The objectives of the Issue are to achieve the benefits of listing on the Stock Exchanges & to raise capital:-  For the implementation of certain identified transmission projects. To partly disinvest the government stake.

1. GRAND PROJECT
IPO Analysis and Interpretation of Power
Grid Corporation of India
FINANCIAL SYSTEMS AND MARKETS
PGDM 2015-17
Enrollment No. 1011517068
Guided By
Professor Tirthank Shah
Submitted By
Prakash Chandrashekar

2. 1 | P a g e
Table of Contents
1. Introduction to Indian IPO Market...................................................................................... 2
2. Introduction to Power Grid Corporation of India .............................................................. 4
3. Objective for the Company to issue IPO.............................................................................. 5
3.1 Issue Details...........................................................................................................................5
4. Balance Sheet and Profit/Loss statement of PGCIL ........................................................... 5
Findings from Balance Sheet of the Company.........................................................................9
Findings from Profit and loss statement...................................................................................9
5. Financial Ratios of Power Grid Corporation of India ......................................................10
Interpretation............................................................................................................................10
Liquidity Ratios......................................................................................................................10
Profitability Ratios..................................................................................................................11
Valuation Ratios.....................................................................................................................11
6. Highlights of FY 2015-16 .....................................................................................................12
Interpretation............................................................................................................................12
7. Share Price Performance of Power Grid Corporation of India.......................................14
Interpretation............................................................................................................................14
8. Share Holding Pattern of Power Grid Corporation of India ...........................................16
Interpretation............................................................................................................................16
9. Conclusion.............................................................................................................................17
Advantages of Power Sector....................................................................................................17
Strategies adopted by power sector beneficial to Power Companies...................................19
Future Aspects of Power Sector ..............................................................................................20
Executive Summary of Project................................................................................................20

3. 2 | P a g e
1. Introduction to Indian IPO Market
An initial public offering (IPO), referred to simply as an offering or flotation, is when a
company (called the issuer) issues common stock or shares to the public for the first time.
A corporate may raise capital in the primary market by way of an initial public offer, rights
issue or private placement. An Initial Public Offer (IPO) is the selling of securities to the
public in the primary market. It is the largest source of funds with long or indefinite
maturity for the company. Requirement of funds in order to finance the business activities
motivates small entrepreneurs to approach the new issue market. Initial Public Offer (IPO)
is a route for a company to raise capital from investors to meet the expenses for its projects
and to get a global exposure by listed in the Stock Exchange. An Initial Public Offer (IPO)
is the selling of securities to the public in the primary stock market. Company raising
money through IPO is also called as company Going Public. From an investor’s point of
view, IPO gives a chance to buy shares of a company, directly from the company at the
price of their choice. Many a times there is a big difference between the price at which
companies decides for their shares and the price on which investor are willing to buy shares
and that gives good listing gain for shares allocated to the investor in IPO. From a
company’s perspective, IPO’s help them to identify their real value which is decided by
millions of investors once their shares are listed on stock exchanges. IPO's also provide
funds for their future growth or for paying their previous borrowings.
IPOs are often issued by smaller, younger companies seeking capital to expand, but can
also be done by large privately owned companies looking to become publicly traded. When
a company lists its securities on a public exchange, the money paid investors for the newly-
issued shares goes directly to the company in contrast to a later trade of shares on the
exchange, where the money passes between investors. An IPO, therefore, allows a company
to tap a wide pool of investors to provide it with capital for future growth, repayment of
debt or working capital. IPO can be used as both a financing strategy and an exit strategy.
In an exit strategy for existing investors, IPOs may be used to offload equity holdings to
the public through a public issue. A company selling common shares is never required to
repay the capital to investors. Once a company is listed, it is able to issue additional
common shares via a secondary offering, thereby again providing itself with capital for

4. 3 | P a g e
expansion without incurring any debt. This ability to quickly raise large amounts of capital
from the market is a key reason many companies seek to go public.
There are several benefits for being a public company, namely:
 Buttressing and diversifying equity base
 Creating multiple financing opportunities: equity, convertible debt, cheaper bank
loans, etc.
 Increased liquidity for equity holder
 Enabling cheaper access to capital
 Exposure, prestige and public image
 Attracting and retaining better management and employees through liquid equity
participation
 Facilitating acquisitions

