Indian Entrepreneurs

Tulsi Tanti Profile

Achievement: Chairman of Suzlon Energy Ltd, Ranks among top 10 richest men of
India.

Tulsi Tanti is the Chairman of Suzlon Energy Ltd, a company dealing in wind
energy. He is one of those first time entrepreneurs who saw potential in an inchoate
idea, ventured into it, and made it big. Today, he ranks among top 10 richest men of
India.

A commerce graduate and a diploma holder in mechanical engineering, Tulsi Tanti

originally hails from Gujarat and is presently based in Pune, Maharashtra. Tulsi
Tanti was earlier into textiles. He started his textile business in Gujarat. But he
found that the prospects stunted due to infrastructural bottlenecks. The biggest of
them all was the cost and unavailability of power, which formed a high proportion of
operating expenses of textile industry.

In 1990, Tulsi Tanti invested in two windmills and realized its huge potential. In
1995, he formed Suzlon and gradually quit textiles. Suzlon Energy is the sixth largest wind energy company in the world
and the largest in Asia. It is presently building what will be among the world's largest wind parks of its kind at 1,000 MW
capacity.

Suzlon is currently concentrating on global expansion drive. It recently acquired Hansen Transmissions, a Belgian maker
of wind-turbine gearboxes. Suzlon is also building a rotor-blade factory in Minnesota and has invested $60m in a factory in
Tianjin, China. Tulsi Tanti is poised to make India a wind-power export hub.

http://ia.rediff.com/money/2006/jun/09forbes.htm?q=bp&file=.htm
Tulsi Tanti: India's 'Wind Man'

June 09, 2006

Confronted in 1994 with escalating power costs, Tulsi Tanti's young

textile business was in dire straits. With survival at stake, Tanti chanced
upon a solution that was literally blowing in the wind. Commissioning two
windmills to supply electricity for the family's factory in Gujarat, on India's west coast,
he realized that he had stumbled onto a promising business opportunity. In a power-
starved nation, renewable energy has a favored future.

India's power is woefully inadequate during summer months when temperatures soar to
115 degrees Fahrenheit and demand peaks. In Delhi, the national capital, a recent heat
wave compelled the government to mandate early shuttering of stores and to ban home
air-conditioner use until after 9 p.m.

"Our country needs power for its economic growth, and clean, green power is the best
option," says Tanti, 48. Acting on that belief, he radically shifted his enterprise into what
is now Suzlon Energy, which just reported annual revenues of $850 million. That was
nearly double the previous year.

Since changing course in 1994 Tanti has become Asia's foremost wind man and one
among India's growing crop of new billionaires. Suzlon Energy makes wind turbines,
industry jargon for modern windmills, to generate electricity. The 70 per cent stake that
Tanti and his three brothers own in their Bombay Stock Exchange-listed company is
worth $4.3 billion. The stock has risen 60 per cent since Suzlon's first daily close last
October, giving Tanti an entrée into the billionaire ranks.

Now situated in Pune, a city known for its engineering skills, Suzlon is a prime example
of India's emerging story in manufacturing, less told than the technology- services tale. A
fellow Pune billionaire, Baba Kalyani, has built Bharat Forge, which makes auto chassis,
into a world beater. Tanti wants a similar status for Suzlon.

The company already ranks as the world's eighth-largest producer of wind energy in
terms of installed capacity to date. Tanti is aiming high and wants to close the gap with
Suzlon's biggest European competitors, Denmark's Vestas Wind Systems, Germany's
Enercon and Spain's Gamesa. Suzlon's surging revenues are only one-fifth those of
Vestas, but the Indian outfit has been consistently profitable for six years. Vestas made
losses in the last two years.

At home, where it still makes 90 per cent of its sales, Suzlon has 35 per cent of the
market. The country is among the top five wind power users, which collectively account
for 70 per cent of global capacity. With its mission to provide "Power for all by 2012"
India's federal government has introduced legislation making it compulsory for electricity
distributors to get a specified quantum from renewable energy sources.

There is a separate ministry for nonconventional energy, which has estimated the
country's capacity to generate wind power at 45,000 megawatts, more than ten times
current installed capacity.

