Indian Power Industry

QUARTERLY PERFORMANCE ANALYSIS OF COMPANIES (October December 2011)
INDIAN POWER INDUSTRY
January 2012
Cygnus Business Consulting & Research Pvt. Ltd.

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QPAC-Indian Power Industry- October - December 2011
CONTENTS
EXECUTIVE SUMMARY.........................................................................................................3 INDUSTRY ANALYSIS ............................................................................................................5 OUTLOOK FOR THE SECTOR ...........................................................................................10 INTER-FIRM COMPARISON................................................................................................11 COMPANY ANALYSIS ..........................................................................................................14 1. CESC Ltd..........................................................................................................................14 2. Gujarat Industries Power Ltd ............................................................................................14 3. Adani Power .....................................................................................................................15 4. KEC International.............................................................................................................15 5. Kalpataru Power Transmission Ltd ...................................................................................16 6. Kei Industries Ltd .............................................................................................................16 7. N T P C LTD....................................................................................................................17 8. Neyveli Lignite Corporation Ltd........................................................................................17 9. P T C India Ltd .................................................................................................................18 10. Suzlon Energy Ltd...........................................................................................................18 11. Tata Power Ltd................................................................................................................19 SOURCES & METHODS FOR COMPANY PROJECTIONS...............................................20
Cygnus Business Consulting & Research Pvt. Ltd., 2012

EXECUTIVE SUMMARY
The Ministry of Power is the apex body responsible for the development of the power sector in India. In order to support the GDP growth rate of 8% per annum, the rate of growth of supply needs to be over 10% annually. The size of the power market is expected to grow more rapidly, with the emphasis on rural electrification and supply. Availability of power is one of the important ingredients for industrial growth. It is an important infrastructure facility without which no industrial activity could be thought of in modern times. Increase in automation of Indian industries created huge demand of power in India, resulting into demand supply gap in India in recent times. India is rich in coal reserves and is also endowed with vast exploitable potential of renewable energy in the form of solar, wind, bio-energy and urban and industrial wastes. At the central level, the Ministry of Non-Conventional Energy Sources (MNES), Ministry of Environment and Forest (MoEF), Ministry of Urban Development and Poverty Alleviation (MoUD &PA) and Ministry of Power (MoP) are the nodal ministries involved in formulating the administrative framework for non-conventional energy, environment, development and power generation respectively. India is the world's fifth largest generator of power after US, China, Japan and Russia, with a total capacity of 186.654 giga watts (GW) in 2011-12. Fossil fuels are the primary source of generation of electricity, accounting for 65% of the capacity. Coal accounts for over 50% of the total capacity (93.9 GW) and is the dominant fuel source. This is followed by hydro-electricity, which contributes 21.6% (or 37.6 GW) to the total power mix. The all India generation in the country increased from 771.551 BU during 2009-10 to 811.143 BU during the year 2010-11 As per Cygnus estimates, the Industry size for the quarter OND11 is estimated to be Rs261.63 billion in terms of sales showing an increase of 13% over OND10. On the basis of estimated that all India power generation grew by 9% yoy during October and November 2011, Coal generation was up by 10%, Hydro and Nuclear was up by around 15% and 14% respectively. Operating profit and net profit for the same period are estimated to be Rs50.01 billion reporting a decline of 12% and Rs30.10 billion respectively reporting a rise of 1%, the operating and net profit of the industry has more or less constant as compared to last quarter due slow growth of economy growth and increased cost pressure in terms of coal. NTPC is expected to post 11% yoy growth in revenues. Margin is expected to decline on yoy basis and on qoq basis. There was no significant capacity addition in this quarter along with lowers PLFs, will restrict margin improvement. Tata Power will post better results on improved coal realisataions. It is expected to register Rs18767.89m in OND11 from Rs16518.80m OND10 Which shows a growth of 14% yoy. However, lower realisations for its 200 MW merchant capacity will offset the growth. The additional sales volume from Maithon, which was commissioned in the previous quarter, is to be watched out. Other major players with significant sales are likely to be and Suzlon Energy, KEC International. PTC could also show slow growth in sales to touch figures of Rs14000.12 million showing a decrease of 20% compared to previous quarter. From Oct 1, 2011 to Dec 31, 2011 BSE Sensex registered negative growth from 18974.96points to 17983.86 points (5.22% negative growth). During this quarter, price of all the companies showed a negative growth except as well as positive growth in some cases like Tata Power, Neyveli lignite, and Adani Power as per BSE India price. GOI, under its Power for all by 2012 mission, plans to increase its per capita consumption to 100 Kw by 2012. This provides a tremendous investment opportunity in the Indian power generation market for both public and private sectors. Under Rajiv Gandhi Grameen Vidhyutikaran Yojana, Ministry of power is planning to achieve 100% rural electrification. The Government is also emphasising on the use of renewal resources of energy generation, like solar power, biomass, hydropower, biogas, and wind power.


