ECONOMY ANALYSIS The Indian economy is one of the fastest growing economies in the world.

The Indian economy grew at 9 per cent in 2007-08 and 9.6 per cent in 2006-07 Growth has been supported by market reforms, rising foreign exchange reserves, huge foreign direct investment (FDI) inflows, development in various sectors and a flourishing capital market. In this growth rate industrial sector, service sector and manufacturing sector have logged in 10.9 per cent, 11 per cent and 12.3 per cent growth rate respectively in 2006-07. As far as savings and investments are concerned both showed good growth rate as a proportion of GDP. Gross saving rate as a proportion of gross domestic product (GDP) has 34.7 per cent in 2006-07 and gross investment rate has 35.1 per cent in 2006-07. The 2007-08 Fiscal Year, India's foreign exchange reserve is at US$ 309.72 billon 2007-08. Indian forex reserves stand at US$ 300.01 billion as on August 08, 2008. India achieved a record food grain production of 227 million tonnes in 2007-08, Food grain output grew by 4.23 per cent in 2007-08, nearly double the average annual growth of 2 per cent between 1994 and 2004. Overall industrial production grew by 8.5 per cent during 2007-08. Significantly, manufacturing sector grew at the rate of 8.8 per cent and construction at 9.8 per cent. Services grew by 10.8 per cent in 2007-08. The trade, hotels, transport and communication segment grew by 12 per cent, while the financing, insurance, real estate and business services sector grew at 11.8 per cent. Exports grew by 23.02 per cent during 2007-08 amounting to US$ 155.5 billion, imports increased by 27.01 per cent to US$ 235.9 billion in the same period. To explain in depth about the Indian economy, following points are taken into consideration by me. These factors are really very important to know about how Indian economy is being growing and are helpful to clear the picture about the economy. 1. GDP (Gross Domestic Product) 2.Inflation 3.FDI (Foreign Direct Investment) 4.Industrial Production Index 5.Stock Market Index 6.Fiscal Deficit 7.Per capita income 8.FII (Foreign Institutional Investor)

1. GDP (Gross Domestic Product)--The gross domestic product (GDP) is one of the measures of national income and input for a country's economy. GDP is defined as the total cost of all completed goods and services produced within the country in a particular period of time (usually a year). The formula to compute or measure GDP: GDP = Consumption + gross investment + government spending + (Exports ± Imports) Here, Consumption and investment are stands for expenditure on final goods and services. Consumption is further divided in two parts such as private consumption and public or government spending. In gross investment depreciation of capital stock is not taken into

consideration otherwise it will be net investment and it converts the GDP into net domestic product. Export minus Import is also called as net exports and this equation adjusts by subtracting the part of expenditure not produced domestically (the imports), and adding back in domestic area (the exports). Recent growth trend in Indian economy--India¶s Economy has grown by more than 9% for three years running, and has seen a decade of 7%+ growth. This has reduced poverty by 10%, but with 60% of India¶s 1.1 billion populations living off agriculture and with droughts and floods increasing, poverty alleviation is still a major challenge. World GDP, also known as world gross domestic product or GWP gross world product, calculated on a nominal basis, was estimated at $65.61 trillion in 2007 by the CIA World Fact book. While the US is the largest economy, growth in world GDP of 5.2% was led by China (11.4%), India (9.2%) and Russia (8.1%). India¶s GDP is expected to be 10% in the year 2011. Sector wise GDP 2003-04 2004-05 2005-06 2006-07 2007-08 4.06 6.6 5.24 8.06 10.03 Pharmaceutical 9.96 -0.05 5.92 3.76 4.55 Agriculture 6 8.51 8.02 10.63 8.09 Industry 8.65 8.98 12 8.78 (a)Manufacturing 6.63 3.09 8.15 4.87 5.7 4.75 (b)Mining (c)Electricity 4.77 7.9 4.68 5.98 6.27 8.84 9.87 11.01 11.18 10.66 Service 11.98 16.14 16.46 11.98 9.81 (a)Construction 12.01 10.69 11.51 11.82 12.02 (b) Trade, hotels 5.58 8.69 11.41 13.92 11.79 (c) Finance 5.58 6.85 7.21 6.89 7.25 (d) Community 7.85 9.4 9.62 9.03 GDP at factor 8.52 cost From the above graph we can say that GDP growth is positive. All four sectors pharmaceutical, Agriculture, Industry and Service are growing well. But the agriculture sector which has lowest contribution is not a good sign for India. When we talk about the service industry it is growing very fastly and brought up boost in the economy in near future. Overall GDP can be concluded as good compare to other developing countries. India¶s GDP growth released for the last quarter of 2009-10 turned out to be robust, it showed a record growth of 8.6 percent as compared to the growth of 5.8 percent in the same quarter of previous year. For the fiscal 2009-10 India's economy grew by 7.4 percent which is an upward revision from earlier estimates of 7.2 percent due to higher-than-anticipated growth in agriculture, mining and manufacturing sectors. 2. Inflation--The Indian method for calculating inflation, the Wholesale Price Index, is different to the rest of world. Each week, the wholesale price of a set of 435 goods is calculated by the Indian

