UNDERSTANDING THE BUSINESS STRATEGIES

OF NTPC

Submitted To: Submitted By:

Prof. Mukund Mate Abhinav Jain

Arun Dahiya

Gunjan

Joginder Singh

Nupur Palit

Prateek Patel

Sumit Dhar

1 IBS PUNE
 TABLE OF CONTENTS

Topic Page No
1. Scenario of Power Sector in India 3

2. Company Profile 4

3. Organizational Structure of NTPC 9

4. History 10

5. NTPC Limited ( its Subsidiaries & Joint Ventures) 12

6. NTPC Core Values & Corporate objectives 13

7. Strategies of NTPC 16

8. SWOT Analysis of NTPC 18

9. Porter‟s Five Force Model 20

10. Business Model of NTPC 21

11. Competitors Overview 22

12. Conclusion 23

13. Bibliography 24

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SCENARIO OF POWER IN INDIA
Growth of economy calls for a watching rate of growth in infrastructure facilities. 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 gone up tremendously from a meager
1712MW in 1950 to a whooping 112000MW today.

GROWTH OVER YEARS: installed capacity around the end of period:

installed capacity (MW)

250000
installed capacity (MW)

200000
150000
100000
50000
0
2012
1950 1960 1970 1980 1990 2007 (proje
cted)
installed capacity (MW) 1700 4600 13000 28000 66000 112000 212000

Generating capacity has grown manifold from 1,712 MW in 1950 to more than 112,000 MW
today.
At the same as a result of growing installed capacity, the power produced has also gone up. In
1950, the total power produced by Indian power sector was a meager 50BU and that is now
587.3BU. The Indian govt. emphasized the need of independence in power generation and in all
subsequent five-year plans the allocated budget for power sector development was increased. But
despite all these efforts by our govt., there is an acute power shortage in the country.
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PROFILE OF NATIONAL THERMAL POWER CORPORATION LTD.
(NTPC)
VISION: “To be one of the world’s largest and best power utilities,
powering India’s growth.”
To realize this vision, NTPC has drawn up a detailed Corporate Plan for the period 1997-2012
which represents the company's collective optimism and enthusiasm, inspired by a glorious past,
a vibrant present and a brilliant future. The Plan has been prepared in-house in consultation the
committed, competent and confident members of the NTPC family. The road map that has been
charted out was after a thorough scan of the strengths and weaknesses within the organization as
well as opportunities and threats in the environment.
Considering multidimensional opportunities in the energy sector, NTPC will adopt a multi-
pronged growth strategy for capacity addition through Greenfield sites, expansion of existing
stations, takeovers and joint ventures. The capacity addition plans that we have drawn up for the
fifteen-year period using all the above strategies to enable the corporation to become a 40,000
MW company by 2012 A.D.

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.

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NTPC‟s core business is engineering, construction and operation of power generating plants. It
also provides consultancy in the area of power plant constructions and power 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. (SPSCL). 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 Private Limited
(RGPPL) a joint venture company between NTPC, GAIL, Indian Financial Institutions and
Maharashtra SEB Holding Co. Ltd.

NTPC‟s share on 31 Mar 2007 in the total installed capacity of the country was 20.18% and it
contributed 28.50% of the total power generation of the country during 2006-07.

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EVOLUTION

NTPC was set up in 1975 with 100% ownership by the

Government of India. In the last 30 years, NTPC has grown into
the largest power utility in India.

In 1997, Government of India granted NTPC status of “Navratna‟

being one of the nine jewels of India, enhancing the powers to the
Board of Directors.

NTPC became a listed company with majority Government

ownership of 89.5%.
NTPC becomes third largest by Market Capitalization of listed
companies

The company rechristened as NTPC Limited in line with its changing

business portfolio and transforms itself from a thermal power utility
to an integrated power utility.

National Thermal Power Corporation is the largest power generation

company in India. Forbes Global 2000 for 2008 ranked it 411th in the
world.

NTPC is the largest power utility in India, accounting for about 20% of India‟s installed
capacity.

