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STRATEGIC ANALYSIS OF NTPC

BUSINESS STRATEGY ASSIGNMENT

7/30/2010

BY

SANDEEP KAUSHIK

ENROL. NO.:09BS0002057

SUBMITTED TO: PROF. A.K.MITRA



1

A STRATEGIC ANALYSIS: NATIONAL THERMAL POWER CORPORATION

Vision

"A world class integrated power major, powering India¶s growth, with increasing global presence."

Mission

³Develop and provide reliable power, related products and services at competitive prices,integrating multiple energy sources with innovative and eco-friendly technologies andcontribute to society.´

Core Values ± BCOMIT

y Business Ethics

y Customer Focus

y Organizational & Professional Pride

y Mutual Respect & Trust

y Innovation & Speed

y Total Quality for Excellence

Overview of Organization:

India¶s largest power company, NTPC was set up in 1975 to accelerate power development inIndia. NTPC is emerging as a diversified power major with presence in the entire value chain of the power generation business. Apart from power generation, which is the mainstay of thecompany, NTPC has already ventured into consultancy, power trading, ash utilization and coalmining. NTPC ranked 317th in the µ2009, Forbes Global 2000¶ ranking of the World¶s biggestcompanies.

The total installed capacity of the company is 31,704 MW (including JVs) with 15 coal basedand 7 gas based stations, located across the country. In addition under JVs, 3 stations are coal

based & another station uses naphtha/LNG as fuel. By 2017, the power generation portfolio is

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 sources

and around 1000 MW from Renewable Energy Sources (RES). NTPC has adopted a multi- 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 18.10%of the total national capacity it contributes 28.60% of total power generation due to its focus on

high efficiency.



2

In October 2004, NTPC launched its Initial Public Offering (IPO) consisting of 5.25% as freshissue and 5.25% as offer for sale by Government of India. NTPC thus became a listed companyin November 2004 with the government holding 89.5% of the equity share capital. The rest isheld by Institutional Investors and the Public. The issue was a resounding success. NTPC isamong the largest five companies in India in terms of market capitalization.

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 and the bestPSU for the year 2009, by the Great Places to Work Institute, India Chapter in collaborationwith The Economic Times.

The concept of Corporate Social Responsibility is deeply ingrained in NTPC's culture. Throughits expansive CSR initiatives, NTPC strives to develop mutual trust with the communities thatsurround its power stations.



3

K ey Competitors and comparative analysis:

Last Price Market Cap.

(Rs. cr.)

Sales

Turnover

Net Profit Total Assets

NTPC 199.25 164,290.88 48,221.32 8,728.20 93,562.70

Power Grid Corp 101.25 42,614.52 6,675.85 1,690.61 41,999.41

Reliance Power 171.90 41,200.99 8.55 273.23 13,792.81

NHPC 31.65 38,931.85 4,331.98 2,090.50 30,214.65

Tata Power 1,337.95 31,750.52 7,098.27 947.65 13,890.56Reliance Infra 1,143.80 28,008.26 10,027.26 1,151.69 19,239.62

Adani Power 127.70 27,839.05 434.86 170.80 7,277.74

Neyveli Lignite 156.15 26,197.44 3,354.91 821.09 13,526.93

JSW Energy 126.20 20,697.49 - - -

Torrent Power 340.70 16,096.31 5,909.20 836.55 7,151.44

Table 1: data as on July 29, 2010

Customer segmentation:

NTPC don¶t have direct retail customers as there are some necessary steps in the power to be

delivered to the end consumer.

1) Power generation: power is generated and stepped up to very high voltage levels of more then 220 KV to reduce the transmission losses.

2) Power transmission: stepped up power transmitted via high tension power lines.3) Power distribution: high voltage levels are further stepped down to lower level as up

to 220 volts for end consumers.



4

So two sorts of customers are there for NTPC directly:1) Government transmission and distribution department.

2) Power grid.

B) PESTEL Environment (macro environment) :

POLITICAL FACTORS:

Government stability: Stable government continuing its second term.

Taxation Policy: "There is no proposal under consideration of the government to provide

further extension of tax holidays for setting up of power plants in terms of direct taxes,

The minister added that tax incentives like exemptions and deductions are economicallyinefficient, inequitable, lead to revenue loss, breed rent-seeking behaviour, increase

compliance costs and enhance the administrative burden.

