Investors

Chairman's Statement

42nd ANNUAL GENERAL MEETING

Dear Shareholders,

It is my privilege to welcome you all to the 42nd Annual General Meeting of your Company.

You will be delighted to note that your Company had another year of strong performance. Your Company added 4423 MW to its commercial capacity during FY18 - the second highest ever commercial capacity added in any year. The generation grew at over 6% in FY18 and nearly 7.5% in Q1FY19. The growth numbers in both cases were much higher than national average. These numbers indicate substantial growth in energy demand of the country. With the implementation of GoI’s flagship programs such as SAUBHAGYA and DDUGJY, demand for power is likely to further rise rapidly. Consequently, your Company is poised to clock significant growth going ahead.

Many policies have been issued recently in the sector, setting the direction in the medium and long terms. These include National Electricity Plan, proposed amendments to Tariff Policy and proposed amendments in Electricity Act 2003.

Performance Highlights:

Your Company has shown robust performance during FY18. Some of the major highlights are:

  1. 1st Wind project was commissioned at Rojmal (50MW), Gujarat.
  2. PLF of Coal Stations was consistently 15% higher than that of national PLF of coal stations.
  3.  Six stations of NTPC figured in top ten stations list of the country in terms of PLF.
  4. 2.68 MMT coal produced from Pakri Barwadih in FY18 and mine became operational at Dulanga. Total 5.00 MMT of coal produced as of Aug’18.
  5. Realized 100% of the billed amount (₹ 85,264 Cr).
  6.  Government of India has awarded “Excellent” MoU rating.
  7. Profit After Tax grew by 10.21% (₹10,343 Cr) and Revenue grew by 6.6% (₹83,453 Cr).
  8. Total dividend of ₹5.12 per share comprising interim dividend of ₹2.73 per share and recommended final dividend of ₹2.39 per share

Focus on business growth:

Your Company contributed 23% of the nation’s power requirement in FY18 with 15.5% of its installed capacity. This share in the national generation portfolio is set to increase with addition of  20 GW capacities presently under construction. The target for FY19 is to add around 5 GW of commercial capacity and your Company is working tirelessly for maximizing the value for its shareholders.

1. Core business growth:

Installed Capacity of NTPC Group stands at 53,651 MW. This includes 870 MW Solar, 800 MW Hydro, 50 MW Wind and 8 MW small hydro.

The pipeline under construction will enter commercial operation over the next 3-4 years and substantially add to the current regulated equity base of ₹51,000 Cr. This will directly add to the bottom line of your Company.

Your Company has acquired the equity of its JV partner Bihar State Power Generation Company Limited in NPGCL and KBUNL (Combined capacity: 2590 MW). Acquisition of Barauni Thermal Power Station in Bihar is also expected to be completed shortly.

Your Company is actively looking at other business opportunities including overseas operations in SAARC, Middle East and African countries to increase its global outreach.

2. Renewable Energy:

Your Company has ventured into large-scale deployment of renewable assets and is committed to add 32 GW of renewable capacity by 2032. The share of non-fossil portfolio is likely to be 30% by 2032. Your Company is also assisting the Government of India in the National Solar Mission.

Tenders were floated for development of 2 GW Solar and 1.2 GW Wind capacity and have received encouraging responses with competitive pricing.

Fresh tenders have been issued for 160 MW Solar at existing projects, 25 MW Solar with Storage system and 22 MW floating solar. Tender for 190 MW hybrid wind solar (60 MW wind+ 130 MW Solar) is also in pipeline.

3. Fuel Security:

Your Company has achieved fuel security through its long-term coal supply agreements. The materialization of Annual Contracted Quantity increased to 96% in FY18.

Coal production from Pakri-Barwadih coal mine project had started in FY17 and a total 5 MMT of coal has been extracted from this mine. Dulanga Coal Block has become operational since February 2018 and coal transportation will start shortly.

Agreement has been signed with Railways for prioritizing dispatch to the plants.

4. Reducing Cost of Power:

Your Company is continuously working for reducing average cost of power to make power more affordable. This shall ensure higher offtake from your plants.

Even though the landed cost of coal increased by 45% in last five years, the average tariff billed to customers has decreased during this period. Your Company is committed to keep the ECR low by optimizing fuel linkages and enhancing operational efficiencies. Flexibility in use of domestic coal has resulted in reduced transportation cost. Third party sampling by Central Institute of Mining and Fuel Research (CIMFR) has started to address grade slippage.

MoP’s recent policy - “Flexibility in scheduling of thermal power plants to reduce the cost of power to the consumer” will help your Company in achieving Higher Efficiency due to optimal operation of plants, minimizing part load operation and maximizing generation from pithead stations. It will also reduce the average ECR for beneficiaries.

5. Strong commercial and financial performance:

Your Company achieved 100% realization of current bills for the fifteenth year in a row. It secures the realization of its revenues by having Tripartite agreements with the States & UTs. These agreements have been renewed with 29 out of 31 States/UTs and are being pursued with the two remaining states for early finalization.

Your Company commands high credibility in the investment world which resulted in less than 7% weighted average cost of borrowings in FY18.

NTPC has signed a syndicated facility agreement (of JPY 39.41 billion) with an average maturity of 10 years at floating interest rate. With this, NTPC has become the first Indian state owned Company to avail more than 10-year unsecured financing in the offshore Japanese loan market and opened a new market for long tenure funding of infrastructure project in India.

