1. Enron Corp Experiences in India
Chiang Peter (N1102788K)
He Jialing (U1010785J)
Hoon Wan Chin Lauren (U1010089E)
Koh Ming Chong Brian (U1011103L)
Koh Yang Lin (U1010520K)
9. TREND
Potential in India’s Energy provision industry
Private Sector increasingly gaining importance
Mission 2012: “Power for All”
• 8% GDP growth rate
• Reliability of power
• Quality
• Optimization of power cost
• Commercial viability of the power industry
Renewable sources of energy more attractive
Fear of gas shortage
Government of India decided not support on new projects that rely on
this resource
11. MARKET OPPORTUNITIES
Transmission, Distribution &
Rural Electrification
Addition of Generation
Capacity
Availability & Quality of
Resources
Renewable
Energy
12. MARKET OPPORTUNITIES
Transmission, Distribution & Infrastructure in India is not
Rural Electrification extensive
Current installed transmission
capacity only at 13% of the total
Addition of Generation installed generation capacity
Capacity Huge market for the transmission of
electricity
Availability & Quality of National Power Grid 2012
Resources Subsidy of USD 6.88 billion for
providing electricity connections and
Renewable associated infrastructure to 120,000
rural villages by 2012.
Energy
13. MARKET OPPORTUNITIES
Transmission, Distribution & Lack of power in India requires huge
Rural Electrification amount of resource and capital
Ultra Mega Power Projects (UMPP) to
Addition of Generation boost the total output throughout the
Capacity country
Availability & Quality of Foreign power generation companies to
Resources take a slice of the pie in the developing
economy.
Renewable
Energy
14. MARKET OPPORTUNITIES
Transmission, Distribution & Lack of readily available coal
Rural Electrification
Coal to remain as the main source of
fuel
Addition of Generation
Capacity Good opportunity for foreign companies
to supply India with coal
Availability & Quality of
Resources
Renewable
Energy
15. MARKET OPPORTUNITIES
Transmission, Distribution & With high demand of resources, India
is looking into renewable projects
Rural Electrification
Eco-friendly and self-reliant
Addition of Generation
Capacity Funds (USD16.5billion) have been set
aside to develop this industry.
Availability & Quality of
Resources
Renewable
Energy
16. INVESTMENT POTENTIAL
Past Present
Poor support from the governing Neutral parties for advice (Central
bodies and irregular terms for foreign Electricity Authority)
investors. Investors have to comply with new
policies set (e.g. Electricity Act)
Urgent investment would require
Urgent investment does not require multiparty agreements and this
multiparty consensus minimizes the chances of political
disruption.
Emphasizes on clean energy and
Focus on electricity power shortage efficiency
20. POLITICAL & LEGAL RISKS
Varying political cultures and
Political System regulations across states
- difficult to expand across states
Possibility of power shifts between
Legal System
political parties
- change in regulatory processes = delay
business
Corruption
Government decisions lack
accountability
- ad-hoc agricultural subsidies placing
power sector at a disadvantage
21. POLITICAL & LEGAL RISKS
Weak and inefficient
Political System - slow in processing cases, legal disputes
take very long to be settled
Lack of legal action against coal
Legal System
mafia
-limited supply of coal available in the
open market
Corruption -↑cost of production (bribe coal
mafia/import coal)
22. POLITICAL & LEGAL RISKS
• Widespread especially in the public
Political System sector
- politicians place personal gains over
nation welfare
Legal System
•Anti-corruption efforts lack
effectiveness
- certain sectors like infrastructure &
Corruption public utilities are especially affected
Corruption will be a cost that needs
to be factored in the cost of doing
business
23. ECONOMIC RISKS
Dampens investment confidence
Inflation - domestic cost not aligned with that of
abroad
Difficult for the company to plan
ahead
Increases cost of production
- cost of raw material
- increasing demand for higher
wages
24. SOCIAL RISKS
Industry strikes are common
Social Unrest occurrences
- disrupts business operations
- forces company to give better benefits
• Terrorist attacks
-dampens economy growth
- disrupts business operations
- power sector potential target for terrorist
attacks
- spike in security regulations hindering
business processes
25. RECOMMENDATIONS
Competitive Non-Competitive
Strategies Strategies
Start Up Strategies Operational Strategies
Political
Set Up Renewable Carry Out the Project in
Energy Project Phases
Legal
Joint Venture with a Fixed Costs through
Local Stakeholder Long-term Contracts
Social
Comprehensive HR
Planning
26. RECOMMENDATIONS
Issue: Coal Availability Set Up Renewable Energy Project
Reduce the reliance on coal
Competitive Strategies
India Government Promotes
Investment for Renewable Energy
Set Up Renewable
Energy Project Project
-Subsidies and resources are given to
investors
Align with environmental standards
-environmentally-friendly energy resources
27. RECOMMENDATIONS
Issue: Different Business Joint Venture with a Local
Culture Stakeholder
Shared Responsibility
India Partner: Operational Aspects
Competitive Strategies
Chinese MNC: Strategic Direction
Joint Venture with a
Local Stakeholder
Build credibility and garner support
from locals
Outsource to Local Suppliers
- Bring revenue to them and facilitate the
local economy
28. RECOMMENDATIONS
Issue: Business Risk & Carry Out the Project in Phases
Uncertainties
Market Test
- Better financial plans
Competitive Strategies
- Measure the ultimate effectiveness of
Carry Out the Project in
power plant
Phases
Obtain feedback based on the
previous phases for improvement
Enlist more support for the next phase
29. RECOMMENDATIONS
Fixed Costs through Long-term
Issue: Inflation Contracts
Workers
Fix the wages rate
Competitive Strategies
Fixed Costs through Suppliers
Long-term Contracts Reduce the risk of rising cost of raw
materials.