"The case for tax incentives is further weakened in the existing tax regime of moderate tax

rates. Therefore, as a matter of principle, government has taken a considered policy decision

not to support tax incentives and to allow minimal exemptions and deductions,"

However, in the power sector, as far as indirect taxes are concerned, all items of machinery

and equipments required for initial setting up mega power projects are fully exempt from

duties and customs. All such goods domestically procured for initial setting up of mega

power plants awarded on an international competitive bidding basis or tariff-based bidding

are also fully exempt from payment of central excise duties.

Foreign Trade regulations:

Electric Generation, Transmission, Distribution and Trading: FDI upto 100% is permitted under automatic route for:i) Generation and transmission of electric energy produced in-hydro electric, coal/lignite

based thermal, oil based thermal and gas based thermal power plants.ii) Non-Conventional Energy Generation and Distribution.

NTPC

38%

Power Grid Corp

10%

Reliance Power

9%

NHPC

9%

Tata Power

7%

Reliance Infra

6%

dani Power

6%

Neyveli Lignite

6%

JSW Energy

5%

Torrent Power

4%

MARKET CAPITALIZATION OF POWER COMPANIES W.R.T.

NTPC AS ON JULY 2010





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Inflation: Food inflation for the week ended July 17, 2010 has fell at 9.67 percent easing atsingle digit for the first time in this year. The food inflation, which was at 12.47 percent in

the earlier week, remained above the 16 percent level for most part of the last year. The fallwas mainly due to drop in prices of vegetables, especially potatoes and onions. The primary

articles index and fuel prices index, however, witnessed an increasing trend at 14.5 percentand 14.29 percent respectively. The fuel prices including petrol, diesel, and kerosene and

cooking gas were raised in the last June. Wholesale price inflation, the measure for overallincrease in prices, was at 10.55 percent in June. Earlier this week, the Reserve Bank of Indiaraised key short-term interest rates to deal with high inflation and indicated that it wouldcontinue with monetary tightening measure till inflation is brought under control.

SOCIO-CULTURAL FACTORS:

Population: 1,192,808,000

Demographic and economic indicators

2006 2007 2008 2009 2010

PopulationAged 65+:

January 1st

('000)

52,128.16 53,626.68 55,132.74 56,656.42 58,215.24

Population

Density

(people per

sq km)

376.62 382.17 387.66 393.11 398.51

GDP

Measured atPurchasing

Power Parity

(million

international

)

2,887,751.94 3,268,287.21 3,500,000.00 3,785,886.25 4,146,600.93

Real GDP

Growth (%

growth)

9.65 9.87 6.47 5.68 9.40

Inflation (%growth)

6.17 6.39 8.32 10.83 13.16

Consumer

Expenditure

(US

million)

501,477.25 670,213.70 727,716.06 724,022.50 817,565.08



7

Annual

Gross

Income

(US

million)

754,849.44 946,420.51 1,017,559.48 1,015,329.55 1,109,895.78

Annual

Disposable

Income

(US

million)

733,601.07 908,057.36 965,342.91 962,330.55 1,052,872.11

Source

y World Economic Fact book

Consumerism: If the 90s was about Indian globalizing, the 2000s was about Indianisation of

global brands and categories. Western tops became kurtis; MTV and Channel V adoptedIndian film music to increase connect and with the K serials, India got its own local soapoperas. McDonald¶s showed the way in marketing to tailor-make its product offering to scripta success story and the successful Thanda Matlab Coke advertising in 2001 was thetorchbearer for global brands to get into Indian culture. Through the decade, there were aspate of global brands, including technology brands like Nokia and Motorola, that recognisedthat India needed its own mix. This ended with Vodafone continuing with its local Hutchadvertising even after taking over the local brand and now contemplating taking the Indiancommunication abroad to the West!

The Indian celebrity disease and advertising craze grew and took fresh shape through thedecade. As we exit, celebrities neither bring ³awe and credibility´ to the brand they represent,

nor transfer values, they just give advertising cut-throughs. With over-exposure and mediaeditorials bringing the celebrity into homes, the aura around them has disappeared, makingthem more human and real. It, of course, gives advertising agencies more play-field to dothings with them; but should get marketers to re-evaluate the value they are bringing.Celebrities have become human!

