Wind energy giant Suzlon, once a star of India's green technology, is facing a stormy future after aggressive expansion left it mired in debt at a tricky time for the industry, analysts say.
The world's fifth largest wind turbine firm this month made the biggest default on repayments by an Indian company, after bondholders rejected its request for a four-month extension to more than $200 million of debt.
Investors are watching with concern to see if founder Tulsi Tanti can steer them out of a desperate fund-crunch over the coming crucial months, in an uncertain global business environment.
The picture was once far rosier for Suzlon, headquartered on a sprawling 10-acre campus on the outskirts of Pune, a city in western India.
Before the global financial crisis, the firm was the bluest of blue-chips and chairman Tanti, fondly called the "Wind-Man of India", was a poster-boy for entrepreneurship and unbridled ambition in the country's growth story.
He had capitalised on rising international concern over global warming and climate change to rapidly expand his firm, which generates nearly 20,000 megawatts of wind energy capacity in 30 countries worldwide, including North and South America, Europe, Asia and Africa.
In 2005, Forbes ranked Tanti as India's eighth richest man, but this year he has fallen off the list of the country's richest 100 people.
His company's fortunes have mirrored the slide, which analysts blame on an over-aggressive expansion, compounded by its unfortunate timing just before the global economic bust.
"It borrowed more than its appetite," said Bhargav Buddhadev, power utilities analyst with equity research firm Ambit Capital.
Suzlon spent more than $2 billion, largely raised through debt, on two large acquisitions in Europe: Belgium's Hansen Transmissions, which made wind gear boxes, and Germany's wind turbine maker giant REpower.
The firm stumbled in 2008 when the credit markets froze after the collapse of Lehman Brothers, a big lender to clean energy projects. Lehman's demise made other banks reluctant to lend to wind farming, which needs large funds.
The following year, Suzlon's global revenues fell by 30 percent and it reported its first net loss in more than 10 years.
Tanti then decided to focus on the domestic market in India but things have not improved much since, despite steps by the firm to reduce debt, including selling off its Hansen stake by 2011.
The firm is rapidly losing market share in India due to competition from new rivals, such as ReGen Power and Orient Green Power.
"They will not come close to Suzlon in terms of market share, but they are growing faster than Suzlon," said Buddhadev.
Suzlon has posted losses for the last three financial years and had a net debt of 130 billion rupees ($2.5 billion) in June-end this year.
Like other emerging economies, India is under pressure to boost renewable sources to meet its huge and growing energy needs and lower reliance on coal and oil, which currently account for two-thirds of India's energy production.
But despite the potential for wind energy growth, tax incentives are reducing in India as elsewhere.
"Worldwide, several countries are struggling with weak balance sheets and their governments have been unable to hike subsidies for 'clean' renewable energy initiatives, including wind," an analyst with a close knowledge of the company said.
With banks reluctant to loan, renewable technologies will struggle commercially without state support in grants and tax-reliefs.
Although India's wind industry has grown annually by an average 22 percent since 1992, new installations have slowed for the first time in 20 years, according to the Indian Wind Turbine Manufacturers Association (IWTMA).
In April to September they were down 39 percent from a year earlier to 851.35 megawatt capacity, the IWTMA said.
Globally, new wind installations are expected to drop by 8.4 percent in 2013, driven by the US market's fears of state subsidies ending there, HSBC analyst Charanjit Singh wrote in a note to clients in June.
Suzlon has embarked on a cost-cutting drive to reduce operational expenses and manpower by 20 percent by the end of 2012, but the firm declined to talk about the debt default and other concerns despite requests from AFP.
"Our business fundamentals as a group remain strong... with a record orderbook valued in excess of $7.2 billion," said an emailed statement from the firm.