Production and Operations Management Project On NTPC Simhadri2007

A PROJECT TO STUDY
PRODUCTION AND OPERATIONS OF NTPC SIMHADRI
USING PRODUCTION AND OPERATION MANAGEMENT FUNCTIONS
SUBMITTED BY
ANAND THORAT- 07
VENKAT SURESH-
40
NANDITA SADANI- 48
MITHUN KUMAR PATNAIK- 82
AMITY GLOBAL BUSINESS SCHOOL
BANJARA HILLS ROAD NO: 11
HYDERABAD
INDEX
S.NO. CONTENTS PAGE NO.

1. POWER SECTOR IN INDIA 2
2. INTRODUCTION TO NTPC 4
PRODUCTION AND OPERATIONS MANAGEMENT PROJECT ON NTPC
SIMHADRI
2.1. MAJOR ACHIEVEMENTS OF NTPC 7
2.2. HISTORY OF NTPC 6
2.3. VISION AND MISSION OF NTPC 10
2.4. NTPC: CULTURE 11
2.5. Simhadri NTPC 12
2.6. NTPC: CORE VALUES &OBJECTIVES 14
2.7. SWOT ANALYSIS 14
2.8. DIVERSIFICATION 17
2.9 SUBSIDIARIES 18
3. BUSINESS MODEL OF NTPC 20
3.1. OPERATIONS OF THE BUSINESS 21
3.2. OPERATING STRATEGIES OF NTPC 29
3.3. ORGANIZATION STRUCTURE 30
3.4. CORPORATE OBJECTIVE 34
3.5. SUPPLY CHAIN MANAGEMENT 34
4. ISSUES AND CHALLENGES 34
4.1. HUMAN RESOURCES 34
4.2. FUTURE CAPACITY ADDITIONS 38

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4.3. CHALLENGES WITH COAL RESOURCES 40

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5. ARTICLE 43
6. CASE STUDY 48
7. CONCLUSIONS/RECOMMENDATIONS 50
8. BIBLIOGRAPHY 50
IST YEAR MBA (2009-11), AGBS HYDERABAD (AMITY UNIVERSITY)

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1. POWER SECTOR IN INDIA:-
Power development in India is the key to economic development. The

power sector has been receiving adequate priority ever since the
process of planned development in 1950. Hydro power and coal based
thermal power have been the main sources of generating electricity.
Nuclear power development is at slower pace, which was introduced
in late 60’s. The concept of operating power systems on a regional
basis crossing the place, the power supply industry have been under
constant pressure to bridge the gap between supply and demand.
Since Independence in 1947, Indian Power sector progress has been

rapid. From mere 1713 MWs of Installed capacity in 1950 the capacity
at the end of March 2007 rose to 124569 excluding capacity of
renewable energy. Total generation in April 2006- March 2007 was
659419 GWs in the utility sector. The per capita consumption of
electricity increased from 15 KWHs in 1950 to 619 in 2006-07.
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Decades of economic planning in India following independence placed

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significant emphasis on the development of the power sector.

Electricity generation capacity with utilities in India had grown from
1713 MW in December 1950 to over 124,287 MW by March 2006.
However, per capita electricity consumption remains much lower than
the world average and even lower than some of the developing Asian
economies. Investment in the sector has not been able to improve

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access and keep pace with the country’s growing demand for
electricity.
India has the fifth largest generation capacity in the world with an
installed capacity of 152 GW as on 30 September 2009, which is about
4 percent of global power generation. The top four countries, viz., US,
Japan, China and Russia together consume about 49 percent of the
total power generated globally. The average per capita consumption
of electricity in India is estimated to be 704 kWh during 2008-09.
However, this is fairly low when compared to that of some of the
developed and emerging nations such US (~15,000 kWh) and China
(~1,800 kWh). The world average stands at 2,300 kWh. The Indian
government has set ambitious goals in the 11th plan for power sector
owing to which the power sector is poised for significant expansion. 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 addition plans being proposed in the sub-sectors
of Generation Transmission and Distribution.
India is world's 6th largest energy consumer, accounting for 3.4% of

global energy consumption. Due to India’s economic rise, 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 power consumption
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stood at 612 kWh. The country's annual power production increased

from about 190 billion kWh in 1986 to more than 680 billion kWh in
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2006. The Indian government has set an ambitious target to add

approximately 78,000 MW of installed generation capacity by
2012. The total demand for electricity in India is expected to cross
950,000 MW by 2030.
About 75% of the electricity consumed in India is generated

by thermal power plants, 21% by hydroelectric power plants and 4%

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by nuclear power plants. More than 50% of India's commercial energy

demand is met through the country's vast coal reserves. The country
has also invested heavily in recent years on renewable sources of
energy such as wind energy. As of 2008, India's installed wind power
generation capacity stood at 9,655 MW. Additionally, India has
committed massive amount of funds for the construction of various
nuclear reactors which would generate at least 30,000 MW. In July
2009, India unveiled a $19 billion plan to produce 20,000 MW of solar
power by 2020.
The Power sector in India is predominantly controlled by

the Government of India's public sector undertakings (PSUs). Major
PSUs involved in the generation of electricity are National Thermal
Power Corporation (NTPC), National Hydroelectric Power
Corporation (NHPC) and Nuclear Power Corporation of India (NPCI).
Besides PSUs, several state-level corporations, such as Maharashtra
State Electricity Board (MSEB), are also involved in the generation and
intra-state distribution of electricity. The Power Grid Corporation of
India is responsible for the inter-state transmission of electricity and
the development of national grid.
The Ministry of Power is the apex body responsible for the generation
and development of power in India. This ministry started functioning
independently from 2 July, 1992; earlier, it was known as the Ministry
of Energy. The Union Minister of Power at present is Sushilkumar
Shinde, who took charge of the ministry on the 28th of May, 2009.
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2. INTRODUCTION TO NTPC :-
NTPC Limited is the largest thermal power generating company of

India. A public sector company wholly owned by Government of India,
it was incorporated in the year 1975 to accelerate power development
in the country. Within a span of 30 years, NTPC has emerged as a
truly national power company, with power generating facilities in all
the major regions of the country.
Recognizing its excellent past performance and its vast potential, the
Govt. of the India has identified NTPC as one of the 'Navratnas'- a
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potential global giant and also it is going to be identified as one of the

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‘Maharatna’- giant among the 'Navratnas'. NTPC Limited is the largest

thermal power generating company of India. A public sector company,
it was incorporated in the year 1975 to accelerate power development
in the country as a wholly owned company of the Government of
India.

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At present, Government of India holds 89.5% of the total equity shares

of the company and the balance 10.5% is held by FIIs, Domestic
Banks, Public and others. Within a span of 30 years, NTPC has
emerged as a truly national power company, with power generating
facilities in all the major regions of the country.
Based on 1998 data, carried out by Data monitor UK, NTPC is the 6th
largest in terms of thermal power generation and the second most
efficient in terms of capacity utilization amongst the thermal utilities
in the world.
The Group's principal activity is to generate and sell power to state

utilities. It also provides consultancy to power utilities and maintains
power stations. The Group operates in two segments, namely, Power
Generation and Others. The Power generation segment includes
generation and sale of bulk power to SEBs/State utilities. Other
business includes providing consultancy, project management and
supervision, oil and gas exploration and coal mining.
In the Forbes list of ‘World's 2000 largest companies, 2008’, NTPC

occupies 317th place. With a current generating capacity of 30,144
MW, NTPC has embarked on plans to become a 75,000 MW company
by 2017.
Presently, Government of India holds 89.5% equity in the company

and the balance 10.5% is held by FIIs, Domestic Banks, Public and
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others.
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As on date, NTPC's total installed capacity is 27, 904 MW. NTPC's coal
based power stations are at: Singrauli (Uttar Pradesh), Korba
(Chattisgarh), Ramagundam (Andhra Pradesh), Farakka (West
Bengal), Vindhyachal (Madhya Pradesh), Rihand (Uttar Pradesh),
Kahalgaon (Bihar), NTCPP (Uttar Pradesh), Talcher (Orissa), Unchahar
(Uttar Pradesh), Simhadri (Andhra Pradesh), Tanda (Uttar Pradesh),
Badarpur (Delhi), and Sipat (Chattisgarh). NTPC's Gas/Liquid based

