Finance management

BBAIII (E) BATCH -2010-2013

Submitted to:

Submitted by:

Mr.j.k.batra (Asst. Professor)

Mukesh kumar 03724501710


Company Certificate

(LETTER HEAD of the Company)


This is to certify that Mukesh kumar , a student of jims ,kalkaji , undertook a project on “_Finance managment” at Universal Crescent power Pvt.Ltd. ( UCPPL) From 11-06-2012 to 020-07-2012. Ms./Mr Mukesh kumar has successfully completed the project under the guidance of Mr./Ms. Mukesh kumar. She/He is a sincere and hard-working student with pleasant manners. We wish all success in her/him future endeavours. Signature with date (Name) (Designation) (Company Name)


This is to certify that Ms./Mr. MUKESH KUMAR, a student of Graduate Degree in _, jims kalkaji has worked in the UCPPL, under the able guidance and supervision of Mr./Ms._Arvind Pasi, designation Manager-Corporate strategy, Company UCPPL. The period for which he/ she was on training was for 8 weeks, starting from 11-06-2011 to 20-07-2012. This Summer Internship report has the requisite standard for the partial fulfillment the Graduate Degree in International Business. To the best of our knowledge no part of this report has been reproduced from any other report and the contents are based on original research.

Signature (Faculty Guide)

Signature (Student)



I express my sincere gratitude to my industry guide Mr./Ms.Arvind Pasi,Manager-corporate strategy, UCPPL , for his/her able guidance, continuous support and cooperation throughout my project, without which the present work would not have been possible.

I would also like to thank the entire team of UCPPL, for the constant support and help in the successful completion of my project. Also, I am thankful to my faculty guide Prof./Mr./Ms J.K .BATRA. of my institute, for his/her continued guidance and invaluable encouragement.

Signature (Student)


0 5.TABLE OF CONTENTS Chapter No.0 7.0 3. 1. 6 B) To understand the types of Finances and relevant factors 5 .0 8.Equity structure Costing parameters Tariff evaluation Due diligence during funding of the project Issues and challenges facing thermal power sector Comparative Ratio Analysis of 5 major players Recommendations Bibliography 51 53 54 56 64 68 70 84 85 41 43 47 7 10 35 Page No.0 9. transmission & distribution Demand and Supply scenario Debt.0 4.0 Subject Executive Summary Review of literature Industry Profile Company Profile Objectives A) To understand the power sector Evaluation of current scenario Regulations and power industry structure Electricity generation.0 • • • • • • • • 6.0 2.

the Indian power sector has witnessed significant structural and regulatory changes to make it attractive for private investment. This document highlights the current scenario of thermal power projects in India.equity structure.Executive Summary The power sector of India is growing at a rapid rate. regulatory requirement for financing etc. availability of water etc. There are certain regulations which have been set by the government of India with regard to the debt. A short peek at the past performances of the major players has also been looked at and what are their future plans. It also compares the power sector to other sectors as to why it is a more attractive option for investment. transmitted and distributed all over India. This document highlights and quantifies some of these gaps and attempts to analyze the problem. and the due. Since the primary focus is on the thermal power sector (coal based power stations) . out of which 1. Furthermore. This document also looks at the key financing and investment trends that have given a boost to the thermal power sector in the past and will do so in the future also. 456 MW is the total thermal power capacity installed all over India. the road that lies ahead of us is dotted with innumerable challenges that result from the gaps that exist between what’s planned versus what the power sector has been able to deliver.74. tariff evaluation i. Zero customs and excise duty waiver on capital equipment for MPP Income tax holiday for 10 years etc.diligence done by the power company for the funding of the project . We have undertaken certain objectives which look into the costing parameters with regard to land cost. These include 100% foreign direct investment all segments of the power sector including trading.e interest on working capital.911. the issues and challenges being faced by the Indian thermal power sector and we also look into the financial aspect of setting up a thermal power plant. we look at the current demand and supply scenario of electricity currently being generated. which all the power companies have to follow. The role of the power finance corporation(PFC) which is the primary lender has also been discussed in detail. interest on loan capital. With the introduction of certain regulations. depreciation cost etc.40 MW.13. fuel cost. 6 . These regulations are discussed at length in this document. have also been highlighted. India’s current installed capacity is 1. we highlight which are the major thermal power generation companies.

NAILD distributors that become ENERGY STAR Partners have an opportunity to increase sales and profits. 7 . While acknowledging positive elements like increase in transparency and participation. The Energy Independence and Security Act of 2007 add to the programs and efforts introduced in EPACT 2005. or a part thereof. The article questions the success of the process in solving the crisis. know where to get more information. recent changes and trends in the lighting market provide new opportunities. provide updates to your customers.The report also gives a detailed ratio analysis on 5 major players in the power sector which has also been carried out based on their past 5yr performance i. According to him. The article concludes with some thoughts on developing an alternate reform approach Schwartz (2008). it criticizes the process for neglect of development issues like rural electrification and energy efficiency. CERC Tariff regulations 2009-14: These regulations may be called the Central Electricity Regulatory Commission (Terms and Conditions of Tariff) Regulations. 2004.2009 shall be determined in accordance with the Central Electricity Regulatory Commission (Terms and Conditions of Tariff) Regulations. Provided that where a project. and unless reviewed earlier or extended by the Commission. A key component of the ENERGY STAR qualified light fixtures program is the Advanced Lighting Package (ALP). and conferences. Reforms were taken up as a response to the crisis in the sector. The keys to taking advantage of the opportunities is to understand the market. 2009. It brings out a public interest oriented critique of the three phases of the reforms — firstly. These regulations came into force on 1. and turn information into active marketing and promotional efforts. This helps us understand that out of the power stocks which ones are the best suited for investment. shall remain in force for a period of 5 years from the date of commencement.3. Review of literature DPR of UCPPL: Gives a detailed analysis of the current growth in the indian economy. It also shows the demand and supply gap that exists all over india and what are the issues and challenges being faced by the indian thermal power sector.2009. secondly. has been declared under commercial operation before the date of commencement of these regulations and whose tariff has not been finally determined by the Commission till that date. privatization of generation.e. the ongoing reforms since the passage of the Electricity Act 2003. tariff in respect of such project or such part thereof for the period ending 31. It also gives us an insight into the companies proposed projects in Gujarat and west Benga land what are the various parameters involved in setting up a thermal power plant. TheNAILD is an organisation supporting lighting distributors in the US with publications. state sector restructuring and finally.4. As market trends and legislation move purchasers away from inefficient technologies and towards energy-efficient products. training. Studies the business of NAILD distributor through this article. from FY 2005 to FY 2010. Sreekumar (2009) reviews the market-oriented power sector reforms initiated in India in the early 1990s.

describes there were many inhibitors to growth in power sector but the main problem in the growth was Government Policy. Reforms were initiated at a juncture when the sector was plagued with commercial losses and burgeoning subsidy burden. The failure of the large structure and the changing global scenario has forced Government to think of ways to revive this fundamental infrastructure sector. volatility clustering. cost of production and transmission. Two ways that government can count on for future growth of this sector are “Small Power Plants” and “Clean Development Mechanism”. and 8 . It can be expanded to include other technologies and also can be made dynamic to provide solutions for different time periods representing the maturing of the power generation plants during the duration of the model. The system demanded financial. Here the authors identified weather and marginal fuel prices as independent variables driving load levels and power prices. Vishakhapatnam etc. but has only considered coal. It also discuss some of the major provisions of the recently enacted Electricity Act 2003 that aims to replace the prevailing acts which govern the functioning of the power sector in the country. Singh and Kumar (2004) . Investment in the sector was not able to keep pace with growing demand for electricity. The approach is capable of capturing the essential power price characteristics such as seasonality in price and volatility. This further created the problem that Indian entrepreneurs didn’t have enough knowledge and experience in developing power projects. introduces FEA's Power Sector Model as the next step in derivatives pricing. together with the marginal fuel price. it discuss two issues arising out of it. which made it difficult for a private player to enter. Singh (2006) address the Power sector reforms in India. tries to put forth a model pertaining to transportation because India is facing a huge increase in power consumption. Some of the bold steps taken in the Act were moving generation and distribution out of ‘License Raj’. The author has considered major power generating areas of the country like Ranchi. bhubwaneshwar. In this context. The paper also illustrates changes in the market structure as we move along the reform process. political and other major requirement in roads and communication. The second step is to conduct a detailed empirical study of the nature and relationships among the various components under analysis. to a large extent. Soronow. The paper discusses major policy and regulatory changes undertaken since the early 1990s. weather dictates load conditions. Finally.Augustine (2007). The goal of the study is twofold: to understand the relationship between the variables. A whole new system was evolved where private players were invited to be an active participant. scalable and easy to implement. Swain. opening access to national grid and demolishing the ‘Single Buyer’ model. Bhopal. determines the power price. dhanbad. price spikes. The model described is very realistic. This paper takes stock of pre-reform situation in Indian power sector and identifies key concerns that led to initiation of the process of reform. as well as to determine the seasonal aspects inherent in each component. The model is done with an aid of GAMS (General Algebraic Modelling System). hydroelectric and natural gas technologies. This is grounded in the understanding that. The paper also evaluates the reform process in the light of some of the regulatory changes undertaken. which. mean-reversion. demand for power and the distances between power plants and consumption centres. namely open access and multi-year tariff that we think would have a significant bearing on the performance of the sector in the near future. The power sector is represented in the model by production capacities. Pierce & Wang(2003). the paper briefly discusses the issues involved in introduction of competition in the power sector primarily through development of a market for bulk power.

Newbery (2005) says that Modern infrastructure. particularly electricity. It also an in depth review on the key financing and investment trends. This report also gives us an in depth analysis of the most prominent prominent players in the Indian thermal power sector as well as shows the demand and supply gap that exists in India. The current thrust of reforms is on the distribution sector. If there is a surplus of infrastructure. In the last few years. Electricity provides light. then shortages constrain total output. During the last decade. Electricity Bill 2001 opens up the sector to private participation with limited approval obligations Banerjee (2004) says that the earliest electric power systems were distributed generation (DG) systems intended to cater to the requirements of local areas. so that the return to reducing that deficit can be very high indeed. is critical to economic development. even from government generators and PSUs. Subsequent technology developments driven by economies of scale resulted in the development of large centralized grids connecting up entire regions and countries. which are changing and diminishing the role of the government. describes that India’s power sector is undergoing significant reforms. The model is self-contained. Tongia (2003). especially new players.regional correlations. primarily in generation. 9 . telecom and roads. which functioned earlier as the near monopoly integrated utility. reducing losses and increasing efficiency. the ability to use modern equipment. which opened up the sector to private participation. beginning in 1991. Because of significant financial difficulties faced by the SEBs 1991 saw the enactment of legislation. but there is only limited interest of private players into the sector. and when fully calibrated. It also shows as to how tariff is calculated and what parameters go into the evaluation of tariffs. while transport infrastructure is critical for trade. the 1991 Electricity (Supply) Act. there has been renewed interest in DG. Those who state that overall financial losses have increased after the reforms do not factor in the increase in costs due to generator price increases regardless of reforms. but if there is a deficit. magnifying the impact. Monte Carlo simulation provides the basis for valuing power contracts and generation assets directly. and by lowering transport costs extends the market and increases competition. The relevance of these options for a developing country context is examined using data for India. The design and operating philosophies of power systems have emerged with a focus on centralized generation. Telecom facilitate information exchange and access to the rest of the world. their current status and evaluates them based on the cost of generation and future potential. more investment adds little to total output. This might just be a precursor to privatization. but there is a goal to full electrification by 2012. This paper reviews the different technological options available for DG. computers and access to ICT. the T&D losses have stabilized somewhat.

This can be appropriately and optimally utilized to make available reliable supply of electricity to each and every household. The demand of power in India is enormous and is growing steadily. To achieve this goal. The Target Mission : ‘POWER for All by 2012’ would mean achieving the target of 1000 KwHr (Units) of per capita consumption of electricity by this period. The vast Indian power market. at least in Urban & Industrialized areas. • 100% Rural Electrification with Adequate & Qualitative Power 10 .600 MW capacity addition per annum). • Reliable & Quality Power On 24 x 7 basis. India is endowed with a wealth of rich natural resources and sources of energy.2 times the GDP rate of growth as espoused by economists.2012) has seen an addition of around 22. This would mean a YOY capacity addition of 18.Industry profile Power sector in India Power is an essential requirement for all facets of our life and has been recognized as a basic human need. Resources for power generation are unevenly dispersed across the country.000 . The Power & Energy Infrastructure sector in India is poised for a major take-off. planners and industry experts. The APDRP (Accelerated Power Development & Reforms Programme 2002 . Electricity supply at globally competitive rates would also make economic activity in the country competitive in the globalized environment. It is the critical infrastructure on which the socio-economic development of the country depends. (A commitment of 15. today offers one of the highest growth opportunities for private developers. And during the next five years. following milestones are critical :• Attract US $ 250 Billion Investment into the sector. Electricity is considered key driver for targeted 8 to 10% economic growth of India. The growth of the economy and its global competitiveness hinges on the availability of reliable and quality power at competitive rates. as an Economic Global Powerhouse.000 MW during last five years.8 . a capacity addition of over 78.000 MW to achieve this ambitious plan of moving India to a Developed Economy status. (FDI & Domestic Investment Combined) • Adequate Capacity Growth to Sustain GDP Growth at 8% plus. The Market Potential to sustain the GDP Growth rate of India @ 8% plus per annum needs the power sector to grow at 1.000 MW has to be setup by 2012.20.

021 MU resulting in an energy shortage of 11 %.2009 was 774. These include:1. adequate power availability is essential. country’s infrastructure needs to be improved. and this is substantiated by the recent upswing in the Indian power market. Power sector IPO’s have been very well received by retail and institutional investors. over the years the demand in the power sector has outpaced the capacity addition. Dr. • Urgent need to develop the alternatives. Income tax holiday for 10 years 4. Zero customs and excise duty waiver on capital equipment for MPP 3. From a total of 17 IPO’s issued in 2009. Manmohan Singh For the current growth in the Indian economy to be sustained. 2.324 million units (MU). The available in public domain gas formed the basis for capital market analysis presented herein. Regulatory changes Thus. • Focus on implementation (Outcomes are more important than Outlays) . development in the power sector is indispensable to bridge the demand supply deficit and further country’s economic growth. while availability was 689. 11 . 100% foreign direct investment allowed in all segments of the power sector including trading. • Increasing the Role of Hydel & Renewable Energy in the Energy Mix. Government has set up steep targets for capacity addition during the 11th and 12th 5 yr plan and has facilitated this through essential investor friendly regulations in the power sector. India’s energy requirement during 2008. To overcome this huge demand supply deficit the power sector is getting a continuous impetus from the government.0 %recorded in FY 2010. Unbundling and corporatization of the transmission & distribution business of SEBs Sector performance in comparison to other sectors These changes have made the power sector attractive for financial and strategic investors and have also been well received by the capital markets. The Indian power sector has witnessed significant structural and regulatory changes to make it attractive for private investment. both in the Fuel & Technology terms. And electricity is the key to support this projected growth in the economy. However.as espoused by the Indian Prime Minister. around 67% were in the energy and power sector. Regulatory and structural changes have made it attractive for strategic and financial investors. To sustain the GDP growth of 8.for irrigation purpose.

