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SEFORGE LTD 1

INITIAL REPORTON

A

FORGING UNITOF

SUZLON ENERGY LTD

SUMMER INTERSHIP REPORT -2010INITIAL


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INDEX

Sr. No. particular Page No.

1 COMPANY PROFILE 3-101.1 history 3

1.2 growth and development 7

1.3 bench mark and milestone 9

1.4 vision mission and values 10

2 FUNCTION AREA 11-17

2.1 MARKETING 11

2.1.1 product portfolio 12

2.2.2 distribution network 162.6.6 market share

2.7.7 competition 15HUMANRESORCE

2.2.1 organization chat

2.2.2FINANCE DEPARTMENT

INTRODUCTION 23

RATIO ANALYSIS 24

ORGANIZATIONAL AND GROUP STRU. 25-26

4 ENVIRONMENTAL FRAMEWORK 32-34

4.1 economical

4.2 political

4.3 social4.4 technological

4.5 legal

5 MODEL APPLICATION 35-38

5.1 strategy advantage profile

5.2 Portals five force model5.3 ETOP5.4 BCG model

5.5 value chain


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History:

Suzlon's wind energy business traces its roots back to the incorporation of Suzlon EnergyLimited in 1995 by the venture ofMr. Tulsi R. Tanti. The company along with itssubsidiaries

engages in designing, developing and manufacturing of wind turbine generators and relatedcomponentssuch 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, identificationof suitable sites and technical planning of wind power projects. Thecompany principally operates in India, China, The Americas, Euro pe, New Zealand, South

Korea, South Africa and Australia. Suzlon hassince grown to become the world'sfifth leadingwind turbine manufacturer with 10.5% ofglobalMarket-share and the leading manufacturer in Asia and India. The company has registered100% year-on-year growth for the past five consecutive years, achieving leadership in Indiaand then becoming the leaderson the globalstage. Suzlon is today a leading force on the wind

energy stage, generating revenuesof USD 2,311 million in FY08 and supplying over 7,000MW ofwind turbine capacity around the world. Injust over a decade since Suzlon was born,the company has grown toover 14,000 people around the world with operations inover 21countries acrossfive continents. The company hasforged ahead with an ethosof innovation ineverything 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'sdesign, 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 ofS&PCNX Nifty Index (NSE) that shows investors satisfaction towards the company and thestability ofitsstock in the financial market.


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ABOUT SEFORGE( SUBSSIDARY OF SUZLON)

Name ofcompany:

Seforge ltd

Forms OfBusiness Organisation:

Public ltd company

Registered Office :

5 shrimali society,

nrshri krishna complex,

navrangpura ahemdabad gujarat india

Corporate office :

5thflooorfodrej millenium , 9 koregeon park road

Pune-411-001 india

Board OfDirector

Tulsi R Tanti- CMD

Girish R Tanti Executive Director

Ajay Rehan Independent Director

Ashish Dhawan Independent Director

Pradip Kumar Khaitan- Independent Director

V.Raghuraman Independent Director

Company Secretary-

Hemal a konuge

Auditors-

snk& co.

e-2 b the fifth avenue dhole patil roadnr .regency

hotel pune


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CharteredAccounts.

R botliboi and co. ,

CA C401 4thfloor panchsil tech park,

yewada boscoschool pune

Banker

Bankofbaroda

Bankofmaharashtra

Sbi

Axis

Icici

Pnb

Registrar And Share Transfer Agent:

Karvy company share pvt ltd

17, 24 vittal rao hanger madhapur hydrabad india\

Website

WWW.SEFORGE.COM

Division :

Machinery shop

Forging shop


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About Company:

Behind the successofSEFORGE are our people most valuable assetsour people. A trainedskilled

anddedicated workforce workunder expert hands todeliversuperiorsolutions each person know

that he can an important cog in the wheel of SEFORGEs delivery cycle he knows that the

contribution to the large goal of the company and works hard to put in his best. The continuous

striving for excellence is a way of life at SEforge through various induction program and training

sessions we trainour people to excel, at seforge we call it the passion is excel

Seforge incorporated in the year 2006 is a company fundedonsolid goal beliefs and value as

we embarkon the journey to becoming the preferred goalsupplier and casting andforging we

follow a single minded goalofexcelling in everything we do

We are equipped with some of the best and the most latest and advanced facilities in the

worldwith capability to produced the highest standardofcasting products along with our expert

team of engineers and advisors we are all set to become the [referredof casting and forging

solutions globally

Seforge product cater to wide array ofproduct and industries ranging from

Wind energy, Defense machine tools, aerospace oil and gas power, heavy construction

equipment many more

Casting

Seforge foundry was created with the goal to become the global benchmarkfor quality casting

by using modern technology efficient processes while meeting environmental requirement thefoundry makes large complexductile and grey iron casting in the weight range of 1000kgsto

55000kgs These casting are delivered fully machine and painted ready for assembly The

foundry located in Coimbatore India is well connected to the Indian partsof cochin Chennai

and tuticorin

Sand mixture

Movable and stationary PLC controlled continuous sand mixers ensure the quality of mixed

sand

50 MT per hour-3 nos.

25MT per hour -7 nos.

Sand reclamation plant

Our environment friendly sand reclamation plant has capacity to claim 90% ofthe use sand


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Mould and core coatingsystem

Flood coating system for coating ofmoulds and cores ensuresoptimal coating thikness

BUILT TO SATISFY

Spread over a sprawling 240000 sq.mtr land area seforge foundry is one the largest fully

integratedfoundries in the country with an annual manufacturing capacity of120000 tonnesof

fully processed and finished casting we are well equipped to meet the requirement of our

customerson quality , quality &delivery

Growth and development:


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Mile stone:

Benchmark:

2008-09

Harvard BusinessSchool concludes a case study onSuzlon - 'The Suzlon Edge'

Hon'ble Michael Rann, Premier, South Australia, inaugurates AGL Hallettwindfarm

Suzlon Energy Ltd Blade Testing Centre, Vadodara, India conducts the first blade static test

Suzlon Energy Ltd is certified ISO/IEC 27001:2005 compliant by Bureau Veritas Certification(India) Pvt. Ltd.

