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8/8/2019 LALALALALAL NTPC

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A

REPORT

ON SWOT ANALYSIS OF POWER SECTORIN INDIA

BY MORE FOCUSING ON

SWOT ANALYSIS AND STRATEGIES USE

BY NTPC INDUSTRY

SUBMITTED TO: PROF. VIRAL PANDYA SUBMITTED BY:


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POWER SECTOR IN INDIA: India has the fifth largest generation capacity in the world with an installedcapacity of 152 GW as on 30 September 2009, which is about 4 percent of global power

generation. The top four countries, viz., US, Japan, China and Russia together consume about 49 percent of the total power generated globally. The average per capita consumption of electricityin India is estimated to be 704kWh during 2008-09. However, this is fairly low when comparedto that of some of the developed and emerging nations such US (~15,000 kWh) and China(~1,800 kWh).The world average stands at 2,300 kWh2.

The Indian government has set ambitious goals in the 11th plan for power sector owing to which the power sector is poised for significant expansion. In order to provideavailability of over 1000 units of per capita electricity by year 2012, it has been estimated thatneed-based capacity addition of more than 100,000 MW would be required. This has resulted inmassive addition plans being proposed in the sub-sectors of Generation Transmission andDistribution.

The current installed transmission capacity is only 13 percent of the total installedgeneration capacity. With focus on increasing generation capacity over the next 8-10years, thecorresponding investments in the transmission sector is also expected to augment. The Ministryof Power plans to establish an integrated National Power Grid in the country by 2012 with closeto 200,000 MW generation capacities and 37,700 MW of inter-regional power transfer capacity.Considering that the current inter-regional power transfer capacity of 20,750 MW 4, this is indeedan ambitious objective for the country.

While some progress has been made at reducing the Transmission and Distribution(T&D) losses, these still remain substantially higher than the global benchmarks, atapproximately 33 percent. In order to address some of the issues in this segment, reforms have

been undertaken through unbundling the State Electricity Boards into separate Generation,Transmission and Distribution units and privatization of power distribution has been initiatedeither through the outright privatization or the franchisee route; results of these initiatives have

been somewhat mixed. While there has been a slow and gradual improvement in metering, billing and collection efficiency, the current loss levels still pose a significant challenge for distribution companies going forward.

Now, the Power & Energy Infrastructure sector in India is poised for a major take-off.

The APDRP (Accelerated Power Development & Reforms Programme 2002 - 2012) has seen anaddition of around 22,000 MW during last five years and during the next five years, a capacityaddition of over 78,000 MW has to be setup by 2012. (A commitment of 15,600 MW of capacityadditions per annum).

The Market Potential to sustain the GDP Growth rate of India @ 8% plus per annumneeds the power sector to grow at 1.8 - 2 times the GDP rate of growth as espoused by


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economists, planners and industry experts. This would mean a YOY capacity addition of 18,000- 20,000 MW to achieve this ambitious plan of moving India to a Developed Economy status, asan Economic Global Powerhouse. The Target Mission: POWER for all by 2012 would meanachieving the target of 1000 KH (Units) of per capita consumption of electricity by this period.

To achieve this goal, following milestones are critical: - Attract US $ 250 Billion Investment into the sector. (FDI & Domestic Investment Combined) Adequate Capacity Growth to Sustain GDP Growth at 8% plus. Reliable & Quality Power On 24 x 7 bases, at least in Urban & Industrialized areas. 100% Rural Electrification with Adequate & Qualitative Power for irrigation purpose. Increasing the Role of Hydel & Renewable Energy in the Energy Mix. Urgent need to develop the alternatives, both in the Fuel & Technology terms. Focus on implementation (Outcomes are more important than Outlays)

- As espoused by the Indian Prime Minister, Dr. Manmohan Singh


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FACTS & FIGURES :-

In 2006/07, the country experienced an overall energy shortage of 9.6% and peaking power shortage of 13.8%. In 2007/08, the percentage energy shortage further declined, thoughmarginally, and was 9.9%. However, the percentage peaking deficit dipped sharply in 2007/08 to16.6%.

Thermal 53% of the power is produced by thermal production using coal. 10% is power is produced using gas and 1% power is produced using diesel.

Hydro -India was one of the pioneering states in establishing hydro-electric power plants; the power plant at Darjeeling and Shimsa (Shivanasamudra) were established in 1898 and 1902respectively and is one of the first in Asia. The installed capacity as of 2008 was approximately367.76 MW. The public sector has a predominant share of 97% in this sector.