The Central Electricity Authority (CEA) projected an energy shortfall of 10.3% and a peak shortage of 12.9% in the country during the current financial year (2011-12). The peaking shortage in the current financial year would prevail in all the regions, varying from 5.9% in the north-eastern (N-E) region to 14.5% in the south. The projected energy shortage in N-E will be 7.7%, compared to 11% in the western region. In the previous financial year, energy shortage was 8.5% and peak shortfall 9.8%. The economy grew at a creditable rate of 8.5% during the last five years, despite the global crisis, which affected every country irrespective of its size or the level of development. To be sure, there are valid concerns regarding inflation. Even so, it is widely acknowledged that the fundamentals of the economy are strong, and that India would continue to record impressive growth in the foreseeable future. As the economy grows, demand for power would only increase. Not only the demand comes from businesses across manufacturing and services sectors, consumer demand, which is limited to a small segment of the population, would increase significantly as more and more people have the incomes to afford energy intensive products and services. It is a foregone conclusion that India would see massive increase in generation capacities as well as T&D infrastructure. India is planning to halve the power deficit by 2012. The government took some major step like power generation target for the current five-year-plan, which ends in March 2012, to 62,000 MW from an initial estimate of 78,700 MW. There will be capacity addition due to which the deficit could be overcome in the coming quarters. As per the recent news in the power sector, that finance minister would come up with the suitable policy for power entrepreneur in term of increasing operating pressure in the industry. The pending issues can address by the concern authority. The outlook for India's power and utilities sector for 2011 is stable, on account of strong demand for power, continued investor interest in augmenting generation capacity and no unfavorable changes in the regulatory regime. According to CII, Indias energy sector would require an investment of around US$120-1580 billion over the next 5 years. Also, if India has to achieve a consistent over 8% GDP growth, then power generation needs to grow by around 11% to 12% per annum. Sector is likely to face challenges in FY12 and FY13 led by fuel constraints and SEB breaking down. SEBs continues to make losses despite of several tariff hikes in the last 18 months. Indian power sector discovered that the total installed capacity will add nearly 45,000 MW by 2013-14 to the existing production. In order to properly address the demand-supply gap, one effective solution lies in the efficient use of renewable energy sources. Renewable energy is the buzz word in Indian power sector and most of the public and private players are coming up with plans to tap the potential market

INDUSTRY ANALYSIS
The Indian Power Industry is one of the largest and most important industries in India as it fulfils the energy requirements of various other industries. India boasts the worlds 5th largest electricity generation capacity and it is the 6th largest energy consumer accounting for 3.4% of global energy consumption. In India, power is generated by State utilities, Central utilities and Private players. The state is a major contributor in the generation of power. The states contribution is 46%, Central 31% and private sector 23%. According to the Central Electricity Authority of India, the Power sector indicates growth of 5.5% in the financial year 2010-11. The power Generation recorded CAGR of 5.17% during the period 2002-2011. The total Installed Capacity of Power in India is 186654.62MW. Of this, more than 75% of the installed capacity is with the public sector (state and central), of which the state sector holds the largest share of 46%. Note: For calculations of Industry aggregates, 11 Companies are taken into consideration. They are: NTPC CESC Gujarat Industries, Kalpataru Power & Transmission KEC PTC Tata Power, Adani power, Suzlon Energy, Kei Industries, Neyveli Lignite.
300
Industry Aggregate (Rs in m) OND 11 (E) Net Sales 261629.5 Change (%) 13% EBITDA 50019.27 Change (%) -12% Depreciation 12644.04 Interest 10934.93 Other Income 11299.85 PBT 37740.16 Tax 13772.71 Effective tax rate 20% Reported PAT 30108.47 Change % 1% Market Cap(bn) 1705.16
Source: BSE India, Cygnus Research
Power Industry Revenue

Sales (LHS) % Growth (RHS) 261.63 20
250 Rs. bn 231.60
15
200 OND 10 (A) OND 11 (E) 13 70.0
Net Profit Vs NPM

34 29.79 27 Rs bn 30.11
Operating Profit Vs OPM
13
60.0
57.02 20 50.02
12 % 50.0 Rs bn
12
20 OND 10 (A) Net profit (LHS) OND 11 (E) NPM (RHS)
11
40.0 OND 10 (A) Operating profit (LHS) OND 11 (E) OPM (RHS)
Source: BSE India; Cygnus Research

% 12
%
10

According to Cygnus estimates, net sales of the industry for the quarter ending Dec, 2011 would increase by 16% and PAT will go up by 17%. Profits of power companies will be squeezed by increased coal prices fall in short-term selling rates for electricity and other operational expenses. Since there is no significant momentum from investments and capacity expansions side, depreciation charge is expected to increase slightly by 11% on the other side interest charge gone up by 20%. The companies are facing major challenge in the area of increased prices of coal and increase in the interest rate. Generation According to CEA, the electricity generation in the country during the month of December11 stood at 72718 MU with a growth rate of 8.02% corresponding to generation of 67322 MU during the same month last year. The growth rate during December10 was 5.03%. The cumulative electricity generation during April - December11 was 653446 MU with a growth rate of 9.23% over the same period last year. During April-December10 the corresponding growth rate was 4.67%. Coal based plants in the country achieved a growth rate of 11.06% during December11 over same month last year.
Installed Capacity of Power in India (2010-11)
Nuclear 3% RES 11% Other 65%
C oal 55%
Hydro 20%
Oil 1%
Source: CEA; Cygnus Research
Gas 10%
The actual generation from Coal based plants exceeded its program by 2232 MU. Cumulative generation of coal based plants during April-December11 also achieved a growth rate of 9.17% over same period last year. The electricity generation during the month from nuclear plants was 124.1% of the program. The growth rate of nuclear generation was7.88% with the corresponding month last year. The cumulative electricity generation during April11 December11 from nuclear plants was 125.53% of the program. The growth rate of nuclear generation was 33.24% with the corresponding month last year.
300 Domestic Irrigation 200 (BU) Others
Consuption of Electrical energy - Utility wise

