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The document provides an overview of the Indian power sector and Adani Power Ltd. It discusses the history and growth of the power sector in India. Key points include:
- India's power generation capacity has grown from 1,362 MW in 1947 to over 420 billion units today.
- The power sector receives high priority in national development plans but still struggles with shortages as demand outstrips supply.
- Adani Power Ltd is a major private power producer in India that generates electricity through various thermal power plants.
The document provides an overview of the Indian power sector and Adani Power Ltd. It discusses the history and growth of the power sector in India. Key points include:
- India's power generation capacity has grown from 1,362 MW in 1947 to over 420 billion units today.
- The power sector receives high priority in national development plans but still struggles with shortages as demand outstrips supply.
- Adani Power Ltd is a major private power producer in India that generates electricity through various thermal power plants.
The document provides an overview of the Indian power sector and Adani Power Ltd. It discusses the history and growth of the power sector in India. Key points include:
- India's power generation capacity has grown from 1,362 MW in 1947 to over 420 billion units today.
- The power sector receives high priority in national development plans but still struggles with shortages as demand outstrips supply.
- Adani Power Ltd is a major private power producer in India that generates electricity through various thermal power plants.
CONTENTS : PAGE NUMBER 1.INDIAN POWER SECTOR 3 2. GLOBAL POWER SECTOR 5 3.PEST ANALYSIS OF POWER SECTOR 6 4.COMPETITOR ANALYSIS 7 5.SWOT ANALYSIS OF POWER SECTOR 8 6.ADANI POWER LTD. 10 7.POWER GENERATION 11 8.FINANCIAL HIGHLIGHTS 12 9.SWOT ANALYSIS OF ADANI POWER 14 10.STRATEGIES USED BY ADANI POWER LTD. 15
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INDIAN POWER SECTOR : HISTORY : The power sector in India has undergone significant progress after Independence. When India became independent in 1947, the country had a power generating capacity of 1,362 MW. Hydro power and coal based thermal power have been the main sources of generating electricity. Generation and distribution of electrical power was carried out primarily by private utility companies. Notable amongst them and still in existence is Calcutta Electric. Power was available only in a few urban centers; rural areas and villages did not have electricity.After 1947, all new power generation, transmission and distribution in the rural sector and the urban centers (which was not served by private utilities) came under the purview of State and Central government agencies. State Electricity Boards (SEBs) were formed in all the states. Nuclear power development is at slower pace, which was introduced, in late sixties. In spite of the overall development that has taken place, the power supply industry has been under constant pressure to bridge the gap between supply and demand. Growth Scenario of Indian Power Sector : Development of Power Sector is the key to the economic development. The power Sector has been receiving adequate priority ever since the process of planned development began in 1950. The Power Sector has been getting 18-20% of the total Public Sector outlay in initial plan periods. Remarkable growth and progress have led to extensive use of electricity in all the sectors of economy in the successive five years plans. Similarly, the electricity generation increased from about 5.1 billion units to 420 Billion units 82 fold increase. The per capita consumption of electricity in the country also increased from 15 kWh in 1950 to about 338 kWh in 1997-98, which is about 23 times. In the field of Rural Electrification and pump set energisation, country has made a tremendous progress. About 85% of the villages have been electrified except far-flung areas in North Eastern states, where it is difficult to extend the grid supply. Structural Development of Power Sector Till December 1950 about 37% of the installed capacity in the Utilities was in the public sector and about 63% was in the private sector. The Industrial Policy Resolution of 1956 envisaged the generation, transmission and distribution of power almost exclusively in the public sector. As a result of this Resolution and facilitated by the Electricity (Supply) Act, 1948, the electricity industry developed rapidly in the State Sector. In the Constitution of India Electricity is a subject that falls within the concurrent jurisdiction of the Centre and the States. The Electricity (Supply) Act, 1948, provides an elaborate institutional frame work and financing norms of the performance of the electricity industry in the country. The Act envisaged creation of State Electricity Boards (SEBs) for planning and implementing the power development programmes in their respective States. The Act also provided for creation of central generation companies for setting up and operating generating facilities in the Central Sector. The Central Electricity Authority constituted under the Act is responsible for power planning at the national level. In addition the Electricity (Supply) Act also allowed from the beginning the private licensees to 4