Nuclear - Nuclear power is the fourth-largest source of electricity in India after thermal, hydroand renewable sources of electricity. [ As of 2008, India has 17 nuclear power plants in operationgenerating 4,120 MW while 6 other are under construction and are expected to generate anadditional 3,160 MW. India has recently made a 123- Nuke deal with USA where Indian atomicsector is divided into two sectors; military atomic sector and civilised atomic sector. Under thisdeal, Indian civilised atomic sector has come under the governance of IAEA (InternationalAtomic Energy Agency). India can receive the required fuel to generate the power from nuclear

power plant as well as nuclear reactors also from various countries.

Renewable - Renewable energy includes power from small hydro, wind, biomass, and urban and

industrial waste, solar energy, wind energy, tidal energy etc. Current installed base of Renewableenergy is 13,242.41 MW which is 7.7% of total installed base with the southern state of Tamil Nadu contributing nearly a third of it (4379.64 MW) largely through wind power.

The following table shows the actual amount of the units of MW generated through varioussectors.

SECTOR MW

State 76036

Central 48471

Private 22246

Total 146753


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The following tables show the transmission and distribution scenario in India.

Cumulative growth in transmission sector-

Transmission lines At the end of 10 th plani.e. March 2007

At the end of 11 th plani.e. March 2012

765 kV 1704 7132

HVDC +/- 500kV 58728 11078

HVDC 200kV monopole 162 162

400 kV 75772 125000

230 kV/220 kV 114629 150000

Total transmission lines 198089 293372

MAJOR PLAYERS :-


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NTPC

NTPC, India's largest power company was set up in 1975 to accelerate power development inIndia. It has emerged as an Integrated Power Major, with a significant presence in the entire

value chain of power generation business. NTPC is ranked 317th in the Forbes Global 2000 ranking of the Worlds biggest companies.With a current generating capacity of 30,644 MW, NTPC has embarked on plans to become a75,000 MW company by 2017.

NHPC

NHPC Limited (Formerly known as National Hydroelectric Power Corporation Ltd.), A Govt. of India Enterprise, was incorporated in the year 1975 with an authorised capital of Rs. 2000million and with an objective to plan, promote and organise an integrated and efficient

development of hydroelectric power in all aspects. Later on NHPC expanded its objects toinclude development of power in all its aspects through conventional and non-conventionalsources in India and abroad.

At present, NHPC is a Mini Ratna Category-I Enterprise of the Govt. of India with an authorisedshare capital of Rs. 1,50,000 Million . With an investment base of over Rs. 3, 17,000 MillionApprox., NHPC is among the TOP TEN companies in the country in terms of investment.

Initially, on incorporation, NHPC took over the execution of Salal Stage-I, Bairasiul and Loktak Hydro-electric Projects from Central Hydroelectric Project Construction and Control Board.Since then, it has executed 13 projects with an installed capacity of 5175 MW on ownership

basis including projects taken up in joint venture. NHPC has also executed 5 projects with aninstalled capacity of 89.35 MW on turnkey basis. Two of these projects have been commissionedin neighbouring countries i.e. Nepal and Bhutan.

NPCIL

Nuclear Power Corporation of India Limited is a Public Sector Enterprise under theadministrative control of the Department of Atomic Energy (DAE), Government of India. TheCompany was registered as a Public Limited Company under the Companies Act, 1956 inSeptember 1987 with the objective of operating the atomic power stations and implementing the

atomic power projects for generation of electricity in pursuance of the schemes and programmesof the Government of India under the Atomic Energy Act, 1962.

NPCIL is a MOU signing Company with DAE. Presently NPCIL is operating seventeen nuclear power plants with total installed capacity of 4120 MW has five reactors under constructiontotalling 2660 MW capacity. NPCIL has achieved more than 285 reactor years of safe nuclear

power plant operating experience. NPCIL operates plants with motto Safety first and production


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Next. NPCIL generated about 90 billion units of electricity in the X plan (2002-2007) exceedingthe set target by about 10%, and added 1180 MW capacity against the target of 1300 MWcapacity, thus realizing 91% of the target capacity addition.