Foreign investment.25 in LPG. These are the steps taken by government to control inflation. vegetables. its highest rate in 13 years. The overall inflation averaged for the month of April 2010 stood at 9.75% at the end of May.After studying the inflation rate in different years we can say that rate for the year 2008 is highest in last 6 to 7 years which can not considered good for the Indian economy.Government. These are the steps taken by government to control inflation.1%. particularly financial services and information technology. This is more than 6% higher than a year earlier and almost three times the RBI¶s target of 4. has been liberalized across the board. This was driven in part by a reduction in government fuel subsidies. Inflation is already dropped at 5.3 percent seen in the same month of previous year. In September inflation is further decrease to around 10% and after that in next month inflation moves in single figure and in December last week inflation rate was at 6.25 in LPG.45% which signals reduction in inflation. The Indian Government's approach towards foreign investment has changed considerably during the past decade. However. which is good for the economy.50 billion.5p/l. which was permitted only in restricted industries under exceptional conditions. up 56 per cent against US$ 15. reaching 8.7billion in 2006-07. India's FDI touched US$ 25 billion. The price of basic goods such as lentils. According to the 2008 Economic Survey Report. Diesel Rs. Since these are wholesale prices. but if we compare inflation rate from may 2008 to Dec 2008 there is a huge decrease in it and on the basis of that we can say that inflation rate will definitely come down to 3%. excellent language and technical skills. Recently government has reduced the price of petrol Rs. After the July month because of highest inflation rate government takes various steps to control and reduce inflation. Central Europe and Western Europe in terms of prospects of alternative business locations. In July 2008. FDI inflows into the Indian real estate sector are estimated to be between US$ 5 billion and US$ 5. A large portion of the FDI has been flowing into the skill-intensive and high valueadded services industries. FDI (Foreign Direct Investment) and FII¶s² The generous inflow of FDI and FII is playing a significant role in the economic growth of our country.62% as on 29th Jan 2009. the Wholesale Price Index.6 percent as compared to theinflation of 1. fruits and poultry were expected to slow their rise. Diesel Rs.1%. Recently government has reduced the price of petrol Rs. the beginning of 2008 has seen a dramatic rise in the price of rice and other basic food stuffs. India has been rated as the fourth most attractive investment destination in the world after China. India is continuously attracting FDI because of its cheap labor. which have lifted gasoline prices by an average 10%. India¶s inflation rate was targeted by the Reserve Bank of India (RBI) to be 4. has risen above 11%. According to me the target of a inflation is set by the government is approximately 3% in the year 2009 which is shown to be possible. when the figure jumped to 11%.5p/l.2p/l andRs. excluding certain restricted or prohibited industries Currently. the actual prices paid by consumers are far higher. This rise in price index is on account of dearer food articles and fuel products. 3.2p/l andRs. Inflation has climbed steadily during the year. There was an alarming increase in June. the key Indian Inflation Rate. low costs.35%. . Because of these steps in august inflation is come down to around 10. In 2007-08.

10.8 percent. calculated over March 2009 numbers . The growth in bank credit to commercial sector was seen to decelerate by (-) 0. 9. this achieved a growth of 72. manufacturing and electricity. was however. mining.3 percent in the fiscal deficit in the opening month of the current financial year 2010-11 as the deficit has stepped down from Rs 54158 crore in April 2009 to Rs 53993 crores in April 2010. Power industry analysis . especially.1 percent in April 2010 as compared to 3. growth numbers were also found to be remarkable. 8. Investment sentiments in the Indian stock market BSE Sensex was maintained above 17K in April 2010.8 percent in April 2010 compared to growth of 2. This growth is mainly fuelled by high growth in consumer durables. Foreign exchange reserves stood at USD 279.4 percent in April 2010.The total foreign investments attracted in 2009-10 amounted to USD 66. 4. In the opening month of 2010-11. The aggregate deposits expanded by 1. The consumer goods sector appeared to have performed well as it posted growth of 14. Fifteen (15) out of the seventeen (17) industry sectors witnessed positive growth in the first month of the present fiscal (2010-11) as compared to the growth numbers in the same month of previous year. As per the use-based classification. This expansion in aggregate deposits. the numbers were almost same when foreign direct investment for both the years were being compared. and petroleum refinery. 12. whereas NSE index NIFTY rose to stay above 5K points. 11.6 percent in the same month of 2009. This increase is subject to the recent surge in the foreign investments inflows.6 percent in April 2010 . finished steel. 5. marginally higher in the same month of previous year.3 billion during 2008-09.7 billion April2009. The rising indices show that strong sentiments among the investors. registering an increase of 37 percent in April 2010. There has been a decline by 0. Growth in six core infrastructure industries accelerated by 5. The broad money supply increased by 0. However. the capital goods sector. growth came from the three sectors. The growth in gross tax revenue was observed to enter the positive quadrant during the month of April 2010. crude petroleum.5 billion compared to USD21. This growth is attributed to high performance in the sectors such as 7.7 percent in April 2009.6 billion in April 2010 from USD 251. This is mainly on account of strong revival in the collection of indirect taxes and partly on account of collection in direct taxes.8 percent indicating a rise in investment sentiments in the economy. 6.