A public sector company, it was incorporated in the year 1975 to accelerate power development
in the country as a wholly owned company of the Government of India. At present, Government
of India holds 89.5% of the total equity shares of the company and the balance 10.5% is held by
FIIs, Domestic Banks, Public and others. Within a span of 31 years, NTPC has emerged as a
truly national power company, with power generating facilities in all the major regions of the

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country. Today NTPC is the largest power generating company in India and contributes one-
fourth of the thermal energy generated in the country. NTPC has 463 ranking the world top class
2000‟s companies which are improved from last year rank i.e. 486. Over all these years NTPC
has been an organization which has delivered expected performance in all the spheres of its
business activities and meeting all the challenges for growth and operation through adoption of
excellent management system and practices.
The success of NTPC is the result of
a modest but systematic beginning.
NTPC known as the NAVRATANS
of PSU‟S have central govt. and the
finding agencies as one of their
major stakeholder. Railways are the
major supplier of NTPC.
If anything which is manufactured is
to be sold out. In the same manner
NTPC also has some of its buyers.
The main buyers who purchase
electricity from NTPC are; the state
electricity board (SEB‟S) and the
state govt.
Goal of establishment: To bridge
the huge electricity supply-demand
gap and the State Electricity Boards
were not able to cope up with the
situation.

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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"
 Make available reliable and quality power in increasingly large quantities at competitive
prices and ensure timely realization of revenues.
 Adopt a broad based capacity portfolio including Hydro Power, LNG, Nuclear Power, and
non conventional and eco-friendly fuels
 Plan and speedily implement power projects using state-of- the art technologies.
 Be an integrated utility by implementing strategic diversifications in areas such as power
trading distribution, transmission, coal mining, coal beneficiation etc.
 Develop a strong portfolio of profitable businesses in overseas markets including technical
services, generation assets etc.
 Continuously attract and develop committed human resources to match world standards.
 Lead fundamental and applied research for adoption of the state-of-the-art technologies,
breakthrough efficiency improvements and new fuels.
 Lead developmental efforts in the Indian power sector including assisting state utility
reform, policy recover etc.
 Be a socially responsible corporate entity with thrust on environment protection, ash
utilization, community development, and energy conservation.

Achievements: Sixth largest thermal

power generator in the World and the
Second most efficient utility in terms of
capacity utilization.

Contribution of NTPC in power

generation: NTPC has contribution of 28%
of total power generation capacity of India.

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NTPC’S CULTURE
 Core values are both intensely and widely shared
 Climate of high behavioral control
 Low employee turnover
 High agreement among the employees, for what NTPC stands for.
 All these point to the fact that strong cohesiveness, loyalty and organization commitment
exist in NTPC lowering he attrition Rate.

Organization structure of NTPC

Organization structure includes three levels of management i.e. corporate level including
top management, then region level comprising management of SBU regional level management
& last as planning level management as GMs of various plants.

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History of NTPC
1975

Incorporated in November

1977

NTPC acquired the first patch of land at Sanghrauli

The first bacth of executive trainees joined the company

1978

takeover of management of the Badarpur project

Construction of the first transmission network Sanghrauli- Korba- Kanpur of 400 KV
system started

1982

Power Management Institute, Delhi, a centre for education was established

1983

in the very first year of commercial operation , NTPC earned a profit of Rs 4.51 crore in
the financial year 1982-83

1985-

This year marked the completion of decade(1975-1985) of NTPC‟s existence. NTPC

achieved a generating capacity of 220 MW by commissioning 11 units of 200 MW each
at its various projects in country
The government of India approved the setting of three gas based combine cycle projects
by NTPC in Kawat in gujrat, Auraiya in Uttar Pradesh and Anta in Rajasthan. For these
projects, the World Bank agreed to provide US$ 485 million, which was the largest
single loan in the history of bank.

