NTPC LIMITED
ANNUAL REPORT 2009-2010
DIRECTOR'S REPORT
Dear Members,
Your Directors are pleased to present the 34TH Annual Report and the
audited accounts for the year ended March 31, 2010.
At the outset, your Directors are elated to state that your Company has
been granted the coveted status of MAHARATNA by the Govt. of India on 19th
May 2010 granting higher level of financial and managerial autonomy. Your
Company is also the official power partner of Delhi 2010 Commonwealth
Games.
FINANCIAL RESULTS:
Rs. Million
Income 2009-10 2008-09
Sale of Energy 461687 417913
Consultancy 1539 1325
Other income (Including
energy internally consumed) 29113 33053
Total Income 492339 452291
Expenditure:
Fuel 294628 271107
Employees Remuneration & Benefits 24124 24631
Generation, Administration & other expenses 20940 18192
Interest 10709 12750
Finance charges 7380 7212
Depreciation 26501 23645
Total Expenditure 384282 357537
Profit before tax, provisions and prior period 108057 94754
adjusts.
Tax 21573 11582
Profit after tax but before provisions and prior 86484 83172
period adjustments
Less:
Prior Period Adjustments (Net) (779) 1083
Provisions (Net) (19) 76
Net Profit after tax 87282 82013
Appropriations: 2009-10 2008-09
Transfer to Bonds:
Redemption Reserve 4978 4537
Interim Dividend 24736 23087
Proposed Dividend 6596 6596
Tax on Dividend 5276 5017
Transfer to General Reserve 47500 44000
Transfer to Capital Reserve 50 86
FINANCIAL PERFORMANCE:
The total income of the company for the year increased by 8.85% to
Rs.492,339 million from Rs. 452,291 million during the previous year. The
profit after tax but before provisions and prior period adjustments
increased by 3.98% to Rs. 86,484 million from Rs. 83,172 million. Net
profit after tax increased to Rs. 87,282 million from Rs. 82,013 million
registering a growth of 6.42% over last year.
DIVIDEND:
In addition to interim dividend of Rs. 3.00 per equity share of Rs. 10/-
each paid in March 2010, your Directors have recommended a final dividend
of Rs.0.80 per equity share of Rs. 10/- each for the year 2009-10. The
total dividend for the year is Rs.3.80 per equity share of Rs. 10/- each as
against Rs.3.60 per equity share of Rs. 10/- each paid last year. The
final dividend shall be paid after your approval at the Annual General
Meeting. The total dividend pay-out for the year amounting to Rs. 31,332
million represents 35.89% of the profits after tax. The total dividend
payout including tax accounts for 41.94% of profit after tax. The dividend
has been recommended in accordance with your Company's policy of balancing
dividend pay-out with the requirement of deployment of internal accruals
for its growth plans. Your Directors believe that growth of the company
through capacity addition, backward and forward integration and strategic
diversification of its operations would lead to increase in shareholders'
value.
FURTHER PUBLIC OFFER:
The President of India acting through Ministry of Power, Government of
India divested its stake by 5% in your Company through Further Public Offer
of 412,273,220 equity shares and the shareholding of Government of India
reduced from 89.5% to 84.5% w.e.f 18th February 2010. These shares were
issued during February 2010 for cash at prices determined through the
Alternate Book Building Method of Securities and Exchange Board of India
(Issue of Capital and Disclosure Requirements) Regulations, 2009 under Fast
Track route.
The proceeds of Further Public Offer amounting to Rs. 84,801 million were
credited to Government of India Account. Post FPO, Government of India
holds 6,967,361,180 equity shares of face value of Rs. 10/- each and public
holds the balance 1,278,103,220 equity shares.
OPERATIONAL PERFORMANCE:
During the year, the power stations of your Company generated 218.84 BU of
electricity which was 28.60% of the total power generated in India. The
power generated by the company has registered an increase of 5.75% over the
previous year's generation of 206.939 BU. Your Company contributed 25.12%
of the generation increase in the country during the year. The coal based
stations of your company operated at a Plant Load Factor (PLF) of 90.81%
(National PLF 77.48%) and Availability Factor of 91.76% at bar during the
year. Your Company has an installed coal based capacity of 24,885 MW
comprising 81 units with average fleet age of 18.8 years. During the year,
12 coal based stations out of 15 achieved more than 90% PLF including six
stations registering PLF above 95%. This included Talcher Thermal Power
Station having an average age of 37 years, achieving 90.87% PLF. National
Capital Thermal Power Station, Dadri (Stage-I) achieved highest ever annual
PLF of 100.59%. The total generation contributed by coal stations is
191.259 BU. The gas stations having a capacity of 3955 MW achieved best
ever annual generation of 27.581 BU at a PLF of 78.38% as against 67.01%
last year registering a growth of 16.96%. The average availability for gas
based stations for the year was 93.14% as compared to 86.65% during
previous year. The Operation Monitoring Centre has been given a new look
and have various features of monitoring Real-time unit outages, Fuel
Monitoring Mechanism and efficiency and environmental parameters monitoring
etc.
A detailed discussion on the operations and performance for the year is
given in the 'Management Discussion and Analysis', Annexure-I included as a
separate section to this report.
COMMERCIAL PERFORMANCE:
During the year, your Company realized 100% payment of current bills raised
for sale of power for seventh successive year. All the beneficiaries are
paying within 30 days of billing except the states of UP and J&K which are
making payment within the permissible 60 days period. An innovative rebate
scheme of providing incentive for early payment based on provisional bill
has helped in achieving early realization of dues. The matter of
securitization of outstanding dues of Government of NCT of Delhi for DESU
period is under active consideration by the Ministry of Power.
All the beneficiaries have established and are maintaining Letters of
Credit (LC). As on date, your Company has monthly LCs of Rs. 40659.70
million.
RBI, on behalf of State Governments, serviced redemptions due on bonds and
half-yearly interest installments on bonds in time as per One Time
Settlement Scheme.
Your Company had signed Power Purchase Agreements (PPAs) with 13
beneficiaries during the year pertaining to new projects for 8442 MW
capacity.
The following units were declared commercial during the year adding 1490 MW
to commercial capacity of your Company:
Project/Unit Capacity COD*
(MW)
Kahalgaon Unit #7 500 20.03.2010
NCTPP Unit#5 490 31.01.2010
Bhilai Expansion Unit#2** 250 21.10.2009
Bhilai Expansion Unit#1** 250 22.04.2009
Total 1490
* COD-Commercial Operation Date.
** JV Company.
Your Company has filed tariff petitions for the five-year period starting
1.4.2009 before CERC for all stations in accordance with the CERC (Terms
and Conditions of Tariff) Regulations, 2009. Petitions have also been filed
before CERC for revision of tariff for the period upto 31.3.2009 due to
additional capital expenditure incurred at the Stations in that period as
per the provisions of the CERC Tariff Regulations.
Customer Relationship Management (CRM) initiative has been taken by your
company towards strengthening relationship with our customers. It draws
inspiration from Company's core values (BCOMIT) that emphasize 'Customer
Focus'. Under this, we provide Customer Support Services in selected areas,
with the objective of overall growth of power sector. During the year,
various workshops and seminars were held at customers' end and free of cost
training to 149 customers' officers was provided based on the requirement
expressed by them. We also organize Regional Customer Meets, State specific
Business Partner Meets and GENCOS Meets regularly for better interaction
and sharing of experiences.
Your Company has developed a Customer Satisfaction Index (CSI) for
gathering customers' feedback and responding to their requirements.
INSTALLED CAPACITY:
During the year, your Company has added 1,560 MW capacity detailed as
under:
Project/Unit Capacity
(MW)
NTPC owned:
Kahalgaon Unit#7 500
NCTPP Unit#5 490
Under JVs:
RGPPL Block #1 640
Less: overall de-rating of RGPPL (-)180
MTPS-I Unit #2 110
Net addition 1560
The total installed capacity of the NTPC Group has increased from 30,644 MW
at the end of fiscal 2008-09 to 31,704 MW at the end of the year 2009-10 as
detailed below:
Capacity
(MW)
Owned by NTPC:
Coal based projects 24885
Gas based projects 3955
Sub-total 28840
Joint Ventures & Subsidiaries:
NSPCL (Coal)-JV with SAIL 814
RGPPL (Gas)-JV with GAIL, MSEB and 1940
Indian Financial Institutions
MTPS-JV with BSEB 110
Sub-total 2864
Total 31704
During the current fiscal, your company has added another 490 MW to the
capacity by commissioning Unit 6 of National Capital Thermal Power Project,
Dadri. With this, the total installed capacity of NTPC Group has crossed
32,000 MW.
CORPORATE PLAN 2032:
Your Company has prepared its Long Term Corporate Plan to set the goals and
targets for the period upto 2032. Through this Corporate Plan, the Company
has adopted the vision to be the world's largest and best power producer,
powering India's growth.'
Your company has set a target to have an installed power generating
capacity of 1,28,000 MW by the year 2032. The capacity will have a
diversified fuel mix comprising 56% coal, 16% gas, 11% nuclear and 17%
Renewable Energy Sources (RES) including hydro. Therefore, by 2032, non-
fossil fuel based generation capacity shall make up nearly 28% of NTPC's
portfolio.
Further beyond 12th Plan, your Company plans to build only high efficiency
super-critical and ultra super-critical coal based power plants. The plan
also outlines the next generation R&D model to drive innovation and
develop/adopt future technologies.
Your Company shall continue to strongly pursue the power trading business
and would maintain its scale in consultancy business. The plan also
provides strategies/ mix of options for ensuring fuel security. These
options include long-term contracts from domestic and international
markets, purchase from spot markets, minority/ majority stake in mining
companies and involvement in associated infrastructure.
CAPACITY ADDITION PROGRAM:
Your company has adopted a multi-pronged growth strategy which includes
capacity addition through green field projects, brown field expansions,
joint ventures and acquisitions. In addition to furthering capacity
addition through Coal / Gas based thermal power projects, your company has
been pursuing enhancement of its power generation portfolio through Hydro,
Renewable Energy and Nuclear energy projects. At present 1,920 MW Hydro
capacity is under implementation together with 552 MW under bidding. In its
endeavor for Renewable Energy, your Company plans to add 1000 MW from RES
by 2017.
Projects planned:
During the year, investment approval has been accorded by the Board of NTPC
and the respective Boards of Joint Ventures/ Subsidiaries for projects
having a total capacity of 890 MW consisting of 500 MW Vallur Thermal Power
Project Phase-II and 390 MW Muzaffarpur Thermal Power Project Expansion,
involving an investment of about Rs.62420 Million. Various projects having
aggregate capacity of 17,830 MW including 4,390 MW, being undertaken by
Joint Venture companies, are under construction, as detailed below:
Name of the Project Capacity (MW)
I. Project under NTPC Ltd:
A. Coal Based Projects:
1. Sipat-I 1980
2. Barh-I 1980
3. Korba-III 500
4. NCTPP-II, Unit-6, Dadri 490*
5. Farakka-III 500
6. Simhadri-II 1000
7. Bongaigaon-I 750
8. Mauda-I 1000
9. Barh-II 1320
10. Rihand-III 1000
11. Vindhyachal-IV 1000
Sub Total (A) 11520
B. Hydro Electric Power Projects (HEPP):
12. Koldam 800
13. Loharinag Pala 600
14. Tapovan Vishnugad 520
Sub Total(B) 1920
Total I (A)+(B) 13440
II. Projects under JVs:
Coal Based Projects:
15. IGSTPP Jhajjar JV with HPGCL & IPGCL 1500
16. Vallur - JV with TNEB 1500
17. Nabinagar- JV with Railways 1000
18. Muzaffarpur Expansion (MTPS)- 390
JV with BSEB
Total II 4390
Total On-Going Projects (I)+(II) 17830
* Commissioned w.e.f. 30th July, 2010.
Further, at present 7,092 MW capacity (3,501 MW NTPC owned and 3,591 MW
through its JVs and Subsidiaries) is under bidding. In addition Feasibility
Reports (FRs) have been approved for projects having an aggregate capacity
of 8,460 MW.
Your Company is also identifying new sites for setting up power projects
during 12th Plan and beyond. These projects would be added to the plans
after project viability is established.
As a measure for further capacity addition, your Company is in discussions
with Govt. of Jharkhand and Jharkhand State Electricity Board (JSEB) for
taking over Patratu TPS (770MW). A Memorandum of Understanding (MOU) was
signed on July12, 2009 amongst your Company and Govt. of Chattisgarh to set
up 4,000 MW regional power project at Lara, Chattisgarh. Another MOU was
signed amongst your Company, Govt. of Madhya Pradesh and MP Tradeco Ltd. to
set up 2,640 MW regional power project at Narsinghpur district, Madhya
Pradesh. Also, Feasibility Report is under preparation for setting up 3,960
MW power project at Barethi, Bundelkhand region of Madhya Pradesh. Govt. of
Madhya Pradesh has already committed land and water availability for this
project.
Project Management - A New Approach:
Your Company has established a state of the art Project Monitoring Centre
at Delhi. PMC provides milestone based project monitoring, project-wise,
vendor-wise, critical issues reporting, enterprise-wide issue monitoring
and site progress monitoring through remote cameras. As a matter of fact
this has become the Nerve Centre of total project management of NTPC.
Capacity addition through Subsidiaries and Joint Ventures (JVs):
Besides adding capacities on its own, your Company plans to add capacities
through some of its subsidiaries and joint ventures. The detail of JV
Companies/Subsidiaries along with details of Joint Venture partners for
addition of coal based capacity is as under:
Name of JV Partner Details
Company
NSPCL Steel A 50:50 JVC formed to
(NTPC-SAIL Authority of own and operate captive
Power Co. India power plants at Durgapur
Pvt. Ltd.) Limited (120 MW), Rourkela (120
(SAIL) MW) and Bhilai Steel Plant
(74 MW). The JV Company
has also added 2 units of
250 MW each.
NTECL Tamil Nadu A 50:50 JVC is implementing
(NTPC Electricity 3x500MW coal based
Tamil Nadu Board(TNEB) power project at Ennore,
Energy Co. Tamilnadu.
Ltd.)
APCPL Indraprastha This JVC is setting up a coal
(Aravali Power based Indira Gandhi Super
Power Generation Thermal Power Project
Company Co Ltd. consisting of 3 units of
Pvt. Ltd.) (IPGCL) and 500MW each. NTPC Ltd.,
Haryana IPGCL and HPGCL have
Power contributed equity in the
Generation ratio of 50:25:25.
Co Ltd.
(HPGCL).
BRBCL Ministry of A subsidiary of NTPC,
(Bhartiya Railways formed as a JVC with
Rail Bijlee Ministry of Railways with
Company equity contribution in the
Ltd.) ratio of 74:26 respectively
for setting up power project
of 1000 MW (4X250MW)
capacity at Nabinagar, Bihar
State.
MUNPL Uttar A 50:50 JVC formed for
(Meja Urja Pradesh setting up 1320 (2X660MW)
Nigam Rajya Vidut coal based power project in
Private Utpadan the state Uttar Pradesh.
Ltd.) Nigam Feasibility Report for the
Limited project has been approved
(UPRVUNL) by the JV Board. Bids have
been invited for main plant
packages under bulk
tendering route.
KBUNL Bihar State A subsidiary of NTPC formed
(Kanti Bijlee Electricity as a JVC with BSEB, took
Utpadan Board over MTPS having 2 units of
Nigam (BSEB) 110 MW each from BSEB.
Ltd.) The equity of NTPC in this
subsidiary is 64.57%. Unit#2
is operational since January
2008. Renovation and
Modernization of Unit #1 is
under progress. The JVC has
taken up expansion of the
station by adding 2 units of
195 MW each.
NPGCL Bihar State A 50:50 JVC for setting up
(Nabinagar Electricity and operation of a 3x660
Power Board MW Coal based plant at
Generating Nabinagar. Bids for Main
Company plant packages have been
Private invited under bulk tendering
Ltd.) route.
RGPPL GAIL, ICICI, Ratnagiri Gas and Power Pvt.
(Ratnagiri SBI, IDBI, Ltd., is a JVC between NTPC,
Gas and Canara Bank GAIL, MSEB holding Co. and
Power Pvt. and MSEB Indian FIs. NTPC is having a
Ltd.) Holding Co. stake of 29.65%. The JVC has
successfully revived all 6 GTs
and 3 STs at Dabhol Power
Project. LNG Terminal is also
mechanically complete.
JVC denotes Joint Venture Company.
Diversified Fuel Mix:
Although coal will remain the mainstay for adding generation capacity owing
to its abundant reserves in the country, your Company is progressively
diversifying its fuel mix to increase the share of non-fossil fuel with a
view to promote sustainable energy development and further reduce CO2
intensity of power generation.
Nuclear Power Development:
To extract the benefits of alternate source of energy in order to deal with
the problems of global warming and rising fuel security concerns, your
Company has entered into a joint venture agreement with Nuclear Power
Corporation of India (NPCIL) for formation of a Company to set up a nuclear
power project with two nuclear reactor units. A blueprint for nuclear power
development is in place. Experienced engineers/ professionals and fresh
executive trainees have been deputed for training at NPCIL to acquire
expertise in nuclear power generation.
Hydro Power:
At present, hydroelectric projects of 1920 MW consisting of Koldam (4x200
MW), Tapovan Vishnugad (4x130 MW) and Loharinag Pala (4 x150MW) are under
advanced stage of construction.
Your Company is also setting up small and medium sized hydro projects
through its wholly owned subsidiary NTPC Hydro Limited (NHL). Two such
projects under development are:
Project Location Capacity
Lata Tapovan Uttarakhand 171 MW
Rammam-III West Bengal 120 MW
The techno economic clearance of CEA and environmental clearance of MoEF
have been obtained for both these projects. The land for both of these
projects has been acquired. PPA has been signed with off-takers for Lata
Tapovan HEPP. Infrastructure development activities are under progress at
these projects. Both the projects are scheduled to be commissioned during
12th plan.
Further, in pursuance of MOA signed with Govt. of Mizoram, Detailed Project
Report of Kolodyne HEPP (4X115MW) has been submitted to CEA for according
Techno-Economic Clearance (TEC).
Your Company has signed an MOU with Gujarat Power Corporation Limited for
developing 500 MW Renewable Energy projects in Gujarat.
STRATEGIC DIVERSIFICATION - INCREASING SELF-RELIANCE:
Your Company is continuously looking for opportunities in the related
business areas such as coal mining, LNG value chain, manufacturing
activities, power trading, distribution, R&M and support to power sector
development in its endeavour to leverage its strength and secure its
interest in the entire power value chain, provide impetus to its core
generation business and enhance shareholders' value.
The details of joint venture companies taking up activities in other
sectors such as R&M and support to power sector is as under:
Name of JV Partner Activities
Company undertaken
UPL Reliance Takes up assignments
(Utility Infrastructure of construction,
Powertech Limited erection and
Limited) supervision of power
sector and other
sectors.
NASL ALSTOM Takes up renovation
(NTPC Power and modernization
ALSTOM Generation AG assignments of power
Power plants both in India
Services and in SAARC
Private Ltd.) countries.
EESL PFC, PGCIL and The Company was
(Energy REC formed on December
Efficiency 10, 2009 for
Services implementation of
Limited) Energy Efficiency
projects.
NHPTL NHPC, PGCIL The Company was
(National and DVC incorporated on
High Power 22.05.2009 for setting
Test up facility for short
Laboratory circuit testing of
Pvt. Ltd.) transformers and other
electrical equipment.
NPEX NHPC, PFC and The Company was
(National TCS incorporated to
Power facilitate trading of
Exchange electrical power
Limited) including ancillary
services. CERC
approval for setting up
the exchange has been
obtained.
In order to strengthen its competitive advantage in power generation
business, the Company has diversified into the area of manufacturing.
NTPC-BHEL Power Projects Pvt. Limited (NBPPL), a joint venture of your
Company with BHEL, incorporated on April 28, 2008 for taking up activities
of Engineering, procurement and construction of power plants and
manufacturing of equipments, has acquired 750 acres of land in Andhra
Pradesh. The Company has bagged two contracts from BHEL on nomination
basis. Your Company is also expected to give EPC contract for Singrauli
(1X500MW) to this Company.
Another joint venture Company, BF-NTPC Energy Systems Limited was
incorporated with Bharat Forge Limited on June19,2008 to manufacture
castings, forgings, fittings and high pressure piping required for power
projects and other industries. Land acquisition for establishing
manufacturing plant at Sholapur, Maharashtra is in progress. A business
plan has been prepared by the consultant and a detailed study is being
initiated for manufacturing of some of the short-listed products.
Your Company has acquired 44.6% stake in Transformers and Electricals
Kerala Limited from Government of Kerala on June 19, 2009. The Company
deals in manufacturing and repair of Power Transformers. The Board of
Directors of this Company has been re-constituted. The Company plans to
augment the existing capacity to 6000MVA.
Apart from the above initiatives, a subsidiary of your Company namely NTPC
Electric Supply Company Limited, has commenced business of distribution of
power through its JVC namely KINESCO Power and Utilities Private Limited,
formed with KINFRA.
Please refer to 'Management Discussion and Analysis', Annexure-I included
as a separate section to this report for further details.
GLOBALISATION INITIATIVES:
Your Company is continuously scanning business potential that global
opportunities offer. A representative office is functioning in Dubai since
November 2006 for marketing of its services in Middle East Region.
After identification of site for setting up a 2x250 MW coal based power
plant in Trincomalee region, Sri Lanka in Joint Venture with Ceylon
Electricity Board, your Company is in the process of finalizing the
Implementation Agreement. NTPC Consultancy Wing has received order for site
specific studies and preparation of Feasibility Report for JV to be formed
with Ceylon Electricity Board.
Your Company has signed an agreement with Department of Energy, Ministry of
Economic Affairs, Royal Govt. of Bhutan, on December 22, 2009, for
preparation of DPR for 620 MW Amochhu Reservoir Hydro-electric Project in
Bhutan. Your Company has opened its site office in Phuentsholing, Bhutan.
In terms of umbrella MOU for cooperation in power sector between the Govt.
of India and Govt. of Bangladesh in January 2010, it was agreed that your
Company will provide consultancy services to Bangladesh Power Utility
(BPDP) in different areas of O&M services, setting up power projects etc.
The wholly owned subsidiary of your Company namely NVVN has been identified
as nodal agency for cross border power trading with Bangladesh.
Your Company is also exploring the possibility of jointly pursing O&M
assignments with Korea Plant Services and Engineering Co. Ltd (KPS) in
countries other than India and Korea.
FINANCING OF NEW PROJECTS:
The capacity addition programs shall be financed with a debt to equity
ratio of 70:30. Your directors believe that internal accruals of the
Company would be sufficient to finance the equity component for the new
projects. Given its low gearing and strong credit ratings, your Company is
well positioned to raise the required borrowings.
Your Company is exploring domestic as well as international borrowing
options including overseas development assistance provided by bilateral
agencies to mobilize the debt required for the planned capacity expansion
program.
During the year 2009-10, your Company has tied up loans of Rs. 168,190
million including a large ticket loan of Rs. 85,000 million with State Bank
of India and Rs. 27,500 million with Canara Bank for part funding of debt
requirement in respect of capex for next three years. In addition, loans
amounting to Rs. 55,690 million have also been tied with other banks to
fulfill the debt requirement for next three years.
Bonds amounting to Rs.15,000 million were raised from domestic market for
financing the capital expenditure and refinancing of the loans.
Fixed Deposits:
The cumulative deposits received by your Company from 277 depositors as at
March 31, 2010 stood at Rs 13.39 million. Further, an amount of Rs. 4
million has not been claimed on maturity by 33 depositors as on that date.
FUEL SECURITY:
Coal Supplies:
Your Company has signed Long Term Model Coal Supply Agreement (CSA) with
Coal India Limited (CIL) on May 29, 2009 for supply of coal to its stations
for 20 years. Based on the revised model CSA, coal agreements have been
signed with the various subsidiary coal companies of CIL by coal based
stations except Farakka and Kahalgaon. Additional 7.35 MMT of coal has been
tied up with CIL and Singareni Collieries Co. Ltd. for Farakka, Kahalgoan
and other projects. This includes 0.55 MMT of coal procured through e-
auction.
During the year 2009-10, your Company received 136.2 Million Tonnes of coal
consisting of domestic coal of 129.9 Million Tonnes (about 4.5% higher than
the coal received in previous year) and imported coal to the tune of 6.3
Million Tonnes, at the stations.
During 2009-10, your Company entered into agreement with MMTC for supply of
about 12.5 MMT of imported coal which is highest ever in NTPC till date.
Further, in order to bridge the short fall in coal supply, Central
Electricity Authority advised the power utilities to set target for import
of coal during 2010-11. Your company has been advised by CEA to place the
orders for import of coal aggregating to 13.90 MTs during 2010-11.
Gas supplies:
During the year 2009-10, your Company received 13.88 MMSCMD of gas/RLNG as
against 10.75 MMSCMD received during 2008-09 registering an increase of
29.12%. The gas off-take in 2009-10 includes 9.08 MMSCMD APM/ PMT gas, 4.45
MMSCMD RLNG and 0.35 MMSCMD of KG D6 basin gas.
Your Company renewed APM gas agreements up to the year 2021 and PMT gas
agreements up to the year 2019 for its gas stations. Your Company has also
signed long term contract for supply of RLNG of 2.0 MMSCMD on firm basis
and 0.5 MMSCMD on fallback basis with GAIL for a period of 10 years for NCR
gas stations viz. Anta, Auraiya, Dadri and Faridabad. Further, Government
of India allocated additional gas of 4.46 MMSCMD from KG-D6 Basin. Out of
this quantity, 1.81 MMSCMD has already been tied up and the balance would
be tied up during the year 2010-11.
Your company has arranged for tying up of spot RLNG on reasonable endeavour
basis based on requirement. Also, your Company has fallback RLNG supply
agreements at pooled price with GAIL, IOCL, BPCL and GSPCL.
Development of Coal Mining projects:
Coal Mining being integral to your company's fuel strategies, is being
developed in Project Mode'.
All notifications for mining area land acquisition have been completed for
Pakri Barwadih, Chatti-Bariatu, Kerendari and Talaipalli Coal Blocks.
Rehabilitation action plan(s) were approved by Board for Pakri Barwadih,
Chatti-Bariatu and Kerendari coal blocks and disbursement of land
compensation commenced. With approval of Mining Plan for Dulanga (7MTPA)
and Talipalli (18MTPA) by Ministry of Coal this year, Mining Plan approval
for total 53 MTPA was received. Environmental clearance was accorded for
Pakri Barwadih, Chatti Bariatu and Kerandari Coal Blocks.
Stage-I Forest Clearance for Pakri Barwadih coal block was accorded by
MOEF. Your company has tied up with NESCL for permanent power arrangements
for coal mining projects.
With completion of detailed exploration in two coal blocks i.e. Talipalli
which was un-explored and Dulanga which was partly explored, Geological
Reports are available for all coal blocks.
