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Ntpc- its strategies

Ntpc- its strategies

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the project contains NTPC strategies and its porters five forces
the project contains NTPC strategies and its porters five forces

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Published by: Gunjan on Sep 02, 2009
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Submitted To: Prof. Mukund Mate

Submitted By: Abhinav Jain Arun Dahiya Gunjan Joginder Singh Nupur Palit Prateek Patel Sumit Dhar




1. Scenario of Power Sector in India 2. Company Profile 3. Organizational Structure of NTPC 4. History 5. NTPC Limited ( its Subsidiaries & Joint Ventures) 6. NTPC Core Values & Corporate objectives 7. Strategies of NTPC 8. SWOT Analysis of NTPC 9. Porter‟s Five Force Model 10. Business Model of NTPC 11. Competitors Overview 12. Conclusion 13. Bibliography

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3 4 9 10 12 13 16 18 20 21 22 23 24



SCENARIO OF POWER IN INDIA Growth of economy calls for a watching rate of growth in infrastructure facilities. Power sector is one of the major aspects of this infrastructure building. Some prominent people like the Ex Chairman of GE Jack Welch have gone to the extent of saying, “you don‟t have a chance to stand in the 21st century without lots of power………Without this you miss the next revolution.” Moreover, the growth rate of demand for power in developing countries is generally higher than that of GDP. In India, the elasticity ratio was 3.06 in 1st plan, and peaked at 5.11 during 3rd plan and came down to 1.65 in 80‟s. For 90‟s a ratio of around 1.5 was projected. Hence, in order to support a growth of GDP of around 7% the rate of growth of power supply of 10%is required. If we look at current scenario, electricity consumption in India has more than doubled in the last decade, outpacing the economic growth. If we analyze the various statistics of Indian power sector, we will find that the generating capacity has gone up tremendously from a meager 1712MW in 1950 to a whooping 112000MW today. GROWTH OVER YEARS: installed capacity around the end of period:

installed capacity (MW)
installed capacity (MW) 250000 200000 150000 100000 50000 0 1950 installed capacity (MW) 1700 1960 4600 1970 13000 1980 28000 1990 2007

2012 (proje cted)

66000 112000 212000

Generating capacity has grown manifold from 1,712 MW in 1950 to more than 112,000 MW today. At the same as a result of growing installed capacity, the power produced has also gone up. In 1950, the total power produced by Indian power sector was a meager 50BU and that is now 587.3BU. The Indian govt. emphasized the need of independence in power generation and in all subsequent five-year plans the allocated budget for power sector development was increased. But despite all these efforts by our govt., there is an acute power shortage in the country.




VISION: “To be one of the world’s largest and best power utilities, powering India’s growth.”
To realize this vision, NTPC has drawn up a detailed Corporate Plan for the period 1997-2012 which represents the company's collective optimism and enthusiasm, inspired by a glorious past, a vibrant present and a brilliant future. The Plan has been prepared in-house in consultation the committed, competent and confident members of the NTPC family. The road map that has been charted out was after a thorough scan of the strengths and weaknesses within the organization as well as opportunities and threats in the environment. Considering multidimensional opportunities in the energy sector, NTPC will adopt a multipronged growth strategy for capacity addition through Greenfield sites, expansion of existing stations, takeovers and joint ventures. The capacity addition plans that we have drawn up for the fifteen-year period using all the above strategies to enable the corporation to become a 40,000 MW company by 2012 A.D. National Thermal Power Corporation Ltd. (NTPC) a global giant in the power sector was set up on 7th November 1975, with an objective to accelerate the electricity generation by planning, promoting and organizing integrated development of thermal power in India.



NTPC‟s core business is engineering, construction and operation of power generating plants. It also provides consultancy in the area of power plant constructions and power generation to companies in India and abroad. As on date the installed capacity of NTPC is 27,904 MW through its 15 coal based (22,895 MW), 7 gas based (3,955 MW) and 4 Joint Venture Projects (1,054 MW). NTPC acquired 50% equity of the SAIL Power Supply Corporation Ltd. (SPSCL). This JV company operates the captive power plants of Durgapur (120 MW), Rourkela (120 MW) and Bhilai (74 MW). NTPC also has 28.33% stake in Ratnagiri Gas & Power Private Limited (RGPPL) a joint venture company between NTPC, GAIL, Indian Financial Institutions and Maharashtra SEB Holding Co. Ltd.

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



NTPC was set up in 1975 with 100% ownership by the Government of India. In the last 30 years, NTPC has grown into the largest power utility in India. In 1997, Government of India granted NTPC status of “Navratna‟ being one of the nine jewels of India, enhancing the powers to the Board of Directors.

