Reliance Energy Pvt Ltd. as a private monopolist

in electricity

Presented by,

107 – Nikunj Dholiya 111 – Siddhi Gor 120 – Shreya Modi 143 – Hiral Shah 147 – Saloni Shah 148 – Saumil Shah

Acknowledgement• I would like to express my deep and sincere gratitude to

my supervisor, Professor Krishna Vaishnav for giving us the opportunity to work on this project.

• We have taken efforts in this project. However, it would not have been possible without the kind support and help of many individuals and organizations. We would like to extend our sincere thanks to all of them.

• We are highly indebted to our group members for their guidance and constant supervision as well as for providing necessary information regarding the project & also for their support in completing the project.

Monopoly

• Monopoly is a market situation in which a firm has the sole right over production or sale of the product and it has no competitor in the market and no close substitute for its product.

• The monopolist is a price maker and not a price taker.

• When an individual or a private body controls the monopoly firm, it is regarded as private monopoly.

Features of Monopoly

• Single seller• Large number of buyers• No close substitutes• Entry barriers• No distinction between firm and industry• Price Maker• Downward sloping inelastic demand curve• Price discrimination

Types of Monopoly

• Pure Monopoly• Imperfect Monopoly or Implied Monopoly• Legal Monopoly• Technological Monopoly• Natural Monopoly• Joint Monopoly• Simple Monopoly• Discriminating Monopoly• Private Monopoly and Public Monopoly

About Reliance Power Ltd.• Reliance Power Limited is part of the Reliance Anil

Dhirubhai Ambani Group.• It was established to develop, construct and operate power

projects in the domestic and international markets. • Reliance Energy Limited, an Indian private sector power

utility company along with the Anil Dhirubhai Ambani Group promotes Reliance Power.

• Along with its subsidiaries, it is presently developing 13 medium and large-sized power projects with a combined planned installed capacity of 33,480 MW.

• Reliance Natural Resources merged with Reliance Power in 2010, shortly after its initial public offering.

Overview

• Industry : Electric utility• Founded : 2007• Headquarters : Navi Mumbai, India• Key people : Anil Ambani (Chairman)• Products : Electrical power & natural gas• Services : Electricity generation and distribution,

natural gas exploration, production, transportation and distribution

• Revenue : 1,892 crore (US$344.34 million) (2011)• Net income : 760 crore (US$138.32 million)(2011)

Background

• Serving over 25 million consumers in substantial areas of Mumbai, Goa, Delhi and Orissa.

• Powering 2 out of 3 homes in Mumbai and 1 out of 2 in Delhi.

• 7500 Schools, 3000 Hospitals, 250 Theatres, 5 Airports, 130 Railway Stations.

• Distributing over 5,000 MW of power – the largest in India.

• Power generation capacity of nearly 950 MW in Maharashtra, Goa, Andhra Pradesh, Kerala and Karnataka.

• India’s most valuable power company, with market capitalisation of over Rs. 10,000 crore.

• Annual revenues over Rs 6,400 crore.• Annual cash profits over Rs 600 crore.• Annual net profits over Rs 350 crore.• Top end credit ratings - rated ‘AAA’ by CRISIL/

ICRA/ FITCH

Supply ChainElectricity Generation covers a long chain from the fuel

source to the ultimate consumer of power.

SWOT ANALYSIS

• Reliance Energy Limited is a fully integrated utility engaged in the generation, transmission and distribution of electricity.

• The company is pursuing several gas, coal, wind and hydro-based power generation projects in India.

• The strong position of the company in the electric power industry provides it with benefits of economies of scale. However, such intense competition could adversely affect the margins of the company.

SWOT ANALYSIS

Strengths Weaknesses

Dominant market positionIncrease in revenues and incomesHigh level of vertical integration

Low margins compared to peers

Opportunities Threats

Investment of thermal power projectExpansion of power generating capacityIncreasing demand for power generation

Intense competitionPower theftsNatural calamities

Power ProjectsThe largest power generation portfolio under development in the private sector in India.

Coal based projects

• Rosa Phase I• Rosa Phase II• Butibori Power Project• Sasan Ultra Mega Power Project• Krishnapatnam Ultra Mega Power Project• Chitrangi Power Project• Tilaiya Ultra Mega Power Project

Gas Based Projects

Samalkot Power Project Dadri Power Project

Hydroelectric Projects• Tato II• Siyom• Urthing Sobla• Kalai II• Amulin• Emini• Mihundon

Mission• To attain global best practices and become a leading

power generating company.• To achieve excellence in project execution, quality,

reliability, safety and operational efficiency.• To relentlessly pursue new opportunities, capitalizing on

synergies in the power generation sector.• To consistently enhance our competitiveness and deliver

profitable growth.• To practice highest standards of corporate governance

and be a financially sound company.• To be a responsible corporate citizen nurturing human

values and concern for society.

• To improve the lives of local community in all our projects.

• To be a partner in nation building and contribute towards India’s economic growth.

• To promote a work culture that fosters learning, individual growth, team spirit and creativity to overcome challenges and attain goals.

• To encourage ideas, talent and value systems and become the employer of choice.

• To earn the trust and confidence of all stakeholders, exceeding their expectations.

• To uphold the guiding principles of trust, integrity and transparency in all aspects of interactions and dealings.

• To build a global enterprise for all our stakeholders• To be the largest private sector power generation

company in India• To be the largest hydro power generation company

in India• To be the largest green power company in India• To be the largest coal mining company in India

Generation Statistics

Hydro Nuclear

R.E.S Total

Coal Gas Diesel Total (MNRE)

State 27,380 49,457 4,965 603 55,025 0 3,514 85,919

Private 2,525 23,450 6,713 597 30,761 0 20,990 54,276

Central 9,085 39,115 6,702 0 45,817 4,780 0 59,683

Total 38,990 1,12,022

18,381 1,200 1,31,063

4,780 24,503 1,99,877

Thermal

Power generation capacity has increased from 1,362 MW in 1947 to 160,000 MW by mid of 2010.

As of March 31, 2012 India had an installed power capacity of almost 2,00,000 MW

Generation Strategy• “From Well Head to Wall Socket”• Environment friendly fuels – gas the preferred feedstock

• Adequate capacity to meet captive requirements of 5,000

MW, covering:

- Base Load

- Trading

• Offtake primarily by own customer base

• Location in proximity to customers

• Economies of scale, capital productivity,

lowest operating costs

Generation of power at the most competitive

unit costs globally