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  1. 1. A brief overview of Strategic Analysis of Submitted by- Supervised by- Mohd Kamran Yusuf Dr. Saboohi Naseem MBA(F) Associate Professor Faculty of Management Studies and Research, Aligarh Muslim University, Aligarh 0|Page
  2. 2. Table of Contents Sr. No Chapter 1 2 3 4 5 6 7 8 9 10 11 12 13 Executive Summary 2 Introduction to Welspun Energy Limited 3 Analysis of Vision, Mission & Core values 5 SWOT Analysis 7 Porter’s five forces analysis 8 Industry Analysis 9 Corporate Level Strategies 11 Business Level Strategies 12 Global Strategies 14 Risk and Mitigation Strategies 15 Challenges to WEL 16 Recommendations 17 References 18 1|Page Page No
  3. 3. “In the name Allah the most beneficent and the most merciful” Executive Summary This project is all about the Welspun Energy Limited company. Welspun Energy Limited is the company which is dealing in renewable energy. Welspun Energy is one of the is the largest companies of renewable energy in India. Project:  Provides all the crucial information on Welspun Energy Limited required for business and competitor intelligence needs.  Contains a study of the major internal and external factors affecting Welspun Energy Limited in the form of a SWOT analysis as well as a breakdown and examination of strategies of WEL.  Major factors contributing the success of Welspun Energy Limited through Porter’s five forces model as well as comparing that with its competitor Tata Power, Reliance Power and Suzlon Energy.  Analysis to industry with respect to the competitors of Welspun Energy Limited. With this project I have tried to understand the different business process identified by the energy producing Company, as well as analyzing its strength and weakness as compared to other company. 2|Page
  4. 4. Introduction Welspun Energy Limited The Welspun Group, a $3.5 billion conglomerate has diversified business interests with a major presence in the following industries: Energy Steel pipes Home Textiles & Retail Infrastructure With presence in over 50 Countries, over 22,000 employees and 100,000 shareholders, Welspun truly represent an amalgamation of expertise, resources, opportunities and engineering excellence. Welspun is considered one of the premier Global Line Pipe and Home Textile Companies. The group enjoys strong relationship with marquee clients including most of the Fortune 100 Companies. Welspun Energy Ltd. (WEL) is a leading independent developer of renewable energy projects with a vision to commission 1.75 GW of solar & wind projects by 2016. Presently more than 130 MW clean energy projects are operational and another 200 MW are under development in high radiation zones pan India. The generator has time and again demonstrated its ability to design, engineer and build solar & wind projects with high performance outputs and low cost - delivery period. Part of the US$ 3.5 billion Welspun group, WEL draws on the know-how of its specialized team of scientists and engineers to design projects by employing cutting edge technologies. Its emphasis of systems and processes has enabled Welspun Energy for flawless execution by consistently decreasing its on-ground development cycle. By integrating systems & processes and engineering excellence, WEL has achieved cost leadership in renewable energy space. Through its cost leadership, Welspun Energy has been instrumental in bringing the solar tariff close to grid parity. In its quest for ensuring energy security of the country, WEL has won and commissioned some of the most prestigious projects in the country. Its 50 MW Rajasthan solar project is India‟s largest solar project to date and has the distinction of being the fastest executed solar projects of this scale. Through its green power projects, the organization is working to fulfill its commitment to the people of the country and a greener environment. 3|Page
