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Edited Transcript of NTPC.NSE earnings conference call or presentation 9-Nov-19 11:00am GMT

Q2 2020 NTPC Ltd Earnings Call

New Delhi Nov 10, 2019 (Thomson StreetEvents) -- Edited Transcript of NTPC Ltd earnings conference call or presentation Saturday, November 9, 2019 at 11:00:00am GMT

TEXT version of Transcript

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Corporate Participants

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* Anand Kumar Gupta

NTPC Limited - Director of Commercial & Director

* Anil Kumar Gautam

NTPC Limited - CFO & Director of Finance

* Prakash Tiwari

NTPC Limited - Director of Operations & Executive Director

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Conference Call Participants

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* Abhishek Puri

Axis Capital Limited, Research Division - Executive Director of Capital Goods, Infrastructure and Power

* Aniket Mittal

Motilal Oswal Securities Limited, Research Division - Research Analyst

* Apoorva Bahadur

Jefferies LLC, Research Division - Equity Associate

* Atul Tiwari

Citigroup Inc, Research Division - VP and Analyst

* Dhruv Muchhal

* Koundinya Nimmagadda

JM Financial Institutional Securities Limited, Research Division - Analyst

* Mohit Kumar

IDFC Securities Limited, Research Division - Analyst

* Murtuza Turab Arsiwalla

Kotak Securities (Institutional Equities) - Senior Analyst

* Pulkit Patni

Goldman Sachs Group Inc., Research Division - Equity Analyst

* Puneet J. Gulati

HSBC, Research Division - Analyst

* Subhadip Mitra

JM Financial Institutional Securities Limited, Research Division - Power Analyst of Institutional Equities Research

* Swarnim Maheshwari

Edelweiss Securities Ltd., Research Division - Research Analyst

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Presentation

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Operator [1]

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Ladies and gentlemen, good day, and welcome to the NTPC Q2 and H1 FY '20 Earnings Conference Call hosted by Edelweiss Securities Limited. (Operator Instructions) Please note that this conference is being recorded.

I now hand the conference over to Mr. Swarnim Maheshwari from Edelweiss Securities. Thank you, and over to you, sir.

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Swarnim Maheshwari, Edelweiss Securities Ltd., Research Division - Research Analyst [2]

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Yes. Thanks, Raymond. Good evening and welcome, everyone, on NTPC's Q2 and H1 FY '20 Conference Call.

From the management, we have with us Mr. A.K. Gautam, Director Finance; Mr. S. Roy, Director, Human Resources; Mr. A. K. Gupta, Director, Commercial; Mr. S.K. Roy, Director, Projects; Mr. Prakash Tiwari, Director, Operations; and Mr. R.S.V. Muthumani, Executive Director Finance.

We'll have the initial remarks from Mr. Gautam, and then we can open up the Q&A session. Thanks, and over to you, sir.

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Anil Kumar Gautam, NTPC Limited - CFO & Director of Finance [3]

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Thank you. A very good evening to everybody. I, A.K. Gautam, Director, Finance, welcome all of you to Q2 FY '20 con call of NTPC Limited. And I have with me Shri S. Roy, Director, Human Resource, Shri A. K. Gupta, Director, Commercial; Shri S.K. Roy, Director, Projects; and Shri Prakash Tiwari, Director, Operations.

I also have with me Shri R.S.V. Muthumani, Executive Director, Finance; and other key members of NTPC team.

Today, the company has announced the unaudited financial results for the second quarter of FY '20. The key performance highlights for the quarter and half year ended 30th September 2019 have already been disclosed on both the stock exchanges.

Operational highlights for Q2 and H1 of FY '20, NTPC stand-alone gross generation in Q2 FY '20 is 64.64 billion units and in H1 FY '20 is 130.14 billion units as compared to 65.99 billion units and 135.20 billion units, respectively, in the corresponding previous periods.

NTPC has posted highest single day generation of 860.50 million units on 4th April 2019, surpassing previous highest day generation was 1 -- 835.79 million units on 29th March 2019.

Gross generation of NTPC Group in Q2 FY '20 is 68.68 billion units and in H1 FY '20 is 145.30 billion units as compared to 73.13 billion units and 150.05 billion units, respectively, in the corresponding previous period.

In H1 FY '20, we have added 1,980 megawatts to our installed capacity comprising 650 megawatts at Khargone, 660 megawatts at Tanda and 660 megawatts at Nabinagar, our joint venture company.

With these additions, the installed capacity of NTPC has become 48,645 megawatts on a stand-alone basis and 57,106 megawatts for the group as on 30th September 2019.

In H1 FY '19, we have added 2,120 megawatts to our commercial capacity comprising 800 megawatts at Gadarwara; 660 megawatts at Meja; and 660 megawatts at Nabinagar.

With these additions, the commercial capacity of NTPC has become 46,525 megawatts on a stand-alone basis and 54,986 megawatts for the group as on 30th September 2019.

For H1 FY '20, 2 coal stations of NTPC were among the top 10 performing stations in the country in terms of PLF. Barh with 86.96% and Singrauli with 86.26% were ranked seventh and ninth, respectively. In total, 4 stations of NTPC clocked over 85% PLF.

During H1 FY '20, PLF for coal stations was 69.04% as against the national average of 57.87%.

We have suffered loss due to grid restrictions. Coal-based stations suffered loss of generation of 17.26 billion units in Q2 FY '20 and 31.61 billion units in H1 FY '20.

Similarly, for the gas-based stations, the loss was 7.28 billion units in Q2 FY '20 and 13.71 billion units in H1 FY '20. The generation loss on account of fuel supply constraint in the coal-based station was 3.97 billion units in Q2 FY '20.

