36^th ANNUAL GENERAL MEETING

Dear fellow shareowners,

It is my great privilege to welcome you all to this 36th Annual General Meeting of your Company. The fact that your Company has acquired much stronger growth momentum in the recent past makes this occasion very special.

You would be glad to know that your Company has been ranked:

• # 1 Independent Power Producer in the world in 2011 by Platts, a part of the prestigious McGraw Hill Group, in its top 250 Global Energy Companies ranking.

• # 337 in the Forbes Global 2000 List of the world’s largest companies for the year 2012, emerging as the 3rd largest electric utility in Asia.

• Unprecedented growth of the Company

  Your Company has demonstrated the highest ever growth in its history and I will briefly touch upon a few highlights:

  • 2,820 MW commissioned in 2011-12, the highest ever in a single year, surpassing the previous year’s capacity addition record of 2,490 MW.

  • 9,610 MW added during 11th Plan period ending March 2012, exceeding the Plan target.

  • Highest ever capex of ` 15,994 crore in 2011-12 with group capex of ` 19,973 crore.

  • 2,160 MW added in the first quarter of 2012-13.

  • 6,870 MW added in the past two years which is almost 20 per cent of the total capacity added since inception of NTPC.

  • Three 660 MW Super Critical Units commissioned and declared commercial at Sipat, the higher efficiency reduces CO2 emissions substantially.

  • 7,041 MW of work awarded since January 2012.

  • 16,809 MW under construction.

• Strong operational performance and challenges

  Operating one of the largest fleets in the world consisting of 120 units (only NTPC units) on commercial operation, your Company’s operational excellence is at par with world standards with high levels of capacity utilization and reliability through use of latest technologies and best practices. Some of the operational highlights of 2011-12 are:

  • 6 out of 15 coal stations had Plant Load Factor (PLF) of over 90 per cent.

  • 27.4 per cent share of NTPC group in total power generated in India, thus maintaining leadership position in the power sector.

  • 85 per cent PLF achieved by the coal based stations as against the national average of 73.32 per cent.

  • 89.5 per cent Availability Factor.

  Your Company is committed to bring about continuous improvement in generation efficiency to scale still higher levels of performance.

• Sound financials

  Your Company’s robust growth and operational excellence translate into sound financials. Prudent management of financial resources ensures that the fundamentals of your Company remain strong and are leveraged for further growth and higher returns. Some of the financial highlights for the year 2011-12 are:

  • Total revenue crossed ` 60,000 crore reaching ` 64,830.65 crore, an increase of about 13 per cent over 2010-11.

  • The net profit increased and stood at ` 9,223.73 crore.

  • Paying highest ever dividend of 40 per cent, including the 5 per cent being proposed in this Annual General Meeting (AGM) today.

  • Ranked 5th among all the listed Companies in terms of PAT for 2011-12.

  • Resounding success in raising USD 500 million from the international bond market which was oversubscribed more than 5 times with participation of over 200 investors, indicating robust confidence in your Company among the international investors.

  • NIL comments in the CAG Audit of your Company’s account for 3 years in succession, underlining the sound financial and accounting practices being adopted by your Company.

  • Your Company has been able to sustain its profitability despite the challenges affecting the Indian Power Sector.

• The momentum gets stronger in 2012-13

  The overall growth and excellence achieved in the year 2011-12 has led your Company into still higher gear of performance as demonstrated in the results during the first quarter of year 2012-13 as compared with the corresponding quarter of the year 2011-12. Some of the highlights are:

  • Commissioned 2,160 MW capacity (NTPC Group).

  • Generation growth has been 7.80 per cent as against all India growth of 6.40 per cent.

  • Total revenue increased by 11 per cent to ` 16,845 crore.

  • Profit After Tax increased by 20 per cent to ` 2,499 crore.

  • Capex increased by 83 per cent to ` 3,978 crore.

  During the year 2012-13, NTPC Group has declared 2,320 MW capacity on commercial operation.

  Thus, despite the numerous challenges and hardships being faced by the economy and the sector, your Company is marching ahead with strong results with the help of well conceived strategies.

