Industry Monitor

Power

Vol. 1101 January 2011

CONTENTS

INDUSTRY AT A GLANCE...........................................................................................2
KEY DEVELOPMENTS.................................................................................................3
MARKETING.................................................................................................................3
INVESTMENT NEWS...................................................................................................4
MERGERS AND ACQUISITIONS ...............................................................................5
INDUSTRY STATISTICS................................................................................................7
PRODUCT FOCUS..........................................................................................................8
Wind Power .....................................................................................................................8
Introduction .................................................................................................................8
Market Scenario............................................................................................................8
Indian Scenario.............................................................................................................9
Outlook........................................................................................................................9
COMPANY SCAN .........................................................................................................10
Power Grid Corporation of India Ltd.............................................................................10
Overview....................................................................................................................10
Cost Structure Analysis...............................................................................................11
Stock Performance .....................................................................................................12
Outlook......................................................................................................................12
STOCK SCAN................................................................................................................13
UPCOMING EVENTS..................................................................................................14

© Cygnus Business Consulting & Research Pvt. Ltd., 2011 1

Industry Monitor – Power January 2011

INDUSTRY AT A GLANCE
MARKETING

Ø ADAG gets US$3 billion loan from China banks, India

Ø Reliance Power eyes Rs50000m loans, India
Ø Power sector may see US$1 billion PE inflows in six months, India
Ø Bajaj Hindustan to set up power projects in next 4-5 yrs, India
Ø India selects 37 companies to build solar power plants, India
Ø NTPC to pick up controlling stakes in projects in Jharkhand, India
Ø Power generation in JK hydel projects fallen by over 50%, India
Ø Bharat Forge to invest Rs19 billion in NTPC JV, India
Ø NTPC to order US$7.2billion power gear by March, India

INVESTMENT NEWS

Ø Power Grid to invest Rs 55.4 billion in projects, India

Ø NTPC secures US$300m loan from a Singapore bank, India
Ø RPower may finalise Rs50 billion loan from Chinese banks, India
Ø Pvt power producers to invest Rs910 billion in 3 to 5 yrs, India

MERGERS AND ACQUISITIONS

Ø JSW buys Canadian Coal Company, UK

Ø NPCIL to form JVs with SAIL and railways, India
Ø Areva likely to sign agreement with NPCIL for 2 nuke plants, India

© Cygnus Business Consulting & Research Pvt. Ltd., 2011 2

Industry Monitor – Power January 2011

KEY DEVELOPMENTS
MARKETING
India: ADAG gets US$3 billion loan from China banks
Anil Dhirubhai Ambani Group (ADAG) companies, Reliance Power and Reliance Communications,
will sew up about US$3 billion in loans from mostly Chinese banks, officials announced.
Utility Reliance Power has secured loans worth Rs50 billion (US$1.1 billion) from a consortium of
three Chinese banks and Standard Chartered for the Sasan power project in central India. The letters
for the financing agreement with the Chinese banks would be exchanged a spokesman reported the
media, as Chinese Premier Wen Jiabao starts his three-day India visit. Wen's visit is the first by a
Chinese premier in five years. He is accompanied by more than 400 business leaders, underscoring
the growing commercial ties of countries which, between them, house more than a third of the
world's population.

India: Reliance Power eyes Rs50000m loans

The Anil Dhirubha Ambani group’s Reliance Power will finalise loans US$1.1 billion with Chinese
banks for its 4,000 Sasan power project during the visit of the country’, industry officials announced.
Bank of China, China Development Bank and the Export Import Bank of China along with Standard
Chartered Bank , which arranged the loans, have finalized the term loans after Reliance Power signed
a memorandum of understanding in Shanghai last October for loans amounting to Rs560 billion for
various projects it is executing. With the finalisation of 13-year debt, Reliance Power has secured
Chinese commitment for the Sasan Project on a longterm basis, ensuring support from Chinese
equipment suppliers during operations and maintenance of the Project, industry officials announced

India: Power sector may see US$1 billion PE inflows in six months
Private equity investors may deploy nearly US$1 billion in the Indian power sector in the next six
months, according to executive director and head of infrastructure group at Kotak Mahindra Capital.
Advising at least half a dozen power companies who are willing to raise private equity funds, and
several other investment bankers too are. Global PE funds have been big investors India's
infrastructure sector, especially power. The investments could be in the range of US$50-250m in
some group holding companies and subsidiaries, mainly unlisted and having strong growth prospects.
The energy sector, which had fallen off the radar of PE investors last year, has shown a strong
recovery this year. According to Venture Intelligence, a Chennai-based research company, there were
22 investments worth US$2 billion in the power sector in 2010 till November, compared to 21
investments.
India: Bajaj Hindustan to set up power projects in next 4-5 yrs
Sugar major Bajaj Hindusthan has committed investments to the tune of Rs225 billion in power
projects to come up in Uttar Pradesh over the next 4-5 years. The company entered into a MoU with
the UP government to set up a 1980MW thermal power plant in Bargarh area of Chitrakoot district.
The project would entail an investment of Rs100 billion and power production is expect to
commence in 2015, announced the Joint Managing Director, Bajaj Hindusthan. The company has
committed to give 100% of the power generated from the plant to the state government. Earlier, the
company had signed a MoU in April this year, to set up another 1,980MW power plant in Lalitpur
district. This power project is expected to be commissioned by 2014.

