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| Roaring loud: Suzlon's Tulsi Tanti |
Suzlon
energy was a largely unknown entity a year ago. Then came its
Rs 1,500-crore initial public offering in October, 2005 and it
has been in the news ever since. The scrip closed at Rs 1,306
on March 20, 2006 compared to its issue price of Rs 510. Its market
capitalisation on that date: Rs 37,551 crore; the value of the
70 percent stake held in the company by promoter Tulsi Tanti and
his family: Rs 26,203 crore. Only recently, Forbes ranked him
on its annual list of billionaires. The one-time textile businessman,
who ventured into the non-conventional power sector in 1995, had
come a long way.
But, before we proceed further, here are
a few interesting facts:
- Suzlon is the world's largest wind turbine
generator manufacturer in terms of market capitalisation
- It enjoys a healthy order book position;
it had orders worth Rs 1,613 crore from Indian customers and
Rs 2,619 crore from overseas buyers at the end of the third
quarter of 2005-06
- Sachin Tendulkar and Aishwarya Rai have
reportedly invested in Suzlon's wind turbines.
Then, Suzlon, the sixth largest company (by
sales) in the world in its field, sprang a surprise. It announced
the m465-million (Rs 2,511 crore) acquisition of Belgium-based
Hansen Transmissions International NV, the world's second largest
maker of wind turbine gearboxes. At one stroke, this backward
integration gave Suzlon direct control over the supply of gear
boxes which are critical to the operation of wind turbines. Hansen
has a capacity to roll out 3,600 mw of wind turbine gearboxes
and 3,000 industrial gear boxes a year. Incidentally, this is
the second largest global mergers and acquisition (M&A) deal
by an Indian company, next only to the m480-million (Rs 2,592-crore)
acquisition by Dr Reddy's Laboratories of German generic drug
maker Betapharm. "Globally, our industry is growing at over
40 per cent annually and this acquisition will sustain our future
growth in the wind energy market," says the painfully media-shy
Tanti.
TANTI'S
GAMEPLAN
Why Tanti Is Paying m465 million For Belgium
Firm Hansen International |
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» Fits
with Suzlon's strategy of integrating manufacturing in the
fast-growing wind power industry
» Offers
readymade gear box and turbine technology
» Moves
the company closer to world leader Denmark's Vestas
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The all-cash deal was financed partly by a
syndicated loan from Britain's Barclays Bank, Germany's Deutsche
Bank and ICICI Bank and partly from internal accruals. "Suzlon
no longer has to depend on global suppliers for gear boxes,"
says Pankaj Namdharani, equity analyst at spa Securities, a Mumbai-based
research firm. Interestingly, Hansen also supplies gear boxes
and other components to Vestas, the world's largest wind energy
equipment manufacturer, which has a 30 per cent share of the international
market. Forbes has quoted Vestas as saying it expected no change
in its arrangement with Hansen following the takeover.
"The Suzlon stock has already run up
in anticipation of a big deal, but there could be a re-rating
going forward in view of various cost advantages it will now enjoy,"
says V.K. Sharma, investment consultant at Anagram Securities,
another Mumbai-based equity research firm, hinting at a further
upside.
With operations in India, China, us and Europe,
and a capacity of 1.5-gigawatts of wind turbine, 48-year-old Tanti,
a commerce graduate and a mechanical engineer, is aiming high.
He is believed to harbour ambitions of emerging as the L.N. Mittal
of wind power. Does he have it in him to achieve his goal? It's
still too early to assess. But watch this space for more.
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