5. 4 | P a g e
2. Introduction to Power Grid Corporation of India
Incorporated in 1989, Power Grid Corporation of India Limited (PGCIL) is Indian
government owned, public sector enterprise. PGCIL is in the business of transmission of
electric power in India. It owns and operates a large network of transmission lines and
infrastructure that constitutes most of India’s interstate and inter-regional electric power
transmission system and carries electric power across India.
Power grid was incorporated on October 23, 1989 under the Companies Act, 1956
with an authorized share capital of Rs. 5,000 Crore as a public limited company, wholly
owned by the Government of India. It is a Navaratna central public sector enterprise which
is India’s largest power transmission utility and a listed company since 2007. Its Domestic
credit rating is ‘stable/Highest safety rating’, AAA by CRISL, CARE and ICRA. Its
International credit rating is on par with Sovereign rating i.e, BBB- by Fitch and S&P.
The Indian Power system for planning and operational purposes is divided into five
regional grids. The integration of regional grids, and thereby establishment of National
Grid, was conceptualised in early nineties. The integration of regional grids which began
with asynchronous HVDC back-to-back inter-regional links facilitating limited exchange
of regulated power was subsequently graduated to high capacity synchronous links between
the regions. The initial inter-regional links were planned for exchange of operational
surpluses amongst the regions. However, later on when the planning philosophy had
graduated from Regional self-sufficiency to National basis, the Inter-regional links were
planned associated with the generation projects that had beneficiaries across the regional
boundaries.
Synchronisation of all regional grids will help in optimal utilization of scarce
natural resources by transfer of Power from Resource centric regions to Load centric
regions. Further, this shall pave way for establishment of vibrant Electricity market
facilitating trading of power across regions. One Nation One Grid shall synchronously
connect all the regional grids and there will be one national frequency.
The Company was initially called as ‘National Power Transmission Corporation
Limited’, with the responsibility of planning, executing, owning, operating and maintaining
the high voltage transmission systems country. It received a certificate for commencement
of business on November 8 1990. The name of the Company was changed to its present
name ‘Power Grid Corporation of India Limited’ and a fresh certificate of incorporation

6. 5 | P a g e
was issued on October 23, 1992. The name of the Company was changed to its present
name from ‘National Power Transmission.
PGCIL is also into the consultancy business and has provided transmission-related
consultancy services to more than 90 clients in over 200 domestic and international
projects. PGCIL is also into the telecommunications business and own and operate a fibre-
optic cable network for telecom business in India.
3. Objective for the Company to issue IPO
The objectives of the Issue are to achieve the benefits of listing on the Stock Exchanges &
to raise capital:-
 For the implementation of certain identified transmission projects.
 To partly disinvest the government stake.
 To bolster expansion of its telecommunications network as it owns and operates
fibre optic cable network.
3.1 Issue Details
 Issue open: September 10, 2007 to September 13, 2007
 Issue type: Book Built Issue IPO
 Issue size: 573,932,895 Equity Shares of Rs.10 aggregating up to Rs.
2984.45 crores
 Face Value: Rs. 10 per Equity Share
 Issue price: Rs.44 to Rs.52 per equity share
 Market lot: 125 shares
 Minimum order quantity: 125 shares
 Listing at: BSE, NSE
4. Balance Sheet and Profit/Loss statement of PGCIL
The below two tables are balance sheet and P/L statement for years 2007 to 2016:

7. Balance Sheet of Power Grid Corporation of India
All values in Rs. Crores Pre IPO Post IPO
Mar-07 Mar-08 Mar-09 Mar-10 Mar-11 Mar-12 Mar-13 Mar-14 Mar-15 Mar-16
EQUITIES AND LIABILITIES
SHAREHOLDER'S FUNDS
Equity Share Capital 3787.41 4208.84 4208.84 4208.84 4629.73 4629.73 4629.73 5231.59 5231.59 5231.59
Reserves and Surplus 7138.66 9545.33 9325.14 11585.08 16737.27 18858.05 21609.74 29228.04 32935 37502.38
Total Shareholders’ Funds 10926.07 9545.33 9325.14 11585.08 16737.27 18858.05 21609.74 29228.04 32935.00 42733.97
NON-CURRENT LIABILITIES
Long Term Borrowings 18575.50 21513.48 27715.43 33168.20 37215.84 49119.19 63076.27 76790.22 89375.84 100239.75
Deferred Tax Liabilities 432.68 1959.16 2442.96 2472.15 2472.15 2489.37 1959.16 2442.96 2472.15 2489.37
-Other Long Term Liabilities 0.00 4707.53 5854.76 1097.88 5860.79 7061.81 4707.53 5854.76 1097.88 7061.81
Long Term Provisions 0.00 442.63 524.37 580.23 580.23 650.45 442.63 524.37 580.23 650.45
Total Non-Current Liabilities 19008.18 70185.59 85612.31 93526.10 98289.01 110441.38 70185.59 85612.31 93526.10 110441.38
CURRENT LIABILITIES
Short Term Borrowings 750.00 2000.00 2700.00 1200.00 1200.00 2000.00 2000.00 2700.00 1200.00 2000.00
Trade Payables 1700.29 246.73 329.07 392.97 392.97 313.89 246.73 329.07 392.97 313.89
Other Current Liabilities 3502.67 11693.46 15520.04 19040.36 19040.36 21391.30 11693.46 15520.04 19040.36 21391.30
Short Term Provisions 833.37 768.31 968.02 1211.95 1211.95 1548.38 768.31 968.02 1211.95 1548.38
Total Current Liabilities 6786.33 14708.50 19517.13 21845.28 21845.28 25253.57 14708.50 19517.13 21845.28 25253.57
Total Capital And Liabilities 36759.39 111133.56 139589.07 158300.88 158300.88 178428.92 111133.56 139589.07 158300.88 178428.92
ASSETS
NON-CURRENT ASSETS
Tangible Assets 21805.53 60877.69 72501.95 88902.51 88902.51 114207.36 60877.69 72501.95 88902.51 114207.36
Intangible Assets 0.00 522.95 652.12 783.70 783.70 950.54 522.95 652.12 783.70 950.54
Capital Work-In-Progress 9450.93 18921.30 31502.41 39670.90 39670.90 33778.58 18921.30 31502.41 39670.90 33778.58
Intangible Assets under Development 0.00 193.62 349.00 211.29 211.29 172.11 193.62 349.00 211.29 172.11
Construction Stores 0.00 15708.62 17625.30 0.00 13041.96 9859.27 15708.62 17625.30 0.00 9859.27
Fixed Assets 31256.46 96224.18 122630.78 129568.40 142610.36 158967.86 96224.18 122630.78 129568.40 158967.86

8. 7 | P a g e
Non-current Investment 1967.00 964.24 814.33 740.99 740.99 771.28 964.24 814.33 740.99 771.28
Long term loan and advances 0.00 5963.40 4552.99 4177.89 4177.89 4838.56 5963.40 4552.99 4177.89 4838.56
Other Non-Current Assets 12.86 0.00 0.00 15883.50 0.00 0.00 0.00 0.00 15883.50 0.00
Total Non-Current Assets 33249.67 103151.82 127998.10 150370.78 147529.24 164577.70 103151.82 127998.10 150370.78 164577.70
Foreign Currency Monetary Item Translation diff
A/C
0.00 1716.29 2490.57 0.00 2841.54 3869.42 1716.29 2490.57 0.00 3869.42
CURRENT ASSETS
Current Investment 0.00 183.26 184.35 185.43 185.43 35.64 183.26 184.35 185.43 35.64
Inventories 184.13 551.53 712.40 717.75 717.75 823.68 551.53 712.40 717.75 823.68
Trade Receivables 490.48 1434.09 1578.46 2118.65 2118.65 2737.97 1434.09 1578.46 2118.65 2737.97
Cash And Cash Equivalents 1196.82 1661.97 4417.52 2062.98 2062.98 2453.72 1661.97 4417.52 2062.98 2453.72
Short Term Loans And Advances 1631.09 595.03 472.04 566.42 566.42 794.00 595.03 472.04 566.42 794.00
Other Current Assets 7.20 1839.57 1735.63 2278.87 2278.87 3136.79 1839.57 1735.63 2278.87 3136.79
Total Current Assets 3509.72 6265.45 9100.40 7930.10 7930.10 9981.80 6265.45 9100.40 7930.10 9981.80
Total Assets 36759.39 111133.56 139589.07 158300.88 158300.88 178428.92 111133.50 139589.07 158300.88 178428.92

