and

NTPC BUSINESS STRATEGIES

S. Ravi Shankar MBA08089 4/1/2010
NTPC BUSINESS STRATEGIES
Executive Summary
This report is about the assessment of business strategies of NTPC ltd. To arriv
e at the assessment of business strategies of the company, the evaluation is don
e in two phases. Subsequent to assessment is strategies followed by the company
and some suggestions that can be done to enhance its business further. The asses
sment begins with factors affecting external environment and it is analyzed at t
wo levels. The two levels are Macro environment and Micro environment. Macro env
ironment analyzed using the tool PESTEL analysis. From macro analysis, it is evi
dent that except ecological (environment) factors, all the factors are influenci
ng in favor of power sector. Micro environment encompasses industry scenario in
the country and driving forces of the industry. Industry scenario revealed that
for sustaining high growth rate in GDP and other factors it calls for infrastruc
ture development, consequently which demands power generation. It is concluded t
hat the sector has huge growth opportunity for the next few decades. Scrutinizin
g the industry driving forces using Porter fives forces model, the two forces wh
ich are pushing backwards are suppliers bargaining power and threat of substitut
es. Since coal is only source through which almost three-forth of the power is g
enerated and there are many players in the country generates thermal power altho
ugh coal is very much scarce. The other force which is pushing is nuclear power.
After nuclear deal, nuclear power generating technology and its resources are n
ot a distant dream for generation of nuclear power. The next phase of the analys
is is internal analysis. Internal analysis covers the present market position of
the company and SWOT analysis. NTPC is the largest power generating company in
the country, catering to 30% of the energy needs in the country. NTPC has excell
ent financial track record and share holders have good faith. The companys operat
ional efficiencies are at par with the international players. It is consistently
awarded as best company to work. Above all it has Mahratna brand equity in the ma
rket. The challenge for NTPC would be to continue to hold its large share in pow
er generation sector because factors like competition from local and global play
ers (through JV). Also, scarce resources and less technical expertise in manufac
turing of equipment and resources mining (thorium for nuclear power) are affecti
ng its present position. After scanning both external and internal environment t
he next step in assessing the business strategies is looking at the companies a
present strategy. NTPC has the Diversification Strategy in related business area
s, such as, Services, Coal Mining, Power Trading, Power Exchange, Manufacturing
to ensure robustness and growth of the company. It generates not only thermal po
wer (through coal, oil and gas) but also hydro power. Recently it is ventured in
to wind, solar and nuclear power generation. It is integrated its business both
forward and backward. Backward integration, it has JVs with its suppliers of powe
r equipment manufactures i.e. with BHEL and Bharati Forge and also it has presen
ce in coal mining business. Moving a step forward, company has ventures in trans
portation and distribution of power supply .It extended its foot print also into
ash utilization business. Gone through two phases of analysis and company strat
egies, it is coherent that the power sector as a whole huge growth opportunity.
The only two forces that are pushing backward are scarce coal resources and othe
r companies endeavor into nuclear power generation. The nuclear technology and r
esources for generation is new to the country and no company has acquired excell
ence in nuclear power generation. So, it can leverage this opportunity by utiliz
ing its huge financial, technical and best human resources to venture into nucle
ar power technology, manufacturing equipment, resources mining and dumping. Amri
ta School of Business
NTPC BUSINESS STRATEGIES
Table of Contents
Executive Summary 1. 2. Introduction External Environment 2.1 Macro environment
2.1.1 Economic Factors 2.1.2 Political Factors 2.1.3 Technological Factors 2.1.4
Ecological Factors 2.1.5 Socio-Cultural Factors 2.1.6 Legal Factors 2.2 Micro e
nvironment 2.2.1 Power Sector Scenario 2.2.2 Industry Competitive Forces 3. Inte
rnal environment 3.1 Competitive Assessment 3.2 SWOT analysis 3.2.1 Strengths 3.