Your Company has taken a number of CSR measures for the benefit of the
people around its coal mining sites. Under community development
activities, it is planned to set up an ITI at Barkagaon, Distt. Hazaribagh,
Jharkhand and also to adopt and upgrade another ITI at Pussore, Distt.
Raigarh, Chhatisgarh besides undertaking other community development
activities.
Other initiatives for securing coal supply:
To leverage the strength of established players in mining and related
areas, your Company has formed following Joint Venture Companies:
Name of JV Partners Purpose
Company
CIL NTPC Urja Coal India For undertaking the
Private Limited Development, O&M of
Limited Brahmini and Chichro
(incorporated Patsimal coal blocks and
on Integrated Power
27.04.2010) Project(s).
NTPC SCCL Singareni For undertaking
Global Collieries development and O&M
Ventures Pvt. Company of coal Blocks in India
Ltd., Ltd. and abroad.
(incorporated
on
31.07.2007)
International SAIL, CIL, For exploring various
Coal Ventures RINL and opportunities in
Pvt. Ltd., NMDC Australia, Mozambique,
(incorporated Canada, Indonesia and
on USA, etc., for acquisition
20.05.2009. of stake in coking coal
and thermal coal mines.
Your Company is also exploring opportunities for acquiring stake in coal
mines in Indonesia, Australia and Mozambique.
Exploration Activities:
Under NELP VIII, your Company has been allotted one block at Cambay basin
as a sole operator and three blocks out of which two blocks are in KG basin
and another in Andaman, as a member of the consortium led by ONGC with 10%
participating interest in each block.
BUSINESS EXCELLENCE: GLOBAL BENCHMARKING:
As a step towards developing Total Quality' culture in the organization,
your Company took forward the Quality Circle and Professional Circle
movements for its employees. These fora provide opportunities to the
employees to get together, network and share knowledge and experience on
issues of professional interest. There are 800 QC teams and 300 PC teams
across the Company creating refreshing learning culture.
With the objective of benchmarking the performance of its units with
international units, your Company became a member of North American
Electric Reliability Corporation:
(NERC). NERC has database of more than 5000 units worldwide under
Generating Availability Data System (GADS). Your Company's coal units of
200 MW and 500 MW capacity were benchmarked with equivalent sized units
amongst their peer group. The comparison revealed that 200 MW as well as
500 MW units of your Company performed better than the peer group units
during the year on parameters of availability, forced outage, planned
outage and capacity outage.
RENOVATION & MODERNISATION:
Your Company undertakes Renovation & Modernization (R&M) under project mode
with focus on feasible and cost effective technology upgrade, efficiency
improvements to bring the latest design to old vintage units. It gives an
opportunity to leverage the technological advancement which has taken place
in the power industry so as to continue economical power generation. It may
also help to reduce emission of green house gases and avail Clean
Development Mechanism benefits apart from life extension of the plant.
Apart from the above, your Company is providing Consultancy Services for
Renovation & Modernisation of old units of State Electricity Boards through
a department 'APDP-R&M'. During the year 2009-10, your Company provided
Consultancy Services for R&M to Barauni TPS (2x110MW) & Muzaffarpur TPS
(2x110MW) of Bihar State Electricity Board, Obra TPS (5x200MW) & Harduaganj
TPS (1x110MW) of Uttar Pradesh Rajya Vidyut Utapadan Nigam Limited and
Ropar TPS (2x210MW) of Punjab State Electricity Board.
VIGILANCE:
Implementation of Integrity Pact:
Your Company is striving to bring more transparency to its business
processes and as a step in this direction has signed a Memorandum of
Understanding with Transparency International India in December, 2008. The
Integrity Pact is being implemented for all contracts having value
exceeding Rs. 100 million. Two Independent External Monitors have been
nominated by the Commission for all contracts values exceeding Rs. 1000
million.
Implementation of Fraud Prevention Policy:
The Fraud Prevention Policy has been formulated and implemented in your
Company since 2006.The cases referred by the nodal officers are being
investigated immediately to avoid fraudulent behaviors.
Workshops and Vigilance Awareness Week:
Preventive Vigilance Workshops are being conducted every year to sensitize
employees about sensitive points in work areas and their role in preventing
corruption.
Vigilance Awareness Week is being organized every year in first week of
November to emphasize on leveraging of IT, create awareness for
transparency accountability, fair play and objectivity.
HUMAN RESOURCE MANAGEMENT:
Your Company takes pride in its highly motivated and competent human
resource that has contributed its best to bring the Company to its present
heights. The productivity of employees is reflected in the consistent
improvement of Man-MW ratio over the years. The over-all Man-MW ratio for
the year 2009-10 excluding JV/subsidiary capacity is 0.82 and 0.80
including capacity of JV/ Subsidiary. Generation per employee has increased
to 9.22 MUs registering an increase of 5.37% over the last year.
The total employee strength of the company stood at 24,955 as on 31.3.2010
against 24,713 as on 31.3.2009.
Fiscal 2010 Fiscal 2009
NTPC:
Number of employees 23,743 23,639
Subsidiaries & Joint Ventures:
Employees of NTPC in 1,212 1,074
Subsidiaries & Joint Ventures
Total employees 24,955 24,713
The attrition rate of the executives during the year has reduced to 1.00%
from 1.88% in the previous year.
Employee Relations:
During the year, employee relations scenario in your Company continued to
be conducive marked by industrial harmony and mutual trust. Regular
interactions take place amongst the management and apex forums of workmen
called National Bipartite Committee and with executives' forum named NTPC
Executive Federation of India. Employees' participation in Management has
been boosting morale of the employees.
The process of pay revision of wage and benefit structure for employees in
Executive category and for employees in unionized category (workmen) was
completed on 16.09.2009 and 07.07.2010 respectively.
Safety:
Your Company has always given prime importance to occupational health and
safety to all the persons working in its projects and stations by making
all efforts to prevent all types of accidents. To comply with the safety
requirements, qualified Safety Officers have been appointed in all the
units. The line executives take full responsibility of safety management
and take preventive measures.
To spread the awareness of safety measures, safety months are organized
involving each worker, wherein activities like safety related competitions
including safety elocution, paintings and quizzes are conducted.
Training and Development:
In line with its long-term objective of being a learning organization, your
Company has a policy of continuously investing in training and development
of not only its own employees but also of all professionals of the power
sector. The Company imparts training at its sites as well as at the
corporate level in diverse areas including general management, power
station operation and maintenance, project construction, erection and
commissioning and information technology. Training imparted is always in
tune with new emerging needs in diverse areas like nuclear power, coal-
mining, hydro-power, super-critical technology, power trading etc.
In pursuit of developing manpower in power sector, your Company established
a dedicated training institute - Power Management Institute (PMI) at NOIDA,
U.P. in 1994. Since then PMI has grown into an impressive centre of
learning. In the year 2009-10, PMI conducted a total of 330 programmes
attended by a total of 9049 participants. Your Company also has largest
number of Project Management Certified Professionals in India.
To widen its portfolio, PMI launched an on-going scheme of strengthening
the Industrial Training Institutes (ITIs) across the country by investing
in its infrastructure upgradation, starting of new trades' teaching and
commencing new classrooms where none existed earlier.
An international conference on O&M of power stations was held during
December 13-15, 2009 wherein several technical papers were presented for
experiential learning by professionals from power sector companies of India
as well from foreign countries.
INCLUSIVE GROWTH:
Your Company is committed to inclusive growth through its Corporate Social
Responsibility initiatives under an integrated stakeholder approach
covering environmental and social aspects.
With a view to provide basic civic amenities in socio-economically backward
areas, your Company is working in the areas of basic infrastructure
development like sanitation, road, drinking water, primary education,
community health, vocational training etc. Your Company has expressed its
commitment to provide financial support for setting up Technical
Polytechnic at Kaladungi, Nainital Distt, and women's polytechnic at
Gopeshwar, Distt. Chamoli, Uttarakhand. Construction of a school cum multi-
purpose building for girls in Village Shaulana, Distt. Ghaziabad, Uttar
Pradesh was completed in July 2009 with your Company's support. Vocational
training programs such as computer training, vehicle and mobile repairing
for youths and coaching classes for children in villages was provided at
various locations.
In order to help women to become more self reliant, assistance was provided
to 500 tribal girls/ women in 15 tribal villages in Udaipur Dist. of
Rajasthan. A girls' hostel was constructed in Guntur Distt of AP. Financial
support was provided for organizing educational and developmental workshop
for Kashmiri migrants.
As a measure to contribute towards conservation of selected national
monuments, your Company in association with Archaeological Survey of India
(ASI) has identified 3 sites for financial support.
Your Company was actively involved in preparation of 'ISO 26000 Guidance on
Social Responsibility' and participated in various workshops/ meetings in
the capacity of industry experts on CSR. It was also closely associated
with Bureau of Indian Standards in formation of 'Standard on Good
Governance' and with the Ministry of Corporate Affairs in preparation of
Guidelines on Corporate Social Responsibility.
Committed to its social responsibility, your Company became a member of
Global Compact, a voluntary initiative of the UN for CSR. Your Company
confirms its involvement in various CSR activities in line with 10 Global
Compact principles and shares its experience with the representatives of
the world through 'Communication on Progress'. A report on progress made in
this area is enclosed at Annex-IX to Directors' Report.
NTPC Foundation:
NTPC Foundation, registered in December'2004, is engaged in serving and
empowering the physically challenged and economically weaker sections of
the society. The Information and Communication Technology (ICT) Centre, set
up jointly by NTPC Foundation and University of Delhi, and similar ICT
facilities to the existing blind schools in Lucknow, Ajmer,
Thiruvanathapuram and Mysore are helping a large number of physically
challenged students to learn IT Skills and move along with the mainstream
society. More than 800 physically challenged students have got benefited in
these centres till now.
Disability Rehabilitation Centre established at Tanda (U.P.) in
collaboration with National Institute of Orthopedically Handicap (NIOH),
Ministry of Social Empowerment, Govt of India is providing rehabilitation/
restorative surgery to physically challenged persons like medical
interventions and surgical corrections, fitting of artificial aids and
appliances and therapeutic services etc. Till now, more than 26000
physically challenged persons have got benefited from the centre and close
to 1800 such persons have been provided with various artificial aids and
appliances.
In the area of health, Direct Observation Treatment cum Designated
Microscopy Centre (DOT cum DMC) with Mobile Vans, diagnostic equipments and
paramedical services have been started at 10 NTPC stations for diagnosis
and treatment of the Tuberculosis patients in the neighbourhood villages of
the stations. Till date more than 5700 patients have been examined by these
centres and treatment has been provided as per requirement.
NTPC Foundation is also providing grants for setting up of Distributed
Generation Projects for preparation of feasibility report, DPR, Insurance
and for meeting funding gap.
Rehabilitation & Resettlement:
Your Company is committed to help the people displaced for execution of its
projects and has been making efforts to improve the Socio-economic status
of Project Affected Persons (PAPs) and also undertaking community
development activities in and around the projects. Rehabilitation Action
Plans are implemented in most of the projects.
'Initial Community Development' (ICD) policy has been further widened to
cover hydro/ mining and other projects to facilitate taking up community
development activities in new greenfield/ expansion projects soon after
land and water clearances are received from State Governments. Your Company
has approved setting up of a new Greenfield Industrial Training Institute
at Bongaigaon.
IMPLEMENTATION OF OFFICIAL LANGUAGE:
Your Company has made vigorous efforts for the propagation and successful
implementation of the Official Language Policy of the Government of India.
Several Hindi workshops and competitions were conducted at projects,
regional offices and corporate centre during the year to encourage the
employees to maximize the use of Hindi in official work. All office orders,
formats and circulars were issued in Hindi as well. Important
advertisements and house journals were released in bilingual form- in Hindi
and in English. Your company's website also has a facility of operating in
bilingual form- in Hindi as well as in English.
SUSTAINABLE ENERGY DEVELOPMENT:
Your Company has adopted the following vision statement on sustainable
energy development: ' Going Higher on Generation, lowering GHG intensity'
Your Company is committed for development of renewable energy in view of
global warming and fast depletion of fossil fuel.
Your company envisages capacity addition of 1000 MW through renewable
energy sources by 2017. An MOU has been signed with GPCL for development of
500 MW renewable energy based projects, preferably wind and solar, in
Gujarat. Your Company has approved a road map to foray into solar power
generation business for capacity addition of 301 MW through solar energy by
March 2014. Out of 301 MW, 190 MW will be added through Solar Thermal
technology and the balance 111 MW will be added through Solar PV
technology. As a first step, grid interactive 15 MW solar thermal based
project is being taken up at Anta in Rajasthan which is the first of its
kind in India. Another MOU has been signed with Andaman & Nicobar
administration for development of 5 MW solar PV based project in South
Andaman and 1MW solar energy based project in North Andaman.
Your Company has so far commissioned 15 Distributed Generation projects,
out of which 5 projects are in Uttar Pradesh, 4 in Chattisgarh, 1 in
Rajasthan and 5 in Madhya Pradesh with a total capacity of 300 KW,
benefiting 2150 households. 5 DG projects near NTPC Vindhyachal Project in
Sidhi Distt. in Madhya Pradesh are based on bio-mass and 1 DG project in
Chattisgarh is based on micro-hydel. Feasibility studies for development of
DG projects near Company's coal mining projects are being finalized.
NETRA - R&D Mission in Power Sector:
NTPC Energy Technology Research Alliance focuses on areas such as Climate
Change , Waste Management, New & Renewable Energy, Efficiency improvement,
Cost reduction and reliability of stations.
Research Advisory Council (RAC) of NETRA has been constituted with eminent
experts from National and International organizations to deliberate on the
projects of NETRA. Regular meetings of RAC are being held and many new
initiatives have been taken for R&D. A Scientific Advisory Council has been
constituted consisting of Regional EDs and Heads of Projects as its members
to help the stations in improving the efficiency, reliability and
availability and reducing cost of generation. More than 21 Networking
partners are involved alongwith NETRA in carrying out various projects
identified by NETRA.
NETRA has filed 3 patent applications for various activities like
integrated approach for bio-diesel preparation utilizing bio-fruit
(Pongamia fruit), sensor for tube inspection and method and apparatus for
efficient heat integration. NETRA has signed an MOU with IOCL (R&D) for
collaborative research on Biochemical Treatment of organic rich waters,
development of energy efficiency lubricants, integrated plant for bio-
diesel production, utilization of bio-mass for power generation, NDT and
corrosion related projects for health assessment.
Environment Management - Continuous Improvements:
Your Company is pursuing the objective of sustainable power development. It
has taken a number of initiatives towards preservation of the environment
by providing state-of-the-art pollution control systems, regular
environment monitoring and judicious use of natural resources, adoption of
advanced and high efficiency technologies such as super critical boilers
for the up-coming greenfield projects. High efficiency Electro-static
Precipitators (ESPs) with efficiency of the order of 99.9% or higher and
advanced ESP control systems have been provided in all coal based plants to
keep Suspended Particulate Matter (PM) below the permissible level of 150
mg/Nm3. All new plants are being provided with ESPs designed for outlet
dust burden of below 100 mg/Nm3. Flue Gas Conditioning (FGC) system has
also been provided at our older stations at Singrauli, Korba, Farakka,
Ramagundam, Rihand and Badarpur which is further contributing in reduction
of PM emissions below statutory limits.
To treat the waste water and reduce consumption of fresh water requirements
for the plants, your Company has installed Liquid Waste Treatment Systems,
Ash Water Recirculation System and closed cycle condenser cooling water
systems with higher Cycle of Concentration (COC) in its stations. Further,
treated waste water is used in various plant systems resulting in reduction
of fresh water requirement. This has resulted in considerable reduction in
fresh water intake by 20% to 30% and also reduction in quantity of effluent
discharge from the power plants.
Ash dykes in the Company have been engineered to ensure that all safety and
environment issues are addressed at design stage itself. Multi-lagoon ash
ponds with provision of over-flow Lagoons and ash pipe garlanding
arrangement for change over of ash slurry feed points have been provided
for effective settlement of ash particles. Water sprinklers have been
provided in the Ash Pond areas for control of fugitive dust.
As a proactive measure and to effectively utilize biodegradable solid
wastes generated in project canteens and townships, a pilot scale Bio-
Methanation Plant has been set up at Faridabad and is under installation at
Singrauli in order to convert the waste into useful energy and bio-
fertilizer. In order to monitor key environmental parameters of stack
emissions, ambient air and effluents continuously on real time basis, 61
continuous Ambient Air Quality Monitoring System (AAQMS) along with
Meteorological Sensors have been installed at 20 stations located all over
India.
Clean Development Mechanism (CDM):
Your Company is pioneer in undertaking climate change issues proactively.
It has taken several initiatives in CDM Projects in Power Sector. North
Karanpura STPP, Loharinagpala HEPP and Tapovan Vishnughad HEPP have got
Host Country Approval from National CDM Authority. A methodology prepared
by your Company namely 'Consolidated baseline and monitoring methodology
for new grid connected fossil fuel fired power plants using less GHG
intensive technology' for super critical Technology has been approved by
'United Nations Frame Work Convention on Climate Change (UNFCCC)' under
Approved Consolidated Methodology 13'. More green field and energy
efficiency CDM projects are in pipeline.
Ash Utilisation:
During the year 2009-10, all time high 27.61 million tonne of ash has been
utilized for various productive purposes which is 59.73% of the total ash
generation against MoU target of 55%.
Important areas of ash utilization are- manufacturing cement, concrete, ash
based products, asbestos sheets, construction of road embankment, ash dyke
raising, mine filling and land development. Issue of fly ash to cement and
concrete industry this year has been 10.85 Million Tonnes, about 8.5% more
than last year's issue.
Fly ash and pond ash is being issued free of cost to fly ash/ clay ash
bricks, blocks and tiles manufacturers on priority basis over other users
from all the NTPC's Stations. Fund collected from sale of ash is being
maintained in a separate account by the subsidiary company i.e. NTPC Vidyut
Vyapar Nigam Limited and the same is being utilized for development of
infrastructure facilities, promotion and facilitation activities to enhance
ash utilization.
CenPEEP - towards enhancing efficiency:
Center for Power Efficiency and Environmental Protection (CenPEEP), set up
with technical assistance of USAID/ USDOE is a symbol of your Company's
commitment towards green house gas (GHG) mitigation from existing thermal
power plants. Through the implementation of Efficiency Management System
and Knowledge Based Maintenance in power plants, your Company has avoided
more than 30 Million tons of CO2 emission since inception of the programme
in 1996. These systems are based on state-of-the-art technologies which are
customized to local conditions and disseminated to power stations by hands-
on-training, guidelines and workshops.
Government of India has identified CenPEEP to support Asia Pacific
Partnership program on Clean Development and climate change initiative.
CenPEEP has worked with various state utilities for identifying potential
for reduction in CO2 emissions.
International cooperation for climate change has been expanded with signing
of an agreement between Ministry of Power, NTPC Ltd. and Japan
International Agency for Cooperation (JICA) to undertake a Study on
enhancing Efficiency of Operating Thermal Power Plants in NTPC-India'. The
study further strengthens CenPPEP as a resource centre, assimilating best
practices from both eastern and western countries.
CenPEEP was conferred International Star Gold Award 2009' by BID
International at Geneva.
MANAGEMENT OF CHANGE:
Your Company has taken several initiatives to improve business processes,
promote innovation and leverage information & communication technology for
over-all productivity enhancement.
Rural Electrification:
NTPC through its wholly owned subsidiary NESCL is carrying out the
implementation of rural electrification in 29 districts in 5 States namely
Madhya Pradesh, Chhatisgarh, Orissa, Jharkhand and West Bengal under Rajiv
Gandhi Grameen Vidyutikaran Yojna (RGGVY). MOU target of 7500 Un-
electrified/ de-electrified (UE/DE) and 8.5 lac BPL household connection
was achieved ahead of schedule. Total number of villages electrified during
2009-10 was 8017 and BPL connection was provided to 8.65 lac households.
Right to Information:
Your Company has implemented Right to Information Act, 2005 in order to
provide information to citizens and to maintain accountability and
transparency. The Company has designated a Central Public Information
Officer (CPIO), an Appellate Authority and APIOs at all projects/ stations/
offices of NTPC. During the year 2009-10, all 644 applications received
under the RTI Act were processed and replied to. In compliance with Section
4 of the RTI Act, RTI manual has been updated and put on NTPC website.
Further, RTI portal for benefit of NTPC employees has been created on NTPC
Intranet. Workshops on RTI Act have been conducted at regional headquarters
and at projects to share and deliberate on latest notifications, amendments
and other issues for smooth implementation. Interaction were also held with
SAARC delegates on RTI.
Using Information and Communication technology for productivity enhancement
Enterprise Resource Planning has been implemented at all Company's
locations and its subsidiaries covering all core business processes of
Finance, Materials, Maintenance, Projects, Operations, HR, Fuel Management,
etc. ERP has been integrated with Freight Online Integrated System of
Railways. Also, new initiative like Activity Based Budgeting (ABB) and
Overhaul Preparedness Index (OPI) have been implemented.
Your Company has set up a Project Monitoring Centre (PMC) at Delhi which
is being used by your Company very effectively to monitor all 44 units
under construction. The video-wall facility facilitates conferencing with
all projects and web based project monitoring with respect to schedule.
NTPC GROUP : JOINT VENTURES AND SUBSIDIARIES:
Your Company has formed 17 joint venture companies and 5 subsidiary
companies for undertaking specific business activities. Another subsidiary,
Pipavav Power Development Company Limited, is under winding up through
striking off its name under Section 560 of the Companies Act, 1956 pursuant
to the Directive issued by the Ministry of Power. Accordingly, necessary
application with declarations and affidavits for winding up of the Company
have been filed with the Registrar of Companies, NCT of Delhi & Haryana on
29.04.2010.
The above Joint Venture Companies also include CIL NTPC Urja Pvt. Ltd.
which was incorporated on April 27, 2010.
The performance of these companies as well as the consolidated financial
statements are briefly discussed in the Management Discussion & Analysis
section. The financial statements of subsidiary Companies along with the
respective Directors' Report are placed elsewhere in this Annual Report.
STATUTORY AND OTHER INFORMATION REQUIREMENTS:
Information required to be furnished as per the Companies Act, 1956,
Listing Agreement with Stock Exchanges, Government guidelines etc., is
annexed to this report as below:
Particulars Annexure
Management Discussion & Analysis I
Report on Corporate Governance II
Information on conservation of energy, III
technology absorption and foreign exchange
earnings and outgo
Information as per Companies (Particulars of IV
Employees) Rules, 1975**
Statement pursuant to Section 212 of the V
Companies Act, 1956 relating to subsidiary
companies
Statistical data of the grievances VI
Statistical information on persons belonging VII
to Scheduled Caste / Tribe categories
Information on Physically Challenged persons VIII
UNGC-Communications on progress 2009-10 IX
Presidential Directives X
Project Wise Ash Utilisation XI
**INFORMATION AS PER COMPANIES (PARTICULARS OF EMPLOYEES) RULES, 1975:
The information required under Section 217(2A) of the Companies Act, 1956
read with the Companies (Particulars of Employees) Rules, 1975, as amended,
are set out in Annexure to the Directors' Report and forms part of this
report. In terms of Section 219(1)(b)(iv) of the Companies Act, 1956, the
Report and Accounts are being sent to all the shareholders excluding the
aforesaid annexure. Any shareholder interested in obtaining a copy of the
said annexure may write to the Company Secretary at the registered office
of the Company. The information is available at NTPC Website at
www.ntpc.co.in. The Company (excluding JV's and Subsidiaries) had 23743
employees as on March 31, 2010. 998 employees employed throughout the year
were in receipt of remuneration of Rs. 24 lac per annum and 151 employees
employed for part of the year were in receipt of remuneration of more than
Rs. 2 lac per month.
STATUTORY AUDITORS:
The Statutory Auditors of your Company are appointed by the Comptroller &
Auditor General of India. M/s. Varma & Varma, B.C. Jain & Co., Parakh &
Co., S.K. Mittal & Co., Dass Gupta & Associates and S.K. Mehta & Co. were
appointed as Joint Statutory Auditors for the financial year 2009-10.
MANAGEMENT COMMENTS ON STATUTORY AUDITORS' REPORT:
The Statutory Auditors of the Company have drawn attention to certain
matters in Paragraph 4 (f) (i) and (ii) of their Report to the Members. In
this regard, your Directors clarify as under:
The CERC notified the Tariff Regulations 2009 containing, inter-alia, the
terms and conditions for determination of tariff applicable for a period of
five years w.e.f. 1st April 2009. The Company has filed tariff petitions
for determination of tariff in respect of all its stations with CERC.
Pending determination of tariff by the CERC, the basis for billing and
accounting of sales for the year has been explained in Note nos. 2(a) & (b)
of the Annual Accounts referred to by the Statutory Auditors.
The appeal filed by the CERC against some of the issues decided by the
Appellate Tribunal for Electricity in respect of tariff for the period
2004-2009 is pending for disposal before the Hon'ble Supreme Court of
India. This fact and the basis for recognition of the sales in the
financial statements has been disclosed in Note No. 2(e) of the Annual
Accounts.
REVIEW OF ACCOUNTS BY COMPTROLLER & AUDITOR GENERAL OF INDIA:
As advised by the office of the Comptroller & Auditor General of India
(C&AG), the comments of C&AG for the year 2009-2010 are being placed with
the report of Statutory Auditors of your Company elsewhere in this Annual
Report.
COST AUDIT:
As prescribed under the Cost Accounting Records (Electricity Industry)
Rules, 2001, the Cost Accounting Records are being maintained by all
stations of the Company since the year 2002-03. The cost audit for the year
2009-10 has been completed and the Cost Audit reports are being submitted
by the Cost Auditors.
BOARD OF DIRECTORS:
Shri R.K. Jain ceased to be Director (Technical) of the Company with effect
from December 31, 2009 on attaining the age of superannuation.
Shri D.K. Jain, Executive Director (Engineering) has taken over as Director
(Technical) with effect from May 13, 2010.
Shri R.C. Shrivastav ceased to be the Director of the Company on June 30,
2010 on attaining the age of superannuation.
Shri Chandan Roy ceased to be the Director of the Company on July 31, 2010
on attaining the age of superannuation.
The Board wishes to place on record its deep appreciation for the valuable
services rendered by Shri R.K. Jain, Shri R.C. Shrivastav and Shri Chandan
Roy during their association with NTPC.
In accordance with the provisions of Article 41(iii) of the Articles of
Association of the company four directors - Shri Shanti Narain, Shri P.K.
Sengupta, Shri K. Dharmarajan and Dr. M. Govinda Rao shall retire by
rotation at the Annual General Meeting of your Company and, being eligible,
offer themselves for re-appointment.