2012) has seen an addition of around 22. ‡ Urgent need to develop the alternatives. as an Economic Global Powerhouse. By . (FDI & Domestic Investment Combined) ‡ Adequate Capacity Growth to Sustain GDP Growth at 8% plus. Major characteristics of the growth are as follows y Installed capacity was 1713 MW in 1950. a capacity addition of over 78. the Power & Energy Infrastructure sector in India is poised for a major take-off. As mentioned earlier.Now. Electricity generation increased from 5.000 . ‡ Focus on implementation (Outcomes are more important than Outlays) As espoused by the Indian Prime Minister. planners and industry experts. The Target Mission: µPOWER for all by 2012¶ would mean achieving the target of 1000 KH (Units) of per capita consumption of electricity by this period. The Market Potential to sustain the GDP Growth rate of India @ 8% plus per annum needs the power sector to grow at 1. ‡ Increasing the Role of Hydel & Renewable Energy in the Energy Mix. Manmohan Singh Power sector after independence Significant changes have been observed in the Indian power sector after independence. y About 80% to 85% of the villages electrified. at least in Urban & Industrialized areas. This would mean a YOY capacity addition of 18. To achieve this goal. ‡ 100% Rural Electrification with Adequate & Qualitative Power for irrigation purpose. ‡ Reliable & Quality Power On 24 x 7 bases.1 billion units to 420 Billion units. following milestones are critical: ‡ Attract US $ 250 Billion Investment into the sector. It means the electricity has reached 80 to 85% of villages. Not every household in these villages is getting electricity.8 .000 MW to achieve this ambitious plan of moving India to a Developed Economy status. per capita consumption is aimed to be at 1000 kWh by 2012.20.000 MW has to be setup by 2012. Dr.2 times the GDP rate of growth as espoused by economists. Now it is increased up to 89090 MW. (A commitment of 15. The APDRP (Accelerated Power Development & Reforms Programme 2002 .000 MW during last five years and during the next five years. y Per capita consumption of electricity increased from 15 kWh in 1950 to about 33 kWh. Still this is much less than world average.600 MW of capacity additions per annum). both in the Fuel & Technology terms.

Later on NHPC expanded its objects to .644 MW. please refer µregulations and policies¶ section of this paper) y To regulate the power industry at centre level and also at state level. with a significant presence in the entire value chain of power generation business. It has emerged as an µIntegrated Power Major¶. y Government has come with the provisions for determining the tariff smoothly. the growth in power sector was very sluggish. India is poised to achieve 100 % electricity penetration in every household in every village. 2000 million and with an objective to plan.). But some accelerated positive initiatives were taken by Indian Government after liberalisation. y To encourage all the states in active participation in the power generation and distribution. There has always been a huge power deficit as power generation could not meet the demand.000 MW company by 2017. Major players NTPC NTPC. NTPC has embarked on plans to become a 75. With a current generating capacity of 30. NHPC NHPC Limited (Formerly known as National Hydroelectric Power Corporation Ltd. regulatory authorities like Central Electricity Regulatory Commission (CERC) & State Electricity Regulatory Commission (SERC) are appointed. India's largest power company was set up in 1975 to accelerate power development in India. A Govt. still power deficit is a big problem. government has placed various policies and plans ( for detailed information. of India Enterprise. was incorporated in the year 1975 with an authorised capital of Rs. Some of them are mentioned below: y Government is encouraging private players not only to produce power but also carrying out its transmission and distribution activities.2012. So the ambiguity involved in complicated tariff rates has been done away with. After of liberalization Before the liberalisation took place in India in 1991. In effect there has been significant Increase in private participation. With the growth in demand being exponential. promote and organise an integrated and efficient development of hydroelectric power in all aspects. NTPC is ranked 317th in the µForbes Global 2000¶ ranking of the World¶s biggest companies.

