krishanu banerjee- ntpc

7/28/2019 Krishanu Banerjee- Ntpc

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Company analysis:

NATIONAL THERMAL POWERCORPORATION OF INDIA (NTPC)

Presented by: krishanu Banerjee


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1. Preamble:........................................................................................................................................2

2. Background:....................................................................................................................................33. Product and services of NTPC........................................................................................................4

4. Business model analysis:................................................................................................................5

4.5. Revenue stream........................................................................................................................55.BUSINESS MODEL FRAMWORK:..............................................................................................7

6.0. Business analysis:........................................................................................................................8

6.1. Growth drivers:........................................................................................................................8

6.2. Value drivers:...........................................................................................................................86.4. Competition (in between top 6 power companies in Indian power industry):.........................9

6.5. Issue and challenges:..............................................................................................................10

7. Operational performance::...........................................................................................................117.1. Sales and sales growth: .........................................................................................................11

7.2 Operating profit and operating profit margin:........................................................................12

7.4. COST STRUCTURE (AS A % OF SALES):.......................................................................13

8. Operating Metrics:........................................................................................................................13Power:...........................................................................................................................................13

9.Financial performances:.................................................................................................................149.1. ROCE:....................................................................................................................................14

9.2. ROE:......................................................................................................................................14

9.3. DEBT-EQUITY RATIO:.......................................................................................................15

9.4. ROCE AND ROE:.................................................................................................................1510. Capital market performance:.......................................................................................................16

11. REACENT STRATEGY:...........................................................................................................17

11.1. GROWTH STRATEGY:.....................................................................................................1712. OUTLOOK :...............................................................................................................................18

1. Preamble:NTPC Indias largest power co. set up in 1975 has emerged as an integratedpower major with a proper presence in power generation business andpowering Indias growth with global increment . I am choosing this companybecause of outstanding market performance with net sales of Rs. 370501mnand market share as 37.63%, highest in the industry.


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TOTAL SHARE HOLDING AS A % OF TOTAL

SHARE

84%

10%2%

4%

promoter group

istitutional invester

non institutional

invester

individual

Sources: bse

2. Background:

NTPC Company generates electricity that lights homes, brightens villages, irrigates

fields, powers businesses and moves the railways. With pan-India presence andperspective, is supplying power through its large and efficient fleet of powergenerating stations with total capacity of 31074 MW. It has 22 stations, consisting of112 units of different sizes, vintage and technologies but all have one commonfeature, that of generating power at high efficiency levels. This company is located in16 States and the Union Territory of Delhi. It supplies power to 24 States and 5 Union

Territories. It will be supplying power to all the 28 States of India. This Company hasbeen described as a 'magnificent national enterprise and as a 'great success story ofour times'.It is a precious national asset and a profitable business enterprise.

Major plant for producing power: NTPC Electric Supply Ltd.

NTPC Vidyut Vyapar Nigam Ltd. NTPC Hydro Ltd.

Pipavav Power Development Co Ltd.

Klanti Bijlee Utpadan Nigam Ltd.

NTPC HEADQUATERS:

Sr. No. Headquarter City

1 NCRHQ Noida

2 ER-I, HQ Patna

3 ER-II, HQBhubaneshwar

4 NER Lucknow

5 SR HQ Hyderabad

6 WR HQ Mumbai
http://en.wikipedia.org/wiki/National_Thermal_Power_Corporationhttp://en.wikipedia.org/wiki/National_Thermal_Power_Corporationhttp://en.wikipedia.org/wiki/National_Thermal_Power_Corporation


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NTPC has been mainly in power production but now NTPC has identified JointVentures, strategic alliances as well as acquisitions and diversifications for. Businessdevelopment.

3. Product and services of NTPC.Example of the service provide by NTPC

NAME OF SERVICES DETAILSPower generating service Generate power all over the IndiaTransmission Transmit the line throw the transmission

process.

