U.S. Markets closed

Edited Transcript of NTPC.NSE earnings conference call or presentation 7-Feb-20 10:00am GMT

Q3 2020 NTPC Ltd Earnings Call

New Delhi Feb 14, 2020 (Thomson StreetEvents) -- Edited Transcript of NTPC Ltd earnings conference call or presentation Friday, February 7, 2020 at 10:00:00am GMT

TEXT version of Transcript

================================================================================

Corporate Participants

================================================================================

* Anand Kumar Gupta

NTPC Limited - Director of Commercial & Director

* Anil Kumar Gautam

NTPC Limited - CFO, Director of Finance & Director

* Prakash Tiwari

NTPC Limited - Director of Operations & Executive Director

================================================================================

Conference Call Participants

================================================================================

* Abhishek Puri

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

* Apoorva Bahadur

Jefferies LLC, Research Division - Equity Associate

* Atul Tiwari

Citigroup Inc, Research Division - VP and Analyst

* Dhruv Muchhal

HDFC Asset Management Company Limited - Equity Analyst

* Kunal Sheth

Batlivala & Karani Securities India Pvt. Ltd., Research Division - Research Analyst

* Manjeet Buaria

Solidarity Investment Advisors - Principal

* Mohit Kumar

IDFC Securities Limited, Research Division - Analyst

* Pulkit Patni

Goldman Sachs Group Inc., Research Division - Equity Analyst

* Shashank Khetawat;Tata AIA Life Insurance;Manager - Investments

* Subhadip Mitra

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

* Sumit Kishore

JP Morgan Chase & Co, Research Division - Research Analyst

* Viraj Kacharia

Securities Investment Management Pvt Ltd - Senior Analyst

================================================================================

Presentation

--------------------------------------------------------------------------------

Operator [1]

--------------------------------------------------------------------------------

Ladies and gentlemen, good day and welcome to the Q3 FY '20 Post-Results Conference Call of NTPC Limited hosted by B&K Securities Pvt. Ltd. (Operator Instructions) Please note that this conference is being recorded.

I now hand the conference over to Mr. Kunal Sheth of B&K Securities Pvt. Ltd. Thank you, and over to you, sir.

--------------------------------------------------------------------------------

Kunal Sheth, Batlivala & Karani Securities India Pvt. Ltd., Research Division - Research Analyst [2]

--------------------------------------------------------------------------------

Sure. Thank you, Shalini, and I would like to welcome the management of NTPC Limited on the call. From the management, we have Mr. A.K. Gautam, Director of Finance; Mr. S. Roy, Director of Human Resources; Mr. A.K. Gupta, Director, Commercial and Projects; Mr. Prakash Tiwari, Director, Operations; and Mr. R.S.V. Muthumani, Executive Director of Finance.

Sir, I would request you to give us some opening remarks, and then we'll open the floor for Q&A. Over to you, sir.

--------------------------------------------------------------------------------

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

--------------------------------------------------------------------------------

A very good evening to everybody. I, A.K. Gautam, Director Finance, welcome all of you to Q3 FY '20 con call of NTPC Limited. And I have with me, Shri A.K. Gupta, Director, Commercial and Project; Shri Prakash Tiwari, Director of 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 third quarter of FY '20. The key performance highlights for the quarter and 9 months ended 31st December '19 have already been disclosed on both the stock exchanges.

Operational highlights of Q3 and 9 months of FY '20. NTPC stand-alone gross generation in Q3 FY '20 is 61.21 billion units and in 9 months FY '20 is 191.35 billion units as compared to 70.06 billion units and 205.26 billion units, respectively, in the corresponding period of the previous year.

Gross generation of NTPC Group in Q3 FY '20 is 68.18 billion units and in 9 months FY '20 is [214.8] billion units as compared to 78.16 billion units and 228.21 billion units, respectively, in the corresponding previous period.

NTPC hydro and RE stations recorded generation of 4.26 billion units in 9 months FY '20 as against 3.81 billion units in corresponding previous period.

In Q3 of FY '20, we have added 1,460 megawatt to our commercial capacity, comprising 800 megawatt at Lara and 660 megawatt at Tanda. With these additions, the commercial capacity of NTPC has become [47,985] megawatts on a stand-alone basis and 56,446 megawatts for the group as on December 31, 2019. NTPC has already commissioned 930 megawatt of RE projects under EPC model. 1,062 megawatts of solar projects are currently under implementation, and 1,942 megawatt are under various stages of pending.

In 4 and 9 months FY '20, 4 coal stations of NTPC were among the top 10 performing stations in the country in terms of PLF, including Singrauli with 87.04%, Rihand with 85.92%, Korba with 85.81% and Vindhyachal with 85.53%.

During 9 months FY '20, PLF of coal stations was 67.13%, as against the national average of 55.84%.

We have suffered losses due to grid restrictions and fuel supply. The generation loss due to grid restrictions in coal-based stations was 53.58 billion units in 9-month FY '20. For the gas-based stations, the loss was 21.51 billion units in 9 months FY '20. The generation loss on account of fuel supply constrained in the coal-based stations was 6.67 billion units in 9 months FY '20.

Now the status of fuel supply. During the 9 months FY '20, utilization of coal against ACQ was 91.45% as against 97.11% in 9 months FY '19.

Coal supply during 9 months FY '20 was 123.03 million metric tons. This comprises 120.88 million metric ton of domestic coal and 2.15 million metric tons of imported coal.

The coal supply during corresponding previous period was 128.28 million metric tons with 127.90 million metric tons of domestic coal and 0.38 million metric tons of imported coal.

Coal consumption during 9 months FY '20 was 123.77 million metric tons. This comprises 122.28 million metric ton of domestic coal and 1.49 million metric ton of imported coal. The coal consumption in corresponding previous period was 129.18 million metric tons with 128 million metric ton of domestic coal and 1.03 million metric ton of imported coal.

During the Q3 FY '20, 2.53 million metric tons of coal. In the corresponding previous quarter, 2.616 million metric ton of coal have been excavated from Pakri Barwadih coal mine. Cumulatively, 16.76 million metric ton of coal has been excavated until 31st December 2019.

0.45 million metric ton of coal has been activated from Dulanga coal block in Q3 FY '20. Previous year, this was nil. Cumulative expenditure of INR 6,738.48 crore has been incurred on the development of coal mines until 31st December 2019. The total expenditure incurred in 9 months FY '20 was INR 869.42 crore.

Cabinet Committee on Economic Affairs, Government of India have given in-principle approval for a strategic sale of entire [GYE] stake in THDC and NEEPCO to NTPC. A transaction adviser has been appointed by DIPAM Ministry of Finance for the merger of NEEPCO and THDC with NTPC. In this regard, NTPC has appointed [Messrs.] SBICAP for providing transaction advisory services for acquisition. Due diligence and other modalities for acquisitions are under progress.

NTPC Limited and Messrs. Siemens India have signed a memorandum of understanding emphasizing larger scale generation of green hydrogen using renewable energy, which will be used by industry's rail electrification, round up low power, energy storage, fuel cell, electrical vehicle mobility, et cetera, with the ultimate goal of reducing the dependence on hydrocarbons in India.

NTPC has signed an MoU for cooperation in power sector in Zimbabwe with Zimbabwe Power Corporation. An MoU has also been signed with National Seeds Corporation Ltd. for the utilization of uncultivatable land in Jaitsar, Rajasthan for setting up of 160-megawatt solar PV power project won in SECI tender.

Environmental management initiatives for preserving environment taken by NTPC are as under. Flue gas desulphurization systems are under various stages of implementation in 64.85 gigawatt of group capacity. FGD for 920 megawatt has already been commissioned. FGD systems package for 46.87 gigawatts have been awarded. Award for FGD systems package for 17.06 gigawatt capacity are under various stages of tendering.