1987

Crossed the 5000 MW capacity mark

1989

Consultancy division launched

1990

Total installed capacity crossed 10000MW

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1992

Acquisition by the company of Feroz Gandhi Unchahar Thermal Power Station (2x210
MW) from Uttar Pradesh Rajya Vidyut Utpadan Nigam Of Uttar Pradesh

1994

Crossed 15000 MW of installed capacity

1995

NTPC celebrated 20 yrs of its existence

A new logo was adopted
NTPC took over the 460 MW Talcher Thermal power Station from Orrisa State
Electricity Board

1997

Achieved 100 million units generation in one year

1998

Commissioned the first Naphtha based plant at kayamkulam with a capacity of 350 MW

2000

Commenced construction of a first hydro- electricity power project of 800 MW capacity

in Himachal Pradesh

2002

Three wholly owned subsidiaries viz. NTPC Electric Supply Company Limited, NTPC
Hydro Limited, NTPC Vidyut Vyapar Nigam Limited incorporated.

2004

NTPC became a listed company

NTPC made its debut issue of euro bonds amounting to USD 200 million in international
market.

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 NTPC Limited

Subsidiaries

NTPC Vidyut Vyapar NTPC Electric Supply Pipavav Power NTPC Hydro
Nigam Limited 100% Co. Limited Development Co. Ltd Limited
100% 100% 100%

Joint Ventures

NTPC-SAIL Power Bhilai Electric Supply NTPC Alstom Power Utility Powertech
Company Pvt. Limited Co. Pvt. Limited Services Pvt. Limited Limited
50% 50% 50% 50%
NTPC-SAIL Power
Company Pvt. Limited
50

NTPC Tamilnadu PTC India Limited Ratnagiri Gas &

Energy Co. Limited 8% Power Private Ltd
50% 28.33%

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CORE VALUES
This corporate plan provides details of the overall agenda for NTPC. The successful delivery of
this agenda would require a committed work force that identifies with and supports the vision.
To ensure realization of this corporate agenda, a set of core values should be central to, and
govern each activity of the organization.

Known as one of the NAVRATAN‟S of the PSU‟S NTPC has its following core values. They
are known as (BCOMIT) as follows:-
B-Business Ethics
C-Customer Focus
O-Organizational & Professional pride
M-Mutual Respect and Trust
I- Innovation & Speed
T-Total quality for Excellence

CORPORATE OBJECTIVE

 BUSINESS PORTFOLIO GROWTH

 To further consolidate NTPC‟S position as the leading thermal power generation
company in India and establish a presence in hydro power segment.
 To broad base the generation mix by evaluating conventional sources of energy to
ensure long run competitiveness and mitigate fuel-risks.
 To diversify across the power value chain in India by considering backward and
forward integration into areas such as power trading, transmission, distribution, coal
mining, coal beneficiation, etc.
 To develop a portfolio of generation assets in international markets.
 To establish a strong brand in the domestic & international market.

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 CUSTOMER FOCUS
 To foster a collaborative style of working with customer growing to be a preferred
brand for supply of quality power.
 To expand the relationship with existing customers by offering a bouquet of services in
addition to supply of power e.g. trading, energy consulting, distribution consulting,
management consulting, management practices.
 To expand the future customer portfolio through profitable diversification into
downstream business, inter alia retail distribution and direct supply.
 To ensure rapid commercial decision making, using customer specific information with
adequate concern for the interests of the customer.

 AGILE CORPORATION
To ensure effectiveness in business decisions and responsiveness to change in the
business environment by
Adopting a portfolio approach to new business development.
Continuous and coordinated assessment of the business environment to identify and
respond to opportunities and threats.
To develop a learning organization having knowledge based competitive edge in current
and future businesses.
To effectively leverage information technology to ensure speedy decision making across
the organization.

 PERFORMANCE LEADERSHIP
To continuously improve on project execution time and cost in order to sustain long run
competitiveness in generation.
To operate & maintain NTPC stations at par with the best-run utilities in the world with
respect to availability, reliability, efficiencies.
To aim for performance excellence in the diversification businesses.
To embed quality in all systems and processes.

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 HUMAN RESORUCE DEVELOPMENT
To enhance organizational performance by institutionalizing an objective and open
performance management system.
To align individual and organizational needs and develop business leaders by
implementing a career development system.
To enhance commitment of employees by recognizing and rewarding high performance.
To build and sustain a learning organization of competent world-class professionals.
To institutionalize core values and create a culture of team building, empowerment,
equity, innovation and openness which would motivate employees and enable
achievement of strategic objectives.