• Growth outlook for the economy and the sector

  Even amid the relatively negative sentiments prevailing in the global and domestic economies, the Indian economy remains ‘the highest growth potential large economy’ in the world in the eyes of experts. India’s overall growth story remains intact for the long run. Being primarily driven by domestic demand and with a very large segment of its huge population having economic aspirations and dynamism, the Indian economy stands on firm foundations. This translates into a strong growth outlook for the power sector. It is envisaged that for 8 per cent GDP growth, India will need power generation capacity of 778 GW by 2032. The target growth of 8.2 per cent over the Twelfth Plan period for “strong inclusive growth” envisaged by the Government of India would require commensurate growth in the power sector. Power being one of the prime movers of economic growth, the Government has been giving it high priority.

• The challenges and your Company’s initiatives

  Your Company maintains close interface with all the stakeholders, continuously scans the business environment and proactively engages in policy advocacy. Some of the key concerns which have emerged during interactions with stakeholders are:

  • Perception of slow capacity addition in the sector.

  • Inadequate fuel supply.

  • Financial status of the state utilities.

  • Tariff revisions and distribution reforms.

  • Delay in land acquisition and environmental clearances.

  Your Company has taken several steps to overcome these challenges which include:

  • Bulk tendering to step up capacity addition. This has also helped in enhancing the capability of equipment manufacturing in the country through induction of leading global manufacturers to set up manufacturing units in India along with their domestic JV partners.

  • Pre qualifications of vendors to reduce the time taken in award of work.

  • Induction of more vendors.

  • Direct import of coal, saving 15 to 23 per cent by way of price.

  • Initiative of importing low GCV coal for increasing the blending ratio and optimizing cost of generation.

  • Development of own mines.

  • Work in progress for transport of coal to Farakka through inland waterways, a pioneering initiative of your Company being cited as a model for other sectors. Initiatives being taken to transport coal to Barh and Bongaigaon projects also through waterways.

  • Incentives to customers for prompt payment.

  • Optimizing plant layouts and continuous improvement in the design of various components of projects with sharper focus on quality assurance.

  • Constant interaction with contractors to resolve contractual issues expeditiously and putting back on fast track over 8,000 MW capacity.

  • Several measures to enhance employee motivation and productivity while reducing employee cost per MW of power generated.

• Preparedness for sound growth during Twelfth Plan and beyond

  Your Company plans to add 14,038 MW capacity during the Twelfth Plan period and maintain its position as the largest power generator in the country.

  The planned capacity growth is firmly on course as :

  • All the clearances and approvals have been obtained.

  • Fuel for all the projects has been tied up, including that from captive mines.

  • Financial resources are assured as your Company’s internal accruals are sufficient to finance equity portion and its ‘Most Favoured Borrower’ status enables it to raise debts at competitive rates. The weighted average cost of borrowings of your Company was 7.76 per cent during 2011-12 and 7.72 per cent during the first quarter of 2012-13.

  • Your Company has already tied up domestic loans of ` 57,229 crore, out of which about ` 17,000 crore is undrawn.

  • Your Company’s domestic bond raising capacity is more than ` 50,000 crore.

  • Your Company has upgraded its medium term note (MTN) programme to USD 2 billion.

  In view of its growth plans, your Company follows a prudent policy of balancing dividend pay-out with the requirement of deployment of internal accruals into its growth plans.

• Global footprints

  In order to expand the geographies of its operations, your Company has formed a joint venture Company “Trincomalee Power Company Limited” with Ceylon Electricity Board for setting-up a 2x250 MW coal based power project in Sri Lanka.

  A JV Agreement has been signed between NTPC and Bangladesh Power Development Board for setting up a 2X660 MW power plant at Khulna, Bangladesh and the process of incorporation of the JV Company is under way.

  Your Company’s wholly owned subsidiary ‘NVVN’ has been designated as the nodal agency for ‘cross-border-power-trading’ with Bhutan and Bangladesh.

• Sustainable power development towards making the planet greener and people happier

  Sustainability principles are translated into strategy and action by your Company in all its operations so that corporate excellence is blended with inclusive growth and environment friendly power development. One of the founder members of the India Chapter of United Nations Global Compact (UNGC), a global sustainability initiative under the aegis of UN, your Company is committed to the principles of sustainable development encompassing the environment, the society and corporate governance. It puts equally sharp focus on the environmental and social bottom lines, along with on financial top line and bottom line. Your Company seeks to strengthen its social partnerships while reducing its carbon footprints.