Reality shows have become a part of our lives. It started with Kaun banega Crorepati andended with the explosive Sach ka Samna with music and dance shows and the likes of BigBoss and Rakhi ka Svayamvar catching eyeballs. Cross over to news channels and they tooare filled with sordid stories of celebrities and semi-celebrities, and happenings within their home walls. Mass voyeurism is in and so too viewer enjoyment, vicariously, of other

people¶s sorrows and unhappiness. Hand in hand with this is the birth and growth of ³brands

with a social conscience´. Lifebouy, Idea, Tata Tea are examples that are talking to theresponsible side of Indian consumers. Clearly, a schizophrenic society is opening up,

providing brand opportunities at opposite ends of the spectrum. And brand communicationhas evolved in both directions.

In sum, it¶s been a decade of evolution. We have progressed from ³needs´ to ³desires´,³adoption´ to ³adaptation´, from ³exuberance´ to ³enjoyment´; from ³starry-eyedfascination´ to more ³value-added evaluation´. The fundamental drivers, structure of the



8

market and the consumer have changed. We entered the decade with unbridled optimism andexited it with cautious optimism and a sense of realism ² a natural evolution from the early

growth stage to late growth stage. The next decade needs to be viewed as the next phase of this evolution and managed accordingly. Looking at the last 10 years as a period will help us

see things as a larger picture.

TECHNOLOGICAL:

Government spending on research: To further encourage R&D across all sectors of the

economy, weighted deduction on expenditure incurred on in-house R&D enhanced from 150

per cent to 200 per cent. Weighted deduction on payments made to National Laboratories,

research associations, colleges, universities and other institutions, for scientific research

enhanced from 125 per cent to 175 per cent.

Speed of technology transfer:

The Indian telecommunications industry is the world's fastest growing telecommunications

industry, with 671.69 Million telephone (landlines and mobile) subscribers and 635.51Million mobile phone connections as of June 2010. It is also the second largest

telecommunication network in the world in terms of number of wireless connections

after China. The Indian Mobile subscriber base has increased in size by a factor of more than

one-hundred since 2001 when the number of subscribers in the country was approximately 5

million to 635.51 Million in June 2010.As the fastest growing telecommunications industry in

the world, it is projected that India will have 1.159 billion mobile subscribers by

2013. Furthermore, projections by several leading global consultancies indicate that the total

number of subscribers in India will exceed the total subscriber count in the China by

2013.The industry is expected to reach a size of Rs 344,921 crore (US 73.47 billion) by

2012 at a growth rate of over 26 per cent, and generate employment opportunities for about

10 million people during the same period. According to analysts, the sector would createdirect employment for 2.8 million people and for 7 million indirectly. In 2008-09 the overall

telecom equipments revenue in India stood at Rs 136,833 crore (US 29.15 billion) during

the fiscal, as against Rs 115,382 crore (US 24.58 billion) a year before.

The Indian Information Technology industry accounts for a 5.9% of the country's GDP and

export earnings as of 2009, while providing employment to a significant number of

its tertiary sector workforce. More than 2.3 million people are employed in the sector either

directly or indirectly, making it one of the biggest job creators in India and a mainstay of the

national economy. In March 2009, annual revenues from outsourcing operations in India

amounted to US 60 billion and this is expected to increase to US 225 billion by 2020. The

most prominent IT hub is IT capital Bangalore. The other emerging destinations

are Chennai, Hyderabad, Mumbai, Pune, NCR, Jaipur and Kolkata. Technically proficient

immigrants from India sought jobs in the western world from the 1950s onwards as India's

education system produced more engineers than its industry could absorb. However, there are

severe skills shortage among engineers, especially who lack in soft skills and technical skills,

as a result engineering graduates remain unemployed after being pass out from college or

university. India's growing stature in the information age enabled it to form close ties with

both the United States of America and the European Union.



9

India's IT Services industry was born in Mumbai in 1967 with the establishment of Tata

Group in partnership with Burroughs. The first software export zone SEEPZ was set up here

way back in 1973, the old avatar of the modern day IT park. More than 80 percent of the

country's software exports happened out of SEEPZ in 80s.

Each year India produces roughly 500,000 engineers in the country, out of them only 25% to

30% possessed both technical competency and English language skills, although 12% of India's population can speak in English. India developed a number of outsourcing companies

specializing in customer support via Internet or telephone connections. By 2009, India also

has a total of 37,160,000 telephone lines in use, a total of 506,040,000 mobile

phone connections, a total of 81,000,000 Internet users²comprising 7.0% of the country's

population and 7,570,000 people in the country have access to broadband Internet² making

it the 12th largest country in the world in terms of broadband Internet users. Total fixed-

line and wireless subscribers reached 543.20 million as of November, 2009.