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power stations are located at: Anta (Rajasthan), Auraiya (Uttar

Pradesh), Kawas (Gujarat), Dadri (Uttar Pradesh), Jhanor-Gandhar
(Gujarat), Rajiv Gandhi CCPP Kayamkulam (Kerala), and Faridabad
(Haryana). NTPC's Power Plants with Joint Ventures are located at
Durgapur (West Bengal), Rourkela (Orissa), Bhilai (Chhattisgarh), and
RGPPL (Maharastra).
India’s largest power company, NTPC was set up in 1975 to accelerate

power development in India. NTPC is emerging as a diversified power
major with presence in the entire value chain of the power generation
business. Apart from power generation, which is the mainstay of the
company, NTPC has already ventured into consultancy, power trading, ash
utilisation and coal mining. NTPC ranked 317th in the ‘2009, Forbes Global
2000’ ranking of the World’s biggest companies. The total installed
capacity of the company is 31,134 MW (including JVs) with 15 coal based
and 7 gas based stations, located across the country. In addition under
JVs, 3 stations are coal based & another station uses naptha/LNG as fuel.
By 2017, the power generation portfolio is expected to have a diversified
fuel mix with 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 Renewable Energy Sources
(RES). NTPC has adopted a multi-pronged growth strategy which includes
capacity addition through green field projects, expansion of existing
stations, joint ventures, subsidiaries and takeover of stations.
NTPC has been operating its plants at high efficiency levels. Although the
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company has 18.79% of the total national capacity it contributes 28.60%

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of total power generation due to its focus on high efficiency.
In October 2004, NTPC launched its Initial Public Offering (IPO)
consisting of 5.25% as fresh issue and 5.25% as offer for sale by

Government of India. NTPC thus became a listed company in November
2004 with the government holding 89.5% of the equity share capital. The

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rest is held by Institutional Investors and the Public. The issue was a
resounding success. NTPC is among the largest five companies in India in
terms of market capitalization.
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 organizations and the best PSU for the year 2009, by the
Great Places to Work Institute, India Chapter in collaboration with The
Economic Times.
The concept of Corporate Social Responsibility is deeply ingrained in
NTPC's culture. Through its expansive CSR initiatives NTPC strives to
develop mutual trust with the communities that surround its power
stations.
Right from social to developmental work of the community and welfare

based dependence to creating greater self reliance; the constant
Endeavour is to institutionalize social responsibility on various levels.
2.1 MAJOR ACHIEVEMENTS OF NTPC
• Largest thermal power generating company of India.
• Sixth largest thermal power generator in the world.
• Second most efficient utility in terms of capacity utilization.
• One of the nine PSUs to be awarded the status of Navratna.
• Provides power at the cheapest average tariff in the country.

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2.2 HISTORY OF NTPC

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1975
 Incorporated in November
1977
 TPC acquired the first patch of land at Sanghrauli

SIMHADRI
 The first batch of executive trainees joined the company
1978
 Takeover of management of the Badarpur project.
 Construction of the first transmission network Sanghrauli- Korba-
Kanpur of 400 KV systems started.
1982
 Power Management Institute, Delhi, a centre for education was
established
1983
 In the very first year of commercial operation , NTPC earned a profit
of Rs 4.51 crore in the financial year 1982-83
1985
 This year marked the completion of decade (1975-1985) of NTPC’s
existence. NTPC achieved a generating capacity of 220 MW by
commissioning 11 units of 200 MW each at its various projects in
country.
 The government of India approved the setting of three gas based

combine cycle projects by NTPC in Kawat in gujrat, Auraiya in Uttar
Pradesh and Anta in Rajasthan. For these projects, the World Bank
agreed to provide US$ 485 million, which was the largest single loan
in the history of bank.
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1987
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 Crossed the 5000 MW capacity mark.

1989
 Consultancy division launched
1990
 Total installed capacity crossed 10000MW
1992

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 Acquisition by the company of Feroz Gandhi Unchahar Thermal

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

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 NTPC made its debut issue of euro bonds amounting to USD 200
million in international market.
2005
 The company rechristened as NTPC Limited in line with its changing

business portfolio and transforms itself from a thermal power utility
to an integrated power utility.

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2008
 National Thermal Power Corporation is the largest power generation

company in India. Forbes Global 2000 for 2008 ranked it 411th in
the world.
2.3 VISION AND MISSION OF NTPC
VISION: “To be one of the world’s largest and best power

utilities, powering India’s growth.”
To realize this vision, NTPC has drawn up a detailed Corporate Plan for the
period 1997-2012 which represents the company's collective optimism
and enthusiasm, inspired by a glorious past, a vibrant present and a
brilliant future. The Plan has been prepared in-house in consultation the
committed, competent and confident members of the NTPC family. The
road map that has been charted out was after a thorough scan of the
strengths and weaknesses within the organization as well as opportunities
and threats in the environment. Considering multidimensional
opportunities in the energy sector, NTPC will adopt a multi-pronged
growth strategy for capacity addition through Greenfield sites, expansion
of existing stations, takeovers and joint ventures. The capacity addition
plans that NTPC have drawn up for the fifteen-year period using all the
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above strategies to enable the corporation to become a 40,000 MW

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company by 2012 A.D.
MISSION: “Develop and provide reliable power, related products

and services at competitive prices, integrating multiple energy
sources with innovative and eco–friendly technologies and
contribute to society"

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➢ Make available reliable and quality power in increasingly large quantities

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

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Climate of high behavioral control

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Low employee turnover
High agreement among the employees, for what NTPC stands for.
All these point to the fact that strong cohesiveness, loyalty and
organization commitment exist in NTPC lowering he attrition Rate.

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2.5 Simhadri NTPC:
P.O. Simhadri-531 020, Dist.

Address
Vishakhapatnam, Andhra Pradesh
Telephone (STD-08924,STD-Vizag-0891) - 243001
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Fax 243092
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Email
Near Pittavanipalem Village,Dist.
Location
Vishakhapatnam, Andhra Pradesh
Govt. approved date 24.07.1997 (Zero date 8.7.1997)
Approved
Capacity/Installed 1000 MW
Capacity
Plant Configuration 2X500 MW
Land Availability 3384.24 acres (entire land)

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Coal Source Kalinga Block of Talcher Coal fields in Orrisa

Yeluru canal for sweet water, Sea water for
Water Source
CW system.
Beneficiary States Andhra Pradesh (100%).
Approved Investment Rs.3650.79 Cr. (I Qtr.97).
Associated Transmission
Implemented by APTRANSCO.
System
Unit-I Commissioning: Feb 2002
Units Commissioned
Unit-II Commissioning: Aug 2002
International Assistance JBIC
Simhadri is the ambitious project of the National Thermal Power
Corporation (NTPC) intended to provide the ever growing power needs of
the state of Andhra Pradesh. Infact, NTPC comes to the rescue of about 20
million units of power consumed every day in Andhra Pradesh. The
construction work of the project is under way. Mr. R.C. Srivatsav has been
appointed as the General Manager for the Simhadri Project Operations.
With the completion of the project, the total power generation capacity of
NTPC will reach to 3600 MW in Andhra Pradesh with NTPC Ramagundum
already generating 2100 MW a day.
The Project was developed near Parawada and 3384 acres of land was
allocated for the construction of the Thermal plant. The height of the
Chimney is 275-feet - a record in Asia for being the tallest factory
chimney. Near to this are the 165-meter two cooling towers. The Coal for
the project will be coming to the plan with a special rail line setup for this.
Coal will be drawn from the Mahanadi Coal Fields in Orissa drawing over 6
Million tones of coal every year. The Coal transport for the NTPC Simhadri
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Project is expected to begin in December 2002.

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The water intake for the project for cooling is done by sea water drawn
from 8.9 kms away from the Bay of Bengal through an intake-well sized
9100 cubic meters. This intake-well is again the biggest well constructed
in the entire India. The project also gets Sweet water from the Yeluru
canal.

