qwertyuiopasdfghjklzxcvbnmqwerty

uiopasdfghjklzxcvbnmqwertyuiopasd
fghjklzxcvbnmqwertyuiopasdfghjklzx
STRATEGIC ANALYSIS OF NTPC
cvbnmqwertyuiopasdfghjklzxcvbnmq
BUSINESS STRATEGY ASSIGNMENT

wertyuiopasdfghjklzxcvbnmqwertyui
BY
SANDEEP KAUSHIK

opasdfghjklzxcvbnmqwertyuiopasdfg
ENROL. NO.:09BS0002057

SUBMITTED TO: PROF. A.K.MITRA

hjklzxcvbnmqwertyuiopasdfghjklzxc
vbnmqwertyuiopasdfghjklzxcvbnmq
wertyuiopasdfghjklzxcvbnmqwertyui
opasdfghjklzxcvbnmqwertyuiopasdfg
hjklzxcvbnmqwertyuiopasdfghjklzxc
vbnmqwertyuiopasdfghjklzxcvbnmq
wertyuiopasdfghjklzxcvbnmqwertyui
opasdfghjklzxcvbnmqwertyuiopasdfg
hjklzxcvbnmrtyuiopasdfghjklzxcvbn
mqwertyuiopasdfghjklzxcvbnmqwert
yuiopasdfghjklzxcvbnmqwertyuiopas
 A STRATEGIC ANALYSIS: NATIONAL THERMAL POWER CORPORATION

Vision
"A world class integrated power major, powering India’s growth, with increasing global
presence."
Mission
“Develop and provide reliable power, related products and services at competitive prices,
integrating multiple energy sources with innovative and eco-friendly technologies and
contribute to society.”

Core Values – BCOMIT

 Business Ethics
 Customer Focus
 Organizational & Professional Pride
 Mutual Respect & Trust
 Innovation & Speed
 Total Quality for Excellence
Overview of Organization:

India’s largest power company, NTPC was set up in 1975 to accelerate power development in
India. NTPC is emerging as a diversified power major with presence in the entire value chain of
the power generation business. Apart from power generation, which is the mainstay of the
company, NTPC has already ventured into consultancy, power trading, ash utilization and coal
mining. NTPC ranked 317th in the ‘2009, Forbes Global 2000’ ranking of the World’s biggest
companies. 

The total installed capacity of the company is 31,704 MW (including JVs) with 15 coal based
and 7 gas based stations, located across the country. In addition under JVs, 3 stations are coal
based & another station uses naphtha/LNG as fuel. By 2017, the power generation portfolio is
expected to have a diversified fuel mix with coal based capacity of around 53000 MW, 10000
MW through gas, 9000 MW through Hydro generation, about 2000 MW from nuclear sources
and around 1000 MW from Renewable Energy Sources (RES). NTPC has adopted a multi-
pronged growth strategy which includes capacity addition through green field projects,
expansion of existing stations, joint ventures, subsidiaries and takeover of stations.
NTPC has been operating its plants at high efficiency levels. Although the company has 18.10%
of the total national capacity it contributes 28.60% of total power generation due to its focus on
high efficiency.

1
In October 2004, NTPC launched its Initial Public Offering (IPO) consisting of 5.25% as fresh
issue and 5.25% as offer for sale by Government of India. NTPC thus became a listed company
in November 2004 with the government holding 89.5% of the equity share capital. The rest is
held by Institutional Investors and the Public. The issue was a resounding success. NTPC is
among the largest five companies in India in terms of market capitalization.

At NTPC,  People before Plant Load Factor is the mantra that guides all HR related policies.
NTPC has been awarded No.1, Best Workplace in India among large organizations and the best
PSU for the year 2009, by the Great Places to Work Institute, India Chapter in collaboration with
The Economic Times.
The concept of Corporate Social Responsibility is deeply ingrained in NTPC's culture. Through
its expansive CSR initiatives, NTPC strives to develop mutual trust with the communities that
surround its power stations.

2
  

Key Competitors and comparative analysis:

Last Price Market Cap. Sales Net Profit Total Assets

(Rs. cr.) Turnover
NTPC 199.25 164,290.88 48,221.32 8,728.20 93,562.70
Power Grid Corp 101.25 42,614.52 6,675.85 1,690.61 41,999.41
Reliance Power 171.90 41,200.99 8.55 273.23 13,792.81
NHPC 31.65 38,931.85 4,331.98 2,090.50 30,214.65
Tata Power 1,337.95 31,750.52 7,098.27 947.65 13,890.56
Reliance Infra 1,143.80 28,008.26 10,027.26 1,151.69 19,239.62
Adani Power 127.70 27,839.05 434.86 170.80 7,277.74
Neyveli Lignite 156.15 26,197.44 3,354.91 821.09 13,526.93
JSW Energy 126.20 20,697.49 - - -
Torrent Power 340.70 16,096.31 5,909.20 836.55 7,151.44
Table 1: data as on July 29, 2010

Customer segmentation:

NTPC don’t have direct retail customers as there are some necessary steps in the power to be
delivered to the end consumer.

