An overview of Strategic Analysis of Welsoun Energy Limited

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
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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
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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.
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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.
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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.
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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.
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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.
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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.
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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
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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.
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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.
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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
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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
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Gearbox R&D
in Belgium
Product &
Process Engg,
India
Technology
Campus
Germany
Engineering
Centre India
Innovation
Centre Europe

14. Presence in high growth markets
Right product for the right market
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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
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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.
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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
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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
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19. References
Web Pages
 http://www.google.co.in/
 http://www.welspun.com/
 http://www.welspuncorp.com
 http://www.welspunenergy.com/
 http://en.wikipedia.org/wiki/Electricity_sector_in_India
 en.wikipedia.org/wiki/Renewable_energy
 en.wikipedia.org/wiki/Solar_power_in_India
 http://www.mnre.gov.in/
 http://en.wikipedia.org/wiki/Jawaharlal_Nehru_National_Solar_Mission
 www.jnnsm.gov.in
 www.moneycontrol.com
Books and Journals
 Welwisher (CSR Journal of Welspun Corp. Ltd)
 Business Policy and Strategic Management ( Pro. Azhar Kazmi)
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