is one of the largest transmission utilities in the world.500 Circuit Km of Transmission network and 120 nos.000 Million Approx. of India with an authorised share capital of Rs. of EHVAC & HVDC sub-stations with a total transformation capacity of 79. . NHPC is a Mini Ratna Category-I Enterprise of the Govt.include development of power in all its aspects through conventional and non-conventional sources in India and abroad. At present. Initially.000 Km across the country. NPCIL operates plants with motto µSafety first and production Next¶.POWERGRID has also diversified into Telecom business and established a telecom network of more than 20.000 Million .e. NPCIL is a MOU signing Company with DAE. on incorporation. Nepal and Bhutan. Since then. POWERGRID has consistently maintained the transmission system availability over 99% which is at par with the International Utilities. NHPC has also executed 5 projects with an installed capacity of 89. and added 1180 MW capacity against the target of 1300 MW capacity. Presently NPCIL is operating seventeen nuclear power plants with total installed capacity of 4120 MW has five reactors under construction totalling 2660 MW capacity. a Navratna Public Sector Enterprise. With an investment base of over Rs. NPCIL-Nuclear Power Corporation of India Limited is a Public Sector Enterprise under the administrative control of the Department of Atomic Energy (DAE). The Company was registered as a Public Limited Company under the Companies Act.500 MVA. Two of these projects have been commissioned in neighbouring countries i.50. 1.35 MW on turnkey basis. 1956 in September 1987 with the objective of operating the atomic power stations and implementing the atomic power projects for generation of electricity in pursuance of the schemes and programmes of the Government of India under the Atomic Energy Act. 17. NHPC is among the TOP TEN companies in the country in terms of investment. NPCIL has achieved more than 285 reactor years of safe nuclear power plant operating experience. Government of India. POWERGRID POWERGRID. 1962. it has executed 13 projects with an installed capacity of 5175 MW on ownership basis including projects taken up in joint venture. NHPC took over the execution of Salal Stage-I. 3. NPCIL generated about 90 billion units of electricity in the X plan (2002-2007) exceeding the set target by about 10%. POWERGRID has a pan India presence with around 71.. Bairasiul and Loktak Hydro-electric Projects from Central Hydroelectric Project Construction and Control Board. thus realizing 91% of the target capacity addition. POWERGRID wheels about 45% of the total power generated in the country on its transmission network.

Tata Power has an installed power generation capacity of above 2785 Mega Watts. But at the same time Indian Power Sector has number of weaknesses/problems such as. India and The Netherlands. Market leader in Asia and 3rd largest wind turbine manufacturer in the world. generated at the Thermal Power Station.000 crores in power sector over next 10 years ‡ Privatization of SEBs ‡ Rationalization of the tariff structure ‡ Politically-sensitive issues such as subsidies Indian Power Sector has some of the major strengths such as abundant coal reserves to support thermal power generation. Asia. Reliance Reliance Power Limited is part of the Reliance Anil Dhirubhai Ambani Group and is established to develop. It is rich with sophisticated R&D capabilities in Denmark. It has got fully integrated supply chain with manufacturing facilities in three continents. 8. ‡ Inadequate power generation capacity ‡ SEBs¶ weak financial health . The challenges and opportunities faced by Indian Power sector are: ‡ Low per-capita consumption of electricity ‡ Estimated demand growth of Power at 6-7% ‡ Estimated investment of Rs. Trombay.460 MW. with the Mumbai power business. accounting for 1797 MW. which has a unique mix of Thermal and Hydro Power. huge potential for hydro-electricity generation and abundant engineering skills to commission and run large-scale projects and a large consumer base. The Company on its own and through subsidiaries is currently developing 16 large and medium sized power projects with a combined planned installed capacity of 35. construct and operate power projects domestically and internationally. Bhivpuri and Khopoli. one of the largest portfolios of power generation assets under development in India. Suzlon is now a leading wind power company with over 14. and the Hydro Electric Power Stations at Bhira.3% thereby making Suzlon 3 rd largest wind turbine manufacturing company in the world. Germany. Suzlon Market Share rose to 12.000 people in 21 countries with operations across the Americas. Suzlon Conceived in 1995 with just 20 people.00.TATA power India¶s largest private sector power utility. Australia and Europe.

Past few years have witnessed an outstanding growth in the power sector especially the sectors based on renewable sources of energy. The power sector in India has grown significantly and is an important part of infrastructure. There are huge opportunities of FDI in power sector in India. Opportunities of FDI in the Power Sector in India Opportunities of Foreign Direct Investment (FDI) in the Power Sector in India exist in y y y y y y y y Hydro Projects Captive Power Ultra Mega Power Projects Nuclear Power National Grid Program Rural Electrification Trading Renewables Important aspects of FDI in the power sector of India are y 100 percent Foreign Direct Investment is allowed under automatic route in almost all the power sectors in India except the Atomic Energy . Investment potential in power sector in India is huge due to the market size and returns on investment capital. 100% FDI is permitted to this sector under automatic route in almost all the power sectors in India except the Atomic energy.‡ Lack of optimum utilization of existing generation capacity ‡ Inadequate inter regional transmission links ‡ Alarming level of Transmission and Distribution Losses ‡ Abysmally low level of collection efficiency ‡ Inadequate metering of consumers ‡ Large-scale theft ‡ Cross subsidization of Power and Skewed tariff structure ‡ Energy shortage of about 7.3% and peaking demand shortage of 12.5% ‡ Low PLF of Generating stations FDI The huge size of the market in the power sector in India and high returns on investment are important factors in boosting FDI inflows to power.

