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.|
Early days
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.
The journey
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.
They are:
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.
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