POWERGRID

POWERGRID, a Navratna Public Sector Enterprise, is one of the largest transmission utilities inthe world. POWERGRID wheels about 45% of the total power generated in the country on itstransmission network. POWERGRID has a pan India presence with around 71,500 Circuit Km of Transmission network and 120 nos. of EHVAC & HVDC sub-stations with a totaltransformation capacity of 79,500 MVA.POWERGRID has also diversified into Telecom

business and established a telecom network of more than 20,000 Km across the country.POWERGRID has consistently maintained the transmission system availability over 99% whichis at par with the International Utilities.

TATA powerIndias largest private sector power utility, Tata Power has an installed power generationcapacity of above 2785 Mega Watts, with the Mumbai power business, which has a unique mixof Thermal and Hydro Power, generated at the Thermal Power Station, Trombay, and the HydroElectric Power Stations at Bhira, Bhivpuri and Khopoli, accounting for 1797 MW.

Reliance

Reliance Power Limited is part of the Reliance Anil Dhirubhai Ambani Group and is establishedto develop, construct and operate power projects domestically and internationally. The Company

on its own and through subsidiaries is currently developing 16 large and medium sized power projects with a combined planned installed capacity of 35,460 MW, one of the largest portfoliosof power generation assets under development in India.

Suzlon

Conceived in 1995 with just 20 people, Suzlon is now a leading wind power company with over 14,000 people in 21 countries with operations across the Americas, Asia, Australia and Europe.It has got fully integrated supply chain with manufacturing facilities in three continents. It is richwith sophisticated R&D capabilities in Denmark, Germany, India and The Netherlands. Marketleader in Asia and 3 rd largest wind turbine manufacturer in the world, Suzlon Market Share roseto 12.3% thereby making Suzlon 3 rd largest wind turbine manufacturing company in the world

CHALLENGES FOR POWER SECTOR IN INDIA


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Low per-capita consumption of electricity Estimated demand growth of Power at 6-7% Estimated investment of Rs. 8,00,000 crores in power sector over next 10 years Privatization of SEBs Rationalization of the tariff structure

Politically-sensitive issues such as subsidiesIndian Power Sector has some of the major strengths such as abundant coal reserves tosupport thermal power generation, huge potential for hydro-electricity generation andabundant engineering skills to commission and run large-scale projects and a largeconsumer base.But at the same time Indian Power Sector has number of weaknesses/problems such as, Inadequate power generation capacity SEBs weak financial health Lack of optimum utilization of existing generation capacity Inadequate inter regional transmission links Alarming level of Transmission and Distribution Losses

Abysmally low level of collection efficiency Inadequate metering of consumers Large-scale theft Cross subsidization of Power and Skewed tariff structure Energy shortage of about 7.3% and peaking demand shortage of 12.5% Low PLF of Generating stations


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SWOT ANALYSIS OF POWER SECTOR

STRENGHT Well established and vast T & D network

An extensive network of T&D lines has been developed in India over the years forwithdrawing the power produced at various generating stations and distributing the same toconsumers. Lines of appropriate voltages are laid, depending on the quantum of power anddistance involved. The state of Andhra Pradesh has the largest T&D network of 803 367 cktkm in the country. Besides, the states of Gujarat, Karnataka, Madhya Pradesh,Maharashtra, Rajasthan, Tamil Nadu, and Uttar Pradesh have more than 0.4 million ckt kmof T&D lines.

Non conventional energy resource baseIndia has substantial non conventional energy resource base and technologies to meetgrowing power requirements by tapping this energy. The MNRE (Ministry of New andRenewable Energy) laid down Guidelines for Promotional and Fiscal Incentives by StateGovernments for Power Generation from Non-conventional Energy Sources. To addressenvironmental issues related to the power sector, the Government of India has startedvarious initiatives, including promotion of renewable energy sources for power generationthrough schemes such as RPO (renewable purchase obligation), wherein certain quantum of electricity distributed must be purchased from renewable sources. Fifteen states havecommitted to the RPO. A mechanism for RECs (renewable energy certificates) is also beingevolved, which would provide a platform for carrying out trading between renewable energysurplus and deficit states.

Regulatory mechanism for tariff setting established Emergence of strongand globally comparable central utilities:

NTPC is the largest power generation company in India . Forbes Global 2000 for 2009ranked it 317th in the world. It is an Indian public sector company listed on the BombayStock Exchange although at present the Government of India holds 84.5%(after divestmentthe stake by Indian government on 19october2009) of its equity.

