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Utilities Sector

India
January 2014

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Table of Contents
I. Utilities Overview

III. Power Generation - Overview

1. Utilities Highlights
2. Main Sector Indicators
3. Power Sector Snapshot
4. Power Sector Snapshot (contd)
5. Utilities as Percent of GDP
6. Wholesale Price Index (WPI)
7. FDI in Utilities
8. Power Sector Forecast
9. Electricity Utilisation, Consumption Forecast
10.Energy Requirement and Peak Load Forecast
11.Power Generation Forecasts
12.Water Supply Forecast
13.Employment and Salaries

1.
2.
3.
4.
5.
6.

IV.Power Generation By Type of Fuel


1. Coal
2. Coal (contd)
3. Legal Framework for IPP Projects in India
4. Competitive Bidding Policy
5. The Fuel Supply Agreement (FSA)
6. Gas and Liquid-Fuel-Based Generation
7. Gas and Liquid-Fuel-Based Generation (contd)
8. Hydropower Generation
9. Hydropower Generation (contd)
10.Nuclear Power
11.Nuclear Power (contd)
12.Renewable Energy
13.Share of RES in Power Generation, Capacity
14.Power Generation SWOT Analysis

II. Utilities Government Policy


1.
2.
3.
4.
5.
6.

Power Sector Government Policy


Power Sector Government Policy (contd)
Power Sector Government Policy (contd)
Renewable Energy Government Policy
Urban Water Supply Government Policy
LPG, PNG Government Policy

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Power Sector Highlights


Power Generation, Electricity Demand
Installed Capacity and Capacity Additions in FY 2013
Capacity Utilisation and Per Capita Consumption
Energy Requirement/Availability Gap
Peak Load Demand/Supply Gap

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Table of Contents
V. Power Transmission and Distribution

VIII.Major Players

1.
2.
3.
4.
5.
6.

Power Transmission and Distribution Highlights


Power Transmission and Distribution Highlights (contd)
Power Transmission and Distribution Highlights (contd)
Performance of State Power Utilities
Performance of Utilities Selling Directly to Consumers
Performance of Utilities Selling Directly to Consumers
(contd)
7. Power Exchange and Trading
8. Power Exchange and Trading (contd)

1. Top M&A Deals


2. Possible M&A Activity in Utilities
3. Liquidity and Solvency Ratios of Major Players
4. GAIL India Ltd.
5. GAIL India Ltd. (contd)
6. NHPC Ltd.
7. NHPC Ltd. (contd)
8. NTPC Ltd.
9. NTPC Ltd. (contd)
10.PowerGrid Corporation of India Ltd.
11.PowerGrid Corporation of India Ltd. (contd)
12.Tata Power Ltd.
13.Tata Power Ltd. (contd)
14.Tata Power Ltd. (contd)

VI.Water Supply and Sanitation (WSS)


1.
2.
3.
4.
5.

Power Transmission and Distribution Highlights


Water Utilities in India
Urban Water and Sewage Highlights
Water Supply
Water Supply and Sewage

IX.Appendix

VII.City Gas Distribution (CGD)

1. Table of Terms and Abbreviations


2. Ratio Calculation Formulas

1. City Gas Distribution (CGD) Highlights


2. PNG in India
3. CNG Sales, Stations and Vehicles

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I. Utilities Overview

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-4-

Utilities Highlights
Energy consumption
In 2011, India was the fourth-largest energy consumer in the world after the United States, China and Russia. The country currently accounts for
about 5% of the world's primary energy consumption and is forecast to claim 6% by 2025. Per capita energy consumption in Asia's third-largest
economy is among the lowest in the world, but is expected to be around the present levels of Japan by 2030.

Transmission
Four of India's five regional electricity grids are interconnected. Inter-regional transmission capacity totalled 28 GW in Mar 2012, accounting for
14% of generation capacity. While keeping its focus on adding generation capacity, the government has pledged to increase inter-regional
transmission to some 59 GW by 2015. State governments sell electricity to consumers at discounted rates and also grant capital subsidies to the
state utilities. Policies and electricity tariff rates are decided by the government. Issues to be addressed include unbundling, granting open access
to transmission and adopting loss reduction technologies.
Water Supply
Economic growth and urbanisation are widening the demand/supply gap of water and managing domestic water resources rationally and
sustainably is a national priority. Current water consumption is roughly in line with availability, but by 2030, water consumption is estimated to be
100% higher than water available. The uneven distribution of water resources, both geographically and seasonally, aggravate the problem. Less
than 50% of the urban population has access to piped water. Cities typically receive piped water for a few hours per day. Water utilities are run by
state, municipal or city authorities.
Natural Gas
With a share of 10%, natural gas is India's third most important energy source and is expected to grow to 20% of the energy basket by 2025. About a fifth
of natural gas demand is currently met by imports. In 2013, India had some 14,000 kilometres of gas pipelines, some 75% of which were operated by staterun gas utility GAIL. City gas distribution (piped natural gas or PNG) was available in some 50 geographical areas at the end of 2013.

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Main Sector Indicators


Main Sector Indicators
Indicator
National GDP, (at constant prices, FY 2005 is base), INRbn
GDP growth (at constant prices, FY 2005 is base), %
Fiscal Deficit, INRbn

FY 2013

FY 2012

55,054.37

52,435.82

4.99%

6.21%

5,209.25

5,159.90

Performance Trend
10-Year History

8-Year History
FDI Inflows in Power, USDbn (calendar years)

3.83
(Jan-Jul 2013)

38.57
Plan-Wise History**

Installed Generation Capacity, GW*

223.34

199.88

Gross Electricity Generation, TWh

963.72

922.45

Transmission Lines Installed, ckt km

17,107

20,434

Per Capita Electricity Consumption, kWh

917.20

883.60
10-Year History

All-India Plant Load Factor (PLF) (Coal & Lignite), %

69.93%

73.47%

Energy Deficit, %

8.71%

8.50%

Peak Deficit, %

9.00%

10.60%

*Includes Renewable Energy Sources (RES)


**Planwise databars show data for years:
FY 1966 (End of 3rd Plan); FY 1974 (End of 4th Plan); FY 1979 (End of 5th Plan); FY 1985 (End of 6th Plan); FY 1990 (End of 7th Plan); FY 1997 (End of 8th Plan); FY 2002 ( End of 9th Plan); FY 2007 (End of 10th
Plan); FY 2012 (End of 11th Plan); FY 2013 (First Year of 12th Plan);

Source: CEIC, CEA


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Power Sector Snapshot


Fossil Fuel Reserves of Key Countries, 2010
25%

498
308

Years of Reserves

10%
5%

1%

1%

1%

0%

Egypt

2%

33

Australia

2%

Natural Gas Demand Forecast

371

446
405

186

134

FY 2013

185

FY 2014

FY 2015

FY 2016

China

4,055

24%

U.S.

2,722

16%

India

980

6%

Russia

814

5%

Japan

597

4%

Demand from power generators outstrips domestic production of fossil


fuels (coal and gas). As a result, coal imports have been rising to support
the operation of plants not ordinarily functioning on imported coal.
Generation losses due to coal supply shortages have also been
increasing. Indias energy requirement is expected to grow four times the
current level to 2.0 BMT/year by 2031. To meet this demand, domestic
coal production has to grow between 7% and 9%. During the XII planning
period, thermal power plants are expected to require 842 MMT of coal,
against an estimated domestic availability of 604 MMT. The 238 MMT
shortfall is expected to be bridged by imports.

Gap,
MMSCMD

159
249

% of World
Consumption

Fossil Fuel Availability

168

206

199

Energy Consumption
(Mtoe)

473

197
293

Country

Total World Consumption: 16,922 Mtoe

Share of Primary Energy Consumption, %

Projected Gas Demand, MMSCMD

Rank

15%
179

South Africa

36

Saudi Arabia

92
4%

Brazil

6%

India

35

211

Russia

9%

6%
3

Western Europe

38

Japan and South


Korea

88

20%

20%

China

19%

USA

600
500
400
300
200
100
0

Projected Primary Energy Consumption in 2025

305

Supply,
MMSCMD
FY 2017

Source: BP Statistical Review, Tata Power, India Energy Book 2012, World Energy Council, GAIL, Oil India Limited, NTPC, Planning Commission
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-7-

Power Sector Snapshot (cont'd)

(charts show Indian fiscal years)

Capacity Addition Targets (MW) for the XII Plan (2012-2017)

XI Plan (2007-12) Capacity Addition - Target Vs Actual


Actual as Percent of Target

39,829

Hydro, 9,204

Coal, 62,695
12.14%

Total: 75,785 MW

3.7%
1.43%

38%

10,760

Gas, 1,086
State Sector, MW
Target

Private Sector Vs Total Capacity Additions

FY 2009

5,061

13%

21,180

56%
42,131

-10.10%

-12.00%

FY 2011

FY 2012

FY 2013

-8.50%

-8.50%

-8.71%
-9.00%

-9.80%
-10.60%

-11.90%
-13.30%

IX Plan (1997-2002) X Plan (2002-2007) XI Plan (2007-2012) XII Plan (2012-2017)


(F)

-16.00%

Energy Requirement/Availability Gap, %


Peak Demand/Supply Gap, %

Total Capacity Addition, MW

Source: NTPC, Association of Power Producers (APP), CEA


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Actual

-11.10%

23,012

2,671

Private Sector Capacity Addition, MW

FY 2010

-8.00%

42%
19,015

Private Sector, MW

Energy Availability and Peak Supply Gaps


75,785

Private Sector Capacity Addition as Percent of Total


Capacity Addition
54,964

23,012

60%
16,732

15,220

Nuclear, 2,800

Central Sector, MW

27%

214%

27,952

82.7%

-8-

Utilities as Percent of GDP


Industrial Production Index - Electricity

IPI Weight, FY 2014 GDP Growth Forecasts

149

180
160
140
120
100
80
60
40
20
0

8.19%

138

131

123

6.08%

5.50%
3.95%

2.75%

FY 2009

FY 2010

FY 2011

FY 2012

Industrial Production Index - Electricity, FY 2005 is base

With a weight of 10.32%, electricity is the fourth-largest contributor to India's


industrial production index (IPI), preceded by manufacturing with 75.53%,
mining with 14.16% and basic metals manufacturing with 11.34%,
respectively, the statistical supplement of the Economic Survey of India for
FY 2013 showed. Chemicals and chemical products have a weight of
10.06% and food products and beverages of 7.28%.

9%
8%
7%
6%
5%
4%
3%
2%
1%
0%

155

In June 2013, the IMF revised its GDP forecast for India for the current fiscal
year (FY 2014) to 5.6% from 5.8% issued in April.
In September 2013, HSBC cut its forecast for India's GDP growth to 4.0%
from 5.5%, while in October the World Bank lowered its forecast for FY 2014
to 4.7% from 6.1% estimated in April.

FY 2013
% y/y change

Utilities as % of GDP
60,000
40,000

41,587

2.00%

45,161

52,436

55,054

2.05%
2.00%

1.95%

20,000
0

49,370

1.88%

1.88%

1.87%

831

882

928

988

1,029

FY 2009

FY 2010

FY 2011

FY 2012

FY 2013

80,000

1.95%

60,000

1.90%

40,000

1.85%

20,000

1.80%

53,036

1.86%
61,089

83,535
1.80%

1.80%

Source: CEIC, EMIS Insight calculations


-9-

1.80%
1.75%

1.73%

1.72%

1.90%
1.85%

72,670

1.70%

911

1,139

1,310

1,448

1,702

FY 2009

FY 2010

FY 2011

FY 2012

FY 2013

All India GDP, INR bn (Current Prices)


GDP Electricity, Gas and Water Supply, INR bn (Current Prices)
Electricity, Gas and Water Supply GDP as % of Total GDP

All India GDP, INR bn (Constant Prices, FY 2005 is base)


GDP Electricity, Gas and Water Supply, INR bn (Constant Prices, FY 2005 is base)
Electricity, Gas and Water Supply GDP as % of Total GDP

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94,610

100,000

1.65%
1.60%

Wholesale Price Index (WPI)


Wholesale Price Index (WPI), Fuel and Power and Subsectors, FY 2005=base
240
220
200
180
160
140
120
100
Mar-12

May-12
Apr-12

Jul-12
Jun-12

Sep-12
Aug-12

WPI Fuel and Power

Nov-12
Oct-12

Jan-13
Dec-12

WPI Fuel and Power - Coal

Mar-13
Feb-13

May-13
Apr-13

Jul-13
Jun-13

WPI Fuel and Power - Mineral Oils

Sep-13
Aug-13

Oct-13

WPI Fuel and Power - Electricity

Wholesale Price Index (WPI), Electricity Subsectors, FY 2005=base


200
180
160
140
120
100
Mar-12

May-12
Apr-12

Jul-12
Jun-12

WPI Electricity - Domestic

Sep-12
Aug-12

Nov-12
Oct-12

WPI Electricity - Commercial

Jan-13
Dec-12

WPI Electricity - Agriculture

Source: CEIC
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Mar-13
Feb-13

- 10 -

May-13
Apr-13

Jul-13
Jun-13

WPI Electricity - Railway Traction

Sep-13
Aug-13

Oct-13

WPI Electricity - Industry

FDI in Utilities

(charts show calendar years)

Foreign Investments in Power in India


300
250
200

6.30%
4.87%

8%

7.54%

253.37
179.77

5.72%
137.73

150

6%
158.63

148.62

50

4%
52.22

3.27%

100
12.35

11.32

11.97

7.88

4.86

0
2008

2009

2010

2011

2012

FDI Inflows, Power, USD bn


Total FDI Inflows, USD bn
FDI Inflows in Power as % of Total FDI Inflows

0.93%
0.48

2%

4.71%

Between April 2000 and March 2012, the Indian power sector
attracted FDI equity inflows of some 4%, compared to 19% by the
service sector and 7% by telecommunications.

40

5%

40.51

30
20
10
0

4%

33.94
25.60
17.52
0.81%
0.14

2008

25.73

17.45

0.82

2009

3%
2%

0.09

1.07%

0.23%

0.36

2010

2011

0.15
0.59%

2012

0.04
0.14%

1%
0%

2013
(Jan-Oct
2013)

In May 2010, the country got its first FDI in the power sector in 54
months, when Singapore-based Sembcorp announced plans to
invest in a 49% stake in a 1,320 MW thermal power plant in
Andhra Pradesh.
In December 2011, Mauritius-based private equity fund Multiples
Private Equity, set up by an Indian national, sought government
approval to acquire a minority stake in the Indian Energy
Exchange (IEX), one of the two power exchange platforms in the
country. The move sparked a debate on whether the government
needs to clarify rules on FDI in such enterprises.
According to comments by India's largest thermal power producer
NTPC, the low FDI inflow in the power sector is indicative of
concerns of the foreign investors over the government's slow
progress in dealing with the sector's structural problems.

Total FDI Outflows, USD mn


FDI Outflows - Electricity, Gas and Water, USD mn
Electricity, Gas and Water Outflows as % of Total Outflows

Source: CEIC
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In spite of this, FDI inflows in the power sector have been very
moderate and have not shown a trend to increase over the years.
India's total FDI inflows are about a fourth of those of China.

0%

2013
(Jan-Jul
2013)

Indian Investments Abroad


50

The Electricity Act of 2003 makes provisions for 100% FDI in the
Indian power sector under an automatic approval scheme and
offers incentives such as 16% assured post-tax return on equity in
current dollars and a five-year tax holiday.

- 11 -

Power Sector Forecast


Soaring
Demand

India's demand for electricity may cross 300 GW earlier than most estimates, consulting firm McKinsey said in a report. The
reasons for the optimistic forecast include faster growth of India's manufacturing sector in the future compared to the past, the
rapid increase in domestic demand as the quality of life of Indians improves, and connection to the grid of some 125,000
villages. A demand of 300 GW will require about 400 GW of installed capacity, the McKinsey analysts pointed out, adding that
blackouts and load shedding currently suppress demand.

Capacity
Additions

India will need between 600 GW and 1,200 GW of new power generation capacity before 2050, according to the International
Energy Agency (IEA). The technology and fuel sources India adopts as it adds this capacity may have a significant impact on
global resource usage and the environment.

Reliance on
Imported Coal

With a share of 58.3% of Indias total installed generation capacity, coal is the single most important fuel in domestic electricity
generation. Reliance on imported coal has been steadily increasing in the past decade, with volume more than doubling to 80
MMT in FY 2012 from 30 FY in fiscal 2010. In comparison, domestic production has remained stagnant. Reliance on imported
coal for power generation in India is expected to continue. Imported coal is forecast to account for some 20% of the coal-based
generation and 19% of all generation in India by fiscal year 2017.

Natural Gas
Deficit

Net natural gas production dropped 15.94% to 38,945.61 MCM in FY 2013, against 46,326.91 MCM in the previous year, due
to lower than anticipated production by both the public and private/JV sectors. The gap between natural gas demand and
supply is expected to grow. The gas requirement of the power sector in fiscal 2017 is forecast at 100 MMSCMD. Due to the
unfavourable demand/supply balance of hydrocarbons in India, the government is encouraging national oil companies to
pursue equity oil and gas opportunities abroad as well as explore domestic shale gas deposits.

Nuclear Power

India has a largely indigenous nuclear power program and expects to have 14,600 MWe nuclear capacity by 2020. It aims to
supply 25% of electricity from nuclear power by 2050. The government has adopted a vision for the country to become a world
leader in nuclear power, due to its expertise in fast reactors and thorium fuel cycle. The use of thorium for nuclear power
generation was developed in India due to its limited availability of indigenous uranium and its being largely excluded from
nuclear trade for some 30 years. The country is a nuclear power and has not signed the Nuclear Non-Proliferation Treaty.

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- 12 -

Electricity Utilisation, Consumption Forecast


Electricity Utilisation Pattern Forecast, %

Rural, Urban Electricity Consumption Forecast, %

120%

120%

100%

80%

8.27%

7.83%

35.79%

36.35%

100%
38.36%

80%
55.45%

60%

60%

40%
20%

18.96%

17.86%

10.60%

11.52%

61.64%

20%

26.38%

26.44%

FY 2017

FY 2022

Commercial

Irrigation

Industrial

58.76%

40%

0%
Domestic

68.77%

39.13%

59.09%

44.55%

31.23%

60.87%
41.24%

40.91%

0%
Northern

Others

Western

Southern

Urban

Eastern

North-Eastern

All India

Rural

Comments
The national, regional and state findings of the 18th Electric Power Survey of India were released in September 2011. The Electric Power Survey
Committee (EPSC) convened to forecast annual electricity demand for states, union territories, regions and the whole country, up to the end of the 12th
Planning Period in fiscal 2017. Another task on the committee agenda was to project electricity demand for the 13th and 14th Planning Periods, i.e. up to the
end of fiscal years 2022 and 2027, respectively.

