Mr Tulsi Tanti chairman of Suzlon has said that Suzlon Energy plans to focus on emerging markets, while its German subsidiary REpower Systems will address the developed markets under the new strategy to boost profits by increasing market share and cutting costs.
Suzlon Energy, which recently completed the acquisition of REpower, will embark on a new strategy from January to help the world’s third-largest windturbine maker increase market share to 9% by 2012-13 from 7% now.
In the short term, this would lead to a 2% improvement in market share and 2% improvement in earnings before interest, tax and depreciation margin. We would make an overall savings of $200 million in the next financial year (2012-13). The process of acquiring 100% in REpower Systems went on for almost four years since Suzlon first acquired stake in the company in 2007.
Although Suzlon gained management control over REpower, it was not allowed access to the company’s technology until it owned 100% in it because German law does not allow so in the interest of minority shareholders. Now, Suzlon can benefit fully from the REpower acquisition that cost it around 1.4 billion euros.
According to Mr Tanti Tanti:
We are targeting 30% consolidated growth despite the challenging environment that has forced competitors such as Denmarkbased Vestas Wind Systems to cut its annual growth guidance. We are extremely well positioned. The top ten utility companies, which are making investments and growing, are our customers in the key four geographies for REpower. REpower will focus on business in developed markets, which have demand for high megawatt wind turbines such as Canada, US, Australia, Europe and the entire market for offshore installations.
Mr Tanti said that Suzlon will focus on emerging markets such as India, China, South America and Africa where it can also provide engineering services along with supply of wind turbines. He dismissed market speculation that Suzlon may use part of the USD 300 million cash available with REpower to service its debt of USD 2 billion, which includes working capital loans of USD 1.2 billion.
Source Reference: Economic Times