For compliance with NOx control, combustion modification has already been implemented at 4 units with 2 gigawatt of thermal power capacity. Our 4 contracts for supply and installation of low NOx combustion system for 19 gigawatt of capacity have been awarded. Award of the NOx system package for 43 gigawatt are in the process. Further in it, and there were 4 more sustainable power generation, NTPC has started utilizing agro residue-based pellets to co-fire its power plants along with coal. NTPC's Dadri power plant has been co-firing close to 70 to 80 tonnes of agro residue fuel along with coal. The company is in the process of procuring around 20,000 tonnes per day of stubble for its other power plants located across the country as well.

Now financial highlights for the Q3 and 9 months FY '20. Gross sales for Q3 FY '20 is INR 23,357.67 crore as against corresponding quarter of previous year, gross sales of INR 24,064.47 crore. On a 9-month basis, there is an increase of 1.95% in the gross sales side, i.e., from INR 68,853.56 crore in 9 months FY '19 to INR 70,193.78 crore in 9 months FY '20.

Total income for Q3 FY '20 is INR 24,022.2 crore, as against corresponding quarter of previous year total income of INR 24,308.01 crore. On a 9-month basis, there is an increase of 3.68% in the total income, that is from INR 69,633.95 crore in 9 months FY '19 to INR 72,199.66 crore in 9 months FY '20.

Profit before tax for Q3 FY '20 is INR 3,422.04 crore, as against INR 3,489.54 crore in the corresponding quarter of the previous year.

On a 9-month basis, PBT is INR 10,082.15 crore, as against INR 9,135.35 crore in 9 months FY '19, registering an increase of 10.36%.

PAT for Q3 FY '20 is INR 2,995.14 crore, as against INR 2,385.41 crore in the corresponding quarter of the previous year, registering an increase of 25.56%. On a 9-month basis, PAT is INR 8,860.37 crore, as against INR 7,399.57 crore in 9 months FY '19, registering an increase of 19.74%.

An update on various other financial activities. The regulated equity as on 31st December 2019, was INR 56,570.82 crore.

Fund mobilization. During Q3 FY '20, NTPC has signed a term loan agreement for INR 5,000 crores with the State Bank of India. Average cost of borrowings for 9 months FY '20 was 6.86% as compared to 6.92% in 9 months FY '19. Further, NTPC has signed a syndicated facility agreement with consortium of 3 banks with State Bank of India, Sumitomo Mitsui Banking Corporation Singapore Branch and Bank of India Tokyo branch for JPY equivalent of USD 750 million with 2 tranches having door-to-door maturity of 11 years. This facility is the largest-ever syndicated JPY loan raised by any Asian corporate for offshore samurai loan market. It is also the highest-ever single foreign currency loan raised by NTPC Limited.

Now certain highlights about the CapEx program of the company. In 9 months FY '20, we have incurred a CapEx of INR 15,236.33 crore, as against INR 17,951.40 crore in 9 months FY '19. The total group CapEx for the 9 months FY '20 was INR 22,085.41 crore. The capital outlay for FY '21 has been estimated at INR 21,000 crore for NTPC Limited.

Now I will briefly touch upon some of the NTPC Group companies. NTPC Vidyut Vyapar Nigam Ltd., our trading subsidiary, transacted 10.90 billion units during the 9 months FY '20, as against 12.96 billion units during the 9 months FY '19. During Q3 FY '20, we have received a dividend of INR 5.10 crore from our subsidiaries and joint venture companies as against INR 4.24 crore received in the corresponding period of the previous year.

NTPC continues to build laurels and awards in various fields. Major awards received in Q3 FY '20 are: NTPC has been awarded the Golden Peacock Award for Sustainability 2019 during the 19th International Conference on Corporate Governance & Sustainability; awarded Best Performing Power Generating Company at Dun & Bradstreet Infra 2019 awards. These were some of the highlights I wanted to share before the question-and-answer session begin. Thank you.

================================================================================

Questions and Answers

--------------------------------------------------------------------------------

Operator [1]

--------------------------------------------------------------------------------

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

--------------------------------------------------------------------------------

Mohit Kumar, IDFC Securities Limited, Research Division - Analyst [2]

--------------------------------------------------------------------------------

So my first question, why is the under-recovery in 9-month FY '20? And has it gone up? Or is it the same like H1 FY '20?

Second question is, why other expense and other income is way too high? Can you explain?

--------------------------------------------------------------------------------

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

--------------------------------------------------------------------------------

Yes. This is regarding first to your question regarding ASC under recovery for the 9-month period. In the 9-month period of FY '19, this indemnity was INR 1,101 crore. Now this incentive in the current 9 months, it is INR 380 crores. So we have gained around INR 721 crores. Incentive during 9 months FY '20 is INR 164 crores as against INR 258.5 crores.

Now the second question, which you talked about, is regarding my other expenses. Other expenses for the 9 months, it is higher by INR 1,122 crores. Out of that, ERV cost of INR 437.56 crores and the ash utilization and marketing expenses of INR 203.57 crores are those expenses in respect of which the corresponding regulatory deferral account has been created under movement in regulatory deferral account.

So effectively, your increase would be INR 500 crores. Out of those INR 500 crores, mainly the increase is towards provision for tariff adjustment towards INR 344 crores.

--------------------------------------------------------------------------------

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

--------------------------------------------------------------------------------

It is a one-off, INR 344 crore?

--------------------------------------------------------------------------------

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

--------------------------------------------------------------------------------

Yes. This is -- consequent to this CRC order, which have been received, for sharing of gains, efficiency gains, which we have created for the previous tariff period.

--------------------------------------------------------------------------------

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

--------------------------------------------------------------------------------

Does that INR 344 crore pertains to the 2014 and '19 period, right?

--------------------------------------------------------------------------------

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

--------------------------------------------------------------------------------

Yes, yes.

--------------------------------------------------------------------------------

Mohit Kumar, IDFC Securities Limited, Research Division - Analyst [8]

--------------------------------------------------------------------------------

Okay. Sir, can you provide the commissioning and -- commissioning target for the -- for FY '20 and FY '21?

--------------------------------------------------------------------------------

Anand Kumar Gupta, NTPC Limited - Director of Commercial & Director [9]

--------------------------------------------------------------------------------

Yes. This is A.K. Gupta, Director, Commercial and Projects. We have done so far in '19, '20, 3,030 megawatts, and we target to achieve 5,290 megawatt during this financial '20. And for financial 2021, our target is 4,490 megawatt.

--------------------------------------------------------------------------------

Mohit Kumar, IDFC Securities Limited, Research Division - Analyst [10]

--------------------------------------------------------------------------------

And sir, you didn't answer my question on the other income line.

--------------------------------------------------------------------------------

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

--------------------------------------------------------------------------------

Okay. Yes, yes. Other income in the -- this October to December quarter, it is higher by INR 338 crores. It is because of recognition of mainly surcharge income of INR 318 crores. For the 9-month period, April to December, the other incomes are higher by INR 1,197 crores, which mainly includes accounting of surcharge income of INR 1,022 crores. Against this surcharge income, we have booked a corresponding increase in finance cost that is related to the interest on working capital amounting to -- just a minute -- 9 month, it is INR 948 crores.

--------------------------------------------------------------------------------

Operator [12]

--------------------------------------------------------------------------------

The next question is from the line of Viraj Kacharia from Securities Investment Management.

--------------------------------------------------------------------------------

Viraj Kacharia, Securities Investment Management Pvt Ltd - Senior Analyst [13]

--------------------------------------------------------------------------------

Just had 3 questions. First is on, when I look at it, doesn't mention of a plan which are older and the division norms have not been updated. They potentially must be close on. So for us, when we say lot 1 and lot 2 especially, how is the implementation of those going on there? In what phase they would be in terms of implementation?

--------------------------------------------------------------------------------

Anil Kumar Gautam, NTPC Limited - CFO, Director of Finance & Director [14]

--------------------------------------------------------------------------------

As you know on the side, the first -- in my opening remarks, about the FGD implementation. So I'm repeating again, flue gas desulphurisation are under various stages of implementation in 64.85 gigawatt capacity of the group. FGD of 920 megawatt has already been commissioned. FGD system packages for 46.87 gigawatts have already been awarded. Award for 17.06 gigawatt capacity are under various stages of tendering.