distribute and/or generate electricity in the specified areas designated by the concerned State Government/SEB. Regional Power Systems Emergence In order to optimally utilise the dispersed sources for power generation it was decided right at the beginning of the 1960s that the country would be divided into 5 regions and the planning process would aim at achieving regional self sufficiency. The planning was so far based on a Region as a unit for planning and accordingly the power systems have been developed and operated on regional basis. Today, strong integrated grids exist in all the five regions of the country and the energy resources developed are widely utilised within the regional grids. Presently, the Eastern & North-Eastern Regions are operating in parallel. With the proposed inter-regional links being developed it is envisaged that it would be possible for power to flow any where in the country with the concept of National Grid becoming a reality during 12th Plan Period. Current problem of power sector Government giveaways such as free electricity for farmers, partly to curry political favor, have depleted the cash reserves of state-run electricity-distribution system. This has financially crippled the distribution network, and its ability to pay for power to meet the demand. This situation has been worsened by government departments of India that do not pay their bills. Shortages of fuel: despite abundant reserves of coal, India is facing a severe shortage of coal. The country isn't producing enough to feed its power plants. Some plants do not have reserve coal supplies to last a day of operations. India's monopoly coal producer, state- controlled Coal India, is constrained by primitive mining techniques and is rife with theft and corruption; Coal India has consistently missed production targets and growth targets. Poor coal transport infrastructure has worsened these problems. To expand its coal production capacity, Coal India needs to mine new deposits. However, most of India's coal lies under protected forests or designated tribal lands. Any mining activity or land acquisition for infrastructure in these coal-rich areas of India, has been rife with political demonstrations, social activism and public interest litigations. Poor pipeline connectivity and infrastructure to harness India's abundant coal bed methane and shale gas potential. The giant new offshore natural gas field has delivered less fuel than projected. India faces a shortage of natural gas. Hydroelectric power projects in India's mountainous north and northeast regions have been slowed down by ecological, environmental and rehabilitation controversies, coupled with public interest litigations. India's nuclear power generation potential has been stymied by political activism since the Fukushima disaster in Japan. 5
Average transmission, distribution and consumer-level losses exceeding 30%. Over 300 million people in India have no access to electricity. Of those who do, almost all find electricity supply intermittent and unreliable. Lack of clean and reliable energy sources such as electricity is, in part, causing about 800 million people in India to continue using traditional biomass energy sources namely fuel wood, agricultural waste and livestock dung for cooking and other domestic needs. Traditional fuel combustion is the primary source of indoor air pollution in India, causes between 300,000 to 400,000 deaths per year and other chronic health issues. Global power sector : Energy consumption is reportedly higher in countries where less than 5% of population lives below poverty line. world power generation rose at an average annual rate of 3.7% from 1971 to 2004. This increase was largely due to development of electricity generation in several developed countries and rural electrification in developing countries. Deregulation in areas of global energy markets has led to fierce competition.now more than ever electricity has to be produced at a lower cost with many countries imposing tightening environmental legislation to reduce the impact of power generation on environment. Collectively, developing countries use 30% of worlds energy but with projected population and economic growth energy demands are expected to rise 95%.china and india will be the key contributors to world energy consumption in future. Over the past decades their energy consumption as a share of total world energy use has increased significantly. In 1980, china and india together accounted for less than 8% of worlds total energy consumption. In 2005 their share had grown to 18%.