India selects 37 companies to build solar power plants

India has selected 37 companies to build solar power projects, as the country moves forward with an
ambitious plan that seeks to significantly scale up production from near zero to 20 gigawatts by 2022.
Lanco Infratech, KVK Energy Ventures Pvt Ltd and Rajasthan Sun Technique Energy Pvt Ltd won
bids for a maximum project capacity of 100MW each, according to documents posted on the website
of NTPC Vidyut Vyapar Nigam Ltd. Under its Solar Mission plan unveiled last year, India is to

© Cygnus Business Consulting & Research Pvt. Ltd., 2011 3

Industry Monitor – Power January 2011
produce 1,300MW of power by 2013, an additional supply of up to 10 gigawatt by 2017 and the rest
by 2022 at an overall investment of about US$70 billion. India's top power producer NTPC Ltd,
through its unit NTPC Vidyut Vyapar Nigam (NVVN), will lead the solar plan's initial phase via
long-term contracts.
India: NTPC to pick up controlling stakes in projects in Jharkhand
Country's largest power producer NTPC today said it would pick up 76% equity each in two thermal
power projects in Jharkhand. Company is talks with Jharkhand government to pick up stakes in
Patratu and Tenughat," NTPC CMD announced. The undertaking would pick up 76% equity in
these two projects which have a combine capacity of 2,640 MW. These power projects have coal
linkages and are running on very low efficiency level.
India: Power generation in JK hydel projects fallen by over 50%
Jammu and Kashmir has witnessed a fall of over 50% in power generation from its hydel power
projects at the onset of winter this year. There is huge gap of 1000MW between demand and supply
of electricity and power generation from hydel projects has fallen down by over 50% due to winters,"
an official of State load Dispatch Centre wing of the state Power Development Department
announced. There is a demand of 2400MW in Jammu and Kashmir, while the state is getting only
1500MW from various sources at present, they said, adding this has triggered power crises in the
state. Total power generation of the hydel power projects in Jammu and Kashmir is around 2340
MWs, but the generation has fallen down to just 1130 MWs at present.
India: Bharat Forge to invest Rs19 billion in NTPC JV
World’s largest forgings company Bharat Forge is making big plans for its power equipment
business. The company is going to invest Rs19 billion in its joint venture with India’s largest power
company NTPC, and its joint with French energy giant Areva will also begin construction for nuclear
forgings plant this month. Chief Operating Officer announced that the Bharat Forge NTPC JV is
currently looking for technology partners for manufacturing high pressure pipes, pumps and valves,
which are used in thermal power plants. The plans are expected to be finalised by March-April. It has
already secured 100 acres of land in Sholapur to set up a plant with a capacity of 60,000 to 70,000
tonnes per annum. Under the NTPC JV, the company may have three to four more joint ventures
with those technology partners.
India: NTPC to order US$7.2billion power gear by March
NTPC Ltd., India's biggest power producer, plans to place orders for generators worth at least
Rs32,850 crore (US$7.2 billion) by March 31 as it accelerates capacity addition to help reduce
blackouts. The utility will buy nine generators of 660 megawatts each and the same number of 800-
megawatt units, Chairman Arup Roy Choudhury stated. The equipment cost per megawatt is Rs25-
30m. NTPC, which failed to meet its capacity addition target in the year ended March 31, aims to
speed up construction of plants to meet demand in Asia's second fastest growing major economy.
Capacity additions will more than double to 3,150 megawatts this year, with another 5,500 megawatts
to follow in the year ending March 2012.

INVESTMENT NEWS
Asia pacific:
India: Power Grid to invest Rs55.4 billion in projects
Power Grid Corp of India announced its board had on approved investing US55.4 billion rupees on
five projects across the country. These include an investment of Rs27.43 billion to set up a
transmission system in phase I of a generation project in Orissa with a commissioning schedule of 36
months from the date of investment approval. Power Grid will also invest Rs17.19 billion for setting
up pooling stations for independent power producer generation projects at Raigarh and Raipur in
Chhattisgarh state.

