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Tata Solar- A Dawn under the Sun

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EPGDIB 2014-16_Group7

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Strategic Recommendations 14. Various Strategies Followed by Tata Solar 9. Porter’s Five Force Analysis 11. How Tata Solar Follows Competitive Strategy? 7. Accounting Information 13. References . What is Completive Strategy? 2. Pest Analysis 10. Background 3. Competitors 8. What is Solar Energy? 4.Contents: 1. Tata Power Solar – An Introduction 6. Solar Power in India 5. Tata Solar SWOT Analysis 12.

The sources of cost advantage are varied and depend on the structure of the industry. Such strategy helps firm to satisfy sufficient consumers and gain popularity. They may include the pursuit of economies of scale. a firm sets out to become the low cost producer in its industry. and uniquely positions itself to meet those needs. proprietary technology. . opportunities. It is rewarded for its uniqueness with a premium price. Before devising a competitive strategy. According to Michael Porter. one needs to evaluate all strengths. competitive strategy is devised into 4 types: Cost Leadership In cost leadership. A low cost producer must find and exploit all sources of cost advantage. What is Competitive Strategy? Competitive strategies are the method by which you achieve a competitive advantage in the market.1. preferential access to raw materials and other factors. Differentiation Leadership In a differentiation strategy a firm seeks to be unique in its industry along some dimensions that are widely valued by buyers. If a firm can achieve and sustain overall cost leadership. provided it can command prices at or near the industry average. Cost focus exploits differences in cost behavior in some segments. Cost Focus In cost focus a firm seeks a cost advantage in its target segment. A firm's relative position within its industry determines whether a firm's profitability is above or below the industry average. then it will be an above average performer in its industry. It selects one or more attributes that many buyers in an industry perceive as important. The fundamental basis of above average profitability in the long run is sustainable competitive advantage. threats in the industry and then go ahead which would give one a competitive advantage. weaknesses.

Differentiation Focus In differentiation focus a firm seeks differentiation in its target segment. (Photovoltaic literally means “light” and “electric. 2. when sunshine hits the PV cell. the photons of light excite the electrons in the cell and cause them to flow. combined with country’s industrialization. Solar energy produces electricity when it is in demand – during the day particularly hot days when air-conditioners drive up electricity demand.e. simply. cells. generating electricity. This energy is in the form of solar radiation. It is a clear niche marketing strategy. Differentiation focus exploits the special needs of buyers in certain segments. The need for renewable energy is obvious in today’s world. 3. PV.”) These cells are made from materials which exhibit the “photovoltaic effect” i. Electricity can be produced directly from photovoltaic. Background India’s strong economic growth. increasing population and increased access to power has led to rising demand for power in the country. . What is solar energy? Solar energy is. The problem is trying to get as many people as possible to recognize the need and to spend their hard earned money on this technology. energy provided by the sun. which makes the production of solar electricity possible. This type of differentiation is made to meet demands of border customers who refrain from purchasing competitors’ products only due to missing of small features.

and meets the energy requirement in domestic sector in decentralized manner quite efficiently.000 MW was installed globally. The exhibit below captures their estimates about solar market in India. Solar Power in India Globally. In 2010. The country receives more than 4kWh/m2 /day. Major states put together then 979. Solar power from SPV (Solar Photo Voltaic) system and solar concentrating system is produced in environmental friendly manner. the solar power industry has been growing rapidly in recent years. which shows that there is a steady growth in the solar market after 2017-22 . in most parts of India.4MWp is the total amount of energy derived in form of solar. clear sunny weather is experienced 250 to 300 days a year.4. Solar radiation over India is 5000trillion KWH/year. an estimated total capacity of 17. does not generate any waste or pollution. Thus this puts India amongst the highest solar radiation receiving countries of the world.