C ommercial Industries
100
0 2007 - 08 2008 - 09 2009 - 10 2010 - 11 2011 - 12



Transmission The Government of India has an Transmission line in India till Sept 2011 ambitious mission of POWER FOR ALL BY 2012. This mission would require that the countrys installed generation capacity should be at least 2, 400 Kv 00,000 MW by 2012 from the present 77% 220 Kv level of 1, 14,000 MW. To be able to reach Other 10% this, power to the entire country and 13% 800 Kv expansion of the regional transmission 3% network and inter regional capacity to 132 Kv transmit power would be essential. The 3% 500 kV latter is required because resources are 7% unevenly distributed in the country and power needs to be carried great distances to areas where load centres exist. The Source Ministry of Power, Cygnus Research transmission system planning in the country in the past, is traditionally linked to generation projects as part of the evacuation system. Ability of the power system to safely withstand a contingency without generation rescheduling or loadshedding was the main criteria for planning the transmission system. However, due to various reasons such as spatial development of load in the network, non-commissioning of load centre generating units originally planned and deficit in reactive compensation, certain pockets in the power system could not safely operate even under normal conditions. This necessitated backing down of generation and operating at a lower load generation balance in the past. Transmission planning therefore moved away from the earlier generation evacuation system planning to integrate system planning. Certain provisions in the Electricity Act 2003 such as open access to the transmission and distribution network, recognition of power trading as a distinct activity, the liberal definition of a captive generating plant and provision for supply in rural areas are expected to introduce and encourage competition in the electricity sector. It is expected that all the above measures on the generation, transmission and distribution front would result in formation of a robust electricity grid in the country. State-owned Power Grid Corporation of India -- the central transmission utility -- alone transmits 50% of the total electricity generated in the country. According to estimates, India needs about Rs2720 billion for implementation of transmission and distribution schemes, of which only around Rs720 billion is expected to be mobilised by states, banks and financial institutions. PFC and REC recently conducted bidding for three ultra mega transmission lines. REC awarded two big power transmission projects to Reliance Infrastructure, while Sterile Technologies emerged as the winner of the PFC project. Central transmission utility Power Grid Corp would invest Rs580 billion for setting up network to facilitate evacuation of electricity from power surplus states to others. In a move that is expected to facilitate the implementation of the long-term open access regime in the country, the Central Electricity Regulatory Commission (CERC), on May 30, 2011, accorded regulatory approval to Power Grid Corporation of India Limited (PGCIL) to proceed with the execution of nine high capacity power transmission corridors (HCPTC), at an estimated total expense of Rs580.6 billion, for evacuation of power from various generation projects being developed by independent power producers (IPP).


Distribution While there have been declarations of 35 All India T&D and AT&C Loss intent at the Central Government level on privatizing distribution, a lot still needs to T & D loss be done. The Government recently set up 32 AT&C Loss a sub-group in the Planning Commission on Public Private Partnership in 29 distribution. The Planning Commission proposed to give incentives to SEBs 26 putting in efforts towards reducing losses. Distribution franchisee model is accepted by few States as the route to bring private 23 investments in the distribution business. However, there has been little inclination 20 to implement it. The Ministry of Power 2005-06 2006-07 2007-08 2008-09 2009-10 2010-11 plans to establish an integrated National Source: Ministry Of Power, Cygnus Research Power Grid in the country by 2012 with close to 200,000 MW generation capacities and 37,700 MW of inter-regional power transfer capacity. Considering that the current inter-regional power transfer capacity of 20,750 Mw, this is indeed an ambitious objective for the country. According to the 13th Finance Commission report, the T&D losses were about Rs400 billion in 2009-10, which would swell to Rs680 billion in the current fiscal if the tariff is not hiked from the 2008 levels. Power Ministry is going to implement new project at the cost of Rs515.77 billion to further reduce the T&D losses in India to 15%. South Korea, which succeeded in reducing its power transmission and distribution losses to a meagre 4%, would now help India do the same. Renewable Energy According to UNEP report globally, nearly Power from Renewable as on Mar 2011 80 GW of renewable power capacity was Grid-interactive renewable power Mw added, including 31 GW of hydro and 48 865.60 GW of non-hydro capacity. Wind power and Biomass Power (Agro residues) Wind Power 11807.00 solar PV additions reached a record high of 2735.42 38 GW and 7 GW, respectively. First time Small Hydro Power (up to 25 Mw) Cogeneration-bagasse 1334.03 investments in Green Energy in Asia and 64.96 Oceania, over US$ 40.8 billion in 2009 Waste to Energy Solar Power 10.28 exceeded that of Americas at US$32.3 billion. 404.56 The use of biomass and geothermal for Off-Grid/Distributed Renewable Power Total Achievement 17221.85 power and heat also grew strongly. As part of the National Action Plan on Climate Change, Source: MNRE; Cygnus Research the Government set the target of increasing contribution of renewable energy sources to power generations to 10% by 2015. The National Solar Mission presented an opportunity to grow the solar generation portfolio of the company and the company is looking forward to a 300 Mw market for installed capacity by 2013. Strengthening of Renewable Energy Certificate (REC) mechanism is expected to help manage the liquidity in the renewable energy market by allowing States that lack renewable energy sources to meet their Renewable Purchase Obligation (RPO). This would stimulate growth in the renewable energy space. There could be significant opportunities in this space depending on how the REC market evolves, and also on whether regulators penalize discoms that do not meet RPO. At present Indias renewable energy capacity (20162.24Mw) is more than 10% of total installed capacity, but real contribution to the power sector was lower than 5% hence it is important to bring it to above 10% to go towards as green power country. Wind energy leads all the renewable energy sources in terms of installed capacity. Wind energy resources are concentrated in a handful of Indian states like Tamil
%