NTPC Hydro and RE stations recorded generation of 2.10 billion units in Q2 FY '20 as against 2 billion units in the corresponding previous period.

In H1 FY '20 recorded Hydro and RE generation of 3.53 billion units as against 3.10 billion units in the corresponding previous periods.

During the Q2 FY '20, 2.37 billion metric tonne of coal has been excavated from Pakri Barwadih coal mine. Cumulatively, it is 14.23 million metric tonnes of coal has been excavated til 30th September 2019.

0.14 million metric tonnes of coal has been expected from the Dulanga coal block in Q2 FY '20 which was nil in the Q2 of FY '19.

Cumulative expenditure of INR 6,342.19 crores has been incurred on the development of coal mines til 30th September 2019.

The total expenditure incurred in H1 FY '20 was INR 477.45 crores.

NTPC Limited incorporated a wholly-owned subsidiary NTPC Mining Limited, on 29th of 2019 for undertaking mining business. NTPC has signed a joint venture and shareholder agreements with Ceylon Electricity Board: Colombo, Sri Lanka for incorporation of 50-50 joint venture company for the proposed development of 300 megawatts, plus minus 15% LNG power block in Sri Lanka.

Investment approval has been accorded for 100 megawatts floating Solar PV Project at Ramagundam and 92 megawatts floating Solar PV Project at Kayamkulam.

NTPC has signed a Memorandum of Understanding with BHEL for forming a joint venture company for setting up of 800 megawatts technology demonstration plant based on advanced ultra supercritical technology, which will be the most efficient plant in the world once it becomes operational, resulting in reduction of carbon dioxide emissions by 20% as compared to the subcritical technology.

NTPC has signed an MoU with Indian Oil to explore business opportunities in the area of mutual interest like power supply to refineries, setting up of new power plants, acquisition of power plant under NCLT, fuels and lubricants, biogas ethanol plant, waste to energy plant, technical consultancy, O&M and R&M services, knowledge sharing, training, et cetera.

NTPC has signed an MoU with Himachal Pradesh government to set up 2 hydropower projects of 520 megawatts in Himachal state at -- near in Lahaul & Spiti district and Seli in Solan district.

NTPC has signed an MoU with Varanasi Municipal Corporation for setting up an integrated waste to energy plant at Varanasi, Environment Management initiative for preserving environment.

FGD are under various stages of implementation in 64.85 gigawatt of good capacity. FGD of 500 megawatts has already been commissioned. FGD system package for 47.29 gigawatts have been awarded. Award for FGD system packages for 17.06 gigawatts capacity are under various stages of tendering. More compliance with NOx control in coal-fired power plants, units require installation of appropriate de-NOx system based on emission level. NTPC is awarded contract for supply and installation of low NOx combustion system for 19 gigawatts of thermal power capacity. The project involves modification of in-combustion system for the boiler to reduce the generation of thermal NOx during the combustion process.

Further, as part of the commitment to environment, NTPC has taken an initiative to utilize agro residue for power generation. The utilization of agro residue-based biofuel for power generation will not only reduce in-field crop residue burning resulting in lower air pollution but will also reduce carbon footprint of coal-based power plants.

NTPC Dadri has become the first plant in the country to commercialize the biomass for firing and up to 10% of the agro residue-based biofuel for co-firing with the coal has been successfully operationalized.

Cumulatively, we have cofired 240 tonnes of agro residue-based biofuel until date.

NTPC has invited expression of interest for production and supply of paddy straw and agro residue-based pellets, torrefied pellets to power plants located across country and received over 100 responses from vendors who are interested to supply biomass-based pellets and co-parties. NTPC has issued orders for procurement of 160 TPD of agro residue pellets and the supply is expected to begin shortly.

Now financial highlights. Gross sales for the quarter FY '20 is INR 22,706.533 crores as against corresponding quarter of the previous year gross sale of INR 22,211.95 crores, registering an increase of 2.23%.

On half year basis, there is an increase of 4.57% in the gross sales, i.e, from INR 44,789.09 crores in H1 FY '19 to INR 46,836.11 crores in H1 FY '20.

Total income for Q2 FY '20 is INR 23,658.23 crores as against corresponding quarter of previous year total income of INR 22,485.96 crores, registering an increase of 5.21%.

On half yearly basis, there is an increase of 6.29% in the total income that is from INR 45 -- INR 325.94 crores in H1 FY 19 to INR 48,177.04 crores in H1 FY '20.

PBT for Q2 FY '20 is INR 3,497.72 crores as against INR 2,634.68 crores in the corresponding quarter of the previous year, registering an increase of 32.76%.

On half yearly basis, PBT is INR 6,660.11 crores as against INR 5,645.81 crores in the H1 FY '19, registering an increase of 17.97%.

PAT for Q2 FY '20 is INR 3,262.44 crores as against INR 2,426.02 crores in the corresponding quarter of the previous period, registering an increase of 34.48%.

On half yearly basis, PAT is INR 5,865.23 crores as against INR 5,014.16 crores in H1 FY '19 registering an increase of 16.97%.

An update on various other financial activities. The regulated equity as on 30th September 2019, was INR 53,256.67 crores. Fund mobilization, during the H1 of FY '20, we have signed term loans of INR 2,000 crores and INR 3,000 crores with Canara Bank and Axis Bank, respectively, totaling to INR 5,000 crores.

Average cost of borrowings for H1 FY '20 was 6.91% as compared to 6.79% in H1 FY '19.