NTPC became a listed company with majority Government ownership of 89.5%. NTPC becomes third largest by Market Capitalization of listed companies

The company rechristened as NTPC Limited in line with its changing business portfolio and transforms itself from a thermal power utility to an integrated power utility.

National Thermal Power Corporation is the largest power generation company in India. Forbes Global 2000 for 2008 ranked it 411th in the world. NTPC is the largest power utility in India, accounting for about 20% of India‟s installed capacity.

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



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



MISSION: “Develop and provide reliable power, related products and services at competitive prices, integrating multiple energy sources with innovative and eco– friendly technologies and contribute to society"
       

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

Achievements: Sixth largest


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

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



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

Organization structure of NTPC

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



History of NTPC
1975 Incorporated in November 1977 NTPC acquired the first patch of land at Sanghrauli The first bacth of executive trainees joined the company 1978 takeover of management of the Badarpur project Construction of the first transmission network Sanghrauli- Korba- Kanpur of 400 KV system started 1982 Power Management Institute, Delhi, a centre for education was established 1983 in the very first year of commercial operation , NTPC earned a profit of Rs 4.51 crore in the financial year 1982-83 1985This year marked the completion of decade(1975-1985) of NTPC‟s existence. NTPC achieved a generating capacity of 220 MW by commissioning 11 units of 200 MW each at its various projects in country The government of India approved the setting of three gas based combine cycle projects by NTPC in Kawat in gujrat, Auraiya in Uttar Pradesh and Anta in Rajasthan. For these projects, the World Bank agreed to provide US$ 485 million, which was the largest single loan in the history of bank. 1987 Crossed the 5000 MW capacity mark 1989 Consultancy division launched 1990 Total installed capacity crossed 10000MW



1992 Acquisition by the company of Feroz Gandhi Unchahar Thermal Power Station (2x210 MW) from Uttar Pradesh Rajya Vidyut Utpadan Nigam Of Uttar Pradesh 1994 Crossed 15000 MW of installed capacity 1995 NTPC celebrated 20 yrs of its existence A new logo was adopted NTPC took over the 460 MW Talcher Thermal power Station from Orrisa State Electricity Board 1997 Achieved 100 million units generation in one year 1998 Commissioned the first Naphtha based plant at kayamkulam with a capacity of 350 MW 2000 Commenced construction of a first hydro- electricity power project of 800 MW capacity in Himachal Pradesh 2002 Three wholly owned subsidiaries viz. NTPC Electric Supply Company Limited, NTPC Hydro Limited, NTPC Vidyut Vyapar Nigam Limited incorporated. 2004 NTPC became a listed company NTPC made its debut issue of euro bonds amounting to USD 200 million in international market.



NTPC Limited

NTPC Vidyut Vyapar Nigam Limited 100%

NTPC Electric Supply Co. Limited 100%

Pipavav Power Development Co. Ltd 100%

NTPC Hydro Limited 100%

Joint Ventures

NTPC-SAIL Power Company Pvt. Limited 50% NTPC-SAIL Power Company Pvt. Limited 50

Bhilai Electric Supply Co. Pvt. Limited 50%

NTPC Alstom Power Services Pvt. Limited 50%

Utility Powertech Limited 50%

NTPC Tamilnadu Energy Co. Limited 50%

PTC India Limited 8%

Ratnagiri Gas & Power Private Ltd 28.33%



CORE VALUES This corporate plan provides details of the overall agenda for NTPC. The successful delivery of this agenda would require a committed work force that identifies with and supports the vision. To ensure realization of this corporate agenda, a set of core values should be central to, and govern each activity of the organization. Known as one of the NAVRATAN‟S of the PSU‟S NTPC has its following core values. They are known as (BCOMIT) as follows:B-Business Ethics C-Customer Focus O-Organizational & Professional pride M-Mutual Respect and Trust I- Innovation & Speed T-Total quality for Excellence

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



 CUSTOMER FOCUS   To foster a collaborative style of working with customer growing to be a preferred brand for supply of quality power. To expand the relationship with existing customers by offering a bouquet of services in addition to supply of power e.g. trading, energy consulting, distribution consulting, management consulting, management practices.   To expand the future customer portfolio through profitable diversification into downstream business, inter alia retail distribution and direct supply. To ensure rapid commercial decision making, using customer specific information with adequate concern for the interests of the customer.  AGILE CORPORATION To ensure effectiveness in business decisions and responsiveness to change in the business environment by Adopting a portfolio approach to new business development. Continuous and coordinated assessment of the business environment to identify and respond to opportunities and threats. To develop a learning organization having knowledge based competitive edge in current and future businesses. To effectively leverage information technology to ensure speedy decision making across the organization.  PERFORMANCE LEADERSHIP To continuously improve on project execution time and cost in order to sustain long run competitiveness in generation. To operate & maintain NTPC stations at par with the best-run utilities in the world with respect to availability, reliability, efficiencies. To aim for performance excellence in the diversification businesses. To embed quality in all systems and processes.