1) Power generation: power is generated and stepped up to very high voltage levels of
more then 220 KV to reduce the transmission losses.
2) Power transmission: stepped up power transmitted via high tension power lines.
3
 3) Power distribution: high voltage levels are further stepped down to lower level as up
to 220 volts for end consumers.
So two sorts of customers are there for NTPC directly:
1) Government transmission and distribution department.
2) Power grid.

MARKET CAPITALIZATION OF POWER COMPANIES W.R.T. NTPC AS ON

JULY 2010
JSW Energy Torrent Power
5% 4%
Neyveli Lignite
6%
Adani Power NTPC
6% 38%
Reliance Infra
6%

Tata Power
7%

NHPC
9% Power Grid Corp
Reliance Power 10%
9%

B) PESTEL Environment (macro environment) :

POLITICAL FACTORS:

Government stability: Stable government continuing its second term.

Taxation Policy: "There is no proposal under consideration of the government to provide

further extension of tax holidays for setting up of power plants in terms of direct taxes,
The minister added that tax incentives like exemptions and deductions are economically
inefficient, inequitable, lead to revenue loss, breed rent-seeking behaviour, increase
compliance costs and enhance the administrative burden.
"The case for tax incentives is further weakened in the existing tax regime of moderate tax
rates. Therefore, as a matter of principle, government has taken a considered policy decision
not to support tax incentives and to allow minimal exemptions and deductions,"  
However, in the power sector, as far as indirect taxes are concerned, all items of machinery
and equipments required for initial setting up mega power projects are fully exempt from
duties and customs. All such goods domestically procured for initial setting up of mega
power plants awarded on an international competitive bidding basis or tariff-based bidding
are also fully exempt from payment of central excise duties.

Foreign Trade regulations:

Electric Generation, Transmission, Distribution and Trading: FDI upto 100% is

permitted under automatic route for:

4
i) Generation and transmission of electric energy produced in-hydro electric, coal/lignite
based thermal, oil based thermal and gas based thermal power plants.
ii) Non-Conventional Energy Generation and Distribution.
iii) Distribution of electric energy to households, industrial, commercial and other users and
iv) Power Trading
5.13.2 The above would be subject to the provisions of the Electricity Act 2003.

Social Welfare policies: special budgetary allocations and subsidized power supply to poorer
sections of society.

ECONOMIC FACTORS

Business cycles: The current phase of high growth may last for more than three years
because of strong productivity gains, according to a report by Man Financial. 
The report said the current business cycle, which began from a peak in 1998, touched a
trough in ’04 is expected to peak again in ’10. This is a departure from past cycles which
lasted for five-and-a-half to six years. The current cycle is going to take longer to reach its
peak levels, as growth is going to be less volatile. 
The economy is expected to stretch its growth rate further and have a close to 8% average
real GDP growth rate. The economy is expected to join the $1trillion club in FY08, the report
said. 
This will be on account a sharp rise in productivity as reflected in the decline in the
incremental capital-output ratio (ICOR). Put simply, the cost of output has been falling
continuously. Since 1982, productivity growth has been driven by services followed by
industry and agriculture, unlike the rest of Asia where growth was driven by manufacturing. 
Man Financial has estimated that for an average 1% increase in GDP growth to 8%, annual
incremental investment of $60bn will be needed. Though the government finances will
improve, it expects the private sector to shoulder the bulk of the burden to fund
investments. The gross domestic capital formation between FY08 and FY12 is likely to
increase to 31.6% as compared to 28.9% between FY03 and 07. It says growth will be driven
by services and industry, though agriculture is going to lag.
(*http://economictimes.indiatimes.com/articleshow/432177.cms)

GNP trends:

Gross National Income in PPP dollars

5
Gross National Income, expressed in purchasing power parity dollars to adjust for price level
differences across countries. Not adjusted for inflation.
Data source: World Bank, World Development Indicators 

