It’s an ill wind that blows

Summaries - Australian Financial Review
Saturday 25/7/2009 Page: 28

Wind turbine company Suzlon is one of the success stories of India's Silicon Valley equivalent, Pune in Mumbai. Pune is also associated with the work of companies including Mercedez-Benz, HSBC and Infosys. Suzlon worked its way up to become the world's fifth largest wine turbine maker, competing against Vestas and GE. Recently, Suzlon's reputation has taken a battering as clients in the United States, Europe and Brazil have withdrawn orders and collected payments in damages for faulty products.

Those companies which have lost faith with Suzlon include US-based Edison Mission and John Deer Wind Energy. Suzlon's share price shed 80% over the past two years, while the company also lost deals, such as the Colgar project. Despite the damage to Suzlon's reputation, a number of Australian companies have or are still ordering wind turbines with Suzlon.

Australian companies which have been clients of Suzlon include AGL Energy, Pacific Hydro and Infigen Energy. In fact, AGL Energy - Infigen Energy has a $300 million order with Suzlon to receive 54 turbines on top of the turbines used on the Hallett Windfarms in South Australia.

JPMorgan analyst Grace Chan said if AGL fails to sell the Hallett 4 windfarm, the company's earnings will take a nosedive. Graham White from consultants Aggtrade Ashen said Australia's wind capacity could jump seven-fold over the next 10 years, the clear beneficiary of the Rudd government's climate change legislation.