  5. 5. Solar Energy Welspun plans to be the pioneering organization to utilize the power of the sun. Welspun plans to install 750MW of solar power plants in the next three years. Through reverse bidding, Welspun won India‟s biggest solar power project of 130 MW in the state of Madhya Pradesh. Presently over 250 MW of power projects are being developed through partnerships with leading solar module and equipment manufacturers in order to enable efficiency at the highest level. The organization aims to develop a total of 550 MW solar capacities in the state of Karnataka alone and an additional 100 MW in Andhra Pradesh. Wind Energy The Indian wind energy sector has an installed capacity of 17,365.03 MW (as on March 31, 2012). India is ranked 5th in the World. India now ranks amongst the foremost wind energy markets globally. With an industry projected growth of 20% per year and a favorable policy ecosystem, Welspun Energy aims to develop 1000 MW of wind power projects in the next three years. The organization envisions developing wind power projects pan India, with Gujarat, Andhra Pradesh and Karnataka being focus states. 4|Page
  6. 6. Analysis of Vision, Mission & Core values VISION “OUR VISION IS TO CHANGE THE SOCIAL FABRIC OF INDIA BY EMPOWERING EVERY INDIAN. WE WILL DO IT BY LIGHTING UP INDIA WITH CLEAN , SUSTAINABLE ENERGY AND BY TRANSFORMING THE LIFE OF EVERY INDIAN THROUGH HEALTH, EDUCATION AND OPPORTUNITY” Analysis – From the above statement, it can be abstracted that Welspun Energy Limited is strongly adhered to making the benefit of their growth to every citizen of India, with a very great concern with the environmental values along with the social responsibilities. MISSION “OUR MISSION IS TO POWER A GREEN INDIA. WE ARE GOING TO HELP INDIA MEET HER GROWING ENERGY REQUIREMENTS IN AN EFFICIENT, ENVIRONMENT-FRIENDLY MANNER . IN THE NEXT SIX YEARS , WE WILL BECOME A FULLY -INTEGRATED POWER COMPANY BY SETTING UP RENEWABLE ENERGY BASED POWER PLANTS TO HELP MEET THIS GOAL” AnalysisIn above mentioned mission statement top management it is clearly seen that company wants to achieve its long term goals by making the country self-sufficient in energy consumption with eco-friendly technology. 5|Page
  7. 7. CORE VALUE Our values make us who we are. We do not lose sight of our values and stand by them always Passion : Our passion for business reflects in our work. Mutual Respect : Diversity of ideas, talent and experience is always encouraged. We treat others the way we would like them to treat us. Integrity : Honoring our commitments is the way of life for us. We always do the right thing and we take responsibility for our actions. Partnership: Collaboration is the key for long term growth and mutual advantage. Sustainability : We love the environment and respect the communities around us. We want to make the lives of the people better and greener. Wellbeing : Safety above all else is important to us AnalysisThe core values of Welspun Energy Limited are totally adhered to human values and they want follow them in long term .It is clear that Welspun does not want to make any compromise with the quality, integrity and ethics at any cost. 6|Page
  8. 8. SWOT Analysis of Welspun Energy Limited Strengths Efficient supply chain management  First Mover advantage in domestic market  Friendly environment  High market share nationally  Latest technology  High thin film PV manufacturing capacity in India  Strategic tie- ups with renowned companies(Suntech,Trina Solars,Canadian Solar) gives an opportunity to reduced cost & increased efficiency Weakness Less awareness about Welspun PV product portfolio in market.  Relatively small production capacity globally, resulting low economies of scale  High debt on the company  Lack of ecosystem  WEL is a subsidiary of Welspun Corporation Limited manufacturer of Towel, Steel Pipes is at maturity stage financial of which may supersede the solar subsidiary. Opportunity Increasing adoption of subsidy program around the world.  Indian announced JNNSM due to which a spur in demand is expected in Indian market.  Multitechnolgy technology platform to offer differentiated/customized solution to customers  Thin film technology is catching up in Indian market due to its suitability in hot weather and low  price in grid-connected segment.  Plans to touch 1750 MW production in next three years which will give high economies of scales. Threats Technology Obsolescence.  Dependence on government subsidies.  Increased competition with the entry og big players.  Raw materials‟ prices are expected to go up.  Political environment may affect the policy of JNNSM.  Constant technological innovation is required. 7|Page
  9. 9. Porter’s five forces analysis –Welspun Enrgy Limited Buyer Power (Moderate) Supplier Power (Moderate) Very few potential buyers High demand for composites Sensitive to Pricing Backward integration by Key Player Power Purchase Structure Industry Rivalry (Moderate to High) High exit costs Competitive pricing Large/Global Players Threat of Substitutes (Moderate to High) Entry Barriers (High) Investment costs in Technology Other renewable technologies Quality Control Standards Price substitution from conventional sources Lack if experience Falling oil and gas prices Access to resources 8|Page
