Production and Operations Management Project on Ntpc Simhadri2007

A PROJECT TO STUDY

PRODUCTION AND OPERATIONS OF NTPC SIMHADRI

USING PRODUCTION AND OPERATION MANAGEMENT FUNCTIONS

SUBMITTED BY

ANAND THORAT- 07

VENKAT SURESH- 40

NANDITA SADANI- 48

MITHUN KUMAR PATNAIK- 82

AMITY GLOBAL BUSINESS SCHOOL

BANJARA HILLS ROAD NO: 11

HYDERABAD

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INDEX

S.NO. CONTENTS PAGE NO.1.2.2.1.2.2.2.3.2.4.2.5.2.6.2.7.2.8.2.93.3.1.3.2.3.3.3.4.3.5.4.4.1.4.2.4.3.5.6.7.8.

POWER SECTOR IN INDIAINTRODUCTION TO NTPCMAJOR ACHIEVEMENTS OF NTPCHISTORY OF NTPCVISION AND MISSION OF NTPCNTPC: CULTURESimhadri NTPCNTPC: CORE VALUES &OBJECTIVES SWOT ANALYSISDIVERSIFICATIONSUBSIDIARIESBUSINESS MODEL OF NTPCOPERATIONS OF THE BUSINESSOPERATING STRATEGIES OF NTPCORGANIZATION STRUCTURECORPORATE OBJECTIVESUPPLY CHAIN MANAGEMENTISSUES AND CHALLENGESHUMAN RESOURCESFUTURE CAPACITY ADDITIONSCHALLENGES WITH COAL RESOURCESARTICLECASE STUDYCONCLUSIONS/RECOMMENDATIONSBIBLIOGRAPHY

2476

101112141417182021293034343434384043485050

IST YEAR MBA (2009-11), AGBS HYDERABAD (AMITY UNIVERSITY)

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1. POWER SECTOR IN INDIA:-

Power development in India is the key to economic development. The power sector

has been receiving adequate priority ever since the process of planned development in

1950. Hydro power and coal based thermal power have been the main sources of

generating electricity. Nuclear power development is at slower pace, which was

introduced in late 60’s. The concept of operating power systems on a regional basis

crossing the place, the power supply industry have been under constant pressure to

bridge the gap between supply and demand.

Since Independence in 1947, Indian Power sector progress has been rapid. From mere

1713 MWs of Installed capacity in 1950 the capacity at the end of March 2007 rose to

124569 excluding capacity of renewable energy. Total generation in April 2006- March

2007 was 659419 GWs in the utility sector. The per capita consumption of electricity

increased from 15 KWHs in 1950 to 619 in 2006-07.

Decades of economic planning in India following independence placed significant

emphasis on the development of the power sector. Electricity generation capacity with

utilities in India had grown from 1713 MW in December 1950 to over 124,287 MW by

March 2006. However, per capita electricity consumption remains much lower than the

world average and even lower than some of the developing Asian economies.

Investment in the sector has not been able to improve access and keep pace with the

country’s growing demand for electricity.

India has the fifth largest generation capacity in the world with an installed capacity of

152 GW as on 30 September 2009, which is about 4 percent of global power

generation. The top four countries, viz., US, Japan, China and Russia together consume

about 49 percent of the total power generated globally. The average per capita

consumption of electricity in India is estimated to be 704 kWh during 2008-09.

However, this is fairly low when compared to that of some of the developed and

emerging nations such US (~15,000 kWh) and China (~1,800 kWh). The world average

stands at 2,300 kWh. The Indian government has set ambitious goals in the 11th plan

for power sector owing to which the power sector is poised for significant expansion. In


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order to provide availability of over 1000 units of per capita electricity by year 2012, it

has been estimated that need-based capacity addition of more than 100,000 MW

would be required. This has resulted in massive addition plans being proposed in the

sub-sectors of Generation Transmission and Distribution.

India is world's 6th largest energy consumer, accounting for 3.4% of global energy

consumption. Due to India’s economic rise, the demand for energy has grown at an

average of 3.6% per annum over the past 30 years. In March 2009, the installed power

generation capacity of India stood at 147,000 MW while the per capita power

consumption stood at 612 kWh. The country's annual power production increased

from about 190 billion kWh in 1986 to more than 680 billion kWh in 2006. The Indian

government has set an ambitious target to add approximately 78,000 MW of installed

generation capacity by 2012. The total demand for electricity in India is expected to

cross 950,000 MW by 2030.

About 75% of the electricity consumed in India is generated by thermal power plants,

21% by hydroelectric power plants and 4% by nuclear power plants. More than 50% of

India's commercial energy demand is met through the country's vast coal reserves. The

country has also invested heavily in recent years on renewable sources of energy such

as wind energy. As of 2008, India's installed wind power generation capacity stood at

9,655 MW. Additionally, India has committed massive amount of funds for the

construction of various nuclear reactors which would generate at least 30,000 MW. In

July 2009, India unveiled a $19 billion plan to produce 20,000 MW of solar power by

2020.

The Power sector in India is predominantly controlled by the Government of

India's public sector undertakings (PSUs). Major PSUs involved in the generation of

electricity are National Thermal Power Corporation (NTPC), National Hydroelectric

Power Corporation (NHPC) and Nuclear Power Corporation of India (NPCI). Besides

PSUs, several state-level corporations, such as Maharashtra State Electricity

Board (MSEB), are also involved in the generation and intra-state distribution of

electricity. The Power Grid Corporation of India is responsible for the inter-state

transmission of electricity and the development of national grid.


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The Ministry of Power is the apex body responsible for the generation and

development of power in India. This ministry started functioning independently from 2

July, 1992; earlier, it was known as the Ministry of Energy. The Union Minister of Power

at present is Sushilkumar Shinde, who took charge of the ministry on the 28th of May,

2009.

2. INTRODUCTION TO NTPC :-

NTPC Limited is the largest thermal power generating company of India. A public sector

company wholly owned by Government of India, it was incorporated in the year 1975

to accelerate power development in the country. Within a span of 30 years, NTPC has

emerged as a truly national power company, with power generating facilities in all the

major regions of the country.

Recognizing its excellent past performance and its vast potential, the Govt. of the India

has identified NTPC as one of the 'Navratnas'- a potential global giant and also it is

going to be identified as one of the ‘Maharatna’- giant among the 'Navratnas'. NTPC

Limited is the largest thermal power generating company of India. A public sector


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company, it was incorporated in the year 1975 to accelerate power development in the

country as a wholly owned company of the Government of India.

At present, Government of India holds 89.5% of the total equity shares of the company

and the balance 10.5% is held by FIIs, Domestic Banks, Public and others. Within a span

of 30 years, NTPC has emerged as a truly national power company, with power

generating facilities in all the major regions of the country.

Based on 1998 data, carried out by Data monitor UK, NTPC is the 6th largest in terms of

thermal power generation and the second most efficient in terms of capacity utilization

amongst the thermal utilities in the world.

The Group's principal activity is to generate and sell power to state utilities. It also

provides consultancy to power utilities and maintains power stations. The Group

operates in two segments, namely, Power Generation and Others. The Power

generation segment includes generation and sale of bulk power to SEBs/State utilities.

Other business includes providing consultancy, project management and supervision,

oil and gas exploration and coal mining.

In the Forbes list of ‘World's 2000 largest companies, 2008’, NTPC occupies 317th

place. With a current generating capacity of 30,144 MW, NTPC has embarked on plans

to become a 75,000 MW company by 2017.

Presently, Government of India holds 89.5% equity in the company and the balance

10.5% is held by FIIs, Domestic Banks, Public and others.