y Hydropower net project It is a web-based application for monitoring of hydro projects by the MoP and sharing of data by hydro utilities and the CEA. y Public Grievances Redressal and Monitoring System. trading in power is activated. which are currently about 9% of the global emissions. or PGRAMS.y Power projects involving generation and distribution tasks are allowed in all types and sizes y As per the Electricity Act 2003. This system has remote data updating facility and is presently being updated by hydro utilities and the CEA. power trading is in an evolving stage and the volumes of exchange are not huge. and Centralized PGRAMS. In India. y y Use of clean coal technology: The Government of India is making concerted efforts to reduce the rising levels of CO2 emissions. through several applications and e-governance initiatives.5 percent PLF y y The import of equipments will be entitled to 20 percent of import duty Power generating projects will have a five year tax holiday with five more years which will have a deduction of 30 percent taxable profits. It has been promoting the use of clean coal technologies for meeting . Impact of technology The MoP is promoting the use of information and technology. Power trading inherently means a transaction where the price of power is negotiable and options exist about whom to trade with and for what quantum. or CPGRAMS: This is an online system for handling public grievances. providing information on various activities undertaken by the MoP. MIS (Management Information System) on power sector scenario: It is a webenabled application. The centralized version was launched in 2007. y y A duration of 30 years will given as a renewable license period Thermal power plants will get a return of 16 percent on equity and will get 68. The ministry is also implementing several measures for implementing egovernance for bringing in transparency and accountability in the functioning of the ministry. for achieving efficiency in transmission and distribution.

has operating efficiency of around 40%. including promotion of renewable energy sources for power generation through schemes such as RPO (renewable purchase obligation). POWERGRID. which would provide a platform for carrying out trading between renewable energy surplus and deficit states. IGCC (integrated gasification combined cycle) technology is one such cutting-edge technology in clean coal technologies. wherein certain quantum of electricity distributed must be purchased from renewable sources. Lines of appropriate voltages are laid. Maharashtra. The state of Andhra Pradesh has the largest T&D network of 803 367 ckt km in the country. The MNRE (Ministry of New and Renewable Energy) laid down Guidelines for Promotional and Fiscal Incentives by State Governments for Power Generation from Non-conventional Energy Sources. the Government of India has started various initiatives. Regulatory mechanism for tariff setting established Emergence of strong and globally comparable central utilities: NTPC. depending on the quantum of power and distance involved. . It is an Indian public sector company listed on the Bombay Stock Exchange although at present the Government of India holds 84. SWOT ANALYSIS Strengths Well established and vast T & D network An extensive network of T&D lines has been developed in India over the years for withdrawing the power produced at various generating stations and distributing the same to consumers. Fifteen states have committed to the RPO. A mechanism for RECs (renewable energy certificates) is also being evolved. and Uttar Pradesh have more than 0. Tamil Nadu. It produces significantly less greenhouse gases. and also produces less solid waste.5%(after divestment the stake by Indian government on 19october2009) of its equity. National Thermal Power Corporation) is the largest power generation company in India. Besides. Madhya Pradesh. To address environmental issues related to the power sector. the states of Gujarat. Rajasthan. reduces water consumption by about 40%.future energy needs of the country.4 million ckt km of T&D lines. Forbes Global 2000 for 2009 ranked it 317th in the world. Non conventional energy resource base India has substantial non conventional energy resource base and technologies to meet growing power requirements by tapping this energy. Karnataka.

the country added 20. Compared to the last two years. with states such as Maharashtra and Gujarat reeling under a shortage of 23. the culprits use the latest in technology: remote sensing devices. States draw power from a transmission and distribution grid and overdrawing by one state could hurt the others. so their consumption is not known. Pitfalls in billing and revenue collection: The free power given to farmers is unmetered. the western region is the worst affected in the country with around 19% power shortage. of over 2% Waste generation leading to environmental damage Michael Porter Analysis .110MW. India¶s track record in adding power generating capacity is poor: in the five years to 2007. against a target of 41. to 32.07%.Weaknesses Persisting shortages Peaking shortages are about 12% on an all India basis. respectively. Power theft Power theft is an increasing menace. According to data from CEA. Opportunities Natural sources Use of digital technology Rural electrification Untapped hydro power in northeast Threats High AT & C losses (Aggregate technical and commercial losses) AT&C loss (defined as the difference between the input energy and the units of energy from which the payment is actually realized) has come down further in 2006/07.4%. high power electromagnet with capacity to effect recordings of meters. this marks an improvement in efficiency.950MW of capacity.7% and 23.