Source: 18th Electric Power Survey of India (most recent available)


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- 13 -

Energy Requirement and Peak Load Forecast


All India Energy Requirement and Peak Load Forecast

Energy Requirement Forecast, GWh


Region

FY 2014

FY 2015

FY 2016

Northern

324,206

353,738

386,382

Western

313,465

337,289

362,901

Southern

280,709

301,823

324,033

Eastern

129,725

140,637

151,668

4,000,000
3,000,000

12,621

13,703

14,878

All India

1,076,327

1,159,201

1,248,456

400,705

2,000,000
1,000,000
0

North-Eastern

600,000
541,823

400,000

283,470

200,000

199,540
1,354,874

1,904,861

2,710,058

3,710,083

FY 2017

FY 2022

FY 2027

FY 2032

All India Energy Requirement, MU, (l)

Al India Peak Load, MW, (r)

Energy Requirement and Peak Load Forecast by Region


FY 2017

FY 2022

FY 2027

FY 2032

Region

Energy
Requirement, GWh

Peak Load, MW

Energy
Requirement, GWh

Peak Load, MW

Energy
Requirement, GWh

Peak Load, MW

Energy
Requirement, GWh

Peak Load, MW

Northern

422,498

60,934

59,400

86,461

840,670

121,979

1,135,543

164,236

Western

394,188

62,015

539,310

86,054

757,318

120,620

1,028,974

163,222

Southern

357,826

57,221

510,786

82,199

727,913

118,764

1,017,526

165,336

Eastern

163,790

24,303

236,952

35,928

349,412

53,053

480,046

72,874

North-Eastern

16,154

2,966

23,244

4,056

33,952

6,169

46,921

8,450

All India

1,354,874

199,540

1,904,861

283,470

2,710,058

400,705

3,710,083

541,823

Source: 18th Electric Power Survey of India


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- 14 -

Power Generation Forecasts


Power Generation Mix Forecast, %

Coal Consumption Trend Forecast


21%

19%

18%

17%
15%

120%

20%

19%

15%
11%

11%
10%

10%

11%

100%
3%

2%

FY 2013

FY 2014

FY 2015

Increase in Domestic Coal Consumption, %


Imports as % of Total Coal Consumed

FY 2016

22%

21%

20%

20%

19%

10%

9%

8%

8%

7%

14%

16%

17%

19%

19%

54%

54%

55%

53%

53%

FY 2014

FY 2015

FY 2016

FY 2017

80%

FY 2017

Increase in Imported Coal Consumption, %


60%

Transmission and Distribution Losses Forecast, %


Region

FY 2017

FY 2022

Northern

20.13

16.12

Western

19.12

14.91

Southern

16.78

15.44

Eastern

19.36

14.22

North-Eastern

22.71

18.65

FY 2013

All India

18.9

15.39

Domestic Coal

40%

20%

0%

Source: CRIS Analysis, 18th Electric Power Survey of India


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- 15 -

Imported Coal

Gas

Hydro & Renewables

Water Supply Forecast


Water Demand Forecast by Sectors, bcm
807

According to the Asian Development Bank (ADB), India's


population is likely to total around 1.6 billion people in
2050. Food requirement is estimated at 400 million metric
tonnes (MMT), against current food production at about
230 MMT.

543

43

Withdrawals for
Agriculture
2010

2050

111

Withdrawals for
Municipal and
Household Use

37

81

19

70

From a water supply perspective, India will have to extend


irrigation to currently rain-fed areas to meet this demand.

Industrial Withdrawals Power Withdrawals

Water Requirement Projection for All Sectors, 2050 921 BCM

Average Annual Water Resource Potential, bcm, 2030


Available Water Resources

Utilizable Water Resources


Ground
Water
(GW),
BCM,
230

Ground
Water
(GW),
BCM,
400

Surface
Water
(SW),
BCM,
2,118

The Ministry of Water Resources forecast total water


requirement in 2050 for all sectors including irrigation,
domestic, industry, power, inland navigation, ecological,
and evaporation losses, at 1,180 billion cubic meters
(bcm). The return flows have been estimated at 259 BCM,
giving a net requirement of 921 BCM for 2050.
Climate change impact is expected to increase
demand, mainly for agriculture, due to increased
evaporation from cropped areas.
An expert committee on Indian urban infrastructure and
services has estimated the total capital investment
needed in the urban water and sewage sector at INR
7,546.27bn over the next 20 years.

Surface
Water
(SW),
BCM,
514

Source: Ministry of Water Resources, Asian Development Bank, 2030 Water Resources Group, Planning Commission
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- 16 -

Employment and Salaries


Daily Average Number of Employees
FY 2009
Daily Avg No. of Employees in
Electric Power Generation,
Transmission and Distribution

Average Daily Wages in Utilities


FY 2010

26,913

550.71
472.27

28,926

462
365.17

Daily Avg No. of Contract Workers in


Electric Power Generation,
Transmission and Distribution

8,034

13,600

Daily Avg No. of Employees in Water


Collection, Treatment and Supply

833

452

169

N/A

1,156

937

170

385

Daily Avg No. of Contract Workers in


Water Collection, Treatment and
Supply
Daily Avg No. of Employees in
Sewerage
Daily Avg No. of Contract Workers in
Sewerage

291.5

263.59

Average Daily Wage in Electric Average Daily Wage in Water


Power Generation,
Collection, Treatment and
Transmission and Distribution,
Supply, INR
INR

FY 2009

Average Daily Wage in


Sewerage, INR

FY 2010

Employment in Utilities
946

940

920

910

870

860

850

850

800

840

840

830

41

50

40

50

50

50

40

50

50

60

60

70

FY 2000

FY 2001

FY 2002

FY 2003

FY 2004

FY 2005

FY 2006

FY 2007

FY 2008

FY 2009

FY 2010

FY 2011

Employment in Electricity, Gas and Water Utilities - Public Sector, thou persons

Employment in Electricity, Gas and Water Utilities - Private Sector, thou persons

Source: CEIC
Any redistribution of this information is strictly prohibited.
Copyright 2014 EMIS, all rights reserved.

- 17 -

II. Utilities Government Policy

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Copyright 2014 EMIS, all rights reserved.

- 18 -

Power Sector Government Policy

Key Bodies

The Ministry of Power (MoP) of India - acts as a liaison between the central government and state utilities of public and private
ownership, as well as oversees rural electrification projects.
The Central Electricity Authority of India (CEA) MoP's planning arm, provides advise to the central and state governments and
regulatory commissions on technical matters relating to generation, transmission and distribution of electricity. It also provides
operational advise to state governments and utilities.
Central Electricity Regulatory Commission (CERC) a key regulator of the power sector in India, in charge of overseeing the tariffs
of state-owned power generating companies and regulating interstate transmission of energy.

Other
Institutions

The Ministry of Coal is in charge of exploration of the coal and lignite reserves of India, as well as of production, supply, distribution
and price of coal through government-owned coal major Coal of India Limited (CIL).
The Department of Atomic Energy (DAE) of India is a body directly under the Prime Minister, in charge of nuclear technology,
nuclear power and research.
The Ministry of New and Renewable Energy (MNRE) the chief institution in charge of implementing renewable energy policies and
programs in India. It was established as Ministry of Non-Conventional Energy Sources in 1992 and assumed it current name in 2006.
The Petroleum & Natural Gas Regulatory Board (PNGRB) Act of 2006 provides the legal framework for the development of the
natural gas pipelines and city or local gas distribution networks.

Electricity Act
2003

The Electricity Act, 2003, is a key legislation regulating generation, distribution, transmission and trading in power in India. It replaced
laws adopted in 1910 and 1948 which were unable to meet modern-day electricity demand and realities. The act de-licenses power
generation, except for hydropower projects over a certain size, de-licenses distribution in rural areas and introduces a licensing regime
for distribution in rural areas. In addition, the act stipulates that 10% of the power distributed to consumers has to be generated from
renewable and non-conventional sources of energy.
Power Finance Corporation Ltd. (PFC) is the financial backbone of the Indian power sector. It provides financial assistance for
power projects across India and also provides funding to State Electricity Boards (SEBs) (which are both electricity regulation boards
and power generating companies), central and state sector power utilities and private companies.

Source: CEA, Power Ministry, CERC, Coal Ministry, DAE, MNRE, PNGRB, PFC
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Copyright 2014 EMIS, all rights reserved.

- 19 -

Power Sector Government Policy (cont'd)

Power
Legislation

National Electricity Policy, 2005 adopted as required by the Electricity Act of 2003. Policy sets priority on hydropower, highlights
the need for increased use of natural gas and nuclear power, pledges to make thermal power less polluting by using low-ash coal and
sets recommendations for improving the transmission and distribution of power.
National Water Policy, 2005, Small Hydropower Policy, 2007 (for plants with capacity of below 20 MW), Hydropower Policy, 2008
- emphasis on development of Indias full hydropower potential, states encouraged to develop workable PPP projects.
The Energy Conservation Act of 2001 was adopted to promote energy saving, reduce Indias energy intensity and curb energy
wastage. The act was amended in 2010. The Bureau of Energy Efficiency (BEE) is a Government of India agency under the Ministry
of Power, in charge of encouraging the conservation and efficient use of energy in India. BEE was set up in 2002 under the provisions
of the Energy Conservation Act of 2001.

Rural
Electrification
Scheme
(RGGVY)

A comprehensive scheme of rural electricity infrastructure and household electrification for providing access of electricity to all rural
households was launched by the government of India in Apr 2005. Under the scheme, called Rajiv Gandhi Grameen Vidyutikaran
Yojana (RGGVY), state capital subsidy is provided for projects under the following panels: Rural Electricity Distribution Backbone
(REDB), Creation of Village Electrification Infrastructure (VEI), Decentralised Distributed Generation (DDG) and Supply and
Electrification of Below Poverty Line Households. In addition, states develop their own Power Distribution and Rural Electrification
Projects. Some 80% of India's inhabited villages were electrified and 44% of the rural households had access to electricity, according
to the 2001 Census. As of July 31, 2011, 96% of India's villages had access to electricity, the Planning Commission said in its report
on Power in the XII Planning Period (2012-17).

Ultra Mega
Power
Projects
(UMPP)

Projects under this initiative, aimed at bridging the gap between Indias power demand and supply, are awarded to developers on the
basis of competitive bidding, by the Ministry of Power in association with CEA and PFC. Each of the coal-based projects has about
4,000 MW capacity.
According to the government's Economic Survey for FY 2012, four UMPPs at Sasan in Madhya Pradesh, Mundra in Gujarat,
Krishnapatnam in Andhra Pradesh and Tilaiya in Jharkhand, respectively, had been awarded to developers. The Mundra UMPP,
owned by Tata Power and functioning on coal imported primarily from Indonesia, started operations in March 2012. The Tiliaya UMPP,
awarded to Reliance Power, is expected to be up and running in 2015.
A 50,000 MW hydroelectric initiative, aimed at building a combined 50,000 MW of hydropower capacity in 16 states, was launched in
2003. UMPPs are regulated by the Revised Mega Power Project Policy of 2009.

Source: World Resources Institute, Planning Commission, India Economic Survey 2011-12, Reliance Power
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Copyright 2014 EMIS, all rights reserved.

- 20 -

Power Sector Government Policy (cont'd)

Energy
Efficiency
Management

National Mission on Enhanced Energy Efciency (NMEEE) an Indian government initiative designed to address inefficient energy
use, developed under the Energy Conservation Act of 2001. A major energy saving initiative is the Perform, Achieve, Trade (PAT)
scheme. PAT is a trading mechanism aimed at stimulating high-energy-consuming industries to implement energy efciency measures
and to comply with energy consumption targets set by the Bureau of Energy Efciency. Under PAT, 478 Designated Consumers (DCs)
have been selected from eight industrial sectors including the power sector. The DCs have been given targets to reduce energy
consumption by March 2015. If the DCs are unable to achieve the allocated targets, they would be either required to purchase Energy
Saving Certicates (ESCerts), or pay penalty corresponding to the shortfall in their target achievements.

Financial
Incentives to
Electrical
Utilities

India's Finance Act of 2012 provided a number of incentives to the domestic power sector. Steam coal has been fully exempted from
basic custom duty and countervailing duty (CVD) has been reduced to 1% until March 31, 2014. Coal mining projects have also been
fully exempted from basic custom duty on imports. Import duties on natural gas have been scrapped. Tax withholdings on External
Commercial Borrowing have been reduced to 5% from 20% and income tax exemption rules have been extended to power plants that
had started generation by the end of the FY 2012 in March.

Reforms in
Distribution

Power distribution is a highly regulated segment, so government policies play a crucial role in its development. Power distribution in
India, a link between power consumers and generators, is plagued by high distribution losses and low billing recovery, which results in
the poor financial health of utilities. The Accelerated Power Development and Reform Program (APDRP) was launched in FY 2003
to improve the financial viability of state utilities, reduce transmission and distribution (T&D) losses and improve the reliability, quality
and availability of power supply. In FY 2008, the government introduced the Re-Structured Accelerated Power Development and
Reforms Program (R-APDRP) to implement IT systems for distribution and launch large-scale distribution franchising.

Source: NTPC, Tata Power, Chandigarh Engineering Dept.


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- 21 -

Renewable Energy Government Policy

Market
Mechanisms

Details

Significance

Technologies for power generation from Renewable Energy Sources (RES) are evolving and
the Indian RES market is expected to mature rapidly. As a result, the cost of renewable-based
generation is expected to decrease. The Indian RES market functions under two governmentpromoted mechanisms Renewable Energy Certificates (REC) and Renewable Purchase
Obligations (RPO). RECs are a policy mechanism to promote RE-based power generation in
India. RPO is being implemented throughout the country to create demand for renewable
energy. Under the Electricity Act 2003, the National Electricity Policy 2005 and the Tariff Policy
2006, State Electricity Regulatory Commissions (SERCs) are required to purchase a certain
percentage of power from renewable energy sources.

Various State Commissions have established an RPO obligation for their distribution
companies. They have also determined the tariffs for RES generation based on different
technologies. However, the specified RPO varies from 1% to 10% across the country. At the
same time, there is wide divergence in the tariffs of different technologies set by different
Regulatory Commissions. REC is aimed at addressing the mismatch between the availability
of RE resources in states and the requirement of the obligated entities to meet the RPO. Under
the REC mechanism, RE generators have two options - to sell the renewable energy at a
preferential tariff or to sell the two cost components of RE generation (1) electricity
generation and (2) environmental attributes associated with RE generation - separately. The
environmental attributes can be exchanged in the form of RECs.
Subsequent to the launch of the Jawaharlal Neru National Solar Mission (JNNSM) in 2010,
almost every state announced a solar-specific percentage as a part of the overall RPO. These
are currently in the range of 0.25% to 0.5% and are expected to go up to 3% by 2022. Solar
generation is complemented by solarsector specific RECs. RECs are issued to RE generators
for 1 MWh of RE electricity injected into the grid, and are valid for 365 days after the date of
issuance. Purchase of RECs is equivalent to purchase of RE for RPO compliance.
Strengthening the REC mechanism is expected to help manage the liquidity in the RE market
by allowing states that lack RE sources to meet their RPO. There could be significant
opportunities in the RE sector, depending on how the REC market evolves, and also on
whether regulators penalise distribution companies that do not meet their RPO.

Source: Council of Energy, Environment and Water, Tata Power, NTPC


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Copyright 2014 EMIS, all rights reserved.

- 22 -

Mid-Term Potential
The Planning Commission
estimated
the
total
medium-term (up to FY
2032) potential for power
generation
from
RE
sources, such as wind,
small hydropower plants,
solar, waste-to-energy and
biomass, in India at some
183,000 MW.
Government measures to
boost RE energy
development:
Fiscal
and
financial
incentives
such
as
capital/interest subsidies
and nil or lowered excise
and customs duties.
Preferential tariff for gridinteractive
renewable
power in most states.
FDI of up to 100% under
the automatic route.
JNNSM targeting 2,000MW
of grid-connected solar
power by 2022.

Urban Water Supply Government Policy

Strain on
Urban
Infrastructure

According to the United Nations Population Division, between 500 and 600 million Indians, equivalent to roughly half of the countrys
population, will live in cities by 2030. As a result, urban infrastructure is coming under severe pressure. In an attempt to boost urban
infrastructure development, the Indian government launched the Jawaharlal Nehru National Urban Renewal Mission (JNNURM) in
December 2005 to fast-track the development of 65 cities across the country. The initiative envisaged spending USD 11bn over
seven years on water, sanitation, drainage, solid waste management, roads, transport and urban renewal. Water supply projects
under JNNURM focus on goals such as reducing non-revenue water (NRW) below 15% and introducing volumetric tariffs, 100%
metering of all connections as well as a 24-hour water supply, among others.

Urban
Renewal
Mission

JNNURM covered 65 Mission Cities and several hundred non-mission cities. The interventions in the Mission Cities are covered by
two sub-missions called Urban Infrastructure and Governance (UIG) and Basic Services to the Urban Poor (BSUP). The non-mission
cities, on the other hand, have two sub-schemes called Urban Infrastructure Development Scheme for Small and Medium Towns
(UIDSSMT) and Integrated Housing and Slum Development Programme (IHSDP). The UIG and UIDSSMT components are managed
by the Ministry of Urban Development (MoUD), while Ministry of Housing and Urban Poverty Alleviation (MoHUPA) is the nodal
agency for the other two components.

Steps to
Improve Urban
Water Sector

According to a report by ADB and another by the Indian Planning Commission on water guidelines for the 12th planning period ending
2017, measures that need to be adopted to address the issues faced by the urban water sector include making the installation of
rainwater harvesting systems mandatory for all public and private buildings, levying progressive water tariffs to discourage waste of
water while providing a basic quantity of water at a low price, introducing mandatory water supply metering, developing a suitable
strategy for operation and maintenance of the assets of water utilities, empowering local bodies to impose penalties for water wastage,
encouraging the usage of low-volume flushing cisterns and promoting the recycling of wastewater.

