Thermal Power in Sweden, Market Outlook to 2020, 2011 Update

Thermal Power in India, Market Outlook to 2020, 2012 Update - Capacity, Generation, Regulations, Power Plants, Companies

Reference Code – GDPE5096IDB Publication Date – SEPTEMBER 2012

Thermal Power in India, Market Outlook to 2020, 2012 GDPE5096IDB \ Published SEP 2012 Update – Capacity, Generation, Regulations, Power Plants, Companies

Table of Contents

1 Table of Contents

1 Table of Contents 2

1.1 List of Tables 7

1.2 List of Figures 9

2 Executive Summary 10

2.1 India Thermal Power Installed Capacity Expected to Grow in Future 10

2.2 Thermal Power Generation Expected to Grow in Future 11

2.3 The Global Thermal Power Market Scenario - Robust Growth to Continue 12

3 Introduction 13

3.1 Thermal Power Markets: Technology Types 13 3.1.1 Coal Fired Power Plants 14 3.1.2 Gas Fired Power Plants 14 3.1.3 Oil Fired Power Plants 14 3.1.4 Co-Firing Power Plant 14 3.1.5 Supercritical and Ultra-supercritical Generation 15

4 Global Thermal Power Market Scenario: 2000-2020 16

4.1 Global Thermal Power Market, Installed Capacity and Generation, 2000-2020 16

5 India Power Market Scenario 18

5.1 Overview 18

5.2 India Power Market, Cumulative Installed Capacity and Generation by Fuel Type, MW, 2000- 2020 18

6 India Thermal Power Market, 2000-2020 23

6.1 India Thermal Power Market, Historical and Forecast Installed Capacity and Power Generation, 2000-2020 23

7 India Thermal Power Market, Market Share of Top Power Equipment Manufacturing Companies, 2009 27

Thermal Power in India, Market Outlook to 2020, 2012 GDPE5096IDB \ Published SEP 2012 Update – Capacity, Generation, Regulations, Power Plants, Companies

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7.1 India Thermal Power Market, Market Share of Steam Turbine Manufacturing Companies, 2011 27

7.2 India Thermal Power Market, Market Share of Gas Turbine Manufacturing Companies, 2011 28

7.3 India Thermal Power Market, Market Share of Heat Recovery Steam Generator (HRSG) Manufacturing Companies, 2011 29

7.4 India Thermal Power Market, Market Share of Steam Turbine Manufacturing Companies, 2011 31

8 India Thermal Power Plants 33

8.1 India Thermal Power Market, Top Thermal Power Plants (Active), 2011 33

8.2 India Thermal Power Market, Top Thermal Power Plants (Upcoming), 2011 34

9 India Thermal Power Market, Regulatory Scenario, Major Policies 35

9.1 India Thermal Power Market, Regulatory Scenario, Overview 35

9.2 India Thermal Power Market, Regulatory Scenario, Regulatory Framework 35

9.3 India Thermal Power Market, Regulatory Scenario, Major Policies 35 9.3.1 Electricity Sector Reforms and Electricity Act of 2003 35 9.3.2 The National Electricity Plan 36

9.4 India Thermal Power Market, Regulatory Scenario, Major Initiatives 37 9.4.1 Restructured Accelerated Power Development and Reforms Program (R-APDRP) 37 9.4.2 Twelfth Five year plan Targets 37

10 India Thermal Power Market – Deals Scenario 38

10.1 India Thermal Power Market Deals Volume versus Value Analysis, 2004-2012 38

10.2 India Thermal Power Market, Deals by Type, 2011-2012 40

10.3 Power Market, India, Major Deals, 2009-2012 41 10.3.1 Asset Finance 41

11 NTPC Limited – Company Snapshot 57

11.1 Key Information 57

11.2 Company Overview 57

11.3 NTPC Limited – Business Description 57

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11.3.1 Business Overview 57

11.4 NTPC Limited – Major Products and Services 59

11.5 SWOT Analysis 59 11.5.1 Overview 59 11.5.2 NTPC Limited Strengths 60 11.5.3 NTPC Limited Weaknesses 62 11.5.4 NTPC Limited Opportunities 62 11.5.5 NTPC Limited Threats 64

11.6 NTPC Limited – Locations and Subsidiaries 65 11.6.1 Head Office 65 11.6.2 Other Locations & Subsidiaries 66

12 Maharashtra State Power Generation Co., Ltd – Company Snapshot 67

12.1 Key Information 67

12.2 Company Overview 67

12.3 Maharashtra State Power Generation Co., Ltd – Business Description 67 12.3.1 Business Overview 67

12.4 Maharashtra State Power Generation Co., Ltd – Major Products and Services 69

12.5 SWOT Analysis 69 12.5.1 Overview 69 12.5.2 Maharashtra State Power Generation Co., Ltd Strengths 70 12.5.3 Maharashtra State Power Generation Co., Ltd Weaknesses 70 12.5.4 Maharashtra State Power Generation Co., Ltd Opportunities 71 12.5.5 Maharashtra State Power Generation Co., Ltd Threats 72

12.6 Maharashtra State Power Generation Co., Ltd – Locations and Subsidiaries 73 12.6.1 Head Office 73 12.6.2 Other Locations & Subsidiaries 74

13 Damodar Valley Corporation – Company Snapshot 75

13.1 Key Information 75

13.2 Company Overview 75

13.3 Damodar Valley Corporation – Business Description 75 13.3.1 Business Overview 75

13.4 Damodar Valley Corporation – Major Products and Services 77

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13.5 SWOT Analysis 77 13.5.1 Overview 77 13.5.2 Damodar Valley Corporation Strengths 78 13.5.3 Damodar Valley Corporation Weaknesses 79 13.5.4 Damodar Valley Corporation Opportunities 80 13.5.5 Damodar Valley Corporation Threats 81

13.6 Damodar Valley Corporation – Locations and Subsidiaries 82 13.6.1 Head Office 82

14 Gujarat State Electricity Corporation Limited – Company Snapshot 83

14.1 Key Information 83

14.2 Company Overview 83

14.3 Gujarat State Electricity Corporation Limited – Business Description 83 14.3.1 Business Overview 83

14.4 Gujarat State Electricity Corporation Limited – Major Products and Services 85

14.5 SWOT Analysis 85 14.5.1 Overview 85 14.5.2 Gujarat State Electricity Corporation Limited Strengths 86 14.5.3 Gujarat State Electricity Corporation Limited Weaknesses 87 14.5.4 Gujarat State Electricity Corporation Limited Opportunities 88 14.5.5 Gujarat State Electricity Corporation Limited Threats 89

14.6 Gujarat State Electricity Corporation Limited – Locations and Subsidiaries 89 14.6.1 Head Office 89

15 Torrent Power Limited – Company Snapshot 90

15.1 Key Information 90

15.2 Company Overview 90

15.3 SWOT Snapshot 90

15.4 Torrent Power Limited – Business Description 91 15.4.1 Business Overview 91

15.5 Torrent Power Limited – Major Products and Services 92

15.6 SWOT Analysis 92 15.6.1 Overview 92 15.6.2 Torrent Power Limited Strengths 93

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15.6.3 Torrent Power Limited Weaknesses 94 15.6.4 Torrent Power Limited Opportunities 94 15.6.5 Torrent Power Limited Threats 95

15.7 Torrent Power Limited – Locations and Subsidiaries 96 15.7.1 Head Office 96 15.7.2 Other Locations & Subsidiaries 97

16 CESC Limited – Company Snapshot 99

16.1 Key Information 99

16.2 Company Overview 99

16.3 SWOT Snapshot 99

16.4 CESC Limited – Business Description 100 16.4.1 Business Overview 100

16.5 CESC Limited – Major Products and Services 101

16.6 SWOT Analysis 101 16.6.1 Overview 101 16.6.2 CESC Limited Strengths 102 16.6.3 CESC Limited Weaknesses 103 16.6.4 CESC Limited Opportunities 104 16.6.5 CESC Limited Threats 105

16.7 CESC Limited – Locations and Subsidiaries 105 16.7.1 Head Office 105 16.7.2 Other Locations & Subsidiaries 106

17 Appendix 108

17.1 Abbreviations 108

17.2 Market Definitions 110 17.2.1 Power 110 17.2.2 Installed Capacity 110 17.2.3 Electricity Generation 110 17.2.4 Electricity Consumption 110 17.2.5 Thermal Power Plant 110 17.2.6 Hydropower Plant 110 17.2.7 Nuclear Power 110 17.2.8 Renewable Energy Resources 110

17.3 Coverage 111 Thermal Power in India, Market Outlook to 2020, 2012 GDPE5096IDB \ Published SEP 2012 Update – Capacity, Generation, Regulations, Power Plants, Companies

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17.4 GlobalData’s Methodology 111 17.4.1 Secondary research and analysis 111 17.4.2 Primary Research and Analysis 112

17.5 Disclaimer 112

1.1 List of Tables Table 1: Thermal Power Market, Global, Thermal Installed Capacity (MW) and Thermal Power Generation (GWh), 2000-2020 17 Table 2: Power Market, India, Cumulative Installed Capacity by Fuel Type, MW, 2000-2020 20 Table 3: Power Market, India, Annual Power Generation by Fuel Type, GWh, 2000-2020 22 Table 4: Thermal Power Market, India, Cumulative Installed Capacity, MW, 2000-2020 24 Table 5: Thermal Power Market, India, Power Generation, GWh, 2000-2020 26 Table 6: Thermal Power Market, India, Market Share of Top Power Boiler Manufacturing Companies, 2011 28 Table 7: Thermal Power Market, India, Market Share of Top Gas Turbine Manufacturing Companies, 2011 29 Table 8: Thermal Power Market, India, Market Share of Top Heat Recovery Steam Generator (HRSG) Manufacturing Companies, 2011 30 Table 9: Thermal Power Market, India, Market Share of Top Steam turbine Manufacturing Companies, 2011 32 Table 10: Thermal Power Market, India, Leading Active Thermal Power Projects, 2011 33 Table 11: Thermal Power Market, India, Leading Upcoming Thermal Power Projects, 2011 34 Table 12: Thermal Power Market, India, Financing Trends, Deal Value ($m) and Volume (Number), 2004-2012 39 Table 13: Thermal Power Market, India, Deals by Type (%), 2011-2012 40 Table 14: NLC To Invest $1.9 Billion In Coal Fired Power Plant In Uttar Pradesh, India 41 Table 15: TNEB To Invest $1.6 Billion In Tuticorin Super Critical Power Project In Tuticorin District, Tamil Nadu 42 Table 16: Ascol To Acquire 74% Stake In IL&FS Tamil Nadu Power For $774 Million 43 Table 17: Government Of Tamil Nadu To Invest $657 Million In The Reconstruction Of Ennore Thermal Power Project In Tamil Nadu, India 44 Table 18: Petronet LNG To Invest $606.7 Million In Kochi Gas Based Power Project In Kerala, India 45 Table 19: OPG Power To Invest $529.5 Million In Thermal Power Plants In India 46 Table 20: Neyveli Lignite Announces Project Financing Of $479 Million For Neyveli Lignite Thermal Power Station III In India 47 Table 21: Neyveli Lignite To Invest $458.6 Million For Expansion Of Thermal Power Station-II In Tamil Nadu, India 49 Table 22: Essar Steel Holdings To Sell Minority Interest In Essar Power For $94 Million 50 Table 23: CEA To Invest $5,402 Million In Junagadh Coal Power Project In Gujarat, India 51 Table 24: NTPC To Invest $5,032 Million For Power Project In Andhra Pradesh, India 52 Table 25: BSEB To Invest $3,293 Million For Rajauli Thermal Power Plant In Bihar, India 53 Table 26: BSEB To Invest $3,293 Million For Rajauli Thermal Power Plant In Bihar, India 54 Table 27: Adani Power Announces Project Financing Of $2,719 Million For Bhadreshwar Coal Fired Power Plant In Gujarat, India 55 Table 28: Lanco Infratech To Invest $2,562 Million In Raigarh Coal Power Project In Chattisgarh, India 56 Table 29: NTPC Limited, Key Facts 57 Table 30: Major Products and Services 59 Table 31: NTPC Limited, SWOT Analysis 60 Thermal Power in India, Market Outlook to 2020, 2012 GDPE5096IDB \ Published SEP 2012 Update – Capacity, Generation, Regulations, Power Plants, Companies

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Table 32: NTPC Limited, Subsidiaries 66 Table 33: Maharashtra State Power Generation Co. Ltd., Key Facts 67 Table 34: Major Products and Services 69 Table 35: Maharashtra State Power Generation Co. Ltd., SWOT Analysis 69 Table 36: Maharashtra State Power Generation Co. Ltd., Subsidiaries 74 Table 37: Damodar Valley Corporation, Key Facts 75 Table 38: Major Products and Services 77 Table 39: Damodar Valley Corporation, SWOT Analysis 78 Table 40: Gujarat State Electricity Corporation Limited, Key Facts 83 Table 41: Major Products and Services 85 Table 42: Gujarat State Electricity Corporation Limited, SWOT Analysis 85 Table 43: Torrent Power Limited, Key Facts 90 Table 44: Major Products and Services 92 Table 45: Torrent Power Limited, SWOT Analysis 92 Table 46: Torrent Power Limited, Other Locations 97 Table 47: Torrent Power Limited, Subsidiaries 98 Table 48: CESC Limited, Key Facts 99 Table 49: Major Products and Services 101 Table 50: CESC Limited, SWOT Analysis 102 Table 51: CESC Limited, Other Locations 106 Table 52: CESC Limited, Subsidiaries 107 Table 53: Abbreviations 108

Thermal Power in India, Market Outlook to 2020, 2012 GDPE5096IDB \ Published SEP 2012 Update – Capacity, Generation, Regulations, Power Plants, Companies

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1.2 List of Figures Figure 1: Thermal Power Market, India, Cumulative Thermal Installed Capacity, MW, 2000, 2011, 2020 10 Figure 2: Thermal Power Market, India, Power Generation, GWh, 2000, 2011, 2020 11 Figure 3: Thermal Power Market, Global, Thermal Power Generation, GWh, 2000, 2011, 2020 12 Figure 4: How a Thermal Power Plant Works 13 Figure 5: Thermal Power Market, Global, Thermal Installed Capacity (MW) and Thermal Power Generation (GWh), 2000-2020 16 Figure 6: Power Market, India, Cumulative Installed Capacity by Fuel Type, MW, 2000-2020 19 Figure 7: Power Market, India, Annual Power Generation by Fuel Type, GWh, 2000-2020 21 Figure 8: Thermal Power Market, India, Cumulative Installed Capacity, MW, 2000-2020 23 Figure 9: Thermal Power Market, India, Power Generation, GWh, 2000-2020 25 Figure 10: Thermal Power Market, India, Market Share of Top Power Boiler Manufacturing Companies, 2011 27 Figure 11: Thermal Power Market, India, Market Share of Top Gas Turbine Manufacturing Companies, 2011 28 Figure 12: Thermal Power Market, India, Market Share of Top Heat Recovery Steam Generator (HRSG) Manufacturing Companies, 2011 29 Figure 13: Thermal Power Market, India, Market Share of Top Steam turbine Manufacturing Companies, 2011 31 Figure 14: Thermal Power Market, India, Financing Trends, Deal Value ($m) and Volume (Number), 2004-2012 38 Figure 15: Thermal Power Market, India, Deals by Type (%), 2011-2012 40

Thermal Power in India, Market Outlook to 2020, 2012 GDPE5096IDB \ Published SEP 2012 Update – Capacity, Generation, Regulations, Power Plants, Companies

Thermal Power in India, Market Outlook to

2020, 2012 Update

2 Executive Summary

2.1 India Thermal Power Installed Capacity Expected to Grow in Future

Thermal power in India has been an important source of power generation accounting for 77.8% of the power generated in 2011. From 2000 to 2011, thermal installed capacity increased from 81,730 MW in 2000 to 141,697 MW in 2011 and is expected to increase to 221,382 MW by 2020. Thermal installed capacity of India increased at a CAGR of 5.1% during the period 2000-2011, and is expected to increase at a CAGR of 4.5% during the period 2012-2020.

Figure 1: Thermal Power Market, India, Cumulative Thermal Installed Capacity, MW, 2000, 2011, 2020

250,000

200,000

150,000

100,000 Thermal Installed Capacity (MW) Capacity Installed Thermal

50,000

2000 2011 2020

Source: GlobalData, Capacity and Generation Database (July 10, 2012)

Note: Figures from 2011 onwards are estimates

Thermal Power in India, Market Outlook to 2020, 2012 GDPE5096IDB \ Published SEP 2012 Update – Capacity, Generation, Regulations, Power Plants, Companies

Thermal Power in India, Market Outlook to

2020, 2012 Update

2.2 Thermal Power Generation Expected to Grow in Future

The share of thermal power generation in the total energy mix is expected to decline from 80% to 71% over the forecast period 2012-2020. However India power market will continue to be dominated by thermal power accounting for majority of power generation. Over the period 2012- 2020, thermal power generation is expected to grow at a CAGR of 4.7% to reach 1,268,707 GWh.

Driven by increasing environmental awareness the renewable power in India is set to grow over the forecast period. Over the historic period 2000-2011, the renewable power generation grew at a CAGR of 27.5% from 3,443 GWh in 2000 to reach 49,923 GWh in 2011. Over the forecast period 2012-2020, the renewable power generation in India is expected to grow at a CAGR of 15.6% from 57,998 GWh in 2012 to reach 184,664 GWh by 2020.

Figure 2: Thermal Power Market, India, Power Generation, GWh, 2000, 2011, 2020

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1,800,000

1,600,000

1,400,000

1,200,000

1,000,000

800,000 PowerGeneration (GWh) 600,000

400,000

200,000

0 2000 2011 2020

Thermal Hydro Nuclear Renewable

Source: GlobalData, Capacity and Generation Database (July 10, 2012)

Note: Figures from 2011 onwards are estimates

Thermal Power in India, Market Outlook to 2020, 2012 GDPE5096IDB \ Published SEP 2012 Update – Capacity, Generation, Regulations, Power Plants, Companies

Thermal Power in India, Market Outlook to

2020, 2012 Update

2.3 The Global Thermal Power Market Scenario - Robust Growth to Continue

Economic and industrial growth all over the world has led to a sharp rise in energy demand. The rise in energy demand is likely to continue in the near future. To meet this demand, thermal power has become a viable option for power generation.

Over the period 2000-2011, the global thermal power generation grew from 9,538,749 GWh in 2000 to 14,724,889 GWh by 2011 at a CAGR of 4%. It is further expected to grow at a CAGR of 3.2% over the forecast period 2012-2020.

Figure 3: Thermal Power Market, Global, Thermal Power Generation, GWh, 2000, 2011, 2020

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20,000,000

15,000,000

10,000,000 Thermal Power Generation (GWh) Generation Power Thermal

5,000,000

0 2000 2011 2020

Source: GlobalData, Power eTrack, Capacity and Generation Database (May 30, 2012)

Note: Figures from 2011 onwards are estimates

Thermal Power in India, Market Outlook to 2020, 2012 GDPE5096IDB \ Published SEP 2012 Update – Capacity, Generation, Regulations, Power Plants, Companies

Thermal Power in India, Market Outlook to

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3 Introduction

3.1 Thermal Power Markets: Technology Types

In a fossil fuel power plant, the chemical energy stored in fossil fuels such as coal, fuel oil, natural gas or oil shale is converted into electrical energy for continuous use and distribution across a wide geographic area. Each fossil fuel power plant is a highly complex, custom-designed system. The following figure illustrates how the conversion from coal to electricity takes place.

Figure 4: How a Thermal Power Plant Works

Source: Tennessee Valley Authority

The first conversion of energy takes place in the boiler. Coal is burnt in the boiler furnace to produce heat. The heat from the coal combustion boils water in the boiler to produce steam, which pushes the turbine blades to rotate the turbine before being condensed and pumped back into the boiler to repeat the cycle. The rotation of the turbine rotates the generator rotor to produce electricity.

Thermal Power in India, Market Outlook to 2020, 2012 GDPE5096IDB \ Published SEP 2012 Update – Capacity, Generation, Regulations, Power Plants, Companies

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3.1.1 Coal Fired Power Plants

Chunks of coal are crushed and heated in a furnace to produce steam from water. Though coal is the cheapest fuel available, it causes the maximum amount of pollution. 3.1.2 Gas Fired Power Plants

Natural gas, because it is a cleaner fuel to burn, is being widely used to produce power. The recent rise in environmental concerns has led to the popularity of natural gas as a fuel for power. Moreover, natural gas-fired power plants are also cheaper and easier to build. 3.1.3 Oil Fired Power Plants

Oil is used primarily for transportation and in homes, but a small proportion of oil is also used for producing electricity.

Three technologies are used to convert oil into electricity: 3.1.3.1 Conventional steam

Oil is burned to heat water, which in turn produces steam. 3.1.3.2 Combustion turbine

Oil is burned under pressure to produce hot exhaust gases which spin a turbine to generate electricity. 3.1.3.3 Combined-Cycle Technology

Oil is first heated in a turbine, using the heated exhaust gases to generate electricity. After these exhaust gases are recovered, they heat water in a boiler, creating steam to drive a second turbine.

3.1.4 Co-Firing Power Plant

Co-firing refers to burning two or more fuels together to generate electricity. Generally coal is combined with biomass, wood and agricultural waste to reduce the amount of greenhouse gases released. Co-firing can take place in existing coal plants with little or no modifications required. 3.1.4.1 Direct Co-firing

Direct co-firing is the simplest, cheapest and most common method, in which biomass fuel and coal are burned together in the same furnace. 3.1.4.2 Indirect Co-firing

In indirect co-firing, a gassifier is used to convert solid biomass into a clean gas fuel. This gas fuel is further cleansed of impurities and burned in the same furnace as the coal. With indirect co-firing, a wider range of biomass can be used as fuel to produce electricity. 3.1.4.3 Completely Separate Biomass Boiler

It is possible to increase the steam pressure of the coal power plants by using the thermal energy produced by a separate biomass-fired boiler. Here, coal and biomass are fed into separate boilers and the steam generated is jointly fed to the common turbine.

Thermal Power in India, Market Outlook to 2020, 2012 GDPE5096IDB \ Published SEP 2012 Update – Capacity, Generation, Regulations, Power Plants, Companies

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3.1.5 Supercritical and Ultra-supercritical Generation

Conventional power plants boil water to produce sub-critical steam while supercritical power generation uses supercritical steam. At supercritical pressures, water is heated directly to produce steam, skipping the boiling point temperature. Due to the improved thermodynamics of expanding at higher temperatures and pressures through steam turbines, power generation becomes more efficient, using less coal.

Ultra-supercritical steam generation is currently the most advanced and efficient way of producing electricity by coal. The unit operates at sub-critical pressure and at advance steam temperatures of 1,100 degrees Fahrenheit, thus increasing the efficiency of the plant.

Fossil fuels like natural gas, coal, liquid fuels and other petroleum forms are expected to continue supplying the majority of energy used worldwide. Presently, fossil fuels provide for the majority of the world‟s energy demand and this percentage has remained more or less constant in the last ten years. Among the fossil fuels, dependence on coal for energy production is expected to increase from 2000 to 2020, followed by natural gas.

Thermal Power in India, Market Outlook to 2020, 2012 GDPE5096IDB \ Published SEP 2012 Update – Capacity, Generation, Regulations, Power Plants, Companies

Thermal Power in India, Market Outlook to

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4 Global Thermal Power Market Scenario: 2000-2020

4.1 Global Thermal Power Market, Installed Capacity and Generation, 2000-2020

A majority of thermal power plants are fed by coal as it is very abundant, and is more economical than oil or natural gas. However, many countries are switching over to Combined Cycle Gas Turbine (CCGT) technology, which uses natural gas as fuel, due to concerns regarding environmental pollution.

