COMPANY ANALYSIS OF RELIANCE

POWER LTD.
 Industry Overview

In Power sector, our government is having ambitious plans to

provide power to all by 2012. To achieve this target government
is planning to add over 78,000 MW in the 11th five year plan and
huge investments have been lined up in order to reach this target.

According to planning commission the total investment

required to achieve this target is about $177 Billion (8,25,000
crore). The share of public investment in total investment in this
sector is likely to be 76 per cent.

This amounts to Rs. 6,27,000 crore with private sector

contributing the balance investment of Rs.1,98,000 crore. In case
of generation, almost 36 per cent of the total investment will
come from private firms, and the balance from central and state
utilities.
Investment required in different power segments between 2007
and 2012:

Particular (Rs Crore)

Generation 400,000
Transmission 150,000
Distribution 170,000

Total Installed Capacity:

Sector MW Percentage
State Sector 70,946.82 52.3
Central Sector 46,165.99 34
Private Sector 18,668.82 13.7
Composition by way of fuel:

Fuel MW Percentage
Thermal 87,225.84 64.2
1.Coal 72,182.38 53.2
2.Gas 13,841.71 10.1
3.Oil 1,201.75 0.9
Hydro 34,260.76 25.2
Nuclear 4,120.00 3.1
Renewable 10,175.03 7.5
Total 1,35,781.63 100
 Company Overview

Reliance Power or “R-Power” is part of the ADAG group

and is engaged in development, construction and operation of
power generation projects in India.

The Company on its own and through subsidiaries is

planning to develop 13 medium and large sized power projects
with a combined planned installed capacity of 32300 MW.

As of now R-Power has acquired the three out of the four

UMPP’s (ultra mega power projects) of 4,000 MW each at
Sasan, Krishnapatnam and Tiliya in M.P., A.P. and Jharkhand.
 It is also implementing a 7,480 MW gas based power plant at
Dadri in U.P., which is expected to be the world’s largest gas
fired power project at a single location.

The company intends to sell the power generated by these

projects under a combination of long term and short-term PPAs
(Public Private Agreements) to state & private distribution
companies and industrial consumers.

By 2013 R-Power will be one of the largest private sector

power generation companies in India. R-Power aims to attain
total aggregate power capacity of around 32,200MW by 2016,
more than 20% of the total Power generation capacity of India
currently.

R-Power has excess coal reserves of around 500 Million

tonnes which is sufficient to fund raw material requirement for
another project as big as an UMPP.
 STRENGTHS

 Reliance Power is currently developing 16 large and medium sized power

projects with a combined planned installed capacity of 33,480 MW, one of the
largest portfolios of power generation assets under development in India

 Strategically Located Power Projects. We have located the majority of our

projects in the northern, western and north-eastern regions of India to cater to
the significant unmet demand in the northern and western regions of India.
 Project portfolio and its customers are well diversified. The locations of all
the 13 projects are either near the load centre or fuel source. Fuel required is
also diversified.

 Reliance ADA group’s Experience and Position in the Indian Power Sector.
REL and its affiliates have expertise in the development and operation of
power projects and the distribution, transmission and trading of power in
India.
 Weaknesses

 Has no power project in operation and its first power generation unit, the Phase
I of the 600-MW Rosa Power project, will go on stream only in December
2009. Unless there is any inorganic expansion, there will not be any operating
revenue or cash flow from the core business of power generation.

 Financial closure has been completed for only one project so far. Similarly,
critical milestones such as power-purchasing agreement (PPA) for non-
merchant power plants or finalizing the engineering, procurement and
constructirion (EPC) contractors or equipment suppliers are year to be
executed.

 Profitability largely depends on ability to maintain the actual operating cost

within the budgeted limits, particularly for projects won through competitive
bidding. The PPA for competitively bid projects based on imported coal
provides for escalation linked to global coal prices. But the pithead power
projects do not have this cushion. Any escalation in the mining and processing
cost will not be insulated by the competitive tariff.
 OPPORTUNITIES
 Power generation has been made a non-licensed activity and techno-
economic clearance from CEA has been waived for thermal power projects,
which expedites the thermal power project development process.

 Power generation companies can now sell power to any distribution

licensees, or where allowed by the state regulatory commissions, directly to
consumers, which expands the market.

 The market has evolved for short-term PPAs, which allows for the supply of
peak power at premium rates.

 Power generation companies have open access to transmission lines, which

will facilitate the direct sale of power to distribution and trading licensees.
 THREATS

 No. of suppliers in India is only 20(approx) so Bargaining power of

suppliers will be high.

