swot analysis of suzlon energy

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

An Assignment on SWOT Analysis

“A SWOT ANALYSIS ON SUZLON ENERGY LIMITED”

CONTENTS

CHAPTER-1 ABOUT SUZLON ENERGYCHAPTER-2 SWOT ANALYSIS: AN OVERVIEWCHAPTER-3 SWOT ANALYSIS OF SUZLON ENERGY


CHAPTER: 1ABOUT 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

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


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


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. TantiChairman & Managing Director

Girish R. TantiExecutive Director

Ashish DhawanIndependent Director

V. RaghuramanIndependent Director

Pradip Kumar KhaitanIndependent Director


Ajay RelanIndependent 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


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.


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


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.


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?


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?


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?


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.


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.

Positive factors

Internal factors

Negative or

potential to be

negative

Strengths Weaknesses

Opportunities Threats

External factors

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.

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).


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


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


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.


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


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.


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


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


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 !!!!


swot analysis of suzlon energy

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