SPARK OF THE CORPORATE
Turning adversity into opportunity, and then making good of it to create a multi-billion dollar pan-geographic corporation (operations spread across 14 nations spanning six continents, with its global management headquarters in Amsterdam, the Netherlands; its international marketing headquarters in Aarhus, Denmark; and its India operations headquarters in Pune) is a rare occurring that is worthy of an epic. This, the resolute Tulsi Tanti, could bring about with a combination of qualities that set such men of caliber apart – an unbridled ambition, an acute sense of enterprise, survival instincts, and a great deal-making ability. He has always followed four mantras (more of them later in this write-up) that have helped his success and growth (ranks among the 10 richest men in India) along with that of his baby -Suzlon Energy -the world's third largest wind turbine maker. While the mantras -or call them maxims if you will- may be sector-specific but they have applicability in a host of other ventures too, prompting some to say that they have attained a rule-of-the-thumb kind of status in the realm of entrepreneurialism. Mr. Tanti will, without any shred of doubt, figure amongst the foremost personalities to emulate, if one wants to.
Mr. Tanti hails from Rajkot in Gujarat. Spurning their father's construction business in Gujarat, Tanti and his three siblings moved into the textile business in the 1980s. Led by Mr. Tulsi Tanti, a Commerce graduate and a diploma holder in mechanical engineering, the brothers began their business lives by setting-up a textiles industry in Surat called Sulzer Synthetics Pvt. Ltd., later changed the name to Suzlon Synthetics Ltd., and, thereafter, to Suzlon Fibres Ltd. They started processing polyester yarn, and then graduated to making furnishing fabrics. But this venture was beset with obstacles and infrastructural bottlenecks. The prominent amongst them was an acute power-shortage owing to frequent outages in the power grid, which so ostensibly led to a huge cost of acquisition and, consequently, hurting the company's finances badly.
Birth of the Spark
Since the power shortage and the burgeoning cost of acquisition were denting into the growth prospects of the company, Mr. Tanti was looking for alternatives to meet the energy needs of his company.
One of which was to invest in two windmills in 1990 sourced from Vestas. It is here that Mr. Tanti realized the huge potential of wind energy which eventually led to the formation of Suzlon energy in 1995. With this discovery, and the then bleak prospects of the textile industry, he gradually exited from the textile business.
It is important to note here that even after shifting to wind energy they had to encounter severe challenges. One was the mistrust of banks to lend capital for such undertakings as some early propagators had nothing but swindled the capital raised in the name of setting up wind energy ventures which were, at best, ill-conceived and, moreover, terribly mismanaged, and hence their (banks) disinclination to align with any such adventure anymore. Compelled, the brothers sold-off some family property to put together about $ 6,00,000 as seed capital to start Suzlon. Even as the problem of raising capital was overcome, there was another drawback. The brothers, all good businessmen, and while they appreciated its potential, did not know a thing about wind energy. The roadblock was not easy to overcome as none of the existing players of the field were willing to sell / share the technology without having an equity stake in the venture, especially the Europeans who were the pioneers of the field. Finally, Sudwind GmbH Windkrafttanlagen of Germany, agreed but with a pre-condition that Suzlon bought ten turbines from it. The saga of Suzlon was initiated with a wind farm project in Gujarat in 1995 with a capacity of 3.5 MW. The customer was IPCL which used to supply raw materials for the yarn business of the Tanti's.
In due course, a golden opportunity came knocking Suzlon's door when Südwind, its initial collaborator, went into bankruptcy in the late 1990s and Tanti seized the opportunity, acquiring parts of the German company's R&D division. Interestingly, instead of simply moving the technology to India, Mr. Tanti hired the former Südwind employees and set up an R&D laboratory in Rostock, Germany. Existing designs were tweaked a little, and fine-tuned at the laboratory, which also served as the training and grooming ground for young Indian technicians, who would later return to India to build turbines with their newly acquired expertise. One success led to another and, in no time, Suzlon was manufacturing wind turbines. Business flowed, and in just about a shade over a decade, it had supplied close to 6000MW of wind energy the world over. In fact, up until the global economic crisis of 2008, its order book had more than it could supply!