 FINANCIAL SOUNDNESS
To maintain and improve the financial soundness of NTPC by prudent management of
the financial resources.
To continuously strive to reduce the cost of capital through prudent management of
deployed funds, leveraging opportunities in domestic and international financial markets.
To develop appropriate commercial policies and processes this would ensure
remunerative tariffs and minimize receivables.
To continuously strive for reduction in cost of power generation by improving operating
practices.

 SUSTINABLE and DEVELOPMENT

To contribute to sustainable power development by discharging corporate social
responsibilities.
To lead the sector in the areas of resettlement and rehabilitation and environment
protection including effective ash-utilization, peripheral development and energy
conservation practices.
To lead developmental efforts in the Indian power sector through efforts at policy
advocacy, assisting customers in the operations and management of power plants etc.

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 RESEARCH and DEVELOPMENTS
To pioneer the adoption of reliable, efficient and cost-effective technologies by carrying
out fundamental and applied research in alternate funds and technologies.
To carry out research and development of breakthrough techniques in power plant
construction and operation that can lead to more efficient, reliable and environment
friendly operation of power plants in the country.
To disseminate the technologies to other players in the sector and in the long-run
generating revenue through proprietary technologies.

NTPC STRATEGIES

Sustainable
Development

Maintain sector
Leadership
Nurturing
position
Human
through
Resource
expansion

STRATEGIES
- NTPC

Further
Technology
enhance
initiatives
fuel security

Exploit new
business
opportunities

Technological Initiatives

 Introduction of steam generators (boilers) of the size of 800 MW

 Integrated Gasification Combined Cycle (IGCC) Technology
 Launch of Energy Technology Center -A new initiative for development of technologies
with focus on fundamental R&D
 The company sets aside upto 0.5% of the profits for R&D
 Roadmap developed for adopting „Clean Development

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Corporate Social Responsibility

 As a responsible corporate citizen NTPC has taken up number of CSR initiatives

 NTPC Foundation formed to address Social issues at national level
 NTPC has framed Corporate Social Responsibility Guidelines committing up to 0.5% of
net profit annually for Community Welfare Measures on perennial basis
 The welfare of project affected persons and the local population around NTPC projects
are taken care of through well drawn Rehabilitation and Resettlement policies
 The company has also taken up distributed generation for remote rural areas

Environment Management

 All stations of NTPC are ISO 14001 certified

 Various groups to care of environmental issues
 The Environment Management Group
 Ash Utilisation Division
 Afforestation Group
 Centre for Power Efficiency & Environment Protection
 Group on Clean Development Mechanism

NTPC is the second largest owner of trees in the country after the Forest department

Partnering government in various initiatives

 Consultant role to modernize and improvise several plants across the country
 Disseminate technologies to other players in the sector
 Consultant role “Partnership in Excellence” Programme for improvement of PLF of 15
Power Stations of SEBs.
 Rural Electrification work under Rajiv Gandhi Grameen Vidyutikaran Yojana

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SWOT ANALYSIS of NTPC

Strengths of NTPC

 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 sizes and fuel types.
 Highly skilled and experienced human resources, exposed to state-of-the art technologies
in 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 the
sector.
 Thrust on reducing social costs of capacity growth – strong execution of Resettlement
and rehabilitation 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.
 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 in
improving efficiency and effectiveness in all aspects of the business.

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  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, maintaing

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.
 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 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 time
overrun.
 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 investments
lending to the risk of low availability of coal in the future

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Porter’s five force model

Application of BCG matrix to NTPC

NTPC is in the business of power generation. With a population of India increasing and the
country on a road map towards development, the demand for electricity from various sectors will
continue to be on increase. As e result of which power generation sector promises increasing
returns to those who have already positioned themselves strongly in this sector. NTPC has been
carrying on its operation since 1975 and has acquired a considerable share of country‟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. Its
remain to be seen that in near future how NTPC will continue to dominate the energy and power
generation sector. Here, 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.

