38th ANNUAL GENERAL MEETING
Dear Fellow Shareowners,
I extend a very warm welcome to all of you in this 38th Annual General Meeting of your Company.
'Team NTPC' through its sustained outstanding performance has achieved several milestones of success in the past and I am confident that it will continue to deliver amidst business environmental constraints and challenges.
Opportunities amid Challenges
The new Government's vision of providing power 24X7 to each household translates into robust growth opportunities amid challenges for the sector. The decision to put coal, power and renewable energy under one Minister also results in an integrated energy approach. The new Government's strong focus on tapping all the possible sources also opens up new business opportunities for your Company.
This growth scenario ensures ample room for both the public and private players to grow, both complementing each other in the endeavour of economic development and nation building.
India currently has one of the lowest annual per capita power consumption of 917.18 kwh in the world. It is also the lowest among BRICS nations. Demand, supply and consumption trends will be the key to the growth of the sector. I am confident that the future will see growth in the economy, fuelling more demand for power.
Almost 43% of the XII Plan target of 88,537 MW has been achieved in the first two years. The rate of capacity addition has risen from ~4 GW per annum during financial years 1992-93 to 2001-02 to ~9GW per annum during financial years 2002-03 to 2011-12.
Creation of new state of Telangana provides further opportunities for your Company to set up new power plants to meet the requirements of Telangana and Andhra Pradesh. Your Company is mandated to set up a 4,000 MW power plant in the state of Telangana.
High Aggregate Technical and Commercial (AT&C) losses and poor financial health of the State utilities is a cause of concern. Several measures have been introduced by the government which include R-APDRP scheme focused to reduce the AT&C losses to below 15% level.
Financial Restructuring Plan (FRP) has been notified to bail out the cash strapped state Discoms. Some states like Tamil Nadu, Rajasthan, etc. have already started implementation of FRP. There has also been strategic rethink about the effectiveness of FRP and the ways and means to make such measure really effective.
Almost the entire output of your Company's power stations has been contracted for under long-term PPAs. Reliable and quality power generation at cheapest cost has been the hallmark of your Company. Thus, NTPC has been able to realize its 100% dues for last eleven consecutive years. Beyond 2016 too, the sales are secured through supplementary agreements with the customers and your Company is committed to supply cheap and reliable power to the customers.
Renewable Energy has now acquired a much greater impetus in the total energy space in India; your Company is geared to increase its green energy presence.
Sustaining sector leadership
Your Company (including JVs) contributed over 26% of the Nation's generation with 18 % installed capacity.
Your Company's coal based stations recorded the highest PLF of 81.5% in the country as compared to the national average PLF of 65.55%, 59% for state sector, 62% for private sector and 76% for all central sector companies.
Your Company was ranked No. 1 Independent Power Producer and Energy Trader Globally in the Platts Top 250 Global Energy Company Rankings, 2013. Your Company has been able to maintain this ranking consistently since 2011.
Your Company is ranked 424th largest company in the world, 16th among the global electric utilities and 2nd among the Asian electric utilities as per Forbes Global 2000 ranking for 2014.
Your Company has been awarded as the 'Outstanding PSU of the Year 2014' by All India Management Association (AIMA). It has also been adjudged 'Best in HR Practices' in the first ever India Today Group PSU Awards.
Robust Performance in 2013-14
Various performance parameters substantiate the operational and functional excellence of your Company:
During the year the Company crossed 43,000 MW capacity and the current installed capacity is 43,128 MW. 1,835 MW was added during the financial year 2013-14. Work was awarded for 4,150 MW capacity.
Your Company exceeded the capex target of Rs. 20,200 crore. The capex has been increasing steadily since 2011-12 with an exceptional and unprecedented feat of exceeding targets by about 7.5% in 2013-14.
Your Company secured 'Excellent' MoU rating by Government of India for the year 2012-13.
Your Company's financial numbers have been impressive during the year 2013-14. The adjusted profit increased by 16.44% reaching Rs. 10,562 crore and the total income increased by 8.5% reaching Rs. 74,708 crore.
Your Company is proposing a very handsome total dividend of Rs. 5.75 per share during the year.
Operation started on Inland Waterways for transportation of imported coal to Farakka station and till date about 2.65 Lakh MT imported coal has been supplied through this mode to Farakka station.
Rs. 2520 crore were finally realized against the outstanding DESU period dues.
Rs. 536.30 crore were received by the Company towards interim settlement of claims recoverable in respect of expenditure incurred on Loharinag Pala Hydro Power Project.
Coal Supply Agreements (CSAs) were signed for 14,010 MW capacity commissioned / to be commissioned between April 2009 to March 2015.
100% realization of dues amounting to about Rs. 68,000 crore from the customers.
The improved performance in the first quarter of 2014-15, registering an increase of ~11% in commercial generation and~4.5% increase in declared capacity, as compared to the corresponding quarter in the previous year, strengthens my belief in the resilience of your Company, despite the adverse impact of the new tariff norms on its profits.
Even amid the general downturn in the economy and market during the year, your Company continued to enjoy tremendous investor confidence.
On the very first day of its launch, i.e. on 03-12-2013, NTPC's public issue of tax free bonds worth Rs. 1,000 crore was oversubscribed by 3.7 times and bonds worth Rs. 1,750 crore were finally issued.
Subsequently, additional bonds of Rs. 500 crore were issued on private placement basis at a premium, which were also oversubscribed by 1.2 times. Thus, total tax free bonds issued by your Company during the year amounted to Rs. 2,250 crore.