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The power generated at NTPC Simhadri will be bought by AP Transco -

the power distribution arm of the Electricity Board in the state. The
approximate selling price of power is expected to be at Rs. 2.10 as against
to the price from private power generation companies which was at Rs. 3 -
4 per unit.
The 500 MW First Boilers at the NTPC Simhadri, Boiler was ignited
on November 6, 2001. This is a mile stone in the history of NTPC Simhadri.
The commencement of the 500 MW first units was expected to begin in

March 2002 while the second unit is expected to begin by December
2002.
To save the environment from pollution, NTPC Simhadri has taken

ample steps. Towards this is the project of planting trees and maintaining
greenery around the site.
2.6 NTPC: CORE VALUES &OBJECTIVES
CORE VALUES
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This corporate plan provides details of the overall agenda for NTPC. The
successful delivery of this agenda would require a committed work force
that identifies with and supports the vision. To ensure realization of this
corporate agenda, a set of core values should be central to, and govern
each activity of the organization. Known as one of the NAVRATAN‟S of the
PSU‟S NTPC has its following core values. They are known as (BCOMIT) as
follows:-

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B-Business Ethics
C-Customer Focus
O-Organizational & Professional pride
M-Mutual Respect and Trust
I- Innovation & Speed
T-Total quality for Excellence
2.7 SWOT ANALYSIS
 STRENGTHS
• Largest market share in domestic power generation and a broad
customer portfolio across the country.
• Excellent track record of performance in project implementation

and plant operation.
• Diversified thermal generation portfolio – multiple sizes and fuel

types.
• Highly skilled and experienced human resources, exposed to state-

of-the art technologies in project execution and power generation.
• Navaratna status
• High brand equity among shareholders.
• Strong balance sheet – ability to raise low cost debt.

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• Engineering skills in project configuration and package design.

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• Turnaround ability for old plants – demonstrated in the takeover

plants of Talcher, Tanda & Unchahar.
• High credit rating that is indicative of the confidence of lenders.
• In-house training facility (PMI), CENPEEP, R&D etc that assist in

development of the sector. Thrust on reducing social costs of

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capacity growth – strong execution of Resettlement and

rehabilitation plans.
 WEAKNESS
• Low risk-diversification of business portfolio consists primarily of
generation assets.
• Poor financial health of customers.
• Functional orientation hampering cross functional perspective in

decision making.
• Long and multi layered procurement process leading to long lead

times and process delay.
• Fragmented IT architecture.
• Gaps in HR systems such as performance management, rewards

and incentives and career development.
• Inadequate deployment of a strong knowledge management

system that could assist in improving efficiency and effectiveness
in all aspects of the business.
• Hierarchy for decision making that affects responsiveness.
• Role ambiguity and dilution within different lends of the
organization.
 OPPORTUNITIES
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• Expand generation capacities by putting up thermal and hydro

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capacities; maintain the position of a dominant generating utility in

the Indian Power sector.
• Broad base fuel mix by considering imported coal, gas, domestic

coal, nuclear power etc with a view to mitigate fuel risks and
maintain long run competitiveness.

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• Expand services for EPC, R&M and O&M activities in the domestic
as well as international markets.
• Backward integrate into fuel management to exercise greater

control and understanding of supply economics.
• Lead the development and commercial deployment of non-

conventional energy sources especially in the distributed
generation mode.
• Improve collections by trading, direct sale to bulk customers and

the active role in allocation in new plants.
• Execute increased number of power plants that classify for Mega

Power Projects status, thereby reducing the cost of the projects and
power and power generated.
• Forward integrate into the distribution business in India.
 THREATS
• Limited experience of operating in a truly liberalized environment
with competition.
• Limited experience of operating in an independently regulated

system.
• Redirecting power may be constrained by inter-regional

connectivity.
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• Downward regulatory and competitive pressure on tariffs.

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• Stringent norms for approval of increase in capital costs for

projects in event of time overrun.
• Stringent environmental norms in the future may add to the cost of

generation.

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• Absence of an independent regular for coal industry and the delay

in private investments lending to the risk of low availability of coal
in the future
2.7 DIVERSIFICATION
NTPC’s quest for diversification started with its foray into Hydro Power. It
has, since then, been moving towards becoming a highly diversified
company through backward, forward and lateral integration. The company
is well on its way to becoming ‘an Integrated Power Major’, having entered
Hydro Power, Coal Mining, Power Trading, Equipment Manufacturing and
Power Distribution. NTPC has made long strides in developing its Ash
Utilization business. In its pursuit of diversification, NTPC has also
developed strategic alliances and joint ventures with leading national 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 Himachal Pradesh. Two more projects have also
been taken up in Uttarakhand. A wholly owned subsidiary, NTPC
Hydro Ltd., is setting up hydro projects of capacities up to 250 MW.
 Coal Mining: In a major backward integration move to create fuel

security, NTPC has ventured into coal mining business with an aim
to meet about 20% of its coal requirement from its captive mines
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by 2017. The Government of India has so far allotted 7 coal blocks

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to NTPC, including 2 blocks to be developed through joint venture

route. Coal Production is likely to start in 2009-10.
 Power Trading: 'NTPC Vidyut Vyapar Nigam Ltd.' (NVVN), a wholly

owned subsidiary was created for trading power leading to optimal
utilization of NTPC’s assets. It is the second largest power trading
company in the country. In order to facilitate power trading in the

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country, ‘National Power Exchange Ltd.’, a JV between NTPC, NHPC,

PFC and TCS has been formed for operating a Power Exchange.
 Ash Business: NTPC has focused on the utilization of ash

generated by its power stations to convert the challenge of ash
disposal into an opportunity. Ash is being used as a raw material
input for cement companies 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
planned to set up cement grinding units in the vicinity of NTPC
stations.
 Power Distribution: ‘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 Yojana’programme for rural electrification and
also working as 'Advisor cum Consultant' for Ministry of Power for
implementation of Accelerated Power Development and Reforms
Programme (APDRP) launched by Government of India.
 Equipment Manufacturing: Enormous growth in power sector

necessitates augmentation of power equipment manufacturing
capacity. NTPC has formed JVs with BHEL and Bharat Forge Ltd. for
power plant equipment manufacturing. NTPC has also acquired
stake in Transformers and Electricals Kerela Ltd. (TELK) for
manufacturing and repair of transformers.
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2.8 SUBSIDIARIES:-
NTPC Electric Supply Company Ltd. (NESCL)
The company was formed on August 21, 2002. It is a wholly owned

subsidiary company of NTPC with the objective of making a foray into the
business of distribution and supply of electrical energy, as a sequel to
reforms initiated in the power sector.

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NTPC Vidyut Vyapar Nigam Ltd. (NVVN)
The company was formed on November 1, 2002, as a wholly owned

subsidiary company of NTPC. The company’s objective is to undertake
sale and purchase of electric power, to effectively utilize installed capacity
and thus enable reduction in the cost of power.
NTPC Hydro Ltd. (NHL)
The company was formed on December 12, 2002, as a wholly owned

subsidiary company of NTPC with an objective to develop small and
medium hydroelectric power projects of up to 250 MW.
Pipavav Power Development Co. Ltd. (PPDCL)
A memorandum of understanding was signed between NTPC, Gujarat

Power Corporation Limited (GPCL) and Gujarat Electricity Board (GEB) in
2004 for development of a 1000 MW thermal power project at Pipavav in
Gujarat by forming a new joint venture company between NTPC and GPCL
with 50:50 equity participation. Pursuant to the decision of Gujarat
Government, NTPC Ltd. has dissociated itself from this company. PPDCL is
under winding up.
Kanti Bijlee Utpadan Nigam Limited, (formerly known as Vaishali

Power Generating Company Limited)
To take over Muzaffarpur Thermal Power Station (2*110MW), a subsidiary

company named ‘Vaishali Power Generating Company Limited (VPGCL)’
was incorporated on September 6, 2006 with NTPC contributing 51% of
equity and balance equity was contributed by Bihar State Electricity
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Board. This company was formed to renovate the existing unit and run the
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plant. The second unit has been successfully re-synchronized on October

17, 2007 after 4 years of being idle. Renovation and modernization of the
first unit is under progress. The company was rechristened as ‘Kanti Bijlee
Utpadan Nigam Limited’ on April 10, 2008.
Bharatiya Rail Bijlee Company Limited (BRBCL)