Inflation: Food inflation for the week ended July 17, 2010 has fell at 9.67 percent easing at
single digit for the first time in this year. The food inflation, which was at 12.47 percent in
the earlier week, remained above the 16 percent level for most part of the last year. The fall
was mainly due to drop in prices of vegetables, especially potatoes and onions. The primary
articles index and fuel prices index, however, witnessed an increasing trend at 14.5 percent
and 14.29 percent respectively. The fuel prices including petrol, diesel, and kerosene and
cooking gas were raised in the last June. Wholesale price inflation, the measure for overall
increase in prices, was at 10.55 percent in June. Earlier this week, the Reserve Bank of India
raised key short-term interest rates to deal with high inflation and indicated that it would
continue with monetary tightening measure till inflation is brought under control.
SOCIO-CULTURAL FACTORS:
Population: 1,192,808,000
Demographic and economic indicators
2006 2007 2008 2009 2010
Population
Aged 65+:
52,128.16 53,626.68 55,132.74 56,656.42 58,215.24
January 1st
('000)
Population
Density
376.62 382.17 387.66 393.11 398.51
(people per
sq km)
GDP
Measured at
Purchasing
Power Parity 2,887,751.94 3,268,287.21 3,500,000.00 3,785,886.25 4,146,600.93
(million
international
$)
Real GDP
Growth (% 9.65 9.87 6.47 5.68 9.40
growth)
Inflation (%
6.17 6.39 8.32 10.83 13.16
growth)
Consumer 501,477.25 670,213.70 727,716.06 724,022.50 817,565.08
Expenditure
(US$

6
 million)
Annual
Gross
Income 754,849.44 946,420.51 1,017,559.48 1,015,329.55 1,109,895.78
(US$
million)
Annual
Disposable
Income 733,601.07 908,057.36 965,342.91 962,330.55 1,052,872.11
(US$
million)

Source
 World Economic Fact book

Consumerism: If the 90s was about Indian globalizing, the 2000s was about Indianisation of
global brands and categories. Western tops became kurtis; MTV and Channel V adopted
Indian film music to increase connect and with the K serials, India got its own local soap
operas. McDonald’s showed the way in marketing to tailor-make its product offering to script
a success story and the successful Thanda Matlab Coke advertising in 2001 was the
torchbearer for global brands to get into Indian culture. Through the decade, there were a
spate of global brands, including technology brands like Nokia and Motorola, that recognised
that India needed its own mix. This ended with Vodafone continuing with its local Hutch
advertising even after taking over the local brand and now contemplating taking the Indian
communication abroad to the West!

The Indian celebrity disease and advertising craze grew and took fresh shape through the
decade. As we exit, celebrities neither bring “awe and credibility” to the brand they represent,
nor transfer values, they just give advertising cut-throughs. With over-exposure and media
editorials bringing the celebrity into homes, the aura around them has disappeared, making
them more human and real. It, of course, gives advertising agencies more play-field to do
things with them; but should get marketers to re-evaluate the value they are bringing.
Celebrities have become human!

Reality shows have become a part of our lives. It started with Kaun banega Crorepati and
ended with the explosive Sach ka Samna with music and dance shows and the likes of Big
Boss and Rakhi ka Svayamvar catching eyeballs. Cross over to news channels and they too
are filled with sordid stories of celebrities and semi-celebrities, and happenings within their
home walls. Mass voyeurism is in and so too viewer enjoyment, vicariously, of other
people’s sorrows and unhappiness. Hand in hand with this is the birth and growth of “brands
with a social conscience”. Lifebouy, Idea, Tata Tea are examples that are talking to the
responsible side of Indian consumers. Clearly, a schizophrenic society is opening up,
providing brand opportunities at opposite ends of the spectrum. And brand communication
has evolved in both directions.

In sum, it’s been a decade of evolution. We have progressed from “needs” to “desires”,
“adoption” to “adaptation”, from “exuberance” to “enjoyment”; from “starry-eyed

7
fascination” to more “value-added evaluation”. The fundamental drivers, structure of the
market and the consumer have changed. We entered the decade with unbridled optimism and
exited it with cautious optimism and a sense of realism — a natural evolution from the early
growth stage to late growth stage. The next decade needs to be viewed as the next phase of
this evolution and managed accordingly. Looking at the last 10 years as a period will help us
see things as a larger picture.

TECHNOLOGICAL:

Government spending on research: To further encourage R&D across all sectors of the
economy, weighted deduction on expenditure incurred on in-house R&D enhanced from 150
per cent to 200 per cent. Weighted deduction on payments made to National Laboratories,
research associations, colleges, universities and other institutions, for scientific research
enhanced from 125 per cent to 175 per cent.

