and
NTPC BUSINESS STRATEGIES
S. Ravi Shankar MBA08089 4/1/2010
NTPC BUSINESS STRATEGIES Executive Summary This report is about the assessment of business strategies of NTPC ltd. To arrive at the assessment of business strategies of the company, the evaluation is done in two phases. Subsequent to assessment is strategies followed by the company and some suggestions that can be done to enhance its business further. The assessment begins with factors affecting external environment and it is analyzed at two levels. The two levels are Macro environment and Micro environment. Macro environment analyzed using the tool PESTEL analysis. From macro analysis, it is evident that except ecological (environment) factors, all the factors are influencing in favor of power sector. Micro environment encompasses industry scenario in the country and driving forces of the industry. Industry scenario revealed that for sustaining high growth rate in GDP and other factors it calls for infrastructure development, consequently which demands power generation. It is concluded that the sector has huge growth opportunity for the next few decades. Scrutinizing the industry driving forces using Porter fives forces model, the two forces which are pushing backwards are suppliers bargaining power and threat of substitutes. Since coal is only source through which almost three-forth of the power is generated and there are many players in the country generates thermal power although coal is very much scarce. The other force which is pushing is nuclear power. After nuclear deal, nuclear power generating technology and its resources are not a distant dream for generation of nuclear power. The next phase of the analysis is internal analysis. Internal analysis covers the present market position of the company and SWOT analysis. NTPC is the largest power generating company in the country, catering to 30% of the energy needs in the country. NTPC has excellent financial track record and share holders have good faith. The company‟s operational efficiencies are at par with the international players. It is consistently awarded as best company to work. Above all it has “Mahratna” brand equity in the market. The challenge for NTPC would be to continue to hold its large share in power generation sector because factors like competition from local and global players (through JV). Also, scarce resources and less technical expertise in manufacturing of equipment and resources mining (thorium for nuclear power) are affecting its present position. After scanning both external and internal environment the next step in assessing the business strategies is looking at the companies a present strategy. NTPC has the Diversification Strategy in related business areas, such as, Services, Coal Mining, Power Trading, Power Exchange, Manufacturing to ensure robustness and growth of the company. It generates not only thermal power (through coal, oil and gas) but also hydro power. Recently it is ventured into wind, solar and nuclear power generation. It is integrated its business both forward and backward. Backward integration, it has JV‟s with its suppliers of power equipment manufactures i.e. with BHEL and Bharati Forge and also it has presence in coal mining business. Moving a step forward, company has ventures in transportation and distribution of power supply .It extended its foot print also into ash utilization business. Gone through two phases of analysis and company strategies, it is coherent that the power sector as a whole huge growth opportunity. The only two forces that are pushing backward are scarce coal resources and other companies endeavor into nuclear power generation. The nuclear technology and resources for generation is new to the country and no company has acquired excellence in nuclear power generation. So, it can leverage this opportunity by utilizing its huge financial, technical and best human resources to venture into nuclear power technology, manufacturing equipment, resources mining and dumping. Amrita School of Business
NTPC BUSINESS STRATEGIES
Table of Contents
Executive Summary
1
1.
Introduction
4
2.
External Environment
5
3.
2.1 Macro environment 2.1.1 Economic Factors 2.1.2 Political Factors 2.1.3 Technological Factors 2.1.4 Ecological Factors 2.1.5 Socio-Cultural Factors 2.1.6 Legal Factors
5 5 5 5 6 6 6
2.2 Micro environment environment 2.2.1 Power Sector Scenario 2.2.2 Industry Competitive Forces
6 6 7
Internal environment
9
3.1 Competitive Assessment
9
3.2 SWOT analysis 3.2.1 Strengths 3.2.2 Weakness 3.2.3 Opportunities 3.2.4 Threats 4.
5.