60 29.7 NM 14.90 5.20 100. media and technology Consumer goods and retail Outsourcing Education Total IPO proceeds ($Mn) 2352 765 197 112 42 11 5 3484 % of IPO proceeds 67. power sector stocks in Indian capital market has yielded relatively higher returns as presented in the table below.00 IPO volume 3 5 2 3 2 1 1 17 % of IPO volume 17.20 1.20 0.016 17.6 14.80 17.80 5.30 0.8 16.5 11.00 Attractive return on power sector stock.6 9.9 15.8 8.mn) P/E(x) CY10E/FY11E CY11E/FY12E CY12E/FY13E (local currency) 196 1.2 40.5 22.218 6.303 7802 4.Sector Energy and Power Industrial Hospitality Telecom.60 11.339 1.40 11.India vs Global In terms of comparative return vis-à-vis global peers listed on stock exchanges overseas.9 9.00 5.7 6.6 11.5 NM 10.S.1 9.7 NM 8. This indicates the high growth expectation for power sector in India and encourages private CMP August 27 2010 India NTPC Tata power Reliance power JSW energy Adani power CESC Mean Market cap ( U.238 152 127 136 379 35.4 19.5 12.6 12 .70 3.480 6.1 10.90 100.

889 2.523 5.1 8.110 10.S Southern co.7 10.130 15.5 13. 13 .555 11.533 23.6 12.1 Mean 14.4 8.06 U. Mean 40 26.2 15.493 10.3 12.mn) P/E(x) CY10E/FY11E CY11E/FY12E CY12E/FY13E Asia Huaneng power Glow energy Datang intl.4 12.2 14.8 13.0 Exelon corp.8 11.6 11.9 8. This makes power sector stocks an attractive proposition for retail as well as institutional investors.1 9.3 16.1 9.9 17. Markets.7 Source: www.indiastat. Power sector stocks offering IPO in the last 2 years have been oversubscribed at the upper end of valuation range.196 9.7 National grid Mean 5 12.4 10.2 13. Duke enegy NRG 36 17 20 30. This highlights greater opportunity for a financial investor to get attractive returns from the Indian capital.6 8.1 12. 4 45 3 9.4 9.9 9.0 11.149 6.1 10.0 8.CMP August 27 2010 Market cap ( U.6 7.S.3 11.6 Europe DRAX Group Fortum RWE 4 18 52 914 12.0 12.222 22.7 15.com Attractive exit option.9 11.3 7.2 11.7 13.8 17.7 8.appetite for power sector stocks Power sector stocks in India have provided relatively better returns than the index stocks.

21 billion tonnes by the geological survry of india. up to depth of 1200mmeters. 14 . Coal and natural gas are two fuel sources that can help to meet the base demand.Madhya Pradesh etc.8 1. are estimated to be 267.67 0. Coal being an abundant and a cheaper source offers a cost effective option of fuel for power generation. These reserves are primarily located in states of jharkand. Million tonnes Gondwana coal Tertiary coal Total Proved 105343 477 123470 Indicated 123380 90 37920 Inferred 37414 506 267210 Total 266137 1073 Source: DRHP. 09 Company Adani power NHPC Indiabulls power Sector Energy & power Energy & power Energy & power Size ($mn) 670 1342 340 Price bottom range 2. Orissa. 09 01 Sept.Trade Date 20 Aug.0 Availability of fuel is critical for reliable and cost-effective production of power. 09 30 Oct. Availability of coal in India The coal reserves of india. The chart on the next page depicts the annual coal production in india in the last 10 years.88 Offering price Price top vs range Price range 2.22 0.8 1.0 0.22 2. coal India ltd Coal mining in india is primarily entrusted to government companies which have produced more than 90% of the coal produced in india in FY 2009.0 0. west Bengal.

coal India ltd 15 .Source: DRHP. the new mines are expected to have considerable gestation period before they are fully operational and due to this we can forsee a considerable shortfall. However. incremental production from new fields would be needed. CIL has projected the following coal deficit ( as per coal linkage already awarded). To meet the fuel requirement for additional capacity generation. Source: DRHP. coal India ltd Coal production by cil has increased by approximately 8% per annum in the last 3 years primarily due to the operational efficiencies achieved in its existing mines. Recognizing the growing requirement of coal for capacity addition plan of CEA and potential lag in supply from domestic sources.

Coal imports are expected to grow since many domestic power utilities NTPC. Coal imports in India As per the current policy. b) For new long term coal linkages being awarded. In FY 2010.Kalimantan and Sumatra holding 43% and 56 % of the total reserves.2 million tonnes has shown an increase by 25. The Indonesian coal industry has shown significant growth in production over the last 15 years primarily to meet the export demand from other south east Asian countries.3 % in H1 201 16 . india has been importing coal from Indonesia and the import at 21. Coal deposits are mainly concentrated in two regions.69 % of its total coal consumption.74 million tonnes of coal which is 11. coal can be imported freely under the open general license. India imported about 67. CIL is committed to supply only 50% coal from domestic sources and balance 50% can be supplied from imported coal sources. PTC and coal mining public sector undertaking are vying for coal assets abroad to meet their fuel requirements for power projects. Recent reports indicate Indonesia and Australia being pitched as favourite destination. Coal reserves and production in Indonesia Coal mining is an important industry segment for the Indonesian economy.The above projected deficit may increase if more projects are awarded the coal linkage in the future. Source: statistical yearbook of Indonesia In order to meet the coal deficit.indonesia has substantial coal reserves totaling 21 billion tonnes and there has been considerabe growth in coal production due to the increase in export demand. This supply deficit is being transferred to the power utilities and following are two potent examples of the same: a) Coastal power projects to mandatorily arrange 30% of their requirement from imported coal.

75% of the total national capacity.28.000 MW by the year 2032. The total installed capacity of the company is 34. Forbes Global 2000’ ranking of the World’s biggest companies. NTPC became a Maharatna company in May. it contributes 27. ash utilisation and coal mining. 16% Gas. NTPC ranked 341st in the ‘2010. 11% Nuclear and 17% Renewable Energy Sources(RES) including hydro. The capacity will have a diversified fuel mix comprising 56% coal. By 2032. NTPC is emerging as a diversified power major with presence in the entire value chain of the power generation business. Source: NTPC 17 . Apart from power generation. In addition under JVs. one of the only four companies to be awarded this status. The company has set a target to have an installed power generating capacity of 1. NTPC has been operating its plants at high efficiency levels. Although the company has 17. NTPC has already ventured into consultancy. 2010. located across the country.40% of total power generation due to its focus on high efficiency. NTPC was set up in 1975 to accelerate power development in India.194 MW (including JVs) with 15 coal based and 7 gas based stations. which is the mainstay of the company. 5 stations are coal based & another station uses naptha/LNG as fuel.5 Major players in the thermal power sector and the projects under their operation India’s largest power company. power trading. non fossil fuel based generation capacity shall make up nearly 28% of NTPC’s portfolio.

015 6. 8. NTPC is the largest thermal power generating company in the country. NTPC’s Installed Capacity and performance depicts the company’s outstanding performance across a number of parametres.995 30.299 With 15 coal based power stations. The company has a coal based installed capacity of 26.875 3.100 3.900 1.830 3.100 7. 4.364 34. NTPC owned Coal based Gas & liquid Total Owned by JV’S Coal & gas Total No of plants 15 7 22 6 28 Capacity (MW) 26.340 1. COAL BASED(Owned by NTPC) Singrauli Korba Ramagundam Farakka Vindhyachal Rihand Kahalgaon NCTPP.875 MW.600 2.Installed Capacity Be it the generating capacity or plant performance or operational efficiency.260 2. 2. 6.600 2.000 2. . 5.860 4.820 1.428 28. 3.194 Source: NTPC Regional Spread of coal based thermal plants Region Northern Western Southern Eastern JV’s Total Coal Based Power Stations Coal 8. 7.000 2. Dadri STATE Uttar Pradesh Chhattisgarh Andhra Pradesh West Bengal Madhya Pradesh Uttar Pradesh Bihar Uttar Pradesh 18 COMMISSIONED CAPACITY(MW) 2.

29% during the year 2010-11. The availability factor for coal based power stations has increased from 89. Sipat-II Chhattisgarh Total 3.000 1.500 440 705 1. Unchahar Uttar Pradesh 11.875 Source: NTPC Operations In terms of operations. Simhadri Andhra Pradesh 13. which compares favourably with international standards. Tanda Uttar Pradesh 14. Source: NTPC 19 .62% in 2010-11. Badarpur Delhi 15. Feroze Gandhi. The PLF has increased from 76.32% in 1998-99 to 91.9.050 460 1. Talcher Kaniha Orissa 10.6% in 1998-99 to 88.000 26. NTPC has always been considerably above the national average. Talcher Thermal Orissa 12.

70 80.24 92.52 89.50 76.88 87. Source: NTPC 20 .62 2009-10 218.86 92.60 89.20 2003-04 149.12 2006-07 188.80 88. The phenomenal improvement in the performance of Talcher and Tanda by NTPC make them their big success stories.39 90. the table indicates the dramatic gains in the performance of the power plant as a result of NTPC’s expertise.16 84.11 89.40 88. Talcher (460 MW) An even more challenging turnaround story was being scripted at the OSEB's old power plant at Talcher.81 91.67 89.91 2004-05 159.09 2000-01 130.20 81.09 2005-06 170.70 2001-02 133.43 90.29 91.10 81.94 91.14 92.47 2007-08 200.84 90.36 Source: NTPC Turnaround Capability NTPC has played an extremely important role in turning around sub-optimally performing stations.11 87.54 88.The table below shows the detailed operational performance of coal based stations over the years OPERATIONAL PERFORMANCE OF COAL BASED NTPC STATIONS Generation(BU) PLF(%) Availability Factor(%) 2010-11 220.86 83.51 91.54 1999-00 118.76 2008-09 206. Taken over in June 1995.06 1998-99 109.79 2002-03 140.57 88.

66% for the year 2007-08. In line with the Corporate Plan. high and quick return option.Tanda (440 MW) Tanda Thermal Power Station was taken over by NTPC on the 15 January 2000. the capacity addition under implementation stage is presented below: Project Indira Gandhi STPP. Source: NTPC While NTPC bettered PPA commitments.The PLF of the power station improved from 21. Future Capacity Additions of coal based thermal power plants: NTPC has formulated a long term Corporate Plan upto 2032.JV with IPGCL & HPGCL ( 3 x 500) Sipat I (3 x 660) Simhadri II Unit . from the viewpoint of capital requirements. This unprecedented success helped the concerned SEBs and the entire nation in terms of economy and power availability. turning around such old units is a low cost.IV( 500) Vallur I -JV with TNEB ( 2 x 500) Vallur Stage-I Phase-II -JV with TNEB ( 1 x 500) Bongaigaon(3 x 250) Mauda ( 2 x 500) Rihand III(2X500) Vindhyachal-IV (2X500) Muzaffarpur Expansion (2x195) – JV with BSEB Nabinagar TPP-JV with Railways (4 x 250) Barh II (2 X 660) Barh I (3 X 660) State Haryana Chhattisgarh Andhra Pradesh Tamilnadu Tamilnadu Assam Maharashta Uttar Pradesh Madhya Pradesh Bihar Bihar Bihar Bihar MW 1000 1980 500 1000 500 750 1000 1000 1000 390 1000 1320 1980 Source: NTPC 21 .59% at the time of the takeover to 91.

•Highly motivated and dedicated workers and officers.SWOT analysis of NTPC STRENGTH OF NTPC: • The company has kept with itself sufficient liquid funds to meet any kind of cash requirement. •Some of the Plant have become old and need investment in Renovation & Modernization. •An early starter-more than 30 years experience in power sector. WEAKNESSES OF NTPC: •Depleting raw materials. •Excellent growth prospects with significant additions. •Employee-friendly personnel policies. • Efficient working capacity of plants •A minimum risk factor.no industrial relations problem. •Huge opportunity in consultancy services. •Low project cost of NTPC’s plants. •Company with an excellent record and high profits. Threats •Rising prices of raw materials 22 . modifications and replacements. OPPURTUNITIES: •Demand and supply gap. •Best-integrated project management systems. •Upcoming hydro and nuclear sector.

The first power transmission project of 400KV Double Circuit Transmission System from the Mundra plant to Dehgam (430 kms) has been realised with two more in the implementation stage. To ascertain a potent presence across the value chain within the industry.•Huge competition from SEB’s. Reliance Energy. Poised to be the LARGEST private power generating company in India. We are achieving it with our out-of-the-box thinking. diversification. FASTEST AND LARGEST power company in many aspects. •Huge Capital requirement for expansion. motivated team and a yen for trendsetting. spurs us to build India’s largest and one of the world’s top 5 single location thermal power plant in Mundra. 23 . Mundra is also the WORLD’S FIRST supercritical technology project to have received ‘CLEAN DEVELOPMENT MECHANISM (CDM) Project’ certification from United Nations Framework Convention on Climate Change (UNFCCC).000 MW of power by 2020. It is Adani’s endeavour to empower one and all with clean. This will be commissioned by March 2011. Adani. This is the first private sector HVDC transmission project in the country ensuring free flow of power between Western India and the Northern Hinterland. a conglomerate with a formidable presence in multiple businesses across the globe. Tata power and other Private Development. Their comprehension of the criticality in meeting the power requirement and its crucial role in ensuring the energy security of India. green power that is accessible and affordable for a faster and higher socio-economic development. Adani has also forayed into power transmission. We are currently implementing nearly 1000 km long high voltage DC double circuit line connecting Mundra power station to Northern India. horizontal & vertical integration and R & M. FASTEST turnaround time of projects in the industry. •Coming up of other sources of power. Adani power has the Adani Power Limited has commissioned the first supercritical 660 MW unit in the country. has entered the power sector to harbinger a ‘power full’ India. Along with thermal power generation. Adani power has made a paradigm shift by venturing into Solar power generation in Gujarat. by generating 20. Our enthusiasm and energy has earned us accomplishments that make us the FIRST. pioneering operational procedures.

Coal based Thermal power projects under Adani group operations:Mundra Thermal Power Project Location : Mundra, District Kutchh, Gujarat, India Capacity : 4620 MW Phase I - 2 x 330 MW Phase II - 2 x 330 MW Phase III - 2 x 660 MW Phase IV - 3 x 660 MW
Source: Adani power

The Mundra Thermal Power Project was conceived for the captive consumption of the Mundra Port & SEZ, thereafter the vision and the capabilities of the promoters shall make the Mundra Power project on completion, the largest single location Coal based Thermal Power Station in India and one of the top five in the World. With the synchronization of Unit 1, Adani Power Limited proved its project execution skills by developing Greenfield coastal power project in a short span of 33 months from the date of NTP. At present all the four units of Phase I and Phase II based on subcritical technology have been commissioned and are Commercially Operational. Adani Power created history by synchronizing the first-ever super-critical technology based 660 MW Unit (Unit 5 of Phase III) in India at Mundra. This is not only the first super-critical turbine in the country but what makes it special is that this has been synchronized within 36 months from the inception, which is the fastest implementation ever by any power developer in the country. The entire project is scheduled to be fully operational within the XIth Five Year Plan (20072012). Further the project being at a coastal location shall use sea water with the implementation of a desalinization unit, making efficient use of the water resources of India. The Phase III of the Mundra Project, which is also based on supercritical technology, has received ‘Clean Development Mechanism (CDM) Project’ certification from United Nations Framework Convention on Climate Change (UNFCCC). This is the world’s first project based on super-critical technology to get registered as CDM Project under UNFCCC. This state-of-the-art supercritical technology is 25% more efficient than conventional sub-critical power plants and enables 20% reduction in CO2 emission.