Source: CEA, UN Population Division, Grant Thornton, ADB, Indian Planning Commission
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Copyright 2014 EMIS, all rights reserved.

- 23 -

LPG, PNG Government Policy


The Indian government controls fully the prices of LPG and kerosene and partially de-controlled those of petrol and diesel in 2010 and 2013, respectively.
Subsidies are provided on 14.2 kg LPG cylinders sold to households under the PDS Kerosene and Domestic LPG Scheme of 2002. Subsidised LPG is
termed "domestic" and is only for residential usage. In September 2012, the government limited subsidised LPG to six cylinders per household a year but in
December said it would raise the cap to nine cylinders per year. As of December 2012, subsidised LPG cost INR 410.66 per cylinder, against a market price
of some INR 896 per 14.2-kg bottle. The price of 19-kg commercial-usage cylinders is market-linked and higher than the market price of the 14.2-kg bottle.

Subsidy
Details

The total amount of the LPG subsidy was INR 19.89bn in FY 2013, according to data by the Petroleum Planning and Analysis Cell. As
of Aug 16, 2013, LPG's cost to Oil Marketing Companies (OMCs) (desired price) was INR 807.98 per cylinder. The price OMCs
charged to retailers (depot price) was INR 373.41, and the retail price charged to consumers was INR 410.66. The difference of INR
434.57 between the desired and the depot price represents the OMCs under-recoveries per cylinder as of that date. The central
government subsidy totalled INR 22.58. The remaining INR 411.99 (to INR 434.57) were shared by upstream (oil producing)
companies and the OMCs themselves.

Consumers
Must Make a
Choice

Households pay for PNG less than they do for subsidised LPG, which results in many using PNG, while continuing to get refills of their
LPG bottles. In early 2009, the government said households using PNG will have to give up their LPG connections. Authorities also
authorised state-owned OMCs to develop a mechanism for blocking multiple or back-up LPG connections, the newswire added.
According to a report by The Hindu dated Oct 20, 2013, India is home to some 140 million LPG connections, of which 25 million are
believed to be multiple LPG connections or to exist parallel to PNG infrastructure. Some 6.3 million of these have already been
blocked by OMCs.

LPG
Connection
Portability

In early 2013, the government launched an LPG portability scheme allowing consumers to change LPG dealers but not the supplying
oil company. In October, the scheme - which is available in 24 cities across India - was enhanced by the possibility for consumers to
buy small 5-kg cylinders at retail company-owned company-operated outlets (COCO), which account for some 3% of all filling stations
in the country. According to an Oil Ministry official, inter-company portability was not legally possible, as the current law required LPG
cylinders belonging to a particular company to be refilled only by that company. The ministry was looking into ways to amend the law
or allow users to return their bottles before signing up for a new connection to a different company, the official added.

Source: Petroleum Planning and Analysis Cell, International Institute for Sustainable Development/The Energy and Resources Institute, EMIS Insight
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Copyright 2014 EMIS, all rights reserved.

- 24 -

III. Power Generation - Overview

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Copyright 2014 EMIS, all rights reserved.

- 25 -

Power Sector Highlights


Installed
Capacity

India's power generation sector boasts the world's fifth-largest installed capacity, at 223.34 GW as of March 31, 2013. Captive
power plants generate additional 43.3 GW. Thermal power plants, fuelled by coal, gas and diesel, constituted more than 67% of
the installed capacity, with coal alone accounting for 58.3% of capacity at the end of FY 2013 in March. Hydro power plants and
those using renewable energy sources had shares of some 17.7% and 12.32%, respectively.

Demand
Outstrips
Availability

Electricity demand in India traditionally outstrips availability, both in terms of base load energy and peak availability. In FY 2013,
base load requirement was 998,114 GWh against availability of 911,209 GWh, which translated into an 8.7% deficit. The
percentage dipped slightly from FY 2012, when peak load demand was 130 GW, against availability of 116 GW, which resulted
in a 10.6% deficit. Peak load deficit was 9.0% in FY 2013.

Electricity
Subsidies

State governments sell electricity to consumers at discounted rates and also grant capital subsidies to the state utilities.
Policies and electricity tariff rates differ among states and between consumer categories in each state. State utilities compute
tariffs on the basis of revenue required and sales forecasts. Tariffs are subject to approval by state regulatory commissions.
The approved tariffs are often lower than those suggested by the companies. State governments then compensate utilities with
a cash subsidy that is supposed to be paid in advance for the upcoming financial year but is often paid later.

Network
Losses

India's transmission and distribution (T&D) losses totalled 23.65% of distributed electricity in FY 2012, against a world average
of some 15%. According to expert estimates, technical factors contribute up to 20% of total losses. Non-technical losses result
from illegal tapping of lines and the installation of faulty electric meters that underestimate actual consumption, among others.

Intermittent
Supply

More than 300 million Indians, comprising nearly half of the rural and 6% of the urban population, had no access to electricity
as of December 2011. Industry experts often criticise the electricity supply in India as intermittent and unreliable with blackouts
and power shedding interrupting irrigation and manufacturing across the country.

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Copyright 2014 EMIS, all rights reserved.

- 26 -

Power Generation, Electricity Demand


Power Generation, TWh, FY 2013
1,000

876.89

912.06

900

5.28
32.29

32.87

800

130.51

Electricity Consumption by Sectors, GWh, FY 2013

4.79
Traction 15,431

Industrial 382,670

113.72

44.87%

Import from
Bhutan

700

1.81%

Total
Consumption
(figure by
CEA):
852,902 GWh

600
Nuclear

500
400
300

708.81

760.68
Hydro

17.95%

5.25%
8.33%

200

Others 44,809

21.79%

100

Thermal

Commercial
71,019

0
FY 2012

Agriculture
140,960

FY 2013

Household
185,858

Comments
In India, a kilowatt hour is called a unit of energy. Energy is traditionally measured in Million Units (MU) = million KWh and Billion Units (BU) = billion KWh.
1 MU = 1 Gigawatt hour (GWh), and 1 BU = 1,000 MU = 1 Terawatt hour (TWh). For example, 855 BU=855,000 MU=855 TWh. All power and electricity
figures taken from Indian sources and measured in MU and BU, have been converted to GWh and TWh for convenience.
On the other hand, 1 TWh per year = 114 megawatts (MW). [1 megawatt = 10^6 watts; 1 terawatt = 10^12 watts. 1 year = 8,765.813 hours.]

Source: Tata Power, NHPC, NTPC, CEA, 18th Electric Power Survey of India Report
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Copyright 2014 EMIS, all rights reserved.

- 27 -

Installed Capacity and Capacity Additions in FY 2013


Installed Generating Capacity (GW) by Type of Fuel, FY 2013

17%

Installed Capacity by Sector (GW), FY 2013

Gas (Thermal)
20.1
Diesel (Thermal)
1.2
9%

Companies owned
by State
Governments
(State Sector) 68.9

Nuclear 4.8

Private
Companies
(Private Sector)
65.36

68.9%

2.15%

Coal (Thermal)
130.2

58.3%

Total:
223.34 GW

12.32%

29.26%

RES 27.5

17.7%
Companies owned
by the Central
Government
(Central Sector)
89.12

Hydro 39.5

39.91%

Comments
India's total installed capacity was 223.34 GW as of March 31, 2013, the world's fifth-largest. Capacity additions expected in FY 2014 total 18,432 MW,
comprising 15,234 MW of thermal, 1,198 MW of hydro and 2,000 MW of nuclear power stations. The country's gross energy generation from the power
plants in operation and those expected to be commissioned by the end of FY 2014, has been assessed at 975 TWh, the Central Electricity Authority (CEA)
said.
The number of villages with provided access to electricity jumped by 37,099 to 593,732 in FY 2013 from 556,633 in FY 2012.
Source: Central Electricity Authority, Tata Power, NTPC, Infraline Reports
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Copyright 2014 EMIS, all rights reserved.

- 28 -

Capacity Utilisation and Per Capita Consumption


Thermal Power Capacity Utilisation, PLF %

All India Annual Per Capita Consumption of Electricity

82.01%

76.19%
79.18%

68.35%

67.27%

FY 2013 (1st Year of 12th Plan)

73.47%

75.69%
69.93%

65.54%

917

FY 2012 (End of 11th Plan)

62.16%

884

FY 2007 (End of 10th Plan)

672

FY 2002 (End of 9th Plan)


FY 1997 (End of 8th Plan)
Central PLF, %

State PLF, %

IPP PLF, %
FY 2012

559

465

Private PLF, % All India PLF, %


Per Capita Electricity Consumption, kWh

FY 2013

Comments
Capacity utilisation in the Indian power sector is measured by a Plant Load Factor (PLF). Plant Load Factor is the ratio of the actual output of a power
plant over a period of time and its output if it had operated a full capacity of that time period.
Plant Load Factor = Gross Generation / (Installed Capacity * Number of Hours).
Per Capita Consumption = Gross Electrical Energy Availability/Mid-Year Population.
Per capita electricity consumption in India about one-third of the worlds average, but is expected to reach 5,000-6,000 kWh by 2050, which would require
about 8,000 TWh per year.
Source: CEA, NTPC, Sterlite Technologies
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Copyright 2014 EMIS, all rights reserved.

- 29 -

Energy Requirement/Availability Gap


All India Energy Requirement/Availability Gap

Requirement/Availability Gap by Regions, FY 2013


-27,534
300,000

-10.10%

-8%

50,000

-12%

-11.10%
0

FY 2009

FY 2010

FY 2011

FY 2012

FY 2013

-15.50%

Availability (GWh)

-10%

-14%
-16%
-18%

Northern

Western

Southern

Deficit, GWh
Requirement (GWh)

-8%

-12%

100,000

-10%

-6%
-7.30%

10,718

-8.71%

-2%
-4%

11,566

-9.20%
150,000

-8.50%

-848

-4.60%

107,457

-6%

-4,947

238,058

200,000

281,842

-4%

0%
-43,784

-3.30%

286,683

250,000

-9,792

296,475

-2%

300,774

998,114

350,000

102,510

200,000

-8.50%

-86,905

911,209

861,591
830,594

400,000

746,644

777,039

600,000

691,038

800,000

857,886

-86,001

-79,313
937,199

-73,236

-83,950

788,355

1,000,000

0%

273,240

1,200,000

Eastern

North-Eastern
Deficit, GWh

Requirement (GWh)

Demand Deficit, %

Availability (GWh)

Demand Deficit, %

Comments
India's energy requirement and availability are forecast at 1,048,533 GWh and 978,301 GWh for FY 2014, respectively. This translates into a shortage of 70,232
GWh, or a deficit of 6.7%, according to CEA. India's energy requirement outstripped availability between FY 2009-2013. Both requirement and availability reported
annual increases in the observed years, so that the gap between requirement and availability remained essentially unchanged. In percentage terms, the energy
requirement deficit reported an average value of -9.4% between FY 2009-2013. Therefore, a constitutional gap between requirement and availability exists in the
country. In the future, as demand grows further, India will have to either boost generation capacities by exploiting more own resources, increase inter-state power
trading or rely on imports.
Source: CEA, EMIS Insight calculations
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Copyright 2014 EMIS, all rights reserved.

- 30 -

Peak Load Demand/Supply Gap


Peak Demand-Supply Gap

Peak Demand-Supply Gap by Regions, FY 2013

38,767
31,586

-10%
-12%
-14%

-16%

-18.50%

1,864

5,000

FY 2011

Supply (MW)

FY 2012

-18%
-20%

Northern

-14%

-6%
-8%

-13.30%

Demand (MW)

-4%

-6.70%

-7.40%

10,000

-12%

FY 2010

45,860

15,000

-134

-1,240

16,655

-10.60%

-7,181

-8.90%

20,000

-10%

-2%

39,486

25,000

0%

-1.50%

40,075

123,294

-6%

-9.00%

-11.90%

FY 2009

30,000

-589

15,415

-9.80%

35,000

-4%

-4,070

1,998

20,000

40,000

-8%

60,000
40,000

45,000

-2%
135,453

116,191

-13,815
130,006

110,000

-12,000
122,000

-15,747

102,725

96,785

80,000

109,809

100,000

-13,024

118,472

140,000
120,000

50,000

0%
-12,159

41,790

160,000

Western

Southern

Eastern

North-Eastern

FY 2013

Demand Deficit, %

Demand (MW)

Deficit, MW

Supply (MW)

Demand Deficit, %

Deficit, MW

Comments
India's peak demand and supply are forecast at 144,225 MW and 140,964 MW for FY 2014, respectively. This translates into a shortage of 3,261 MW, or a
deficit of 2.3%, according to CEA's Annual Load Generation Balance Report (LGBR) for FY 2014. Considering transmission constraints, however, the
anticipated peak shortage increases to 6.2%, CEA added. Similarly to energy requirements and availability commented on in the previous slide, peak load
demand and supply reported increases between FY 2009-2013. Deficit remained large, at an average value of -10.9%, but in the years after FY 2010, it
has been smaller compared to 2010, perhaps due to utilities striving to add capacities to reduce power cuts. Peak load demand is set to further increase in
the future, not only because of current consumer usage, but also as a result of new consumer additions under the rural and urban electrification programs.
Source: CEA, EMIS Insight calculations
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Copyright 2014 EMIS, all rights reserved.

- 31 -

IV. Power Generation by Type of Fuel

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- 32 -

Coal
Sufficiency of Coal Reserves in Meeting India's Power Demand
45,000
40,000
35,000
30,000
25,000
20,000
15,000
10,000
5,000
0

40
22
12

39,761

24,492

12,879

9,297

Jharkhand

Orissa

Chhattisgarh

Andhra
Pradesh

8,871
Madhya
Pradesh

5
5,490

45
40
35
30
25
20
15
10
5
0

Maharashtra

Top 6 States with Proven Coal Reserves (million tonnes)


No. of Years Reserves Can Support India's Power Requirement

Share of Coal-Fired Plants in Total Installed Capacity, 2012


92%
77%

76%

China

Australia

56%

India

South Africa

Share of Coal-Fired Plants in Total Installed Electricity Capacity, 2012

Source: Tata Power, Sterlite Technologies, CRIS Analysis, Coal India


Any redistribution of this information is strictly prohibited.
Copyright 2014 EMIS, all rights reserved.

- 33 -

With a share of 58.3% of India's total installed generation


capacity, coal is the single most important fuel in domestic
electricity generation.
Some 75 thermal power projects depend on governmentowned Coal India Ltd. (CIL) for supplies. Power projects
absorb about 80% of domestic output. It takes some 5,000
tonnes of coal to generate 1 MW of power.
CIL accounted for about 81% of the total coal produced in
India in FY 2013. The countrys ever-increasing demand for
coal is expected to total 980 million tonnes by FY 2017. The
power sector is to account for some 70% of this demand.
In FY 2013, CIL reported output of 452.21 million tonnes of
coal, against 435.84 million tonnes in FY 2012.
Domestic coal availability is challenged by a number of
issues including bottlenecks in capacity expansion of CIL and
coal block allocation, tribal land acquisition and
environmental and forest clearances. Most of Indias coal
deposits are located under forest land.
Coal-based plants also face issues related to water
availability and ash disposal.
Thermal coal imports are needed to bridge the gap between
demand and domestic coal availability.
Reliance on imported coal has been steadily increasing in the
past decade, with volume more than doubling to 80 MT in FY
2012 from 30 MT in FY 2010. In comparison, domestic
production has remained stagnant.

Coal (cont'd)
CIL Production and Dispatch to Power Sector

285

299

304

310

312

FY 2009

FY 2010

FY 2011

FY 2012

FY 2013

CIL Production, MT

As of March 31, 2013, the President of India held 90% in


CIL. The remaining 10% were owned by Indian and
overseas financial institutions, pension funds and other
investors, following a 2010 IPO. The government of India
has repeatedly stated it aimed to further reduce its stake
in CIL through share offers in the markets, a Sep 2013
report by the Institute for Energy Economics and Financial
Analysis (IEEFA) and Greenpeace said.
CIL's current measure of its extractable reserves, by its
own research subsidiary the Central Mine Planning and
Design Institute Limited (CMPDIL), is 16% below the
estimates contained in the 2010 IPO papers, the IEEFA
and Greenpeace report added.
There remains significant uncertainty about the true extent
of CILs extractable reserves. The Indian Chamber of
Commerce considers an accurate account of CILs
extractable reserves as a critical reform to Indias coal
policies.
Domestic coal prices have grown at a slower rate than
imported coal prices over the past five years. Imported
coal is forecast to account for some 20% of the coalbased generation and 19% of all generation in India by FY
2017, CRISIL said.
As the reliance on imported fuel grows, power tariffs need
to become more reflective of costs and fuel prices, the
research agency added.

452

440

430

420

395

Dispatch to Power Sector, MT

Indian Coal Production and Imports

362

442

440

419

397

27

28

30

46

FY 2008

FY 2009

FY 2010

FY 2011

Domestic Coal Production, MT

80

FY 2012

Imported Coal, MT

Source: Tata Power, CRIS Analysis, Ministry of Coal, IEEFA, Greenpeace


Any redistribution of this information is strictly prohibited.
Copyright 2014 EMIS, all rights reserved.

- 34 -

Legal Framework for IPP Projects in India


Legal Options for Establishing IPP Projects in India

A merchant plant

In India,
there are
three options
for setting up
an
Independent
Power
Producer
(IPP) project:

Under the negotiated


route (MoU route)

Under a competitive
bidding process

Power off-take
arrangements
depend upon
the scheme
the IPP is set
up by.

The power producer does not enter


into long term off-take arrangements,
and instead sells power on a shortterm basis on the spot market or
through .a power exchange.

A memorandum of understanding
(MoU) is negotiated and executed
with a state government for setting
up the project within its jurisdiction.

The IPP candidate bids for an


identified project under the
Competitive Bidding Guidelines.
Power procurement in the Indian
market is increasingly being done
through competitive bidding.

In January 2011, the Ministry of Power decreed that all long-term power procurement by state governments and
distribution companies should be made under the competitive bidding process.
The Competitive Bidding Guidelines require project developers to bid on the basis of a level annual tariff.
Winning bidders sign a standard-form power purchase agreement (PPA) drafted by the Power Ministry.

Source: Trilegal
Any redistribution of this information is strictly prohibited.
Copyright 2014 EMIS, all rights reserved.

