Oct 26, 2009, 03.50 PM | Source: Forbes India

GE Energy to re-enter India's wind energy market

GE Energy has returned to India with a Rs 150 crore order. The company has won its first order in India after 2005. An industry source says GE signed the Rs150 crore contract with Bhoruka Power, a Bangalore-based power generation company.

GE Energy to re-enter Indias wind energy market
By: Forbes India
The year 2005 was a big one for India in wind energy. Alternative sources of energy were the next big thing to hit corporate consciousness. The government announced tax breaks and wind-turbine maker Suzlon Energy made its debut in the stock market with an initial public offering of Rs 1,500 crore that was over-subscribed 45 times. But, GE Energy, the -billion arm of US conglomerate General Electric, pulled out of India the same year.

GE was frustrated. It was looking to sell turbines for wind mills in the premium end of the market. At the time, celebrities like actress Aishwarya Rai and cricketer Sachin Tendulkar were looking to invest in alternative energy. They made investments in Satara district in Mahrashtra and in Rajasthan. It was this clientele that GE was targeting. But, its sales team was not able to convince its target audience to pay a premium for efficient windmills.

Local rival Suzlon had figured out that clients werent looking for windmills to generate electricity but to claim tax benefits an 80% depreciation benefit in the first year of operation meant for a Rs 100 crore investment in wind energy, a developer could deduct Rs 80 crore out of his taxable income.

GE only managed to sell only 14 wind turbines in 2004-05. It was primarily a fiscal benefit industry and it didnt make sense for us to participate in that market because it was price-sensitive without any acknowledgement for technology, defends Kishore Jayaraman, who took over as CEO of GE Energy India in 2007.

When the Indian market seemed to have all but forgotten GE Energy, word spread that the US giant has returned with a Rs 150 crore order. Coming as it does closely on the heels of rival BPs exit from the wind energy market in India, GEs comeback raised many questions. What does GE see in India now and will it be second-time lucky?

Sitting in his Gurgaon office, Jayaraman, 44, says the Indian market is getting to be more discerning and that has brought back GE. Now we have found a couple of customers who want to be in this game long term so we have signed a deal with them. And we are noticing that more and more people want to be energy producers and developers. So thats why we are re-entering the business, he says.

He admits that the company has won its first order in India after 2005 but refuses to divulge details. An industry source says GE signed the Rs150 crore contract with Bhoruka Power, a Bangalore-based power generation company.

GEs timing couldnt have been better. Market leader, Suzlon Energy, is in a sea of troubles and vulnerable to competitive onslaught. The last 18 months have seen Suzlon crippled by allegations of faulty turbines and a lot of its orders got cancelled. It controls half the Indian market.

GE is also on its way to build an assembly plant in India which Jayaraman claims should be up and running by early 2010. Its parent company GE has acquired Scandanavian company ScanWind which deals in advanced turbine technology. That should give GE Energy a boost.

But why is GE so sure that things will be different this time?
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