9. 8 | P a g e
Profit and loss account for Power Grid Corporation of
India
Particulars (values in Rs. Cr) Pre IPO Post IPO
Mar-07 Mar-08 Mar-09 Mar-10 Mar-11 Mar-12 Mar-13 Mar-14 Mar-15 Mar-16
INCOME
Revenue From Operations 1,380.39 4,614.82 6,579.81 7,127.45 8,388.70 10,035.33 12,709.45 15,152.74 17,106.35 20,734.79
Other Operating Revenues 5.08 0.00 0.00 0.00 0.00 128.94 48.40 77.54 70.88 67.43
Total Operating Revenues 1,385.47 4,614.82 6,579.81 7,127.45 8,388.70 10,164.27 12,757.85 15,230.28 17,177.23 20,802.22
Other Income 1.61 476.37 500.89 496.75 710.05 620.74 570.89 491.13 602.81 478.96
Total Revenue 1,387.08 5,091.19 7,080.70 7,624.20 9,098.75 10,785.01 13,328.74 15,721.41 17,780.04 21,281.18
EXPENSES
Purchase Of Stock-In Trade 248.87 51.78 55.18 68.30 0.00 0.00 63.50 219.40 0.00 0.00
Employee Benefit Expenses 45.75 691.60 899.86 959.26 745.89 842.97 886.40 941.68 1,023.65 980.54
Finance Costs 31.48 1,809.13 3,161.93 1,327.18 1,625.44 1,943.26 2,535.22 3,167.52 3,979.32 5,022.97
Depreciation And Amortisation Expenses 5.26 959.65 1,093.97 1,979.69 2,199.39 2,572.54 3,351.92 3,995.68 5,085.41 6,182.76
Other Expenses 75.27 -440.72 -538.04 400.90 698.93 809.98 871.54 1,112.86 1,355.16 1,540.87
Total Expenses 1,300.15 3,186.99 4,781.77 4,901.82 5,269.65 6,168.75 7,708.58 9,437.14 11,443.54 13,727.14
Profit/Loss Before Tax 86.93 1,904.20 2,298.93 2,722.38 3,829.10 4,616.26 5,620.16 6,284.27 6,336.50 7,553.99
Current Tax 31.3 197.12 318.25 430.34 680.02 891.10 1,071.50 1,274.30 1,281.25 1,574.81
Deferred Tax -1.63 74.45 44.76 164.97 443.23 454.14 341.80 492.20 29.22 17.22
Tax For Earlier Years 0.06 0.00 0.00 0.00 4.59 -2.59 -2.94 -0.17 -0.26 -0.02
Total Tax Expenses 29.73 282.07 377.63 595.31 1,127.84 1,342.65 1,410.36 1,766.33 1,310.21 1,592.01
Profit/Loss For The Period 57.19 1,448.47 1,690.61 2,040.94 2,696.89 3,254.95 4,234.50 4,497.42 4,979.17 6,026.72

10. Findings from Balance Sheet of the Company
 Reserves and surplus has been increased consistently from 2007 to 2016.
 Long term borrowings has increased at a higher rate since past 3 years.
 Total current liabilities has been increased at a higher rate for the past 3 years.
 It is clearly noticeable that tangible assets is been increased for the past 3 years which
is the reason the current liabilities and long term borrowing is increased meaning, the
tangible assets is being bought by increasing their current liabilities.
Findings from Profit and loss statement
 It is evident from Profit and loss statement that revenue from operations has been
increasing consistently from 2007 to 2016.
 It is clearly evident from the profit and loss statement that the depreciation expense has
been increasing consistently from 2007 to 2016 because the company being
incorporated in 1982, has many assets and apart from that the tangible assets is been
increased year after year which is the reason that depreciation of those assets is been
increased.
 It is clearly evident from the profit and loss statement that profits are increasing year
after year at a moderate pace which is the reason company has plans to enter new areas
where there is scope of growth according to Director of PGCIL.