Being the lead adopter of technology with a spirit of pioneering and calculated risk taking. Growing profitably across the power value chain and allied areas. Tata Solar Power – An Introduction Tata Power Solar is India’s largest integrated solar company that is driven by the singular vision – harness the power of sun to enable solar everywhere. cost and time. Enable employees and associates to achieve and unleash their full potential to deliver outcomes in a sustainable way. Tata Solar Power. is one of the pioneering solar manufacturers in the world and India's largest specialized EPC player. in focus geographies. . Headquartered in Bangalore. Tata Power Solar with 25 years of deep domain expertise. Driving competitiveness by operating our businesses at benchmark levels. People and creating a culture that will reinforce our values. The company has more tha118% growth in 2104 as compared to 2013. Community.5. Mission: To earn affection of customers by delivering superior experience and value. thereby making them our ambassadors. Practicing ‘Leadership with Care’ by pursuing best practices on Care for our Environment. Shareholders. delivering sustainable value to all stakeholders. Executing projects safely with predictable benchmark quality. EPC services for solar power projects and creating innovative solar products.Vision and Mission Vision: To be the most admired and responsible Integrated Power Company with international footprint. Customers. Tata Power Solar operates in three distinct segments – cutting-edge manufacturing.

The solar energy is converted in to electricity by using a photo voltaic array. government involvement will be required in encouraging non-high-end residential and agriculture consumers to use solar power. Residential Rooftops and Utility Scale Solar power (CSP and PV). according to KPMG report. For irrigation and drinking water solar PV water pumping systems are used in India. For example. It is expected that high-end residential consumers will be proactive in adopting solar rooftop given their higher power tariffs. solar power is already cost competitive with alternatives in certain applications. In the off-grid space. Solar Market Segment: -Grid Connected Solar Potential -Off-Grid Connected Solar Application Potential -Solar Water Heater (SWH) Grid Connected Solar Potential includes. However. And Off-grid connected Solar Application Potential includes. The current strategic goals of Tata Solar are market diversification and operations expansion. Tata Solar has a generic cost leadership and product differentiation strategy in the solar energy industry. A large number of these consumers are likely to start adopting solar power from 2017-18. And Solar Water Heating (SWH) applications could be used in residential. but combines this broad scope with a differentiation strategy based on design.6. Solar water pumping system works on power generated using solar photovoltaic system. telecom towers are an attractive market for solar PV installations. branding and user experience that enables it to reach the Indian common man. this is expected to increase to 34 percent by 2021-22. How Tata Solar Follows Competitive Strategy? Tata Solar targets the mass market with its products. The residential consumer category contributes to about 29 percent of the total Indian Power requirement. Consumer categories: -Domestic -Agricultural Solar powered equipment is more environmentally friendly and economical in its operation compared to equipment’s powered by an internal combustion engine (ICE) or nuclear power. Solar Powered Agricultural Pump sets and Solar powered Telecom towers. commercial as well as industrial sectors .

. no electricity at all. Solar Projects with Power Producers Tata Power Solar can design a fully integrated and customized solar power plant project for you. Tata Power Solar has played a pivotal role in making electricity accessible in off-grid villages. We have the prowess to manage solar energy projects of such scale and the much-needed know-how to work within the confines of regulatory policies or the geography constraints. Focus on both domestic and international markets. affordable and green Solutions for Business Tata Power Solar. Tata have helped countless businesses benefit from these policies while attaining their sustainability goals for the past 25 years. Programs with governments Partnering with multiple government and non-profit agencies.Turnkey solar solutions. Industry leaders trust Tata Power Solar. It has many first to its credit like Solutions for Consumers Solution for Consumers Power cuts. Sunjevini a power converter that charge your converter with solar energy. A promise of No CAPEX and a low OPEX. Government Funded Projects to start new plant and to increase market share. we have developed an array of solar lighting. lowincome homes and isolated regions across India. our pursuit to enable solar continues like. every home today is facing at least one of these challenges. Refineries. Customized systems for unique challenges. heating and power backup products that are reliable. Meet Solar RPO & REC regulations. Tata Solar Dynamo roof top solar power generators Product Differentiation Tata Solar reaches Indian mass and industries by launching new and innovative products since inception. Product Innovations Tata Solar product portfolio embraces more than 60 models today. rising bills and. Ports. Nearly 75% of sales is achieved from exports to Europe and USA. From big cities to remote villages. At Tata Power Solar. in some cases. Profit from power. we are at the forefront of this mission – provide sustainable solar solutions.Tata Solar Objectives Focus on retail customers in metros. ranging from Rooftops to solar pumps. it is essential to increase production capacity.