2.2 Weakness 3.2.3 Opportunities 3.2.4 Threats 4. Strategies of the Company 4.1
Diversified Growth 5. Recommendations 1 4 5 5 5 5 5 6 6 6 6 6 7 9 9 10 10 10 11
11 12 12 13
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NTPC BUSINESS STRATEGIES
1. Introduction
National Thermal Power Corporation Ltd. (NTPC) a global giant in the power secto
r was set up on 7th November 1975, with an objective to accelerate the electrici
ty generation by planning, promoting and organizing integrated development of th
ermal power in India. NTPCs core business is engineering, construction and operat
ion of power generating plants. It also provides consultancy in the area of powe
r 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 (2
2,895 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. This JV company op
erates the captive power plants of Durgapur (120 MW), Rourkela (120 MW) and Bhil
ai (74 MW). NTPC also has 28.33% stake in Ratnagiri Gas & Power Private Limited
(RGPPL) a joint venture company between NTPC, GAIL, Indian Financial Institution
s and Maharashtra SEB Holding Co. Ltd. NTPC, with a rich experience of engineeri
ng, construction and operation of over 30,000 MW of thermal generating capacity,
is the largest and one of the most efficient power companies in India, having o
perations that match the global standards. Commensurate with our countrys growth
challenges, NTPC has embarked upon an ambitious plan to attain a total installed
capacity of 75,000 MW by 2017. Towards this end, NTPC has adopted a multipronge
d strategy such as Greenfield Projects, Brownfield Projects, Joint Venture and A
cquisition route. Apart from this, NTPC has also adopted the Diversification Str
ategy in related business areas, such as, Services, Coal Mining, Power Trading,
Power Exchange, Manufacturing to ensure robustness and growth of the company. Vi
sion "A world class integrated power major, powering Indias growth, with increasi
ng global presence." Mission Develop and provide reliable power, related products
and services at competitive prices, integrating multiple energy sources with in
novative and eco-friendly technologies and contribute to society. Core Values BCO
MIT

Business Ethics Customer Focus Organizational & Professional Pride Mutual Respec
t & Trust Innovation & Speed Total Quality for Excellence Amrita School of Busin
ess
NTPC BUSINESS STRATEGIES
2. External Environment
The external environment is examined in two levels. The first one is Macro envir
onment and second is Micro environment.
2.1 Macro environment
On the macro environment a firm holds only little control. It consists of a vari
ety of external factors that manifest on a large (or macro) scale. These are typ
ically economic, social, political or technological phenomena. A common method o
f assessing a firm's macro-environment is via a PESTLE (Political, Economic, Soc
ial, Technological, Legal, and Ecological) analysis. Within a PESTLE analysis, a
firm would analyze national political issues, culture and climate, key macroeco
nomic conditions, health and indicators (such as economic growth, inflation, une
mployment, etc.), social trends/attitudes, and the nature of technology's impact
on its society and the business processes within the society. 2.1.1 Economic Fa
ctors India is in the rising phase of its economy curve, the economy of the coun
try was growing at 9 % before it is affected by recession in 2008. Even during r
ecession also it managed to touch 7.9% in the last quarter (July-Sep 2009) while
developed countries suffering from negative growth. The Indian economy has the
resilience to withstand the challenges arising out of the global slowdown and th
e domestic drought situation. This inorganic growth in economy calls for a watch
ing rate of growth in infrastructure facilities. Power sector is one of the majo
r aspects of this infrastructure building; the demand for energy has grown at an
average of 3.6% per annum over the past 30 years. In March 2009, the installed
power generation capacity of India stood at 147,000 MW while the per capita powe
r consumption stood at 680 KWH. The per capita consumption is expected to increa
se 1000 KWH. So, this provides huge opportunity for NTPC.1 2.1.2 Political Facto
rs The Government of India has a mission of `POWER FOR ALL BY 2012'. This mission wo
uld require that our installed generation capacity should be at least 2, 00,000
MW by 2012 from the present level of 1, 14,000 MW.2 The Indian government has se
t an ambitious target to add approximately 78,000 MW of installed generation cap
acity by 2012. The total demand for electricity in India is expected to cross 95
0,000 MW by 2030. 2.1.3 Technological Factors The operational efficiency of a th
ermal power plant is only 30% that is very poor and also high maintenance cost w
hen compared to hydro power plants (these two are prevalent in India). The advan
tages of thermal power plant are low installation cost, less time for installati
on and generation, and constant supply. But with advent of nuclear power (after
nuclear deal) these advantages are disserted.
