A TERM PAPER ON

“ADANI POWER”

SUBJECT

“STRATEGIC MANAGEMENT”

SUBMITTED

BY

MANOJ J BAGRECHA1PT13MBA22

TO

PROF. M G VEDVYASA

FACULTY

MASTER OF BUSINESS ADMINISTRATION

P.E.S INSTITUTE OF TECHNOLOGYBANGALORE-560085

ADANI POWER

Type Public

Industry Energy

Founded 22 August 1996

Headquarters Ahmedabad, India

Key people Gautam Adani, (Chairman)Vineet S Jain, (CEO)

Products Electricity generation, Transmission and Distribution; Energy trading

Adani Power Limited is the power arm of Indian business conglomerate Adani Group with head office at Ahmedabad, Gujarat. The company is India's largest thermal private power producer with capacity of 7920 MW and also it is the largest solar power producer of India with capacity 40 MW. Adani Power Limited is ranked #334 in top companies in India in Fortune India 500 list of 2011.

It is India's first company to achieve the supercritical technology. The plant is the only thermal power plant in India to be certified by UN under CDM.

CEO’s message: Believe in passion

Power Business of Adani Group has witnessed several achievements as well as challenges since its inception and yet the journey continues on the chosen path. Team Power believes in Passion, Speed and Quality in every endeavor of the organization. The team has established benchmarks in various areas and is continuously in pursuit of excellence. Words like First, Largest, Top, etc have become its identity.

The recent times have been very eventful. Many lessons have been learnt, initiatives taken and benchmarks established. The current scenario in power sector and our long term plans present several challenges but we are committed to re-energized actions and further refined competencies to meet them.

We believe that challenges are a part of our professional life and provide us with the opportunity to excel. I foresee a brighter and exciting times ahead when many more milestone shall be crossed by Team Power. I believe in our people’s strength, which has been evident on many occasions. It’s the people, in the organization who make miracles happen and they shall continue to empower the organization to make it the best in the business.

Vision:

To be the globally admired leader in integrated Infrastructure businesses with a deep commitment to nation building. We shall be known for our scale of ambition, speed of execution and quality of operation.

Mission:

To assimilate knowledge, develop capabilities and manage collective enterprise to profitably tap global commercial opportunities and advantages for the benefit of stakeholders and society.

Values:

Courage: we shall embrace new ideas and businesses Trust: we shall believe in our employees and other stakeholders Commitment: we shall stand by our promises and adhere to high

standard of business.

Culture:

Passion: Performing with enthusiasm and energy. Results: Consistently achieving goals. Integration: Working across functions and businesses to create

synergies. Dedication: Working with commitment in the pursuit of our aims. Entrepreneurship: Seizing new opportunities with Initiative and

Ownership.

BALANCE SHEET (in crores)

Particulars 2013-14 2012-13 2011-12

Revenue 11304.56 6868.09 4194.27Profit Before Tax (PBT)

-465.37 -1493.71 -3.62

Tax -1060.63 458.32 290.3Profit After Tax (PAT)

595.26 1952.03 -293.92

EPS (in) 2.13 -8.16 -1.35

SWOT ANALYSIS OF ADANI POWER:

Strengths:Strong Business OperationsSignificant Asset BaseImproved Financial Performance

Weaknesses:Dependency on Thermal Fuel SourcesWeak Liquidity Position

Opportunities:Renewable Power DevelopmentNew Project DevelopmentGrowing Power Demand in India

Threats:Regulatory NormsCompetitive EnvironmentVolatility in Commodity Pricing

PORTER’S FIVE FORCES ANALYSIS – POWER SECTOR:

Industry Rivalry (Medium)

Potential Entrants (Threat

of Mobility) (Low)

Buyers (Buyer Power)

(Medium)

Substitutes (Threat Of

Substitutes) (Medium)

Suppliers (Supplier Power)

(High)

The Intensity of Competitive Rivalry within the Industry:

Power producing companies – No competitive rivalry as demand for power is way above its supply and all the power generated is used up.

However, with government encouragement, private participation is expected to increase in the coming years to take advantage of huge demand for power

Power equipment market - Market leader like BHEL is facing tough competition from L&T, Alstom, Doosan and most importantly Chinese suppliers.

Major orders of Boiler, Turbine and Generator grabbed by Chinese suppliers from most of the private sector clients.

So overall the intensity of competitive rivalry is medium.

The Threat of the Entry of New Competitors:

Highly capital-intensive industry and hence demands huge investment

Power producers – Behemoth like NTPC, SEBs contributing around 85 % of total power produced.

Ditto for Power Grid Corp. of India in Transmission and Distribution Segment.

Major plans by big companies like Reliance power, Adani power, Lanco etc. to make a entry into power sector after market opened up for private sector through Electricity Act 2003 and subsequent reforms.

However obtaining regulatory approvals, fuel linkages, land etc. still remain the major bottlenecks.

Hence the threat of new entrant appears to be low.

The Threat of Substitute Products or Services:

Power does not have substitute but it can be generated from different sources of energy.

Currently thermal power is dominant in India, coal being the major raw material.

Coal availability is limited and therefore power from nuclear, hydro and other renewable sources could be used as substitute for thermal power in future.

Agreements with various countries for nuclear collaboration will give major impetus to Nuclear power plants.

Although demand for power outstrips its supply, going forward, thermal power plant companies have threat from non-thermal power generators.

Hence the threat of substitute products is medium.

The Bargaining Power of Suppliers:

Coal is majorly used as a feed for generating power.

The supply of coal in India is limited and hence coal players are in dominant position.

Power companies are required to import coal if the domestic supply is not sufficient, which proves to be an expensive affair.

With companies like Lanco, Adani Power buying coal mines in Indonesia, Australia etc. to import better grade coal than available in India, market dominance of Govt. Companies like Coal India will subside gradually.

However looking at the present situation, the power of suppliers is high.

The Bargaining Power of Buyers:

Industrial consumers have huge demand for power

Their bargaining power is low in India as the number of power companies to buy from is limited in number. Hence power companies are in better position.

Retail customers -Government regulates the power sector to ensure supply of power at reasonable prices but this regulation is limited.

Peak shortage is much more in every region and it is about 12 % on all India bases which allow suppliers to dictate terms with the buyers.

Overall, the bargaining power of buyers is Medium.