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Porters 5 forces of Lanco Infratech Ltd (LITL) - EPC Company
1. The threat of the entrants Highly capital-intensive industry
and hence demands huge investment EPC Companies Behemoth like
L&T, HCC, Tata Project etc. are the leader in this EPC
Business
Expertise in Major Power Project in India but new player is
coming in this field likely but threatis less as the cost is very
much high to take a contract of a big project.
However obtaining regulatory approvals, Coal Permission, land
etc. still remain the majorbottlenecks.
The threat of new entrant appears to be medium.2. Threat of
Substitute Products
There is not perfect substitute to EPC industry as India is in
growing stage India is facing lot of crisis of Power and
infrastructure. Resources is limited in India and microeconomic
condition is playing big role to success in this
EPC Business but LITL is diversified in Road, Power, Renewable
and others.
Hence the threat of substitute products is less.3. Bargaining
power of Buyers
Bargaining Power of costumer is depend on quality of
construction as several companies want togive project to
L&T.
In India no of EPC companies is less in Mainly Power sector but
in other sector like Road, realstate etc. bargaining power of
costumer can be high.
Regulation by Government and Policies of Government can affect
the business of LITL. Overall, the bargaining power of buyers is
Medium.
4. Bargaining power of suppliers Bargaining Power of suppliers
is high as now a days EPC companies condition is not very good
so Supplier want to insure their money and they will bargain as
much as they can.
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Lanco has to import better grade coal from other countries for
power plant so they have to paymuch high price compare to coal of
India.
So, looking at the present condition, the power of suppliers is
high.
5. Intensity of Rivalry Among Competitors EPC companiesHowever
demand of Infrastructure is very high but due to economic
slowdown
LITL has intensity of Competition is high.
Government encouragement is expected to increase but in this
current situation LITL are facingcompetition from several companies
like L&T, HCC, and Tata Project etc. As LITL is not very
old company.
So overall the intensity of competitive rivalry is high.
Hambrick and James W. Fredrickson Diamond Strategy model -
LITL
1. Arena (Where will we be active?)LITL has been creating growth
in EPC, Power, Solar, Infra etc. They have diversified in many
sector and many countries. LITL has its core business in
integrated infrastructure and they are
expertise in EPC turnkey project.
2. Vehicle (How will we get the?)Diversification in many cities
like Bihar, Odisha, Kolkata where infrastructure is very poor.
New technology to improve execution of EPC project to get
competitive advantages.
3. Differentiator (How will we win?)Execution of Power project
in minimum time slot and diversification in many sector and
countries.
4. Staging (What will be our speed and sequence of moves?)Solve
the Financial Problem to gain the faith of other stockholder and
try to target external EPC
project for Finance Viability.
5. How will we obtain our returns?
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Economic Scale: - As I have seen at site for construction of 4
project (TG) they have purchase 4
unit of cribs, however they can do by 1 or max 2 so they need to
work out on economic of scale.
As India is expected to boom in infrastructure, so
diversification and EoS can expedite the
return.