WEAKNESSES Persisting shortages

Peaking shortages are about 12% on an all India basis. Indias track record in adding powergenerating capacity is poor: in the five years to 2007, the country added 20,950MW of

capacity, against a target of 41,110MW. According to data from CEA, the western region isthe worst affected in the country with around 19% power shortage, with states such asMaharashtra and Gujarat reeling under a shortage of 23.7% and 23.4%, respectively.States draw power from a transmission and distribution grid and overdrawing by one statecould hurt the others.

Power theftPower theft is an increasing menace; the culprits use the latest in technology: remotesensing devices, high power electromagnet with capacity to effect recordings of meters.
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Pitfalls in billing and revenue collection:

The free power given to farmers is unmetered, so their consumption is not known.

OPPORTUNITIES Natural sources Use of digital technology Rural electrification Untapped hydro power in northeast

THREATS High AT & C losses ( Aggregate technical and commercial losses )

AT&C loss (defined as the difference between the input energy and the units of energy from

which the payment is actually realized) has come down further in 2006/07, to 32.07%.Compared to the last two years, this marks an improvement in efficiency, of over 2%

Waste generation leading to environmental damage

NTPC

INTODUCTION


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National Thermal Power Corporation Ltd. (NTPC) a global giant in the power sector wasset up on 7th November 1975, with an objective to accelerate the electricity generation by

planning, promoting and organizing integrated development of thermal power in India.

NTPC s core business is engineering, construction and operation of power generating plants. Italso

provides consultancy in the area of power plant constructions and power generation tocompanies in India and abroad. As on date the installed capacity of NTPC is 27,904 MW throughits 15 coal based (22,895 MW), 7 gas based (3,955 MW) and 4 Joint Venture Projects (1,054MW). NTPC acquired 50% equity of the SAIL Power Supply Corporation Ltd. This JV companyoperates the captive power plants of Durgapur (120 MW), Rourkela (120 MW) and Bhilai (74MW). NTPC also has 28.33% stake in Ratnagiri Gas & Power Private Limited (RGPPL) a jointventure company between NTPC, GAIL, Indian Financial Institutions and Maharashtra SEBHolding Co. Ltd.

NTPC, with a rich experience of engineering, construction and operation of over 30,000MW of thermal generating capacity, is the largest and one of the most efficient power companiesin India, having operations that match the global standards.

Commensurate with our country s growth challenges, NTPC has embarked upon an ambitious plan to

attain a total installed capacity of 75,000 MW by 2017. Towards this end, NTPC has adopted amulti- pronged strategy such as Greenfield Projects, Brownfield Projects, Joint Venture andAcquisition route. Apart from this, NTPC has also adopted the Diversification Strategy in related

business areas, such as, Services, Coal Mining, Power Trading, Power Exchange, Manufacturingto ensure robustness and growth of the company.

Vision"A world class integrated power major, powering India s growth, with increasing global

presence."MissionDevelop and provide reliable power, related products and services at competitive prices,

integratingmultiple energy sources with innovative and eco-friendly technologies and contribute to society. EXTERNAL ENVIRONMENT

The external environment is examined in two levels. The first one is Macro environment andsecond is Micro environment.


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Macro environmentOn the macro environment a firm holds only little control. It consists of a variety of

external factors that manifest on a large (or macro) scale. These are typically economic, social, political or technological phenomena. A common method of assessing a firm's macro-environment is via a PESTLE (Political, Economic, Social, Technological, Legal, andEcological) analysis. Within a PESTLE analysis, a firm would analyze national political issues,culture and climate, key macroeconomic conditions, health and indicators (such as economicgrowth, inflation, unemployment, etc.), social trends/attitudes, and the nature of technology'simpact on its society and the business processes within the society.

Economic Factors

India is in the rising phase of its economy curve, the economy of the country wasgrowing at 9 % before it is affected by recession in 2008. Even during recession also it managed

to touch 7.9% in the last quarter (July-Sep 2009) while developed countries suffering fromnegative growth. The Indian economy has the resilience to withstand the challenges arising outof the global slowdown and the domestic drought situation. This inorganic growth in economycalls for a watching rate of growth in infrastructure facilities. Power sector is one of the major aspects of this infrastructure building; the demand for energy has grown at an average of 3.6%

per annum over the past 30 years. In March 2009, the installed power generation capacity of India stood at 147,000 MW while the per capita power consumption stood at 680 KWH. The per capita consumption is expected to increase 1000 KWH. So, this provides huge opportunity for

NTPC.1

Political Factors

The Government of India has a mission of POWER FOR ALL BY 2012. This mission wouldrequire that our installed generation capacity should be at least 2, 00,000 MW by 2012 from the

present level of 1, 14,000 MW.2 The Indian government has set an ambitious target to addapproximately 78,000 MW of installed generation capacity by 2012. The total demand for electricity in India is expected to cross 950,000 MW by 2030.