Your Company received “NIL” comments from Comptroller and Auditor General of India for accounts.

6. Environmental Protection:

Taking care of environment is at the core of the business activities of your Company and it has taken significant steps towards environmental protection and water conservation.

Your Company is the first PSU in the country to have come out with a dedicated Biodiversity Policy in order to establish a holistic vision and define guiding principles for conservation, restoration and enhancement of biodiversity.

Your Company shall develop an Eco-park at the ash pond of Badarpur plant which would be bigger than the New York city Central park and shall act as “Green Lungs” for National Capital Region.

Substantial investment is being made to ensure compliance with revised environmental norms released by MoEF&CC in December 2015. Work is in progress at plants of 17 GW capacity and award for all coal based capacity shall be completed at the earliest for meeting the SOx limits. Tenders have been issued for Combustion Modification of 14.8 GW capacity for NOx limits.

Your Company has taken various steps for reducing water consumption. Specific water consumption has been reduced by 3.3%. The Company is striving to achieve higher Cycles of Concentration across all plants. It has also adopted the Air-Cooled condenser technology at two projects which consumes less than 25% of the water as compared to that in a conventional thermal power plant.

Bio-mass co-firing pilot testing has been done at Dadri power plant to address the issue of smog in Northern Part of Inida during winter season and action has been taken for mass firing.

To improve the ash utilization in a fruitful manner, your Company is implementing a Light Weight Aggregate (LWA) project at Sipat. Transportation of ash by waterways is also being undertaken for achieving higher utilization – for instance, ash is being transported from Kahalgaon to Pandu in Assam through Inland Waterways Authority of India barge.

In line with the Digital India program of GoI, your Company has rolled out paperless office program across all its locations. In addition to paper saving, this initiative shall ensure reduced process time and bring more transparency.

7. People:

Your Company places the utmost confidence in its dedicated and committed manpower. The employees are putting best efforts to provide sustained returns to its shareholders. Their integrity and work satisfaction is reflected in the fact that your Company has been ranked 25th in the 2018’s Great Place to Work list, and stands first among PSUs.

Leadership programs for senior management team have been conducted at Harvard and Wharton. Leadership talent pool has been created through interventions such as Harvard Manage Mentor and Young Leader programmes for middle level management. With a view to groom future leaders, Job rotation and career development schemes have been introduced.

Your Company has made annual health checkup compulsory as a precautionary approach to ensure the well-being of its employees.

8. Corporate Social Responsibility:

Your Company is committed to create value for the society in ways beyond enabling the nation’s growth through power generation. It takes care of the community and strives to improve its living standards through Corporate Social Responsibility.

Your Company is providing financial assistance for setting up of special burn wards at AIIMS-Bhubaneswar, AIIMS-Patna and King George's Medical University-Lucknow.

Another key program was the Girl Empowerment Mission - launched to train and develop 400 young girls in areas of academics, health, hygiene, self-defence, yoga and personality development.

Your Company has adopted Charminar in Hyderabad under Swachh Iconic Places Projects of India, a special drive under Swachh Bharat Mission of GoI. In order to promote sports, your Company has provided financial assistance for National Archery and Under-17 football world cup. Education, health and drinking water remains focus area.

Challenges and Opportunities:

GoI has set a target for 100% electrification by Dec’18 under DDUGJY and SAUBHAGYA schemes. This has huge potential for power demand. This increase in demand, coupled with your Company’s increasing generation fleet and the MoP scheme of flexibility in generation scheduling of thermal power plants presents significant opportunity for your Company for increasing generation share in the country.

In the future, your Company will add more renewables than thermal. Steps are already taken in this direction.

As outlined during 41st Annual General Meeting, your Company is putting lot of thrust on electric vehicle charging stations. MoUs have been signed with Jabalpur, Bhopal and Navi Mumbai Municipal Corporation for providing complete e-mobility solutions.

Your Company is also keen to expand its consultancy business in order to leverage its core competencies of Project Management, Engineering and Operations & Maintenance.

Corporate Governance:

Your Company considers robust Corporate Governance as the foundation of its business. It is a means to improve efficiency, enhance investor confidence, and boost returns to shareholders.

An example of the highly effective Corporate Governance practices at your Company is the fact that FY17 and FY18 saw zero audit observations from CAG.

Deep Condolences:

I take this opportunity to put on record your Company’s deepest condolences on the loss of lives during the tragic incident at Unchahar Power Station. Your Company has reviewed all operational and safety systems, and engaged the services of a leading global consultant on safety to further improve these aspects. Your Company has provided all support and financial assistance to the families of deceased.

Acknowledgement:

I take this opportunity to place on record my sincere thanks and gratitude to the Government of India, particularly the Ministry of Power, Ministry of Coal, Ministry of Railways, Ministry of Environment, Forest and CC, Ministry of New and Renewable Energy, DIPAM, CERC, CEA, State Governments, our valued Customers, Auditors, Vendors, and other authorities and agencies that provide unstinted support to your Company.

I convey my appreciation to my colleagues on the Board for their invaluable contribution in strengthening the Company.

I express my special thanks to the investors and shareholders for their sustained support to the Company.

On behalf of the committed members of NTPC Family, I assure you of our total dedication and tireless efforts in fulfilling your expectations.


(Gurdeep Singh)
Chairman & Managing Director