The brothers saw the opportunity for a producer to not only build the wind turbine but also provide maintenance and service. The company revolutionised the way the industry functioned; instead of different stages of production being shared between different companies, Suzlon manufactured, installed and maintained all their wind turbines themselves. They also allowed customers to use wind power without having to own a turbine on their own land; instead allowing the customer to buy the output of a specific wind turbine in a wind park (a large collection of turbines in one place).
After having tasted success in all its initial endeavors, and growing at almost twice the rate of growth of the industry itself Suzlon, gradually, expanded laterally as also diversified to some extent with a great degree of success with a series of shrewd stake acquisitions.
Suzlon now engages in the design, development, manufacture, and supply of wind turbine generators in the Americas, Asia, Australia, and Europe. The company's product portfolio includes drive systems, annular generators, and grid connection systems, as well as towers and foundations comprising tower constructions, tubular steel towers, precast concrete towers, and foundation constructions. It also involves in the sale/sub-lease of land; infrastructure development; sale of gear boxes, and foundry and forging components; and power generation operations. In addition, the company offers land sourcing and permitting, wind resource assessment, and erection and commissioning services, as well as operations and maintenance services for projects.
All this, for sure, wasn't served on a platter. It could only have been possible with some very astute leadership and strategic thinking. Coming to which, one would do well to know of the four maxims that Mr. Tanti has followed right since his inception into the wind energy space, whose application by clean-tech start-ups he strongly advises.
Good deal-making and effective decision-making abilities have long been the traits of most successful businessman. Mr. Tanti inhibits these in full-measure.
For example, his shrewd business sense and a tremendous deal-making ability is evident in the fact that he was able to acquire 89% voting rights of the German power-maker, REPower (which was, subsequently, sold to ZF Friedrichshafen in 2011), by putting up a sum of money upfront that can only be considered as paltry by any standards. Suzlon, eventually went on to acquire 34% stake in the company, outbidding the French nuclear energy giant Areva, and subsequently increased it to 63.5%. This was considered as a master-stroke by some, while others branded it as a financial coup. Incidentally, it was also the largest acquisition an Indian company had ever made in Germany.
When we say timely and effective decision-making, then the transaction involving Edison International, California's largest utility owner, just after Suzlon had entered the rotor blade market in 2003, deserves mention. Edison cancelled the order for the supply of 150 MW, which was to be supplied in the second phase, after the delay in the first phase installation owing to cracked blades. Mr. Tanti, quickly seized of the situation that Suzlon would not have been able to supply for the second phase of installation capacity which would have led to huge losses for Edison and too much collateral damage for Suzlon -okayed the cancellation. This decision turned out to be a very rewarding one as Suzlon sold the 150MW, which it didn't supply to Edison, to another customer at a much higher price. So it turned out to be a win-win situation for all the parties involved, while also avoiding the severance of Suzlon's association with Edison.
The REpower stake acquisition was part of Suzlon's global expansion drive which included acquisition of Hansen Transmission, a Belgian maker of wind-turbine gearboxes; building a rotor blade factory in Minnesota (US), in addition to investing about $60 m in a rotor-blade factory (reported to be on the verge of being sold for the same amount) in Tianjin, China. Mr. Tanti aims to make India a wind-power export hub of the world. With the company growing and expanding the way it is, and with his twenty-five years of experience in various technical and commercial areas, apart from the success that he has had -and has- at everything he did and does, Mr. Tanti looks all set to accomplish this vision of his.