As on date, NTPC's total installed capacity is 27, 904 MW. NTPC's coal based power

stations are at: Singrauli (Uttar Pradesh), Korba (Chattisgarh), Ramagundam (Andhra

Pradesh), Farakka (West Bengal), Vindhyachal (Madhya Pradesh), Rihand (Uttar

Pradesh), Kahalgaon (Bihar), NTCPP (Uttar Pradesh), Talcher (Orissa), Unchahar (Uttar

Pradesh), Simhadri (Andhra Pradesh), Tanda (Uttar Pradesh), Badarpur (Delhi), and

Sipat (Chattisgarh). NTPC's Gas/Liquid based power stations are located at: Anta

(Rajasthan), Auraiya (Uttar Pradesh), Kawas (Gujarat), Dadri (Uttar Pradesh), Jhanor-


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Gandhar (Gujarat), Rajiv Gandhi CCPP Kayamkulam (Kerala), and Faridabad (Haryana).

NTPC's Power Plants with Joint Ventures are located at Durgapur (West Bengal),

Rourkela (Orissa), Bhilai (Chhattisgarh), and RGPPL (Maharastra).

India’s largest power company, NTPC was set up in 1975 to accelerate power development

in India. NTPC is emerging as a diversified power major with presence in the entire value

chain of the power generation business. Apart from power generation, which is the

mainstay of the company, NTPC has already ventured into consultancy, power trading, ash

utilisation and coal mining. NTPC ranked 317th in the ‘2009, Forbes Global 2000’ ranking of

the World’s biggest companies. The total installed capacity of the company is 31,134 MW

(including JVs) with 15 coal based and 7 gas based stations, located across the country. In

addition under JVs, 3 stations are coal based & another station uses naptha/LNG as fuel. By

2017, the power generation portfolio is expected to have a diversified fuel mix with coal

based capacity of around 53000 MW, 10000 MW through gas, 9000 MW through Hydro

generation, about 2000 MW from nuclear sources and around 1000 MW from Renewable

Energy Sources (RES). NTPC has adopted a multi-pronged growth strategy which includes

capacity addition through green field projects, expansion of existing stations, joint ventures,

subsidiaries and takeover of stations.

NTPC has been operating its plants at high efficiency levels. Although the company has

18.79% of the total national capacity it contributes 28.60% of total power generation due to

its focus on high efficiency.

In October 2004, NTPC launched its Initial Public Offering (IPO) consisting of 5.25%

as fresh issue and 5.25% as offer for sale by Government of India. NTPC thus became a listed

company in November 2004 with the government holding 89.5% of the equity share capital.

The rest is held by Institutional Investors and the Public. The issue was a resounding success.

NTPC is among the largest five companies in India in terms of market capitalization.

At NTPC people before Plant Load Factor is the mantra that guides all HR related policies.

NTPC has been awarded No.1, Best Workplace in India among large organizations and the

best PSU for the year 2009, by the Great Places to Work Institute, India Chapter in

collaboration with The Economic Times.


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The concept of Corporate Social Responsibility is deeply ingrained in NTPC's culture.

Through its expansive CSR initiatives NTPC strives to develop mutual trust with the

communities that surround its power stations.

Right from social to developmental work of the community and welfare based dependence

to creating greater self reliance; the constant Endeavour is to institutionalize social

responsibility on various levels.

2.1 MAJOR ACHIEVEMENTS OF NTPC

Largest thermal power generating company of India.

Sixth largest thermal power generator in the world.

Second most efficient utility in terms of capacity utilization.

One of the nine PSUs to be awarded the status of Navratna.

Provides power at the cheapest average tariff in the country.

2.2 HISTORY OF NTPC

1975

Incorporated in November

1977

TPC acquired the first patch of land at Sanghrauli

The first batch of executive trainees joined the company

1978

Takeover of management of the Badarpur project.

Construction of the first transmission network Sanghrauli- Korba- Kanpur of 400 KV

systems started.

1982


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Power Management Institute, Delhi, a centre for education was established

1983

In the very first year of commercial operation , NTPC earned a profit of Rs 4.51 crore

in the financial year 1982-83

1985

This year marked the completion of decade (1975-1985) of NTPC’s existence. NTPC

achieved a generating capacity of 220 MW by commissioning 11 units of 200 MW

each at its various projects in country.

The government of India approved the setting of three gas based combine cycle

projects by NTPC in Kawat in gujrat, Auraiya in Uttar Pradesh and Anta in Rajasthan.

For these projects, the World Bank agreed to provide US$ 485 million, which was the

largest single loan in the history of bank.

1987

Crossed the 5000 MW capacity mark.

1989

Consultancy division launched

1990

Total installed capacity crossed 10000MW

1992

Acquisition by the company of Feroz Gandhi Unchahar Thermal Power Station

(2x210 MW) from Uttar Pradesh Rajya Vidyut Utpadan Nigam Of Uttar Pradesh

1994

Crossed 15000 MW of installed capacity.

1995

NTPC celebrated 20 yrs of its existence.

A new logo was adopted.

NTPC took over the 460 MW Talcher Thermal power Station from Orrisa State

Electricity Board.

1997


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Achieved 100 million units generation in one year.

1998

Commissioned the first Naphtha based plant at Kayamkulam with a capacity of 350

MW.

2000

Commenced construction of a first hydro- electricity power project of 800 MW

capacity in Himachal Pradesh

2002

Three wholly owned subsidiaries viz. NTPC Electric Supply Company Limited, NTPC

Hydro Limited, NTPC Vidyut Vyapar Nigam Limited incorporated.

2004

NTPC became a listed company.

NTPC made its debut issue of euro bonds amounting to USD 200 million in

international market.

2005

The company rechristened as NTPC Limited in line with its changing business

portfolio and transforms itself from a thermal power utility to an integrated power

utility.

2008

National Thermal Power Corporation is the largest power generation company in

India. Forbes Global 2000 for 2008 ranked it 411th in the world.

2.3 VISION AND MISSION OF NTPC

VISION: “To be one of the world’s largest and best power utilities, powering India’s

growth.”


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To realize this vision, NTPC has drawn up a detailed Corporate Plan for the period 1997-

2012 which represents the company's collective optimism and enthusiasm, inspired by a

glorious past, a vibrant present and a brilliant future. The Plan has been prepared in-house

in consultation the committed, competent and confident members of the NTPC family. The

road map that has been charted out was after a thorough scan of the strengths and

weaknesses within the organization as well as opportunities and threats in the

environment. Considering multidimensional opportunities in the energy sector, NTPC will

adopt a multi-pronged growth strategy for capacity addition through Greenfield sites,

expansion of existing stations, takeovers and joint ventures. The capacity addition plans that

NTPC have drawn up for the fifteen-year period using all the above strategies to enable the

corporation to become a 40,000 MW company by 2012 A.D.

MISSION: “Develop and provide reliable power, related products and services at

competitive prices, integrating multiple energy sources with innovative and eco–friendly

technologies and contribute to society"

Make available reliable and quality power in increasingly large quantities at competitive

prices and ensure timely realization of revenues.

Adopt a broad based capacity portfolio including Hydro Power, LNG, Nuclear Power, and

non conventional and eco-friendly fuels

Plan and speedily implement power projects using state-of- the art technologies.

Be an integrated utility by implementing strategic diversifications in areas such as power

trading distribution, transmission, coal mining, coal beneficiation etc.

Develop a strong portfolio of profitable businesses in overseas markets including technical

services, generation assets etc.

Continuously attract and develop committed human resources to match world standards.

Lead fundamental and applied research for adoption of the state-of-the-art technologies,

breakthrough efficiency improvements and new fuels.

Lead developmental efforts in the Indian power sector including assisting state utility

reform, policy recover etc.


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Be a socially responsible corporate entity with thrust on environment protection, ash

utilization, community development, and energy conservation.

2.4 NTPC: CULTURE

Core values are both intensely and widely shared

Climate of high behavioral control

Low employee turnover

High agreement among the employees, for what NTPC stands for.

All these point to the fact that strong cohesiveness, loyalty and organization

commitment exist in NTPC lowering he attrition Rate.