Technology Transfer Approach:NTPC:

Dual Approach in technology / practices selection:

1. General technologies & practices for performance improvement like plant and equipment

performance testing & optimization. The practice helps establish current level of equipment

performance & best achievable efficiency& recommend optimal operating regime.

It facilitates performance degradation assessment, and performance & capability restoration

Use of IDAS and DALITE software to simplify procedure.

ENVIRONMENTAL:

Environmental protection laws:

ENVIRONMENTAL (PROTECTION) ACT, 1986

The Environment (Protection) Act, 1986 was introduced as an umbrella legislationthat provides a holistic framework for the protection and improvement to theenvironment.

In terms of responsibilities, the Act and the associated Rules requires for obtainingenvironmental clearances for specific types of new / expansion projects (addressedunder Environmental Impact Assessment Notification, 1994) and for submission of an

environmental statement to the State Pollution Control Board annually.Environmental clearance is not applicable to hydro projects also.

SJVNL undertakes Environmental Impact Assessment for all projects as a standardmanagement procedure as laid down in The Environment (Protection) Act, 1986 andalso functions within permissible standards of ambient air quality and noise levels as

prescribed by national laws and International regulations. The EnvironmentalClearance procedure is at



10

Other rules and regulations under the Environmental (Protection) Act, 1986applicable to the operation of SJVNL are described below:

AIR (PREVENTION AND CONTROL OF POLLUTION) ACT 1981

The objective of this Act is to provide for the prevention, control and abatement of air

pollution, for the establishment, with a view to carrying out the aforesaid purposes, of Boards, for conferring on and assigning to such Boards powers and functions relating

thereto and for matters connected therewith.

Decisions were taken at the United Nations Conference on the Human Environmentheld in Stockholm in June 1972, in which India participated, to take appropriate stepsfor the preservation of the natural resources of the earth which, among other things,includes the preservation of the quality of air and control of air pollution. Therefore itis considered necessary to implement the decisions foresaid in so far as they relate tothe preservation of the quality of air and control of air pollution.

India Power Consumption to double by 2020

Currently at some 600TWh annually, is set to double by 2020, to tread ahead of Ru ssia - C ountry's peak power capacity deficit expected to widen in 2010 to 12.6

percent of total capacity - Increase in u sage of renewables resources, expansion of

thermal plants, mini-hydro plants, solar energy and nuclear energy to meet the

growing consumption levels

Electricity consumption in India, currently at some 600TWh annually, is set to

double by next decade, by then it would have surpassed Russian levels in the process.

K PMG's Global Advisory Practice released a power industry research published

under the title 'Think BRIC!' reveals that in order to supply this extra electricity,

total generating capacity should jump by 90 GW, to 241GW, with an increased

emphasis on nuclear, clean coal and renewables, including solar and small-hydro.

The survey finds that while the state and federal governments have initiated reforms,legislation designed to supply electricity to all consumer groups, conservative

elements, social programs, systemic weaknesses and contradictions within frequently

combine to stifle progress. Additionally factors like increasing economic activity,

wealth and population, an improved standard of living and infrastructure

developments are all expected to underline a continuous increase in demand for power

in the next decade.

A rural electrification program in the 1980s brought electricity to 200,000 villages for

the first time. Generation capacity hit 150GW in 2006; a 40 percent increase on the

2000 figure, after reforms in 2003 initiated a much needed restructuring of the power

sector. However one respondent of our survey estimated that at least 500 million

Indians still have no access to electricity."

With per capita GDP rising by about 8 percent per year in 2000-2008, the growth in

energy demand is enormous; in particular regarding electricity. While private sector

investment in generation is increasing, India could face challenges until 2020 to

comfortably meet its demand."

According to the study, the country's peak power capacity deficit is expected to widen

in 2010 to 12.6 percent of total capacity, up from 11.9 percent last year. In addition to

the generation deficit, this deficit is also contributed by the inefficiencies in the



11

transmission and distribution systems and electricity theft. To combat this, some

respondents expressed confidence in government assurances on formation of an

independent regulatory system which will support growth in private investment, in

public-private partnerships. They also point to the private investors, who have already

made a start in building independent power plants , with the share of privately

generated electricity currently at around 13 percent of the total and rising. Coal, which already provides almost 70 percent of India's power, will remain the

dominant primary fuel, holding out commercial opportunities to those producers who

are global leaders in high efficiency, clean-burn plant. But with India needing to

diversify production, openings will exist for nuclear, gas and small hydro schemes.