Nadu, Andhra Pradesh, Gujarat, Maharashtra, Karnataka and Rajasthan. Due to increased wind power technology, presence of world class players in domestic wind market accelerates wind energy growth in the global wind market. The tariff rates of wind energy generated power are also much more competitive with the power generated from conventional fuels as compared to solar energy. The Government levied a cess of Rs50 a tonne on coal, to build the corpus of the National Clean Energy Fund According to UNEP and Renewable Energy Policy Network for the 21st Century (REN21) latest reports in 2011, both the US and Europe added more power capacity from renewable sources such as wind and solar for the second year in a row, than from conventional sources like coal, gas and nuclear. Renewable accounted for 60% of newly installed capacity in Europe and more than 50% in the USA in 2009. Wind power and solar PV additions reached a record high of 38 GW and 7 GW. India boast the 5th largest power generation capacity in the world with an installed capacity of 163 GW as on 30th June 2010, which is about 3% of global power generation capacity (Considering Global Capacity at 4800GW estimated by UNEP). As promotional measures, Indian government provided package of fiscal and financial incentives, which includes concessions such as 80% accelerated depreciation, confessional custom duty on specified items, excise duty exemption, sales tax exemption, and income tax exemption for 10 years. In addition, State Electricity Regulatory Commissions (SERCs) are determining preferential tariffs. Indian Renewable Energy Development Agency (IREDA) provides loan for setting up wind power projects. During 2009-10, the wind energy capacity grew up 15.3% with an addition of 1565 Mw. The state of Karnataka is planning to add 4,000 Mw of wind energy capacity in the next four years. Jawaharlal Nehru National Solar Mission Under Jawaharlal Nehru National Solar Mission, Indian Government set a target of 20,000 Mw by 2022 in 3 phases (first phase up to 2012-13, second phase from 2013-2017 and the third phase from 20172022) for various components, including grid connected solar power. The total aggregated capacity to be developed under bundling scheme in Phase-I of JNNSM shall be 1000 Mw. Under JNNSM, India expected to generate 1000 Mw solar power by 2013, with the financial assistance from Power Finance Corp., and Rural Electrification Corp. The country currently produces less than 5 Mw of solar power every year. Solar Photovoltaic Programme during FY 2010-11 With total budget outlay of Rs2240m, Ministry of Renewable Energy started this programme to finalise the off grid scheme under JNNSM. The Programme would provide Central Financial Assistance (CFA) to Implementing Agencies for deployment of SPV systems and related activities. Cost Structure Analysis For the industry, cost of fuel is the major cost contributor followed by cost of raw material, staff cost and power purchased. For thermal power generating companies like NTPC, CESC and Tata Power, major cost component is cost of fuel. It is highest for NTPC followed by Tata Power. In case of hydro power generating company (JP Hydro), the major cost components are interest and staff cost. For the power equipment manufacturing companies like KEI KEC Kalpataru and Suzlon, the major contributor is cost of erection. For power trading company, PTC India, cost of power purchased constitutes the major portion of cost. Except for Neyveli Lignite, staff cost forms a small part of cost structure of the companies. Industry Revenue As per Cygnus estimates, the power industry is estimated to touch revenues of Rs165.15 billion in OND 11 showing an increase of 20% over the same period previous year. During 2011, an increase in generation capacity and bidding for Ultra Mega Power Projects (UMPP), have taken place. All these are first-rate symbols of positive growth of the industry. Key changes would have taken place among major players during the quarter.


OPM decreased and increased operating cost As per Cygnus, operating profit for the quarter OND 11 is estimated to reach Rs47.89 billion from Rs43.00 billion in OND 11. OPM is estimated to be 29% in OND 11 as compared to 31 % during the same quarter of previous year. Operating expenditure like fuel cost and raw materials increased in OND 11 due to increase in price of coal and India is the importer of coal. NPM decreased and with increased need of power According to Cygnus, the net profit for OND 11 is expected to touch Rs38.25 billion, a decrease of 3% as compared to same period of previous year. NPM is estimated to be 16% in OND 11 as compared to 18% during the same quarter of previous year.
OUTLOOK FOR THE SECTOR

With the world population nearly doubling in the past three decades, the present surge in electricity demand and the projected increase of global population, the importance of available energy could not be underestimated. Globally, India is presently positioned as the fifth largest manufacturer of energy. Usually Energy, and especially electricity boasts a major contribution in speeding up the economic development of the country. The existing per capita electricity consumption is 704Kwh and is expected to touch 1000Kwh in the coming future. According to CII, Indias energy sector would require an investment of around US$120-1580 billion over the next 5 years. Also, if India has to achieve a consistent over 8% GDP growth, then power generation needs to grow by around 11% to 12% per annum. A massive amount of US$20 trillion is projected to be invested to meet the world's energy demand in 2030. The 11th Plan set a target for an additional 1700 Mw power generation capacity consisting of 500 Mw of biomass projects and 1200 Mw of biogas cogeneration projects by 2012. Based on governments plans, by 2012, a capacity addition of 22,900Mw would be identified for the private sector out of total target of around 107,000`Mw. The Government recently set up a sub-group in the Planning Commission on Public Private Partnership in distribution. At the global level, the most fundamental relationship in energy economics remains robust more people with more income means that the production and consumption of energy will rise. The Market Potential to sustain the GDP Growth rate of India @ 8% plus per annum needs the power sector to grow at 1.8 - 2 times the GDP rate of growth as espoused by economists, planners and industry experts. This would mean a YOY capacity addition of 18,000 - 20,000 MW to achieve this ambitious plan of moving India to a Developed Economy status, as an Economic Global Powerhouse. The Target Mission: POWER for All by 2012 would mean achieving the target of 1000 Kwh (Units) of per capita consumption of electricity by this period.