 NTPC has current capacity of 28000 MW and has target to achieve 66000
MW by 2017.

 Around 2012 - 2013, Tata Power is expected to have similar capacity as

Reliance Power.
 Shareholding Pattern
Particular Reliance Torrent Power Tata Power
Power
Foreign 9,45,43,240 74,47,134 (1.6%) 4,26,94,060
(4.0%) (19.2%)
Institutions 4,50,77,629 10,63,55,678 6,49,85,213
(1.9%) (22.5%) (29.3%)
Govt. Holding 0 (0.0%) 70,58,742 (1.5%) 1,21,205 (0.1%)
Non Promoter 4,30,62,588 5,22,05,826 17,92,505 (0.8%)
Corporate Holding (1.8%) (11.1%)
Promoters 2,03,20,00,000 24,93,35,872 7,36,39,286
(84.8%) (52.8%) (33.2%)
Public & Others 18,21,16,543 5,00,45,056 3,87,76,887
(7.6%) (10.6%) (17.4%)
Total 2,39,68,00,000 47,24,48,308 22,20,09,156
(100%) (100%) (100%)
 Return on Equity

March 07 March 08 March 09

Reliance Power 0.09 % 0.33 % 1.4 %

Torrent Power 1.43 % 4.98 % 13.3 %

Tata Power 2.21 % 5.72 % 8.2 %

Book Value Per Share

March 07 March 08 March 09
Reliance Power 10 59.92 57.55
Torrent Power 57.26 61.17 68.44
Tata Power 302.73 362.11 390.36
 Earning Per Share

March 07 March 08 March 09

Reliance Power 0.01 0.42 1.04

Torrent Power 1.52 4.47 8.63

Tata Power 35.21 39.42 41.65

Beta
March 09
Industry Beta 0.77
Reliance Power 0.78
Torrent Power 0.54
Tata Power 0.9
 Price to Earning Ratio
March 09
Industry P/E 26.89
Reliance Power 134.96
Torrent Power 31.43
Tata Power 25.81

Price to Book Value Ratio

March 09
Reliance Power 2.88
Torrent Power 4.35
Tata Power 3.54
 Earning Retention Ratio

March 07 March 08 March 09

Reliance Power 100 100 100

Torrent Power 68.32 71.80 73.09

Tata Power 54.01 43.09 40.16

Other Ratios
 Liquidity And Solvency Ratios
Current Ratio

Company Name 2008-2009 2007-2008 2006-2007

Reliance Power
9.16 12.60 167.36

Tata Power
2.22 1.78 1.64

Torrent Power
0.57 0.66 0.91
Quick Ratio

Company Name 2008-2009 2007-2008 2006-2007

Reliance Power
9.16 12.60 167.36

Tata Power
2.00 1.75 1.77

Torrent Power
0.48 0.57 0.82
Debt Equity Ratio

Company Name 2008-2009 2007-2008 2006-2007

Reliance Power --- --- ---

Tata Power
0.61 0.39 0.61

Torrent Power
0.60 0.88 1.01
Net Profit Margin(%)

Company Name 2008-2009 2007-2008 2006-2007

Reliance Power
7.19 83.90 90.90

Tata Power
13.26 14.35 12.32

Torrent Power
5.00 5.70 9.16
Return On Capital Employed(%)

Company Name 2008-2009 2007-2008 2006-2007

Reliance Power --- --- ---

Tata Power
7.61 6.96 7.32

Torrent Power
3.35 8.05 9.95
Return on Long Term Funds(%)

Company Name 2008-2009 2007-2008 2006-2007

Reliance Power
0.68 0.64 1.45

Tata Power
7.62 7.18 7.67

Torrent Power
12.68 3.35 8.05
Inventory Turnover Ratio

Company Name 2008-2009 2007-2008 2006-2007

Reliance Power --- --- ---

Tata Power
6,072.41 18.70 15.49

Torrent Power
9.39 -- --
Debtors Turnover Ratio

Company Name 2008-2009 2007-2008 2006-2007

Reliance Power
1.00 -- --

Tata Power
3.88 4.09 4.83

Torrent Power
3.76 9.73 9.69
Earning Retention Ratio

Company Name 2008-2009 2007-2008 2006-2007

Reliance Power
100.00 100.00 100.00

Tata Power
54.01 43.09 40.16

Torrent Power
68.32 71.80 73.09
Moving Average Convergence Divergence
Rate of Change
Relative Strength Index
Conclusion….
Thank You