Further, your Company placed, for the first time, taxable bonds amounting to Rs. 750 crore directly with EPFO at a coupon rate of 9.34%, taking the total bonds issued during 2013-14 to Rs. 3,000 crore.
Your Company also raised several long term foreign currency loans from KfW, Japan Bank for International Cooperation (JBIC) and Sumitomo Mitsui Banking Corporation (SMBC) amounting to about USD 700 million.
Fuel security for reliable generation
Total coal consumed during FY 14 was 158.57 MMT comprising 148.18 MMT of domestic coal and 10.39 MMT of imported coal. For FY15, total coal requirement is estimated to be 177 MMT. Out of this 147 MMT is expected against coal supply agreements and 3 MMT through bilateral MOU/ E-auction. The gap of 27 MMT domestic coal is to be mitigated through 17 MMT of imported coal.
10 coal blocks have been awarded to your Company having geological reserves of around 5 billion tonnes and production potential of 100 MTPA, which can cater to substantial requirement of your Company's generation capacity. Your Company is making best efforts to extract these reserves as soon as possible to augment generation.
People, Planet and Power- in harmony
Your Company gives priority to all aspects related to sustainable development and follows the 'triple bottom line approach' encompassing economic, environmental and social criteria.
A Board level committee on corporate social responsibility (CSR) and sustainable development, headed by the CMD with two Independent Directors on it, guides the sustainability agenda.
As during the previous year, the sustainable development plan for the year 2013-14 was prepared in line with the Sustainable Development Policy of your Company. It mainly covers areas such as waste management, water management, bio-diversity conservation, energy management etc.
The main activities carried out by your Company under the sustainable development plan of 2013-14 included plantation of more than 4 lakh saplings in and around NTPC plants, installation of roof top solar PV units, rehabilitation of water body, etc., with a view to minimize the environmental impact.
‘Center for Power Efficiency and Environmental Protection (CenPEEP)', a unique voluntary program of GHG emission reduction initiated by your Company in the past, has resulted in avoidance of an estimated quantity of over 37 million tons of CO2 since 1996.
The efforts of your Company in the field of Corporate Social Responsibility-Community Development (CSR-CD) have been widely appreciated and awarded.
Your Company enhanced allocation for CSR and sustainable development activities. A total expenditure of Rs 128.35 crore was incurred towards corporate social responsibility and sustainable development activities during the year 2013-14, which exceeded the target. Your Company covers a very large number of CSR areas, ranging from infrastructure development to vocational training and women empowerment. The NTPC Foundation is specially sensitized to the call of the Honourable Prime Minister of our country and would give special emphasis to providing girls' toilets and development of model villages.
Apart from contributing in such CSR areas, your Company was prompt in extending support for relief activities concerning natural calamities in Uttarakhand, Himachal Pradesh and Odisha.
The capacity addition targeted by your Company and the sector requires availability of skilled manpower, which is projected to be less than that required in the future. Your Company not only aims to enhance requisite skills of its manpower, but is also working towards building a skill base for the entire sector.
Presently, there are 25 ITIs with which your Company is associated, with an aim to create a vocationally trained skilled workforce, capable of quality work execution. Your Company has adopted 17 existing government ITIs. It is setting up 08 new ITIs near its plants/stations, out of which 3 are already functioning. Your Company has organized a total of 29,593 man-days of industrial training/plant visits in order to give industry exposure to the students studying in the functional ITIs.
An Integrated International Project Management framework is being developed through international faculties for achieving competitive advantage by upgrading the capability of employees, besides entering into a long term institutional tie-up with IIM-Indore in this area.
Senior executives are being sent to top institutes in the world. The Power Management Institute of your Company is soon going to open NTPC School of Business for running PG Diploma in Management approved by AICTE.
Sound Corporate Governance
Your Company takes pro-active steps to ensure sound corporate governance and is committed to sound corporate practices based on conscience, transparency, fairness, professionalism and accountability. The core values of your Company embody the spirit of sound governance and act as a guiding beacon for the employees and management alike.
The corporate structure, business and disclosure practices of your Company are aligned to its corporate governance philosophy. Whistle blower policy, Fraud Prevention policy and policy of banning the business dealings are examples of the systems created to ensure fair and objective business dealings.
Your Company has a well established Risk Management Framework in place involving risk optimization, risk strategy, risk reporting structure, risk measurement and monitoring, and risk portfolio.
Team NTPC – Committed to setting new benchmarks of performance
The back bone of your Company is its committed manpower, which is dedicated to the progress of the Company and for maximizing stakeholders' value. Your Company is committed to the welfare and development of its employees to ensure high productivity.
The output of the employee engagement was evident in the enhanced generation per employee of 9.96 MUs as compared to 9.72 MUs during the previous year.
Acknowledgement of support
I take this opportunity to place on record my sincere thanks to the Government of India, especially the Ministry of Power, the State Governments, our valued customers, all the authorities and agencies who provide unstinted support to your Company. I convey my appreciation and thankfulness to my colleagues on the Board for their invaluable contribution in strengthening the Company. I express my thankfulness to the investors for their sustained support to the Company.
On behalf of over 25,000 competent and committed members of 'Team NTPC', I assure you of our total dedication and tireless efforts in order to fulfill your expectations.
(Dr. Arup Roy Choudhury)
Chairman & Managing Director
August 27, 2014