India’s total wind energy capacity is around 40 gigawatts (GW), a third of which has been set up by Suzlon Energy.
Suzlon Energy’s market capitalisation was at an all-time high of Rs 68,067 crore in January 2008. It now stands at Rs 8,536 crore.
These two statements encapsulate the story of Tulsi Tanti, founder and chairman of Suzlon Energy. He was the man who built a wind energy company from scratch and was the wind beneath the wings of a fledgling industry. He also witnessed his personal fortunes erode as Suzlon battled mounting debt, muted cash flows, and defaults.
Tanti, aged 64, passed away late evening on October 1. He had spent the day in Ahmedabad — a city he called the home of the firm’s loyal retail investors — meeting shareholders, investors, and the media, updating them about the company’s upcoming Rs 1,200 crore equity rights issue. He then flew back to Pune, where he had started Suzlon 27 years ago, and suffered a fatal cardiac arrest.
“The world has untapped renewable resources that can meet mankind’s energy needs five times over. We need to develop and embrace technologies that help us harness these resources and create a sustainable future for mankind,” Tanti had said back in 2009 after the United Nations Environment Program (UNEP) named him a ‘Champion of the Earth that year for his entrepreneurial vision in combating climate change.
Tanti built Suzlon Energy to manufacture wind turbines in India much before ‘Make in India’ was a buzzword. He displayed global ambition, acquiring companies abroad, much before India occupied centre stage on global platforms and declared its green energy ambitions. In many ways, the journey of Tanti and the company he founded in 1995 mirrors the story of India’s wind energy market.
In an email sent to over 5,500 employees across the globe, Ashwani Kumar, CEO, Suzlon Energy, said, "This is by far the most heart-breaking communication I have ever sent..."
"While the world will remember Tulsibhai as the pioneer of wind energy and a warrior against climate change, we know him better as the champion of creating a better world for future generations. If there was anything our CMD taught us it was resilience, the will to fight back, and the strength to stand tall in our worst times,” Kumar said.
Tanti’s may not exactly be a rags-to-riches story, but it is a story of Indian ingenuity, ambition, and resilience. In 1987, Tanti, along with his siblings, set up a textile business with 20 employees – Sulzer Synthetics – in Surat. He soon realized that the captive wind energy unit that he had set up to run his units had better prospects than his current business.
Tanti set up a green energy company to focus on wind energy in 1995. Although it was a decade after India had seen its first privately-owned, grid-connected 40 kW wind turbine in Gujarat, set up by a joint venture between Gujarat Energy Development Agency (GEDA) and JK Synthetics, it was still early days for the industry and India only had a token presence in renewable energy.
The next decade saw India recognising the need to encourage renewable energy, and 2005 emerged as a landmark year when the government announced tax breaks for the wind energy sector.
Suzlon became the first renewable energy company in the country to hit the capital market with an initial public offer (IPO). The company’s Rs 1,500 crore IPO was oversubscribed 15 times, reflecting the enthusiasm around alternative sources of energy.
Tanti was at the eighth spot on Forbes’ list of richest Indians in 2005. The decade from 2005-15 witnessed fast growth in wind energy capacity in the country, with energy-guzzling industries and utilities looking to gain from government incentives.
It even lured cricketer Sachin Tendulkar and actress Aishwarya Rai, among others, to invest in the sector. Around the same time, Suzlon established a strong foothold in the country, capturing almost 50 percent of the local market and emerging as one of the top five wind turbine makers globally.
Tanti had global ambitions for Suzlon and the global move towards clean energy provided the tailwind that helped him fly.
In 2005-06, Suzlon acquired gearbox maker Hansen Transmissions International of Belgium, aimed at backward integration to overcome the global deficit in component supplies.
A Belgium-based banker who was privy to the negotiations and the subsequent developments told this reporter that Tanti had emerged “out of nowhere,” and taken the wind energy and banking community by storm. “He doesn’t speak their language but he speaks business,” he had said.
Tanti then made his boldest move in 2006-2007, announcing that Suzlon’s subsidiary AE-Rotor Holding B.V. had acquired Germany’s REpower Systems to expand its presence in Europe and get access to the company's technology.
Even as the company was piling on debt, Suzlon Energy became the proxy for India’s wind energy story, and Tanti the poster boy. Investors were upbeat and the company’s market capitalisation soared to over Rs 68,000 crore in January of 2009.