  10. 10. Industry Analysis Major Competitors of Welspun Energy Limited Green Investing in India makes a great theme but investing in specific CleanTech companies is a tough task.Some of the biggest Renewable Energy Companies have led to serious losses eg. Suzlon or Moser Baer. However Renewable Energy in India has a great future and a rising tide will lift all boats. Note the list of solar power companies is growing by the day while there a number of wind energy companies in India as well. Then their are green utilities like Greenko, Orient Green Power that are building substantial alternative energy capacities as well. While writing about all the companies is big and probably not a very useful endeavor, here is a list o the Top 10 Alternative Energy/Clean Technology Companies in India. It is a subjective list and should be regarded as such. Suzlon Energy is the biggest Wind Energy Company by far with 4-5 Gigawatts of WTG Capacity per year. Its subsidiaries Hansen Transmission and RePower are also big players in the Wind Energy in Europe. The Company has seen its revenues and profits take a huge hit in recent times but has been recover in. This is primarily a Solar Panel Production Company which has recently made a big bet to get into the Power Production Space as well. Moser Baer Projects Private in which the Blackstone Group made a $300 million bet has plans of a 20:80 mix of Green and Dirty Power. The biggest private utility in India has big plans for Clean Energy as well. Its subsidiary Tata BP Solar is one of the biggest producers of solar panels and cells in the country. The company has huge plans in wind, solar and geothermal energy. It has also invested in a geothermal energy project in Indonesia.. This Chennai based company is the largest Green Utility in India with more than 200 MW of Renewable Energy Capacity mostly in Wind and Biomass. The company came out with one of the biggest IPOs in India in 2010. 9|Page
  11. 11. This is one of the biggest Green Utilities in India with around 200 MW of Electricity Capacity predominantly in small hydro and biomass plants.It is listed London’s AIM Exchange and has a top notch managment team.Its recent performance has been quite good and it is expanding rapidly. The biggest utility in India will obviously be a big renewable energy generator in the future as well.While currently it does not have much of renewable energy capacity,it has lined up massive investments in hydro and solar power.Its trading arm NVVN is the nodal agency for dispersing funds for solar plants under JNNSM. The company is part of the Baba Kalyani Group which is a major forgings manufacturer in India. It was bought over in 2007,when the Kalyani Group and PE firm First Reserve bought over the German company RSB Consult. The Company mainly makes 2 and 2.5 MW turbines and has production facilities both in India and Germany. It has wind design capabilities between 1-3.6 MW and with a powerful parent, it could become a success in the future. Amongst the newer wind energy companies like Lietnar, RRB Energy, Regen and WinWind,it looks like the one with most potential. Note you can an indirect exposure by investing in Bharat Forgings. Summary There are a number of other Green Companies like Lanco,Reliance Power that have the capacity to become big players once their solar plants are complete. Besides this foreign companies with a major presence in India are Siemens, Vestas, Gamesa, Enercon, Hong Kong Light and Power. Getting exposure to these companies requires investing in the home markets of their parents. 10 | P a g e
  12. 12. Corporate Level strategies – Welspun Energy Limited Improving Cost Efficiency Growth Acceleration Focus on High growth market  Develop next-generation products with focus on improving efficiency/cost-per-kWh  Increasing production capacity and strengthening vertical integration  Augmenting Management Bandwidth  Strong focus on driving global growth  Moving up Value Chain with comprehensive end-to-end solutions 11 | P a g e