SIMHADRI
A subsidiary of NTPC under the name of ‘Bharatiya Rail Bijlee Company

Limited’ was incorporated on November 22, 2007 with 74:26 equity
contribution from NTPC and Ministry of Railways, Govt. of India
respectively for setting up of four units of 250 MW each of coal based
power plant at Nabinagar, Bihar. Investment approval of the project was
accorded in January, 2008.
1. BUSINESS MODEL OF NTPC
1. Efficiency improvement includes both improvements in the

existing process and through improvement in the technology used
to increase the productivity of the company. Research &
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Development Centre is ISO 17025 accredited and provides high end

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scientific services to all the company’s stations as well as many

outside stations resulting in improving availability and reliability of
stations by providing condition assessment, failure analysis, solving
and analyzing specific problems, and helping our stations in
increasing the availability and reliability of their units.
2. Cost efficiency i.e. providing power at reasonable prices so that

they could provide power to all in need. Their ultimate aim is to

SIMHADRI
reduce the cost because without being the cost leader they can’t
dominate the market. So as a market leader they are always aiming
at reducing the cost.
3. Technology enhancement i.e. to stay in competition they have to

continuously enhance their technology. Technology enhancement is
also a part of cost efficiency. That means by applying the new
technologies the company can reduce the cost as well as improve
the efficiency.
4. Eco friendly system: Driven by its commitment for sustainable

growth of power, NTPC has evolved a well defined environment
management policy and sound environment practices for
minimizing environmental impact arising out of setting up of power
plants and preserving the natural ecology.
3.1 OPERATIONS OF THE BUSINESS

Page
24
LOCATION OF FACILITY FOR NTPC

SIMHADRI
The purpose of the location of NTPC in Visakhapatnam is to find an

optimal location which will result in the greatest advantage to the
organization.
There is minimal wastage of resources because of this location.
BHEL is the major supplier of equipment for NTPC Simhadri. It is
located at a distance of 20 Kms from the plant.
HPCL is the major supplier of FUEL. It is located at a distance of 20
Kms.
The plant is quite near to Sea ports, Railway station (to handle coal
from Australia and Talcher) and Airport.
It distributes power to Power Grid which is just 10 Km away from the
location of the plant and hence there is no wastage of power during
Page
transmission.
25
Nearest water source is Yeleru Canal.

5 Kms from Seashore as it uses sea water as coolant in cooling
towers.

SIMHADRI
PLANT LAYOUT AND MATERIAL HANDLING
NTPC SIMHADRI OVERALL LAYOUT
✔ Coal is handled and processed. It is then sent to the units 1,2,3,4.

✔ Units 1 and 2 are linked with chimney 1 which consists of 2
chimneys internally. Similarly units 3 and 4 are linked with chimney
2.
✔ Each unit is linked with cooling towers in order to cool the steam.
Sea water pump house links with cooling towers in order to supply
Page
Sea water as a coolant.

✔ DM plant links all the units in order to supply DM water.
26
✔ Yeleru Reservoir Canal is linked with DM plant to supply water.

✔ Every unit is linked with power handling and transmission station
where power is transmitted to the power grid.
✔ Also, each unit is linked with Ash pond through Ash dispenser.

SIMHADRI
GENERAL THERMAL POWER PLANT LAYOUT
Page
1. Cooling Tower 10. Steam Control Valve 19. Superheated

11. High Pressure Steam 20. Forced Draught
27
2. Cooling Water Pump

Turbine (Draft) Fan
3. Transmission Line (3-
12. Deaerator 21. Reheater
Phase)
4. Step-Up Transformer (3-
13. Feedwater Heater 22. Combustion Air Intake
Phase)
5. Electrical Generator (3-
14. Coal Conveyor 23. Economizer
Phase)
6. Low Pressure Steam
15. Coal Hopper 24. Air Preheater
Turbine

SIMHADRI
7. Condensate Pump 16. Coal Pulverizer 25. Precipitator

26. Induced Draught
8. Surface Condenser 17. Boiler Steam Drum
(Draft) Fan
9.Intermediate
18. Bottom Ash Hopper 27. Flue Gas Stack
Pressure Steam Turbine
COAL PROCESS LAYOUT
Page
28
a Coal is imported from Talcher and Australia which is transported to

the plant through rail.
a Coal wagons are handling at the Coal handling station.

SIMHADRI
a From the coal handling station, coal is either stored in Stock Yard or
directly sent to Coal Crushing mill, which crushes coal to 20mm size.
a Through Conveyor belts, coal is sent to bunkers.
a From bunkers it is sent to Coal mill where coal is milled to powdered
state.
a The powdered coal is mixed with air and sent to Coal Gun.
a From Coal Gun, it is sent to the Coal Furnace.
UNIT LAYOUT 1(IN ORDER TO KNOW THE

INTERNAL OPERATION OF COAL FURNACE)
Page
 The coal furnace is surrounded by water walls which consist of DM

29
water.
 DM water is supplied from Boiler Drum to Coal Furnace which is
more than 165 meters high from Coal Furnace.
 Coal is supplied through coal gun.
 Initially, the coal is burnt with the help of Diesel. Two kinds of Diesel
are used: HSD (High Speed Diesel) and LSD (Low Speed Diesel).

SIMHADRI
First LSD is used and then HSD is used. Later, Oil supply is stopped
and coal is left for burning.
 In order to ignite the furnace, DC supply is given by the DC
inverters.
 The heat generated by the coal furnace is more than 1200 degrees
centigrade.
 When water comes through the water walls, it gets heated upto 540
degrees and turns into steam.
 This steam flows to turbines at various pressures.
 These turbines are linked with generators which generate power
and these generators supply power to power stations from where it
is sent to power grid.
 After the Coal is burnt, it turns into Ash. Bottom Ash is collected at
Bottom Ashing and the Fly ash at the Induction Fans (IDF). Ash flows
through IDF to ESP (Electro Static Priscribrators). In this ESP, 99% of
Ash is sent to bottom Ashing. Less than 1% of the Fly ash goes
through Chimneys which is 275 meters high. So, there is very less
Air pollution.
UNIT LAYOUT 2(IN ORDER TO KNOW THE

INTERNAL OPERATION AND PROCESS OF
TURBINE) Page
30

SIMHADRI
• Steam generated in the coal furnace is supplied to the Economizer.

• From there, it is sent to the Super heater which has an elaborate
setup of tubing where the steam vapour picks up more energy from
Hot Flue gases outside the tubing and its temperature is now super
heated above the saturation temperature. The super heater steam
is then piped through the main steam lines to the walls before the
high pressure turbines. From High Pressure turbines (HP) steam is
transferred to Super Heater again and then to IP (Intermediate
Page
pressure) turbine.
31
• The turbines are connected to generators where power is generated

and sent to power grid.
• After this, the steam loses its pressure and hence is sent to low
pressure turbine (LP). Then, steam has very low pressure which
cannot be used for the turbines. Hence, it is sent to condenser
which is in Vaccum.

SIMHADRI
• The condenser is a shell and tube heat exchanger in which cooling

water is circulated through the tubes. The exhaust steam from the
LP turbines enters the shell where it is cooled and converted to
condensate (water) by falling over the tubes. Such condensers use
steam ejectors for continuous removal of air and gases from the
steam side to maintain vaccum. This condensated steam is
converted to water by the cooling towers in which coolant is sea
water.
• The water from the cooling tower is sent to hot well.
• From hot well, the water will go through condenser pumps through
low pressure temperature heater, then through High pressure
temperature heaters. This is called Re-heating or Re-cycling system
(Deaerator system) to Boiler speed pump. Each boiler speed pump
consumes 10MW in 500MW generated power.
• Deaerators to boil speed pumps and to HP heaters and to FRS (Feed
Regulating Station) to Boiler Drum.
• Hence whatever DM water was vaporized is again De-vaporized to
DM water again. This comes back to Boiler Drum again.
• In cyclic process, this water goes down from Boiler drum to Furnace.
• In between the process of vaporizing and de-vaporizing of water,
10% of water is lost. This lost water is made up by make up pumps
which are connected to the DM plant.
Page
32
DE-MINERALIZATION PLANT LAYOUT

SIMHADRI
 Water is supplied from Yeleru Canal to the reservoir. From

here, this water is pumped to DM plant.
 This water is purified with the help of Aulum and Chlorine in
the first stage. This water is called Filter water.
 Filter water is sent through gravity filters by which we get
pure drinking water.
 This pure water is sent to Cat-ion vessel and then to Cat-ion
exchanges from here to the Degasser and then to An-ion exchanger
and to mixed bed.
Page
 The water coming out of the mixer bed is 100% pure

33
Dematerialized water (DM).

 DM water is stored in DM water tank.
 The DM water tank is linked with DM water make up pump
which is again linked to boiler drum.
POWER STATION LAYOUT

SIMHADRI
➢ The power generated through the generators is 18 Kv.