Technological Factors

The operational efficiency of a thermal power plant is only 30% that is very poor and also highmaintenance cost when compared to hydro power plants (these two are prevalent in India). Theadvantages of thermal power plant are low installation cost, less time for installation andgeneration, and constant supply. But with advent of nuclear power (after nuclear deal) theseadvantages are disserted.

Ecological Factors


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Thermal power plants produce co2, so2 and other gases which are hazardous to theenvironment. AfterCOPENHA GEN Climate Conference it became more imperative for thegovt. to reduce pollution. This might put pressure on NTPC to go for alternatives.

Socio-Cultural Factors

With a population of India increasing and the scenario of the country is changing fromsurvival to consumption mode, the demand for electricity continue to be on increase. As a resultof which power generation sector promises increasing returns to those who have already

positioned themselves strongly in this sector.

Legal Factors

Legal factors that main hindrance to enter this industry primarily licenses, environment protections laws and work safety laws. This is the reason why the most of private companiesalthough ventured a decade ago still they are thriving for success.

Micro environmentA firm holds a greater amount (though not necessarily total) control of the micro environment. Itcomprises factors pertinent to the firm itself, or stakeholders closely connected with the firm or company.

Power Sector Scenario

The Growth of an economy, calls for a matching rate of growth in its infrastructure

facilities. India is on the peak of its growth trajectory. Power sector is one of the major aspects of this infrastructure building. Some prominent people like the Ex Chairman of GE Jack Welchhave gone to the extent of saying, you dont have a chance to stand in the 21st century withoutlots of powerWithout this you miss the next revolution.

Moreover, the growth rate of demand for power in developing countries is generallyhigher than that of GDP. In India, the elasticity ratio was 3.06 in 1st plan, and peaked at 5.11during 3rd plan and came down to 1.65 in 80 s. For 90 s a ratio of around 1.5 was projected.Hence, in order to support a growth of GDP of around 7% the rate of growth of power supply of 10%is required. If we look at current scenario, electricity consumption in India has more than

doubled in the last decade, outpacing the economic growth. If we analyze the various statistics of Indian power sector, we will find that the generating capacity has gone up tremendously from ameager 1712MW in 1950 to a whooping 112000MW today.3

To enhance power supply in cost effective ways is one of the top priorities for thecountry. During the quarter April-June 2009, the energy and peaking shortages in the countrywere 9.8% and 12.3% respectively. The Compound Annual Growth Rate (CAGR) of power


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demand for the last five years has been 6.80% as against power supply CAGR of 5.88%. TheCAGR of your Company's power generation has been higher at 6.79%. Strong appetite for electricity consumption in the country translates into robust growth outlook for power playerslike NTPC.

Gross electricity requirement by the end of the 11t h Plan projected by the Working Group onPower is 1,038 billion kWh and peaking demand estimation is 1, 51,000 MW.

The Integrated Energy Policy, 2006 of the Government of India estimates installedcapacity requirement of 778 GW and energy requirement of 3,880 billion kWh by 2031-32 if thecountry's GDP grows at the rate of 8%. At 9% GDP growth rate, the capacity requirement will be960 GW and energy requirement will be 4,806 billion kWh by 2031-32.

Concerted efforts are being made to enhance power supply at a rapid pace and meet growingelectricity requirements. NTPC is playing a major role in this national endeavor.

Industry Competitive Forces1) Competition Rivalry Low

In competition front the major part of the pie is occupied by govt. organization. Also, NTPCcontributes alone 28% of power generation, although the company has 18.79% of the totalnational capacity that is because of its focus on high efficiency.4

After 1991 liberalization, it opens gates for both the privet sectors in domestic and foreigninvestors. The initial response of the domestic and foreign investors to the policy of private

participation in power sector has been extremely encouraging. However, many projects haveencountered unforeseen delays. There have been delays relating to finalization of power

purchase agreements, guarantees and counter guarantees, environmental clearances, matchingtransmission networks and legally enforceable contracts for fuel supplies.

