION

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From the above SWOT Analysis we can draw a conclusion that the Internal
Strengths are sufficient to compensate the Weaknesses as well, but for this
the management has to take effective and time bound actions. Though there
are some threats that restrict its growth, they will not form a compound
pressure on the development of the company. There is a sky of opportunities
and it has to reach one by one by defeating the threats and by rooting out the
weaknesses that if faces. In a nut-shell it can be said that to start a venture it
requires a little patience and time, but what about a market leader who a
have the experience of 15 years….!! Undoubtedly, there will be a day when
the entire world will become happy without any pollution and harmful
particles with much pleasure and prosperity and the royal-rod will be seen in
the hands of …………..yes, SUZLON !!!!

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