By the year 2005 Suzlon was the fastest growing among the world's biggest turbine makers; by 2007 i.e. in less than 13 years since its inception, Mr. Tanti had created a business that was valued at Rs. 57,000 crore, and by the end of 2011, Suzlon was:
It wasn't as if all was hunky-dory for Mr. Tanti. The global financial crisis, and the economic downturn triggered, in 2008 almost wrecked Suzlon. Orders dried up and the fortunes of the company looked like having caught up in a downward spiral. So much so that Mr. Tanti's net worth more than halved from about $930 m in November 2008 to $ 400 m. But Mr. Tanti held firm and has led the company into the path of recovery and consolidation by changing strategies, and demonstrating yet again what a truly champion leader he is. During the 36-month revival period, Mr. Tanti revisited every step he had ever taken, questioned every key business assumption, virtually tore down every element of his strategy and rebuilt a whole new business.
Take, for instance, the cost of wind energy itself. Suzlon was always one of the lowest cost producers of wind turbines in the world after the Chinese. In the past 18 months, Mr. Tanti has used the crisis to restructure the business even further. Around 2007-08, the cost of a unit of power from wind energy cost Rs. 5, compared to Rs. 2 to Rs. 2.75 for coal. Today, the cost of wind power has come down to between Rs. 3.25 and Rs. 3.5, while the price of power from coal has increased to Rs. 3 to Rs. 3.10.
Today, as the wind energy market begins to show some recovery, Suzlon has once more emerged as one of the fastest growing wind energy players, and the most profitable as well (gross margins of 35 %).
Mr. Tanti has been involved in Suzlon's operations since inception. He has been the Chairman of the Board of Suzlon Energy Ltd. since 1995. He has been Chairman of the Supervisory Board at REPower Systems AG since June 21, 2007. Mr. Tanti served as Chairman of Hansen Transmissions International and as its Director since May 10, 2006. He serves as a Director of SE Forge Ltd. Mr. Tanti is also the President of Gujarat Chapter of Indian Wind Turbine Manufacturers Association.
Another interesting and inspiring aspect of Mr. Tanti and his brothers is their down-to-earth selves. Unlike most billionaires, they are not indulgent at all. The company's Pune headquarters occupies a modest fifth floor of an office building. Mr. Tanti lives with his wife in a rented apartment next door to his brothers. Their two children attend university. The large clan gets together for meals as often as possible.
Corporate Social Responsibility
Suzlon is perhaps one of the very few companies in the world that acknowledges the fact that if we are to leave the world a better place than the one we inherited, it is necessary to go beyond business interests and boundaries. Obviously, the distinct, refreshing yet practicable thought process and the qualities of its leader have rubbed onto the basic fabric of the company. Therefore, determined to go beyond charitable and philanthropic acts, Suzlon has initiated an integrated approach in designing Corporate Social Responsibility (CSR). Accordingly it started the ‘Suzlon Foundation' in 2007 with a three-pronged implementation strategy. The company calls them Transformative Corporate Social Responsibility, Responsive Corporate Social Responsibility, and Proactive Corporate Social Responsibility.
Transformative Corporate Social Responsibility Programs are aimed at changing the way business is done at Suzlon and focus on Suzlon's internal environment and employees. Minimizing footprints and engaging employees to be responsible civil society members are the goals of Transformative Corporate Social Responsibility Programs. Responsive Corporate Social Responsibility Programs aim to contribute towards the achievement of Millennium Development Goals.
The aspiration to champion the cause of renewable energy and guided by the corporate vision of 'Powering a Greener Tomorrow', the Suzlon Foundation designed the Proactive Corporate Social Responsibility Programs. Proactive initiatives support national and international programs to deal with global issues such as climate change/global warming, natural disasters, international peace, youth development, cultural diversity, human rights, equity and justice.
Clearly, one can see that the genesis of the ‘Suzlon Foundation' stems from the ideology of its founder and CMD, Mr. Tulsi Tanti, which has driven Suzlon not as a business, but as a cause – contributing to the world by creating sustainable social, economic and ecological development, by using the very best of technology to help mitigate the global climate crisis. It is no wonder then that the foundation has found acceptance from various local stake-holders through partnerships for programs with common goals in various focus areas such as livelihood, education, health, civic amenities, and environment. It now has a presence in 8 states and 2 UTs across the country.
|Hope viewers caught up the spark...|