2007-08

Suzlon Energy Ltd enters Kerala with itsfirst WindPowerProject commissionofS52-600 kW

turbine at Agali

Suzlon Energy Ltdsecures its maiden QIP (Qualified InstitutionalPlacement)

Suzlon Energy Ltd isfirst S88-2.1 MW wind turbine is commissioned by Deco Light Ceramics

Ltd, in Gujarat, India

Hansen Transmission International N.V completes provisionallisting of IPOon LondonStock

Exchange

Suzlon Energy LtdSignsup with ONGC Limited - for 51 MW wind turbine capacity


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SEFORGE vision statement:

Being the preferredsupplieroflarge casting andforging

Creating an benchmark in technological innovation and processes

Enhance value for allstakeholders

Contributing towards a greener environment

Developing a sense ofownership and a passion inour team to excel

Mission statement:

Meet qualitative, quantitative and competitive expectationofcustomer

Develop and continuously upgrade our infrastructure, technology and processes

Faster continuous improvement at our manufacturing processes through innovation inorder to

enhance quality, productivity, lead time andoptimize cost

Ensure fair returns and rewards toour investor

Create values addedlong term partnership with our vendors

Be proactive and responsive to the needsofthe society

Ourvalues:

Collaboration:

Bonding as a team forming alliances andsharing knowledge, inorder to achieve SEFORGEs

vision goals.

Excellence:

delivering performance, which consistently surpasses the expectation of all stake holders.

Anticipation and taking necessary actions proactively to meet or exceed the needs of the

customers, setting high personal goals andstandard, continuously striving to achieve them

Innovation:

applying creativity and ingenuity to make usfaster and better .seeking opportunities to improve

product and work processes generating ideas that go beyond the status quo. Recognizing the

needfornew and modified approaches and championing the same .Being catalyst for a change.


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FUNCTIONAL AREA

2.1 marketing:

Marketing is very vital function in any industry. Every company has to handle its marketing

function with care. As the whole world is turning in to a global market, marketing function is

getting more and important in every company.

The term marketing is changing in the world. Now selling product by advertising in the

presentationfor public at for the investors and public. It isnot the only functionofmarketing.

But in thisnew world

marketing puts weight age on satisfying consumer needs. If the market does a good Job

understanding consumer needs, develops product that provide superior value and price,

distributes& promotes them effectively. These products willsell very easily. Together with

their Associate Companies in their Grou p. They have positioned themselves as an integrated

solution provider of services related to wind energy in the Indian market. Besides

manufacturing WTGs. they are involved in wind resource mapping. Identificationofsuitable

sites and technical planning ofwind power projects.

Suzlon

They also provide after-sale O & M services for WTGs supplied by them. Their Associate

Companies acquire sites they have identified assuitable for wind energy projects, which are

then sold or leased to their customers, and undertake the technical implementation ofwind

farms, including infrastructure development, installation of WTGs and connection to powergrids.

Marketing Environments:

The concept of markets finally brings as full circle to the concept of marketing. Marketing

means managing markets to bring about exchanging for the purpose ofsatisfying human wants.

Thus they return to theirdefinitionofmarketing as a process by which individual and groups

obtain what they need and what by creating and exchanging products and value with others.

Sales and Marketing

Our WTGs are primarily sold by us through oursales and marketing team based in India and

by ourforeignsales and marketing subsidiaries and branch offices.

India

We have divided the Indian market according to the states where we have identifiedsuitable

sites for wind energy projects, specifically Maharashtra, Gujarat, Rajasthan, Tamil Nadu,


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Karnataka, Madhya Pradesh and Andhra Pradesh. Marketing for each state is under the

supervision of a senior management executive who directly reports to our Chairman and

Managing Director. We also have salesoffices in key citiessuch asPune, Bangalore, Chennai,

Coimbatore, Hyderabad, Ahmedabad, Rajkot, Surat, Jaipur, Calcutta, Mumbai, Indore andNew Delhi.

The marketing team focuseson three typesofcustomers:

(a) companies that have manufacturing units with high power consumption

(b) companies with high profitability and/or surplus liquidity that seek investment

opportunities with stable returns and that offer tax benefits; and

(c) powerutilities andstate nodal agencies.

These potential customers are contacted by our marketing team, introducing them toour Group

and the potential benefitsofwind power. Our team conducts regularfollow-up calls and visits

and provide potential customers with detailed working andfeasibility studies regarding wind

power projects. We alsoorganise site visits to existing windfarms. From time to time, we also

obtain customers through participation in tenders by utilities, state nodal agencies and public-

sector entities. As part ofourstandard practices, we also conduct credit checks and review the

balance sheet ofeach potential customer inorder to ensure that it has the financial capacity to

acquire and operate our WTGs.Asof March 31, 2005, we employed 66 people in sales and

marketing for India. AsofMarch 31, 2005, we have sold 1,465 WTGs to Indian customers and

the performance ofthese WTGs has resulted in a numberofrepeat ordersfrom customerssuch

as Bajaj Auto Limited, Ellora Time Ltd., the Ramco Group, MSPL Limited and Vishal Exports

Overseas Ltd. and REI Agro Ltd.