Strategies of the Company
10 10 10 11 11 12
4.1 Diversified Growth
12
Recommendations
13
Amrita School of Business
NTPC BUSINESS STRATEGIES 1. Introduction National Thermal Power Corporation Ltd. (NTPC) a global giant in the power sector was set 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 power generating plants. It also provides consultancy consulta ncy in the th e area of power plant pla nt constructions construction s and power pow er generation to companies in India and abroad. As on date the installed capacity of NTPC is 27,904 MW through its 15 coal based (22,895 MW), 7 gas based (3,955 MW) and 4 Joint Venture Projects (1,054 MW). NTPC acquired 50% equity of the SAIL Power Supply Corporation Ltd. This JV company operates the captive power plants of Durgapur (120 MW), Rourkela (120 MW) and Bhilai (74 MW). NTPC also has 28.33% stake in Ratnagiri Gas & Power Pow er Private Limited Limit ed (RGPPL) a joint venture v enture company between betwe en NTPC, GAIL, GAI L, Indian Financial Institutions and Maharashtra SEB Holding Co. Ltd. NTPC, with a rich experience of engineering, construction and operation of over 30,000 MW of thermal generating capacity, is the largest and one of the most efficient power companies in India, having operations that match the global standards. Commensurate with our country‟s growth challenges, NTPC has embarked upon upon an ambitious plan to attain a total installed capacity of 75,000 MW by 2017. Towards this end, NTPC has adopted a multipronged strategy such as Greenfield Projects, Brownfield Projects, Joint Venture and Acquisition route. Apart from this, NTPC has also adopted the Diversification Strategy in related business areas, such as, Services, Coal Mining, Power Trading, Power Exchange, Manufacturing to ensure robustness and growth of the company. Vision
"A world class integrated power major, powering India‟s growth, growth, with increasing global presence." Mission
“Develop and provide reliable power, related products and services at competitive prices, integrating multiple energy sources with innovative and eco- friendly technologies and contribute to society.” Core Values – BCOMIT
Business Ethics Customer Focus Organizational & Professional Pride Mutual Respect & Trust Innovation & Speed Total Quality for Excellence Amrita School of Business
NTPC BUSINESS STRATEGIES 2. External Environment The external environment is examined in two levels. The first one is Macro environment and second is Micro environment.
2.1 Macro environment On 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, and Ecological) analysis. Within a PESTLE analysis, a firm would analyze national political issues, culture and climate, key macroeconomic conditions, health and indicators (such as economic growth, inflation, unemployment, etc.), social trends/attitudes, and the nature of technology's impact on its society and the business processes within the society. 2.1.1 Economic Factors
India is in the rising phase of its economy curve, the economy of the country was growing 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 from negative growth. The Indian economy has the resilience to withstand the challenges arising out of the global slowdown and the domestic drought situation. This inorganic growth in economy calls 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 1 per capita consumption is expected to increase 1000 KWH. So, this provides huge opportunity for NTPC. 2.1.2 Political Factors
The Government of India has a mission of ‘POWER FOR ALL BY 2012’ . This mission would require that our installed generation capacity should be at least 2, 00,000 MW by 2012 from the present level of 1, 2 14,000 MW. The Indian government has set an ambitious target to add approximately 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. 2.1.3 Technological Factors
The operational efficiency of a thermal power plant is only 30% that is very poor and also high maintenance cost when compared to hydro power plants (these two are prevalent in India). The advantages of thermal power plant are low installation cost, less time for installation and generation, and constant supply. But with advent of nuclear power (after nuclear deal) these advantages are disserted. 1 2
http://en.wikipedia.org/wiki/Electri http://en.wikipedia.org/wiki/Electricity_sector_in city_sector_in_India#cite_note-autogenerat _India#cite_note-autogenerated1-21 ed1-21 http://www.powermin.nic.in/JSP_SERVLETS/internal.jsp
Amrita School of Business
NTPC BUSINESS STRATEGIES 2.1.4 Ecological Factors
Thermal power plants produce co 2, so2 and other gases which are hazardous to the environment. After COPENHAGEN Climate Conference it became more imperative for the govt. to reduce pollution. This might put pressure on NTPC to go for alternatives. 2.1.5 Socio-Cultural Factors
With a population of India increasing and the scenario of the country is changing from survival to consumption mode, the demand for electricity continue to be on increase. As a result of which power generation sector promises increasing returns to those who have already positioned themselves strongly in this sector. 2.1.6 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 companies although ventured a decade ago still they are thriving for success.