Global thermal power installed capacity grew from 2,292,149 MW in 2000 to 3,577,712 MW in 2011 at a CAGR of 4.1%. Global thermal power generation grew from 9,538,749 GWh in 2000 to 14,724,889 GWh in 2011 at a CAGR of 4%. During the forecast period, capacity is expected to grow from 3,746,709 MW in 2012 to 4,691,657 MW in 2020 at a CAGR of 2.9%. Similarly, global power generation is expected to grow from 15,495,599 GWh in 2012 to 19,984,059 GWh in 2020 at a CAGR of 3.2%.

Figure 5: Thermal Power Market, Global, Thermal Installed Capacity (MW) and Thermal Power Generation (GWh), 2000-2020

5,000,000 25,000,000

4,500,000

4,000,000 20,000,000

3,500,000

3,000,000 15,000,000

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0 0 2000 2002 2004 2006 2008 2010 2012 2014 2016 2018 2020

Thermal Installed Capacity (MW) Total Power Generation (GWh)

Source: GlobalData, Power eTrack, Capacity and Generation Database (May 30, 2012)

Note: Figures from 2011 onwards are estimates

Thermal Power in India, Market Outlook to 2020, 2012 GDPE5096IDB \ Published SEP 2012 Update – Capacity, Generation, Regulations, Power Plants, Companies

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Table 1: Thermal Power Market, Global, Thermal Installed Capacity (MW) and Thermal Power Generation (GWh), 2000-2020

Year Thermal Installed Capacity (MW) Thermal Power Generation (GWh) 2000 2,292,149 9,538,749 2001 2,373,704 9,816,178 2002 2,478,601 10,269,424 2003 2,589,039 10,813,892 2004 2,686,631 11,261,536 2005 2,787,844 11,803,625 2006 2,929,288 12,355,294 2007 3,051,595 13,149,767 2008 3,154,113 13,275,872 2009 3,270,070 13,086,372 2010 3,419,965 13,931,168 2011 3,577,712 14,724,889 2012 3,746,709 15,495,599 2013 3,911,877 16,304,407 2014 4,067,409 17,092,925 2015 4,235,663 17,916,016 2016 4,334,155 18,400,632 2017 4,417,265 18,776,803 2018 4,504,216 19,174,470 2019 4,595,267 19,579,865 2020 4,691,657 19,984,059 CAGR 2000-2011 (%) 4.1 4 CAGR 2012-2020 (%) 2.9 3.2 CAGR 2000-2020 (%) 3.6 3.8 Source: GlobalData, Power eTrack, Capacity and Generation Database (May 30, 2012)

Note: Figures from 2011 onwards are estimates

In recent years, rising power demand and significant economic development across the world has led to increased thermal power generation. However, the fall in electricity demand due to the economic recession resulted in sharp fall in the growth rate of electricity consumption in 2008 and 2009. The year 2009 recorded a decline in terms of power generation. However, thermal power generation picked up in 2010 and is expected to continue increasing from 2011 onwards with the increase in demand and the construction of various new power plants throughout the world.

Thermal Power in India, Market Outlook to 2020, 2012 GDPE5096IDB \ Published SEP 2012 Update – Capacity, Generation, Regulations, Power Plants, Companies

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5 India Power Market Scenario

5.1 Overview

Electricity consumption has grown rapidly in India in 2000–2010 period due to population growth and economic development. Continued economic and population growth will lead to increased electricity demand in the future and more supply will need to be added in order to meet this increased demand. Traditionally, thermal fuel sources, coal, oil and gas, have been the main contributors to the power mix. However, India has limited fossil fuel reserves and is thus dependent on imports of gas, and crude oil as well as more recently, coal. During the forecast period, the nuclear and renewable energy sectors are expected to experience the highest growth in new installed capacity, as the government increases its focus on clean energy sources for generating electricity.

During the 12th five year plan period, the government aims to add around 76,000 MW of capacity. The government is showing increasing interest in attracting foreign players to augment the power sector. Hence, increasing participation by the private sector is expected in the future. During the 12th five year plan period (2012–2017), considerable generation capacity additions are expected to come from private participants alone.

5.2 India Power Market, Cumulative Installed Capacity and Generation by Fuel Type, MW, 2000-2020

In the year 2000, thermal power had constituted 72.7% (81,730 MW) of the total installed capacity in India. Hydropower constituted 23.6% or 26,505 MW, while renewable energies constituted 2.3% or 2,603 MW. Over the historic period 2000-2011, thermal power, hydro power and renewable grew at a CAGR of 5.1%, 4.3% and 26.2%, respectively..

The country had a total installed capacity of 208,537 MW in 2011. Out of this, thermal had the highest share of 67.9% or 141,697 MW, followed by hydropower and renewable power with share of 20.2% and 9.8% respectively.

During the forecast period, 2012-2020, thermal power installed capacity is expected to increase from 155,878 MW in 2012 to 221,382 MW in 2020, at a CAGR of 4.5%. It is expected to constitute 55.4% of total installed capacity in 2020. During the same period, hydro power and renewable energy installed capacity is expected to grow at a CAGR of 5.8% and 16.1% , respectively.

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Figure 6: Power Market, India, Cumulative Installed Capacity by Fuel Type, MW, 2000-2020

450,000

400,000

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300,000

250,000

200,000

InstalledCapacity (MW) 150,000

100,000

50,000

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020

Thermal Hydro Nuclear Renewables

Source: GlobalData, Power eTrack, Capacity and Generation Database (July 10, 2012)

Note: Figures from 2011 onwards are estimates

Thermal Power in India, Market Outlook to 2020, 2012 GDPE5096IDB \ Published SEP 2012 Update – Capacity, Generation, Regulations, Power Plants, Companies

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Table 2: Power Market, India, Cumulative Installed Capacity by Fuel Type, MW, 2000-2020

Total Installed Year Thermal Hydro Nuclear Renewable Capacity (MW) 2000 81,730 26,505 2,603 1,582 112,420 2001 82,819 27,708 2,603 1,906 115,036 2002 86,118 28,430 2,603 2,263 119,414 2003 87,623 31,104 2,603 2,825 124,154 2004 89,233 31,786 2,603 3,870 127,492 2005 92,682 33,961 3,003 5,520 135,167 2006 95,538 35,618 3,493 7,633 142,281 2007 102,412 36,862 3,695 9,549 152,517 2008 108,013 39,078 3,695 11,826 162,611 2009 115,592 39,620 3,897 14,496 173,606 2010 128,414 40,409 4,099 16,239 189,162 2011 141,697 42,143 4,301 20,396 208,537 2012 155,878 45,730 6,135 23,680 231,423 2013 174,059 49,076 6,605 28,651 258,391 2014 181,240 52,176 6,605 34,223 274,243 2015 194,421 55,030 8,782 40,203 298,436 2016 203,602 57,643 11,876 46,775 319,896 2017 204,783 60,765 15,567 53,918 335,033 2018 211,912 64,121 17,167 61,594 354,793 2019 216,647 67,717 24,084 69,744 378,192 2020 221,382 71,557 28,254 78,304 399,497 Source: GlobalData, Power eTrack, Capacity and Generation Database (July 10, 2012)

Note: Figures from 2011 onwards are estimates

The electricity generation in India increased from 502,478 GWh in 2000 to 896,312 GWh in 2011, registering a CAGR of 5.4%. It is estimated that total generation in the country will increase at a CAGR of 6.3% during 2012–2020; increasing from 1,097,754 GWh in 2012 to 1,786,818 GWh in 2020. By 2020, it is estimated that the thermal power sources will continue to dominate the country‟s generation mix, with a share of 71%, followed by renewable power sources (10.3%), and the remaining by hydro power (11.1%).

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Figure 7: Power Market, India, Annual Power Generation by Fuel Type, GWh, 2000-2020

2,000,000

1,800,000

1,600,000

1,400,000

1,200,000

1,000,000

800,000 PowerGeneration (GWh) 600,000

400,000

200,000

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020

Thermal Hydro Nuclear Renewables

Source: GlobalData, Power eTrack, Capacity and Generation Database (July 10, 2012)

Note: Figures from 2011 onwards are estimates

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Table 3: Power Market, India, Annual Power Generation by Fuel Type, GWh, 2000-2020

Total Power Year Thermal Hydro Nuclear Renewables Generation (GWh) 2000 408,358 76,457 14,220 3,443 502,478 2001 422,299 80,052 17,320 4,168 523,838 2002 452,855 82,218 17,490 4,971 557,534 2003 469,477 90,181 16,360 6,235 582,253 2004 486,100 92,238 15,040 8,544 601,922 2005 497,200 98,733 15,730 11,832 623,495 2006 519,471 103,574 15,590 16,731 655,366 2007 549,344 104,540 15,750 21,261 690,895 2008 582,284 110,454 13,170 26,956 732,864 2009 628,712 111,998 14,740 33,729 789,180 2010 655,146 114,420 20,480 38,420 828,467 2011 697,763 119,678 28,948 49,923 896,312 2012 878,365 130,442 30,949 57,998 1,097,754 2013 985,484 133,830 35,089 68,530 1,222,933 2014 1,027,186 146,496 34,381 80,992 1,289,056 2015 1,104,876 154,106 43,083 94,600 1,396,666 2016 1,158,800 161,010 54,565 109,404 1,483,778 2017 1,164,848 169,423 71,270 126,096 1,531,636 2018 1,208,971 178,551 83,052 144,277 1,614,851 2019 1,238,802 188,412 102,641 162,070 1,691,925 2020 1,268,707 199,020 134,427 184,664 1,786,818 Source: GlobalData, Power eTrack, Capacity and Generation Database (July 10, 2012)

Note: Figures from 2011 onwards are estimates

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6 India Thermal Power Market, 2000-2020

6.1 India Thermal Power Market, Historical and Forecast Installed Capacity and Power Generation, 2000-2020

Figure 8: Thermal Power Market, India, Cumulative Installed Capacity, MW, 2000-2020

Source: GlobalData, Power eTrack, Capacity and Generation Database (July 11, 2012)

Note: Figures from 2011 onwards are estimates

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Table 4: Thermal Power Market, India, Cumulative Installed Capacity, MW, 2000-2020

Total Thermal Capacity Year Coal Gas Oil (MW)

Source: GlobalData, Power eTrack, Capacity and Generation Database (July 11, 2012)

Note: Figures from 2011 onwards are estimates

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Figure 9: Thermal Power Market, India, Power Generation, GWh, 2000-2020

Source: GlobalData, Power eTrack, Capacity and Generation Database (July 12, 2012)

Note: Figures from 2011 onwards are estimates

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Table 5: Thermal Power Market, India, Power Generation, GWh, 2000-2020

Year Coal Gas Oil Thermal (GWh)

Source: GlobalData, Power eTrack, Capacity and Generation Database (July 12, 2012)

Note: Figures from 2011 onwards are estimates

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7 India Thermal Power Market, Market Share of Top Power Equipment Manufacturing Companies, 2009

7.1 India Thermal Power Market, Market Share of Steam Turbine Manufacturing Companies, 2011

The figure below shows the market share of power boiler manufacturers in 2011. Bharat Heavy Electrical Limited (BHEL) was the major player accounting for 58% of the market revenues. This was followed by Mitsubishi Heavy Industries with 27% of the market share. Shanghai Electric Group Company Ltd and Foster Wheeler AG accounted for 10% and 5% of market revenues respectively.

Figure 10: Thermal Power Market, India, Market Share of Top Power Boiler Manufacturing Companies, 2011

Foster Wheeler AG 5% Shanghai Electric Group Company Ltd. 10%

Mitsubishi Heavy Bharat Heavy Industries, Ltd. Electricals Limited 27% 58%

Source: GlobalData, Power eTrack, Equipment Markets Database (13 July, 2012)

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Table 6: Thermal Power Market, India, Market Share of Top Power Boiler Manufacturing Companies, 2011

Company Market Share (%) Bharat Heavy Electricals Limited 58 Mitsubishi Heavy Industries, Ltd. 27 Shanghai Electric Group Company Ltd. 10 Foster Wheeler AG 5 Source: GlobalData, Power eTrack, Equipment Markets Database (13 July, 2012)

7.2 India Thermal Power Market, Market Share of Gas Turbine Manufacturing Companies, 2011

In 2011, Mitsubishi Heavy Industries, Ltd. was the leading supplier of gas turbines in India with market share of 39%. BHEL was at second position with a market share of 28%. General Electric Company and Siemens AG held 17% and 16% market share respectively.

Figure 11: Thermal Power Market, India, Market Share of Top Gas Turbine Manufacturing Companies, 2011

Siemens AG 16%

Mitsubishi Heavy Industries, Ltd. 39% General Electric Company 17%

Bharat Heavy Electricals Limited 28%

Source: GlobalData, Power eTrack, Equipment Markets Database (13 July, 2012)

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Table 7: Thermal Power Market, India, Market Share of Top Gas Turbine Manufacturing Companies, 2011

Company Market Share (%) Mitsubishi Heavy Industries, Ltd. 39 Bharat Heavy Electricals Limited 28 General Electric Company 17 Siemens AG 16 Source: GlobalData, Power eTrack, Equipment Markets Database (13 July, 2012)

7.3 India Thermal Power Market, Market Share of Heat Recovery Steam Generator (HRSG) Manufacturing Companies, 2011

In 2011, Greens Holdings Ltd was the major supplier of HRSGs in India with market share of 42%. This was followed by CMI Limited with a market share of 35%. BHEL accounted for 23% of the total HRSG market revenues in 2011.

Figure 12: Thermal Power Market, India, Market Share of Top Heat Recovery Steam Generator (HRSG) Manufacturing Companies, 2011

Bharat Heavy Electricals Limited 23%

Greens Holdings Ltd 42%

CMI Limited 35%

Source: GlobalData, Power eTrack, Equipment Markets Database (13 July, 2012)

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Table 8: Thermal Power Market, India, Market Share of Top Heat Recovery Steam Generator (HRSG) Manufacturing Companies, 2011

Company Market Share (%) Greens Holdings Ltd 42 CMI Limited 35 Bharat Heavy Electricals Limited 23 Source: GlobalData, Power eTrack, Equipment Markets Database (13 July, 2012)

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7.4 India Thermal Power Market, Market Share of Steam Turbine Manufacturing Companies, 2011

BHEL accounted for 40% of steam turbine market revenues in 2011. This was followed by BGR Energy Systems with a market share of 31%. Mitsubishi Heavy Industries had a market share of 19%. Toshiba Corporation and Shanghai Electric Company accounted for 7% and 3% of the market revenues.

Figure 13: Thermal Power Market, India, Market Share of Top Steam turbine Manufacturing Companies, 2011

Shanghai Electric Group Company Ltd 3% Toshiba Corporation 7%

Mitsubishi Heavy Bharat Heavy Industries, Ltd Electricals Limited 19% 40%

BGR Energy Systems Limited 31%

Source: GlobalData, Power eTrack, Equipment Markets Database (13 July, 2012)

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Table 9: Thermal Power Market, India, Market Share of Top Steam turbine Manufacturing Companies, 2011

Company Market Share (%) Bharat Heavy Electricals Limited 40 BGR Energy Systems Limited 31 Mitsubishi Heavy Industries, Ltd 19 Toshiba Corporation 7 Shanghai Electric Group Company Ltd 3 Source: GlobalData, Power eTrack, Equipment Markets Database (13 July, 2012)

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8 India Thermal Power Plants

8.1 India Thermal Power Market, Top Thermal Power Plants (Active), 2011

The cumulative installed capacity of the top 10 active thermal power plants in India was 21,820 MW in 2011. This was 15.4% of the thermal installed capacity of the country in 2011. All the power plants are coal-fired.

The Talcher Kaniha Coal Fired Thermal Power Plant, situated in Odisha is the largest coal fired power plant in the country. The plant has a total installed capacity of 3,000MW and was commisssioned in 1995.

Table 10: Thermal Power Market, India, Leading Active Thermal Power Projects, 2011

State or Plant Name Plant Type Province Fuel Category Capacity (MW) Year Online Owner Name Talcher Kaniha Coal Fired Thermal Power Plant Steam Turbine Odisha Coal 3,000 Feb-1995 NTPC Limited Korba Super Thermal Power Station Steam Turbine Chhattisgarh Coal 2,600 Mar-1983 NTPC Limited Rihand Coal Fired Power Plant Steam Turbine Uttar Pradesh Coal 2,500 Mar-1988 NTPC Limited Maharashtra Chandrapur State Power Super Thermal Generation Co. Power Station Steam Turbine Maharashtra Coal 2,340 Aug-1983 Ltd. Farakka Coal Fired Thermal Power Plant Steam Turbine West Bengal Coal 2,100 1-Jan-1986 NTPC Limited Simhadri Coal Fired Thermal Power Plant Steam Turbine Andhra Pradesh Coal 2,000 Feb-2002 NTPC Limited Sipat Coal Fired Thermal Power Plant Stage I Steam Turbine Chhattisgarh Coal 1,980 Jun-2011 NTPC Limited Dadri Coal Fired Power Plant Steam Turbine Uttar Pradesh Coal 1,820 Oct-1991 NTPC Limited Andhra Pradesh Power Vijayawada Generation Thermal Power Corporation Station Steam Turbine Andhra Pradesh Coal 1,760 1-Nov-1979 Limited Karnataka Power Raichur Thermal Corporation Power Station Steam Turbine Karnataka Coal 1,720 Mar-1985 Limited Source: GlobalData, Power eTrack, Power Plants Database (July 13, 2012)

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8.2 India Thermal Power Market, Top Thermal Power Plants (Upcoming), 2011

The figure below shows the upcoming thermal power plants in India. Among these, the largest power plant will be gas fired Bharuch Thermal Power Plant with an installed capacity of 7,200 MW. Rest all upcoming power plants are coal fired. The total installed capacity of the upcoming thermal power plants will be 43,160 MW.

Table 11: Thermal Power Market, India, Leading Upcoming Thermal Power Projects, 2011

State or Plant Name Plant Type Province Fuel Category Capacity (MW) Year Online Owner Name Combined Cycle Bharuch Thermal Gas Turbine Bharuch Power Power Plant (CCGT) Gujarat Gas 7,200 - Limited Bedabahal Ultra Mega Power Plant Steam Turbine Odisha Coal 4,000 - Bhadrak Ultra Power Finance Mega Power Corporation Plant Steam Turbine Odisha Coal 4,000 - Limited Coastal Girye Ultra Mega Maharashtra Power Project Steam Turbine Maharashtra Coal 4,000 - Mega Power Ltd. Husseinabad Ultra Mega Thermal Power Jharkhand State Plant Steam Turbine Jharkhand Coal 4,000 - Electricity Board Lodhva Ultra Mega Power Plant Steam Turbine Gujarat Coal 4,000 - Pudimadaka Coal Fired Power Plant Steam Turbine Andhra Pradesh Coal 4,000 - NTPC Limited Surguja Ultra Mega Power Project Steam Turbine Chhattisgarh Coal 4,000 - Andhra Pradesh Power Vadarevu Ultra Generation mega Power Corporation Project Steam Turbine Andhra Pradesh Coal 4,000 2014 Limited Barethi Super Thermal Power Project Steam Turbine Madhya Pradesh Coal 3,960 Oct-2015 NTPC Limited Source: GlobalData, Power eTrack, Power Plants Database (July 13, 2012)

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9 India Thermal Power Market, Regulatory Scenario, Major Policies

9.1 India Thermal Power Market, Regulatory Scenario, Overview

India has a population of over a hundred billion people and is one of the fastest developing countries in the world. Yet, about 44% of households are deprived of electricity. Growth of the power sector in India, since its independence, has been noteworthy. However, the demand for power has constantly outstripped supply, mainly due to inadequate power capacity and high power transmission and distribution losses. Realizing the importance of electricity, the government of India has set a target of supplying electricity to every household by 2012. This requires various tasks such as capacity generation, expansion of the grid network, and reducing power transmission and distribution losses.

9.2 India Thermal Power Market, Regulatory Scenario, Regulatory Framework

The Ministry of Power is primarily responsible for development and regulation of the power industry in the country. Some of the major tasks of the ministry include formulation and implementation of energy policies, and, the administration and enactment of legislation with regard to thermal, hydro power generation, transmission and distribution. Apart from this, the ministry also monitors the implementation of power projects.

The Central Electricity Authority (CEA) performs an advisory role to the Ministry of Power. CEA assists the ministry on technical and techno-economic matters. CEA is responsible for advising or directing the central government on various subjects such as formulation of plans and policies for electricity, defining technical standards and safety requirements of the power plants and the grid, promoting research, and collection and recording of data.

The Central Electricity Regulatory Commission (CERC) and the state level regulatory commissions work under the Ministry of Power to look after, and implement the Central and State level tariffs, policies, transmission of electricity, licensing of transmission and distribution, dispute handling, etc.

9.3 India Thermal Power Market, Regulatory Scenario, Major Policies 9.3.1 Electricity Sector Reforms and Electricity Act of 2003

Power sector reforms in India began in the early part of the 1990s. The Government of India (GOI), through an amendment of the Electricity Supply Act (1948), allowed the entry of private players for power generation as Independent Power Producers (IPP). In the next phase of reforms, in order to bring about cohesiveness in the power sector regulatory scenario, a Common Minimum Action Plan for Power (CMNAPP) was prepared in 1996. This paved the way for the setting up of regulatory commissions at the state and central levels. The GOI passed the Electricity Regulatory Commissions (ERC) Act in 1998 and established the CERC. Various states have also established their own regulatory commissions or have notified the establishment of such commissions. The Electricity Act, 2003 is currently the umbrella act under which the Indian electricity sector operates. The National Electricity Policy (NEP) was formulated under this act in 2005.

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9.3.1.1 Electricity Act of 2003

Electricity Act came into affect from 2nd June, 2003. The act aimed to open up the electricity market which was previously characterized by long term power purchase agreements and inability of distribution companies and customers to choose their suppliers. Some of the important features of the act were de-licensing power generation and captive generation, non discriminatory open access in transmission sector from the very beginning and open access in distribution in a phased manner.

Under this act electricity generation has been de-licensed and techno-economic clearance from CEA is not required, except for hydropower plants above certain capital investment. The generating company can sell electricity to any licensees or where allowed by state regulatory commissions, directly to customers.

The act did away with the approval required from State Electricity Boards (SEBs) or regulatory commission for setting up of captive power plants. After the enactment of the act there has been a renewed interest in captive power generation as the surplus power generated from these plants can be directly fed to the grid as Electricity Act provides open access in a non-discriminatory way.

9.3.2 The National Electricity Plan

A National Electricity Plan is drawn up every five years that aims to assess demand for electricity and plan for capacity addition. Though the plan is drawn for a five year period, the plan perspective is for 15 years. The planning is done by the CEA in conjunction with the central and state government agencies. The plan includes –

 Short and long term demand forecasts for different regions in India

 Identification of regions or locations where capacity additions are required keeping in view various techno-economic parameters, environmental considerations, and rehabilitation and resettlement issues.

 Integration of new generating centers with the national grid, including development of the grid.

 Survey of different technologies available for efficient generation, transmission and distribution.

 Choice of fuel for power generation based on economy, energy security and environmental considerations.

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9.4 India Thermal Power Market, Regulatory Scenario, Major Initiatives 9.4.1 Restructured Accelerated Power Development and Reforms Program (R-APDRP)

The Accelerated Power Development Reforms Program (APDRP) was initiated in 2002 to assist states in strengthening and upgrading the sub–transmission and distribution systems of high density load centers. The program is aimed at reducing aggregate technical and commercial (AT&C) losses. It is also targeted at improving the reliability and quality of the power supply.

R-APDRP was introduced in 2008, to place more focus on actual and provable performance in terms of AT&C loss reduction. Execution was taken up in two parts. Part–A includes projects for the establishment of baseline data, IT applications for energy accounting and the auditing and establishment of IT based consumer service centers. Part–B includes projects for renovation, modernization and strengthening of the distribution projects. Under Part–A, 599 projects were approved at a cost of $391.7m (INR 19,477m).