Consultancy service NTPC extends consultancy services tovarious organizations in the area of PowerPlant constructions

Power Training Institute NTPC run a power training institute the art of power management at Noida.

NETRA NTPC Energy Technologies Research Alliancewith the research and developing services.

distribution Distribution service also maintain by NTPC.Partnership excellence With an aim to increase capacity addition

and meet the objective of power


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4. Business model analysis:

4.1 .Value proposition: In case power product, the competion is not too high butalong with that NTPC has to generate the power electricity all of his customer thatcustomer satisfaction are maximize.

4.2. Target customer: The target customer of the NTPC ltd is the private sectore and the households sector.

4.3. Distribution Channel: Distribution channel is one of the important factorin all type of companies, because with out distribution we cant reach to ourcustomer. So in case of NTPC the distribution channel is Power Grid Corporation India

ltd (PGCIL) and going to every and each customer..

4.4. Promotion: The NTPC promotes the sustainable energy development & it iscommitted to develop and provide reliable power related product and service atcompetitive prices.

4.5. Revenue stream.stream Detailselectricity charges Electricity charges received as

revenue from different sector.

multipurpose energy plantation Revenue from multipurpose energyplantation.consultancy services Revenue received from deferent type

of consultancy servicespenalties Revenue from implementation of

penalties for non compliance fortimely payment bill

4.6 Core Capabilities: Core capability mean the inner power of anycompany. In case of NTPC the production is thermal power and coal

power but in recent time NTPC has moves towards the solar power.

The installed capacity in power wise of NTPC:NTPC OWNED NO. OF PLANT MWCoal 15 24885Gas 7 3955Coal and Gas for jt.venture 27 2864


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4.7. Value configuration: These power plants generate electrical energyfrom thermal energy (heat). Heat is generated by burning fossil fuels like coal,petroleum, or natural gas chemical energy of the rotating turbine into electricalenergy. The new technology was used in setting up a suitable gasified and clean upfacilities to stabilized there operation. The new technologies are

Clean Coal technology.

Super critical and ultra critical technology.

Integrated gasification combined cycle (IGCC) technology.

4.8Partner Network:NTPC main partner is PGCIL; with the help of it NTPC cantransmit the line and through the help of the state government i.e. State ElectricityBoard distributes the electricity among the customer. So these two sectors are themain partner of NTPC.


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5.BUSINESS MODEL FRAMWORK:

This model is depicting the capabilities of a particular company

An organization offers value to various customers across the globe.

Profitable & sustainable revenue streams are portrayed here.

Value is derived through a chain of process including marketing, banking,manufacturing etc.

Cost structure is also analyzed in this model.

Every business is concerned about its core capabilities & strengths. .Taking all these factors at a time into consideration the ultimate value chain

can be achieved.

Core

capabilities.1. Thermal

power

2. Coal

Partner

network.

1. PGCIL2. State

goverment

Activityconfirgatio

n

Cost

structure

1. Coal cost

2. Fuel cost

Value

propositio

n

1.Maximise

customer

satisfaction

Revenue

stream

1.

Electricity

charge

2. Penalties

3.Consultanc

y service

Customer

relationshi

p

.

Distributio

n channel1. PGCIL

Custom

segmen

1. Priva

sector

2.Househ

sector.

Infrastructure

Offer

Custom


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GENERATION GROWTH

0

50

100

150

200

250

2005-06 2006-07 2007-08 2008-09 2009-10

YE A

generation(BU)

SOURCE: ANNUAL

REAPORT

profit(Rs.in cr.)

0

1000

2000

3000

4000

5000

6000

7000

8000

9000

10000

2005-06 2006-07 2007-08 2008-09 2009-10

period

profit(Rs.in cr.)

Sources: ntpc.nic.in

6.0. Business analysis:

6.1. Growth drivers:Growth driver means the the tools which areinfluencing the growth rate of the NTPC.In

case of that the generation Growth increasedue to the increase in demand and

the provisions relating to openaccess for transmission and

distribution, opportunity to set upmerchant power capacity,

Expansion in the inter-state powertransmission capacity,

Focus on distribution reforms shall inducegrowth in this sector.