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The per capita consumPtion of different countries and regions of world varies and it is shown in the following graph
Figure 1: comparative per capita consumption of electricity (Kwh)
PEST Analysis : POLITICAL 1. Government is encouraging private players to produce power and also carry out its transmission and distribution activities. There has been significant Increase in private participation. 2. Indistinctness involved in complicated tariff rates has been done away with by the government. 3. Regulatory authorities like Central Electricity Regulatory Commission (CERC) & State Electricity Regulatory Commission (SERC) are appointed, to regulate the power industry at centre and state level 4. The Indian government has set large scale goals in the 11th plan for power sector due to which the power sector is poised for significant expansion. 5. Unbundling of the State Electricity Boards into separate Generation, Transmission and Distribution units and privatization of power distribution has been initiated either through the direct privatization or the franchisee route. While there has been a slow and gradual improvement in metering, billing and collection efficiency, the current loss levels still pose a significant challenge for distribution companies. 7
ECONOMICAL 1. In order to provide availability of over 1000 units of per capita electricity by year 2012, it has been estimated that need-based capacity addition of more than 100,000 MW would be required. This has resulted in massive invstment plans being proposed in the sub-sectors of Generation Transmission and Distribution 2. The Ministry of Power plans to establish an integrated National Power Grid in the country by 2012 with close to 200,000 MW generation capacities and 37,700 MW of inter-regional power transfer capacity. Considering that the current inter-regional power transfer capacity of 20,750 MW, this is indeed an ambitious objective for the country. 3. For increasing the generation capacity over the next 8-10 years, the corresponding investments in the transmission sector is also expected to expand. COMPETITOR ANALYSIS : TATA POWER : Tata Power is Indias largest integrated power company with a significant international presence. The Company has an installed generation capacity of 6099 MW in India and a presence in all the segments of the power sector viz Generation (thermal, hydro, solar and wind), Transmission, Distribution and Trading. It has successful publ ic-pr ivate par tner ships in Generat ion, Transmission and Distribution in India namely Tata Power Delhi Distribution Limited" with Delhi Vidyut Board for distribution in North Delhi, 'Powerlinks Transmission Ltd.' with Power Grid Corporation of India Ltd. for evacuation of Power from Tala hydro plant in Bhutan to Delhi and 'Maithon Power Ltd.' with Damodar Valley Corporation for a 1050 MW Mega Power Project at Jharkhand. It is one of the largest renewable energy players in India and is developing countrys first 4000 MW Ultra Mega Power Project at Mundra (Gujarat) based on super-critical technology.
The pricing system of Tata Power is as follows.
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Consumer Category Final FAC Charge for Billing Units Rs/ kWh LT Category LT 1- Residential BPL Category 0.09 > 51 (0-100 units) 0.23 > 52 (100-300 units) 0.54 > 53 (above 300 units) 0.95 > 54 (> 500 Units) 1.14
LT III - LT Industries upto 20 kW Load 0.97 LT IV - LT Industries above 20 kW Load 1.10 LT V - Advt & Hoardings 2.92 L T VI - Street Light 0.86 LT VII - Temporary - Temporary-Religious 0.43 - Temporary-Others 2.37 LT VIII - Crematorium and Burial Grounds 0.43
HT Category HT I - Industry 1.08 HT II - Commercial 1.12 HT III - Group Housing Society 0.88 HT IV - Temporary Supply 1.94 HT V - Railways > 22/33 kV 1.07 > 100kV 1.03
PARTNERSHIPS : Partnerships:Its international presence includes strategic investments in Indonesia through 30% stake in coal mines and a geothermal project; in Singapore through Trust Energy Resources to securitise coal supply and the shipping of coal for its thermal power generation operations; in South Africa through a joint venture called Cennergi to develop projects in South Africa, Botswana and Namibia; in Australia through investments in enhanced geothermal and clean coal technologies and in Bhutan through a hydro project in partnership with The Royal Government of Bhutan. With its track record of technology leadership, project execution excellence, world class safety processes, customer care and driving green initiatives, Tata Power is poised for a multi-fold growth and committed to 'lighting up lives' for generations to come.