© Cygnus Business Consulting & Research Pvt. Ltd., 2011 4

Industry Monitor – Power January 2011
India: NTPC secures US$300m loan from a Singapore bank
Country's largest power producer NTPC has tied up with a Singapore-based bank for a US$300m
loan for funding its financial plans in this fiscal, a senior company official announced.
It is US$300m loan with a Singapore bank for funding NTPC’s project in the current financial year,
NTPC Director Finance announced. The loan is for seven-year period. It needs to seek Reserve
Bank approval for this loan and after that would immediately start drawing. It is also noted that the
company was already committed for Rs260 billion worth of loan from the domestic banks which, it
has not drawn yet.

India: RPower may finalise Rs50billion loan from Chinese banks

Anil Ambani-led Reliance Power is likely to finalise Rs50 billion loan from Chinese banks tomorrow
for its 4,000MW thermal power project at Sasan in Madhya Pradesh. Bank of China, China
Development Bank and The Export Import Bank of China have agreed to provide a loan of Rs50
billion for Reliance Power's Ultra Mega power project. The final commitment of letters is expected
to be signed during the three-day visit of the Chinese Prime Minister. The maturity of loans extends
to over 13 years. Reliance Power's Sasan UMPP is a 3,960MW super-critical technology based pit-
head coal-fired power generating plant at Sasan in Madhya Pradesh.

India: Pvt power producers to invest Rs910 billion in 3 to 5 yrs

Private power producers will invest about Rs910 billion in Tamil Nadu in the next three to five years
to generate 18,140MW, Deputy Chief Minister announced. Private power developers are putting up
plants with a capacity of 18140MW. These initiatives will bring investment of about Rs910 billion in
the next three to five years," he stated at the All India Conference of Chairman of Central and State
Electricity Regulatory Commissions. S tate government also planned to promote renewable energy
due to limited coal resources. Keeping in view the limited coal resources and to promote clean
energy, the Government has mandated for a major shift from coal fuel to renewable energy, he stated
adding the Tamil Nadu Electricity Regulatory Commission has imposed the Renewable Energy
Purchase Obligations to focus on renewable energy for industry and a conducive tariff policy.

MERGERS AND ACQUISITIONS

Europe:
Toronto: JSW buys Canadian Coal Company
India Inc. made yet another foray into the resource-rich Canadian market with JSW Energy buying
the Canadian coal company CIC Energy for US$422m, thereby giving it a significant foothold in the
lucrative coal sector in southern Africa. JSW joins Aditya Birla Group, Vedanta and the Tata Group
in entering Canada in the past two to three years. The deal at US$7.42 a share has been given the
green signal by the board of CIC Energy, which is listed in both Toronto and Botswana in southern
Africa. In Botswana, CIC Energy operates the Mmamabula coal and power station project.

Asia pacific:
India: NPCIL to form JVs with SAIL and railways
Nuclear Power Corpoaration of India plans to set up joint ventures with the Indian Railways and
Steel Authority of India Ltd (SAIL) to set up nuclear reactors, continuing its strategy to involve state
entities to fund its ambitious plan to add nearly 60,000MW of new capacity in two decades. It also
hopes to involve private firms in nuclear power plants if the government allows this in the future, the
chairman of NPCIL announced. SAIL and Indian Railways have approached them for joint ventures.
NPCIL is already in the process of setting up joint ventures with three other state firms, NTPC,
Indian Oil Corporation and National Aluminium Company. NPCIL would hold majority stake and
offer up to 49% to the partners in ongoing or upcoming projects.

© Cygnus Business Consulting & Research Pvt. Ltd., 2011 5

Industry Monitor – Power January 2011
India: Areva likely to sign agreement with NPCIL for 2 nuke plants
French nuclear giant Areva is likely to sign a framework agreement with NPCIL to build the first two
of the six planned nuclear power reactors in Maharashtra, which is expected to be inked in the
presence of Prime Minister and French President. NPCIL is sourcing the two reactors of 1,650MW
each from Areva to be set up at Jaitapur in Ratnagiri district of Maharashtra. An Early Works
Agreement that is essential to start implementation of the 10,000MW nuclear project at Jaitapur in
Maharashtra will be part of the framework pact which will lay down broad rules for atomic
cooperation. Areva is expected to set up six reactors of 1,650MW each at the site and MoUs been
signed and clearances granted for the first two.