International Markets

We are currently expanding our presence internationally, with an emphasison North America,

China and Australia. Our global marketing, sales, project andservice activities are managedby

our Danish subsidiary, Suzlon Energy A/S. Our international marketing activities primarily

consist of cultivating contacts with wind power project developers with a view to supplying

WTGs for wind power projects developed by them, advertisements placed in professional

industry journals, attendance at national and international energy fairs, such as the Hanover

Fair, PowerGen, WindTechHusum andPowerExpo, as well as conferences and professionalseminars conducted by trade associations and various wind energy associations, such as the

American Wind Energy Association and the British Wind Energy Association.

UnitedStates

In 2001, we incorporatedSWECO inorder to establish a presence in the UnitedStates, which

is among the top three wind energy markets in the world in termsofcumulative installations.

AsofMarch 31, 2005, we employed 16 people in marketing, sales, projects andservices for


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the United States. We ex pect to target the following types of customers: (a) companies

interested in investing in renewable energy sources; (b) utilities; (c) wind energy project

developers; and (d) municipalities, schools and cooperatives interested in establishing captive

powerfacilities.We intend tofocuson establishing ongoing business relationships with a coregroup of key customers, strategic investors and financial investors, with a view to gaining

access to wind power projects that these entities propose to undertake, as well as securing

exclusive WTG supply agreements with these entities.We focusourdirect sales efforts in three

main geographic areas: the Midwest, the South (Texas, Oklahoma) and the West (California),

which will allow us to concentrate onutilities and independent service operators in areas that

we believe have growth potential. We may alsooffer customers assistance inobtaining project

finance and also provide technicalservices relating to the installation, O&M ofWTGs.Ason

June 30, 2005 we have agreements tosupply 62 WTGs with 79.9 MW capacity for wind power

projects to be located in the statesofTexas and Minnesota in the UnitedStates. During fiscal

2003 and 2004, we supplied 24 WTGs with 22.80 MW of nominal output for a wind farm

project developed by DanMar and Associates Inc. in the state of Minnesota in the United

States.

Europe

We have established Suzlon Energy A/S in Denmark as our global headquarters for sales

outside India. We also plan to establish several marketing and project officesfor the European

market. As of March 31, 2005, we employed 15 people in marketing, sales, projects and

services in Europe. We expect our customers in Europe to consist primarily ofpowerutilities,

wind power project developers and private investors. Initially, we intend to market our WTGs

inScandinavia, the Baltic region andSouthern Europe. We may alsooffer customers assistance

in obtaining project finance and also provide technical services relating to the installation,

O&M ofWTGs.

Asia Pacific (Australia and New Zealand)

Marketing activities in Australia and New Zealand are conducted by Suzlon Energy Australia

Pty. Ltd., which employednine people in marketing, sales, projects andservices asofMarch

31, 2005. We believe that both Australia and New Zealand have substantial renewable energy

resources, including wind. Customers are expected to be primarily powerutilities and wind

power project developers. We intend to establish market presence by undertaking a pilot

project todemonstrate our capabilities as a WTG manufacturer. We also intend toundertake

direct sales to both wind power project developers andutilities. We may alsooffer customers

assistance in obtaining project finance and provide technical services relating to the

installation, O&M ofWTGs.

China

We have opened a representative office in Beijing, which employed four people insales and

marketing as of March 31, 2005. As of December 31, 2004, China was among the to p ten


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nations in t s of installe 69 wind power capacit according to t e March 2005 report of

B MConsult ApS. TheChinese go ernmentis encouraging developmentofrenewableenergy

sources and has declared its intention to get 10% of its electricity from renewable energy

sources by 2020. We plan to incorporate a local subsidiary by the end of calendar 2005,through which we plan to construct a fully-integrated WTG manufacturing facility in China.As

the energy market in China is currently dominated by state-owned utilities, we e pect that

these stateowned utilities and theirsubsidiaries will beourprimary customers.

Product portfolio:

Products of purpose (castin )

SE E Castin cater to a wide ran e ofindustries.


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PRODUCT OF (FORGING)

DI ENSION AND SCOPE

Outerdiameterrange: 800mm-5000mm

Highestrange : 30mm-600mm

Weight: 200kg- 4500kg

PRODUCT RANGE

1. Towerflanges

2. Bearing rings

3. Gearring blanks

4. Gas and steam turbinerings

5. Otherring

PRODUCT APPICATION:

1. Wind energy

2. Bearing industry

3. Aerospace

4. Oil & gas

5. Power

6. Material handling

7. Construction & mining


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Distribution channel:

SEFORGE LTD generally used all typesoftransportationfacilitieslike air cargo, by road and

by ship in which there isdifferent agents are there at different locationdifferent agent is there

andsame agents also there so company can access all that thing and also there isdifferent types

like who are workfor company inland andout land also and by ship , air cargo, road all agent

are there fordistribution

Strategy:

The strategy ofthe suzlonfor the marketing are very less because in this industry the product is

industrial base and because ofthis reason the company isnot spending on promotions but they

do inform about their working anddifferent modelsfor the benefit ofthe company.

MARKET SHARE:

The fastest growing marketsover the past three years have been China, France and the US,although the UK hasalsoseensignificant growth.


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Suzlon's market share (combined with REpower) rose to 12.3% thereby making Suzlon the 3largest wind turbinemanufacturingcompany in the world.

In China, Suzlonsshare has come down to 2% in 2008 as against 4% reported in 2007.

Furthermore, due to biased policies of Chinese governments against foreign players, it is

difficult for an international player to retain or enhance its share. So, des pite Chinesegovernments ambitious plans to add 100GW overnext 10 years it will be difficult forSuzlonto avail its benefits.

