TATA POWER COMPANY (MARKET CAP: 18,149.03 Cr.

)
TATA POWER is the largest power generation company in India aimed at providing uninterrupted
power supply from its variant plants. Company latest business integrated solutions, focusing on
mobility and lifestyle, is poised for multi fold growth.

The company has the distinction of being among the top private players in each sector of the value
chain including solar rooftop and value-added services.

BUSINESS OVERVIEW, PRODUCT & SERVICES -

BUSINESS OVERVIEW- PRODUCT & SERVICES-

1) RENEWABLES 1) POWER SUPPLY
a. GENERATION 2) EV CHARGING STATIONS
b. MANUFACTURING 3) SOLAR ROOFTOPS
c. EPC PROJECTS 4) SOLAR PUMPS
2) CONVENTIONAL GENERATION 5) SOLAR MODULE & CELLS
a. HYDRO 6) MICRO GRIDS
b. THERMAL 7) HOME AUTOMATION
c. WASTE
3) TRANSMISSION
4) DISTRIBUTION & TRADING

Management of Tata Power

Tata Power is subsidiary of Tata Group and managed by professionals.

Board of Directors
NAME DESIGNATION
Mr. Natarajan Chandrasekaran Chairman
Mr. Nawshir H Mirza Independent Non-Executive Director
Mr. Deepak M Satwalekar Independent Non-Executive Director
Mrs. Anjali Bansal Independent Non-Executive Director
Mrs. Vibha Padalkar Independent Non-Executive Director
Mr. Sanjay Bhandarkar Independent Non-Executive Director
Mr. KM Chandrasekhar Independent Non-Executive Director
Mr. Hemant Bhargava Nominee Director (LIC)
Mr. Saurabh Agarwal Non-Independent & Non-Executive Director
Mr. Banmali Agarwala Non-Independent & Non-Executive Director
Mr. Praveer Sinha CEO & Managing Director
Mr. Ashok S Sethi COO & Executive Director
Mr. Hanoz M Mistry Company Secretary

The company recognises that diversity at board level is a necessary requirement in ensuring an
effective board. A mix of executive, independent and other non-executive directors is one important
facet of diverse attributes that the company desires. Further, a diverse board representing
differences in the educational qualifications, knowledge, experience, gender, age, thought and
perspective results in delivering a competitive advantage and a better appreciation of the interests
of stakeholders. These differences should be balanced against the need for a cohesive, effective
board.

SWOT ANALYSIS

STRENGTH
• Talent management at Tata Power Co.
and skill development of the employees
• High margins compare to Electric
Utilities industry's competitors
• Wide geographic presence
• Brands catering to different customers
segments within Electric Utilities
segment
WEAKNESS
• Limited Market share due to intense
competition
• Low investments into Tata Power Co.'s
customer-oriented services
• High cost of replacing existing experts
within the Tata Power Co.
• Niche markets are disappearing
• Predictable Business Model
• Declining per unit revenue
• Dependence on external sources for
coal

OPPORTUNITIES
• Increasing customer base in lower
segments
• Customer preferences are fast changing
• Rapid Expansion of Economy
• Lower inflation rate
• Increasing government regulations
THREAT
• Distrust of institutions and increasing
threat of legal actions
• Trade Relation between US and China
can affect growth
• Commoditization of the product
segment
• Changing demographics
• Changing political environment
• Saturation in urban market and
stagnation in the rural markets

EXPLANIATION OF ABOVE
Strength
- Talent management at Tata Power Co. and skill development of the employees - Human
resources are integral to the success of Tata Power Co. in Electric Utilities industry.

- High margins compare to Electric Utilities industry's competitors - Even though Tata Power Co. is
facing downward pressure on profitability, compare to competitors it is still racking in higher profit
margins.

- Brands catering to different customers segments within Electric Utilities segment - Tata Power
Co. extensive product offerings have helped the company to penetrate different customer segments
in Electric Utilities segment. It has also helped the organization to diversify revenue streams.