--------------------------------------------------------------------------------

Viraj Kacharia, Securities Investment Management Pvt Ltd - Senior Analyst [15]

--------------------------------------------------------------------------------

Sir, to the lot 1 and lot 2, how is the implementation? Is there any risk of re-tendering?

And also, there were issues on availability of specialized steel, which was supposed to be co-fired really because of what's going on in China. So are we seeing any delay of the implementation?

--------------------------------------------------------------------------------

Anil Kumar Gautam, NTPC Limited - CFO, Director of Finance & Director [16]

--------------------------------------------------------------------------------

As of now that -- because of the structural steel, as of now, we don't see any delay. But I think it's a dynamic situation when there is a positive indication. So we expect that we will be able to meet the guidelines order and this is given by the Supreme Court, as far as December 22 is concerned.

--------------------------------------------------------------------------------

Viraj Kacharia, Securities Investment Management Pvt Ltd - Senior Analyst [17]

--------------------------------------------------------------------------------

Okay. And how are we seeing any -- and in terms of ordering for by state governments on -- I believe because we also have a JV with GE now for bidding for state and it will be for FGDs, so have you seen any traction there?

--------------------------------------------------------------------------------

Anil Kumar Gautam, NTPC Limited - CFO, Director of Finance & Director [18]

--------------------------------------------------------------------------------

No, I would not be able to answer you for the FGDs being done by states because that's the Ministry of Power that keeps review on that. And CEA is also another authority who can give that information, but I can only talk about what NTPC is doing. And also, our joint venture companies with the state governments, those are also, along with the NTPC, we are placing orders.

--------------------------------------------------------------------------------

Viraj Kacharia, Securities Investment Management Pvt Ltd - Senior Analyst [19]

--------------------------------------------------------------------------------

Okay. And last question was on the CapEx side. Any major greenfield CapEx we are planning? Any color on Lara and...

--------------------------------------------------------------------------------

Anil Kumar Gautam, NTPC Limited - CFO, Director of Finance & Director [20]

--------------------------------------------------------------------------------

The CapEx, I have told you about. For that year, FY '20, it is INR 20,000 crores -- INR 21,000 crores. And until September 2019, we have incurred the CapEx of INR 15,236.33 crores. For December? Yes, sorry, December 2019.

--------------------------------------------------------------------------------

Viraj Kacharia, Securities Investment Management Pvt Ltd - Senior Analyst [21]

--------------------------------------------------------------------------------

No, what I meant in other new projects, this INR 21,000 crore. And then for FY '22, what are the major new projects which we are looking to...

--------------------------------------------------------------------------------

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

--------------------------------------------------------------------------------

I can provide these details afterwards.

--------------------------------------------------------------------------------

Operator [23]

--------------------------------------------------------------------------------

(Operator Instructions) We move to the next question from the line of Subhadip Mitra from JM Financial.

--------------------------------------------------------------------------------

Subhadip Mitra, JM Financial Institutional Securities Limited, Research Division - Power Analyst of Institutional Equities Research [24]

--------------------------------------------------------------------------------

Firstly, if you could please give us the adjusted PAT number for the quarter adjusted for all one-offs and prior year items.

--------------------------------------------------------------------------------

Anil Kumar Gautam, NTPC Limited - CFO, Director of Finance & Director [25]

--------------------------------------------------------------------------------

Yes. Regarding adjusted PAT for 9 months FY '20 as on...

--------------------------------------------------------------------------------

Subhadip Mitra, JM Financial Institutional Securities Limited, Research Division - Power Analyst of Institutional Equities Research [26]

--------------------------------------------------------------------------------

Third quarter number that will be very useful, please.

--------------------------------------------------------------------------------

Anil Kumar Gautam, NTPC Limited - CFO, Director of Finance & Director [27]

--------------------------------------------------------------------------------

Okay, okay. Third quarter, it is. Reported PAT is INR 2,995.14 crores. If you reduce previous year sales of INR 443.61 crores, provision for this sharing gain, INR 325.93 crores; tax related to earlier years, minus INR 1.30 crores; tax impact on the Board adjustment amounting to INR 77.51 crores. The adjusted profit comes to INR 2,953.67 crores as compared to INR 2,184.57 crores.

--------------------------------------------------------------------------------

Subhadip Mitra, JM Financial Institutional Securities Limited, Research Division - Power Analyst of Institutional Equities Research [28]

--------------------------------------------------------------------------------

So I'm just repeating the numbers. So the final adjusted PAT number would be INR 2,953.67 crores. Is that right?

--------------------------------------------------------------------------------

Anil Kumar Gautam, NTPC Limited - CFO, Director of Finance & Director [29]

--------------------------------------------------------------------------------

That's correct. That's correct.

--------------------------------------------------------------------------------

Subhadip Mitra, JM Financial Institutional Securities Limited, Research Division - Power Analyst of Institutional Equities Research [30]

--------------------------------------------------------------------------------

Okay. Understood.

Sir, secondly, the fixed cost on recovery number you mentioned. I'm just making sure if I got that right. Was it INR 380 crore for the 9-month number?

--------------------------------------------------------------------------------

Anil Kumar Gautam, NTPC Limited - CFO, Director of Finance & Director [31]

--------------------------------------------------------------------------------

Yes, as compared to INR 1,100 crore in the corresponding 9-month period. And in terms...

--------------------------------------------------------------------------------

Subhadip Mitra, JM Financial Institutional Securities Limited, Research Division - Power Analyst of Institutional Equities Research [32]

--------------------------------------------------------------------------------

For the first half of the current year, what was that number for 1H FY '20? That number was somewhere around, I think, 4...

--------------------------------------------------------------------------------

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

--------------------------------------------------------------------------------

INR 448 crores.

--------------------------------------------------------------------------------

Subhadip Mitra, JM Financial Institutional Securities Limited, Research Division - Power Analyst of Institutional Equities Research [34]

--------------------------------------------------------------------------------

INR 448 crores. So from INR 448 crores, it's come down to INR 380 crores. And if I remember correctly, I think we had a target of getting it below INR 200 crores for the full year.

--------------------------------------------------------------------------------

Anil Kumar Gautam, NTPC Limited - CFO, Director of Finance & Director [35]

--------------------------------------------------------------------------------

Yes, that's the target we're aiming at.

--------------------------------------------------------------------------------

Subhadip Mitra, JM Financial Institutional Securities Limited, Research Division - Power Analyst of Institutional Equities Research [36]

--------------------------------------------------------------------------------

That's something that you're still aiming at.

--------------------------------------------------------------------------------

Anil Kumar Gautam, NTPC Limited - CFO, Director of Finance & Director [37]

--------------------------------------------------------------------------------

Yes.

--------------------------------------------------------------------------------

Subhadip Mitra, JM Financial Institutional Securities Limited, Research Division - Power Analyst of Institutional Equities Research [38]

--------------------------------------------------------------------------------

Okay. Last question from my side. With regard to the tax rate, that seems to be quite high because I think there is an increase on the deferred tax side, et cetera. So are we expecting the tax rate to normalize in 4Q or for the full year?

--------------------------------------------------------------------------------

Anil Kumar Gautam, NTPC Limited - CFO, Director of Finance & Director [39]

--------------------------------------------------------------------------------

Yes, yes. You know that...

--------------------------------------------------------------------------------

Anand Kumar Gupta, NTPC Limited - Director of Commercial & Director [40]

--------------------------------------------------------------------------------

Investment presentation.

--------------------------------------------------------------------------------

Anil Kumar Gautam, NTPC Limited - CFO, Director of Finance & Director [41]

--------------------------------------------------------------------------------

The tax rate we are under MAT for the 9 months, my foreign tax for the October to December quarter is INR 672 crores as against INR 786 crores in the corresponding period of the previous year. There is a reduction of INR 114 crores. In the impact for deferred tax, my deferred tax for the third quarter is INR 1,353 crores as against INR 781 crores. Deferred tax in the current quarter has been increased, mainly due to updation of MAT credits related to earlier years due to certain assessment products which we have received.