Tiroda Thermal Power Project


Location : Tiroda, District Gondia, Maharashtra, India Capacity : 3300 MW Phase I - 2 x 660 MW Phase II - 1 x 660 MW Phase III - 2 x 660 MW
Source: Adani power

The Tiroda Thermal Power Project of 3300 MW is being set up by Adani Power Maharashtra Ltd (APML), a subsidiary of Adani Power Limited. In line with their commitment to the environment all the units are based on supercritical technology. The construction activities are in full swing and the first three units of the project are planned to be commissioned within the XIth Five Year Plan (2007-2012) and the balance two units in the first year of the XIIth Five Year Plan (20122017). With the completion of the Phase I and Phase II project Adani shall be making the largest capacity addition in the Indian power sector in the XIth five year plan (2007-2012) with a cumulative capacity of 6600 MW. Kawai Thermal Power Project

Location Kawai, District Baran, Rajasthan, India Capacity 1320 MW
Source: Adani power

The Kawai Thermal Power Project of 1320 MW is being set up by Adani Power Rajasthan Limited, a subsidiary of Adani Power Limited. In line with our commitment to the environment all the units are based on supercritical technology. The state of Rajasthan shall be the beneficiary for the entire power generated from the project. We are prepared to commence construction activities at the project site and the project is planned to be commissioned in the first year of the XIIth Five Year Plan. Upcoming thermal power plants Pench Thermal Power Project Location Chhindwara, District Chhindwara, Madhya Pradesh, India Capacity 1320 MW
Source: Adani power


The Pench Thermal Power Project of 1320 MW is being set up by Adani Pench Power Limited, a subsidiary of Adani Power Limited. In line with our commitment to the environment all the units are based on supercritical technology. The project is in advanced stage of development and the project is planned to be commissioned in the second year of the XIIth Five Year Plan. Dahej Thermal Power Project Adani Power Dahej Limited a subsidiary of Adani Power Limited is implementing at a coastal location, near the port of Dahej, in the industrial district of Bharuch in Gujarat, a thermal power project with an aggregate capacity 2640 MW. The project is advanced stage of development. Bhadreshwar Thermal Power Project Kutchh Power Generation Limited a subsidiary of Adani Power Limited is implementing at a coastal location, near the port of Mundra, in district Kutchh in Gujarat, a thermal power project with an aggregate capacity 3300 MW. The project is advanced stage of development.

Adani power growth chart

Source: Adani power


SWOT Analysis of Adani power Strengths • Strong execution track record on the back of the huge success of Mundra Port • The diversified nature of the Adani Group (especially its presence in ports and coal trading) augurs well for Adani Power • Stellar operational efficiency (FY10 average PLF was 85%+ compared with India’s national average of 78%) • Minimal exposure to merchant power (23% compared with JSW’s 56%) Weakness • All of Adani’s power plants use Chinese equipment • Conflict of interest given that other promoter owned companies are also in power generation • Limited bargaining power vis a vis delays in coal supplies from Adani Enterprises as it is Adani Power’s holding company Opportunities • private sector (this is equivalent to 10x Adani’s installed capacity) and Adani Power will be a relatively strong contender for these UMPPs • Given group’s presence in coal mining and India’s rising coal imports, domestic coal mining offers a huge opportunity for Adani Enterprises This in turn will reduce • Adani Power’s coal cost as currently Adani Enterprises is the biggest supplier of coal to Adani Power Threats • The 5x increase in private sector generation capacity by FY13 could result in merchant power rates getting compressed. • The rising Maoist insurgency (with its greatest influence in states having the largest coal resources) could result in delays and higher costs. • The improving trend in T&D losses due to rising investment in T&D could result in the fading of India’s power deficit at a quicker pace than expected.


These include Construction. A preferred employer. Lanco has operational and under execution projects amounting to over 11000MW.320 Lanco Anpara II 600 Lanco Vidarbha Thermal 1. biomass. Lanco Infratech builds on a tradition and culture where trust comes first… and the credo is inspiring growth. Lanco Infratech is recognized for its Good Corporate Governance and Corporate Social Responsibility initiatives led by the Lanco Foundation. operational and underway. Property Development. and Renewables.Lanco Infratech Ltd is one of India’s top business conglomerates and among the fastest growing. Power LANCO has proven expertise in power generation from conventional and non-conventional sources of energy including gas.240 Fuel Coal Coal Coal Location Chhattisgarh Uttar pradesh Karnataka Fuel Coal Coal Coal Location Chhattisgarh Uttar pradesh Karnataka Cost(mn) 1100 1300 900 Source: Lanco group 28 . hydro and wind. Power.320 Total 3. Lanco Infratech has subsidiaries and divisions across a synergistic span of verticals. Lanco Infratech’s projects. Infrastructure. coal. are spread across India. EPC. A member of the UN Global Compact. Operational coal based thermal power Projects Plants Lanco Power I & II Lanco Anpara I* Udupi Power I & II Total Capacity 600 (2x300) 600 1200 2400 Coal based power Projects Under Construction Plants Capacity Lanco Power III & IV 1.

Operating margin improved by 400 basis points to 18.6% in FY09.3 bn in FY10. which led to increase in revenue from both business divisions. mainly due to improved operating profit and credit entitlement from minimum alternate tax of Rs 603. etc) 29 .6% year-on-year to Rs 82. SWOT analysis of Lanco Power Strengths • • • • • • Cost advantage High R&D Market share leadership Strong management team Strong brand equity Strong financial position Weaknesses • • Diseconomies to scale Over leveraged fiancial position Opportunities • Financial markets (raise money through debt.6 bn in FY09. mainly on account of growth in power and infrastructure sector. taxes.6 bn.72 mn during the year. from Rs 3. against 14.FINANCIAL PROFILE In FY10.6% in FY10. LITL’s top-line grew by 34. PAT increased to Rs 5. due to decrease in operating expenses as a percentage of sales. politics. etc) • Emerging markets and expansion abroad • Innovation Threats • • • Competition Economic slowdown External changes (government.

Currently power projects are present in the states of Andhra Pradesh. Punjab and Uttarakhand. GVK is also creating presence in this area. Leveraging the company's skills and extensive experience. Recognizing Oil and Gas as potential growth segment. Gvk’s thermal power projects GVK Power Goindwal Sahib Ltd 30 .Considering India's diverse energy needs and anticipating the high demand of the future. It uses state of the art technology that minimizes impact on the environment. Together. GVK has established a significant presence in the energy sector. Andhra Pradesh. GVK addresses the consistently growing energy requirements of the country. This extraordinary project has won many accolades for its environmental initiatives. GVK's energy portfolio currently features six power projects which are being developed across several states in the country. these power projects are set to exceed over 5.000 MW capacity. The current portfolio has gas. Jammu Kashmir. hydro and thermal energy projects. The diverse portfolio in the energy sector covers conventional and non-conventional energy resources. GVK is proud of establishing India's first independent power plant at Jegurupadu.

1 Mn (Approved by PSERC) 25 Years with PSEB Achieved on 1st Feb 2010 As per CERC norms 31 .5 Mn Compound wall construction.638.677. site grading work and approach roads work completed Work in progress at Boiler area. TG Foundation and Coal Handling Area BTG contract awarded to BHEL and BOP contract awarded to Punj Lloyd Coal to be sourced from captive mines (Tokisud & Seregarha) in Jharkhand Coal Transportation Agreement signed with Indian Railways GVK Coal (Tokisud) & Seregarha Mines PROJECT OVERVIEW Capacity Commissioning Date Project Cost PPA Agreement Financial Closure Tariff Structure 540 MW Coal Fired Thermal Plant FY 2013 (Expected) ` 29.075 acres of land acquired at a cost of ` 1. ESP area. Power House Building.Source: GVK Highlights • • • • • • 1.

Jharkhand 1 million tonnes per annum to Goindwal Sahib thermal power plant To be finalized 32 .Source: GVK Highlights KISUD HIGHLIGHTS • Financial Closure achieved on 27th April 2010 • Environmental Clearance granted by MoEF • Forest Clearance granted by MoEF • Mining Lease executed with Govt. of Jharkhand on 5th Aug 2010 • Entire 926 acres acquired for compensatory afforestation PROJECT OVERVIEW Geological Reserves Project Cost ` Location Coal Supply Coal Pricing Structure 66.7 Mn Tonnes 2914 Mn Latehar .

PROJECT OVERVIEW Mineable Reserves Project Cost ` Location Coal Supply Coal Pricing Structure 52 Mn Tonnes 2948 Mn Hazaribagh. Jharkhand 2 million tonnes per annum to Goindwal Sahib thermal power plant Coal India Ltd rates minus grade discount Source: GVK SEREGARHA HIGHLIGHTS • Jointly allocated with Arcelor-Mittal. GVKPIL’s share is 45% • Prospecting License has been applied for • ` 5 Mn paid to Central Coalfields Ltd towards compensation for transfer of Mineral Rights SWOT analysis of GVK Power Strengths • Stellar operational efficiency (FY10 average PLF was 85%+ compared with India’s national average of 78%) • Minimal exposure to merchant power (23% compared with Lanco’s 56%) Weaknesses • Conflict of interest given that other promoter owned companies are also in power generation • Limited bargaining power vis a vis delays in coal supplies from GVK Enterprises Oppurtunities 33 .

About 6. Jindal Power Limited Jindal Power Limited (JPL). also supplied by BHEL. domestic coal mining offers a huge opportunity for GVK power Threats • The 5x increase in private sector generation capacity by FY13 could result in merchant power rates getting compressed.9 km conveyer pipeline has been set up for transportation of coal between the mines and the plant. JPL has set up India’s first mega power project in the private sector at Tamnar. Transmission line 34 .• Given group’s presence in coal mining and India’s rising coal imports. Raigarh. has been contributing significantly to the growing needs of power in the country. Chhattisgarh. • The rising Maoist insurgency (with its greatest influence in states having the largest coal resources) could result in delays and higher costs. The company has constructed a 258 km. erection and commissioning of 4X600 MW Boiler Turbine Generation (BTG) package. 4310 crore for setting up a 1000 MW thermal power plant which commenced commercial operation of the 1st unit in December 2007 and all four units (250 MW each) within a short span of nine months. 25 kms away from the project-site. to meet the plant's water requirements. (JSPL).410 crore. The existing 1000 MW power plant was set up with four Turbine Generators of 250 MW each. an 18 m high dam over the river Kurket has been built. The company has already placed an order with Bharat Heavy Electricals Limited (BHEL) for supply. Jindal Power Limited plans to add a 2400 MW Thermal Power plant to the existing capacity of the 1000 MW thermal power plant at Tamnar at an estimated cost of Rs 13. Rs. The company has invested approx. a company promoted by Jindal Steel & Power Ltd. JPL has also signed a MoU with the State Government of Jharkhand to set up a 2640 MW thermal power plant. 400 KV Double Circuit transmission line from the plant to the PGCIL sub-station at Raipur through which power can be sold anywhere in India. The fuel supply of the plant is met through its captive coal mines.

Jindal Power Limited has established a 258 km.73 827.71 700.53 3257.29 1581.93 8598 2178 2238 1972 2210 8148 2086 2120 1851 2091 6368 98% 101% 101% 89% 101% 93% 97% 96% 84% 96% 79% Year 200910 4th Qtr.56 785. 2010. Highlights • • • • • • • • Total length: 258.99 796.76 521. (PGCIL) 220 KV crossing: 6 nos. (Mand. (CSEB) Railway crossing: 2 nos.48 2001. Net Sales Profit After Tax (PAT) Unit Generation (MU) PLF Year 201011 4th Qtr.39 514. (SECR) River crossing: 3 nos.98 2318.96 965.08 1213. 2010-11 2nd Qtr. Asdeo.37 582.251 km Total towers: 701 nos.58 927.08 459. 400 KV Double Circuit transmission line from Raigarh to the PGCIL sub-station at Raipur. 2009-10 2nd Qtr.60 3921. Sheonath) Financial Performance of JPL at a Glance Particulars For the Qtrs.920 hectares at village Rabo (Raigarh) 400 KV crossing: 5 nos. 2009-10 1st Qtr. 2010-11 3rd Qtr.54 487. Forest: 5. 2010-11 1st Qtr.11 3337. 2009-10 3rd Qtr.90 851.33 891.00 559.60 495. (4 CSEB+1 PGCIL) 132 KV crossing: 3 nos. 2009-10 Year 200809 35 .

Efficient working capacity of plants A minimum risk factor. OPPURTUNITIES: •Demand and supply gap. 36 . Weaknesses Depleting raw materials. •Some of the Plant have become old and need investment in Renovation & Modernization. Reliance Energy.Source: Jindal power SWOT analysis of Jindal power Strengths • • • The company has kept with itself sufficient liquid funds to meet any kind of cash requirement. Threats •Rising prices of raw materials •Huge competition from SEB’s. •Huge opportunity in consultancy services. Tata power and other Private Development. •Upcoming hydro and nuclear sector.

