PRESENTATION ON

OPPORTUNITY IN POWER SECTOR & GROWTH STRATEGY

BY SUNNY KUMAR
M.B.A. (3RD SEM.)
INTRODUCTION

 The power sector provides one of the most important

ingredients for the development of a country.
Availability of reliable and inexpensive power is
critical for any nation’s sustained economic
development.
 Since independence, the Indian power sector has grown
significantly in size and capacity with the installed
capacity of power generation having increased by
around 80 times, electricity generation by nearly 140
times and the total length of transmission lines by over
135 times.
 The per capita annual consumption of electricity in India
is one of the lowest in the world, at 704 KWH, and this
is due to the low penetration of electricity at the
household level. The Government of India has set a
mission of achieving “Power for All” by 2012, where the
demand for power is expected to be around 167 GW.
 In order to contribute to the Government of India's goal
of ‘Power for All’ by 2012, JSPL has planned further
capacity expansion in the future and is working actively
to increase domestic power production.
COMPANY STUDY:
 Jindal Steel & Power Ltd.
 
 JSPL is among a highest wealth creator in the country. JSPL is a leading
player in Steel, Power, Mining, Oil & Gas and Infrastructure. After
consolidating its position as a leading player in the steel, power, mining and
infrastructure sectors, JSPL has recently diversified into the oil & gas sector.
 
 With an annual turnover of US $2.1 billion (over Rs. 10,000 crore), Jindal
Steel & Power Limited (JSPL) forms a part of the US $12 billion (over Rs.
60,000 crore) Jindal Group. The company operates across Asia, Africa,
South America and Georgia.
 
 Mission:
 Achieve business excellence through:
 The spirit of entrepreneurship and innovation
 Optimum utilization of resources
 Sustainable environment friendly procedures and practices
 The highest ethics and standards
 Hiring, developing and retaining the best people
 Maximizing returns to stakeholders
 Positive impact on the communities
Core Values:
 Passion for People
 Business Excellence
 Integrity, Ownership & Sense of Belonging
 Sustainable Development
 JSPL has consistently tapped new opportunities by increasing production capacity, diversifying
investments, and leveraging its core capabilities to venture into new businesses. JSPL’s investment
commitments in steel, power, oil & gas and mining have touched more than US $ 30 billion (Rs.
1,50,000 crore). The company, today, is the largest private sector investor in the state of
Chhattisgarh with an investment commitment of over US$ 6.25 billion (Rs. 31,250 crore).
 JPL has set up India’s first mega power project in
the private sector at Raigarh, Chhattisgarh. The
company has invested approximately. Rs. 4310
crore for setting up 1000 MW power plant which
commenced commercial operation of the 1st unit
in December 2007 and all four units (250 MW
each) were commissioned within a span of nine
months.
 Besides this, JSPL is operating a 340 MW power plant on the premises of
its steel plant in Raigarh.

Jharkhand :
 An 11 million tonne integrated steel plant and 2600 MW captive power
plant in phases, with an investment of US $ 6.00 billion (Rs. 30,000 crore).

Orissa:
 A 12.5 million tonne integrated steel plant and 2600 MW captive power
plant in phases, with an investment of US $ 8.00 billion (Rs. 40,000 crore).
The first phase of 3 million tonne is expected to be commissioned by 2011.
 In the Hydro sector, JPL has signed agreements for 6100 MW projects in Arunachal Pradesh in joint
venture with Hydro Power Development Corporation of Arunachal Pradesh Limited(HPDCAPL)

Projects under implementation:

Thermal Projects
 2400 MW coal based power project in Tamnar, Raigarh, Chhattisgarh
 1320 MW coal based power project in Dumka, Jharkhand
 660 MW coal based power project in Godda, Jharkhand
  
Hydroelectric Projects
 4000 MW hydroelectric power project in Etalin, Arunachal Pradesh
 500 MW hydroelectric power project in Attunli, Arunachal Pradesh
 1600 MW hydroelectric power project in Subansiri Middle, Arunachal Pradesh

Projects under planning, signed an MoU or have been granted a survey license.
 2640 MW power project in Jharkhand
 1320 MW power project in Angul, Odisha and
SWOT ANALYSIS OF JSPL:
External