2.5 Simhadri NTPC:


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AddressP.O. Simhadri-531 020, Dist. Vishakhapatnam, Andhra

Pradesh

Telephone (STD-08924,STD-Vizag-0891) - 243001

Fax 243092

Email

LocationNear Pittavanipalem Village,Dist. Vishakhapatnam,

Andhra Pradesh

Govt. approved date 24.07.1997 (Zero date 8.7.1997)

Approved Capacity/Installed

Capacity1000 MW

Plant Configuration 2X500 MW

Land Availability 3384.24 acres (entire land)

Coal Source Kalinga Block of Talcher Coal fields in Orrisa

Water Source Yeluru canal for sweet water, Sea water for CW system.

Beneficiary States Andhra Pradesh (100%).

Approved Investment Rs.3650.79 Cr. (I Qtr.97).

Associated Transmission System Implemented by APTRANSCO.

Units CommissionedUnit-I Commissioning: Feb 2002

Unit-II Commissioning: Aug 2002

International Assistance JBIC

Simhadri is the ambitious project of the National Thermal Power Corporation (NTPC)

intended to provide the ever growing power needs of the state of Andhra Pradesh. Infact,

NTPC comes to the rescue of about 20 million units of power consumed every day in Andhra

Pradesh. The construction work of the project is under way. Mr. R.C. Srivatsav has been

appointed as the General Manager for the Simhadri Project Operations. With the

completion of the project, the total power generation capacity of NTPC will reach to 3600

MW in Andhra Pradesh with NTPC Ramagundum already generating 2100 MW a day.


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The Project was developed near Parawada and 3384 acres of land was allocated for

the construction of the Thermal plant. The height of the Chimney is 275-feet - a record in

Asia for being the tallest factory chimney. Near to this are the 165-meter two cooling

towers. The Coal for the project will be coming to the plan with a special rail line setup for

this. Coal will be drawn from the Mahanadi Coal Fields in Orissa drawing over 6 Million

tones of coal every year. The Coal transport for the NTPC Simhadri Project is expected to

begin in December 2002.

The water intake for the project for cooling is done by sea water drawn from 8.9 kms

away from the Bay of Bengal through an intake-well sized 9100 cubic meters. This intake-

well is again the biggest well constructed in the entire India. The project also gets Sweet

water from the Yeluru canal.

The power generated at NTPC Simhadri will be bought by AP Transco - the power

distribution arm of the Electricity Board in the state. The approximate selling price of power

is expected to be at Rs. 2.10 as against to the price from private power generation

companies which was at Rs. 3 - 4 per unit.

The 500 MW First Boilers at the NTPC Simhadri, Boiler was ignited on November 6,

2001. This is a mile stone in the history of NTPC Simhadri.

The commencement of the 500 MW first units was expected to begin in March 2002

while the second unit is expected to begin by December 2002.

To save the environment from pollution, NTPC Simhadri has taken ample steps.

Towards this is the project of planting trees and maintaining greenery around the site.

2.6 NTPC: CORE VALUES &OBJECTIVES


http://www.vizaginfo.com/vnews/nov2001/nov1.php

http://www.vizaginfo.com/vnews/nov2001/nov1.php

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CORE VALUES

This corporate plan provides details of the overall agenda for NTPC. The successful delivery

of this agenda would require a committed work force that identifies with and supports the

vision. To ensure realization of this corporate agenda, a set of core values should be central

to, and govern each activity of the organization. Known as one of the NAVRATAN‟S of the

PSU‟S NTPC has its following core values. They are known as (BCOMIT) as follows:-

B-Business Ethics

C-Customer Focus

O-Organizational & Professional pride

M-Mutual Respect and Trust

I- Innovation & Speed

T-Total quality for Excellence

2.7 SWOT ANALYSIS

STRENGTHS

Largest market share in domestic power generation and a broad customer portfolio

across the country.

Excellent track record of performance in project implementation and plant

operation.

Diversified thermal generation portfolio – multiple sizes and fuel types.

Highly skilled and experienced human resources, exposed to state-of-the art

technologies in project execution and power generation.

Navaratna status

High brand equity among shareholders.

Strong balance sheet – ability to raise low cost debt.

Engineering skills in project configuration and package design.


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Turnaround ability for old plants – demonstrated in the takeover plants of Talcher,

Tanda & Unchahar.

High credit rating that is indicative of the confidence of lenders.

In-house training facility (PMI), CENPEEP, R&D etc that assist in development of the

sector. Thrust on reducing social costs of capacity growth – strong execution of

Resettlement and rehabilitation plans.

WEAKNESS

Low risk-diversification of business portfolio consists primarily of generation assets.

Poor financial health of customers.

Functional orientation hampering cross functional perspective in decision making.

Long and multi layered procurement process leading to long lead times and process

delay.

Fragmented IT architecture.

Gaps in HR systems such as performance management, rewards and incentives and

career development.

Inadequate deployment of a strong knowledge management system that could

assist in improving efficiency and effectiveness in all aspects of the business.

Hierarchy for decision making that affects responsiveness.

Role ambiguity and dilution within different lends of the organization.

OPPORTUNITIES

Expand generation capacities by putting up thermal and hydro capacities; maintain

the position of a dominant generating utility in the Indian Power sector.

Broad base fuel mix by considering imported coal, gas, domestic coal, nuclear

power etc with a view to mitigate fuel risks and maintain long run competitiveness.


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Expand services for EPC, R&M and O&M activities in the domestic as well as

international markets.

Backward integrate into fuel management to exercise greater control and

understanding of supply economics.

Lead the development and commercial deployment of non-conventional energy

sources especially in the distributed generation mode.

Improve collections by trading, direct sale to bulk customers and the active role in

allocation in new plants.

Execute increased number of power plants that classify for Mega Power Projects

status, thereby reducing the cost of the projects and power and power generated.

Forward integrate into the distribution business in India.

THREATS

Limited experience of operating in a truly liberalized environment with competition.

Limited experience of operating in an independently regulated system.

Redirecting power may be constrained by inter-regional connectivity.

Downward regulatory and competitive pressure on tariffs.

Stringent norms for approval of increase in capital costs for projects in event of

time overrun.

Stringent environmental norms in the future may add to the cost of generation.

Absence of an independent regular for coal industry and the delay in private

investments lending to the risk of low availability of coal in the future

2.7 DIVERSIFICATION

NTPC’s quest for diversification started with its foray into Hydro Power. It has, since then,

been moving towards becoming a highly diversified company through backward, forward


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and lateral integration. The company is well on its way to becoming ‘an Integrated Power

Major’, having entered Hydro Power, Coal Mining, Power Trading, Equipment

Manufacturing and Power Distribution. NTPC has made long strides in developing its Ash

Utilization business. In its pursuit of diversification, NTPC has also developed strategic

alliances and joint ventures with leading national and international companies.

Hydro Power: In order to give impetus to hydro power growth in the country and to

have a balanced portfolio of power generation, NTPC entered hydro power business

with the 800 MW Koldam hydro projects in Himachal Pradesh. Two more projects

have also been taken up in Uttarakhand. A wholly owned subsidiary, NTPC Hydro

Ltd., is setting up hydro projects of capacities up to 250 MW.

Coal Mining: In a major backward integration move to create fuel security, NTPC has

ventured into coal mining business with an aim to meet about 20% of its coal

requirement from its captive mines by 2017. The Government of India has so far

allotted 7 coal blocks to NTPC, including 2 blocks to be developed through joint

venture route. Coal Production is likely to start in 2009-10.

Power Trading: 'NTPC Vidyut Vyapar Nigam Ltd.' (NVVN), a wholly owned subsidiary

was created for trading power leading to optimal utilization of NTPC’s assets. It is

the second largest power trading company in the country. In order to facilitate

power trading in the country, ‘National Power Exchange Ltd.’, a JV between NTPC,

NHPC, PFC and TCS has been formed for operating a Power Exchange.