Also the need to extend basic electricity to vast rural population means that there are

massive opportunities in terms of wind, biomass and, if we can get the prices right,

especially solar energy.

The respondents surveyed also feel that India is an attractive destination for foreign

capital investment since India has an advantage for future investment in production

and manufacturing facilities. Government and private utilities are endeavoring to set

up an infrastructure framework to facilitate investments in the country. The survey also reveals that as compared to the other BRIC countries, India had the

second highest growth rate between 2000 and 2008 with an electricity consumption of

5.7 percent. Despite this the country has the lowest electricity consumption per capita

out of the BRIC countries. India's electricity consumption per capita is expected to be

roughly 841 kWh in 2020, representing only about one quarter of the global average.

"While government finances will find it impossible to manage alone, private finance

and skills are largely available if investors feel the regulatory and legal framework is

made to work for a fair return."

LEGAL

Anti-trust / Monopolies legislation:

Competition Commission of India

The Competition Act seeks to ensure fair competition in India through the CCI. The CCI was

made functional with effect from 20 May 2009; Dharendra Kumar is the chairman and thereare six other members. The central government has the power to appoint a director-general

and other advisers and consultants to assist the CCI in inquiries. KK Sharma is presently the

acting director-general.

The CCI has the authority to inquire on its own motion, on information or on a reference

made by the central government, the state government or statutory authorities, or upon

receiving a complaint. The CCI also has the power to investigate agreements, combinations



12

or abuse of dominant position outside India that have an appreciable adverse effect on

competition in India.

If, after an inquiry, the CCI finds that the provisions of the Competition Act are being

contravened, it may direct that the agreement or abuse of dominant position or combination

should not be given effect, or should be discontinued, or it may impose penalties, direct anamendment to an agreement or combination, or make recommendations to the central

government.

Abuse Of Dominant Position

An enterprise is said to be dominant if it is able to operate independently of competitive

forces prevailing in the relevant market or affect its competitors, consumers or the relevant

market in its favour. Abuse of dominant position by an enterprise or a group has been defined

in the Competition Act to include directly or indirectly imposing unfair or discriminatory

conditions or prices in purchase or sale of goods or services; restricting or limiting production

of goods and services, or the market, or limiting technical or scientific development relating

to goods or services to the prejudice of consumers; indulging in practices resulting in denial

of market access; or using dominance in one market to move into or protect other markets.

Certain factors such as market share, the size and resources of enterprise, the size and

importance of competitors and the economic power of the enterprise would have to be given

due regard by the CCI when determining whether an enterprise enjoys a dominant position.

Regulation Of Combinations

The Competition Act seeks to regulate 'combinations', including acquisitions, mergers or

amalgamations of enterprises. Notifications of combinations are mandatory. Acquisitions of

one or more enterprises by one or more persons, or mergers or amalgamations of enterprises,

are combinations if they meet the jurisdictional thresholds based on assets and turnover. The

Competition Act prohibits enterprises from entering into combinations that cause or are likely

to cause an appreciable adverse effect on competition within the relevant market in India.

Various factors have been listed that the CCI has to take into account to determine whether a

combination will or is likely to have an appreciable adverse impact on competition in India.

Thresholds for parties having assets or turnover in India are different from parties that have

assets or turnover within and outside India. A territorial nexus means minimum presence in

the Indian market at least of any two globally merging companies. The minimum threshold

requirement for determining territorial nexus is assets worth 5 billion rupees in India or

turnover worth 15 billion rupees in India from the combined entities. As per the draft

Competition Commission of India (Combination) Regulations, each of at least two of the

parties to the combination must have assets of 2 billion rupees or a turnover of 6 billion

rupees in India.It will be mandatory for qualifying transactions to notify the CCI within 30

days of executing the merger and acquisition disclosing the details of the proposed

combination of a merger or an acquisition, if the said merger or acquisition falls within the





14

The Act regulates issues relating to time limits within which wages shall be distributed to

employees and that no deductions other than those authorized by the law are made by the

employers.