Europe and US Market: Given the difficult availability of short term finances in Europeand US the market for wind energy is anticipated to relatively remainsluggish till 2010


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Human resource department

According toflippo Human resource management is the planning, organizing directing and

controlling of the procurement, development, compensation, integration, maintenance and

reproductionofhuman resources to the end that individual, organizational andobjectives are

accomplishedHRM is concerned with integration getting all the members of the

organization involved and working together with a sense ofcommon purpose. Human resource

take active role in the modern economic scenario of any country. The abundant Physical

Resources alone cannot benefit the growth of the country without Human Resource

component, which transform physical resources into productive.They are in a technology-

driven industry and they believe that their employees are key contributors to their business

success. Accordingly, they focuson attracting, training and retaining the best people possible.

They believe that a combinationof their position as a leading wind energy solutions provider,

their working environment and competitive compensation programs allow them to attract and

retain talented people. They believe their relationship with their employees at theiroperations

and maintenance centre at vankusawade went on strike to demand revision in wages,

allowance, overtime payments, and changes in working conditions such as lodging and

boarding facilities, transport facilities.Allotment of 233400 equity shares during the year on

account ofexercise ofstockoptions arising out ofthe employee stockoption plan.

Employee Retention and Care

We strive tofoster a feeling ofwell-being inour employees through care and respect. We have

several structured processes including employee mentoring and grievance management

programmes which are intended to facilitate a friendly and cohesive organizational culture.

Off-site activities are encouraged to improve inter-personal relationships. We also

acknowledge the efforts exerted by our employees by organizing an annual celebration called

"Sumilan" where we recognize employees who have shown exceptional talent, sincerity and

dedication. For employeesforming part ofouroperations and maintenance teams and who are

based in remote wind farm sites, we provide residential, medical, recreational and

communicationsfacilities as part ofthe windfarm infrastructure.

Compensation and Performance Management

Our compensation policy is performance based and we believe it is competitive with industry

standards in India. Our compensation packages are adjusted annually basedon industry salary

correction, compensationsurveys and individual performance. From time to time, employees

who have met or exceeded performance standards are awarded bonuses. We also award long-

service bonuses to employees who have completed atleast five years and ten yearsofservice

with us.Other than thisstrike, we have never experienced a workstoppage as a result oflabour


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Ladles

Ladlesofvarying capacity with ladle pre heaters 7mt, 10mt, 15mt, 20mt

Material analysis

Spectrometerfor testing chemical compositionofmolten metal which can analyze 28 element

thermal analysisunit fordeterminationofsolid andliquid temperature ofmetal

Mould shake-out machine capacity machine

Capacity 60mt/hrs -2 nos.

Capacity 30 mt /hrs -1 nos.

Shot blasting machines

Capacity 30 mt/hrs 1no.



Manipulatorforfinishing grinding ofcasting

Machine shop

CNC double column vertical machine centre -10mahcine

Table size 5000mm* 300mm

Travel ------ X-5200MM, Y-4200MM, Z-1500MM

Paintshop

Facilities for grit blasting painting and trying having motorized ground trolley with overhead

electricity monorail

Painttype

Epoxy and polyurethane maximum size of part for painting 5000mm (L)*3500MM

(D)*3000MM (H)

Testingfacilities

Mechanical lab: - UTM with 600 kn capacity impact testing machine hardness testing

machine

Metallographic lab:spectrometer, microscope 40a with camera and image analyzer


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Non destructive testing:

Ultrasonic testing equipments magnetic principal inspection

FORGING

Seforgingsforging plant a sophisticated ISO 9001:2008 facility located hi- tech industrial park

in(SEZ) in vadodara, Gujarat India spread across 200000 sq meter with an installed capacity to

manufacture 42000 fully machinedforged ring per annum having diameterup to 5000mm our

planned isfully equipped to meet the demandofour customerseforge product are consumed

by industries like bearing, wind energy aerospace, oil gas power material, handling

construction and mining , heavy machine anddefense.

Facility and process:

The materialstorage includes a wide range ofsteel grades as per the internationalstandardsor

customer technicalspecificationslike

y Fine grain constructionalsteel e.g. S355NL as per EN 10025-3-2004

y Carbonsteel and alloyed heat treatable steel grades e.g.42CrMo4 as per DIN EN 10083

forslow bearing and gear rings

y High alloyedstainlesssteel e.g.AISI310 or AISI 410 forshroud rings ,turbine rings and

diverse application

HIGH SPEED SAWING CENTRE

y Has high speedsawing machine (HK 180 E160) with ingot feeding magazine weighing

device up to 5 MT labeling machine and plate conbeyor

y Ingots to be cut: diameter 250mm-700mm, length 7000mm maximum, weight 18 MT

maximum

y Billets range length 300mm-1600mm, weight 200kg-4500kg

y TCT saw blade: diameter 1620mm-2000mm

GRINDING CENTRE

Our service shop is equipped with 7 unit for complete maintenance and re sharpening of

tungsten carbide tipped (TCT) saw bladesup to 2000mm diameter

HANDING ROBOTS

2 robotsof 4.5 MT carrying capacity for handling of billets i.e. from sawing centre to rotary

heath furnace and ring blanking press as well as to the ring rolling machine or re-handling

furnace


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MANUFACUTURIGN EXCELLENCE

SEFORGE forging plant hasstate ofthe art equipment and machinery. The ring rolling facility

with high level of precision and automation along with integrated machining ensures

consistency, quality andless cycle time. Our best in class equipment ensures that each product

which leaves the plants, qualifies to the highest globalstandards

FACILITIES AND PROCESS

The heath has diameter of 12m*2.5m width maximum billet height 1600mm maximum

temperature 1330 C with separate control of 4 zones. The maximum heating capacity is

30MT/hr. the fuelused isnatural gas

RING BLANKING PRESS

It has a maximum force of50MN ram stroke 1500mm, and isfully equipped with a 2 station

sliding table, a centering device ,2 swivel arms and integrated piecing device

CENTRAL CONTROL ROOM

The central control room control the automatic line and providessafety using software program

like CARWIN, ROLLTECH, PIECE TRACKING SYSTEM etc.