Ash Business: NTPC has focused on the utilization of ash generated by its power

stations to convert the challenge of ash disposal into an opportunity. Ash is being

used as a raw material input for cement companies and brick manufacturers. NVVN

is engaged in the business of Fly Ash export and sale to domestic customers. Joint

ventures with cement companies are being planned to set up cement grinding units

in the vicinity of NTPC stations.

Power Distribution: ‘NTPC Electric Supply Company Ltd.’ (NESCL), a wholly owned

subsidiary of NTPC, was set up for distribution of power. NESCL is actively engaged

in ‘Rajiv Gandhi Gramin Vidyutikaran Yojana’programme for rural electrification and

also working as 'Advisor cum Consultant' for Ministry of Power for implementation


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of Accelerated Power Development and Reforms Programme (APDRP) launched by

Government of India.

Equipment Manufacturing: Enormous growth in power sector necessitates

augmentation of power equipment manufacturing capacity. NTPC has formed JVs

with BHEL and Bharat Forge Ltd. for power plant equipment manufacturing. NTPC

has also acquired stake in Transformers and Electricals Kerela Ltd. (TELK) for

manufacturing and repair of transformers.

2.8 SUBSIDIARIES:-

NTPC Electric Supply Company Ltd. (NESCL)

The company was formed on August 21, 2002. It is a wholly owned subsidiary company of

NTPC with the objective of making a foray into the business of distribution and supply of

electrical energy, as a sequel to reforms initiated in the power sector.

NTPC Vidyut Vyapar Nigam Ltd. (NVVN)

The company was formed on November 1, 2002, as a wholly owned subsidiary company of

NTPC. The company’s objective is to undertake sale and purchase of electric power, to

effectively utilize installed capacity and thus enable reduction in the cost of power.

NTPC Hydro Ltd. (NHL)

The company was formed on December 12, 2002, as a wholly owned subsidiary company of

NTPC with an objective to develop small and medium hydroelectric power projects of up to

250 MW.

Pipavav Power Development Co. Ltd. (PPDCL)

A memorandum of understanding was signed between NTPC, Gujarat Power Corporation

Limited (GPCL) and Gujarat Electricity Board (GEB) in 2004 for development of a 1000 MW

thermal power project at Pipavav in Gujarat by forming a new joint venture company

between NTPC and GPCL with 50:50 equity participation. Pursuant to the decision of Gujarat

Government, NTPC Ltd. has dissociated itself from this company. PPDCL is under winding up.


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Kanti Bijlee Utpadan Nigam Limited, (formerly known as Vaishali Power Generating

Company Limited)

To take over Muzaffarpur Thermal Power Station (2*110MW), a subsidiary company named

‘Vaishali Power Generating Company Limited (VPGCL)’ was incorporated on September 6,

2006 with NTPC contributing 51% of equity and balance equity was contributed by Bihar

State Electricity Board. This company was formed to renovate the existing unit and run the

plant. The second unit has been successfully re-synchronized on October 17, 2007 after 4

years of being idle. Renovation and modernization of the first unit is under progress. The

company was rechristened as ‘Kanti Bijlee Utpadan Nigam Limited’ on April 10, 2008.

Bharatiya Rail Bijlee Company Limited (BRBCL)

A subsidiary of NTPC under the name of ‘Bharatiya Rail Bijlee Company Limited’ was

incorporated on November 22, 2007 with 74:26 equity contribution from NTPC and Ministry

of Railways, Govt. of India respectively for setting up of four units of 250 MW each of coal

based power plant at Nabinagar, Bihar. Investment approval of the project was accorded in

January, 2008.

3. BUSINESS MODEL OF NTPC

1. Efficiency improvement includes both improvements in the existing process and

through improvement in the technology used to increase the productivity of the


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company. Research & Development Centre is ISO 17025 accredited and provides

high end scientific services to all the company’s stations as well as many outside

stations resulting in improving availability and reliability of stations by providing

condition assessment, failure analysis, solving and analyzing specific problems, and

helping our stations in increasing the availability and reliability of their units.

2. Cost efficiency i.e. providing power at reasonable prices so that they could provide

power to all in need. Their ultimate aim is to reduce the cost because without being

the cost leader they can’t dominate the market. So as a market leader they are

always aiming at reducing the cost.

3. Technology enhancement i.e. to stay in competition they have to continuously

enhance their technology. Technology enhancement is also a part of cost efficiency.

That means by applying the new technologies the company can reduce the cost as

well as improve the efficiency.

4. Eco friendly system : Driven by its commitment for sustainable growth of power,

NTPC has evolved a well defined environment management policy and sound

environment practices for minimizing environmental impact arising out of setting up

of power plants and preserving the natural ecology.

3.1 OPERATIONS OF THE BUSINESS


LOCATION OF FACILITY FOR NTPC

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The purpose of the location of NTPC in Visakhapatnam is to find an optimal location

which will result in the greatest advantage to the organization.

There is minimal wastage of resources because of this location.

BHEL is the major supplier of equipment for NTPC Simhadri. It is located at a distance

of 20 Kms from the plant.

HPCL is the major supplier of FUEL. It is located at a distance of 20 Kms.

The plant is quite near to Sea ports, Railway station (to handle coal from Australia

and Talcher) and Airport.

It distributes power to Power Grid which is just 10 Km away from the location of the

plant and hence there is no wastage of power during transmission.

Nearest water source is Yeleru Canal.

5 Kms from Seashore as it uses sea water as coolant in cooling towers.

PLANT LAYOUT AND MATERIAL HANDLING


NTPC SIMHADRI OVERALL LAYOUT

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Coal is handled and processed. It is then sent to the units 1,2,3,4.

Units 1 and 2 are linked with chimney 1 which consists of 2 chimneys internally.

Similarly units 3 and 4 are linked with chimney 2.

Each unit is linked with cooling towers in order to cool the steam. Sea water pump

house links with cooling towers in order to supply Sea water as a coolant.

DM plant links all the units in order to supply DM water.

Yeleru Reservoir Canal is linked with DM plant to supply water.

Every unit is linked with power handling and transmission station where power is

transmitted to the power grid.

Also, each unit is linked with Ash pond through Ash dispenser.


GENERAL THERMAL POWER PLANT LAYOUT

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1. Cooling Tower 10. Steam Control Valve 19. Superheated

2. Cooling Water Pump 11. High Pressure Steam Turbine 20. Forced Draught (Draft) Fan

3. Transmission Line (3-Phase) 12. Deaerator 21. Reheater

4. Step-Up Transformer (3-Phase) 13. Feedwater Heater 22. Combustion Air Intake

5. Electrical Generator (3-Phase) 14. Coal Conveyor 23. Economizer

6. Low Pressure Steam Turbine 15. Coal Hopper 24. Air Preheater

7. Condensate Pump 16. Coal Pulverizer 25. Precipitator

8. Surface Condenser 17. Boiler Steam Drum 26. Induced Draught (Draft) Fan

9.Intermediate Pressure Steam

Turbine18. Bottom Ash Hopper 27. Flue Gas Stack


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a Coal is imported from Talcher and Australia which is transported to the plant

through rail.

a Coal wagons are handling at the Coal handling station.

a From the coal handling station, coal is either stored in Stock Yard or directly sent to

Coal Crushing mill, which crushes coal to 20mm size.

a Through Conveyor belts, coal is sent to bunkers.

a From bunkers it is sent to Coal mill where coal is milled to powdered state.

a The powdered coal is mixed with air and sent to Coal Gun.

a From Coal Gun, it is sent to the Coal Furnace.


COAL PROCESS LAYOUT

UNIT LAYOUT 1(IN ORDER TO KNOW THE

INTERNAL OPERATION OF COAL FURNACE)

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The coal furnace is surrounded by water walls which consist of DM water.