© Cygnus Business Consulting & Research Pvt. Ltd., 2011 6

Industry Monitor – Power January 2011

INDUSTRY STATISTICS
States/Region-wise Power Forecast in India
Energy Requirement (Mk wh) Peak Load (MW)
States/ 2001-02 2006-07 2011-12 2001-02 2006-07 2011-12
UTs/Region end of end of end of end of end of end of
9th Plan 10th Plan 11th Plan 9th Plan 10th Plan 11th Plan
Delhi 20735 29082 39845 3481 4847 6592
Haryana 24182 33287 44546 4540 6179 8202
Punjab 31997 41819 53373 5814 7578 9595
Uttar Pradesh 61066 86452 121253 11280 15841 22041
Gujarat 48777 64356 84111 8070 10647 13916
Maharashtra 82921 115488 158229 13147 18311 25087
Andhra Pradesh 45226 59812 78172 7483 9824 12748
Karnataka 31208 41763 55232 5422 7202 9453
Kerala 15756 22099 30278 3226 4505 6172
Tamil Nadu 40456 52176 66591 6598 8509 10860
West Bengal (Excl. DVC) 23595 32100 42957 4517 6107 8173
Orissa 18836 28982 43579 3072 4726 7107
North Eastern Region 8148 12062 17553 1722 2527 3661
Other 116747 162385 222721 17385 24141 33040
India 569650 781863 1058440 95757 130944 176647
Note: Year: Period of fiscal year in India is April to March, e.g. year shown as 1990-91 relates to
April 1990 to March 1991, Source: India Stat., Cygnus Research

States/Region-wise Energy Requirement in India

200000 9th Plan 10th Plan 11th Plan

100000
(Mk wh)

0
Other
Delhi

AP

Tamil Nadu

N E Region
Punjab

Gujarat

Orissa
Maharashtra
Haryana

Kerala
Karnataka

(Excl.DVC)
UP

WB

States/Region-wise Peak Load in India

30000
9th Plan 10th Plan 11th Plan

15000
(MW)

0
Other
Delhi

AP

Tamil Nadu

N E Region
Punjab

Gujarat

Orissa
Maharashtra
Haryana

Kerala
Karnataka

(Excl.DVC)
UP

WB

Note: Year: Period of fiscal year in India is April to March, e.g. year shown as 1990-91 relates to
April 1990 to March 1991, Source: India Stat., Cygnus Research
© Cygnus Business Consulting & Research Pvt. Ltd., 2011 7
Industry Monitor – Power January 2011

PRODUCT FOCUS
Wind Power
Introduction
Wind power is a key clean energy source that is poised to make significant
inroads into mainstream electrical power production. The wind power
market has grown rapidly in the last ten years and is currently the fastest
growing power source, contributing more than any other renewable. Modern wind technology is
available for a range of sites including––low and high wind speeds, and desert and arctic climates.
European wind farms operate with high availability of around 97% and are generally well integrated
with the environment and accepted by the public.
Wind energy is a clean energy source as electricity generated by wind turbines do not pollute the air
or emit pollutants like other energy sources. This means less smog, less acid rain and fewer
greenhouse gas emissions. Every 10,000MW of wind installed can reduce CO2 emissions by
approximately 33 MMT annually if it replaces coal-fired generating capacity, or 21 MMT if it replaces
generation from average fuel mix. Major players in the wind turbines market are: Vestas, Enercon,
Gamesa, Siemens, Suzlon, REpower, Alstom/Ecotecnia, Mitsubishi and Nordex.

Market Scenario
The demand for wind turbine is steadily growing in the world. The component suppliers are going
for major production capacity investments in the multi-megawatt segment, as well as focus on local
supply in booming new markets while keeping costs competitive. In the past three or four years,
although interest remains in yet larger turbines for the offshore market, there has been a levelling of
turbine size at the centre of the main, land-based market and a focus on increased volume supply in
the 1.5 to 3MW range. Companies involved in the manufacturing and distribution of products related
to wind energy are anticipating a banner year for 2009 as a new base of customers inherit the wind as
their primary source of energy. Over the past three years, the global wind turbine market has been
growing driven by rise in competitors, capacity investments, and project orders as the industry races
to keep up with the booming global demand. Competition is stiffly rising among wind turbine OEMs
as growth extends to new regions that is encouraging start-ups of new manufacturers while pushing
leading suppliers to expand their sales and production globally. The turbine prices and the cost of
installations have spiralled upward after a decade of cost reduction per megawatt of nameplate
capacity.
Global wind power installed capacity Global Wind Power Installed
250
Global installed capacity reached 121GW Capacity
by the end of 2008 and is lead by five
large markets. Of this the newly-added 200
installed capacity was 27.05GW. The USA
GW

has the largest installed base with 25GW, 150

followed by Germany with 24GW,
followed by Spain, China and India. 100
These countries contribute 73% of global
capacity. The global wind capacity is 50
expected to reach 230GW by 2012, with
the US and China leading, Germany and
0
Spain not far behind. Because of its high 2008 2012 (E)
cost, along with other renewables, the
wind power market has been heavily Source: ABS Energy Research; Cygnus Research
subsidised by governments in order to
drive investment.