Twist in the tale
The acquisition of REpower Systems was to be a milestone in Suzlon’s global ambitions but turned out to be a millstone around its neck.
Suzlon gained management control of REpower, but was not allowed access to the company's technology as German law does not allow it in the interest of minority shareholders.
To make matters worse, REpower’s finances were ring-fenced, which meant that Suzlon had no access to the cash reserves of the German subsidiary even as it paid off the debt raised to finance the acquisition.
Around the same time, when every penny counted for the cash-strapped Suzlon, it faced another setback as it had to pay Rs 411 crore to US customers for the replacement of faulty components supplied by the company.
Tanti changed gear. Suzlon started divesting Hansen Transmissions in 2009 to raise funds and repay debt. But the debt hung heavy on the company, and for the first time it reported a loss of Rs 989 crore in fiscal 2009-10.
The slowing of the wind energy equipment market as Western governments cut spends on renewable energy projects made things worse.
In July 2012, Suzlon defaulted on the repayment of $209 million worth of foreign currency convertible bonds (FCCBs), the biggest of its kind at the time.
Rise and fall
After struggling with mounting losses and muted cash flows, Suzlon got a big relief in 2013 as lenders led by State Bank of India (SBI), restructured Rs 9,500 crore of loans and eased the terms of repayment. The company also got a fresh working capital loan of Rs 1,800 crore to keep it afloat. In 2015, billionaire Dilip Shanghvi came in as a white knight and acquired a 23 percent stake in the company.
But these developments did not help. Suzlon’s problems persisted as the Indian government rolled back incentives to the wind energy sector, which led to the shrinking of the market even as competition intensified. In May 2017, the government moved away from the feed-in tariff system to a reverse auction mechanism, affecting the industry further.
In May 2019, Suzlon defaulted again on the repayment of bonds worth $172 million. Tanti and his team made another effort, with the support of lenders, to sell its operations and maintenance (O&M) business to raise funds and pare debt. Canadian investor Brookfield and Denmark-based Vestas Wind Systems, separately, came close to acquiring the business but the deals fell through.
In 2019, when Suzlon was talking to banks for its second debt restructuring, your reporter had asked Tanti why the banks would agree again. Tanti had replied with his usual optimism, “Bankers realise that India cannot afford to lose the largest company in its wind energy space."
In March 2020, Suzlon Energy received yet another lifeline from an SBI-led consortium to restructure debt worth Rs 14,000 crore. The lenders had agreed to convert Rs 8,200 crore worth of loans to long-term optionally convertible debentures payable in 20 years, and had asked the promoters to infuse equity. The banks had reportedly taken a 65 percent haircut.
Tanti was optimistic of a turnaround after the debt recast but the timing coincided with India announcing a nationwide lockdown due to the Covid pandemic. Even with the reduced debt overhang, it was tough to salvage the business when the industry was going through a dismal phase, with execution delays and order cancellations.
In June 2022, the bankers’ consortium sold over Rs 4,100 crore of Suzlon Energy loans to the Rural Electrification Corp (REC), and the state-owned Indian Renewable Energy Development Agency (IREDA). The liberal terms of repayment will ensure that Suzlon Energy has low-interest payout every month.
Interestingly, Tanti had famously said once that the name Suzlon came from ‘soojh-boojh’ (intelligence and tact) and lon (loan).
It’s not over, till it’s over
Tanti’s untimely demise comes right before the company is scheduled to open its rights issue on October 11. The company planned to use Rs 900 crore from the proceeds to repay debt, which would have eased cash flows and helped sustain the firm. The company’s management told Moneycontrol over the weekend that it was confident of the success of the issue.
A big win for Tanti would have been the government shelving the reverse auction for wind energy, which he had been persistently lobbying for as the chairperson of the Indian Wind Turbine Manufacturers Association (IWTMA). In July, Indu Shekhar Chaturvedi, Secretary, New and Renewable Energy Ministry had said that the government will cease the electronic reverse auction for renewable energy projects. The final decision is awaited.The one thing that admirers and even critics of Tanti have always agreed on was that he never gave up. His demise may have cut short his story, but the story of Suzlon and the Indian wind energy sector will continue. Will his efforts for the company and the industry pay off? The answer is up there…