Financial Analysis of Adani Power Limited And NHPC Limited

Adani Power Limited

Adani Power Limited is engaged in power generation and setting up of power projects. As of March 31, 2011, the Company together with its subsidiaries has nine power projects with a combined installed capacity of 16,500 megawatts, out of which 7260 megawatts is under implementation and 7260 megawatts is at the planning stage.

SWOT Analysis
Strengths A definite positive advantage for the company is that the company together with its subsidiaries currently has eight power projects with a combined installed capacity of 13,200 MW, out of which 660 MW has been commissioned, 9900 MW is under implementation and 2640 MW is at the planning stage.

Weakness Most important factor that company should consider at present is its high dependence on imported raw material it uses. Of the total raw material used the company currently uses 97.92% imported raw material Another weakness for the company can be that because the company has just started its operations and has many projects it may have to face a capital shortage in the near future.

Opportunities
With the increase in the per capita income levels there will be substantial increase in the per capita electricity demand. Considering the demandsupply gap, the Govt of India plan of providing Power for All by FY12, there will be number of opportunities for the private sector in the power generation.

With the increased efforts to secure the gas supply and improvements in the gas transmission and distribution infrastructure, there will be large number of opportunities to implement projects near the existing or proposed gas pipeline or gas grid. India is endowed with vast solar energy potential. With the increased focus on research and development for reducing the costs of setting up solar power projects and the tariffs being offered for solar power, the sector provides large number of opportunities.

Threats The macroeconomic factors like the growth of the Indian economy, interest rates, as well as the political and economic environment have a significant effect on the business environment and the sector as a whole . The biggest grievance of private sector has been the long process of clearances, securing fuel linkages and delays in land acquisition.

The shift from the regulated regime to a competitive scenario has made developers conscious of the costs incurred. Delays in equipment delivery schedules due to inadequate manufacturing capacity in the country.

INDUSTRY ANALYSIS

NHPC LIMITED
NHPC Limited, A Govt. of India Enterprise, was incorporated in the year 1975 with an authorized capital of Rs. 2000 million and with an objective to plan, promote and organize an integrated and efficient development of hydroelectric power in all aspects. Later on NHPC expanded its objects to include development of power in all its aspects through conventional and non-conventional sources in India and abroad. At present, NHPC is a Mini Ratna CategoryI Enterprise of the Govt. of India with an authorized share capital of Rs. 1,50,000 Million . With an investment base of over Rs. 3,87,180 Million Approx. , NHPC is among the TOP TEN companies in the country in terms of investment.

During the financial year 2010-2011 , NHPC Power Stations achieved the highest ever generation of 18604 MU.

During the period 2010-2011 , NHPC had a sales turnover of 4046.59 crore with a Net Profit of 2166.67 crore.

SWOT ANALYSIS
Strengths:
Established track record in implementing hydroelectric projects: The company has successfully
managed the development and implementation of 13 hydroelectric projects

Long-term power purchase agreements with customers: The Company derives most of its revenues from sale of energy to Power Departments and their successor entities, based on long-term power purchase agreements.

Competent and committed workforce:The skill, industry knowledge and operating experience of the Companys executives provide it with a significant competitive advantage. Thus its human resource will be one of its key strengths. Strong in-house design and engineering team The Company has an in-house team for project design and its engineering capabilities range from the concept stage to the commissioning of the projects.

Opportunities

The Government of India has laid special emphasis on accelerated hydro power development in recent years. Besides the, huge untapped hydro power potential of India, especially in North Eastern India, offers great opportunities for NHPCs capacity expansion programme in the coming years.

Threats/ Weaknesses

Environment & Forest clearances Stringent norms and cumbersome procedures for getting environment and clearances as well as the National Board for Wild Life (when applicable) lead to delay in construction of projects. This could significantly impact the Companys capacity expansion programme. Land Acquisition - The process of land acquisition, for infrastructure work as well as for project components including submergence, is quite cumbersome and time consuming, thereby affecting the timely completion of projects.

Geological Uncertainties In spite of extensive Survey and Investigation, various components of hydro projects such as construction of the Underground Power house come up against geological barriers, especially in the Himalayan regions. Inter-State and International Disputes In India, water is a State subject, and often inter-state river disputes can hamper the progress of hydro projects. In some cases, projects may get delayed or may have to be abandoned.

Natural Calamities A majority of hydro projects are located in hilly terrain. As a result, landslides, hill slope collapses, road blocks, flood etc., cause severe setbacks in construction schedules.
Unexpected complexities Often delays in clearances/execution, as well as other complications, due to reasons beyond the Companys control may lead to cost escalation or