  Bulk of the new capacity addition would come through super critical units leading to greater efficiency and reduced impact on the environment, thus promoting sustainable growth.

  Your Company has taken several initiatives to increase the share of electricity based on non-fossil sources in its portfolio as well as in the country:

  • Work is already in progress on 3 hydro-electricity projects with total capacity of 1491 MW.

  • A roadmap for development of 1,000 MW basket through renewable energy sources is under development, out of which the roadmap has already been prepared for implementation of 300 MW by 2017.

  • Solar capacity of 105 MW is targeted to be completed till 2017 most of which is in advanced stages of work or ordering.

  • Your Company is playing a key role in the implementation the first phase of Jawaharlal Nehru National Solar Mission (JNNSM) of 1,050 MW through its trading subsidiary NTPC Vidyut Vyapar Nigam Ltd (NVVN). Under this mission, NVVN has awarded contracts for about 1,000 MW. So far, 178 MW of Solar PV capacity has been commissioned. Further, Solar Projects of around 850 MW capacity is scheduled for commissioning over the next two years.

• Green initiatives

  Your Company has set an example by designing and setting up a 40 TR Solar Thermal based heating, ventilation, air conditioning (HVAC) system at the campus of NTPC Energy Technology & Research Alliance (NETRA) located at Greater Noida. This system is first of its kind in the country and has a very high solar to air conditioning efficiency. It is likely to result in energy saving of nearly 1 lakh units per year and CO2 reduction of 75 per cent compared to conventional AC system.

  For monitoring air quality around its power plant on real time basis, 61 Ambient Air Quality Monitoring Systems (AAQMS) have been installed and networked to provide online access to the Central Pollution Control Board also.

  Till date your Company has planted around 19 million trees throughout the country. This is a rich carbon sink.

  Various water conservation measures have been taken to reduce water consumption in power generation by using 3 R’s (Reduce, Reuse & Recycle) as the guiding principle.

  The environmental initiatives taken by your Company have led to avoidance of 1.96 million tons of CO2 during the year 2011-12.

• Corporate Social Relationship

  Your Company has built strong partnerships with the communities around its projects and also with the wider society through a well conceived basket of CSR interventions for the betterment of lives of the people. A few areas out of the large CSR basket are:

  • access to water, road and electricity,

  • education and capacity building facilities,

  • healthcare support,

  • sanitation and public health,

  • promotion of sports and games,

  • community centres,

  • vocational training and capacity building,

  • skill development centres,

  • support for agricultural activities.

  During the year 2011-12, your Company scaled up its expenditure on CSR activities in a major way utilizing over 0.50 per cent of its Profit after Tax.

  Your Company is playing an active role in preserving and nurturing the rich cultural heritage of our nation. For commemorating the 150th birth anniversary of Swami Vivekananda, your Company has provided support to the Ramakrishna Mission for organizing various activities.

• Corporate Governance: ingrained in NTPC’s DNA

  Your Company has taken proactive steps for setting up appropriate governance systems and processes. Transparency, accountability, fairness and intensive communication with stakeholders are integral to its functioning.

  The Company has requisite number of Independent Directors on the Board, meeting the requirements of the Listing Agreement and the Guidelines on Corporate Governance for Central Public Sector Enterprises.

• Team NTPC: competence, commitment and contribution

  All the impressive achievements of your Company have been made possible by the untiring efforts of the employees for whom NTPC is an ‘employer of choice’.

  It is my pleasure to share with you that in a study on ‘India’s Best Companies to Work for 2012’, by the Economic Times and ‘Great Place to Work Institute’ your Company has been ranked #1 among PSUs, #1in Manufacturing and Production Industry segment and overall #3 among 514 companies with business operations in India, next only to Google and Intel. Thus your Company has continued the unique tradition of being the only PSU to consistently figure among the best employer surveys by prestigious organizations amid MNCs and enterprises from IT and service sectors.

A grateful enterprise committed to the stakeholders

I take this opportunity to place on record my sincere thanks to the Government of India, especially 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 valued customers and investors for their sustained support to the Company. I also assure you that ‘Team NTPC’ will measure up to your expectations and strive to perform beyond them.

On behalf of over 25,000 competent and committed colleagues, I assure you of our total dedication and tireless efforts towards the objective of maximizing returns for all stakeholders.

Thank you,