Further, we have issued bonds with the door-to-door maturity of 10 years aggregating to INR 4,300 crores at attractive coupon of 7.32% per annum on 17 July 2019.

CapEx. In H1 FY '20, we have incurred a CapEx of INR 9,143.86 crores as against INR 10,018.31 crores in H1 FY '19. The CapEx by the other group companies has been INR 1,624.90 crores. Thus, the total group CapEx for the H1 FY '20 was INR 10,768.76 crores.

The capital outlay for FY '20 has been estimated at INR 20,000 crores for NTPC.

Now let me discuss the operational performance for Q2 H1 FY '20. Still, coal. During H1 FY '20, metallization of coal against ACQ was 88.84% as against 96.35% in H1 FY '19.

Coal supply during H1 FY '20 was 79.13 MMT. This comprises 77.62 million metric tonnes of domestic coal and 1.5 million metric tonnes of imported coal. This coal supply during corresponding previous period was 82.85 MMT, with 82.65 MMT of domestic coal and 0.2 MMT of imported coal.

Coal consumption during H1 FY '20 was 84.55 million metric tonne. This comprises 83.54 MMT of domestic coal and 1.01 MMT of imported coal.

The coal consumption in corresponding previous period was 85.28 MMT with 84.40 MMT of domestic coal and 0.85 MMT of imported coal.

Now gas. The gas consumption during H1 FY '20 was 3.76 MMSCMD as against 4.37 MMSCMD in H1 FY '19.

The gas consumption of H1 FY '20 procured under APM plus PMT mechanism was 2.05 MMSCMD under non-APM gas was 0.79 MMSCMD.

Under long term, RLNG was 0.84 MMSCMD and under spot RLNG was 0.08 MMSCMD.

Now I will briefly touch upon some of the NTPC Group companies, NVVN. Our trading subsidiary transacted 8.03 billion units during H1 FY '20 as against 8.82 billion units during the H1 FY '19. Units transacted during H1 FY '20 include 2.64 billion units of solar bundled power.

One bundled -- sorry, 1 billion units traded through bilateral arrangement, 3.68 billion units under cross-border trading and 0.71 billion traded through power exchange.

During H1 FY '20, we have received dividend of INR 83.65 crores from our subsidiary and joint venture companies. Of this, INR 4 crores is achieved from UPL. INR 75.18 crores is received from Aravali Power Company Private Limited and INR 4.47 crores from Energy Efficiencies Services Limited as against INR 8.30 crores received in the corresponding period of the previous year.

NTPC continues to win laurels and awards in various fields. Major awards received in H1 FY '20 are NTPC has been ranked 14th in 2019 Great Place to Work rankings for India.

NTPC has also won the Frost & Sullivan and TERI Sustainability 4.0 Award 2019 under the Challengers Award Mega Large Business, Process Sector category.

NTPC awarded the Dun & Bradstreet Corporate Award 2019 for the excellence in power generation.

NTPC, along with TCS was adjudged winner of 14th edition of BML Munjal Award in the Sustained Excellence category.

These were some of the law highlights I wanted to share before the question-and-answer session begins. Thank you.

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Questions and Answers

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Operator [1]

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Thank you. Shall we begin with the question-and-answer, sirji?

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Anil Kumar Gautam, NTPC Limited - CFO & Director of Finance [2]

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Yes. Yes, please.

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Operator [3]

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(Operator Instructions) The first question is from the line of Mohit Kumar from IDFC Securities.

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Mohit Kumar, IDFC Securities Limited, Research Division - Analyst [4]

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Congratulations on a good set of numbers. Sir, for the -- I have 2 questions, sir. First is on what are the fixed cost under recovery during the quarter? And what is the reason for high sharp rise in the receivables from March 2019 to September 2019? And third question, the other income significantly high. Just explain it.

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Anil Kumar Gautam, NTPC Limited - CFO & Director of Finance [5]

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The last question I will answer first. The other income is high because of accounting of surcharge income on this outstanding data, which you mentioned in your first question or second question.

Now we come to under recovery. Under recovery is INR 448 crores in H1.

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Mohit Kumar, IDFC Securities Limited, Research Division - Analyst [6]

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What is the number in the last half year, sir? Sorry H1 FY '19?

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Anil Kumar Gautam, NTPC Limited - CFO & Director of Finance [7]

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Just a minute.

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Prakash Tiwari, NTPC Limited - Director of Operations & Executive Director [8]

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It was INR 800 crores.

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Anil Kumar Gautam, NTPC Limited - CFO & Director of Finance [9]

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It was INR 800 crores.

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Prakash Tiwari, NTPC Limited - Director of Operations & Executive Director [10]

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H1 in the last fiscal was...

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Anil Kumar Gautam, NTPC Limited - CFO & Director of Finance [11]

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Last fiscal, H1, it was INR 822 crores, which is now INR 448 crores.

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Mohit Kumar, IDFC Securities Limited, Research Division - Analyst [12]

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And sir what is the surcharge income you have booked in the quarter, sir?

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Anil Kumar Gautam, NTPC Limited - CFO & Director of Finance [13]

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Quarter, we have booked a surcharge income of INR 650 crores.

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Mohit Kumar, IDFC Securities Limited, Research Division - Analyst [14]

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And sir, why the under recovery remains pretty high despite having low demand in the country? And what is the number we are targeting for FY '20?

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Prakash Tiwari, NTPC Limited - Director of Operations & Executive Director [15]

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This side Prakash Tiwari, Director Operations. Under recovery in H1 is, as indicated by Mr. Gautam, INR 448 crores. It has been primarily in our stations like Farakka, Talcher Super and Talcher Thermal.