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INTER-FIRM COMPARISON
Operational Performance NTPC may continue as the leader in sales. Operational Performance OND 11 Vs OND 10 According to Cygnus estimates, National OND 10 (A) OND 11(E) % Growth Thermal Power Corporation (NTPC), 9390.00 11268.00 20% Indias biggest thermal power generator, is CESC Ltd 3077.50 3371.41 10% expected to continue as the leader in terms Gujarat Ind. of sales. The companys sales in OND 11 Adani Power 5026.02 11099.75 121% are estimated to have registered Rs155.15 KEC Int. 8693.60 11242.91 29% billion showing an increase of 11% 7930.40 9229.24 16% compared to the same quarter of previous Kalpataru 2841.07 3301.37 16% year. The company is also planning to set KEI Ind. up plant in Karnataka with the total NTPC 139638.10 155157.2 11% capacity of 4000MW in two stages. In the PTC 17580.08 14000.12 -20% phase of 1 of 2400MW, the project would 12213.60 14057.85 15% have super critical boilers and latest Suzlon 16518.80 18767.89 14% technology. Coal requirement will be met Tata Power from NTPC's own mine. Karnataka Neyveli Lignite 8692.10 10133.71 17% industrial area development area board Source: BSE India, Cygnus Research recently handed over 1923 acres of land Note: (A) Actual; (E) Expected requirement for the main plant. Land acquisition for the rest 1,600 acres is in progress. Financial Performance OND 11 Vs OND 10 Rs in million Suzlon Tata Power Neyveli Lignite OND 10 OND 11 OND 10 OND 11 OND 10 OND 11 12213.60 14057.85 16518.80 18767.89 8692.10 10133.71 9% 10% 20% 20% 13% 12% 35% 29% 9% 9% 10% 8%
Net sales NPM % OPM %
Financial Performance OND 11 Vs OND 10 Rs in million Kalpataru KEI Ind. NTPC PTC OND 10 OND 11 OND 10 OND 11 OND 10 OND 11 OND 10 OND 11 Net sales 7930.40 9229.24 2841.07 3301.37 139638.10 155157.2 17580.08 14000.12 NPM % 12% 11% 2% 2% 17% 15% 3% 1% OPM % 6% 6% 8% 8% 31% 21% 5% 2%

11

Financial Performance OND 11 Vs OND 10 CESC Ltd Gujarat Ind. Adani Power OND 10 OND 11 OND 10 OND 11 OND 10 OND 11 9390.00 11268.00 3077.50 3371.41 5026.02 11099.75 11% 10% 3% 5% 22% 19% 27% 25% 27% 28% 54% 50% Rs in million KEC Int. OND 10 OND 11 8693.60 11242.91 4% 4% 10% 9%
Net sales NPM % OPM %
According to Cygnus, JP Hydro is estimated to have posted an Operating profit margin of 88% for the quarter ended OND 11. NPM for the same period is estimated to be 12% due to slight increase in Depreciation and Financial charges. Other companies that are expected to have remarkable profits are NTPC (OPM of 21% and NPM of 15%), CESC (OPM of 25% and NPM of 10%). KEI Ltd is estimated to show NPM of 2% and OPM of 2%, Suzlon India is estimated to show NPM 10% and OPM 29%. Neyveli Lignite is estimated to have an NPM of 12% and OPM of 8. The company with the least margin is believed to be, with NPM estimated to be around 2% and OPM to be around 2%. Cost Structure The major portion of cost for power companies is in the form of Cost of Fuel/Raw Material, staff cost & other expenses. Fuel costs, for some companies, formed a big part in their total cost. KEI has the highest raw material expenses constituting 85.62% of sales followed by Adani power at 85.04%, NTPC at 68.38% and Tata Power at 65.03%. There are some companies which are having higher cost in other expenditure like KEC International, Kei and PTC India ltd. The other cost like staff cost charges is having in the range of 5-10% for the year. The major concern for the companies is increasing fuel and coal prices because of the above reasons there will be a lot of pressure in future. The raw material is in the range of 10-30% as per the requirement of the companies. Adani power, CESC Ltd and Kei Industries are having highest raw material cost. Cost Structure (as % of Net sales) OND 11 Vs OND 10 KECI Kalpataru Power Kei industries 2010 2011 2010 2011 2010 2011 0.00 0.00 1.51 3.00 -5.60 -7.00 10.44 15.88 0.00 0.00 0.00 0.00 0.00 0.00 46.58 48.00 83.55 84.00 10.12 9.93 5.38 5.00 2.25 3.00 52.50 49.63 34.85 33.00 11.45 12.00 7.35 6.49 1.49 1.36 1.49 1.36 7.35 6.83 2.79 2.74 5.16 4.97 2.88 2.53 2.46 2.32 0.44 0.45 Rs in million Industry 2010 2011 -0.33 -0.09 8.56 6.92 45.72 51.69 6.31 6.04 15.11 16.33 4.49 4.83 4.23 4.18 5.37 2.92
Stock Power Purchased Raw Material Staff cost Other expenses Depreciation Interest Tax