11. 10 | P a g e
5. Financial Ratios of Power Grid Corporation of India
Financial Ratios of Power Grid Corporation of India
Particulars (Values in
Crores) 2005-06 2007-08 2009-10 2011-12 2013-14 2015-16
Per share ratios
Div./share (Rs.) 73.7 1.1 1.35 1.925 2.665 2.155
Basic EPS (Rs.) 264.75 3.345 4.435 6.61 9.255 10.52
Profitability Ratios
Net profit Margin (%) 31.66 32.81 27.16 32.08 31.36 28.975
Return on Asset (%) 3.205 3.34 3.2 3.58 3.515 3.255
Debt to Equity ratio (X)
10.13 1.695 2.14 1.985 2.395 2.38
Liquidity Ratios
Current Ratio(X) 0.69 0.62 0.65 0.74 0.45 0.38
Quick Ratio(X) 0.645 0.59 0.63 0.7 0.41 0.345
Div-Payout Ratio (%) 26.71 32.43 30.4 30.025 30.04 20.53
Valuation Ratios
Enterprise value/Net
operating Revenue 0.00 6.675 10.39 9.735 8.68 8.94
Management Efficiency
Ratios
Inventory Turnover
Ratio(X) 15.545 19.045 21.39 22.535 22.26 24.595
Asset Turnover Ratio (%) 10.13 10.21 11.83 11.165 11.19 11.25
Earnings Retention Ratio
(%) 73.29 67.57 69.6 69.975 69.97 79.47
Note: Average values of 2 Years are assumed here.
Interpretation
Liquidity Ratios
Current Ratio: As CR is decreasing continuously from the year 2005 to 2016, it is not good for
the company because it is the decision factor to pay its bills. As current ratio is decreasing, it
could have hard time in paying its bills.
Quick Ratio: As Quick Ratio is decreasing continuously from the year 2005 to 2016, it is not
good for the company because it is the decision factor to meet its liabilities immediately. If
there is a sudden need for cash, then the company is not in a position to liquidate its assets on
time and meet the liabilities.
Dividend Pay-out Ratio: During the year 2013-2016, it can be noticed that dividend pay-out
ratio has been drastically decreased which means company has downward trends of pay-outs

12. 11 | P a g e
is alarming to investors. If this would repeat for the next five years, the company would no
longer afford to pay such high dividends.
Profitability Ratios
Net profit Margin: There is a constant decrease in the net profit margin which means that the
expenses are not managed well. Here, for every $1 of sales, the profit the company is achieving
is decreasing perennially.
Debt to Equity Ratio: Here, the debt to equity ratio is lower which means that the power grid
corporation of India has a more financially stable business.
Valuation Ratios
Earning Retention Ratio: It is noticeable that during the years 2013 to 2016, the earning
retention ratio has drastically increased which means that amount that has been retained back
to the business for growth and not being paid out as dividends is good for the company because
for shareholders who invest in the company, higher the retention ratio, growth of the company
also increases thereby raising the price of the shares as well.
Asset Turnover Ratio: There is almost a constant growth in asset turnover ratio which is good
for the company as it bolsters efficiency of usage of assets. When the corporation has older
assets that are fully depreciated, then this could increase the ratio.
Inventory Turnover Ratio: From 2005 to 2016, it is noticeable that the inventory turnover ratio
is increasing perennially which means that it can run inventory down to Zero and then
immediately restock which is good for the company.

13. 12 | P a g e
6. Highlights of FY 2015-16
Interpretation
 From the above Pie chart it is evident that maximum amount is been funded through
the means of bond (38.32%) and minimum source of funds is through grants (0.07%)
in FY 2015-16.
 From the above bar chart it is evident that maximum income is been attained from
transmission charges (93.40%) and minimum income is been attained from dividend
income (0.40%).
7.14%
3.21%
23.04%
0.07%
19.32%
7.67%
38.32%
1.23%
Sources of funds (%) 2015-16
Deferred Tax and Net current Liablities Equity
Reserves Grants
Foreign Currency Loan Loan from bank and FII
Bonds Short term loans
0.00%
10.00%
20.00%
30.00%
40.00%
50.00%
60.00%
70.00%
80.00%
90.00%
100.00%
Transmi
ssion
charges
Consult
ancy
Teleco
m
Revenu
e
Interest
Income
Dividen
d
Income
Other
Income
Series1 93.40% 2.19% 1.84% 1.01% 0.40% 1.16%
Income Break-up (%) 2015-16