DIRECTORS' RESPONSIBILITY STATEMENT:
As required under Section 217(2AA) of the Companies Act, 1956 your
Directors confirm that:
1. In the preparation of the annual accounts, the applicable accounting
standards had been followed along with proper explanation relating to
material departures;
2. The Directors had selected such accounting policies and applied them
consistently and made judgments and estimates that are reasonable and
prudent so as to give a true and fair view of the state of affairs of the
company at the end of the financial year 2009-10 and of the profit of the
company for that period;
3. The Directors had taken proper and sufficient care for the maintenance
of adequate accounting records in accordance with the provisions of the
Companies Act, 1956 for safeguarding the assets of the company and for
preventing and detecting fraud and other irregularities; and
4. The Directors had prepared the Annual Accounts on a going concern basis.
ACKNOWLEDGEMENT:
Your Directors acknowledge with deep sense of appreciation the co-operation
received from the Government of India, particularly the Prime Minister's
Office, Ministry of Power, Ministry of Finance, Ministry of Environment &
Forests, Ministry of Coal, Ministry of Petroleum & Natural Gas, Ministry of
Railways, Planning Commission, Department of Public Enterprises, Central
Electricity Authority, Central Electricity Regulatory Commission, Appellate
Tribunal for Electricity, State Governments, Regional Power Committees,
State Electricity Boards and Office of Solicitor General of India.
Your directors also convey their gratitude to the shareholders, various
International and Indian Banks and Financial Institutions for the
confidence reposed by them in the Company. The Board also appreciates the
contribution of contractors, vendors and consultants in the implementation
of various projects of the Company. We also acknowledge the constructive
suggestions received from Government and the Statutory Auditors.
We wish to place on record our appreciation for the untiring efforts and
contributions made by the employees at all levels to ensure that the
company continues to grow and excel.
For and on behalf of the Board of Directors
Place: New Delhi (R.S. Sharma)
Date : August 04, 2010 Chairman & Managing Director
Annexure-I to Directors' Report:
MANAGEMENT DISCUSSION AND ANALYSIS:
INDUSTRY STRUCTURE AND DEVELOPMENTS:
GENERATION:
India ranks 5th in the world in terms of total installed capacity, it is
one of the lowest in terms of per capita consumption of power. The National
Electricity Policy (NEP) stipulates 'power for all' and annual per capita
consumption of electricity to rise to 1000 units by 2012. The policy aims
at inclusive growth of power sector by providing adequate reliable power,
at reasonable rates with access to all citizens. The 17th Electric Power
Survey (EPS) forecast that the peak demand would grow at a CAGR of 7.8% in
the 11th Plan as compared to growth in supply expected around 6.8% to 7%
resulting in continued upward trend of power deficit in India. The demand
projections as per 17th EPS for next 11-12 years on all-India basis show
that the energy requirement and annual peak load will be 2.30 times and
2.50 times respectively of the existing requirement as detailed hereunder:
Year Energy Annual Peak
Requirement Load at Power
Tera Watt Hrs Stn. (GW)
2009-10 (Act.) 830.594 119.166
2011-12 968.659 152.746
2016-17 1392.066 218.209
2021-22 1914.508 298.253
Source-: 17th Electric Power Survey of CEA
However, over last 3 years, the CAGR of peak demand as well as energy
shortages have shown a downward trend as compared to projections considered
in the 17th EPS.
Mid Term Review of 11th plan:
Based on the progress made so far during 11th plan, Planning Commission in
its draft midterm review has assessed that against a target of 78,700 MW, a
total capacity of 62,374 MW is likely to be added with high certainty
alongwith 12,590 MW capacity that may be added on best efforts basis.
Capacity in MW
Sector Thermal Hydro Nuclear Total Likely
Addition
Central 24,840 8,654 3,380 36,874 21,222
State 23,301 3,482 0 26,783 21,355
Private 11,552 3,491 0 15,043 19,797
Total 59,693 15,627 3,380 78,700 62,374
Source: CEA
So far, in the 11th Plan, 29,023 MW (including Renewable Energy Sources-
RES) capacity has been added (upto May, 2010). In absolute terms, this
capacity addition in the 11th plan is much higher as compared to the
capacity added in each of last three five-year-plans.
The main issues in capacity addition during 11th plan are delayed supply of
equipment due to issues concerning shortages, non-sequential supply of
material by suppliers, shortage of skilled manpower for construction and
commissioning of projects, contractual disputes between project
authorities, contractors and their sub-vendors, delay in readiness of
balance of plants by the executing agencies. Hydro capacity addition has
slipped substantially. Difficulties have been experienced by developers in
land acquisition, rehabilitation, environmental and forest - related
issues, inter-State issues, geological surprises (particularly for Hydro
projects) and contractual issues. These issues continue to pose challenges
to maintain the pace of development of power projects.
Advance action for 12th Plan:
As regards 12th Plan, it is expected that capacity addition close to
1,00,000 MW will take place. In this proposed capacity, the major portion
is expected to come through super-critical technology. In order to achieve
the 12th Plan target and in order to augment the domestic manufacturing
base of main plant equipment, bulk tendering of supercritical units was
approved by the Cabinet Committee on Infrastructure in August 2009 with
emphasis on phased manufacturing programme so that domestic manufacturing
capacity of super-critical units is established in the country through new
manufacturers apart from BHEL. It was also decided to invite separate
international competitive bids (ICBs) for the boiler and the steam turbine
generator (STG) islands, i.e. one bulk package for all the boilers and
another bulk package for all the STGs, instead of a single common boiler
turbine generator (BTG) bulk package, as there are limited manufacturers
who manufacture both boilers and STGs. Following the approval of Government
of India, NTPC was entrusted with the task of issuing NIT for bulk ordering
of 11 units of 660 MW (totalling 7260 MW).
CEA has also set up 18th EPS committee to forecast electricity demand in
detail upto the end of 12th Plan (2012-13 to 2016-17) and to project
prospective electricity demand for 13th and 14th plans.
Substantial capacity is also expected to be added through Ultra Mega Power
Projects.
Existing Installed Capacity:
The total installed capacity in the country as on March 31, 2010 was
159,398.49 MW with State Sector leading with a share of 49.80%, followed by
Central Sector with 32 % share and balance 18.20% contributed by Private
Sector entities.
Total MW % share
Capacity
State 79,391.85 49.80%
Centre 50,992.63 32.00%
Private 29,014.01 18.20%
Total* 159,398.49 100.00%
* Excluding captive generating capacity connected to the grid 19509 MW as
on 31.3.2010.
Source: CEA's Reports
Capacity addition gained momentum during the year 2009-10 with 9,585 MW
(excluding RES) of capacity being added as compared to 3,454 MW added
during the previous year, registering a growth of 178%.
Out of 11,433.08 MW (including RES) added during the year in the country,
the Central Sector contributed to an addition of about 17.69%, State Sector
28.65% and 53.66% was contributed by Private Sector.
The total thermal capacity, including gas stations and diesel generation
accounts for about 64.27% of installed capacity of the country followed by
hydro capacity at 23.13%. Nuclear stations account for 2.86% and the
balance 9.74% is contributed by Renewable Energy Sources.
Total MW % share
Capacity
Thermal 102,453.98 64.27%
Hydro 36,863.40 23.13%
Nuclear 4,560.00 2.86%
R.E.S.@ 15,521.11 9.74%
Total 159,398.49 100.00%
@ Renewable Energy Sources.
Source: CEA's executive summary
With 84,198.38 MW of the installed capacity contributed by coal based
stations which is 52.82% of nation's capacity, coal remains key fuel for
power generation.
Existing Generation:
The total power available in the country during the year 2009-10 was
771.551 billion units as compared to 723.794 billion units during last
year, registering a growth of 6.6%.
The sector wise and fuel wise break-up of generation for the year 2009-10
is detailed as under:
Total Generation Billion Units % share
State Sector 348.274 45.14%
Central Sector 324.284 42.03%
Pvt. Sector 93.634 12.14%
Others* 5.359 0.69%
Total 771.551 100.00%
Total Generation Billion Units % share
Thermal 640.876 83.06%
Hydro 106.680 13.83%
Nuclear 18.636 2.42%
Others* 5.359 0.69%
Total 771.551 100.00%
* Bhutan Import.
Source: CEA's Reports
Although the State Sector accounts for 49.80% of installed capacity, its
contribution to national generation is only 45.14%. Central Sector
utilities have better performing stations as compared to those of State
utilities and contribute 42.03% of nation's generation with a share of 32%
in installed capacity.
Demand and Supply position:
The supply of power improved during the year 2009-10 owing to increase in
capacity in coal as well as gas based plants. Gas based supply also
increased primarily due to availability of KG basin gas.
For the first time since 2003-04, energy deficit declined on a year-on-year
basis in 2009-10 to 10.1% from 11.1%. The base load demand increased by
7.26% while base load supply grew by 8.36% over last year. This is also
attributed to higher capacity addition coupled with higher utilisation
owing to improved fuel availability.
Peak load demand, however, increased by 8.52% whereas peak supply grew by
7.6% resulting in raising peak load deficit to 12.7% in 2009-10 from 11.9%
in the previous year. The reversal of the downtrend witnessed last year is
mainly due to resumption in industrial activity as reflected in the change
of growth rate of Index of Industrial Production (IIP) from 2.7% in 2008-09
to 10.4% in 2009-10. (source: CSO)
Years Peak Energy
Deficit% Deficit%
2000-01 13.0 7.8
2001-02 11.8 7.5
2002-03 12.2 8.8
2003-04 11.2 7.1
2004-05 11.7 7.3
2005-06 12.3 8.4
2006-07 13.8 9.6
2007-08 16.6 9.8
2008-09 11.9 11.1
2009-10 12.7 10.1
As per IMF's World Economic Outlook 2010 update, India's GDP is expected to
grow at 9.4%, next only to China which is expected to grow at 10.5% this
year in comparison to other countries. In order to sustain the growth in
GDP, India needs to add power generation capacity commensurate with this
pace since growth of power sector is strongly co-related with the growth in
GDP and going forward it is expected that supply will create further
demand.
Central Electricity Authority in its 17th Electric Power Survey (EPS) has
projected that in order to completely wipe off the energy deficit, the
energy requirement at the power station bus bar would be of the order of
968.659 Billion Units in 2011-12.
Currently, the sector is characterized by acute shortages. The demand and
supply position during the last five years in the country is indicated as
under:
Actual Power Demand-Supply Position:
Fiscal Require- Availa- Surplus/Deficit
Year ment bility (+/-)
(MU) (MU) (MU) (%)
2005 591,373 548,115 -43,258 -7.3%
2006 631,554 578,819 -52,735 -8.4%
2007 690,587 624,495 -66,092 -9.6%
2008 737,052 664,660 -72,392 -9.8%
2009 777,039 691,038 -86,001 -11.1%
2010 830,594 746,644 -83,950 -10.1%
MU denotes Million units.
Source: Executive Summary Reports of CEA.
Structure of power market:
Power is transacted in India largely through long term Power Purchase
Agreements (PPA) entered between Generating/Transmission Companies with the
Distribution utilities. A small portion is transacted through various
short-term mechanisms like trading through licensees, bi-lateral trading,
trading through power exchanges and balancing market mechanism (i.e.
Unscheduled Interchange (UI) mechanism).
In the year 2009-10, around 93.17% of power generated in the Country was
transacted through the long term PPA route. 5.35% of the power was
transacted through trading mechanism which included trading through short
term licensees, bi-lateral trading, trading through power exchanges and the
balance 1.48% of the power was transacted through UI mechanism.
Consumption:
The end users of power in India are broadly classified into industrial,
domestic, agricultural and commercial categories. The share of each of
these categories in the consumption of electricity during the fiscal 2008
was approximately 38%, 24%, 22% and 8% respectively. The balance pertains
to various other consumers. The per capita consumption of electricity of
704.2 kWh (2007-08) in India is quite low as compared to the world average
of 2750 kWh in the year 2006.
Capacity Utilisation:
Capacity utilisation in the Indian power sector is measured by Plant Load
Factor (PLF).
Sector wise PLF (Thermal):
Sector Plant Load Factor
2007-08 2008-09 2009-10
State 71.9 71.2 70.9
Central 86.7 84.3 85.5
Private 90.8 91.0 83.9
All India 78.6 77.3 77.5
Further, PLF of gas stations improved considerably from 57.6% clocked in
2008-09 to 67.28% during 2009-10 owing to improvement in gas supply.
TRANSMISSION AND DISTRIBUTION:
In India, the power transmission and distribution (T&D) system is a three-
tier structure comprising of distribution networks, state grids and
regional grids. The distribution networks are owned by the distribution
licensees and the state grids are primarily owned and operated by
respective state utilities. In order to facilitate the transmission of
power among neighbouring states, state grids are interconnected to form
regional grids.
Most of the inter-state transmission links are owned and operated by Power
Grid Corporation of India Limited. Power Grid also owns and operates many
inter-regional transmission lines (forming a part of the national grid), in
order to primarily facilitate the transfer of power from a surplus region
to a deficit region. The regional grids are being gradually integrated to
form a national grid enabling inter-regional transmission of power
facilitating optimal utilization of the national generating capacity. The
geographical distribution of primary sources of power generation in the
country is uneven. The hydro potential is in the Northern and North-Eastern
States and coal is primarily located in the Eastern part of the country.
The focus of planning the generation and the transmission system in the
country has shifted from the orientation of regional self-sufficiency to
the concept of optimization of utilization of resources on all-India basis.
Development of a strong National Grid has become a necessity to ensure
optimal supply of power to all. The Ministry of Power (MoP) has envisaged
establishment of an integrated National Power Grid in the country by the
year 2012. The program envisages addition of over 60,000 ckt km of
Transmission Network in a phased manner by 2012. The integrated grid shall
evacuate additional 100,000 MW and carry 60% of the power generated in the
country. The existing inter-regional transmission capacity connects the
northern, eastern, northeastern and western regions in synchronous mode and
the southern region asynchronously. The inter-regional power transmission
capacity as on March 2010 is 20,800 MW. This capacity is expected to be
further augmented to 37,700 MW by 2012. High capacity transmission
corridors need to be developed for the viable and economic evacuation of
such a quantum of power. For this, high capacity HVDC links and 1,200 kV
and 765 kV UHV (Ultra High Voltage) AC corridors with pooling stations at
suitable locations in Jharkhand, Orissa, Chhattisgarh, Madhya Pradesh,
Andhra Pradesh and Tamil Nadu have been envisaged. Work has started on the
first 800 kV HVDC bipole line from the northeastern region to the northern
region.
POWER TRADING:
Trading of power is recognized as a distinct license activity under the
Electricity Act 2003 (EA 2003). The Central and State Electricity
Regulatory Commissions have powers to grant inter-state and intra-state
trading licenses. As per CERC, there are 39 inter-state trading licensees
on March 31, 2010.
The volume of electricity transacted through trading licensees and on power
exchanges has increased from 20.18 BUs in 2007 to 30.60 BUs in 2009
representing 3% and 4% of total generation respectively in the country. The
weighted average price of electricity transacted through two power
exchanges are showing a downward trend and came down from Rs.7.57/kWh in
the year 2008 to Rs.5.73/ kWh in the year 2009.
Volume of Electricity Transacted during 3 years:
BUs
Year Electricity Transacted Through Total Trade as
Trading IEX PXIL % of
Licensees Generation
2007 20.18 - - 20.18 2.93%
2008 21.63 1.72 0.02 23.37 3.28%
2009 24.81 5.07 0.72 30.60 4.08%
Source: Annual Report of CERC for the year 2009
India has two power exchanges - India Energy Exchange (IEX) promoted by
Financial Technologies (India) Limited (FTIL) and PTC India Financial
Services Ltd. and Power Exchange India Limited (PXIL), promoted by NSE and
National Commodities & Derivatives Exchange Ltd. (NCDEX). Both the power
exchanges are operational contributing to trade and distribution of market
information, promoting competition and creation of liquidity in a
deregulated power market. The trading is done through on-line satellite
connected exchange that ensures transparency and price discovery.
Open access in inter-state transmission is fully operational. To boost open
access, the CERC has recently notified a regulation on Connectivity, Long-
term Access and Medium-term Open Access in inter-state transmission. The
regulation introduced medium-term open access to the inter-state grid. A
transmission corridor can now be availed for a period ranging from 3 months
to 3 years. Provisions have also been made for seeking connectivity to
grid. The new dispensation has abolished the discrimination between public-
sector and private-sector generators in the matter of connectivity to grid.
Also, now any 100 MW and above consumer can be connected directly to the
Central Transmission Utility grid without having to go to State Load
Dispatch Centers (SLDCs).
RURAL ELECTRIFICATION:
As per Central Electricity Authority (CEA), around 83.9% villages have been
electrified by end March, 2010. The Central Govt. launched a scheme 'Rajiv
Gandhi Grameen Vidyutikaran Yojana' (RGGVY) in April 2005 with the goal of
electrifying all (around 118500) un-electrified villages and hamlets and
providing access to electricity to all households in next five years. Under
RGGVY, 80,864 villages have been electrified and connections to 1.15 crore
Below Poverty Line (BPL) households have been released up to 15.6.2010.
(Source: Ministry of Power -RGGVY projects)
R-APDRP:
Accelerated Power Development and Reforms Programme (APDRP) was modified
and renamed as Restructured APDRP (R-APDRP).The program was approved by
CCEA on July 31, 2008. R-APDRP is linked to actual demonstrable performance
in terms of AT&C loss reduction to 15% or less by the end of 11th plan
through adoption of IT for energy accounting/ auditing and strengthening
/up-gradation of distribution network.
The R-APDRP program size is Rs.51,577 crore. Projects under the scheme are
classified in 4 parts - A', B', C' and D'. Part A' is for
establishment of baseline data and IT applications for energy
accounting/auditing & IT based consumer service centers and Part B' is
towards regular distribution strengthening projects. The expected
investment in Part A' is Rs.10,000 crore and that in Part B' would be
Rs.40,000 crore. PFC is the nodal agency for operationalizing the
programme. Part A' & Part B' projects can be implemented simultaneously
with a gap of 3-6 months which is needed to establish the baseline figure
of AT&C loss of the project area through ring fencing by installation of
boundary (import/ export energy meters). A steering committee has been
constituted under the Secretary (Power) in order to sanction projects,
monitor and review implementation, approve guidelines for operationalizing
the components of the scheme. The steering committee has approved 1,344
projects for 22 states under Part A' at the cost of Rs.4,859.60 crore. 6
states, namely West Bengal, Madhya Pradesh, Rajasthan, Karnataka,
Uttarakhand and Gujarat have awarded the work for implementation of
projects approved under Part A' of the R-APDRP to the IT Implementing
Agency.
R-APDRP also has provision for Capacity Building of Utility personnel and
development of franchisees through Part C' of the scheme. The part D' of
R-APDRP provides for payment of incentive for utility staff in towns where
AT&C loss levels are brought below the baseline. (Source : Economic Survey
2009-10, MoP)
POLICY FRAMEWORK:
Electricity is in the concurrent list of the seventh schedule of the
Constitution of India and therefore the responsibility for the development
of the power industry is with both - Central Government and the State
Governments. Distribution of electricity, in particular comes in the domain
of the states. The Electricity Act 2003 (EA 2003) provides the overall
legislative framework for the sector.
MoP oversees the operation of all Central Sector Power utilities. The
Central Electricity Authority (CEA) advises the MoP on electricity policy
and technical matters. The government has constituted CERC to regulate the
tariffs for the central power utilities and other entities with inter-state
generation or transmission operations. The EA 2003 also requires state
governments to set up State Electricity Regulatory Commissions for
rationalization of energy tariffs and formulation of policy within each
state. As of March 31, 2010 all the states except Arunachal Pradesh and
Nagaland have set up their Regulatory Commissions. In addition, two Joint
Electricity Regulatory Commissions have been set up for Manipur & Mizoram
and Goa & UTs. So far, eighteen states have unbundled their electricity
boards into Generation Companies, Transmission Companies and Distribution
Companies.
The Electricity Act 2003 (EA 2003), National Electricity Policy (NEP) 2005
and Tariff Policy 2006 set the enabling framework for power development in
the country. EA 2003 has promoted a liberal, transparent and enabling legal
framework for power development for creation of a competitive environment
and reforming distribution segment of power industry. It allows open access
in transmission and distribution. It provides for regulatory oversight for
fixation of tariff. Definition of theft was expanded to cover the use of
tampered meters and their use for unauthorized purpose. Theft of power was
made explicitly cognizable and non-bailable offence. Rural Electricity
Policy was launched in August, 2006 to provide access to electricity to all
areas including villages and hamlets through rural electricity
infrastructure and electrification of households. National Hydro Policy was
launched in fiscal 2008 allowing private producers to undertake hydro
projects based on PPA route with a facility of merchant sale upto 40% from
saleable energy from hydro plant.
RECENT POLICY INTITIATIVES IN POWER SECTOR:
a) Distribution reforms modified under 'Mega Power Project Policy':
On December 3, 2009, MoP notified that under Mega Power Project Policy, the
condition of privatization of distribution by power purchasing states
would be replaced by the condition that power purchasing states shall
undertake to carry out distribution reforms as laid down by MoP.
b) Revision in 'Mega Power Project' conditions:
The following amendments have been made with regard to classification of a
project as 'Mega Power Project' and being eligible for the benefits under
mega power policy:
I. Revision with regard to threshold capacity of the project:
a) A thermal power plant of capacity of 1000 MW or more; or
b) A thermal power plant of capacity of 700 MW or more located in the
States of J&K, Sikkim, Arunachal Pradesh, Assam, Meghalaya, Manipur,
Mizoram, Nagaland and Tripura; or
c) A hydel power plant of capacity of 500 MW or more; or
d) A hydel power plant of a capacity of 350 MW or more, located in the
States of J&K, Sikkim, Arunachal Pradesh, Assam, Meghalaya, Manipur,
Mizoram, Nagaland and Tripura.
II. Mega policy benefits extended to brownfield projects also subject to
certain conditions.
III. Mandatory condition of inter-state sale of power for getting mega
power status removed.
IV. Goods required for setting up a mega power project, would qualify for
the fiscal benefits after it is certified by designated MoP official that:
(i) the power purchasing States have constituted the Regulatory Commissions
with full powers to fix tariffs and (ii) power purchasing states shall
undertake to carry out distribution reforms as laid down below:
* Timely release of subsidy as per Section 65 of Electricity Act, 2003.
* Ensure that Discoms approach SERC for approval of annual revenue
requirement/tariff determination in time according to the SERC regulations.
* Setting up special courts as provided in the Electricity Act 2003 to
tackle theft related cases.
* Ring fencing of State Load Dispatch Centres.
V. Mega Power Projects would be required to tie up power supply to the
distribution companies/ utilities through long term PPA(s) in accordance
with NEP 2005 and Tariff Policy 2006 as amended from time to time.
VI. No further requirement of ICB for procurement of equipment for mega
projects if the requisite quantum of power has been tied up or the project
has been awarded through tariff based competitive bidding.
VII. The present dispensation of 15% price preference available to the
domestic bidders in case of cost plus projects of PSUs would continue.
However, the price preference will not apply to tariff based competitively
bid project(s) of PSUs.
c) Scheme for Supply of Power to Rural Households notified by MoP:
MoP on April 27, 2010 notified that electricity will have to be supplied to
households of the villages located in the areas which fall within 5
kilometer radius around Central Power Plants for minimum 6-8 hours on daily
basis. The scheme covers all the existing and upcoming power plants of
CPSUs. The cost of providing infrastructure is to be borne by the CPSUs to
which the plant belongs and the same will be booked by the CPSUs as part of
project cost. The scheme shall be implemented under the supervision of a
nodal officer appointed by the State Utility. Separate transformers with
suitable meters will be installed for accounting energy for supply of
households, agriculture and industry by State Utility at their expense. The
tariff for supply of electricity to these villages will be notified by the
SERC. MoP shall allocate adequate power to the state utility for supplying
to identified villages.
d) Inter-State trading margin regulations 2010:
The CERC issued new regulations fixing trading margins for inter-state
trading in electricity. The main features of the new regulations are:
* The trading margin shall apply only to short-term buy - short-term sell
contracts for inter-state trading,
* Trading margin shall not exceed 4 paise per unit if the sell price of
electricity is less than or equal to Rs.3 per unit. The ceiling of trading
margin shall be 7 paise per unit in case the sell price of electricity
exceeds Rs.3 per unit.
* If more than one trading licensee is involved in a chain of transactions,
the ceiling on the trading margin shall include the trading margins charged
by all the traders put together.
* Long-term agreements have been exempted from trading margins to
facilitate innovative products and contracts for new capacity addition
which involve higher risk in transactions.
e) CERC's 2009-14 Regulations:
CERC tariff regulation for power generation and transmission for 2009-14
ensures certainty of RoE at base rate of 15.5% to be grossed up with normal
tax rate as applicable to the concerned utility. There is an additional
0.5% RoE if projects are commissioned within given time-lines in addition
to retaining contribution on account of efficient operation subject to
certain conditions. In the year, in which the concerned utility pays
Minimum Alternate Tax (MAT), the base rate will be grossed up by applying
MAT rate. Other provisions of Regulation have been discussed elsewhere in
this report.
f) New Indian Electricity Grid Code (IEGC) and amendments to Unscheduled
Interchange (UI) regulations:
CERC notified new IEGC effective from 3rd May, 2010. While the new Grid
Code will facilitate larger integration of renewable energy sources with
grid, the amended UI regulations will bring stricter grid discipline. To
discourage states from overdrawing electricity from the grid, CERC
increased the overdrawing charge to Rs 12.25 per unit. An additional
unscheduled interchange (UI) charge of 40% on the normal UI rate of Rs 8.73
per unit will now become applicable when the frequency is below 49.5 Hz.
As a further deterrent on overdrawals, the additional UI charge rate will
be 100% (on the normal UI rate) on overdrawals when the grid frequency is
below 49.2 Hz instead of 49.5 Hz earlier.
OPPORTUNITIES AND THREATS:
Opportunities:
No slowing of demand for electricity:
Although, the Indian power sector is one of the fastest growing sector in
the world and energy availability has increased by around 36% in the past 5
years, the demand for power outstrips the supply. Nearly 60 crore Indians
do not have access to electricity. The energy and peaking deficits have
been hovering around double digits for the past two years. There is
therefore ample scope for rapid capacity expansion. It is widely believed
that the demand of power is understated and supply will also create further
demand. Although, the peaking shortages have reduced over the years,
however the energy deficits are expected to remain in double digits. Going
forward, the peak deficit is expected to increase since only base load
capacity is being planned and implemented.
Favourable environment to induce investment in power sector:
100% FDI is allowed in Generation, Transmission and Distribution segments.
Government of India has allowed Income-Tax holiday for a block of
consecutive 10 years in the first 15 years of operation. Further incentives
from Government include waiver of duties on capital equipment under mega-
power project policy.