The shortfall in the private sector was due to the emergence of a number of constraints,which were not anticipated at the time the policy was formulated. The most important is thatlenders are not willing to finance large independent power projects, selling power to a monopoly

buyer such as SEB, which is not financially sound because of the payment risk involved if SEBs

do not pay for electricity generated by the IPP. Uncertainties about fuel supply arrangements andthe difficulty in negotiating arrangements with public sector fuel suppliers, which concern

penalties for non-performance, is another area of potential difficulty.

Large private organization like Tata power, Reliance energy, Adani Power and Jindal power arealso finding fortunes very rare, even these organizations also need support from other areas suchas transportation and distribution.


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2) Threat of Entry Low

Threat of entry is less likely to be there although power generation is a lucrative business inview of thefact that everyone requires power. Ever since liberalization the others industries (i.e. buyers) aregrowing.Also, the present industries also making profits, this calls an opportunity for the new entrants.

The major challenge for the entrants is resources are scarce and requires good network for distribution which demands collaboration with the distribution channel members. The other options available for a potential entrant are hydro, solar, wind and tidal which are very costly(installation and maintenance) and entry barriers are also high.

3) Threat of Substitutes Moderately High

The substitutes of thermal power are hydro, nuclear, solar, wind and tidal power. In case of hydro electric power the installation cost is high though the maintenance cost and also availableat cheap price. But solar, wind and tidal power both the installation and maintenance cost is high,hence these are not cost- effective to the buyer. From environmental prospective also these areeco-friendly .However, in all the cases there is no assurance for consistent continuous supply.

For generating nuclear power both installation costs and maintenance costs are low whencompared to thermal power. However, the major challenge is resources, technology and dumpingthe waste. After nuclear deal these constraints are disappeared also, Indian govt. is planning to goin large way to enhance nuclear power in India with a target of 25000MW by 2012. This is onlya major threat to the NTPC.

4) Suppliers Bargaining Power Moderately High

The major suppliers of NTPC are raw material providers of coal and machinery providerssuch as boilers and cooling tanks. For machinery purpose it is heavily depending on BHELwhich is sole provider of power plant equipment suppliers, engineering products & services for all power plants.

Coal miners are predicting that the coal will no longer available after 20-30 years. Furthermore,the quality of coal available in India is degrading day by day, which demands more filteringduring sieving process. Those eventually result in less efficiency. More than 53% of the power inIndia is generated by coal based thermal power plants which consequences in higher competitionfor purchase of raw material. So, this increases the bargaining power of suppliers.

5) Buyers Bargaining Power Low


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The buyers of power from NTPC are power grids and industries. Power grids in turn supply power toend customer via state electricity boards and purchasing cost are directly regulated by thegovernment.

In current scenario no industry runs without power, after the liberalization of trade in India alltypes industries are emerging in India which is just adding fuel to the fire. The major buyers of

power are industries pertaining to the infrastructure and these industries are growing in large way because economic surge. Also these buyers require consistent and continuous supply of power which can be provided only through thermal power and nuclear power hence the buyer

bargaining power is weak. Backward integration of buyers such as Tata power, Reliance power for their business is a not major threat to the NTPC because they very minute.

Diagnosis of Competitive Forces

Subsequent to scrutinizing each of the five forces, it is apparent that only two forces thateffecting NTPC are suppliers bargaining power (scarce resources and large no of buyers) andsubstitutes (Nuclear power generation). The other three forces are not playing a major role incompetition. So, it is comprehensible that the sate of competition is conducive to good

profitability.

INTERNAL ENVIRONMENT Competitive Assessment

NTPC is the largest power generation company in India. Forbes Global 2000 for 2009ranked it 317th in the world. With a current generating capacity of 30,644 MW, NTPC hasembarked on plans to become a 75,000 MW company by 2017. It was founded on November 7,1975 to accelerate power development in India.

