We will insulate ourselves from biz cyclicality: J P Chalasani, Suzlon Group
In the last year, Suzlon Energy's shares have rallied 277% while Benchmark Sensex gained 19%. The company is now debt-free and generating cash. Chief executive officer, J P Chalasani tells ET the company wants to insulate itself from being a cyclical organisation and build an annuity business model through its services business. Edited excerpts:
Suzlon's shares rallied in the past year. What do you attribute this to?
The answer is investor confidence.
But the confidence is coming due to two reasons. One, we had an issue with respect to high opex (operating expenditure). Our fixed costs and debt were very high.
So, our interest cost was Rs 100 crore a month. Secondly, the sector went down after FY17. In FY 17, we did 5 gigawatts, but subsequently, we've been struggling.
However, internally, we fixed both-the opex in 2019- 2020, and now we are debt-free. Now we have huge internal accruals coming from our services business. The order book has been significant, especially for 3MW wind turbine generators (WTGs).
The sectoral tailwinds are strong, wind energy is picking up significantly.
So what entails the next growth phase for Suzlon?
We do have a significant manufacturing capacity. We can manufacture 3-4 GW a year. Our ability to deliver larger volumes is significant now.
We closed the last quarter with an order book of 1. 6 GW and subsequently, we have announced several orders. In fact, 50% of our order book is from the commercial and industrial segment.
These things make us believe that our numbers and delivery will be strong.
You were Suzlon Energy's CEO between 2016 and 2020. Whatis being done differently this time to improve Suzlon's performance?
In 2017, we did close to 1800 MW. We had a 30% market share.