DM water is supplied from Boiler Drum to Coal Furnace which is more than 165

meters high from Coal Furnace.

Coal is supplied through coal gun.

Initially, the coal is burnt with the help of Diesel. Two kinds of Diesel are used: HSD

(High Speed Diesel) and LSD (Low Speed Diesel). First LSD is used and then HSD is

used. Later, Oil supply is stopped and coal is left for burning.

In order to ignite the furnace, DC supply is given by the DC inverters.

The heat generated by the coal furnace is more than 1200 degrees centigrade.

When water comes through the water walls, it gets heated upto 540 degrees and

turns into steam.

This steam flows to turbines at various pressures.

These turbines are linked with generators which generate power and these

generators supply power to power stations from where it is sent to power grid.

After the Coal is burnt, it turns into Ash. Bottom Ash is collected at Bottom Ashing

and the Fly ash at the Induction Fans (IDF). Ash flows through IDF to ESP (Electro

Static Priscribrators). In this ESP, 99% of Ash is sent to bottom Ashing. Less than 1%


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of the Fly ash goes through Chimneys which is 275 meters high. So, there is very less

Air pollution.

Steam generated in the coal furnace is supplied to the Economizer.

From there, it is sent to the Super heater which has an elaborate setup of tubing

where the steam vapour picks up more energy from Hot Flue gases outside the

tubing and its temperature is now super heated above the saturation temperature.

The super heater steam is then piped through the main steam lines to the walls

before the high pressure turbines. From High Pressure turbines (HP) steam is

transferred to Super Heater again and then to IP (Intermediate pressure) turbine.

The turbines are connected to generators where power is generated and sent to

power grid.


UNIT LAYOUT 2(IN ORDER TO KNOW THE

INTERNAL OPERATION AND PROCESS OF

TURBINE)

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After this, the steam loses its pressure and hence is sent to low pressure turbine (LP).

Then, steam has very low pressure which cannot be used for the turbines. Hence, it

is sent to condenser which is in Vaccum.

The condenser is a shell and tube heat exchanger in which cooling water is circulated

through the tubes. The exhaust steam from the LP turbines enters the shell where it

is cooled and converted to condensate (water) by falling over the tubes. Such

condensers use steam ejectors for continuous removal of air and gases from the

steam side to maintain vaccum. This condensated steam is converted to water by

the cooling towers in which coolant is sea water.

The water from the cooling tower is sent to hot well.

From hot well, the water will go through condenser pumps through low pressure

temperature heater, then through High pressure temperature heaters. This is called

Re-heating or Re-cycling system (Deaerator system) to Boiler speed pump. Each

boiler speed pump consumes 10MW in 500MW generated power.

Deaerators to boil speed pumps and to HP heaters and to FRS (Feed Regulating

Station) to Boiler Drum.

Hence whatever DM water was vaporized is again De-vaporized to DM water again.

This comes back to Boiler Drum again.

In cyclic process, this water goes down from Boiler drum to Furnace.

In between the process of vaporizing and de-vaporizing of water, 10% of water is

lost. This lost water is made up by make up pumps which are connected to the DM

plant.


DE-MINERALIZATION PLANT LAYOUT

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Water is supplied from Yeleru Canal to the reservoir. From here, this water is

pumped to DM plant.

This water is purified with the help of Aulum and Chlorine in the first stage. This

water is called Filter water.

Filter water is sent through gravity filters by which we get pure drinking water.

This pure water is sent to Cat-ion vessel and then to Cat-ion exchanges from here to

the Degasser and then to An-ion exchanger and to mixed bed.

The water coming out of the mixer bed is 100% pure Dematerialized water (DM).

DM water is stored in DM water tank.

The DM water tank is linked with DM water make up pump which is again linked to

boiler drum.


POWER STATION LAYOUT

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The power generated through the generators is 18 Kv.

This 18 Kv power is stepped up by step-up generator to 400 Kv.

This is done in order to avoid heavy Cabling for transmission of power.

This is sent to power grid.

From Power grid, the power distributions are 400 Kv which is given to factories. In

the same way 33 Kv, 11 Kv are stepped onto 440v and again stepped onto 230v

which is used to household purpose.

3.2 OPERATING STRATEGIES OF NTPC

Maintain its position as the leader:

As the largest power Generation Company in India NTPC Ltd is looking to

increase its capacity to 75000 MW by 2017.

Adopt the new technology:

NTPC Ltd is also looking to utilize other sources of power generation in the

next 5 years namely Hydel power and nuclear energy to generate electricity.

Resource management :

The company will look to continue with their stringent recruitment and

retention policy which has provided it with the best minds in the country.

Environment management :


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Being the leader in its trade the company will look towards fulfilling its

corporate social responsibility and contributing towards the environment.

3.3 ORGANIZATION STRUCTURE:

3.4 CORPORATE OBJECTIVE

BUSINESS PORTFOLIO GROWTH

To further consolidate NTPCS position as the leading thermal power

generation company in India and establish a presence in hydro power

segment.

To broad base the generation mix by evaluating conventional sources of

energy to ensure long run competitiveness and mitigate fuel-risks.


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To diversify across the power value chain in India by considering backward

and forward integration into areas such as power trading, transmission,

distribution, coal mining, coal beneficiation, etc.

To develop a portfolio of generation assets in international markets.

To establish a strong brand in the domestic & international market.

CUSTOMER FOCUS

To foster a collaborative style of working with customer growing to be

a preferred brand for supply of quality power.

To expand the relationship with existing customers by offering a

bouquet of services in addition to supply of power e.g. trading, energy

consulting, distribution consulting, management consulting,

management practices.

To expand the future customer portfolio through profitable

diversification into downstream business, inter alia retail distribution

and direct supply.

To ensure rapid commercial decision making, using customer specific

information with adequate concern for the interests of the customer.

AGILE CORPORATION

To ensure effectiveness in business decisions and responsiveness to change

in the business environment by

Adopting a portfolio approach to new business development.

Continuous and coordinated assessment of the business environment to

identify and respond to opportunities and threats.

To develop a learning organization having knowledge based competitive

edge in current and future businesses.

To effectively leverage information technology to ensure speedy decision

making across the organization.


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PERFORMANCE LEADERSHIP

To continuously improve on project execution time and cost in order to

sustain long run competitiveness in generation.

To operate & maintain NTPC stations at par with the best-run utilities in the

world with respect to availability, reliability, efficiencies.

To aim for performance excellence in the diversification businesses.

To embed quality in all systems and processes.

HUMAN RESORUCE DEVELOPMENT

To enhance organizational performance by institutionalizing an objective and

open performance management system.

To align individual and organizational needs and develop business leaders by

implementing a career development system.

To enhance commitment of employees by recognizing and rewarding high

performance.

To build and sustain a learning organization of competent world-class

professionals.

To institutionalize core values and create a culture of team building,

empowerment, equity, innovation and openness which would motivate

employees and enable achievement of strategic objectives.

FINANCIAL SOUNDNESS

To maintain and improve the financial soundness of NTPC by prudent

management of the financial resources.

To continuously strive to reduce the cost of capital through prudent

management of deployed funds, leveraging opportunities in domestic and

international financial markets.

To develop appropriate commercial policies and processes this would ensure

remunerative tariffs and minimize receivables.

To continuously strive for reduction in cost of power generation by improving

operating practices.


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SUSTAINABLE DEVELOPMENT

To contribute to sustainable power development by discharging corporate

social responsibilities.

To lead the sector in the areas of resettlement and rehabilitation and

environment protection including effective ash-utilization, peripheral

development and energy conservation practices.

To lead developmental efforts in the Indian power sector through efforts at

policy advocacy, assisting customers in the operations and management of

power plants etc.

RESEARCH and DEVELOPMENTS

To pioneer the adoption of reliable, efficient and cost-effective technologies

by carrying out fundamental and applied research in alternate funds and

technologies.