In case of Farakka, it is attributable to some surprises during capital overhaul, where we had to replace capital equipments and in case of Talcher Super, it was because of fuel shortage. As you know, in Talcher Super, there we have frequent disruptions due to strikes. Now in both the stations -- both the stations are on path to recovery. And at the end of the year, we expect this under recovery to be less than INR 200 crores.

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Mohit Kumar, IDFC Securities Limited, Research Division - Analyst [16]

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So what is under recovery on Talcher Thermal, the smaller power plant?

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Prakash Tiwari, NTPC Limited - Director of Operations & Executive Director [17]

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Smaller, it is INR 55 crores, which we both -- by the end of the year will be offset and will not be having any under recovery as far as Talcher Thermal is concerned. 6 processes.

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Operator [18]

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We seem to have lost the line for the management. Please stay reconnected while we reconnect the management.

(technical difficulty)

Participants, thank you for patiently holding your lines. We have the line for the management reconnected. Over to you, sir.

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Anand Kumar Gupta, NTPC Limited - Director of Commercial & Director [19]

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Yes, sure I think -- I do not know whether the line got disconnected but let me repeat the total thing. As I said that we have around INR 7,556 crores outstanding as on date, which is beyond due date. And the defaulters are the ones, which we had last year as well. That's Telangana, Karnataka, UP, Andhra Pradesh and J&K. Now only good thing, which I wanted to share with you is that after this LC -- mandatory LC order from Ministry of Power to all the DISCOMs, we have received in last 2 months, 2.5 months, the 100% realization of our dues, so which have caused very positive development, and we are working out how do we -- really talking to all the DISCOMs to really manage the past dues, which were there before August. And I think we are sure that by end of this first fiscal, we should be able to be doing 100%.

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Operator [20]

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The next question is from the line Koundinya N. from JM Financial.

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Koundinya Nimmagadda, JM Financial Institutional Securities Limited, Research Division - Analyst [21]

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Sir, what is the existing PAT number for the quarter if there are any adjustments?

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Anil Kumar Gautam, NTPC Limited - CFO & Director of Finance [22]

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The adjusted PAT for the half year and quarter are more or less same. There is no much difference between the PAT, which we have reported and the existed PAT, which -- there are any minor difference that can be obtained from Aditya Dar subsequently, means after this call. There is no much difference.

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Koundinya Nimmagadda, JM Financial Institutional Securities Limited, Research Division - Analyst [23]

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Sure sir, will do that. Sir, you spoke of about INR 448 crores under recovery for the first half. What is the corresponding number for the second quarter, sir?

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Anil Kumar Gautam, NTPC Limited - CFO & Director of Finance [24]

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Second quarter, it is INR 332 crores as against INR 329 crores.

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Koundinya Nimmagadda, JM Financial Institutional Securities Limited, Research Division - Analyst [25]

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Sir, can you help us with the bifurcation? I mean INR 33 crores against -- what is the quantum against coal shortage?

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Anil Kumar Gautam, NTPC Limited - CFO & Director of Finance [26]

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In the INR 332 crores, major is Talcher Kaniha which is INR 136 crores; Farakka INR 56 crores; Sipat INR 68 crores; and rest are very small stations.

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Koundinya Nimmagadda, JM Financial Institutional Securities Limited, Research Division - Analyst [27]

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Sir, I missed the last one. If you can -- after Farakka, I missed it.

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Anil Kumar Gautam, NTPC Limited - CFO & Director of Finance [28]

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Korba -- INR 331.19 crores; Korba, INR 27.30 crores.

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Koundinya Nimmagadda, JM Financial Institutional Securities Limited, Research Division - Analyst [29]

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Sure sir. Sir, in the last quarter if I remember correctly we had some INR 300 crores of under recovery towards DSM and coal quality-related issues. I hope we don't have similar issues continuing...

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Anil Kumar Gautam, NTPC Limited - CFO & Director of Finance [30]

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Yes, on that account, there is no such under recovery in the current quarter.

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Operator [31]

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(Operator Instructions) We take the next question from the line of Apoorva Bahadur from Jefferies.

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Apoorva Bahadur, Jefferies LLC, Research Division - Equity Associate [32]

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Sir, wanted to understand this. In this quarter only, 2 of our plants are among the top 10 in terms of PLF. So what has gone wrong because typically we have at least 4 to 5 five plants, which are there in the top 10 in the country. So why are we seeing this current decline in scheduling?

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Anil Kumar Gautam, NTPC Limited - CFO & Director of Finance [33]

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Mr. Tiwari will address this question.

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Prakash Tiwari, NTPC Limited - Director of Operations & Executive Director [34]

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Okay. In top 10, we have 2 plants and reasons could be attributed to less generation from some of our pit head stations, which could not generate because of shortage of coal. Notably, there are stations where we regenerated less are Sipat, Korba, Talcher Kaniha, Kahalgaon, Farakka, et cetera, which used to be traditionally top generating stations. And also in H1, this financials, there has been loss of generation on account of great restrictions which is on higher side. So this has contributed to only our 2 stations being in the top run.

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Apoorva Bahadur, Jefferies LLC, Research Division - Equity Associate [35]

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So sir, grid restrictions would have been because of the demand-side issues?

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Prakash Tiwari, NTPC Limited - Director of Operations & Executive Director [36]

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Yes, demand-side issues.

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Apoorva Bahadur, Jefferies LLC, Research Division - Equity Associate [37]

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Okay. Sir, secondly, you also spoke about awarding 19 gigawatts of low NOx combustion system. So if I recall correctly til last time around, we were still in trial basis trying out various technologies. So have you finalized on this one? And we have this -- I mean this is the one which are we doing for all our plants and which are the major suppliers who would be supplying this 19 gigawatts of technology?