Government has taken a number of steps, including the enactment of
Electricity Act (2003) and Securitisation of SEB dues to reform the power
sector and to attract investments. Distribution reforms were brought under
focus besides making theft of power a punishable offence. Further APDRP was
launched to improve the T&D infrastructure in the country and electricity
regulatory commissions have been set up at the state level to delineate
tariff setting from extraneous influences. In addition, Government has
taken a number of measures to encourage new capacity addition such as
allowing non-discriminatory open access to transmission and distribution
besides introducing setting up of new capacities on competitive bidding
route. Govt. has also allowed developers to set up merchant power plants
without entering into long term PPAs. Coal blocks have been allocated to
power project developers to strengthen fuel security.
Ultra Mega Power Projects:
Recognizing the fact that economies of scale leading to cheaper power can
be secured though large size power projects, Govt. of India alongwith CEA
and PFC has taken an initiative for the development of coal based Ultra
Mega Power Projects (UMPPs) as pit head stations and coastal based stations
each with a capacity of about 4000 MW using super critical technology under
Public -Private Partnership mode. So far, 4 such projects have been awarded
international competitive bidding route namely Sasan in MP, Mundra in
Gujarat, Krishnapatnam in AP and Tilaiya in Jharkhand. As per Economic
Survey 2009-10, one unit of 660 MW of the Sasan UMPP and two units of 800
MW each of the Mundra UMPP are expected to be commissioned in the 11th
Plan. Government has decided to include an additional bidding qualification
criterion stating that no bidding company or group may hold more than 3
UMPPs at the pre commissioning stage. The competitive bidding process for
selection of developer for Surguja UMPP in Chattisgarh has also commenced
during the year.
Green power:
Opportunities in Renewable Energy Sources (RES) based Power generation:
Even though RES account for only 9.74% of installed capacity, their share
in the total energy basket is gradually increasing. Under the National
Action Plan on Climate Change (NAPCC), Jawaharlal Nehru National Solar
Mission is one of the eight National Missions launched by Govt. on January
11, 2010 with the twin objectives of contributing to India's long-term
energy security and its ecologically sustainable growth. The Mission will
be implemented in 3 stages leading to an installed capacity of 20,000 MW of
grid power, 2,000 MW of off-grid solar applications and 20 million sq. m.
solar thermal collector area and solar lighting for 20 million households
by the end of the 13th Five Year Plan in 2022. The immediate aim of the
Mission is to focus on setting up an enabling environment for solar
technology penetration in the country and includes feeding 1,000 MW of
solar power (solar thermal and photovoltaic) to the grid under the first
phase by March 2013. Govt. of India has designated NVVN, a wholly owned
subsidiary of NTPC as the nodal agency for the purchase of up to 1,000 MW
of solar power commissioned by Fiscal 2013 under the National Solar Mission
and sale after bundling an equivalent MW capacity from our stations.
EA 2003 requires SERCs to specify a percentage for purchase of electricity
from cogeneration or renewable sources termed as Renewable Purchase
Obligation (RPO). SERCs in 16 States have already specified the percentage-
Andhra Pradesh, Gujarat, Karnataka, Madhya Pradesh, Orissa, Rajasthan,
Tamil Nadu, Kerala, Haryana, Maharashtra, Uttar Pradesh, West Bengal,
Uttarakhand, Punjab, Chattisgarh, and NCT of Delhi. (Source: Ministry of
New and Renewable Energy)
CERC has notified tariff regulations for electricity generated from
renewable energy (RE) sources.
The Forum of Regulators has evolved a Renewable Energy Certificate (REC)
mechanism at national level to facilitate inter-state transaction of RE
sources. CERC has notified the regulation for implementing the REC
framework. The REC mechanism is aimed at addressing the mismatch between
availability of RE resources in a State and the requirement of the
obligated entities to meet the renewable purchase obligation.
Threats:
Slow investment in power sector:
Although 100% FDI is permissible in power sector yet share of power sector
in FDI is hovering around 18-19% of total infrastructure investment as
compared to Telecom sector where it has increased to 47% during 2008-09.
FDI flows in infrastructure:
(US $ million)
2007-08 2008-09
Amount % Amount %
Power 968.0 19% 948.8 18%
Telecom 1,261.5 24% 2,558.4 47%
Others 2,949.3 57% 1,892.4 35%
Total 5,178.8 5,399.6
The FDI inflow in power sector has improved during the year 2009-10 and was
over USD 1.4 billion.
The reason for low FDI inflow in the power sector is that there is a lack
of politico-administrative support on containment of commercial losses
coupled with poor financial health of state utilities in addition to capped
regulatory returns on equity. Delays in land, forest and environmental
clearances resulting in cost escalation are other reasons for low inflow of
FDI into power sector.
Constraint on Power Equipment manufacturing capacity:
The capacity addition in the country has taken gigantic proportions
compared to the earlier plan periods. The huge capacity addition programs
entail the timely availability of power equipments - both the main plant as
well as Balance of Plants like Coal Handling Plant, Ash Handling Plants,
Water Treatment Plants, Cooling Towers and Cooling Water Systems etc.
Despite the growing need of power, the capacity addition in the last three
plan periods has been less than encouraging and one of the main reasons has
been the lack of adequate power equipment manufacturing capacity in the
country. In view of the huge requirement for power equipment the Government
of India has taken various initiatives for encouraging the setting up /
enhancement of manufacturing capability. The precondition of phased setting
up of manufacturing capacity, by the suppliers of the Super Critical power
equipment under the bulk tendering is a step in this direction. Several
players have formed joint venture companies with global manufacturers and
domestic power equipment suppliers are also enhancing their manufacturing
capacity. Apart from the adequate manufacturing capacity, Technology
absorption, adaptation and assimilation is also essential. Further,
critical raw materials like Alloy Steel, Cold Rolled Grain Oriented (CRGO)
steel etc. for forgings, castings, transformers etc. need to be developed
indigenously matching with the quantum of capacity addition planned. There
is also a need to develop adequate erection and construction agencies for
executing civil and mechanical works and engineering consultants for
engineering and design of various packages for meeting the requirements of
huge capacity addition targets in the country.
High AT&C /T&D Losses:
Aggregate Technical and Commercial (AT&C) loss captures technical,
commercial losses in the network and also loss due to non realization of
billed amount and is a true indicator of total losses in the system.
High technical losses in the system were primarily due to inadequate
investments into system improvement works, which resulted in unplanned
extensions of the distribution lines, overloading of transformers and
conductors, and lack of adequate reactive power support. The commercial
losses are mainly due to low metering efficiency, theft & pilferages. This
may be eliminated by improving metering efficiency, proper energy
accounting & auditing and improved billing & collection efficiency. Fixing
of accountability of the personnel / feeder managers may help considerably
in reduction of AT&C loss.
T&D (Transmission and Distribution) losses represent the difference in the
amount of electricity supplied and the amount actually metered. The gap
between average tariff and average cost of supply, which was historically
high, has declined to around paisa 49 per kWh in 2006-07 (Rs.2.76/kWh less
Rs.2.27/kWh). The tariffs for agricultural and domestic consumers is
subsidised in most states.
AT&C losses currently exceed 29% for the country as a whole.
Country AT&C losses
Japan 4.00%
USA 6.00%
China 7.00%
Brazil 17.00%
Pakistan 26.00%
India 29.24%
Source: Ministry of Finance, PFC Report
This issue is being addressed by Govt. through R-APDRP. AT&C losses are
showing a declining trend and have come down from 38.86% in 2001-02 to
29.24% in 2007-08
(Source : PFC).
Strained commercial viability of State Power Utilities:
As per the report of 13th Finance commission, during 2007-08 subsidies
amounting to Rs. 16,950 crore were given to state utilities. The subsidies
have persisted due to:
a) Inability of the state utilities to enhance operating efficiencies and
reduce T&D losses adequately.
b) High cost of short term power purchases. Several utilities have not
planned capacity addition in time and are relying on short term purchases
at high rates (an average of Rs.7.31 per kWh as compared to Rs.4.52 per kWh
in 2007-08). The inability to reduce T&D losses has increased the purchase
levels and supply costs.
c) Due to lack of political will, there is an absence of timely tariff
increase leading to increased gap in tariff and cost of supply resulting
further in impaired utilities' operations.
Some states have not raised tariffs for the past eight to nine years in
spite of increasing deficits. Tariff increase requirements to bridge the
gap, even in the better performing states, are as much as 7% p.a. on an
average at the 2007-08 subsidy levels. In some of the poorly performing
states the increase in tariff requirement is as much as 19% p.a. and the
same is very difficult to achieve. As a result, the net losses (financial
losses & subsidies) of state T&D utilities are on the increase and are
projected at the level Rs.68,643 crore for the year 2010-11 (being over 1%
of GDP) and the same poses a high risk to their commercial viability.
Fuel Constraints:
As per CEA, due to non availability of coal, the loss of generation was
around 14.5 BUs. The power generation in India is predominantly based on
coal, 70% of generation during 2009-10 was based on coal. This trend is
likely to continue in the future. Almost 74% of domestic coal production is
utilized for thermal power generation. The total coal production for the
year 2009-10 was 526.6 MMT(source: Monthly economic Report, March'2010,
MoF). India is the third largest producer of coal in the world. National
energy requirement is expected to grow to almost 4 times of present level
to 2 BMT/annum by 2030-31. The domestic coal production has to grow in the
range rate of 7%-9% range in order to match with the growth in demand. This
is a big challenge.
As per Coal India Ltd (CIL), as against demand of 732 MMT as at the end of
11th plan, the supply is expected to be of the order of 628 MMT(as against
Planning Commission's forecast of 680 MMT) leaving a shortfall of 104 MMT.
The shortfall in supply is made good by importing 59 Million Tonnes of coal
during 2008-09 (Source: Economic Survey 2008-09). The indigenous coal
supply has to be augmented to match the growth in power sector since most
of the thermal plants may not use coal blended with more than 15% of
imported fuel because of the design of the boilers. Imported coal is also
subjected to wide price fluctuations.
Slow development of coal mines allocated to Power Developers:
In order to augment coal resources, the government is promoting captive
block allocation to match rising demand. So far, 208 coal blocks, with
geological reserves of 50 BMT have been allocated to public and private
companies for captive and commercial mining. However, less than 20 of these
coal blocks have started production and it is expected that they will
contribute to about 21 MMT of coal production during 2010-11. The coal
ministry has issued 40 show cause notices and allocations of 7 coal mines
have been cancelled. The development of coal mines has been delayed
primarily due to delay in site exploration and signing of mining lease for
appointment of contractors and also delay in environment clearances.
Slow Diversification of Fuel basket:
With the total coal reserves assessed in the country at 267 BMT, (proven
reserves of around 106 BMT), the known coal reserves are expected to
exhaust in about 45-50 years, assuming an annual growth in domestic
consumption of 5% as per Integrated Energy Policy issued by Planning
Commission. Going forward, coal will remain the mainstay for power
generation in India and the share on coal based stations for power
generation is expected to be in the range of 75%-78%. However, it would be
a challenge to diversify the fuel basket to reduce uncertainties in energy
supply.
Hydro based power generation:
India is endowed with an estimated hydro power potential of more than
150,000 MW. However, installed capacity of hydro electric projects is only
36,863 MW contributing to only 23.13% of the fuel basket. Hydro-electric
power contributed 13.83% of total generation during last fiscal. No
capacity addition took place in hydro sector during 2009-10 and it is
expected that the 11th plan achievement will also be around 50% of the
target. Private sector accounts for only about 3 per cent of the installed
capacity. However, the share of private sector in hydro capacity is slated
to grow. There are 14 schemes with an installed capacity of 4,383 MW under
construction in the private sector. Private developers have been allotted
129 schemes with an installed capacity 36,123 MW by States which are yet to
be taken up for construction.
The share of hydro generation is low since these projects are dependent on
the rain fall and are used primarily to meet peaking demand. The
hydroelectric potential has been given thrust by government of India by
launching New Hydro Power Policy 2008 offering incentives to investors in
order to increase the installed capacity of hydro projects to over 50,000
MW by 2012.
(Source: Economic Survey 2009-10)
Nuclear based power generation:
At present the installed nuclear power capacity in the country is only 4560
MW which is about 3% of the total power generating capacity. India, though,
has limited Uranium reserves; it has the second largest deposits of Thorium
in the world. India's three stage nuclear power programme envisages
increasing the role of nuclear power for the national development. The
first stage of this programme with setting up of Pressurized Heavy Water
Reactors (PHWR) is already in the commercial domain. The second stage of
this programme comprises setting up of Fast Breeder Reactors (FBR) and the
third stage will be based on Thorium Reactor Technology. With the
development of Thorium based technology, role of nuclear power will
increase significantly in the future. Looking at the technological
development, the energy security, the absence of Green House Gases (GHGs)
and the economics of nuclear power, Government of India has planned to have
a nuclear power capacity of 20,000 MW by the year 2020 and about 60,000 MW
by the year 2030.
Renewable Energy Sources (RES) based Power generation:
The share of RES based capacity to total installed capacity in India has
increased gradually from 8% in 2007-08 to 9.74% in 2009-10. Although there
is immense potential for growth of RES based power generation in the
country, the challenges in formulating future energy policies are too many.
The new technologies used in this sector are faced with market
acceptability and credibility problems.
Power generation from RES increases the uncertainty in accurate
availability of power which in turn affects grid reliability and
operations.
Further, the cost-competitiveness of renewable technologies vis-a-vis
conventional systems is another issue that requires to be tackled. The high
capital cost of RES based power generation is the biggest market barrier
for increasing share of generation.
OUTLOOK:
Power sector in India is poised to have a CAGR of 9.0%-9.8% upto end of
12th Plan and hence offers multiple opportunities of growth to public as
well as private sector entities so as to achieve Govt's objective of 'power
for all'. The main features of India's power generation programme would be:
* To continue rapid capacity addition.
* To augment indigenous power equipment manufacturing capacity.
* To reduce uncertainties of supply of energy.
* To reduce price vulnerability.
* Minimize the risks arising out of equipment failures.
* Diversification of its fuel basket.
We attempt to give some more details concerning certain aspects of the
sector and the Company by way of information and analysis.
NTPC VIS-A-VIS ALL INDIA:
With approximately 20% of capacity, your Company contributes to around 30%
of country's generation.
All NTPC % share
India
Capacity (MW) 159,398 28,840 18.09%
Generation (MU) 771,551 218,839 28.36%
Capacity incl. JVs (MW) 159,398 31,704 19.89%
Generation incl. JVs (MU) 771,551 230,007 29.81%
Source: All India Data - CEA's executive summary
Your Company is the largest utility in Asia and 8th largest amongst listed
global utilities as per Forbes Global 2000 ranking published in the year
2010. It has also been ranked No.1 Independent Power Producer in Asia and
No.2 Independent Power Producer Globally in Platts Top 250 Global Energy
Company for 2009. It has also been ranked as the 10th largest electricity
producer in the World and 3rd largest in Asia based on its generation
during 2008-09. It is also ranked as 341st largest company in the world in
the Forbes Global 2000.
Over the last fiscal, operationally NTPC stations performed better than
collective performance of any other sector.
PLF COMPARISON (%):
2009-10 2008-09 Increase
Central sector 85.49 84.30 1.19
State sector 70.90 71.17 -0.27
Pvt sector 83.88 91.01 -7.13
National avg. 77.53 77.27 0.26
NTPC 90.81 91.14 -0.33
After excluding your Company's PLF, national average PLF will reduce to 73%
approximately during fiscal 2010 as compared to 72.23% approximately during
last fiscal.
National Availability Factor for coal stations was 85.45% during fiscal
2010 as compared to 85.04% last year. As against national AVF, your
Company's coal stations had AVF of 91.76% during fiscal 2009 as compared to
92.23% last year.
COMPETITION:
Due to the gap between demand and supply in the Indian power sector, there
has generally been a stable market for power generation companies in India.
NTPC is the largest power generating company in the country having a market
share of approximately 18% in terms of installed capacity and about 28% in
terms of national generation. The Maharashtra State Power Generation
Company Ltd with an installed capacity of 11,330 MW with market share of
7.1% is the next largest entity.
The share of private sector capacity has increased to 29,041 MW as of March
31, 2010 and going forward the same is expected to increase even more
aggressively as is evident from capacity added during 11th plan so far.
Private sector has contributed to around 12.14% to total electricity
generation in the year 2009-10 as compared to their share of 9.5% in the
previous year.
EA 2003 and other reforms in the power sector provide opportunities for
increased investment in power generation. Specifically, non-discriminatory
open access regulations of state regulatory commissions which enable
generators to sell directly to bulk consumers, have made investment in
power generation more viable.
Further, the Tariff Policy issued in January 2006 provides that all future
requirements of power should be procured through tariff based competitive
bidding by distribution licensees. There are exceptions in the tariff
policy for cases of expansion of existing projects or where there is a
state controlled or state-owned company as an identified developer and
where tariff is regulated.
The Competitive Bidding Guidelines have created a level playing field for
both CPSUs and private sector developers to participate in the tariff based
bidding process for securing power projects including coal based ultra mega
power projects. This competition is likely to increase further in future.
With proven in house engineering capabilities built in the past and wide
ranging experience of project execution, we are confident that we shall be
able to retain our leadership position in the industry and are on our way
to become 75000 MW plus company by 2017. Further, our high operational
efficiency enables us to sell power at competitive prices and achieve
savings. We believe that our monitoring and maintenance techniques offer us
a competitive advantage in an industry where reliability and maintenance
costs are a significant determinant of profitability.
RISKS AND CONCERNS:
The Company has to sustain its leadership position in the country by
growing at an appropriate rate and at the same time improve its operational
efficiency to continue to generate at high PLF minimizing the outages. In
order to reduce dependence on conventional fuel, the Company is foraying
into hydro, nuclear and non-conventional energy sources. As a step in
backward integration, the Company is entering into coal mining business
and also LNG value chain.
To sustain its leadership position in the country and befitting its
'Maharatna' stature, the company has drawn an ambitious Corporate Plan up
to the year 2032 with diversified power generation portfolio based on
thermal, hydro, nuclear and renewable energy sources. Though our growth
strategies are built upon the inherent strengths of the company, various
activities undertaken to achieve the targets make us susceptible to various
risks. We recognize and realize that risks are not merely the hazards to be
avoided but in many cases offer opportunities which create value ultimately
leading to enhancement of shareholders' wealth.
To effectively manage the risks associated with our business, we have taken
adequate measures to institutionalize risk management process in the
company by implementing an elaborate Enterprise Risk Management (ERM)
framework. As part of implementation of the ERM framework, an Enterprise
Risk Management Committee (ERMC) has been constituted with Executive
Directors representing geographically dispersed regions and core functions
of the company. ERMC, as owner of Enterprise Risk Management framework has
been entrusted with the responsibility to identify and review the risks and
formulate action plans and strategies for risk mitigation on short-term as
well as long-term basis. The ERMC has identified key areas out of which
following have been classified as the top risks for the company:
* Inconsistent fuel supply.
* Delay in execution of projects.
* Risks related to coal mining and coal washeries.
* Risks pertaining to Hydro Projects.
* Hindrances in acquisition of land.
* Non compliance with environmental, pollution and other related regulatory
norms including Ash Utilization.
* Inability to attract and retain skilled employees.
These areas are being regularly monitored through reporting of key
performance indicators of identified risks and exceptions with respect to
risk assessment criteria are being reported to the top management. The ERMC
meets every quarter to deliberate on mitigating strategies. So far, eight
such meetings of ERMC have been held.
On the above issues, a number of initiatives have been taken such as
establishing a state of the art Project Monitoring Centre at Delhi. PMC
provides milestone based project monitoring, real time network updation,
real time video capture apart from latest video conferencing facility
leading to speedy resolution of critical issues, review of project progress
by top management alongwith chief executives of major agencies. As regards
augmentation of fuel supply, a three pronged strategy is in place spot
purchase of coal/ gas, coal imports and production of coal by acquiring
coal mines in India or abroad. As regards other risks, appropriate actions
are taken for their mitigation.
INTERNAL CONTROL:
Your Company has robust internal systems and processes in place for smooth
and efficient conduct of business and complies with relevant laws and
regulations. A comprehensive delegation of power exists for smooth decision
making. Elaborate guidelines for preparation of accounts are followed
consistently for uniform compliance. In order to ensure that all checks and
balances are in place and all internal control systems are in order,
regular and exhaustive internal audits are conducted by experienced firms
of Chartered Accountants in close co-ordination with Company's own Internal
Audit Department. Besides, the Company has two Committees of the Board viz.
Audit Committee and Committee on Management Controls to keep a close watch
on compliance with Internal Control Systems.
A well defined Internal Control Framework has been developed identifying
key controls and supervision of operational efficiency of designed key
controls by Internal Audit. The framework has been partially rolled out and
tested at some of the locations. The system provides elaborate system of
checks and balances based on self assessment as well as audit of controls
conducted by Internal Audit at process level. Gap Tracking report for
testing of controls for design efficiency and operating efficiency has been
reviewed by Audit Committee and action has been taken to further strengthen
the Internal Control System by further standardizing systems and
procedures. The system presents a written assessment of effectiveness of
company's internal control over financial reporting by the process owners,
project/office heads to facilitate certification by CEO and CFO and
enhances reliability of assertion.
FINANCIAL DISCUSSION AND ANALYSIS:
A detailed financial discussion and analysis is furnished below on Reported
Audited Financial Statements and Adjusted Profit. The Adjusted Profit has
been arrived at after adjustments on account of one-off items/extra
ordinary items which have been indicated against each broad category of
revenue and expense to explain better the year on year (YoY) performance.
A. Results of Operations:
1. Gross Income:
Fiscal 2010 Fiscal 2009 % Change
Sl. Units of electricity 205,091 193,688 5.89%
No. sold (million units)
Income Amount in Rs. Million
1 Energy Sales (Excl 461,687 417,913 10.47%
Electricity Duty)
2 Energy Internally 551 514 7.20%
Consumed
3 Consultancy & other 1,539 1,325 16.15%
services
4 Other income 18,571 21,063 -11.83%
(excluding income
related to OTSS*)
5 Income related to 9,991 11,476 -12.94%
OTSS*
6 Total (4+5) 28,562 32,539 -12.22%
Gross Income 492,339 452,291 8.85%
(1+2+3+6)
* OTSS-One Time Settlement Scheme.
The gross income of the Company comprises of income from sale of
electricity, consultancy and other services, and interest earned on
investments such as term deposits, mutual funds and bonds (issued under
one-time-settlement scheme). The gross income for fiscal 2010 is Rs.492,339
million as against Rs.452,291 million in the previous year registering an
increase of 9%. This gross income excludes provisions written back. Each
element of income is discussed below:
Tariffs for computation of Sale of Energy:
The charges for electricity are based on tariff rates determined by the
CERC. The tariff rates consist of a capacity charge for recovery of annual
fixed cost based on plant availability, energy charges for recovery of fuel
costs and an unscheduled interchange charge for the deviation in generation
with respect to schedule payable (or receivable) at rates linked to
frequency prescribed in the regulation to bring grid discipline. The CERC
sets tariff rates on a plant-by-plant basis in accordance with the tariff
regulations/ norms notified by them. CERC has issued new Tariff Regulations
for the period 2009-14, Central Electricity Regulatory Commission (Terms
and Conditions of Tariff) Regulations, 2009, which is a balanced regulation
for both consumers and investors.
Capacity Charge:
The capacity charge for making plant capacity available is allowed to be
recovered in full if plant availability is at least 85%. If the
availability of the plant is lower than 85%, the capacity charges are
recovered on a pro rata basis. The significant elements of the capacity
charges permissible under the Tariff Regulations 2009 are:
* Return on equity on pre-tax basis at a base rate of 15.5%, to be grossed
up by the normal tax rate as applicable for the respective year on a
prescribed 70:30 debt to equity ratio for new projects. For projects
commissioned on or after April 1, 2009, there is an additional return of
0.5% if the new projects are completed within the timeline specified in the
2009 Regulations. In the year, in which the concerned utility pays Minimum
Alternate Tax (MAT), the base rate will be grossed up by applying MAT rate.
* Interest cost incurred on normative debt at weighted average rate of
interest on loan portfolio of the project.
* Interest on working capital determined on a normative basis.
* Depreciation up to 90% of capital costs, excluding the cost of freehold
land, based upon the rates of depreciation prescribed in the regulation,
for a 12 year period from the date of commercialization. The remaining
depreciable value thereafter, is to be spread over the balance useful life
of the assets.
* Normative operation and maintenance costs determined by the CERC based on
capacity of unit, on a per megawatt basis.
* Normative secondary fuel oil costs for coal-based stations.
* Special allowance per annum per MW for plants in operation beyond their
useful life in lieu of recovery for capital expenditures on renovation and
modernization.
* Compensation allowances on a per annum per MW basis to meet expenses on
new capital assets, including minor capital assets, after 10 years of
commercial operation.
Energy Charges:
Energy charges for the electricity sold are determined on the basis of
landed cost of fuel applied on the quantity of fuel consumption derived on
the basis of norms for heat rate, auxiliary consumption, specific oil
consumption etc.
Other Charges:
Besides the capacity charges and the energy charges, the other elements of
tariff are:
* Cost of hedging interest on and repayment of foreign currency loans and
exchange rate fluctuations for unhedged portion of interest on and
repayment of foreign currency loans on a normative basis.
* The unscheduled interchange charge payable (or receivable) at rates
notified by the CERC from time to time.
For the fiscal 2009, our tariffs were determined pursuant to the CERC's
Tariff Regulations, 2004 while for fiscal 2010, Tariff Regulations, 2009
are applicable. In the new regulations the following changes have been made
as compared to Tariff Regulations, 2004:
Key changes over Tariff Regulations 2004-09:
* Pre-tax return on equity (ROE) to be computed by grossing up post-tax ROE
of 15.50% p.a. (base rate) for existing stations with the applicable tax
rate (with the tax to be borne by the company) as against post-tax ROE of
14% p.a. in old regulations (with tax on generation income as a pass
through). The concept of grossing up of ROE by MAT introduced, in case a
utility pays MAT.
* Secondary oil component of 2 ml/kwh which was a part of variable charges
has been reduced in the new regulations to 1 ml/kwh and has been made part
of fixed charges with the condition that savings made, if any, are to be
shared with beneficiaries equally.
* Full capacity (fixed) charges to be recovered at 85% normative plant
availability factor as against 80% under old regulations.
* Incentive of Rs.0.25 per unit for more than 80% Plant Load Factor in old
regulations has been done away with and in new regulations, recovery of
fixed charges has been made proportionate to the availability factor. Thus,
incentive/disincentive are a part of the fixed charges in the new
Regulations.
* O&M charges have been increased considering the inflation, employees'
wage revision etc., and are available on a normative basis on per MW
capacity of stations.
* Deprecation which was being allowed at rates specified by CERC till the
repayment of normative loan and thereafter spread over useful life of
assets in old regulations is now to be given as per the rates provided in
new regulations in the initial 12 years and thereafter spread over the
balance useful life of the assets.