© Cygnus Business Consulting & Research Pvt. Ltd., 2011 8

Industry Monitor – Power January 2011
The US market scenario
The US market for wind turbine components and systems expected to reach US$12.3 billion from
the base of US$7.9 billion in 2007. The market is further expected to reach a value of US$60.9 billion
by 2013. The CAGR between 2008 and 2013 is expected to be 40.0%. Top 10 spending US states for
wind energy technology include––Texas, California, Iowa, Minnesota, Washington, Oregon,
Colorado, New York, Kansas and Illinois. Texas has the largest state-wide expenditure, should grow
at a CAGR of 38.0% to reach US$15.2 billion in 2013.

US to dominate investment in renewable energy sources

The US alone plans to invest US$15 billion a year in renewable energy sources to create 5 million
new energy jobs through 2018. The US Government would spend US$150 billion over 10 years to
develop renewable energy sources, like wind, and to encourage energy conservation. Despite the
global recession, Europe remains a leading global wind power market, with growth shifting from
mature onshore markets to newer growth areas in Eastern Europe and offshore. To date, more than
96% of the installed wind capacity is installed in North Africa. However, the announcement of the
renewable energy feed in tariff in South Africa is attracting interest in the large wind turbine market
in this region.

Indian Scenario
India’s wind energy and power grid markets are rapidly Major Players in India
growing. India is beginning to tap into its renewable energy Ø Gamesa Corporacion
resources and is making significant investments to vastly
Ø Suzlon Energy
improve the throughput and reliability of its power grid.
According to the World Bank, roughly 40% of residences in Ø Enercon GmbH
India are without electricity, and blackouts are a common Ø Vestas Wind Systems
occurrence throughout the country’s main cities. To address Ø NEPC India
this shortfall, the Indian government has established an Ø GE Energy
ambitious “Power for All by 2012” plan that will require the Source: www.earthtimes.org;
Cygnus Research
country’s installed generation capacity to grow from
140,000MW to nearly 225,000MW by 2012. It also will require billions of dollars to investment in
India’s transmission and distribution infrastructure. Capacity in the country grew by 22% in 2008 to
9,600MW. The Indian Wind Energy Association estimates that the country has 65,000MW of wind
power potential. Major players in the Indian wind power market are––Gamesa Corporacion, Suzlon
Energy, Enercon GmbH, Vestas Wind Systems, RRB Energy, MSPL Limited, Indowind Energy
Limited, NEPC India, and GE Energy.

Outlook
Worldwide electrical demand is unprecedented, the economics of wind energy are becoming more
attractive and the technical obstacles including transmission and storage are being worked on
aggressively. The results of greater penetration of wind powered electrical generation will be lower
electrical costs, especially after the capital investments have been recouped, as well as significantly
lower environmental impact as compared to other electrical generation technologies. The trend is
expected to drive up growth of wind power installations in the world.

© Cygnus Business Consulting & Research Pvt. Ltd., 2011 9

Industry Monitor – Power January 2011

COMPANY SCAN
Power Grid Corporation of
India Ltd
Overview
Power Grid Corporation of India Limited is engaged in the transmission of bulk power across
different states of India. The Company’s business segments are Transmission, Consultancy, Telecom
and ULDC/RLDC. The Company has around 75,290 circuit kilometers of transmission network and
124 numbers of extra high-voltage alternating current (EHVAC) and high-voltage direct current
(HVDC) sub-stations with a total transformation capacity of 83,100 megavolt ampere (MVA). The
Company has diversified into telecom business to utilize spare telecommunication capacity of its
unified load dispatch center (ULDC) schemes, using its country-wide transmission infrastructure. As
a part of this, it has installed over 20,000 kilometers of telecom network, and connectivity has been
provided to all metros, cities and towns.

Company Performance at a Glance:

2009-10 2008-09 2007-08
Net Sales 71274.50 66758.50 46148.20
PBIDT 61492.50 82024.50 61333.30
OPM (%) 86.28 87.70 87.32
NPM (%) 28.63 25.32 31.39
Depreciation 19796.90 10939.70 9596.50
Interest 15432.40 25320.90 13395.50
PAT 20409.40 16906.10 14484.70
Source: BSE India; Cygnus Research

Key Ratios at a Glance:

2009-10 2008-09 2007-08
Debt-Equity Ratio 0.39 0.42 0.30
Long Term Debt-Equity Ratio 0.39 0.42 0.30
Current Ratio 2.15 1.90 1.98
OPM (%) 45.92 44.07 63.21
NPM (%) 30.27 24.47 36.94
ROCE (%) 11.35 9.43 12.37
RONW (%) 12.19 8.72 12.22
Source: Company; Cygnus Research

