Industry Analysis

Indian Power Sector

Arjun Yadav IIM Indore, Mumbai

Key Success Factors

Market Position: The company with strong operating
performance and favorable terms of services can position itself better in the industry. be able to comply with the regulations and be flexible to changes. important concern as selling prices are not flexible and fuel prices are irregular. Downstream efficiencies for better transmission and distribution. Operational success will lead to efficiency. type of generation plants and location, in order to keep their business sustainable.

Regulation: Since the industry is highly regulated, companies must Cost and Operation Management: Managing costs is an

Diversification: Companies need to diversify its market segments,

PESTEL and Industry analysis

Political / Government policies Analysis:
The low allocation of budget in power sector hampered the rural & urban electrification, and power generation capacity. The different pricing regimes and distribution policies of state governments further aggravated the power situation. As the state government paid these subsidies irregularly, the SEBs did not plan any long term project implementation i.e. capacity expansion, network extension, regular maintenance and system improvement. This also affected the T&D losses of SEBs.

PESTEL and Industry analysis

Economic Analysis:
Multiple drivers (industrial expansion, growing per-capita incomes) leading to growth in power demand - this is set to continue in the future. During FY1015, GDP growth is likely to average 8.08.5 % India set to become a global manufacturing hub with investments across the value chain Power consumption estimated to increase from 821.2 TWh in 2013 to 1,433.2 TWh by 2022 Indias power demand expected to rise up to 1,915 TWh by FY22

PESTEL and Industry analysis

Technological Analysis:
India to face significant challenges in achieving high CO2 reduction in power generation, while also meeting the predicted growth in demand and supply. Accelerated exploitation of natural resources and more trans mission and distribution (T&D) capacity are essential to ove rcome the current problems. Increased competition, additional equipment supply capacity and other actions to involve the private sector can help to acc elerate investments.

PESTEL and Industry analysis

Environmental Analysis:
Openness towards renewable energy Effect on flora and fauna Air and Water pollution Social Analysis: Waste Management Poor health level Environment Laws Food insecurity Poor health level Homelessness Loss of assets Landlessness Joblessness

PESTEL and Industry analysis

Legal & Regulatory Analysis:
If government doesnt own sufficient resources to develop power projects, it has option to issue the license to others for these projects. There is legal frame work for laying down wires and other works but there was no regulation regarding the tariff, power generation, and infrastructure development.
There are some provisions to maintain the relationship between licensee and consumer but there was no regulation for efficiency of power plant, tariff, environmental issues, and infrastructure development.

The value chain of the industry

Prior to 2003, the market was vertically integrated with state owned boards, causing monopoly and price regulation.

The value chain starts from the producers. Forwarded to generation facilities where they are converted to power. Generators pass it on to the distributors. Supplied to the consumers over the network.

Market Leader
NTPC has a significant presence in the value chain of power generation business. Current generating capacity of 30,144 MW - plans to become a 75,000 MW company by 2017. NTPC has 18.79% of the total national capacity it contributes 28.60% of total power generation due to its focus on high efficiency. NTPC thus became a listed company in November 2004 with the government holding 89.5% of the equity share capital.

Second Largest Player

Presence in all the segments of the power sector Generation (thermal, hydro, solar and wind), Transmission, Distribution and Trading. It is one of the largest renewable energy players in India. Its international presence includes strategic investments and collaborations in other countries. With its track record of technology leadership, project execution excellence, world class safety processes, customer care and driving green initiatives, Tata Power is poised for a multi-fold growth.