2.2 Micro environment A firm holds a greater amount (though not necessarily total) control of the micro environment. It comprises factors pertinent to the firm itself, or stakeholders closely connected with the firm or company. 2.2.1 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 Welch have gone to the extent of saying, “you don t have a chance to stand in the 21st century without lots of power………Without this you miss the next revolution.” ’
Moreover, the growth rate of demand for power in developing countries is generally higher than that of GDP. In India, the elasticity ratio was 3.06 in 1st plan, and peaked at 5.11 during 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 3 gone up tremendously from a meager 1712MW in 1950 to a whooping 112000MW today. ‟
‟
To enhance power supply in cost effective ways is one of the top priorities for the country. During the quarter April-June 2009, the energy and peaking shortages in the country were 9.8% and 12.3% respectively. The Compound Annual Growth Rate (CAGR) of power demand for the last five years has been 6.80% as against power supply CAGR of 5.88%. The CAGR of your Company's power generation 3
http://www.natcomindia.org/reports_m http://www.natcomindia.org/reports_ministries/power/s inistries/power/scenario.htm cenario.htm
Amrita School of Business
NTPC BUSINESS STRATEGIES has been higher at 6.79%. Strong appetite for electricity consumption in the country translates into robust growth outlook for power players like NTPC. th
Gross electricity requirement by the end of the 11 Plan projected by the Working Group on Power 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 installed capacity requirement of 778 GW and energy requirement of 3,880 billion kWh by 2031-32 if the country's GDP grows at the rate of 8%. At 9% GDP growth rate, the capacity requirement will be 960 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 growing electricity requirements. NTPC is playing a major role in this national endeavor. 2.2.2 Industry Competitive Forces 1) Competition Rivalry – Low
In competition front the major part of the pie is occupied by govt. organization. Also, NTPC contributes alone 28% of power generation, although the company has 18.79% of the total national 4 capacity that is because of its focus on high efficiency. After 1991 liberalization, it opens gates for both the privet sectors in domestic and foreign investors. 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 have encountered unforeseen delays. There have been delays relating to finalization of power purchase agreements, guarantees and counter guarantees, environmental clearances, matching transmission 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 that lenders 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 and the 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 are also finding fortunes very rare, even these organizations also need support from other areas such as transportation and distribution.
4
https://www.ntpc.co.in/index.php?option=com_cont https://www.ntpc.co.in/i ndex.php?option=com_content&view=artic ent&view=article&id=42&Itemi le&id=42&Itemid=75&lang=en d=75&lang=en
Amrita School of Business
NTPC BUSINESS STRATEGIES 2) Threat of Entry – Low
Threat of entry is less likely to be there although power generation is a lucrative business in view of the fact that everyone requires power. Ever since liberalization the others industries (i.e. buyers) are growing. 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 available at cheap price. But solar, wind and tidal power both the installation and maintenance cost is high, hence these are not costeffective to the buyer. From environmental prospective also these are eco-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 when compared to thermal power. However, the major challenge is resources, technology and dumping the waste. After nuclear deal these constraints are disappeared also, Indian govt. is planning to go in large way to enhance nuclear power in India with a target of 25000MW by 2012. This is only a major threat to the NTPC. 4) Suppliers Bargaining Power – Moderately High
The major suppliers of NTPC are raw material providers of coal and machinery providers such as boilers and cooling tanks. For machinery purpose it is heavily depending on BHEL which 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 filtering during sieving process. Those eventually result in less efficiency. More than 53% of the power in India is generated by coal based thermal power plants which consequences in higher competition for purchase of raw material. So, this increases the bargaining power of suppliers. 5) Buyers Bargaining Power – Low
The buyers of power from NTPC are power grids and industries. Power grids in turn supply power to end customer via state electricity boards and purchasing cost are directly regulated by the government. In current scenario no industry runs without power, after the liberalization of trade in India all types 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 of Amrita School of Business
NTPC BUSINESS STRATEGIES 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 that effecting NTPC are suppliers bargaining power (scarce resources and large no of buyers) and substitutes (Nuclear power generation). The other three forces are not playing a major role in competition. So, it is comprehensible that the sate of competition is conducive to good profitability.