Opportunity Threat

1 Expanding capacity to meet huge power demand Gas & coal unavailability

2 Diversification in fuel business Competition with cost effective companies from

other countries
3 Take over of poor performing assets Gas & coal unavailability

4 Diversification in renewable energy business Strict environmental norms

5 Competitive bidding from 2011

Internal

Strength Weakness

1 Exposure of coal & steel plants Non exposure in renewable

2 Market experience Not vertical integrated

3 Small & agile company Not country wide network

4 Highly skilled & experienced manpower

5 strong balance sheet

 COMPETITOR ANALYSIS
 NTPC Ltd.
 NTPC is largest power utility of India with an installed capacity of 32194
MW as on 07.08.2010. NTPC plans to become 50000 by 2012 & 75000
plus company by 2017. The company is contributing around 28.6 % of the
total electricity generated in the country with installed capacity of less than
20%. PLF of the company’s coal based power plants was 90.81% during
2009-10. Gross revenue is 49478 cr. & Net profit Rs. 86565 million.
NTPC has done diversification in hydro power & coal mining etc. In
addition to its thermal power generation business and also plans to enter
nuclear power generation. Company also plans to go Global. With a
dedicated manpower of around 25000, NTPC has achieved new heights.
Company has been ranked among the “top 10 great place to work for” in
the country in the business world survey.
SWOT ANALYSIS OF NTPC
External

Opportunity Threat

1 Service business of O&M, Efficiency improvements etc Competitive bidding from 2012

2 Expanding in different countries Competition with cost effective companies

3 Diversification in fuel business Gas & coal unavailability

4 Take over of poor performing assets Strict environmental norms

5 Diversification in renewable energy business

Internal

Strength Weakness

1 Exposure of gas, coal & hydro power plants Non exposure in nuclear & renewable

2 Largest market share Not vertical integrated

3 Excellent tract record of erection to O&M Operation attuned to cost plus of tariff

4 Highly skilled & experienced manpower Constraint of being a PSU

5 Maharatna status Inertia & process delay in decision

6 strong balance sheet

BUSINESS ENVIRONMENT:
 Indian GDP growth rate is around 8%. So power
sector needs to grow at the rate of 10%. Demand
may exceed even this.
 Power sector would have to add over 1,00,000
MW of additional capacity by the year 2012 to
meet the demand arising out of a combination of
factors such as population growth, improved
standards of living and increased industrial
activity.
 CHANGING FUEL SCENARIO

 Coal Production
 Coal will continue to be a main fuel in the power sector in India. Due to more capacity addition & increased
in Plant load factor of plants, a scarcity for coal is expected to increase significantly in the future.
 Gas:
 Demand for gas in India for power generation could also significantly increase the future.
 Liquid fuels
 Diesel based power is more expensive and is used for smaller generators for self use.
 Hydro
 As per Government of India, the total hydroelectric potential in India is 1,50,000 MW, of which, around 17 %
has been developed and another 7-8% is under development. Small and medium sized hydroelectric power
plants are especially suited for remote and inaccessible areas.
 Nuclear
 Capital costs for nuclear units are very high but fuel cost is favorable.
 Wind Power
 India is the fifth largest wind power producing nation in the world after Germany, USA, Spain and Denmark.
Commercial projects have been established mainly in Tamil Nadu, Maharashtra, Gujarat, Andhra Pradesh and
Karnataka.
 Fuel Cells
 Fuel cells can provide an attractive alternative for exploiting the advantages of distributed Generation in the
future.
NATIONAL ELECTRICITY POLICY
 The salient features of the Electricity Policy:
 Access to Electricity Available for all households in next five years.
 Availability of Power Demand to be fully met by 2012.
 Supply of Reliable and Quality Power of specified standards at reasonable rates.
 Per capita availability of electricity to be increased to over 1000 units by 2012.
 Minimum lifeline consumption of 1 unit/household/day as a merit good by year
2012.
 Choice of fuel for thermal generation to be based on economics of generation and
supply of electricity.
 Development of National Grid.
 Tariff of Generation and Transmission Projects in Private Sector determined
through competitive bidding to be accepted by Regulatory Commission.
PRIVATE INVESTMENTS IN POWER SECTOR

 The private investment could not come forward till

recently due to poor financial performance of the
SEB’s and the constraining regulatory
environment. But now private player are coming
in a big way through ultra mega power projects and
renewable energy projects.The intention of UMPP
project is to provide power to the consumers at the
minimum cost. The cost of the project would be
lower due to the economy of scale.
OVERVIEW OF THE INDIAN ECONOMY & DEMAND OF ELECTRICITY:

 India currently ranks as the world’s eleventh

greatest energy producer, accounting for about
2.4% of the world’s total annual energy
production. But over 40% of households have no
consistent supply of commercial energy even for
lighting. So the demand/consumption of
electricity is not a problem.
  