Part-A of R-APDRP is currently in the implementation stage in many states. Part A is to be completed after three years of sanctioning. As of now, no project has completed three years post sanctioning. However, State Procurement Policy and procedure has delayed the appointment of IT implementing agencies (ITIA) in some states.

9.4.2 Twelfth Five year plan Targets

The Power Ministry has proposed the addition of around 76,000 MW of capacity in the twelfth five year plan (2012–2017). Out of this, 63,000 MW is expected to come from coal fired power plants. Adequate supply of coal is an important factor between 2012-2017. Considerable demand of coal will be met through imports. The government also has plans to increase the domestic production of coal.

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10 India Thermal Power Market – Deals Scenario

10.1 India Thermal Power Market Deals Volume versus Value Analysis, 2004-2012

The thermal deal value increased from $5,490m in 2004 to $91,988m in 2007 before declining to $64,619m in 2008. The deal value peaked with $145,875m in 2010 before declining in 2011.

The number of deals increased steadily over the period 2004-2009 increasing from 27 in 2004 to 194 in 2009. The number of deals signed declined to 188 and 91 in 2010 and 2011.

Figure 14: Thermal Power Market, India, Financing Trends, Deal Value ($m) and Volume (Number), 2004-2012

160,000 250

140,000

200 120,000

100,000 150

80,000 DealVolume

DealValue ($m) 100 60,000

40,000 50

20,000

0 0 2004 2005 2006 2007 2008 2009 2010 2011 2012

Source: GlobalData, Power eTrack Deals Database (July 11, 2012)

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Table 12: Thermal Power Market, India, Financing Trends, Deal Value ($m) and Volume (Number), 2004-2012

Year Deal Value ($m) Deal Volume 2004 5,490 28 2005 7,587 40 2006 14,773 70 2007 91,988 97 2008 64,619 112 2009 143,055 194 2010 145,875 188 2011 62,885 91 2012 7,173 38 Source: GlobalData, Power eTrack Deals Database (July 11, 2012)

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10.2 India Thermal Power Market, Deals by Type, 2011-2012

In 2011 and 2012 (till date), 97.7% of the deals signed were of Asset finance type accounting for $68,448m. The remaining 2.3% constituted of Debt Offerings ($1,056.4m), Private Equity ($426.6m), Acquisitions ($94m), Equity Offerings ($28.3m) and Venture Financing ($4.4m).

Figure 15: Thermal Power Market, India, Deals by Type (%), 2011-2012

Others 2.3%

Asset Finance 97.7%

Source: GlobalData, Power eTrack Deals Database (July 13, 2012)

Table 13: Thermal Power Market, India, Deals by Type (%), 2011-2012

Deal Type Deal Value ($m) Share (%) Asset Finance 68,448.0 97.7 Others 1,609.7 2.3 Source: GlobalData, Power eTrack Deals Database (July 13, 2012)

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10.3 Power Market, India, Major Deals, 2009-2012 10.3.1 Asset Finance

10.3.1.1 NLC to Invest $1.9 Billion in Coal Fired Power Plant in Uttar Pradesh, India

Table 14: NLC To Invest $1.9 Billion In Coal Fired Power Plant In Uttar Pradesh, India

Deal Type Asset Finance Deal Sub Type Self Funded Deal in Brief Neyveli Lignite Corporation Limited (NLC), a mining and power generation company, announced an investment of INR100,000m ($1,913.28m) in the construction and development of coal fired power plant at Ghatmapur in Kanpur district of Uttar Pradesh, India. The total installed capacity of the project will be 1,980 MW. The investment per MW will be approximately $0.97m. In connection to the transaction, the company has initiated the process for entering into memorandum of understanding with Uttar Pradesh Rajya Vidyut Utpadan Nigam Limited (UPRVUNL) for setting up the plant through a 50:50 joint venture. NLC has received approval from the government of India for joint venture. The UP government has given principle approval to allocate 2,500 acres of land and also 80 cusecs of water. Deal Information

Deal Status Announced

Announced Date 12-Apr-2012

Companies Information

Owner/Sponsor Company Information

Company Name Neyveli Lignite Corporation Limited

Business Description

Neyveli Lignite Corporation Limited (NLC) is a mining and power generation company. The company is the largest open-cast Mechanized Lignite Mine in India. NLC is engaged in producing about 23.14 million tonnes of lignite annually and has an installed capacity of more than 2,740 MW for power generation. The company operates four mines, namely, Mine-I (8.30 million tones per year (MTPA)), Mine-IA (2.719 MTPA), Mine-II (11.71 MTPA) and Barsingsar Mine (0.409 MTPA). NLC operates four power plants, namely, Thermal Power Station-I (600 MW), Thermal Power Station-I Expansion (420 MW), Thermal Power Station-II (1,470 MW) and Barsingsar Thermal Power Plant (250 MW). In addition, the company is also engaged in providing consultation services to companies in mining and power sectors. The company is headquartered in Chennai, India. Deal Financials Deal Value Local (mn) 100,000 Deal Value (US$ m) 1,913.28

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10.3.1.2 TNEB to Invest $1.6 Billion in Tuticorin Super Critical Power Project in Tuticorin District, Tamil Nadu

Table 15: TNEB To Invest $1.6 Billion In Tuticorin Super Critical Power Project In Tuticorin District, Tamil Nadu

Deal Type Asset Finance Deal Sub Type Self Funded Deal in Brief Tamil Nadu Electricity Board Limited (TNEB Ltd) announced an investment of INR80,000m ($1,612.6m) in the construction of tuticorin super critical power project in Udangudi, Tuticorin District, Tamil Nadu. The total installed capacity of the project will be 1,600 MW, comprising two units of 800 MW each. The investment per MW will be approximately $1m. The project will be developed with super critical technology to obtain benefits under clean development mechanism (CDM). The project will have its own coal jetty with transportation of coal through pipe conveyor system to the project. In 2007, Bharat Heavy Electricals Limited (BHEL) and TNEB have formed a joint venture company known as Udangudi Power Corporation Limited, to implement the project. Due to absence of long term coal linkage necessary for the project, and non-receipt of no objection certificate from environmental ministry and lack of cooperation from the BHEL, the state government itself would implement the project. Jayalalitha, chief minister of Tamil Nadu, said, " I have decided to implement it as a state government project which will allocate the entire estimate of INR80,000m as share capital to the Tamil Nadu Electricity Board (TNEB) which will implement it." Deal Information

Deal Status Announced

Announced Date 24-Feb-2012

Companies Information

Owner/Sponsor Company Information

Company Name TNEB Ltd

Business Description

TNEB Ltd (TNEB) formerly Tamil Nadu Electricity Board, is primarily involved in the generation, transmission and distribution of electricity to Tamil Nadu. The company is authorized to work as the State Transmission Utility. It has power generation from the various sources including thermal stations, hydro stations, non conventional sources, and gas turbine power stations. TNEB is headquartered in Chennai, Tamil Nadu, India. Deal Financials Deal Value Local (mn) 80,000 Deal Value (US$ m) 1,612.64 Valuation Multiples Information Powerplant Valuation Multiple

Capacity MWH Transaction Implied Value $ / MW

(Bcf) (Bcf) Ethanol Information Type Acquired Capacity (Million Transaction Implied Values Liters) (US$/Liters per day) Production 80.00 1000000.00

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10.3.1.3 Ascol to Acquire 74% Stake in IL&FS Tamil Nadu Power for $774 Million

Table 16: Ascol To Acquire 74% Stake In IL&FS Tamil Nadu Power For $774 Million

Deal Type Asset Finance Deal Sub Type Self Funded Deal in Brief Ascol, a consortium of four private equity funds, agreed to acquire 74% stake in IL&FS Tamil Nadu Power Company Limited, a company which owns and operates coal power project in Cuddalore, Tamil Nadu, India, from IL&FS Energy Development Company, for a purchase consideration of INR40,000m ($773.7m), reported a person with direct knowledge of the development. The plant will have an installed capacity of 3,600 MW. The transaction implies a deal value of $0.29m per MW of installed capacity. Deal Information Deal Status Announced Announced Date 19-Mar-2012 Companies Information Vendor Company Information Company Name IL&FS Energy Development Company Limited Business Description IL&FS Energy Development Company Limited is a renewable energy company engaged in developing and implementing non-conventional energy projects. Acquirer Firm Information Firm Name Ascol

Asset Information Asset Name Asset Type Asset Installed Capacity Location Classification IL&FS Power Plant I Thermal Thermal 1200.00MW Tamil Power power Nadu IL&FS Power Plant II Thermal Thermal 2400.00MW Tamil Power power Nadu

Deal Financials Deal Value Local (mn) 40,000 Deal Value (US$ m) 774 Valuation Multiples Information Powerplant Valuation Multiple Capacity MWH Transaction Implied Value $ / MW (Bcf) (Bcf) Ethanol Information Type Acquired Capacity Transaction Implied Values (Million Liters) (US$/Liters per day) Production 80.00 1000000.00

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10.3.1.4 Government Of Tamil Nadu To Invest $657 Million In The Reconstruction Of Ennore Thermal Power Project In Tamil Nadu, India

Table 17: Government Of Tamil Nadu To Invest $657 Million In The Reconstruction Of Ennore Thermal Power Project In Tamil Nadu, India

Deal Type Asset Finance Deal Sub Type Self Funded Deal in Brief Government of Tamil Nadu announced an investment of INR36,000m ($657m) in the reconstruction of Ennore Thermal power project in Ennore, Tamil Nadu, India. The total installed capacity of power plant will be 600MW. The project is expected to be operational by 2015. Deal Information

Deal Status Announced

Announced Date 01-Jan-2012

Companies Information

Owner/Sponsor Company Information

Company Name Government of Tamil Nadu

Business Description

Government of Tamil Nadu is the governing authority for the Indian State of Tamil Nadu, based in India. Tamil Nadu State covers an area of 130,058 Sq.kms. It is formerly known as Chennai. The administrative units of the State include, district statistics, revenue divisions, taluks, municipal corporations, municipalities, panchayat unions, town panchayats, village panchayats, lok sabha constituencies and assembly constituencies. The Departments of Government of Tamil Nadu include, Adi Dravidar and Tribal Welfare, Agriculture, Animal Husbandry, Dairying and Fisheries, Commercial Taxes and Registration, Co-operation, Food and Consumer Protection, Housing and Urban Development Labour and Employment and Welfare of Differently Abled Persons. Government of Tamil Nadu is headquartered in Chennai, Tamil Nadu, India.

Asset Information

Asset Name Asset Type Asset Installed Capacity Location Classification

Ennore Thermal Power Station Thermal Power Thermal 450.00MW Tamil Nadu Phase I power Deal Financials Deal Value Local (mn) 36,000 Deal Value (US$ m) 657

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10.3.1.5 Petronet LNG To Invest $606.7 Million In Kochi Gas Based Power Project In Kerala, India

Table 18: Petronet LNG To Invest $606.7 Million In Kochi Gas Based Power Project In Kerala, India

Deal Type Asset Finance Deal Sub Self Funded Type Deal in Brief Petronet LNG Limited (Petronet), a midstream oil and natural gas company, announced an investment of INR30,000m ($606.7m) in the construction of Kochi gas fired power project in Kerala, India. The total installed capacity of the project will be 750 MW. The investment per MW will be approximately $0.81m. The company is in talks with Government Of Kerala to sign a power purchase agreement to sell the electricity generated by the project. The construction of the project is expected to be completed by July 2012 and is expected to become operational by December 2012. A K Balyan, managing director and CEO of Petronet LNG, said, “The Kerala government wants us to set up a gas-based power plant in the state under a joint venture. We have asked the government to sign a power purchase agreement before so that the anchor load is taken care of. Ideally, it should have a capacity of 750 MW.” Deal Information

Deal Status Announced

Announced Date 06-Feb-2012

Companies Information

Owner/Sponsor Company Information

Company Name Petronet LNG Limited

Business Description

Petronet LNG Limited (Petronet) is a midstream oil and natural gas company. The company is engaged in importing Liquefied Natural Gas (LNG) and operating LNG terminals in India. The company was formed as a Joint Venture by the Government of India that involve major oil and gas industry players from India. The major promoters of the company are GAIL (India) Ltd (GAIL), Oil & Natural Gas Corporation Ltd (ONGC), Indian Oil Corporation Ltd (IOCL) and Bharat Petroleum Corporation Ltd (BPCL). The potential supplier of LNG are Qatar, Oman, Iran, Yemen, Malaysia, Indonesia and Australia. Petronet owns and operates largest LNG terminal at Dahej, Gujarat, Petronet is headquartered at New Delhi, India.

Deal Financials Deal Value Local (mn) 30,000 Deal Value (US$ m) 606.73 Valuation Multiples Information Powerplant Valuation Multiple

Capacity MWH Transaction Implied Value $ / MW

(Bcf) (Bcf) Ethanol Information Type Acquired Transaction Implied Values Capacity (US$/Liters per day) (Million Liters) Production 80.00 1000000.00 Thermal Power in India, Market Outlook to 2020, 2012 GDPE5096IDB \ Published SEP 2012 Update – Capacity, Generation, Regulations, Power Plants, Companies

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10.3.1.6 OPG Power To Invest $529.5 Million In Thermal Power Plants In India

Table 19: OPG Power To Invest $529.5 Million In Thermal Power Plants In India

Deal Type Asset Finance Deal Sub Type Self Funded Deal in Brief OPG Power Ventures Plc, a UK-based company, engaged in the development and operation of power generation plants, announced an investment of INR30,000m ($529.52m) in the construction and development of thermal power plants in India. The total installed capacity of the plants will be 540 MW. Out of which one 80 MW and one 160 MW plant will be developed in Chennai and 300 MW plant will be developed in Kutch, Gujarat. The investment per MW will be approximately $0.98m. The plants will be operational by 2014. Each of the plant will be held through separate subsidiary of OPG in India. OPG will work with a team of industry-leading suppliers and contractors including BHEL and Ansaldo Boilers for construction and operation of the plants. Arvind Gupta, CEO of OPG power, said, "In the recent years, India's energy consumption has grown at the fastest rate in the world due to rising population and economic developments. This growth leads to huge demand and supply gap and gives us a huge opportunity to grow our business. India is a resourceful country in terms of exhaustible and renewables." Deal Information

Deal Status Announced

Announced Date 03-Jun-2012

Companies Information

Owner/Sponsor Company Information

Company Name OPG Power Ventures Plc

Business Description

OPG Power Ventures Plc. (OPG Power) is a UK-based company, engaged in the development and operation of power generation plants for the supply of power directly to industrial consumers in India. It also participates in the spot and short term power markets in the country. The company's operating capacity is 107 MW. OPG Power operates a 77 MW coal-based plant at Chennai,Tamil Nadu; a 19.48 MW of gas fired power plant in Tamil Nadu; and a 10 MW waste-heat fired facility at Gummidipoondi, Tamil Nadu. The company supplies electric power to public sector undertakings, state electricity boards, and industrial consumers. OPG Power is headquartered in Douglas, Isle of Man. Deal Financials Deal Value Local (mn) 30,000 Deal Value (US$ m) 529.52 Valuation Multiples Information Powerplant Valuation Multiple

Capacity MWH Transaction Implied Value $ / MW

(Bcf) (Bcf) Ethanol Information Type Acquired Transaction Implied Values Capacity (US$/Liters per day) (Million Liters) Production 80.00 1000000.00

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10.3.1.7 Neyveli Lignite Announces Project Financing Of $479 Million For Neyveli Lignite Thermal Power Station III In India

Table 20: Neyveli Lignite Announces Project Financing Of $479 Million For Neyveli Lignite Thermal Power Station III In India

Deal Type Asset Finance Deal Sub Type Project Finance Deal in Brief Neyveli Lignite Corporation Limited (NLC), a power generation company, announced project financing of INR25,000m ($479m) for the construction of Neyveli Lignite Thermal Power Station III at Neyveli in Cuddalore district of Tamil Nadu, India. The financing will be provided by State Bank of India. The total cost of the project is estimated at INR59,071.1m ($1,131.8m). The total cost for the project will be financed through 70% debt and 30% equity. The total installed capacity of the project will be 1,000 MW, comprising two units of 500 MW each. The investment per MW will be $1.13m. The equity part of the investment will be met through internal accruals, the loan component would be funded through rupee term loan, external commercial borrowings, bonds and other debt instruments. NLC is planning to set up the project replacing the five decade old 600 MW Thermal Power Station-I. The electricity generated from the project will be supplied to Tamil Nadu Generation and Distribution Corp. Ltd. under power purchase agreement. The fuel for the project lignite will be supplied by mines operated by the company. The first unit of the project is expected to be commissioned in June 2015 and the second unit by December 2015. Deal Information

Deal Status Announced

Announced Date 29-Mar-2012

Companies Information

Owner/Sponsor Company Information

Company Name Neyveli Lignite Corporation Limited

Business Description

Company Name State Bank of India

Business Description

State Bank of India (SBI), along with its subsidiaries, offers a range of financial and banking services including life insurance, merchant banking, mutual funds, credit card and factoring, security trading and primary dealerships in the money market. The bank provides trading services, international banking and traditional banking and treasury operations. SBI also offers treasury services including international banking, corporate banking, retail banking, NRI services, agricultural banking, small and medium enterprise (SME) banking and other services. SBI conducts it activities through three reportable segments, namely, Treasury,

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Corporate/Wholesale Banking, and Retail Banking. The bank principally operates in India. In addition it conducts overseas operations in countries such as the US, Canada, Nigeria, Mauritius, Nepal, Russia, Indonesia and Bhutan. The bank is headquartered in Mumbai, India.

Asset Information

Asset Name Asset Type Asset Installed Location Classification Capacity

Neyveli Lignite Thermal Power Station III Thermal Thermal 1000.00MW Tamil Nadu Power power Deal Financials Deal Value Local (mn) 25,000 Deal Value (US$ m) 479 Total Cost Local (mn) 59071.10 Total Cost (US$ m) 1131.80 Owner Equity Local (mn) 34071.10 Owner Equity USD (mn) 652.80 Owner Equity (%) 30.00 Debt Local (mn) 25000.00 Debt USD (mn) 479.00 Debt(%) 70.00 Valuation Multiples Information Powerplant Valuation Multiple

Capacity MWH Transaction Implied Value $ / MW

(Bcf) (Bcf) Ethanol Information Type Acquired Capacity Transaction Implied (Million Liters) Values (US$/Liters per day) Production 80.00 1000000.00

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10.3.1.8 Neyveli Lignite To Invest $458.6 Million For Expansion Of Thermal Power Station-II In Tamil Nadu, India

Table 21: Neyveli Lignite To Invest $458.6 Million For Expansion Of Thermal Power Station-II In Tamil Nadu, India

Deal Type Asset Finance Deal Sub Type Self Funded Deal in Brief Neyveli Lignite Corporation Limited (NLC), a power generating company, announced an investment of INR24,535.7m ($458.6m) for the expansion of thermal power station TPS-II in Neyvali, Cuddalore District, Tamil Nadu, India. The total installed capacity of TPS-ll Expansion will be 500 MW, comprising of two 250 MW power stations. The investment per MW will be approximately $0.91m. The project has been approved by Government Of India for further expansion. The first unit of the project is expected to become operational by December 2011 with the second unit by July 2012. Deal Information

Deal Status Announced

Announced Date 10-Jan-2012

Companies Information

Owner/Sponsor Company Information

Company Name Neyveli Lignite Corporation Limited

Business Description

Asset Information

Asset Name Asset Type Asset Installed Location Classification Capacity

Neyveli Lignite Thermal Power Station II Thermal Thermal 250.00MW Tamil Nadu Expansion Power power Deal Financials Deal Value Local (mn) 24,535.70 Deal Value (US$ m) 458.60 Valuation Multiples Information Powerplant Valuation Multiple

Capacity MWH Transaction Implied Value $ / MW

(Bcf) (Bcf)

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Ethanol Information Type Acquired Capacity Transaction Implied (Million Liters) Values (US$/Liters per day) Production 80.00 1000000.00

10.3.1.9 Essar Steel Holdings To Sell Minority Interest In Essar Power For $94 Million

Table 22: Essar Steel Holdings To Sell Minority Interest In Essar Power For $94 Million

Deal Type Acquisition Deal Sub Type Minority Acquisition Deal in Brief Essar Steel Holdings Limited (Essar), a steel producer, agreed to sell 1.87% interest in Essar Power Limited, a power generation company, to Essar Power Holdings Limited, a subsidiary of Essar Group, for a consideration of $94m. V Suresh, CFO Essar Power said, "Essar Energy has been infusing funds into Essar Power by way of convertible preference shares, reducing the economic interest of Essar Steel in Essar Power to 1.82% now. If 1.82% stake is valued at $94m, then the conservation valuation of Essar Power will be $4 billion." The transaction has been extended till March 31, 2013 from September 30, 2011 according to a new share purchase agreement signed between two parties. The transaction is subject to satisfaction or waiver of certain conditions on mutual consent of both the parties. Deal Information Deal Status Announced Announced Date 06-Jan-2012 Expected Closing Date 31-Mar-2013 % Acquired 1.87 Companies Information Acquirer Company Information Company Name Essar Power Holdings Limited Vendor Company Information Company Name Essar Steel Holdings Limited Parent Essar Global Limited Business Description Essar Steel Holdings Limited is a subsidiary of Essar Global Limited, a producer of steel. Target Company Information Company Name Essar Power Limited Parent Essar Group Business Description Essar Power Limited (Essar Power) is an Indian power producer involved in generating power through conventional energy sources. The company operates four power plants with a combined capacity of 1,600 MW in three locations across India. The power generation assets of the company include two gas-based plants in Bhander and Hazira of 500 MW and 515 MW capacities respectively, a 500 MW co-generation plant in Vadinar and a 85 MW cogeneration power plant in Algoma, Canada. Essar Power supplies 300 MW of its current capacity to the Gujarat state grid to meet the country‟s power needs. The company is a subsidiary of Essar Group, a diversified company active in the areas of BPO and telecommunications, oil and gas, shipping, steel, ports, construction and energy sectors. Essar Power is headquartered in Mumbai, Maharashtra, India. Deal Financials Deal Value ($ million) 94

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10.3.1.10 CEA to Invest $5,402 Million in Junagadh Coal Power Project in Gujarat, India

Table 23: CEA To Invest $5,402 Million In Junagadh Coal Power Project In Gujarat, India

Deal Type Asset Finance Deal Sub Type Self Funded Deal in Brief Central Electricity Authority (CEA) of India, a government utility, announced an investment of INR240,000m ($5,401.89m) in the construction and development of a coal based ultra mega power project (UMPP) at Lodhva village in Kodinar taluka of Junagadh district, Gujarat, India. The total installed capacity of the project will be 4,000 MW. The investment per MW of the project will be approximately $1.35m. D Jagdeesh Pandian, principal secretary, Energy and Petrochemical Department, Gujarat State, said, "We suggested various locations to the CEA. After their technical evaluation, they have chosen Lodhva village site. The location is most convenient for importing coal for the UMPP. Proximity to sea will also help in getting water for coal-washing etc. Generated power will also be transmitted through grids in Gujarat. The state will get 40% of the generated power while the rest will be allocated to other states. The central government is in process of inviting bids for the project. We hope to see considerable progress shortly." Deal Information

Deal Status Announced

Announced Date 02-Aug-2011

Companies Information

Owner/Sponsor Company Information

Company Name Central Electricity Authority Deal Financials Deal Value Local (mn) 240,000 Deal Value (US$ m) 5,401.89 Valuation Multiples Information Powerplant Valuation Multiple

Capacity MWH Transaction Implied Value $ / MW

(Bcf) (Bcf) Ethanol Information Type Acquired Capacity (Million Transaction Implied Values Liters) (US$/Liters per day) Production 80.00 1000000.00

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10.3.1.11 NTPC to Invest $5,032 Million for Power Project in Andhra Pradesh, India

Table 24: NTPC To Invest $5,032 Million For Power Project In Andhra Pradesh, India

Deal Type Asset Finance Deal Sub Type Self Funded Deal in Brief NTPC Limited, a company engaged in the development, engineering, construction and operation of power generating plants, announced to invest INR230,000 million ($5,032.27 million) for the construction and development of power project to be located at Pudimadaka in Anakapally mandal of Visakhapatnam district, Andhra Pradesh, India. The total installed capacity of the project will be 4,000 MW. The 50% of power (2,000 MW) from the proposed 4,000 MW power project will be purchased by the government at a tariff to be decided by the Central Electricity Regulatory Authority (CERC). NTPC power project will help meet the growing demand for power in the state due to rapid industrialization and extensive agricultural operations. The state government, said, “It would facilitate necessary clearances required for the project and provide the requisite land and water. In response, NTPC, in December 2010, sent a draft power purchase agreements (PPAs) to be entered between NTPC and the AP discoms.” N. Kiran Kumar Reddy, chief minister of Andhra Pradesh, said, “This is another critical step taken by the state government to promote power generation, which will help have access to power, matching to the ever- increasing needs in the state.” Deal Information

Deal Status Announced

Announced Date 03-Jan-2011

Companies Information

Owner/Sponsor Company Information

Company Name NTPC Limited

Business Description

NTPC Limited (NTPC) is a power utility company, engaged in the development, engineering, construction and operation of power generating plants. NTPC sells electricity to bulk consumers, principally electricity utilities companies or entities owned by States Government. Further, it is also engaged in providing consultancy services for power plant construction and power generation to companies nationally as well as internationally. NTPC is the largest thermal power generating company in India as well as sixth in world. The company has a total installed capacity of 34,194 MW. NTPC carries out its operations through its six wholly or partially owned subsidiaries. Further, NTPC has around 17 joint ventures (JV) projects. The company is headquartered at New Delhi, India.