* Advance against Depreciation (AAD) which was provided under old
regulations has been done away with, in new regulations.
* Many of the operating parameters like heat rate, allowed auxiliary
consumption etc., have been tightened.
During fiscal 2010, final tariff orders for the period 2004-09 have been
issued for unit 1 and 2 of Sipat-II. Thus, under Tariff Regulations, 2004,
tariff orders have been issued for all the stations except for unit 1 and 2
of Kahalgaon-II declared commercial during fiscal 2009 and NCTPP unit 5 &
Kahagaon-II unit 3 which were declared commercial during fiscal 2010.
Tariff orders are yet to be issued for all the stations under CERC Tariff
Regulations 2009-14.
Sale of Electricity:
Your Company sells electricity to bulk customers comprising, mainly,
electricity utilities owned by State Governments. Sale of electricity is
made pursuant to long-term Power Purchase Agreements (PPAs) entered into
for 25 years in case of most of our coal-fired plants and for 15 years in
case of most of gas-fired plants in line with the estimated average life of
the plants. The actual lives of the stations are often longer and unless,
customer ceases to draw power, contracts continue to be in force until they
are formally extended, renewed or replaced. With the issuance of CERC
Tariff Regulation 2009, the estimated average life of the gas stations is
also estimated as 25 years. Hence, the long-term power purchase agreements
for new gas stations hence forth will also be for the same period.
Income from sale of electricity for the fiscal 2010 was Rs.461,687 million
which constituted 94% of the gross income. The income from sale of
electricity has increased by 10% over the previous year's income of
Rs.417,913 million. The increase is mainly on account of 5.89% increase in
units sold partly due to increase in the commercial capacity by 990 MW
comprising unit 5 of 490 MW of NCTPP Stage-II w.e.f. 31.01.2010 and unit 7
of 500 MW of Kahalgaon Stage II w.e.f. 20.03.2010 and partly due to higher
generation from gas stations due to improved gas supply. Sale of
electricity is also higher on account of unit 1 & 2 of 500 MW each at
Sipat-II and unit 5 & 6 of 500 MW each at Kahalgaon-II being in commercial
operation for the entire fiscal 2010 as compared to part of fiscal 2009.
Tariff Regulations, 2009 provide that the company shall continue to
provisionally bill the beneficiaries with the tariff approved by the CERC
and applicable as on 31st March, 2009 till approval of tariff in accordance
with these Regulations. The tariff petitions have been made to CERC for all
stations under Tariff Regulations, 2009. Pending determination of station-
wise tariff by the CERC, sales of Rs.444,739 million for fiscal 2010 have
been recognized on provisional basis (explained in note 2(a) of Notes on
Accounts, Schedule-26).
For the units commissioned during fiscal 2010, namely, unit 7 of Kahalgaon,
Stage II and unit 5 of NCTPP, Stage-II, CERC is yet to issue final tariff
orders. Accordingly, sales of Rs.17,354 million for fiscal 2010 relating to
these units/ stations have been recognized on provisional basis (explained
in note 2(b) of Notes on Accounts, Schedule-26). It is pertinent to mention
that unit 5 (490 MW) of NCTPP, Stage-II has commenced commercial operation
within the normative schedule given by CERC and is eligible for additional
0.5% Return on Equity as per Tariff Regulations, 2009.
While revising the rates of depreciation and removing the provision for
Advance Against Depreciation (AAD), CERC Tariff Regulations, 2009 also
provide that the balance depreciable value of the each of the existing
stations as on 1st April, 2009 shall be worked out by deducting the
cumulative depreciation including AAD as admitted by the CERC up to 31st
March 2009 from the gross depreciable value of the assets thereby merging
AAD with depreciation for tariff recovery. Accordingly, the accounting
policy relating to AAD has been revised (please refer to Accounting Policy
no. 12.1.2) and the amount of AAD required to meet the shortfall in the
component of depreciation in revenue over the depreciation to be charged
off in future years has been assessed station-wise and wherever an excess
has been determined as on 1st April 2009, the same has been recognised as
sales during the year amounting to Rs.3,115 million. In addition, Rs.53
million has been recognised as sales during the year out of AAD consequent
to this change (explained in note 17(a) of Notes on Accounts, Schedule-26).
As per Tariff Regulations, 2009, the deferred tax liability for the period
up to 31st March 2009 whenever it materializes shall be recoverable
directly from the beneficiaries. Accordingly, the deferred tax liability
recoverable from beneficiaries has been computed by identifying the major
changes in the deferred tax liability/asset and an amount of Rs.2,485
million has been included in sales (explained in note 2(d) of Notes on
Accounts, Schedule-26).
If the income tax/deferred tax recoverable from or payable to beneficiaries
is excluded from income from sale of electricity (pl. refer to Sch.17), it
has increased by 14% over last fiscal.
Rs. million
Fiscal 2010 Fiscal 2009 % Change
Energy Sales (Excl 461,687 417,913 10%
Electricity Duty)
Less: Tax Recoverable -7,199 7,583
from customers
Less: Deferred tax 2,485 -
recoverable from
customers
Energy Sales (Excl 466,401 410,330 14%
Electricity Duty and tax
recoverable from
customers)
The average selling price this year has increased to Paise 227.41 per kWh
compared to Paise 211.85 per kWh in the previous year. The increase is
mainly due to increase in fixed charges consequent upon change in CERC
norms w.e.f 01.04.2009. The average tariff includes adjustments pertaining
to previous years. Excluding adjustment of sales pertaining to previous
period, the average selling price would be 226.83 p/Kwh in the current year
as against 206.63 p/Kwh in the previous year.
There has been 100% realization of the dues during the last seven years.
All the beneficiaries have opened and are maintaining Letter of Credit
equal to or more than 105% of average monthly billing as per One-Time
Settlement Scheme (OTSS). In order to ensure prompt and early payment of
bills for supply of energy to beneficiaries, your company has formulated a
Rebate Scheme by way of providing graded incentive for early payment based
on the provisional bill raised on the last working day of the month.
Under OTSS, tri-partite agreements are valid up to 31st October, 2016. For
the period beyond October 2016, the supplies which will be made to state
utilities, the same shall be covered by an escrow arrangement. The
supplementary agreements have been signed with all state utilities which
have a provision of keeping a first charge on their revenue streams for
supplies made by your company. Under the Supplementary Agreement, the state
utilities have agreed to provide payment security through execution of the
Hypothecation Agreement and the Default Escrow agreement. Further, this
will be over and above the LC requirement of 105% of average monthly
billing.
Energy Internally Consumed:
Energy internally consumed relates to own consumption of power for
construction works at station(s), township power consumption etc. It is
valued at variable cost of generation and is shown in sales with a debit to
respective expense head under power charges. The increase in energy
internally consumed is 7% which is lower than increase in fuel charges over
the previous year.
Consultancy and other services:
Accredited with an ISO 9001:2000 certification, the Consultancy Division of
your Company undertakes the consultancy and turnkey project contracts for
domestic and international clients in the different phases of power plants
viz engineering, project management, construction management, operation and
maintenance of power plants.
During the year, Consultancy Division posted an income of Rs.1,513 million
as against Rs.1,313 million achieved in the last fiscal. In the fiscal
2010, it has recorded a profit of Rs.557 million as against Rs.452 million
in the last fiscal. A total of 53 orders valued at Rs.2,511 million were
secured by the Division during the year including 4 overseas assignments of
Rs.266 million.
Other Income:
Other income' mainly comprises of income from bonds issued under OTSS,
income from investment of surplus cash, dividend on equity investment in
joint ventures & subsidiaries and miscellaneous income.
Other income' in fiscal 2010 was Rs. 28,562 million as compared to
Rs.32,539 million in the fiscal 2009. Broadly the break up of other income
is as under:
Rs. Million
Fiscal 2010 Fiscal 2009
Interest for the year on tax 9,991 11,476
free bonds/Loan to State
Govt.
Income on investment of 13,447 15,909
surplus cash
Dividend/Income from 654 361
mutual funds
Dividend from JVs and 208 180
Subsidiaries/Interest from
subsidiaries
Income earned on other heads 4,707 3,096
such as hire charges, profit on
disposal of assets, etc.
Total 29,007 31,022
Interest on IT refund (non- - 2,199
recurring)
Total 29,007 33,221
Less: Transfer to EDC/ 379 414
development of coal mines
Less: Transfer to Deferred 66 268
Foreign Currency Fluctuation
Liability
Net other income 28,562 32,539
Interest income from OTSS bonds (including loan to State Government) for
fiscal 2010 is Rs.9,991 million as compared to Rs.11,476 million in fiscal
2009.The reduction in interest income to the extent of Rs.1,485 million is
due to redemption of OTSS bonds amounting to Rs.16,515 million and
repayment of loan amounting to Rs.957 million in lieu of settlement of
dues. We have earned income of Rs.13,447 million during fiscal 2010 on
account of investments made from surplus cash as against Rs.15,909 million
earned last year. The income on investment of surplus cash has registered
a 15% decrease over last fiscal mainly due to reduction in interest
earnings due to low interest rate regime. However, the dividend earned from
investments made in mutual funds has registered a 81% increase from Rs.361
million to Rs.654 million.
We have earned Rs.173 million as dividend from our investments in joint
venture and subsidiary companies. Another Rs.35 million has been earned as
interest from loan of Rs.263 million extended to Kanti Bijlee Utpadan Nigam
Limited, one of our subsidiaries. Further, an amount of Rs.4,707 million
has been earned from various other sources consisting of miscellaneous
income of Rs.2,254 million, surcharge received from customers on late
payment as per CERC regulations amounting to Rs.623 million and interest of
Rs.196 million earned from loan of Rs.1,417 million extended to Ratnagiri
Gas and Power Private Ltd. etc.
During fiscal 2009, Commissioner of Income Tax (Appeals) had issued a
favourable decision on certain issues relating to previous years consequent
to which net tax refund of Rs.2,400 million was payable to your company and
the interest earned on this refund amounting to Rs.2,199 million had been
accounted under 'other income'.
Adjusted Gross Income:
The gross income reported for the year includes certain revenues pertaining
to previous years. The revenue from sale of electricity for fiscal 2010 is
reduced by Rs.6,006 million pertaining to previous years which have been
recognized in sales based on the orders of the CERC / Appellate Tribunal
(explained in note 2(c) of Notes on Accounts, Schedule-26). This reduction
in sales is on primarily on account of income tax pertaining to previous
year amounting to Rs.7,199 million payable to the beneficiaries. If this
income tax element is excluded from total reduction of Rs.6,006 million,
the balance amount of Rs.1,193 million represents sales pertaining to
previous years which have been included in sale of electricity for fiscal
2010. Similarly, for fiscal 2009, an amount of Rs.10,201 million pertaining
to previous years was included in the sales.
As per our accounting policy (please refer to Accounting Policy no.
12.1.3), foreign exchange variation on restatement of foreign currency
loans as at the Balance Sheet date which is payable/recoverable to/from
customers later on settlement as per CERC Regulations is accounted for by
creating a deferred liability/asset in the accounts instead of adjusting
the same in the profit & loss account. Accordingly, Deferred Foreign
Exchange Fluctuation Asset of Rs.319 million on account of exchange
differences recoverable from customers has been created with corresponding
credit to sales during fiscal 2010 as against Rs.1,894 million accounted in
previous year.
In addition, interest earned on income tax refund amounting to Rs.2,199
million had been adjusted as one-off item during fiscal 2009.
The gross income of the company after such adjustments is as under:
Rs. Million
Fiscal 2010 Fiscal 2009
Gross Income 492,339 452,291
Less:
Sales of previous years 1,193 10,201
Exchange Fluctuation 319 1,894
receivable from customers
Interest on IT refund - 2,199
Adjusted Gross Income 490,827 437,997
2. Expenditure:
2.1 Expenditure related to operations:
Rs. Million
Expenditures Fiscal Rs. per Fiscal Rs. per
2010 kwh 2009 kwh
Commercial 218,439 206,156
Generation-MU
Fuel 294,628 1.35 271,107 1.32
Employees' 24,124 0.11 24,631 0.12
remuneration and
benefits
Generation, 20,940 0.10 18,192 0.09
administration
and other
expenses
Total 339,692 1.56 313,930 1.53
The expenditure incurred on fuel, employees, generation, administration and
other expenses for the fiscal 2010 was Rs.339,692 million which is 8% more
than the expenditure of Rs.313,930 million incurred during the previous
year. In terms of expenses per unit of power produced, it was Rs.1.56 per
unit in fiscal 2010 in comparison to Rs.1.53 per unit in the previous year.
This increase is mainly due to increase in cost of coal and increase in
operation and maintenance expenses. The increase in commercial generation
due to additional capitalization has resulted in an additional operational
expenditure of Rs.10,917 million. A discussion on each of these components
is given below.
2.1.1 Fuel:
Expenditure on fuel constituted 87% of the total expenditure relating to
operations as compared to 86% in previous year. Expenditure on fuel was
Rs.294,628 million in fiscal 2010 in comparison to Rs. 271,107 million in
fiscal 2009 representing an increase of 9%. The break-up of fuel cost in
percentage terms is as under:
Fiscal 2010 Fiscal 2009
Fuel cost (Rs./million) 294,628 271,107
% break-up
Coal 76% 70%
Gas 14% 15%
Oil 5% 10%
Naphtha 5% 5%
The higher fuel expenses were mainly on account of increase in cost of coal
partly due to increased consumption resulting mainly from additional
capitalization of 990 MW and partly due to increase in price of coal. Coal
India Limited (CIL) and SCCL increased the prices of coal by about 10%-15%
w.e.f. 16.10.2009 and 30.12.2009 respectively depending upon grade of coal.
Also, the stations generally consumed a greater proportion of costlier
imported coal in fiscal 2010 than in fiscal 2009. However, there has been
decrease in the price of gas and oil during fiscal 2010. Fuel cost per unit
generated increased to Rs.1.35 in fiscal 2010 from Rs.1.32 in fiscal 2009.
The increase in fuel cost due to addition of commercial capacity is
Rs.8,633 million.
The power plants of the company use coal and natural gas as the primary
fuels. Oil is used as a secondary fuel for coal-fired plants and naphtha as
an alternate fuel in gas-fired plants. Under the tariff norms set by the
CERC, your Company is allowed to pass on fuel charges through the tariff,
provided the company meets certain operating parameters. The company
purchases coal under the long term coal supply agreements with subsidiaries
of Coal India Limited (CIL) and with Singareni Collieries Company Limited
(SCCL). A model Coal Supply Agreement (CSA) was signed with CIL on May 29,
2009. Based on the revised model CSA, coal agreements have been signed with
the various subsidiary coal companies of CIL by the various coal based
stations except Farakka and Kahalgaon. The CSA for Ramagundam with SCCL is
in an advanced stage of finalization (explained in note 10 of Notes on
Accounts, Schedule-26).
As per the provisions of the new CSA, the CSA is valid for 20 years and has
a provision for review after every 5 years. The annual quantity envisaged
to be supplied to the existing power stations against the various CSAs is
98.7 million tonnes. The CSAs contain a provision for payment of
incentive/levy of penalty to/from coal companies on supplies in excess of
90% of the Annual Contracted Quantity (ACQ).
In an effort to encourage coal companies to supply Annual Contracted
Quantity (ACQ), new CSA provides for incentive payments as a percentage of
Weighted Average base price of coal in the following three slabs:
Supplies in the range of Rate of Incentive
90%-95% of the ACQ 10%
95%-100% of the ACQ 20%
Supplies exceeding ACQ 40%
CSA also contains clauses of penalty for under supply/ under off-take by
coal companies and power plants respectively. The price and other charges
for coal, as per new CSA, will be as notified by CIL for its subsidiary
companies from time to time.
During the fiscal 2010, coal based stations consumed 135.10 Million Tonnes
of coal as against 129.49 Million Tonnes in the fiscal 2009. This was
including 6.76 Million Tonnes of coal which was imported as compared to
4.71 Million Tonnes imported in fiscal 2009.
In order to ensure uninterrupted supply of coal to its power stations, your
company during fiscal 2010 resorted to sourcing of coal through e-auction
and bilateral arrangements. Your company participated in 23 e-auctions
conducted by the subsidiary companies of CIL and procured 0.58 Million
Tonnes of coal for Farakka & Kahalgaon. A bilateral agreement was reached
with Eastern Coalfields Limited (ECL) for supply of 2 Million Tonnes of
coal to Farakka and Kahalgaon projects. In addition, bilateral agreements
were entered with SCCL for supply of one Million Tonne to Farakka and
Kahalgaon project, one Million Tonne to NCTPP and Sipat project and 2.5
Million Tonnes to Ramagundam project.
The company sources gas domestically under an administered price and supply
regime. The main gas supplier is GAIL. Gas prices are fixed by the Ministry
of Petroleum and Natural Gas. 13.88 Million Metric Standard Cubic Meters
per Day (MMSCMD) of gas was received during the fiscal 2010 as against
10.75 MMSCMD received in fiscal 2009. This includes 3.88 MMSCMD of spot gas
and fall back RLNG as compared to 2.02 MMSCMD received last year. The
increased gas supply has resulted in the increased PLF of gas stations to
78.38% during fiscal 2010 as compared to 67.01% last year.
The gas supply for fiscal 2010 also includes 0.35 MMSCMD of KG D6 gas.
Government of India has allocated 4.46 MMSCMD of KG D6 gas for company's
National Capital Region (NCR) stations of Anta, Auraiya, Dadri and
Faridabad. Gas Supply and Purchase Agreements (GSPA) have been signed for
the supply of 0.61 MMSCMD which was subsequently revised to supply of 1.81
MMSCMD. The supplies have started for 0.61 MMSCMD from 01.11.2009 and 1.81
MMSCMD from 25.02.2010.The supplies of balance 2.65 MMSCMD of this gas are
expected to start as soon as the GAIL's pipeline capacity is made
available.
To meet the shortfall in supply of Natural Gas from GAIL, the Company
sought supplies of RLNG on limited tender basis from all the known gas
suppliers in the country. These supplies are being contracted on best
effort basis with no penalty either on the supplier or the buyer for
supplies not offered / not off taken. During fiscal 2010, supplies to the
extent of 887 MMSCM were received from the various suppliers. Further,
supplies were also received from GAIL/IOCL/ BPCL on 'fall back' basis to
the extent of 529 MMSCM. Thus, the total consumption of RLNG during the
year was 1416 MMSCM.
In order to meet the gas requirements of its NCR power stations, your
company had signed RLNG agreement with GAIL for supply of a firm quantity
of 2.0 MMSCMD of RLNG (with supplies of additional 0.5 MMSCMD on fallback
basis) for a period of 10 years. The supplies under this agreement have
started from 01.01.2010.
Rajiv Gandhi Combined Cycle Power Project (RGCPP), Kerala generates power
on naphtha as no gas supply is available. Besides RGCPP, other gas based
stations also used Naphtha depending upon the demand from customers and
schedule from load dispatch centres. During the fiscal 2010, 0.578 million
MTs of naphtha was consumed as against 0.923 million MTs in the previous
year.
2.1.2 Employees' Remuneration and Benefits:
Employees' remuneration and other benefits have reduced by 2% from
Rs.24,631 million in fiscal 2009 to Rs.24,124 million in fiscal 2010.
Employees' remuneration and benefits expenses include salaries and wages,
bonuses, allowances, benefits, contribution to provident and other funds
and welfare expenses. These expenses account for approximately 7% of our
operational expenditure in fiscal 2010 as compared to 8% in fiscal 2009.
The main reason for reduction in employee cost is the additional provision
of Rs.4,144 million that was made towards gratuity/pension during fiscal
2009 due to increase in ceiling of gratuity payment to Rs.1 million from
Rs.0.35 million for an employee. Since, no such additional provision is
made in the fiscal 2010, there is a decrease in the employee cost per unit
of generation from Rs.0.12 in the previous fiscal to Rs.0.11 in the current
fiscal.
The pay revision of the executive category of employees of the Company
which was due w.e.f. 1st January 2007 has been approved during the current
fiscal based on the guidelines issued by Department of Public Enterprises
(DPE), GOI. However, pay revision of the employees of the non-executive
category is under finalisation and a provision of Rs.3,145 million has been
updated for fiscal 2010 as compared to Rs.1,767 million provided in fiscal
2009 on estimated basis having regard to the guidelines issued by DPE. Out
of the total wage provision, an amount of Rs.1,387 million has been paid as
ad-hoc advance towards pay revision (explained in note 6 of Notes on
Accounts, Schedule-26).
The increase in employee cost due to additional commercial capacity is
Rs.1,040 million.
2.1.3 Generation, Administration and Other Expenses:
Generation, administration and other expenses consist primarily of repair
and maintenance of buildings, plant and machinery, power and water charges,
security, insurance, training and recruitment expenses and expenses for
travel and communication. These expenses have remained at approximately 6%
of our operational expenditure in fiscal 2010. In absolute terms, these
expenses increased to Rs.20,940 million in fiscal 2010 from Rs.18,192
million in fiscal 2009 registering a hike of 15%. Out of this, the increase
of Rs.2,748 million is attributable to addition of commercial capacity
during fiscal 2010. In terms of expenses per unit of generation, it is
Rs.0.10 in fiscal 2010 as compared to Rs.0.09 in previous fiscal.
Repair & Maintenance expenses constitute 61% of total Generation,
Administration and Other Expenses and have increased to Rs.12,783 million
from Rs.10,992 million resulting in an increase of 16%.
The other increase in generation & administration expenses is mainly
attributable to increase in water charges and security expenses. Water
charges have increased by 30% from Rs.932 million in fiscal 2009 to
Rs.1,209 million in fiscal 2010 due to revision of water charges in certain
stations. Security expenses have increased to Rs.2,014 million in fiscal
2010 from Rs.1,490 million in fiscal 2009 on account of levy of service tax
on this service during the current fiscal.
The miscellaneous expenses have reduced from Rs.827 million in fiscal 2009
to Rs.373 million in fiscal 2010 since Rs.531 million was included in
fiscal 2009 on account of arbitration award issued against the Company at
one of our gas projects.
2.1.4 Adjusted Expenditure related to Operations:
If the impact of wage revision is adjusted, the operational expenditure for
the fiscal 2010 and fiscal 2009 would be as follows:
Rs. Million
Fiscal 2010 Fiscal 2009
Total Expenditure related 339,692 313,930
to Operations
Less:
Wage revision provision/ 3,042 9,579
Pension /Gratuity
Additional Incentive 2,080 1,048
provision
Provision on account of 531
arbitration award
Adjusted Expenditure 334,570 302,772
related to Operations
2.2 Depreciation:
The depreciation charged to the profit and loss account during the year was
Rs. 26,501 million as compared to Rs.23,645 million in fiscal 2009,
registering an increase of 12%. This is due to increase in gross block by
Rs.44,971 million i.e. from Rs.623,530 million in the previous fiscal to
Rs.668,501 million in the current fiscal. The increase in gross block is
largely on account of increase in commercial capacity by 990 MW resulting
from additional capitalization amounting to Rs.38,324 million on account of
unit 5 of NCTPP Stage-II and unit 7 of Kahalgaon Stage II. Further,
depreciation for units 1 & 2 of 500 MW each at Sipat-II and units 5 & 6 of
500 MW each at Kahalgaon-II were charged pro-rata during fiscal 2009 while
depreciation on the same has been charged for the entire fiscal 2010. The
impact on depreciation from additional capitalization during the fiscal
2010 is Rs.2,020 million.
As per the accounting policy of the company, depreciation is charged on
straight line method as per the rates given in schedule set forth in the
Companies Act, 1956 except for some items for which depreciation at higher
rates is charged (please refer to Accounting Policy No.12.2.1). Government
of India in January 2006 notified the Tariff Policy under the provisions of
the Electricity Act, 2003 which provides that the rates of depreciation
notified by the CERC would be applicable for the purpose of tariff as well
as accounting. Subsequent to the notification of the Tariff Policy, CERC
through Tariff Regulations, 2009 notified the rates of depreciation for the
purpose of determination of tariff. CERC exercising its powers under
Section 79 of the Electricity Act, 2003 requested the Ministry of Power to
advise the Ministry of Corporate Affairs to notify the rates of
depreciation considered by the CERC for tariff determination as
depreciation under Section 205 (2) (c) of the Companies Act, 1956. However,
Ministry of Corporate Affairs is yet to notify such rates under Section 205
(2) (c) of the Companies Act, 1956.
As per the legal opinions obtained, the Tariff Policy cannot override the
provisions of the Companies Act, 1956 and your company is required to
follow Schedule XIV of the Companies Act, 1956 in the absence of any
specific provision in the Electricity Act, 2003. Hence provisions of
Section 616 of the Companies Act, 1956 are also not applicable in this
regard. Accordingly, depreciation is being charged consistently at the
rates specified in Schedule XIV of the Companies Act, 1956 with effect from
the financial year 2004-05 (explained in note 4 of Notes on Accounts,
Schedule-26).
2.3 Provisions made (and written back):
During the fiscal 2010, the Company had made provisions amounting to Rs.109
million in comparison to Rs.246 million provided for in fiscal 2009. The
provisions were made mainly in respect of doubtful advances and claims,
obsolescence /diminution in value of surplus stores and for other items.
During the fiscal 2010, the Company had also written back provisions made
in earlier years amounting to Rs.128 million in comparison to Rs.170
million of provisions written back in fiscal 2009. During fiscal 2010,
there is write-back of Rs.44 million in respect of doubtful construction
advances for one of the projects.
2.4 Interest and Finance Charges:
The interest and finance charges for the fiscal 2010 were Rs.18,089 million
in comparison to Rs.19,962 million in fiscal 2009. The details of interest
and finance charges are tabulated below:
Rs. Million
Fiscal 2010 Fiscal 2009
Interest Charges:
Interest on borrowings 24,806 21,532
Others 386 701
Total Interest charges 25,192 22,233
Finance Charges 7,704 7,293
Total 32,896 29,526
Less: Adjustments and
transfers
Exchange differences (1) (2,688)
regarded as adjustment
to interest costs
Interest charges capitalised 14,484 12,171
Finance charges capitalised 324 81
Interest and finance 14,808 12,252
charges capitalised
Net interest and finance 18,089 19,962
charges
Interest amount on long term borrowings (including Interest during
Construction) has increased by 13% over last fiscal due to increase in long
term borrowings (net of repayment) during the year by Rs. 32,176 million.
However, average cost of borrowing has reduced marginally to 7.1576% in
fiscal 2010 from 7.1618% in previous fiscal due to your company's ability
to raise loans at competitive rates from domestic as well international
sources as well as reduction in interest cost of foreign loans. Our
borrowings are denominated in Rupees and foreign currencies.