14. 13 | P a g e
 From the above bar chart, it is evident that maximum amount of reserves is been
assimilated on the FY 2015-16 (Rs. 37502 Cr) which is gradually increasing for the
past 5 years and the board members expects it to grow at a higher rate in the next five
years.
 From the above bar chart, it is evident that Equity is consistently constant for the past
3 years (Rs. 5232 Cr) for FY 2015-16.
0
5000
10000
15000
20000
25000
30000
35000
40000
2011-12 2012-13 2013-14 2014-15 2015-16
Equity 4630 4630 5232 5232 5232
Reserves 18858 21610 29228 32035 37502
Rs.incrores Equity and Reserves
Equity Reserves

15. 14 | P a g e
7. Share Price Performance of Power Grid Corporation of
India
Interpretation
IPO issue:-
Issue Date: 10th
September 2007.
0
20
40
60
80
100
120
140
160
180
Oct-07
Feb-08
Jun-08
Oct-08
Feb-09
Jun-09
Oct-09
Feb-10
Jun-10
Oct-10
Feb-11
Jun-11
Oct-11
Feb-12
Jun-12
Oct-12
Feb-13
Jun-13
Oct-13
Feb-14
Jun-14
Oct-14
Feb-15
Jun-15
Oct-15
Feb-16
Jun-16
ClosePrice
Months
Share Price Performance of Power Grid Corporation of
India
0
20
40
60
80
100
120
140
160
2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
ClosePrice
Years
Share Price Ending in Financial Year 2015-16
CAGR:
4.482%

16. 15 | P a g e
Issue price: Rs.44 to Rs.52 per equity share
First Month Closing Price: Rs. 149.75
Stock Price after 5 Years: Rs. 107.9
Stock Price as on June 30th
2016: Rs. 162.95
The CAGR of the Stock price from the year 2007 to 2016: 4.482%
Year
Close price of Financial
Year Returns
2007 97.95
2008 95.65 -2.35%
2009 107.05 11.92%
2010 101.8 -4.90%
2011 107.9 5.99%
2012 105.95 -1.81%
2013 105.05 -0.85%
2014 145.2 38.22%
If investors invested in shares of PGCIL in the above years,
In 2008, he has incurred a loss of 2.35%.
In 2009, he incurred profits of 11.92%.
In 2010, he has incurred loss of 4.90%
In 2011, he has incurred profits of 5.99%
In 2012, he has incurred loss of 1.81%
In 2013, he has incurred loss of 0.85%
In 2014, he has incurred profits of 38.22%
In the fourth quarter of financial year 2015-16, company has posted a net profit of Rs. 1599
crores. The company surpassed Rs.6000 crores profit after tax for the first time. The company
capitalized assets about Rs. 31,800 crore which was highest ever in a year.

17. 16 | P a g e
8. Share Holding Pattern of Power Grid Corporation of India
Interpretation
 Total Foreign companies involvement increased up-to 26.55% on September 2016(post
IPO) when compared to 0.10% on June 2007 (pre IPO).
 The institutions (like FII) involvement in the shareholding increased from 4% (pre IPO)
to 8.44% (post IPO).
 The total government holding is decreased from 86.36% (pre IPO) and 57.9% (post
IPO).
So we can say that private companies (domestic as well as foreign) involvement is increased.
So it would not face difficulties in acquiring capital for any new projects. Hence company’s
objective to facilitate private sector participation in transmission system through independent
private transmission is being achieved.
Share Holding Pattern
Post IPO (Sep 2016) Pre IPO (Jun 2007)
% Share Holding % Share Holding
Total Foreign 26.55% 0.10%
Total Institutions 8.44% 4.00%
Total Non-Promoter Corporate
Holding 3.42% 1.26%
Total Promoters (Govt.) 57.90% 86.36%
Total Public & others 3.70% 8.28%
Total 100% 100.00%

