The Mundra Project: Tata Power's Mega Headache

The Mundra Project: Tata Power's Mega Headache
Case Code: ECON083
Case Length: 12 Pages
Period: 2007-2018
Pub Date: 2020
Teaching Note: Available
Price: Rs.400
Organization : The US Egg Industry
Industry : Electric Utility
Countries : India
Themes: Macroeconomics, Economics of Strategy, Turnaround Strategy, Project Finance
The Mundra Project: Tata Power's Mega Headache
Abstract Case Intro 1 Excerpts

Abstract

This case is about the challenges faced by the Tata Power due to Tata Mundra Project, a coal-based power plant project, in India. Mundra project was set up with the objective of providing low-cost electricity across the country. Tata Power was well-known for its ethical stance and corporate social responsibility, but it faced unprecedented challenges regarding its Mundra project. The project soon came on the verge of shut down faced with criticism on economic, social and environmental fronts. After the Supreme Court verdict against it in 2017, Tata Power management found himself left with only a few options —to appeal to the Supreme Court to reconsider its decision, to sell 51% stake in CGPL for just Rs. 1 to one of the largest procurers of power and retain a 49% stake to operate the plant under the Operation & Management contract, or to renegotiate with electricity procurers on the tariff, and lastly, they could forget the equity investment in the project and hand the project over to the lenders. What should the management do?

Learning Objectives

The case is structured to achieve the following learning objectives:

  • Analyze the reasons for the strategic failure of Tata's Mundra Project
  • Understand the concept of PESTEL analysis with the example of Tata's Mundra Project and identify the various factors which could create an impact on power companies when they have a dependency on the international market
  • Understand the concept of Triple Bottom Line and measure the performance of the Mundra Project on various parameters elaborated in the TBL tool

Contents

Keywords

Macroeconomics, Business Environment, PESTEL Analysis, Triple Bottom Line, Sustainability economics, Business Ethics, SWOT Analysis, Project Finance, Ultra Mega Power Projects, Environmental Issues, Social Issues, Financing issues, Unfavorable Exchange Rate, Sustainable Project

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