Speed of technology transfer:

The Indian telecommunications industry is the world's fastest growing telecommunications

industry, with 671.69 Million telephone (landlines and mobile) subscribers and 635.51
Million mobile phone connections as of June 2010. It is also the second largest
telecommunication network in the world in terms of number of wireless connections
after China. The Indian Mobile subscriber base has increased in size by a factor of more than
one-hundred since 2001 when the number of subscribers in the country was approximately 5
million to 635.51 Million in June 2010.As the fastest growing telecommunications industry in
the world, it is projected that India will have 1.159 billion mobile subscribers by
2013. Furthermore, projections by several leading global consultancies indicate that the total
number of subscribers in India will exceed the total subscriber count in the China by
2013.The industry is expected to reach a size of Rs 344,921 crore (US$ 73.47 billion) by
2012 at a growth rate of over 26 per cent, and generate employment opportunities for about
10 million people during the same period. According to analysts, the sector would create
direct employment for 2.8 million people and for 7 million indirectly. In 2008-09 the overall
telecom equipments revenue in India stood at Rs 136,833 crore (US$ 29.15 billion) during
the fiscal, as against Rs 115,382 crore (US$ 24.58 billion) a year before.

The Indian Information Technology industry accounts for a 5.9% of the country's GDP and

export earnings as of 2009, while providing employment to a significant number of
its tertiary sector workforce. More than 2.3 million people are employed in the sector either
directly or indirectly, making it one of the biggest job creators in India and a mainstay of the
national economy. In March 2009, annual revenues from outsourcing operations in India
amounted to US$60 billion and this is expected to increase to US$225 billion by 2020. The
most prominent IT hub is IT capital Bangalore. The other emerging destinations
are Chennai, Hyderabad, Mumbai, Pune, NCR, Jaipur and Kolkata. Technically proficient
immigrants from India sought jobs in the western world from the 1950s onwards as India's
education system produced more engineers than its industry could absorb. However, there are
severe skills shortage among engineers, especially who lack in soft skills and technical skills,
as a result engineering graduates remain unemployed after being pass out from college or
university. India's growing stature in the information age enabled it to form close ties with
both the United States of America and the European Union.

8
India's IT Services industry was born in Mumbai in 1967 with the establishment of Tata
Group in partnership with Burroughs. The first software export zone SEEPZ was set up here
way back in 1973, the old avatar of the modern day IT park. More than 80 percent of the
country's software exports happened out of SEEPZ in 80s.

Each year India produces roughly 500,000 engineers in the country, out of them only 25% to
30% possessed both technical competency and English language skills, although 12% of
India's population can speak in English. India developed a number of outsourcing companies
specializing in customer support via Internet or telephone connections. By 2009, India also
has a total of 37,160,000 telephone lines in use, a total of 506,040,000 mobile
phone connections, a total of 81,000,000 Internet users—comprising 7.0% of the country's
population and 7,570,000 people in the country have access to broadband Internet— making
it the 12th largest country in the world in terms of broadband Internet users. Total fixed-
line and wireless subscribers reached 543.20 million as of November, 2009.

Technology Transfer Approach:NTPC:

Dual Approach in technology / practices selection:

1. General technologies & practices for performance improvement like plant and equipment
performance testing & optimization. The practice helps establish current level of equipment
performance & best achievable efficiency& recommend optimal operating regime.

•It facilitates performance degradation assessment, and performance & capability restoration

•Use of IDAS and DALITE software to simplify procedure.

ENVIRONMENTAL:

Environmental protection laws:

ENVIRONMENTAL (PROTECTION) ACT, 1986
The Environment (Protection) Act, 1986 was introduced as an umbrella legislation
that provides a holistic framework for the protection and improvement to the
environment.
In terms of responsibilities, the Act and the associated Rules requires for obtaining
environmental clearances for specific types of new / expansion projects (addressed
under Environmental Impact Assessment Notification, 1994) and for submission of an
environmental statement to the State Pollution Control Board annually.
Environmental clearance is not applicable to hydro projects also.
SJVNL undertakes Environmental Impact Assessment for all projects as a standard
management procedure as laid down in The Environment (Protection) Act, 1986 and
also functions within permissible standards of ambient air quality and noise levels as
prescribed by national laws and International regulations. The Environmental
Clearance procedure is at

9
 Other rules and regulations under the Environmental (Protection) Act, 1986
applicable to the operation of SJVNL are described below:

AIR (PREVENTION AND CONTROL OF POLLUTION) ACT 1981

The objective of this Act is to provide for the prevention, control and abatement of air
pollution, for the establishment, with a view to carrying out the aforesaid purposes, of
Boards, for conferring on and assigning to such Boards powers and functions relating
thereto and for matters connected therewith.
Decisions were taken at the United Nations Conference on the Human Environment
held in Stockholm in June 1972, in which India participated, to take appropriate steps
for the preservation of the natural resources of the earth which, among other things,
includes the preservation of the quality of air and control of air pollution. Therefore it
is considered necessary to implement the decisions foresaid in so far as they relate to
the preservation of the quality of air and control of air pollution.
India Power Consumption to double by 2020

• Currently at some 600TWh annually, is set to double by 2020, to tread ahead of

Russia - Country's peak power capacity deficit expected to widen in 2010 to 12.6
percent of total capacity - Increase in usage of renewables resources, expansion of
thermal plants, mini-hydro plants, solar energy and nuclear energy to meet the
growing consumption levels
•  Electricity consumption in India, currently at some 600TWh annually, is set to
double by next decade, by then it would have surpassed Russian levels in the process.
KPMG's Global Advisory Practice released a power industry research published
under the title 'Think BRIC!' reveals that in order to supply this extra electricity,
total generating capacity should jump by 90 GW, to 241GW, with an increased
emphasis on nuclear, clean coal and renewables, including solar and small-hydro.
• The survey finds that while the state and federal governments have initiated reforms,
legislation designed to supply electricity to all consumer groups, conservative
elements, social programs, systemic weaknesses and contradictions within frequently
combine to stifle progress. Additionally factors like increasing economic activity,
wealth and population, an improved standard of living and infrastructure
developments are all expected to underline a continuous increase in demand for power
in the next decade.
• A rural electrification program in the 1980s brought electricity to 200,000 villages for
the first time. Generation capacity hit 150GW in 2006; a 40 percent increase on the
2000 figure, after reforms in 2003 initiated a much needed restructuring of the power
sector. However one respondent of our survey estimated that at least 500 million
Indians still have no access to electricity."
• With per capita GDP rising by about 8 percent per year in 2000-2008, the growth in
energy demand is enormous; in particular regarding electricity. While private sector
investment in generation is increasing, India could face challenges until 2020 to
comfortably meet its demand."
• According to the study, the country's peak power capacity deficit is expected to widen
in 2010 to 12.6 percent of total capacity, up from 11.9 percent last year. In addition to
the generation deficit, this deficit is also contributed by the inefficiencies in the

10
 transmission and distribution systems and electricity theft. To combat this, some
respondents expressed confidence in government assurances on formation of an
independent regulatory system which will support growth in private investment, in
public-private partnerships. They also point to the private investors, who have already
made a start in building independent power plants, with the share of privately
generated electricity currently at around 13 percent of the total and rising.
• Coal, which already provides almost 70 percent of India's power, will remain the
dominant primary fuel, holding out commercial opportunities to those producers who
are global leaders in high efficiency, clean-burn plant. But with India needing to
diversify production, openings will exist for nuclear, gas and small hydro schemes.
Also the need to extend basic electricity to vast rural population means that there are
massive opportunities in terms of wind, biomass and, if we can get the prices right,
especially solar energy.
• The respondents surveyed also feel that India is an attractive destination for foreign
capital investment since India has an advantage for future investment in production
and manufacturing facilities. Government and private utilities are endeavoring to set
up an infrastructure framework to facilitate investments in the country.
• The survey also reveals that as compared to the other BRIC countries, India had the
second highest growth rate between 2000 and 2008 with an electricity consumption of
5.7 percent. Despite this the country has the lowest electricity consumption per capita
out of the BRIC countries. India's electricity consumption per capita is expected to be
roughly 841 kWh in 2020, representing only about one quarter of the global average.
• "While government finances will find it impossible to manage alone, private finance
and skills are largely available if investors feel the regulatory and legal framework is
made to work for a fair return." 

LEGAL

Anti-trust / Monopolies legislation:

Competition Commission of India
The Competition Act seeks to ensure fair competition in India through the CCI. The CCI was
made functional with effect from 20 May 2009; Dharendra Kumar is the chairman and there
are six other members. The central government has the power to appoint a director-general
and other advisers and consultants to assist the CCI in inquiries. KK Sharma is presently the
acting director-general.

The CCI has the authority to inquire on its own motion, on information or on a reference
made by the central government, the state government or statutory authorities, or upon
receiving a complaint. The CCI also has the power to investigate agreements, combinations

11
or abuse of dominant position outside India that have an appreciable adverse effect on
competition in India.