RING ROLLING MACHINE

It manufacturing ringsofsize 600mm-5000m diameter and 30mm-600mm height.

RING BLANKING AND PROCESS

This process can conduct the upsetting stroke, indenting punch, final upsetting and piercing

operations


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Finance department:

The wind industry has enjoyed a periodofuninterrupted growth of34% CAGRover the past 5

years. To outline our consolidated performance as a group for the first 9 months of the

financial year 2009, our revenue grew from 8,756 crores rupees to 17,277 croresof rupees, a

growth of 97%. The world is now looking for the energy security with the governments,

looking to diversify energy source, to mitigate the geopolitical risk around oil and gas

supplies.

KEY FINANCIAL DATA

Suzlon is the worlds 3rdlargest wind powersupplier*, with a market share of9.8%. Suzlon

has been the market leader in India with more than 4400 MW ofinstalled wind energy projects

in 8 states. Suzlon has maintained the top position with the highest year-on-year market share

since 10 consecutive years. In FY 2008-09, Suzlon had a market share ofmore than 50% in theIndian market.

RATIO ANALYSIS :


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Organizational and group structure

ORGANISATION STRUCTURE

Suzlon is a leading wind power products and services company with a global footprint. The

primary principle shaping the organizations structure across global operations is to infuse

momentum andflexibility indecision-making and execution, with empowered managers.

BOARD OF DIRECTORS

The BoardofDirectors, as repositoriesofcorporate powers, act as a guardian to the Company,

as also the protectors of shareholders interests. The Board of the Company represents the

finest blendofknowledge and experience.

Tulsi R. Tanti - Chairman& Managing Director

Mr. Tulsi Tanti, a qualified Mechanical Engineer, foundedSuzlon Energy Limited in 1995. He

has led from the front to transform Suzlon into the world's third* and India's leading wind

turbine manufacturer. Mr. Tanti has driven Suzlon not as a business, but as a cause

contributing to the world by creating sustainable social, economic and ecologicaldevelopment,

by using the very best oftechnology to help mitigate the global climate crisis.

Girish R. Tanti - Executive Director

Mr. Girish R. Tanti, isone of the Promoters, Executive Directorof the Company

and a sibling of Mr. Tulsi Tanti. He comes with an extensive experience of 11 years in business

management. Since 1995 he has played a vital role in the growth of the business, internationalisation

ofSuzlon and building the brandSuzlon. He transformed the wind turbine manufacturing from a local

dream into an international reality. Mr. Girish Tanti now works in a strategic, supervisory role as a

mentor and is a memberofthe Board

AshishDhawan - Independent Director

Mr. AshishDhawanis the co-founderofChrysCapital, a private equity fund that currentlymanages approximately U.S.$2.25 billion across five funds. Mr. Dhawan is a graduate Mathematics

and Economics from Yale University and a post graduate in business administration with distinction

from Harvard University. He is the Senior Managing DirectorofChrysCapital based in New Delhi and

was also appointed as an independent Directoron the BoardofChrysCapital III


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V. Raghuraman - Independent Director

Mr. V.Raghuraman, an internationally recognizedspecialist in energy management, energy

efficiency, energy policy, regulatory and technology issues is a Chemical Engineer by qualification.

He was Chairmanof the World Energy Efficiency Association and also served the ASSOCHAM as

Secretary General. Armed with his qualification and subject matter expertise he is the currently

Principal Adviser & Chief Coordinator Energy, Environment & Natural Resources of the

ConfederationofIndian Industry (CII) Energy Program.

Pradip Kumar Khaitan - Independent Director

Mr. Pradip Kumar Khaitan is a well-known lawyer and partner of Khaitan& Company,

Advocates. He is a memberofthe Bar CouncilofIndia and Indian CouncilofArbitration, New Delhi.

His areas of specialisation are commercial and corporate laws, tax laws, arbitration, joint ventures,

mergers and acquisition, restructuring andde-mergers. He was appointedon the Board from August25, 2004.

Ajay Relan - Independent Director

Mr. Ajay Relan has an illustrious careerspanning across twenty five years in corporate and

investment banking. Mr. Relan was the head of CVCI in India, a position that he held since the

inceptionof that business in India in 1995. He has servedon the boards of several CVCI portfolio

companies, such asSuzlon, HT Media, Yes Bank, i-FLEX andProgeon, among others. The top ranker

from Delhi University isnow an independent Directoron board.


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INDUSTRIAL PROFIEL

INTRODUCTION

Indian wind energy sector has beendeveloping into the mainstream of industrial activity withactive participation of the private sector. About fifteen Wind Turbine (WT)manufacturers/suppliers with foreign collaborations either asjoint venturesor with technologytransfer arrangements are installing Wind Turbines (WTs) in India. Thesemanufacturers/suppliers, with a few exceptions, are normally supplying WTs of the types

provided by their principals, which are certified by Internationally accredited CertificationBodies. However, these certificates are issued based on the European site conditions andapprovalschemes/technical criteria of the country in which they are carriedout. In addition,the turbines installed in India undergo major/minor changes to suit the Indian conditions.Therefore, all the major stakeholders of the industry expressed the need for establishing thetesting facilities and certification procedures in the country.In view of this, Ministry ofNew and Renewable Energy (MNRE) has established Centre for