--------------------------------------------------------------------------------

Subhadip Mitra, JM Financial Institutional Securities Limited, Research Division - Power Analyst of Institutional Equities Research [42]

--------------------------------------------------------------------------------

Is there any one-off component in this which you've already included in your adjusted PAT number?

--------------------------------------------------------------------------------

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

--------------------------------------------------------------------------------

I don't think. No, no.

--------------------------------------------------------------------------------

Subhadip Mitra, JM Financial Institutional Securities Limited, Research Division - Power Analyst of Institutional Equities Research [44]

--------------------------------------------------------------------------------

Okay. Understood. So the adjusted PAT number of INR 2,953 crores would take care of most of these other adjustments?

--------------------------------------------------------------------------------

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

--------------------------------------------------------------------------------

Correct.

--------------------------------------------------------------------------------

Subhadip Mitra, JM Financial Institutional Securities Limited, Research Division - Power Analyst of Institutional Equities Research [46]

--------------------------------------------------------------------------------

Okay. Sorry, just one last one, if I'm squeezing in. And that is the commissioning target of 5,290 megawatts for the full year and 4,490 megawatts for the next year. These would be for the group or stand-alone?

--------------------------------------------------------------------------------

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

--------------------------------------------------------------------------------

It is for the group.

--------------------------------------------------------------------------------

Subhadip Mitra, JM Financial Institutional Securities Limited, Research Division - Power Analyst of Institutional Equities Research [48]

--------------------------------------------------------------------------------

If you can also mention the stand-alone targets, please?

--------------------------------------------------------------------------------

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

--------------------------------------------------------------------------------

Commissioning target for NTPC stand-alone. I think the number which I gave you was basically for commissioning what I think, if you are interested for commercial operation.

--------------------------------------------------------------------------------

Subhadip Mitra, JM Financial Institutional Securities Limited, Research Division - Power Analyst of Institutional Equities Research [50]

--------------------------------------------------------------------------------

Commercial operations, yes.

--------------------------------------------------------------------------------

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

--------------------------------------------------------------------------------

So once we have -- I gave you the number last time only from the point of view of the commissioning. So if you take commercial capacity, we have added so far 4,240, right? And we are going to 5,950. This is for the group.

Now as far as if you look at the stand-alone, then I think ex of the 660 and -- except the 660 megawatt of NTPC, adjusted all NTPC.

--------------------------------------------------------------------------------

Subhadip Mitra, JM Financial Institutional Securities Limited, Research Division - Power Analyst of Institutional Equities Research [52]

--------------------------------------------------------------------------------

Out of that 4,240?

--------------------------------------------------------------------------------

Anil Kumar Gautam, NTPC Limited - CFO, Director of Finance & Director [53]

--------------------------------------------------------------------------------

Yes, absolutely, absolutely.

--------------------------------------------------------------------------------

Subhadip Mitra, JM Financial Institutional Securities Limited, Research Division - Power Analyst of Institutional Equities Research [54]

--------------------------------------------------------------------------------

And for the full year, 559...

--------------------------------------------------------------------------------

Anil Kumar Gautam, NTPC Limited - CFO, Director of Finance & Director [55]

--------------------------------------------------------------------------------

5,950. That is -- and previously, it is 660 -- I'm sorry, another 660 from Madhya. So 1,320 we have to reduce for this NTPC stand-alone.

--------------------------------------------------------------------------------

Subhadip Mitra, JM Financial Institutional Securities Limited, Research Division - Power Analyst of Institutional Equities Research [56]

--------------------------------------------------------------------------------

For stand-alone. And for FY '21, similar numbers?

--------------------------------------------------------------------------------

Anil Kumar Gautam, NTPC Limited - CFO, Director of Finance & Director [57]

--------------------------------------------------------------------------------

FY '21, we are targeting around 5,290 megawatt. And out of this 5,290, Group company will be 660, 1,320 and 1,570. 1,570 in order to arrive at...

--------------------------------------------------------------------------------

Subhadip Mitra, JM Financial Institutional Securities Limited, Research Division - Power Analyst of Institutional Equities Research [58]

--------------------------------------------------------------------------------

1,570?

--------------------------------------------------------------------------------

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

--------------------------------------------------------------------------------

Yes.

--------------------------------------------------------------------------------

Operator [60]

--------------------------------------------------------------------------------

The next question is from the line of Atul Tiwari from Citigroup.

--------------------------------------------------------------------------------

Atul Tiwari, Citigroup Inc, Research Division - VP and Analyst [61]

--------------------------------------------------------------------------------

Sir, this is on THDC and NEEPCO acquisition. So what is the expected time line and the valuation? That is the first question.

And will these entities be merged with NTPC stand-alone or they will become subsidiaries?

--------------------------------------------------------------------------------

Anil Kumar Gautam, NTPC Limited - CFO, Director of Finance & Director [62]

--------------------------------------------------------------------------------

Okay. As far as the process is on, I think all of you are aware that the Cabinet CCA has already approved. The Government of India stick to NTPC.

Now 2 things which you've asked me. As far as valuation is concerned, we have appointed a valuer from our side, that's SBICAP, who are going to do the valuation process for us. That's under process. And I can only come back to you only when these valuations are actually done. Similarly, Government of India has also appointed consultant for valuation and we're going to discuss on that.

Now coming back to the merger of these companies with NTPC. I think for THDC, there is already a share of government of UP. So it would be a stand-alone in any case because we are not going to have 100% acquisition. As far as NEEPCO is concerned, we are going to acquire 100% of shares, which we will acquire and we'll keep it as our subsidiary company. And then decision will be taken later, whether to merge with NTPC to have overall kind of commercial benefits. And the CCA has already given in-principle approval for this management control to NTPC of both the companies.

--------------------------------------------------------------------------------

Atul Tiwari, Citigroup Inc, Research Division - VP and Analyst [63]

--------------------------------------------------------------------------------

Okay, sir. And sir, my second question is how much was the overall receivable from discounts at third quarter end?

--------------------------------------------------------------------------------

Anil Kumar Gautam, NTPC Limited - CFO, Director of Finance & Director [64]

--------------------------------------------------------------------------------

Yes. This -- just a minute. Let me have my numbers. As of date, this is INR 17,000 crores as at 31st December 2019. And for the month of December, around INR 8,000 crores are unbilled. So they will be billed in the next month, say, by 5th of January, they must have billed it.

--------------------------------------------------------------------------------

Atul Tiwari, Citigroup Inc, Research Division - VP and Analyst [65]

--------------------------------------------------------------------------------

Okay. But sir, just to confirm, you are not seeing a further buildup of receivables. So whatever you are billing post 31st July, you're getting paid for that, right? There is no...

--------------------------------------------------------------------------------

Anil Kumar Gautam, NTPC Limited - CFO, Director of Finance & Director [66]

--------------------------------------------------------------------------------

Well, let me answer the question in a different way. You see, if you look at the performance in terms of realization from last year, '19 -- '18, '19 versus '19, '20, if I say, as of date, what was there was INR 22,000 crores outstanding on 6th February of '19. But if you look at today, we are having outstanding of INR 17,196 crores. So actually, compared year-on-year, we have less outstanding than what we had in last year.

Now out of this INR 17,196 crores today, around INR 12,000 crores which is delayed beyond the due debt. So I think after this, the Government of India issued the circular on provisioning of LC, mandatory LC. I think payment position has improved.

--------------------------------------------------------------------------------

Operator [67]

--------------------------------------------------------------------------------

The next question is from the line of Sumit Kishore from JPMorgan.

--------------------------------------------------------------------------------

Sumit Kishore, JP Morgan Chase & Co, Research Division - Research Analyst [68]

--------------------------------------------------------------------------------

Could you please tell us the details of the projects which are under tendering? And what is their award timeline?