INDIAN ENERGY SECURITY:
 With GDP growth rates, consumption of energy in India is catching up as well. But
the country is finding it increasingly difficult to source all the oil, coal, natural gas
and electricity it needs.
 Coal in India:
 In India, coal is the most abundant available fossil fuel and provides a substantial
part of energy needs. It is used for power generation, to supply energy to industry
as well as for domestic needs. India is highly dependent on coal for meeting its
commercial energy requirements. Presently about 54% of power generated in the
country is from coal fired boilers. About 66% of the coal produced is consumed by
Thermal Power Plants. This pattern is likely to continue. India now ranks as the
third largest coal producer of the World next only to China and USA.
 Most of the power plants built in the last decade in the world was fueled by natural
gas due to its availability, low cost and low emissions. But in India, its availability
is a problem and also fertilizer sector gets first priority.
AVAILABLE TECHNOLOGY FOR ELECTRICITY:

With consumable Fuels With Renewable or no Fuels

A. Fossil Fuels A. Renewable Source
1. Coal 1. Hydro power
2. Natural Gas 2. Wind Energy
3. Oils 3. Solar Power
B. Other Fuels 4. Geo-thermal Energy
4. Nuclear Power 5. Tidal Power
5. Fuel Cells 6. Energy from Biomass
6. Hydrogen
ECONOMICS OF GENERATION:
 Solar: The estimated capital cost of setting up a Solar
Power Plant is in the range of Rs. 20 crore to 30 crores
per MW. The cost of generation is around Rs.15 to
Rs.18 per unit,depending upon technology efficiency
etc.
 Hydro: Hydro cost is lowest. It is well below Rs. 2.5
per Kwh even for new units.The estimated hydro
potential in the country is 1,50,000 MW out of which
only 26,910 MW amounting to 18% of the total
potential has been harnessed.
Wind power : The flow of air masses is harvested by wind turbines
that transform its kinetic energy into electrical energy. The available
wind energy estimates range from 300 TW to 870 TW. Just 5% of
the available wind energy can supply the current worldwide energy
needs. Most of this wind energy is available over the open ocean.
Geothermal : Geothermal energy harnesses the heat energy present
underneath the Earth. Two wells are drilled. One well injects water
into the ground to provide water. The hot rocks heat the water to
produce steam which comes from second well & is used to drive
turbines & electric generators. Geothermal energy is used
commercially in over 70 countries.
Biomass: fuel is burned in a boiler to produce high-
pressure steam. This steam is introduced into a steam
turbine. Steam flow causes the turbine to rotate and
electricity is produced. Bio-fuels represent a
sustainable partial replacement for fossil fuels
Wave and tidal power:Tidal forces created on earth
by the relative motion of Moon (68%) and the Sun
(32%). The energy fluxes of waves add up to 3 TW.
0.3 GW of electricity is now produced by tidal power.
Coal: Coal is the most abundant fossil fuel. According
to the International Energy Agency the proven reserves
of coal are around 909 billion tones, which could
sustain at the current production rate for 155 years.
Global warming gases and pollutants are the concerns.
Oil & Gas: Advanced technologies: It is estimated
that there may be 57 ZJ of oil reserves on Earth.Over
68% of oil and 67% of gas reserves are concentrated in
the Middle East and Russia.
RESEARCH PROBLEM:

 The research was centered towards answering the questions

 1. To assess what are the difficulties/constraints of power
company growth?
 2. The new environmental changes happening in the power
sector and future trends?
 3. Its impact on the growth of power company ?
 4. Private company capability & resources to turn
opportunity into a success story
 5. Employees capability and willing to assist in the change
process?
RESEARCH TOOL
Sample
 Since focus of this study was the perception about the company growth strategy so
focused group considered was literate persons. Random samples of 120 persons
taken.
 The responses were scanned for strategies and ten persons had to be contacted
again to provide missing data in some of the questions.
Primary data
 Survey provided the primary data for quantitative research and hypotheses testing.
The literature survey provided secondary data for qualitative analysis.
Limitation
 One of the limitations of study was that large no. responses were received from a
particular place. This may introduce some bias in the results. Some respondents
were not fully aware of the future implications and consequences of adopting the
new business model. Thus there existed a knowledge gap to this extent in the
interpretation of the research questionnaire.
 
PRIMARY RESEARCH DATA AND ANALYSIS

 The objective of this study is to establish a growth strategy for company. An appropriate designed
questionnaire was propagated to collect primary data from a cross section of different persons. The
respondents were requested to give their free and frank view as their personal opinion was felt to be the
best response our purpose. The survey needed intense efforts by personal visits to the respondents with
considerable persuasion to obtain their valued opinion on each query.
  
 Profile of the respondents surveyed for the project
  
 No.
 VALID 120
  
 MISSING 0
  
 During the survey, samples were drawn from executives and frequency distribution of levels in various
categories is shown below.
  
  
Thank You