It provides end-to-end power solutions. it acquired Hansen Transmissions. The company principally ope rates in India. The company along with it subsidiaries engages in designing. the company has the total production capacity of over 3000 MW. nacelle cover. installation. solar energy Company Analysis: Company Overview Suzl Energy Li ited (Suzl n) i a wind power company. China. tubular towers. Now. the world's second largest turbine gearbox maker. a major force in Global Wind Industry (Ranked 5th Worldwide) by installed capacity. policy regarding raw material and prices. developing and manufacturing of wind turbine generators and related components such as rotor blades. identification of suitable sites and technical planning of wind power projects. New Zealand. control panels. for . The company holds nearly 10. > entry and exit barrier Competitive Rivalry: MODERATE Bargaining Power of Supplier: HIGH > number of companies -40 > brand image of major power companies > demand and supply gap > creation of power excnange > no product differentiation ony > manufacturing process is different Bargaining Power of Buyer: LOW > no subsitute > high demand and supply gap Product and Technology Development: HIGH > other sources wind energy.700 MW of capacity in FY2009. operation and maintenance services as well as is involved in wind resource mapping. Further. Aggressive growth The company has emerged as a formidable force in Mergers & Acquisitions. In March 2006.700 MW of annual capacity.5% share in the global market. The company currently has a combined manufacturing base of 2. generators and gearboxes. The Americas. South Africa and Australia. the company also provides consultancy.Treat of New Entrent: LOW > high fund requirment > strict govt. manufacturing. design. and is undertaking an aggressive expansion program to expand its base to 5. Suzlon. South Korea. Europe. bio fuel.

4. paying US$1.For example: It has acquired HANSEN which was the worlds second largest manufacturer of gear boxes. Sophisticated and modernized research and development facilities 9. 2. 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.In June 2007. 3. it is now necessary for it to produce and sell at low cost and the production must be cost effective. Highly qualified and energetic work force WEAKNESSES OF SUZLON 1. 2. Pricing Power As Suzlon is the market leader in India. S uzlon finally saw off French nuclear group Areva in a hardfought battle for Repower. Integrated business model Suzlon Energy Ltd.9bn for its German rival. They have very good vertical integration for supporting their production activities. So they don¶t have to be dependent for supplies. Suzlon has focused more on integration.US$585m. They don¶t have to go to outsider experts for designing the products. 7. STRENGTHS OF SUZLON 1. So proper implementation of strategies is lacking. 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. it can drive the price and others will follow it. but its products can work at global level also. 6. Global Production As Suzlon has a global presence. Is having an integrated business model that they don¶t have to go to other suppliers for raw products. So it has gone for acquisition and backward integration which blocks its investments in assets. . Growth in Assets diminishing Growth in Profits Since last few years. 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. 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. But . 8. because new global players are entering in to the market. Though it is not that much technically developed as compared to other global players. Ithas a wide range of products that has been sufficiently designed to cope with the specific conditions and to that give optimum results. Operational Risk Suzlon as a market leader don¶t have that much efficient operation management team. 5. Diversified Product line Suzlon is producing each type of wind turbines working in India. it produces the products which can be used globally.

This factor is favourable for the wind power energy as its an option to thermal power.3. a credit rating agency has down-graded Suzlon Energy Limited due ti its financial weaknesses. Unsupportive Stock Prices When a company¶s stock price is more than its book value. Unfavourable Ratings Before sometime. Improper Working capital Management Earlier Suzlon was a financially strong company. Thus its growth rate of profits has declined. Govt. initiatives. But the previous down-turn in the world economy has brought the company in a critical situation. 6. As a part of this industry suzlon can gain advantage of govt. 2. is also providing tax exemption on their earnings and also providing subsidies for encouraging investment in backward areas of society to generate employment. Many experts also think that Suzlon has paid more for its HANSEN acquisition. So wind energy is having benefit of no pollution as it produces pollution free wind energy. Environmental Awareness Now a days environmental awareness has been increased among the population of India. OPPORTUNITIES FOR SUZLON 1. compared to growth in assets the growth in profits is low which is not favourable for the firm. So. 5. it has signed a contract that Suzlon will pay 65 million Euro in December 2007. So it can have advantage of covering untapped offshore market as an Indian player. And Suzlon is also facing this problem because of improper working capital management. 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. Government Initiatives As government has also understood the importance of natural resources. Suzlon is also having strong financial backup compared to its competitors in Indian market. is in favour for wind energy which uses wind and provide pollution free energy. Such lacuna in appropriate and timely decision making in finance is the biggest weakness of Suzlon. Weak Strategic Financial Management Suzlon when expanded its business through RE Power. it can be considered as a good sign for investors. which is also responsible for polluting the environment. Govt. They have also found the improper operation management at Suzlon. And Suzlon is the market leader in India in this sector which is the backup force for it. the govt. but currently due to the unfavour market conditions Suzlon¶s stock prices has fallen below the book value. They have started saving energy and trying to reduce pollution. there is a high growth opportunity for Suzlon in future horizon. 4. 30 milliono in April 2009 and final payment of 175 million Euro will be paid in May 2009. Steady Growth in Demand . only Moody. 3. Untapped Offshore Market Till now none of the Indian player other than Suzlon has gone for global expansion. 4. of India is supporting firms those provide untraditional energy. while other competitor¶s share prices has not declined below than their book value. Therefore.