SWOT ANALYSIS OF POWER SECTOR :
STRENGTH :
1. Well established and vast transmission and distribution network. 2. Highly qualified engineering and technical personnel. 3. Regulatory framework is further facilitated with enactment of Electricity Bill, 2003. 9
4. The Electricity Bill, 2003 holds promises for the power sector and certainly for the consumer by way of competition reliability and rationalized tariff structure. 5. Emergence of strong and globally comparable central utilities (NTPC, POWER GRID).
WEAKNESS :
1. Lack of proper metering and theft has led to large scale losses. Only 51%of the power generated is billed and only 41% is realized 2. Moreover, Government provides power to agricultural sector at subsidized rates and also free of cost in some states. All these factors have resulted in financial disorder of the State Electricity Boards (SEBs). 3. Restoration of SEBs financial health and improvement in their operating performance continues to be a critical issue. The Government of India has s i g n e d a Me mo r a n d u m o f Un d e r s t a n d i n g ( MOU) wi t h v a r i o u s s t a t e s reflecting the joint commitment of centre and states to undertake reforms in a time bound manner 4. Poor return to utilities, which affect their profitability and capacity to make further investments 5. Increasing gap between unit cost of supply & revenue, approximately Rs1.10/ unit 6. Ma n a g e r i a l a n d f i n a n c i a l i n e f f i c i e n c i e s i n s t a t e s e c t o r u t i l i t i e s h a v e adversely affected capacity addition and systems improvement 7. Non-availability of quality coal may hamper thermal plants efficiency in power generation
OPPORTUNITIES:
1. I n d i a h a s s u b s t a n t i a l n o n - c o n v e n t i o n a l e n e r g y r e s o u r c e b a s e a n d technologies to meet growing power requirements by tapping this energy. 2. 100% FDI in all sectors allowed 3. Opportunity to sell generation to Trading company 4. 50,000 MW Hydro initiative launched 5. Ultra Mega Power Projects
THREATS :
1. I nabi l i t y of SEBs t o r ai s e f unds , as mos t of t he SEBs i s on t he ver ge of bankruptcy due to poor operational performance. Adding to the problems, SEBs need huge money to measure up competition from efficient private players 2. The major risk of privatizing a critical sector like power is the precedence of commercial over public int erest. Some of these interests that will take a back s eat i ncl ude devel opment of envi r onment f r i endl y gener at i on and pr ovi s i on of el ect r i ci t y f or r ur al ar eas . The new El ect r i ci t y Act does not pr ovi de any s peci f i c f i nanci al i ncent i ves f or pr i vat e pl ayer s t o addr es s public issues 10
3. The SBEs which are right now holding 60% of total installed capacity, will be hi t adver s el y by s ome pr ovi s i ons of t he new el ect r i ci t y act s uch as delicensing of generation and open access for IPPs and CPPs, there by such units will t ake away the most lucrative customers (like industrial and commercial users) from the SEBs. This will not only affect SEBs but also the entire power sector for near term. 4. Poor infrastructure has led to heavy T&D losses. Old and poor transmission and distribution network has led to frequent power outages and poor quality of power
ADANI POWER LTD. Company Name : Adani Power Ltd. Industry : Energy Founded : 22 August 1996 Headquarters :Ahmedabad, India Key people : Gautam Adani, (Chairman) Products : Electricity generation, transmission and distribution; energy trading Revenue : 4,240 crore (US$845.88 million)(2012) Net income : -294 crore (US$-0.06 billion)(2012) Employees : 2,000 (2011) Parent : Adani Group Website : adanipower.com
Adani Power Limited is the power business arm of Indian business conglomerate Adani Group with head office at Ahmedabad, Gujarat. The company is India's largest thermal private power producer with capacity of 4620 MW and also it is the largest solar power producer of India with capacity 40MW. Adani Power Limited is ranked 334th in top companies in India in Fortune India 500 list of 2011. The company currently operates five supercritical boilers of 660MW each (as per March 2012) at Mundra, Gujrat. It also operates a mega solar plant of 40MW at Surendra nagar, Gujrat. It is India's first company to achieve the supercritical technology. Mundra is also the WORLDS FIRST supercritical technology project to have received CLEAN DEVELOPMENT MECHANISM (CDM) Project certification from United Nations Framework Convention on Climate Change (UNFCCC).
