Alpha: en route from “Power”-less to “Power”-ful

Abstract

Subject area

Strategy and finance.

Study level/applicability

MBA/MBA equivalent programme – finance specialisation.

Case overview

In June 2009, Mr Rakesh Vora, CEO of Alpha Power Ltd, India was facing problems while deciding the appropriate business model of the company. Without the existence of an adequate business plan, the CFO, Mr Harish Gupta, could not decide the adequate capital structure and valuation of the one million shares the company planned to issue in the market through private placement.

Alpha Power Ltd is planning to start two power plants at Jatra and Chhapra. The plants are to be funded by a prudent mix of debt and equity; but, it has major issues regarding the financing arrangements. The management is undecided about how to fund these projects. Power sector in India is booming; however, the challenges faced by the company are numerous. They include possibility of a slowdown, different buying/leasing options for land, option of using better technology, decision regarding importing of superior quality, but high-cost coal and valuation of the company using various approaches, etc.

Expected learning outcomes

The case is intended to help future finance professionals understand the working of power plants in India and experience the decision-making process faced by managers, while making a business plan and raising funds for power projects.

Supplementary materials

Teaching notes.

Citation

Rathi, N. and Modi, G. (2011), "Alpha: en route from “Power”-less to “Power”-ful", , Vol. 1 No. 4. https://doi.org/10.1108/20450621111190827