1 2
http://en.wikipedia.org/wiki/Electricity_sector_in_India#cite_note-autogenerated
1-21 http://www.powermin.nic.in/JSP_SERVLETS/internal.jsp
Amrita School of Business
NTPC BUSINESS STRATEGIES
2.1.4 Ecological Factors Thermal power plants produce co2, so2 and other gases w
hich are hazardous to the environment. After COPENHAGEN Climate Conference it be
came more imperative for the govt. to reduce pollution. This might put pressure
on NTPC to go for alternatives. 2.1.5 Socio-Cultural Factors With a population o
f India increasing and the scenario of the country is changing from survival to
consumption mode, the demand for electricity continue to be on increase. As a re
sult of which power generation sector promises increasing returns to those who h
ave already positioned themselves strongly in this sector. 2.1.6 Legal Factors L
egal factors that main hindrance to enter this industry primarily licenses, envi
ronment protections laws and work safety laws. This is the reason why the most o
f private companies although ventured a decade ago still they are thriving for s
uccess.
2.2 Micro environment
A firm holds a greater amount (though not necessarily total) control of the micr
o environment. It comprises factors pertinent to the firm itself, or stakeholder
s closely connected with the firm or company. 2.2.1 Power Sector Scenario The Gr
owth of an economy, calls for a matching rate of growth in its infrastructure fa
cilities. India is on the peak of its growth trajectory. Power sector is one of
the major aspects of this infrastructure building. Some prominent people like th
e 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 powerWithout this you miss the
next revolution. Moreover, the growth rate of demand for power in developing coun
tries 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 80s.
For 90s 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 double
d in the last decade, outpacing the economic growth. If we analyze the various s
tatistics 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.3
To enhance power supply in cost effective ways is one of the top priorities for
the country. During the quarter April-June 2009, the energy and peaking shortag
es in the country were 9.8% and 12.3% respectively. The Compound Annual Growth R
ate (CAGR) of power demand for the last five years has been 6.80% as against pow
er supply CAGR of 5.88%. The CAGR of your Company's power generation
3
http://www.natcomindia.org/reports_ministries/power/scenario.htm
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NTPC BUSINESS STRATEGIES
has been higher at 6.79%. Strong appetite for electricity consumption in the cou
ntry translates into robust growth outlook for power players like NTPC. Gross el
ectricity requirement by the end of the 11 th Plan projected by the Working Grou
p on Power is 1,038 billion kWh and peaking demand estimation is 1, 51,000 MW Th
e Integrated Energy Policy, 2006 of the Government of India estimates installed
capacity requirement of 778 GW and energy requirement of 3,880 billion kWh by 20
31-32 if the country's GDP grows at the rate of 8%. At 9% GDP growth rate, the c
apacity requirement will be 960 GW and energy requirement will be 4,806 billion
kWh by 2031-32. Concerted efforts are being made to enhance power supply at a ra
pid pace and meet growing electricity requirements. NTPC is playing a major role
in this national endeavor. 2.2.2 Industry Competitive Forces 1) Competition Riv
alry Low In competition front the major part of the pie is occupied by govt. org
anization. Also, NTPC contributes alone 28% of power generation, although the co
mpany has 18.79% of the total national capacity that is because of its focus on
high efficiency.4 After 1991 liberalization, it opens gates for both the privet
sectors in domestic and foreign investors. The initial response of the domestic
and foreign investors to the policy of private participation in power sector has
been extremely encouraging. However, many projects have encountered unforeseen
delays. There have been delays relating to finalization of power purchase agreem
ents, guarantees and counter guarantees, environmental clearances, matching tran
smission networks and legally enforceable contracts for fuel supplies. The short
fall in the private sector was due to the emergence of a number of constraints,
which were not anticipated at the time the policy was formulated. The most impor
tant is that lenders are not willing to finance large independent power projects
, selling power to a monopoly buyer such as SEB, which is not financially sound
because of the payment risk involved if SEBs do not pay for electricity generate
d by the IPP. Uncertainties about fuel supply arrangements and the difficulty in
negotiating arrangements with public sector fuel suppliers, which concern penal
ties for non-performance, is another area of potential difficulty. Large private
organization like Tata power, Reliance energy, Adani Power and Jindal power are
also finding fortunes very rare, even these organizations also need support fro
m other areas such as transportation and distribution.