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Power Generation Mundra Thermal Power Project Location : Mundra, District Kutchh, Gujarat, India Capacity : 4620 MW Phase I - 2 x 330 MW Phase II - 2 x 330 MW Phase III - 2 x 660 MW Phase IV - 3 x 660 MW
The Mundra Thermal Power Project was conceived for the captive consumption of the Mundra Port & SEZ, the largest single location Coal based Thermal Power Station in India and one of the top five in the World. With the synchronization of Unit 1, Adani Power Limited proved its project execution skills by developing Greenfield coastal power project in a short span of 33 months from the date of NTP. At present all the four units of Phase I and Phase II based on subcritical technology have been commissioned and are Commercially Operational. Adani Power created history by synchronizing the first-ever super-critical technology based 660 MW Unit (Unit 5 of Phase III) in India at Mundra. This is not only the first super-critical turbine in the country but what makes it special is that this has been synchronized within 36 months from the inception, which is the fastest implementation ever by any power developer in the country. The entire project is scheduled to be fully operational within the 11th Five Year Plan (2007- 2012). Further the project being at a coastal location shall use sea water with the implementation of a desalinization unit, making efficient use of the water resources of India. The Phase III of the Mundra Project, which is also based on supercritical technology, has received Clean Development Mechanism (CDM) Project certification from United Nations Framework Convention on Climate Change (UNFCCC). This is the worlds first project based on super-critical technology to get registered as CDM Project under UNFCCC. This state-of-the-art supercritical technology is 25% more efficient than conventional sub-critical power plants and enables 20% reduction in CO2 emission.
Tiroda Thermal Power Project
Location : Tiroda, District Gondia, Maharashtra, India Capacity : 3300 MW Phase I - 2 x 660 MW Phase II - 1 x 660 MW Phase III - 2 x 660 MW 12
The Tiroda Thermal Power Project of 3300 MW is being set up by Adani Power Maharashtra Ltd (APML), a subsidiary of Adani Power Limited. all the units are based on supercritical technology. The construction activities are in full swing and the first three units of the project are planned to be commissioned within the XIth Five Year Plan (2007-2012) and the balance two units in the first year of the XIIth Five Year Plan (2012-2017). Kawai Thermal Power Project
Location : Kawai, District Baran, Rajasthan, India Capacity : 1320 MW The Kawai Thermal Power Project of 1320 MW is being set up by Adani Power Rajasthan Limited, a subsidiary of Adani Power Limited. all the units are based on supercritical FINANCIAL HIGHLIGHTS The financial highlights of the company for the year ended on 31 st march 2012 are summarized as follows. (Rs. in Crores) Particulars For the year ended For the year ended 31stMarch,2012 31st March, 2011 Column1 Column2 Column3 Column4 Column5
Income from operations 3949 2106
Other Income 291 88
Total Income 4240 2194
Operating & Administrative Expenses 3261 1046
Operating Profit before
Interest and Tax 979 1148
Financial Charges 788 317
Profit Before Tax 191 831
Exceptional Item 195 8
Profit after exceptional item 4 823
Provision for tax
(including deferred tax) 290 300 13
Profit/(Loss) After tax 294 523
Profit & Loss account of Adani Power ------------------- in Rs. Cr. -------------------
Mar '12 Mar '11 Mar '10 Mar '09 Mar '08
12 mths 12 mths 12 mths 12 mths 12 mths
Income
Sales Turnover 3,948.90 2,106.43 434.86 0.00 0.00
Excise Duty 0.00 0.00 0.00 0.00 0.00
Net Sales 3,948.90 2,106.43 434.86 0.00 0.00
Other Income 96.08 105.19 31.93 0.00 0.00
Stock Adjustments 0.00 0.00 0.00 0.00 0.00
Total Income 4,044.98 2,211.62 466.79 0.00 0.00
Expenditure
Raw Materials 43.18 10.30 167.09 0.00 0.00
Power & Fuel Cost 2,264.49 704.36 0.00 0.00 0.00
Employee Cost 52.51 30.23 4.55 0.00 0.00
Other Manufacturing Expenses 72.16 35.46 8.06 0.00 0.00
Selling and Admin Expenses 0.00 103.81 9.57 2.81 0.00
Total Debt 26,942.87 17,346.06 9,749.10 4,989.69 1,011.17
Total Liabilities 32,971.66 23,668.77 15,548.74 7,280.58 2,443.46
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SWOT ANALYSIS OF ADANI POWER LTD.