- 35 -

The Competitive Bidding Guidelines provide for


two bidding models:
Case I Route - the project developer is
responsible for arranging consents, land and
fuel for the power project; and
Case II Route - the procurer undertakes to
bear higher risk by arranging land and fuel
linkages for the project.
The effect of the introduction of competitive
bidding has been estimated as positive, but a
major problem is that the contractual
framework does not provide power producers
with flexibility to react to issues such as coal
shortage or increase in coal prices, leading to
project developers running a significant risk of
default. Considerable certainty on fuel price
and availability is necessary for bidders to
accurately price their bids. However, obtaining
an assured domestic coal supply arrangement
has become a challenge resulting in producers
often failing to meet their agreements with offtakers.

Competitive Bidding Policy

Coal Supply

The Ministry of Coal grants coal allocation under a long-term or a short-term linkage. To
obtain a long-term linkage, project developers file an application with the Ministry, which
issues a letter of assurance (LoA). Following fulfilment of milestones set out in the LoA, the
IPP signs a standard-form Fuel Supply Agreement (FSA) with a government-owned coal
producer [e.g. Coal India Limited (CIL)]. Under the FSA, the coal supplier guarantees up to
50% of the IPPs requirements, which is a significant risk for the project developer. In
agreements signed in late 2012 and Jan 2013, CIL guaranteed coal supplies meeting at
least 80% of plants requirements (see next slide).

Coal Supply
Problems

IPPs are entitled to full capacity charges when selling power only if their plants
operate at "normative availability", which was 85% as per tariff regulations in force in
January 2012. Under the standard PPA, if availability falls below a pre-agreed
threshold, the IPP is required to pay a penalty to the power purchaser. The power
purchaser can terminate the PPA if average availability falls below 65% of normative
availability for a specified period. Thus, IPPs are penalised for failing to achieve
normative availability due to fuel supply problems outside their control. On the other
hand, existent coal reserves cannot be transported to IPPs due to transportation
network problems.

Way Out of
Coal Supply
Problems

In an attempt to insure themselves against coal supply risks, IPPs may seek to buy
imported coal in which case they will face a substantial increase in fuel supply and
power generation costs. IPPs may seek to pass this increase on to power distributors
(which they sell power to), and ultimately to consumers. However, the Competitive
Bidding Route forbids the passing on of increased fuel supply costs. As a result, IPPs
risk incurring significant losses if they use imported coal to generate power and sell it
at the tariff agreed under their PPAs.

Source: Trilegal, Tata Power


Any redistribution of this information is strictly prohibited.
Copyright 2014 EMIS, all rights reserved.

- 36 -

Policy Changes Needed


Coal suppliers should be
required to commit to supply
100% of IPPs requirements
or provide compensation;
IPPs should not be penalised
for failing to perform their
obligations under the PPA to
the extent of the effect of the
reasons outside their control;
Allowing passing on of fuel
price increases to the extent
beyond the control of IPPs
should be allowed;

Power distribution companies


are also required to bid for
power procurement under the
Competitive Bidding Policy.
However, the negotiating
process
is
seriously
challenged as procurers are
unwilling to take fuel price
risks and would like them to
be built into the tariff. As a
result, distribution companies
prefer to procure power under
the MoU route with a fuel price
increase pass-on, or under
competitive bids on fixed
charges and efficiency.

The Fuel Supply Agreement (FSA)

Coal Demand
Above
Production
Capacity

With the nationalisation of coal mines in 1973, the government of India became responsible for managing the country's coal mines through Coal of
India (CIL) and its subsidiaries. The shortage of coal supply in recent years has limited the ability of power companies to generate at full capacity
and meet their purchase agreements with off-takers. In an effort to address coal supply uncertainties, the Ministry of Coal decreed that by March 31,
2012, CIL and its subsidiaries sign Fuel Supply Agreements (FSA) with power projects that had entered into long-term PPAs with distribution
licensees, and started operations after March 31, 2009 or are scheduled to become operational by March 31, 2015. CILs independent directors
strongly opposed the move saying that the aggregate demand under the FSAs will exceed the companys and its subsidiaries current and near
future production capacities. In April 2012, the President of India issued a decree requiring CIL to commit to supplying 80% of the coal requirements
of projects that started operations between March 31, 2009 and 2011. In case of a failure to do so, the company had to pay a penalty of 0.01% of the
value of the deficit measured against the supply commitment, or import coal to bridge the shortfall.

Controversy
over Coal
Supplies

The presidential decree sparked off a multi-level debate. Experts questioned its legality since there is no judicial precedent of a decree regulating the
management of a company. Others voiced concerns as to whether coal supplies to power producers were a public or a commercial interest. CIL
independent directors said the decree undermined their fiduciary duties to act in the best interest of the company. Power producers demanded
higher penalty, claiming that the proposed threshold of 0.01% of commitment deficit may make CIL consider penalty payment a more viable option to
importing coal. In the same time producers argued that if CIL chose to import coal to bridge its supply deficit, it may transfer higher coal costs to
them, thus making the production and delivery of power under an agreed tariff impossible. Other contentious issues included coal quality and the
need to sign multiple FSAs for multiple units of the same plant.
Indias largest thermal power producer, NTPC, declined to sign the FSA, saying the pact was lacking in commitment. As a result of the growing
pressure, the CIL Board of Directors requested the Prime Ministers Office (PMO) to review the FSA provisions in May 2012.

Attempts at
Solution

The PMO recommendations, which NTPC deemed acceptable, included fuel supply commitment of 65% instead of 80%, and a penalty of between
20% and 40% of the value of the deficit in the first four years of the agreement. Interested parties voiced enthusiasm over the Prime Ministers
recommendations, but Indias legal order makes them less binding to CIL than those of the President.
On December 10, 2012, CIL and NTPC officials met to smooth out their differences over the FSA provisions and set a date for signing the pact.
NTPC agreed to sign the FSA in June 2013 on mutually agreed terms and conditions. In August 2013, CIL modified the FSA to allow a third party to
collect samples and determine the quality of the dry fuel. As of September 6, 2013, the coal producer had signed FSAs with 140 power plants, out of
the 173 that depend on it for coal supplies. In the meantime, in the summer of 2013, CIL came under the scrutiny of Indias Competition Commission
over allegations that it abused a dominant market position in supplying fuel to power plants.

Source: Trilegal, Local media


Any redistribution of this information is strictly prohibited.
Copyright 2014 EMIS, all rights reserved.

- 37 -

Gas and Liquid-Fuel-Based Generation


Deficit in Domestic Natural Gas
163.9

103.9
85

FY 2006

111.9

115.8

120

86

84.6

89.7

FY 2007

FY 2008

FY 2009

129.5

FY 2010

179.8

178.8

142.6

FY 2011

132.5

FY 2012 Est.

Supply of Domestic Natural Gas (MMSCMD)


Total Consumption of Gas (MMSCMD)

LNG Imports, million tonnes


14

12
10
8

25%

11.632
8.922
7.958

9.73

19.55%

10.901

15%

12.11%

10%

9.06%

5%

4
2

20%

0%
-3.54%

-6.28%

-5%
-10%

FY 2009

FY 2010

FY 2011

FY 2012

Total LNG Imports (Long-Term, Spot), million tonnes

FY 2013
% y/y change

Source: Tata Power; Deloitte Touche Tohmatsu; Petroleum Planning and Analysis Cell; NTPC;
Any redistribution of this information is strictly prohibited.
Copyright 2014 EMIS, all rights reserved.

- 38 -

India was home to 20.1 GW of gas-based installed


generation capacity as of Mar 31, 2013.
The price of the gas power generators receive from stateowned GAIL are decided by the government under the
Administered Price Mechanism (APM) regime. Gas can also
be domestically sourced from companies exploiting the
Panna Mukta Tapti (PMT) fields, both at APM and non APM
prices. Generators sign Gas Sales and Transmission
Contracts (GSTCs) and long term agreements for gas
supplies.
In FY 2012, the Ministry of Petroleum and Natural Gas
(MPNG) said Indias gas output was expected to fall by 35%
by the end of the year and by additional 12% in years 2013
and 2014. For this reason, the Central Electricity Authority
(CEA) issued a statement advising investors not to plan new
capacities based on domestic gas supplies until the end of
FY 2016 in March. The embargo did not affect FY 2012
capacity additions which were a little above 1,000 MW.
The ban will also not be applicable to power projects planned
on imported LNG, which, according to comments by Tata
Power, is a direct substitute for domestic natural gas but at
almost double the price.
As a result, electricity produced from imported LNG will
increase the cost of generation, the recovery of which will be
uncertain due to highly regulated transmission. The
production of such electricity may not be financially viable.

Gas and Liquid-Fuel-Based Generation (cont'd)

27,063

FY 2008

FY 2009

FY 2011

FY 2012

38,942.61

41,025

46,326.91

51,229.29

Natural Gas Net Production, mmscm

46,042

40,831.10

FY 2010

34,303

31,751.02
26,947

31,478.57

Natural Gas Available for Sale is


derived by deducing internal use
of gas by producing companies.

46,485.88

Production and Availability of Natural Gas

FY 2013

CAGR Natural Gas Available for


Sale FY 2008-2013: 4.95%

Natural Gas Available for Sale, mmscm

Source: PPAC, CEA, GAIL, OIL, ONGC, Ministry of Petroleum and Natural Gas
Any redistribution of this information is strictly prohibited.
Copyright 2014 EMIS, all rights reserved.

- 39 -

With a share of 9%, natural gas was Indias fourth power


generation source in FY 2013, after coal with 58.3%, hydro
power with 17.7% and RES with 12.32%, respectively.
The average global share of natural gas in primary energy
consumption is some 24%. It is expected that the share of
natural gas in India's energy basket will double to 20% by
2025.
The demand for natural gas is largely met through
domestic production with imports contributing less than
30% of the total gas consumption.
With an import of 20.5 million tonnes in 2012, India has
become the fourth largest importer of LNG in the world,
ONGC said.
The main producers of natural gas are Oil & Natural Gas
Corporation Ltd. (ONGC), Oil India Limited (OIL) and
Reliance Industries. LNG is imported by state-owned
company Petronet LNG Ltd. As of March 2013, GAIL held
some 60% in India's gas marketing.
The demand for natural gas is expected to reach
more than 450 thou mmscmd by end of the XII five-year
plan ending in FY 2017, and over 600 thou mmscmd by the
end of the XII five-year plan ending in FY 2022.
In such a scenario, India will have to boost domestic
natural gas production as well as create sufficient
infrastructure for LNG imports to meet demand.

Hydropower Generation
All India Hydropower Generation, GWh
Hydropower generation accounted for 17.7%, or 39.5 GW, of
Indias total installed capacity as of Mar 31, 2013.
In the early 2000s, the Indian government adopted a strategy
to boost hydropower development in the country in an effort
to achieve a hydro-to-thermal ratio of 40:60.
Some 68% of Indias identified hydropower capacities were
still to be developed as of Nov 30, 2012.
The following hydropower projects exist in India: storage
schemes, Run-of-River (RoR) Schemes without Poundage,
RoR Schemes with Poundage and Pumped Storage
Schemes.
Problems affecting the development of the hydropower
sector include land acquisition, resettlement and
rehabilitation issues, delays in environment and forest
clearances, landslides affecting capacity construction
schedules, tunnelling in inaccessible sites and inter-states
water disputes.
The Indian government has established special mechanisms
and committees to encourage hydropower cooperation with
neighbouring Nepal, Bhutan and Myanmar, as well as with
Afghanistan.
Hydropower projects are capital-intensive, have a long
gestation period and require large investments, which all
hinders the full exploitation of Indias hydropower potential.
Since water is a state subject in India, state governments are
demanding incentives, such as free power, which results in
higher tariffs.

135,714.00
118,924.80

FY 2009

119,905.80

109,026.30

FY 2010

FY 2011

118,514.79

FY 2012

FY 2013

All India Hydropower Generation, GWh

Hydropower Stations in India as on Aug 31, 2013


No. of Stations

No. of Units

Capacity (MW)

Northern Region

61

206

15,523.25

Western Region

28

101

7,392.00

Southern Region

67

240

11,387.45

Eastern Region

17

61

4,078.70

North Eastern
All India (Total)

10
183

29
637

1,242.00
39,623.40

Note: Figures show installed capacity of stations with capacity above 25 MW

Source: CEA, hydropowerstation.com, NHPC


Any redistribution of this information is strictly prohibited.
Copyright 2014 EMIS, all rights reserved.

- 40 -

Hydropower Generation (cont'd)


Hydropower Potential Development by Region

Hydropower Potential Development by Basin

Percentages are shown in terms of Identified Capacity Above 25 MW (which is assumed to equal 100%).
Figures are as of Nov 30, 2012.

Percentages are shown in terms of Identified Capacity Above 25 MW (which is assumed to equal 100%).
Figures are as of Nov 30, 2012.

Capacity Identified

Total
(MW)

Northern
Region

53,395

Capacity Under
Operating Capacity
Construction

Above
25 MW

52,263

MW

15,643.30

29.93

MW

6,903

Capacity Under
Capacity Yet To
Operation and
Be Developed
Under Construction

MW

13.21 22,546.30

MW

Southern
Region

16,458

15,890

9,426.90

59.33

510

3.21

9,936.90

62.54

5,953.20

37.46

Eastern
Region

10,949

10,680

3,138.70

29.39

2,482

23.24

5,620.70

52.63

5,059.30

47.37

NorthEastern
Region

58,971

All India,
148,701
Total

58,356

145,320

1,242

35,002.9

68.28

2.13

400

2,810

4.92

4.82

24.09 13,105.00 9.02

5,952

4,052

48,107.80

73.20

6.94

2,179.00

54,304

26.80

93.06

33.10 97,212.20 66.90

Source: CEA
Any redistribution of this information is strictly prohibited.
Copyright 2014 EMIS, all rights reserved.

Above
25 MW

MW

Indus

33,832

33,028

11,244.3

34.04

Ganga

20,711

20,252

4,987.2

Central
Indian
Rivers

4,152

3,868

West
Flowing
Rivers

9,430

East
Flowing
Rivers

Capacity Under
Construction

MW

Capacity Under
Capacity Yet To
Operation and
Be Developed
Under Construction

MW

MW

5,596.0 16.94

16,840.3

50.99

16,187.7

49.01

24.63

1,307.0

6.45

6,294.2

31.08

13,957.6

68.92

3,147.5

81.37

400.0

10.34

3,547.5

91.71

320.5

8.29

8,997

5,660.7

62.92

100.0

1.11

5,760.7

64.03

3,236.3

35.97

14,511

13,775

7,843.2

56.94

410.0

2.98

8,253.2

59.91

5,521.9

40.09

Brahmaput
66,065
ra Basin

65,400

2,120.0

3.24

5,292.0

8.09

7,412.0

11.33

57,988.0

88.67

All India,
148,701
Total

145,320

35,002.8

24.09

13,105.0 9.02

48,107.8

33.10

97,212.2

66.90

43.14 29,716.80 56.86

8,928

5,552

Operating Capacity

Total
(MW)

Western
Region

8,131

Capacity Identified

- 41 -

Nuclear Power
Indian Nuclear Power Capacity Expansion, MW
6,000

140%

5,000

118%

114.9%

4,780

120%

India has a 42-year history of nuclear power generation


with 20 nuclear power reactors operating in six states.

100%

4,000

87.1%

4,120

80%

3,000

60%

1,890

2,000

46.9%

1,000

320

470

FY 1969

FY 1979

40%

1,010
16%

20%
0%

FY 1989

FY 1999

FY 2009

FY 2011

The countrys three-stage nuclear power program


includes a closed-fuel cycle of Pressurised Heavy Water
Reactors (PHWR) in the first stage, Fast Breeder
Reactors (FBR) in the second stage and uranium and
thorium usage in the third stage. Efforts are made towards
progressively increasing the share of nuclear power in the
countrys electricity portfolio.

Indian Nuclear Power Capacity Expansion, MW


CAGR FY 1969 FY 2011: 71.3%

% change

Nuclear Power Generation


35,000

32,451

30,000
25,000
20,000
15,000

32,863

40.81%
18,798

26,469

25.98%

14,921

22.60%

10,000
5,000
1.27%

FY 2009

FY 2010

FY 2011

Electricity Generation by NPCIL, GWh

FY 2012

45%
40%
35%
30%
25%
20%
15%
10%
5%
0%

FY 2013
% y/y change

Source: World Nuclear Association, NPCI, Department of Atomic Energy (DAE), EMIS Insight calculations
Any redistribution of this information is strictly prohibited.
Copyright 2014 EMIS, all rights reserved.

- 42 -

India's integrated energy policy aims to reach 63,000 MW


of nuclear power generation by 2032.
The Nuclear Power Corporation of India Ltd. (NPCIL) is a
state-owned nuclear power company, in charge of
generation, construction and operation of the first stage
PHWRs and Light-Water Reactors (LWR).

As of March 31, 2013, NPCIL operated 20 nuclear power


reactors with a total installed capacity of 4,780 MW. A
total six reactors, with an aggregate capacity of 4,800 MW
were under various stages of construction and
commissioning. A total eight projects with a cumulative
capacity of 16,100 MW have been proposed for launch in
the 12th Five-Year Plan.

Nuclear Power (cont'd)


Nuclear Plants in Operation, as of Mar 31, 2012
Plant Name

Tarapur Atomic Power Station (TAPS),


Maharashtra

Rajasthan Atomic Power Station (RAPS),


Rawatbhata, Rajasthan

Madras Atomic Power Station (MAPS),


Kalpakkam, Tamil Nadu

Kaiga Generating Station (KGS), Karnataka

Narora Atomic Power Station (NAPS), Uttar


Pradesh
Kakrapar Atomic Power Station (KAPS), Gujarat

Projects Proposed for Launch in the XII Plan (2012-17)

Capacity, Launch
MW
Year

Unit

Type

BWR

160

1969

BWR

160

1969

PHWR

540

2006

PHWR

540

2005

PHWR

100

1973

PHWR

200

1981

PHWR

220

2000

PHWR

220

2000

PHWR

220

2010

PHWR

220

2010

PHWR

220

1984

PHWR

220

1986

PHWR

220

2000

PHWR

220

2000

PHWR

220

2007

PHWR

220

2011

PHWR

220

1991

PHWR

220

1992

PHWR

220

1993

PHWR

220

1995

Capacity (MW)

Type

Expected Commercial
Operation

Kudankulam Nuclear Power


Project, Tamil Nadu

2 x 1,000

LWR

Unit 1 - FY 2014

Unit 2 - FY 2014

Kakrapar Atomic Power


Project, Gujarat

2 x 700

PHWR

Unit 3 - FY 2017

Unit 4 - FY 2017

Rajasthan Atomic Power


Project, Rajasthan

2 x 700

PHWR

Unit 7 - FY 2017

Unit 8 - FY 2017

Source: NPCIL
Any redistribution of this information is strictly prohibited.
Copyright 2014 EMIS, all rights reserved.