Terms of References (ToR) for Environment Clearance has already been approved by Ministry of Environment and Forests (MoEF). Mr. Spearheaded by a highly experienced management team and a rapidly growing workforce of talented power sector professionals. a Detailed Project Report (DPR) has been prepared. the company aims to help materialize the ambition of reliable power for all. Universal Success Enterprise Limited (USEL). Purba Medinipur district near Haldia in West Bengal. land has been alloted. founded by eminent NRI business man. The power plants will be constructed with state of the art. EPC specifications have been prepared. For Sagar STPP. unload and transfer the imported coal to power plant sites. land acquisition is under final stages. Terms of References (ToR) for Environment Clearance has already been approved by MoEF and signing of fuel supply and power off take agreements are underway. highly efficient supercritical technology and will employ stringent environmental standards to greatly limit effluents and emissions. which is coming up at Bhatvadia Village. Currently the company is developing two imported-coal based thermal power plants named ‘Saurashtra Super Thermal Power Plant’ (3960 MW) in Gujarat and ‘Sagar Super Thermal Power Plant’ (1980 MW) in West Bengal. strong corporate governance and environmental sustainability. Proposed projects 37 . which is coming up on Nayachar Island.000MW of power plant capacity in next 10 years to help meet India’s rapidly growing power requirement. the company aims to develop 10.Chapter 4 Company Profile Universal Crescent Power Private Limited (UCPPL) is a subsidiary of diversified multinational business group. For Saurashtra STPP. Development of the power projects is proceeding at a rapid pace and the company expects StageI of Sagar STPP and Saurashtra STPP to start commercial operation in the year 2015. Jamnagar district in Gujarat. fuel supply and power off take agreements have been signed and financial closure is at an advance stage. Guided by deeply rooted principles of dedication to technical and commercial excellence. Prasoon Mukherjee. Both the projects shall have their own dedicated Captive Coal Jetties to receive.

supercritical units and will adhere to strict environmental protection standards. The project is coming up on Nayachar Island near Haldia district and is being developed in two stages – Stage-I: 2×660 MW and Stage-II: 1×660 MW. The power station will employ high efficiency. 8km from the power plant site.000MW thermal power plants at various locations in the state of West Bengal. A cross country conveyor belt will bring the coal to the power plant site from the captive jetty. Gujarat he company has signed an MoU for 10. Sagar Super Thermal Power Project. Power from the station will be evacuated through a 400kV transmission line which will connect to a substation at Rajkot. Power from the station will be evacuated to Kharagpur 400 KV substation located 100 Km from the project site. In line with the MoU. Universal Crescent Power is developing a 1980 MW coal fired Sagar Super Thermal Power Project in the state. This substation is connected to West Bengal State Electricity Transmission Corporation Limited (WBSETCL).Saurashtra Super Thermal Power Project. The project is coming up at Bhatvadia village in Jamnagar district and will be developed in three stages with each stage having two units of 660MW. Power from the project will be sold directly to the merchant market and through a combination of long term MoUs with state governments and sale agreements with reputed power traders. supercritical units and will adhere to strict environmental protection standards. located on the coast. A Power Purchase Agreement (PPA) with WBSEDCL for supply of 85% of Stage-I (2×660 MW) power has already been signed. West Bengal The company has signed an MOU with the Government of West Bengal for setting up 10. The last mile connectivity for power evacuation will be developed by WBSETCL as West Bengal State Electricity Development Corporation Limited (WBSEDCL) will buy the power at plant bus. The power station will employ high efficiency. The rest of the 15% will be sold to the merchant market. Universal Crescent Power is developing 3960 MW coal fired Saurashtra Super Thermal Power Project in the state.000MW with the Government of Gujarat during the “Vibrant Gujarat investor Summit” held in January 2009. In line with the MoU. Roadmap for UCPPL viz a viz project Implementation plan 38 . Low ash coal will be imported from leading coal suppliers and unloaded at captive coal jetty which shall be constructed at Nayachar Island near power plant site and transferred to the power plant through belt conveyers. Coal of low ash will be imported from the leading coal suppliers on large cape size ships and shall be unloaded on a captive jetty which will be constructed in Gojiness village.

The implementation of these projects would be monitored by in. on lump su turn key basis by engaging an EPC contractor. The envisaged mode of implementation would entail following benefits: • EPC contractor would be responsible for integrated development.Location West Bengal Nayanchar island Haldia Gujarat – Bhatwadia village Jamnagar Capacity 3 × 660 MW Project Sagar super thermal Power project Phases Stage 1: 2 × 660 MW Stage 2: 1 × 660 MW Stage 1: 2 × 660 MW Stage 2: 2 × 660 MW Stage 3: 2 × 660 MW 6 × 660 MW Saurashtra Super thermal Power project Construction and commissioning strategy UCPPL envisages implementing the first 2640 MW.house technical team of UCPPL. UCPPL project team would handle the integrated development of plant by constructing and installing various packages for the plant procured from the vendors. 39 . commissioning and performance test of the plant thus ensuring single point responsibility for commissioning and performance thereafter.house capability for implementation of future projects on a package basis. • • • • For the subsequent 3300 MW units. UCPPL has elaborate manpower recruitment and capability development plan to achieve the same. Award of EPC work on LSTK will protect UCPPL against any increase in the project capital cost. 1320 MW project in west Bengal( sagar state 1) and Gujarat ( saurashtra stage-1) each. EPC contractor will be engaged on international competitive bidding (ICB) basis which would ensure a competitive price for UCPPL project Would provide time to UCPPL to build its in.

At head quarter and regional office: Engineering + IT +QA and I HR + Admin.Snapshot of implementation strategy Phases Sagar stage-I Saurashtra stage.‖ Saurashtra stage. • Project operation and maintenance philosophy UCPPL would develop an experienced in house team to carry out operations and maintenance of the plants after taking over the plant from the EPC contractor after commissioning. UCPPL plans to develop the team by recruiting experienced manpower for key positions and also train the team by utilizing EPC contractor’s facility for training of its manpower.on a fixed cost basis Integration managed by LSTK contractor LSTK contractor selected through ICB bidding route Monitoring by in.I • • • • Sagar stage . Manpower – planning and recruitment UCPPL’s manpower recruitment and development plan is synchronized to the project development activities. Key technical and commercial positions will be filled up by experience For two projects under execution Area By mar 2011 15 3 3 4 13 40 By march 2012 40 8 5 8 25 By march 2013 80 8 5 10 35 A.III Source: UCPPL Implementation philosophy LSTK EPC basis.house team of UCPPL Pant packages will be procured and the plant would be constructed by integrating these packages by the project team of UCPPL.‖ Saurashtra stage. Contracts Finance Planning + project management .

I would like to discuss the power scenario in both states as well as look at the current demand & supply scenario and future energy requirements in these states As mentioned earlier UCPPL has drawn up firm plans to develop a total of 5940 coal.940 Capital cost.33 Mn/MW.Documentation B.320 1.Crores 1760 880 1760 1760 1760 7920 Source: UCPPL Potential for UCPPL in Gujarat and west Bengal Before discussing on why UCPPLL has chosen these states as a destination. the estimated capital cost for project and its units are: Stages Sagar stage-I Sagar stage-II Saurashtra stage-I Saurashtra stage-II Saurashtra stage. the capital cost of project is estimated to be $1.320 5. Accordingly.III Total Project capacity.MW 1.based thermal power generation capacity in two locations with 1980 MW capacity to be set up in West Bengal and 3960 MW in Gujarat. + finance + planning Mechanical + electrical + C&I + QA Total manpower for two Phases 2 4 4 8 30 30 3 51 30 150 60 262 Source: UCPPL As per the detailed project report prepared for Sagar Stage-I and saurashtra stage-I and further rationalization by the company based on their ongoing discussions with various EPC contractors. Location advantages 41 .320 1.320 660 1. At site for construction supervision: Civil + QA + HR+ Admin.

5 MW. Coastal location also offers abundant sea water desalination. 42 . Other advantages include: 1. West Bengal offers support through power purchase at normative tariff as the state has not added any new generation capacity in the recent past creating potential power deficit in the near future. northern and southern regions of the country at optimum transmission cost for interregional transmission.Gujarat offers wider optionfor sale of power to the power.83% of the target of 648. 11 units of 5 thermal power stations of Independent Power Producers (IPPs) aggregating to 1870 MW have been covered in this review. Power evacuation through existing substation or last mile connectivity by power grid corporation of india ltd.Logistical advantage in transporting imported coal.deficit markets in western.6 BU representing a growth rate of 6. • Thermal Generation stood at 640. 4. • Achievement in thermal generation in the country during 2009-10 was 98. Availability of adequate land with minimal R&R issues/cost. 3.6%.6%. • All India electricity generation in the country during 2009-10 has been 771. Chapter 5 Objectives A) To understand the Indian Power sector I.9 BU representing a growth rate of 8. delay in commissioning / commercial operation of new generating units & long duration of forced outage of some of the existing thermal units. • Considering increased role of private sector projects in the power generation.captive jetty planned at both locations 2.5 BU. • Major reasons for shortfall in thermal generation vis-à-vis targets have been inadequate availability of coal. With no additional cost to the project account. Current scenario of thermal power projects • This Covers the performance analysis of 413 coal / lignite based thermal units above 25 MW capacity of 104 thermal power stations aggregating 80439.

Further.0 MW) have registered the highest PLF of 80.05% as compared to 5. CESC and JSPL) and 5 were from State Sector Utilities (PSEB. • Energy loss on account of planned maintenance was 6. 71.• Thermal power Stations have achieved PLF of 77.3. • 36 Thermal stations achieved the Operating Availability more than 90% during 2009-10. in Maharashtra achieved the highest ever PLF of 102.13%. 35. the PLF would have been 80. • 15 thermal generating units have achieved plant operating availability more than 99% during 2009-10. 5 were from Pvt. • The average duration of boiler overhaul and capital maintenance was achievedcas 28 days and 62 days respectively.21% among different capacity groups. 82.10% has been achieved as against 85.22% achieved during previous year. Power and one each from Reliance Infra.68% respectively. • BHEL/BHEL make units (277 units aggregating to 62147. • An all time high overall Operating Availability of 85. • The loss of generation due to non-availability of thermal units due to forcedcoutages during 2009-10 reduced to 8. Had there been no loss of generation due to coal shortages. Utilities (Two from Torr. APGENCO-2) • PLF of 19 Thermal units aggregating to 6005 MW is 100% or more.41% and 85.33 %.19% of shut downs were for more than 25 days.03% outages were of duration varying from 1 to 25 days and only 1.68% at the National level which Is higher than 77.85% as compared to 9.39% among units of different make.09%. • Main cause of forced outage was due to various boiler problems. State and Private sector Utilities and Private Sector IPPs achieved the PLF of 85.64%. • 63. • PLF of 21 thermal power Stations aggregating to 25247. Among these 11 were from Central Sector Utility (NTPC). 43 .29 % during 2008-09.78% of the total forced shut down were of duration up to 24 hours. PLF of 70 thermal power units aggregating to 19255 MW is 90% or more. • 490-500 MW unit capacity group achieved the highest PLF of 87.05% achieved during 2008-09.66% during 200809.5 MW is above 90%. • Average duration of boiler overhaul in private sector was lowest (21 days). • Thermal stations of Central. • Dahanu Thermal Power Station (2X250 MW) of M/s Reliance Infrastructure Ltd.

MAHAGENCO.• Generation loss of 14.50 Gas 504134. • Energy loss due to Low system demand & grid constraints during 2009-10 increased from 0.74 kg/kWh to 0. • Loss of generation due to planned maintenance of units was maximum (6105.93 MU) during August'09 while loss of generation due to forced outages of units was maximum (6036.56%.72 kg/kWh.88 MU) during October'09 • 7 Nos.99 Total 28380. 1 Region Northern Coal 24232. Trombay TPS #5 of TATA PCL had continuously operated for more than 300 days.25 .88%. coal/lignite based thermal generating units (5 of NTPC. • Energy losses due to partial unavailability was above national average in the Western & Eastern Regions mainly due to shortage of coal. • The gas based generation registered a remarkable improvement during the year 2009-10 mainly on account of availability of gas from KG Basin and recorded a growth rate 32. ALL INDIA REGIONWISE GENERATING INSTALLED CAPACITY (MW) OF POWER UTILITIES INCLUDING ALLOCATED SHARES IN JOINT AND CENTRAL SECTOR UTILITIES S no.5 BU was reported due to coal shortage by the power utilities during 2009-10. Tata PCL & TNEB) have been operating continuously for more than 250 days.76 44 DSL 12. and one each of Tata PCL & TNEB) continuously have been operating for more than 300 days while 17 coal/ lignite based thermal generating units (13 of NTPC and one each of GSECL.03% as compared with 8. coal handling problems & poor quality / wet coal & other miscellaneous problems and was minimum in the Southern Region.33% to 8.34% mainly due to high auxiliary consumption by newly commissioned lignite based unit at Giral TPS. • Auxiliary power consumption of thermal units at National level marginally increased from 8. Jalippa Kapurdi & Surat Lignite.48% during 2008-09.50% during 2008-09 to 0. • Energy loss due to Partial availability of the generating units during 2009-10 was 8. • All India Specific coal consumption of thermal units at National level reduced from 0. • Among 500 capacity group.

00 0. The State Electricity Boards (SEBs) generate.00 94953.48 Source: UCPPL II.02 1199.74 70. transmit and distribute electricity in coordination with private/centrally owned generating companies or any other relevant agency. 45 .88 60. Each state has set up a State Electricity Regulatory Commission.00 787. adequate.2 3 4 5 6 7 Western Southern Eastern N. It is also responsible for the techno-economic appraisal of the project reports for the proposed power plants.20 142.38 7903. The salient positive features of this legislation are: • Removal of a number of restrictive barriers to the flow of power in a competitive market scenario by opening access to transmission (from the outset) and distribution.32 17. an institution called the Central Electricity Regulatory Commission (CERC) has been set up for rationalisation of bulk and retail tariff for generation and transmission utilities involved in interstate operations.74 70. Eastern Islands All India 31430.50 20482.60 18955. Subsequent to enactment of the Legislation on establishment of a regulatory authority.08 989. 2003.5 18747.81 4690.79 26112.78 190.02 113859. The Electricity Act 2003 The Electricity Act 2003 has been enacted by the Parliament in June. Regulations and power industry structure Institutional Framework The Ministry of Power is primarily responsible for the development of the Indian power sector.00 0. The Central Electricity Authority (CEA) is a body constituted under the Electricity Supply Act. which is responsible for developing a sound.35 17. It is concerned with perspective planning and policy formulation in the sector. It also regulates at intra-state level. and uniform policy for the control and utilisation of national power resources.75 39351. including those in the private sector.00 17706.48 939.

• Freeing up of generation and captive power plants from licenses and technoeconomic approvals. • 18 State Electricity Regulatory Commissions have issued tariff orders. in case of agreements between consumers and generating companies. • 20 states have constituted State Electricity Regulatory Commissions and are functional. Tripura and Jharkhand have notified the constitution of SERC. • 11 States have unbundled/corporatised. • The Energy Conservation Act. • The conversion of the remaining State Electricity Boards into State Transmission Utilities and deemed licensees with the freedom (but not compulsion) to restructure and progress down the road to corporatisation and privatization. Reforms So Far • 26 states have signed Memorandum of Understanding (MoU) with the Government of India to undertake reforms.g. 2001 has been enacted and consequently Bureau of Energy Efficiency (BEE) has already been set up. • The formation of an expert Appellate Tribunal to hear appeals against State and Central Electricity Regulatory Commission orders. The power sector is high on India's priority as it offers tremendous potential for investing companies based on the sheer size of the market and the returns available on investment capital. • Transferring the full range of regulatory and licensing functions to the Central and State Regulatory Commissions. Power structure India's power market is the fifth largest in the world. • The recognition to trading as a distinct activity that would help ushering in a market environment. • State of Orissa and Delhi have privatised distribution of electricity. • Deregulating tariffs in certain situations e. • The distancing of Government from the functioning of the sector after giving broad directions via the National Electricity Policy and the National Tariff Policy. 46 .

It will have to continue to push the process of reform and restructuring and ensure greater private participation. there is delivery constraint with respect to gas. 26 per cent on hydro. Of the fossil fuel supplies.3 per cent in the last decade. there has been a much greater emphasis on transmission and distribution reforms. The share of thermal power as a proportion of total power generated has decreased from 71 per cent to 66. Captive power plants (CPPs) also make a major contribution. In the past few years. which is more than one-fifth of the total installed capacity. It is feared that supply shortages can disturb the capacity addition plans. captive capacity has grown at an average of 1. rationalize tariffs and ensure that average revenue realization is greater than the cost of production.600 MW per year. A number of gas plants today are running at sub-optimal plant load factor (PLF) levels due to shortages. cut AT&C losses substantially to below 20 per cent. They have to pay huge prices as they have to source power from the grid during low frequency 47 . To achieve that promise. The introduction of ABTs (Availability Based Tariffs) has changed the thinking of discoms. in every segment. The Plant Load Factor (PLF) of generating plants has improved consistently over the last 10 years. The government has decided not to embark on new projects that rely on gas. about 10 per cent on gas. there has been considerable growth in power plants based on renewable sources of energy. The government aims to provide "power to all" by 2012. reduce PLFs. In the last three years. The share of hydro has increased to 26 per cent from 25. it will have to add as much as 1.Source: CEA Almost 55 per cent of this capacity is based on coal. Emerging environmental concerns have led to an increasing interest in renewables.000 MW of generation capacity. about 3 per cent on nuclear and 1 per cent on diesel.00. In the past five years.7 per cent. as the rising crude prices have led to firmer naphtha and natural gas prices. approximately 5 per cent on renewable sources.

