How Tulsi Tanti sailed Suzlon during the turbulent weather?

Globally solar and wind project developers face the risk of regulatory uncertainties and changing policies. Typically, this business is incentive driven business and as incentives are withdrawn by government in an unexpected/sudden manner, the solar and wind companies face the burnt of these changing policy regimes. The typical incentives offered by governments are in the form of tax credits, low cost of financing, feed in tariffs and production related to incentives/generation-based incentives.

In early 90s when American Government withdrew these benefits from the wind developers, many of the European wind power players operating in US, went bankrupt and started identifying some other destinations. In early 90s Government of India introduced the similar benefits to the wind developers in the form of feed in tariffs, 100% accelerated depreciation benefits, import duty benefits, generation-based incentives and other facilities for land and power evacuation.

Immediately after inception in 1995, Suzlon became one of the major global players among top 5 wind power manufacturers. In 2005, company also came up with Initial Public Offering (IPO) and it was at its peak during 2008 before the global recession hit in 2008. The major reasons for continuing decline of Suzlon was the rising debt levels due to investments in acquisition of companies such as RE Power, and Hensen Transmission. The cascading impact was also due to rejection of wind blades exported by Suzlon to one of the American company named Edison Power.

Till 2008, Suzlon was having 100% year on year growth and post 2008 due to global recession, debt levels rose. In 2009, the company’s net profit felled by over 300%. The increasing debt levels in the company reached to over Rs. 17000 crores in 2015 and it was very difficult for the promoters to manage the cash flow in the company. The yet another blow to the company came in 2012 when Government of India withdrew the accelerated depreciation benefits from 80% to 40% and reverse bidding was also introduced for the wind projects. The tariff levels in wind power projects prior to reverse bidding used to be over Rs. 5/kWh which came down to about Rs. 2.8/kWh.

While the other Indian players such as Inox Wind are facing bankruptcy, Tulsi Tanti could still manage to sail Suzlon through the rough weather. The company’s debt levels have come down to about Rs. 2800 crores and a rights issue is also on its way to bring down the debt levels to Rs. 1800 crores. It was Tulsi Tanti who could manage the roller coaster journey of Suzlon through multiple ups and downs. It was his perseverance to stand tall and face all challenges and rescue the company from bankruptcy.