Wind power has its critics, one beef being the noise that neighbors of turbines have to
endure. But densely populated India in fact has large tracts of open land, mostly in
remote rural areas. About 15 to 20 acres are needed for a 1-megawatt installation.

Suzlon has built Asia's largest wind farm, with an installed capacity of 500 megawatts,
near Kanyakumari, on India's southernmost tip, where trade winds of 15mph are
common. The ministry of nonconventional energy has created a "wind atlas" for picking
the best sites.

India itself could easily keep Suzlon busy in the years to come. But Tanti is keen to
expand abroad. "This is a global business, and we want to also grow in the global
market," he insists. Worldwide the wind energy industry is worth $11 billion, growing 27
per cent a year for the past five years. BTM Consult ApS, a renewable energy
consultancy in Denmark, predicts that global installed capacity for wind power will more
than double to 124,000 megawatts by 2009. Tanti is positioning Suzlon to get a fair
chunk of that growth by being a low-cost producer and is collecting engineering talent so
Suzlon can continually improve technology.
"Tulsi is a tiger with a burning desire to play on the global stage. He wants Suzlon to be
among the top three wind energy companies in the world," says Ashish Dhawan, senior
managing director, ChrysCapital, a private equity firm in Mumbai that made a timely $11
million investment in Suzlon in 2004. (ChrysCapital bought shares at 27 rupees, selling
part of its then 7 per cent stake just before the IPO for a slight discount to the 510-rupees-
a-share IPO price. Dhawan remains on Suzlon's all-Indian board.)

Can a relative newcomer seriously challenge the Europeans, who have dominated the
modern incarnation of the industry for 40 years? Until the IPO Suzlon was virtually
unknown and had to hard sell its credentials. "Now we can tell our potential customers
that we're a $6 billion [market cap] company!" beams Tanti. In a marketing drive led by
Tanti's younger brother Girish, an electronics engineer, Suzlon has established a
marketing outpost in Denmark to canvas for customers outside India. The company has
made headway in the US and China and, more recently, in Australia.

Suzlon started selling in the U.S. in 2003 when it landed a contract with DanMar &
Associates, a Minnesota development firm, to supply 24 turbines in southwestern
Minnesota. Suzlon clinched the deal not only because it could supply at prices 10 per
cent cheaper than its European rivals.

"Their design and technology was better suited for our wind resources in the US Midwest
and 10 per cent more efficient than that of competing providers," says DanMar's founder
Dan Juhl, who has followed up with repeat orders. Turns out that Suzlon's robust turbines
could best withstand extreme weather conditions.

Customers like John Deere Credit got sold on Suzlon's willingness to execute even the
smallest of projects. To serve its customers, Deere figured out that renewable energy was
another "crop" that farmers could be harvesting. "We felt that Suzlon, which was learning
to become a global supplier, was the best option for our small community-based
projects," says David Drescher, vice president of the wind energy group at John Deere
Credit.

With orders worth $600 million in hand from US, Chinese and Australian customers,
Suzlon has invested in a service support facility and a workshop in Pipestone, Minnesota
to manufacture rotor blades. At 140 feet these are longer than the wing of a 747 plane, so
they are too expensive to transport across continents. Building them closer to the
customer location obviates the logistical issues of transporting them from India."We're an
Indian company that's creating 300 jobs in the US," boasts Tanti.

Expansion isn't expected to require a dilutive follow-on equity offering anytime soon.
Banks are now chasing such projects, so getting bank loans is no problem for Suzlon.
Besides, it generates cash profits that are put back in the business.

The same kind of venturesome spirit that drives Tanti now was what set the Suzlon train
in motion. Spurning their father's construction business in Gujarat, Tanti and his three
siblings moved into textiles in the late 1980s. They started processing polyester yarn,
then graduated to making furnishing fabrics.

The decision to shift again, into wind energy, was a brave one. The industry was in the
dumps, as it had been given a bad name by unscrupulous companies that lured customers
with the bait of tax breaks. But projects were ill conceived, often left incomplete with no
maintenance or service support to speak of. Banks wised up and stopped lending for wind
power projects.