➢ This 18 Kv power is stepped up by step-up generator to 400 Kv.
➢ This is done in order to avoid heavy Cabling for transmission of
power.
➢ This is sent to power grid.
➢ From Power grid, the power distributions are 400 Kv which is given
to factories. In the same way 33 Kv, 11 Kv are stepped onto 440v
and again stepped onto 230v which is used to household purpose. Page
3.2 OPERATING STRATEGIES OF NTPC

34
➢ Maintain its position as the leader:

As the largest power Generation Company in India NTPC Ltd is
looking to increase its capacity to 75000 MW by 2017.
➢ Adopt the new technology:
NTPC Ltd is also looking to utilize other sources of power
generation in the next 5 years namely Hydel power and
nuclear energy to generate electricity.

SIMHADRI
➢ Resource management :
The company will look to continue with their stringent
recruitment and retention policy which has provided it with
the best minds in the country.
➢ Environment management :
Being the leader in its trade the company will look towards
fulfilling its corporate social responsibility and contributing
towards the environment.
3.3 ORGANIZATION STRUCTURE:
Page
35
3.4 CORPORATE OBJECTIVE
 BUSINESS PORTFOLIO GROWTH

SIMHADRI
• To further consolidate NTPCS position as the leading thermal

power generation company in India and establish a presence
in hydro power segment.
• To broad base the generation mix by evaluating conventional

sources of energy to ensure long run competitiveness and
mitigate fuel-risks.
• To diversify across the power value chain in India by

considering backward and forward integration into areas such
as power trading, transmission, distribution, coal mining, coal
beneficiation, etc.
• To develop a portfolio of generation assets in international

markets.
• To establish a strong brand in the domestic & international

market.
 CUSTOMER FOCUS
• To foster a collaborative style of working with customer
growing to be a preferred brand for supply of quality
power.
• To expand the relationship with existing customers by
offering a bouquet of services in addition to supply of
power e.g. trading, energy consulting, distribution
consulting, management consulting, management
Page
practices.
36
• To expand the future customer portfolio through

profitable diversification into downstream business, inter
alia retail distribution and direct supply.
• To ensure rapid commercial decision making, using
customer specific information with adequate concern for
the interests of the customer.

SIMHADRI
 AGILE CORPORATION
• To ensure effectiveness in business decisions and
responsiveness to change in the business environment by
• Adopting a portfolio approach to new business development.
• Continuous and coordinated assessment of the business
environment to identify and respond to opportunities and
threats.
• To develop a learning organization having knowledge based
competitive edge in current and future businesses.
• To effectively leverage information technology to ensure
speedy decision making across the organization.
 PERFORMANCE LEADERSHIP
• To continuously improve on project execution time and cost in
order to sustain long run competitiveness in generation.
• To operate & maintain NTPC stations at par with the best-run
utilities in the world with respect to availability, reliability,
efficiencies.
• To aim for performance excellence in the diversification
businesses.
• To embed quality in all systems and processes.
 HUMAN RESORUCE DEVELOPMENT

• To enhance organizational performance by institutionalizing
Page
an objective and open performance management system.

37
• To align individual and organizational needs and develop

business leaders by implementing a career development
system.
• To enhance commitment of employees by recognizing and
rewarding high performance.
• To build and sustain a learning organization of competent
world-class professionals.

SIMHADRI
• To institutionalize core values and create a culture of team

building, empowerment, equity, innovation and openness
which would motivate employees and enable achievement of
strategic objectives.
 FINANCIAL SOUNDNESS
• To maintain and improve the financial soundness of NTPC by
prudent management of the financial resources.
• To continuously strive to reduce the cost of capital through
prudent management of deployed funds, leveraging
opportunities in domestic and international financial markets.
• To develop appropriate commercial policies and processes
this would ensure remunerative tariffs and minimize
receivables.
• To continuously strive for reduction in cost of power
generation by improving operating practices.
 SUSTAINABLE DEVELOPMENT
• To contribute to sustainable power development by
discharging corporate social responsibilities.
• To lead the sector in the areas of resettlement and
rehabilitation and environment protection including effective
ash-utilization, peripheral development and energy
conservation practices.
Page
• To lead developmental efforts in the Indian power sector

38
through efforts at policy advocacy, assisting customers in the

operations and management of power plants etc.
 RESEARCH and DEVELOPMENTS

• To pioneer the adoption of reliable, efficient and cost-effective
technologies by carrying out fundamental and applied
research in alternate funds and technologies.

SIMHADRI
• To carry out research and development of breakthrough

techniques in power plant construction and operation that can
lead to more efficient, reliable and environment friendly
operation of power plants in the country.
• To disseminate the technologies to other players in the sector
and in the long-run generating revenue through proprietary
technologies.
3.5SUPPLY CHAIN MANAGEMENT

➢ Coal is supplied from Talcher and Australia which is stored and
maintained very well at the Coal Stock yard.
➢ There are no retailers or distributors. Everything is taken care by the
government since it is a State-owned company.
➢ Supply of electric products are done by BHEL which is also a
government owned enterprise.
➢ Chief water source is Yeleru canal.
Page
4. ISSUES AND CHALLENGES

39
4.1 HUMAN RESOURCES

People before PLF (Plant Load Factor)' is the guiding philosophy behind
the entire gamut of HR policies at NTPC. NTPC are strongly committed to
the development and growth of all our employees as individuals and not
just as employees. NTPC currently employ approximately 24500 people at
NTPC.

SIMHADRI
Competence building, Commitment building, Culture building and Systems

building are the four building blocks on which our HR systems are based.
RECRUITMENT
NTPC believe in the philosophy of 'Grow your own timber'. Our 'Executive
Trainee' scheme was introduced in 1977 with the objective of raising a
cadre of home grown professionals. First Division Graduate Engineers/
Post graduates are hired through nation-wide open competitive
examinations and campus recruitments. Hiring is followed by 52 weeks of
fully paid induction training.
Page
40
CAREER ADVANCEMENT AND OPPORTUNITIES

NTPC have a well established talent management system in place, to
ensure that NTPC deliver on our promise of meaningful growth and
relevant challenges for our employees. Our talent management system
comprises PERFORMANCE MANAGEMENT, CAREER PATHS and LEADERSHIP

SIMHADRI
DEVELOPMENT.
REWARDS AND RECOGNITIONS

We have, from inception, created a culture of rewards and recognitions
through celebration of various achievements and events and recognizing
the contributions behind such success.
INNOVATE, CREATE, COMPETE

We have introduced numerous initiatives which seek to enhance the
creativity, innovation, functional aptitude and teamwork of our employees.
These initiatives include National Open Competition for Executive Talent
(NOCET), Professional Circles, Quality Circles, Business Minds and Medha
Pratiyogita (a quiz for our employees). A management journal called
“Horizon” is published quarterly to enable the employees to share their
ideas and experiences across the organization.
QUALITY OF WORK-LIFE
NTPC is proud of its systems for providing a good quality of work-life for its
employees. In addition to providing beautiful and safe work places, NTPC
encourages a culture of mutual respect and trust amongst peers,
superiors and subordinates.
Away from hectic city life, NTPC townships provide an environment of

serenity, natural beauty and close community living. Numerous welfare
Page
and recreation facilities including schools, hospitals and clubs are provided
41
at the townships to enhance quality of life & the well being of employees
and their families. An entire range of benefits, from child care leave to
post retirement medical benefits are extended to employees to meet any
exigency that may arise in a person's life.
KNOWLEDGE MANAGEMENT IN NTPC

To meet our ultimate objective of becoming a learning organization, an

SIMHADRI
integrated Knowledge Management System has been developed, which

facilitates tacit knowledge in the form of learning and experiences of
employees to be captured and summarized for future reference.
TRAINING AND DEVELOPMENT

NTPC subscribes to the belief that efficiency, effectiveness and success of
the organization, depends largely on the skills, abilities and commitment
of the employees who constitute the most important asset of the
organization.
Our Training Policy envisages a minimum of 7 man days of training per

employee per year. NTPC have developed our own comprehensive training
infrastructure.
EDUCATION UP-GRADATION SCHEMES