3. Internal environment 3.1 Competitive Assessment NTPC is the largest power generation company in India. Forbes Global 2000 for 2009 ranked it 317th in the world. With a current generating capacity of 30,644 MW, NTPC has embarked 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 chain of the power generation business. NTPC's core business apart from power generation, which is the mainstay of the company, is engineering, construction and operation of power generating plants and also ventured into providing consultancy to power utilities, power trading ,ash utilization 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 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, 10000 MW 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 18.79% of the total national capacity it contributes 28.60% of total power generation due to its focus on high efficiency. NTPC‟s share at 31 Mar 2001 of the total installed capacity of the country was 24.51% and it generated 29.68% of the power of the country in 2008-09. Every fourth home in India 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).
Amrita School of Business
NTPC BUSINESS STRATEGIES 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 The Economic 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 the communities that surround its power stations. Right from social to developmental work of the community 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 evaluate the Strengths, Weaknesses, Opportunities, and Threats involved in a project or in a business venture. It involves specifying the objective of the business venture or project and identifying the internal and external factors that are favorable and 5 unfavorable to achieving that objective. 3.2.1 Strengths
i. ii. iii. iv. v. vi. vii. viii. ix. x. xi. xii.
Largest market share in domestic power generation and a broad customer portfolio across the country. Excellent track record of performance in project implementation and plant operation. Diversified thermal generation portfolio – multiple – multiple sizes and fuel types. Highly skilled and experienced human resources, exposed to state-of-the art technologies in project execution and power generation. Emerged into Maharatna status from Navratna i.e. more autonomy and more decision making power. High brand equity among shareholders. Huge financial track record with NPAT Rs 82013 million and total assets base is Rs 945362 million st as on 31 March 2009 , with this strong balance sheet it has 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 the sector. Thrust on reducing social costs of capacity growth – strong execution of Resettlement and rehabilitation plans.
3.2.2 Weakness
i. ii. iii. iv.
5
Low risk-diversification of business portfolio consists primarily of generation assets. Functional orientation hampering cross functional perspective in decision making. Long and multi layered procurement process leading to long lead times and process delay. Gaps in HR systems such as performance management, rewards and incentives and career development.
http://en.wikipedia.org/wiki/SWOT_analysis
Amrita School of Business
NTPC BUSINESS STRATEGIES v. vi. vii.
Inadequate deployment of a strong knowledge management system that could assist in improving 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.
3.2.3 Opportunities
i. ii. iii. iv. v. vi. vii. viii. ix. x. xi.
Future of India is dependent on nuclear power which is in its budding stage. Since it has expertise in power generation and also huge financial strength it can leverage this opportunity. in country acquired acumen in power equipment Apart from BHEL, BHEL, no company (exclude JV‟s) in manufacturing 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 etc with 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 as international 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 sources especially in the distributed generation mode. Multi Commodity Exchange has sought permission to offer electricity future market Improve collections by trading, direct sale to bulk customers and the active role in allocation 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 by intensifying its present channel in India.
3.2.4 Threats
i. ii. iii. iv. v. vi. vii.