Suzlon has continuously reduced capital cost per unit of power generation and also has maintained a consistent new product launch schedule. and since any man-made installation can have adverse effects on terrestrial ecosystems. Strengths: Skill Amalgamation y Cost Reduction---It has blended the best resources across the globe. 3. Globally . Intense Competition The govt. Denmark where it has wide base of wind energy expertise and large network of components suppliers. it has become more risky for Suzlon to do business globally. 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. So entry of global players will affect Suzlon a lot. of India has approved FDI limits up to 74%. As the exchange rates are fluctuating highly since last couple of years. they also take more land to operate safely and effectively. there is default risk of exchange rate fluctuations. turbines take up lands. Hardcore environmentalists may object to the installation of wind parks. Foreign Exchange Risk As Suzlon is having a global presence. to look for other sources of energy. This can be a favourable factor for the whole industry. Many wind parks remain shut-down for a part of the year because of bird migration patterns and numerous turbine related bart-deaths. 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. y Reverse outsourcing----The Company has international head offices in Aarhus. Though it is a market leader. the oil and coal industries will lobby against govt. though larger turbines produce more power. It has competitive R&D in Europe. 5. lobbing the govt.As awareness of wind energy is increasing and people understood the importance of renewable energy sources which is cost effective. 4. this leads to steady growth in demand giving an opportunity to business more. Obviously. The skilled workforce is available to the company. The Manufacturing Units in India and China proves to be cost effective. 2. subsidization of clean energy sources. THREATES TO SUZLON 1. effective lobbying could greatly reduce the amount of government support given to the wind power industry. Technology Risk Earlier technology was not become obsolete so fast. its technology efficiency is not up to the mark as compared to global giants like VASTAS. Objections to Wind Power The main objection to wind power is due to other environmental costs. 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. Basing on this industry. but for Suzlon it is a threat. but currently technological development is very fast and new technology is been introducing in to the market very fast. Furthermore.

China and India. specifies that a minimum percentage of power generation should come from non-conventional energy sources. Suzlon in its vision for future growth aims to rank among the top three wind turbine manufacturers worldwide. Integrated Business Model-The Company plans to enter in to Solar and Bio-fuel Business. In fact the board of directors have only two Tanti brothers as executive directors. 2003. So demand will be sensitive to interest rates. The Suzlon Group boasts one of the largest teams in the wind energy business. It has become global/ world-wide sponsor for CNN International innovative capsule on environment preservation. where major players have established markets. The advantage of new markets and new orders may take time. This will help the company to produce 10-20 MW additionally. Risks involved in overseas business are also higher.The industry's outlook to turn favorable by 2010 as easing credit and lower costs boost demand from the U. The Electricity Act. while marketing.renowned wind energy companies¶ presence like Vetas and NEG Micon makes it a hub of talented workforce and technology. Human Resource-Suzlon¶s true strength is seen not only in its technology. Capital Intensive-Wind power projects require high upfront capital investment per kWh of energy. totaling over 13. Europe. Overseas Business-Suzlon Energy is expanding overseas..S. higher than industry rate. this may put pressure on the margin in the short run. O&M services.000 people from over a dozen nationalities in operations around the world. Innovation. including wind resource mapping. Weakness: Management Structure-The Company is fully dependent on promoter Tulsi Tanti.Suzlon is a vertically integrated wind turbine manufacturer ± with manufacturing capability along the full value chain ± ranging from components to complete wind turbine systems.. For example. End to End Solutions---Planning of Wind Farm Systems. Market leadership in India and Global Presence. Company is facing liquidity crunch to pay its debt recently promoters had sold their holding in the company. Suzlon offers customers' endto-end wind energy solutions. Land Acquisition. personnel and other initial costs could jump. Hence. and the Madhya Pradesh government 0.Suzlon¶s R&D effort includes a highly successful practice of leveraging skill and knowledge pools in the industry and allied areas the world over. So expansion plan may further increase the . Moreover. This has resulted in a R&D network located across geographies. quality and market share ± but also its people. The company is conducting feasibility study for the further approach in this business. Development and Technical Design. This allows Suzlon to offer Indian customers economies of scale. Three other board members are non-executive independent directors. and eliminates the need for customer involvement in the complex process of wind farm development. Vertical Integration and Amalgamation-. Growth-Growing at 29% CAGR for past 10 years. maximizing growth while maintaining margins to generate maximum value for all stakeholders. Infrastructure and Equipment.5% This reflects the government¶s intention of reducing the dependence on fossil fuels and cut down carbondioxide emission. and finally operations & maintenance services in India. the Karnataka government has mandated 5% from non-conventional sources. perennial power shortages assure a sustained growth in demand for power generation. site development and installation.