Increase in demand for electricity.

6.2. Value drivers:Value drivers means which are directlyrelated toInfluence the profitability of the company.

7Increase in growth rate in 2009-10.around at 6% which result the increase inprofit Provide the proper services which

attractthe customer related with the value

added.Increase in Plant Load Factor for last5years.Decrease in short term liability.Increase in thermal power production.Decrease in transmission and distribution cost.


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SEGMENTAL ANALYSIS Rs.(lakhs)

0%

100%

generation

other

Sources: NSEIndia

MARKET SHARE AS %

0.59

19.89

9.41

2.9

2.63

2.61

2.36

Reliance power

NTPC

BHEL

Adani pow er

Suzlon Energy

ABB Ltd.

TATA Pow er

SOURCES:MINISTRY OF

.6.3. Segmental analysis:

In case of segmental analysis of NTPCthere has been only two factorsgeneration and other sector for bothwe taking its there sales values incase of generation it is Rs.(lakh)4616867 and for other Rs.(lakh)15932.So it can be showing thatmaximum portion has been taken bygeneration, and in % term otherportion is .33% and generation portion

is 99.67%.

6.4. Competition (in betweentop 6 power companies in

Indian power industry):


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Here we only consider the six companies in power industry, butaccording to Herfinadal index of overall power industry we can say thatthe market compitoin is moderate.

6.5.Issue and challenges:

A.Issues:Issues DetailsGeneration Developing coal reaserve,high capital

investmentTransmission Rural electrification, policies of state

governmentConsumption Insufficient use of powerEnvironment Ash disposal

B. Challenges:

Challenges: DetailsSustaining present label of operationalperformance.

The company has to maintain thecapacity.

Fuel security Fuel is one of the important factor, sosources of fuel have to be checked.

Fund mobilization Utilize the fund in proper way.Technology upgradation Company has to improve their

technological processManaging environment With the help of the management remove

the difficulties.

companiesmarket sharein %

Reliance power .59

NTPC 19.89

BHEL 9.41

Adani power 2.9Suzlon Energy 2.63

ABB Ltd. 2.61

TATA Power 2.36


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SALES & ITS GROWTH

105000

110000

115000

120000

125000

130000

31-12-

08

31-3-09

30-6-09

30.9.09

31-12-

09

31-3

-10

Rsmillion

-5

0

5

10

15

20

25

30

35

(%)

net sales (Rs.mil liun) growth in%

Sources: bse

7. Operational performance::

7.1. Sales and sales growth:

Here we can see that the sales has beenincrease during the last threequarter.from112526.1mn to 127315.4mnIf we noted the growth rate it will decreaseduring the middle of the year but at lastquarter it will increase marginally. The

growth rate has decrease from 1st 32%to 2ndquarter at 24.47% after that it will increase.

Growth in sales is owing to a good demandfrom the private and household sector whichincreases the sales also.At the end of the sixth quarter sales has been increasedue to increase in the installed capacity to31074mw.


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net profit and npm

18000

19000

20000

21000

22000

23000

24000

31-12-08 31-3-09 30-6-09 30.9.09 31-12-09 31-3-10

year

Rs,m

n

0

5

10

15

20

25

%net profit net profit margin (%)

Sources: bse

OPERATING PROFIT AND OPM

5000

15000

25000

35000

45000

31-12-08 31-3-09 30-6-09 30.9.09 31-12-09 31-3-10

year

Rs.m

0

5

10

15

20

25

30

35

%

operating profit OPM

Sources: bse

7.2Operating profit and operating profit margin:

In the second quarter we can see that theoperating profit has been decrease from37946 to 29885 due to increase in theoperating expenses for that reason the OPMhas also been decrease. But in the nextquarter we can see that the operating profithas been increasei.e.37009.3 to 38907.2mn

to in the fifth quarter due to the decrease inthe cost structureand for that reason the OPM has beenincrease.now in case of last quarter thecrises among the defferent countries causedecrease in OPM.. In the last quarter saleshas been increase but OPM has been decrease becausegrowth in sales less then growth in operating expenses.