--------------------------------------------------------------------------------

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

--------------------------------------------------------------------------------

As far as projects under tendering are concerned, we have -- just a minute. So most of the projects which we are tendering now are basically solar projects. Now I'll just give you the numbers. Can I come back to you a little bit later?

--------------------------------------------------------------------------------

Sumit Kishore, JP Morgan Chase & Co, Research Division - Research Analyst [70]

--------------------------------------------------------------------------------

Sure. My next question is, there was Lara and Singrauli, which was also supposed to be awarded maybe this financial year. Are we on track? Or is it probably going to happen next financial year now?

--------------------------------------------------------------------------------

Anil Kumar Gautam, NTPC Limited - CFO, Director of Finance & Director [71]

--------------------------------------------------------------------------------

In fact, we are waiting for the environmental clearance for these 2 projects. And once we have the environmental clearance, we'll be in a position to award.

--------------------------------------------------------------------------------

Sumit Kishore, JP Morgan Chase & Co, Research Division - Research Analyst [72]

--------------------------------------------------------------------------------

Okay. So basically, award timelines would be more like FY '21 now, it can't happen suddenly?

--------------------------------------------------------------------------------

Anil Kumar Gautam, NTPC Limited - CFO, Director of Finance & Director [73]

--------------------------------------------------------------------------------

No, I think -- let's start with that benefit but what you say looks like the reality.

--------------------------------------------------------------------------------

Sumit Kishore, JP Morgan Chase & Co, Research Division - Research Analyst [74]

--------------------------------------------------------------------------------

Okay. And in terms of your captive coal mine production roadmap, what appears to be the likely production now for FY '21, FY '22? How will the scale-up happen?

--------------------------------------------------------------------------------

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

--------------------------------------------------------------------------------

In fact, as far as -- if you look this financial year, we are going to do something like 10.5 million tonnes. And 2021, we are going to -- I mean, enhance it to around 18 million tonnes. And FY '22, around 29 million tonnes.

--------------------------------------------------------------------------------

Sumit Kishore, JP Morgan Chase & Co, Research Division - Research Analyst [76]

--------------------------------------------------------------------------------

Okay. Out of the 29 million tonnes, basically, Pakri Barwadih and Dulanga would be the bulk of it?

--------------------------------------------------------------------------------

Anil Kumar Gautam, NTPC Limited - CFO, Director of Finance & Director [77]

--------------------------------------------------------------------------------

Yes, you're right. And -- but we will also have -- we have opened Talaipalli and we are in a very advanced stage for Pakri Barwadih West, which is another 3 million tonne mine. And we are also working on Talaipalli, main mine -- main MDO and Chatti Bariatu. So I think all mixed together, these numbers which I'm giving you is a mixed group, together all these mines.

--------------------------------------------------------------------------------

Sumit Kishore, JP Morgan Chase & Co, Research Division - Research Analyst [78]

--------------------------------------------------------------------------------

Got it. And just to follow up on one of the earlier questions. You were talking about some adjustment of INR 3.4 billion, which was for FY '15 -- '14, '19. That was not really clear. I mean what was that related to? And is it a positive or a negative adjustment?

--------------------------------------------------------------------------------

Anil Kumar Gautam, NTPC Limited - CFO, Director of Finance & Director [79]

--------------------------------------------------------------------------------

Okay. The Phase 1 CRC order has been received in the current year, in which the methodology for calculation of sharing of gains has been changed by CERC from annual basis to the monthly basis. So this is with respect to the tariff period 2014 to '19. We are in the process of challenging this award before the April. But on a conservative basis, we have made a provision.

--------------------------------------------------------------------------------

Sumit Kishore, JP Morgan Chase & Co, Research Division - Research Analyst [80]

--------------------------------------------------------------------------------

So it has led to a reduction in profit of INR 340 crores?

--------------------------------------------------------------------------------

Anil Kumar Gautam, NTPC Limited - CFO, Director of Finance & Director [81]

--------------------------------------------------------------------------------

Yes. But as the Director said, we are approaching upsell for -- against this order of CRC.

And one more thing you wanted to know about renewables, new projects under construction. See, as far as solar are concerned, we presently have 940 megawatt under operation and 1,062 megawatt projects are under construction.

--------------------------------------------------------------------------------

Sumit Kishore, JP Morgan Chase & Co, Research Division - Research Analyst [82]

--------------------------------------------------------------------------------

This is on your books, 1,062 megawatt under construction on your books?

--------------------------------------------------------------------------------

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

--------------------------------------------------------------------------------

Yes.

--------------------------------------------------------------------------------

Anand Kumar Gupta, NTPC Limited - Director of Commercial & Director [84]

--------------------------------------------------------------------------------

Yes.

--------------------------------------------------------------------------------

Sumit Kishore, JP Morgan Chase & Co, Research Division - Research Analyst [85]

--------------------------------------------------------------------------------

And the commissioning timeline is going to be FY '21 now?

--------------------------------------------------------------------------------

Anil Kumar Gautam, NTPC Limited - CFO, Director of Finance & Director [86]

--------------------------------------------------------------------------------

Timeline is, for financial year '20, we will do around [40] megawatts. And 2021, we'll be around 540 megawatts, and that will come in '21, '22.

--------------------------------------------------------------------------------

Sumit Kishore, JP Morgan Chase & Co, Research Division - Research Analyst [87]

--------------------------------------------------------------------------------

Okay. And the adjusted profit that you had given of INR 29.53 billion had taken care of the CERC order-related provision?

--------------------------------------------------------------------------------

Anil Kumar Gautam, NTPC Limited - CFO, Director of Finance & Director [88]

--------------------------------------------------------------------------------

Yes, yes. It is amounting to INR 326 crores.

--------------------------------------------------------------------------------

Operator [89]

--------------------------------------------------------------------------------

The next question is from the line of Apoorva Bahadur from Jefferies.

--------------------------------------------------------------------------------

Apoorva Bahadur, Jefferies LLC, Research Division - Equity Associate [90]

--------------------------------------------------------------------------------

Sir, I wanted to put some clarity on this jumbo acquisition. So there were media reports that because we have stake in the Ratnagiri, we won't be able to pursue this. So what's happening over there?

--------------------------------------------------------------------------------

Anand Kumar Gupta, NTPC Limited - Director of Commercial & Director [91]

--------------------------------------------------------------------------------

Yes. We have submitted our bid for this, identifying and very clearly bringing out the issues related with our joint venture with -- for this Ratnagiri. Now as far as we are concerned, we have not defaulted after the demerger plan of these 2 companies, the RGPPL into RGPPL and KLPL. We have not defaulted any payment to any banks. So this NPA is just a technical NPA, and we have taken up with RBI and other bankers to actually review this NPA because this is -- we have been making on the payments.

--------------------------------------------------------------------------------

Apoorva Bahadur, Jefferies LLC, Research Division - Equity Associate [92]

--------------------------------------------------------------------------------

Okay. So it is expected to be resolved.

Sir, secondly, on our strategy, bidding strategy over here, so we were like almost 2x the second-lowest bidder. So -- and that's second-highest bidder, sorry. So in that case, will this be slightly going ahead if we consider other stress test? We will sort of be laying a baseline marker of acquisition cost?

--------------------------------------------------------------------------------

Anand Kumar Gupta, NTPC Limited - Director of Commercial & Director [93]

--------------------------------------------------------------------------------

I think it's for you people to really decipher and this is for you people to actually say that the valuation will be right, if this is the best.

--------------------------------------------------------------------------------

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

--------------------------------------------------------------------------------

Yes.

--------------------------------------------------------------------------------

Apoorva Bahadur, Jefferies LLC, Research Division - Equity Associate [95]

--------------------------------------------------------------------------------

Sure, sir. Sir, lastly, on NVVN, the trading volumes have gone down these 9 months versus the previous 9 months. So is that because of this backing down by Andhra?

--------------------------------------------------------------------------------

Anand Kumar Gupta, NTPC Limited - Director of Commercial & Director [96]

--------------------------------------------------------------------------------

Not really. There are basically -- it depends, this business of trading early. It actually -- the margins are going down. So it would depend whether you want to really work at a very, very low margins.