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Prakash Tiwari, NTPC Limited - Director of Operations & Executive Director [38]

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The ones we have awarded are based on combustion modification. And at 10 of our stations the trial, which was being carried out that was pertaining to catalytic converter-based de-NOx systems. Where in Indian conditions, we found it to be -- it's not suitable for Indian conditions. So we have gone for combustion modification and already done in 2 units. One at Dadri, another in Jhajjar with very satisfactory results. And as far as other catalytic-based de-NOx systems front, not suitable for our conditions because of very high ash content.

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Apoorva Bahadur, Jefferies LLC, Research Division - Equity Associate [39]

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Okay. Those are -- the cost for this technology will be same as the other one or will it -- will there be a difference?

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Prakash Tiwari, NTPC Limited - Director of Operations & Executive Director [40]

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No. This cost will be much less compared to selective catalytic reduction-based technology. This is going to be much cheaper.

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Apoorva Bahadur, Jefferies LLC, Research Division - Equity Associate [41]

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Okay. Sir, could you quantify for this 19 gigawatts how much would be the total CapEx?

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Prakash Tiwari, NTPC Limited - Director of Operations & Executive Director [42]

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For 19,000...

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Anil Kumar Gautam, NTPC Limited - CFO & Director of Finance [43]

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That -- CapEx is INR 0.1 crores per megawatt.

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Apoorva Bahadur, Jefferies LLC, Research Division - Equity Associate [44]

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Okay, great, sir. Sir, lastly, if I may just squeeze in one more. This was on the receivables, which -- where we support NVVN and developers. So we used to extend working capital support to these solars and wind developers where in NVVN had signed contracts. So what is that amount as of now? Where does it stand and how has the progression been? Are we seeing any recovery of dues from space or has it been increasing?

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Anil Kumar Gautam, NTPC Limited - CFO & Director of Finance [45]

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Regarding you're talking about recovery of the dues of our trading NVVN Limited?

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Apoorva Bahadur, Jefferies LLC, Research Division - Equity Associate [46]

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Right, sir.

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Anil Kumar Gautam, NTPC Limited - CFO & Director of Finance [47]

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I think I will not be able to give you the numbers right away, but let me update that the situation for payment for NVVN is also to some extent is similar to what other people are having, and the defaulters remaining the similar states, so there was a requirement of some additional working capital requirement for NVVN and similar to what we're doing for NTPC NVVN also we are trying to really work it out how do we make it 100% by end of the year.

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Apoorva Bahadur, Jefferies LLC, Research Division - Equity Associate [48]

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So sir, how much would have we extended til now, the support?

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Anil Kumar Gautam, NTPC Limited - CFO & Director of Finance [49]

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Around INR 90 crores only.

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Apoorva Bahadur, Jefferies LLC, Research Division - Equity Associate [50]

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Total? In all?

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Anil Kumar Gautam, NTPC Limited - CFO & Director of Finance [51]

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Yes.

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Prakash Tiwari, NTPC Limited - Director of Operations & Executive Director [52]

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Yes.

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Operator [53]

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The next question is from the line of Abhishek Puri from Axis Capital.

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Abhishek Puri, Axis Capital Limited, Research Division - Executive Director of Capital Goods, Infrastructure and Power [54]

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I just wanted to know on this auxiliary consumption looks to be extremely high in the current quarter. I mean if my calculations are correct, close to 7.8% as against 6% to 6.2% in the previous quarters. So what could be the reason for the same?

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Prakash Tiwari, NTPC Limited - Director of Operations & Executive Director [55]

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This side, Prakash Tiwari, Director Operations. Let me respond. As for -- based on our analysis auxiliary power consumption is more because of 2 factors. The first, our units have been running at partial loading for extended period of time; and secondly, some of our stations are under reserve shutdown. There are stations like Kudgi, Solapur, Gadarwara, these are the main stations. So in these stations even when unit is not running, we consume auxiliary power. This has led to increase in auxiliary power consumption. And moreover, we get cable compensation from CERC as far as auxiliary power consumption is concerned for park load. Sample would be...

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Abhishek Puri, Axis Capital Limited, Research Division - Executive Director of Capital Goods, Infrastructure and Power [56]

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In case of a back down you're saying?

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Prakash Tiwari, NTPC Limited - Director of Operations & Executive Director [57]

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Yes. In case of backing down and in case of reserve shutdown there auxiliary power consumption is more, there is provision for compensation as per CERC guidelines.

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Abhishek Puri, Axis Capital Limited, Research Division - Executive Director of Capital Goods, Infrastructure and Power [58]

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Right. Sir, my second question is on the regulated equity growth has been pretty muted. From Q1 to Q2, I think you've added capacity yet the addition is pretty small. And also, on the operating results, obviously, the PAT is lower than last quarter. The auxiliary consumption is higher. So on overall parameter basis, operating results seem to be a little weaker than previous quarter yet the profitability is higher. So what will be the reason for the same? And which is why we were asking for adjusted profit numbers earlier.

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Anil Kumar Gautam, NTPC Limited - CFO & Director of Finance [59]

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No. No. Adjusted profit, there are no major differences with respect to the reported numbers. Aditya -- you can get it from Aditya separately. And...

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Abhishek Puri, Axis Capital Limited, Research Division - Executive Director of Capital Goods, Infrastructure and Power [60]

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Right. Sir, so what is the reason for profit jump, sir, in this CapEx turn? So if I remove INR 650 crores, which is the surcharge income that was not there in Q1, right?