12

Cost Structure (as % of Net sales) OND 11 Vs OND 10 PTC India Suzlon Tata Power 2010 2011 2010 2011 2010 2011 0.00 0.00 20.36 -0.15 0.00 0.00 97.34 97.78 1.19 1.00 2.39 9.52 0.00 0.00 53.63 70.04 55.51 55.03 0.14 0.23 14.11 2.69 3.79 3.55 0.17 0.29 25.29 50.67 6.94 2.10 0.07 0.08 6.25 2.22 5.55 4.95 0.04 0.82 44.05 10.02 5.84 4.23 0.95 0.47 0.15 9.68 6.62 4.82 Rs in million Industry 2010 2011 -0.33 -0.09 8.56 6.92 45.72 51.69 6.31 6.04 15.11 16.33 4.49 4.83 4.23 4.18 5.37 2.92 Rs in million Industry 2010 2011 -0.33 -0.09 8.56 6.92 45.72 51.69 6.31 6.04 15.11 16.33 4.49 4.83 4.23 4.18 5.37 2.92
Stock Power Purchased Raw Material Staff cost Other expenses Depreciation Interest Tax
Cost Structure (as % of Net sales) OND 11 Vs OND 10 NTPC Neyveli Lignite 2010 2011 2010 2011 Stock 0.00 0.00 2.08 2.00 Power Purchased 0.00 0.00 0.00 11.00 Raw Material 59.72 68.38 0.00 15.00 Staff cost 4.93 4.68 46.42 40.00 Other expenses 4.56 6.39 38.72 20.00 Depreciation 4.29 4.73 11.00 10.00 Interest 3.53 2.92 3.01 2.94 Tax 7.44 3.51 2.79 3.11

13
COMPANY ANALYSIS
1. CESC Ltd
Quarter OND 11 (E) 11268.00 2766.96 731.40 770.00 223.71 1489.27 285.00 1204.27 25% 10% 19% Growth Rate % YoY 20% 9% 6% 12% 2% 9% 6% 9% (Rs in million) Full Year Ended March March Growth 10 (A) 11 (A) Rate % 33650.00 40150.00 19% 8220.00 10730.00 31% 2060.00 2670.00 30% 1780.00 2710.00 52% 840.00 740.00 -12% 5220.00 6090.00 17% 890.00 1220.00 37% 4330.00 4870.00 12% 24% 27% 13% 12% 17% 20%
Item Net Sales EBITDA Depreciation Interest Other Income PBT TAX PAT OPM NPM Tax Rate
OND 10 (A) 9390.00 2530.00 690.00 690.00 220.00 1370.00 270.00 1100.00 27% 11% 20%
JFM 12 (P) 10746.93 2686.75 710.00 752.28 214.95 1439.42 290.00 1149.42 25% 10% 20%
Source: Cygnus Research Note: A: Actuals; E: Estimated; P: Projected
2. Gujarat Industries Power Ltd

Quarter OND 11 (E) 3371.41 932.28 411.28 285.53 2.45 237.92 83.97 153.95 28% 5% 35% Growth Rate % YoY 10% 14% 6% 7% 23% 43% 8% 74% (Rs in million) Full Year Ended March March Growth 10 (A) 11 (A) Rate % 9498.60 10894.60 15% 2295.40 3124.80 36% 880.40 1250.80 42% 162.40 703.40 333% 31.10 40.20 29% 1283.70 1210.80 -6% 215.90 -418.70 -294% 1067.80 1629.50 53% 24% 29% 11% 15% 17% -35%
OND 10 (A) 3077.50 818.60 388.10 266.50 2.00 166.00 77.60 88.40 27% 3% 47%
JFM 12 (P) 3239.20 939.37 415.20 300.20 12.75 236.72 65.30 171.42 29% 5% 28%

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3. Adani Power
Quarter OND 11 (E) 11099.75 5537.87 1109.98 1553.97 15.23 2889.16 722.29 2166.87 50% 19% 25% Growth Rate % YoY 121% 103% 144% 192% 0% 64% 8% 99% (Rs in million) Full Year Ended March March Growth 10 (A) 11 (A) Rate % 7177.90 8407.40 17% 6349.30 7235.80 14% 951.00 949.10 0% 2364.30 4121.10 74% 0.00 0.00 0% 3034.00 2165.60 -29% 518.50 411.60 -21% 2515.50 1754.00 -30% 88% 86% 35% 21% 17% 19%
OND 10 (A) 5026.02 2729.72 454.77 531.67 14.96 1758.24 667.14 1091.10 54% 22% 38%
JFM 12 (P) 11377.25 5616.80 1137.72 1479.04 17.25 3017.29 754.32 2262.97 49% 20% 25%
4. KEC International
Quarter OND 11 (E) 11242.91 1011.86 91.16 275.52 0.00 645.18 176.70 468.48 9% 4% 27% Growth Rate % YoY 29% 19% 6% 12% 0% 25% 7% 33% (Rs in million) Full Year Ended March March Growth 10 (A) 11 (A) Rate % 38782.30 39653.20 2% 3867.20 3719.40 -4% 262.40 344.90 31% 865.30 986.60 14% 0.00 0.00 0% 2739.50 2387.90 -13% 1029.60 917.00 -11% 1709.90 1470.90 -14% 10% 9% 4% 4% 38% 38%
OND 10 (A) 8693.60 847.90 86.00 246.40 0.00 515.50 164.40 351.10 10% 4% 32%
JFM 12 (P) 16884.37 1350.75 95.71 310.68 0.00 944.36 283.31 661.05 8% 4% 30%

