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54753660 Reliance Power

54753660 Reliance Power

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Published by: Vishvendra Singh Rajput on Jan 04, 2013
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Reliance Power

Reliance Power Mission
• • • • • • • • • • • • To attain global best practices and become a leading power generating company. To achieve excellence in project execution, quality, reliability, safety and operational efficiency. To relentlessly pursue new opportunities, capitalizing on synergies in the power generation sector. To consistently enhance our competitiveness and deliver profitable growth. To practice highest standards of corporate governance and be a financially sound company. To be a responsible corporate citizen nurturing human values and concern for society. To improve the lives of local community in all our projects. To be a partner in nation building and contribute towards India’s economic growth. To promote a work culture that fosters learning, individual growth, team spirit and creativity to overcome challenges and attain goals. To encourage ideas, talent and value systems and become the employer of choice. To earn the trust and confidence of all stakeholders, exceeding their expectations. To uphold the guiding principles of trust, integrity and transparency in all aspects of interactions and dealings.

Vision
• • • • • To build a global enterprise for all our stakeholders To be the largest private sector power generation company in India To be the largest hydro power generation company in India To be the largest green power company in India To be the largest coal mining company in India

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Reliance Power
Strategy
Reduction of Cost of Power Generation
We intend to continue our focus on reducing the cost of power generation by acquiring and developing captive fuel sources that will insulate us from the volatility in the market price of fuel and can thus leverage our operating efficiencies. Such a move is pursuing economies of scale, securing favorable financing and sharing resources among our various power projects and with our affiliates.

Ensuring Fuel Supply
Securing adequate supplies of fuel is critical to the success of a power project. To ensure fuel security, we continue to take proactive steps to ensure access to sufficient coal reserves domestically and globally by investing in additional overseas opportunities that are a strategic fit with our business. While we have secured fuel supplies for our entire coal-fired portfolio, we will continue to strive to control the entire supply chain to ensure continued and uninterrupted availability and control costs.

Focusing on Power Deficit Regions
We intend to locate our power projects and enter into off-take arrangements in power deficit regions that typically support higher market-wide tariffs. We will continue to concentrate our off-take arrangements on the Western and Northern regions of India, which we believe will comprise the bulk of power demand in India. We also intend to focus our merchant off-take sales in these two regions to derive better returns on power generated from our projects.

Establishing an Optimal Mix of Off-take Arrangements
We intend to continue to pursue an optimal mix of long and short-term PPAs to minimize the risks and maximize returns for our shareholders. For power projects situated closer to load centers, we have entered into and will continue to enter into a mix of long and short-term PPAs to achieve a balanced portfolio. For power projects located in other locations, we intend to continue to focus on long-term PPAs. Further, we plan to continue to maintain a significant
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Targeting Additional Revenue Sources We are actively pursuing opportunities to target additional revenue sources. including by selling carbon credits and fly ash. Chitrangi and Tilaiya power projects will be eligible for the CDM benefits as a result of the supercritical technologies. We expect that we will be able to generate additional revenue from the sale of fly ash when more of our domestic coal-fired power projects commence operations. Our Sasan. Krishnapatnam. ash procurers in NCR and Western Uttar Pradesh. 3 . SWOT ANALYSIS Strength:• • • • • • Huge Capacity generation in pipeline Growth in EPC division Established and good Image Reliance – Long term Investment BSES – part of Reliance Strategically Located Power Projects Weakness:• • Effect on balance sheet due to funding of New project Distribution-something new for Reliance.Reliance Power portion of merchant power in our portfolio to take advantage of favorable prices in the electricity spot market.

Increase in interest rate. Setting up largest thermal plant in Orissa . PEST analysis of Reliance Power 4 . Other players in the market. • • • • Good timing with the passing of Electricity Act Reaping returns of generating power Abundance of intellectual capital in India Nearly half the geographical area doesn’t have electricity-Distribution Opportunities Threats:• • • • • • Any delay in project implementation.Reliance Power • Reliance dynamic approach with creating “total consumer experience” complicate the process could • Financing Dadri project . like Tata Future plans depend on government policy Dealing with state regulators who determine tariff rates Remote possibility opportunities back firing. which has huge deposits of Coal Reserves.a big liability Opportunities:• • Huge scope in power sector.

Even during recession also it managed to touch 7. this provides huge opportunity for Reliance Power 5 . So. Government is having very ambitious plans for increasing the capacity of the power sector and hence is encouraging power sector companies like RPower.Reliance Power Political Forces: The Government of India has a mission of “Power to all” by 2012. Economic Factors India is in the rising phase of its economy curve. The per capita consumption is expected to increase 1000 KWH.9% while developed countries suffering from negative growth. the economy of the country was growing at 9 % before it is affected by recession in 2008.

As a result of which power generation sector promises increasing returns to those who have already positioned themselves strongly in this sector Technological factors: The operational efficiency of a thermal power plant is only 30% that is very poor Also. the demand for electricity continue to be on increase. the advantages of low installation cost is disserted with the invention of nuclear power. Porter’s Five Forces Model 6 .Reliance Power Socio cultural factors With a population of India increasing and the scenario of the country is changing from survival to consumption mode.