To carry out research and development of breakthrough techniques in power

plant construction and operation that can lead to more efficient, reliable and

environment friendly operation of power plants in the country.

To disseminate the technologies to other players in the sector and in the

long-run generating revenue through proprietary technologies.

3.5 SUPPLY CHAIN MANAGEMENT

Coal is supplied from Talcher and Australia which is stored and maintained very well

at the Coal Stock yard.


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There are no retailers or distributors. Everything is taken care by the government

since it is a State-owned company.

Supply of electric products are done by BHEL which is also a government owned

enterprise.

Chief water source is Yeleru canal.

4. ISSUES AND CHALLENGES

4.1 HUMAN RESOURCES

People before PLF (Plant Load Factor)' is the guiding philosophy behind the entire gamut of

HR policies at NTPC. NTPC are strongly committed to the development and growth of all our

employees as individuals and not just as employees. NTPC currently employ approximately

24500 people at NTPC.

Competence building, Commitment building, Culture building and Systems building are the

four building blocks on which our HR systems are based.

RECRUITMENT

NTPC believe in the philosophy of 'Grow your own timber'. Our 'Executive Trainee' scheme

was introduced in 1977 with the objective of raising a cadre of home grown professionals.

First Division Graduate Engineers/ Post graduates are hired through nation-wide open

competitive examinations and campus recruitments. Hiring is followed by 52 weeks of fully

paid induction training.


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CAREER ADVANCEMENT AND OPPORTUNITIES

NTPC have a well established talent management system in place, to ensure that NTPC

deliver on our promise of meaningful growth and relevant challenges for our employees.

Our talent management system comprises PERFORMANCE MANAGEMENT, CAREER PATHS

and LEADERSHIP DEVELOPMENT.

REWARDS AND RECOGNITIONS

We have, from inception, created a culture of rewards and recognitions through celebration

of various achievements and events and recognizing the contributions behind such success.

INNOVATE, CREATE, COMPETE

We have introduced numerous initiatives which seek to enhance the creativity, innovation,

functional aptitude and teamwork of our employees. These initiatives include National Open

Competition for Executive Talent (NOCET), Professional Circles, Quality Circles, Business

Minds and Medha Pratiyogita (a quiz for our employees). A management journal called

“Horizon” is published quarterly to enable the employees to share their ideas and

experiences across the organization.

QUALITY OF WORK-LIFE

NTPC is proud of its systems for providing a good quality of work-life for its employees. In


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addition to providing beautiful and safe work places, NTPC encourages a culture of mutual

respect and trust amongst peers, superiors and subordinates.

Away from hectic city life, NTPC townships provide an environment of serenity, natural

beauty and close community living. Numerous welfare and recreation facilities including

schools, hospitals and clubs are provided at the townships to enhance quality of life & the

well being of employees and their families. An entire range of benefits, from child care leave

to post retirement medical benefits are extended to employees to meet any exigency that

may arise in a person's life.

KNOWLEDGE MANAGEMENT IN NTPC

To meet our ultimate objective of becoming a learning organization, an integrated

Knowledge Management System has been developed, which facilitates tacit knowledge in

the form of learning and experiences of employees to be captured and summarized for

future reference.

TRAINING AND DEVELOPMENT

NTPC subscribes to the belief that efficiency, effectiveness and success of the organization,

depends largely on the skills, abilities and commitment of the employees who constitute the

most important asset of the organization.

Our Training Policy envisages a minimum of 7 man days of training per employee per year.

NTPC have developed our own comprehensive training infrastructure.

EDUCATION UP-GRADATION SCHEMES

To meet the academic aspirations of employees and match them with the needs of the

organization, NTPC has tie-ups with institutes of repute like MDI, Gurgaon; IIT Delhi; BITS

Pilani, etc. NTPC sponsors fixed size batches of employees who are inducted into these

courses based on their performance rating in the company and their performance in the

entrance exam conducted by the respective institute. Unlike other study leave and

sabbaticals, employees undergoing these courses do not forego their salary or growth during

the duration of the course.

SEEKING FEEDBACK

NTPC actively seek and encourage employee feedback to ensure that our HR interventions


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and practices remain relevant and meaningful. NTPC regularly conduct Employee

Satisfaction and Organizational Climate Surveys.

AWARDS

NTPC derive immense satisfaction from the awards NTPC receive and the resulting

recognition they bestow. The awards are key indicators and milestones on our HR journey,

and reinforce our HR philosophy and practices. NTPC has been awarded No.1, Best

Workplace in India among large organizations for the year 2008, by the Great Places to Work

Institute, India Chapter in collaboration with The Economic Times.

4.2 FUTURE CAPACITY ADDITIONS

NTPC has formulated a long term Corporate Plan up to 2017. In line with the Corporate Plan,

the capacity addition under implementation stage is presented below:

PROJECT STATE MW

Coal


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1. NCTPP II ( 2 x 490) Uttar Pradesh 980

2 Korba III ( 1 x 500) Chhattisgarh 500

3 Sipat I (3 x 660) Chhattisgarh 1980

4. Farakka III ( 1 x 500) West Bengal 500

5. Indira Gandhi STPP- JV with IPGCL & HPGCL ( 3 x 500) Haryana 1500

6. Simhadri II ( 2 x 500) Andhra Pradesh 1000

7. Vallur I -JV with TNEB ( 2 x 500) Tamilnadu 1000

8. Vallur Stage-I Phase-II -JV with TNEB ( 1 x 500) Tamilnadu 500

9. Bongaigaon(3 x 250) Assam 750

10. Mauda ( 2 x 500) Maharashta 1000

11. Rihand III(2X500) Uttar Pradesh 1000

12. Vindhyachal-IV (2X500) Madhya Pradesh 1000

13. Nabinagar TPP-JV with Railways (4 x 250) Bihar 1000

14. Barh II (2 X 660) Bihar 1320

15. Barh I (3 X 660) Bihar 1980

Hydro

1. Koldam HEPP ( 4 x 200) Himachal Pradesh 800

2. Loharinag Pala HEPP ( 4x 150) Uttarakhand 600

3. Tapovan Vishnugad HEPP (4 x 130) Uttarakhand 520

Total 17930

NTPC Limited, country’s largest power generating company having an installed capacity of

30,144 Mw, is adding 6,500 Mw in the southern region. Of this, 1,000 Mw is for the

Simhadri Super Thermal Power Station at Visakhapatnam, according to NTPC regional

executive director (south) Ambarish N Dave.

Of the two 500 Mw units planned to be added at Simhadri, one unit would be ready by

November 2010 while the second would come up in the subsequent phase. The Simhadri

power plant expansion is estimated to cost about Rs 5,130 crore.


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Andhra Pradesh would get about 35 per cent power from the new capacity addition at

Simhadri. The remaining would be distributed in the southern region according to the

agreements with the respective states. The entire power currently generated by the 1,000

Mw Simhadri plant is being used by the state.

In Tamil Nadu, the company would add another 500 Mw once its 1,000 Mw plant at Vallur is

complete. The plant is being set up at an estimated cost of Rs 5,123 crore in joint venture

with the Tamil Nadu Electricity Board.

This apart, the company is also in the process of conducting feasibility studies for the 4,000

Mw power plant at Kudgi in Bijapur district of Karnataka. The project would be executed

together with Power Company of Karnataka Limited for which a memorandum of

understanding was signed in January this year. The project would have three units of 800

Mw each in Stage I and two units of similar capacity in Stage II.

Feasibility studies for multiple locations for a 500Mw wind power project in Karnataka too

would be conducted soon.

NTPC was in talks with Gas Authority of India Limited for supply of liquefied natural gas

(LNG) to the Rajiv Gandhi Combined Cycle Power Project at Kayamkulam in Kerala. The

company would take up Stage II expansion of the project upon availability of fuel (LNG) at a

viable cost. The proposed expansion would not require additional land.