Deal Financials Deal Value Local (mn) 230,000 Deal Value (US$ m) 5,032.27

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10.3.1.12 BSEB to Invest $3,293 Million for Rajauli Thermal Power Plant in Bihar, India

Table 25: BSEB To Invest $3,293 Million For Rajauli Thermal Power Plant In Bihar, India

Deal Type Asset Finance Deal Sub Type Self Funded Deal in Brief Bihar State Electricity Board (BSEB), a government utility company, announced an investment of INR148,000m ($3,293.04m) in the construction and development of thermal power project to be located at Rajauli in Nawada district, Bihar, India. The total installed capacity of the project will be 2,640 MW. BSEB has received approval from the government for the construction of power project. The project is expected to be operational by the end of 2015. An official of Bihar State Investment Promotion Board (SIPB), said, "More than anything, Bihar attracted private investment in the power sector till March 31. The proposal for establishing five new thermal power plants has been approved by the government." Renu Kumari Kushwaha, industry minister, said, "Big and small industrialists are showing a keen interest in Bihar after Chief Minister Nitish Kumar initiated measures to develop infrastructure, including power." An official in the chief minister‟s office, said, "After roads, the power sector is a priority of Nitish Kumar for the development of Bihar." Deal Information

Deal Status Announced

Announced Date 14-Apr-2011

Companies Information

Owner/Sponsor Company Information

Company Name Bihar State Electricity Board

Business Description

Bihar State Electricity Board (BSEB) is a state owned electric utility that generates, transmits and distributes electricity. The new projects of the company include Proposed Power Projects in Bihar, IPP Power Stations under Case-II Tariff Based Bidding, and IPP Power Stations (MOU signed with BSEB). BSEB's short and long-term projects are, Rashtriya Sam-Vikas Yojna Phase-II and R&M of Old Grids under Phase-II. BSEB has planned to Construct new GSS 1 at 220/132 KV at Sipara and 6 at 132/33KV at Muzaffarpur, Katra, Naugachia, Hulasganj/Ekangarsarai, Buxar and Tekari in Rashtriya Sam-Vikas Yojna Phase-II (Part 1) project. R&M of Old Grids under Phase-II (Part - 1): RSVY works on Dehri-on-Sone, Fatuha, Jakkanpur, Barauni, Samastipur has been completed. Deal Financials Deal Value Local (mn) 148,000 Deal Value (US$ m) 3,293.04

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10.3.1.13 BSEB to Invest $3,293 Million for Rajauli Thermal Power Plant in Bihar, India

Table 26: BSEB To Invest $3,293 Million For Rajauli Thermal Power Plant In Bihar, India Deal Type Asset Finance Deal Sub Type Self Funded Deal in Brief Bihar State Electricity Board (BSEB), a government utility company, announced an investment of INR148,000m ($3,293.04m) in the construction and development of thermal power project to be located at Rajauli in Nawada district, Bihar, India. The total installed capacity of the project will be 2,640 MW. BSEB has received approval from the government for the construction of power project. The project is expected to be operational by the end of 2015. An official of Bihar State Investment Promotion Board (SIPB), said, "More than anything, Bihar attracted private investment in the power sector till March 31. The proposal for establishing five new thermal power plants has been approved by the government." Renu Kumari Kushwaha, industry minister, said, "Big and small industrialists are showing a keen interest in Bihar after Chief Minister Nitish Kumar initiated measures to develop infrastructure, including power." An official in the chief minister‟s office, said, "After roads, the power sector is a priority of Nitish Kumar for the development of Bihar." Deal Information

Deal Status Announced

Announced Date 14-Apr-2011

Companies Information

Owner/Sponsor Company Information

Company Name Bihar State Electricity Board

Business Description

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10.3.1.14 Adani Power Announces Project Financing Of $2,719 Million For Bhadreshwar Coal Fired Power Plant In Gujarat, India

Table 27: Adani Power Announces Project Financing Of $2,719 Million For Bhadreshwar Coal Fired Power Plant In Gujarat, India

Deal Type Asset Finance Deal Sub Type Project Finance Deal in Brief Adani Power Limited, a power generation company, announced project financing of INR123,750m ($2,719.14m) for the construction and development of Bhadreshwar coal fired power plant to be located at Bhadreshwar, near Mundra in the coastal district of Kutch, Gujarat, India. The company expects to close the financing by March 2012. The total project cost is estimated to be INR165,000m ($3,625.52m) and will have a total installed capacity of 3,300 MW, comprising five units of 660 MW each. Adani Power has set up a subsidiary Kutch Power Generation Company Ltd to oversee execution of the proposed 3,300 MW imported coal-fired thermal power plant, power generation, evacuation and transmission of electricity at Bhadreshwar. Deal Information

Deal Status Announced

Announced Date 01-Mar-2011

Companies Information

Owner/Sponsor Company Information

Company Name Adani Power Limited Parent Adani Enterprises Ltd

Business Description

Adani Power Limited (APL) is a power project development company in India. APL operates as a subsidiary of Adani Enterprises Limited (AEL). The company engages in power generation and power transmission business. It also engages in developing a number of power projects and a transmission station system. APL has nine power projects with a total installed capacity of 16,500 MW, out of which 2,640 MW has been commissioned. The company comprises 430 kms of 400 KV D/C transmission line from Mundra to Dehgam. It's key subsidiaries include Adani Power Maharashtra Limited (APML), Adani Power Rajasthan Limited (APRL), Adani Pench Power Limited, Adani Power Dahej Limited, Kutchh Power Generation Limited and Adani Shipping PTE Limited. APL is headquartered in Ahmedabad, Gujarat, India. Deal Financials Deal Value Local (mn) 123,750 Deal Value (US$ m) 2,719.14 Total Cost Local (mn) 165000.00 Total Cost (US$ m) 3625.52 Owner Equity Local (mn) 41250.00 Owner Equity USD (mn) 906.38 Owner Equity(%) 25.00 Debt(%) 75.00

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10.3.1.15 Lanco Infratech To Invest $2,562 Million In Raigarh Coal Power Project In Chattisgarh, India

Table 28: Lanco Infratech To Invest $2,562 Million In Raigarh Coal Power Project In Chattisgarh, India

Deal Type Asset Finance Deal Sub Self Funded Type Deal in Brief Lanco Infratech Limited (Lanco), an integrated infrastructure developing company, announced an investment of INR120,000m ($2,561.80m) in the construction and development of a coal based power project in Raigarh, Chhattishgarh, India. The total installed capacity of the project will be 2,000 MW. The investment per MW of the project will be approximately $1.28m. The company will receive coal from Gare Pelma II coal block of Maha Tamil Collieries for the project. Nagaprasad Kandimalla, chief executive officer of Lanco, said, "We have emerged as successful bidder and are selected as the Mine Developer and Operator (MDO) of Gare Pelma II coal block of Maha Tamil Collieries. We will set up a 2,000 power project using coal from the mine. "We have emerged as successful bidder and are selected as the Mine Developer and Operator (MDO) of Gare Pelma II coal block of Maha Tamil Collieries. We will set up a 2,000 power project using coal from the mine. "As per the agreement, Chhattishgarh, being the base state for the project would have the right to offtake 30% of the power generated from the project. The remaining half would be connected to the Tamil Nadu grid and the rest, we will sell on commercial basis." Deal Information Deal Status Announced Announced Date 03-Aug-2011 Companies Information Owner/Sponsor Company Information Company Name Lanco Infratech Limited Business Description Lanco Infratech Limited (Lanco) is an integrated infrastructure enterprise of India. It specializes in building large civic and urban infrastructure projects. Lanco developed various projects across power, road and port infrastructure and carried out brownfield and greenfield projects. The company is a private sector power developer with 4,388 MW under operation, 4,988 MW under construction and 7,103 MW of projects under development. Furthermore, Lanco is also engaged in infrastructure and property development business. Lanco is headquartered in Gurgaon, Haryana, India.

Deal Financials Deal Value Local (mn) 120,000 Deal Value (US$ m) 2,561.80 Valuation Multiples Information Powerplant Valuation Multiple Capacity MWH Transaction Implied Value $ / MW (Bcf) (Bcf) Ethanol Information Type Acquired Transaction Implied Values Capacity (US$/Liters per day) (Million Liters) Production 80.00 1000000.00

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11 NTPC Limited – Company Snapshot

11.1 Key Information

Table 29: NTPC Limited, Key Facts

Corporate Address NTPC Bhawan, Scope Complex, Ticker Symbol, Exchange NTPC [National Stock Exchange New Delhi, Delhi, 110003, India of India] Telephone +91 11 24360100 No. of Employees 25,144 Fax +91 11 24361018 Fiscal Year End March URL www.ntpc.co.in Revenue (in USD Million) 14,573.72 Industry Clean Technology, Energy and Revenue (in INR Million) 688,316.80 Utilities Locations India, Nigeria, Sri Lanka Source: Annual Report, Company Website, GlobalData, Power etrack Companies Database (August 28, 2012)

11.2 Company Overview

NTPC Limited (NTPC) is a power utility company that specializes in the development, engineering, construction and operation of power generating plants. It is the largest thermal power generating company in India and the sixth in the world. The company has a total installed capacity of 39,174 MW. It carries out operations through its wholly or partially owned subsidiaries. NTPC sells electricity to its substantial customer base consisting of electricity utilities or entities owned by state governments. It also specializes in providing consultancy services for power plant construction and power generation to companies nationally and internationally. NTPC also carries out power trading, coal mining and ash utilization. The company operates around 16 coal and seven gas-based stations across India. The company is headquartered in New Delhi, India.

The key business strategies of the company include focus on the construction and development of the power generation plants. It also aims at maintaining its existing partnerships and entering into new collaborative agreements to augment its services. To this end, the company recently entered into a power purchase agreement with Bangladesh Power Development Board, through its wholly- owned subsidiary, NTPC Vidyut Vyapar Nigam Limited.

11.3 NTPC Limited – Business Description 11.3.1 Business Overview

NTPC is a power generation company that specializes in developing, constructing and operating power generation plants. The company is the largest power generation company in India with a market share of around 19% in terms of installed capacity and around 27.40% in terms of national power generation. NTPC also specializes in a wide range of business areas, which includes coal mining, power trading, power exchange and manufacturing. The company carries out its operations through its five wholly-owned subsidiaries, namely, NTPC Electric Supply Company Ltd. (NESCL), NTPC Hydro Ltd. (NHL), NTPC Vidyut Vyapar Nigam Ltd. (NVVN), Kanti Bijlee Utpadan Nigam Limited and Bhartiya Rail Bijlee Company Limited (BRBCL).

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NESCL carries out the distribution and supply of electrical energy. The company has the mandate to accomplish rural electrification work on turnkey basis under Rajiv Gandhi Grameen Vidyutikaran Yojana (RGGVY) in five states, namely Chhattisgarh, Jharkhand, Madhya Pradesh, Orissa and West Bengal and the union territory of Lakshadweep. NESCL set up a joint venture with Kerala Industrial Infrastructure Development Corporation to acquire the business of retail distribution of electricity in Kerala.

The company's subsidiary, NHL, specializes in the development of small and medium sized hydro electric power projects of up to 250 MW capacity. NHL is currently implementing two hydro projects, one each in Uttarakhand and West Bengal. The company‟s Uttarakhand power plant, Lata Tapovan, has the generation capacity of 171 MW of electricity. On the other hand, the company‟s West Bengal power plant is Rammam-III and has the generation capacity of 120 MW of electricity.

NTPC's wholly-owned subsidiary, NVVN, conducts the sale and purchase of electric power and facilitates the development of power exchange in India. The government of India made NVVN the main nodal agency to purchase around 1,000 MW of solar power that would be commissioned by 2013 under the National Solar Mission.

The company‟s subsidiary, Kanti Bijlee Utpadan Nigam Limited (formerly Vaishali Power Generating Company Limited) is responsible for Muzaffarpur Thermal Power Station. NTPC has 64.93% interest in this subsidiary.

NTPC's subsidiary, BRBCL, is responsible for setting up four units of 250 MW each of coal-based power plants at Nabinagar, district Aurangabad, Bihar. The company has 74% interest in this subsidiary and the remaining 26% is held by the Ministry of Railways (govt. of India).

The company conducts its operations through two segments, namely, Generation and Others. In 2012, the Generation segment reported revenue of INR 654,841.1m, which accounted for 98.9% of the company's total revenue. The other segments reported revenue of INR 8,000.7m, which accounted for 1.1% of the company's total revenue.

In May 2012, the company received Golden Peacock Award for its Corporate Social Responsibility (CSR) 2012. In March 2012, the company's wholly-owned subsidiary, NVVN entered into a power purchase agreement with Bangladesh Power Development Board, for the commencement of energy cooperation between the two countries. In January 2012, the company entered into a joint venture agreement with Bangladesh Power Development Board for setting up and implementing 1320 MW coal-based power plants in Bangladesh.

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11.4 NTPC Limited – Major Products and Services

NTPC carries out the engineering, construction and operation of power generating plants. The company's major products and services include the following:

Table 30: Major Products and Services

Product: Electricity Services: Construction Management Environment Engineering and Management Erection and Commissioning Financial Systems and Modeling HRD and Training Information Technology Support & Special Projects Lender's Engineer Services Management Consultancy Materials Management Operation and Maintenance Owner's Engineer Services Project Management Procurement Services Quality Assurance and Inspection Services Restoration Efficiency Improvement and Renovation and Modernization Research and Development Turnkey Execution

Source: Annual Report, Company Website, GlobalData, Power etrack Companies Database (August 28, 2012)

11.5 SWOT Analysis 11.5.1 Overview

NTPC Limited (NTPC) is an independent power company that conducts the development, engineering, construction and operation of power generating plants. The company has a strong foothold in the market with efficient generation matrix and diversified business operations. Increasing long term liabilities and lack of fuel diversification for power generation could hamper the company's business operations. Nevertheless, the company's focus on expanding in international markets and development of generation capabilities enable the company to increase

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the total number of customers it serves. However, it faces the threats of intense competition, commodity price fluctuations and power theft risk, which could affect its operational activities.

Table 31: NTPC Limited, SWOT Analysis Strengths Weakness

Strong Market Position Slow Fuel Diversification Process Business Model: Diversified Operations Lack of Fuel Diversity Sturdy Research and Development Activities Long Term Liabilities Growth Prospects: Business Performance

Opportunities Threats

Developmental Projects Intense Competition

Expansion Initiatives: International Markets Increasing Raw Material Costs

Diversification into Coal Mining & Other Business Legal and Political Framework

Strategic Collaborations Power Theft

Source: Annual Report, Company Website, GlobalData, Power etrack Companies Database (August 28, 2012)

11.5.2 NTPC Limited Strengths

11.5.2.1 Strong Market Position

The company is one of the largest power generation companies in India. It conducts transmission and distribution of electricity through its subsidiary, NTPC Electric Supply Company Ltd. (NESC). NTPC operates a total of 30 power generation plants (including joint ventures) and has a total net installed capacity of 39,174 MW. The company‟s installed capacity accounts for approximately 19% of the total capacity in India. As of March 31, 2012, NTPC generated approximately 27% of the total power generated in India. NTPC has plants spread across India, with capacity of 10,827 MW in the Northern region; 11,133 MW in the Western region; 7,900 MW in the Eastern region; 4,950 MW in the Southern region; with the remaining 4,364 MW coming from joint ventures (JVs). The company operates through six subsidiary companies for undertaking specific business activities. The strong market position gives NTPC a competitive edge over its peers, besides stable revenue. 11.5.2.2 Business Model: Diversified Operations

The company‟s diversified business operations enable it to explore new growth avenues. NTPC's core business activity is to generate power. It undertakes the transmission and distribution of power through its subsidiary. The company's other business operations include providing consultancy, project management and supervision and coal mining activities. It provides consultancy services for the renovation and modernization of old units of state electricity boards

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and to various international clients. The Services segment provides a broad range of services such as engineering, construction, operations and management (O&M), Residual Life Assessment (RLA) / Renovation and Modernization (R&M) and management of power projects. Besides, the company conducts power trading, coal mining and ash utilization activities. Its diversified business operations support NTPC in gaining market share and improving its profits. 11.5.2.3 Sturdy Research and Development Activities

NTPC has strong focus on research and development (R&D) activities to develop techniques in power plant construction and operation, which enable it to provide more efficient, reliable and environmentally friendly operations of power plants. The company established NTPC Energy Technology Research Alliance (NETRA) to focus on technologies that deal with climate change issues and also provide a comprehensive range of scientific services that enables NTPC power stations to retain their technological and commercial edge. NETRA focuses on areas such as climate change, waste management, new and renewable energy, efficiency improvement, cost reduction, and reliability of stations. NETRA filed 16 patent applications related to various activities such as integrated approach for bio-diesel preparation utilizing biofruit (pongamia fruit), sensor for tube inspection and method and apparatus for efficient heat integration. It signed a memorandum of understanding (MoU) with Indian Oil Corporation Limited (IOCL) for collaborative research on biochemical treatment of organic rich waters, development of energy efficiency lubricants, an integrated plant for biodiesel production, utilization of biomass for power generation, NDT and corrosion related projects for health assessment. It also entered into an MoU with Research Designs & Standard Organization (RDSO) to explore utilization of ash in railway embankment. 11.5.2.4 Growth Prospects: Business Performance

NTPC recorded high revenue margins in 2011. The company reported 11.2% increase in total revenue in 2012, as compared to that in 2011. For the fiscal year ended 2012, the company reported revenue of INR 688,316.8m. Such growth resulted in strong margins. In 2012, the company maintained good liquidity with minimal project financing to report free cash flow of INR 180,916.70m, after incurring capital expenditure, interest, and tax. As a result, its current ratio stood at 2.06 at the end of fiscal year 2012. A higher current ratio indicates that the company is in a strong financial position and is more capable of meeting its short term obligations than other companies in the sector. Its quick ratio stood at 1.86 with cash ratio of 0.95 for fiscal year 2012. The company's current assets were valued at INR 428,053.90m in 2012, as compared to current liabilities of INR 208,020.70m.

Besides, the company reported increased returns in 2012, as compared to those in previous years. The company's return on equity (ROE) was 13.19% at the end of fiscal year 2012, as compared to 13.6% in 2011. Its return on working capital was 59.71% in 2012, as compared to 54.77% in 2011. Increasing profitability ratios indicate the company‟s improved performance and its ability to deliver returns, as expected by its shareholders. Its net profit margin was 14.26% and Profit Before Tax (PBT) margin was 19.09% in 2012. Increased margins reflect strong operational efficiency of the company.

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11.5.3 NTPC Limited Weaknesses 11.5.3.1 Slow Fuel Diversification Process

NTPC is expanding its electricity generation portfolio under a long-term strategic plan. Though NTPC generates electricity using fossil fuels, it intends to diversify into renewable energy sources. The total coal reserves assessed in India stand at 267 billion metric tons (BMT), which are expected to be exhausted in approximately 45-50 years. NTPC is developing a 2,000 MW nuclear power plant; a 1,000 MW solar power plant and a 1,920 MW hydro power plant, which will become operational by 2017. Since India submitted to the United Nations (UN) its proposed emission intensity cut targets by 20-25% by 2020 in comparison to the 2005 level, NTPC's slow diversification into renewable sources for power generation could impact its business operations.

11.5.3.2 Lack of Fuel Diversity

The company generates almost all of its electricity using fossil fuels. It has total installed capacity of 39,174 MW, which includes 30,855 MW from coal-fired power plants, 3,955 MW from gas-fired power plants and the remaining 3,364 MW capacity is generated from JVs, utilizing coal and natural gas powered plants. High dependence on these fuels could increase the cost of production and affect the profit margin of the company. Lack of exposure to renewable energy could adversely impact its commitments to customer energy efficiency and renewable energy. The company should focus on clean fuel sources for power generation to reduce dependence on conventional fuels. It increases generation capacity with renewable sources and has a positive impact on its business. 11.5.3.3 Long Term Liabilities

The company reported highly leveraged capital structure, which could affect its expansion and growth plans. Up to the end of fiscal 2012, the company reported total debt obligation of INR 550,021m, consisting of senior unsecured notes, drawn from domestic line of credit facilities, loans from corporate banks, KfW and MTN programme. Of the total debt obligation, it has 16.6% increased long term debt component of INR 548,519.40m in 2011. It also has short term debts and accounts payable of INR 1,501.60m in 2011, as compared to INR 394m in 2010. As a result, the company reported substantially high debt to equity ratio of 73.93% and debt to capital ratio of 0.41% for fiscal year ended March 2012. The company incurred this debt to meet its working capital and capital expenditure needs. If it fails to comply with any of the debt service requirements, the debt could become due and payable prior to its scheduled maturity. Any reduction in revenue and operating cash flows could hinder the company‟s ability to repay interest and principal, resulting in default. Hence, such huge debt increases the financial burden on the company, limiting the availability of cash for its growth. 11.5.4 NTPC Limited Opportunities

11.5.4.1 Developmental Projects

NTPC has many projects that are being implemented to increase the company‟s generating capacity. The company initiated a plan for 2017, under which it would expand its total generation capacity by around 17,000 MW. The company‟s expansion project consists of 11 coal-based projects with a total installed capacity of 11,520 MW; three hydroelectric power projects with a total

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installed capacity of 1,920 MW and four coal-based power plants that are being developed under JVs with a total installed capacity of 4,390 MW. NTPC is also developing a 2,000 MW nuclear power plant. The projects are expected to become operational by 2017. The company is focusing on increasing its total generation capacity to 1,28,000 MW by 2032. Some of its projects under coal generation include Indira Gandhi STPP- JV with IPGCL & HPGCL ( 3 x 500) with a total expected installed capacity of around 1,000 MW; Vindhyachal-IV (2X500) project with a net installed capacity of 1,000 MW, and others. With these projects, NTPC wound be able to increase its total generation capacity and thereby its customer base and revenue. 11.5.4.2 Expansion Initiatives: International Markets

The company is planning to expand its business in the Middle East, Asia-Pacific and Africa. In January 2012, the company entered into a 50:50 joint venture agreement based on build, own and operate (BOO) power plants with Bangladesh Power Development Board. It also entered into consulting agreement with EGCB for providing operation and maintenance services for its 240 MW gas-fired power plant. The company signed an agreement with Bangladesh Power Development Board to construct two 1,320 MW power generation plants in Bangladesh, as part of the joint venture. In Bhutan, NTPC entered into an agreement with Royal Govt. of Bhutan for preparing DPR for 620 MW Amochhu reservoirs based hydroelectric power plant. In Sri Lanka, the company entered into a joint venture with Ceylon Electricity Board, to construct 500 MW power plants in Trincomalee region. Such expansion initiatives of the company to enter new and emerging markets would enable NTPC to diversify its revenue generation base. 11.5.4.3 Diversification into Coal Mining & Other Business

NTPC plans to branch out its portfolio in order to come forward as an integrated power major. The company aspires to have a presence across the entire energy value chain through backward and forward integration into areas such as coal mining and manufacturing. It focuses on coal mining, LNG value chain, manufacturing activities, power trading, distribution, R&M and support to power sector development in its endeavor to leverage its strength and secure its interest in the entire power value chain, provide impetus to its core generation business and enhance shareholders‟ value. Under power trading, it operates through a wholly-owned subsidiary, NVVN. It is also a participant in National Power Exchange Ltd., a joint venture of NTPC, NHPC, PFC and TCS for operating power exchange to facilitate power trading in the country. For distribution of electrical energy, it operates through a wholly-owned subsidiary, NESCL, which conducts rural electrification programme, Rajiv Gandhi Gramin Vidyutikaran Yojana. The company intends to utilize growth prospects in power equipment manufacturing capacity for which, NTPC formed a joint venture with BHEL and Bharat Forge Ltd. for power plant equipment manufacturing. It also has acquired stakes in Transformers and Electricals Kerala Ltd. (TELK) for manufacturing and repair of transformers.