4
https://www.ntpc.co.in/index.php?option=com_content&view=article&id=42&Itemid=75
&lang=en
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NTPC BUSINESS STRATEGIES
2) Threat of Entry Low Threat of entry is less likely to be there although power
generation is a lucrative business in view of the fact that everyone requires p
ower. Ever since liberalization the others industries (i.e. buyers) are growing.
Also, the present industries also making profits, this calls an opportunity for
the new entrants. The major challenge for the entrants is resources are scarce
and requires good network for distribution which demands collaboration with the
distribution channel members. The other options available for a potential entran
t are hydro, solar, wind and tidal which are very costly (installation and maint
enance) and entry barriers are also high. 3) Threat of Substitutes Moderately Hi
gh The substitutes of thermal power are hydro, nuclear, solar, wind and tidal po
wer. In case of hydro electric power the installation cost is high though the ma
intenance cost and also available at cheap price. But solar, wind and tidal powe
r both the installation and maintenance cost is high, hence these are not costef
fective to the buyer. From environmental prospective also these are eco-friendly
.However, in all the cases there is no assurance for consistent continuous supp
ly. For generating nuclear power both installation costs and maintenance costs a
re low when compared to thermal power. However, the major challenge is resources
, technology and dumping the waste. After nuclear deal these constraints are dis
appeared also, Indian govt. is planning to go in large way to enhance nuclear po
wer in India with a target of 25000MW by 2012. This is only a major threat to th
e NTPC. 4) Suppliers Bargaining Power Moderately High The major suppliers of NTP
C are raw material providers of coal and machinery providers such as boilers and
cooling tanks. For machinery purpose it is heavily depending on BHEL which is s
ole provider of power plant equipment suppliers, engineering products & services
for all power plants. Coal miners are predicting that the coal will no longer a
vailable after 20-30 years. Furthermore, the quality of coal available in India
is degrading day by day, which demands more filtering during sieving process. Th
ose eventually result in less efficiency. More than 53% of the power in India is
generated by coal based thermal power plants which consequences in higher compe
tition for purchase of raw material. So, this increases the bargaining power of
suppliers. 5) Buyers Bargaining Power Low The buyers of power from NTPC are powe
r grids and industries. Power grids in turn supply power to end customer via sta
te electricity boards and purchasing cost are directly regulated by the governme
nt. In current scenario no industry runs without power, after the liberalization
of trade in India all types industries are emerging in India which is just addi
ng fuel to the fire. The major buyers of power are industries pertaining to the
infrastructure and these industries are growing in large way because of Amrita S
chool of Business
NTPC BUSINESS STRATEGIES
economic surge. Also these buyers require consistent and continuous supply of po
wer which can be provided only through thermal power and nuclear power hence the
buyer bargaining power is weak. Backward integration of buyers such as Tata pow
er, Reliance power for their business is a not major threat to the NTPC because
they very minute. Diagnosis of Competitive Forces Subsequent to scrutinizing eac
h of the five forces, it is apparent that only two forces that effecting NTPC ar
e suppliers bargaining power (scarce resources and large no of buyers) and subst
itutes (Nuclear power generation). The other three forces are not playing a majo
r role in competition. So, it is comprehensible that the sate of competition is
conducive to good profitability.