Plants under Different


Stages of Construction and
Commissioning

- 43 -

Renewable Energy
Indias Renewable Energy Basket, FY 2013
Small Hydro Power
13.01%
Biomass Power
and Gasification
4.63%
Bagasse
Cogeneration
8.43%
Waste to Power
0.35%

Wind Power
68.27%

Solar Power 5.30%

Off-Grid/Captive Power Capacities as of Jan 31, 2013


Off-Grid/Captive Power (Capacities in MW eq)
Waste-to-Energy
Biomass (non-bagasse) Cogeneration

Capacities in MW eq, as of Jan 31,


2013
116
443

Biomass Gasifiers
Rural

17

Industrial

140

Aero-Generators/Hybrid Systems

2.08

SPV Systems

107.8

Water mills/Micro Hydel

2,323 (number)

Bio-Gas Based Energy System

0.65

TOTAL

826.1

Source: Ministry of New and Renewable Energy (MNRE)


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Copyright 2014 EMIS, all rights reserved.

- 44 -

The installed capacity of India's renewable energy sector


increased significantly from 3.9 GW in FY 2003 to about
27.5 GW in FY 2013. Capacity was at 24 GW in Jan 2012.
Wind energy dominates India's renewable energy
industry, accounting nearly 70% of installed capacity (18.6
GW). It is followed by small hydropower (3.5 GW),
biomass power (1.26 GW) and solar power (1.45 GW).
A total capacity of 18,635 MW was installed up to January
2013 in the country, making India the fifth-largest wind
power producer in the world, after the U.S., Germany,
Spain and China. India is a major producer of wind
turbines.
The slowdown in the growth of the wind power sector in
FY 2013 that can be attributed to the withdrawal of
accelerated depreciation for investments made in the
sector, MNRE said.
A total 1,067 MW of wind power projects started
operations in FY 2013 .
A total 12,760 villages and hamlets have been covered
under the Remote Village Electrification Program as of
December 31, 2011. In FY 2013, a total 66,000 biogas
plants were installed across India, taking the total number
of biogas plants to 4.54mn.

Share of RES in Power Generation, Capacity


RES as % of Total Generating Capacity in India
318,414
17.12%

350,000
300,000

250,000
150,000
100,000
50,000
0

147,965

143,061

200,000

63,636

85,795

69,065

902

32

18

105,046

0.03%

0.05%

31-Mar-90

31-Mar-92

1.05%

132,329

12.26%

5.86%

1,658

11,125

7,761

1.58%

31-Mar-97

10.63%

9.74%

8.95%

7.78%

199,877

173,626

159,398

31-Mar-02

31-Mar-07

Total Installed Generating Capacity in India, GW

31-Mar-08

15,521

13,242

31-Mar-09

31-Mar-10

31-Mar-11

Total Installed RES Generating Capacity, GW

54,503

24,503

18,455

31-Mar-12

18%
16%
14%
12%
10%
8%
6%
4%
2%
0%

31-Mar-17 (F)

RES % of Total Capacity

RES as % of Total Energy Generation in India


1,000,000
900,000
800,000
700,000
600,000
500,000
400,000
300,000
200,000
100,000
0

844,846

799,850
722,626

670,654
517,439

3.49%

741,167

928,113
5.52%

4.87%

4.62%

245,438
6
0%

1990

39
0.01%

1992

876
0.22%

1997

2,085
0.40%

3%

2002

Total Gross Energy Generation in India, GWh

25,210

27,860

36,947

41,150

51,226

1%
0%

2007

2008

2009

Total Gross RES Energy Generation, GWh

Source: CEA
Any redistribution of this information is strictly prohibited.
Copyright 2014 EMIS, all rights reserved.

2%

1.47%
9,860

5%
4%

3.76%

395,889
287,029

6%

- 45 -

2010

2011
RES as % of Total

2012

Power Generation SWOT Analysis


Strengths

Opportunities

India offers different models of power sale including integrated utilities,


single buyers (MoU-based regulated generation), wholesale
competition (Ultra Mega Power Projects), captive power generation and
sale to captive users, as well as retail competition (open access).
Economic growth and policy reforms are triggered by social factors
such as urbanisation. Increased environmental responsibility drives
efforts to replace current polluting technologies with more sustainable
sources.

. The need for regular and sustainable sourcing of fuel will result in
company efforts to decentralise generation and distribute capacities
among various resources and technologies. Diversified generation will
be challenged by technology maturity and grid infrastructure issues.
New business models will result from regulatory intentions to privatise
distribution and transmission companies and allow distribution
franchisees as a way to bring private investment into the sector. Clarity
in commercial policies and regulations will be crucial.

Power Sector
SWOT Analysis

Delays in land acquisition, environmental clearances and indigenous


population policies block the development of power projects.
Distribution companies sell power at prices below procurement costs,
which hurts their liquidity and solvency and results in high subsidies.
The low tariff hikes approved by authorities limit the cost recovery
possibilities of companies. The ban on the pass-on of increased costs
to consumers adds to the problem. T&D losses need to be limited
through metering, feeder separation and other measures.

Domestic coal supply is estimated to last less than a century and is a


concern because of policy and logistic issues. Imported coal will result
in higher fuel and generation costs. Shortage of domestic gas and
expensive LNG imports could hamper the financial viability of gasbased power plants. The availability and cost of capital for funding new
projects is also a problem, as power projects are highly capitalintensive. The fresh water requirements of power plants can be met by
developing coastal capacities and building desalination plants.

Weaknesses

Threats

Source: Tata Power, NTPC


Any redistribution of this information is strictly prohibited.
Copyright 2014 EMIS, all rights reserved.

- 46 -

V. Power Transmission and Distribution

Any redistribution of this information is strictly prohibited.


Copyright 2014 EMIS, all rights reserved.

- 47 -

Power Transmission and Distribution Highlights

Electricity Grids

India has five electricity grids - Northern, Eastern, North-Eastern, Southern and Western. All of them are interconnected in
synchronous mode into a National Grid, except the Southern grid, which is connected asynchronously. All are run by the stateowned PowerGrid Corporation of India Ltd. (PGCI), which operated more than 100,200 circuit km of transmission lines at endMarch 2013. One-third of the population is not connected to any grid. Installed transmission capacity is about 14% of
generation capacity. Part of Indias national power strategy is to have a country-wide synchronous grid by 2014.

Power
Allocation

Electricity end-consumers are largely served by their respective State Electricity Boards (SEBs). Each SEB has an allocated
share of the electricity generated by the central sector and public-private companies, which is provided, and expected to be
drawn, at a certain price. Pricing is controlled by the central and state governments. The amount of electricity drawn below or
above the allocated daily share is called Unscheduled Interchange (UI) and is priced at a separate UI rate. PowerGrid
transmitted some 50% of the total power generated in India as of end-March 2013.

Electricity
Tariffs

End-user electricity tariffs consist of fixed- and variable-charge components, determined by the Central Electricity Authority
(CERC). The fixed-charge component covers fixed costs such as property, plant and equipment maintenance and salary
expenses; the variable-charge component covers the costs of generating electrical energy, including fuel costs linked to
generation. The actual amounts of charge components depend on each beneficiarys claim on the generation capacity used.

Power Trading

Power generation and transmission are highly capital-intensive so the fixed-charge components make up a major part of the
tariff. Thus, the average tariff becomes sensitive to the generation capacities Plant Load Factor (PLF). Investing in higher grid
interconnection that would enable trading of power from state utilities reporting surplus to those reporting deficit, could help
defer or reduce investment in additional generation capacity, would increase PLF and reduce the average cost of power for
utilities and consumers.

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Copyright 2014 EMIS, all rights reserved.

- 48 -

Power Transmission and Distribution Highlights (cont'd)

Power Trading
Problems

India is currently home to two power exchange platforms PXIL and IEX. According to B2B portal electricityindia.com, the
issues hampering the quicker development of inter-regional electricity exchange include relative lack of commercial awareness
by SEBs, lack of statutory provisions for direct sale by Independent Power Producers (IPPs) and Captive Power Plants (CPPs)
outside the state, and inadequate transmission capacity, among others.

Debt Recast

In September 2012, the Indian government approved a plan to relieve the debt burden of state-run power distribution
companies by taking over half of their short-term debt over the next two to five years. According to international media, the
distribution companies will issue bonds to lenders backed by the state governments against this debt. For the remaining shortterm debt, lenders will relax the terms, including extending the time of repayment. The central government will also provide
fiscal incentives to states which adopt the plan.

Temporary
Relief

The implementation of the plan is at the discretion of states, which could be a hurdle to its success. As of Sep 2013, six states
have approved the scheme, and two of them Tamil Nadu and Haryana, have already issued bonds. According to Standard
and Poors, the plan would provide only temporary relief as it fails to address tariff regulations and unreliable fuel supply.
Reliable fuel supply, according to the rating agency, depends on the existence of a transparent framework for producing fuel
and adequate infrastructure for transporting it.

Electricity
Tariffs

More than 30 states and Union Territories have raised electricity tariffs since January 2012. The move was an attempt to
improve the financial position of distribution companies, whose accumulated losses (at INR 2.4tn in FY 2013) prevent them
from meeting payment deadlines from lenders and generating companies. The average price increase was 16%. Tamil Nadu
was the state that reported the highest increase 37%, followed by Kerala 30%, Mumbai 28%, Kolkata 24% and Delhi
21%.

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- 49 -

Power Transmission and Distribution Highlights (cont'd)

Grid InterConnection
Milestones

Grid management on regional basis started in the 1960s in India. Integrating regional grids to establish a national grid was
conceptualised in the early 1990s. State grids were initially interconnected to form regional grids. The initial inter-regional links
were planned for exchange of operational surpluses amongst the regions. Later the planning philosophy evolved from regional
to national self-sufficiency. The North-Eastern and Eastern grids were connected in 1991. The Western and Northern grids
joined the network in 2003 and 2006, respectively. The Southern grid is connected to the synchronous grid network through
HVDC links. Part of Indias national power strategy is to have a country-wide synchronous grid by 2014. As of March 31, 2013,
India had inter-regional transmission capacity of 29.8 GW, against 28 GW (some 14% of generation capacity) in the previous
year. Inter-regional transmission capacity is expected to grow to 58.7 GW by 2015 and some 65 GW by the end of the XII Plan
in March 2017.

Private
Participation

In an effort to meet the growing power demand of the country, the government of India has developed a legal framework for
private sector participation in power generation. Private power generating companies, called Independent Power Producers
(IPPs), are required to transmit the power they generate to state and regional load centres. Regional Load Dispatch Centres
(RLDC) are the bodies in charge of the daily management of local grids. Their operations are overseen by the National Load
Dispatch Centre (NLDC), set up in 2009. Government-controlled company PowerGrid is in charge of granting Long-Term
Access (LTA) to private power producers. To facilitate the long-distance transfer of power generated from IPP projects,
PowerGrid will build 11 High-Capacity Power Transmission Corridors, nine of which are scheduled to be completed in the XII
plan ending Mar 2017.

Power
Transmission
Corridors

The 11 High-Capacity Power Transmission Corridors will be worth an estimated INR 750bn, newswire The Hindu reported,
quoting a top PowerGrid official as saying. The company planned to raise the funds it needed through bond issues. The first
phase of a 6,000 MW sub-station in the eastern state of Odisha, part of High-Capacity Power Transmission Corridor-1
(HCPTC-1) is expected to be completed in by March 2014, a May 2013 report by the Power Ministry said. HCPTC-1 will help
bring about 10,000 MW power from Independent Power Projects (IPP) to the state and will improve its transmission capacity.
The sub-station will require some 300 acres of land in and around four villages.

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- 50 -

Performance of State Power Utilities


Revenue Growth in State Power Sector
3,000

25%

2,073.47

2,500

Capital Employed by State Power Utilities

2,421.89
20%

19.89%

2,000

16.80%

1,729.48

INR 4,707.92bn

15%

304

1,500
1,000

INR 4,297.84bn

10%

9.83%

240
5%

500
0

INR 3,729.36bn
262

0%

FY 2010

FY 2011

FY 2012

Sales, INR bn

FY 2010

57

244
39

Other Loans, INR bn

% y/y Growth

FY 2011

3,811

3,285

FY 2012

Consumer Contribution,
INR bn
Grants towards Capital
Assets, INR bn

206
31

Aggregate Losses of All State Power Utilities


FY 2009

302

2,632

Loans from Financial


Institutions, Banks, Bonds,
INR bn
State Govt. Loans, INR bn

-245.96
-377.73

-304.30

Networth, INR bn
-453.82

-534.92

-516.02

-539.86
-625.81

-644.63
-742.91

448
-670.06

150

437

551

53
-318

-928.45

Aggregate Book Losses, All Utilities, INR bn


Aggregate Losses w/o Accounting for Subsidy, All Utilities, INR bn
Aggregate Losses on a Subsudy Received Basis, All Utilities, INR bn

FY 2010

Source: Power Finance Corporation Ltd.


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Copyright 2014 EMIS, all rights reserved.

- 51 -

FY 2011

FY 2012

Performance of Utilities Selling Directly to Consumers


Subsidies Booked and Released
400
350
300
250
200
150
100
50
0

Total Income and Energy Sold


100%

89.54%

85.42%

56.08%

340.14

258.32

202.95

190.74
226.66

FY 2010
Subsidy Booked, INR bn
% Subsidy Released

80%

2,600

60%

2,400

40%

640,000
622,504

600,000
578,698

2,000

0%

2,684.47

FY 2011

FY 2012

Total Energy Sold, GWh

AT&C Losses by Region


77%
42.61%

76%
75.39%
1,906.98

2,529.32

FY 2010

2,287.31
2,998.15

FY 2011

75.51%
2,684.47
3,555.01

34.85%

76%

38.72%

37.03%

75%

31.49%
29.22%

75%

FY 2012

24.86%
18.62%

24.47%

27%
26.04%

19.21%

Aggregate Turnover of Utilities (SEBs, Power Departments and DISCOMs) Excl. Subsidy
Booked, INR bn
Aggregate Expenditure, INR bn

Eastern

North-Eastern

Northern

FY 2011

Cost Recovery, INR bn

Source: PFC
Any redistribution of this information is strictly prohibited.
Copyright 2014 EMIS, all rights reserved.

540,000

Total Income Excl. Subsidy for Utilities Selling Directly to Consumers, INR bn

Subsidy Released, INR bn

3,000

1,000

560,000

FY 2012

76.29%

2,000

580,000

2,287.31

Cost Recovery of Utilities Selling Directly to Consumers


4,000

620,000

2,200

20%
302.42

FY 2011

2,800

- 52 -

Southern

FY 2012

Western

Total

Performance of Utilities Selling Directly to Consumers (cont'd)


Receivables and Payables of Utilities Selling to Consumers

Power Sales by Region


FY 2010

Region
Eastern

FY 2011

160

FY 2012

Revenue
Revenue
Revenue
from Sale Energy from Sale Energy from Sale Energy
of Power, Sold, GWh of Power, Sold, GWh of Power, Sold, GWh
INRbn
INRbn
INRbn
149.57

44,124

187.56

47,957

231.03

151

140

1,075.53

1,000
116

120

48,656

North-Eastern

24.8

6,116

27.52

7,010

32.55

7,664

Northern
Southern
Western
All India

509.45
489.44
556.21
1,729.48

166,530
168,116
143,420
528,086

591.91
604.6
661.87
2,073.47

184,605
176,042
163,084
578,698

686.72
684.3
787.29
2,421.89

198,005
187,026
181,153
622,504

807.02

100

100

646.41

80

800

686.07

600

504.08

60

400

40

Gap between Electricity Cost of Supply and Consumer Price

200

20
0.7

FY 2012

1.07

109

As of Mar 31, 2010

0.64

FY 2011

105

As of Mar 31, 2011

102

As of Mar 31, 2012

No of Days of Customer Receivables Outstanding, (l)


0.94

No of Days of Payables for Purchase of Power, (l)


0.4

FY 2010

Total Receivables for Sale of Power of Utilities Selling Directly to


Consumers, INR bn, (r)
Total Payables for Purchase of Power of Utilities Selling Directly
to Consumers, INR bn, (r)

0.87

Gap with Subsidy, INR/KWh

Gap w/o Subsidy, INR/KWh

Source: PFC
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Copyright 2014 EMIS, all rights reserved.

1,200

1,077.50

- 53 -

Power Exchange and Trading


Price of Electricity Transacted
The Electricity Act of 2003 recognised power trading as a new
segment apart from generation, transmission and distribution.
Inter-state trading in electricity started in 2004. The two power
exchanges, IEX and PXIL, started operations in Jun 2008 and
Oct 2008, respectively. The number of CERC-licensed traders
rose to 56 in FY 2012 from 13 in FY 2005. A total 13.79 TWh
were traded through IEX and 1.03 TWh through PXIL in FY
2012.
Although unscheduled interchange (UI) is not a market
mechanism, electricity transacted under UI is considered part of
short-term transactions, as is electricity transacted directly
between distribution companies, without involving trading
licensees or power exchanges.
In FY 2013, the volume of UI transactions was 24.76 TWh and
that of transactions directly between distribution companies 14.52 TWh (see tables on next slide).
Developments expected to lead to further growth in power
trading in the future include open access to consumers,
increased share of merchant power from independent power
plants, establishment of distribution franchisees and supply of
power to investment-promoting projects such as the Special
Economic Zones (SEZs).
Rising competition among power exchange players reduces
trade margins. Independent power producers are selling below
their estimates, as, when faced with a deficit, power distribution
companies prefer load shedding to buying market-priced
electricity and thus increasing their expenses. In spite of the
Electricity Act provisions, open access is only slowly granted to
consumers, which is a further barrier to growth and competition
in the sector.