Besides, NTPC is focusing upon the utilization of ash generated from its power stations to convert ash disposal into an opportunity for cement firms. Ash generated is used as raw material by cement companies and brick manufacturers. The company‟s subsidiary, NVVN, conducts the business of fly ash sale to domestic and export customers. NTPC also participates in joint ventures with cement companies to establish cement grinding units within NTPC power stations. These diversifications strengthen the business operations as well as the competitive advantage of the company.

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11.5.4.4 Strategic Collaborations

The company entered into various contracts and agreements that would enable NTPC to expand its operational and revenue generation base. In March 2012, the company, through International Coal Ventures (ICVL), an Indian state consortium, intended to acquire Washpool coking coal project for $324.14m from Aquila Resources Limited. ICVL is made up of the utility NTPC Limited, Steel Authority of India Limited, National Mineral Development Corp. Ltd (NMDC), Coal India Limited and steelmaker Rashtriya Ispat Nigam Ltd. Besides, in January 2011, the company signed a joint venture agreement with Nuclear Power Corporation of India Ltd. (NPCIL), named, Anushakti Vidhyut Nigam Ltd to develop nuclear power plants in the country. The company‟s involvement into new projects would enable it to expand its operational base and revenue generation ability 11.5.5 NTPC Limited Threats

11.5.5.1 Intense Competition

NTPC operates in the highly competitive industry. The company‟s competitors may have extensive and diversified developmental or operating experience and greater financial resources. In recent years, competition is increasing for securing sales agreements and acquiring new assets. In certain markets, these factors caused higher acquisition prices for existing assets. Thus, increasing competition is likely to put pressure on the company‟s pricing policy and could reduce the market share it currently enjoys. Its business could also be threatened by new and efficient technologies. As a result, such competition could adversely affect NTPC‟s performance. 11.5.5.2 Increasing Raw Material Costs

The company generates power through fossil fuels. NTPC‟s operations and revenue are significantly dependent on the prices of and the demand for fossil fuels. In the past, the energy commodities prices were highly volatile. Moreover, the energy commodities prices are likely to remain volatile in the near future. The prices the company pays for raw materials such as coal, oil and natural gas, fluctuate depending on supply and demand for these commodities in the international markets. Frequent pricing changes and imbalances in the market could adversely affect the company‟s operations and profitability. 11.5.5.3 Legal and Political Framework

NTPC‟s business depends on various national and local environmental laws and regulations. The laws and regulations imposed by the government control the operations and activities of the company. The role of various renewable sources of energy is increasing due to the growing importance of climatic changes, and also due to the need to reduce carbon emissions. The company‟s earnings could be impacted by the regulations concerning emissions, fuel consumption and safety. Non-compliance with regulatory limits could lead to penalties. The political conditions of the country could also affect NTPC‟s business. The change in government policies and regulations could have a negative effect on the company‟s growth and expansion strategies. 11.5.5.4 Power Theft

Electricity theft is one of the serious issues in India. A large number of electric companies are affected by electricity related illicit practices. Theft of electricity, in most parts of urban India, amounts to 1.5% of India's GDP. NTPC is exposed to risks from practices such as illegal wire

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tapping, meter tampering and seal breaking. The company installs meters and instrument transformers that play a vital role in energy calculations. Any manipulation of the grid system, and tampering with meters and security seals could severely affect the financial and operational performance of the company.

11.6 NTPC Limited – Locations and Subsidiaries 11.6.1 Head Office

NTPC Limited

NTPC Bhawan

Scope Complex New Delhi

Delhi

ZIP: 110003 Tel: 91 11 24360100

Fax: 91 11 24361018

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11.6.2 Other Locations & Subsidiaries

Table 32: NTPC Limited, Subsidiaries NTPC Electric Supply Company Ltd.2nd floor, R&D Building NTPC HYDRO LTDA-11, NFL Premises, Ground floor A-8A, SECTOR - 24 F-Wing, sector -24, Noida Delhi Delhi Haryana Uttar Pradesh Zip: 201301 Tel: 91 0120 2412294 Tel: 91 0120 2410333 Fax: 91 0120 2412736 Fax: 91 0120 2410205 India India

NTPC Vidyut Vyapar Nigam Ltd.3rd Floor, Core 5, Scope Bhartiya Rail Bijlee Company LimitedIndia Complex 7 Institutional Area, Lodi Road New Delhi

Zip: 110003 Tel: 91 11 24387741 India

Kanti Bijlee Utpadan Nigam LimitedMuzaffarpur Delhi Tel: 91 6223 267315 Fax: 91 6223 267310 India Source: Company Website, Annual Reports

Source: Annual Report, Company Website, GlobalData, Power etrack Companies Database (August 28, 2012)

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12 Maharashtra State Power Generation Co., Ltd – Company Snapshot

12.1 Key Information

Table 33: Maharashtra State Power Generation Co. Ltd., Key Facts

Corporate Address Plot No. G-9, Prakashgad, Mumbai, Maharashtra, 400051, India Telephone +91 22 26474211 No. of Employees 16,773 Fax +91 22 26476749 Fiscal Year End March URL www.mahagenco.in Revenue (in USD Million) 2,587.38 Industry Energy and Utilities Revenue (in INR Million) 122,201.90 Locations India Source: Annual Report, Company Website, GlobalData, Power etrack Companies Database (August 28, 2012)

12.2 Company Overview

Maharashtra State Power Generation Co., Ltd. (Mahagenco), a wholly-owned subsidiary of M.S.E.B. Holding Co., Ltd., is a government-owned, electricity company. It generates and supplies electricity in the state of Maharashtra, India. The company came into existence following the Maharashtra government‟s decision to reorganize Maharashtra State Electricity Board (MSEB). Mahagenco owns and operates power stations based on various technologies including thermal, gas and hydro. The company‟s power generation portfolio comprises seven thermal power stations, one hydro station and one gas-based power station with total installed capacity of 10,017 MW. Mahagenco is headquartered in Maharashtra, India.

12.3 Maharashtra State Power Generation Co., Ltd – Business Description 12.3.1 Business Overview

Mahagenco is a government-owned organization, carrying out the generation and supply of electricity in the state of Maharashtra. Mahagenco is a wholly-owned subsidiary of M.S.E.B. Holding Co., Ltd. The company was formed following a decision by the government of Maharashtra to reorganize the erstwhile MSEB. Mahagenco owns and operates power stations based on various technologies including thermal, gas and hydro. The company‟s power generation portfolio includes seven thermal stations, one hydro station and one gas-based power station. It has total installed capacity of 10,017 MW. Mahagenco is headquartered in Maharashtra, India. The company generates and supplies electricity in Maharashtra, India, which is its only operational and geographical segment.

The power stations that Mahagenco operates include Bhusawal Thermal Power Station, Chandrapur Super Thermal Power Station, Khaperkheda Thermal Power Station, Koradi Thermal Power Station, Nasik Thermal Power Station, Paras Thermal Power Station, Parli Thermal Power Station, Pophali Hydro Power Station and Uran Gas Turbine Power Station.

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Bhusawal Thermal Power Station is in Jalgaon in Bhusawal District. It is a coal-based power station, with a total installed capacity of 475 MW, operating four units. Chandrapur Super Thermal Power Station is in Chandrapur with a total installed capacity of 2,340 MW (seven generating units). The Khaperkheda Thermal Power Station is in Nagpur and has a total installed capacity of 840 MW (four generating units). Koradi Thermal Power Station is in Koradi, Nagpur and has a total installed capacity of 1,040 MW (seven units). Nasik Thermal Power Station is in Nasik and has a total installed capacity of 880 MW. Paras Thermal Power Station is at Paras in Akola district with a total installed capacity of 305 MW (five units). The Parli Thermal Power Station, in Parli-Vaijnath in Beed district, has a total installed capacity of 920 MW (six units).

The Pophali Hydro Power Station is at Pophali Tal Chiplun in Ratnagiri district and has a total installed capacity of 1,920 MW. Uran Gas Turbine Power Station, in Raigad district, has a total installed capacity of 612 MW. The company also operates various small hydro power plants with a capacity of 424 MW.

In 2011, the average availability factor was 81.64% for the coal fired plants, as compared to 88.40% in the previous year and 97.16% for gas based plants. The company overhauled 17 units in 2011, as against 18 units in 2010. To meet the rising demand for electricity, Mahagenco installed two new units with capacity of 500 MW. The company commissioned Parli TPS (thermal power station) Unit 7 (250 MW) and Paras TPS Unit 4 (250 MW). It has a few other projects in progress, which include Khaperkheda TPS Unit 5 (500 MW), Bhusawal TPS Unit 4 and 5 (500 MW each), Chandrapur TPS Unit 8 and 9 (500 MW each), Parli TPS Unit 8 (250 MW) and Koradi TPS unit 8, 9 and 10 (660 MW each). The company is planning future projects of upto 13,940 MW capacity.

Mahagenco's total annual requirement of coal is approximately 38.95 million metric tons. Mahagenco receives coal through domestic supplies, e-auction and import. It meets the demand for approximately 35.60 million metric tons of coal from indigenous supplies and imports 3.35 million metric tons.

The company operates through two joint ventures and one subsidiary. Its joint ventures include Mahaguj Collieries Ltd. and UCM Coal Company Ltd. Dhule Thermal Power Co. Ltd. is its only subsidiary. Mahaguj Collieries Ltd. is a joint venture between Mahagenco and Gujarat State Electricity Co Ltd. for captive mining of coal blocks at Machchakata. The UCM Coal Company Ltd is a JV company between the company, Uttarpradesh Rajya Vidyut Uttpadan Nigam Ltd. and Chattisgarh Mineral Development Corporation. The joint venture partners share the output of coal to be generated from Chendipada and Chendipada II coal blocks. Dhule Thermal Power Co. Ltd. implements various green field projects under the guidelines of Ministry of Power, Government of India.

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12.4 Maharashtra State Power Generation Co., Ltd – Major Products and Services

Mahagenco is a Government owned organization, undertaking power generation business. The company‟s key products include the following:

Table 34: Major Products and Services

Products:

Electricity

Source: Annual Report, Company Website, GlobalData, Power etrack Companies Database (August 28, 2012)

12.5 SWOT Analysis 12.5.1 Overview

Maharashtra State Power Generation Co. Ltd. (Mahagenco) is a state-owned electric utility and a subsidiary of M.S.E.B. Holding Co. Ltd. The company conducts its business operations leveraging its operational infrastructure and new technologies. To meet the rising demand for electricity in the state, it initiated measures to augment its generation portfolio in both thermal and renewable energy segments. However, difficulty in procuring coal and environmental regulations could affect the company's operations.

Table 35: Maharashtra State Power Generation Co. Ltd., SWOT Analysis Strengths Weakness

Operational Infrastructure Dependent on Thermal Fuel Sources Focus on New Technologies and Innovation High Power Generation Costs Growing Financial Performance

Opportunities Threats

Increasing Power Demand in India Regulatory Environment

Increasing Renewable Energy Demand Coal Supply Issues

Growth through Joint Ventures Operational Issues

Source: Annual Report, Company Website, GlobalData, Power etrack Companies Database (August 28, 2012)

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12.5.2 Maharashtra State Power Generation Co., Ltd Strengths 12.5.2.1 Operational Infrastructure

Mahagenco plays a major role in the electricity sector of the state of Maharashtra. In terms of installed capacity, it is the second largest power generation company in India. As of May 2012, the company operated a number of thermal and renewable power generation plants with an installed capacity of around 10,237 MW. Mahagenco operates a number of thermal power generation plants including Koradi Thermal Power Station (TPS), Nashik TPS, Bhusawal TPS, Paras TPS, Parli TPS, Khaparkheda TPS and Chandrapur TPS. Its hydro power generation plants include Koyna Hydro Power Station with an installed capacity of around 1,920 MW and a number of small hydro power stations with installed capacity of 424 MW. The company also operates a gas-fired power plant, Uran G. T. that has an installed power generation capacity of around 612 MW, and a waste heat recovery (WHR) plant with an installed capacity of 240 MW. Such operational network supports Mahagenco's power generation. 12.5.2.2 Focus on New Technologies and Innovation

Mahagenco plays a significant role in the development of the Indian power sector. As part of its efforts to improve power generation, it launched a number of new technologies. The company was the first to introduce bag filter technology in thermal plants in India, which helps control and minimize pollution. It was the first to set up a pilot project to extract alumina from fly-ash at its Koradi TPS with the assistance of Central Power Research Institute (CPRI). Mahagenco introduced the operating “cost center concept” for the first time in India, which is based on the share market power sale. The company also implemented a number of new technology initiatives in India for the first time, including the installation of a 400 kilovolt (kV) ring main system to link 400 kV substations for bulk power transmission; implementation of a fully computerized load despatch center with real time viewing system (RTVS) to collect data for supervisory control and data acquisition (SCADA). These initiatives enable Mahagenco to improve its operational efficiency. 12.5.2.3 Growing Financial Performance

Mahagenco's focus on efficient operations helped improve its financial performance in the previous fiscal year. For the fiscal year ended March 2011, the revenue reported by the company increased 9.2% to reach INR 122,201.9m from INR 111,865.39m reported for the previous fiscal year. Such growth in revenue could be due to 9.3% growth in revenue from sale of electricity. In fiscal 2011, the company was able to manage its costs, which enhanced its profit margins, as its operating costs (as percentage of sales) declined from 96% in fiscal 2010 to 93% in fiscal 2011. In 2011, the company reported 90.8% growth in its profit before tax, provisions and prior year adjustments and 52.1% growth in net profit. 12.5.3 Maharashtra State Power Generation Co., Ltd Weaknesses

12.5.3.1 Dependent on Thermal Fuel Sources

Mahagenco's dependence on coal to generate power restricts its power generating abilities. The company generates electricity by utilizing thermal and renewable energy sources. As of May 2012, it generated almost 68.2% of its total electricity using coal. Given the high costs and risks related to fossil fuel imports for thermal power generation, unconventional sources of power such as

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renewable and hydro could be cheaper and more stable options for the company in the long run. Typical thermal efficiency of coal and oil-fired plants is between 33%-35%, as compared to combined-cycle gas-fired plants that can reach efficiency rate of 50%. Mahagenco continues to face coal shortage, which is resulting in power outages at its coal fired power plants, including Paras, Parli, Bhusawal and Koradi.

Coal-based generators emit high amounts of pollutants when compared to other generators. Considering pounds per billion Btu of energy input, the amount of carbon dioxide released is approximately (208,000), followed by carbon monoxide (208), nitrogen oxides (457), sulfur dioxide (2,591), particulates (2,774) and mercury (0.016). Pollutants released by oil-fired plants include carbon dioxide (164,000), followed by carbon monoxide (33), nitrogen oxides (448), sulfur dioxide (1.122), particulates (84) and mercury (0.007). Pollutants released by gas-fired plants include carbon dioxide (117,000), followed by carbon monoxide (40), nitrogen oxides (92), sulfur dioxide (1) and particulates (7). The company should focus on clean fuel sources for power generation to reduce dependence on coal and increase its electricity generation capacity. 12.5.3.2 High Power Generation Costs

Mahagenco's business performance could be affected if it continues to incur high costs per unit of power generated. According to the company's aggregate revenue requirement (ARR) petition for 2012-13, filed with Maharashtra Electricity Regulatory Commission (MERC), in fiscal 2012, the costs of power generation at its Parli TPS unit I and II are higher than power purchased by Mahagenco from Dabhol and other private companies. The company also reported low plant load factor (PLF) due to the higher age of its power generation plants. In fiscal 2012, its PLF declined to 81.64%, compared to 88.4% reported in the previous fiscal. Mahagenco could look forward to improving its plant efficiencies and containing costs of generation to avoid losses. 12.5.4 Maharashtra State Power Generation Co., Ltd Opportunities 12.5.4.1 Increasing Power Demand in India

With increasing industrialization, the demand for electricity is also on the rise in India. According to industry estimates, average demand for power has considerably grown in the past 30 years. As of April 2012, the nation's total installed power generation capacity reached more than 2, 00,000 MW. In April 2012, the 660 MW unit of a power plant in Jhajjar, Haryana was commissioned, which increased the nation's installed capacity to 2,00,287 MW, comprising 1,32,013 MW thermal; 38,991 MW hydro; 4,780 MW nuclear; and 24,503 MW renewable. In the 11th five-year plan ended March 2012, India added around 55,000 MW of power, which is less than the revised target of 62,000 MW. To bridge the widening gap between electricity demand and supply, the Planning Commission aims to add around 88,425 MW installed capacity in the 12th five year plan (2012- 2017).

In the 18th Electric Power Survey (EPS) report published by the Planning Commission, the estimated energy requirement during the 12th five year plan is 13,54,874 billion units (BU) and a peak demand of 1,99,540 MW. The power ministry of India set a target to add 93,000 MW capacity in the 13th Five-Year Plan (2017-2022). The government intends to attract private sector participation for developing major transmission related projects on a BOO basis. Besides, the CERC gave approval to Power Grid to develop nine high capacity power transmission corridors (HCPTC). According to a study by Maharashtra State Electricity Transmission Company Ltd

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(MSETCL), in 2015, the total daily power consumption in the state is expected to reach to 4,174 MW, as compared to 3,288 MW in 2011.

12.5.4.2 Increasing Renewable Energy Demand

Increasing popularity of clean sources of power generation is critical to the development of renewable power generation assets. India planned to improve its renewable generation ability substantially by installing various clean source-based power plants. At the end of 2010, the total installed wind capacity in the country stood at 13,065.37 MW and around 6,000 MW wind power capacity is expected be added by 2012. In the solar sector, the government plans to invest around US$9 billion to improve solar power generation capacity to 20 GW by 2020. For hydro power, the Indian government decided to tap hydropower resources, which currently stand at only 23%. The government intends to ensure 40% of its total power generation from hydropower and 60% from other sources.

Mahagenco is also focusing on developing renewable energy projects in the state. In 2012, the company received regulatory approval from the Union Environment Ministry to build the world's largest solar power project, in Dhule, Maharashtra. Mahagenco also has plans to build four solar power plants of total installed capacity of around 200 MW in several regions of the state by 2015. Such projects in renewable energy, coupled with the government's aggressive plans to improve its overall renewable energy capacity, would improve growth prospects of the company. 12.5.4.3 Growth through Joint Ventures

Mahagenco intends to execute new power generation projects through JV partnerships with private sector to improve the state's installed capacity. The company has a number of projects in pipeline, and is considering building 74% of the planned projects through partnerships with private players. Major JV projects include the 3,300 MW coal fired power plant project in north Maharashtra, and the 1,980 MW project in Konkan region. Through JV partnerships, Mahagenco plans to complete the projects on time, incorporating industry expertise and latest technologies. The company has a number of projects of total capacity 4,230 MW under different phases of construction. It plans to add around 13,530 MW in the 12th and 13th five-year plans. Such aggressive expansion plans supported by strategic partnerships will enable the company to meet the growing demand for electricity. 12.5.5 Maharashtra State Power Generation Co., Ltd Threats 12.5.5.1 Regulatory Environment

Mahagenco's business depends on national and local environmental laws and regulations. The laws and regulations imposed by the government control the operations and activities of the company. The role of various renewable sources of energy is increasing due to the growing importance of climatic changes, and also due to the importance of carbon emission reduction. The company‟s earnings can be impacted by regulations related to emissions, fuel consumption and safety. The company's operations are regulated by the central agencies such as CEA and state agencies such as MERC. Previously, the company faced problems in obtaining regulatory approvals for its solar power plant from the state environment authority and had to move to the central authority to resolve the issue. Non-compliance with the regulatory limits could lead to penalties and fines. In addition, the political conditions of the country and state could also affect

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the company business. The change in government policies and regulations could have a negative effect on the company‟s growth and expansion strategies.

12.5.5.2 Coal Supply Issues

About two thirds of electricity generation in non-OECD Asia, particularly China and India, is from coal. India depends heavily on coal for electricity production. According to a report by Credit Lyonnais Securities Asia (CLSA), in India, there are around 29 coal-based power stations among 86 power projects, which operate with less than four days‟ coal stock and another 44 with stock of less than seven days. This had a serious effect on coal-based power plants in India and most of the power plants are not operating to their full capacity, which resulted in power cuts. In June 2012, Coal India declared to increase its coal prices by around 10 to 15% in the western region. As result, Mahagenco would need to spend another INR 2,010m annually to procure coal from the Western Coalfields Ltd (WCL), an arm of Coal India. The company is also facing coal supply issues and reported generation loss. Some of power generation plants of Mahagenco faced forced outages in the first quarter of 2012 as lack of supply hampered generation. Such dependence could pose challenges to companies in India in meeting the future demand for electricity. 12.5.5.3 Operational Issues

Mahagenco operates numerous power generation assets including power plants, substations and others related assets. The operations of the company are subject to interruptions due to breakdown or failure of equipment, plant outages, and disruption of substations, major accidents or damage caused by severe weather conditions or natural disasters. Mahagenco has been retiring its old power generation plants and is constructing new plants to meet the supply gap created, and closed some of power generation units in 2011. Thus, to meet the demand and to establish new generation infrastructure, the company would require spending huge capital. Also, breakdown or failure of such operating facilities could prevent the administration in meeting its power sales agreement obligations in time. Such operational faults and discrepancies would weaken the performance of the company, hampering its results of operations and profitability.

12.6 Maharashtra State Power Generation Co., Ltd – Locations and Subsidiaries 12.6.1 Head Office

Maharashtra State Power Generation Co. Ltd. Plot No. G-9

Prakashgad

Mumbai Maharashtra

ZIP: 400051

Tel: 91 22 26474211 Fax: 91 22 26476749

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12.6.2 Other Locations & Subsidiaries

Table 36: Maharashtra State Power Generation Co. Ltd., Subsidiaries Dhule Thermal Power Co. Ltd.Maharashtra Fax: India Source: Company Website, Annual Reports

Source: Annual Report, Company Website, GlobalData, Power etrack Companies Database (August 28, 2012)

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13 Damodar Valley Corporation – Company Snapshot

13.1 Key Information

Table 37: Damodar Valley Corporation, Key Facts Corporate Address DVC Towers, VIP Road, Kolkata, West Bengal, 700054, India Telephone No. of Employees +91 33 23559940 NA

Fax +91 33 23550585 Fiscal Year End March

URL www.dvcindia.org Revenue (in USD Million) NA

Industry Agriculture and Forestry, Energy and Utilities, Metals and Mining Locations India

Source: Annual Report, Company Website, GlobalData, Power etrack Companies Database (August 28, 2012)

13.2 Company Overview

Damodar Valley Corporation (DVC) is an Indian based company engaged in the generation and transmission of power. It is the first multipurpose river valley project taken up by the Government of India. The company generates power through three fuel sources; coal, water and liquid fuel. The total installed capacity of the DVC power plants is 2,936 MW. DVC supplies bulk power to various industries like railway, steel and coal. The company's transmission and distribution system comprises of over 5600 km of lines spanning in an area of around 24,325 square kilometers. It is also involved in the water management and mining activities. DVC is headquartered in Kolkata, West Bengal, India.

