41th ANNUAL GENERAL MEETING
Dear Shareholders,NTPC: A 50,000 MW+ Company
It is my privilege to welcome you all to the 41st Annual General Meeting of your Company.
You will be delighted and proud to note that your Company crossed the 50,000MW+ mark in installed capacity in financial year
2016-17. With this increased capacity base, your Company has further strengthened its position as the market leader in the country, and finds a place amongst the largest and most respected power majors across the globe.
The GDP of India grew at an appreciable 7.1% rate in FY17, which got translated into a power generation growth of close to 5%. Power demand is expected to pick up, which is being reflected in the rise in merchant tariffs.
FY17 proved to be a landmark year during which renewable capacity addition surpassed the conventional capacity addition for the first time in Indian history, and extremely low solar and wind tariffs were discovered. The power sector looks promising, and is buzzing with opportunities.
Some of the recent key initiatives in the sector were:
- Introduction of flexibility in the use of domestic coal
- Cross Border Electricity Trade Policy
- Compensation allowed for partial loading of generating units
- New National Energy Policy by NITI Aayog
- UJALA: GoI’s scheme for Affordable LEDs, in order to promote energy efficiency.
- SHAKTI: Will enable power plants to get fuel linkages
- Launch of various Apps bringing in more transparency in the sector.
Your Company has once again turned-in another strong performance during FY17. Some of the major highlights include:
- Commissioned power projects of 3845 MW capacity.
- Declared 2190 MW capacity on commercial operation, including 510 MW of solar projects.
- Achieved PLF of 78.59% as against all India PLF of 59.88%. The country’s top three stations in terms of PLF, Talcher Thermal, Sipat and Korba, are owned by your Company.
- The group generated approximately 24% power in the country with 15.5% share of installed capacity.
- Achieved “EXCELLENT” MoU rating by Government of India.
- Started coal mining operations and flagged off first coal rake from Pakri Barwadih.
- Group capital expenditure for FY17 was ₹33,991 Cr.
- Realized 100% revenue from current bills from customers.
- Revenue stood at ₹79,342 Cr and Profit After Tax (PAT) was ₹9,385 Cr.
- Total dividend of ₹4.78 per share comprising interim dividend of ₹2.61 per equity share paid and recommended final dividend of ₹2.17 per equity share, subject to approval of shareholders.
- Total dividend payout including tax is 50.54% of Profit After Tax (as compared to 32.42% last year).
- Honored with Business Standard “Star PSU Award”
- Awarded IPMA International Project Excellence Award for Vindhyachal Stage V.
Some important events during FY18 were:
- GoI holding in your Company is now 62.99% - post disinvestment of 6.75% – fetching over ₹9200 Cr for the Government.
- Started commercial operations from the first 800 MW unit at Kudgi in Karnataka.
- Very significantly, your Company added wind to its power generation portfolio, commissioning 40 MW.
Installed Capacity of NTPC Group stands at 51,698 MW, which includes 800 MW of hydro, 870 MW of solar, and 40 MW of wind capacities. Your Company also commissioned its first 800 MW unit at Kudgi, in Karnataka.
Various projects of your Company are under construction across 22 locations, having a total capacity of almost 21,000 MW. This translates into an aggregate capital investment of more than ₹1.3 lakh crore.
Your Company is also looking at potential opportunities for inorganic growth. An MoU was signed with Rajasthan Vidyut Utpadan Nigam Limited (RVUNL) for takeover of Chhabra power station.
Your Company has made noteworthy progress at its international Joint Venture Project, Bangladesh-India Friendship Power Company (Private) Limited. Work has commenced on the 1320 MW project in achieving its financial closure.
Your Company flagged off its first coal rake in FY17, from its mining operations at Pakri Barwadih which would have a production capacity of 15 MMTPA. This coal is being used at Barh Super Thermal Station of NTPC, in Bihar. Developing its own mines is an important step in securing fuel supplies for your Company. It has also appointed the Mine Developer cum Operator for Dulanga in Odisha, and is in advanced stages of appointing MDOs for Chatti-Bariatu and Talaipalli coal blocks. These three mines have a combined mine capacity of 32 MMTPA.
Power generation of your Company (Group) increased by more than 5%, contributing close to 24% of the country’s generation. Although profit before tax of NTPC increased by as high as 16.91%, Profit after Tax was subdued, primarily due to impairment on investment in Ratnagiri Gas and Power Private Limited.
Strengthened by its strategic vision, core competence in project management, operations and maintenance, and best-in-class manpower, your Company has been able to continue its strong operational performance which is translating into profits.
Some initiatives taken to sustain your Company’s strong operational performance included:
1. Reducing cost of power:
- Swapping and rationalizing coal allocation,
- Appointing Central Institute of Mining and Fuel Research, an agency for third party coal sampling, which helped in re-grading of mines, and
- Reducing imported coal consumption by 85% as compared to previous year, and bringing down to 15% of last year.