7.3 Net profit and net profitmargin:

The company for the quarter ended of march09 sales has decreased 22509.10 to 21133.5due to increase in the fuel cost, interest costand other cost. In the quarter of June theprofit has increase due to decrease in costlike material and fuel cost etc .At the end ofthe year 09-10 the profit has decrease badly

due to effectof cost structure.


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PLANT LOAD FAC TOR

0

10

20

30

40

50

60

70

80

90

100

2005-

2006

2006-

2007

2007-

2008

2008-

2009

2009-

2010

PERIOD

%

all india plf (%) ntpc plf (%)

SOURCE: NTPC.NIC.IN

7.4. COST STRUCTURE (AS A % OF SALES):

From the above cost structure we can see that the sales has been increase upto30-06-09 but after that it has been decrease due to increase in oil price but in nexttime it will increase again because of increase in demand.

Also employee cost has been increase in current time due to the market condition.

According to the fuel cost it also has been increase in 08-09 after that it willdecrease and after it will increase also.

In case of interest also we can see that it will be increase and decrease also.

Other cost is related also with the sales so it will decrease first and then it will beincrease.

8. Operating Metrics:

Power:

1. In term of operation NTPC has always

been considerably above the nationalaverage. The availability factor for coalbased power station has increased in 2009-10 at 91.76%, which Companies favorablywith international standards. The plf hasbeen increased due to this factor.

SALESSalaries andwages %

fuelcost %

othercost % interest % tax %

OND-08 118630.8 6603.2 5.566176743 70004.3 59 4077.3 3.44 5075.7 4.279 7423.8 6.25JFM-09 122144.2 6202.5 5.078014347 80158.3 65.6 5898.4 4.83 5670.7 4.643 1512.2 1.23AMJ-09 125279.7 5904.2 4.712814606 77426.6 61.8 4939.3 3.94 4446.7 3.549 7008.7 5.59JAS-09 112526.1 5040.3 4.479227486 66068.4 58.7 458109 407 5406.9 4.805 6183.4 5.49OND-09 117092 5723 4.887609743 67672.6 57.8 4789.2 4.09 3417.2 2.918 7762.6 6.62

JFM-10 127315.4 7456.1 5.856400718 83459.8 65.6 5960.3 4.68 4817.9 3.784 617.9 0.48


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ROCE IN %

2.5

3

3.5

4

4.5

5

5.5

6

31- 3-2007 31-3-2008 31-3-2009

YEARROCE IN %

SOURCES:NTPC.NIC.IN

ROE

0

0.5

1

1.5

2

2.5

3

3.5

4

4.5

5

3 1- 3- 200 7 3 1- 3- 20 08 3 1-3 -20 09

YEAR

%

ROE

SOURCES: NTPC.NIC.IN

2. Due to increased in the install capacityin last 12 years to 62.15%, generation hasbeen increased 99.84% for that reasonPlf has also increased.

9.Financial performances:

9.1. ROCE:

All of we know the meaning of ROCE i.e.return on capita employed. The % of

operating profit in terms of (capital+reaserve+long term loan) i.e. capitalemployed. The main reason for change inROCE is as follows: ROCE has been has beenincrease in the 2008 due to Increase in theoperating profit fromRs.23397mn toRs.28222mn at a growth rate of 20.62%. Thecapital employed also increase in the year of2008 I.e.Rs.485968mn to Rs.526386mn butincrease in operating profit more then that so roce beingincrease. Due to decrease in the operatingexpenses, 94216MN to Rs.92456mn

the operating profit has been increase andfor that reasons the return on capital employed also increase.