3. Internal environment
3.1 Competitive Assessment
NTPC is the largest power generation company in India. Forbes Global 2000 for 20
09 ranked it 317th in the world. With a current generating capacity of 30,644 MW
, NTPC has embarked on plans to become a 75,000 MW company by 2017. It was found
ed on November 7, 1975 to accelerate power development in India. NTPC is emergin
g as a diversified power major with presence in the entire value chain of the po
wer generation business. NTPC's core business apart from power generation, which
is the mainstay of the company, is engineering, construction and operation of p
ower generating plants and also ventured into providing consultancy to power uti
lities, power trading ,ash utilization and coal mining in India and abroad The t
otal installed capacity of the company is 30, 644 MW (including JVs) with 15 coa
l based and 7 gas based stations, located across the country. In addition under
JVs, 3 stations are coal based & another station uses naphtha/LNG as fuel. By 20
17, the power generation portfolio is expected to have a diversified fuel mix wi
th coal based capacity of around 53000 MW, 10000 MW through gas, 9000 MW through
Hydro generation, about 2000 MW from nuclear sources and around 1000 MW from Re
newable Energy Sources (RES). NTPC has adopted a multi-pronged growth strategy w
hich includes capacity addition through green field projects, expansion of exist
ing stations, joint ventures, subsidiaries and takeover of stations. NTPC has be
en operating its plants at high efficiency levels. Although the company has 18.7
9% of the total national capacity it contributes 28.60% of total power generatio
n due to its focus on high efficiency. NTPCs share at 31 Mar 2001 of the total in
stalled capacity of the country was 24.51% and it generated 29.68% of the power
of the country in 2008-09. Every fourth home in India is lit by NTPC. 170.88BU o
f electricity was produced by its stations in the financial year 2008-2009. The
Net Profit after Tax on March 31, 2006 was INR 58,202 million. Net Profit after
Tax for the quarter ended June 30, 2006 was INR 15528 million, which is 18.65% m
ore than for the same quarter in the previous financial year. 2005).
Amrita School of Business
NTPC BUSINESS STRATEGIES
At NTPC people before Plant Load Factor is the mantra that guides all HR related
policies. NTPC has been awarded No.1, Best Workplace in India among large organ
izations for the year 2008, by the Great Places to Work Institute, India Chapter
in collaboration with The Economic Times. The concept of Corporate Social Respo
nsibility is deeply ingrained in NTPC's culture. Through its expansive CSR initi
atives NTPC strives to develop mutual trust with the communities that surround i
ts power stations. Right from social to developmental work of the community and
welfare based dependence to creating greater self reliance; the constant endeavo
r is to institutionalize social responsibility on various levels.
3.2 SWOT analysis
SWOT Analysis is a strategic planning method used to evaluate the Strengths, Wea
knesses, Opportunities, and Threats involved in a project or in a business ventu
re. It involves specifying the objective of the business venture or project and
identifying the internal and external factors that are favorable and unfavorable
to achieving that objective.5 3.2.1 Strengths i. ii. iii. iv. v. vi. vii. viii.
ix. x. xi. xii. Largest market share in domestic power generation and a broad c
ustomer portfolio across the country. Excellent track record of performance in p
roject implementation and plant operation. Diversified thermal generation portfo
lio multiple sizes and fuel types. Highly skilled and experienced human resource
s, exposed to state-of-the art technologies in project execution and power gener
ation. Emerged into Maharatna status from Navratna i.e. more autonomy and more d
ecision making power. High brand equity among shareholders. Huge financial track
record with NPAT Rs 82013 million and total assets base is Rs 945362 million as
on 31st March 2009 , with this strong balance sheet it has ability to raise low
cost debt. Engineering skills in project configuration and package design. Turn
around ability for old plants demonstrated in the takeover plants of Talcher, Ta
nda & Unchahar. High credit rating that is indicative of the confidence of lende
rs. In-house training facility (PMI), CENPEEP, R&D etc that assist in developmen
t of the sector. Thrust on reducing social costs of capacity growth strong execu
tion of Resettlement and rehabilitation plans.
3.2.2 Weakness i. ii. iii. iv.
5
Low risk-diversification of business portfolio consists primarily of generation
assets. Functional orientation hampering cross functional perspective in decisio
n making. Long and multi layered procurement process leading to long lead times
and process delay. Gaps in HR systems such as performance management, rewards an
d incentives and career development.
http://en.wikipedia.org/wiki/SWOT_analysis
Amrita School of Business
NTPC BUSINESS STRATEGIES
v. vi. vii. Inadequate deployment of a strong knowledge management system that c
ould assist in improving efficiency and effectiveness in all aspects of the busi
ness. Hierarchy for decision making that affects responsiveness. Role ambiguity
and dilution within different lends of the organization.