both on-grid and off-grid solar projects and residential. Price and Promotion Tata Solar has shown strength in another significant aspect that is distribution network. With an in-house production capacity of 200 MW for modules and 180 MW for cells. Consumer Spread energy mix Comply with regulation Would otherwise have to buy carbon emission credits (in the EU) Use solar powered lights or charges instead of oil lamps (especially in developing countries or remote areas) Use solar powered products for novelty val Tata Solar Distribution Networks Apart from the Product. higher margins up to 15 per cent were offered to the dealers.Globally Trusted Module Tata Power Solar. admin buildings etc. Achieving supply chain superiority or excellence is within the reach of any company. Target Markets Who? House Owners Councils Corporations Where are they? How many? Millions of domestic roofs and developers / architects of new buildings. which was higher than the industry average of 6 per cent to 10 per . a pioneer of the solar industry offers a broad range of photovoltaic solar modules that feature high efficiency and best-in-class manufacturing edge. Many councils who own buildings with large roofs . Many companies with large roofs Reduce electricity costs Contribute to carbon emission reduction Take advantage of other incentives Increase value of property Reduce electricity costs Comply with carbon emission targets Reduce electricity costs Display corporate social responsibility Gain emission credits Sell electricity Sell carbon emission allowances Land Owners / Project Developers Electricity Companies Motivation Big companies. as well as the organizational imperative and willingness to invest in the right direction. it requires a vision. our broad range of solar energy panels and modules are among the top tier PV panels available to multiple customer segments including industrial. For the B2C model.schools. often globally operating. However. commercial.

7. Thus. transformers. This helped them penetrate the market deeper into the urban markets. This total is usually pretty high. * TRA International * Waaree Energies Private Limited * Webel SL Energy Systems Ltd. Perform analysis of the property and financial implications of the purchase. where corporate selling was involved. inverters. the target market of professionals was reached. * XL Telecom & Energy Limited 8. and installers. Competitors * Azure Power * Bharat Electronics Limited (BEL) * Bharat Heavy Electricals Ltd. Perform maintenance at no charge if anything breaks. In B2B model. Various Strategies Followed by Tata Solar Products Goods: panels. (BHEL) * Central Electronics Ltd. (CEL) * HHV Solar Technologies Private Limited * Micro Sun Tech Private Limited * Moser Baer India Limited * Photon Solar Energy Systems * Punj Lloyd Delta Renewables * Reliance Industries Solar Group * Renewable Energy Systems Limited * Solar Semiconductor * Sun Energy Systems * TATA BP Solar India Limited * Titan Energy Systems Limited * Titan Energy Systems Ltd. necessary construction equipment. Use marketing to . tie ups with major corporate houses saved the margins of the distributors and Tata Solar could provide the corporate houses a lesser price than the market. Services and ideas: have expert and experienced salespeople. Price Give the customer a detailed accounting of all equipment and service fees. and come up with a total. spec sheets.cent. In the proposal include all the equipment needed. and warranty info to better inform the client of what they are buying. engineers. tally it up.