 HUMAN RESORUCE DEVELOPMENT To enhance organizational performance by institutionalizing an objective and open performance management system. To align individual and organizational needs and develop business leaders by implementing a career development system. To enhance commitment of employees by recognizing and rewarding high performance. To build and sustain a learning organization of competent world-class professionals. To institutionalize core values and create a culture of team building, empowerment, equity, innovation and openness which would motivate employees and enable achievement of strategic objectives.  FINANCIAL SOUNDNESS To maintain and improve the financial soundness of NTPC by prudent management of the financial resources. To continuously strive to reduce the cost of capital through prudent management of deployed funds, leveraging opportunities in domestic and international financial markets. To develop appropriate commercial policies and processes this would ensure remunerative tariffs and minimize receivables. To continuously strive for reduction in cost of power generation by improving operating practices.  SUSTINABLE and DEVELOPMENT To contribute to sustainable power development by discharging corporate social responsibilities. To lead the sector in the areas of resettlement and rehabilitation and environment protection including effective ash-utilization, peripheral development and energy conservation practices. To lead developmental efforts in the Indian power sector through efforts at policy advocacy, assisting customers in the operations and management of power plants etc.



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


Sustainable Development Maintain sector Nurturing Human Resource Leadership position through expansion

Further enhance fuel security Exploit new business opportunities

Technology initiatives

Technological Initiatives      Introduction of steam generators (boilers) of the size of 800 MW Integrated Gasification Combined Cycle (IGCC) Technology Launch of Energy Technology Center -A new initiative for development of technologies with focus on fundamental R&D The company sets aside upto 0.5% of the profits for R&D Roadmap developed for adopting „Clean Development


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

Environment Management        All stations of NTPC are ISO 14001 certified Various groups to care of environmental issues The Environment Management Group Ash Utilisation Division Afforestation Group Centre for Power Efficiency & Environment Protection Group on Clean Development Mechanism

NTPC is the second largest owner of trees in the country after the Forest department Partnering government in various initiatives     Consultant role to modernize and improvise several plants across the country Disseminate technologies to other players in the sector Consultant role “Partnership in Excellence” Programme for improvement of PLF of 15 Power Stations of SEBs. Rural Electrification work under Rajiv Gandhi Grameen Vidyutikaran Yojana



Strengths of NTPC  Largest market share in domestic power generation and a broad customer portfolio across the country.  Excellent track record of performance in project implementation and plant operation.  Diversified thermal generation portfolio – multiple sizes and fuel types.  Highly skilled and experienced human resources, exposed to state-of-the art technologies in project execution and power generation.  Navaratna status  High brand equity among shareholders.  Strong balance sheet – ability to raise low cost debt.  Engineering skills in project configuration and package design.  Turnaround ability for old plants – demonstrated in the takeover plants of Talcher, Tanda & Unchahar.  High credit rating that is indicative of the confidence of lenders.  In-house training facility (PMI), CENPEEP, R&D etc that assist in development of the sector.  Thrust on reducing social costs of capacity growth – strong execution of Resettlement and rehabilitation plans. Weakness  Low risk-diversification of business portfolio consists primarily of generation assets.  Poor financial health of customers.  Functional orientation hampering cross functional perspective in decision making.  Long and multi layered procurement process leading to long lead times and process delay.  Fragmented IT architecture.  Gaps in HR systems such as performance management, rewards and incentives and career development.  Inadequate deployment of a strong knowledge management system that could assist in improving efficiency and effectiveness in all aspects of the business.


 Hierarchy for decision making that affects responsiveness.  Role ambiguity and dilution within different lends of the organization. Opportunities  Expand generation capacities by putting up thermal and hydro capacities, maintaing the position of a dominant generating utility in the Indian Power sector.  Broad base fuel mix by considering imported coal, gas, domestic coal, nuclear power etc with a view to mitigate fuel risks and maintain long run competitiveness.  Expand services for EPC, R&M and O&M activities in the domestic as well as international markets.  Backward integrate into fuel management to exercise greater control and understanding of supply economics.  Lead the development and commercial deployment of non-conventional energy sources especially in the distributed generation mode.  Improve collections by trading, direct sale to bulk customers and the active role in allocation in new plants.  Execute increased number of power plants that classify for Mega Power Projects status, thereby reducing the cost of the projects and power and power generated.  Forward integrate into the distribution business in India. Threats  Limited experience of operating in a truly liberalized environment with competition.  Limited experience of operating in an independently regulated system.  Redirecting power may be constrained by inter-regional connectivity.  Downward regulatory and competitive pressure on tariffs.  Stringent norms for approval of increase in capital costs for projects in event of time overrun.  Stringent environmental norms in the future may add to the cost of generation.  Absence of an independent regular for coal industry and the delay in private investments lending to the risk of low availability of coal in the future