13.3 Damodar Valley Corporation – Business Description 13.3.1 Business Overview

Damodar Valley Corporation (DVC) is a power utility company and is the first multipurpose river valley project of the Government of India. The company was formed under the Damodar Valley Corporation Act (Act No. XIV of 1948). This act was passed by the Central Legislature in 1948, requiring the three governments; the Central Government and the State Governments of West Bengal and Bihar (now Jharkhand) to participate jointly for the purpose of building the Damodar Valley Corporation.The company is engaged in the activities of power generation, power transmission, water management and mining.

DVC is involved in the power generation activity through joint venture projects like; Maithon Power Limited, Bokaro Power Suppply Co. Ltd (BPSCL) and DVC Emta Coal Mines Ltd. Maithon Power

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Limited is a joint venture company formed by DVC and Tata Power. It has been formed to implement 1000 MW Maithon Right Bank Thermal Power Project. BPSCL is a joint venture company of DVC and SAIL. DVC Emta Coal Mines Ltd is a joint venture company formed with Eastern Minerals & Trading Agency.

The company has four thermal power stations namely; Bokaro 'B', Chandrapura thermal power station (CTPS), Durgapur thermal power station (DTPS) and Mejia thermal power station (MTPS). The Bokaro 'B' comprises three generating units, each having installed capacity of 210 MW, followed by CTPS (390 MW), DTPS (350 MW) and MTPS (1340 MW). It has three hydel power stations namely; Tilaiya power station with installed capacity of 4 MW. The Maithon power station and Panchet power station has 60 MW and 80 MW respectively.

The company's transmission network consists of 132 KV and 220 KV grids. All the power stations and substations of DVC are connected with the DVC grids. DVC supplies power to its customers at 25 KV, 33 KV, 132 KV and 220 KV pressure. The 132 KV total transmission line length is approximately 1334 km and 220 KV transmission line length is 3415 km.

Besides, power generation and transmission has a network of four dams; Tilaiya and Maithon on river Barakar, Panchet on river Damodar and Konar on river Konar for water management. The company has provided the flood reserve capacity of 1292 mcm in four reservoirs, which can moderate a peak flood of 18395 cumec to a safe carrying capacity of 7076 cumec. In addition, 419 mcm of water is stored in the four DVC reservoirs to supply 680 cusec of water to meet industrial, municipal and domestic requirements in West Bengal and Jharkhand.

The company is also involved in the mining activities. It started its mining activities in 1951 by acquiring captive coalmine at Bermo from the Indian Railway to meet the coal requirement of Bokaro „A‟ Thermal Power Station. DVC in collaboration with Tata Power is constructing Maithon Power station, a 2 x 525 MW thermal power plant at Maithon in Jharkhand. The company is also constructing a 500 MW thermal power station in Bokaro, which is expected to be completed in the fiscal year 2012-13.

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13.4 Damodar Valley Corporation – Major Products and Services

Table 38: Major Products and Services Products:

Electricity

Water

Coal

Services:

Generation and Transmission of Power

Water Management

Mining

Source: Annual Report, Company Website, GlobalData, Power etrack Companies Database (August 28, 2012)

13.5 SWOT Analysis 13.5.1 Overview

DVC is a government owned organization and is the first multipurpose river valley project taken up by the Government of India. It is the only government organization generating power through three fuel sources; coal, water and liquid fuel. The company enjoys strong government support and has strong customer base. The high dependence on coal fuel for power generation and decline in credit rating are key areas of concern for the company. Nevertheless, the company can explore growth opportunities arising from the rising electricity demand in the region by developing and expanding its power infrastructures. However, competitive environment and stringent regulatory obligations are major challenges for the company.

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Table 39: Damodar Valley Corporation, SWOT Analysis Strengths Weakness

Strong Customer Base

Wide Range of Activities Highly Dependent on Coal for Power Generation

Leading Position Project Related Litigations

Association with Government Decline in Credit Ratings

Opportunities Threats

Expansion Through Renewable Generation Volatility in Electricity Prices

Projects in Pipeline Liberalization of the Electricity Market

Increasing Power Demand in India Power Theft

Source: Annual Report, Company Website, GlobalData, Power etrack Companies Database (August 28, 2012)

13.5.2 Damodar Valley Corporation Strengths 13.5.2.1 Strong Customer Base

DVC engages in supplying power to large and strong customer base. The company has the exclusive rights to sell power to large industrial consumers located in an around the Damodar valley region comprising five districts of West Bengal and seven districts of Jharkhand. It supplies bulk power to various industries like railway, steel and coal. Its customer base includes Eastern Railway, Eastern Central Railway and South Eastern Railway. Consumers in steel sector include Bokaro Steel; Ltd, Durgapur Steel Plant, Indian Iron and Steel Company, Steel Authority of India Limited and Tata Iron and Steel Company. Consumers in coal sector include Eastern coal Fields Ltd, central Coal Fields Ltd and Bharat Coking Ltd. In addition to this, DVC‟s customer base includes many other public and private undertakings. Such a strong customer base enables the company to maintain its leading position in the market. 13.5.2.2 Wide Range of Activities

DVC along with the power generation, transmission and distribution is also active in the areas of water management and mining. The total installed capacity of DVC power plants is 2,936 MW. The company's transmission and distribution system comprises of over 5600 km of lines spanning in an area of around 24,325 square kilometers. It has a network of four dams and provides water for irrigation to over 5.69 hectares of land area. DVC also engages in soil conservation activities such as managing farms, forests and wastewater treatment facilities in covering approximately four lakh hectares. Besides, it also has ownership in a captive coalmine at Bermo. The company also supplies raw water for industrial and domestic purposes. The diversified nature of operations helps DVC to maintain its leading position in the Indian power sector and enables to diversify its revenue

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generation sources. DVC's diversified operations limits the effects of fluctuations in the business climate. 13.5.2.3 Leading Position

DVC is the first multipurpose river valley project taken up by the Government of India. It is the only government organization generating power through three fuel sources; coal, water and liquid fuel. DVC is the first Indian company to set up underground hydel station at Maithon. Its Bokaro thermal power station is one of the biggest thermal power plants in the country. Further, the company is one of the leading power generators in the eastern region of the country. DVC has been generating and transmitting power since 1953. This gives the company a significant competitive edge over its counterparts. 13.5.2.4 Association with Government

DVC is a government owned organization. The company was formed under the Damodar Valley Corporation Act (Act No. XIV of 1948) passed by the Central Legislature in 1948, requiring the three governments; the Central Government and the State Governments of West Bengal and Bihar (now Jharkhand) to participate jointly for the purpose of building the Damodar Valley Corporation. Being a government organization, the company enjoys many benefits. Its activities are fully backed by the government. The company gets several financial and technical supports from the government. This enables it to carry out its operations uninterruptedly. The government backing thus, enables DVC to have a significant competitive edge over its private counterparts.

13.5.3 Damodar Valley Corporation Weaknesses

13.5.3.1 Highly Dependent on Coal for Power Generation

DVC generates electricity principally through utilizing thermal energy sources. DVC generates substantial portion of power from thermal energy sources like coal and fuel oil. As of March 2010, of the company‟s total installed capacity, coal contributed for 92% of power installations. Coal is costlier fuel when compared to non conventional sources of energy such as nuclear, wind, solar and hydro. Any inability to procure the required amount of coal and gas at right price could severely impact the net generation of the company. High dependency on coal increases the cost of production and affects the profit margins of the company. Also typical thermal efficiency of coal and oil-fired plants is between 33%-35%, compared to combined-cycle gas-fired plants that can reach efficiency rate of 50%.

Coal based generator emit high amounts of pollutants when compared to other generators. Considering Pounds per Billion Btu of Energy Input the amount of carbon dioxide released is approximately (208,000), followed by carbon monoxide (208), nitrogen oxides (457), sulfur dioxide (2,591), particulates (2,774) and mercury (0.016). Pollutants released by oil-fired plants include carbon dioxide (164,000), followed by carbon monoxide (33), nitrogen oxides (448), sulfur dioxide (1.122), particulates (84) and mercury (0.007). Pollutants released by gas-fired plants include carbon dioxide (117,000), followed by carbon monoxide (40), nitrogen oxides (92), sulfur dioxide (1), particulates (7) and mercury (0.000). The company should focus on clean fuel sources for power generation so that dependency on coal can be minimized and the generation capacity of the company increases. The company should focus on clean fuel sources for power generation so that dependency on coal can be minimized and the generation capacity of the company increases.

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13.5.3.2 Project Related Litigations

Involvement in litigation adds to costs, which could have an adverse impact on the operations and financial position of the company. DVC has been subjected to several lawsuits and legal proceedings in the process of its normal business operations. In 2011, power distribution companies (Discoms) of New Delhi filed a civil suit against the company, as it could meet the deadline to supply contracted power to New Delhi from Chandrapura Thermal Power Station (CTPS) Unit no 8 and 7. The company claimed that such delays were due to the non-attainment of commercial actitvities by the units. Besides, the company is also engaged in various other litigations as well. Involvement in litigation increases costs and also affects its image in the market and among its customers. 13.5.3.3 Decline in Credit Ratings

Decline in credit ratings is a matter of concern for the company. In 2011, Fitch downgraded the long term rating of DVC to AA-from its earlier rating of AA. The agency also downgraded the rating on the company‟s INR 6.4 billion bonds to AA- from AA. Such downgrade reflects in deterioration of DVC's financial profile and its increased exposure to fuel availability risks. The downgrade also reflects significant cost and time overruns in DVC's large capacity addition programmes, and its failure to attain significant collections from the Jharkhand Sate Electricity Board (JSEB). Such factors resulted in constrained liquidity and reduced profitability. Such downgrade in credit ratings affects the company‟s overall market position and also affects its ability to raise funds.

13.5.4 Damodar Valley Corporation Opportunities

13.5.4.1 Expansion through Renewable Generation

Presently, a substantial part of electricity generated DVC comes from thermal energy sources including coal and oil, which are comparatively depletable than renewable energy sources such as, wind and solar energy. The company should focus on diversifying into renewable energy sources as they are cleaner and economical energy sources. The favorable macro-economic trends have drawn attention of several governments across the globe towards renewable energy sources, including India. The Indian government is encouraging the increasing usage of renewable energy sources. In solar sector, the government plans to invest around US$9 billion to improve solar power generation capacity to 20 GW by 2020. Besides, in the hydro power, the Indian government has decided to tap hydropower resources, which currently stands at only 23%. The government has set a target to include 40% of its total from hydropower and 60% from other sources. Subsequently, the company should focus on developing renewable energy projects including wind and solar projects. Such projects will enhance the power generation business of the company and boost its generation capacity. In addition, such initiatives will also help the company to earn carbon credits and reduce its dependence on the price of thermal energy sources. 13.5.4.2 Projects in Pipeline

With the improvement in infrastructure facilities, the power consumption in the company‟s operational regions is expected to rise. In order to meet the increasing demand of electricity, DVC is focusing on expanding its generation capacity by adding up new power generating facilities. It is planning to further increase its generation capacity. The company is intending to set up thermal as well as hydro power plants in the state. DVC in collaboration with Tata Power is constructing

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Maithon Power station, a 2 x 525 MW thermal power plant at Maithon in Jharkhand. DVC is also constructing a 500 MW thermal power station in Bokaro, which is expected to be completed in the financial year 2012-13. Besides, there are various other projects under construction. Such expansion would significantly enhance the power generating portfolio of the company and would enable it to meet the rising electric demand in the region. 13.5.4.3 Increasing Power Demand in India

With the rise in industrialization, the demand for electricity is also on a rise in the Indian subcontinent. According to industry estimates average demand for power has grown by an average of 3.6% per annum over the past 30 years. The government has initiated various plans to enhance and modernize the country‟s power generation capacity, and transmission and distribution infrastructure. The Government of India has set up a plan to provide reliable power to the entire nation by 2012. In this regard, the Ministry of Power has set several targets such as to decrease T&D losses, generate sufficient power to maintain the country‟s economic growth and to provide power to all homes in the next few years. CERC gave approval to Power Grid to develop nine HCPTC. DVC‟s substantial presence in the domestic market provides potential growth benefits to the company. 13.5.5 Damodar Valley Corporation Threats

13.5.5.1 Volatility in Electricity Prices

The prices of electricity are subject to huge fluctuations in the utility industry. The volatility in electricity prices is driven by various factors such as demand for electricity, the number of market participants and the willingness of market participants to trade, adequacy of generating reserve margins, scheduled and unscheduled outages of generating facilities, price and availability of fuel for thermal generating plants, and disruption of or constraints on transmission facilities. The fluctuations in the electricity prices could increase the cost of operation for DVC thereby affecting its financial performance. 13.5.5.2 Liberalization of the Electricity Market

Liberalization of the electricity market has created opportunities as well as challenges for the electricity companies like DVC. With the liberalization in the electricity generation sector, the market is opening up for other players including the private ones. All these are creating a challenging environment and making the market more competitive. The company could be adversely affected in few areas where it is the sole supplier. In such transitional phase of the industry, any failure of the company to respond quickly could adversely affect its operations. To sustain, the company needs to rise successfully in these challenging environment by adopting industry best practices and expanding its energy capacity. 13.5.5.3 Power Theft

Electricity theft is one of the serious issues in India. A large number of electric companies are affected from electricity related illicit practices. Theft of electricity, in most parts of urban India, amounts to 1.5% of India's GDP. DVC is exposed to risk from practices such as illegal wire tapping, meter tampering and seal breaking. The company installs meters and instrument transformers that play a vital role in energy calculations. Any manipulation of grid system, tampering of meters, as well as damage of security seals may severely affect the financial and operational performance of the company.

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13.6 Damodar Valley Corporation – Locations and Subsidiaries 13.6.1 Head Office

Damodar Valley Corporation

DVC Towers

VIP Road Kolkata

West Bengal

ZIP: 700054 Tel: 91 33 23559940

Fax: 91 33 23550585

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14 Gujarat State Electricity Corporation Limited – Company Snapshot

14.1 Key Information

Table 40: Gujarat State Electricity Corporation Limited, Key Facts Corporate Address Vidyut Bhavan, Race Course, Vadodara, Gujarat, 390007, India Telephone No. of Employees +91 265 2355193 1,255

Fax Fiscal Year End March

URL www.gsecl.in Revenue (in USD Million) 1,499.19

Industry Energy and Utilities Revenue (in INR Million) 74,373,69 9

Locations India

Source: Annual Report, Company Website, GlobalData, Power etrack Companies Database (August 28, 2012)

14.2 Company Overview

Gujarat State Electricity Corporation Limited (GSECL) is engaged in power generation activities. GSECL produces and supplies electricity in the state of Gujarat. The company was promoted by the former Gujarat Electricity Board (GEB) and is a wholly owned subsidiary of Gujarat Urja Vikas Nigam Limited (GUVNL). It owns and operates 13 power stations based on various technologies including thermal, gas, thermal and hydro. GSECL is an Independent Power Producer (IPP) with a total installed capacity of 5226 MW.The company has four power projects being implemented, with a total capacity of 1445 MW. Further, the company obtained ISO 9001:2008 certification during July 09.Thje company is headquartered in vadadora,India.

14.3 Gujarat State Electricity Corporation Limited – Business Description 14.3.1 Business Overview

GSECL is engaged in power generation activities. GSECL produces and supplies electricity in the state of Gujarat. The company was promoted by the former GEB and is a wholly owned subsidiary of GUVNL. It owns and operates 13 power stations based on various technologies including thermal, gas, thermal and hydro. GSECL is an IPP with a total installed capacity of 5226 MW. The company has four power projects being implemented, with a total capacity of 1445 MW. Further, the company obtained ISO 9001:2008 certification during July 09.Thje company is headquartered in vadadora,India. Independent Power Producer (IPP) GSECL is a government owned organization responsible for power generation. It produces and supplies electricity in the state of Gujarat. The company owns and operates 13 power stations based on various technologies

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including thermal, gas and hydro. As of 31st March 2010, the company had a total installed capacity of 5226MW.

The power stations operated by GSECL include the UKAI thermal power station; Gandhinagar thermal power station; the Wanakbori thermal power station; Sikka thermal power station; Kutch lignite thermal power station; Dhuvaran oil based thermal power station; Utran and Dhuvaran gas based power stations; Kadana hydro power station; Panam hydro power station and UKAI hydro power station.

The UKAI thermal & hydro power station is located near Ukai Dam on Tapi River in the Surat District. The thermal power station is a coal based power station, with a total installed capacity of 850 MW. The hydro power station has four units of hydro turbine each of 75 MW, with a total installed capacity of 300 MW. In addition, it also operates two units of hydro turbine each of 2.5 MW, with a total installed capacity of 5 MW.

The Gandhinagar thermal power station is located at Gandhinagar, Gujarat. It is a coal based power station. It comprises two units of 120 MW each, three units of 210 MW each with a total installed capacity of 870 MW. The plant generated 5196MUs of electricity during 2010.

The Wanakbori thermal power station is located near Wanakbori Dam on the bank of Mahi River in Kheda District. It is a coal based power station with seven units of 210 MW each. The total installed capacity of Wanakbori thermal power station is 1470 MW. The plant generated 12908MUs of electricity during 2010.

The Sikka Thermal Power Station is located near Jamnagar. It comprises two units of 120 MW each with a total installed capacity of 240 MW. Further, the Kutch thermal coal Power Station is located near Panandhro village in Kutch District. It is a Lignite Based Power Station. It consists of two units of 70 MW each and one unit of 75 MW with a total installed capacity of 290 MW. The plant generated 1170 million units (MUs) of electricity during 2010. The Dhuvaran oil based thermal power station is located near Khambhat in Anand District. It is an oil and gas based power station.The plant generated 457 MUs of electricity during 2010. It consists of two units of 140 MW each and four units of 63.5MW each.It total installed capacity of 220 MW.

The Utran gas based power station is located on the bank of Tapi River near Surat. It is a gas based power station. It consists of three gas turbine units of 30 MW each and one unit of 45 MW STG with a total installed capacity of 240MW. Further, its 370 MW gas based Utran CCPP-II has started commercial operation from November 7, 2009 which increases the company's total generating capacity to 5,136 MW from 4,766 MW.

The Kadana Hydro Power Station is located at Kadana Dam on Mahi River in Panchmahal District. It comprises four units of hydro turbine each of 60 MW with a total installed capacity of 240 MW. The Panam Canal Mini Hydro Power Station is located at Panam Dam in Panchmahal District. It consists of two units of hydro turbine of 1 MW each with a total installed capacity of 2 MW. The company has four power projects being implemented, with a total capacity of 1445 MW.

Notice was issued to M/s. Larsen & Toubro (L&T) Ltd for installation of 375 MW Gas Based Combined Cycle Power Plant-III at Dhuvaran on 10th March 2011

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14.4 Gujarat State Electricity Corporation Limited – Major Products and Services

Gujarat State Electricity Corporation Limited is engaged in power generation. It produces and supplies electricity in the state of Gujarat

Table 41: Major Products and Services Product: Electricity

Source: Annual Report, Company Website, GlobalData, Power etrack Companies Database (August 28, 2012)

14.5 SWOT Analysis 14.5.1 Overview

GSECL is a government owned organization. The company is empowered as State Generating Power Plant by the Government of Gujarat. It is a power generating company promoted by the GEB and is a wholly owned subsidiary of GUVNL. The Government of Gujarat (GoG) has given to the GSECL the status IPP, with approval to undertake new power projects. However, dependence on coal fired power plants and coal supply issues are serious issues for the company to look upon. Nevertheless, there are tremendous growth prospects to explore on for renewable energy. However, increasing competition and increasing regulations could have material negative impact on the financial health of the company. Nonetheless, the company is capable of overcoming the hurdles, with its new projects and increasing demand for electricity.

Table 42: Gujarat State Electricity Corporation Limited, SWOT Analysis Strengths Weakness

Government Organization Lack of Fuel Diversity Environmental Friendly Technologies Power Outages and Related Issues Positive Trend in Financial Performance Critical Coal Stock

Opportunities Threats

Opportunities in Solar and Wind Generation Fluctuating Raw Material Costs

Gujarat's Growing Electricity Market Increasing Competition

New Projects Regulatory Environment

Source: Annual Report, Company Website, GlobalData, Power etrack Companies Database (August 28, 2012)

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14.5.2 Gujarat State Electricity Corporation Limited Strengths 14.5.2.1 Government Organization

GSECL is a government owned organization. The company is empowered as State Generating Power Plant by the Government of Gujarat. It is a power generating company promoted by the GEB and is a wholly owned subsidiary of GUVNL. The company enjoys many benefits of being a government organization. Its activities are fully backed by the GoG. It gets all financial and technical support from the Government. The GoG has also approved GSECL's status as an IPP and also provided the company with rights to undertake new power projects. Such rights enable GSECL to carry out its operations uninterruptedly that helps it in pursuing new projects for development and growth. The Government backing thus, enables GSECL to enjoy significant competitive edge over its private counterparts. 14.5.2.2 Environmental Friendly Technologies

GSECL installed various new equipment and technologies to further reduce emissions of nitrogen oxide (NOx), sulfur dioxide (SO2), and mercury from its generating plants, which helps to protect the environment. The Government of Gujarat (GoG) is providing various fiscal incentives and schemes to encourage the increasing usage of cleaner fuels and efficient technologies in power generation. The company installed Greenbelt that is designed around the emission source, to provide a second line of pollution control. It installed Electrostatic precipitators (ESP) to control ash particles from the flue gas. GSECL has also installed dual flue gas conditioning system at its Ukai Thermal Power Station (TPS). This system helps to condition flue gas with the help of SO3 and NH4 before the ESP‟s to improve the collection of fine ash particles. This helps reduction of particulate matter emission into atmosphere. In addition, to control nitrogen oxides, coal based thermal power stations are provided with low NOx burners. Further, opacity meters are installed at all the units for continuous measurement of particulate matters emitted into atmosphere. The new efficient and environmental friendly technologies enable the company to generate clean and reliable power. Besides, GSECL developed an ash management plan for it's utilization with consultation of The Energy and Resources Institute. 14.5.2.3 Positive Trend in Financial Performance

Improving financial performance shows the company's ability to manage its business operations efficiently. During the fiscal year ended March 2011, the company's total revenue increased to INR 74,373.7m, compared to INR 73,235.16m in 2009. During 2010, GSCEL's profit before depreciation and interest increased approximately 49%, to INR 10,417.18m, compared to INR 6,937.26m in 2009. Such improvements could be attributed to decline in operational costs by 3.53% from INR 66,297.9m in 2009 to INR 63,956.51m in 2010. Besides, its total profit after tax increased 75.89%, to INR 1,240.65m, compared to INR 705.34m in 2009. Such improvements in overall financial performance would help the company in further enhancing its operational efficiencies through installing efficient and cost effective power plants.