15
5. Kalpataru Power Transmission Ltd

Quarter OND 11 (E) 9229.24 1015.22 125.08 252.51 120.00 757.63 214.09 543.54 11% 6% 28% Growth Rate % YoY 16% 10% 6% 14% 4% 8% 10% 7% (Rs in million) Full Year Ended March March Growth 10 (A) 11 (A) Rate % 25973.70 28786.90 11% 3047.70 3362.50 10% 382.40 459.30 20% 722.50 801.50 11% 333.20 464.40 39% 2276.00 2566.10 13% 571.40 660.20 16% 1704.60 1905.90 12% 12% 12% 6% 7% 25% 26%
OND 10 (A) 7930.40 926.40 118.00 221.50 115.70 702.60 194.80 507.80 12% 6% 28%
JFM 12 (P) 9470.89 947.09 130.45 270.75 170.00 715.89 215.76 500.13 10% 5% 30%
6. Kei Industries Ltd

Quarter OND 11 (E) 3301.37 264.10 44.97 164.20 15.98 70.91 15.01 55.90 8% 2% 21% Growth Rate % YoY 16% 11% 6% 12% 9% 13% 20% 11% (Rs in million) Full Year Ended March March Growth 10 (A) 11 (A) Rate % 9104.210 11645.630 28% 732.550 892.290 22% 146.760 166.100 13% 443.960 583.210 31% 30.770 35.880 17% 172.600 178.860 4% 30.280 73.290 142% 142.320 105.570 -26% 8% 8% 2% 1% 18% 41%
OND 10 (A) 2841.07 237.21 42.45 146.61 14.65 62.80 12.51 50.29 8% 2% 20%
JFM 12 (P) 4071.32 311.45 47.77 200.90 17.58 80.36 18.76 61.60 8% 2% 23%

16
7. N T P C LTD
Quarter OND 11 (E) 155157.21 31895.59 7344.63 4523.61 7982.99 28010.34 5452.00 22558.34 21% 14% 19% Growth Rate % YoY 11% -26% 23% -8% 295% -18% -48% -5% (Rs in million) Full Year Ended March March Growth 10 (A) 11 (A) Rate % 482213.2 583597.8 21% 143191.2 157963.1 10% 26500.6 24856.9 -6% 18089.3 21490.8 19% 10253.3 8880.6 -13% 108854.6 120496.0 11% 21572.6 29470.1 37% 87282.0 91025.9 4% 30% 27% 18% 15% 20% 24%
OND 10 (A) 139638.10 43002.70 5985.50 4931.80 2020.90 34106.30 10391.50 23714.80 31% 17% 30%
JFM 12 (P) 179755.10 45028.98 7400.28 5935.44 2261.16 33954.42 8721.00 25233.42 25% 14% 26%
8. Neyveli Lignite Corporation Ltd

Quarter OND 11 (E) 10133.71 1216.04 1013.04 297.54 1387.75 1293.21 315.38 977.83 12% 8% 24% Growth Rate % YoY 17% 9% 6% 14% 6% 7% 30% 2% (Rs in million) Full Year Ended March March Growth 10 (A) 11 (A) Rate % 41210.30 39490.80 -4% 12936.00 12861.40 -1% 2538.90 4128.70 63% 335.80 1590.70 374% 5987.30 9703.50 62% 16048.60 16845.50 5% 3574.00 3862.20 8% 12474.60 12983.30 4% 31% 33% 26% 26% 22% 23%
OND 10 (A) 8692.10 1111.00 955.70 261.20 1309.20 1203.30 242.60 960.70 13% 10% 20%
JFM 12 (P) 10157.37 1929.90 1250.69 495.00 1484.89 1669.10 500.73 1168.37 19% 10% 30%

17
9. P T C India Ltd
Quarter OND 11 (E) 14000.12 238.35 11.21 115.00 51.03 163.17 65.12 98.05 2% 1% 40% Growth Rate % YoY -20% -42% -15% 1384% -67% -70% -61% -74% (Rs in million) Full Year Ended March March Growth 10 (A) 11 (A) Rate % 77723.13 90645.51 17% 660.70 1414.89 114% 55.21 50.34 -9% 3.74 11.23 200% 718.03 615.24 -14% 1319.78 1968.56 49% 376.92 576.43 53% 942.86 1392.13 48% 1% 2% 1% 2% 29% 29%
OND 10 (A) 17580.08 411.86 13.14 7.75 154.89 545.86 166.31 379.55 2% 2% 30%
JFM 12 (P) 16012.12 632.57 11.68 128.10 65.96 558.75 130.00 428.75 4% 3% 23%
10. Suzlon Energy Ltd

Quarter Item Net Sales EBITDA Depreciation Interest Other Income PBT TAX PAT OPM NPM Tax Rate OND 10 (A) 12213.60 1087.50 375.40 1408.90 708.80 12.00 0.00 12.00 9% 0% 0% OND 11 (E) 14057.85 1363.61 397.92 1512.81 562.31 15.20 3.04 12.16 10% 0% 20% JFM 12 (P) 18066.73 2419.48 507.53 1589.21 895.52 1218.27 182.74 1035.53 13% 5% 15% Growth Rate % YoY 15% 25% 6% 7% -21% 27% 0% 1% (Rs in million) Full Year Ended March March Growth 10 (A) 11 (A) Rate % 35089.30 43663.90 24% -6817.20 1427.70 NA 1262.70 1568.90 24% 6535.90 5780.40 -12% 2228.90 3316.70 49% -12386.90 -2604.90 NA 1754.00 -748.30 -143% -14140.90 -1856.60 NA -19% 3% -38% -4% -14% 29%