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Business Model of NTPC

Business model of NTPC has been formed based on the strategies of NTPC. This included:

1. Cost efficiency i.e. providing power at reasonable prices so that they could provide
power to all in need.
2. Eco friendly system: 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.
3. 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 company‟s 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.
4. Technology enhancement i.e. to stay in competition they have to continuously enhance
their technology.

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Competitors’ overview

Tata Power

Tata power is India‟s largest private sector power utility. Its revenues are $ 1 bn. Its Profit after
tax is $ 137 mn. Its generation capacity is 2300 MW. Out of that in Mumbai, the capacity is
1800 MW. It has presence in generation, transmission and distribution of power. It supplies
power to Mumbai and Delhi regions.

Business strategy:

The core business of Tata Power Company is to generate, transmit and distribute electricity. The
Company operates in two business segments: Power and Other services. The Power segment is
engaged in generation, transmission and distribution of electricity. The other services segment
includes electronic equipment, broadband services, and project consultancy and oil exploration.

Reliance Energy

Reliance Energy Ltd (REL) formerly known as Bombay Suburban Electric Supply (BSES) is a
part of the Anil Dhirubhai Ambani Group. It is an integrated power utility company in the
private sector in India which came into existence when it took over BSES in 2002.

The company is the sole distributor of electricity to consumers in the suburbs of Mumbai. It also
runs power generation, transmission and distribution businesses in other parts of Maharashtra,
Goa and Andhra Pradesh. REL has significant presence in the field of execution of the Power
projects on EPC (Engineering, Procurement and Commissioning) basis.

CESC

CESC, a power utility in India was setup in 1899. CESC Limited is a flagship company of RPG
Enterprises, which is one of India's well-managed groups of companies with a diversified
presence. Company brought thermal power to India more than 100 years ago and supplies power
to the city of Kolkata.

Vision

We will be a profitable consumer oriented power utility consistent with global standards meeting
the expectations of consumers, employees and other stake holders.

22 IBS PUNE
Conclusion
Globalization initiatives

NTPC is keenly exploring opportunities to mark its footprints in different parts of the world. In
line with its Globalization strategy, NTPC is making consistent efforts to enter the overseas
markets and is focusing its efforts in the Middle East, Asia-Pacific and Africa regions for
business. A Representative office is functioning in Dubai. A site has been identified for setting
up a 2X250 MW coal based power plant in Trincomalee region, Sri Lanka in Joint Venture with
Ceylon Electricity Board. Energy Audit of 15 Units of Saudi Electric Company has been
successfully completed. Pursuant to signing of MoU with Government of Nigeria, our team is
working on selection of prospective site for setting up one 700 MW Gas based and one 500 MW
coal based power plant in Nigeria. In lieu of this, Government of Nigeria shall provide LNG for
our stations.

Long term plans and agenda: The Company has three plan horizons:

1) Long-term corporate plan containing overall objectives/targets adopted by the company

for the period up to2017.
2) Five-year business plans (to be launched for the period 2006-2011) to be rolled annually
containing more detailed targets.
3) Annual targets i.e. Agenda 2005-2006.

CORPORATE PLAN 1997-2012 (“LOOKING AHEAD”)

In order to facilitate the growth program a comprehensive corporate plan covering three plan
periods was prepared. This plan “LOOKING AHEAD”-corporate plan (1997-2012) was
drawn out after extensive discussion and deliberations.

23 IBS PUNE
 Bibliography

1. www.ntpc.co.in
2. www.scribd.com
3. www.managementparadise.com
4. www.constructionupdate.com
5. www.reportlinker.com
6. www.assocham.org

Names Topics
Joginder Singh SWOT analysis, Porter‟s 5 force model & BCG, Business model of
NTPC
Gunjan Introduction & company profile
Abhinav Jain NTPC strategies
Prateek Patel Corporate Objectives
Nupur Palit History of NTPC
Sumit Dhar Corporate objectives
Arun Kumar Dahiya Competitors study &Conclusion

24 IBS PUNE