During this time the CPP power comes in handy at a much lower tariff. Source: CEA III. (March 2007). US.644 MW and the nuclear power’s share would be 3. FUTURE PLANS OF CAPACITY ADDITION Plan for Capacity Addition during XIth Five Year Plan (2007-2012) The power generation capacity added during the last five years is a lowly 21. transmission & distribution Generation India has the fifth largest generation capacity in the world with an installed capacity of 152 GW as on 30 September 20091.250 Mw capacity addition projected by the government in last few days of Xth five year plan.280 Mw. An ambitious target of 78. which is about half the original target of 41. distribution and generation.110 MW set for the Tenth Plan.577 Mw has been set by the government for the eleventh plan period (2007 -2012). In order to provide availability of over 1000 units of per capita electricity by year 2012. which is about 4 percent of global power generation. However.380 MW. the hydropower’s share would be 16. Regulatory authorities have been set up in 24 states. These authorities are applying commercial principles to tariff setting. Thirteen states have unbundled SEBs into separate entities for transmission.553 MW. Japan. The top four countries. The average per capita consumption of electricity in India is estimated to be 704 kWh during 2008-09. Two states have privatized distribution. The world average stands at 2. Capacity addition plan from different sources during XIth five year plan (2007-2012). it has been 48 . viz. This is also 2000 Mw less than the 23. monitoring the performance of state utilities and paying attention to areas such as demand side management and grid discipline.periods. Electricity generation. The Indian government has set ambitious goals in the 11th plan for power sector owing to which the power sector is poised for significant expansion.300 kWh2. The reform process in the power sector continues. this is fairly low when compared to that of some of the developed and emerging nations such US (~15. Of this.. the thermal power would constitute 58.800 kWh).000 kWh) and China (~1. China and Russia together consume about 49 percent of the total power generated globally.

nic The annual growth in power generation during 11th Plan period is as under: 11th Plan 2007-08 2008-09 2009-10 2010-11 Growth in Achievement(%) 6.nic The growth in electricity generation during 2008-09 was constrained due to delay in commissioning of new units during 2008-09. This has resulted in massive addition plans being proposed in the sub-sectors of Generation Transmission and Distribution. etc Transmission Transmission of electricity is defined as bulk transfer of power over a long distance at a high voltage. The Government of India has an ambitious mission of ‘POWER FOR ALL BY 2012’. In India bulk transmission has increased from 3708 ckm in 1950 to more than 265. namely Northern Region.3 2. Southern Region and Western Region. long outages. Source: www.56 www. 00. generally of 132 KV and above. This mission would require that our installed generation capacity should be at least 2. Eastern Region.000 MW would be required. shortage of coal/gas/nuclear fuel. poor hydrology. North Eastern Region. The entire country has been divided into five regions for transmission systems. The interconnected transmission system within each region is also called the regional grid.000 MW by 49 .000 ckm today.6 5.powermin.7 6.powermin.estimated that need-based capacity addition of more than 100.

14. The latter is required because resources are unevenly distributed in the country and power needs to be carried great distances to areas where load centres exist. certain pockets in the power system could not safely operate even under normal conditions. in the past.2012 from the present level of 1. To be able to reach this power to the entire country an expansion of the regional transmission network and inter regional capacity to transmit power would be essential. While the predominant technology for electricity transmission and distribution has been Alternating Current (AC) technology. non-commissioning of load centre generating units originally planned and deficit in reactive compensation. Transmission planning has therefore moved away from the earlier generation evacuation system planning to integrated system planning. recognition of power trading as a distinct activity. transmission and distribution front would result in formation of a robust electricity grid in the country. The transmission system planning in the country. Distribution 50 . Ability of the power system to safely withstand a contingency without generation rescheduling or load-shedding was the main criteria for planning the transmission system.000 MW. had traditionally been linked to generation projects as part of the evacuation system. due to various reasons such as spatial development of load in the network. the liberal definition of a captive generating plant and provision for supply in rural areas are expected to introduce and encourage competition in the electricity sector. High Voltage Direct Current (HVDC) technology has also been used for interconnection of all regional grids across the country and for bulk transmission of power over long distances. However. Certain provisions in the Electricity Act 2003 such as open access to the transmission and distribution network. It is expected that all the above measures on the generation. This had necessitated backing down of generation and operating at a lower load generation balance in the past.

theft & pilferages.Due to lack of adequate investment on T&D works. proper energy accounting & auditing and improved billing & collection efficiency. As the T&D loss was not able to capture all the losses in the net work. With the initiative of the Government of India and of the States. The commercial losses are mainly due to low metering efficiency. 19546 Crore. The programme. has led to reduction in the overall AT&C loss from 38. The loss as percentage of turnover was reduced from 33% in 2000-01 to 16. This may be eliminated by improving metering efficiency. 29331 Crore to Rs. concept of Aggregate Technical and Commercial (AT&C) loss was introduced. The APDRP programme has been restructured by the Government of India.54% in 2005-06. AT&C loss captures technical as well as commercial losses in the network and is a true indicator of total losses in the system. overloading of the system elements like transformers and conductors.60% in 200506. and lack of adequate reactive power support. Fixing of accountability of the personnel / feeder managers may help considerably in reduction of AT&C loss. in order that reliable and verifiable baseline data of revenue and enegry in APDRP Project areas is attained over an IT plateform and that AT& C loss reduction is achieved on a sustained basis. The main objective of the programme was to bring Aggregate Technical & Commercial (AT&C) losses below 15% in five years in urban and in high-density areas.86% in the year 2000-01. The commercial loss of the State Power Utilities reduced significantly during this period from Rs. which has resulted in unplanned extensions of the distribution lines.The reduction of these losses was essential to bring economic viability to the State Utilities. and reached to the level of 32.86% in 2001-02 to 34. the Accelerated Power Development & Reform Programme (APDRP) was launched in 2001. High technical losses in the system are primarily due to inadequate investments over the years for system improvement works. The Restructured APDRP (R-APDRP) was launched by MoP. Gol in July 2008 as a central sector scheme for XI 51 . along with other initiatives of the Government of India and of the States. for the strengthening of Sub ? Transmission and Distribution network and reduction in AT&C losses. the T&D losses have been consistently on higher side.

6% to 11. MoP. Part-A of the scheme being dedicated to establishment of IT enabled system for achieving reliable & verifiable baseline data system in all towns with population greater than 30. However.1% during the first three years of the current five year plan with an increasing trend. enhancing availability of skilled and trained manpower. For special category states. 52 . 40. Gol has earmarked Rs. IV.9% to 16.000 Crores for R-APDRP Part-A. 90% loan is provided by GOI for Part-b projects and entire GOI loan shall be converted to grant in five tranches depending on extent of maintaining AT&C loss level at 15% level for five years. Current Demand and Supply scenario of power in India • • The energy deficit has been in the range of 9.000 as per 2001 census (10.000 Crore would be converted to grant depending on extent to which utilities reduce AT&C losses in project areas. Few pilot projects adopting innovations are also envisaged under Part-C.6% with a decreasing trend. Structural reforms like de-licensing of generation. 10.The focus for Part-B is on AT&C loss reduction on sustainable basis.25% loan is provided under Part-B projects and upto 50% of scheme cost is convertible to grant depending on extent of maintaining AT&C loss level at 15% level for five years. Gol has earmarked sanctioning of schemes upto Rs.000 for Special Category Status). Of this. R-APDRP also has provision for Capacity Building of Utility personnel and development of franchises through Part-C of the scheme. the peak deficit has been in the range of 11. upto Rs. Part-B of the scheme deals with regular Sub Transmission & Distribution system strengthening & upgradation projects.000 Crores under R-APDRP Part-B. MoP . 20. 100% loan is provided under R-APDRP for Part-A projects & shall be converted to grant on completion and verification of same by Third Party independent evaluating agencies (TPIEA) being appointed by MoP. Installation of SCADA/DMS for towns with population greater than 4 lakhs & annual input energy greater than 350MU is also envisaged under Part-A. The scheme comprises of two parts-Part-A & Part-B.plan. introduction of ultra-mega power projects (UMPP) and liberalization of mega power policy have been undertaken to improve the power situation in the country.

96. Additionally.35% during the same period of the previous plan.228 MW.74 trillion units at 75% plant load factor ( PLF ) even if around 70 % of the planned 97 GW is commissioned. During the last few years.1 trillion units from the current 0. Steps. including capacity from renewable energy sources (RES). import of coal has risen tremendously from 4.81 lakh BPL households. the CAGR of electricity generation in the country during the first three years of the 11th Plan has been 5. In order to improve capacity addition further. are being taken by the government to improve the PLF performance of existing thermal power stations. 2011. 26.51 crore.18 lakh un-electrified villages. under the Rajiv Gandhi Grameen Vidyutikaran Yojana (RGGVY) scheme. These projects cover electrification of 1.7% of the target for generation of power has been achieved during the current fiscal year. Also.76 lakh already electrified villages have been intensively electrified and free electricity connections have been released to 148.353.470 MW . stands at 1. as compared to 6. india has only commissioned ~52 GW of its power capacity plans in last two decades. development of national power grid and reorganization of APDRP is being undertaken.55 lakh electrified villages and free electricity connections to 246 lakh BPL households. 573 projects have been sanctioned at an estimated cost of Rs.2 MT in 2009-10. 1. The government plans to add ~ 97 GW in the indian power sector over the next 4 years of which ~53 GW is planned to be added by the private sector. Additionally.5 MT in 2004-05 to around 23. Further. 92. As on 15 February 2011. the Ministry of power (MoP) has adopted a robust monitoring system for the capacity addition program so that the projects are executed in time. In addition.762 MW has taken place in the 11th Plan till date.• • • • • • Despite these initiatives. such as renovation and modernization.70. the supply of coal by Coal India Limited (CIL) to various power utilities has stagnated.21%. a capacity addition of only 32.689 un-electrified villages have been electrified. Consequently. 53 . intensive electrification of 3. This capacity addition will boost the overall supply to 1. As on January 31. The capacity addition in the next five-year plan is targeted as 106. the installed generation capacity.

Source: CEA 54 .Source: CEA Even with increase in capacity additions in recent years and planned capacity additions in future. the country is still expected to have power deficit of around 4.10% in FY 2010 ). This country wide power supply deficit provides adequate market to power projects like that of UCPPL.80%in FY 2014 ( down from 11% in FY 2009 and 10.

and desired rates of return. Likewise. IPP projects are required to meet two minimum debt coverage ratios.) Flow-through accounting is used to allow equity investors to realize maximum benefit from accelerated depreciation and tax credits. The first requirement is to have an operating income of no less than 1.5 times the annual debt service for the worst year. to perhaps 20% or more. Because debt coverage is often the tightest constraint. Although corporate finance might assume the debt to equity ratio remains constant over the project's life and principal is never repaid. financing costs.5% annual return (with no debt service reserve or letter of credit required) and 65% equity at 13% return. Therefore.OBJECTIVE 2 B) To understand the types of finances and relevant factors I Debt. In this project finance approach. The company uses balance-sheet or corporate finance. a capital structure of 60% debt and 40% equity should be considered. to be conservative. For this reason.8 times or better for the average year. and all the debt is repaid assuming level mortgage-style payments. Flowthrough accounting is used so that the corporate GenCo receives maximum benefit from accelerated depreciation and tax credits. a typical capital structure is 70% debt at 8. where debt and equity investors hold claim to a diversified pool of corporate assets. negative after-tax cash flows in later years of debt repayment (phantom income) are low. (For solar and geothermal projects that are entitled to take Investment Tax Credits.0% annual return (based on 30-year Treasury Bill return plus a 1. Debt term for an IPP project is generally 15 years. Each reflects a different financial structure. it is often informative to explicitly show the effect of the project on a stand-alonefinancial basis. The second is to have an operating income of about 1. Briefly. A typical GenCo capital structure consists of 35% debt at a 7. Independent Power Producer (IPP): An IPP’s debt and equity investment is secured by only the one project. the debt term is estimated as 28 years for a 30-year project. with good debt coverage. with a level mortgage-style debt repayment schedule.5% spread) and 30% equity at a minimum 17% return. taxes. not by a pool of projects or other corporate assets as is the case for a GenCo. and operating a power plant. GenCo debt and equity are less risky than for an IPP (see below) and therefore GenCos pay lower returns. owning. A 6-month Debt Service Reserve is maintained to limit repayment risks.equity structure Four distinct ownership perspectives were identified for this analysis. actual IRR may be well over 17%. 55 . the four ownership scenarios are: Generating Company (GenCo): The GenCo takes a market-based rate of return approach to building.

returns on investment are not set by the market. taxes. For construction of jetty and power evacuation additional land is required at an estimated cost. and 47% common stock at 12. operating expenses. B) Main equipment The cost of the steam generator with supercritical steam parameters burning coal as main fuel of composition in a pulverized fuel furnace. To arrange soil for land filling dredged silt from river shall have to be depended upon. Use of a Fixed Charge Rate is a way to approximate the levelized COE from this perspective. but by the regulatory system. Here is an example of UCPPL power projects proposed funding plan ( subject to change ) which would make the financial structure more clear:- II Costing parameters A) land • • The designated area for power plants requires considerable land filling. insurance. Municipal Utility (or other tax-exempt utility): The municipal utility uses an analysis approach similar to that of the IOU. insurance.B prive considered on imported items • Customs duty on imported items would levied @ 22% 56 . etc. and returns are summed to determine the revenue stream necessary to provide the approved return to debt and equity investors. its auxiliaries and critical high pressure piping take place on the price indication by a vendor using similar supercritical steam parameters and associated technology.5% annual return. are considered at the following rates:• Ocean freight and marine insurance @6. duties. C) taxes. Debt term and project life are both 30 years. assumed to be 100% debt at 5. As described by the EPRI Technical Assessment Guide (TAGTM).5% annual return. duties.Regulated Investor-Owned Utility (IOU): The regulated IOU perspective analyzes a project with a cost-based revenue requirements approach.O. insurance etc. Capital structure is. property taxes.0%.2%. IOU capital structure is estimated as 47% debt at a 7.:For plant and equipment. Accelerated depreciation is normalized using a deferred tax account to spread the result over the project's lifetime. In this calculation. depreciation.5% on F. As under the financial regulations set by central electricity authority (CEC) most of the generating companies follow a debt-equity structure of 70:30. 6% preferred stock at 7. and the public utility pays neither income tax nor property tax. IOUs are not eligible to take an Investment Tax Credit for either solar or geothermal projects. however.