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14.5.3 Gujarat State Electricity Corporation Limited Weaknesses

14.5.3.1 Lack of Fuel Diversity

GSECL generates majority of electricity through utilizing thermal sources. The company generates power utilizing coal, gas and hydro based power plants. However, of the total installed generating capacity coal fired power contributes for more than 75% of the installed capacity. This indicated that the company is dependent principally on coal, which is a costlier fuel, compared to non conventional sources of energy such as nuclear, wind and solar. Further, any inability to procure the required amount of coal from the suppliers at right price could severely impact the net generation of the company. This high dependency on coal increases the cost of production and affects the profit margins of the company. High dependency on coal increases the cost of production and affects the profit margins of the company. Also typical thermal efficiency of coal and oil-fired plants is between 33%-35%, compared to combined-cycle gas-fired plants that can reach efficiency rate of 50%. In addition, coal based generator emit high amounts of pollutants when compared to other generators. Considering Pounds per Billion Btu of Energy Input the amount of carbon dioxide released is approximately (208,000), followed by carbon monoxide (208), nitrogen oxides (457), sulfur dioxide (2,591), particulates (2,774) and mercury (0.016). Pollutants released by oil-fired plants include carbon dioxide (164,000), followed by carbon monoxide (33), nitrogen oxides (448), sulfur dioxide (1.122), particulates (84) and mercury (0.007). The company should focus on clean fuel sources for power generation so that dependency on coal and use of other thermal sources can be minimized with out upsetting the generation capacity of the company. This dependence of the company on hazardous coal might affect the company‟s operations in the near future. 14.5.3.2 Power Outages and Related Issues

Frequent outages and other operational issues restrict the company's ability to achieve operational efficiencies. During 2010, the company's Gandhinagar Thermal Power Station (GTPS) Unit 1 and 2 were not fully operational due to ageing affect; Sikka Thermal Power Station (STPS) experienced backing down and vacuum problems; and Kutch Lignite Thermal Power Station (KLTPS) Unit 1, 2 and 3 had vacuum problems due to brackish water, which caused low load operations and Unit 4 of the plant experienced teething problems. Dhuvaran Gas 1 suffered forced outage for 157 days due to damage of compressor. Such operational issues affect the company's ability to function efficiently and effectively. Besides, PLF for KLTPS Unit 1, 2 and 3 was 57.15% during fiscal year 2010, compared to the approved 75%. PLF for Dhruvan Oil Plant was 49.45%, compared to the approved 80%. Such operational constraints and declining efficiencies is a matter of concern for the company as would need to spend heavily to purchase power from third party sources. 14.5.3.3 Critical Coal Stock

Availability of coal is a serious cause of concern for GSECL. According to a report published by the CEA in May 2011, around 28 coal based power plants in India are in critical state with coal stock availability of less than seven days. The situation is worse in Gujarat, as four coal power plants are facing issues relating to sufficient availability of coal. The four coal plants include GTPS (870 MW), Ukai TPS (850 MW), STPS (240 MW) and Wanakbori TPS (1470 MW). In the event of any disruption in the supply of coal at right time, GSECL's operations would be severely affected, as its PLF would decline substantially thereby reducing the company operated power plants

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efficiency. GSECL should focus to keep sufficient stock to meet the requirements of coal at any point, so that operations of the power plants could be maintained effectively.

14.5.4 Gujarat State Electricity Corporation Limited Opportunities

14.5.4.1 Opportunities in Solar and Wind Generation

The GoG is focusing to tap the immense potential offered by renewable sources of energy generation. The GoG conducted various experimental studies in decentralized energy supply models in areas such as solar cooking and solar water heating in the domestic and industrial sectors. Besides, it successfully completed studies in relation to decentralized power generation projects that can be replicated on small and large scale. In 2009, the government declared the Solar Power Generation Policy and signed 961.5 MW public private agreements (PPAs) by 87 National and International Developers. In Wind sector, the government announced various plans to capture the 10,000 MW of wind power along the coastal areas such as, Saurashtra and Kachchh. Such initiatives by the government provide strategic opportunities to the company diversify its generation capacity to solar and wind energy sources. 14.5.4.2 Gujarat's Growing Electricity Market

The increasing electricity demand in Gujarat presents a huge opportunity for GSECL to increase its current installed capacity. With the growing energy needs in Gujarat, the electricity and natural gas consumption levels are continuously increasing, which simultaneously increases the demand for electricity. According to industry estimates, an additional 4,600 MW of power generation capacity is expected to begin in the state in the current financial year. This would increase the state's total installed power generation capacity to reach from the current 13,140 MW, to cross 17,700 MW by the end of year 2011-12. According to government sources, two 800 MW units of Tata Power's Ultra Mega Power Project (UMPP) at Mundra are scheduled to begin this current fiscal. Besides, two units of 660 MW each by Adani Power Limited and an 800 MW power plant at Vadinar of Essar are also expected to begin power generation in this year. The per capita consumption of power in the state of Gujarat is expected to be 1,000 kilowatt hour (Kwh) per year by 2011-12. Such growth prospects would help the company in its current and future generation projects. 14.5.4.3 New Projects

GSECL is currently developing to add approximately 1,000 MW of power generation projects. These projects include a 370 MW gas based combined cycle power plant at Utran; 2X250 MW thermal based power project at Sikka; extension of unit No. 6 at Ukai with 500 MW capacity and a 75 MW units at Kutch Lignite Thermal Power Station. Such new projects would enable the company to further enhance is generation capacity and maintain its position. The company is also considering a 395 MW gas based combined cycle power plant (CCPP) Stage-III at Dhuvaran power plant. The other projects that are currently at different stages include 4X800 MW coal fired units at Kuchhadi, Porbandar; 2X800 MW coal fired units at Sinor, Vadodara; 2X800 MW coal fired units at Dahej, Bharuch; and 2X1000 MW gas fired power plants in North Gujarat. Such projects would help the company to substantially improve the generation capacity.

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14.5.5 Gujarat State Electricity Corporation Limited Threats 14.5.5.1 Fluctuating Raw Material Costs

The company is engaged in generating power through fossil fuels. GSECL‟s operations and revenues are significantly dependent upon the prices of and the demand for fossil fuels. In the past, the energy commodities prices were highly volatile. Moreover, the energy commodities prices are likely to remain volatile in the near future. The prices, the company pays for raw materials like coal, oil and natural gas, fluctuate depending on supply and demand of these commodities in the international markets. The frequent pricing changes and imbalances could adversely affect the company‟s operations and profitability. 14.5.5.2 Increasing Competition

The power sector market in India is slowly becoming competitive. Further, in recent years, competition is increasing with respect to both obtaining sales agreements and acquiring new assets. GSECL faces stiff competition from the leading private power providers in the country like Tata Power, Adani Power, Essar and Reliance, which are establishing large scale power plants in the state. The competition for the company also comes from the existing small players and new market entrants and also from its counterparts in other states of the country. This growing competitive market could adversely affect the company‟s profitability, if the company fails to bring in new and innovative technologies in the generation of power. 14.5.5.3 Regulatory Environment

GSECL‟s business depends on national and local environmental laws and regulations. The laws and regulations imposed by the government control the operations and activities of the company. The role of various renewable sources of energy is increasing due to the growing importance of climatic changes, and also due to the emphasis on carbon emission reduction. The company‟s earnings can be impacted by the regulations concerning emissions, fuel consumption and safety. The company's operations are regulated by the central agencies such as CEA and state agencies such as Gujarat Electricity Regularity Commission. Any non-compliance with the regulatory limits could lead to penalties and fines. In addition, the political conditions of the country may also affect GSECL‟s business. The change in government policies and regulations could have a negative effect on the company‟s growth and expansion strategies.

14.6 Gujarat State Electricity Corporation Limited – Locations and Subsidiaries 14.6.1 Head Office

Gujarat State Electricity Corporation Limited

Vidyut Bhavan Race Course

Vadodara

Gujarat ZIP: 390007

Tel: 91 265 2355193

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15 Torrent Power Limited – Company Snapshot

15.1 Key Information

Table 43: Torrent Power Limited, Key Facts

Corporate Torrent House, Off Ashram Road, Ahmedabad, Ticker Symbol, TORNTPOWER [National Stock Exchange of Address Gujarat, 380009, India Exchange India] Telephone +91 79 26583060 No. of Employees 7,184 Fax +91 79 26582326 Fiscal Year End March URL www.torrentpower.com Revenue (in USD 1,707.20 Million) Industry Energy and Utilities Revenue (in INR 80,631 Million) Locations India Source: Annual Report, Company Website, GlobalData, Power etrack Companies Database (July 16, 2012)

15.2 Company Overview

Torrent Power Limited (Torrent Power) is a power utility. The company undertakes generation, transmission and distribution of electricity. It owns and operates through three subsidiaries, namely, Torrent Power Grid Limited, Torrent Pipavav Generation Limited and Torrent Energy Limited. The company serves residential, commercial and industrial customers in the cities of Ahmedabad, Gandhinagar, Surat, Bhiwandi, spanning an area of 408 Sq. Km. and franchise area of 721 sq. km. Torrent Power is also a franchisee distributor in Agra. It is headquartered in Ahmedabad, Gujrat, India.

The company focuses on augmenting its generating capacity and is in the process of adding a standalone unit of 382.5 MW named UNOSUGEN at the existing SUGEN site and setting up a 1200 MW Greenfield DGEN Mega power project based on gas at Dahej SEZ.

15.3 SWOT Snapshot

Torrent Power Limited (Torrent Power) leverages on its vertically integrated operational network with presence across the entire value chain, comprising electricity generation, transmission and distribution. However, declining plant efficiency at its SUGEN Power Plant is an area of concern for the company. Nevertheless, the company can increase its sales with developing new projects and with increasing demand for electricity. However, the ongoing market volatility coupled with increasing competition and increasing regulations could have material negative impact on the financial health of the company.

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15.4 Torrent Power Limited – Business Description 15.4.1 Business Overview

Torrent Power Limited (Torrent Power) is a Gujrat, India based power utility. The company undertakes generation, transmission and distribution of electricity along with implementation of large power projects. It has a generating capacity of 1,647.5 MW. The company distributes more than 12 billion units of power to around 2.2 million customers in the cities of Ahmedabad, Gandhinagar, Surat and Bhiwandi spanning an area of 408 Sq. Km. and 721 sq. km of franchise area. It has operations in Gujarat and Maharashtra. The company is a subsidiary of Torrent Group.The Company‟s business activities include, Generation and Distribution of Electricity which is its only business segment.

Torrent Power operates two thermal power plants with a generating capacity of 500 MW at Ahmedabad. The power plants of the company comprise of a 400 MW coal based thermal power station at Sabarmati and a 100 MW dual fuel based combined cycle power plant at Vatva. The company‟s power plant at Sabarmati comprises of four thermal generating units, namely C, D, E and F with installed capacities of 60 MW, 120 MW, 110 MW and 110 MW, respectively. Its Vatva power plant is a combined cycle dual fuel power plant, with an installed capacity of 100 MW. This power plant consists of two gas turbines each of 32.5 MW and a steam turbine of 35 MW capacity.

The company also has a combined cycle power plant (CCPP) of 1147.5 MW, at SUGEN near Surat. SUGEN is a backward integration initiative taken by the Torrent Group. It would replace the power currently procured by Torrent Power from the State Electricity Board.

The company transmits and distributes more than 12 billion units of power to around 3 million customers in the cities of Ahmedabad, Gandhinagar and Surat. Torrent Power transmits and distributes over 4 billion units of power annually to its 1.26 million customers spread over 293 Sq km in Ahmedabad and 63 Sq km in Gandhinagar. It distributes over 3.03 billion units of power per annum to its 0.52 million consumers spread over 52 Sq km in Surat. The company distributes to more than 0.2 million customers spread over 721 Sq km in Bhiwandi region through the company‟s distribution franchise business. Torrent Power has been selected as the Distribution Franchise in Agra through a competitive bidding process undertaken by UP Power Corporation Limited. The estimated demand in the area is about 420 MVA with annual power consumption of about 1900 million units.

The company has three subsidiaries, namely, Torrent Power Grid Limited, Torrent Pipavav Generation Limited and Torrent Energy Limited. The Torrent Power Grid Limited is a joint venture between the Power Grid Corporation of India Limited and the company. The Torrent Pipavav Generation Limited has been established to develop 2,000 MW coal based thermal power project in Pipavav. Torrent Energy Limited has been formed as a Special Purpose Vehicle to set up approximately 400 MW gas based combined cycle power plant.

It has geographical presence in India.

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15.5 Torrent Power Limited – Major Products and Services

Torrent Power is a power utility. The company undertakes generation, transmission and distribution of power in Gujarat. The company's key products and services include the following:

Table 44: Major Products and Services Product: Electricity Services: Generation, Transmission and Distribution of electricity Source: Annual Report, Company Website, GlobalData, Power etrack Companies Database (July 16, 2012)

15.6 SWOT Analysis 15.6.1 Overview

Table 45: Torrent Power Limited, SWOT Analysis Strengths Weakness

Vertically Integrated Operations

Fuel Mix Declining Plant Efficiency: SUGEN Power Plant

Steady Growth in Revenue Performance

Opportunities Threats

Increasing Demand for Electricity in Gujarat Intense Competition

Growth in Solar and Wind Generation Legal and Political Framework

Planned Expansion Fluctuating Raw Material Prices

Source: Annual Report, Company Website, GlobalData, Power etrack Companies Database (July 16, 2012)

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15.6.2 Torrent Power Limited Strengths 15.6.2.1 Vertically Integrated Operations

Torrent Power is one of the few private players in India that operates a vertically integrated structure. The company has presence across the entire value chain of energy business, including power generation, transmission and distribution. It supplies electricity to more than 3 million customers annually in Ahmedabad, Gandhinagar, Surat, Bhiwandi and Agra. At the end of March 2012, Torrent Power had an aggregate power generation capacity of 1,697.1 megawatt (MW) using coal, gas and wind based power plants. The company distributes electricity to Ahmedabad, Gandhinagar and Surat cities and operates as the distribution franchisee in Bhiwandi (Maharashtra) and Agra (Uttar Pradesh). It transmits and distributes more than 12 billion units of power to customers in the cities of Ahmedabad, Gandhinagar, Surat, Bhiwandi and Agra spanning an area of 408 square kilometers and franchise area of 721 square kilometers. With such establishments, Torrent Power‟s efforts to increase its efficiency in distribution and transmission network add on significantly to its growth. 15.6.2.2 Fuel Mix

Balanced fuel mix of Torrent Power provides it a competitive edge over other players in the market. The company generates electricity using various sources. Its power generation plants include SUGEN Mega Power Plant, a combine cycle power plant that has an installed generation capacity of 1,147.5 MW. The other power plant is the AMGEN that has power generation capacity of 500 MW, comprising 400 MW coal based and 100 MW gas based. The company is also active in renewable energy generation and operates a 49.6 MW wind power plant. The company also holds 49% interest in Tidong Hydro Power Limited.

The total installed capacity sums up to 1,73,626 MW. Torrent Power has shown tremendous improvement in the usage of fuels for energy generation. The company has increased its focus on renewable sources from the thermal sources used in the past. For the fiscal year ended March 2012, 54% of energy was generated by thermal sources, followed renewable sources (10.60%), hydro (21.60%), gas (10%), nuclear (2.80%) and diesel and liquid fuels (0.70%). Thus, the usage of such diverse fuels enables the company to deliver electricity without interruption even in extreme climatic conditions. 15.6.2.3 Steady Growth in Revenue Performance

Torrent Power's focused business activities helped it to record a continuous growth in its revenue performance during the past five years. The company's CAGR for revenue during 2008-2012 was 21.2%. Such growth in revenue is due to increasing customer base and higher generation and sales of electricity. During the fiscal year ended March 2008 the company generated revenue of $867.2m (INR 37,220.90m), followed by $946.7m (INR 44,657.10m) in 2009, $1269m (INR 59,578.20m) in fiscal year ended 2010 , $1536.9m (INR 69,231.20m) in fiscal year ended 2011. Besides, during fiscal year 2012, total revenue generated by the company increased 16.5%, to $1,612.6m (INR 80,631m). Such growth in fiscal 2012 could be attributed to 3.5% growth in electricity sales, which increased to 14,983 million units (MUs), compared to 14,512 MUs sold during the previous fiscal year. Besides, during the period 2008-2012, operating income of the company increased at a CAGR of 45.71% and reflected an upward trend and net income of the

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company increased at a CAGR of 56.1%. Such growth in overall financial performance has helped the company in strengthening its competitive position.

15.6.3 Torrent Power Limited Weaknesses

15.6.3.1 Declining Plant Efficiency: SUGEN Power Plant

Declining efficiencies is an area Torrent Power look forward to improve its efficiencies. During fiscal 2012, the company reported a decline in the efficiency at its SUGEN Power Plant, which accounts for more than 65% of its total installed capacity. During fiscal 2012, the company reported fall in the plant availability factor (PAF) to 89.29%, compared to 95.32% achieved during previous fiscal year. PAF decline was attributable to increase in maintenance activities, lower gas supplies, off takers reluctance to take power using LNG sources that is expensive and transmission constraints in the region. This had an affect on the plant's plant load factor (PLF), which reduced to 75.99% during fiscal 2012, compared to 82.77% in fiscal 2012. As a result, total electricity dispatched from the plant reduced to 7,430 MUs, compared to 8,070 MUs during previous fiscal year. The company also reported fall in PLF factor for the AMGEN Power Plant. In 2012, the plant's PLF declined to 77.8%, compared to 82.53% in fiscal 2011. As a result, total electricity dispatched declined to 3,128 MUs, compared to 3,327 MUs in 2011. The company could look forward to improve the efficiency of its power plants. 15.6.4 Torrent Power Limited Opportunities

15.6.4.1 Increasing Demand for Electricity in Gujarat

The increasing electricity demand in Gujarat presents a huge opportunity for GSECL to increase its current installed capacity. With the growing energy needs in Gujarat, the electricity and natural gas consumption levels are continuously increasing. According to industry estimates, an additional 4,600 MW of power generation capacity is expected to begin in the state in the current financial year. This would increase the state's total installed power generation capacity to reach from the current 13,140 MW, to cross 17,700 MW by the end of year 2011-12. According to government sources, two 800 MW units of Tata Power's Ultra Mega Power Project (UMPP) at Mundra are scheduled to begin this current fiscal. Besides, two units of 660 MW each by Adani Power Limited and an 800 MW power plant at Vadinar of Essar are also expected to begin power generation in this year. The per capita consumption of power in the state of Gujarat is expected to be 1,000 kilowatt hour (Kwh) per year by 2011-12. Such growth prospects would help the company in its current and future generation projects.

15.6.4.2 Growth in Solar and Wind Generation

The Government of Gujarat (GoG) is focusing to tap the immense potential offered by renewable sources of energy generation. The GoG conducted various experimental studies in decentralized energy supply models in areas such as solar cooking and solar water heating in the domestic and industrial sectors. Besides, it successfully completed studies in relation to decentralized power generation projects that can be replicated on small and large scale. In 2009, the government declared the Solar Power Generation Policy and signed 961.5 MW public private agreements (PPAs) by 87 National and International Developers. In Wind sector, the government announced

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various plans to capture the 10,000 MW of wind power along the coastal areas such as, Saurashtra and Kachchh. Such initiatives by the government provide strategic opportunities to the company diversify its generation capacity to solar and wind energy sources. In 2011, the company installed its first wind power plants with an installed generation capacity of 49.6 MW and also signed a power purchase agreement (PPA) with a solar power company to procure additional 50 MW of power. Thus, the company's focus on renewable energy supported by favorable government initiatives will help the company to further strengthen its position.

15.6.4.3 Planned Expansion

Expanding the business operations will help Torrent Power to gain competitive advantage over other players and also strengthen its foothold in the market. The company has several projects in pipeline to improve its power generation capacity. Its power plants under development include 382.5 MW UNOSUGEN Project; 1,200 MW DGEN Mega Power Project; and 2,520 MW Super criticalcoal-based power project. During previous fiscal year, the companies entered into an agreement with ReGen Powertech Pvt. Ltd., to commission and maintain a 75 MW Wind Power Project in Maharashtra. The Company also signed a memorandum of understanding (MoU) with the Government of Uttar Pradesh to develop a 1,320 MW Coal Based Power Plant in Uttar Pradesh. The company also signed related agreements, such as the long term power purchase agreement (PPA) with U. P. Power Corporation Limited (UPPCL) to sell 90% of electricity to the UPPCL. Thus, with these new projects, the company can increase its generating capacity and thereby its revenues. 15.6.5 Torrent Power Limited Threats

15.6.5.1 Intense Competition

Torrent Power operates in highly competitive markets, which increases the pressure and limits its ability to maintain or increase its rates. The power sector market in India is slowly becoming competitive. Torrent Power faces stiff competition from the leading private power providers in the country like Tata Power and Reliance as well as government owned companies. The competition for the company also comes from the existing small players and new market entrants and also from its counterparts in other states of the country. The company faces stiff competition from the leading private power providers in the country like Tata Power, Adani Power, Essar and Reliance, which are establishing large scale power plants in the state. Additionally, any major activities of these companies or their entry or expansions into new markets could increase the pressure on Torrent Power, which could further impact its competitive ability. This growing competitive market could adversely affect the company‟s profitability if the company fails to bring in new and innovative technologies in the generation of power. 15.6.5.2 Legal and Political Framework

Changes in government policies and regulations could have a negative effect on the growth and expansion strategies of Torrent Power. Torrent Power is engaged in power generation, distribution and transmission business. The company‟s businesses are regulated by various national and local laws and regulations. GOI promulgated Electricity Regulatory Commission Act, 1998, which led to the setting up of Independent Regulatory bodies both at the Central level and at the State level. The CERC and the State Electricity Regulatory Commission (SERCs) at the Central and the State

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levels respectively, are responsible for regulating the tariffs. The government also has state and central transmission utilities to undertake activities related to the transmission of energy through inter-state transmission system and discharge all functions of planning and coordination relating to inter-state transmission system with State Transmission Utilities, Central Government, State Governments, generating companies and may others. The laws and regulations set up by these bodies monitor the Torrent Power‟s operations, products and other activities in the various jurisdictions in, which it operates. Thus these regulations concerning emissions, fuel consumption and safety could have impact on the operations of the company. Any non-compliance with the regulatory limits could lead to penalties and fines. In addition, the political conditions of the country may also affect the company‟s business.

15.6.5.3 Fluctuating Raw Material Prices

Torrent Power‟s operations and revenue is significantly dependent upon the prices of raw materials. The demand for coal, oil and natural gas for power generation may affect the company‟s business. In the past, these commodities prices were highly volatile. Moreover, these commodities prices are likely to remain volatile in the near future. The prices, the company pays for raw materials like coal, oil and natural gas fluctuate a lot depending on supply and demand of these commodities in the international markets. The frequent pricing changes and imbalances could adversely affect the company‟s operations and profitability. With the high gap between the demand and supply of oil and natural gas in India, the company‟s business may be affected.