Wind Energy Technology (C-WET), as an autonomous institution of Government of India,registered as a society under the Tamil NaduSocieties Registration Act- 1975, at Chennai,Tamil Nadu. C-WET has five units namely, Research and Development (R&D), WindResource Assessment (WRA), Wind Turbine Testing (WTT), Standards& Certification (S&C)and Information, Training & CommercialServices (IT&CS) tosupport all the areasofthe windenergy sector. The Wind Turbine Test Station, an integral part ofC-WET, is being establishedas a Project covering the WTT and S&C Units with the technical support and financialassistance of DANIDA, Denmark. RISO National Laboratory (RISO), Denmark, wasappointed by DANIDA, as a Technical Consultant of thisProject. MNRE has been issuingguidelines and recommendations periodically tothe wind energy sector, to address the issues related to maintaining quality ofthe WTs installedin India. As per the guidelines dated 24.05.1999, it was stated, Certification by foreign

agencies willnot be required henceforth ; manufacturersofWTs will provide self-certificationabout the quality and performance oftheir equipment ; thisself certification procedure will befollowed tillsuch time that Testing/ Certificationfacilities are established within the country.While the establishment ofC-WET in termsofinfrastructure and training is in progress, the Wind Turbine Testing Station,the facility for the Testing and Certification issimultaneously made partly operational to meetthe immediate needs of the wind energy sector in the areas of testing and certification

provisionally.In this context, a provisional scheme namely, Type Approval -ProvisionalScheme (TAPS), for provisional certification and corresponding requirementsof provisionaltype testing and measurements, is formulated in consultation with RISO. The Wind EnergySector may now avail thisfacility for provisional type testing and provisional type certificationtill the formation and issue of final Type ApprovalScheme (TAS) and formal accreditation.TAPS is intended to meet the requirementsofmanufacturers/suppliers, windfarm developers,financial institutions, insurance companies, State Electricity Boards, State Nodal Agencies andother related Government /regulatory bodies. TAPS aims to promote procedures andrequirements for the establishment of uniform codes, standards and technical criteria fordesign, manufacturing and operation of WTs. TAPS comprises of principles, procedures,requirements and the technical criteria for certificationofWTs in India, addressed to applicantsandothers involved in the scheme. TAPS isformulated in line with national and internationalrules, codes andstandards relevant for certificationof WT. In TAPS, technical requirements


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have beenframedfor topics, which have not been covered currently by the existing standardsin India. The procedures and requirements for obtaining the necessary approvals andcertificatesfor manufacturing system (production and installation) evaluation including qualitymanagement system, which the WT manufacturer/supplier must comply with, are described in

TAPS. The requirements of aspects to be fulfilled and the corresponding documentationrequirements are alsodescribed. TAPS will be applicable only to the grid connected, horizontalaxis WT of the rotor swept area greater than 40 m2. The procedures in TAPS have beenformulated in consultations/discussions with Indian Wind Turbine Manufacturers Association(IWTMA). Compliance with TAPS and certificate issued by C-WET to this effect do notabsolve any person, organisation or corporation, of the responsibility for following andadhering to all applicable guidelines, procedures, rules, regulations, and protocols. In thefollowing Chapters, both Type Approval and Type Certification have the same meaning. TAPShas four Chapters. The first Chapterdeals with Introduction and the second Chapterdealswith Approval AndOrganisation. The third andfourth chaptersdeal with Definitions andProvisional Type Certification. The List of Acts, Standards and Guidelines, which areapplicable to wind energy sector and TAPS, is given as References.

Environmentalfactorsdetermine by suzlon energy

COMPETITIVE SENARIO

Factors Affecting Wind Energy Segment

Economic Growth:The relationship between economic growth and wind energy segmentcan be given by:-

High Economic Growth=High IndustrialProduction=High Demandfor Electricity=BetterSalesPossibilities for Wind Energy Industry.Demand for electricity depended on the economicgrowth of India and countries, such asUSA and China that are huge market. As a result anyeconomic downturn in theseeconomies will have an adverse impact onSuzlons business andfinancials.

Current & Future OutlookofGDP

Despite the globalfinancial crisis Indian economy registered GDP growth of6.1% in thefirstquarterof2009-10 positioned against the growth of5.8% in the previous quarter and7.8% inthe same period of the previous year. Such impressive performance substantiatesIndias

position asone of the best performing economies. Owing to which CII has raisedthe growthtarget for 2009-10 to 6.5-7.0 percent

Cost Competitiveness:

The demand for wind power plants is dependent on the cost ofwind-generated electricitycompared to electricity generatedfrom othersourcesofenergy.

Hence, limited cost andsuppliesofoil, coal andotherfossilfuels are key factors indeterminingthe effectivenessofwind power.


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Interest Rates:

Windfarm project require higherupfront capital investment per kWh ofenergy produced when

compared tofossilfuel-based power plants. As a result conditionand availability offinancingavailedfor wind power project significantly affects thebusiness, financial condition and resultsofoperations. Higher interest rates increase thecost of investment, making investment in windenergy less attractive.- Investment in wind power projects is considered to be riskier.- Therefinancing ofwind power project isdone at a higher rate.- Project funding has taken a hit duetonon availabltiy ofcredit in the wake offinancial crisis

Regulatory Framework:WindPower Industry worldwide issupported by grants andseveral government initiatives and

incentives. Hence, any eliminationofthe following caneliminate the competitive advantage ofthe industry.Current State- Indian and global government have enacted have enacted

legislations topromote expansionof renewable energy sources.- Fiscal incentive scheme, taxincentives and public grants, such as preferentialtariffson power generated by WTGsor tax

incentives promotinginvestments in wind power.- State governments have even give windpower generator with wheelingfacilities.- Wind power generators are allowed to take power

from the grid, tooffsetthe impact of intermittent wind.- Country specific targets toobtain a setamount of electricity from renewableenergy sources.- Global efforts to reduce carbondioxide

emissions

Local Sentiments:Local communities have at times opposed the construction of windpower projects due to

concerns about:-- Aesthetic unappealing- Impact onflora, due to killing ofbirdsInsome countries there are legislations pertaining to height ofWTG and minimum distance

between the power plant andurban area. Any further restrains can reduce the growthprospectsofwind power industry.

