Industry Profile: Power is one critical component for the development of the economy. Lack of availability of power is not sustainable for growth and development. India is one of the countries having diverse sources of natural resources like Water, Coal, Lignite, Natural Gas, Oil, Nuclear power, and wind which also help the development of the power sector. Electricity demand in the country has increased rapidly and is expected to rise further in the years to come. To meet the increasing demand for electricity in the country, massive addition to the installed generating capacity is required. India ranked third among 40 countries in EY’s Renewable Energy Country Attractiveness Index, on the back of a strong focus by the Government on promoting renewable energy and implementation of projects in a time-bound manner and moved up 73 spots to rank 26th in the World Bank’s list of electricity accessibility in 2017.
The power sector in India is undergoing a significant change that has redefined the industry outlook. Sustained economic growth continues to drive electricity demand in India. In addition, the Government of India’s focus on attaining ‘Power for all’ has accelerated capacity addition in the country. At the same time, the competitive intensity is increasing at both the market and supply sides (fuel, logistics, finances, and human resources).
The total installed capacity of power stations in India stood at 330,260.53 Megawatt (MW) as of May 2017. The Ministry of Power has set a target of 1,229.4 billion units (BU) of electricity to be generated in the financial year 2017-18, which is 50 BU higher than the target for 2016-17. The annual growth rate in renewable energy generation has been estimated to be 27 percent and 18 percent for conventional energy.
The Government has added 10.2 Giga Watts (GW) of conventional energy generation capacity and 12.5 GW of renewable energy capacity in the Financial Year 2017. As a result, under the 12th Five Year Plan, the Government has added 93.5 GW of power generation capacity, surpassing its target of 88.5 GW during the period.
Company Profile. : Tata Power, an Electric Utility Company, was founded in 1910. The company’s core business is to generate, transmit and distribute electricity. The company has operations in India, Singapore, Indonesia, South Africa, and Bhutan and has functions based in 35 locations in India. The thermal power plant in Trombay in Mumbai, Mundra in Gujarat (4000 MW UMPP), Jojobera and Jharkhand, Kalinga Nagar in Orissa, and Haldia in West Bengal. The hydro stations are located in the Western Ghats of Maharashtra, and the wind farms in Ahmednagar, Supa. The company also operates and maintains in the Middle East and South Africa. The strategic engineering division of the company is also used in defense and engineering and working for pinaka launchers.
Shareholding Pattern. : BSE Data
Financials and Ratios : [table id=77 /]
Future Prospects: Although the company had grand parentage, its management was incorrect. The concept of UMPP is good, but its cost is very high. This is visible even on the balance sheet and Ratios. Moreover, the company is holding a stake in group companies which is like having unnecessary risk when Tata Sons can buy from it. The company is also in the business of Defence. Why? Tata Motors and Nelco are sufficient for that. Right now, it is not advisable to invest in this company.