Tata Power Solar. Promotion Tata BP Solar has embarked on an extensive retail distribution network. named Project Disha. . and go wherever they need to close the sale. Sales Promotions: Direct marketing: uses direct communication to generate a response in the form of an order or a request for further information. Informs the public of the benefits of solar without having to spend money on advertising. Meet face to face with the potential buyer to understand their goals and resources.DuPont is collaborating with Tata Power Solar to provide a safer. to reach out to customers across the country and overseas Advertising: newspaper. Solar Panels are complex and customized. Manipal varsity unveil solar car prototype .get the client to think of the purchase as an investment.Tata Solar working on Indo-China partnership for solar energy . rather than a huge expense. radio. Tata Solar Collaborations . . where the electricity supply is unreliable. billboards. reliable and cost-effective alternative to kerosene lamps for home lighting in areas such as Uttar Pradesh. Place Salespeople need to be available to travel to the individual sites to perform the analysis. anything to get your message across Personal Selling: very important. more efficient. Public Relations: media is constantly reporting about new developments in the renewable energy industry.Transphorm Partners With Tata Power Solar to Introduce India’s Most Efficient Solar Inverter. Give them immediate feedback. TV.

Social There are two overall forces in the social environment that are influencing the growth of the renewable energy industry: increasing environmental concerns and increasing energy demand. In addition to emerging technology.9. setup. The government has initiated a Renewable Energy Certificate (REC) scheme. Growing environmental awareness which is defined as the increasing knowledge and understanding of the finite nature of many of the world’s resources. solar hybrid lighting.49/kWh to INR 12. Technical Technological developments and investments catalyze the advancement of technology. and the impact of global warming on biodiversity. have led to increasing environmental concerns. companies engaged in R&D in solar power are also offered several subsidies and tax exemptions. IREDA has come up with several schemes to not only encourage the use of solar-powered systems. improved manufacturing techniques. and the stability of delicate ecosystems. The budgets has also encouraged private solar companies by reducing customs duty on solar panels by 5% and exempting excise duty on solar photovoltaic panels. and improving concentrating solar power systems.76/ kWh for solar PV projects.24/kWh for solar-thermal and between INR 10. . which is designed to drive investment in low-carbon energy projects. It Political regulates the market through MNRE (Ministry of Renewable Energy) and financial assistance is provided by IREDA (Indian Renewable Energy Development Agency Limited). the negative impact and contribution to climate change from burning fossil fuels and deforestation. future technology being aggressively pursued by research and development include thermal and electrical storage systems. Economical In the recent round of reverse auctioning process for the solar projects under the National Solar Mission. the price discovery for levelized tariff was in the range of INR 10. strengthen the ability of energy consumers to harness solar energy. (MNRE) provided financial assistance to the installation of around 33 grids of solar photovoltaic power plants. nanotechnology. but also facilitate businesses in the arena. and improve manufacturing equipment and techniques that enable low cost production. Tata Solar PEST Analysis PEST Analysis The government has huge presence in the Solar Energy market.59/ kWh to INR 12.

Tata Solar Porters 5 forces Analysis Suppliers Power: Solar technology has oligopoly characteristics dominated by a small number of players. -High switching costs for the firm in the industry is high. hotels. Degree of influence exerted over the industry by the buyers: -Forcing down the prices. -Suppliers are more concentrated in the European market because of better technology. But for the non-high end residential consumers’ government’s role will be important. There is no substitute product for solar. agriculture. Since the awareness in the market is very low.10. Degree of influence exerted over the industry by the suppliers: -Product is unique and scarce. only a small part of residential segment i. The product is critical for the company. The time taken to reach grid party would also depend on the bargaining power of the developers.e. The Suppliers of the solar energy supplies also too many industries. high end residential consumers is the pro-active group. but then with government intervention and rising awareness the price of solar energy is coming down. like rural. Buyers Power: The industry’s major power lies within the buyers’ side. hospitals. etc. higher quality -Low switching costs for the buyers -Substitute products are available . since the consumers are price sensitive -Consumers are demanding in terms of value-added.