After liberalization new player in the country like Tata, Reliance, Adani, Jindal etc are evolved and these are planning to go in big way. It is predicted that the primary ingredient for thermal power generation i.e. coal will not available after 4 decades. Absence of an independent regular for coal industry and the delay in private investments lending to the risk of low availability of coal in the future Joint ventures of foreign players with Indian companies to get access in power generation and power equipment manufacturing. Redirecting power may be constrained by inter-regional connectivity. Downward regulatory and competitive pressure on tariffs. 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 considerable share of country‟s countr y‟s total electricity generation. The challenge for NTPC would be to continue to hold its large share in power generation sector. Thus NTPC strategies would fall under star of the BCG matrix. It‟s to be seen that in near future how NTPC will continue to dominate the energy and power generation sector. Here, Amrita School of Business
NTPC BUSINESS STRATEGIES when we talk of high growth we would like to say that NTPC would experience a high growth rate 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 share from about 19% today to around 25% by 2017. The capacity growth of will enable it to maintain its position as the market leader. Today, the installed capacity is 30,644 MW, including 2,294 MW in joint ventures. During the 11th plan, your Company has already commissioned 3,240 MW capacity . Capacity aggregating to 17,930 MW consisting of 45 units, including 8 super-critical units of 660 MW each, is under construction at 18 projects situated in 16 locations. Capacity of 3,022 MW is under 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 during the 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, it is 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 is targeting 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 moving towards becoming a highly diversified company through backward, forward and lateral integration. The company is well on its way to becoming „an Integrated Power Major‟, having entered Hydro Power, Coal Mining, Power Trading, Equipment Manufacturing and Power Distribution. NTPC has made 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 and international companies. 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 MW Koldam hydro projects in Himachal Pradesh. Two more projects have also been taken up in Uttarakhand. 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 has ventured into coal mining business with an aim to meet about 20% of its coal requirement from its captive mines 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 was created for trading power leading lea ding 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, „National a)
Amrita School of Business
NTPC BUSINESS STRATEGIES Power Exchange Ltd.‟, a JV between NTPC, NHPC, PFC and TCS has been formed for operating operating a Power Exchange. d) Ash Business: NTPC has focused on the utilization of ash generated by its power stations to convert the challenge of ash disposal into an opportunity. Ash is being used as a raw material input for cement companies and brick manufacturers. NVVN is engaged in the business of Fly Ash export and sale to domestic customers. Joint ventures with cement companies are being planned to set up cement grinding units in the vicinity of NTPC stations. e) Power Distribution: „NTPC Electric Supply Company Ltd.‟ (NESCL), a wholly owned subsidiary of NTPC, was set up for distribution of power. NESCL is actively engaged in „Rajiv Gandhi Gramin Vidyutikaran Yojana‟programme for rural electrification and also working as 'Advisor cum Consultant' for Ministry of Power for implementation of Accelerated Power Development and Reforms Programme (APDRP) launched by Government of India. f) Equipment Manufacturing: Enormous growth in power sector necessitates augmentation of power equipment manufacturing capacity. NTPC has formed JVs with BHEL and Bharat Forge Ltd. for power plant equipment manufacturing. NTPC has also acquired stake in Transformers and Electricals Kerala Ltd. (TELK) for manufacturing and repair of transformers. Looking ahead
Company has prepared its long term Corporate Plan for the period 2010 – 2032 – 2032 which includes all strategies and growth targets, fuel choices, technology choices and measures to deal with the likely changes in the business environment. During the course of implementing this proposed Plan, company would aspire to be the most valuable Indian company as well as the world leader in power generation . Company also aspires to be a leader in GREEN POWER
5. Recommendations From strategic point of view company is in very strong position, it made all types of diversification and integration to leverage its position in power sector. It has very less penetration into nuclear power generation market. As of now the nuclear power generated in India contributes only 2.9% of generated capacity. After the nuclear deal, Indian govt. is planning to go in a big way to enhance its nuclear power generation .Since coal fields also are in their saturation stage there will be huge demand for nuclear power in future. To reap benefits of the deal it made a joint venture with NPICL to generate 2000MW which is very minute. It has joint ventures with coal mining industries, BHEL, Bharati Forex all these are ventures leverage its position. But these do not add value with respect its venture into nuclear power generation. Because, these organizations did not have expertise skills in nuclear power generating equipments or/and its technology. The technology and equipment required for it also different, in the present scenario no enterprise in India has acquired expertise in technology and equipment manufacturing of nuclear plants. So, this gives a huge opportunity for NTPC to leverage its financial, technological and human capital to extend its foot print into nuclear power industry. foreign players who are expert in nuclear power generation This can be done by making JV‟s with foreign and subsequently get access to its technology, manufacturing of equipment, resource mining and dumping (the biggest concern). Amrita School of Business