So the company has to prepare itself for competition against them. Threat of Substitute Products: 7 . Reliance power and other companies in the power sector always face the threat and as such they have to prepare themselves for the competition against the new entrants. Jindal. Adani NHPC. The company should formulate its strategy in a way that it minimizes its costs and quotes less price for the different bids. Rivalry among existing firms: Reliance power has competition against already established players like NTPC. Jaiprakash Power Ventures Ltd. Tata. etc .Reliance Power Threat of New Entrants: With the government deregulation there is always a threat of new entrants into the market.

Reliance Power The generators. Bargaining power of buyers: This factor does not affect the company a lot because the company supplies electricity in a particular area and there is no other player in the same area. solar energy are the main substitutes for the electricity. so the buyers cannot bargain. technology. BCG Matrix For Reliance Power High Market Growth Low Question Mark Star Dogs(SBU’s) Low Market High Share Cash cows Reliance power comes in the category of question mark as they have a low market share and the market growth is very high. Bargaining power of sellers: The bargaining power of sellers which include suppliers of coal. manpower has a impact on reliance power and they should formulate their strategy accordingly. Core Competencies of Reliance power 8 . The company has to formulate its strategy accordingly.

Reliance Power • • • • • Reliance’s growth through backward and forward integration Low costs Strong and rising market shares Good profits Large-scale capacity Value Chain analysis 9 .

Reliance Power A value chain is a chain of activities for a firm operating in a specific industry. not the divisional level or corporate level. Reliance Power Plans to span over entire value chain in the power business. and at each activity the product gains some value. The business unit is the appropriate level for construction of a value chain. Products pass through all activities of the chain in order. Reliance Power growth strategy 10 . It is important not to mix the concept of the value chain with the costs occurring throughout the activities. The chain of activities gives the products more added value than the sum of added values of all activities.

Naptha. Natural Gas. Diesel etc  Equipment Provider: Domestic Equipment Manufacturers. Global Equipment Vendors Transmission Utilities :  Central Transmission Utilities  Power Grid Corporation  Private Transmission Licensees  State Transmission Utilities Distribution Utilities  State Electricity Boards  State Distribution Utilities  Private Distribution Utilities 11 .Reliance Power      Generation of power Transmission of power Distribution of power Trading of power Bundling of services to maximize customer satisfaction Generation of power  Fuel Sources: Coal.

Reliance Power Ultimate Consumer  Agricultural Consumers  Industrial Consumers  Retail Consumers Supporting Activities  Ensuring Fuel Supply  Secure access to coal reserves  Acquired 3 coal mines from Sugico Group. Indonesia with capacity to generate 10 GW in 2010  Investment of Rs.300 billion in Andhra Pradesh by 2017   Focusing on Power Deficit Regions Reduction of Cost of Power Generation  Large reserves  Ensuring fuel supply  Reducing unit cost of fuel  Gas recovery project  HR Strategy : Recruitment of intellectual Workforce INTERNAL FACTOR ANALYSIS SUMARY 12 .

0 0.25 .10 4.5 An aid to overcome competitor’s threat 0.0 3.15 .10 .10 3.40 0.35 0.4 A reliable Company 13 .0 .05 3.Reliance Power IFAS (Internal factor analysis summary) table Internal Factors Weight Rating Weighted Comments score Strengths S 1: Huge Capacity generation in pipeline S2: Growth in EPC division S3: Established and good Image S4: Reliance – Long term Investment S5: BSES – part of Reliance S6: Strategically Located Power Projects .15 A preference factor for customers An aid to overcome competitors .0 0.0 4.05 3.75 Will attract potential investors Creation of goodwill 0.

10 3. W3: Reliance dynamic approach with creating “total consumer experience” could complicate the process W4: Financing Dadri project a big liability 0.10 3.something new for Reliance.5 0.0 3.35 14 .05 3.5 0.35 0.15 Threat of not completing the project on time Total Score 1.0 0.10 3.30 0.35 Threat of having not adequate working capital Threat of potential losses Threat of losing potential customers 0.0 0.Reliance Power Weaknesses W1: Effect on balance sheet due to funding of new project W2: Distribution.

30 A beneficial move for the company by the government An opportunity to go for R & D and expansion 0.0 An opportunity for the company to hire people at low cost 0.05 3.1 4. O3: Good timing with the passing of Electricity Act O4: Reaping returns of generating power O5: Abundance of intellectual capital in India O6: Nearly half the geographical area doesn’t have electricityDistribution Opportunities Threats T1: Any delay in project implementation.5 0.15 3.05 15 .1 3. 0.0 3.525 An encouragement for the management .40 .0 0. O2: Setting up largest thermal plant in Orissa.0 0.15 0.3 An opportunity to earn more profits 0.10 3. 10 4.0 Market Expansion 0.Reliance Power EXTERNAL FACTOR ANALYSIS SUMARY EFAS (External factor analysis summary) table External Factors Weight Rating Weighted Comments score Opportunities O1: Huge scope in power sector.5 0. which has huge deposits of Coal Reserves.4 0.175 Need to quickly implement the projects .