Threat of New Entrance: The threat of new entrance is not that prominent now but it will be high as soon as grid parity is reached. conventional sources of energy are already present in the market and it is dominated by them. Degree of influence exerted over the industry by the threat of new entrance. Mahindra. companies dealing in conventional residential pump it is very high.e.6 percent of our carbon emissions in that year and save over 71 MTPA of imported coal in that year (equal to USD 5.5 bn of imports). etc. like Reliance. For the industry. -Product is not differentiated. Now the segment has high entry barrier but not very low exit barrier so the segment is attractive. -Switching cost for the consumers for the conventional market is low. this represents a significant investment opportunity. Since the solar prices are coming down and the support from the government will be the major driver in this regard. mitigate 2. BHEL.e. are: -There are many substitute products available -Customers’ switching cost is low as they can easily switch over to them as there price is less. . Threat of substitute product: Another prominent power in the industry is the threat of substitute. are: -Low scale of economies before the grid parity. is low but from the indirect competition i. Investment opportunities across the value chain from manufacturing to EPC to project development over the next decade. whose brand image is much higher. The imperative for action today is strong and therefore is the case for persistence and consistency on part of the Government. Moser Baer. -Government policy makes the entry barrier lower but after the grid parity it is expected to go down. -The major barrier to entry is the distribution channel. -The technology is not protected. are: -Market is crowded with indirect competition from indirect competition but with some direct competition. -Some prominent companies in the solar market. The substitute i. Solar power has tremendous potential to meet almost 7 percent of our power needs by 2022.e. Industry Rivalry: The intensity of rivalry from the direct competition i. companies dealing in solar equipment. Degree of influence exerted over the industry by the threat of substitute product. The exit barrier is expected to go down after the grid parity is reached. Degree of influence exerted over the industry by the industry rivalry.

Opportunity Existing supplier network be strengthened. Beneficiary of major Solar lighting system schemes Warranty of upto 5 years is a major benefit Manufacturing plant based in the country Huge supply network and service facilities. Threats Chinese solar lighting products providing cheaper alternatives For water heating. Supply from Tata subsidiaries for component could improve margins To expand its product mix. High cost of the product. Present systems utility limited to lighting and heating. Products limited for indoor use mostly Poor efficiency of the solar panels as compared to competitor products. Use of its R & D Centre’s for development of newer cheaper products. Newer and bigger entrants like Philips entering the solar lighting system market .11. biogas is another cheaper option compared to solar water heating systems. Tata Solar SWOT Analysis SWOT Analysis Strength First established manufacturer in the country. Portable product market yet to be tapped. Quality of the products manufactured is durable Weakness Limited portability of products available.

12. Financial Performance and Sales: .

13. Company to reach out to as many people and organizations as possible to through different marketing media. 3.e. Promote low cost solution to convert existing inverters to solar. Improve the cell efficiency and production cost. . It is expected that the solar tariff to lie anywhere within this band depending on the bargaining power of the developers. 4. used to track the sun movement – improve 20% solar power 5. i. And India will reach its grid parity by 2019-20. it shows a band representing solar rooftop costs. Cost reduction is achievement of economies of scale 8. Increase the plant capacity to cater market demand. In the exhibit below. the difference between cost and price (includes margins across the value chain). Promote Single Axis Tracking System technology. Strategic Recommendations The key driver of the growth of this sector is the concept of Grid Parity. Technological advancements 9. Invest in R&D for cost effective technologies and increase the segment – like developing the Solar Water Purifiers. In order to meet the rapidly growing electricity requirements in coming years. 6. 2. Emergence of low cost manufacturing locations. The band variation signifies the margins. 7. Tata Solar have to focus on following:1. This refers to the point when the cost of the solar power equals the cost of conventional power.

IREDA (Indian Renewable Energy Development Agency Limited). Google finance 6. References 1. MNRE (Ministry of Renewable Energy) 8. . 4. http://www.14. www. www. 2.renewableenergyworld. Mercom Communications India 7. moneycontrol. www.