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Anil Kumar Gautam, NTPC Limited - CFO & Director of Finance [61]

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Yes.

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Abhishek Puri, Axis Capital Limited, Research Division - Executive Director of Capital Goods, Infrastructure and Power [62]

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So then the quarterly profits will be same as Q1 of last year?

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Anil Kumar Gautam, NTPC Limited - CFO & Director of Finance [63]

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No, no. In the first quarter, there were certain under recoveries due to DSM, et cetera, around INR 300 crores. That is not there in the current quarter Apart from the surcharge, if you add surcharge along with this under recovery, I think that clarifies your question.

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Operator [64]

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(Operator Instructions) The next question is from the line of Subhadip Mitra from JM Financial.

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Subhadip Mitra, JM Financial Institutional Securities Limited, Research Division - Power Analyst of Institutional Equities Research [65]

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My question is with reference to the low PAF that we've been seeing at the plant. I understand a large component of it is because of fuel-related issues. If you could just clarify, how we are looking at overcoming the fuel-related issues? Because I understand that the nonpit head-based plants have been importing coal. But now, we've started facing issues even at the pit head-based coal plant. So are we looking at importing of coal there as well?

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Prakash Tiwari, NTPC Limited - Director of Operations & Executive Director [66]

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Yes. As far as import of coal is concerned, there is award for 6.25 million metric tonnes. Out of this, we have received 2.8 million tonnes. So balance around 4 million tonnes, we are going to receive, which under flexibilization policy, we can supply to the station wherever there is shortage. In case of Kaniha where we experienced huge generation loss because of fuel shortage. We supplied imported coal, and we could make up for some of the losses. So we have resorted to supply of imported coal even in some of our pit head stations like Talcher Kaniha and also Sipat. And still 3.98 million metric tonnes has to be received. So we'll be able to better manage this issue about the coal shortage.

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Subhadip Mitra, JM Financial Institutional Securities Limited, Research Division - Power Analyst of Institutional Equities Research [67]

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So sir, in your opinion by end of the year we should not have too much of coal-related under recovery?

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Prakash Tiwari, NTPC Limited - Director of Operations & Executive Director [68]

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Yes. Yes.

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Anil Kumar Gautam, NTPC Limited - CFO & Director of Finance [69]

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I will supplement this coal-related under recovery in the current quarter is also not that much. It is only INR 120 crores.

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Operator [70]

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The next question is from the line of Aniket Mittal from Motilal Oswal.

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Aniket Mittal, Motilal Oswal Securities Limited, Research Division - Research Analyst [71]

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Sir, actually 2 questions from my side. Sir, firstly, you said that post the implementation of LC mechanism you have started receiving some dues. Sir, could you help me understand what that number is? And how do we look at the -- your overdue number going forward?

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Anand Kumar Gupta, NTPC Limited - Director of Commercial & Director [72]

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No. For the energy, which we have billed, from 1st August to this -- to the date. Whatever, I mean for the 1st August dues, then whatever has been billed has been recovered. So that is why I said that we have got 100%. If you want to really know the number, I can -- we can share with you. I think Aditya will able to share with you, but all what I wanted to say is that whatever we have built, we have actually received.

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Aniket Mittal, Motilal Oswal Securities Limited, Research Division - Research Analyst [73]

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Sir, I was just trying to understand, sir going forward if your receivables are coming down ideally this built-in surcharge number should also then come down, right?

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Anand Kumar Gupta, NTPC Limited - Director of Commercial & Director [74]

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Which number?

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Anil Kumar Gautam, NTPC Limited - CFO & Director of Finance [75]

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Surcharge number.

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Aniket Mittal, Motilal Oswal Securities Limited, Research Division - Research Analyst [76]

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The built-in surcharge number. Yes.

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Anand Kumar Gupta, NTPC Limited - Director of Commercial & Director [77]

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Yes. Yes.

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Anil Kumar Gautam, NTPC Limited - CFO & Director of Finance [78]

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Yes. You are right.

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Anand Kumar Gupta, NTPC Limited - Director of Commercial & Director [79]

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We believe that we are more interested in recovering our dues rather than actually making money on surcharge.

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Anil Kumar Gautam, NTPC Limited - CFO & Director of Finance [80]

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Surcharge.

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Aniket Mittal, Motilal Oswal Securities Limited, Research Division - Research Analyst [81]

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Sir, on that point, sir, see, your borrowings have also increased. So what has been the impact on interest expense because your receivables have decreased, I think to fund that you have also increased your short-term borrowings.

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Anand Kumar Gupta, NTPC Limited - Director of Commercial & Director [82]

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Yes. I can answer that. So you see our borrowing rate is much lower than the surcharge.

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Anil Kumar Gautam, NTPC Limited - CFO & Director of Finance [83]

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It is due to short-term borrowings. There's a interest cost in the current quarter is around INR 450 crores. Correspondingly, my director commercial has already informed I -- account for a surcharge, which is at a very, very high rate of 18%.

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Operator [84]

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The next question is from the line of Pulkit Patni from Goldman Sachs.

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Pulkit Patni, Goldman Sachs Group Inc., Research Division - Equity Analyst [85]

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Sir, my first question is in continuation on the receivable front. Could you highlight as of now that INR 19,000 crores receivable, which we see as of 30th September, what that number is as of now?

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Anand Kumar Gupta, NTPC Limited - Director of Commercial & Director [86]

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Today, it is -- just let me -- I'll come back to you.