So for the bids -- because nowadays, most of it is by bidding, except the cross-border listing, so what happens is that we don't want to go back to very low bids. I'd say, after -- rather than [7%], doing it at [1% offers] and all that, we are not interested in that kind of business. So we would be only doing the business when it made some sense to us in terms of returns or profitability.

--------------------------------------------------------------------------------

Apoorva Bahadur, Jefferies LLC, Research Division - Equity Associate [97]

--------------------------------------------------------------------------------

Okay. So the volumes that you are not trading, are we absorbing it?

--------------------------------------------------------------------------------

Anand Kumar Gupta, NTPC Limited - Director of Commercial & Director [98]

--------------------------------------------------------------------------------

Pardon? No, no, no. It's that trading what I'm talking about. Even whatever volumes we have today, we are not reducing. Wherever we already have a contract for the trade increase, we are continuing with that. All I'm trying to say is the new orders [possibly] we want to take it only when there are margins of level.

--------------------------------------------------------------------------------

Apoorva Bahadur, Jefferies LLC, Research Division - Equity Associate [99]

--------------------------------------------------------------------------------

Got it, sir. Sir, lastly, again, hearing the railways is in need of working capital support at the beginning of the year. So any plan on that? Have you been approached by them for any similar arrangement like...

--------------------------------------------------------------------------------

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

--------------------------------------------------------------------------------

As of now, there is no such proposal finding with NTPC or we have not received any such proposal.

--------------------------------------------------------------------------------

Operator [101]

--------------------------------------------------------------------------------

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

--------------------------------------------------------------------------------

Dhruv Muchhal, HDFC Asset Management Company Limited - Equity Analyst [102]

--------------------------------------------------------------------------------

Sir, the deferred tax amount seems pretty high at INR 1,300 crores. You said it is because of some bad credit. So is there also an offset? And I mean, the point is, is it impacting the PAT number?

--------------------------------------------------------------------------------

Anil Kumar Gautam, NTPC Limited - CFO, Director of Finance & Director [103]

--------------------------------------------------------------------------------

Yes, yes. The corresponding figure will appear under the regulatory movement in regulatory deferral account. So it will not have any impact on the profitability.

--------------------------------------------------------------------------------

Dhruv Muchhal, HDFC Asset Management Company Limited - Equity Analyst [104]

--------------------------------------------------------------------------------

Okay. So, what, INR 700 crores is regarding that?

--------------------------------------------------------------------------------

Anil Kumar Gautam, NTPC Limited - CFO, Director of Finance & Director [105]

--------------------------------------------------------------------------------

Yes, yes.

--------------------------------------------------------------------------------

Dhruv Muchhal, HDFC Asset Management Company Limited - Equity Analyst [106]

--------------------------------------------------------------------------------

Okay, okay. Sir, secondly, the other income, the surcharge income is about INR 350 crores for the quarter versus last quarter it was about INR 650 crores. Although the overdues have not increased -- I mean, have not decreased, so how has the surcharge income declined? Last quarter, I think it was about INR 650 crores.

--------------------------------------------------------------------------------

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

--------------------------------------------------------------------------------

In the current year, we have done certain bill discounting, certain bill discounting. Because of this, this figure is coming down.

--------------------------------------------------------------------------------

Dhruv Muchhal, HDFC Asset Management Company Limited - Equity Analyst [108]

--------------------------------------------------------------------------------

In the current quarter, you have done bill discounting?

--------------------------------------------------------------------------------

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

--------------------------------------------------------------------------------

Yes, some we have done.

--------------------------------------------------------------------------------

Dhruv Muchhal, HDFC Asset Management Company Limited - Equity Analyst [110]

--------------------------------------------------------------------------------

Okay, okay. So you mentioned the 9-month cost of interest or the interest burden. If you can give the third quarter number, too?

--------------------------------------------------------------------------------

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

--------------------------------------------------------------------------------

Yes, quarter number also I'll give you. This...

--------------------------------------------------------------------------------

Dhruv Muchhal, HDFC Asset Management Company Limited - Equity Analyst [112]

--------------------------------------------------------------------------------

Just to match the corresponding...

--------------------------------------------------------------------------------

Anil Kumar Gautam, NTPC Limited - CFO, Director of Finance & Director [113]

--------------------------------------------------------------------------------

Yes, yes, definitely. Yes. It is, for the quarter, is INR 287 crores.

--------------------------------------------------------------------------------

Dhruv Muchhal, HDFC Asset Management Company Limited - Equity Analyst [114]

--------------------------------------------------------------------------------

The interest cost impact?

--------------------------------------------------------------------------------

Anil Kumar Gautam, NTPC Limited - CFO, Director of Finance & Director [115]

--------------------------------------------------------------------------------

Yes, working capital. Interest on working capital.

--------------------------------------------------------------------------------

Dhruv Muchhal, HDFC Asset Management Company Limited - Equity Analyst [116]

--------------------------------------------------------------------------------

Interest in working capital. Okay.

And sir, lastly, the 2Q adjusted PAT was somewhere around INR 3,300-odd crores. Now this current quarter it is about INR 2,900 crores. That is a decline. Just for the other income, I mean, the [subsidiary] income, yet, there is a decline. So just wanted to understand despite the capitalization increase. So just wanted to understand what's causing this decline.

--------------------------------------------------------------------------------

Anil Kumar Gautam, NTPC Limited - CFO, Director of Finance & Director [117]

--------------------------------------------------------------------------------

No, no. You are comparing the adjusted...

--------------------------------------------------------------------------------

Dhruv Muchhal, HDFC Asset Management Company Limited - Equity Analyst [118]

--------------------------------------------------------------------------------

Versus 2Q, Q-o-Q, 2Q.

--------------------------------------------------------------------------------

Anil Kumar Gautam, NTPC Limited - CFO, Director of Finance & Director [119]

--------------------------------------------------------------------------------

Okay, Q3 versus Q2?

--------------------------------------------------------------------------------

Dhruv Muchhal, HDFC Asset Management Company Limited - Equity Analyst [120]

--------------------------------------------------------------------------------

Yes.

--------------------------------------------------------------------------------

Anil Kumar Gautam, NTPC Limited - CFO, Director of Finance & Director [121]

--------------------------------------------------------------------------------

Okay. Let me just -- just a minute. I'll -- in [respect to this], I'll tell Aditya will provide it to you.

--------------------------------------------------------------------------------

Operator [122]

--------------------------------------------------------------------------------

The next question is from the line of Shashank Khetawat from Tata AIA.

--------------------------------------------------------------------------------

Shashank Khetawat;Tata AIA Life Insurance;Manager - Investments, [123]

--------------------------------------------------------------------------------

Can you again please give the interest burden for Q2, this EBITDA number for Q3 that you have given?

--------------------------------------------------------------------------------

Anil Kumar Gautam, NTPC Limited - CFO, Director of Finance & Director [124]

--------------------------------------------------------------------------------

Q2, it is INR 330 crores. Q1, INR 330 crores. Q2, INR 329 crores. Q3, INR 281 crores. So 9 months, if you add up all, INR 941 crores.

--------------------------------------------------------------------------------

Operator [125]

--------------------------------------------------------------------------------

The next question is from the line of Manjeet Buaria from Solidarity Investment Managers.

--------------------------------------------------------------------------------

Manjeet Buaria, Solidarity Investment Advisors - Principal [126]

--------------------------------------------------------------------------------

Sir, I wanted to understand. On a longer-term basis, what are the strategy disadvantages of the new central government's stake if the company falls below the majority mark?

--------------------------------------------------------------------------------

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

--------------------------------------------------------------------------------

As of now, the government of India's stake in NTPC is 51.01%. So we hope that the government will continue with such holding.

--------------------------------------------------------------------------------

Manjeet Buaria, Solidarity Investment Advisors - Principal [128]

--------------------------------------------------------------------------------

Sir, but I mean, just to understand, are there any debt covenants which get triggered or probably the right of use of coal mines would go away in case the government is not a promoter?