To meet the academic aspirations of employees and match them with the
needs of the organization, NTPC has tie-ups with institutes of repute like
MDI, Gurgaon; IIT Delhi; BITS Pilani, etc. NTPC sponsors fixed size batches
of employees who are inducted into these courses based on their
performance rating in the company and their performance in the entrance
exam conducted by the respective institute. Unlike other study leave and
sabbaticals, employees undergoing these courses do not forego their
salary or growth during the duration of the course.
SEEKING FEEDBACK
NTPC actively seek and encourage employee feedback to ensure that our
HR interventions and practices remain relevant and meaningful. NTPC
Page
regularly conduct Employee Satisfaction and Organizational Climate

42
Surveys.
AWARDS
NTPC derive immense satisfaction from the awards NTPC receive and the
resulting recognition they bestow. The awards are key indicators and
milestones on our HR journey, and reinforce our HR philosophy and
practices. NTPC has been awarded No.1, Best Workplace in India among

SIMHADRI
large organizations for the year 2008, by the Great Places to Work
Institute, India Chapter in collaboration with The Economic Times.
4.2 FUTURE CAPACITY ADDITIONS
NTPC has formulated a long term Corporate Plan up to 2017. In line with
the Corporate Plan, the capacity addition under implementation stage is
presented below:
PROJECT STATE MW
Page
Coal
1. NCTPP II ( 2 x 490) Uttar Pradesh 980
43
2 Korba III ( 1 x 500) Chhattisgarh 500

3 Sipat I (3 x 660) Chhattisgarh 1980
4. Farakka III ( 1 x 500) West Bengal 500
Indira Gandhi STPP- JV with IPGCL &
5. Haryana 1500
HPGCL ( 3 x 500)
Andhra
6. Simhadri II ( 2 x 500) 1000
Pradesh
7. Vallur I -JV with TNEB ( 2 x 500) Tamilnadu 1000

SIMHADRI
Vallur Stage-I Phase-II -JV with TNEB (

8. Tamilnadu 500
1 x 500)
9. Bongaigaon(3 x 250) Assam 750
10
Mauda ( 2 x 500) Maharashta 1000
.
11
Rihand III(2X500) Uttar Pradesh 1000
.
12 Madhya
Vindhyachal-IV (2X500) 1000
. Pradesh
13 Nabinagar TPP-JV with Railways (4 x
Bihar 1000
. 250)
14
Barh II (2 X 660) Bihar 1320
.
15
Barh I (3 X 660) Bihar 1980
.
Hydro
Himachal
1. Koldam HEPP ( 4 x 200) 800
Pradesh
2. Loharinag Pala HEPP ( 4x 150) Uttarakhand 600
3. Tapovan Vishnugad HEPP (4 x 130) Uttarakhand 520
179
Total
30
NTPC Limited, country’s largest power generating company having an

installed capacity of 30,144 Mw, is adding 6,500 Mw in the southern
region. Of this, 1,000 Mw is for the Simhadri Super Thermal Power Station
at Visakhapatnam, according to NTPC regional executive director (south)
Page
Ambarish N Dave.
44
Of the two 500 Mw units planned to be added at Simhadri, one unit would
be ready by November 2010 while the second would come up in the
subsequent phase. The Simhadri power plant expansion is estimated to
cost about Rs 5,130 crore.
Andhra Pradesh would get about 35 per cent power from the new capacity
addition at Simhadri. The remaining would be distributed in the southern

SIMHADRI
region according to the agreements with the respective states. The entire
power currently generated by the 1,000 Mw Simhadri plant is being used
by the state.
In Tamil Nadu, the company would add another 500 Mw once its 1,000 Mw
plant at Vallur is complete. The plant is being set up at an estimated cost
of Rs 5,123 crore in joint venture with the Tamil Nadu Electricity Board.
This apart, the company is also in the process of conducting feasibility

studies for the 4,000 Mw power plant at Kudgi in Bijapur district of
Karnataka. The project would be executed together with Power Company
of Karnataka Limited for which a memorandum of understanding was
signed in January this year. The project would have three units of 800 Mw
each in Stage I and two units of similar capacity in Stage II.
Feasibility studies for multiple locations for a 500Mw wind power project in
Karnataka too would be conducted soon.
NTPC was in talks with Gas Authority of India Limited for supply of
liquefied natural gas (LNG) to the Rajiv Gandhi Combined Cycle Power
Project at Kayamkulam in Kerala. The company would take up Stage II
expansion of the project upon availability of fuel (LNG) at a viable cost.
The proposed expansion would not require additional land.
The southern region achieved the highest-ever generation of 32,067.76

million units (mu) during the financial year 2008-09, surpassing the target
of 29,775 mu.
4.3 CHALLENGES WITH COAL RESOURCES

Page
The policy changes in coal sector provide an opportunity to NTPC to enter

45
captive coal mining business. Production is expected by 2010 in one coal

block already allotted (Pakri Barwadih in the state of Jharkhand). Five
more blocks (~40MTPA) have been allotted to NTPC, including two in JV
with CIL.

SIMHADRI
In addition to development of its own domestic coal mines NTPC is

exploring various other options including acquisition of stake in coal mines
abroad for sourcing of thermal coal for addressing fuel security concerns.
Ash Utilization is one of the key concerns at NTPC. The Ash Utilization
division, set up in 1991, strives to drive maximum usage from vast
quantities of ash produced at its coal based stations. The division
proactively formulates policies, plans and programmes for Ash Utilization.
It further monitors the progress in these areas and works at developing
new fields of Ash Utilization.
The quality ash produced conforms to the requirements of IS 3812 – 2003.

The fly ash generated at NTPC stations is ideal for use in cement,
concrete, concrete products, cellular concrete, light weight aggregates,
bricks/blocks/ tiles etc. this is attributed to very low loss on ignition value.
To facilitate availability of dry ash to end users, all the new units of NTPC
are provided with the facility of dry ash collection system. Partial dry ash
Page
collection systems have also been set up at the existing stations where
46
these facilities did not exist earlier. Augmentation of these systems to

100% capacity is in under progress.
As the emphasis on gainful utilization of ash grew, its usage over the
years also increased. From 0.3 million tons in 1991 – 1992, the level of
utilization during 2008 – 09 stood at over 24.40 million tons.

SIMHADRI
The various segments of Ash Utilization currently includes use by a

number of Cement, Asbestos – Cement products & Concrete
manufacturing industries, Land development, Road & Embankments, Ash
Dyke Raising and Building Products. Such as bricks / blocks / tiles, as a soil
amender and source of micro –nutrients in agriculture and backfilling of
mines.
AREA WISE BREAK-UP OF UTILISATION FOR THE YEAR 2008-09 IS

AS UNDER:
Quantity (in
Area of Utilization
Million Tons)
Cement
7.04
Industries
Ready Mix
0.33
Concrete
Asbestos 0.20
Clay Ash/ Fly Ash
1.64
Bricks
Land Fill 5.74
Ash Dyke Raising 6.24
Road/
1.30
Embankments
Mine Filling 1.14
Agriculture 0.002
Export 0.73
Others 0.02
Page
Total 24.40
47
MAJOR INITIATIVES TAKEN BY NTPC TOWARDS ASH UTILISATION
NTPC continually strives to evolve innovative and diverse means of Ash

Utilization to further broaden the scope. Prominent among the methods
devised so far are:
✔ Dry Flyash Extraction Systems

✔ Use in cement & concrete

SIMHADRI
✔ Use in Ash based products including setting up of

○ Ash Technology Park
○ Land Development/Wasteland Development, Roads &
Embankments, Raising Ash Dykes'
✔ Mine filling / Stowing
✔ Agriculture
Page
NTPC Ash Utilization Division has published multiple literatures on the use
48
of ash in various applications in the form of books & promotional

brochures and documentary films to create awareness among the
prospective users & entrepreneurs for use of ash. The booklets/
brochures/ films are:
BROCHURES:
a Fly Ash Bricks

SIMHADRI
a Clay Ash bricks
a Clay Ash Bricks with 60% Fly Ash
a Coal ash Environment friendly material - For fills, Embankments and