  13. 13. Business level strategy –Welspun Energy ltd. Integrated Business Model  Allows customers to benefit from cost efficiencies and economies of scale in wind farm  Provides hassle free solutions to customers  Provides greater control over execution time line  Control of value chain from planning to maintenance  Leveraging experience across wind energy value chain Research and Development – Best of all World Wind turbine R&D in Germany Rotor blade R&D in Netherlands Vertical Integration 12 | P a g e Gearbox R&D in Belgium Product & Process Engg, India Technology Campus Germany Engineering Centre India Innovation Centre Europe
  14. 14. Presence in high growth markets Right product for the right market 13 | P a g e
  15. 15. Global strategy – Welspun Energy ltd. Expanding Global Presence  Australia - Sustainable and internationally competitive renewable energy industry  USA – It has outpaced Germany in terms of capacity  China - Favorable policies & targets  Foray into new markets – Brazil and Sri Lanka  India – Robust domestic demand Global Manufacturing Capacity  Manufacturing facilities in India, China, USA, and Germany  WEL has acquired forging and foundry capacity in India Global Acquisitions Hansen Transmission  Plugs critical gap in suzlon’s supply chain (gearbox - longest lead time)  Develops long term growth driver in terms of wind and industrial gearbox business REpower Systems AG  Entry into large European markets  Complimentary product portfolio - offshore technology  Improve REpower margins through synergy  Capitalize on know-how and brand equity 14 | P a g e
  16. 16. Risk and Mitigation Strategy of WEL SI 1. Component Risk Factor Land Timely Risk Mitigation Measures Acquisition appropriate of with land The total land requirement for the Project is around 320 acres out of which the Company has already purchased adequate radiation. around 158 acres of land. The balance land will be acquired shortly. 2. Technology Actual performance of modules affects the financial Crystalline technology has been chosen for this project based on detailed study. returns. 3. Engineering Basic Engineering, layouts and Plant WEL has got State of Art Engineering Centre at Noida Detailed with more than 100 technical people. This team is being engineering headed by Mr. S L Kapur who has earlier headed engineering team of NTPC and Reliance Power. With this team who has already engineered 5 solar projects, WEL is confident of using its engineering expertise to optimize the project 4. Vendor Sub-vendor identification and WEL has strong procurement and technical capabilities as demonstrated in successful implementation of 5 Solar Quality of the sub-vendor projects by the same team. Further our top management and promoters are actively involved in cultivating and promoting vendor relationship Accordingly WEL is committed to bring best vendors for the project 8. Long project operation leads Long term certain revenue stream with 20 Years PPA assurance to future revenue risks with TAN Implementation Implementation risk as project WEL has plan of implementing the projects within FY risk should be commissioned with 2014 and it is confident of doing so based on its past in timelines 9. Revenue experience of implementing projects before scheduled time. 15 | P a g e
  17. 17. Challenges – Welspun Energy ltd. 1.Transition to being a global supplier  Welspun Energy Limited has negative operating leverage  High start up costs for manufacturing facilities  Increased freight cost  Growth has been fragmented among a growing number of smaller, more dispersed markets 2.Increased uncertainty on Order Intake – Technology Issues  Blade crack issue - Incremental order intake from US will be challenging  Order sizes have shrunk - Credit availability, which could impact demand 3. Large capacity + Weak demand = Margin Pressure Industry majors are adding ~13,000MW  Pricing power will shift towards wind farm developers  Supply exceeding demand in the medium term 1.Working Capital Management  Huge inventory hold-up  Poor collections 16 | P a g e
  18. 18. Recommendations – Welspun Energy Limited  Sustained Research and Development efforts  Synergize with Repower  Reduction of inventory levels and focus on improving collections  Focus on offshore markets  Special attention to Chinese market  Leveraging on cost advantage (through backward integration and control on the supply chain)  Diversify into other renewable technologies like Solar PV and Biomass 17 | P a g e
  19. 19. References Web Pages            Books and Journals  Welwisher (CSR Journal of Welspun Corp. Ltd)  Business Policy and Strategic Management ( Pro. Azhar Kazmi) 18 | P a g e