9.2. ROE:ROE means return on equity .the companiesprofit as a % against the net worth of thecompany. The Reason for change in ROE isas follows: The ROE is being in the 2008


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D/E RATIO

0.5

1

1.5

2

2.5

3

3.5

4

4.5

31-3-2007 31-3-2008 31-3-2009

YEARTURNS

D/E RATIO

SOURCES:

NTPC.NIC.IN

ROCE AND ROE

0

1

2

3

4

5

6

31-3-2007 31-3-2008 31-3-2009YE AR

%

ROCE IN % ROE

SOURCES:

NTPC.NIC.IN

mainly because of decrease in the profit at a % of 29.50 from 2007 to 2008, Due tothe increase in the net worth the ROE has decrease in the year 2008.Due to increasein profit in 2009 the ROE has been increase Due to decrease the expenses like-wages, fuel cost, interest the roe has been increase through the effect of profit.

9.3. DEBT-EQUITY RATIO:

The debt equity ratio has been increase from2.9694 to 4.1924 due to the increased41.19% in 2009, in debt amount. We can seethat in last three years the value of equitywas stable

at rs.82455 so in the opposite site the debthas been increase and the debt-equity ratiohas increase automatically.

9.4. ROCE AND ROE:Previously we can discuss about the roce andthe roe differently but in that case we willdiscus it together. In this case we can see

that the roce has been increase first then itwill decrease but in the case ROE it will firstdecrease then it will increase. Roe changemainly because of net profit and ROCEchange mainly because of the capitalemployed and operating profit.


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realetive performance

0

20406080

100120

140160180

april

may

june ju

ly

augu

st

septem

ber

octobe

r

nove

mbe

r

dece

mbe

r

janua

ry

febr

uary

month

%

industry sensex closing price

Source: BSE

10. Capital market performance:For the period of last year we can see that

the industry indices has been increase from2112.76 to 2961.56 i.e. growing by 40.17%,in the another hand we can also see that theSensex hasbeen increase 11463.25to16429.55 increasei.e.44% and increase in the share prices190.15to 203 at a growth rate of 6.75%.Sothe above are increase all over the last 12month due tothe mainly on account of crises in us marketcrises.

the companies financial performance supplement its stockPrices. So in the above conclusion we can say that themarket position and the company position wasstable.


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11. REACENT STRATEGY:

11.1. GROWTH STRATEGY:

As the installed capacity is being increase the impact of that the sales alsoincrease in the huge amount in the year of 2009-2010.

In the year 2009-2010 the company has innovated such new technology

which was very help full to increase the sales. Incentive scheme for encouraging prompt payment continues.

11.2.value strategy: In case value strategy we can say that those factorsare implement for the increase of the profit, means the factors are improving the co.profit in recent time. The factors are-

In the recent financial year the company increases in the gross realization sothe profit has been increase.

The company has introduced new thermal power technology which increasesthe profit.

Company decreases the relevant cost which tries to obstruct the growth of theprofit.

100% realization of billing for six years in succession and also for Q1/10. `


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12. OUTLOOK:

The government was planning to sell shares in 60

central PSUsthat would be shortlisted in the stock market in thenext two years, The company increases the audited net sales at

10.489%, total income increased by 8.84%. Plan to add 4150mw and total capacity under

construction is 17830mw. Approved outlay for 2010-2011 for NTPC capital

scheme is Rs.22350 cr. for NTPC group the outlay isRs.29104.06cr.

All of we know that NTPC has transmit the electricitythrough the PGCIL in the current year it has increaseits transmit line about 71050ckm.

.

. Renewable energy (RE) is being perceived as analternative source of energy for Energy Security andsubsequently Energy Independence by 2020.


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Renewable energy technologies provide not onlyelectricity but offer an environmentally clean and lownoise source of power.

At NTPC we are proud of the fact that they havesuccessfully explored more than one way to

generate power. Other than thermal power, weoperate in hydro and gass regions too.

.

krishanu banerjee- ntpc

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