Porter’s five force model

Application of BCG matrix to NTPC NTPC is in the business of power generation. With a population of India increasing and the country on a road map towards development, the demand for electricity from various sectors will continue to be on increase. As e result of which power generation sector promises increasing returns to those who have already positioned themselves strongly in this sector. NTPC has been carrying on its operation since 1975 and has acquired a considerable share of country‟s total electricity generation. The challenge for NTPC would be to continue to hold its large share in power generation sector. Thus NTPC strategies would fall under star of the BCG matrix. Its remain to be seen that in near future how NTPC will continue to dominate the energy and power generation sector. Here, when we talk of high growth we would like to say that NTPC would experience a high growth rate because it has a strong presence in this sector. it has withstood the onslaught of time and other pressure to position itself as a leading power producer in India.



Business Model of NTPC

Business model of NTPC has been formed based on the strategies of NTPC. This included: 1. Cost efficiency i.e. providing power at reasonable prices so that they could provide power to all in need. 2. Eco friendly system: Driven by its commitment for sustainable growth of power, NTPC has evolved a well defined environment management policy and sound environment practices for minimizing environmental impact arising out of setting up of power plants and preserving the natural ecology. 3. Efficiency improvement includes both improvements in the existing process and through improvement in the technology used to increase the productivity of the company. Research & Development Centre is ISO 17025 accredited and provides high end scientific services to all the company‟s stations as well as many outside stations resulting in improving availability and reliability of stations by providing condition assessment, failure analysis, solving and analyzing specific problems, and helping our stations in increasing the availability and reliability of their units. 4. Technology enhancement i.e. to stay in competition they have to continuously enhance their technology.



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

power to Mumbai and Delhi regions. Business strategy: The core business of Tata Power Company is to generate, transmit and distribute electricity. The Company operates in two business segments: Power and Other services. The Power segment is engaged in generation, transmission and distribution of electricity. The other services segment includes electronic equipment, broadband services, and project consultancy and oil exploration. Reliance Energy Reliance Energy Ltd (REL) formerly known as Bombay Suburban Electric Supply (BSES) is a part of the Anil Dhirubhai Ambani Group. It is an integrated power utility company in the private sector in India which came into existence when it took over BSES in 2002. The company is the sole distributor of electricity to consumers in the suburbs of Mumbai. It also runs power generation, transmission and distribution businesses in other parts of Maharashtra, Goa and Andhra Pradesh. REL has significant presence in the field of execution of the Power projects on EPC (Engineering, Procurement and Commissioning) basis. CESC CESC, a power utility in India was setup in 1899. CESC Limited is a flagship company of RPG Enterprises, which is one of India's well-managed groups of companies with a diversified presence. Company brought thermal power to India more than 100 years ago and supplies power to the city of Kolkata. Vision We will be a profitable consumer oriented power utility consistent with global standards meeting the expectations of consumers, employees and other stake holders.



Globalization initiatives NTPC is keenly exploring opportunities to mark its footprints in different parts of the world. In line with its Globalization strategy, NTPC is making consistent efforts to enter the overseas markets and is focusing its efforts in the Middle East, Asia-Pacific and Africa regions for business. A Representative office is functioning in Dubai. A site has been identified for setting up a 2X250 MW coal based power plant in Trincomalee region, Sri Lanka in Joint Venture with Ceylon Electricity Board. Energy Audit of 15 Units of Saudi Electric Company has been successfully completed. Pursuant to signing of MoU with Government of Nigeria, our team is working on selection of prospective site for setting up one 700 MW Gas based and one 500 MW coal based power plant in Nigeria. In lieu of this, Government of Nigeria shall provide LNG for our stations. Long term plans and agenda: The Company has three plan horizons: 1) Long-term corporate plan containing overall objectives/targets adopted by the company for the period up to2017. 2) Five-year business plans (to be launched for the period 2006-2011) to be rolled annually containing more detailed targets. 3) Annual targets i.e. Agenda 2005-2006. CORPORATE PLAN 1997-2012 (“LOOKING AHEAD”)

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



Bibliography 1. www.ntpc.co.in 2. www.scribd.com 3. www.managementparadise.com

4. www.constructionupdate.com 5. www.reportlinker.com 6.

Names Joginder Singh

Topics SWOT analysis, Porter‟s 5 force model & BCG, Business model of NTPC

Gunjan Abhinav Jain Prateek Patel Nupur Palit Sumit Dhar Arun Kumar Dahiya

Introduction & company profile NTPC strategies Corporate Objectives History of NTPC Corporate objectives Competitors study &Conclusion



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