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Pulkit Patni, Goldman Sachs Group Inc., Research Division - Equity Analyst [87]

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Sure, sir. Sir, my second question is more a general question. This decline in power generation that we've seen recently, would you attribute it to just poor demand? Or is it attributable to this LC issue because of which DISCOMs are purchasing less power? How would you look at this?

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Anand Kumar Gupta, NTPC Limited - Director of Commercial & Director [88]

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See, I think it's very difficult to answer, but fundamentally, it's a lack of demand. And if you look at the numbers, there have been increase in the hydro generation. There has been increase in the wind generation. And accordingly, the coal generation requirement, coal generation has gone down but ultimately, if you look at from the corresponding half year last year, there has been a lack of demand.

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Pulkit Patni, Goldman Sachs Group Inc., Research Division - Equity Analyst [89]

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Understood. Sir, if you could come back on the first question, sir.

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Anand Kumar Gupta, NTPC Limited - Director of Commercial & Director [90]

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Yes. I think we will come back to you.

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Anil Kumar Gautam, NTPC Limited - CFO & Director of Finance [91]

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I think we can -- yes. We have already given the answer for this question. For the electricity supplied after 1st of August 2019, there is an LC mechanism, and we have been realizing 100% of our dues. So whatever dues are pending, they relate to the prior period only before 1st of August.

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Operator [92]

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The next question is from the line of Puneet Gulati from HSBC.

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Puneet J. Gulati, HSBC, Research Division - Analyst [93]

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Sir, just on this surcharge and did I get it right that you spent INR 450 crores as interest cost and you want INR 650 crores as surcharge for the same period, so the net benefit of INR 200 crores.

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Anil Kumar Gautam, NTPC Limited - CFO & Director of Finance [94]

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Actually, this INR 450 crores is for the half year. Surcharge.

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Prakash Tiwari, NTPC Limited - Director of Operations & Executive Director [95]

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Interest. Interest, INR 329 crores.

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Anil Kumar Gautam, NTPC Limited - CFO & Director of Finance [96]

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Interest for the quarter is INR 329 crores.

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Prakash Tiwari, NTPC Limited - Director of Operations & Executive Director [97]

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For the half year.

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Anil Kumar Gautam, NTPC Limited - CFO & Director of Finance [98]

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Half year, it is INR 659 crores. And corresponding surcharge is around, just a minute, INR 822 crores half year; and INR 650 crores for the quarter.

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Puneet J. Gulati, HSBC, Research Division - Analyst [99]

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Okay. That's very clear. Secondly, if you can comment a bit on what's happening with your plan for the 5 gigawatt renewable?

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Anand Kumar Gupta, NTPC Limited - Director of Commercial & Director [100]

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Okay. In terms of renewables, today, we have -- see, we have renewable in 2 types of thing. One is our own projects, which are EPC waste that means that our ownership and an another one is the developer mode. Now as far as our plants are concerned, we already have -- I'm talking about the first, our own projects. We already have commissioned capacity of 920 megawatts. We are going to add 20 megawatts in this financial year. 572 megawatts in the next '20, '21. And '21, '22, we'll have major capacity addition, so that we are going to have by 2022, 6,500 megawatts of our own capacity, and we are going to have around 7,500 megawatts will be the developer mode. So by '21, '22, whatever tenders we have already issued and, which have been awarded, we are trying to really get into a situation of around 14,000 megawatts by 2022.

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Puneet J. Gulati, HSBC, Research Division - Analyst [101]

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So basically you're talking about 5,000 gigawatts getting added in FY '22 and have orders being placed for that already?

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Anand Kumar Gupta, NTPC Limited - Director of Commercial & Director [102]

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No. No. Not -- order is not placed. They are basically which are various stages of tendering, and where the land tie-ups are being done. So this is the number, which we are talking about that we should be able to really do, not that the orders have been placed.

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Puneet J. Gulati, HSBC, Research Division - Analyst [103]

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Okay. Okay, sir. And also if you can give some plan on what will be your target capacity addition for this year?

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Anand Kumar Gupta, NTPC Limited - Director of Commercial & Director [104]

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This year for -- as far as solar is concerned, we have just one 20 megawatts Auraiya plant will be commissioned by -- in this financial year, which is our own EPC.

As far as developer -- and we have also got some -- we have also going for awards of the various projects, which will be commissioned in next 15 to 18 months. That means they will come in 2020, '21, and '22 and as I said already that as far as 2021 is concerned, 572 megawatts is that we are going to commission. This I am talking about NTPC projects.

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Operator [105]

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The next question is from the line of Dhruv Muchhal from HDFC Mutual Fund.

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Dhruv Muchhal, [106]

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Sir, is there any carpet coal loss this quarter?

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Anil Kumar Gautam, NTPC Limited - CFO & Director of Finance [107]

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No. No. There is no such loss. Whichever we have reported in Q1 of FY '20 that has been made good.

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Dhruv Muchhal, [108]

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Sir, secondly, have you booked any SCED income this quarter, the security-based economic dispatch?

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Anil Kumar Gautam, NTPC Limited - CFO & Director of Finance [109]

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No. We will inform you. You can get this information from Mr. Aditya Dar.

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Dhruv Muchhal, [110]

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Sir, because just wondering if the number, the PAT number looks decently well, I mean INR 3,200 crores versus INR 2,600 crores in first quarter. So what's driving this number? I understand the late payment surcharge, but even if you adjust it to late payment what's driving this?

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Anil Kumar Gautam, NTPC Limited - CFO & Director of Finance [111]

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Actually, there's one late payment surcharge. In addition to that, the recoveries -- they were under recoveries in Q1 regarding this -- what you just mentioned, depleted coal and DSM they have been made good. Plus in the current quarter, PSU in the last year we have not accounted for MAT credit, which we accounted for the during the -- with effect from 1st March 2019. So that has been accounted for in the current half year and quarter also. So that is also making a difference.