18. 17 | P a g e
9. Conclusion
Almost 80% of business is from state power utilities. Around 293 global and domestic
companies have committed to generate 266 GW of solar, wind, mini-hydel and biomass-based
power in India over the next 5–10. Over 51% of total power generated is wheeled by Power
Grid Corporation of India.
From this study, it can be said that Power Grid Corporation of India has an overall stable
performance and power sector in India also has a stable performance. Therefore when the
power sector in the country expands, it would positively impact the Power Grid Corporation of
India.
Advantages of Power Sector
Hence the advantages of Power Sector in comparison with the company PGCIL is as follows:
 Growing demand:
• Expansion in industrial activity to boost demand for electricity.
• Growing population and increasing penetration and per-capita usage to provide
further gives the momentum.
• Power consumption is estimated to increase from 1174.07 TWh in 2015 to
1,894.7 TWh in 2022 and hence more transmission lines is expected to be
constructed by PGCIL.
 Attractive opportunities:
• Ambitious projects and increasing investments across the value chain.
• Diversification into renewable sources increasing growth avenues.
 Higher investments
• Total FDI inflows in the power sector touched USD9.9 billion during April 2000
to September 2015, accounting for 4.0 per cent of total FDI inflow in India.
• Investment for 7 new transmission systems that includes strengthening of
national grid have been sanctioned.

19. 18 | P a g e
 Policy support
• 100 per cent FDI allowed in the power sector has boosted FDI inflows in this
sector
• Schemes like DeenDayal Upadhyay Gram Jyoti Yojana (DDUGJY) and
Integrated Power Development Scheme (IPDS) have already been implemented
for rural and urban areas respectively.
157
967 985
1437
1252
1652
536
1066
657
155
0
200
400
600
800
1000
1200
1400
1600
1800
FY07 FY08 FY09 FY10 FY11 FY12 FY13 FY14 FY15 FY16E
(INUSDMILLION$)
YEARS
FDI Inflow in Power Sector
132.3 143.1 148 159.4
173.6
199.9
223.3
237.7
272.5 280.3
0
50
100
150
200
250
300
FY07 FY08 FY09 FY10 FY11 FY12 FY13 FY14 FY15 FY16E
GW
Installed electricity generation
capacity (GW)

20. 19 | P a g e
From the above graph, it can be said that Installation of electric generation capacity is been
growing at a CAGR of 8.7%.
Strategies adopted by power sector beneficial to Power Companies
Control Generation Cost
• Companies are developing captive coal fields to reduce price volatility and ensure
uninterrupted supply of fuel to control generation cost.
• Most of the power companies are now located near energy source. This helps minimize
costs of fuel transport
Diversifying Generation Technologies
Companies are using multiple-generation technologies based on a project’s requirement.
Companies such as NTPC and Reliance Power already have coal-fired, gas-fired and
hydroelectric capacity.
This helps them diversify, reduces dependence on a single source.
Additional Revenue Streams
Most of the companies are now looking to sell their carbon credits to generate additional
revenue by employing supercritical technology
Digital India
Launch of smart grid mission with 14 DISCOMS as a pilot.
Smart metering for high – end users of electricity.
In 2015, Companies like Uttar Gujarat Vij Company, Tata Power and Essel have installed
machine-to-machine (M2M) based smart metering systems in India
Due to these reasons, major players in the power sector in which Power Grid Corporation of
India is one among them, have an extreme opportunities of growth in the next 5 years span of
time.

21. 20 | P a g e
Future Aspects of Power Sector
 The Indian power sector has an investment potential of Rs. 15 trillion (US$ 222.36
billion) in the next 4–5 years.
 The government’s immediate goal is to generate two trillion units (kilowatt hours) of
energy by 2019. This means doubling the current production capacity to provide 24x7
electricity for residential, industrial, commercial and agriculture use.
 The Government of India is taking a number of steps and initiatives like 10-year tax
exemption for solar energy projects, etc., in order to achieve India's ambitious
renewable energy targets of adding 175 GW of renewable energy, including addition
of 100 GW of solar power, by the year 2022.
 The government has also sought to restart the stalled hydro power projects and increase
the wind energy production target to 60 GW by 2022 from the current 20 GW.
Hence there are ample of opportunities for the PGCIL to generate revenues and profits because
PGCIL being a public sector undertaking having Stake in Government, it would be easy to
surpass legal aspects quickly and obtain new projects.
Executive Summary of Project
From the above study, it can be concluded that the fundamentals of PGCIL is not good because
its long term borrowings are increasing year after year although the tangible assets are
increased, its depreciation expense are also increased which is an area of concern. Therefore
Power Grid Corporation of India can increase its profitability to a higher rate and expected
to expand its operations, generate revenues within the next 5 years as Government is taking
number of initiatives to support companies belonging to power sector. It requires huge capital
to undergo its operations which is a major reason for going public (in 2007), further public
offering (2013) and increasing long term borrowings.