An in plant coal storage of 30 days requirement is considered within the plant boundary Delivery cost of coal is generally taken at $66-$80 M.R cost is considered D) auxiliary plants and equipment All auxiliary plants and equipment’s other than civil packages are considered to be procured through international competitive bidding route. H) electrical system The system helps to evacuate power from generating station to the proposed pooling station or substation.F Value Excise duty is levied @8. 57 .a high twin flue chimney with on-line gas monitoring system is considered • Desulphurization: considering the sulphur content in thue fuel no FGD unit needs to be installed but a space provision is kept. I) environmental • Stack emission:. Cost of jetty is considered under the civil cost of the estimate It is assumed that coal would be supplied in size of (-) 50 mm in certain cases. E) plant water system • • • F) fuel • • • • • Coal is considered to be generally available from mines in Indonesia and Australia.• • • Port handling charges are anywhere between 1% to 2. Sales tax @2 % of supply price with education cess @3% is considered.T For conveyance of consumptive water 1200 NB buried mild steel pipes are considered from the intake pump house to plant site covering a cross country length of 4km.5 % on C. The cost of transmission lines for grid connectivity for evacuation of power generated and for supply of emergency will not be considered.5% on F.I.O. Freight and insurance for indigenous items @3.24% for mechanical items of the project . Cost of natural draft cooling water is estimated from the budgetary offer of typical vendors For drawal of raw water fro the rivers an intake pump is constructed at a locatiom to be studied separately by the project authority. G) ash disposal Bottom ash from units shall be extracted and disposed in wet mode and fly ash from the furnace would be extracdted. stored in dry form and disposed either in dry form for use as landfill or in wet slurry form to ash dyke using HCSD system.

(g) Special allowance in lieu of R&M or separate compensation allowance. (f) Cost of secondary fuel oil (for coal-based and lignite fired generating stations only). (d) Interest on working capital. capacity charge and energy charge (for recovery of primary fuel cost and limestone cost where applicable). (b) Interest on loan capital. K) Manpower Many key personnel are envisaged for O&M. (3) The tariff for transmission of electricity on inter-State transmission system shall comprise transmission charge for recovery of annual fixed cost. 2) The tariff for supply of electricity from a hydro generating station shall comprise capacity charge and energy charge to be derived in the manner specified in regulation 22. Annual Fixed Cost. (e) Operation and maintenance expenses. (c) Depreciation. wherever applicable.• Effluent: waste water from different processes of the station is collected in a guard pond where it is treated and recycled for use in less priority areas. The cost involved towards EHV line from the powerhouse to the nearby pooling station would be borne by the state distribution company. 58 . The annual fixed cost (AFC) of a generating station or a transmission system shall consist of the following components – (a) Return on equity. administration and finance. for recovery of annual fixed cost through the two charges. (1) The tariff for supply of electricity from a thermal generating station shall comprise two parts. III Tariff evaluation Components of Tariff. L) grid connectivity The state electricity distribution company will draw power from the station bus of the power plant. J) Time schedule: Commercial operation of both the unitrs from” zero date” i. namely.e the date for placement of order for main equipment is usually 51 months.

3399) = 23. an additional return of 0. (4) Rate of return on equity shall be rounded off to three decimal points and be computed as per the formula given below: Rate of pre-tax return on equity = Base rate / (1-t) Where t is the applicable tax rate in accordance with clause (3) of the regulation. (1) The loans arrived at in the manner indicated in regulation 12 shall be considered as gross normative loan for calculation of interest on loan. on then equity base determined in accordance with regulation 12 of CERC regulation (2) Return on equity shall be computed on pre-tax basis at the base rate of 15. - This would be made more clear with the help of an illustration:Illustration.2009 shall be worked out by deducting the 59 .5% shall be allowed if such projects are completed within the timeline specified in Appendix-II: Provided further that the additional return of 0.481% Interest on loan capital.5% to be grossed up as per clause (3) of the CERC regulation: Provided that in case of projects commissioned on or after 1st April.Return on Equity. as the case may be: Provided that return on equity with respect to the actual tax rate applicable to the generating company or the transmission licensee. (2) The normative loan outstanding as on 1.481% (ii) In case of generating company or the transmission licensee paying normal corporate tax @ 33. in line with the provisions of the relevant Finance Acts of the respective year during the tariff period shall be trued up separately for each year of the tariff period along with the tariff petition filed for the next tariff period.50/ (1-0. as the case may be.33% including surcharge and cess: Rate of return on equity = 15.1133) = 17.99% including surcharge and cess: Rate of return on equity = 15.(i) In case of the generating company or the transmission licensee paying Minimum Alternate Tax (MAT) @ 11. 2009. (3) The rate of return on equity shall be computed by grossing up the base rate with the normal tax rate for the year 2008-09 applicable to the concerned generating company or the transmission licensee. (1) Return on equity shall be computed in rupee terms.4.50/ (1-0.5% shall not be admissible if the project is not completed within the timeline specified above for reasons whatsoever.

(4) In case of the existing projects. (7) The generating company or the transmission licensee. (1) The value base for the purpose of depreciation shall be the capital cost of the asset admitted by the Commission. as the case may be. any of the parties may make an application in accordance with the Central Electricity Regulatory Commission (Conduct of Business) Regulations.3. (2) The salvage value of the asset shall be considered as 10% and depreciation shall be allowed up to maximum of 90% of the capital cost of the asset. 1999.: Provided that if there is no actual loan for a particular year but normative loan is still outstanding. as the case may be.2009 shall be 60 . does not have actual loan. Depreciation. (3) Depreciation shall be calculated annually based on Straight Line Method and at rates specified in the regulations for the assets of the generating station and transmission system: Provided that. in the ratio of 2:1. (6) The interest on loan shall be calculated on the normative average loan of the year by applying the weighted average rate of interest.2009 from the gross normative loan.cumulative repayment as admitted by the Commission up to 31. then the weighted average rate of interest of the generating company or the transmission licensee as a whole shall be considered.4. (8) The changes to the terms and conditions of the loans shall be reflected from the date of such re-financing.. the balance depreciable value as on 1. as the case may be. the remaining depreciable value as on 31st March of the year closing after a period of 12 years from date of commercial operation shall be spread over the balance useful life of the assets. (5) The rate of interest shall be the weighted average rate of interest calculated on the basis of the actual loan portfolio at the beginning of each year applicable to the project. as the case may be the repayment of loan shall be considered from the first year of commercial operation of the project and shall be equal to the annual depreciation allowed. including statutory re-enactment thereof for settlement of the dispute: Provided that the beneficiary or the transmission customers shall not withhold any payment on account of the interest claimed by the generating company or the transmission licensee during the pendency of any dispute arising out of re-financing of loan. as amended from time to time. (3) The repayment for the year of the tariff period 2009-14 shall be deemed to be equal to the depreciation allowed for that year: (4) Notwithstanding any moratorium period availed by the generating company or the transmission licensee. the last available weighted average rate of interest shall be considered: Provided further that if the generating station or the transmission system. shall make every effort to re-finance the loan as long as it results in net savings on interest and in that event the costs associated with such re-financing shall be borne by the beneficiaries and the net savings shall be shared between the beneficiaries and the generating company or the transmission licensee. (9) In case of dispute.

(1) The working capital shall cover : (a) Coal-based/lignite-fired thermal generating stations (i) Cost of coal or lignite and limestone. Operation and Maintenance Expenses.2009 or on 1st April of the year in which the generating station or a unit thereof or the transmission system. other than the generating stations Year 2009-10 2010-11 200/210/250 MW sets 18. namely: Coal based and lignite fired (including those based on CFBC technology) generating stations. Interest on Working Capital.4. for generation corresponding to the normative annual plant availability factor. and in case of use of more than one secondary fuel oil. cost of fuel oil stock for the main secondary fuel oil. In case of commercial operation of the asset for part of the year. and (v) Operation and maintenance expenses for one month. (4) Interest on working capital shall be payable on normative basis notwithstanding that the generating company or the transmission licensee has not taken loan for working capital from any outside agency.00 13.74 Rs in lakh/MW 600 MW sets & above 11. (iv) Receivables equivalent to two months of capacity charges and energy charges for sale of electricity calculated on the normative annual plant availability factor. is declared under commercial operation. depreciation shall be charged on pro rata basis. (3) Rate of interest on working capital shall be on normative basis and shall be equal to the short-term Prime Lending Rate of State Bank of India as on 1. (5) Depreciation shall be chargeable from the first year of commercial operation. (2) The cost of fuel in cases covered under sub-clauses (a) and (b) of clause (1) shall be based on the landed cost incurred (taking into account normative transit and handling losses) by the generating company and gross calorific value of the fuel as per actual for the three months preceding the first month for which tariff is to be determined and no fuel price escalation shall be provided during the tariff period.2009 from the gross depreciable value of the assets. Normative operation and maintenance expenses shall be as follows.92 61 500 MW sets 13. (ii) Cost of secondary fuel oil for two months for generation corresponding to the normative annual plant availability factor.worked out by deducting the cumulative depreciation as admitted by the Commission upto 31. whichever is later.24 300/330/350 MW sets 16. as the case may be. (iii) Maintenance spares @ 20% of operation and maintenance expenses specified in regulation 19.70 12.00 16.37 . for 1½ months for pithead generating stations and two months for non-pit-head generating stations. if applicable.3.20 19.

75 34.62 36.15 0.2009 in the same station: 200/210/250 300/330/350 MW 500 MW and above MW Additional 5th & 6th units Additional 7th & more units Additional 4th & 5th units Additional 6th & more units Additional 3rd & 4th units Additional 5th & above units 0.70 40.9 . Bokaro and Durgapur TPS 31. Tanda TPS.24 13.85 0.51 22.79 Badarpur. Badarpur TPS of NTPC and Bokaro TPS.34 31.35 0.65 62 .53 15.85 (b) Talcher Thermal Power Station(TPS).09 In a coal-based or lignite-fired thermal generating station a separate compensation allowance unit-wise shall be admissible to meet expenses on new assets of capital nature including in the nature of minor assets.9 0.99 14.4.2011-12 2012-13 2013-14 20. 15.88 18.08 13. Chandrapura TPS and Durgapur TPS of DVC Year 2009-10 2010-11 2011-12 2012-13 2013-14 Talcher TPS 32.74 17.82 14.35 32.75 29.02 32.34 21.36 16.60 38.9 0.85 0.25 27.25 33. or 20 years of useful life: Years of operation 0-10 11-15 16-20 21-25 Compensation allowance Rs/lakh/MW/ yr Nil 0.91 Tanda and Chandrapura TPS 26.12 35.17 34. in the following manner from the year following the year of completion of 10.62 Provided that the above norms shall be multiplied by the following factors for additional units in respective unit sizes for the units whose COD occurs on or after 1.91 19.

/ml considered initially NAPAF – Normative Annual Plant Availability Factor in percentage NDY – Number of days in a year IC . The total capacity charge payable for a generating station shall be shared by its beneficiaries as per their respective percentage share / allocation in the capacity of the generating station. SFC – Normative Specific Fuel Oil consumption in ml/kWh LPSFi – Weighted Average Landed Price of Secondary Fuel in Rs. latest procurement price for the generating station.Installed Capacity in MW. based on norms specified under these regulations. /ml Computation and Payment of Capacity Charge and Energy Charge for Thermal Generating Stations (1) The fixed cost of a thermal generating station shall be computed on annual basis. (1) Expenses on secondary fuel oil in Rupees shall be computed corresponding to normative secondary fuel oil consumption (SFC) specified in clause (iii) of regulation 26. (2) The capacity charge (inclusive of incentive) payable to a thermal generating station for a calendar month shall be calculated in accordance with the following formulae : 63 . before the start of the year. the landed cost incurred by the generating company on secondary fuel oil shall be taken based on actuals of the weighted average price of the three preceding months and in the absence of landed costs for the three preceding months. LPSFy = The weighted average landed price of secondary fuel oil for the year in Rs. in accordance with the following formula: = SFC x LPSFi x NAPAF x 24 x NDY x IC x 10 Where.Transmission system (i) Norms for operation and maintenance expenses shall be as under Expenses on secondary fuel oil consumption for coal-based and lignite-fired generating station. and recovered on monthly basis under capacity charge. The secondary fuel oil expenses shall be subject to fuel price adjustment at the end of the each year of tariff period as per following formula: SFC x NAPAF x 24 x NDY x IC x 10 x (LPSFy – LPSFi) Where. (2) Initially.

AFC = Annual fixed cost specified for the year. NAPAF = Normative annual plant availability factor in percentage NDM = Number of days in the month NDY = Number of days in the year PAFM = Plant availability factor achieved during the month. Where. Provided that in case the plant availability factor achieved during a financial year (PAFY) is less than 70%. AUX = Normative auxiliary energy consumption in percentage. (5) The energy charge shall cover the primary fuel cost and limestone consumption cost 64 . In case of a change in IC during the concerned period. the month or the year as the case may be. in percent (3) The PAFM and PAFY shall be computed in accordance with the following formula: N PAFM or PAFY = 10000 x Σ DCi / { N x IC x ( 100 .5 x PAFM / NAPAF ) (in Rupees). subject to clause 4) below. as certified by the concerned load dispatch centre after the day is over.e. IC = Installed Capacity (in MW) of the generating station N = Number of days during the period i. DCi = Average declared capacity (in ex-bus MW). in percent: PAFY = Plant availability factor achieved during the year. DCi in such an event shall be taken to be equal to the maximum peak-hour expower plant MW schedule specified by the concerned Load Despatch Centre for that day.5 + 0. in consultation with the beneficiaries. (4) In case of fuel shortage in a thermal generating station.e. its average value shall be taken. (b) For generating stations in commercial operation for ten (10) years or more on 1st April of the year: AFC x ( NDM / NDY ) x ( PAFM / NAPAF ) (in Rupees). Note : DCi and IC shall exclude the capacity of generating units not declared under commercial operation. in Rupees.(a) Generating stations in commercial operation for less than ten (10) years on 1st April of the financial year : AFC x ( NDM / NDY ) x ( 0. for the ith day of the period i. the generating company may propose to deliver a higher MW during peak-load hours by saving fuel during off-peak hours. the month or the year as the case may be. the total capacity charge for the year shall be restricted to AFC x ( 0.5 + 35 / NAPAF ) x ( PAFY / 70 ) (in Rupees). The concerned Load Despatch Centre may then specify a pragmatic day-ahead schedule for the generating station to optimally utilize its MW and energy capability.AUX ) } % i=1 Where.