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11. Tata Power Ltd

Quarter OND 11 (E) 18767.89 3753.58 1363.37 1184.25 938.39 2144.35 294.33 1850.02 20% 9% 14% Growth Rate % YoY 14% 13% 6% 8% 10% 20% 13% 21% (Rs in million) Full Year Ended March March Growth 10 (A) 11 (A) Rate % 70982.70 69184.80 -3% 18622.60 15458.00 -17% 4779.40 5101.40 7% 4066.40 4168.90 3% 2815.80 4935.80 75% 12592.60 11123.50 -12% 3205.00 1708.60 -47% 9387.60 9414.90 0% 26% 22% 13% 13% 25% 15%
OND 10 (A) 16518.80 3318.90 1286.20 1094.90 852.40 1790.20 259.50 1530.70 20% 9% 14%
JFM 12 (P) 20026.18 4205.50 1294.15 1250.95 1001.31 2661.71 360.55 2301.16 21% 11% 14%

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SOURCES & METHODS FOR COMPANY PROJECTIONS

Sources Company annual reports Press releases BSE India Research reports related to Economy, Industry and Company Methods Understanding companies product services Understanding industry and economic indicators and general economic scenario Understanding the dynamics between the companies and the industry in relation to demand and supply, technology, regulation, inflation, etc Understanding recent strategies and initiatives taken by companies such as product launches, capacity additions and M&As Making revenue projections based on the expected business strategies and financial analysis Validating the financial projections of the company with the overall business strategy Calculating the cost structure on the basis of sales and past and present trends in the industry Analysing quarterly growth rates and growth rates of last 8 quarters
The cut-off date for OND quarter results is January 20, 2012. Quarterly performance analysis of companies announcing their results after this date is based on Cygnus estimates.

20

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QUARTERLY PERFORMANCE ANALYSIS OF COMPANIES (October December 2011)

INDIAN POWER INDUSTRY

Cygnus Business Consulting & Research Pvt. Ltd.

QPAC-Indian Power Industry- October - December 2011

Cygnus Business Consulting & Research Pvt. Ltd., 2012

QPAC-Indian Power Industry- October - December 2011

Cygnus Business Consulting & Research Pvt. Ltd., 2012

QPAC-Indian Power Industry- October - December 2011

Cygnus Business Consulting & Research Pvt. Ltd., 2012

QPAC-Indian Power Industry- October - December 2011

Power Industry Revenue

250 Rs. bn 231.60

200 OND 10 (A) OND 11 (E) 13 70.0

Net Profit Vs NPM

Operating Profit Vs OPM

20 OND 10 (A) Net profit (LHS) OND 11 (E) NPM (RHS)

Source: BSE India; Cygnus Research

Cygnus Business Consulting & Research Pvt. Ltd., 2012

QPAC-Indian Power Industry- October - December 2011

Consuption of Electrical energy - Utility wise

0 2007 - 08 2008 - 09 2009 - 10 2010 - 11 2011 - 12

Cygnus Business Consulting & Research Pvt. Ltd., 2012

QPAC-Indian Power Industry- October - December 2011

Cygnus Business Consulting & Research Pvt. Ltd., 2012

QPAC-Indian Power Industry- October - December 2011

Cygnus Business Consulting & Research Pvt. Ltd., 2012

QPAC-Indian Power Industry- October - December 2011

Cygnus Business Consulting & Research Pvt. Ltd., 2012

QPAC-Indian Power Industry- October - December 2011

OUTLOOK FOR THE SECTOR

Cygnus Business Consulting & Research Pvt. Ltd., 2012

QPAC-Indian Power Industry- October - December 2011

Net sales NPM % OPM %

Source: BSE India; Cygnus Research

Cygnus Business Consulting & Research Pvt. Ltd., 2012

QPAC-Indian Power Industry- October - December 2011

Net sales NPM % OPM %

Source: BSE India; Cygnus Research

Source: BSE India; Cygnus Research

Cygnus Business Consulting & Research Pvt. Ltd., 2012

QPAC-Indian Power Industry- October - December 2011

Source: BSE India; Cygnus Research

Cygnus Business Consulting & Research Pvt. Ltd., 2012

QPAC-Indian Power Industry- October - December 2011

Source: Cygnus Research Note: A: Actuals; E: Estimated; P: Projected

2. Gujarat Industries Power Ltd

Source: Cygnus Research Note: A: Actuals; E: Estimated; P: Projected

Cygnus Business Consulting & Research Pvt. Ltd., 2012

QPAC-Indian Power Industry- October - December 2011

Source: Cygnus Research Note: A: Actuals; E: Estimated; P: Projected

Source: Cygnus Research Note: A: Actuals; E: Estimated; P: Projected

Cygnus Business Consulting & Research Pvt. Ltd., 2012

QPAC-Indian Power Industry- October - December 2011

5. Kalpataru Power Transmission Ltd

Source: Cygnus Research Note: A: Actuals; E: Estimated; P: Projected

6. Kei Industries Ltd

Source: Cygnus Research Note: A: Actuals; E: Estimated; P: Projected

Cygnus Business Consulting & Research Pvt. Ltd., 2012

QPAC-Indian Power Industry- October - December 2011

Source: Cygnus Research Note: A: Actuals; E: Estimated; P: Projected

8. Neyveli Lignite Corporation Ltd

Source: Cygnus Research Note: A: Actuals; E: Estimated; P: Projected