10 3.1375 0.5 0.175 Need to find cheaper sources of finance Need to decrease costs to outplay their competitors Need to maintain good amicable relationship with the government Lower costs of operations to absorb their bargaining powers Need to have alternate strategies STRATEGIC FACTOR ANALYSIS SUMARY 16 .05 2.387 0.Reliance Power T2: Increase in interest rate.375 0.15 0. like Tata T4: Future plans depend on government policy T5: Dealing with state regulators who determine tariff rates T6: Remote possibility opportunities back firing Total Score 1 3.0 3.75 0.25 0.3 0.05 3. T3: Other players in the market.05 3.0 0.10 0.

15 0. W4: Financing Dadri project a big liability O1: Huge scope in power sector.20 0.15 0. O2: Setting up largest thermal plant in Orissa.175 0.75 2.5 0.75 2. T3: Other players in the market. like Tata T4: Future plans depend on government policy T5: Dealing with state regulators who determine tariff rates Total Score 1 2.75 3.1875 0.5 3.75 2.05 2.075 TOWS MATRIX SO 17 .08 0.0 2 0.something new for Reliance.4124 0.10 0.05 0.15 0.3 0.10 3.71 0.2 0. O6: Nearly half the geographical area doesn’t have electricity.16 0.0 3.45 0.07 0.Reliance Power Strategic Factors Weight Rating Weighted score S3: Established and good Image S4: Reliance – Long term Investment S6: Strategically Located Power Projects W2: Distribution.05 0.1375 0.08 2 0.0 1.07 0.Distribution Opportunities T1: Any delay in project implementation. which has huge deposits of Coal Reserves.05 0.2625 0.5 3.

therefore distribution opportunities arise. The strategically located power projects of the reliance power can be used to deal with the threats of the other players in the market like Tata Power etc. The financing of the Dadri project which is a big liability should be prevailed over to tackle any delay in the implementation of other projects. The distribution which is something new for the company can be used to cover and reach the places where there is no electricity. TOWS MATRIX Internal Factors Strengths(S) 18 Weaknesses(W) . Reliance power has a established and good image.Reliance Power It reflects how strengths can be used to take advantage of opportunities. WT It implies you overcome your weaknesses to avoid threats. ST It implies how the strengths can be used to overcome threats. WO It implies how you overcome your weaknesses to take advantage of your opportunities. therefore it can skim the huge scope in power sector.

Lewis The idea from above statement says in strategy you cannot just attempt something that you have to or will do just like that you need to take small and control in sometimes brave steps to 19 . We are like eggs at present. And you cannot go on indefinitely being just an ordinary.S.Reliance Power External Factors Opportunities(O) SO Strategies Use established image to skim of potential WO Strategies and good Use the the distribution new which for is the huge something power company to reach and cover those places which have no electricity to generate more revenue generation sector Threats(T) ST Strategies Use strategically WT Strategies located Finance the projects in such a could be power plants to eliminate the way that any delay in project threat of other players in the implementation market handled. We must be hatched or go bad.”-C. decent egg. “It may be hard for an egg to turn into a bird: it would be a jolly sight harder for it to learn to fly while remaining an egg. ROLE OF STRATEGY Every company on a small level with very low risk or a multinational company with much more to lose than just money on the line has to have a strategy to make its name in the world with other companies in mind. Behind every successful organization there is a strategy. Strategy is as important in an organization like walking for a human.

continues to undergo significant changes as more users in growth markets gain access to power generation. You have to think of the value added to the organization after the completion of your strategy. I came to a conclusion that in any business. Sometime it takes years to be where you want your organization to stand. Reliance Power aims at capitalizing on efficiency and its skill in execution as well as demand supply chain management to respond to these requirements. REFERENCES www. These changes have demanded agility and flexibility from industry players to adapt to new market conditions rapidly. Another trend is an increased emphasis on the role of distribution of power. being Reliance Power’s most significant market area. Thus. if not managed well and unable to take advantage of its opportunities can come to its knees. successful or a newly established. The power generation and transmission industry. In a competitive business environment you have to realize the brutal facts of Market environment. You need to ask yourself the hard questions before making a strategic plan weather it can be achieved or not and have to make sub small plans those will help you.google. the importance of end-to-end solutions increases and technology continues to evolve. So for a business to run successfully we have to manage its Competitors and threats that may affect the performance of a business. which was more of a research. Financial and Economic conditions. CONCLUSION After completing this assignment.Reliance Power achieve what you desire and have to be patient because in planned strategy to work time is your biggest friend and sometimes the worst enemy.com 20 • .

co.com www.reliancepower.wikipedia.Reliance Power • • www.in • “Strategic Management” by Azhar Kazmi 21 .

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