Strengths Strong execution track record on the back of the huge success of Mundra Port The diversified nature of the Adani Group (especially its presence in ports and coal trading) augurs well for Adani Power. Stellar operational efficiency (FY10 average PLF was 85%+ compared with Indias national average of 78%) Minimal exposure to merchant power (23% compared with JSWs 56%) Weakness All of Adanis power plants use Chinese equipment Conflict of interest given that other promoter owned companies are also in power generation Limited bargaining power vis a vis delays in coal supplies from Adani Enterprises as it is Adani Powers holding company Opportunities private sector (this is equivalent to 10x Adanis installed capacity) and Adani Power will be a relatively strong contender for these UMPPs Given groups presence in coal mining and Indias rising coal imports, domestic coal mining offers a huge opportunity for Adani Enterprises This in turn will reduce Adani Powers coal cost as currently Adani Enterprises is the biggest supplier of coal to Adani Power Threats The 5x increase in private sector generation capacity by FY13 could result in merchant power rates getting compressed. The rising Maoist insurgency (with its greatest influence in states having the largest coal resources) could result in delays and higher costs. The improving trend in T&D losses due to rising investment in T&D could result in the fading of Indias power deficit at a quicker pace than expected. STRATEGIES USED BY ADANI POWER Adani Power seeks merger of APML shareholding entity : Adani Power Ltd (APL), a power generation arm of Ahmedabad-based diversified business conglomerate Adani Group, has decided to merge shareholding entity of Adani Power Maharashtra Ltd (APML) in Adani Power. The move is aimed at making APML a 100 per cent subsidiary of APL. APL currently holds 74 per cent stake in APML, a joint venture company floated to execute 3300 Mw power project at Tiroda in Maharashtra. Adani Power did not disclose the name of its JV partner in APML, which it plans to merge with it. However, as per Adani Power's Red Herring Propspectus filed with Securities and Exchange Board of India (SEBI) Millennium Developers hold 26 per cent in APML. "In order to hold 100% of Adani Power Maharashtra 15
Limited (as against current holding of 74%), it is decided to evaluate the proposal to merge 26% shareholding entity of Adani Power Maharashtra Limited in Adani Power Limited subject to necessary permission and approvals in this regard," Adani Power said in a filing to BSE. The shareholding entity of APML will be offered shares of Adani Power post its merger with power generation arm of billionaire Gautam Adani promoted Adani Group. Adani group eyes coal assets in Mozambique for $400 mn : Adani Enterprises, the Gujarat-based Adani groups flagship firm, is in discussions with the Mozambique-based NCondezi Coal to acquire a minority stake in its coal assets. The deal with the AIM-listed NCondezi is expected to be in the range of $350-400 million (Rs 2,000-2,200 crore). Standard Chartered Bank is advising NCondezi on finding a partner. According to sources in the know, Adani Enterprises is looking to become a strategic partner of NCondezi by acquiring a part of its assets. The acquisition is for its subsidiary, Adani Power, which has targeted a 20,000-Mw expansion plan in the power sector by 2020.