National Hydro-Electric Power Corporation-NHPC SWOT Analysis Report

National Hydro-Electric Power Corporation-NHPC Company SWOT Analysis Report

Strengths

NHPC

Financial Statistics Sales: INR421.9bn (2009/10) INR269.8bn (2008/09) Net profit: INR20.9bn (2009/10) INR10.8bn (2008/09) Operating Statistics Electricity generation: 17.0TWh Market share: 2.1% Installed capacity: 5.3GW Generation share: 3.5% Employees: 12,341 Address NHPC Office Complex Sector-33 121003 Faridabad Haryana India Fax: +91 11 2277941 www.nhpcindia.com

• Dominant hydro generating portfolio.
• Growing market presence.
• State backing.
• Stock exchange listing.

Weaknesses

• State control reduces flexibility.
• Rising plant development costs.
• Lack of geographical diversification.

Opportunities

• Plant upgrading/expansion at home.
• Huge untapped hydro potential.
• Plans for diversification.

Threats

• Strong competition in domestic power market.
• Changes in national energy policy.

Company Analysis

NHPC has entered the privatisation phase, which may ultimately lead to changes in the company's development and strategy. In the meantime, it will continue to dominate India's hydro-power segment, while seeking diversification opportunities. Some 4.6GW of capacity is being developed, which should virtually double generating capability and increase significantly the group's market share. Another 7.7GW of projects are awaiting approval. Further privatisation can be expected.

Market Position

NHPC Limited (formerly known as National Hydro-electric Power Corporation), a government of India Enterprise, was incorporated in the year 1975 and with an objective to plan, promote and organise an integrated and efficient development of hydro-electric power in all aspects. Later on NHPC expanded its objects to include development of power in all its aspects through conventional and non-conventional sources in India and abroad. Installed capacity is around 5.18GW and the company in 2008 supplied 16.7TWh. Privatisation is now under way.

Strategy

At present, NHPC is engaged in the construction of 11 projects aggregating to a total installed capacity of 4.62GW. NHPC has added 1.97GW during the 10^th Plan period and planned to add 5.32GW during 11^th Plan period. Eight projects of 7.73GW are awaiting clearances/government approval for their implementation. Detailed project reports are being prepared for eight projects of 6.51GW.

Latest Developments

In 2010-2011 NHPC will add 692MW of power generation capacity, including a second unit at its Uri hydro-power project in Jammu and Kashmir, Parliament was informed in August 2010.

NHPC had set a 5.32GW target for the 11^th five-year plan. However, its chairman and managing director, S.K. Garg, sees a slip of 2.05GW by one year, which will be spilled over to the 12^th Plan. He added the company will commission delayed capacities by 2013.

Indian utilities Satluj Jal Vidyut Nigam Ltd (SJVNL) and NHPC are set to develop a 1.5GW hydro-power project in the state of Manipur, in India, reports The Economic Times. The project will have six power generating units of 250MW each. The project, with an investment of INR90bn (US$1.89bn), is expected to be completed within 12 years. SJVNL will own and operate the project in partnership with NHPC and the Manipur government. NHPC will hold a 69% stake in the project and SJVNL and Manipur government will hold a 26% and 5% respectively.

The initial public offer of NHPC was oversubscribed 23 times on its closing day on August 12 2009, according to The Economic Times. According to merchant banking sources, the portion of the issue for qualified institutional buyers was subscribed 29 times; for high net worth individuals it was subscribed 56 times while, for the retail segment, it was subscribed more than three times.