3.2.3 Opportunities i. ii. iii. iv. v. vi. vii. viii. ix. x. xi. Future of India
is dependent on nuclear power which is in its budding stage. Since it has exper
tise in power generation and also huge financial strength it can leverage this o
pportunity. Apart from BHEL, no company (exclude JVs) in country acquired acumen
in power equipment manufacturing Expand generation capacities by putting up ther
mal and hydro capacities; maintain the position of a dominant generating utility
in the Indian Power sector. Broad base fuel mix by considering imported coal, g
as, domestic coal, nuclear power etc with a view to mitigate fuel risks and main
tain long run competitiveness. Expand services for EPC, R&M and O&M activities i
n the domestic as well as international markets. Backward integrate into fuel ma
nagement to exercise greater control and understanding of supply economics. Lead
the development and commercial deployment of non-conventional energy sources es
pecially in the distributed generation mode. Multi Commodity Exchange has sought
permission to offer electricity future market Improve collections by trading, d
irect sale to bulk customers and the active role in allocation in new plants. Ex
ecute increased number of power plants that classify for Mega Power Projects sta
tus, thereby reducing the cost of the projects and power and power generated. Fo
rward integrate into the distribution business by intensifying its present chann
el in India.
3.2.4 Threats i. ii. iii. iv. v. vi. vii. After liberalization new player in the
country like Tata, Reliance, Adani, Jindal etc are evolved and these are planni
ng to go in big way. It is predicted that the primary ingredient for thermal pow
er generation i.e. coal will not available after 4 decades. Absence of an indepe
ndent regular for coal industry and the delay in private investments lending to
the risk of low availability of coal in the future Joint ventures of foreign pla
yers with Indian companies to get access in power generation and power equipment
manufacturing. Redirecting power may be constrained by inter-regional connectiv
ity. Downward regulatory and competitive pressure on tariffs. Stringent environm
ental norms in the future may add to the cost of generation.
NTPC has been carrying on its operation since 1975 and has acquired a considerab
le share of countrys total electricity generation. The challenge for NTPC would b
e to continue to hold its large share in power generation sector. Thus NTPC stra
tegies would fall under star of the BCG matrix. Its to be seen that in near futur
e how NTPC will continue to dominate the energy and power generation sector. Her
e, Amrita School of Business
NTPC BUSINESS STRATEGIES
when we talk of high growth we would like to say that NTPC would experience a hi
gh 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.
4. Strategies of the Company
NTPC is ramping up its generation capacity and is expected to increase its marke
t share from about 19% today to around 25% by 2017. The capacity growth of will
enable it to maintain its position as the market leader. Today, the installed ca
pacity is 30,644 MW, including 2,294 MW in joint ventures. During the 11th plan,
your Company has already commissioned 3,240 MW capacity. Capacity aggregating t
o 17,930 MW consisting of 45 units, including 8 super-critical units of 660 MW e
ach, is under construction at 18 projects situated in 16 locations. Capacity of
3,022 MW is under the award process. For the 12th plan, company has started the
process of capacity addition in right earnest. NIT is to be issued for 5,940 MW
capacities through bulk tendering of 9 units of 660 MW each by mid-October 2009.
Feasibility reports have been approved for 11,450 MW capacities for further pro
cessing and for an additional 10,100 MW capacity, feasibility reports are ready
and are in the process of approval. Your Company is aiming to place orders for t
he 12th plan projects during the next 2 years. Infrastructure work has already c
ommenced in several 12th plan project sites Thus, your Company is fully geared t
o become a 75,000 MW Company by 2017. In other words, it is going to increase it
s generation capacity by two and half times between now 2017. With the11th plan
projects under execution, the 12th plan projects in the process company is targe
ting to achieve 10% or double-digit growth in generation every year
4.1 Diversified Growth
NTPCs quest for diversification started with its foray into Hydro Power. It has,
since then, been moving towards becoming a highly diversified company through ba
ckward, forward and lateral integration. The company is well on its way to becom
ing an Integrated Power Major, having entered Hydro Power, Coal Mining, Power Trad
ing, Equipment Manufacturing and Power Distribution. NTPC has made long strides
in developing its Ash Utilization business. In its pursuit of diversification, N
TPC has also developed strategic alliances and joint ventures with leading natio
nal and international companies. Hydro Power: In order to give impetus to hydro
power growth in the country and to have a balanced portfolio of power generation
, NTPC entered hydro power business with the 800 MW Koldam hydro projects in Him
achal Pradesh. Two more projects have also been taken up in Uttarakhand. A wholl
y owned subsidiary, NTPC Hydro Ltd., is setting up hydro projects of capacities
up to 250 MW. b) Coal Mining: In a major backward integration move to create fue
l security, NTPC has ventured into coal mining business with an aim to meet abou
t 20% of its coal requirement from its captive mines by 2017. The Government of
India has so far allotted 7 coal blocks to NTPC, including 2 blocks to be develo
ped through joint venture route. Coal Production is likely to start in 2009-10.