NTPC is emerging as a diversified power major with presence in the entire value chainof the power generation business. NTPC's core business apart from power generation, which isthe mainstay of the company, is engineering, construction and operation of power generating

plants and also ventured into providing consultancy to power utilities, power trading ,ashutilization and coal mining in India and abroad

The total installed capacity of the company is 30, 644 MW (including JVs) with 15 coal based and 7 gas based stations, located across the country. In addition under JVs, 3 stations arecoal based & another station uses naphtha/LNG as fuel. By 2017, the power generation portfoliois expected to have a diversified fuel mix with coal based capacity of around 53000 MW, 10000MW through gas, 9000 MW through Hydro generation, about 2000 MW from nuclear sourcesand around 1000 MW from Renewable Energy Sources (RES). NTPC has adopted a multi-


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pronged growth strategy which includes capacity addition through green field projects,expansion of existing stations, joint ventures, subsidiaries and takeover of stations.

NTPC has been operating its plants at high efficiency levels. Although the company has 18.79%of the total national capacity it contributes 28.60% of total power generation due to its focus onhigh efficiency. NTPC s share at 31 Mar 2001 of the total installed capacity of the country was24.51% and it generated 29.68% of the power of the country in 2008-09. Every fourth home inIndia is lit by NTPC. 170.88BU of electricity was produced by its stations in the financial year 2008-2009. The Net Profit after Tax on March 31, 2006 was INR 58,202 million. Net Profit after Tax for the quarter ended June 30, 2006 was INR 15528 million, which is 18.65% more than for the same quarter in the previous financial year. 2005).

At NTPC people before Plant Load Factor is the mantra that guides all HR related policies. NTPC has been awarded No.1, Best Workplace in India among large organizations for the year 2008, by the Great Places to Work Institute, India Chapter in collaboration with TheEconomic Times.

The concept of Corporate Social Responsibility is deeply ingrained in NTPC's culture.Through its expansive CSR initiatives NTPC strives to develop mutual trust with thecommunities that surround its power stations. Right from social to developmental work of thecommunity and welfare based dependence to creating greater self reliance; the constant endeavor is to institutionalize social responsibility on various levels.

3.2 SWOT analysis

SWOT Analysis is a strategic planning method used to evaluatetheStrengths,Weaknesses,Opportunities, andThreats involved in a project or in a businessventure. It involves specifying the objective of the business venture or project and identifying theinternal and external factors that are favorable and unfavorable to achieving that objective.5

3.2.1 Strengthsi.Largest market share in domestic power generation and a broad customer portfolio across thecountry.ii.

Excellent track record of performance in project implementation and plant operation.iii.Diversified thermal generation portfolio multiple sizes and fuel types.iv.Highly skilled and experienced human resources, exposed to state-of-the art technologies in

projectexecution and power generation.v.


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Emerged into Maharatna status from Navratna i.e. more autonomy and more decision making power.vi.High brand equity among shareholders.vii.

Huge financial track record with NPAT Rs 82013 million and total assets base is Rs 945362millionas on 31st March 2009 , with this strong balance sheet it has ability to raise low cost debt.viii.Engineering skills in project configuration and package design.ix.Turnaround ability for old plants demonstrated in the takeover plants of Talcher, Tanda &Unchahar.x.High credit rating that is indicative of the confidence of lenders.xi.

In-house training facility (PMI), CENPEEP, R&D etc that assist in development of the sector.xii.Thrust on reducing social costs of capacity growth strong execution of Resettlement andrehabilitation plans.3.2.2 Weaknessi.Low risk-diversification of business portfolio consists primarily of generation assets.ii.Functional orientation hampering cross functional perspective in decision making.iii.Long and multi layered procurement process leading to long lead times and process delay.iv.Gaps in HR systems such as performance management, rewards and incentives and career development.

NTPC BUSINESS STRATEGIESv.Inadequate deployment of a strong knowledge management system that could assist in improvingefficiency and effectiveness in all aspects of the business.vi.Hierarchy for decision making that affects responsiveness.vii.Role ambiguity and dilution within different lends of the organization.3.2.3 Opportunitiesi.Future of India is dependent on nuclear power which is in its budding stage. Since it hasexpertisein power generation and also huge financial strength it can leverage this opportunity.ii.Apart from BHEL, no company (exclude JV s) in country acquired acumen in power equipment


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manufacturingiii.Expand generation capacities by putting up thermal and hydro capacities; maintain the positionof adominant generating utility in the Indian Power sector.

iv.Broad base fuel mix by considering imported coal, gas, domestic coal, nuclear power etc with aview to mitigate fuel risks and maintain long run competitiveness.v.Expand services for EPC, R&M and O&M activities in the domestic as well as internationalmarkets.vi.Backward integrate into fuel management to exercise greater control and understanding of supplyeconomics.vii.

