By Vipin Agnihotri
For so many years, Indian companies have loved the colour green, but only when it meant the US dollar! But Suzlon is one rare Indian company, which saw the potential of ‘green’, as in environmental friendly businesses, well ahead of time, ventured into wind energy and went on an expansion spree with success.
After a bad first quarter, bogged down by component shortages, Suzlon posted record turnover of Rs 16.8 billion and net profit of Rs 3.95 billion for the quarter ending September 2007. In other words, the wind is blowing stronger than ever.
Suzlon is gung-ho with huge expansion plans such as adding an extensive 3,000 MW of wind power, increasing total production capacity to 5,700 MW by the end of this year. According to sources, to increase ROI from acquired companies, Suzlon is all set to list them as separate entities on number of stock exchanges.
For example, Hansen Technologies, which Suzlon acquired in 2006, will be listed on London Stock Exchange. According to experts, it might not directly assist them in their expansion plans but will help them managing the entities separately. Furthermore, performance of any unit won’t disturb the others.
The pivotal factor for the brilliant second quarter performance was due to sales of 684 MW of wind turbines, which were part of the carry over inventory, and were not delivered due to shortage of components.
In my opinion, listing companies in separate stock exchange might assist the balance sheet for the time being but if such issues are not addressed in future, Suzlon will have to see more downfall. The company must ensure such issues don’t occur in future, or the wind could start blowing in the opposite direction.
The India Street rating: 8/10
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