The southern region achieved the highest-ever generation of 32,067.76 million units (mu)

during the financial year 2008-09, surpassing the target of 29,775 mu.

4.3 CHALLENGES WITH COAL RESOURCES

The policy changes in coal sector provide an opportunity to NTPC to enter captive coal

mining business. Production is expected by 2010 in one coal block already allotted (Pakri

Barwadih in the state of Jharkhand). Five more blocks (~40MTPA) have been allotted to

NTPC, including two in JV with CIL.


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In addition to development of its own domestic coal mines NTPC is exploring various other

options including acquisition of stake in coal mines abroad for sourcing of thermal coal for

addressing fuel security concerns.

Ash Utilization is one of the key concerns at NTPC. The Ash Utilization division, set up in

1991, strives to drive maximum usage from vast quantities of ash produced at its coal based

stations. The division proactively formulates policies, plans and programmes for Ash

Utilization. It further monitors the progress in these areas and works at developing new

fields of Ash Utilization.

The quality ash produced conforms to the requirements of IS 3812 – 2003. The fly ash

generated at NTPC stations is ideal for use in cement, concrete, concrete products, cellular

concrete, light weight aggregates, bricks/blocks/ tiles etc. this is attributed to very low loss

on ignition value. To facilitate availability of dry ash to end users, all the new units of NTPC

are provided with the facility of dry ash collection system. Partial dry ash collection systems

have also been set up at the existing stations where these facilities did not exist earlier.

Augmentation of these systems to 100% capacity is in under progress.

As the emphasis on gainful utilization of ash grew, its usage over the years also increased.

From 0.3 million tons in 1991 – 1992, the level of utilization during 2008 – 09 stood at over

24.40 million tons.

The various segments of Ash Utilization currently includes use by a number of Cement,

Asbestos – Cement products & Concrete manufacturing industries, Land development, Road


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& Embankments, Ash Dyke Raising and Building Products. Such as bricks / blocks / tiles, as a

soil amender and source of micro –nutrients in agriculture and backfilling of mines.

AREA WISE BREAK-UP OF UTILISATION FOR THE YEAR 2008-09 IS AS UNDER:

Area of Utilization Quantity (in Million Tons)

Cement Industries 7.04

Ready Mix Concrete 0.33

Asbestos 0.20

Clay Ash/ Fly Ash Bricks 1.64

Land Fill 5.74

Ash Dyke Raising 6.24

Road/ Embankments 1.30

Mine Filling 1.14

Agriculture 0.002

Export 0.73

Others 0.02

Total 24.40

MAJOR INITIATIVES TAKEN BY NTPC TOWARDS ASH UTILISATION

NTPC continually strives to evolve innovative and diverse means of Ash Utilization to further

broaden the scope. Prominent among the methods devised so far are:

Dry Flyash Extraction Systems

Use in cement & concrete

Use in Ash based products including setting up of

o Ash Technology Park

o Land Development/Wasteland Development, Roads & Embankments, Raising

Ash Dykes'

Mine filling / Stowing

Agriculture


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NTPC Ash Utilization Division has published multiple literatures on the use of ash in various

applications in the form of books & promotional brochures and documentary films to create

awareness among the prospective users & entrepreneurs for use of ash. The booklets/

brochures/ films are:

BROCHURES:

a Fly Ash Bricks

a Clay Ash bricks

a Clay Ash Bricks with 60% Fly Ash

a Coal ash Environment friendly material - For fills, Embankments and Road pavement

Construction

a Fly Ash - a Resource for Cement & Concrete

a Use of Ash in agriculture (In Hindi)


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FILMS:

a Clay Ash Bricks

a Fly Ash Bricks

a Use of Fly Ash in Mine Filling

a Coal Ash As Fill Material

5. ARTICLE

Assembly Lines –Past and Present Scenario wrt Effective Cost

Objective of Study: Analysis of past and present trends used in Assembly Lines and the cost

factor associated with it.

1. History

In earlier times, prototypes of assembly lines were used. In the 19th-century meat-packing industry in Cincinnati, Ohio, and in Chicago, overhead trolleys were employed to convey carcasses from worker to worker. When these trolleys were connected with chains and power was used to move the carcasses past the workers at a steady pace, they formed a true assembly. Stationary workers concentrated on one task, the pace was dictated by the machine. Unnecessary movement was minimized so production was done faster.

On similar lines, Henry Ford, the American automobile manufacturer, designed an assembly line that began operation in 1913. The manufacturing time for magneto flywheels was reduced from 20 minutes to 5 minutes. After this success Ford applied the same technique to chassis assembly. Earlier, 12 1/2 man-hours were required for each chassis, however, Ford cut labor time to six man-hours using a rope to pull the chassis. Later, chains were used to drive to power assembly-line movement. So the assembly time fell to 93 man-minutes. With due credit to Ford's efforts, a private automobile could be afforded by a common man. The assembly line spread through a large part of U.S. industry and even low-cost unskilled labor could be employed. Sometimes, supervisors accelerated the pace of the machines and forced the workers to work faster. This led to conflict between the labor and supervisor. Furthermore, the assembly line jobs were monotonous and bored the workers. Quality was also not emphasized.

2. Concept


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In today’s world there is fierce competition and products are highly customized. The response times have reduced. This is especially true wrt machine tools, heavy construction equipment, heavy manufacturing in general and computer software and hardware. Even though the product is highly customized, yet it is required to be delivered with very short lead times, even shorter as compared to manufacturing lead time. So, the scheduling practice is to release the manufacturing order before the customer order is released and subsequently match incoming customer orders to units in progress. This is referred to as the “build-to-forecast” (BTF) approach. (Amitabh S. Raturia, Jack R. Mereditha, David M. McCutcheona and Jeffrey D. Camm)

Assembly Line Balancing

Assembly lines are widely used for the mass production of consumer goods and components

in large volume production systems. Design of these lines warrants taking into consideration

not only cycle time and precedence constraints, but also other restrictions.

Assembly Line Balancing would occur when for balance purposes workstation size or the no.

used would have to be physically modified.

The assembly line balancing problem is one of assigning all tasks to a series of workstations

so that each workstation has no more than can be done in the workstation cycle time and so

the unassigned (idle) time across all workstations is minimized.

Line Balancing is the process of assigning tasks to workstations in such a way that the

workstations have approximately equal time requirements (Chase Richard B., Aquilano,

Nicholas J, et al; Production & Operations Management- Manufacturing & Services; 8th

edition; Tata McGraw Hill., New Delhi; 1999)

Workstation Cycle TimeTime between successive units coming off at the end of the line

C = Production Time/ day

Required output/ day (units)


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Precedence RelationshipIt specifies the order in which tasks must be performed in the assembly process.

Evaluate the efficiency of the balanceEfficiency = Sum of task times (T)

Actual No. of WS (Na)* WS Cycle Time (C)

When Task Times are longer than workstation Cycle Times, the Solution is to -

1. Split the task

2. Share the task

3. Use parallel workstations

4. Use a more skilled worker

5. Work overtime

6. Redesign

Traditional and Dynamic Line Balancing

The layout of production facilities also determines productivity potential of a manufacturing enterprise. It is particularly important in the design of assembly lines where the objective is to assign tasks to work stations in such a way as to minimize total variable production costs. A Balanced Layout would produce the desired output with the fewest number of work stations, minimizing idle time. Studies have shown that task times are random variables; therefore the cost of task incompletion must be considered a part of total production cost. Incompletion cost will be the cost of repairing or completing tasks which cannot be completed within the cycle time after the item has reached the end of the assembly line. (John C. Carter* and Fred N. Silverman*)

Dynamic line balancing, assigns operators to one or more operations, where each operation has a predetermined processing time. It is like a group of identical parallel stations. Operator costs and inventory costs are stochastic because they are


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functions of the assignment process employed in balancing the line, which may vary throughout the balancing period, and the required flow rate. Earlier studies focused on the calculation of the required number of stations and demonstrated why the initial and final inventories at the different operations are balanced. (K. Roscoe Davis* and Deena D. Kushner)

Operator costs and inventory costs are the components of the cost function. The operator costs are based on the operations to which operators are assigned and are calculated for the entire work week regardless of whether an operator is given only a partial assignment which results in idle time. It is assumed that there is no variation in station speeds, no learning curve effect for operators' performance times, and no limit on the number of operators available for assignment. The costs associated with work-in-process inventories are computed on a “value added” basis. There is no charge for finished goods inventory after the last operation or raw material before the first operation.