7.29 7.49
5.26 4.96

4.79
3.47

FY 2009

FY 2010

FY 2011

4.18

4.33
3.57

3.67

FY 2012

FY 2013

Price of Electricity Transacted Through Traders, INR/kWh


Price of Electricity Transacted Through Power Exchanges, INR/kWh

Short-Term Transactions by Participants, FY 2013


Long-term
transactions
accounted for
89% of all
power trading
transactions in
FY 2013. ShortTerm
transactions
were 11% of the
total.

Bilateral Through
Traders 36.5%
Power Exchange
Transactions
23.8%

UI Transactions
25.0%

Bilateral Between
Distribution
Companies 14.7%

Source: Central Electricity Regulatory Commission (CERC), Tata Power, NTPC


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- 54 -

Power Exchange and Trading (cont'd)


Electricity Transacted by Trading Licensees, Sept 2013

Volume and Price of Electricity Transacted Through UI


Volume of UI
Transactions,
TWh

Volume of ShortVolume of UI as
Term
% of Short-Term
Transactions,
Transactions
TWh

UI Price
(INR/kWh)

FY 2010

25.81

65.9

39%

4.62

FY 2011

28.08

81.56

34%

3.91

FY 2012

27.76

94.51

29%

4.09

FY 2013

24.76

98.94

25%

3.86

Volume of Electricity Transacted Directly Between Discoms


Volume of Electricity
Volume of Direct
Volume of ShortTransacted Directly
Bilateral Transations
Term Transactions,
Between Distribution
as % of Short-Term
TWh
Companies, TWh
Transactions

FY 2010

6.19

65.9

9%

FY 2011

10.25

81.56

13%

FY 2012

15.37

94.51

16%

FY 2013

14.52

98.94

15%

Source: CERC, CEA


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- 55 -

Name of the Trading Licensee

PTC India Ltd.

33.87%

Tata Power Trading Company Ltd.

14.79%

JSW Power Trading Company Ltd.

12.68%

Shree Cement Ltd.

6.21%

Reliance Energy Trading Ltd.

4.76%

Jaiprakash Associates Ltd.

4.67%

Mittal Processors Ltd.

4.31%

Adani Enterprises Ltd.

3.36%

Knowledge Infrastructure Systems Ltd.

3.13%

NTPC Vidyut Vyapar Nigam Ltd.

2.75%

Manikaran Power Ltd.

1.78%

GMR Energy Trading Ltd.

1.70%

National Energy Trading & Services Ltd.

1.46%

Instinct Infra & Power Ltd.

1.30%

RPG Power Trading Company Ltd.

1.27%

Essar Electric Power Development Corp. Ltd.

0.77%

Arunachal Pradesh Power Corporation Ltd.

0.73%

Pune Power Development Ltd.

0.33%

Customised Energy Solutions India Ltd.

0.12%

Ambitious Power Trading Company Ltd.

0.02%

Total

100.00%

Top 5 trading licensees

72.30%

VI. Water Supply and Sanitation (WSS)

Indias fiscal year runs from Apr 1 to March 31. Thus, FY 2012 (also called fiscal 2012) means Apr 1, 2011 Mar 31, 2012. In Indian documents, FY (fiscal) 2012 is also labeled FY11-12.
Indian fiscal year 2013 ends in March 2013 and the remaining nine months of calendar 2013 belong to fiscal year 2014.
In order to better align with calendar years and make international comparisons more meaningful, Emerging Markets Insight has chosen to label data by the year in which most of the result
occurred. Unless otherwise stated, in graphs throughout this report, 2011, for example, means the 12 months between Apr 1, 2011 - Mar 31, 2012, or what in India is referred to as fiscal 2012.

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- 56 -

Water Supply and Sanitation (WSS) Highlights

Top Priority

India's rapid economic growth and urbanisation are widening the demand/supply gap of water and managing the countrys
water resources rationally and sustainably is one of the government of India's priorities for the 12th Planning Period (20122017).

Scarcity

According to the Asian Development Bank, per capita water availability is expected to fall to 1,140 cu m by 2050 from 1,588 cu
m in 2010 and 5,200 cu m in 1951. India's current water consumption is roughly in line with its availability, but by 2030, water
consumption is estimated to be 100% higher than the water available, the deputy chairman of the Indian Planning Commission,
Montek Singh Ahluwalia, was quoted as saying. The uneven distribution of water resources, both geographically and
seasonally, aggravates the problem.

Intermittent
Supply

According to the World Bank, more than 90% of India's urban population has access to drinking water, and more than 60% of
the population has access to basic sanitation. However, less than 50% of the urban population has access to piped water. No
Indian city receives piped water 24 hours a day, 7 days a week. Utility companies provide piped water for never more than a
few hours per day, regardless of the quantity available. The government urges power generators to reduce fresh water
consumption in plants under the Reduce, Reuse & Recycle principle.

Water Losses

The World Bank estimates Non Revenue Water (NRW), unaccounted for due to leakages, unauthorised connections and billing
and collection inefficiencies, at some 40% to 70% of the water distributed. Operations and maintenance (O&M) cost recovery
through user charges is at about 30% to 40%. Most urban water utilities survive on operating subsidies and capital grants.

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- 57 -

Water Utilities in India


Indian Water Utilities Performance Trend
1,200

1,000

858

819

1,140
15.22%

990

930

Indian Water Utilities Industry Volume


16%

800

14%

800
8.36%

8%
6.49%

400

740

6%

4.69%

0%
FY 2008

FY 2009

FY 2010

FY 2011

Indian Water Utilities Turnover, INR bn

1,469

1,500
1,140

1,214

9.98%
1,335

10.01%

10.09%

1,783
10.29%

1,000

12%

FY 2012

FY 2013

FY 2014

FY 2015

FY 2016

Indian Water Utilities Industry Turnover Forecast, INR bn

FY 2010

FY 2011

FY 2012
% y/y change

1.95%
822

840
820
800

853

1.97%

860

10%

806

2%

760

0%

740

% y/y change

1.90%
1.86%

1.84%

1.85%
1.80%
1.75%

FY 2013

FY 2014

FY 2015

FY 2016

Indian Water Utilities Industry Volume Forecast, INR bn

- 58 -

2.00%
1.95%

1.90%

791

FY 2012

FY 2017

869

838

780

Source: Marketline
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Copyright 2014 EMIS, all rights reserved.

0%
FY 2009

880

4%

1%

Indian Water Utilities Industry Volume Forecast

6%

500

1%

Indian Water Utilities Industry Volume, bn cu m

8%

6.45%

2%

728

FY 2008

% y/y change

1,617

1.63%

744

680

FY 2012

Indian Water Utilities Industry Turnover Forecast


2,000

2%

700

2%

2.22%

720

4%

200

773

761

760

10%

600

2.24%

780

12%

3%

791
2.24%

FY 2017
% y/y change

Urban Water and Sewage Highlights

Sewage
Upgrade

As of January 2012, most Indian cities did not have sewage treatment plants for biological and chemical waste, the Planning
Commission said in a report. Technologies used are not adapted to treating chemical waste or operating within a limited
capacity of the receiving environment to assimilate treated waste. Sewage technology issues include price of capital, availability
of land and operation and maintenance costs. The increasing pollution of the receiving environment highlights the need for
more advanced and expensive sewage technologies.

Upgrade Costs

Tertiary treatment plants, capable of cleaning water for reuse in households and industries are being built in India, but are
expensive. According to the Planning Commission, cities can partially recover construction costs by restricting freshwater use
and promoting the sale and use of treated sewage water. Companies that build their own pipelines and connect them to the
citys sewage treatment plants can recover their costs by buying treated water at a lower price than the industrial tariff.

Public-Private
Partnerships

Current models of public-private water partnerships include concessions for treatment plants and service contracts for billing,
tariff collection and metering. Most projects are publicly funded and focus on distribution improvement by employing the
managerial and technical expertise of private companies. Examples of cities with privately-run citywide distribution include
Jamshedpur, where a company of industrial conglomerate Tata Group has set up a water supply system, and Tirupur where a
public-private company is in charge of water distribution.

Attracting
Private Capital

The Planning Commission believes that the role of private companies in water distribution and sewage treatment must be
encouraged. The current experience, however, is that the private sector is reluctant to engage in capital and operational
investments. In order to promote private participation, city authorities will have to better consider the financial sustainability of
projects, keep accurate base-line data on water and sewage, provide correct project designs and relax procedures for
renegotiating of tendered agreements in case of an inaccuracy significantly altering the performance or financial scopes of
projects.

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- 59 -

Water Supply
Per Capita Water Availability in India (cu m/per year)
5,500
5,000
4,500
4,000
3,500
3,000
2,500
2,000
1,500
1,000
500
0

5,177

2,200

1,869

Water Stress

1,341

1,140

2015

2050

Water Scarcity

1951

1991

2001

Per Capita Water Availability in India (cu m/per year)

Water Resources by Source and Consumers


Utilizable Water Resources in
India (Publ. Oct 2011)

Ground
Water
(GW),
BCM,
433

Water Utilities by Major


Consuming Sectors, FY 2012,
%

Households
38.40%

Total:
1,123
BCM

Surface
Water
(SW),
BCM,
690

Agriculture
59.70%

Industry
1.90%

Source: Ministry of Water Resources, Asian Development Bank


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- 60 -

Water availability in India is very unevenly distributed, with


75%-80% of precipitation falling during the monsoon
season from July to September. This, coupled with Indias
billion-strong population and increasing household and
industrial demand, is the major cause for water scarcity in
the country.
Because of India's rapid population growth, annual per
capita water availability is declining and is forecast at just
about the water stress line in 2015.
According to the Indian Planning Commission, the
drinking water requirements of most big cities in the
country are generally met with a combination of
groundwater (75%) and surface water supply (25%)
from nearby irrigation/multi-purpose reservoir schemes.
India's average annual water resource potential, meaning
the total runoff generated from rainfall, is estimated at
1,869 billion cubic meters (BCM), the Asian
Development Bank said.
Utilisable water resources are assessed at 1,123 BCM
and include water that can be utilised economically within
the
limitations of the technology available, the
physiographic, hydrological and socio-political conditions,
as well as the existing environmental, legal and
constitutional constraints.

Water Supply and Sewage


Central Government Investment in Water and Sewage
Period (FY)

INR bn

Central Assistance for Water and Sewage

1980-2005

37

Central Assistance for River Conservation

1995-2010

50

Central Assistance under JNNURM (urban renewal mission)

2005-2011

430

Improving water and utility management and ensuring


equal supply to all is Indias main urban water objective
the XII plan (fiscal 2012-17), according to a Jan 2012
report by the Planning Commissions body on water
resources and sanitation.
Water utilities are mostly run by cities and municipalities,
making Indias water supply network very fragmented.
Water utilities comprise the following legal forms:
municipal council, municipal corporation, private
company, city board and autonomous local body.
In most cities, water is supplied from distant sources.
Long pipelines result in higher leakage and losses, which
the Planning Commission estimated at some 50% of the
water that enters pipes. Electricity makes up 40%-60% of
water supply costs.
Pipes are distributed unevenly in cities, with some parts
getting nearly all the water and other parts getting none.
City water agencies have no records of the amount of
groundwater which is privately extracted in cities.
Cities keep no national accounts on the load of sewage
generated because of the different ways in which people
source water and dispose of sewage. According to the
Planning Commission, India treats 30% of the sewage it
generates, with the cities of Delhi and Mumbai claiming
40% of the countrys installed capacity.

Types of PPP Contracts in Water Supply and Sewage

Management Contract
Service Contract
Design-Build-Operate Contract (DBO)
Long-Term Lease
Build-Own-Operate Contract (BOO)
Build-Operate-Transfer (BOT) Variations: Build-Transfer-Operate
(BTO), Build-Rehabilitate-Operate-Transfer (BROT), Build-LeaseTransfer (BLT), Build-Own-Operate-Transfer (BOOT)

Source: Planning Commission, JNNURM, World Resources Institute


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Copyright 2014 EMIS, all rights reserved.

- 61 -

VII. City Gas Distribution (CGD)

Indias fiscal year runs from Apr 1 to March 31. Thus, FY 2012 (also called fiscal 2012) means Apr 1, 2011 Mar 31, 2012. In Indian documents, FY (fiscal) 2012 is also labeled FY11-12.
Indian fiscal year 2013 ends in March 2013 and the remaining nine months of calendar 2013 belong to fiscal year 2014.
In order to better align with calendar years and make international comparisons more meaningful, Emerging Markets Insight has chosen to label data by the year in which most of the result
occurred. Unless otherwise stated, in graphs throughout this report, 2011, for example, means the 12 months between Apr 1, 2011 - Mar 31, 2012, or what in India is referred to as fiscal 2012.

Any redistribution of this information is strictly prohibited.


Copyright 2014 EMIS, all rights reserved.

- 62 -

City Gas Distribution (CGD) Highlights

Natural Gas
Overview

Indian natural gas production was 1.4% of global production in 2011, down from 1.6% in the previous year. Domestic natural
gas consumption accounted for 1.9% of global consumption in 2011. With a share of 9%, natural gas is India's fourth energy
source, after coal with 58.3%, hydro with 39.5% and RES 12.32%, respectively. Natural gas held a 10% share in India's
installed capacity in FY 2012. About a fifth of natural gas demand is currently met by imports. It is expected that the share of
natural gas in the countrys energy basket will grow to 20% by 2025.

City Gas
Distribution

Gas requires expensive infrastructure and complex pipeline networks to ensure constant flow. As of March 2012, India was
home to gas pipelines of a total length of 13,428 km, 70% of which were operated by public gas transporter and marketer GAIL.
City gas distribution was available in 43 geographical areas and consumed some 14 MMSCMD of gas, of which 6.63
MMSCMD is from re-gasified liquefied natural gas (RLNG), according to the government's Economic Survey for FY 2013.

PNG/CNG

City gas projects based on PNG/CNG started operations in the early 1990s in Delhi and Mumbai. Piped Natural Gas (PNG), in
this context also termed "cooking gas" is for household and commercial usage, and Compressed Natural Gas (CNG) is used as
transportation fuel. Before the government's Oil Sector Vision 2015 was adopted in 2009, PNG/CNG was available in 35 cities,
reached 860,000 households and was used by 500,000 vehicles. By 2015, a total 200 cities are envisaged to be covered. India
had some 1.6 million PNG connections in mid-2012.

LPG

In its Oil Vision 2015, the government pledged to secure 55 million new connections to raise population coverage from 50% to
75%. The total number of LPG customers is thus set to reach 160 million, with most of the newly joined households coming
from rural India. The government vowed to provide 100% LPG coverage to all towns with a population of more than 500,000.
Portability of LPG connections, similar to that for mobile phone numbers, is also on the agenda.

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Copyright 2014 EMIS, all rights reserved.

- 63 -

PNG in India
Piped Natural Gas Status as of Mar 31, 2013
State

City Covered

Company

Domestic PNG

Commercial PNG

Industrial PNG

Delhi

Delhi, Noida, Greater Noida, Ghaziabad

IGL

386,226

962

418

Maharashtra

Mumbai, Thane, Mira-Bhayandar, Navi Mumbai, Pune,


Kalyan, Ambernath, Panvel, Bhiwandi

MGL, MNGL

647,790

1,990

98

Gujarat

Ahmedabad, Baroda, Surat, Ankeleshwar

GSPC, SABARMATI GAS, GUJRAT GAS,


HPCL, VMSS,ADANI GAS

1,144,424

12,693

3,686

Uttar Pradesh

Agra, Kanpur, Bareilly, Lucknow

Green Gas Ltd. (Lucknow),


CUGL(Kanpur)

7,090

55

430

Tripura

Agartala

TNGCL

11,431

256

41

Madhya Pradesh

Dewas, Indore, Ujjain, Gwalior

GAIL GAS, AGL

1,775

49

Rajasthan

Kota

GAIL GAS

177

16

Assam

Tinsukia, Dibrugarh, Sibsagar, Jorhat

ASSAM GAS CO. LTD

23,632

759

366

Andhra Pradesh

Kakinada, Hyderabad, Vijaywada, Rajamundry

BGL

1,802

15

Haryana

Sonepat, Gurgaon, Faridabad

GAIL GAS, ADANI GAS, HARYANA CITY


GAS

11,508

43

123

2,235,855

16,779

5,228

TOTAL

Source: PPAC
Any redistribution of this information is strictly prohibited.
Copyright 2014 EMIS, all rights reserved.

- 64 -

CNG Sales, Stations and Vehicles


CNG Sales as of Mar 31, 2013

CNG Stations and Vehicles as of Mar 31, 2012


FY 2013
(Prov.),
thou
tonnes

State

Company Name

No of CNG
Stations

No of CNG
Vehicles,
mln

Gujarat

GAIL Gas/ Adani Energy/ Gujrat


Gas,GSPC, GGCL, SGL,HPCL

313

638,422

Delhi / NCR

Indraprastha Gas (IGL) New Delhi

286

654,158

Maharashtra

Mahanagar Gas Ltd.(MGL) Mumbai,


MNGL Pune.

203

334,810

29

19,958

State

Company Name

FY 2012,
thou tonnes

Gujarat

GAIL Gas/ Adani Energy/ Gujrat


Gas,GSPC, GGCL, SGL,HPCL

409.1

441.8

Delhi

Indraprastha Gas (IGL) New Delhi

649.3

695.1

Rajasthan
(Kota)

GAIL

0.2

0.8

Maharashtra

Mahanagar Gas Ltd.(MGL) Mumbai,


MNGL Pune.

382.8

425.1

Andhra Pradesh

Bhagyanagar Gas Ltd.( BGL)


Hyderabad.

15.8

24.7

U.P.

Green Gas Ltd. (Lucknow),


CUGL(Kanpur)

112.6

137.7

Tripura

Tripura Natural Gas Co. Ltd.(TNGCL)


Agartala.

3.2

4.3

M.P.

Avantika Gas (Indore) / GAIL Gas Ltd.

10.7

Haryana

Haryana City Gas Ltd.

West Bengal

GEECL

Total

Andhra Pradesh Bhagyanagar Gas Ltd.( BGL) Hyderabad.


Rajasthan

Gail Gas.

1,085

U.P.

Green Gas Ltd. (Lucknow),


CUGL(Kanpur)

30

56,857

Tripura

Tripura Natural Gas Co. Ltd.(TNGCL)


Agartala.

4,682

14.5

M.P.

Avantika Gas (Indore) / GAIL Gas Ltd.