If, after an inquiry, the CCI finds that the provisions of the Competition Act are being
contravened, it may direct that the agreement or abuse of dominant position or combination
should not be given effect, or should be discontinued, or it may impose penalties, direct an
amendment to an agreement or combination, or make recommendations to the central
government.

Abuse Of Dominant Position

An enterprise is said to be dominant if it is able to operate independently of competitive
forces prevailing in the relevant market or affect its competitors, consumers or the relevant
market in its favour. Abuse of dominant position by an enterprise or a group has been defined
in the Competition Act to include directly or indirectly imposing unfair or discriminatory
conditions or prices in purchase or sale of goods or services; restricting or limiting production
of goods and services, or the market, or limiting technical or scientific development relating
to goods or services to the prejudice of consumers; indulging in practices resulting in denial
of market access; or using dominance in one market to move into or protect other markets.
Certain factors such as market share, the size and resources of enterprise, the size and
importance of competitors and the economic power of the enterprise would have to be given
due regard by the CCI when determining whether an enterprise enjoys a dominant position.

Regulation Of Combinations
The Competition Act seeks to regulate 'combinations', including acquisitions, mergers or
amalgamations of enterprises. Notifications of combinations are mandatory. Acquisitions of
one or more enterprises by one or more persons, or mergers or amalgamations of enterprises,
are combinations if they meet the jurisdictional thresholds based on assets and turnover. The
Competition Act prohibits enterprises from entering into combinations that cause or are likely
to cause an appreciable adverse effect on competition within the relevant market in India.
Various factors have been listed that the CCI has to take into account to determine whether a
combination will or is likely to have an appreciable adverse impact on competition in India.

Thresholds for parties having assets or turnover in India are different from parties that have
assets or turnover within and outside India. A territorial nexus means minimum presence in
the Indian market at least of any two globally merging companies. The minimum threshold
requirement for determining territorial nexus is assets worth 5 billion rupees in India or
turnover worth 15 billion rupees in India from the combined entities. As per the draft
Competition Commission of India (Combination) Regulations, each of at least two of the
parties to the combination must have assets of 2 billion rupees or a turnover of 6 billion
rupees in India.It will be mandatory for qualifying transactions to notify the CCI within 30
days of executing the merger and acquisition disclosing the details of the proposed
combination of a merger or an acquisition, if the said merger or acquisition falls within the

12
threshold limits. As per the Combination Regulations, triggering events are the date of
execution of any agreement or documents for acquisition of shares or control, or the last date
of approval of the proposed merger or amalgamation by the board of directors of the
enterprise concerned. In the case of an acquisition of shares or acquisition of control, the
acquirer is required to notify the CCI. In the case of a merger or an amalgamation, all the
persons or enterprises to the combination or to the proposed merger or amalgamation are
required to jointly notify. Where the CCI acts suo moto, the party to whom the notice has
been issued is required to notify the transaction.

The CCI is required to give its decision on the transaction within 210 days, failing which the
combination is deemed to be approved. However, as per the Combination Regulations, the
CCI may form a prima facie opinion as to the existence of appreciable adverse effect on
competition - within 30 days of receipt of the notice if the notice is in Form 1, and within 60
days of receipt of the notice if the notice is in Form 2. Thus, the CCI will not be required to
wait for the entire period of 210 days in a situation when it is prima facie of the view that a
combination does not have an appreciable effect on competition.

Employment law: The object of the employment laws in India is social welfare legislation
protecting the employees, protecting their contentment and regulates situation of crisis.  India
adopted the core labour standards of ILO for welfare of workers and to protect their interests.
India has enacted a number of labour laws addressing various issues such as resolution of
industrial disputes, working conditions, labor compensation, insurance, child labour, equal
remuneration etc. Labor is a subject in the concurrent list of the Indian Constitution and is
therefore in the jurisdiction of both central and state governments. Both central and state
governments have enacted laws on labor issues. Central laws grant powers to officers under
central government in some cases and to the officers of the state governments in some cases.
The labour laws cast upon the employer certain obligations for meticulous, impeccable and
timely compliance. A minor violation or an inadvertent delay in complying with the statutory
requirements, not only results in levy of damages but also prosecutions that too, of the top
executives.
Workmen’s Compensation Act 1923
This Act is the earliest national legislation to provide the compensation to certain classes of
workmen by their employers for injury which may be suffered by the workmen as a result of
an accident during the course of employment.  The general principle is that a workman who
suffers injury in course of his employment should be entitled to compensation and in case of
fatal injury his dependants should be compensated.  
Minimum Wages Act 1948