--------------------------------------------------------------------------------

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

--------------------------------------------------------------------------------

Yes, yes. It will be in the debt covenant directly or indirectly.

--------------------------------------------------------------------------------

Manjeet Buaria, Solidarity Investment Advisors - Principal [130]

--------------------------------------------------------------------------------

Right. Sir, has the government -- so like for all practical purposes then, will the government stop taking even more stakes in the company?

--------------------------------------------------------------------------------

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

--------------------------------------------------------------------------------

No, we -- we just -- we can't answer your question. It's a government action, only government can respond.

--------------------------------------------------------------------------------

Operator [132]

--------------------------------------------------------------------------------

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

--------------------------------------------------------------------------------

Abhishek Puri, Axis Capital Limited, Research Division - Executive Director of Capital Goods, Infrastructure and Power [133]

--------------------------------------------------------------------------------

Yes, congratulations on good set of results, sir. So 2 things. First, this INR 344 crores, which has come in, this is because of the cap that the regulator has put. And I was reading there's a 7% cap on this sharing of gains now.

--------------------------------------------------------------------------------

Anil Kumar Gautam, NTPC Limited - CFO, Director of Finance & Director [134]

--------------------------------------------------------------------------------

INR 325 crores -- INR 323 crores.

--------------------------------------------------------------------------------

Abhishek Puri, Axis Capital Limited, Research Division - Executive Director of Capital Goods, Infrastructure and Power [135]

--------------------------------------------------------------------------------

INR 344 crore, that amount that you mentioned, which has been reversed on the profit.

--------------------------------------------------------------------------------

Anil Kumar Gautam, NTPC Limited - CFO, Director of Finance & Director [136]

--------------------------------------------------------------------------------

Okay. Yes, this is actually because of the CERC order, which we have given in the case of TANGEDCO, where they have said that these gains are to be calculated on a monthly basis instead of annual reconciliation, which has been mentioned in the CERC tariff regulations.

So on a conservative basis, we have make a provision -- we will make the provision in the accounts, but side by side, we will be approaching to the capital for this.

--------------------------------------------------------------------------------

Abhishek Puri, Axis Capital Limited, Research Division - Executive Director of Capital Goods, Infrastructure and Power [137]

--------------------------------------------------------------------------------

Sir, but I didn't understand. Because if this is done on an annual basis, why should 2014 to '19 gains should be reversed back now? Because that would have been on -- annual conciliation would have been done for that by now.

--------------------------------------------------------------------------------

Anil Kumar Gautam, NTPC Limited - CFO, Director of Finance & Director [138]

--------------------------------------------------------------------------------

Abhishek, [just really -- Prakash] will answer to your question.

--------------------------------------------------------------------------------

Unidentified Company Representative, [139]

--------------------------------------------------------------------------------

The dispute portends to the period of '14, '19 only. That's where the challenge was.

--------------------------------------------------------------------------------

Abhishek Puri, Axis Capital Limited, Research Division - Executive Director of Capital Goods, Infrastructure and Power [140]

--------------------------------------------------------------------------------

But you would have already done the annual reconciliation is what I'm -- I'm not sure I understand.

--------------------------------------------------------------------------------

Anil Kumar Gautam, NTPC Limited - CFO, Director of Finance & Director [141]

--------------------------------------------------------------------------------

That is what we are going to be [at then].

--------------------------------------------------------------------------------

Abhishek Puri, Axis Capital Limited, Research Division - Executive Director of Capital Goods, Infrastructure and Power [142]

--------------------------------------------------------------------------------

Okay. And in the latest CERC regulation, I was reading that the gains have been captured at 7% now as a trading gain.

--------------------------------------------------------------------------------

Anil Kumar Gautam, NTPC Limited - CFO, Director of Finance & Director [143]

--------------------------------------------------------------------------------

Yes.

--------------------------------------------------------------------------------

Abhishek Puri, Axis Capital Limited, Research Division - Executive Director of Capital Goods, Infrastructure and Power [144]

--------------------------------------------------------------------------------

From intraday sale of power, not from the operating loans gain that you get?

--------------------------------------------------------------------------------

Unidentified Company Representative, [145]

--------------------------------------------------------------------------------

Yes. That's a different thing. That's trading margin.

--------------------------------------------------------------------------------

Anil Kumar Gautam, NTPC Limited - CFO, Director of Finance & Director [146]

--------------------------------------------------------------------------------

These 2 are already paid.

--------------------------------------------------------------------------------

Unidentified Company Representative, [147]

--------------------------------------------------------------------------------

Different quarter. Newer ones, newer content.

--------------------------------------------------------------------------------

Abhishek Puri, Axis Capital Limited, Research Division - Executive Director of Capital Goods, Infrastructure and Power [148]

--------------------------------------------------------------------------------

Right. Understood. Sir, secondly, on the under-recovery part, since for the first half of the year, we already had INR 448 crore-odd under-recovery. And for 9 months, it is INR 370 crore. Would that mean that we have gained about INR 78-odd crores, the balance amount we have gained in the current quarter because of higher pass?

--------------------------------------------------------------------------------

Anil Kumar Gautam, NTPC Limited - CFO, Director of Finance & Director [149]

--------------------------------------------------------------------------------

That's correct, Abhishek.

--------------------------------------------------------------------------------

Abhishek Puri, Axis Capital Limited, Research Division - Executive Director of Capital Goods, Infrastructure and Power [150]

--------------------------------------------------------------------------------

Okay. And lastly, on the auxiliary consumption looks to be extremely high at about 8.5% because, obviously, the demand was lower in the current quarter. Is there any disincentive related to that in the current numbers?

--------------------------------------------------------------------------------

Anil Kumar Gautam, NTPC Limited - CFO, Director of Finance & Director [151]

--------------------------------------------------------------------------------

No, no. It is not there.

--------------------------------------------------------------------------------

Abhishek Puri, Axis Capital Limited, Research Division - Executive Director of Capital Goods, Infrastructure and Power [152]

--------------------------------------------------------------------------------

Typical standard is about 6.5%. So we are at 8.5%. I'm just trying to understand on that.

--------------------------------------------------------------------------------

Anil Kumar Gautam, NTPC Limited - CFO, Director of Finance & Director [153]

--------------------------------------------------------------------------------

That is only because of this we will lose certain [on Netra] but it will not -- there are no any other disincentive pertaining to this. No penalties there.

--------------------------------------------------------------------------------

Operator [154]

--------------------------------------------------------------------------------

The next question is from the line of the Deepak Mishra from Goldman Sachs.

--------------------------------------------------------------------------------

Pulkit Patni, Goldman Sachs Group Inc., Research Division - Equity Analyst [155]

--------------------------------------------------------------------------------

Sir, this is Pulkit. Sir, just one question. We are one of the few companies that are actually installing emission equipment today vis-a-vis a lot of other competition is not doing it. Now if you were to look at the next few quarters, 2 years, do you expect any differential treatment to plants which have emission equipment versus plants that do not install? How do you think that -- is there any advantage that we have other than what we are contributing to the environment in general?

--------------------------------------------------------------------------------

Prakash Tiwari, NTPC Limited - Director of Operations & Executive Director [156]

--------------------------------------------------------------------------------

This is Prakash Tiwari, Director of Operations. The stations where we install flue gas desulphurisation units will get priority in scheduling. That way, we will be benefited. And as far as impacting us financially is concerned, that will not be considered as a part of -- that will not come in picture...

--------------------------------------------------------------------------------

Anil Kumar Gautam, NTPC Limited - CFO, Director of Finance & Director [157]

--------------------------------------------------------------------------------

Pulkit, you must be knowing that -- just to interrupt, sir. Pulkit, in the CERC regulations for the time period 2019 to '24, CERC has given in these regulations that any expenditure on -- and [medias] which are -- which will protect the environment will be allowed by the CERC on a case-to-case basis after prudence check.