Performance Analysis of Power Grid Corporation Ltd

Quarterly Performance Financial Year Performance
JAS10 JAS09 Var (%) 2009-10 2008-09 Var (%)
Sales 21266.30 17485.50 21.62 71274.50 66758.50 6.76
Other Income 963.40 751.10 28.27 3761.30 3526.90 6.65
PBIDT 18786.00 15465.80 21.47 61492.50 82024.50 (25.03)
Interest 4016.60 4162.30 (3.50) 15432.40 25320.90 (39.05)
PBDT 14769.40 11303.50 30.66 46060.10 33225.40 38.63
Depreciation 5456.00 5818.50 (6.23) 19796.90 10939.70 80.96
PBT 9313.40 5485.00 69.80 26263.20 22285.70 17.85
TAX 2799.40 885.30 216.21 5853.80 5379.60 8.81
PAT 6514.00 4599.70 41.62 20409.40 16906.10 20.72
Source: BSE India; Cygnus Research

© Cygnus Business Consulting & Research Pvt. Ltd., 2011 10

Industry Monitor – Power January 2011
Performance Analysis:
During the year 2009-10 the company sales 80000
Operating Income
increased to Rs71274.50m against the
previous year Rs66758.50m and recorded a
6.76% growth in the fiscal. The increase in
the turnover and profits are mainly due to

Rs in m
the increase in power generation and exports
of power during the year. , and higher 60000
adoption of higher tariff as per the tariff
petition filed before CERC. Other income
increased by 6.65% and recorded
Rs3761.30m. PBT of the company increased
by 17.85% compared to the previous year 40000
and recorded Rs26263.20m against previous 2007-08 2008-09 2009-10
year Rs22285.70m. Tax paid by the company
increased by 8.81% and recorded Source: BSE India; Cygnus India
Rs5853.80m against previous year
Rs5379.60m PAT increased by 20.72% and recorded Rs20409.40m against previous year
Rs16906.10m.
During the JAS10 quarter the company had registered growth in sales by 21.62% when compared to
JAS09 and recorded Rs21266.30m. During the quarter the other income has seen a decline of around
28.27%. Interest paid by the company has even decreased when compared to JAS09. Depreciation
declined and Tax paid by the company increased during the quarter compared to JAS09.How ever
the overall performance and profit making that is PAT has increased by 41.62% and reached from
Rs4599.70m of JAS09 to Rs6514.00m of JAS10.
Cost Structure Analysis Cost Structure as Percentage of Net Sales
Overall cost structure of the company as 2009-10 2008-09 2007-08
percentage of operating income has improved. Staff Expenses 10.20 9.64 11.25
The company has been able to control its raw Other Expenditure 7.46 6.89 7.52
material cost. The major driver of the cost Depreciation 27.78 16.39 20.79
structure for the company is staff expenses Interest 21.65 37.93 29.03
which is increased by 41.17% when compared Tax 8.21 8.06 6.11
to previous fiscal, raw material cost has Source: BSE India; Cygnus Research
decreased by 100.02 basis points and other
expenses decreased by 17.4% during the year 2009-10, as a percentage of sales have declined when
compared to previous year.
Common Size Comparison:
Power Grid when compared with its peers Common Size Comparison for 2009-10 (% of Sales)
Tata power and Reliance Power other Power Tata Reliance
income is low when compared to the Grid power power
peers Tata power and Reliance power. Other Income 5.28 3.97 4,438.33
Staff expenses are comparatively low Staff Expenses 10.20 4.30 455.22
when compared with Reliance and higher Other Expenditure 7.46 8.33 151.05
when compared with Tata power, the Depreciation 27.78 6.73 6.01
company registered PBT of 36.85% while Interest 21.65 5.73 0.00
Tata power 17.74% and Reliance power is PBT 36.85 17.74 3,379.00
drastically higher as a percentage of sales. Tax 8.21 4.52 183.66
The Other expenditure of the company as PAT 28.63 13.23 3,195.33
percentage of operating income is more or Source: BSE India; Cygnus Research

© Cygnus Business Consulting & Research Pvt. Ltd., 2011 11

 Industry Monitor – Power January 2011
less the same as that of Tata power but lower more than Reliance power. Tax paid by the company is
low when compared with Reliance power but higher when compared with Tata power. PAT of the
company is 28.63% where as Tata power is making 13.23% as a percentage of sales.