c) Power Trading: 'NTPC Vidyut Vyapar Nigam Ltd.' (NVVN), a wholly owned subsidi
ary was created for trading power leading to optimal utilization of NTPCs assets.
It is the second largest power trading company in the country. In order to faci
litate power trading in the country, National
a)
Amrita School of Business
NTPC BUSINESS STRATEGIES
Power Exchange Ltd., a JV between NTPC, NHPC, PFC and TCS has been formed for ope
rating a Power Exchange. d) Ash Business: NTPC has focused on the utilization of
ash generated by its power stations to convert the challenge of ash disposal in
to an opportunity. Ash is being used as a raw material input for cement companie
s and brick manufacturers. NVVN is engaged in the business of Fly Ash export and
sale to domestic customers. Joint ventures with cement companies are being plan
ned to set up cement grinding units in the vicinity of NTPC stations. e) Power D
istribution: NTPC Electric Supply Company Ltd. (NESCL), a wholly owned subsidiary
of NTPC, was set up for distribution of power. NESCL is actively engaged in Rajiv
Gandhi Gramin Vidyutikaran Yojanaprogramme for rural electrification and also wo
rking as 'Advisor cum Consultant' for Ministry of Power for implementation of Ac
celerated Power Development and Reforms Programme (APDRP) launched by Government
of India. f) Equipment Manufacturing: Enormous growth in power sector necessita
tes augmentation of power equipment manufacturing capacity. NTPC has formed JVs
with BHEL and Bharat Forge Ltd. for power plant equipment manufacturing. NTPC ha
s also acquired stake in Transformers and Electricals Kerala Ltd. (TELK) for man
ufacturing and repair of transformers. Looking ahead Company has prepared its lo
ng term Corporate Plan for the period 2010 2032 which includes all strategies an
d growth targets, fuel choices, technology choices and measures to deal with the
likely changes in the business environment. During the course of implementing t
his proposed Plan, company would aspire to be the most valuable Indian company a
s well as the world leader in power generation. Company also aspires to be a lea
der in GREEN POWER
5. Recommendations
From strategic point of view company is in very strong position, it made all typ
es of diversification and integration to leverage its position in power sector.
It has very less penetration into nuclear power generation market. As of now the
nuclear power generated in India contributes only 2.9% of generated capacity. A
fter the nuclear deal, Indian govt. is planning to go in a big way to enhance it
s nuclear power generation .Since coal fields also are in their saturation stage
there will be huge demand for nuclear power in future. To reap benefits of the
deal it made a joint venture with NPICL to generate 2000MW which is very minute.
It has joint ventures with coal mining industries, BHEL, Bharati Forex all thes
e are ventures leverage its position. But these do not add value with respect it
s venture into nuclear power generation. Because, these organizations did not ha
ve expertise skills in nuclear power generating equipments or/and its technology
. The technology and equipment required for it also different, in the present sc
enario no enterprise in India has acquired expertise in technology and equipment
manufacturing of nuclear plants. So, this gives a huge opportunity for NTPC to
leverage its financial, technological and human capital to extend its foot print
into nuclear power industry. This can be done by making JVs with foreign players
who are expert in nuclear power generation and subsequently get access to its t
echnology, manufacturing of equipment, resource mining and dumping (the biggest
concern). Amrita School of Business