Exports soar but results fall short

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Although reporting record growth, India's Suzlon fell short of its key forecasts for the year ending March 31, 2007. Wind turbines were sold for a combined capacity of 1456 MW, 51% up on the 964 MW sold in the previous fiscal year, but slightly down on the 1500-1600 MW forecast. Operating margins, at 17%, fell below the 20% Suzlon had predicted.

The company cites cost increases, component shortages and 222 MW of stock still in transit for the missed targets. Had all the turbines been delivered, profits would have been larger by some INR 2.34 billion ($58.1 million). Group sales came in at INR 79.86 billion ($1.97 billion) compared with INR 38.41 billion ($954.3 million) a year earlier and net profit increased 14% to INR 8.64 billion ($212.86 million) from INR 7.61 billion ($188.9 million).

Delays in delivery of towers and some critical components prevented 150 MW being completed as planned, while increased costs of outsourced towers affected margins, says company boss Tulsi Tanti. "We expect to rectify this situation shortly by starting supply of towers from India," he says. A stronger rupee against the dollar also dented margins while higher than expected start up costs for its rotor blade facility in the US ate into profits.

While the results -- which include the contribution of gearbox division Hansen Transmissions, acquired in May 2006 -- disappointed some analysts, Tanti remains confident of steady and long term growth.

The company's plans for global expansion continue. Now active in 14 countries across four continents, overseas sales accounted for 502 MW of total capacity sold and INR 38.57 billion ($957.6 million) in revenue. Exports dominate its order book. Of the 1958 MW in the pipeline, valued at some INR 94.86 billion ($2.35 billion), all but 266 MW is destined for overseas customers. New factories in China, the US and India, have boosted its manufacturing capacity from 1500 MW to 2700 MW a year. Another new turbine assembly plant, in Karnataka, India, will take capacity to 4200 MW by the end of 2008. With orders for 500 MW since the close of the fiscal year, the company says it is "well poised on the road of continued high growth."

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