- First mover advantage First mover advantage in the increasingly crowded market place. The new
products are rapidly increasing Tata Power Co. market share in the Electric Utilities industry.

- Wide geographic presence - Tata Power Co. has extensive dealer network and associates’ network
that not only help in delivering efficient services to the customers but also help in managing
competitive challenges in Electric Utilities industry.
- Success of new product mix - Tata Power Co. provides exhaustive product mix options to its
customers. It helps the company in catering to various customers segments in the Electric Utilities
industry.

Weakness
-High cost of replacing existing experts within the Tata Power Co.- Few employees are responsible
for the Tata Power Co.'s knowledge base and replacing them will be extremely difficult in the
present conditions.

- Niche markets- Niche markets and local monopolies that company’s like Tata Power Co. able to
exploit are fast disappearing. The customer network that Tata Power Co. has promoted is proving
less and less effective.

-Predictable Business Model of Tata Power Co.- Business Model can be easily imitated by the
competitors in the industry name industry. To overcome these challenges company name needs to
build a platform model that can integrate suppliers, vendors and end users.

- Declining per unit revenue for Tata Power Co. - competitiveness in the industry name industry is
putting downward pressure on the profitability. A starting guide to manage this situation for
company name is – objectively assessing the present value propositions of the various products.

- Low investments into Tata Power Co.'s customer-oriented services - This can lead to competitors
gaining advantage in near future. Tata Power Co. needs to increase investment into research and
development especially in customer services-oriented applications.

Opportunities
- Customer preferences are fast changing - Driven by rising disposable incomes, easy access to
information, and fast adoption of technological products, customers today are more willing to
experiment / try new products in the market. Co. has to carefully monitor not only wider trends
within the Electric Utilities industry but also in the wider Utilities sector.

- Rapid Expansion of Economy - As the US economy is improving faster than any other developed
economy, it will provide Tata Power Co. an opportunity to expand into the US market. Tata Power
Co. already have know-how to operate into the competitive US market.

- Lower inflation rate - The low inflation rate brings more stability in the market, enable credit at
lower interest rate to the customers of Tata Power Co. This will increase the consumption of Tata
Power Co. products.

- Increasing government regulations- Increasing government regulations are making it difficult for
un-organized players to operate in the Electric Utilities industry. This can provide Tata Power Co. an
opportunity to increase the customer base.

- Increasing customer base in lower segments - As customers have to migrate from un-organized
operators in the Utilities industry to licensed players. It will provide Tata Power Co. an opportunity
to penetrate entry level market with a no-frill offering.

Threats
- Trade Relation between US and China can affect Tata Power Co. growth plans - This can lead to
full scale trade war which can hamper the potential of Tata Power Co. to expand operations in China.
- Saturation in urban market and stagnation in the rural markets - This trend is an ongoing
challenge in the Electric Utilities segment. One of the reasons is that the adoption of products is slow
in rural market. Secondly it is more costly for Tata Power Co. to serve the rural customers than urban
customers given the vast distances and lack of infrastructure.

- Changing political environment - US and China trade war, Brexit impacting European Union, and
overall instability in the middle east can impact Tata Power Co. business both in local market and in
international market.

- Changing demographics - As the baby boomers are retiring and new generation finding hard to
replace their purchasing power. This can lead to higher profits in the short run for Co. but reducing
margins over the long run as young people are less brand loyal and more open to experimentation.

- Commoditization of the product segment - The biggest challenge for Co. and other players in the
industry is the increasing commoditization of the products in Utilities industry.

- Distrust of institutions and increasing threat of legal actions. - As the WTO regulations and laws
are difficult to enforce in various markets. Legal procedures have become expensive and long drawn
process. It can lead to less investment into emerging markets by Co. thus resulting in slower growth.