15.7 Torrent Power Limited – Locations and Subsidiaries 15.7.1 Head Office

Torrent Power Limited

Torrent House Off Ashram Road

Ahmedabad

Gujarat ZIP: 380009

Tel: 91 79 26583060

Fax: 91 79 26582326

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15.7.2 Other Locations & Subsidiaries

Table 46: Torrent Power Limited, Other Locations Naranpura Zonal OfficeSola Road Amraiwadi Zonal Office66 kV Substation Ahmedabad Near IndiraNagar, Amraiwadi Road Gujarat Ahmedabad Zip: 380013 Gujarat Fax: 91 79 27492222 Zip: 380026 India Tel: 91 79 22772020 Source: Company Website, Annual Reports India

City Zonal OfficeOpposite Jubilee House Gandhinagar Zonal OfficePlot no. 283, 284 GH 41/2, Shahpur Sector 16 Ahmedabad Gandhinagar Gujarat Gujarat Zip: 380001 Zip: 382016 India Tel: 91 79 23222247 Fax: 91 79 23227271 India

Surat Zonal OfficeTorrent House Power PlantPower House Station Road Sabarmati 395008 Ahmedabad Gujarat Gujarat Zip: 395008 Zip: 380005 Fax: 91 261 2422171 India India Source: Company Website, Annual Reports

Vatva Gas Power StationVatva SUGEN Mega Power ProjectNational Highway No.8 Ahmedabad Taluka Kamrej Gujarat Surat Zip: 382445 Gujarat India Zip: 394155 India

Source: Annual Report, Company Website, GlobalData, Power etrack Companies Database (July 16, 2012)

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Table 47: Torrent Power Limited, Subsidiaries Torrent Pipavav Generation LimitedGujarat Torrent Power Grid LimitedGujarat Fax: India India Source: Source: Company Website, Annual Reports

Torrent Energy LimitedTorrent House, Station Road Surat Gujarat Zip: 395003 Tel: 91 261 2421117 India

Source: Annual Report, Company Website, GlobalData, Power etrack Companies Database (July 16, 2012)

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16 CESC Limited – Company Snapshot

16.1 Key Information

Table 48: CESC Limited, Key Facts

Corporate Address CESC House, Chowringhee Ticker Symbol, Exchange CESC [National Stock Exchange Square, Kolkata, West Bengal, of India] 700001, India Telephone +91 33 22256040 No. of Employees 10,391 Fax +91 33 22255155 Fiscal Year End March URL www.cesc.co.in Revenue (in USD Million) 1,275.46 Industry Energy and Utilities Revenue (in INR Million) 60,240 Locations India Source: Annual Report, Company Website, GlobalData, Power etrack Companies Database (July 16, 2012)

16.2 Company Overview

CESC Limited (CESC) the flagship company of RPG Enterprises is a power utility. The company undertakes generation, transmission and distribution of electricity. It owns and operates four thermal power plants, namely, Budge Budge Generating Station, Southern Generating Station, Titagarh Generating Station and New Cossipore Generating Station with a total generation capacity of 1,225 MW of power. 80% of the company's customers electricity requirement is met from its own generating plants, balance electricity is purchased from third parties. CESC's transmission system comprises of 474 km circuit of transmission lines linking the Company's generating and receiving stations with 85 distribution stations. Its 3,837 km circuit of HT lines links distribution stations with LT substations, large industrial consumers and 9,867 km circuit of LT lines connect the LT substations to LT consumers. The company serves residential, commercial and industrial customers in Kolkata and Howrah. CESC is headquartered in Kolkata, India.

16.3 SWOT Snapshot

CESC is a power utility company engaged in generating and distributing electricity to the consumers of Kolkata and its adjoining areas. It is a flagship company of RPG Enterprises, one of the country‟s best managed groups of companies that has a diversified and integrated presence. The drawback of the company is its excess dependency on fossil fuels and transmission/distribution losses. Nevertheless, it can utilize opportunity arising from increasing electricity demand and the expansion projects of the company will promote its business operations. However, it faces threat from intense competition and volatility in commodity pricing which could hamper the growth of the company.

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16.4 CESC Limited – Business Description 16.4.1 Business Overview

CESC the flagship company of RPG Enterprises is a power utility. The company undertakes generation, transmission and distribution of electricity to more than 2.5 million customers within a service area of 567 sq km in Kolkata and Howrah. It owns and operates four thermal power plants, namely, Budge Budge Generating Station, Southern Generating Station, Titagarh Generating Station and New Cossipore Generating Station with a total generation capacity of 1225 MW of power.The company operates through three reportable business segments, namely, Power, Retail and Property.

CESC through its power segment undertakes generation, transmission and distribution of electricity. It operates four coal based thermal power plants, namely. 80% of the company's customers electricity requirement is met from its own generating plants, balance electricity is purchased from third parties. New Cossipore Generating Station is the oldest generating station of the company, commissioned in 1949. The other three thermal power plants (TPPs) are pulverized fuel fired stations having a combined generating capacity of 1,125 MW.

The other three TPPs have a combined PLF (plant load factor) of 92.61% and are recognized for their highest capacity utilization in the country. Budge Budge Generating Station is a thirteen year old power plant. The generating capacity of the plant is 750 MW. The station consists of three units each with a generating capacity of 250 MW. Southern Generating Station is a 20 year old power plant having a power generation capacity of 135 MW. It consists of two units each with a generating capacity of 67.5 MW. Titagarh Generating Station is a 28 year old power plant having a power generation capacity of 240 MW. It consists of four units each with a generating capacity of 60 MW.

The company transmits and distributes power to its consumers in 567 sq km metropolitan area of Kolkata and Howrah. It owns and operates 474 km of transmission lines, 85 distribution stations, 3,837 km of HT lines and 9,867 km of LT lines.

For the fiscal year ended March 2012, the power segment contributed 77.94% of the total revenue of the company.

The company undertakes organized retailing activities through retail segment. Its subsidiary Spencer‟s Retail Limited operates 206 stores across India including 19 hypermarts and five apparel stores under the „Spencer‟s‟ label. Music World Retail Limited (MWRL) a wholly owned subsidiary of Spencer‟s Retail Limited undertakes music and books retailing business. MWRL has 88 stores across India. Au Bon Pain Cafe India Limited (ABPCIL) is an other subsidiary of Spencer‟s Retail Limited and operates two cafe retail stores in Bangalore. For the fiscal year ended March 2012, the retail segment contributed 20.43% of the total revenue of the company.

CESC through its subsidiaries, CESC Properties Limited and CESC Infrastructure Limited, undertakes property development business. For the fiscal year ended March 2012, the property segment contributed 1.63% of the total revenue of the company.

CESC has eight subsidiaries, namely, Spencer‟s Retail Limited and its two subsidiaries (Au Bon Pain Cafe India Limited and Music World Retail Limited), CESC Properties Limited, CESC

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Infrastructure Limited, Metromark Green Commodities Private Limited, Dhariwal Infrastructure Limited, Haldia Energy Limited, Nalanda Power Company and Surya Vidyut Limited.

The company has geographical presence in India.

16.5 CESC Limited – Major Products and Services

CESC is a power utility company that serves more than 2.3 million consumers of Calcutta and its adjoining areas. The company's key products and services include the following:

Table 49: Major Products and Services Products:

Electricity

Services:

Transmission and Distribution of Electricity

Source: Annual Report, Company Website, GlobalData, Power etrack Companies Database (July 16, 2012)

16.6 SWOT Analysis 16.6.1 Overview

CESC is a power utility company engaged in generating and distributing electricity to the consumers of Kolkata and its adjoining areas. It is a flagship company of RPG Enterprises, one of the country‟s best managed groups of companies that has a diversified and integrated presence. The drawback of the company is its excess dependency on fossil fules and transmission/distribution losses. Nevertheless, it can utilize opportunity arising from increasing electricity demand and the expansion projects of the company will promote its business operations. However, it faces threat from intense competition and volatility in commodity pricing which could hamper the growth of the company.

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Table 50: CESC Limited, SWOT Analysis Strengths Weakness

Business Model: Vertically Integrated Structure Transmission and Distribution Losses Vast Experience Lack of Fuel Diversity Operational Performance

Opportunities Threats

Renewable Energy Generation Volatility in Commodity Pricing

Increasing Demand for Electricity Legal and Political Framework

Asset Expansion Plans Extreme Weather

Source: Annual Report, Company Website, GlobalData, Power etrack Companies Database (July 16, 2012)

16.6.2 CESC Limited Strengths 16.6.2.1 Business Model: Vertically Integrated Structure

The vertically integrated structure of CESC enables the company to carry out its operations efficiently resulting in cost synergies. In the power sector value chain the company is present in mining, power generation, transmission and distribution. The company operates owns captive mines through which it fulfills 50% of its coal requirement. CESC own and operate four thermal power plants generating 1,225 MW of power. The power plants of the company include Budge Budge generating station, Southern generating station, Titagarh generating station and New Cossipore generating station. Operational plants meet more than 80% of its customers requirements from the power generated by itself and balance electricity is purchased from third parties. The company's transmission system comprises of 17,500 ckt kilometer of transmission and distribution network lines linking generation facilities and with 85 distribution stations. The presence across value chain provides cost synergies through economies of scale thus enabling the company to operate in cost effective manner. 16.6.2.2 Vast Experience

CESC started its business in 1899 as a private power utility company serving Kolkata and its adjoining areas. It is involved in the business of generating and distributing power. CESC is India's first fully integrated electrical utility. The company has more than 100 years of experience in providing power to over 2.5 million domestic, industrial and commercial consumers of Kolkata. Using its vast experience in the industry, the company provides excellent service to its customers supporting their requirements. This reflects the company‟s strong position in the market.

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16.6.2.3 Operational Performance

CESC exhibited a strong financial performance for the fiscal year ended in March 2012 reflecting its ability to fulfill operational and business expansion needs. The revenue of the company for the fiscal year ended March 2012 stood at $1,204m (INR 60,240m) as compared to $1102.8m (INR 51,059.42m) in 2011 representing an increase of 13.8% over the previous year. The operating income of the company increased to $85.1m (INR 3,940m) in 2011 as compared to $71.3m (INR 3,303.61m) in 2011 an increase of around 19.4% over the previous year. Operating margins increased with segmental performance of power, which recorded increased revenue of $1,030.7m (INR 47,720m) with an increase of 12.2%. 16.6.3 CESC Limited Weaknesses

16.6.3.1 Transmission and Distribution Losses

The increasing transmission and distribution (T&D) losses affect the company‟s operational efficiency. In 2011, the company recorded T&D losses of 12.9% compared to 13.3% during 2010. For nine months ended 2012, the company recorded total transmission and distribution loss of 12.8%. Such losses could be attributed to the increasing power theft cases, infrastructure loopholes and adverse weather conditions. Rise in T&D losses not only affects the company‟s operational efficiencies but also deteriorates its revenue and profits. 16.6.3.2 Lack of Fuel Diversity

The company generates electricity through utilizing thermal energy sources. All the four power plants of CESC are coal fired. Any inability to procure the required amount of coal and gas at right price could severely impact the net generation of the company. Also typical thermal efficiency of coal and oil-fired plants is between 33%-35%, compared to combined-cycle gas-fired plants that can reach efficiency rate of 50%.

Coal based generator emit high amounts of pollutants when compared to other generators. Considering Pounds per Billion Btu of Energy Input the amount of carbon dioxide released is approximately 208,000, followed by carbon monoxide (208), nitrogen oxides (457), sulfur dioxide (2,591), particulates (2,774) and mercury (0.016). Pollutants released by oil-fired plants include carbon dioxide (164,000), followed by carbon monoxide (33), nitrogen oxides (448), sulfur dioxide (1.122), particulates (84) and mercury (0.007). Pollutants released by gas-fired plants include carbon dioxide (117,000), followed by carbon monoxide (40), nitrogen oxides (92), sulfur dioxide (1), particulates (7) and mercury. High dependency on thermal energy sources increases the cost of production and affects the profit margins of the company. The company should focus on clean fuel sources for power generation so that dependency on thermal energy sources can be minimized and the generation capacity of the company increases.

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16.6.4 CESC Limited Opportunities 16.6.4.1 Renewable Energy Generation

The favorable macro-economic trends have drawn attention of the Indian government towards renewable energy sources. The government is providing various fiscal incentives and schemes to encourage the increasing usage of renewable energy sources. These incentives and schemes range from preferential tariffs or tax credits for renewable energy projects, and framing taxing schemes for those who contribute to emission of carbon dioxide. In 2011, the company completed the commissioning of 9 MW solar project in Gujarat. Renewable energy market is booming, focusing growing energy demand inadherence to environmental regulations. CESC‟s renewable project involvement will enhance the power generation business of the company and boost its generation capacity. In addition, such initiatives will also help the company to earn carbon credits and reduce its dependence on the price of thermal energy sources. 16.6.4.2 Increasing Demand for Electricity

With the growing energy needs in India, the electricity and natural gas consumption levels are continuously increasing which simultaneously increase the demand for electricity. India is gradually progressing towards a service-led economy. Electricity consumption has grown during the period 2000–2010, driven by the growth in the economy coupled with population growth. This led to a significant growth in the country‟s power generation. However, the per capita consumption of electricity in the country is lower than most developed countries. Despite the government‟s strong effort, the country is not fully electrified and several remote parts of the country will not yet enjoy electricity even by 2012. To overcome such scenario, the government has set a huge target of increasing generation capacity by 100,000 MW during the country‟s 12th five year plan period (2012 –2017), making the industry commercially viable. The Indian real GDP is expected to grow marginally higher than 6% per annum between 2009 and 2013. The population of India is expected to grow to 1.27 billion in 2013. Such a continued growth in the economy and population will require more supply to be added in order to meet the growing demand for electricity. 16.6.4.3 Asset Expansion Plans

CESC has been involved in the development of new projects to support its operations and to meet the increasing demand for power. The company has six upcoming projects in pipeline which helps in enhancing the capacity generation of the company. Completion of underdevelopment projects would add 8,294 MW of capacity in the portfolio. The upcoming projects include six thermal power plants such as, 600 MW thermal power plant to be completed by 2013 in Chandrapur, Maharashtra; Haldia Phase I, 600 MW thermal power plant to be completed by 2014 in Haldia, West Bengal and a 600 MW thermal power plant to be completed by 2016 in Dumka, Jharkahand. Besides, it has 1,000 MW thermal power project in Dhenkanal, Orissa; a 1,320 MW thermal power project to be completed by 2016 in Balagarh, West Bengal and a 2,000 MW thermal power project to be completed by 2017 in Pirpainti, Bihar. All these development plans increases the scope to improve the power generation there by increasing the top line growth.

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16.6.5 CESC Limited Threats 16.6.5.1 Volatility in Commodity Pricing

The company‟s operations and revenues are significantly dependent upon the prices of and demand for coal, oil and natural gas. In the past, the energy commodities prices were highly volatile. Moreover, the energy commodities prices are likely to remain volatile in the near future. The prices, the company pays for raw materials like coal, oil and natural gas, fluctuate a lot depending on supply and demand of these commodities in the international markets. The frequent pricing changes and imbalances could adversely affect CESC‟s operations and profitability. 16.6.5.2 Legal and Political Framework

The company‟s businesses are regulated by various national and local environmental laws and regulations concerning its operations, products and other activities in the various jurisdictions in which it operates. The growing importance on climate change and to emphasis on reducing carbon emissions is increasing the role of various renewable sources of energy. The company‟s earnings can be affected by the regulations concerning emissions, fuel consumption and safety. The non- compliance with these limits could lead to penalty payments. In addition, the political conditions of the country also affect the company‟s business. The change in government policies and regulations could have negative effect on CESC‟s growth and expansion strategies. 16.6.5.3 Extreme Weather

Electric power generation and distribution, in many regions is seasonal. Demand for power is at peaks during the hot summer and the cold winter months. As a result of this seasonal fluctuation, the operating results of the company may fluctuate substantially. In addition, the company would sell less power, and consequently earn less income, when weather conditions are milder. Moreover, seasonal calamities can disturb and at times disrupt the transmission and distribution network. This in turn would increase the operational and distribution cost of CESC for their multiple locations in one or more markets.

16.7 CESC Limited – Locations and Subsidiaries 16.7.1 Head Office

CESC Limited

CESC House Chowringhee Square

Kolkata

West Bengal ZIP: 700001

Tel: 91 33 22256040

Fax: 91 33 22255155

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16.7.2 Other Locations & Subsidiaries

Table 51: CESC Limited, Other Locations Southern 6 South West P18 Mandeville Gardens Taratolla Road Kolkata Kolkata West Bengal West Bengal Zip: 700019 Zip: 700088 Tel: 91 33 24406470 Tel: 91 33 24014541 India India Source: Company Website, Annual Reports

226 A & B APC Road Howrah 433/1 Kolkata G.T.Road(North) West Bengal Kolkata Zip: 700004 West Bengal Tel: 91 33 25559815 Zip: 711101 India Tel: 91 33 26661667 India

P-18 Taratolla Road 32 B. T. Road Kolkata Kolkata West Bengal West Bengal Zip: 700088 Zip: 700058 Tel: 91 33 24014541 Tel: 91 33 25537583 India India

Budge Budge Generating StationP.S. Budge Budge New Cossipore Generating Station28 Jheel Road 24 Parganas KolKata Pujali Village and Post West Bengal West Bengal Zip: 700002 Zip: 700138 Tel: 91 33 25566695 Tel: 91 33 24821708 India India Source: Company Website, Annual Reports

Titagarh Generating StationB.T. Road, P.O. Khardah 24 Parganas Titagarh West Bengal Zip: 700119 Tel: 91 33 25011042 India

Source: Annual Report, Company Website, GlobalData, Power etrack Companies Database (July 16, 2012)

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Table 52: CESC Limited, Subsidiaries Spencer‟s Retail Limited7th Floor, 5 Clive Row Metromark Green Commodities Private LimitedIndia Kolkata Source: West Bengal Zip: 700001 Tel: 91 33 66257800 Url: www.spencersretail.com India Source: Company Website, Annual Reports

Nalanda Power Co. Ltd.Kolkata Haldia Energy LimitedBarick Bhawan West Bengal 6th Floor India Kolkata Source: Company Website, Annual Reports West Bengal Zip: 700072 Tel: 91 33 22127087 Url: www.haldiaenergy.co.in India

Dhariwal Infrastructure Pvt. Ltd.CF-366, Salt Lake City Cesc Properties LimitedIndia Sector-I Kolkata West Bengal Zip: 700064 Tel: 91 23 216530 India

Surya Vidyut LimitedIndia CESC Infrastructure LimitedIndia Source: Company Website, Annual Reports

Source: Annual Report, Company Website, GlobalData, Power etrack Companies Database (July 16, 2012)

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Appendix

17 Appendix

17.1 Abbreviations

Table 53: Abbreviations

Abbreviation Full Form kV kilovolt ARR aggregate revenue requirement BHEL Bharat Heavy Electricals Limited BMT billion metric tons BOO build, own and operate BPSCL Bokaro Power Suppply Co. Ltd Kanti Bijlee Utpadan Nigam Limited and Bhartiya Rail Bijlee BRBCL Company Limited BU billion units CCPP combined cycle power plant CCPP combined cycle power plant CEA Central Electricity Authority CERC Central Electricity Regulatory Commission CLSA Credit Lyonnais Securities Asia CMNAPP Common Minimum Action Plan for Power CPRI Central Power Research Institute CSR Corporate Social Responsibility DVC Damodar Valley Corporation EPS Electric Power Survey FYP five year plan GEB Gujarat Electricity Board GoG Government of Gujarat GoG Government of Gujarat GOI Government of India GSECL Gujarat State Electricity Corporation Limited GTPS Gandhinagar Thermal Power Station GUVNL Gujarat Urja Vikas Nigam Limited HCPTC high capacity power transmission corridors ICVL International Coal Ventures IOCL Indian Oil Corporation Limited IPP Independent Power Producers JSEB Jharkhand Sate Electricity Board JVs joint ventures KLTPS Kutch Lignite Thermal Power Station Kwh kilowatt hour Kwh kilowatt hour MERC Maharashtra Electricity Regulatory Commission MoU memorandum of understanding MoU memorandum of understanding Thermal Power in India, Market Outlook to 2020, 2012 GDPE5096IDB \ Published SEP 2012 Update – Capacity, Generation, Regulations, Power Plants, Companies

Appendix

MSEB Maharashtra State Electricity Board MSETCL Maharashtra State Electricity Transmission Company Ltd MUs million units MUs million units MW megawatt NEP National Electricity Policy NESC NTPC Electric Supply Company Ltd. NESCL NTPC Electric Supply Company Ltd. NETRA NTPC Energy Technology Research Alliance NHL NTPC Hydro Ltd. NMDC National Mineral Development Corp. Ltd NPCIL Nuclear Power Corporation of India Ltd. NVVN NTPC Vidyut Vyapar Nigam Ltd. PAF plant availability factor PLF plant load factor PLF plant load factor PPA power purchase agreement PPAs public private agreements R&D research and development R&M Renovation and Modernization RDSO Research Designs & Standard Organization RGGVY Rajiv Gandhi Grameen Vidyutikaran Yojana RLA Residual Life Assessment ROE return on equity RTVS real time viewing system SCADA supervisory control and data acquisition SEBs State Electricity Boards SERCs State Electricity Regulatory Commission STPS Sikka Thermal Power Station T&D transmission and distribution TELK Transformers and Electricals Kerala Ltd. TPPs thermal power plants TPS Thermal Power Station UMPP Ultra Mega Power Project UMPP Ultra Mega Power Project UN United Nations UPPCL U. P. Power Corporation Limited WCL Western Coalfields Ltd WHR waste heat recovery Source: GlobalData

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Appendix

17.2 Market Definitions 17.2.1 Power

The rate of production, transfer, or energy use, usually related to electricity. Measured in watts and often expressed in kilowatts (kW) or megawatts (MW), it is also known as "real" or "active" power. 17.2.2 Installed Capacity

Installed capacity refers to the generator‟s nameplate capacity as stated by the manufacturer or the maximum rated output of a generator under given conditions. Installed capacity is given in Megawatts (MW) on a nameplate physically fixed on the generator. 17.2.3 Electricity Generation

Producing electric energy by transforming other forms of energy. Also refers to the amount of electric energy produced, expressed in Gigawatt hours (GWh). 17.2.4 Electricity Consumption

Electricity consumption is a sum of electricity generated, plus imports, minus exports, minus transmission and distribution losses and measured in Gigawatt-hours (GWh). 17.2.5 Thermal Power Plant

A plant in which, turbine generators are driven by burning fossil fuels. 17.2.6 Hydropower Plant

A plant in which, the turbine generators are driven by falling water. 17.2.7 Nuclear Power

The electricity generated by the use of the thermal energy released from the fission of nuclear fuel in a reactor. 17.2.8 Renewable Energy Resources

Naturally replenishing energy resources limited in the amount of energy that is available per unit of time. For example, biomass, geothermal, solar, wind can all be termed as renewable resources.

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Appendix

17.3 Coverage

This databook gives detailed information on India‟s thermal power market. It examines the country‟s power market structure at a macro level and provides historical and forecast numbers for generation and capacity up to 2020. The thermal power market has been analyzed in further detail and also provides historical and forecast numbers for generation and capacity up to 2020 by fuel type. The databook also discusses the market‟s regulatory structure, competitive landscape and leading active and upcoming thermal power projects. It also presents the key deals announced in country‟s thermal power sector since 2009.

17.4 GlobalData’s Methodology

GlobalData‟s dedicated research and analysis teams consist of experienced professionals with marketing, market research and consulting backgrounds in the power industry, and possessing advanced levels of statistical expertise.

GlobalData adheres to the codes of practice of the Market Research Society (www.mrs.org.uk) and the Strategic and Competitive Intelligence Professionals (www.scip.org).

The following research methodology is followed for all country databooks. 17.4.1 Secondary research and analysis

Capacity and generation data is collected and validated using a number of secondary resources including, but not limited to:

 Government agencies, ministerial websites, industry associations, the World Bank, statistical databases

 Company websites, annual reports, financial reports, broker reports and investor presentations

 Industry trade journals, market reports and other literature

 Globaldata‟s proprietary databases like the Capacity and Generation Database and Power Plant Database

Further to this, the following secondary information is collected and analyzed to forecast the country‟s power market capacity and generation through to 2020:

 Country‟s macroecocomic scenario

 Government regulations, policies and targets

 Government and private sector investments

 Utility expansion plans

 Historic track record of the sector

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Appendix

17.4.2 Primary Research and Analysis

Secondary research is further complemented through primary interviews with industry participants to verify and fine-tune the market numbers obtained through secondary research and get first- hand information on industry trends.

The participants are drawn from a diverse set of backgrounds, including equipment manufacturers, industry associations, government bodies, utilities, distributors, and academia. The participants include, but are not limited to, C-level executives, industry consultants, academic experts, business development and sales managers, purchasing managers, plant managers, government officials, and industry spokespeople.

17.5 Disclaimer

No part of this publication may be reproduced, stored in a retrieval system or transmitted in any form by any means, electronic, mechanical, photocopying, recording or otherwise, without the prior permission of the publisher, GlobalData.

This report is a licensed product and should not to be reproduced without prior permission

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