Easier to predict the cost of
manufacturing and producing power
30. RECOMMENDATIONS
Issue: Manpower Shortage Comprehensive HR Planning
Collaboration with recruitment agencies or
manpower consultants in India
Competitive Strategies e.g. M.M. Enterprises
Comprehensive HR Proper projection, allocation and
Planning examination of resources
Recruit over 70% of experienced workers with
the remaining 30% being fresher.
e.g. Intelenet
Tapping onto the pool of talents in their
home countries.
Foreign talents: Higher skilled level of jobs
Local workers: Lower skilled level of jobs
Trainings and guidance will be provided
31. RECOMMENDATIONS
Issues: Political Instabilities & Political
Corruptions
Work closely with the Embassy of the
People's Republic of China in India
Non- Competitive Strategies
Seek reference from other Chinese MNC in
Political
similar industries
Refrain from partaking in related
Corruption activities
Company's discretion
- The Naïve Immoralist
- Righteous Moralist
32. RECOMMENDATIONS
Issues: Complex Legal Legal
Structure
Comply with local laws and regulations
across all states of India
Non- Competitive Strategies - Prevent any possible breach of law
Legal
Nullify the validity of prior contracts
- Approach the Central government to seek
advice
- Ensure agreements signed are legally binding.
Contract to be signed contains
- Specific details in the event of breach of
contract
- Clause for international treaty
33. RECOMMENDATIONS
Issues: Social Unrest & Social
Labour Strike
Long term Employment Contract
- Provide job security to Indian workers
Non- Competitive Strategies -Reduce the turnover rates
Social
Health care package
-Keep employee satisfied
-Increase production efficiency
Secure through Insurance
- e.g. Lloyd’s market
-Coverage ranges from strike damages to
terrorism and political violence to energy
business interruption
- Prevent future financial losses due to
uninsured unfortunate events.
35. CONCLUSIONS
Start Up Strategies Operational Strategies
• Joint Venture with a Local • Start Project in Phases
Stakeholder • Long-term Contracts fix costs
• India Partner: Operational • Comprehensive HR Planning Success
• China Power MNC: Strategic - M.M. Enterprises
• Renewable Energy Project
Political Legal Strategies Social Strategies
Strategies • Ensure agreements • Long Term Employment
• Work closely with signed are legally binding contracts + healthcare
Embassy • Specific details in contract packages Success
– events of breach • Secure through Insurance
company - Lloyd’s market
36. THANK YOU FOR YOUR KIND ATTENTION!
The QUESTION and ANSWER
will commence shortly …
Notas del editor
GMR Group, Jaiprakash Power, Larsen&Toubro, National Thermal Power Corporation (NTPC), Reliance Power and Adani Power
optimum utilization of generating resources, conservation of an eco-sensitive right of way and the flexibility to accommodate the uncertainty of generation plans.
Change in regulatory process = disrupt businessdelay in government decisions = unplanned-for delays and exceeding budget.
Slow in processing 27 million cases backlog- ↑cost of production because have to bribe or import coalover 10,000 groups of mafias operating within the state-owned monopoly of Coal India Limited’s collieries, stealing at least 5 - 6 million tonnes of coal per year.
Better benefts= wages,
Build credibility and garner support from its locals as the India counterpart would will fight for the benefits of its own people and would not only take advantage or make use of India's resources. AES, another player in the power industry who could not understand the local dynamics of the business, had poor management and eventually withdrew from the industry. outsourcing some of its required services to local suppliers so that it would not appear that the company is just making money from the people but they are bringing money to them and facilitating the economy.
