Chairman and managing director of the world’s fifth largest windmill maker Suzlon Energy LtdTulsi R. Tanti, 50, is confident he’s finally got a tailwind behind him.
Last week, on 1 September, Tanti struck a deal to buy Portuguese construction company Martifer Group’s 22% stake in Repower Systems AG, the last step to complete his acquisition of that company, giving Suzlon a 90% holding and access to the German wind turbine maker’s technology which it needs, some analysts say, to increase the quality of its own turbines that have suffered quality problems in both India and the US.
Creating value: Tulsi R. Tanti, chairman and managing director of Suzlon Energy, says component knowledge and technology can lead to a fully vertically integrated company. Ashesh Shah / Mint
Tanti says Suzlon has a clear advantage over rivals because, unlike other wind turbine companies that are either assemblers or manufacturers, it is vertically integrated: It builds wind towers, turbines, gearboxes, control panels and rotor blades. With access to Repower’s technology , he says in an interview, Suzlon can take a shot at becoming one of the world’s top three firms in wind energy. Edited excerpts:
You have a whole year left to acquire Martifer’s stake in Repower. Why did you buy them out now, when you had a choice to close the deal next year?
At the time of the Repower acquisition last year, we had a two-year time slot. There was some uncertainty regarding Areva (the French nuclear energy company that was in the race for Repower too). Areva had an option to sell their stake to us after one year. They also had the option to continue as a Repower stakeholder. We were clueless about when they would decide. Fortunately for us, Areva’s management was not interested in continuing as a stakeholder in Repower. They offered to sell when the specified one-year time frame ended.
As the Areva uncertainty got over, we decided to complete the buyout of Martifer’s stake. The opportunity and benefit for us is that now we have an early integration at the company level as well as at the group level. As per German laws, we had gone for a domination agreement. For a domination agreement, a minimum stake of 75% stake is mandatory...
That’s very different from what you have done with Hansen Transmissions (the Belgian gearbox maker that Suzlon acquired before Repower)?
Hansen Transmissions (International NV) is in a different business. They make gearboxes for wind turbines. Hansen is an independent company listed on the London Stock Exchange and integration with it is not required. We are running it at arms-length basis. They are key suppliers to Suzlon and Repower.
Hansen being an independent company gives huge comfort to other customers, including leading wind turbine makers like Vestas (Wind Systems AS) and Gamesa (Corporacion Technologica SA)
In the case of Repower, we are both in the wind turbine business. So integration is required for our growth strategy.