COMPETITIVE ANALYSIS

Main Competitors: -
1) ADANI POWER
2) NTPC
3) NHPC
4) POWER GRID CORP.
5) RELIANCE POWER
6) CG POWER
7) PRIVATE PLAYERS (VIKRAM SOLAR, BOSCH SOLAR)
Doings of Company to eliminates the competition are as follows: -
• Technological innovation is fast disrupting the supply chain as it is providing greater access
to information to not only supply chain partners but also to wider players in the Utilities
industry.
• Maturity of technology – The technology in the Electric Utilities sector is still not reached
maturity and most players are vying for new innovations that can enable them to garner
higher market share in India.
• Research and development investment at both macro level and micro level in India. If there
is an environment of creative disruption and both government and private players are
spending resources on developing new solutions.
• Power structure – There is an increasing trend of income inequality in India. This has altered
the power structure that has been persistent in the society for over last 6-7 decades.
• Access to essential services – By and large over the last decade and half the wider
population in getting access to essential services in India. This has been a result of increasing
investment in public services.
• Demographics – For the Utilities products, Tata Power Co. has demographics on its side.
India is a young country and growing. Tata Power Co. can use this trend to cater to various
segments of the population
 • Low Debt to Equity- Capable of expansion since it has large reserves and low Debt-Equity
Ratio. Can leverage on the "Tata" brand which signifies Trust, it helps the company to raise
fund and avail the benefit of tax laws.

CONCULSION

Tata power is a company which has show the growth from its first day and working members of
company are the jewels of company. Tata Power can be considered for long term purpose as there is
no threat of solvency in future.

Reasons which make Tata Power more attractive than its peer: -

• Renewables on strong growth trajectory: The company’s renewable portfolio (minus

EPC) reported 20% increase in EBITDA in Q3FY19 to Rs 4.7 bn on improvement in PLFs
and capacity addition. Moreover, extension of Mumbai PPA for 5 years till FY24
reassures standalone regulated business to remain steady state.

• Underlying EBITDA on track: Adjusting for the one-offs in the coal companies, Tata
Power’s underlying EBITDA stood at Rs 25 bn in Q3 (9M: Rs 74 bn) – which reassures
that TPWR is on track to deliver annualized underlying EBITDA of Rs 100 bn.
• Debt reduction plan to strengthen balance sheet: Tata Power reduced debt by Rs 3200
cr in Q3 with net D/E at 2.24 x. The company plans to reduce debt / equity to less than
2x by FY2020 through(a) pending receipts from sale of defence business (Rs 2200 cr) (b)
receipts from Arutmin mine (Rs 1800 cr) (c) stake sale in Tata Projects (estimated to
fetch Rs 3500 cr) and other non-core assets over next 2 years. This is expected to
improve bottom line and key driver for EPS growth going forward.
• Mundra UMPP: The company is undertaking measures such as a) blending low GCV coal
(32% in Q3 vs. 10%, YoY), (b) competitive coal procurement, and (c) lower cost of
funding by replacement of ECBs with rupee loans– to improve operational efficiencies of
plant. Further the management remains optimistic on the tariff revision; outcome to
emerge only post upcoming.
• Proceeds from divestment of non-core to deleverage balance sheet: Management
expects to reduce debt below 2X by FY 20 (Currently 2.27 X) through (1) pending
receipts from sale of Tata Communications, SED business (2) proceeds from divestment
of non-core assets such as Tata Projects, Nelito, Tata Ceramics, NELCO and (3) proceeds
from sale of Arutmin mine (~USD 245 mn outstanding).
• Renewables on strong footing: TPWR’s renewable portfolio reported steady EBITDA of
Rs 6.3 bn (up 33% YoY) and added 400 MW in H1. Management remains upbeat in
renewable space – targets 3x capacity addition in 3-4 years.
• Positive outcome expected for Mumbai regulated business: Around 50% of the 1.4 GW
of Mumbai thermal generation assets have long-term PPAs with in-house distribution
company. For the remaining 50%, TPWR has PPA with BEST which is expiring in March
2019. Management highlighted it is favourably placed to win the bids (750 MW) invited
by BEST and expects positive outcome by Q3 towards PPA revision for the next 5 years.