The Act prescribes minimum wages for all employees in all establishments or working at
home in certain employments specified in the schedule of the Act. Central and State
Governments revise minimum wages specified in the schedule. 
Payment of Wages Act 1936

13
The Act regulates issues relating to time limits within which wages shall be distributed to
employees and that no deductions other than those authorized by the law are made by the
employers. 
Industrial Disputes Act 1947
Further more the Act aims to ensure fair terms to workmen and to prevent disputes between
employer and the employees so that production may not be adversely affected in the larger
interest of public.
It provides the mechanism for the reconciliation and adjudication of disputes or differences
between the employees and the employers. Industrial undertaking includes an undertaking
carrying any business.  The Act provides the procedure for termination/retrenchment or
layoff of a workman who has been in continuous service for not less than one year under an
employer.

Employees Provident Fund and Miscellaneous Provisions Act 1952

This Act provides for the institution of provident funds, employees pension funds and deposit
linked insurance fund for employees in factories and other establishment.  Its main purpose to
ensure the financial security of the employees in an establishment by providing for a system
of compulsory savings. There is a provision for establishments of a contributory Provident
Fund in which employees’ contribution shall be at least equal to the contribution payable by
the employer. 
Payment of Bonus Act 1965

The Act applies to any establishment / business in which twenty or more persons are
employed on any day during an accounting year.  It provides for the payment of bonus to
persons employed in certain establishments on the basis of profits or on the basis of
production or productivity. The minimum bonus, which an employer is required to pay even
if he suffers losses during the accounting year is 8.33% of the salary. 
Payment of Gratuity Act 1972

The Act provides for a provision for the payment of gratuity to all employees in all
establishments employing ten or more employees to all types of workers. Gratuity is payable
to an employee on his retirement/resignation.

Maternity Benefit Act 1961

The Act provides the certain benefits to the women in certain establishments for a prescribed
period before and after child birth. The Act does not apply to any factory or other
establishment to which the Employees State Insurance Act 1948 is applicable. Every women
employee who has actually worked in an establishment for a period of at least 80 days during
the 12 months immediately proceeding the date of her expected delivery, is entitled to receive
maternity benefits i.e. medical bonus, maternity leave, nursing breaks under the Act.

14
(C) INDUSTRY ANALYSIS: PORTERS FIVE FORCE ANALYSIS:

Prominent force for the NTPC in near future:

Competitive rivalry: as increasing liberalization in Indian economy for a steady and

sustainable growth. Very soon power sector market will be fiercely competitive. Further
cutting subsidies and disinvestment in public sector units will increase the share holders
expectations towards the companies to stretch there profits and work in an optimized
environment.

(D)Who are members of ‘organisation field’ for the company & how they influence.

“Members of organization field in an industry are the members who contribute to the
company directly or indirectly”

In our case the industry is power generation but many companies which can be the part of
organizational field for the NTPC and their impacts are:

1) Coal industry: NTPC is basically a coal based power generation company so coal is
a major contributor for the company sustainability.
2) Transportation: coal, ash and other raw material transportation is also an influencing
factor for the company.
3) Power grid: power cannot be stored after generation hence has to be transmitted
instantly and should be consumed thus power grid plays the important role for the
company.

15
4) Turbine, transformer and other instrument suppliers are also the members of
organization field whose quality is a basic for qualitative generation.

STARATEGIC GROUP FOR NTPC:

• The concept of strategic groups

– Within an industry, a competitor grouping using similar strategic

characteristics, that differ from other groups within the same industry or
sector.

– There may be different characteristics which distinguish between strategic

groups. E.g; Size, geographic coverage, breadth of product range, quality or
service level, R &D spending etc

– Companies in same strategic group follow largely similar strategies or

compete on similar bases in the markets

16
(E) MARKET SEGMENTATION:

Figure 1: Power Generation In Mw In Various Sectors

(F)WHAT CUSTOMER’S VALUE? CRITICAL SUCCESS FACTORS (CSF) FOR

THE COMPANY.

What customer values:

India is a sort of country where people prefer the products which provide the value for money
to them. Further according to C.K.Prahlad, 4 billion people in India are at the bottom of
pyramid. So they need electricity at cheaper and affordable rates. Hence NTPC must have to
be very competitive in its efforts to optimize processes and efficient use of resources.

17
Critical Success Factors (CSF):
1. Rapid capacity expansion
2. Fuel security
3. Regulatory Risk
4. Financial Resources
5. Technological Obsolescence
6. Competition
7. Health of Customers
8. Pollution
9. CSR and Resettlement and Rehabilitation Rapid.