Industrial Disputes Act 1947

Further more the Act aims to ensure fair terms to workmen and to prevent disputes between

employer and the employees so that production may not be adversely affected in the larger interest of public.

It provides the mechanism for the reconciliation and adjudication of disputes or differences

between the employees and the employers. Industrial undertaking includes an undertaking

carrying any business. The Act provides the procedure for termination/retrenchment or

layoff of a workman who has been in continuous service for not less than one year under an

employer.

Employees Provident Fund and Miscellaneous Provisions Act 1952

This Act provides for the institution of provident funds, employees pension funds and deposit

linked insurance fund for employees in factories and other establishment. Its main purpose to

ensure the financial security of the employees in an establishment by providing for a systemof compulsory savings. There is a provision for establishments of a contributory Provident

Fund in which employees¶ contribution shall be at least equal to the contribution payable by

the employer.

Payment of Bonus Act 1965

The Act applies to any establishment / business in which twenty or more persons are

employed on any day during an accounting year. It provides for the payment of bonus to

persons employed in certain establishments on the basis of profits or on the basis of

production or productivity. The minimum bonus, which an employer is required to pay even

if he suffers losses during the accounting year is 8.33% of the salary.

Payment of Gratuity Act 1972

The Act provides for a provision for the payment of gratuity to all employees in all

establishments employing ten or more employees to all types of workers. Gratuity is payable

to an employee on his retirement/resignation.

Maternity Benefit Act 1961

The Act provides the certain benefits to the women in certain establishments for a prescribed

period before and after child birth. The Act does not apply to any factory or other

establishment to which the Employees State Insurance Act 1948 is applicable. Every womenemployee who has actually worked in an establishment for a period of at least 80 days during

the 12 months immediately proceeding the date of her expected delivery, is entitled to receive

maternity benefits i.e. medical bonus, maternity leave, nursing breaks under the Act.



15

(C) INDUST Y ANALYSIS: POR TERS FIVE FOR CE ANALYSIS:

Prominent force for the NTPC in near future:

Competiti e ri alry: as i asi li ali ati i Indian economy for a steady and

sustainable growt Very soon power sector market will be f iercely competiti e. Fur t er

cutting subsidies and disinvestment in public sector units will increase t e share holdersexpectations towards the companies to stretch there prof its and work in an optimi ed

environment.

(D)Who are members of µorganisationf ield¶ for the company & how they inf luence.

³Members of organi ation f ield in an industry are the members who contr i bute to the

company directly or indirectly´

In our case the industry is power generation but many companies which can be the par t of

organi ational f ield for the NTPC and their impacts are:

1) Coal industry: NTPC is basically a coal based power generation company so coal isa ma jor contr i butor for the company sustainability.

2) Transportation: coal ash and other raw mater ial transpor tation is also an inf luencing

factor for the company.

3) Power grid: power cannot be stored af ter generation hence has to be transmittedinstantly and should be consumed thus power gr id plays the impor tant role for the

company.



16

4) Turbine, transformer and other instrument suppliersare also the members of

organi ation f ield whose quality is a basic for qualitative generation.

STA¡

ATEG¢ C G

¡

£

¤ ¥ FOR NTPC:

The concept of strategic groups

± Within an industry, a competitor grouping using similar strategic

character istics, that differ from other groups within the same industry or

sector.

± There may be different character istics which distinguish between strategic

groups. E.g; Si e, geographic coverage, breadth of product range, quality or

service level, R &D spending etc

± Companies in same strategic group follow largely similar strategies or

compete on similar bases in the markets

REL ¦ ANCE

POWER

N § PC

TATA POWER

ADAN¦ POWER

NEYVEL ̈

L¨ ©

N ̈

TE

JSW ENERGY

TORRENT POWER

NTPC

POWER GRID

CORP



17

(E) MAR K ET SEGMENTATION:

Figure 1: Power Generation In Mw In Various Sectors

(F)WHAT CUSTOMER¶S VALUE? CRITICAL SUCCESS FACTORS (CSF) FOR

THE COMPAN .

What customer values:

India is a sort of country where people prefer the products which provide the value for moneyto them. Further according to C.K .Prahlad, 4 billion people in India are at the bottom of

pyramid. So they need electricity at cheaper and affordable rates. Hence NTPC must have to be very competitive in its efforts to optimize processes and efficient use of resources.