The exchange differences in respect of overseas borrowings relating to
fixed assets/capital work-in-progress are treated in accordance with
provisions of Accounting Standard (AS) 11 issued by ICAI based on
guidelines issued by Companies (Accounting Standards) Rules, 2006 issued by
National Advisory Committee on Accounting Standards from time to time. Out
of this, the exchange differences in respect of assets during the period of
construction /renovation and modernisation are capitalized by transfer to
EDC.
During the fiscal 2010, an unfavourable exchange rate variation treated as
adjustment to interest costs amounting to Rs.1 million increased the
interest expenses as against Rs.2,688 million in fiscal 2009. The reason
for substantial reduction in adverse amount of exchange rate variation is
depreciation in the currencies of all our foreign denominated loans against
Indian rupee namely, US dollar by 11%, Japanese yen by 7% and Euro by 10%.
The USD, Japanese yen and Euro denominated loans contributed to about 68%,
28% and 4% respectively in the loan basket at the end of fiscal 2010 as
compared to 67%, 29% and 4% in previous fiscal. The component of USD has
increased marginally since all the drawdowns made under foreign loans
during the year were denominated in USD.
In respect of one of our hydro power project, the construction work has
been suspended temporarily from 18th May 2009 on the advice of the Ministry
of Power, Government of India (GoI). Presently, the issue regarding
resumption of the project is under consideration with the GOI. Pending
decision, borrowing costs of Rs.237 million have not been capitalised from
the date of suspension. (explained in note 12 of Notes on Accounts,
Schedule-26). The gross amount of interest amounting to Rs.288 million has
been treated as one-off adjustment from Profit after Tax in the adjusted
income for the year 2009-10.
During fiscal 2009, interest charges (others) also include Rs.538 million
towards interest cost on account of award issued by the Arbitration
Tribunal for one of our Gas Project.
The finance charges have increased by 6% from Rs. 7,293 million in fiscal
2009 to Rs.7,704 million in fiscal 2010. The increase is mainly due to
increase in rebate payable to customers as per the Rebate Scheme of the
company from Rs.6,700 million in previous fiscal to Rs.6,937 million in
current fiscal. In order to secure 100% realization of amounts billed, the
Company had introduced a revised Rebate Scheme 2009-10. The current Rebate
Scheme provides for a rebate of 2.25% on the amounts credited to the
Company's account on the first day of the month which gets reduced by 0.05%
for each day's delay upto the 5th day of the month provided that entire
amount is credited to the Company's account. Beyond 5th day, 2% rebate is
allowed for credit to Company's account which gets progressively reduced to
nil after last day of the month. Finance charges for fiscal 2010 also
include an amount of Rs.206 million on account of upfront fee paid towards
loans tied-up with a nationalized bank for financing projects under
construction and has been consequently capitalized.
For the fiscal 2010, an amount of Rs.14,808 million relating to interest
and finance charges of projects under construction was capitalized while
the corresponding amount for the previous year was Rs. 12,252 million.
However, if the impact of exchange difference is excluded, the interest and
finance charge capitalized during fiscal 2009 is Rs.11,441 million. Thus
after excluding exchange rate variation, interest and finance charges
capitalized registering an increase of 29%.
The interest and finance charges for fiscal 2010 after these adjustments
and without taking into account the exchange differences treated as
adjustment to interest costs is Rs.17,800 million.
Rs. Million
Fiscal 2010 Fiscal 2009
Total Interest charges less 10,709 12,750
interest charges capitalised
Total Finance charges 7,380 7,212
excluding finance charges
capitalized
Net interest and finance 18,089 19,962
charges
Less: Adjustment of 1 1,877
exchange diff. regarded as
borrowing cost
Less: Interest cost on 288 538
account of hydro project/
arbitration award
Total Adjusted Interest 17,800 17,547
and Finance charges
2.5 Prior period income / expenditure:
Certain elements of income and expenditure have been charged to the profit
and loss account relating to previous years. For the fiscal 2010 a net
amount of Rs. 779 million was booked as prior period income whereas a net
amount of Rs. 1,083 million was charged as prior period expenditure to the
profit and loss account in the previous year. For the current fiscal, an
amount of Rs.973 million which was charged to employee cost in earlier year
(towards excess provision on account of fitment benefit under pay revision)
has been written back through Prior Period' adjustments on finalisation of
the pay revision.
3. Profit before tax, provisions and prior period adjustments:
The profit of the Company before tax and prior period adjustments for the
current and the previous year, both on reported and adjusted basis, is
tabulated below:
Rs. Million
Reported Adjusted
Fiscal Fiscal Fiscal Fiscal
2010 2009 2010 2009
Gross Income 492,339 452,291 490,827 437,997
Expenditure 339,692 313,930 334,570 302,772
related to
operations
Depreciation 26,501 23,645 26,501 23,645
Interest and 18,089 19,962 17,800 17,547
Finance
charges
Profit before 108,057 94,754 111,956 94,033
tax, prov. &
prior period
adjust.
4. Provision for Tax:
The Company provides for current tax and deferred tax computed in
accordance with provisions of Income Tax Act, 1961. The payment of fringe
benefit tax (FBT) has been abolished by Finance Act 2009 from 1st April
2009 and accordingly, no FBT is payable for the year.
As per erstwhile Tariff Regulations, 2004, the Company recovered actual tax
payments in respect of generation business from its customers while taxes
on the income from all other activities was borne by the Company. However,
under Tariff Regulations, 2009, w.e.f. 1st April 2009, income tax is
recoverable on normative basis as Return on Equity following the applicable
rate of tax for respective year. The actual income tax liability, if any,
(more or less than the normative) is to be borne by NTPC. Accordingly,
provision for current tax has been computed at the applicable rate of
33.99% for the financial year 2009-10.
The deferred tax liability related to the period upto 31st March 2009 is
recoverable from customers as and when the same materializes. However, the
deferred tax liability/asset for the period after 1st April 2009 is to the
account of the company.
During the year, the deferred tax liability (net) of Rs.51,350 million that
existed as on 31st March 2009 (out of which Rs.51,349 million was
recoverable from customers) has been reviewed and restated to Rs.24,942
million. In terms of Regulation 39 of CERC Tariff Regulations, 2009, the
Company has determined the amount of the deferred tax liability (net)
materialised during the year pertaining to the period up to 31st March 2009
by identifying the major changes in the elements of deferred tax
liability/asset, as recoverable from the beneficiaries. Accordingly,
deferred tax liability (net) and the deferred tax recoverable from the
beneficiaries as at 31st March 2010 works out to Rs.30,494 million and
Rs.28,402 million respectively resulting in increase in the deferred tax
liability amounting to Rs.2,091 million arising during the current year.
The same has been debited to Profit & Loss Account (explained in note 26 of
Notes on Accounts, Schedule-26).
Fiscal 2009 (Rs. Million)
Current Deferred FBT* Total
tax tax
Provision for 25,337 (4,488) 210 21,059
fiscal 2009
Adjustment for (13,953) - - (13,953)
earlier years
Payable to - 4,488 4,488
customers
Capitalised - - (12) (12)
Net prov. as 11,384** - 198 11,582
per P&L
Account
* FBT-Fringe Benefit Tax.
** Rs.7,583 million is recoverable from customers.
Fiscal 2010 (Rs. Million)
Current Deferred FBT* Total
tax tax
Provision for 24,709 2,091 - 26,800
fiscal 2010
Adjust. for (5,254) - 27 (5,227)
earlier years
Net prov. as 19,455 2,091 27 21,573
per P&L A/C
Net provision of tax for the fiscal 2010 was Rs. 21,573 million in
comparison to Rs. 11,582 million in the fiscal 2009, an increase of
Rs.9,991 million. The net tax was lower during fiscal 2009 as company had
received tax refund of Rs.13,953 million on account of the favourable
decisions relating to previous years by CIT (Appeal) , out of which an
amount of Rs.2,400 million was retained by your company and the balance was
paid to customers.
5. Profit After Tax before provisions written back and prior period
adjustments:
Rs. Million
Reported Adjusted
Fiscal Fiscal Fiscal Fiscal
2010 2009 2010 2009
Profit before 108,057 94,754 111,956 94,033
tax, provisions
and prior
period
adjustments
Tax as per P&L (21,573) (11,582) (21,573) (11,582)
Deferred Tax 2,091 (2,400)
impact/IT
refund
Profit after tax 86,484 83,172 92,474 80,051
(before prov.
and prior
period adjust.)
The profits before prior period adjustments and provisions on reported
basis have grown by almost 4% while on an adjusted basis have grown by 16%.
6. Net Profit After Tax:
The net profit after tax after provisions (made and written back) and prior
period adjustments on a reported and adjusted basis are as follows:
Rs. Million
Reported Adjusted
Fiscal Fiscal Fiscal Fiscal
2010 2009 2010 2009
Profit after tax 86,484 83,172 92,474 80,051
(before provisions
and prior period
adjustments)
Provisions (net of 19 (76) 19 (76)
write back)
Add: Income tax on 747
interest on IT refund
pertaining to
previous years
Add: Prior period 779 (1,083)
adjustments
Net profit after tax 87,282 82,013 92,493 80,722
On a reported basis, the net profit after tax for the fiscal 2010 has
increased by about 6.42% while on an adjusted basis, the net profit after
tax has grown by 14.58%.
7. Segment-wise performance:
For the purpose of compiling segment-wise results, the business of the
Company is segregated into Generation' and Other Business'. The Company's
principal business is generation and sale of bulk power. Other business
includes providing consultancy, project management and supervision, oil and
gas exploration and coal mining.
The profit before tax and interest in the generation business for the
fiscal 2010 was Rs. 101,524 million as against Rs. 90,531 million for
fiscal 2009. Excluding income tax payable/recoverable from customers
amounting to Rs. 4,714 million for fiscal 2010 and Rs. 7,583 million for
fiscal 2009, the above has increased by 28% mainly on account of increased
generation.
For the profit before tax on Other Business' represented by income from
consultancy, the same was Rs. 582 million for fiscal 2010 and Rs. 418
million for the previous fiscal registering a growth of 39%.
B. Financial Condition:
1. Net worth:
The net worth of the Company at the end of fiscal 2010 increased to
Rs.624,375 million from Rs. 573,701 million in the previous year
registering an increase of 9% mainly due to retained earnings.
Correspondingly, the book value per share also increased from Rs. 69.58 to
Rs.75.72.
2. Loan Funds:
The loans as on March 31, 2010 were Rs. 377,970 million in comparison to
Rs. 345,678 million as on March 31, 2009. A summary of the loans
outstanding is given below:
Rs. Million
As at March 31 % change
2010 2009
Secured Loans:
Bonds 85,500 82,500 4%
Foreign Currency terms 5,286 7,180 -26%
loans
Other 13 16 -19%
Sub-total 90,799 89,696 1%
Unsecured Loans:
Fixed Deposits 134 14 857%
Foreign Currency Bonds 22,835 25,775 -11%
Foreign Currency loans 75,417 78,281 -4%
Rupee term loans 180,785 151,911 19%
Loans from GOI - 1 -100%
Bonds (unsecured) 8,000 - -
Sub-total 287,171 255,982 12%
Total 377,970 345,678 9%
GOI-Government of India
Over the last fiscal, the debt has registered a growth of 9%. Debt
amounting to Rs. 69,824 million was raised during the year 2009-10 and as
against this, an amount of Rs. 69,703 million was utilized to finance
capital expenditure. The balance amount of Rs. 120 million was towards
accretion in Public Deposits of the Company. The domestic debt funds
included term loans amounting Rs.47,510 million raised and bonds
aggregating to Rs.15,000 million (including bonds of Rs.8,000 million
utilized for refinancing loans) privately placed during the year.
Rs. Million
Source Debt Raised Repayment Net
& Utilised
Term Loan 47,510 18,637 28,873
Bonds 15,000 4,000 11,000
Foreign Currency 7,193 3,907 3,286
Debt
Others 120 4 116
Total 69,823 26,548 43,275
FERV - 10,983 (10,983)
Total 69,823 37,531 32,292
During the year, fresh agreements for term loans aggregating Rs. 168,190
million were entered into including the loan agreement of Rs. 85,000
million with State Bank of India signed on May 14, 2009 and Rs. 27,500
million signed with Canara Bank on June 23, 2009 to finance capital
expenditure of power generation projects, coal mining business and
Renovation and Modernisation activities.
Your Company has redeemed bonds amounting to Rs.4,000 million during the
year. Repayments amounting to Rs.18,637 million were made under various
term loans extended by Indian Banks and Govt. of India. Repayment of
Rs.3,907 million was made during the year towards foreign currency loans.
Fixed Deposits for Rs.4 million were also discharged during the year.
The credit rating by CRISIL and ICRA of the Company as an issuer and also
the rating for rupee bonds & fixed deposits program continued to be AAA'
and 'LAAA' respectively, being the highest rating. During the rating
exercise of our domestic borrowings from banks including the amounts
committed by them, CRISIL has assigned the highest possible rating i.e.
AAA'. In addition, during the fiscal 2009, ICRA has assigned LAAA' rating
for sanctioned lines of credit extended from domestic banks.
During the year, Standard and Poors' and Fitch Ratings maintained the
'Investment Grade' foreign currency ratings of your company. While, Fitch
Ratings continued to maintain the stable' outlook for the ratings, the
outlook on the company's rating was revised from negative' to stable' by
Standard and Poors' in March 2010. The Company's foreign currency ratings
are at par with sovereign ratings of India.
The debt to equity ratio at the end of fiscal 2009-10 of the Company
increased to 0.61 from 0.60 at the end of the previous fiscal.
The Debt Service Coverage Ratio (DSCR) for the year has improved to 3.92
from 3.67 in the previous financial year and Interest Service Coverage
Ratio of fiscal 2010 has improved to 13.64 from 10.19 in previous fiscal.
Both these ratios have shown improvement due to higher Earnings Before
Interest, Tax and depreciation and also due to reduction in net interest
charged to P&L Account.
Formula used for computation of coverage ratios DSCR = Earnings before
Interest, Depreciation and Tax/ (Interest net off transferred to
expenditure during construction + Principal repayment) and ISCR = Earnings
before Interest, Depreciation and Tax/(Interest net off transferred to
expenditure during construction).
The maturity profile of the borrowings by the Company is as under:
Rs. million
Rupee Foreign Total
Loans Currency
loans
Within 1 year 22,919 17,003 39,922
1-3 years 52,549 18,929 71,478
3-5 years 56,579 13,766 70,345
5-10 years 119,481 36,567 156,048
Beyond 10 years 22,904 17,273 40,177
Total 274,432 103,538 377,970
3. Fixed Assets:
During the year your Company added Rs.44,971 million to the gross block
mainly on account of capitalization of one unit of Kahalgaon-II (500MW)
Power Project and one unit of Dadri-II (490MW) Power Project. Due to
increase in construction activities, there was an addition of Rs.55,413
million in the capital-work-in-progress registering an increase of 26% over
the last year. In addition, there was also an increase of 3% in
Construction Stores and Advances.
Rs. Million
As at March 31
2010 2009 %
Change
Gross block 668,501 623,530 7%
Net Block 347,613 329,377 6%
Capital Work-in-Progress 267,624 212,211 26%
Construction stores and advances 53,419 51,838 3%
Total fixed assets 668,656 593,426 13%
4. Investments:
The Investments consist mainly of bonds issued under One Time Settlement
Scheme and bonds issued against outstanding dues besides equity
participation in joint ventures and subsidiaries. The investments also
include the deployment of surplus cash generated out of operations in
various treasury instruments issued by Government of India. During fiscal
2010, the investments increased by about 6%. Broadly the break-up of
investments is as follows:
Rs. Million
As at March 31
2010 2009
Bonds issued under One time 98,217 114,732
settlement scheme
Investments in Joint Ventures 24,803 18,729
Investment in subsidiaries 5,496 4,146
Investment of surplus cash in 19,435 1,865
various instruments
Others 120 120
Bonds against dues (issued prior - 243
to one time settlement scheme)
Total investments 148,071 139,835
Bonds issued against settlement of receivables account for 66% of total
investments at the end of fiscal 2010. Bonds received under One Time
Settlement Scheme (OTSS) amounting to Rs.16,515 million were redeemed
during the year as per scheduled redemption. These OTSS bonds carry a call
option' giving right to SEBs to redeem the bonds before scheduled
redemption date. However, no call option was exercised by any SEB during
the year 2009-10.
Your company fully redeemed Rs.243 million of 10% Secured Non-Cumulative
Non-Convertible Redeemable GRIDCO Bonds as per redemption plan, during the
fiscal 2010.
Your company invested Rs.6,074 million in following joint ventures during
the year:
Rs. Million
Name of JV Amount
NTPC-Tamil Nadu Energy Company Ltd. 2,345
Aravali Power Company Private Ltd. 2,000
NTPC BHEL Power Projects Private Ltd. 199
Meja Urja Nigam Private Limited 192
BF-NTPC Energy Systems Ltd. 58
Nabinagar Power Generating Company 950
Private Ltd.
Transformer and Electrical Kerala Ltd. 314
National High Power Test Laboratory 9
Private Ltd.
International Coal Ventures Ltd. 1
Energy Efficiency Services Ltd. 6
Total 6,074
The company also invested Rs.1,350 million in subsidiaries as under:
Rs. Million
Name of Subsidiary Amount
NTPC Hydro Ltd. 99
Bhartiya Rail Bijlee Company Ltd. 1,251
Total 1,350
During the year, there was an investment of surplus funds in short term
funds for Rs.19,435 million.
5. Current Assets:
The current assets and current liabilities as on March 31, 2010 and March
31, 2009 and the changes therein are as follows:
Rs. Million
As at March 31 YoY %
Change Change
2010 2009
Current Assets Amt Amt Amt
Inventories 33,477 32,434 1,043 3%
Sundry Debtors 66,514 35,842 30,672 86%
Cash and Bank 144,595 162,716 (18,121) -11%
balances
Other Current 8,440 9,794 (1,354) -14%
Assets
Loans and 55,131 68,467 (13,336) -19%
Advances
Total Current 308,157 309,253 (1,096) -
Assets
A major portion of current assets comprised of Cash and Bank balances. As
on March 31, 2010, cash and bank balances stood at Rs.144,595 million being
47% of the total current assets in comparison to Rs.162,716 million as at
March 31, 2009 which was 53% of the total current assets as on that date.
Of this, Rs.138,255 million was kept as term deposits with banks as on
March 31, 2010 while the term deposits for the last year was Rs. 159,998
million.
The next largest component of current assets is Sundry Debtors. Sundry
Debtors net of provisions have increased from Rs 35,842 million in previous
financial year to Rs. 66,514 million showing an increase of 86%. Sale of
energy, however, only grew by 10%.
As on 31.03.2010, Sundry Debtors amounted to Rs. 74,875 million as compared
to Rs. 44,203 million as at the end of previous year. As a percentage of
sales, the sundry debtors represent are 16% of sales as compared to 10% in
previous financial year. The Sundry debtors were equivalent to 59 days of
sales for current year compared to 38 days in previous year. Reason for
increase in debtor balances is mainly the discontinuance of Special Rebate
Scheme by the company w.e.f 01.04.2010. Special Rebate Scheme had a
provision for giving additional rebate to customers who made payments on
the last day of the month on the basis of provisional billing to be
adjusted from the final bill raised in the subsequent month. This resulted
in reduced debtors at the end of each month. Due to discontinuation of
Special Rebate in the first five days of the month w.e.f 1st April, 2010,
the sundry debtors as on 31st March, 2010 have increased.
Loans and advances reduced by 19% as compared to previous financial year
mainly on account of Lower Advance tax and tax deducted at source (Net of
Provision for tax). Besides advance tax and tax deducted at source (net of
provisions) amounting to Rs.20,644 million, this includes a loan of
Rs.6,222 million to the Government of Delhi subsequent to the conversion of
the dues of Delhi Vidyut Board under the one-time-settlement scheme. The
Government of Delhi pays 8.5% tax-free interest on this loan. The other
loans and advances are mostly to suppliers and contractors and also on
account of advances extended to employees for various purposes such as
building of house, purchase of vehicles etc., as per the policies of your
Company. The advances to employees mainly include Rs.1,387 million paid as
adhoc advance to employees in non-executive category pending pay revision
(explained in note 6 of Notes on Accounts, Schedule-26).
Inventories as at March 31, 2010 were Rs.33,477 million being 11% of
current assets as against Rs. 32,434 million as on March 31, 2009.
Inventories mainly comprise of components and spares and coal which are
maintained for operating plants. Components and spares were Rs.16,500
million as against Rs.15,662 million in previous year end. Coal inventory
amounted to Rs. 11,175 million as against Rs. 11,133 million in previous
year.
6. Current Liabilities:
Rs. Million
As at March 31 YoY %
2010 2009 change change
Amt Amt Amt
Liabilities 76,876 74,391 2,485 3%
Provisions 30,705 32,495 -1,790 -6%
Total Current 107,581 106,886 695 1%
Liabilities
The current liabilities as at March 31, 2010 were Rs. 76,876 million as
against Rs. 74,391 million in the previous year. The current liabilities
mainly comprise of creditors for capital expenditure, creditors for supply
of goods and services, deposits and retention money from contractors. The
creditors and retention money, deposits etc. at the end of the year stood
at Rs. 68,844 million as against Rs. 64,469 million in the previous year.
The current liabilities have also increased by Rs. 2,869 million on account
of unsettled liabilities due to price variation claims accounted on
estimation basis rather than on acceptance basis due to change in
accounting policy (explained in note 17(b) to Notes on Accounts, Schedule-
26). Besides these, advances from customers were Rs. 2,935 million as
against Rs 4,520 million in the previous year. These sums include amount
payable to the customers on account of income tax refunds.
7. Provisions:
As on March 31, 2010, your Company had provisions outstanding amounting to
Rs. 30,705 million as against Rs. 32,495 million on 31st March 2009. This
mainly comprised Rs.20,345 million (previous year Rs. 21,927 million) being
provision for estimated employee benefits under AS 15 (Revised 2005)
'Employee Benefits' and estimated benefits payable pending pay revision
w.e.f. 01.01.07.
The provision in current year is lower mainly due to reduction in provision
amount after payment of pay revision arrears to employees on finalization
of pay-revision of employees in executive category.
Further, provisions include Rs 6,596 million on account of proposed
dividend which would be paid subject to approval of our shareholders. The
income tax payable on the proposed dividend is Rs.1,072 million included in
the Provisions of FY 2009-10.
8. Cash flows:
Cash, cash equivalents and cash flows on various activities for the past
five years are tabulated below:
Rs. Million
For the year ended March 31
2010 2009 2008 2007 2006
Opening Cash 162,716 149,332 133,146 84,714 60,783
& cash
equivalents
Net cash from 105,942 96,881 97,860 80,653 59,720
operating
activities
Net cash used -104,977 -75,004 -58,187 -31,458 -26,992
in investing
activities
Net cash flow -19,086 -8,493 -23,487 -763 -8,797
from financing
activities
Change in Cash -18,121 13,384 16,186 48,432 23,931
and cash
equivalents
Closing cash 144,595 162,716 149,332 133,146 84,714
& cash
equivalents
Net cash from operating activities for the year ended March 31, 2010
increased by 9% from the previous year. Net cash from operating activities
was Rs.105,942 million as against Rs 96,881 million for the previous year.
Net cash used in investing activities increased to Rs 104,977 million in FY
2009-10 from Rs. 75,004 million in the previous year registering an
increase of 40%. Cash flows on investing activities arise from expenditure
on setting up power projects, investment of surplus cash in various
securities, investments in joint ventures and subsidiaries. Cash utilized
for purchase of fixed assets increased by 8% from Rs. 100,087 million in
the previous year to Rs. 107,741 million during FY 2009-10. Net cash used
in purchase of investments (after adjusting sale of investments and the
redemption of OTSS bonds) increased by Rs.17,732 million during the year.
No call option was exercised by SEBs on OTSS bonds during the FY 2009-10.
The investment in Joint Venture companies and subsidiaries was Rs.7,424
million in current financial year as against Rs.4,093 million during
previous year. Cash generated from investing activities also reduced due to
reduction in interest amount on OTSS bonds.
During the year, out of cash raised from operating activities the company
paid net Rs.19,086 million of cash for servicing financing activities as
against Rs.8,493 million in the previous year. During the FY 2009-10 the
company had an inflow of Rs.69,824 million from long term borrowings as
against Rs. 73,600 million in the previous year. Cash used for repayment of
long term borrowings during the current fiscal was Rs.26,548 (excluding
exchange rate variation of Rs.10,983 million) million as against Rs.22,666
million repaid in the previous year. Cash used for paying dividend and the
tax thereon was Rs.36,639 million as against Rs.34,718 million in the
previous year.
BUSINESS AND FINANCIAL REVIEW OF SUBSIDIARIES:
NTPC has six subsidiary companies. The financial statements of the
subsidiaries are included in this Annual Report elsewhere. Out of six
subsidiary companies, one company namely, Pipavav Power Development Company
Limited (PPDCL) is under winding up. The performance of remaining five
subsidiaries is briefly discussed here:
(a) NTPC Electric Supply Company Limited (NESCL):
The financial highlights of the Company are as under:
Particulars Fiscal 2010 Fiscal 2009
Rs. Million
NTPC's investment in equity 0.8 0.8
Gross Income 800 785
Profit After Tax 266 185
Rs. Per Share
Earnings Per Share 3,286.38 2,284.54
The company was formed on August 21, 2002 as a wholly owned subsidiary
company of NTPC with an objective to make a foray in the business of
distribution and supply of electrical energy as a sequel to reforms
initiated in the Power Sector. Presently the company is undertaking the
following activities:
* The company has been involved in the execution of work on turnkey basis
under the government's rural electrification program namely 'Rajiv Gandhi
Grameen Vidyuti-Karan Yojana' in 29 districts in 5 states, namely,
Chhattisgarh, Jharkhand, Madhya Pradesh, Orissa and West Bengal covering
more than 38000 villages and approximately 27 lakh Below Poverty Line (BPL)
connections. During the year 2009-10, the Company achieved electrification
of 8,017 villages and provided electricity connection to 8.6 lakh BPL
households which is higher then the MOU target of 7,500 Un-electrified/ De-
electrified and 8.5 lakhs BPL connections. So far the Company has achieved
electrification of 16,954 villages.
* The Company is assisting the DISCOMs and utilities for enhancement and
bringing the sectoral reforms process and has been participating in the
distribution infrastructural development programme under consultancy
assignments. The Company is executing project management consultancy work
for setting up 220 KV substations, switch yard and associated facilities at
BPCL Kochi Refinery.
* The Company is also involved in the turnkey execution of infrastructure
for Power supply arrangement for Port based Special Economic Zone at
Vallarpadam for Cochin Port Trust (CPT) as well as turn key execution of
development of infrastructure for power supply arrangement for all coal
mining projects of NTPC.
* NESCL is also trying to implement a new business model in which bulk
power is brought to the load centre from NTPC merchant plants & is
distributed to a predetermined geographical area having dedicated
consumers as an independent licensee. This model shall not only pave the
way for NESCL to take up the retail distribution but also assist the state
utilities in meeting the power shortages in the respective states.