Stock Performance
From December 2009 to November 2010, the BSE Sensex has seen a slight rise of 11.77% from the
base of 17464.81points to 19521.25 points. Over the same period, Power Grid Corporation of India
has seen a decline of 13.71% from Rs110.10 to Rs95.00. The 52 week high performance of Power
grid stock is seen in Jan10 at Rs112.70 and 52 week low performance is seen in November 10 at
Rs95.00. Coming the Sector Indices BSE power has seen a declined of 9.32% from 3188.55 point in
December 2009 to 2891.48 points in November 2010. The shareholding pattern of the company is,
82% is in the hands of promoters, and remaining 18% in the hands of public as on 31st September
2010.

120 Relative Market Performance Shareholding Pattern

BSE Sensex
110 BSE Power
Pwergrid Public
18%
100

90

Promotor
80
s
Jun '10
Feb '10

Oct '10
Jan '10

Mar '10

July '10

Nov '10
May '10

Aug '10
April '10

Sep '10
Dec '09

82%

Source: BSE India; Cygnus research

Outlook
The demand for power in our country always outstrips over the supply leading to power deficit. The
demand forecast analysis of 17th EPS provides ample opportunity for all players in this sector. The
government of India has initiated several measures to accelerate the power generation in order to
achieve the envisaged economic growth rate. These include identifying power sector as the
infrastructure sector by the government. Further the government of India has also chalked out plans
for development of more number of ultra mega power projects 'Transmission System associated with
Krishnapatnam UMPP - Part-A' at an estimated cost of Rs7.79 billion, with commissioning schedule
of 32 months from the date of Investment approval. Provision of Bus Reactors in Northern Region'
is at an estimated cost of Rs900.30m, with commissioning schedule of 20 months from the date of
investment approval. Transmission System for Phase-I Generation Project in Orissa - Part-B' is at an
estimated cost of Rs27.43billion, with commissioning schedule of 36 months from the date of
investment approval. Establishment of Pooling Stations at Raigarh (Kotra) and Raipur for IPP
Generation Projects in Chhattisgarh' at an estimated cost of Rs17195.20m, with commissioning
schedule of 32 months from the date of investment approval.

© Cygnus Business Consulting & Research Pvt. Ltd., 2011 12

 Industry Monitor – Power January 2011

STOCK SCAN
Relative market cap performance
100

90
BSE Sensex
Tata
Neyveli
80
16/11/10

18/11/10

19/11/10

22/11/10

23/11/10

24/11/10

25/11/10

26/11/10

29/11/10

30/11/10

01/12/10

02/12/10

03/12/10

06/12/10

07/12/10

08/12/10

09/12/10

10/12/10

13/12/10

14/12/10

15/12/10
115
Relative market cap performance
BSE Sensex Reliance Infra
105 NTPC PTC

95

85

75
16/11/10

18/11/10

19/11/10

22/11/10

23/11/10

24/11/10

25/11/10

26/11/10

29/11/10

30/11/10

01/12/10

02/12/10

03/12/10

06/12/10

07/12/10

08/12/10

09/12/10

10/12/10

13/12/10

14/12/10

15/12/10
Source: BSE India; Cygnus Research

1st Week (16-24 Nov 2010) 2nd Week (25th Nov - 1st Dec 2010)
Index
Opening Closing Var(%) Opening Closing Var(%)
BSE (points) 19865.14 19459.85 -2.04 19318.16 19850.00 2.75
Tata (Rs) 1344.00 1292.20 -3.85 1276.90 1312.60 2.80
Neyveli (Rs) 147.30 139.90 -5.02 133.10 133.90 0.60
Reliance Eng (Rs) 994.05 932.65 -6.18 910.25 870.90 -4.32
NTPC (Rs) 187.00 178.50 -4.55 177.15 186.35 5.19
PTC (Rs) 132.70 123.20 -7.16 114.90 122.85 6.92

3rd Week (02nd - 8th Dec 2010) 4th Week (9-15 Dec, 2010)
Index
Opening Closing Var(%) Opening Closing Var(%)
BSE (points) 19992.70 19696.48 -1.48 19242.36 19647.77 2.11
Tata (Rs) 1301.20 1294.70 -0.50 1278.50 1315.80 2.92
Neyveli (Rs) 135.85 126.55 -6.85 118.30 126.45 6.89
Reliance Eng (Rs) 874.20 832.80 -4.74 777.70 824.40 6.00
NTPC (Rs) 183.05 190.45 4.04 187.15 196.95 5.24
PTC (Rs) 124.50 116.25 -6.63 111.05 118.55 6.75