18

Critical Success Factors (CSF):

1. Rapid capacity expansion2. Fuel security

3. Regulatory Risk 4. Financial Resources

5. Technological Obsolescence6. Competition

7. Health of Customers8. Pollution

9. CSR and Resettlement and Rehabilitation Rapid.

(G) SWOT ANAL SIS OF NTPC

Strengths of NTPC Largest market share in domestic power generation and a broad customer portfolio acrossthe country.

Excellent track record of performance in project implementation and plant operation.

Diversified thermal generation portfolio ± multiple sizes and fuel types.

Highly skilled and experienced human resources, exposed to state-of-the art technologiesin project execution and power generation.

Navaratna status

High brand equity among shareholders.

Strong balance sheet ± ability to raise low cost debt.

Engineering skills in project configuration and package design.

Turnaround ability for old plants ± demonstrated in the takeover plants of Talcher, Tanda& Unchahar.

High credit rating that is indicative of the confidence of lenders.

In-house training facility (PMI), CENPEEP, R&D etc that assist in development of thesector.

Thrust on reducing social costs of capacity growth ± strong execution of Resettlement andrehabilitation plans.

Weakness

Low risk-diversification of business portfolio consists primarily of generation assets.

Poor financial health of customers.

Functional orientation hampering cross functional perspective in decision making.

Long and multi layered procurement process leading to long lead times and process delay.



19

Fragmented IT architecture.

Gaps in HR systems such as performance management, rewards and incentives and career development.

Inadequate deployment of a strong knowledge management system that could assist inimproving efficiency and effectiveness in all aspects of the business.

Hierarchy for decision making that affects responsiveness. Role ambiguity and dilution within different lends of the organization.

Opportunities Expand generation capacities by putting up thermal and hydro capacities, maintain the

position of a dominant generating utility in the Indian Power sector.

Broad base fuel mix by considering imported coal, gas, domestic coal, nuclear power etcwith a view to mitigate fuel risks and maintain long run competitiveness.

Expand services for EPC, R&M and O&M activities in the domestic as well asinternational markets.

Backward integrate into fuel management to exercise greater control and understanding of supply economics.

Lead the development and commercial deployment of non-conventional energy sourcesespecially in the distributed generation mode.

Improve collections by trading, direct sale to bulk customers and the active role inallocation in new plants.

Execute increased number of power plants that classify for Mega Power Projects status,thereby reducing the cost of the projects and power and power generated.

Forward integrate into the distribution business in India.

Threats Limited experience of operating in a truly liberalized environment with competition.

Limited experience of operating in an independently regulated system.

Redirecting power may be constrained by inter-regional connectivity.

Downward regulatory and competitive pressure on tariffs.

Stringent norms for approval of increase in capital costs for projects in event of timeoverrun.

Stringent environmental norms in the future may add to the cost of generation.

Absence of an independent regular for coal industry and the delay in private investmentslending to the risk of low availability of coal in the future



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(H) STRATEGIC GAPS:

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These are some strategic gap points where NTPC can do a deep exploration to get the

sustainable competitive environment.

Technology enhancement: to stay in competition they have to continuously enhance their

technology. There are many scopes in power sector in India as we still works with outdated

transmission line and transformers.

Cost efficiency i.e. providing power at reasonable prices so that they could provide power to

all in need.

Eco friendly system for carbon emissions: Driven by its commitment for sustainable

growth of power, NTPC has evolved a well defined environment management policy and

sound environment practices for minimizing environmental impact arising out of setting up of

power plants and preserving the natural ecology.

Efficiency improvement: includes both improvements in the existing process and through

improvement in the technology used to increase the productivity of the company. Research &

Development Centre is ISO 17025 accredited and provides high end scientific services to all

the companies stations as well as many outside stations resulting in improving availability

and reliability of stations by providing condition assessment, failure analysis, solving and

analyzing specific problems, and helping our stations in increasing the availability and

reliability of their units.



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OPPORTUNITIES AND STRATEGIES FOR THE NTPC:

1) Sustaining present level of Operational Performance Fuel Security

2) Growth

Growth Challenges

Accelerated Organic Growth

Diversification and Inorganic Growth

3) Manpower

4) Fuel Security

5) Environment

Managing Environment

Regulatory Environment

Managing people

Fund mobilization

Technology up gradation

Competition

Corporate Governance



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Documents

Bs Assignment Final Reported