for the purpose of computation of energy charge. taxes and duties as applicable and transportation cost for the month. installed capacity (IC). who shall share these charges in the manner specified in Regulation 33. and recovered on monthly basis as transmission charge from the users. Government of India for the nuclear generating stations by specifying annual fixed cost (AFC). inclusive of royalty. at the energy charge rate of the month (with fuel and limestone price adjustment)./kWh) x {Scheduled energy (ex-bus) for the month in kWh.} (6) Energy charge rate (ECR) in Rupees per kWh on ex-power plant basis shall be determined to three decimal places in accordance with the following formulae : For coal based and lignite fired stations ECR = { (GHR – SFC x CVSF) x LPPF / CVPF + LC x LPL } x 100 / (100 – AUX) (7) The landed cost of fuel for the month shall include price of fuel corresponding to the grade and quality of fuel inclusive of royalty. in Percent. (9) The tariff structure as provided in this regulation may be adopted by the Department of Atomic Energy. (2) The transmission charge (inclusive of incentive) payable for a calendar month for a transmission system or part thereof shall be AFC x ( NDM / NDY ) x ( TAFM / NATAF ) Where.(where applicable). and. Computation and Payment of Transmission Charge for Inter-State Transmission System (1) The fixed cost of the transmission system shall be computed on annual basis. AFC = Annual fixed cost specified for the year. (3) The transmission charges shall be calculated separately for part of the transmission 65 . and in case of coal/lignite shall be arrived at after considering normative transit and handling losses as percentage of the quantity of coal or lignite dispatched by the coal or lignite supply company during the month as given below : Pithead generating stations : 0. computed in accordance with Appendix IV.–. and shall be payable by every beneficiary for the total energy scheduled to be supplied to such beneficiary during the calendar month on ex-power plant basis. normative auxiliary power consumption (AUX) and energy charge rate (ECR) for such stations. taxes and duties as applicable.2% Non-pithead generating stations : 0. in accordance with norms contained in these regulations. Total Energy charge payable to the generating company for a month shall be: (Energy charge rate in Rs. in Rupees NATAF = Normative annual transmission availability factor. transportation cost by rail / road or any other means. normative annual plant availability factor (NAPAF). aggregated as appropriate.8% (8) The landed price of limestone shall be taken based on procurement price of limestone for the generating station. in per cent NDM = Number of days in the month NDY = Number of days in the year TAFM = Transmission system availability factor for the month.

shall be made on the basis of the TAFM to be certified by the Member-Secretary of the Regional Power Committee of the concerned region within 30 days from the last day of the relevant month Unscheduled Interchange(UI) Charges. and all variations between actual net drawal and scheduled net drawal for the beneficiaries shall be treated as their respective Unscheduled Interchanges (UI). charges for which shall be governed by the relevant regulations specified by the Commission from time to time. electricity off‐take • Availability of roads • Availability of water 66 . earthquake risks • Fuel supply. (4) The transmission licensee shall raise the bill for the transmission charge (inclusive of incentive) for a month based on its estimate of TAFM.system having differing NATAF. and aggregated thereafter. soil strength • Flood. Adjustments. (2) Actual net unscheduled interchange of every inter-State entity shall be metered on its periphery through special energy meters (SEMs) installed by the Central Transmission Utility (CTU). according to their sharing by the beneficiaries. topography. (1) All variations between actual net injection and scheduled net injection for the generating stations. and computed in MWh for each 15-minute time block by the concerned Regional Load Despatch Centre. IV Due diligence during funding of a power project Here are the various Due Diligence activities involved in funding of a thermal power project FUEL AVAILABILITY • Long term fuel availability • Daily. seasonal fluctuations • Fuel competition • Long term Fuel Purchase Agreement (FPA) PLANT CAPACITY • Optimum capacity • Electricity demand • Present and future situation • Fuel supply security SITE SELECTION • Location. if any.

operating cost • Equipment quality. net power 67 . investment cost. ground water EPC CONTRACTOR/EQUIPMENT SUPPLIER • Track record • Capability and reliability • Plant performance • Guarantees • Payment terms and conditions • After sale service • Market presence • Financial stability ONSTRUCTION CONTRACT • Payment terms/conditions • Payment schedules • Performance guarantees • Liquidated damages • Contract law • Arbitration FINANCIAL MODELLING • Gross power. automation • Design suitability • Combustion system • Equipment type • Safety margins • Fuel flexibility WATER AVAILABILITY • During summer/drought season • Historical availability • Water quality • River/stream water vs.• Availability of grid • Equipment transfer facilities TECHNOLOGY • Proven technology • Acceptable efficiency • Acceptable availability • Environmental compliance • Project life • Investment cost EQUIPMENT SELECTION • Efficiency. parasitic load.

grace period • IRR.• Annual operating hours • Fuel and electricity pricing • Adequate escalations • Investment cost • Training and development cost • Insurance • Working capital • Tax rate • Discount rate • Interest. repayment period. NPV • Sensitivity analysis • Debt service coverage ratio EQUITY FINANCING • Current status of the project • Credibility of the project developer • Credibility of other investors • Commitment from investors • Completion guarantee • Equity drawdown DEBT FINANCING • Loan terms • Repayment period • Grace period • Interest rate • Interest during construction • Debt‐service coverage ratio • Working capital • Debt drawdown PROJECT SCHEDULE • Practical schedule • Design • Manufacturing • Transportation • Erection • Testing and commissioning • Commercial operation and hand over PLANT OPERATION • Operating team • Qualification and experience • Commitment • Motivation 68 .

PLANT MAINTENANCE • Maintenance team • Qualification and experience • Commitment • Motivation • Local maintenance companies PROJECT MANAGEMENT TEAM • Experience of project developer • Experience of consultant • Experience of other stakeholders INSURANCE DURING CONSTRUCTION • Workmen’s compensation insurance • Automobile liability insurance • Construction plant and equipment insurance • Construction all risks insurance • Third party liability insurance • Marine and other transit insurance INSURANCE DURING OPERATION • Fire risks insurance • Advanced loss of revenue insurance • Operator’s business interruption insurance • Third party liability insurance • Workmen’s compensation insurance PERFORMANCE GUARANTEE • Availability guarantee • Net Power output guarantee • Completion guarantee • Heat rate guarantee • Environmental and noise level guarantee • Warranty RISK MITIGATION MEASURES • Technology risk • Long term fuel supply • Off‐take of electricity • Construction/operation risk • Cost over‐run risk Chapter 6 69 .

etc. there is shortage of construction equipment as well. Hence. equipment shortages have been a significant reason for India missing its capacity addition targets for the 10th five year plan. Manpower Shortage 70 . ash-handling plants. Apart from these. plus. a project developer has to account for and manage its logistics chain in a manner that ensures regular fuel supply which is a big challenge. These include coal handling. In both cases. Within the country. there are some inherent risks which this sector faces. Dependence on Equipment Suppliers: The power sector is heavily dependent on Equipment suppliers. coal is transported by Indian Railways and in case of imports. Technical losses are due to inadequate investments over the years for system improvement works. Aggregate Commercial and Technical Losses: The Aggregate Technical and Commercial Loss (AT&C) is defined as the power lost due to inefficient transmission and distribution infrastructure. inadequate supply of equipments is a cause of concern for the power companies. before the commencement of revenue generation. 30 are lost during transmission and distribution. India currently faces capacity shortage. This is a huge problem for the power sector. Commercial losses are mainly due to low metering efficiency. availability of domestic coal is a challenge on account of various bottlenecks such as capacity expansion of Coal India Limited (the largest coal producing company in the world. coal is to be unloaded at ports. Hence. etc. Availability of Coal: Coal is the mainstay of the power production in India and is expected to remain so in the future. pilferage and theft of power. India has limited coal reserves. environmental and forest clearances. While the shortage has been primarily in the core components of boilers.Issues and challenges facing thermal power sector The thermal Power Sector is a highly capital-intensive industry with long gestation periods. coal block allocation. there has been lack of adequate supply of Balance of Plant (BOP) equipment as well. In fact. Transportation of coal is a big concern in itself. India’s AT&C losses are as high as 30% compared with 5-10% in the developed markets which means out of every 100 units produced. Since most of projects have a long time frame (4-5 years of construction period and operating period of over 25 years). turbines and generators. tribal land acquisition.

The Government. environmental and forest – related issues. These issues continue to pose challenges to maintain the pace of development of power projects. inter-state issues. Investment in existing employees is also crucial in order to offer better-defined career structures. contractors and governments to attract more school leavers and graduates. Difficulties have been experienced by developers in land acquisition. contractors and their sub-vendors. © Other Roadblocks leading to Demand Supply Gap: - The power sector has other concerns like shortage of skilled manpower for construction and commissioning of projects. geological surprises (particularly for Hydro projects) and contractual issues. the industry needs a genuine collaboration between project owners. with a greater focus on training and higher salaries where possible.There is a general consensus that shortage of talent in the thermal power sector is a long term problem and is likely to continue to push up project costs and risks. the sector can reach out to a wider potential audience that perhaps would not previously have considered such a career. surveying and contract management. rehabilitation. has also not done enough to address this challenge. engineering. Facing a desperate game of catch up. Companies should also seek to stay in touch with changing employee aspirations. contractual disputes between project authorities. delay in readiness of balance of plants by the executing agencies. estimating. By encouraging diversity in its employment practices and by offering greater flexibility in working hours. which is the biggest buyer of the capital projects. Chapter 7 71 . The flow of talent into construction and power sector has been gradually drying up as candidates have sought an alternative – and often more lucrative – career options. The education system is often not delivering the required number of specialists across project management.

48 2.40 40.09 -- 10 --0.38 -- 10 -1.01 Per Share (Rs) Net Operating Profit Per Share -(Rs) Free Reserves Per -0.07 -- 10 --0.09 --0.43 5.41 72 .70/21.64 Adani power Mar '06 Investment Valuation Ratios Face Value 10 Dividend Per Share -Operating Profit -0.75 23.30 1125/1465 74.10 Volume 19883 333486 32502 3561 12.44 31. TATA POWER.15 1286.50 5 Eps 45.385.12 1.5/105.63 12.70 52 week high/low 144.14 Share (Rs) Bonus in Equity -Capital Profitability Ratios Operating Profit -Margin(%) Profit Before -Interest And Tax Mar '07 Mar '08 Mar '09 Mar '10 10 --0.7 17.75 44.40 0.0 p/e 2.35/136.6 -- --- --- --- 56.Financial Comparative analysis between Adani power.45 64.90 GVK power JSW power Tata power Lanco power 19.02 -2. jsw and GVK power Ratio analysis of the last 5 companies based on their performance in the last 5 years Current share price Company Share name price Adani power 109.60/51.88 25.30 67.24 45.99 16.03 --0.

56 -0.11 22.52 Adjusted Return on -0.93 0.78 2.94 2.68 7.61 2.18 6.07 37.51 2.07 1.88 9.56 --------0.38 -0.9 0.24 1.68 1.22 0.42 43.06 --------0.6 26.47 Debt Equity Ratio -Long Term Debt -Equity Ratio Debt Coverage Ratios Interest Cover -Total Debt to -Owners Fund Financial Charges -Coverage Ratio Financial Charges Coverage Ratio -Post Tax Management Efficiency Ratios 0.91 9.78 1.91 -0.22 0.57 22.1 Term Funds(%) Liquidity And Solvency Ratios Current Ratio 0.93 -0.42 37.65 6.18 --- 1.04 1.56 --- 0.03 48.Margin(%) Gross Profit Margin(%) Cash Profit Margin(%) Adjusted Cash Margin(%) Net Profit Margin(%) Adjusted Net Profit Margin(%) Return On Capital Employed(%) Return On Net Worth(%) ---------------0.93 --- 1.84 26.56 0.1 Net Worth(%) Return on Assets Excluding -0.38 12.57 -0.47 73 .01 Revaluations Return on Assets Including -0.6 1.01 Revaluations Return on Long -0.47 Quick Ratio 0.18 2.12 12.9 0.11 43.18 -2.

16 ---- ---- ---- ---- --1.42 -- -- -- -- -- --- --- --- --- 1.73 Mar '10 74 .Inventory Turnover Ratio Debtors Turnover Ratio Investments Turnover Ratio Fixed Assets Turnover Ratio Total Assets Turnover Ratio Asset Turnover Ratio Average Raw Material Holding Average Finished Goods Held Number of Days In Working Capital Profit & Loss Account Ratios Material Cost Composition Imported Composition of Raw Materials Consumed Selling Distribution Cost Composition Expenses as Composition of Total Sales ------- ------- ------- ------- -1.9 -- Cash Flow Indicator Ratios Dividend Payout -Ratio Net Profit Dividend Payout Ratio Cash Profit Earning Retention Ratio Cash Earning Retention Ratio AdjustedCash Flow Times ----Mar '06 -----Mar '07 -----Mar '08 -----Mar '09 --100 100 48.7 45.130.03 0.7 0 -- -- -- -- 38.68 -0.

4 (Rs) 8 Net Operating Profit Per 230.4 12.5 Operating Profit Per Share 42.27 18.65 12.47 26.04 362.61 11.42 Mar '08 10 10.9 Net Profit Margin(%) 2 Adjusted Net Profit 9.2 0.31 Revaluations Return on Assets Including 6.99 8.63 19.86 -0.4 Operating Profit Margin(%) 6 Profit Before Interest And 11.03 22. Share (Rs) 1 Free Reserves Per Share 192.78 26.63 10.9 8.84 12.32 7.77 278.79 16.66 5.26 9.88 5.63 7.54 215.79 327.91 -0.9 362.36 Mar '10 10 12 79.85 13.44 0.96 10.57 Profitability Ratios 18.11 7.36 390.99 302.65 14.57 14.46 248.5 50.9 Tax Margin(%) 18.17 18.0 Return On Net Worth(%) 7 Adjusted Return on Net 7.88 10.31 Mar '07 10 9.2 Gross Profit Margin(%) 5 18.16 299.69 Employed(%) 11.01 9.68 447.19 12.51 15.44 18.81 14.32 12.96 10.99 Worth(%) Return on Assets Excluding 6.49 10.57 -0.88 12.35 6.64 12.8 Cash Profit Margin(%) 1 Adjusted Cash Margin(%) 15.42 302. (Rs) 5 Bonus in Equity Capital 0.Earnings Per Share Book Value -0.51 15.68 75 .32 10.3 Margin(%) Return On Capital 8.78 19.56 10.5 35.35 14.83 447.6 From the above ratios we can make out that the earning per share of adani power has increased rapidly from FY 2009 to FY 2010.67 267.02 12.95 0.63 0. Tata power Mar '06 Investment Valuation Ratios Face Value 10 Dividend Per Share 8.26 7.88 9.38 10.56 390.09 9.74 308.04 Mar '09 10 11.5 41.12 -0.

99 12.91 0.81 0.47 70.4 1 1.55 5.79 18.67 1.6 Inventory Turnover Ratio 8 Debtors Turnover Ratio 5.51 2.51 0.86 10.78 31.41 Total Assets Turnover Ratio 0.53 3.74 --0.19 2.39 0.82 31.86 -0.79 --166.05 54.64 1.19 1.04 0.2 22.61 0.63 0.51 Financial Charges Coverage 6.34 4.1 -5. 9 70.9 40.72 Funds(%) Liquidity And Solvency Ratios Current Ratio 2.09 31.47 60.19 2. Investments Turnover Ratio 8 Fixed Assets Turnover Ratio 1.34 7.2 498.072.79 18.81 --123.11 4.51 Long Term Debt Equity 0.85 Debt Equity Ratio 0.84 23.37 13.62 2.49 0.33 0.56 76 .4 1 21.68 65.6 22.09 18.25 3.57 0.78 7.18 Quick Ratio 1.39 6.78 1.83 15.23 7.77 0.98 3.7 0.59 0.02 43.61 5.01 30.88 6.6 4.63 Ratio Financial Charges Coverage 6.26 0.15 4.55 4.49 4.4 3 -1.89 15.77 Average Raw Material Holding Average Finished Goods Held Number of Days In Working Capital Profit & Loss Account Ratios Material Cost Composition Imported Composition of Raw Materials Consumed Selling Distribution Cost Composition Expenses as Composition of Total Sales Cash Flow Indicator Ratios Dividend Payout Ratio Net Profit Dividend Payout Ratio Cash Profit Earning Retention Ratio --131.22 2 0.53 0.43 0.7 4.52 0.03 0.12 22.61 0.4 0.75 0.91 --122.12 72.67 4.89 Ratio Post Tax Management Efficiency Ratios 10.55 Asset Turnover Ratio 0.31 73.02 0.55 6.86 Total Debt to Owners Fund 0.61 4.71 0.Revaluations Return on Long Term 8.71 --181.18 1.76 -0.3 4 56.5 Ratio Debt Coverage Ratios Interest Cover 4.16 34.3 7.

