Tata power is India's leading private power Sector Company with expertise in full value chain. Tata Power Company Ltd, Tata Hydro Electric Power Supply Company Ltd and Andhra Valley Power Supply Company Ltd all licensees as per the Electricity Supply Act, are jointly managed as Tata Electric Companies. Company works as a mix of thermal and hydropower generation, it supplies to the highly industrialized area in and around Mumbai. Any shortfall in generation is met through purchases from MSEB.

In June, 2002 Tata Power acquired 51% stake in North West Delhi Distribution Co. Investment and Credit Rating Agency (ICRA) retained the LAAA rating assigned to Tata Power its non- convertible debentures (NCD) issue aggregating Rs 1,000 crore. Company has a joint venture "New Delhi Power Limited" with the State Government of Delhi for its North Delhi consumers, the NDPL serves over 8 lakhs satisfied consumers with a peak load of 1050 MW, also providing state-of-the-art technology driven processes for enhancing consumer billing and related services.

Products & services:

Company provides consistent power supply and timely service to the Mumbai city and keeps the reputation of having the best power supply in India. A significant amount of power is supplied to the metro's railway network, refineries, ports, BEST and Reliance Energy Limited. Company has now successfully served the Mumbai consumers for over nine decades and has spread its footprints across the nation. The Company also supplies power directly to such bulk consumers as Central and Western Railways, Mumbai Port, refineries, textile mills, fertilizer factories, BARC, Municipal Corporation water pumping plants and other major continuous processes industries requiring uninterrupted power supply. The latest addition to the list is the commercial district at the Bandra-Kurla Complex and major commercial and residential complexes in the suburbs.

Company has capability in setting up Independent Power Plants, Setting up Captive Power Plants, Power Transmission and Distribution Projects, Operation and Maintenance Services, Remnant Life Assessment and Performance Evaluation Services of Power Plant Equipment and in overseas projects (i. e. Erection, Testing, Commissioning & Trial operations, Power Plant/Utility Operations Management and Plant Operators Training).

Except Mumbai, the company has generation capacities in Jojobera, Jharkhand and Karnataka. Tata Power has an installed power generation capacity of above 2785 Mega Watts, with the Mumbai power business, which has a unique mix of Thermal and Hydro Power, generated at the Thermal Power Station, Trombay, and the Hydro Electric Power Stations at Bhira, Bhivpuri and Khopoli, accounting for 1797 MW. Its diverse generation capability facilitates the company in producing low cost energy, thereby giving its consumers a greater value for Tata Power Trading Company Limited (TPTCL), a wholly owned subsidiary of the Tata Power Company has been awarded the first ever power trading license by the Central Electricity Regulatory Commission
(CERC) under section 14 of the Electricity Act 2003, enabling it to carry out transactions all over India.

International Projects - Leveraging upon its engineering skills and understanding of the power business, Tata Power has carried out several overseas projects and successfully completed erection, testing and commissioning of major power projects in Saudi Arabia, Bangladesh, Kuwait, Algeria, Myanmar and Thailand. The company has also undertaken projects pertaining to power plant / operations management and plant operations training.

Strategic Electronics Division (SED) - The Strategic Electronics Division of Tata Power has been in operation for over 30 years and has been pursuing development and production activities for the Indian defence sector. SED successfully developed the Multi Barrel Rocket Launcher, 'Pinaka', proven in the field through extended user trials which led to its induction into the Indian Army. The Division has developed specialized equipment for Air Defence and Naval Combat systems.

Transmission Business - Tata Power owns over 1200 circuit Km of high voltage (220 kV and 110 kV) Transmission Network. The Company has a 51% stake in the Rs 1200 Cr, 1200 Km Tala Transmission project, which is a joint venture with the Power Grid Corporation of India. The JV Company named Powerlinks Transmission Limited.

Distribution Business - Tata Power has over 935 km HT and LT cable distribution network connecting 17 major receiving stations and over 85 sub-stations in its Mumbai License area. With the privatization of Delhi Vidyut Board (DVB), Tata Power Company holds managing control in the distribution company North Delhi Power Limited (NDPL). NDPL today distributes and supplies power to the North and North-West areas of Delhi.

Recent Developments:

Tata Power is eyeing coal mines abroad, including Australia and Mozambique, to meet demand for upcoming projects. Tata Power has 30% ownership in a block in Indonesia and the company is able to meet 50% of its coal requirement from this property. It is also looking at other sources. When it comes to domestic power projects, the company has said that it will bid only for projects, which have coal linkages, as it does not have the appetite to import dry fuel in the near Tata Power is exploring options to raise about USD 200-250 million to part finance its future expansion plans that include a new power plant and developing the infrastructure for retail customers in Mumbai. Although the instrument to be used in raising the proposed USD 200-250 million hasn't been finalized, it has been learnt that Tata Power is looking at either a repeat GDR issue or qualified institutional placement (QIP) route.

Valuation:

Tata Power is planning to become an integrated energy company, making its international presence in all kind of power generations. At current market price, stock is trading at
14.5 P/E multiple of its FY2010 estimated EPS. We recommend investors "buy" Tata power" with medium to long-term investment prospective.