Technological Obsolescence:

Wind energy sector issensitive to changes in technology.Hence a firms inability todevelopfinancially viable and cost efficient WTG on anongoing basis can dilute its competitiveadvantage.

Other Factors:

The competition in the global wind energy market is governed byperformance of WTGs,reliability, product quality, technology, price, and the scope andquality ofservices, includingO&M services, and training offered to customers.If competitors come together through joint

ventures and other coo perative agreement, thatcan have impact the leadership position ofSuzlon.Growing competition can either result in the reductionof the market share of the firms

orreduction in margins, ifthe firm plans to reduce its prices.


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HighlightsofGlobal Wind EnergyMarket - Total installed capacity of152000 MW by 2009-end- Estimated annual capacity expansionofover 30000 MW- Executionofsome wind energy projects which have been postponeddue to

financing challenges, new regulationsor bureaucratic delays- Turnoverof40 Billion in 2008- China doubles its installations, more than 12 GW ofwind turbines installed- North America and Asia bullish on growth as Europe slowsdown- Global capacity ofaround 1500000 MW isfeasible by 2020- USA reports maximum numberofinstallations.- The USA and China accountedfor 51 % ofthe wind turbine sales in 2008- Generated 260 TWh electricity in 2008- Currently contributes to 1.5% ofglobal electricity consumption and isexpected to contribute 12% by 2020

Market share:

Suzlon commanded 7% market share globally and 58% in India in 2008.]


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Industry spectrum:

PROCESS OFMAKING WTG (WIND TURBINE GENERATOR)

y FOUNDRY ANDMACHINING.

y FORGING &MACHINING.

y GEARBOX

y BLADES

y PANELS

y GENERATOR

y TOWER


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GOVERNMENT RULE AND REGULATION:

WindPower Industry worldwide issupported by grants andseveral government initiatives andincentives. Hence, any eliminationofthe following caneliminate the competitive advantage of

the industry.Current State- Indian and global government have enacted have enactedlegislations topromote expansionof renewable energy sources.- Fiscal incentive scheme, taxincentives and public grants, such as preferentialtariffson power generated by WTGsor taxincentives promotinginvestments in wind power.- State governments have even give wind

power generator with wheelingfacilities.- Wind power generators are allowed to take powerfrom the grid, tooffsetthe impact of intermittent wind.- Country specific targets toobtain a setamount of electricity from renewableenergy sources.- Global efforts to reduce carbondioxideemissions

Government Policies

The Ministry has been issuing guidelinesfor wind powerdevelopment since July 1995 inorderto bring about balanced growth ofthe sector. These guidelines relate to preparationofdetailed

project reports, micro-sitting, selectionofwind turbine equipment, operation& maintenance,

performance evaluation, etc.

The tariffreview period isof3 years which is toolong because in this much periodoftime

there is huge possibilitiesofchanges. So this much long time for tariffreview isnot suitable at

this point oftime.

In India each state is having itsown policy for wind energy. The harmony is missing between

states. So it can create complexity fordoing business indifferent states.

Tariffprocurement rates are alsodifferent indifferent states which can create a comparative

advantage ordisadvantage forstatesfor establishing wind mills.

Insome stateslike Rajasthan and Maharashtra land allotment process isso much complicated

while its comparatively easy in Gujarat.

Insome stateslike there is a long processfor approving a project while some stateslike

Rajasthan project approval is givenon single window clearance basis.

Changes insafety, health and environmentallaws:

The mainlaw affecting the windfarms is the laws regarding safety, health and environmentalissues, thus any change in these regulations will affect the industry in that manner.

Central Governments Incentives

Energy buyback, power wheeling and banking facilities.

Sales tax concession benefits.


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Electricity tax exemption.

Demand cut concessionoffered to industrial customers who establish power generating units

from renewable energy sources.

Capitalsubsidy.

Environmental Framework

Economic:The relationship between economic growth and wind energy segmentcanbe given by:-

High Economic Growth=High IndustrialProduction=High Demandfor Electricity=BetterSalesPossibilitiesfor Wind Energy Industry.Demandfor electricity dependedon the economicgrowth of India and countries, such asUSA and China that are huge market. As a result any

economic downturn in theseeconomies will have an adverse impact onSuzlons business andfinancials

The Average GDP growth rate of India is between 3.84 to 9 from 2002-03 to 2007-08,It has

been increased more than double over a period. The GDP rate is sign of boosting industrial

revolutionsooverall productionlevel increased and it needs more electricity tofulfill it so that

it would be tremendous support to wind turbine manufacturers. Along with that the service

industry is also increasing which accounts for the sizable amount of energy. From the

experience ofthe developed countries we couldsay that as the economy increases the emission

ofCO2 increases, thus the wind isone ofthe few sources that can keep the balance innature.

And the above graph shows that, though there isfluctuation in GDP rates productionofwindelectricity is increasing because ofits environment friendly nature and its cost effectiveness..

Political:

Govt. of India and state govts.have developed suitable policiesandguidelines for providingtechnical help, financialsupport andvariousother incentivesfordevelopment ofwind power inthecountry. These include R&D activities fordesign anddevelopment of low cost indigenouswind energy harnessingtechnologies, dissemination of the developed technologiesthroughdemonstration projects, setting up of the commercialwind farms through central and stategovernment subsidy,providing financial incentives to potential entrepreneurs etc.


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Social:

Technological:

Wind energy sector issensitive to changes in technology.Hence a firms inability todevelopfinancially viable and cost efficient WTG on anongoing basis can dilute its competitiveadvantage.

Legal:A host of fiscal incentives and facilities are available to both manufacturers and users ofrenewable energy systems, which include:

100 percent accelerated depreciation for tax purposes in the first yearof the installationof

projects/systems.