For cheaper funds, your Company raised first-of-its-kind Green Masala Bonds, worth ₹2000 crore, and yet another set of Masala Bonds, worth the same value. Both these bonds have been listed on London and Singapore Stock Exchanges.
Average cost of debt has also been brought down substantially to 7.05% as of Q1 in FY18, through loan restructuring.
By fully transitioning to GST, and also helping its vendors and suppliers to adopt it, your Company stands to reduce the energy tariff by over 5 paise per unit of electricity.
Your Company is placing renewed focus on its Research & Development activities. Some key initiatives are:
- Using Flue Gas heat for making de-mineralized water from sea water, at Simhadri
- Floating Solar PV modules at Kayamkulam
- Construction of fly ash based geo-polymer road
3. Environmental Leadership:
Vindhyachal – The largest power generation complex in India has already commissioned a Flue Gas Desulphurization unit successfully. Your Company has issued tenders for setting up more FGDs across other units.
Your Company is taking several initiatives to contain carbon emissions, not only generated by its own operations, but potential pollution from other sources also. Two such projects your Company is experimenting with are Waste-to-Energy and Biomass Co-firing.
Your Company is also proud to share that it planted one crore trees in a short duration of 03 months during FY17 for building carbon sink. It has also taken steps to be a zero e-waste Company.
Your Company is placing enormous focus on conserving water, a life-giving but stressed resource. Apart from launching a Water Policy to reflect its conscious stewardship of an effective water management approach, your Company has:
- Adopted Air-Cooled-Condenser technology instead of Water-Cooled-Condenser in two of its upcoming projects,
- Taken steps to make its Stations Zero Liquid Discharge,
- Tying up with Municipal Corporations to use treated sewage water.
Health and Safety are of utmost importance to your Company. Your Company has implemented policies for Safety, Anti-Tobacco, and preventive healthcare.
Formal training forms an integral pillar of your Company’s strategy to ensure all-round development. Your Company has won the reputed “Association for Talent Development” Award, USA – the best-in-class recognition for using employee talent development as a strategic business tool.
Your Company is also providing customized management and leadership training through Harvard University, covering 2000 young executives, who shall in due course take up middle to senior level leadership positions.
Your Company commissioned a solid waste management plant at Karsara in Varanasi in order to promote clean living habitats. Varanasi now ranks 32nd in Swachh Sarvekshan Survey by GoI – a jump of 386 positions over its ranking in 2014.
Other initiatives include opening “Jan Aushadhi Kendra” at 15 locations to make available affordable medicines. Your Company plans to build a school for tribal children in Sonebhadra District of Uttar Pradesh, and is supporting the construction of “National Cancer Institute” in Nagpur. These are steps to promote better health and education on a large and sustainable basis.
Your Company is taking forward GoI’s “Digital India” initiative by making its townships cashless.
Challenges and Opportunities
As per NITI Aayog, 30 crore people in India still don’t have access to electricity. This latent demand is poised to be tapped through the 100% village electrification target of Government of India. Further, various initiatives by the Government are expected to unlock demand for power. Your Company is uniquely positioned to leverage the potential increase in demand, by scaling up its power generation capacity through a mix of:
- Conventional and renewable energy sources,
- Brown-field and inorganic growth wherever possible
- Developing and operating own coal mines
- Phasing out old inefficient units and replacing them with highly efficient units
However, rapid addition and the plummeting tariffs of solar power shall present challenges in terms of lower PLFs of thermal power plants. Integration of increasing renewable energy into the grid will entail flexible operation of thermal power plants, which will have bearing on energy rates as well as plant life. On the other hand, your Company’s large portfolio with flexible generation capabilities will open up opportunities in providing Ancillary Services.
The GoI’s thrust on Electric Vehicles will also go a long way in presenting opportunities for your Company. It will not only reduce oil imports, and urban pollution, but also increase power demand. Your Company is planning to have a strong presence in the electric vehicle charging infrastructure market.
At your Company, good governance is built into the very fabric of its culture encompassing all structures and processes. For your Company, robust Corporate Governance 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 saw zero audit observations from CAG, a great feat reflecting utmost transparency and integrity – towards the shareholders and the country.
Your Company revisited its vision and core values in FY17. The new core values are represented by the acronym ICOMIT, which stands for:
C: Customer Focus
O: Organizational Pride
M: Mutual Respect and Trust
I: Innovation and Learning
T: Total Quality and Safety
These core values inspire all our actions and decisions, nurturing a culture of commitment to provide maximum value to our shareholders.
I take this opportunity to place on record my sincere thanks and gratitude to the Government of India, particularly the Ministry of Power, 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 thankfulness 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.
CMD, NTPC Limited