(G) SWOT ANALYSIS OF NTPC

Strengths of NTPC
 Largest market share in domestic power generation and a broad customer portfolio across
the country.
 Excellent track record of performance in project implementation and plant operation.
 Diversified thermal generation portfolio – multiple sizes and fuel types.
 Highly skilled and experienced human resources, exposed to state-of-the art technologies
in project execution and power generation.
 Navaratna status
 High brand equity among shareholders.
 Strong balance sheet – ability to raise low cost debt.
 Engineering skills in project configuration and package design.
 Turnaround ability for old plants – demonstrated in the takeover plants of Talcher, Tanda
& Unchahar.
 High credit rating that is indicative of the confidence of lenders.
 In-house training facility (PMI), CENPEEP, R&D etc that assist in development of the
sector.
 Thrust on reducing social costs of capacity growth – strong execution of Resettlement and
rehabilitation plans.

Weakness
 Low risk-diversification of business portfolio consists primarily of generation assets.
 Poor financial health of customers.
 Functional orientation hampering cross functional perspective in decision making.
 Long and multi layered procurement process leading to long lead times and process delay.

18
 Fragmented IT architecture.
 Gaps in HR systems such as performance management, rewards and incentives and career
development.
 Inadequate deployment of a strong knowledge management system that could assist in
improving efficiency and effectiveness in all aspects of the business.
 Hierarchy for decision making that affects responsiveness.
 Role ambiguity and dilution within different lends of the organization.

Opportunities
 Expand generation capacities by putting up thermal and hydro capacities, maintain the
position of a dominant generating utility in the Indian Power sector.
 Broad base fuel mix by considering imported coal, gas, domestic coal, nuclear power etc
with a view to mitigate fuel risks and maintain long run competitiveness.
 Expand services for EPC, R&M and O&M activities in the domestic as well as
international markets.
 Backward integrate into fuel management to exercise greater control and understanding of
supply economics.
 Lead the development and commercial deployment of non-conventional energy sources
especially in the distributed generation mode.
 Improve collections by trading, direct sale to bulk customers and the active role in
allocation in new plants.
 Execute increased number of power plants that classify for Mega Power Projects status,
thereby reducing the cost of the projects and power and power generated.
 Forward integrate into the distribution business in India.

Threats
 Limited experience of operating in a truly liberalized environment with competition.
 Limited experience of operating in an independently regulated system.
 Redirecting power may be constrained by inter-regional connectivity.
 Downward regulatory and competitive pressure on tariffs.
 Stringent norms for approval of increase in capital costs for projects in event of time
overrun.
 Stringent environmental norms in the future may add to the cost of generation.
 Absence of an independent regular for coal industry and the delay in private investments
lending to the risk of low availability of coal in the future

19
(H) STRATEGIC GAPS:

“Strategic gap is an opportunity in the competitive environment that is not being fully
utilized”. Instead of competing head to head with rivals companies should seek out
opportunities in the competitive environment.

These are some strategic gap points where NTPC can do a deep exploration to get the
sustainable competitive environment.
Technology enhancement: to stay in competition they have to continuously enhance their
technology. There are many scopes in power sector in India as we still works with outdated
transmission line and transformers.

Cost efficiency i.e. providing power at reasonable prices so that they could provide power to
all in need.

Eco friendly system for carbon emissions: Driven by its commitment for sustainable
growth of power, NTPC has evolved a well defined environment management policy and
sound environment practices for minimizing environmental impact arising out of setting up of
power plants and preserving the natural ecology.

Efficiency improvement: includes both improvements in the existing process and through
improvement in the technology used to increase the productivity of the company. Research &
Development Centre is ISO 17025 accredited and provides high end scientific services to all
the companies stations as well as many outside stations resulting in improving availability
and reliability of stations by providing condition assessment, failure analysis, solving and
analyzing specific problems, and helping our stations in increasing the availability and
reliability of their units.

20
OPPORTUNITIES AND STRATEGIES FOR THE NTPC:

1) Sustaining present level of Operational Performance Fuel Security

2) Growth
􀂉Growth Challenges
􀂃 Accelerated Organic Growth
􀂃 Diversification and Inorganic Growth
3) Manpower
4) Fuel Security
5) Environment
􀂉Managing Environment
􀂉Regulatory Environment
􀂉Managing people
􀂉Fund mobilization
􀂉Technology up gradation
􀂉Competition
􀂉Corporate Governance

21
22