Road pavement Construction
a Fly Ash - a Resource for Cement & Concrete
a Use of Ash in agriculture (In Hindi)
FILMS:
a Clay Ash Bricks
a Fly Ash Bricks
a Use of Fly Ash in Mine Filling
a Coal Ash As Fill Material
1. ARTICLE
Assembly Lines –Past and Present Scenario wrt Effective Cost
Objective of Study: Analysis of past and present trends used in

Assembly Lines and the cost factor associated with it.
1. History
In earlier times, prototypes of assembly lines were used. In the 19th-

century meat-packing industry in Cincinnati, Ohio, and in Chicago,
overhead trolleys were employed to convey carcasses from worker to
worker. When these trolleys were connected with chains and power was
used to move the carcasses past the workers at a steady pace, they
formed a true assembly. Stationary workers concentrated on one task,
Page
the pace was dictated by the machine. Unnecessary movement was

minimized so production was done faster.
49
On similar lines, Henry Ford, the American automobile manufacturer,

designed an assembly line that began operation in 1913. The
manufacturing time for magneto flywheels was reduced from 20 minutes
to 5 minutes. After this success Ford applied the same technique to
chassis assembly. Earlier, 12 1/2 man-hours were required for each
chassis, however, Ford cut labor time to six man-hours using a rope to pull
the chassis. Later, chains were used to drive to power assembly-line
movement. So the assembly time fell to 93 man-minutes. With due credit
to Ford's efforts, a private automobile could be afforded by a common
man. The assembly line spread through a large part of U.S. industry and

SIMHADRI
even low-cost unskilled labor could be employed. Sometimes, supervisors

accelerated the pace of the machines and forced the workers to work
faster. This led to conflict between the labor and supervisor.
Furthermore, the assembly line jobs were monotonous and bored the
workers. Quality was also not emphasized.
2. Concept
In today’s world there is fierce competition and products are highly

customized. The response times have reduced. This is especially
true wrt machine tools, heavy construction equipment, heavy
manufacturing in general and computer software and hardware.
Even though the product is highly customized, yet it is required to
be delivered with very short lead times, even shorter as compared
to manufacturing lead time. So, the scheduling practice is to
release the manufacturing order before the customer order is
released and subsequently match incoming customer orders to
units in progress. This is referred to as the “build-to-forecast” (BTF)
approach. (Amitabh S. Raturia, Jack R. Mereditha, David M.
McCutcheona and Jeffrey D. Camm)
Assembly Line Balancing
Assembly lines are widely used for the mass production of consumer
goods and components in large volume production systems. Design of
these lines warrants taking into consideration not only cycle time and
precedence constraints, but also other restrictions.
Assembly Line Balancing would occur when for balance purposes

workstation size or the no. used would have to be physically modified.
Page
The assembly line balancing problem is one of assigning all tasks to a

50
series of workstations so that each workstation has no more than can be

done in the workstation cycle time and so the unassigned (idle) time
across all workstations is minimized.

SIMHADRI
Line Balancing is the process of assigning tasks to workstations in such a

way that the workstations have approximately equal time requirements
(Chase Richard B., Aquilano, Nicholas J, et al; Production & Operations
Management- Manufacturing & Services; 8th edition; Tata McGraw Hill.,

New Delhi; 1999)
Workstation Cycle Time

Time between successive units coming off at the end of the line
C = Production Time/ day
Required output/ day (units)
Precedence Relationship
It specifies the order in which tasks must be performed in the assembly
process.
Page
Evaluate the efficiency of the balance

51
Efficiency = Sum of task times (T)
Actual No. of WS (Na)* WS Cycle Time (C)
When Task Times are longer than workstation Cycle Times, the Solution is
to -

SIMHADRI
1. Split the task
2. Share the task
3. Use parallel workstations
4. Use a more skilled worker
5. Work overtime
6. Redesign
Traditional and Dynamic Line Balancing

The layout of production facilities also determines productivity
potential of a manufacturing enterprise. It is particularly important
in the design of assembly lines where the objective is to assign
tasks to work stations in such a way as to minimize total variable
production costs. A Balanced Layout would produce the desired
output with the fewest number of work stations, minimizing idle
time. Studies have shown that task times are random variables;
therefore the cost of task incompletion must be considered a part
of total production cost. Incompletion cost will be the cost of
repairing or completing tasks which cannot be completed within
the cycle time after the item has reached the end of the assembly
line. (John C. Carter* and Fred N. Silverman*)
Dynamic line balancing, assigns operators to one or more
operations, where each operation has a predetermined processing
time. It is like a group of identical parallel stations. Operator costs
and inventory costs are stochastic because they are functions of
the assignment process employed in balancing the line, which may
vary throughout the balancing period, and the required flow rate.
Earlier studies focused on the calculation of the required number of
Page
stations and demonstrated why the initial and final inventories at

the different operations are balanced. (K. Roscoe Davis* and
52
Deena D. Kushner)
Operator costs and inventory costs are the components of the cost
function. The operator costs are based on the operations to which
operators are assigned and are calculated for the entire work week
regardless of whether an operator is given only a partial
assignment which results in idle time. It is assumed that there is no
variation in station speeds, no learning curve effect for operators'
performance times, and no limit on the number of operators
available for assignment. The costs associated with work-in-process

SIMHADRI
inventories are computed on a “value added” basis. There is no

charge for finished goods inventory after the last operation or raw
material before the first operation.
The conditions, which must be examined before using the cost
evaluation method, are yield, input requirements, operator
requirements, scheduling requirements and output requirements.
Yield reflects the output of good units at any operation. The input
requirement accounts for units discarded or in need of reworking.
The operator requirements define the calculation of operator-hours
per hour, set the minimum number of operators at an operation,
and require that the work is completed. The scheduling
requirements ensure that operators are either working or idle at all
times, and that no operator is assigned to more than one operation
at any time. The calculation of the output reflects the yield, station
speed, and work assignments at the last operation on the line.
3. Challenges
An important obstacle is that some pairs of tasks cannot be
assigned to the same station due to factors such as safety, physical
demands placed on workers, quality, and technological
considerations.
4. Analysis
One study shows that while most simple assembly line balancing
problems can be solved optimally, presence of additional
restrictions such as task assignments makes them inherently more
difficult. Insights into this aspect. (Ram Rachamadugu)
The cost evaluation method for dynamic balancing enables a
manager to compare the costs of assigning operators to work
stations. Using this method to calculate the operator and inventory
costs, a number of different heuristics for assigning operators in
dynamic balancing can be evaluated and compared for various
configurations of the production line. The least cost solution
Page
procedure then can be applied to a real manufacturing situation

with similar characteristics. (K. Roscoe Davis* and Deena D.
53
Kushner)
In order to evaluate candidate line layouts, a total cost model is
developed. Total cost is the sum of normal operating cost—which is
simply a function of the number of work stations—and the cost of
repairing products containing incomplete tasks. Because this latter
cost is a random variable for a given balance, the expected value is
used to evaluate a candidate layout. The cost associated with one
or more workers exceeding the cycle time is the product of the
probability of this happening and the expected cost of off-line

SIMHADRI
repair.
The heuristic method for generating feasible balances builds
workstations from continually updated lists of precedence
satisfying tasks. Qualifying tasks are added to the station as long
as the probability of the station exceeding the cycle time remains
below a pre-specified threshold. The methodology requires
systematically varying this threshold to permit a lowest total cost
solution to emerge. The process of generating a large number of
balances for a particular threshold is efficient. Evaluating the total
costs of the resulting balances takes the majority of the
computational time.
Even for large-scale problems, the computational cost is
infinitesimal in the context of assembly line balancing, where very
small improvements in productivity can mean substantial
increments to profitability. (John C. Carter* and Fred N.
Silverman*)
5. Conclusion
With high levels of customization and shorter Lead Times, flexibility

in manufacturing, Modular BOM, subcontracting and expediting are
used.
In the age of Product Innovation, new technologies, the manufacturing
system has to be flexible. So, several hybrid layouts have emerged. Set
up times have reduced, so mixed model assembly lines are used. The
newest manufacturing system (FMS) has worked wonders and can process
any item. Manufacturing cells that resemble small assembly lines are
designed to process families of items. Some companies are placing wheels
on their machines for adjustment. Others are experimenting with modular
conveyor system that allows assembly lines to be rearranged while
workers are away.
Page
54
Cost is an important element in layout design. Inventory levels have

reduced. Instead of minimizing material flow, the number of loads has
been minimized and also the distance they are moved. Machines are
located closer together to allow the frequent movement of smaller loads.
Planners are now concerned with the rapid movement of material to and
from the facility itself.
Preeti Nigam