As on 31.3.2010, paid up capital of the Company is Rs. 0.8 million. The
Company has paid a dividend of Rs.40 million for the year 2009-10 as
against Rs 25 million paid in the previous year.
Joint venture of NESCL:
NESCL has set up a JV with Kerala Industrial Infrastructure Development
Corporation (KINFRA), a statutory body of Government of Kerala with equity
participation of 50% each named as KINESCO Power and Utilities Pvt. Ltd on
17th September 2008, to take up retail distribution of power in various
Industrial parks developed by KINFRA in Kerala and other SEZs and
industrial areas. The license has been issued for Kakkanad, Kalamassery and
Palakkad by the state regulator. The new JV Company has taken over the
operations from 1st Feb 2010 in the Kakkanad Industrial area of KINFRA.
As on 31.3.2010, the paid up capital of the Company is Rs. 1 million and
Rs. 2.6 million of share application money is pending for allotment.
(b) NTPC Vidyut Vyapar Nigam Limited (NVVN):
The financial highlights of the Company are as under:
Particulars Fiscal 2010 Fiscal 2009
Rs. Million
NTPC's investment in equity 200 200
Gross Income 851 1,211
Profit After Tax 284 495
Rs. Per Share
Earnings per share 14.20 24.76
The company was formed on November 1, 2002 as a wholly owned subsidiary
company of NTPC with an objective to undertake business of sale and
purchase of electric power, to effectively utilise installed capacity and
thus enabling reduction in the cost of power. During the year 2009-10, the
company transacted business with various state electricity boards spread
all over the country and traded 5.549 billion units of electricity in
comparison to 4.831 billion units traded in the previous year.
As on 31.3.2010, the paid up capital of the Company is Rs. 200 million. The
Company has paid a dividend of Rs.100 million for the year 2009-10.
(c) NTPC Hydro Limited (NHL):
The financial highlights of the Company are as under:
Particulars Fiscal 2010 Fiscal 2009
NTPC's investment in 1026 927
equity(incl. share capital
deposit) (Rs. Million)
Loss (Rs.) Nil 10,800
In furtherance of its efforts to take forward the hydro capacity addition
and to give exclusive thrust to small and medium sized Hydro Power Projects
upto 250MW capacity, NTPC Ltd. had set up a wholly owned subsidiary company
named 'NTPC Hydro Ltd.' in December, 2002. Presently the company is
implementing the following projects:
* Lata Tapovan hydro electric project (171 MW) in the state of Uttrakhand.
All the statutory clearances have been obtained and entire land required
for the project has been physically acquired. The main EPC package, namely,
Civil & HM Works (Hydro Mechanical) is currently under tendering process
and award is envisaged during the current calendar year. The project is to
be developed as a regional power station with 12% free power to Govt. of
Uttarakhand and balance to be supplied to the beneficiaries of Northern
states. PPAs with number of beneficiary states have also been signed. The
project is slated for commissioning during 12th Plan. Annual generation
from this project is estimated as 869 MU.
* Rammam-III (120 MW) in the state of West Bengal- All the statutory
clearances have been obtained and majority of land acquisition activities
have been completed. Various infrastructure developmental works are under
progress. The main EPC package, namely, Civil & HM Works is currently under
tendering process and award is envisaged during the year 2010-11. The
project is for the benefit of West Bengal and Sikkim states and is slated
for commissioning during 12th Plan. Annual generation from this project is
estimated as 476 MU.
As on 31.3.2010, the paid up capital of the Company is Rs. 1,008 million
and Rs. 18 million of share application money is pending for allotment.
(d) Kanti Bijlee Utpadan Nigam Limited:
As per the decision of Govt. of India, a new company named Vaishali Power
Generating Company Ltd.' was incorporated on September 6, 2006 as a
subsidiary of NTPC to take over Muzaffarpur Thermal Power Station (MTPS)
(2 x 110 MW). The Company was rechristened as Kanti Bijlee Utpadan Nigam
Limited' on 10.04.2008. The present equity contribution in the company is
64.57% by NTPC and 35.43% by BSEB.
Unit 2 of 110 MW of the transferred station is under operation w.e.f.
29.01.08 after restoration and refurbishment and generated infirm power of
460.58 MUs during financial year 2009-10 which is highest ever generation
by this unit since its inception.
Renovation and Modernization (R&M) of existing units 2X110 MW is to
commence in 2010-11 for which contract has been awarded to BHEL on
15.04.10.
The Board of the Company has approved the Feasibility Report for the
expansion of MTPS by 2x195 MW. Main Plant package award has been finalized
and Letter of Intent (LOI) was issued to BHEL in March 2010 for Rs.1,076
crore.
As on 31.3.2010, the paid up capital of the Company is Rs. 885 million and
Rs. 44 million of share application money is pending for allotment which
includes Rs. 22 million as the share of NTPC Ltd.
The financial highlights of the Company are given below:
Particulars Fiscal 2010 Fiscal 2009
NTPC's investment in equity 594 594
(incl share capital deposit)
(Rs. Mln)
Loss (Rs.) 7,50,950 27,866
Earnings per share (Rs.) (0.13) (0.28)
(e) Bhartiya Rail Bijlee Company Limited (BRBCL):
'Bhartiya Rail Bijlee Company Limited' was incorporated as a subsidiary of
NTPC on November 22, 2007 having equity participation of 74:26 by NTPC Ltd.
and Ministry of Railways, Govt. of India respectively for setting up of 4
units of 250 MW each of coal based power plant at Nabinagar, district
Aurangabad, Bihar. Land measuring 1,250 acres (approx) was taken under
possession during the year. As on 31.3.2010, the paid up capital of the
Company is Rs. 4,000 million and Rs. 1,462 million of share application
money is pending for allotment which includes Rs. 712 million as the share
of NTPC Ltd.
The financial highlights of the Company are given below:
Particulars Fiscal 2010 Fiscal 2009
Rs. Million
NTPC's investment in equity 3,672 2,421
(incl. share capital deposit)
Loss 0.2 3.9
Rs. Per Share
Earnings per share (0.00) (0.03)
BUSINESS AND FINANCIAL REVIEW OF JOINT VENTURE COMPANIES:
a) Utility Powertech Limited (UPL):
The financial highlights of the Company are as under:
Particulars Fiscal 2010 Fiscal 2009
Rs. Million
NTPC's investment in equity 10 10
Gross Income 2,629 2,383
Profit After Tax 90 8
Rs. Per Share
Earnings per share 22.45 2.03
UPL is a joint venture company of NTPC and Reliance Infrastructure Limited
formed to take up assignments of construction, erection and supervision in
power sector and other sectors in India and abroad as well as to provide
man power to power, telecom and other sectors. As on 31.3.2010, the paid up
capital of the Company is Rs. 40 million (including Rs. 20 million of paid
up equity capital issued as fully paid up bonus shares in the previous
year) with 50% initially contributed by NTPC Ltd.
b) NTPC-SAIL Power Company Pvt. Ltd. (NSPCL):
NSPCL, a 50:50 Joint venture Company of NTPC and SAIL was incorporated on
08.02.1999 for running the Captive Power Plants of SAIL at Durgapur,
Rourkela. Later, Bhilai Electricity Supply Company Ltd. merged into NSPCL.
NSCPL owns and operates a capacity of 814 MW mostly as captive power plants
for SAIL's steel manufacturing facilities located at Durgapur, Rourkela and
Bhilai. Two units of 250 MW each of Bhilai expansion were commissioned
during 2008-09 out of which 255 MW capacity is allocated for captive use
and the balance 245 MW is allocated for CSEB, UT Daman & Diu and UT Dadra &
Nagar Haveli. Both the units were declared commercial during 2009-10. The
above stations generated a total of 5.043 BUs (including 2.418 BUs from
Bhilai expansion units) during 2009-10 as compared to 2.389 BUs during the
corresponding previous year. Captive power plants (314 MW) of NSPCL
recorded annual generation of 2625 MUs at 95.5% PLF, highest ever since
inception. Further, both 250MW units of Bhiliai Expansion (2X250MW)
achieved 100% PLF & AVF during March '10 and achieved 85% AVF during 2009-
10 after commercial operation.
As on 31.03.2010, the paid up capital of the Company is Rs. 9,505 million
and out of this, 50% has been contributed by NTPC Ltd.
The financial highlights of this Company are as under:
Particulars Fiscal 2010 Fiscal 2009
Rs. million
NTPC's investment in equity 4,752 4,752
Gross Income 9,571 2,697
Profit After Tax 839 355
Rs. Per Share
Earnings per share 0.88 0.42
NSPCL has recommended a final dividend of Rs.290 million of which NTPC's
share is Rs.145million.
c) NTPC-ALSTOM Power Services Private Limited (NASL):
The financial highlights of the Company are as under:
Particulars Fiscal 2010 Fiscal 2009
Rs. million
NTPC's investment in equity 30 30
Gross Income 286 597
Profit After Tax 13 34
Rs. Per Share
Earnings per share 2.18 5.73
NASL is a 50:50 joint venture company between NTPC and ASLTOM POWER
GENERATION AG, Germany. The company was formed on 27.09.1999 for taking up
Renovation & Modernization assignments of power plants both in India and
SAARC countries. During 2009-10, NASL has submitted technical bids for
Badarpur and Bandel projects. As on 31.3.2010, the paid up capital of the
Company is Rs. 60 million with 50% being contributed by NTPC Ltd.
d) NTPC Tamil Nadu Energy Company Ltd. (NTECL):
NTPC Tamil Nadu Energy Company Ltd, was formed as a 50:50 joint venture
between NTPC and Tamil Nadu Electricity Board (TNEB) on May 23, 2003 to
develop and operate 1500MW power project at Vallur. The project is named
as Vallur Thermal Power Project and is expected to use Ennore port
infrastructure facilities. Mega Power Status was accorded to the project
(3x500 MW) on 12.03.08.
Investment Approval of Stage-I, Phase-II (1 x 500MW) expansion of the
Project was accorded by the NTECL Board on 19.05.09.MOEF clearance for
phase-II (1 x 500 MW) was accorded on 03.06.09 while Main Plant Boiler &
Turbine contract was awarded to M/s BHEL on 28.07.09.Financial closure of
Phase-II was achieved with signing of Loan Agreement with M/s REC on
06.03.10 for Rs. 21,140 million. The construction work at site is in full
progress.
The paid up capital of the Company is Rs. 8500 million and out of this, 50%
has been contributed by NTPC Ltd. Further as on 31.03.2010, the amount of
Share Capital Deposit pending for allotment is Rs. 555 million. Out of
this, Rs. 155 million was contributed by NTPC Ltd. during 2009-10.
e) Ratnagiri Gas and Power Pvt. Limited:
Ratnagiri Gas and Power Private Ltd has been formed as joint venture
between NTPC, GAIL, Maharashtra State Electricity Board and Indian
Financial institutions with NTPC having a stake of 29.65% for taking over
and operating gas based Dabhol Power Project. Block #I RGPPL was also
revived and declared commercial on May 19, 2009.The total generation from
all the Power Blocks during 2009-10 is 8,289 MUs. All the power blocks
machines are in operation. GoI has allocated full quantum of gas required
for Power Blocks (about 8.5 MMSCMD). RGPPL commenced power generation using
domestic gas from KG D-6 basin from September 30, 2009. The current drawl
is around 7.2 MMSCMD.
As on 31.3.2010, the paid up capital of the Company is Rs. 20,000 million
and out of this, Rs.5,929 million has been contributed by NTPC Ltd. Further
as on 31st March 2010, out of Share Capital Deposit pending allotment
amounting to Rs 2,970 million, an amount of Rs. 1,000 million has been
contributed towards equity by NTPC Ltd.
The financial highlights of the Company are as under:
Rs. Million
Particulars Fiscal 2010 Fiscal 2009
NTPC's investment in equity 6,929 6,929
(incl. share capital deposit
Gross Income 37,702 12,612
Profit (Loss) 445 (6,551)
Rs. Per Share
Earnings per share(Basic) 0.22 (3.83)
f) Aravali Power Company Private Limited:
Aravali Power Company Private Limited (A Joint Venture Company of NTPC
Ltd., Indraprastha Power Generating Co. Ltd. [IPGCL] of Delhi Govt. and
Haryana Power Generating Co. Ltd. [HPGCL] of Haryana Govt.) is setting up
Aravali Super Thermal Power Project of 1500 MW (3x500 MW), a coal fired
power plant, in Jhajjar district of Haryana. The project is being set up by
NTPC on concept-to-commissioning basis. NTPC Ltd. would also operate and
maintain the station on Management Contract basis for at least 25 years.
The project is being set up for meeting the power requirement of Haryana
and NCT of Delhi. The power will be shared on 50:50 basis between Haryana
and NCT of Delhi.
Construction activities at the site are in full swing. Boiler Hydro Test
for Unit-I has been completed on 26.01.10. For Unit-II, TG erection work
commenced in January, 2010. Boiler Drum Lifting of Unit-III was completed
on 12.11.2009 and TG Deck casted on 14.02.2010. Unit-I & II is expected to
be ready during 2010-2011. For the fuel linkage, Letter of Assurance
obtained from MCL for 6.94 MTPA (F Grade Coal). Water agreement signed with
Haryana Irrigation Department on 21.12.09 for supply of 150 cusec of water
from JLN canal.
As on 31.3.2010, the paid up capital of the Company is Rs. 13,170 million
with 50% being contributed by NTPC Ltd.
g) NTPC-SCCL Global Venture Pvt. Ltd.:
NTPC Limited alongwith Singareni Collieries Company Limited formed a 50:50
joint venture Company under the name and style of 'NTPC-SCCL Global
Ventures Private Limited' on July 31, 2007 to undertake various activities
in coal and power sectors including acquisition of coal/lignite mine
blocks, development and operation of integrated coal based power plants and
providing consultancy services. In the proposed Joint Venture Company both
NTPC and SCCL shall hold 50% equity each.
As on 31.3.2010, the paid up capital of the Company is Rs. 1 million, out
of which 50% has been contributed by NTPC Ltd.
h) Meja Urja Nigam Private Limited:
NTPC has formed a JV Company with Uttar Pradesh Rajya Vidyut Utpadan Nigam
Limited (UPRVUNL) under the name 'Meja Urja Nigam Private Limited' on April
2, 2008 for setting up a power plant of 1320 MW (2X660 MW) at Meja Tehsil
in Allahabad district in the state of Uttar Pradesh.
All significant clearances except MOEF clearance have been obtained.
Application for MoEF clearance submitted on 30.03.10. CWC/MOWR clearance
for use of Ganga Water received on 17.11.09. In-principle approval for Coal
Linkage received from the MOC.
Land acquisition has been completed. Further, possession & mutation for
1,118 Hectares of Government & Private Land & Resettlement of PAPs has
commenced. The project is identified under Bulk Tendering for 660 MW
units.
As on 31.03.2010, the paid up capital of the Company is Rs. 604 million and
out of this, 50% has been contributed by NTPC Ltd. Further as on 31.3.2010,
out of Share Capital Deposit pending for allotment amounting to Rs. 385
million, Rs.192 million being 50% of the total Share Capital Deposit has
been contributed by NTPC Ltd.
i) NTPC BHEL Power Projects Pvt Ltd. (NBPPL):
'NTPC BHEL Power Projects Pvt Ltd.' (NBPPL) was formed on April 28, 2008 as
a JV Company with Bharat Heavy Electrical Ltd (BHEL) for carrying out
Engineering Procurement and Construction (EPC) activities in the power
sector and to engage in manufacturing and supply of equipment for power
plants and other infrastructure projects in India and Abroad. The Company
has acquired 750 acres of land at YSR Puram in Chittoor district (Andhra
Pradesh) for setting up manufacturing plant. The company has also bagged
contracts for execution of Balance of Plant package for a value of Rs. 79
Crore for Palatana Combined Cycle Power Plant in Tripura and 1x100 MW
Namrup Thermal Power Station valued at Rs. 71.81 Crore.
As on 31.03.2010, the paid up capital of the Company is Rs. 500 million,
out of this, 50% has been contributed by NTPC Ltd.
j) BF-NTPC Energy Systems Limited:
'BF-NTPC Energy Systems Limited' (BFNESL) was formed on June 19, 2008 with
Bharat Forge Limited (BFL) to establish a facility to take up manufacturing
of castings, forgings, fittings and high pressure piping required for power
projects and other industries, Balance of Plant (BOP) equipment for the
power sector.
BFNESL has finalized land in Solapur, Maharashtra for setting up
manufacturing facilities; foundation stone for the same was laid on 20th
March, 2010.
As on 31.3.2010, the paid up capital of the Company is Rs. 21 million with
49% being contributed by NTPC Ltd. Further, out of Rs. 99 million of share
application money pending allotment as on 31.03.2010, Rs.49 million has
been contributed by NTPC.
k) Nabinagar Power Generating Company Private Limited:
'Nabinagar Power Generating Company Private Limited' (NPGCL) was
incorporated as a JV Company on September 9, 2008 with equal equity
contribution from Bihar State Electricity Board for setting-up of a coal
based power project at New Nabinagar in district Aurangabad of State of
Bihar. The project will have a capacity of 1,980 MW (3X660 MW). The Company
will also undertake operation & maintenance of the project after its
commissioning.
Feasibility Report of the project was approved by NPGCL Board on 02.07.09.
Land acquisition activities have been initiated. Application for MoEF
clearance submitted on 29.03.10. In-principle approval for Coal Linkage
received from the MOC. The project is identified under Bulk Tendering for
660 MW units.
As on 31.3.2010, the paid up capital of the Company is Rs. 1 million with
50% being contributed by NTPC Ltd. during 2009-10. Further as on 31.3.2010,
out of share application money pending for allotment amounting to Rs. 2,229
million, Rs.950 million has been contributed by NTPC Ltd.
l) National Power Exchange Limited (NPEX):
'
'National Power Exchange Limited' (NPEX) was incorporated as a JV Company
with NHPC Ltd., Power Finance Corporation Ltd. and Tata Consultancy
Services Ltd. on December 11, 2008 to operate a Power Exchange at National
level. This Power Exchange would provide a neutral and transparent
electronic platform for trading of power on 'day ahead basis' and ensure
clearing of all trades in a transparent, fair and open manner with access
to all players in the power markets. NTPC Ltd. & NHPC Ltd. have contributed
16.67% equity each, Power Finance Corporation Ltd. 16.66% of equity while
Tata Consultancy Services has contributed 50% equity in the share capital
of this Company. An in-principle approval by CERC to set up and operate a
national level power exchange was received on July 1, 2009. New Regulations
for power exchange have been issued by Central Electricity Regulatory
Commission on 20th Jan 2010.The Company has initiated action for compliance
and aligning itself to these regulations.
As on 31.3.2010, the paid up capital of the Company is Rs. 50 million with
16.67% amounting Rs. 8 million contributed by NTPC Ltd.
m) International Coal Ventures Private Limited (ICVL):
A JV Company was incorporated on May 20, 2009 under the name 'International
Coal Ventures Private Limited' (ICVL) in association with Steel Authority
of India (SAIL), Coal India Limited (CIL), Rashtriya Ispat Nigam Limited
(RINL) and NMDC Limited (NMDC). SAIL, CIL, RINL, NMDC and NTPC shall
contribute in the equity share capital of the Company in the ratio of
2:2:1:1:1 respectively. The Company has been incorporated for the purpose
of carrying on business for overseas acquisition and/ or operation of coal
mines or blocks/ companies for securing coking and thermal coal supplies.
ICVL is pursuing coal opportunities from countries like Australia,
Indonesia, Mozambique, South Africa and USA. As on 31.03.2010, the paid up
capital of the Company is Rs. 7 million.
n) National High Power Test Laboratory Private Limited (NHPTLPL):
NTPC has formed a JV Company on May 22, 2009 under the name 'National High
Power Test Laboratory Private Limited' (NHPTLPL) in association with NHPC
Limited (NHPC), Power Grid Corporation of India Limited (PGCIL) and Damodar
Valley Corporation (DVC). All JV partners have contributed equally in the
equity share capital of the Company. The Company has been incorporated for
setting up an On-line High Power Test Laboratory for short-circuit test
facility in the Country. The project Feasibility Report has been submitted
by Technical Consultants, CSEI, Italy.
As on 31.03.2010, the paid up capital of the Company is Rs. 35 million
which includes Rs. 9 million being 25% of paid up equity capital
contributed by NTPC Ltd.
o) Energy Efficiency Services Pvt. Limited:
A JV company has been formed on December 10, 2009 under the name 'Energy
Efficiency Services Limited' with Power Finance Corporation Limited (PFC),
Powergrid Corporation of India Limited (PGCIL) and Rural Electrification
Corporation Limited (REC) to carry on and promote the business of Energy
Efficiency and climate change including manufacture and supply of energy
efficiency services and products. NTPC, PFC, PGCIL and REC hold shares in
the equity share capital of the Company equally.
As on 31.03.2010, the share application money pending for allotment in the
Company is Rs. 25 million which includes Rs. 6 million being 25% of this
amount contributed by NTPC Ltd.
p) Transformers and Electricals Kerala Limited (TELK):
In line with the Business Collaboration and Shareholders Agreement executed
between NTPC Limited, Government of Kerala and Transformers and Electricals
Kerala Limited (TELK), 44.6% of presently paid-up capital of TELK were
acquired from Government of Kerala at a total value of Rs. 313.4 million
during 2009-10. The shares were credited in NTPC's demat account on
19.06.2009. TELK is engaged in manufacturing and repair of heavy duty
transformers. During the year TELK produced 5,085 MVA transformers as
against 4,566 MVA in 2008-09, an increase of 11.37%.
As on 31.03.2010, the paid up capital of the Company is Rs. 430 million
with Rs. 314 million contributed by NTPC Ltd.
Consolidated Financial Statements of NTPC Ltd, its Subsidiaries and Joint
Venture Companies:
The consolidated Financial statements have been prepared in accordance with
Accounting Standards (AS)-21 - ' Consolidated Financial Statements' and
Accounting Standards(AS) 27 -'Financial reporting of Interests in Joint
Ventures' and are included in this Annual report.
A brief summary of the results on a consolidated basis is given below:
Rs. million
Fiscal 2010 Fiscal 2009
Gross Income 512,035 460,365
Profit before Tax 110,491 93,073
Profit after Tax 88,377 80,925
Net Cash from operating 119,235 102,417
activities
CAUTIONARY STATEMENT:
Statements in the Management Discussion and Analysis and in the Directors'
Report, describing the Company's objectives, projections and estimates,
contain words or phrases such as 'will', 'aim', 'believe', 'expect',
'intend', 'estimate', 'plan', 'objective', 'contemplate', 'project' and
similar expressions or variations of such expressions, are 'forward-
looking' and progressive within the meaning of applicable laws and
regulations. Actual results may vary materially from those expressed or
implied by the forward looking statements due to risks or uncertainties
associated therewith depending upon economic conditions, government
policies and other incidental factors. Readers are cautioned not to place
undue reliance on these forward-looking statements.
For and on behalf of the Board of Directors
Place: New Delhi (R.S. Sharma)
Date : August 04, 2010 Chairman & Managing Director
Annex-III to Directors' Report
PARTICULARS REQUIRED UNDER THE COMPANIES (DISCLOSURE OF PARTICULARS IN THE
REPORT OF THE BOARD OF DIRECTORS) RULES, 1988:
A. CONSERVATION OF ENERGY:
a) Energy conservation measures taken:
Some of the important energy conservation measures taken during the year
2009-2010 in different areas are as under:
ENERGY AUDITS:
During 2009-10, 107 energy audits in the areas of auxiliary power
consumption, water balance, cooling water system, thermal insulation,
compressed air, coal handling plant, MGR, milling system, air conditioning,
ash handling system, GT compressors, GT open cycle efficiency, WHRB
performance, lighting etc., were carried out at different stations of the
company.
Till now 255 executives of NTPC have passed Energy Auditors Examination of
Bureau of Energy Efficiency to become Certified Energy Auditors / Managers.
AUXILIARY POWER CONSUMPTION:
Replacement of inefficient BFP cartridges and attending BFP recirculation
valves at Dadri, Rihand, Singrauli, Unchahar, Kahalgaon, Korba,
Vindhyachal, Badarpur etc., Application of efficiency improvement coating
on cooling water pump internals at Talcher Thermal & Kawas, Vapour
Absorption System for control room airconditioning at Unchahar, Attending
passing of LPBFP recirculation valve at Dadri gas, Installation of FRP
blades in HVAC cooling towers and fin fan Coolers at Kawas, Optimization of
operation of CW pumps, ARCW and clarified water pumps & Cooling Tower Fans
at Anta, Auraiya, Unchahar, Farakka, Korba, Vindhyachal, Maintaining
optimum DP across Feed Regulating Station at Kahalgaon, Korba, Singrauli
and Vindhyachal, Optimization of HP/LP water pumps at Dadri coal, Singrauli
and Rihand, External cleaning of Fin Fan coolers by steam jetting at Kawas,
Optimization of AC compressors and airwasher units at Kahalgaon, Talcher
Thermal, Simhadri and Anta, Optimization of air compressors at Tanda,
Vindhyachal and Simhadri.
LIGHTING:
Installation of timer switches in plant and township lighting at Anta and
Kahalgaon, Replacement of conventional GLS lamps and conventional FTLs with
CFLs at Singrauli, Unchahar, Vindhyachal, Ramagundam, Kayamkulam, Kawas and
Gandhar.
HEAT ENERGY:
New installation of Online condenser tube cleaning system at Rihand, New
installation of Online water washing system for GT compressors at
Kayamkulam, Repair of Thermal Insulation and cladding at Unchahar and
Kayamkulam, Optimization of ejector steam pressure at Vindhyachal.
Arresting passing in HP heaters at Ramagundam, Improving condenser vacuum
by tube cleaning, arresting air leakages etc., at Anta, Talcher Thermal and
Gandhar, Cleaning of Boiler with ammonia at Auraiya.
DM WATER'
Reuse of uncontaminated SWAS drains at various stations.
MISCELLANEOUS WATER:
Reuse of water from ash pond at various stations, Reuse of clarified return
water and raw water from coal settling pond at various stations.
b) Additional investments and proposals for reduction in consumption of
energy:
Provision of Rs.1068 lacs has been kept in BE 2010-11 for different energy
conservation schemes like:
- On-Line Energy Management System.
- Vapor absorption system for Air Conditioning.
- Upgradation of Boiler Feed Pumps.
- Energy efficient devices in lighting.
c) Impact of measures taken for energy conservation:
Savings achieved during 2009-2010 on account of specific efforts for energy
conservation:
S. Area/Activities Savings
No. Energy Qty. of Rs.