The conditions, which must be examined before using the cost evaluation method, are yield, input requirements, operator requirements, scheduling requirements and output requirements. Yield reflects the output of good units at any operation. The input requirement accounts for units discarded or in need of reworking. The operator requirements define the calculation of operator-hours per hour, set the minimum number of operators at an operation, and require that the work is completed. The scheduling requirements ensure that operators are either working or idle at all times, and that no operator is assigned to more than one operation at any time. The calculation of the output reflects the yield, station speed, and work assignments at the last operation on the line.

3. Challenges

An important obstacle is that some pairs of tasks cannot be assigned to the same

station due to factors such as safety, physical demands placed on workers, quality,

and technological considerations.

4. Analysis

One study shows that while most simple assembly line balancing problems can be solved optimally, presence of additional restrictions such as task assignments makes them inherently more difficult. Insights into this aspect. (Ram Rachamadugu)

The cost evaluation method for dynamic balancing enables a manager to compare the costs of assigning operators to work stations. Using this method to calculate the operator and inventory costs, a number of different heuristics for assigning operators in dynamic balancing can be evaluated and compared for various configurations of the production line. The least cost solution procedure then can be applied to a real manufacturing situation with similar characteristics. (K. Roscoe



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Davis* and Deena D. Kushner)

In order to evaluate candidate line layouts, a total cost model is developed. Total cost is the sum of normal operating cost—which is simply a function of the number of work stations—and the cost of repairing products containing incomplete tasks. Because this latter cost is a random variable for a given balance, the expected value is used to evaluate a candidate layout. The cost associated with one or more workers exceeding the cycle time is the product of the probability of this happening and the expected cost of off-line repair.

The heuristic method for generating feasible balances builds workstations from continually updated lists of precedence satisfying tasks. Qualifying tasks are added to the station as long as the probability of the station exceeding the cycle time remains below a pre-specified threshold. The methodology requires systematically varying this threshold to permit a lowest total cost solution to emerge. The process of generating a large number of balances for a particular threshold is efficient. Evaluating the total costs of the resulting balances takes the majority of the computational time.

Even for large-scale problems, the computational cost is infinitesimal in the context of assembly line balancing, where very small improvements in productivity can mean substantial increments to profitability. (John C. Carter* and Fred N. Silverman*)

5. Conclusion

With high levels of customization and shorter Lead Times, flexibility in manufacturing, Modular BOM, subcontracting and expediting are used.

In the age of Product Innovation, new technologies, the manufacturing system has to be

flexible. So, several hybrid layouts have emerged. Set up times have reduced, so mixed

model assembly lines are used. The newest manufacturing system (FMS) has worked

wonders and can process any item. Manufacturing cells that resemble small assembly lines

are designed to process families of items. Some companies are placing wheels on their

machines for adjustment. Others are experimenting with modular conveyor system that

allows assembly lines to be rearranged while workers are away.

Cost is an important element in layout design. Inventory levels have reduced. Instead of

minimizing material flow, the number of loads has been minimized and also the distance

they are moved. Machines are located closer together to allow the frequent movement of





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smaller loads. Planners are now concerned with the rapid movement of material to and

from the facility itself.

Preeti Nigam

Sr. Lecturer, Production and Operations Management

RBS Meadow

6.CASE STUDY

AT&T BUYS A PRINTER

AT&T decided in 1991 to replace with state-of-the art technology the Troy brand of check printers that were being used in two of its operations sites. These sites printed checks for Payroll, Accounts Payable, Employee Reimbursements, and Billing Customer Refunds. Total annual print volume was estimated to be 13 million checks for 1992 and growing.

Treasury Operation's management thought that serving AT&T check printing needs in the future would require a major re-engineering of the check issuance process and that replacement of the printers was a first step. The current systems and equipment, for example, could not meet requirements for printing checks as part of AT&T marketing promotions. The marketing team, therefore, was forced to use outside services to print these checks. While the outside services met most of the requirements, the accounting transactions that were associated with these checks were often incorrect, and check reconciliation for these checks was almost impossible. Treasury Operations believed that they could eliminate the use of outside services and improve the duality and costs of their current service if they purchased print equipment that was computer controlled. In addition, it was important that the magnetic ink character recognition (MICR) line that was printed at the bottom of the check be of high quality, because banks charge extra for processing checks with unreadable MICR lines.

The team looking into new printers had identified Siemens, Delphax, Xerox, IBM, and NCR as the vendors that had printers that should be considered. Team members then decided on the following six criteria:

1. Features: Documented the technical features of each printer, maintenance availability, and requirements.

2. User rating: Documented results of a survey of users of each of the printers.

3. Pros/cons: Documented overall team observations.


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4. Cost: Cost analysis included purchase of printers, maintenance, supplies, and software.

5. MICR quality: Conformance to MICR standards.

6. Print quality: Conformance to print quality standards.

The team then assigned a point value (10 being the highest score), for each printer for each situation. Their final tabulation is shown on the next page.

Criteria Siemens Delphax Xerox IBM NCR

Features 9.9 6.6 5.2 7.7 8.2

User Ratings 8.0 8.3 6.7 8.6 8.6

Pros/Cons 10.0 1.0 5.0 8.0 8.0

Cost 10.0 6.0 4.0 2.0 8.0

MICR Quality 9.7 5.4 6.0 9.4 9.4

Print Quality 9.7 5.7 8.0 8.4 8.6

TOTAL 57.3 33.0 34.9 44.1 50.8

RANKING 1 5 4 3 2

DISCUSSION QUESTIONS

1. Is it appropriate taht in the final analysis MICR Quality was given the same weight as Cost?

2. Recompute the comparisons, using the following weight factors: Features 15%, User Ratings 15%, Pros/Cons 15%, Cost 30%, MICR Quality 12.5%, Print Quality 12.5%. Does this change the end result?

7. CONCLUSIONS/RECOMMENDATIONS

a NTPC Simhadri plant has created a benchmark in technology utilization, efficiency

and effective utilization of resources.

a It has been achieving records right from its synchronization.

a It is the only Power plant in India where maximum Automation is done in its

operations.

a It is the first power plant which uses sea water as a coolant.


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a It has also achieved great environment standards through its infrastructure facilities

like Tallest Chimneys in Asia (275m), Tallest cooling towers in Asia and maintaining

an Ash pond which is eco-friendly.

a It been maintaining excellent CSR(Corporate Social Responsibility) by providing jobs

to the land losers along with good compensation, providing employment for the

locals on a contract basis, construction of roads, drainage systems, drinking water

supply, hygienic conditions, hospitals, schools, etc all within 8 Kms of the NTPC plant.

a NTPC Simhadri has followed the principles of production and operation management

quite well and also maintained good relationship within its Micro as well as Macro

environments.

a There should be more Involvement of management at all levels with effective

creation of policies, vision, Mission, values, goals and support, communicated and

implemented throughout the Organization.

a There should be training of senior executives in managing for quality.

a It should evaluate plans for expansion in order to meet the Power needs of India as

well as to create more employment.

8. BIBLIOGRAPHY

Production and Operations Management, Chary

www.ntpc.in

www.google.com

Wikipedia

Forbes India

Business World


Production and Operations Management Project on Ntpc Simhadri2007

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