The brothers saw the opportunity for a producer not only to build the wind turbine but to
provide maintenance and service support--even operation--as well.

The experience seems to have kept the brothers tight. "We have a common store, but our
kitchens are separate," is how Tulsi Tanti puts it, though even today they host each other
daily at their respective flats.

Selling some family property, the Tantis put together $600,000 as seed capital to start
Suzlon. They shopped around for technology in Europe, but no one was willing to give it
without having an equity stake in the venture.

Finally, Sudwind, a small German company agreed, provided Suzlon bought ten turbines.
Tanti convinced IPCL, a petrochemicals company that had been supplying raw materials
for his yarn business, to sign up as Suzlon's first customer. Suzlon completed IPCL's 3.5-
megawatt project using Sudwind's turbines within the three-month deadline. Tanti claims
that ten years on, this first wind farm continues to run at 97 per cent efficiency.

WIND POWER MARKET SHARE LEADERS

Suzlon is growing fastest among the world's biggest turbine makers.

COMPANY/COUNTRY TOTAL % GROWTH

INSTALLED MW 2004-2005 MW

Vestas/Denmark 20,766 15%

Enercon/Germany 8,550 18%

Gamesa/Spain 7,912 23%

GE Wind/US 7,370 14%

Siemens¹/Denmark 4,502 13%

Nordex/Germany 2,704 7%
Repower/Germany 1,522 22%

Suzlon/India 1,485 28%

Mistubishi/Japan 1,252 21%

¹Wind Unit. Source: BTM Consult ApS.

But the brothers, all four engineers, wanted to prove their technical prowess by crafting
their own turbine. Their research efforts got a boost when Sudwind went bust in 1997.
They hired Sudwind's engineers and created an R&D center in Germany. The subsequent
acquisition of a manufacturer of rotor blades in the Netherlands gave them access to
technology for a key component.

Electricity-Generating Capacity by By 1999 Suzlon had introduced its partly homegrown

Type (2003) turbine into the market. Today the company has three
Fossil fuels remained dominant research sites, in Germany, the Netherlands and
sources of power in the latest
available year.
India, which are linked together. One important
mission: to find ways of increasing output so cost per
MW (THOU)
kilowatt of energy-generated decreases.
Combustible Fuels

Coal and Coal 488 At the same time, Tulsi Tanti is shrewdly
Products consolidating his hold on component supplies, a
critical success factor in this business. In March
Natural Gas 376
Suzlon acquired Hansen Transmissions Intl., a
Other Combustibles 710 Belgian maker of wind turbine gearboxes, for $565
Hydro 421 million, thereby securing supplies of another key
component. (Suzlon now makes two-thirds of its
Nuclear 313
turbines in India; the remaining third are imported.)
Wind 35
Geothermal 6 Traditionally, wind power has depended on tax
breaks to make it an attractive alternative to
Solar 1
conventional energy. But Tanti insists that with the
Other 1 price of conventional power climbing, production
Source: International Energy Agency costs today are almost the same. Suzlon's technology
Note: Numbers are for OECD innovations and ability to substitute for expensive
countries only. Emerging countries imports with cheaper domestic components has
such as India, China not inlcuded.
reduced costs in the last ten years. "We don't need
government handouts to survive," he declares.

However, Indian investors in wind power can claim an accelerated depreciation of 80 per
cent starting from the first year. "Wind energy projects tend to be viewed as tax-saving
devices, but they make business sense as firms can reduce their power costs," says
Karthik Ranganathan, an investment manager at Baring Private Equity Partners.
As often, the breaks create suspicion. Suzlon, along with other firms, is being
investigated by the Indian income tax authorities for creating fictitious projects as a tax
dodge.

Tanti insists Suzlon is as clean as the power it generates. He's also confident the run-up in
oil prices is putting the wind at his back. "This is only the beginning," he promises.

By the Numbers

• 200,000 megawatts: Estimated production (installed capacity) of electricity in

India by 2012, up by 60%. 0.69% The share of wind power in total global
electricity generation.

$10 trillion: Investments required to meet global electricity demand in 2030.

Sources: Company reports; IEA.