SIMHADRI
Sr. Lecturer, Production and Operations Management
RBS Meadow
6.CASE STUDY
AT&T BUYS A PRINTER
AT&T decided in 1991 to replace with state-of-the art technology the Troy
brand of check printers that were being used in two of its operations sites.
These sites printed checks for Payroll, Accounts Payable, Employee
Reimbursements, and Billing Customer Refunds. Total annual print volume
was estimated to be 13 million checks for 1992 and growing.
Treasury Operation's management thought that serving AT&T check

printing needs in the future would require a major re-engineering of the
check issuance process and that replacement of the printers was a first
step. The current systems and equipment, for example, could not meet
requirements for printing checks as part of AT&T marketing promotions.
The marketing team, therefore, was forced to use outside services to print
these checks. While the outside services met most of the requirements,
the accounting transactions that were associated with these checks were
often incorrect, and check reconciliation for these checks was almost
impossible. Treasury Operations believed that they could eliminate the
use of outside services and improve the duality and costs of their current
service if they purchased print equipment that was computer controlled.
In addition, it was important that the magnetic ink character recognition
(MICR) line that was printed at the bottom of the check be of high quality,
because banks charge extra for processing checks with unreadable MICR
lines.
The team looking into new printers had identified Siemens, Delphax,
Xerox, IBM, and NCR as the vendors that had printers that should be
considered. Team members then decided on the following six criteria:
Page
1. Features: Documented the technical features of each printer,

maintenance availability, and requirements.
55
2. User rating: Documented results of a survey of users of each of the

printers.
3. Pros/cons: Documented overall team observations.
4. Cost: Cost analysis included purchase of printers, maintenance,
supplies, and software.
5. MICR quality: Conformance to MICR standards.
6. Print quality: Conformance to print quality standards.

SIMHADRI
The team then assigned a point value (10 being the highest score), for
each printer for each situation. Their final tabulation is shown on the next
page.
Criteria Siemens Delphax Xerox IBM NCR
Features 9.9 6.6 5.2 7.7 8.2
User Ratings 8.0 8.3 6.7 8.6 8.6
Pros/Cons 10.0 1.0 5.0 8.0 8.0
Cost 10.0 6.0 4.0 2.0 8.0
MICR Quality 9.7 5.4 6.0 9.4 9.4
Print Quality 9.7 5.7 8.0 8.4 8.6
TOTAL 57.3 33.0 34.9 44.1 50.8
RANKING 1 5 4 3 2
DISCUSSION QUESTIONS
1. Is it appropriate taht in the final analysis MICR Quality was given the
same weight as Cost?
2. Recompute the comparisons, using the following weight factors:
Features 15%, User Ratings 15%, Pros/Cons 15%, Cost 30%, MICR Quality
12.5%, Print Quality 12.5%. Does this change the end result?
7. CONCLUSIONS/RECOMMENDATIONS
a NTPC Simhadri plant has created a benchmark in technology
utilization, efficiency and effective utilization of resources.
a It has been achieving records right from its synchronization.
a It is the only Power plant in India where maximum Automation is
done in its operations.
a It is the first power plant which uses sea water as a coolant.
a It has also achieved great environment standards through its
infrastructure facilities like Tallest Chimneys in Asia (275m), Tallest
Page
cooling towers in Asia and maintaining an Ash pond which is eco-

56
friendly.
a It been maintaining excellent CSR(Corporate Social Responsibility)
by providing jobs to the land losers along with good compensation,
providing employment for the locals on a contract basis,
construction of roads, drainage systems, drinking water supply,
hygienic conditions, hospitals, schools, etc all within 8 Kms of the
NTPC plant.

SIMHADRI
a NTPC Simhadri has followed the principles of production and

operation management quite well and also maintained good
relationship within its Micro as well as Macro environments.
a There should be more Involvement of management at all levels with
effective creation of policies, vision, Mission, values, goals and
support, communicated and implemented throughout the
Organization.
a There should be training of senior executives in managing for
quality.
a It should evaluate plans for expansion in order to meet the Power
needs of India as well as to create more employment.
8. BIBLIOGRAPHY
Production and Operations Management, Chary

www.ntpc.in
www.google.com
Wikipedia
Forbes India
Business World
Page
57

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A PROJECT TO STUDY

PRODUCTION AND OPERATIONS OF NTPC SIMHADRI

USING PRODUCTION AND OPERATION MANAGEMENT FUNCTIONS

MITHUN KUMAR PATNAIK- 82

AMITY GLOBAL BUSINESS SCHOOL

BANJARA HILLS ROAD NO: 11

S.NO. CONTENTS PAGE NO.

2.1. MAJOR ACHIEVEMENTS OF NTPC 7

2.2. HISTORY OF NTPC 6

2.3. VISION AND MISSION OF NTPC 10

2.4. NTPC: CULTURE 11

2.5. Simhadri NTPC 12

2.6. NTPC: CORE VALUES &OBJECTIVES 14

2.7. SWOT ANALYSIS 14

3. BUSINESS MODEL OF NTPC 20

3.1. OPERATIONS OF THE BUSINESS 21

3.2. OPERATING STRATEGIES OF NTPC 29

3.3. ORGANIZATION STRUCTURE 30

3.4. CORPORATE OBJECTIVE 34

3.5. SUPPLY CHAIN MANAGEMENT 34

4. ISSUES AND CHALLENGES 34

4.1. HUMAN RESOURCES 34

4.2. FUTURE CAPACITY ADDITIONS 38

4.3. CHALLENGES WITH COAL RESOURCES 40

IST YEAR MBA (2009-11), AGBS HYDERABAD (AMITY UNIVERSITY)

1. POWER SECTOR IN INDIA:-

Power development in India is the key to economic development. The

Since Independence in 1947, Indian Power sector progress has been

Decades of economic planning in India following independence placed

significant emphasis on the development of the power sector.

IST YEAR MBA (2009-11), AGBS HYDERABAD (AMITY UNIVERSITY)

India is world's 6th largest energy consumer, accounting for 3.4% of

stood at 612 kWh. The country's annual power production increased

2006. The Indian government has set an ambitious target to add

About 75% of the electricity consumed in India is generated

IST YEAR MBA (2009-11), AGBS HYDERABAD (AMITY UNIVERSITY)

by nuclear power plants. More than 50% of India's commercial energy

The Power sector in India is predominantly controlled by

IST YEAR MBA (2009-11), AGBS HYDERABAD (AMITY UNIVERSITY)

NTPC Limited is the largest thermal power generating company of

potential global giant and also it is going to be identified as one of the

‘Maharatna’- giant among the 'Navratnas'. NTPC Limited is the largest

IST YEAR MBA (2009-11), AGBS HYDERABAD (AMITY UNIVERSITY)

At present, Government of India holds 89.5% of the total equity shares

The Group's principal activity is to generate and sell power to state

In the Forbes list of ‘World's 2000 largest companies, 2008’, NTPC

Presently, Government of India holds 89.5% equity in the company

IST YEAR MBA (2009-11), AGBS HYDERABAD (AMITY UNIVERSITY)

power stations are located at: Anta (Rajasthan), Auraiya (Uttar

India’s largest power company, NTPC was set up in 1975 to accelerate

company has 18.79% of the total national capacity it contributes 28.60%

of total power generation due to its focus on high efficiency.

In October 2004, NTPC launched its Initial Public Offering (IPO)

consisting of 5.25% as fresh issue and 5.25% as offer for sale by

IST YEAR MBA (2009-11), AGBS HYDERABAD (AMITY UNIVERSITY)

Right from social to developmental work of the community and welfare

2.1 MAJOR ACHIEVEMENTS OF NTPC

• Largest thermal power generating company of India.

• Sixth largest thermal power generator in the world.

• Second most efficient utility in terms of capacity utilization.

• One of the nine PSUs to be awarded the status of Navratna.

• Provides power at the cheapest average tariff in the country.

2.2 HISTORY OF NTPC