Lead the development and commercial deployment of non-conventional energy sourcesespeciallyin the distributed generation mode.viii.Multi Commodity Exchange has sought permission to offer electricity future marketix.Improve collections by trading, direct sale to bulk customers and the active role in allocation innew

plants.x.Execute increased number of power plants that classify for Mega Power Projects status, therebyreducing the cost of the projects and power and power generated.xi.Forward integrate into the distribution business by intensifying its present channel in India.3.2.4 Threatsi.After liberalization new player in the country like Tata, Reliance, Adani, Jindal etc are evolvedandthese are planning to go in big way.ii.It is predicted that the primary ingredient for thermal power generation i.e. coal will not availableafter 4 decades.iii.Absence of an independent regular for coal industry and the delay in private investments lendingtothe risk of low availability of coal in the futureiv.Joint ventures of foreign players with Indian companies to get access in power generation and

power equipment manufacturing.v.


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Redirecting power may be constrained by inter-regional connectivity.vi.Downward regulatory and competitive pressure on tariffs.vii.Stringent environmental norms in the future may add to the cost of generation.

NTPC has been carrying on its operation since 1975 and has acquired a considerableshare of country s total electricity generation. The challenge for NTPC would be to continue tohold its large share in power generation sector. Thus NTPC strategies would fall under star of theBCG matrix.It s to be seen that in near future how NTPC will continue to dominate the energyand power generation sector. Here

when we talk of high growth we would like to say that NTPC would experience a high growthrate because it has a strong presence in this sector. It has withstood the onslaught of time and

other pressure to position itself as a leading power producer in India.

4. Strategies of the Company

NTPC is ramping up its generation capacity and is expected to increase its market sharefrom about 19% today to around 25% by 2017. The capacity growth of will enable it to maintainits position as the market leader. Today, the installed capacity is 30,644 MW, including 2,294MW in joint ventures.

During the 11th plan, your Company has already commissioned 3,240 MW capacity. Capacityaggregating to 17,930 MW consisting of 45 units, including 8 super-critical units of 660 MWeach, is under construction at 18 projects situated in 16 locations. Capacity of 3,022 MW isunder the award process.

For the 12th plan , company has started the process of capacity addition in right earnest. NIT is to be issued for 5,940 MW capacities through bulk tendering of 9 units of 660 MW each by mid-October 2009. Feasibility reports have been approved for 11,450 MW capacities for further

processing and for an additional 10,100 MW capacity, feasibility reports are ready and are in the process of approval. Your Company is aiming to place orders for the 12th plan projects duringthe next 2 years. Infrastructure work has already commenced in several 12th plan project sites

Thus, your Company is fully geared to become a 75,000 MW Company by 2017. In other words,itis going to increase its generation capacity by two and half times between now 2017.With the11th plan projects under execution, the 12th plan projects in the process company istargeting to achieve 10% or double-digit growth in generation every year 4.1 Diversified Growth

NTPC s quest for diversification started with its foray into Hydro Power. It has, since then, been


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moving towards becoming a highly diversified company through backward, forward and lateralintegration.The company is well on its way to becoming an Integrated Power Major , having enteredHydro Power,

Coal Mining, Power Trading, Equipment Manufacturing and Power Distribution. NTPC hasmade long strides in developing its Ash Utilization business. In its pursuit of diversification,

NTPC has also developed strategic alliances and joint ventures with leading national andinternational companies.

a)Hydro Power: In order to give impetus to hydro power growth in the country and to have a

balanced portfolio of power generation, NTPC entered hydro power business with the 800 MWKoldam hydro projects in Himachal Pradesh. Two more projects have also been taken up inUttarakhand. A wholly owned subsidiary, NTPC Hydro Ltd., is setting up hydro projects of capacities up to 250 MW.

b)Coal Mining: In a major backward integration move to create fuel security, NTPC hasventured

into coal mining business with an aim to meet about 20% of its coal requirement from its captivemines by 2017. The Government of India has so far allotted 7 coal blocks to NTPC, including 2

blocks to be developed through joint venture route. Coal Production is likely to start in 2009-10.

c)Power Trading: 'NTPC Vidyut Vyapar Nigam Ltd.' (NVVN), a wholly owned subsidiary wascreated for trading power leading to optimal utilization of NTPC s assets. It is the second largest

power trading company in the country. In order to facilitate power trading in the country,Nationa

lalalalalal ntpc

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