© Cygnus Business Consulting & Research Pvt. Ltd., 2011 13

Industry Monitor – Power January 2011

UPCOMING EVENTS
1. Event POWER ON
Date Jan 14-16, 2011
Venue BSNL GROUND, Agra, India.
POWER ON 2010 provided us with an excellent opportunity t o
showcase our products and services. It is a platform which brings
Highlights together all battery industry enthusiasts to share ideas on assessing the
battery potential. This includes vendors from other countries like China,
Taiwan and America.
Shivam, Shop 6, B Block, Central Shopping Centre, Dilshad Garden,
Contact Details
Delhi, India. Tel:+(91)-(11)-22137081
2. Event Middle East Electricity
Date Feb 08-10, 2011
Venue Dubai International Convention & Exhibition Centre Dubai, UAE
It will be an important event for the energy sector, featuring around
1,000 national and international exhibitors displaying products,
technologies and new innovations from the field of energy. The event is
Highlights
considered as just the right kind of opportunity to meet up potential
buyers, to make a mark in the energy market, to launch new products or
technologies in energy sector and to establish business contacts.
IIR Middle East, PO Box 21743, Dubai, United Arab Emirates
Contact Details
Tel:+(971)-(4)-3365161; Fax:+(971)-(4)-3364021
3. Event Electroindia Rajkot
Date Feb 11-14, 2011
Venue Ahmedabad Education Society Grounds Ahmedabad, Gujarat, India
It will features entire range of electrical equipment, home electrical and
Highlights industrial electrical under one roof. It will house more than 318 stalls
and expect 50 Thousand potential visitors from throughout the country
7-star Infocom, B-509, 5th Floor, Diamond world, Minibazar, Surat -
Contact Details 395 006., India.
Tel: +(91)-(261)-4004000; Fax: +(91)-(261)-4004000
4. Event Energy and Power India
Date Feb 11-14, 2010
Venue Bangalore International Exhibition Centre (BIEC) Bengaluru, India
It is one of the biggest trade fair in India for Electronics and Electrical
Highlights industry, Energy and Power India is an event to promote players from
Power, Electrical, Lighting, and Service.
AdsStationNo. 1365, 2nd Floor, Sarakki Gate Kanakapura Main Road,
Contact Details
Bengaluru, India; Tel:+(91)-(80)-65707899; Fax:+(91)-(80)-26543205
5. Event Strategies in Light
Date Feb 23-25, 2011
Venue Santa Clara Convention Center Santa Clara, United States Of America
It is a business conference and exhibition on high-brightness LEDs. In
its eighth year, it is both the longest-running and the largest conference
in the HB LED industry. It is the premier annual forum for presenting
Highlights
current commercial developments in high-brightness LED applications
and providing unparalleled networking opportunities for component and
equipment suppliers, manufacturers, and end-users of HB LED devices.
Penn Well, 1421, S Sheridan Road, Tulsa, United States Of America
Contact Details
Tel:+(1)-(918)-8353161

© Cygnus Business Consulting & Research Pvt. Ltd., 2011 14

Industry Monitor – Power January 2011
6. Event ELECTRICITY
Date Mar 02-04, 2011
Venue Ukraine Exhibition Hall, Lviv, Ukraine
It gives you a good opportunity to learn the experience of leading
producers, to familiarize with the newest technologies of generation,
transmission and distribution of electric energy, newest energy-efficient
Highlights
lighting technologies and equipment for industrial, public, architectural
and special lighting, and industrial automation. It will focus special
attention on energy-saving, automation in industry, and electronic parts.
Agency of Marketing & Development (AMD) Limited P. O. Box 8304,
Contact Details
Lviv, Ukraine; Tel:+(380)-(322)-441191; Fax:+(380)-(322)-441191
7. Event Light India International
Date Mar 04-07, 2011
Venue Chennai Trade & Convention Centre Chennai, Tamil Nadu, India
It is one of the highly specialized fair; it helps in exploring various
trends, opportunities of related sector and proves to be hub of
penetrating into lighting sector at the international level. Along with a
Highlights
conference which helps in exploring business potential. Some of the
major exhibited products include street lighting, flood lighting,
hospitality lighting, studio lighting and others.
Indian Society Of Lighting Engineers, Chennai Center, D -10 Ambattur
Contact Details Industrial Estate, Chennai - 600 058., India.
Tel: +(91)-(44)-26257710; Fax: +(91)-(11)-26257866
8. Event Power & Alternative Energy Asia
Date Mar 28-30, 2011
Venue Karachi Expo Center Karachi, Pakistan
It will be the biggest specialized exhibition in Pakistan, covering power
Highlights generation, transmission and distribution, as well as energy saving
technologies and renewable energy development.
E- Commerce Gateway Pakistan Private LimitedC-17, KDA Scheme - I
Contact Details Off: Karsaz Road, Karachi, Pakistan
Tel:+(92)-(21)-111222444; Fax:+(92)-(21)-34536330

© Cygnus Business Consulting & Research Pvt. Ltd., 2011 15