*Trouble in Suzlon?* *
Suzlon's Chief Resigns After 16 Months at Helm*
*By TOM WRIGHT
May 28, 2008*
The chief executive officer of Suzlon Energy Ltd., the world's fifth-largest
wind-turbine producer by sales, has resigned amid growing questions about the
Indian company's fast-paced growth.
Andre Horbach, a former senior executive for General Electric in Europe,
stepped down on Friday, 16 months after taking the job.
Mr. Horbach, a Dutch citizen, was among a number of foreign executives
assembled by Suzlon founder and chairman Tulsi Tanti to help manage its rapid
global expansion. Mr. Horbach is the second senior executive to leave Suzlon in
recent months; the company's chief financial officer left in March.
Vivek Kher, a spokesman for Pune-based Suzlon, said Mr. Horbach left "strictly
for personal reasons." Attempts to contact Mr. Horbach weren't successful.
Suzlon has benefited from a global shortfall of turbines from more-established
producers like GE and Denmark's Vestas AS, the world's largest producer in terms
of sales. In the quarter ended March 31, Suzlon's revenue rose 69% from the year
before to $1.2 billion and net profit rose 30% to $109 million.
But Suzlon is also facing headwinds. Blades on turbines that it has sold to
power producers in the U.S. have begun cracking. The company says only 45 blades
have been affected, but it plans to spend $30 million on repairs and to
strengthen almost all the blades it has sold in the U.S.
Suzlon's efforts to upgrade its technology have also run into problems. Last
year, the firm agreed to buy REpower Systems AG, one of Germany's largest
turbine makers, for $1.7 billion. REpower's know-how could help Suzlon improve
its product line. But under German corporate law, Suzlon must offer to buy out
minority shareholders before it can access REpower's designs -- a process that
probably won't be complete until 2009.
The company's shares, listed on the Bombay Stock Exchange, have fallen about
35% since early January, compared with a 22% decline in the market's benchmark
Sensex index in the same period. On Tuesday, the shares closed at 297.40 rupees
($6.98), a drop of 7.60 rupees a share.
In March, Patrick Krähenbühl, a former executive at Swiss engineering giant
ABB AB, resigned as chief financial officer. Mr. Kher said Mr. Krähenbühl also
left for personal reasons; he couldn't be reached to comment.
The resignations deal a blow to Mr. Tanti, who, in an interview in December,
outlined plans for cherry-picking top managers from around the globe to run an
increasingly complex business. "We require global management talent," he said at
the time.
Mr. Tanti, whose extended family owns about two-thirds of Suzlon's shares, has
appointed Toine van Megen, a Dutch citizen, as its CEO. Mr. Van Megen has worked
as Suzlon's vice president for international corporate development for four
years and is a member of the company's supervisory board. Before joining Suzlon,
he ran electricity services in Auroville, an experimental township near the
former French enclave of Pondicherry on India's southeast coast.
Kirti Vagadia, an Indian who joined Suzlon shortly after Mr. Tanti founded the
company in 1995, was appointed interim chief financial officer on April 1 while
the company looks for a successor, Mr. Kher said. Mr. Vagadia is also a member
of Suzlon's supervisory board.
Rohit
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