The country's industrial parks are now set to be brought into line with environmental standards - with more efficient energy usage, a switch to renewable resources and environmentally-friendly waste management systems.
To save guard the Chinese MNC, it is recommended to fix the wages rate of workers by signing long term contracts where possible. As for suppliers, having forward and long term contracts with local industries may reduce the risk of rising cost of raw materials. With these measures in place, it will be easier to predict the cost of manufacturing and producing power for the term stated in the contracts.
Manpower shortages problems in India’s power generation sectors are real and solving them requires some fresh approaches. To meet these manpower challenges in India, it is imperative for Chinese MNC to engage in comprehensive Human Resource planning and develop strategies to address projected manpower needs. Such shortage situations can also be amended through collaboration with recruitment agencies or manpower consultants in India. For instance, M.M. Enterprises is a leading and professional manpower consultancy firm in India. They provide a complete platform for recruitment and staffing needs in large scale projects in thermal power and hydro electric sector. A detailed study will be undertaken by the recruitment agency to understand the staffing requirements, the type of business and the nature of projects before embarking the projects. As such, working with domestic recruitment agencies is proven to bring qualified workers to match Chinese MNC’s business requirements. Proper projection, allocation and examination of resources are crucial. The Chinese MNC is recommended to recruit over 70% of experienced workers with the remaining 30% being fresher. The less experienced would be given trainings to meet the company’s long term needs for skill level. This approach is similar to Intelenet, an Indian IT firm’s strategies in dealing with the threat of skilled manpower shortage looming over the IT sectors. Alternatively, Chinese MNC can make strategic adjustment in talent allocation by tapping onto the pool of talents in their home countries. Companies can use talents from their home countries to perform management or higher skilled level of jobs while provide trainings and guidance to local workers.MM Enterprises. (n.d.). The leading recruitment agency in india. a complete station for recruitment and staffing needs.. Retrieved from http://www.mmenterprises.co.in/recruitment_staffing.phpKurup , R. (2005, December 28). It firms brace to face skilled manpower shortage. Retrieved from http://www.rediff.com/money/2005/dec/28it.htmManpower shortages problems in India’s power generation sectors are real and solving them requires some fresh approaches. To meet these manpower challenges in India, it is imperative for Chinese MNC to engage in comprehensive Human Resource planning and develop strategies to address projected manpower needs. Such shortage situations can also be amended through collaboration with recruitment agencies or manpower consultants in India. For instance, M.M. Enterprises is a leading and professional manpower consultancy firm in India. They provide a complete platform for recruitment and staffing needs in large scale projects in thermal power and hydro electric sector. A detailed study will be undertaken by the recruitment agency to understand the staffing requirements, the type of business and the nature of projects before embarking the projects. As such, working with domestic recruitment agencies is proven to bring qualified workers to match Chinese MNC’s business requirements. Proper projection, allocation and examination of resources are crucial. The Chinese MNC is recommended to recruit over 70% of experienced workers with the remaining 30% being fresher. The less experienced would be given trainings to meet the company’s long term needs for skill level. This approach is similar to Intelenet, an Indian IT firm’s strategies in dealing with the threat of skilled manpower shortage looming over the IT sectors. Alternatively, Chinese MNC can make strategic adjustment in talent allocation by tapping onto the pool of talents in their home countries. Companies can use talents from their home countries to perform management or higher skilled level of jobs while provide trainings and guidance to local workers.MM Enterprises. (n.d.). The leading recruitment agency in india. a complete station for recruitment and staffing needs.. Retrieved from http://www.mmenterprises.co.in/recruitment_staffing.phpKurup , R. (2005, December 28). It firms brace to face skilled manpower shortage. Retrieved from http://www.rediff.com/money/2005/dec/28it.htm
They can provide advises of how to maintain business processes during political instability. The close relationship also ensures that the company is adequately protected under their home country's interest. However, such decisions are based on the company's values and if the situation arises, it is at the company's discretion whether they should adopt the approach of The Naïve Immoralist and do what the other companies are doing or that of a Righteous Moralist and follow what they would do in the home country.
Comply with local laws and regulations across all states of India and prevent any possible breach of lawNullify the validity of prior contracts in all aspects of their business process, from labour contracts to purchase of raw materials, Contract to be signed contains specific details in the event of breach of contract by their business partners, thoroughly protecting their company's interest. In the event that conflicts cannot besolved by the Indian government, external parties like the International Court of Justice can be involved to ensure a fair solution for all parties.
A low labour turnover rate reduces the costs for employee search and training and with the power sector facing a shortage of skilled labor, Although the amount spent on insurance will not bear any possible financial returns, it will prove to be worthy in the long run in preventing future financial losses due to uninsured unfortunate events.