16

10,878

54

73.2

Haryana

Haryana City Gas Ltd.

14

85,560

0.6

West Bengal

GEECL

1,201

1,637.7

1,817.8

All India

903

1,807,611

Source: Petroleum Planning and Analysis Cell (PPAC)


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Copyright 2014 EMIS, all rights reserved.

- 65 -

VIII. Major Players

Indias fiscal year runs from Apr 1 to March 31. Thus, FY 2012 (also called fiscal 2012) means Apr 1, 2011 Mar 31, 2012. In Indian documents, FY (fiscal) 2012 is also labeled FY11-12.
Indian fiscal year 2013 ends in March 2013 and the remaining nine months of calendar 2013 belong to fiscal year 2014.
In order to better align with calendar years and make international comparisons more meaningful, Emerging Markets Insight has chosen to label data by the year in which most of the result
occurred. Unless otherwise stated, in graphs throughout this report, 2011, for example, means the 12 months between Apr 1, 2011 - Mar 31, 2012, or what in India is referred to as fiscal 2012.

Any redistribution of this information is strictly prohibited.


Copyright 2014 EMIS, all rights reserved.

- 66 -

Top M&A Deals


Top M&A Deals in the Indian Utilities Sector in 2013
Date

Target Company

Deal Type

Buyer

Seller

Deal Value USD (mn)

Stake %

Sep 11, 2013

Transmission and distribution (T&D)


business of Vijai Electricals Ltd

Acquisition

Toshiba Corporation

Vijai Electricals Ltd

200

N/A

Mar 4, 2013

Gujarat Gas Company Ltd

Tender Offer

Gujarat State Petroleum Corp (GSPC)

Minority Shareholders

62.46

8.58%

Goldman Sachs Capital Partners

N/A

135

N/A

Jul 5, 2013

150MW Gujarat wind mill project

Minority stake
purchase; PE Entry
Acquisition

Apr 8, 2013

Wind power facility of VRL Logistics

Acquisition

Jul 30, 2013

110 MW Chuzachen Hydro-Electric


Project in East Sikkim

Jun 5, 2013

ReNew Wind Power Pvt Ltd

Minority Stake Purchase

Bharat Light and Power Pvt Ltd

DLF Ltd.

53.41

100.00%

Amplus Infrastructure Developers Pvt Ltd

VRL Logistics Ltd

42.15

100.00%

GE Energy Financial Services

Gati Infrastructure Private


Limited

43.29

21.63%

N/A

60

N/A

Asia Clean Energy Ltd., DEG Investitions und


Entwicklungsgesellschaft mbH, FE Clean Energy
Group Inc., GS Power Co.Ltd., International Finance
Corp (IFC), Proparco - Societe de Promotion et de
Participation pour la Cooperation Economique SA

Apr 23, 2013

NSL Renewable Power Pvt Ltd

Minority stake
purchase; PE Entry

Oct 9, 2013

AES Saurashtra Windfarms Pvt Ltd

Acquisition

Tata Power Company Ltd

AES Corp

24.4

100.00%

Apr 4, 2013

Tamil Nadu wind mill of DLF

Acquisition

Tulip Renewable Powertech Pvt Ltd

DLF Ltd

34.62

N/A

Nov 15, 2013

Dans Energy Consulting Pvt Ltd

Minority Stake Purchase

Equis Funds, Singapore

N/A

18.96

N/A

18.64

33.96%

8.62

N/A

10.9

N/A

2.39

100.00%

Jan 23, 2013

Bharat Light and Power Pvt Ltd

Jun 13, 2013

Atria Brindavan Power

Apr 4, 2013

Rajasthan wind mill of DLF

Sep 15, 2013

Kudgi Transmission Ltd

Oct 30, 2013

5.7 MW hydro plant in Uttarakhand

Minority stake
Draper Fisher Jurvetson Venture Capital, UTI Capital
purchase; PE Entry, VC
N/A
Pvt Ltd, VenturEast,
Entry
Minority stake
BanyanTree Finance Pvt Ltd
N/A
purchase; PE Entry
Acquisition
Violet Green Power Pvt Ltd
DLF Ltd
L&T Infrastructure Development Projects Ltd (L&TAcquisition
Rural Electrification Corp Ltd
IDPL)
Acquisition

Pan Global Corp

Regency Yamuna Energy Ltd

6.6

100.00%

N/A

100.00%

N/A

100.00%

Aug 30, 2013

Vizag Transmission Ltd

Acquisition

Power Grid Corpn. of India Ltd

REC Transmission Projects


Co Ltd

Aug 26, 2013

Two wind farms in Madhya Pradesh

Acquisition

Continuum Wind Energy

Sravanthi Group

Source: DealWatch
Any redistribution of this information is strictly prohibited.
Copyright 2014 EMIS, all rights reserved.

- 67 -

Possible M&A Activity in Utilities


Companies Looking to Buy

Companies Looking to Sell

Tata Power Co Ltd is evaluating renewable energy projects totaling over


2,800 MW for acquisition, the Business Line reported on December 2,
2013. In October, the company had acquired a 39-MW wind farm in
Gujarat.
Jindal Steel and Power (JSPL) will acquire a majority stake of 53.63%
in Gujarat NRE Coke's loss-making Australian subsidiary through a
complex deal, which involves issue of convertible notes, placement of
shares and option to acquire shares at a later stage, the Financial Express
reported on October 28, 2013. The deal, announced in September, was
cleared on October 27, 2013 by the shareholders of Gujarat NRE Coking
Coal, which is the Australian subsidiary of Kolkata-based Gujarat NRE
Coke.
Public sector company SJVN Ltd. may acquire two hydro electric projects
owned by Jaypee Group if the later goes for open bidding, the Hindu
reported on September 16, 2013. SJVN Chairman and Managing Director
R. P. Singh said the private sector company was selling two of its major
hydro projects, the 1,000 MW Karcham Wangtoo and 300 MW Baspa
hydro electric projects, to square off some of its debts. The Jaypee Group
is believed to be in touch with many players including the UAE
Government-owned Abu Dhabi Water and Electric Authority (ADWEA) and
might choose not to go for an open international bidding.
State-owned NHPC was in the process of buying back its shares worth up
to INR 23.68bn between November 29 and December 12, Business Today
reported. The company was to buy back 123,00,74,277 fully paid-up equity
shares of INR 10 each at a price of INR 19.25 per share, which
represented 8.89% of its total paid-up equity share capital and free
reserves as of June 30, 2013. Prior to the buyback, the government held
86.36% in NHPC.

Essar Energy, the India-focused and London-listed oil, gas and power arm
of the Essar group, will be divesting its exploration and production (E&P)
assets globally to raise funds for further growth, the Financial Express
reported on November 26, 2013. Essar Energy CEO Sushil Maroo did not
give any deadline for completing the process or the amount that the
company would raise, but alluded to the fact that Essar Energy would look
at exiting most of its non-core or non-performing assets in the near future.
On Nov 7, 2013, the Indian government approved a secondary share sale
of PowerGrid Corp., open from Dec 3 to Dec 5 for institutional buyers and
to Dec 6 for retail investors, the Economic Times of India reported.
PowerGrids follow-on public offer (FPO) got subscribed 0.06 times on day
1 and 1.06, 4.77 and 6.74 times on days 2, 3 and 4 respectively. The offer
included a government disinvestment of 4% and the sale of 601.9 million
new shares, equivalent to 13% of the existing paid-up capital. Post-issue,
the governments holding in PowerGrid came down to 57.89% from
69.42%. The shares were offered at INR 85-90 per share and could fetch
around INR 70.83bn at the upper end of the price range. The company
may raise some INR 57.17bn, while the government may receive some
INR 17.58bn. PowerGrids IPO was held in October 2007. The
government has set a target to raise some INR 400bn from disinvestment
in the current fiscal year, ending Mar 31, 2014.
The Jaypee Group is in talks with Abu Dhabi National Energy
Company PJSC (TAQA) to sell its hydro-power projects, Business Line
reported on September 17, 2013. Earlier in September, the group, whose
interests range from engineering and construction to cement and sports,
sold its Gujarat cement unit for INR 38bn to UltraTech Cement of the
Aditya Birla Group.

Source: Local media


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Copyright 2014 EMIS, all rights reserved.

- 68 -

Liquidity and Solvency Ratios of Major Players


Liquidity Ratios of Major Players

Cash Flow/Earnings Index of Major Players

PowerGrid

NTPC

NHPC

Tata Power

GAIL

Current Ratio
2012

0.43

1.82

1.91

0.83

1.01

Current Ratio
2011

0.56

2.17

1.76

1.33

0.86

Acid Test 2012

0.22

1.06

1.24

0.43

0.55

Acid Test 2011

2.68

4.05

4.05

2.62

1.49

Cash Ratio 2012

0.13

0.82

0.92

0.15

0.27

Cash Ratio 2011

0.22

1.03

0.92

0.43

0.13

Solvency Ratios of Major Players


NTPC

NHPC

Tata Power

GAIL

Debt-to-Assets
2012

61.36%

36.09%

34.18%

35.84%

20.28%

Debt-to-Assets
2011

59.2%

35.7%

33.44%

31.65%

14.79%

Debt-to-Capital
2012

72.21%

41.97%

40.09%

44.53%

27.22%

69.45%

40.69%

40.10%

39.47%

19.82%

259.87%

72.33%

66.91%

80.29%

37.41%

227.36

68.6%

66.94%

65.20%

24.72%

NHPC

Tata Power

GAIL

Cash
Flow/Earnings
Index 2012

2.61

1.23

0.81

0.42

1.25

Cash
Flow/Earnings
Index 2011

1.97

1.16

0.75

0.56

1.23

Liquidity, measured by the current ratio, improved for GAIL and NHPC and
worsened for the other three observed companies in 2012. The quick ratio
reflects the y/y increase in current liabilities, observed in all companies
except NHPC, and the decrease or non-proportional increase in cash and
receivables. The cash ratio shows that NTPC and NHPC had more cash
relative to current liabilities compared to the other three companies.
Solvency weakened for all five observed companies. The three solvency
ratios were similar for the three power generators NHPC, NTPC and Tata
Power, and widely different for the other two companies, active in electricity
and gas transmission and distribution, respectively.
A Cash Flow/Earnings Index of 1.0 would indicate parity between a
companys net operating cash flows and net income. An index below 1.0
could be a sign of high levels of debt financing.

Source: Company data, EMIS Insight calculations


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Copyright 2014 EMIS, all rights reserved.

NTPC

Comments

PowerGrid

Debt-to-Capital
2011
Debt-to-Equity
2012
Debt-to-Equity
2011

PowerGrid

- 69 -

GAIL India Ltd.


Financial Performance

Highlights
Gail India Ltd., headquartered in New Delhi, is the largest
state-owned gas transporter and marketer in India. The
company is active in the following segments: transmission
of natural gas and LPG, natural gas trading, production of
petrochemicals, LPG and liquid hydrocarbons, and
telecommunications.
GAIL, formerly known as the Gas Authority of India Ltd.,
was set up in 1984 to create gas infrastructure in the
country. GAIL began city gas distribution in New Delhi in
1997. GAIL Gas Ltd. is a wholly-owned subsidiary of GAIL,
set up in 2008, to manage its PNG/CNG business.
As of March 31, 2013, GAIL held some 60% market share
in gas marketing in India. The company claimed 75% in the
gas transmission business in the country.
GAIL is the only company in India, which owns and
operates LPG transmission pipelines for third-party usage.
The company has seven LPG plants in the country which
produced a total 1.38 million tonnes of liquid hydrocarbons
between April 1, 2012 and March 31, 2013.
In the Exploration and Production (E&P) segment, the
company has been awarded exploration rights for a total 32
blocks, 30 of which in India and two overseas.
GAIL has international presence, including stakes in JV
companies, wholly-owned subsidiaries and representative
offices, in China, Egypt, Myanmar, Singapore and the
United States.

480
408
329

254

244

46 31

42 28

2008

2009

Gross Sales, INR bn

52 36

2010
Profit Before Tax, INR bn

53 37

2011

61 40

2012

Profit After Tax, INR bn

Physical Performance by Segments


Unit

2011

2012

Natural Gas Throughput

mmscmd

117.62

104.90

Natural gas Trading

mmscmd

84.17

81.44

Liquid Hydrocarbon Sales

thou tonnes

1,441

1,371

Polymer Sales

thou tonnes

448

427

LPG Transported

thou tonnes

3,362

3,136

Source: Company data


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Copyright 2014 EMIS, all rights reserved.

- 70 -

GAIL India Ltd. (cont'd)


Five-Year Gas Throughput/Production Overview

Highlights

Unit

2008

2009

2010

2011

2012

Natural Gas

MMSCMD

83.29

106.73

117.62

117.91

104.9

LPG

M/T
(metric tonnes)

SBP
Solvent/Naphtha

M/T

101,493

102,479

111,140

146,123

147,988

Pentane

M/T

58,392

58,551

34,523

23,144

20,739

Propane

M/T

152,671

179,274

155,152

146,015

129,570

Ethylene

M/T

431,580

429,992

428,444

457,080

448,534

HDPE/LLDPE

M/T

420,108

417,147

416,396

441,136

441,051

Its wholly-owned subsidiary GAILTEL operates in


bandwidth and infrastructure leasing.
GAIL moved from being a captive renewable energy
producer to being a commercial producer, after launching
some 100 MW of wind energy projects in 2011. In its
annual report, the company announced plans to further
expand its wind and solar energy portfolio.
GAIL is one of the three upstream companies that share
the under-recoveries of Oil Marketing Companies (OMCs)
by selling them petroleum products at a discount. In an
effort to make LPG affordable to domestic consumers, the
company has contributed a total INR 165.19bn since 2003.
GAILs contribution to OMCs under-recovery burden
totalled INR 26.87bn in 2012, slightly down from INR
31.83bn in the previous year.
The gas transporter and marketer is listed on both Indian
stock exchanges as well as on the London Stock
Exchange.
GAIL's operating cash flows were not sufficient to finance
investments in 2011 and 2012. Long-term borrowing
increased in 2012 compared to 2011. Unlike in 2011, in
2012 GAIL took on short-term debt. Cash increased by INR
14.27bn in 2012 compared to a net decrease of INR 12bn
in the previous year.

1,087,986 1,099,554 1,068,156 1,124,341 1,077,866

Statement of Cash Flows


2011,
INRbn

2012,
INRbn

Cash Flow from Operating Activities

44.88

50.33

Cash Flow from Investing Activities

-71.42

-54.72

Cash Flow from Financing Activities

14.54

18.65

Net Increase/Decrease in Cash and Cash Equivalents

-12.00

14.27

Cash and Cash Equivalents at the Beginning of the


Year

21.31

9.31

Cash and Cash Equivalents at the End of the Year

9.31

23.58

Source: Company data


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- 71 -

NHPC Ltd.
Financial Performance

Highlights

55.10

42.19

40.47
27.72

26.72

10.75

2009

Sales, INR bn

8.61

7.38

6.77

3.25

23.48

21.67

20.91

2008

NHPC Ltd. is a hydropower generating company based in


Faridabad in the state of Haryana. As of Mar 31, 2012, the
government of India controlled 86.36% in the company.
NHPC, which is listed on both the Bombay and National Stock
Exchanges, had a total five subsidiaries and joint venture
companies in 2012. The utility was awarded a Miniratna status in
2008.
NHPC, set up in 1975, operated 16 power stations with an
installed capacity of 4,227 MW as of March 31, 2013. In addition,
it operated two power stations of its subsidiary, NHDC Ltd., with
an installed capacity of 1,520 MW. As of Mar 31, 2012, the
company had a 14.55% share of Indias installed hydroelectric
power capacity (5.75 GW out of 39.5 GW).
NHPC launched the 231-MW Chamera-III hydro project in
Himachal Pradesh in Jul 2012, the 44-MW Chutak project in
Jammu & Kashmir in Jan 2013 and the 132-MW Teesta Low Dam
III HEP project in West Bengal in May 2013. In addition, all the
three units of the 45-MW Nimmo Bazgo project were launched at
partial load.
Six hydropower projects with an installed capacity of 4,050 MW
were under construction at the end of the companys most recent
completed financial year in March 2013. Two of these projects,
the 760-MW Uri-II and Parbati-III were in advanced stages of
completion.
NHPC has also been working on capacity additions of 3,686 MW
to be developed through JVs with central and state utilities.
Net cash from operations decreased in 2012 (see next slide) but
was sufficient to cover the companys investments. The company
took on less debt compared to 2011 but repaid more, resulting in
negative cash from financing activities. The company reported
lower ending cash and increased borrowing in 2012 compared to
2011.

50.49

2010

Net Profit, INR bn

2011

7.38

2012

Dividend Proposed/Paid, INR bn

Power Generation Overview


18,604 18,683 18,923
16,689 16,960
14,813
9,863

2002

11,046 11,286

2003

2004

12,567 13,049

2005

2006

2007

2008

2009

2010

2011

2012

Power Generation, GWh

Source: Company data


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- 72 -

NHPC Ltd. (cont'd)


NHPC Borrowings

Statement of Cash Flows


176.41

122.34

138.68

2004

71.67

2005

2007

2008

2009

2010

18.98

20.84

-12.95

-19.76

-9.91

5.45

Net Increase/Decrease in Cash and


Cash Equivalents

-3.88

6.54

Cash and Cash Equivalents at the


Beginning of the Year

60.04

53.5

Cash and Cash Equivalents at the


End of the Year

56.16

60.04

Net Cash (Used in) Investing


Activities
Net Cash Flow from Financing
Activities

75.32

2006

2011, INRbn

Net Cash from Operating Activities

145.69

99.56
70.22

2012, INRbn

186.27

2011

2012

Borrowings, INR bn (include current maturities of long-term borrowings)

Other Lines of Business

Number of Employees
13,648

13,470
13,118

13,017

NHPC is registered with the World Bank, the Asian Development


Bank, the African Development Bank, the Kuwait Fund for Arab
Economic Development and the Central Water Commission as a
consultant in the area of hydropower.
The company has so far completed 84 consultancy assignments and
has 17 assignments under progress.
Apart from hydropower generation, NHPC has taken up initiatives in
solar power.

12,768
12,341

12,028

11,712

11,036

10,410

2002

2003

2004

2005

2006

2007

2008

2009

Number of Employees

Source: Company data


Any redistribution of this information is strictly prohibited.
Copyright 2014 EMIS, all rights reserved.