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Operator [112]

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(Operator Instructions) The next question is from the line of Atul Tiwari from Citigroup.

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Atul Tiwari, Citigroup Inc, Research Division - VP and Analyst [113]

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Sir, my question is, again, on the surcharge income. So you're booking the surcharge as 18% and obviously, DISCOMS are obligated to pay, but isn't there a risk that at such a high rate of surcharge, ultimately when the time comes to settle the dues, they may ask you to reduce the rate because anyways they are not able to pay the principal amount itself?

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Anil Kumar Gautam, NTPC Limited - CFO & Director of Finance [114]

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This surcharge is as per CERC tariff regulations. So this is not applicable for the current year. This has been applicable even in the past. And even in the past also, we have been recovering 100% of our outstanding dues to our surcharge.

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Anand Kumar Gupta, NTPC Limited - Director of Commercial & Director [115]

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Yes, I think I wanted to share some numbers. On outstanding, see I'll just give you some numbers that end of July, we had INR 22,742 crores as outstanding, total outstanding. This is not the -- more than delay the total outstanding of...

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Anil Kumar Gautam, NTPC Limited - CFO & Director of Finance [116]

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Our director commercial, he is speaking about the total position of outstanding debtors.

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Anand Kumar Gupta, NTPC Limited - Director of Commercial & Director [117]

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So on July 2019, the total outstanding was INR 22,742 crores. Now we have done the billing for August, September, October, which was INR 42,336 crores against which we have got the receivables of INR 24,716 which means that we have done more than billing INR 2,380 crores. So today's outstanding is INR 20,361 crores. I think that clarifies the question, which was asked on the receivables.

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Operator [118]

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The next question is from the line of Murtuza Arsiwalla from Kotak Securities.

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Murtuza Turab Arsiwalla, Kotak Securities (Institutional Equities) - Senior Analyst [119]

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One is, sir, how is the plant availability and capacity under recovery going into the third quarter because from the numbers that we can see from Coal India, coal dispatches have been weak. Monsoon -- extended monsoons have been a concern. That's the first question. Second, sir, if you look at the regulatory deferral account during the quarter, there is a sequential, quite a jump INR 500 crores moved up to almost INR 867 crores. So any specific items which have been included in that? And the third is sir, you talked about the DSM and the coal carpet losses in first quarter being made good. Does that mean that there were no losses in the quarter or you were able to sort of partly recover some of the money that you lost in the previous quarter?

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Anil Kumar Gautam, NTPC Limited - CFO & Director of Finance [120]

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First question is regarding under recovery, proposed under recovery or what would be the under recovery in Q3?

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Murtuza Turab Arsiwalla, Kotak Securities (Institutional Equities) - Senior Analyst [121]

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Yes.

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Anil Kumar Gautam, NTPC Limited - CFO & Director of Finance [122]

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Yes. As we already mentioned, that in Q1, it was INR 332 crores. For the half year, it was only INR 448 crores. And Q2 -- Q3, it will be -- up to December it will be?

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Prakash Tiwari, NTPC Limited - Director of Operations & Executive Director [123]

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Up to fiscal end, up to March end, we expect it will be less than INR 200 crores because the part related with the outages planned and forced will not be there and will end up with the figures less than INR 200 crores.

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Murtuza Turab Arsiwalla, Kotak Securities (Institutional Equities) - Senior Analyst [124]

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So we've not had any disruption on fuel availability in the month of October and early November so far?

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Prakash Tiwari, NTPC Limited - Director of Operations & Executive Director [125]

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Traditionally -- rather historically, this is a period when coal supply from Coal India increases, and we are seeing the impact of that. Coal supply to our stations is gradually increasing. So related to coal supply issues, I'm not foreseeing loss of generation. And also to fall back upon, we have this 3.98 million metric tonnes of imported coal available with us, which is yet to be delivered, which can be supplied to any of the stations, where we require it. And stock also has gone up by -- in recent 2, 3 weeks, it has gone up by at least 1 million tonnes. And it's increasing day by day.

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Anand Kumar Gupta, NTPC Limited - Director of Commercial & Director [126]

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Actually, the -- I'm A.K. Gupta, director commercial. Actually reduction in demand is actually helping us in turn, so if you look at the coal generation has gone down and which has given us a benefit in terms of availability of coal.

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Anil Kumar Gautam, NTPC Limited - CFO & Director of Finance [127]

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Your second question was related to the accounting of regulatory deferral account balance. In quarter 1 and quarter 2, we are accounting for on a similar basis, there are no new numbers, although there is some increase on account of ash transportation expenses, which we account for under expenses and corresponding regulatory deferral account balances made.

So in this April to September half year, we have accounted for INR 230 crores towards fly ash transportation expenses as regulatory deferral account balance.

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Operator [128]

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Thank you very much. We'll take that as the last question. I would now like to hand the conference back to the management team for closing comments.

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Anil Kumar Gautam, NTPC Limited - CFO & Director of Finance [129]

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Thank you. I think this is off -- we have been able to answer. If at all any question is still remaining, you can contact Mr. Aditya Dar and any information, he will provide to you. Thank you.

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Operator [130]

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Thank you very much. On behalf of Edelweiss Securities, that concludes the conference.

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Anil Kumar Gautam, NTPC Limited - CFO & Director of Finance [131]

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Thank you.

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Operator [132]

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Thank you for joining us ladies and gentlemen. You may now disconnect your lines.