As it is a rate sensitive sector reduction in commodity prices. and is now on the threshold of "taking off" in wind power.The projections of Ministry of NonConventional Energy Sources says10% of the 2. India has now gained sufficient technical and operational experience.According to the CEA estimates by 2012 the energy demand is expected to increase by 44%.The Company faces foreign exchange loss of nearly Rs 435 crore because of that 500 million zero coupon convertible foreign Currency Convertible Bond (FCCB) which is still pending are due in 2012. policy support and optimistic outlook are driving investment in this sector. which could result in client dissatisfaction and a reduction of our revenues.The Redemption of 500 million Zero Coupon Convertible which are due in 2012 is nearly Rs 273 cr.It reflects the significant delays in Private equity infusion into Suzlon resulting in a sharp deterioration in its gearing. _ Local Units. inventory. in contrast to the expected improvement. 40. These are the three important areas ± the foreign exchange loss.860 crore . Favourable tax exemptions-The Wind Energy industry enjoys special tax benefits from government and subsidies from regulatory bodies. wind is expected to account for 34% of new generating capacity. blade retrofits and MTM loss which can affect the company¶s profitability in coming time. _ Net Income. and overall project costs affects the business as a whole. Financial Performance: _ Profitability. It is envisaged that 50% of this capacity or 12.In US by 2030.burden on the company balance sheet. _ Growth in Assets overweighting Growth in ProfitsRoot cause analysis shows cost overrun due to retrofitting in winter which is an operationally challenging season results in low productivity and inefficiencies. _ Leverage-The total debt on the company¶s book stands nearly Rs 14. It'll account for 46% from 2020-2030.000MW may come from wind power.e. Steady source of demand. . Operational Risk _ Cash Conversion-Company revenue mostly comes from the International clients that involves exchange rate risk. Untapped offshore Market-According to the estimate the demand for power is still high in India even during the recent global slowdown. The blade retrofits and consequentially availability charges of nearly Rs 307 crore is another concern area and the third is the mark-to-market (MTM) loss of nearly Rs 215 crore which is on account of foreign exchanges forwards options contract which the company has taken to hedge. 20 % of the electricity would be generated by wind energy as compared to today's 1%.D. logistics costs.The allocation of Equity Shares pursuant to Employee Stock Option Plan will result in a change to income statement and will adversely impact company net income Opportunities: Environmental and Government initiatives. In Europe. _ Ratings²CRISIL has downgraded the rating of the Company to BBB/P3 from A-/P+2. will come from renewable.000MW) installed capacity requirement by the year 2012 A. Better tariffs. _ Basic Infrastructure: Disruptions in telecommunications and basic infrastructure could harm our ability to provide O&M services.000MW (i. The gap between supply and demand is increasing .The construction and operation of wind power projects has faced opposition from local communities and other Parties. 24.

including environmental controls and other regulations . Mexico. the costs of our raw materials and revenues from exports. Over dependence on US. Kenya plans to erect a wind farm that will provide up to 30 percent of its electricity needs. Thus addressing the environmental concerns all over the world. and Spain in later years. These agreements may be subject to regulatory challenges. predominantly wind power. and renewable. If the crude suffers from low prices which indicate the overall fall in demand in infrastructure and energy demand then it would affect the growth of the Sector. China. which may subject to higher taxes and adversely affects the earnings. Germany.The Indian wind industry was placed third in terms of total installed capacity of wind electricity in the world some years back. Foreign Exchange Risk-Fluctuation in the value of the Rupee against other currencies could adversely affect the cost of our borrowings and repayment of indebtedness. Interest rate increase-Company agreements with whollyowned overseas subsidiaries are subject to transfer pricing regulations.Mexico is investing more than half a billion US dollars and plans to build a wind farm of 250 MW within ten years. Green Power: The existing power sector emits around 40% of global carbon dioxide emissions and there are only three options to substantially reduce these emissions between now and 2020: energy efficiency. It suffered a great setback when this rank shifted down to fifth after the United States.USA accounts for 50% sales for Suzlon. The fastest growing wind markets are Turkey. global slowdown may hamper the demand for the energy in the host countries which are most affected by the recession further blade quality issue in China and Australia is a concern for the company . and Poland.The construction and operation of wind power projects is subject to regulation. Further Cancellation of orders. Denmark. Recent economic slowdown results affects the States wind energy sector which results in liquidity crunch and investment setback in India. Decreasing Price of crude. Wind power could produce 12% of the world¶s energy needs and save 10 billion tones of CO2 within 12 years. Technology Risk.There is a direct correlation between Crude prices and Wind energy demand. Threats: Intense competition.The failure to keep technical knowledge confidential could erode company competitive advantage. Brazil. fuel switching.

55 Turnover Ratio Fixed Assets Turnover 9.54 Operating Ratio 24.57 Ratio Working Capital 2.58 9.09 10.90 Earning Per Shares 42.44 .17 23.20 24.98 Quick Ratio 1.46 0.26 15.12 0.08 1.59 2.36 3.40 0.56 Inventory Holding Period 90.15 11.44 10.33 0.84 0.05 Debt-Equity Ratio 0.12 Gross Profit Ratio 22.44 0.70 76.80 28.32 2.90 101.78 23.96 3.65 1.65 4.85 23.09 2008 2.59 21.88 2007 3.53 Ratio Stock Turnover Ratio 3.31 1.90 21.97 9.Financial Ratios analysis Ratios 2005 2006 Current Ratio 2.54 10.75 Interest Coverage Ratio 9.96 90.37 2.94 37.73 2.13 Proprietary Ratio 0.

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