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Vestas to scale down India operations

According to reports, Vestas, the world’s biggest wind turbine manufacturer, has decided to “scale down its sales efforts in the Indian market’’.

Business Line had heard rumours that the Danish multinational was closing down its India operations and sent an email query.

In response to the query, Mikkel Friis-Thomsen, Communication Partner, Media & External Relations, Vestas Wind Systems A/S, said that the global wind energy market is in a “challenging situation right now’’.

As a consequence, Vestas is currently implementing a global re-organisation plan to develop a “more scalable and flexible organisation” and cut cost by €250 million by the end of 2012.

Consequent to its efforts to “re-establish a more efficient and profitable business”, the company is “re-evaluating its current business set-up and approach in India’’.

Therefore, “Vestas has decided to scale down its sales efforts in the Indian market to focus on providing value-added service and maintenance to existing Indian wind power plants,” Friss-Thomsen said.

“Vestas will adjust the number of employees to match the reduced business scope,” he has said in the email.

Vestas was one of the earliest wind turbine manufacturers to set up shop in India. It came into India in collaboration with RRB. Vestas-RRB was a well known brand in the mid-1990s and was the second highest selling turbine after NEPC Micon, which was a joint venture between NEG Micon of Denmark and the NEPC group.

In 1996, NEG was taken over by Vestas in Europe consequent to which the partners of NEPC Micon had to split up. NEG was on its own in India, as a subsidiary of Vestas, even though Vestas was present also through Vestas RRB.

In 2004, the partners of Vestas-RRB decided to part ways. Vestas was on its own and all the operations of NEG were subsumed under Vestas.

Vestas today has about 3,000 MW of standing machines.

According to Mr Ramesh Kymal, who headed Vestas for many years—he now heads Vestas’ competitor, Gamesa India—the Danish company’s business model was not appropriate for India, as it refused to do the “project development work”—such as buying and developing land and putting the transmission infrastructure.

Also, Vestas India had to report into Singapore, rather than Denmark, and as such those in Denmark were not fully aware of the realities in India, Mr Kymal told Business Line today.

Vineeth Vijayaraghavan, Founder-Editor of the online newsletter, Panchabuta, says that the Indian wind energy market is “shifting to a smaller number of customers and larger size of wind farms”. Against this new backdrop, “Vestas’s approach on scaling down sales force and focusing on value added service and maintenance is the best approach given that they do not do project development in India,” Vineeth said.

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