Unit units (Lacs)
1. Electrical MU 93.78 1542.45
2.a Heat Energy (equivalent MT of coal) MT 72747 894.68
2.b Heat Energy (equivalent MCM of Gas) MCM 2.55 177.67
2.c Heat Energy (equivalent MT of Naptha) KL 414 146.66
3.a D.M. Water MT 22920 9.15
3.b Miscellaneous Water M.Cu M 16.38 159.83
4. LDO KL 86 29.53
Grand Total 2959.97
Savings achieved during 2008-09: Rs: 498.02 Million.
B. Technology Absorption:
Efforts made towards technology as per Form -B (Form-B enclosed).
C. FOREIGN EXCHANGE EARNINGS AND OUTGO:
Activities relating to export initiative taken to increase export,
development of new export markets for products and services and export
plan:
Total Foreign Exchange Used/Earned:
Rs. (Million)
1. Foreign Exchange Outgo:
a) Value of Imports calculated on CIF basis:
Capital Goods 8970
Spare Parts 1393
b) Expenditure:
Professional and Consultancy Charges 53
Interest 3588
Others 188
2. Foreign Exchange Earned:
Consultancy 8
Interest -
Others 1
FORM B:
FORM FOR DISCLOSURE OF PARTICULARS WITH RESPECT TO ABSORPTION OF
TECHNOLOGY:
1.0 Specific areas in which NETRA activities have been carried out during
2009-10:
1. MOU Projects with MoP for 2009-10 Completed:
Technical Specification of Centralized Ammonia based Flue Gas Conditioning
System (with Heavy Water Board, Mumbai); Setup Advance Computing Centre :
Phase-I; Design of integrated bio-diesel pilot unit for using 80% energy
from bio-fruit instead of existing 15%; Optimization of process parameter
for bench scale PSA system for CO2 separation from flue gas (with IIT
Mumbai, IIP Dehradun, NEERI Nagpur, CSMRI Bhavnagar); Lab scale design &
dev of automated LTSH/eco tube surface inspection system; Feasibility study
of producing methane from raw water, as a supplemental fuel to boiler (with
IIT Delhi); ECBC 2007 compliance of new building; Lab scale development of
technique for online monitoring of colloidal silica in steam water cycle.
2. Developmental Projects undertaken by NETRA:
A. Climate Change:
Study of CO2 capture technology (With IIT Guwahati); Study of CO2 storage
technology (With IIT Kharagpur); PSA based CO2 capture technology (With IIT
Mumbai, IIP Dehradun, NEERI Nagpur, CSMRI Bhavnagar)
B. New & Renewable Energy:
Preparation of Technical Specifications for a demonstration plant for
Solar air Conditioning; Preparation of DPR for setting up of 1 MW Solar
Thermal Demonstration Plant; Designing of Integrated self sustaining
bio-diesel plant'.
C. Efficiency Improvement and Cost reduction:
Lab Testing of 5 KW MALAE Cycle pilot plant (With UICT, Mumbai); Studies on
Flue Gas Heat Recovery from power plant; CFD Modeling of 210 MW Boiler
(With NCL Pune); Field trials of Robotic crawler for boiler tube thickness;
Technical Feasibility Report for Plasma coal burners for Oil Gun
Replacement; Technical Feasibility Report for Heat Pipe based Air Pre-
Heater; Motor winding modification specifications suitable for VFD
retrofitting; Development of nano coating material for HV insulators (with
IIT Roorkee); etc.
3. Scientific Support to NTPC Stations:
NETRA continued to provide scientific support to NTPC stations and other
utilities such as: Studies on Corrosion Induced damages to RCC structures
of cooling towers of Simhadri (Stage 1); Change of specifications of PA fan
blades of coastal power stations; 11 boilers were chemically cleaned to
improve the heat transfer; Environmental Appraisal of 20 stations have been
carried out and corrective actions are being taken by the stations based on
the appraisal; Health assessment of plant components like Platen super
heater tubes of Ramagundam, generator rotor, main steam pipeline, hot gas
path components of gas stations, etc.; failure investigations such as LP
turbine blade of Tanda, condenser tubes of Badarpur, Condenser tubes of
Tarapore Atomic Power station, etc.; repair of critical electronic card;
improvement in heat transfer of HRSGs of gas stations; Development of
guidelines for CW system operation & monitoring and cleaning of sulphuric
acid tanks; development of chemical treatment programs for Tanda, Jhajjar,
Talcher Kaniha, Talcher Thermal, etc.; Design of cathodic protection system
for condenser water boxes at Badarpur; Condition monitoring of 500 HV
transformers by DGA, 1300 rotating equipment by wear debris analysis, ion
exchange resins of 18 stations; etc.
4. Scientific Support to Other Utilities:
Scientific services provided to more than 60 other utilities such as
Panipat, Kota Thermal, Lehra Mohabat, Faridabad, JPL (Raigarh), Neyvelli,
IPGCL, DVC, PGCIL. NHPC, etc.
5. Works under Patent:
Three (3) Patents namely: 1 - Integrated approach for bio-diesel
preparation utilizing bio-fruit (Pongamia fruit) utilizing 83% energy
instead of existing 15%'; 2 - Sensor for tube inspection and 3 - Method and
Apparatus for efficient heat integration; have been filed by NETRA in 2009-
10.
2.0 Benefits derived as a result of above Research & Technology
Development:
NETRA activities as carried out have helped in increasing the availability,
reliability and efficiency of the stations. Chemical treatment and
corrosion control measures suggested is helping the stations in improving
the efficiency, availability and life of various heat exchangers/cooling
towers. Techniques developed by NETRA are implemented at stations, which
are enhancing the life of boiler & turbine components.
The timely and scientific failure analysis of various components helped in
identifying the cause of failure and thus providing necessary input for
taking corrective action in preventing re-occurrence of similar failures
thereby increasing the availability of power plant equipment.
Studies on CO2 fixation/utilization; solar thermal; bio-fuels will result
into development of technologies for reduction in the impact on climate
change and technologies for affordable renewable energy sources.
Development of technologies for efficiency improvement will help in
reducing cost of generation.
3.0 FUTURE PLANS:
Developmental Projects planned to be taken up:
A. Climate Change:
Feasibility study of CO2 fixation for development of Product/EOR;
Feasibility report for setting up of 100 Kg/day pilot plant of microalgae
based CO2 capture technology; NIT for setting up of pressure swing
adsorption (PSA) based CO2 capture pilot plant 100 Kg/hr. flue gas
capacity; Feasibility studies on 1.2 T/day CO2 fixation by aqueous
carbonation of fly ash at Ramagundam B. New & Renewable Energy: Award for
solar heating ventilation and air-conditioning (HVAC) system; TS for 1 MW
solar thermal pilot plant; Commissioning of integrated bio-diesel pilot
plant to produce energy for existing bio-diesel plant at Dadri; Set-up &
commissioning of solar radiation station at suitable locations; Lab scale
demo of methane production from raw water of Badarpur (with IIT Delhi);
Experimental set up of Thermoelectric Generation.
C. Efficiency Improvement & Cost reduction:
Installation of a demonstration pilot plant at Dadri Thermal for the proof
of concept of the theoretical model developed for extraction of moisture
from flue gas (With IIT Delhi); Completion of integrated Polarization
Depolarization Current - Recovery Voltage (PDC-RV) measurement apparatus
for Insulation condition monitoring of Transformers; Preparation of TS for
100 TR Flue gas heat recovery - AC plant; Field trials of Robotic based
inspection system at one station; PR for heat pipe based air-pre-heater
pilot plant; Finalization of Technical Specifications for 2nd Phase
Advanced computing Center.
4.0 Expenditure on R&D:
S. Description Expenditure in
No. (Rs./Millions)
2009-2010 2008-2009
a) Capital 14 12
b) Recurring 206 81
c) Total 220 93
d) Total R&D expenditure as a percentage of 0.0475% 0.0222%
total turnover
5.0 Technology Absorption, Adaptation and Innovation:
Particulars of some of the important technology imported during last five
(5) years are as follows:
Technology:
1. Super critical Technology with 256 Kg/cm2 Steam Pressure and 568/595 C
MS/RH steam temperature is being adopted for improvement in thermal
efficiency and reduced emission of green house gasses.
Year:
2008
Stations:
Being Implemented in Barh-II and further Being implemented in 11 units (in
Mauda, Sholapur, Meja, Nabinagar and Raghunathpur plant) through bulk
tendering mechanism.
Technology:
2. Feasibility of IGCC (Integrated Gasification Combined Cycle) established
for high ash Indian coal. Further efforts are on to take ahead the work
already done to implement IGCC technology demonstration plant of about 100
MW capacity.
Year:
2010
Stations:
Nil
Technology:
3. Communicable Numerical Relay Technology (on IEC 618500) along with
Networking Systems introduced in 33 KV/11KV /6.6 KV/3.3 KV and LV System.
Year:
2009
Stations:
Implemented at Dadri-II, Korba-III & IGSTPP, Simhadri-II. Being Implemented
in all ongoing projects.
Technology:
4. 765 KV Switchyard & associated equipments including 24KV/ 765KV
Generator Step up (GSU) Transformer.
Year:
2005
Stations:
Implemented at Sipat.
Technology:
5. Switchyard Control & Data Acquisition (SCADA) System based on universal
protocol IEC 61850.
Year:
2005
Stations:
Implemented at Sipat.
Technology:
6. Boiler Flame Viewing Camera
Year:
2009
Stations:
Implemented in Kahagaon and Sipat-II
For and on behalf of the Board of Directors
Place: New Delhi (R.S. Sharma)
Dated: August 04, 2010 Chairman & Managing Director
Annex-VI to Directors' Report
STATISTICAL DATA OF GRIEVANCE CASES:
2009-10:
Particulars A B
1. Grievance cases outstanding at the beginning of the year - 3
2. Grievance cases received during the year - 27
3. Grievance cases disposed off during the year - 24
4. Grievance Cases outstanding at the end of the year - 6
A = Public Grievance Cases
B = Staff Grievances Cases
For and on behalf of the Board of Directors
Place: New Delhi (R.S. Sharma)
Dated: August 04, 2010 Chairman & Managing Director
Annex-VII to Directors' Report:
STATICAL INFORMATION ON RESERVATION OF SCs/STs FOR THE YEAR 2009:
Representation of SCs/STs as on 01.01.2010:
Group a b c d e
A 13274 1565 11.78 552 4.15
B 4826 723 14.98 321 6.65
C 5998 1055 17.58 437 7.28
D 1734 396 22.83 173 9.97
Total 25832 3739 14.47 1483 5.74
a = Employees on Roll
b = SCs
c = SCs - % age
d = STs
e = STs - % age
Recruitment of SCs/STs during the year 2009:
Group a b c d e
A 1051 131 12.46 82 7.80
B - - - - -
C 9 2 22.22 - -
D - - - - -
Total 1060 133 12.54 82 7.73
a = Total Recruitment
b = SCs
c = SCs - % age
d = STs
e = STs - % age
Promotions of SCs/STs during the year 2009:
Group Total SCs % age STs % age
A 3083 422 13.68 152 4.93
B 1792 230 12.83 180 10.04
C 2346 453 19.30 136 5.79
D 213 30 14.08 12 5.63
Total 7434 1135 15.26 480 6.45
The following backlog vacancies reserved for SCs/ STs/ OBCs have been
filled through special recruitment drive/ advertisement of backlog
vacancies along with current vacancies:
SCs : 6
STs : 19
OBCs : 54
For and on behalf of the Board of Directors
Place: New Delhi (R.S. Sharma)
Dated: August 04, 2010 Chairman & Managing Director
Annex-VIII to Directors' Report:
PHYSICALLY CHALLENGED PERSONS:
With a view to focus on its role as a socially responsible and socially
conscious organization, NTPC has endeavored to take responsibility for
adequate representation of physically challenged persons in its workforce.
With this in view, NTPC launched a massive recruitment drive to make up the
shortfall of physically challenged persons. Presently, 458 physically
challenged persons are on rolls of NTPC. Reservation has been provided for
PH as per rules/ policy. Some of the other initiatives taken for the
welfare of physically challenged persons by NTPC over the years are as
under:
- For individual needs of the VH employees, screen reading software and
Brailee shorthand machines made available by the Projects of NTPC.
- 'Sign language' training for the employees in general.
- Changes in the existing building have been/are being made to provide
barrier free access to physically challenged.
- Ramps have also been provided for unhampered movement of wheelchair.
- At most of the NTPC Projects, wherever house are located in multi-storied
structure, allotment to physically challenged has been made on the ground
floor.
- Special parking enclosure near the ramp at the office entrance as well as
PH friendly toilets and lift at CC and projects.
- Wheel chairs have been provided to employees with orthopaedics
disabilities. If required, the assistance of an attendant has also been
sanctioned.
- Wherever required, gates/door of the quarter has been widened.
- At CC procurement of stationery items like files, envelopes are mainly
being done from NGOs/agencies like ADI, MUSKAN, Blind relief Association
who are working for physically challenged thereby creating indirect
employment.
- Paintings made by disabled persons have also been procured and placed at
different locations in the Company offices.
- Medical camps have been organized in various projects of NTPC for
treatment and distribution of aids like artificial limbs, tricycles,
wheelchairs, calipers etc.
- Shops have been allotted in NTPC Township to physically challenged
persons so that they may earn their livelihood. Similarly, PCOs
within/outside plant premises are also allotted to physically challenged
persons.
- Regular interactive meetings are being organized with physically
challenged employees.
- Training needs are being fulfilled as per the individual requirement.
- 5 number of scholarship @ Rs.1500/- per month/per student are given to PH
students pursuing MBA/PGDBM course.
- Petty contracts like book binding, scribbling pad preparation from waste
paper, file binding, furniture repair, screen printing spiral binding,
painting contract are also being given to disabled persons.
- Physically challenged (Orthopedically handicapped) employees have been
allowed to purchase a three wheeler vehicle with a hand fitted engine
against their normal entitlement (advance for scooter/ motorcycle/ moped)
under NTPC Conveyance Advance Rules.
- At all projects/offices, Nodal Officers (physically challenged) have been
nominated.
- Reimbursement towards low vision aids, dark glasses etc. subject to
maximum of Rs.1000/- every year has been introduced. Similarly, hearing
aid; behind the ear model for each ear restricted to Rs.10,000/- or actual
cost whichever is lower have been introduced. It may be replaced every 4
years subject to certificate of condemnation by ENT Specialist.
- Relaxation in qualifying marks for open recruitment: pass marks only and
also 10% relaxation in written test and interview from the year 2002
onwards.
- The minimum performance level marks for promotions within the cluster is
relaxed by 3 marks in case of employees belonging to SC/ST/Physically
Challenged category.
- NTPC has launched special recruitment drive for fulfilling up 18 backlog
vacancies for Physically Challenged Persons in Group A posts and the
recruitment process has been completed in July-2010.
For and on behalf of the Board of Directors
Place: New Delhi (R.S. Sharma)
Dated: August 04, 2010 Chairman & Managing Director
Annex-IX to Directors' Report:
UNGC - Communication on Progress (2009-10):
NTPC expresses its continued support for the Global Compact and its
commitment to take action in this regard, as was communicated by the
Chairman & Managing Director, NTPC in his letter dated May 29, 2001
addressed to Secretary General, United Nations.
NTPC has posted the brief of Global Compact and its commitment to the
principles of GC on its website at www.ntpc. co.in. The principles of GC
were communicated to all employees through in-house magazines, internal
training programmes and posters. NTPC, a core member of Global Compact
Network (GCN), India, (formerly known as Global Compact Society) actively
participated in the Annual Convention of the Global Compact Network at
Mumbai and Asia Pacific Regional Conclave at New Delhi. NTPC representative
contributed as faculty for various training programmes organized by GCN for
Global Compact Member Organizations in Chennai and Delhi.
NTPC is in the process of preparing its 'Corporate Sustainability Report'
covering Economic, Environmental and Social aspects with the 'triple bottom
line' approach based on widely accepted and updated Global Reporting
Initiative (GRI) Guidelines.
Human Rights: Principle 1-2:
Most of NTPC's operating power stations are located in remote rural areas
which are socio-economically backward and deficient in the basic civic
amenities. NTPC, as responsible corporate citizen, has been addressing the
issue of community development in the neighbourhood areas of its stations,
which had been impacted due to establishment of the project.
While, this has been initially administered as part of Resettlement and
Rehabilitation (R&R) effort, NTPC recognized its social responsibility to
continue community and peripheral development works where the same has been
closed under R&R policy. Towards this, NTPC adopted 'Corporate Social
Responsibility-Community Development (CSR-CD) Policy' in July'04. Keeping
in view the new Organizational Strategies towards Community Development in
line with the emerging trends and multifarious community needs, the CSR-CD
policy of NTPC is being re-visited.
Under this policy, during 2009-10, NTPC allocated a fund of Rs.86 million
to 20 operating stations for carrying out comprehensive Community
Development work in the area of health, education, drinking water and
peripheral development. In addition, Quality Circles (QCs) are functioning
in neighborhood villages of its stations. The NTPC employees participate in
various CD activities through Employee Voluntary Organization for
Initiative in Community Empowerment (EVOICE). 50 Solar Lanterns were
provided for Girls' Hostel attached to one of the Kasturba Gandhi Balika
Vidyalay in the vicinity of NTPC Korba Station through TERI under their
LaBL campaign.
NTPC representatives associated with Confederation of Indian Industry (CII)
as Certified Assessors for the assessment of CII-ITC Sustainability Award
constituted by the CII and actively participated and contributed for
establishing CSR Hub at TISS, Mumbai.
NTPC Foundation, registered in December'2004, is engaged in serving and
empowering the physically challenged and economically weaker sections of
the society. The Information and Communication Technology (ICT) Centre, set
up jointly by NTPC Foundation and University of Delhi, and similar ICT
facilities to the existing blind schools in Lucknow, Ajmer,
Thiruvanathapuram and Mysore are helping a large number of physically
challenged students to learn IT Skills and move along with the mainstream
society. More than 800 physically challenged students have got benefited in
these centres till now.
NTPC Foundation is providing grants for setting up of Distributed
Generation Projects for preparation of feasibility report, DPR, Insurance
and for meeting funding gap.
Major activities taken up by NTPC in this area are highlighted under the
head 'Inclusive Growth' and 'NTPC Foundation' under Directors' Report for
the Annual Report 2009-10.
Labour Standard: Principle 3-6:
For addressing the issue of labour standard in comprehensive manner, NTPC
has decided to adopt international standards like SA-8000 and OHSAS-18001.
During the year 2009-10, accreditation SA-8000 got revalidated for Auraiya,
Badarpur, Jhanor-Gandhar and Dadri stations of NTPC. Revalidation is in
process at Faridabad, Kayamkulam, Unchahar and Vindhyachal. The process for
accreditation has been initiated at Kawas station.
Environment: Principle 7-9:
As a result of pursuing sound environment management systems and practices,
NTPC's all 20 operating stations have obtained accreditation for ISO-14001
Certification. Surveillance audit was done through agencies at various
stations to ensure adherence to the ISO requirements. During the year 2009-
10, 6 stations viz. Korba, Singrauli, Unchahar, Ramagundam, Kayamkulam and
NCPP-Dadri Stations have been recertified under ISO-14001.
Steps have been taken up by dedicated groups for training of NTPC Employees
for strengthening Environment Management at Stations, Regional Headquarters
and Corporate Centre. Following training programmes were organized in the
area of environment during the year:
'Strengthening Environment Management' for Executives working in
Environment Management Group/ Function, 'Insight into the Environmental
Issues' exclusively for Senior Officials at the level of DGM & Above, and
'Environmental Concerns' for Non-EMG Executives.
Major activities taken up by NTPC in the area of Environment are
highlighted under the head 'Environment Management' under Directors' Report
for the Annual Report 2009-10.
Anti-corruption: Principle 10:
The Company has a Vigilance Department headed by Chief Vigilance Officer
who is a nominee of the Central Vigilance Commission. The Vigilance
Department Consisting of Four Units, namely Corporate Vigilance Cell,
Departmental Proceeding Cell (DPC), MIS Cell, Technical Cell (TC). These
units deal with various facets of Vigilance Mechanism Exclusive and
independent functioning of these Units ensure transparency, objectivity and
quality in vigilance functioning. The Vigilance Department submits its
reports to Competent Authority including the Board of Directors. The CVO
also reports to the Central Vigilance Commission as per their norms.
Major activities taken up by NTPC in the area regarding Implementation of
Integrity Pact, Implementation of Fraud Prevention Policy, Preventive
Vigilance Workshops and Vigilance Awareness Week etc., are highlighted
under the head 'Vigilance' under Directors' Report for the Annual Report
2009-10.
For and on behalf of the Board of Directors
Place: New Delhi (R.S. Sharma)
Dated: August 04, 2010 Chairman & Managing Director
Annex-X to Directors' Report:
CONTENTS OF PRESIDENTIAL DIRECTIVES:
1. Induction of supercritical technology through bulk ordering of 660MW
generating units for Central Public Sector Undertakings (CPSUs) under the
Administrative control of Ministry of Power:
Vide Presidential Directive No.8/3/2002-Th-II (Vol.-IV) dated 4th
September, 2009 read with letter of even No. dated 7th October, 2009, the
Government of India has directed NTPC for induction of supercritical
technology through bulk ordering of 660MW generating units by NTPC Limited
for itself and on behalf of its JV Companies, and on behalf of DVC as per
details given in the Appendix-I enclosed with the letter. Government of
India has also approved that the liquidated damages be made applicable to
all the vendors and the same may be followed strictly. A detailed road map
for implementation of the same in this regard was to be provided to the
Ministry so that action is completed within 45 days from the date of issue
of the letter. Government of India has further directed that the whole
procedure has to be completed in accordance with the approval of Government
of India as per detail given in Annexure to the letter and NTPC has to
evolve a monitoring mechanism for reviewing the progress in this regard and
also depute a dedicated team for implementation of the same.
Approval/ guidelines for bulk tendering of 11 units of 660 MW units of SG
(Steam Generator) and STG (Steam Turbine Generator) packages were received
from MOP through their letter no. 8/3/2002-Th.II (Vol.IV) dated 04.09.2009
as Presidential Directive.
As per directive, Invitation of Bids (IFB) had to be completed within 45
days of its issuance. In compliance of the aforesaid directive, the IFB was
published on 16.11.2009 (within 45 days) for both SG and STG packages.
Further, the provisions specified in Presidential Directive were adequately
taken care while framing Qualification Requirements and finalizing the
bidding documents. The bidding documents were on sale from 21.10.2009 to
23.12.2009. Subsequently, Stage-I (Techno-Commercial) bids have been opened
on 12.02.2010 for both SG and STG packages. As for SG Package only one
valid bid was received, the NIT was annulled and fresh bids have been
invited. For STG Package, the bids are under evaluation.
2. Winding up of Pipavav Power Development Company Limited (PPDCL) through
striking off the name of PPDCL under Section 560 of the Companies Act, 1956
subject to final settlement of claims pending with Gujarat Power
Corporation Limited/Government of Gujarat:
Vide Presidential Directive No.5/5/2004-Th.II dated 3.7.2009, Government of
India has conveyed the approval of Government to permit NTPC Limited for
winding up of Pipavav Power Development Company Limited pending final
settlement of claims with Gujart Power Corporation Limited/Government of
Gujarat.
Vide Presidential Directive No.5/5/2004-Th.II dated 15th April, 2010, the
Government of India has conveyed the approval of Government to permit NTPC
Limited for winding up of the Pipavav Power Development Company Limited
through striking off the name of PPDCL under Section 560 of the Companies
Act, 1956 subject to final settlement of all claims pending with Gujarat
Power Corporation Limited/Government of Gujarat and the completing all
formalities under the statues.
After decision of disassociation of NTPC from Pipavav Project, Rs.131
million was received towards reimbursement of cost of land and other
expenditure incurred by NTPC Limited for Pipavav Project including interest
thereon. On taking up the matter further payment of Rs.20 million has been
made by GPCL as full and final settlement of claims of NTPC.
After receipt of approval of Government of India a necessary applications/
declarations have been filed with the Registrar of Companies, Delhi &
Haryana on 29.4.2010 for striking off the name of the company from the
Register of the Companies maintained by the Registrar of Companies.
3. Contract relating to Main Plant Package for Barh Super Thermal Power
Project Stage-I (3x660MW) awarded on M/s. Technopromexport, Russia by NTPC
Ltd.:
NTPC had sought permission from Ministry of Power for termination of Main
Plant Package Part-A (Steam Generator & Auxiliaries) Contract for Barh
Super Thermal Power Project Stage-I (3x660MW) awarded on M/s.
Technopromexport, Russia (TPE). However, Ministry of Power vide letter
No.5/9/2010-th.II dated 28th May, 2010 has directed NTPC to invite
reference to the record of discussions between MOP/NTPC and TPE on
12.03.2010 held in the Ministry of Power and to NTPC's letter dated
17.04.2010 containing the anticipated cost implications of
continuing/discontinuing with the above contract. Ministry of Power has
further directed that the matter was taken to the Cabinet Committee on
Infrastructure (CCI). CCI in its meeting dated 19.5.2010 has decided that
'NTPC may carry on with the contract with TPE in Barh Stage-I
notwithstanding CBI's advisory to NTPC for civil action against TPE as per
tender conditions and the contract. However, CBI is to continue with the
investigation of corruption/criminal part of the case.' Accordingly, NTPC
has been asked to take all necessary actions for early completion of the
project in view of the CCI's decision as above.
In view of the above directive of the Ministry of Power, it has been
decided to go ahead with the contract with TPE and discussions are being
held with them for execution of work and settlement of claims.
The exact financial implication of the above directive can not worked out
at this stage. However, anticipated extra financial implication works
out to approx. Rs.1190 crores.
For and on behalf of the Board of Directors
Place: New Delhi (R.S. Sharma)
Dated: August 04, 2010 Chairman & Managing Director
Annex-XI to Directors' Report:
The quantity of ash produced, ash utilized and percentage of such
utilization during 2009-10 from NTPC Stations is as under:
Sl. Stations Ash Ash % Utili-
No. Produced Utili- zation
zation
Lakh MTs Lakh MTs %
1 Badarpur 12.53 10.66 85.11
2 Dadri 17.39 15.55 89.41
3 Singrauli 35.84 26.16 73.00
4 Rihand 28.56 21.00 73.52
5 Unchahar 22.09 20.48 92.73
6 Tanda 9.70 7.08 73.01
7 Korba 52.31 38.79 74.14
8 Vindhyachal 50.17 37.31 74.36
9 Sipat 21.43 0.21 0.96
10 Ramagundam 42.80 31.34 73.22
11 Simhadri 22.18 10.00 45.09
12 Farakka 28.47 23.62 82.99
13 Kahalgaon 30.31 6.99 23.05
14 Talcher-Thermal 11.43 11.43 100.00
15 Talcher-Kaniha 77.00 15.46 20.08
Total 462.19 276.08 59.73
For and on behalf of the Board of Directors
Place: New Delhi (R.S. Sharma)
Dated: August 04, 2010 Chairman & Managing Director
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