36 77.96 18.92 13.14 Mar '10 39.2 Mar '08 10 -14.11 64.42 362.8 5 278.71 Mar '07 35.79 4.85 12.81 66.23 17.95 71.68 6.02 4.7 77 .6 24.44 Mar '09 41. 6 71.94 19.89 19. Therefore it does not make it an attractive stock to invest in.6 5 3.73 65.45 21.05 75 14.Cash Earning Retention Ratio AdjustedCash Flow Times Earnings Per Share Book Value 7 73.14 70.91 49.06 19.71 13.45 11.64 71.57 71.21 302.02 Mar '08 39.81 61.22 Mar '09 10 -25.67 12.89 Mar '07 10 -5.6 73.03 12.89 12.36 51.95 19.13 24.93 447 As we can make out from the above table that eps of tata power has come down from FY 2009 to FY 2010.28 14.18 4.5 183.65 390.89 Mar '10 1 -3. Lanco Infratech Mar '06 Investment Valuation Ratios Face Value Dividend Per Share Operating Profit Per Share (Rs) Net Operating Profit Per Share (Rs) Free Reserves Per Share (Rs) Bonus in Equity Capital Profitability Ratios Operating Profit Margin(%) Profit Before Interest And Tax Margin(%) Gross Profit Margin(%) 10 -6.84 Mar '06 30.44 13.

31 1.28 0.16 0.1 15.96 --76.26 0.93 5.3 5.95 2.21 12.72 83.03 62.15 15.96 0.82 15.03 8.14 10.3 62.28 7.03 13.46 6.19 6.09 6.67 4.14 13.94 0.2 13.77 1.09 --0.78 --0.99 1.1 8.58 3.72 11.62 2.39 12.73 7.91 0.35 0.9 14.27 11.89 4.1 7.64 19.1 8.94 3.35 9.76 13.72 0.55 11.94 4.14 12.72 4.11 11.72 3.9 1.1 9.63 11.18 1.76 15.95 14.56 12.62 10.64 0.76 --126.61 1.16 10.64 71.21 4.22 7.Cash Profit Margin(%) Adjusted Cash Margin(%) Net Profit Margin(%) Adjusted Net Profit Margin(%) Return On Capital Employed(%) Return On Net Worth(%) Adjusted Return on Net Worth(%) Return on Assets Excluding Revaluations Return on Assets Including Revaluations Return on Long Term Funds(%) Liquidity And Solvency Ratios Current Ratio Quick Ratio Debt Equity Ratio Long Term Debt Equity Ratio Debt Coverage Ratios Interest Cover Total Debt to Owners Fund Financial Charges Coverage Ratio Financial Charges Coverage Ratio Post Tax Management Efficiency Ratios Inventory Turnover Ratio Debtors Turnover Ratio Investments Turnover Ratio Fixed Assets Turnover Ratio Total Assets Turnover Ratio Asset Turnover Ratio Average Raw Material Holding Average Finished Goods Held Number of Days In Working Capital Profit & Loss Account Ratios Material Cost Composition Imported Composition of Raw Materials Consumed Selling Distribution Cost 7.1 4.76 1 14.49 12.92 13.86 13.08 0.18 --75.2 9.54 7.82 12.57 15.76 0.39 8.22 14.72 16.78 0.06 0.2 3.06 1.48 71.22 83.39 13.12 0.48 0.16 14.89 4.16 3.24 0.12 5.35 5.66 0.9 1.92 7.46 16.6 6.6 0.87 --0.77 ---- 9.45 7.95 15.09 11.08 7.89 0.03 0.47 11.46 ---- 78 .13 1.49 15.45 6.65 9.76 12.78 --53.35 4.67 12.27 --3.89 13.67 11.

78 30. 99 -- 1 1.01 42.79 Mar '07 Mar '08 Mar '09 Mar '10 5 18 457.72 --100 100 5.07 Mar '07 3.9 -0.6 -- 0.3 Bonus in Equity -Capital Profitability Ratios Operating Profit 40.05 79 .67 230.04 -- -- --100 100 3. 14 773.03 --100 100 2.29 -- 1 4 149.39 Mar '06 3.26 Margin(%) Profit Before Interest And 31.82 Earnings Per Share Book Value Jindal power Mar '06 Investment Valuation Ratios Face Value 5 Dividend Per 15 Share Operating Profit Per Share 335.01 Mar '10 2.44 --100 100 2.Composition Expenses as Composition of Total Sales Cash Flow Indicator Ratios Dividend Payout Ratio Net Profit Dividend Payout Ratio Cash Profit Earning Retention Ratio Cash Earning Retention Ratio AdjustedCash Flow Times 18.15 33.4 Mar '09 11.73 -- 78.85 1.91 83.64 --100 100 4.17 28.41 (Rs) Net Operating Profit Per Share 833.02 12. 57 496.12 1 5.5 170.3 5 27.63 Mar '08 9 71.144.9 8 34.76 34.29 62. 46 327.99 27.4 Tax Margin(%) 40.79 348.25 26.01 (Rs) Free Reserves Per Share (Rs) 564.03 83.

28 Employed(%) Return On Net 31.41 21.24 13.54 26.92 0.83 Quick Ratio 0.82 19.59 14.06 1.75 18.79 24.35 8.5 9 7.19 0.71 30.91 1.7 1 26.84 Excluding Revaluations Return on Assets 598.78 243.97 1.49 26.3 3 0.88 0.8 7 349.47 28.99 22.6 13.9 1.1 1.83 34.46 28.1 6 28.77 1.49 Ratio Long Term Debt Equity 1.96 28.3 8 30.07 Worth(%) Adjusted Return on Net 31.84 6.78 72. 96 25.87 1.03 0.92 10.95 37.25 1.95 32.11 Margin(%) Return On Capital 18.78 Debt Equity 1.5 23.68 0.21 Ratio Debt Coverage Ratios Interest Cover Total Debt to Owners Fund Financial Charges Coverage Ratio 8.24 0.4 8.45 1.73 1.95 0.0 1 27.68 19.19 27.99 33.75 19.8 26.5 19.26 Worth(%) Return on Assets 598.68 10.84 Including Revaluations Return on Long 20.55 Term Funds(%) Liquidity And Solvency Ratios Current Ratio 0.03 9.7 1 26.8 809.79 22.71 30.96 19.4 1.11 28.78 243.11 Margin(%) Adjusted Net Profit 22.72 30.41 809.86 21.04 0.78 72.35 33.7 1 19. 96 349.57 80 .94 21.Gross Profit Margin(%) Cash Profit Margin(%) Adjusted Cash Margin(%) 31.94 Net Profit 22.49 9.92 1.

66 Cost Composition Expenses as Composition of 14.6 2 9.01 17.5 3 --- 21.71 0.16 13.07 31.9 7 43.49 Total Sales Cash Flow Indicator Ratios 7.04 0.09 Composition Imported Composition of Raw Materials Consumed -- 95.56 0.34 Coverage Ratio Post Tax Management Efficiency Ratios Inventory 7.74 1.56 50.49 5.94 0.74 Held Number of Days In 43.99 0.83 0.49 0.35 6.9 4 50.31 85.4 8 31.95 8.7 0.91 9.91 0.58 81 .83 Average Raw Material 67.84 4.81 -- 46.59 0.05 14.3 5.55 0.93 4.82 12.23 Selling Distribution 8.67 7.79 7 7.55 Turnover Ratio Debtors Turnover Ratio Investments Turnover Ratio Fixed Assets Turnover Ratio Total Assets Turnover Ratio Asset Turnover Ratio 10.35 11.86 48.86 7.04 8.08 79.41 45.99 11.95 45.8 Working Capital Profit & Loss Account Ratios Material Cost 28.01 0.0 4 37.77 46.Financial Charges 8.26 -- 16.56 Holding Average Finished Goods 56.88 40.37 6.08 22.08 1.79 0.94 35.71 7.

9 95.34 243.98 5.3 810.29 94.08 As we can make out from the above table that eps of Jindal power has rapidly come down from FY 2009 to FY 2010.77 3.87 93.09 Mar '08 80.14 6.33 94.07 599.07 1 -0.18 90.45 Mar '06 9.12 82 .84 93.89 72.19 6.71 1 -0.36 Mar '09 99.4 Mar '07 228.74 93.1 1 -0.55 4.83 5.07 2. 16 8.84 Share (Rs) Mar '07 Mar '08 Mar '09 Mar '10 10 2.Dividend Payout Ratio Net Profit Dividend Payout Ratio Cash Profit Earning Retention Ratio Cash Earning Retention Ratio AdjustedCash Flow Times 9.64 90.16 6.06 91.79 96.94 4.9 5 2.21 Mar '10 15. Therefore it does not make it an attractive stock to invest in.44 Earnings Per Share Book Value 186.86 4.39 3.3 5 350.5 1. GVK power Mar '06 Investment Valuation Ratios Face Value 10 Dividend -Per Share Operating Profit Per 2.

06 Margin(%) Profit Before Interest 28.42 And Tax Margin(%) Gross Profit 43.3 138.93 Net Worth(%) Return on 1.Net Operating 4.31 Margin(%) Adjusted Cash 33.59 -- 32.87 4.75 3.31 38.77 Margin(%) Return On Capital 4.01 39.59 Employed( %) Return On Net 1.05 --45.11 38.61 83 .4 11.32 Per Share (Rs) Bonus in Equity 22.11 76.05 76.72 0.64 34.37 14.22 1.37 0.83 51.52 5.25 148.35 Capital Profitability Ratios Operating Profit 59.15 -- 41.45 11.91 Assets Excluding Revaluatio 4.22 34.06 76.06 76.78 Margin(%) Net Profit 34.34 36.62 6.81 Profit Per Share (Rs) Free Reserves 164.22 11.4 9.75 3.96 Worth(%) Adjusted Return on 1.17 51.11 36 36 4.92 15.61 22.06 12.35 3.27 3.15 -- 1.45 5.2 0.19 51.83 34.3 Margin(%) Adjusted Net Profit 33.88 Margin(%) Cash Profit 34.26 12.65 34.19 0.33 -- 41.26 -- 0.

04 222.32 1.59 Funds(%) Liquidity And Solvency Ratios Current 9.37 15.26 2.99 266.94 Ratio Post Tax Management Efficiency Ratios Inventory Turnover -Ratio Debtors Turnover 15.79 22 1.75 -- 223.96 1 266.9 -- 268.2 Ratio Quick 9.73 -4.22 12.17 6.21 Cover Total Debt to Owners -Fund Financial Charges 2.45 12.04 1.04 -- -- -- 0.38 0.47 15.54 -9 -7.ns Return on Assets Including 1.93 94.28 102.78 14.04 1.91 Revaluatio ns Return on Long Term 4.89 1 16.21 Coverage Ratio Financial Charges Coverage 1.28 -- --- 38 0.96 Ratio 148.27 0.15 1.23 84 .89 16.19 Ratio Debt Equity -Ratio Long Term Debt -Equity Ratio Debt Coverage Ratios Interest 2.52 268.61 10.7 -9.

02 -- -- 257. 54 -- -- -- 0.42 91.31 73. Working 94 Capital Profit & Loss Account Ratios Material Cost -Compositi on Imported Compositi on of Raw -Materials Consumed Selling Distributio n Cost -Compositi on Expenses as Compositi -on of Total Sales -- -- -- -- -- -- -- -- 2. 91 8.65 59 -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- -- 85 .01 0.25 1. 04 7. 58 10.Investmen ts Turnover Ratio Fixed Assets Turnover Ratio Total Assets Turnover Ratio Asset Turnover Ratio -- -- -- -- -- 931.28 Average Raw -Material Holding Average Finished -Goods Held Number of Days In 3.144.03 0.277.63 238.

4 -- -- -- 45.28 148.37 4.42 Per Share Book 174.39 -- -- -- 54.14 15.45 -Mar '08 0. 86 .37 Mar '10 0.61 As we can make out from the above table that eps of GVK power has come down to an extent from FY 2009 to FY 2010.85 100 100 100 23.22 -Mar '09 0. recommendation would be to keep the stock if one has it and whoever doesn’t should invest in it.32 Value 45.64 12.48 Mar '07 6.15 12.Cash Flow Indicator Ratios Dividend Payout -Ratio Net Profit Dividend Payout -Ratio Cash Profit Earning Retention 100 Ratio Cash Earning 100 Retention Ratio AdjustedC ash Flow -Times Mar '06 Earnings 3. Therefore it does not make it an attractive stock to invest in.85 100 100 100 54.

87 . With electricity to gross domestic product (GDP) elasticity pegged at 0. maintenance. the power generation capacity addition is considered to be the key infrastructure requirement to support projected growth in the economy. The liberalized power sector in India has achieved structural and regular stability making it attractive for private investment. These factors and the supportive Indian capital market establish UCPPL as an attractive target for equity investment. What should be UCPPL’S business plan in setting up further power plants ? • UCPPL should plan to achieve economies of scale in operations.8 and the current supply deficit. power sale and funding. Increase in the middle class population and changing lifestyle leading to higher per capita electricity consumption from current level of 704 kwh would require additional generation capacity of more than 100 GW as envisaged in X1 and X11 five year plan of the government of India.Recommendations Attractive market and sector The Indian economy is expected to continue on a high growth path with recent GDP growth being in the range of 7-9 % per annum.

COAL INDIA LIMITED 88 .html www. They should secure cash flows through long term power sale for initial stages.com/index.nic. Bibliography www.in/JSP_SERVLETS/internal.adanipower.com/plant/overview.aspx http://www.html www.com/ourbusiness/energy/energy. internal accruals from initial stages of the project and the IPO.com/Business/PowerGeneration.gov.html http://www. They should go in for robust financing arrangements. This would immune financial returns from any increase in fuel and project cost. external private or financial partners.in/regulations.php?option=com_content&view=article&id=48&Itemid=54 DRHP. This includes promoter’s equity.jindalpower.ntpc.jsp www.lancogroup.in/index.powermin.ucppl. market and land should be easily available.in/regulations. water. They have to adopt latest and proven state-of-the-art supercritical technology for better operational efficiencies and environmental impact management.cea.cercind.aspx http://www.• • • • They should choose a location where ffuel.co.gvk.php?option=com_content&view=article http://www.html http://www.nic. infrastructure.com/power/power.

pfcindia.com/financials/ www.usea.moneycontrol.Statistical yearbook of Indonesia 2010 www.org/ power DPR of UCPPL on west Bengal and Gujarat 89 .in?loan disbursements http://www.

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