No excise duty on the manufacturing ofmost finished products.

Low import tariffsfor capital equipment and most ofthe materials and components.

Soft loans to manufacturers andusersfor commercial andnear commercial technologies.

Five-year tax holiday for power generation projects.

Remunerative pricing under the alternate power purchase policy by state government for thepower generated through renewable energy systems, fed to the grid by private sector.

Facility for the banking and wheeling ofpower.

Facility for the third party sale ofrenewable energy power.

Financial Incentives/Subsidiesfordevices with high initial cost.

Involvement of women not only as beneficiaries but also as active contributors in the

implementationofrenewable energy programs.

Encouragement tonon-governmentalorganizations (NGOs) andsmall entrepreneurs.


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Special thrust for renewable energy in Northeastern regionofthe country. 10 percent ofplanfunds earmarkedfor the Northeast towards enhanced andspecialsubsidies.

Allotment oflandon a long-term basis at tokenlease rent andsupply ofgarbage free ofcost

at project site by state governments, with res pect to projects on energy recovery frommunicipal waste.

Modal Application:

Strategic Advantage Profile:

Suzlon Wind Energy limited - Porters Five Force Analysis

The Intensity of Competitive Rivalry Medium Although the market isdominated by two

players but the extent ofcompetitive rivalry can be termed as medium because there is a scopeforforeign players.

Bargaining Power of Suppliers Medium High bargaining power of suppliers can be

attributed to multiple requirement ofnumber of components, which are either sourced fromopen market or imported. However, this issue has been resolved due to widespread verticalintegration. Yet some components have long delivery time which gives medium bargaining

power tosuppliers.

Bargaining PowerofBuyers LowSince its a relatively new sectorstill in the developmentstage ofthe life cycle so there can be numberofcases where supplier governs the terms whencompared to the buyers.

The ThreatofSubstitute Product LowSince wind power isone ofthe cheapest sourcesofenergy so the threat ofsubstitutes is relatively low


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The ThreatofNew Entrants Medium Since its a capital intensive industry soonlymajor players can afford enter the market either individually or in the form ofJVs.

ETOP (environmental threat and opportunities and profile)

Environmental: India has the fifth largest electricity generation capacity in the world

Transmission& Distributionnetworkof6.6 million circuit km - the thirdlargest in theworld

Potentialfor growth in thissector (demand exceeding supply)

Increasing focuson renewable sourcesof energy Government presence in the sector(encouraging entry offoreign players)

No barriers to entry

Threat: Competition todomestic playersfrom foreignPvt players as 100% FDI permitted by

government in Generation, Transmission& Distribution

Not a lucrative optionfor investors(ROE )

Rise in price ofraw materials

Tariffs are distorted anddonot cover cost

Opportunities:

huge population base

Opportunities in Generation

Ultra Mega PowerPlants (UMPP) 9 projectsof4000MW each.

Coal based plants at pitheador coastallocations whichare untapped. Hydel power potentialof150,000 MW isuntapped asassessed by the Government of

India.


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Renovation, modernisation, up-rating andlife extensionofold thermal and hydro powerplants.

Profile:

A recent study by consultancy major McKinsey estimatesIndia's power demand to increasefrom the present 120 gigawatt (GW) to 315 GW335 GW by 2017, ifIndia continues togrow atan average of8 per cent over the next 10 yearsPage 161WIND POWER SECTOR IN INDIA 2010This would require a five- to ten-fold rise in powerproduction, entailing investments worthUS$ 600 billionoverthe next ten years.Tofeed its rapidly growing economy, India is planningto getan additional 60,000 MW of electricity from various hydropowerprojects by the endof2025.

The government targets providing electricity for all by 2012.Under the Rajiv Gandhi GrameenVidyutikaran Yojna, theMinistry ofPower plans to electrify 120,000 villages in thecurrent Five

YearPlan (200712)

BCG MATRIX

Value chain:


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Suzlonsglobal Value Chain

R & D and Technology Focus

y Best ofall worlds technology strategyy Product development in Germany

y Product and process Engineering in Indiay Gearbox R&D in Belgium (Hansen)

y Generator technology from Austria (Elin)

Strong Presence in Keygrowth markets

y India, China, USA, Brazil, Italy, Portugal, Australia, Korea

Global manufacturing Capabilities

y Vertical integrationfrom components to turbiney Facilities in Belgium, China, India and the USAy 4,200 MW ofcomponent manufacturing capacity by FY 2008y Experienced workforce in both low labour cost economies as well as advanced

economies

Domestic growth strategy

From small beginnings in 1995, Suzlon has tried to become a fully integrated company capableofbuilding wind turbines and installing andoperating windfarms. Suzlondelivers end-to-endwind power solutions from assembly, installation to commissioning. ]Suzlon has benefitedfrom a favourable taxscheme in India, designed to promote renewable energy investment anddevelopment. Currently, the income-taxlaws allow 80 percent ofthe cost ofthe windmill to beset off against taxable income. Furthermore, if the owner can show itself as a power sectoroperator, it can get a tax holiday for 10 yearsfor income from power generation. Thussuzlonhas built a profitable business at home using India'slow- cost, highly skilledlabourforce , tax

benefits and Vertical Integration through joint ventures and acquisitions, it isnow pursuing aglobal vision.

Global growth strategy

Suzlon isfocusing on globalizing through a numberofmethods. First, it benefitsfrom India'sdepreciating currency, as its products are seen as cheaper by the rest of the world. Second,Suzlon offers varying packages in different places depending on the price levels; in China,where prices are low, they offerfull power plants, but in the U.S., they install cheaper turbinegenerators. This price discrimination allows Suzlon to cut their costs while maximizingmargins. Finally, Suzlon is increasing its global reach, with its R&D branch in Europe,


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