11,420

- 73 -

2010

2011

2012

NTPC Ltd.
Financial Performance

Highlights

800

NTPC Ltd, formerly called National Thermal Power


Corporation, is India's largest power utility. The Delhi-based
company, set up in 1975, is listed on both Indian stock
exchanges and was awarded a Maharatna status in 2010.
As of March 31, 2013, the utility was 75.00% owned by the
government of India.
The company's core business is engineering, construction
and operation of power plants. It also provides consultancy
services to both Indian and foreign power utilities.
As of March 31, 2012, NTPC had an installed generation
capacity of 34.82 GW, which accounted for 15.7% of India's
total installed capacity of 223 GW. Standalone coal-based
and gas-based plants had capacity of 31.9 GW and 3.96
GW, respectively. Group generation capacity was 41.18
GW in 2012, against 37 GW a year earlier. With standalone
power generation of 232.03 TWh, the company claimed a
25% share of Indias total generation in 2012.
As of March 31, 2012, NTPC had five subsidiaries and 21
joint venture companies. JVs reported a total 5.36 GW of
capacity, 3.4 GW and 1.94 GW of which were fuelled by
coal and gas, respectively.
Standalone number of employees was 23,865 in 2012
against 24,011 in 2011, and group employees were 25,484
against 25,511 in 2011, respectively.
NTPC's operating cash was sufficient to cover its
investment activities in both 2012 and 2011. Long-term
debts increased which drove ending cash up at the end of
the period. The dividends NTPC paid out accounted for
44% of net profit in 2012, compared to 40% in 2011.

679.31

645.15

700

573.99

600

492.34

452.29

500
400
300
200

82.01

100

91.03

87.28

126.19

92.24

0
2008

2009

2010

Total Revenue, INR bn

2011

2012

Net Profit, INR bn

Commercial Capacity and ESO (standalone)


34,820

40,000
35,000
30,000

27,850

28,840

25,000

205.09

29,830
206.58

30,990

215.92

10,000

215
210

206.68

205

20,000
15,000

220

200
195

193.69

190

5,000

185

180

2008

2009

Commercial Capacity , MW

2010

2011

2012

Energy Sent Out (ESO), TWh

Source: Company data


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Copyright 2014 EMIS, all rights reserved.

- 74 -

NTPC Ltd. (cont'd)


Capacity and Generation by Regions, 2012

Number of Employees
Gross
Generation,
GWh

Number of Stations Fuel Type By Station

Capacity MW

4 - Coal

5,990

44,372

National Capital Region

2 - Coal; 4- Gas

4,869

29,421

Western Region

4 - Coal; 2 - Gas

12,154

71,540

Eastern Region

4 - Coal

7,900

51,670

Southern Region

2 - Coal; 1 - Liquid
Fuel

4,960

35,025

35,872

232,028

Northern Region

Total

24,011

23,865
23,797
23,743
23,639

2008

Number of Employees

NTPC Long and Short-Term Debt


700,000

502,671

600,000

133.90

500,000
400,000

345,663

377,836

132.60

160
581,457

122.60

154.95

107.10

Net Cash (Used in) Investing Activities

-140.17

-78.81

80

Net Cash Flow from Financing Activities

-7.52

-28.69

60

Net Increase/Decrease in Cash and


Cash Equivalents

7.26

-0.40

Cash and Cash Equivalents at the


Beginning of the Year

161.42

161.82

Cash and Cash Equivalents at the End of


the Year

168.68

161.42

20
0.00

2009

Long-Term Loans, INR mn

2010

2011

2012

Short-Term Loans, INR mn

Source: Company data


Any redistribution of this information is strictly prohibited.
Copyright 2014 EMIS, all rights reserved.

Note: Figures exclude joint venture companies and


subsidiaries

Net Cash from Operating Activities

40

2008

2012

2011, INRbn

100

200,000
0

2011

2012, INRbn

140
120

431,750

14.20

2010

Statement of Cash Flows

300,000
100,000

2009

- 75 -

PowerGrid Corporation of India Ltd.


Financial Performance

Highlights
133.29

90.99

79.02

67.01

53.24

2009

Transmission Charges, INR bn

2010

42.35

32.55

26.97

20.41

16.91

2008

95.44

75.04
61.39

PowerGrid Corporation of India Ltd. is the countrys Central


Transmission Utility (CTU) active in bulk power transmission
and in charge of operating the national and regional power
grids of India. PowerGrid also plans and supervises the
development of Indias inter-state transmission system.
The company, set up in 1989, was listed on both Indian stock
exchanges in 2007 and as of March 31, 2013 was 69.42%
controlled by the President of India. In 2008, it was awarded a
Navratna status, meaning it has the autonomy to undertake
new transmission projects of any amount without the approval
of its Board of Directors.
As of March 31, 2013 the company owned and operated a
transmission network of some 100,200 ckt km of inter-state
transmission lines and 197 EHV & HVDC substations with
transformation capacity of about 164,763 MVA.
PowerGrid had three subsidiaries and held stakes in 12 jointventure companies as of Mar 31, 2013. As of Nov 2013, it also
operated an all-India broad-band telecom network of some
29,300 km.
The company has worked as consultant and developer of
projects in Afghanistan, Bangladesh, Bhutan, Ethiopia, Nigeria,
Nepal, Kenya, Myanmar, Sri Lanka, Tajikistan and UAE.
Cash from operating and financing activities was insufficient to
cover investment both in 2011 and 2012, and the company
reported net cash decreases in both years. Borrowing
increased y/y in 2012, weakening both liquidity and solvency.

121.63

107.85

2011

Total Revenue, INR bn

2012
Net Pprofit, INR bn

Power Transmitted and Length of Transmission Lines

334,013

71,500

2008

363,723

75,290

2009

400,596

82,355

2010

430,992

92,981

2011

450,027

100,200

2012

Length of Transmission Lines, ckt km


Power Transmitted on PowerGrid network, GWh

Source: Company data


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Copyright 2014 EMIS, all rights reserved.

- 76 -

PowerGrid Corporation of India Ltd. (cont'd)


Sources of Funds, %, 2012

PowerGrid Total Debt, INR bn


800

Foreign Currency
Loans 18.87%

Reserves 21.08%

700

534.02

600
Deferred Tax &
Net Current
Liabilities 7.78%

500

Equity 4.52%
Short-Term Loans
1.95%
Loans from Banks
and Financial
Institutions 1.78%

Bonds (Incl.
Foreign Currency
Bonds) 43.91%

344.17

400

284.65

300

31

26

15
22

13

631

277

2008

Cash Flow Statement

332

372

2009

2010

Total Long-Term Loans,


INR bn
2011

2012

Number of Employees (l), Sub-Stations (r)

2012, INR bn

2011, INR bn

110.46

64.03

2012

-217.11

-158.34

2011

9,670

2011

99.90

80.89

2010

9,775

2010

Net Increase/Decrease in Cash and


Cash Equivalents

-6.75

-13.43

2009

Cash and Cash Equivalents at the


Beginning of the Year

23.37

36.80

Cash and Cash Equivalents at the


End of the Year

16.62

23.37

Net Cash (Used in) Investing


Activities
Net Cash Flow from Financing
Activities

2008

9,347

9,162
8,214

Number of Employees

Source: Company data


Any redistribution of this information is strictly prohibited.
Copyright 2014 EMIS, all rights reserved.

Current Maturities of LongTerm Loans, INR bn

Grants 0.11%

Net Cash from Operating Activities

Short-Term Loans, INR bn

491

200
100

17

408.83

681.88
20

- 77 -

2012

167
150
135

2009

124

2008

120

Number of Sub-Stations

Tata Power Ltd.


Standalone and Consolidated Financial Performance

Highlights

330.25

260.01

Tata Power, which assumed its current name in 2000, is


one of Indias leading privately-held utilities with a
significant international presence.
As of March 31, 2013, the company had an installed
generation capacity of 8,521 MW in India and a presence in
all the segments of the power sector - generation (thermal,
hydro, solar and wind), transmission, distribution and
trading. It is also a partner in a number of public-private
projects in power generation, transmission and distribution
in India.
As of March 31, 2012, Tata Power, which is listed on two
Indian stock exchanges, had a wind generation installed
capacity of 398 MW (375 MW in 2011) and plants spread
across Maharashtra, Gujarat, Tamil Nadu and Karnataka
the leading states in promoting wind power generation in
India.
Tata Powers international investments include a stake in
coal mines and a geothermal project in Indonesia; a coal
supply project in Singapore; a joint venture to develop
projects in South Africa, Botswana and Namibia; an
investment in geothermal and clean coal technologies in
Australia; and a hydro project in partnership with The Royal
Government of Bhutan.
As of March 31, 2013, Tata Power owned 23 subsidiaries
(14 wholly owned), 26 joint venture companies and 10
associates. Including major subsidiaries, the company
employed 4,830 people, against 4,709 a year earlier.

95.67

84.96
11.70

10.25
0.99

-9.68
2011

2012

2011

Standalone

2012

Consolidated

Revenue from Operations (Net of Excise Duty), INR bn

Net Profit, INR bn

Ten-Year Standalone Generation, Net Profit Overview


18,000
16,000
14,000
12,000
10,000
8,000
6,000
4,000
2,000
0

14,717 14,807
13,746 14,269
12,917 13,283
8.7
5.51

5.09

6.11

9.22

15,946 15,325 15,230 15,770


11.7

14

10.25

10

9.39

9.41

12
8

6.97

6
4
2
0

2003

2004

2005

2006

2007

Generation, GWh, (l)

2008

2009

2010

2011

2012

Net Profit, INR bn (r)

Source: Company data


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Copyright 2014 EMIS, all rights reserved.

- 78 -

Tata Power Ltd. (cont'd)


Installed Capacity of the Tata Power Group of Companies
Fuel Source

Thermal
Coal/Oil/Gas

Thermal
Waste Heat Recovery

Hydro

Location

State

Installed
Capacity
MW

Mundra

Maharashtra

4,000

Trombay

Jharkhand

1,580

Maithon

Gujarat

1,050

Jojobera

Jharkhand

428

IEL Jojobera

Jharkhand

120

Rithala

New Delhi

108

Belgaum

Karnataka

81

Lodhivali

Maharashtra

40

IEL Jojobera

Jharkhand

120

Haldia

West Bengal

120

Bhira

Maharashtra

300

Khopoli

Maharashtra

75

Bhivpuri

Maharashtra

72

Wind farms

Maharashtra,
Gujarat,
Karnataka, Tamil
Nadu

398

Maharashtra,
Gujarat

28

Renewables
Solar Photovoltaic (PV)
Total

Tata Power Group of Companies - Other Businesses

Total
Capacity by
Category,
MW

Business

Transmission
7,407

Distribution

Mumbai

Over 1,110 ckm of transmission lines, connecting


generating stations to 19 receiving stations.

Installed transmission lines which transmit surplus


Eastern/North power from the Eastern/North Eastern region
Eastern Regions (Siliguri) to Uttar Pradesh (Mandaula), covering a
distance of 1,166 km.
Mumbai

Over 2,500 ckm of distribution lines.

New Delhi

Over 10,500 ckm of distribution lines.

Mumbai
Retail

447

8,521

Source: Company data


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Copyright 2014 EMIS, all rights reserved.

Details

240

427

Location

- 79 -

Over 380,000 customers with sales of over 6,500


MUs in FY13, emerging as the largest Distribution
Company in Mumbai.

New Delhi

Over 1.3 million customers with sales of over


7,760 MUs in FY13.

Strategic Electronics

Mumbai

One of the leading suppliers of defence


equipment and solutions amongst the Indian
Private Sector.

Power Services

Mumbai

One of the leading service providers for Project


Management, O&M and specialised services in
the power sector.

Tata Power (cont'd)


Comments

Performance by Major Items


2012

2011

Change,
INRbn

Revenue from Power


Supply and
Transmission
Charges, INRbn

9,081.33

8,051.53

1,029.80

13

Finance Costs,
INRbn

6.78

5.15

1.63

32

Depreciation and
Amortisation, INRbn

3.64

5.70

-2.06

-36

% Change

Tata Power reported higher Revenue from Power Supply in 2012 compared
to 2011 mainly because of higher fuel costs.
The company reported higher financing costs mainly due to the fresh issue
of INR 15bn of 10.75% Redeemable and Non-Convertible Debentures.
Depreciation was lower mainly due to a one-time impact of a change in the
depreciation rate and methodology authorised by the Ministry of Corporate
Affairs (MCA) for companies engaged in the generation and supply of
electricity.
In 2012, standalone net operating cash decreased 34% y/y. The company
invested less in 2012 compared to the previous year, took on more shortand long-term debt, but, unlike in 2011, did not issue Unsecured Perpetual
Securities which are classed as equity instruments. This resulted in a
deepened net decrease in cash and 39% less ending cash compared to
2011.

Standalone and Consolidated Cash Flow Statements


2012, INR bn

2011, INR bn

2012, INR bn

201, INR bn

Net Cash from Operating Activities

4.32

6.51

32.80

11.47

Net Cash Used in Investing Activities

-14.94

-19.88

-42.86

-61.28

Net Cash from Financing Activities

8.03

11.63

-5.87

57.98

Net Increase/Decrease in Cash and Cash


Equivalents

-2.60

-1.74

-15.93

8.17

Cash and Cash Equivalents at the


Beginning of the Year

6.61

8.35

31.22

21.41

Cash and Cash Equivalents at the End of


the Year

4.01

6.61

17.90

31.22

Source: Company data


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Copyright 2014 EMIS, all rights reserved.

- 80 -

IX. Appendix

Indias fiscal year runs from Apr 1 to March 31. Thus, FY 2012 (also called fiscal 2012) means Apr 1, 2011 Mar 31, 2012. In Indian documents, FY (fiscal) 2012 is also labeled FY11-12.
Indian fiscal year 2013 ends in March 2013 and the remaining nine months of calendar 2013 belong to fiscal year 2014.
In order to better align with calendar years and make international comparisons more meaningful, Emerging Markets Insight has chosen to label data by the year in which most of the result
occurred. Unless otherwise stated, in graphs throughout this report, 2011, for example, means the 12 months between Apr 1, 2011 - Mar 31, 2012, or what in India is referred to as fiscal 2012.

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- 81 -

Table of Terms and Abbreviations


Table of Terms and Abbreviations

kWh

A unit of energy equivalent to one kilowatt (1 kW), or 1,000 watts, of power expended for one hour (1 h) of time.

MW

A unit of electric power equal to one million (10^6) watts

GW

A unit of electric power equal to one billion (10^9) watts, one thousand megawatts

MU, BU
MMT, BMT
Plant Load Factor (PLF)
Load Shedding
MWe
MWth or MW t

Million Units, Billion Units; 1 MU = 1 GWh, 1 BU = 1 TWh. For example, 855 BU=855,000 MU=855 TWh
Million Metric Tonnes, Billion Metric Tonnes
Plant Load Factor is the ratio of the actual output of a power plant over a period of time and its output if it had operated a full capacity of
that time period. PLF = Gross Generation / (Installed Capacity * Number of Hours)
The deliberate shutdown of parts of a power distribution system to prevent the failure of the entire system when demand strains capacity.
Megawatt electrical, used in the electric power industry
Megawatt thermal, refers to a unit of tehrmal power produced

ckt km, circuit kilometers

The route kilometers of revenue producing circuits in service, determined by measuring the length in terms of kilometers, of the actual
path followed by the transmission medium.

MMBtu

One million Btu = British Thermal Unit, a unit of energy used for natural gas. Approximately 1,000 ft3 of natural gas 1 MMBtu 1 GJ
(gigajoule).

Source: Reference sources


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- 82 -

Ratio Calculation Formulas


Calculation of Liquidity Ratios
Ratio Name

What it Measures

Calculation

Current Ratio

A unit of current assets per unit of current liabilities.


Higher ratio means higher level of liquidity.

Current Assets Current Liabilities

Quick (Acid Test) Ratio

More conservative than the current ratio. Reflects the


fact that certain current assets cannot be easily
converted into cash.

(Cash + Current Investments + Receivables) Current Liabilities

Cash Ratio

The most stringent liquidity ratio. A measure of a


companys liquidity n a crisis.

(Cash + Current Investments) Current Liabilities

Calculation of Solvency Ratios


Ratio Name

What it Measures

Calculation

Debt-to-assets

The percentage of total assets financed with debt

Total interest-bearing debt (long-term borrowings+current portion of long-term borrowings+short-term


borrowings) Total Assets

Debt-to-Capital

The percent of total capital (debt+equity) financed through


debt

Total debt (Total Debt + Total Shareholders' Equity)

Debt-to-Equity

The amount of debt financing relative to equity financing

Total debt Total Shareholders' Equity

Cash Flow/Earnings Index

Operating cash generated per rupee of net income

Net Cash Flow from Operations Net Income

Source: Emerging Markets Insight;


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- 83 -

Contact:

Corporate Headquarters
Nestor House
Playhouse Yard
London EC4V 5EX
UK
Voice: +44 207 779 8471
Fax: +44 207 779 8224

Asia Headquarters
Eucharistic Congress Bldg. No.
III
4th Floor, 5 Convent Street
Mumbai 400 001
India
Voice: +91 22 22881123
Fax: +91 22 22881137

Americas Headquarters
225 Park Avenue South
New York, New York 10003
US
Voice: +1 212 610 2900
Fax: +1 212 610 2950

Disclaimer:

The material is based on sources which we believe are reliable, but no warranty, either expressed or implied, is provided in relation to the accuracy or completeness
of the information. The views expressed are our best judgment as of the date of issue and are subject to change without notice. EMIS and Euromoney Institutional
Investor PLC take no responsibility for decisions made on the basis of these opinions.
Any redistribution of this information is strictly prohibited. Copyright 2014 EMIS, all rights reserved. A Euromoney Institutional Investor company.
About EMIS Insight
EMIS Insight is a unit of EMIS that produces proprietary strategic research and analysis. The service features market overviews, industry trend analysis, legislation
and profiles of the leading sector companies provided by locally-based analysts.
About EMIS
Founded in 1994, EMIS (formerly known as ISI Emerging Markets) was acquired by Euromoney Institutional Investor PLC in 1999. EMIS works from over 15 offices
around the world to deliver electronic information products, by subscription, to institutional customers globally. EMIS provides hard-to-get information covering more
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