Regarding your question that the Supreme Court, the Hon'ble Supreme Court which has given the guidelines by December 22, every station in the country has to meet environmental norms. So we hope, definitely, after that period, whoever does not meet those norms, either they have to do -- pay some penalty, then only they can operate or they may not be allowed to operate.

So as we have mentioned, that around 47 gigawatt of NTPC capacity as we have already awarded FGD contracts. So we would definitely be in the advantageous position as compared to other generators.

--------------------------------------------------------------------------------

Operator [158]

--------------------------------------------------------------------------------

The next question is from the line of [Vishant Kothari] from [Vector].

--------------------------------------------------------------------------------

Unidentified Analyst, [159]

--------------------------------------------------------------------------------

The first question is about the generation numbers that you have given for the quarter down by about 13%; for the 9 months, down by about 6%, 7%.

--------------------------------------------------------------------------------

Operator [160]

--------------------------------------------------------------------------------

Excuse me, this is the operator. [Mr. Kothari], we are unable to hear you.

--------------------------------------------------------------------------------

Unidentified Analyst, [161]

--------------------------------------------------------------------------------

So the question is about the generation numbers, is down about 12%, 13% for the quarter and about 6%, 7% for the 9 months. Can you just help me understand why this the case? Is this the weakness in demand? Or is it that we are losing share to some cheaper generation sources?

--------------------------------------------------------------------------------

Prakash Tiwari, NTPC Limited - Director of Operations & Executive Director [162]

--------------------------------------------------------------------------------

Yes. Prakash Tiwari, this side. It is primarily because of less demand from coal stations. And also, pertaining to NTPC, our -- some of our stations have very much less dispatch schedules. This is the reason why generation is down when we compare quarter-to-quarter and also for the 9-month period.

--------------------------------------------------------------------------------

Unidentified Analyst, [163]

--------------------------------------------------------------------------------

So what are we doing to reduce the cost so that we can become more competitive?

--------------------------------------------------------------------------------

Prakash Tiwari, NTPC Limited - Director of Operations & Executive Director [164]

--------------------------------------------------------------------------------

We are using this policy of flexibilization of usage of coal in a big way to reduce cost of generation in some of our plants like Kudgi, Solapur, Mouda and Gadarwara. So this policy is coming in handy for us to reduce energy sharing, and we are getting schedule in this business now. And also -- yes, please.

At the same time, since middle of January, we find that energy demand is increasing. So some of our stations have become operational since then. These 2 factors combined, now we are able to generate more.

--------------------------------------------------------------------------------

Unidentified Analyst, [165]

--------------------------------------------------------------------------------

Okay. So how has the cost of power changed for us compared to last year?

--------------------------------------------------------------------------------

Prakash Tiwari, NTPC Limited - Director of Operations & Executive Director [166]

--------------------------------------------------------------------------------

On overall basis, the energy charges...

--------------------------------------------------------------------------------

Anil Kumar Gautam, NTPC Limited - CFO, Director of Finance & Director [167]

--------------------------------------------------------------------------------

It is the cost of power as at 31st December 2019 is INR 3.81 crores -- sorry, INR 3.81 per kwh. And last year, it was INR 3.47. It is there overall, including cost.

--------------------------------------------------------------------------------

Prakash Tiwari, NTPC Limited - Director of Operations & Executive Director [168]

--------------------------------------------------------------------------------

Fixed costs and variable costs.

--------------------------------------------------------------------------------

Unidentified Analyst, [169]

--------------------------------------------------------------------------------

So it means that our cost of power is not yet under control?

--------------------------------------------------------------------------------

Anil Kumar Gautam, NTPC Limited - CFO, Director of Finance & Director [170]

--------------------------------------------------------------------------------

No. Actually, it is more under control, but we are taking measures side by side. The Government of India has also taken measures through SCED mechanism.

--------------------------------------------------------------------------------

Unidentified Analyst, [171]

--------------------------------------------------------------------------------

Sir, do you have any targets in terms of where this cost could be, let's say, next year when the measures are implemented?

--------------------------------------------------------------------------------

Anil Kumar Gautam, NTPC Limited - CFO, Director of Finance & Director [172]

--------------------------------------------------------------------------------

And one more, just I supplement my initial reply. The energy charges for coal stations, it is INR 2.19, as against INR 2.04. INR 0.15, the increase. So as Director of Operations has mentioned, that we are taking initiatives through flexibilization in use of coal, we will reduce our -- these energy charges.

--------------------------------------------------------------------------------

Unidentified Analyst, [173]

--------------------------------------------------------------------------------

Okay. Yes. So any targets we have in terms of how much we want this cost to go to?

--------------------------------------------------------------------------------

Prakash Tiwari, NTPC Limited - Director of Operations & Executive Director [174]

--------------------------------------------------------------------------------

This recently introduced policy of security constrained economic dispatch, SCED, we hope to reduce our cost component and transportation of coal. We have not rolled out numbers as such. That keeps changing. And 2 more factors I understand have effect to the cost overall for us is more capitalization. Fixed cost has gone up marginally. And since the railways have also increased their freight by around 8%. So that increased the cost of transportation to our rail freight stations.

These are the factors. But definitely, we are trying to keep rail costs under control using the flexibilization scheme and SCED policy.

--------------------------------------------------------------------------------

Unidentified Analyst, [175]

--------------------------------------------------------------------------------

Okay. And just one small question is on the coal consumption that you had. It seems that despite lower production of LNG, we have ended up consuming more coal, including our own production. Can you just explain why is that? Is there coal usage efficiency somehow producing?

--------------------------------------------------------------------------------

Prakash Tiwari, NTPC Limited - Director of Operations & Executive Director [176]

--------------------------------------------------------------------------------

There are 2 things I can recall. In certain months, we received coal, which was not up to the market as far as quality was concerned. This is particularly pertaining to [stress] and like [Punjab coming here]. Then in the first quarter of this financial year, we had consumed a lot of our old stock of the coal, which obviously was slightly in deteriorated condition. So these 2 factors combining so that our physical coal [incentive] is slightly marginally higher. These are the 2 factors.

--------------------------------------------------------------------------------

Unidentified Analyst, [177]

--------------------------------------------------------------------------------

Okay. So are we able to claim back from Coal India? I mean if the coal coming in is not as per our specifications.

--------------------------------------------------------------------------------

Prakash Tiwari, NTPC Limited - Director of Operations & Executive Director [178]

--------------------------------------------------------------------------------

Yes, yes. We are -- as you know, we have introduced this system of measuring quality of coal importance, loading and [loading in]. But if we receive a slightly inferior coal for whatever reasons, that duly reflects in the payment that we made to Coal India. So the financial implications are bare minimum, but it definitely reflects in the [50] coal consumption.

--------------------------------------------------------------------------------

Operator [179]

--------------------------------------------------------------------------------

Ladies and gentlemen, this was the last question for today. I now hand the conference over to the management for their closing comments. Over to you, sir.

--------------------------------------------------------------------------------

Anil Kumar Gautam, NTPC Limited - CFO, Director of Finance & Director [180]

--------------------------------------------------------------------------------

Thank you very much, and we hope that we continue to do same as per your expectations. Thank you.

--------------------------------------------------------------------------------

Anand Kumar Gupta, NTPC Limited - Director of Commercial & Director [181]

--------------------------------------------------------------------------------

Thank you.

--------------------------------------------------------------------------------

Prakash Tiwari, NTPC Limited - Director of Operations & Executive Director [182]

--------------------------------------------------------------------------------

Thank you.

--------------------------------------------------------------------------------

Operator [183]

--------------------------------------------------------------------------------

Thank you, members of the management. Ladies and gentlemen, on behalf of B&K Securities India Pvt. Ltd., that concludes this conference call. Thank you for joining us, and you may now disconnect your lines.

--------------------------------------------------------------------------------

Anil Kumar Gautam, NTPC Limited - CFO, Director of Finance & Director [184]

--------------------------------------------------------------------------------

Thank you very much. Thank you.