Moderator: Good afternoon Ladies and Gentlemen - Ntpc

1 of 20NTPC LIMITEDInvestors/Earnings Conference Call(February 1, 2008)Moderator: Good afternoon Ladies and Gentlemen. Thank you for standing by. Wewelcome you to the Q3 FY2007-08 results conference call of NTPC Limited hosted byBatliwala & Karani Securities India (Pvt) Limited. We have with us Mr. A.K. Singhal,Director Finance from NTPC Limited and Mr. Subhadip Mitra, Research Analyst fromBatliwala & Karani Securities India (Pvt) Limited. At this moment all participants are inthe listen-only mode. Later we will conduct the question and answer session. At thattime if you have a question please press * and 1. Participants are advised to note thatBatliwala & Karani Securities India (Pvt) Limited cannot be held responsible for theinformation and views that maybe exchanged during this conference call. This callshould not be construed as any offer for sale or subscription of any invitation to offer tobuy or subscribe for any securities and should not be construed as financial advice forinvestment or an advice to buy or sell the securities of the subject company. I wouldnow like to turn the conference over to Mr. Subhadip Mitra. Over to you sir.Mr. Subhadip Mitra: Thank you. Good afternoon everyone. I welcome you all onbehalf of Batliwala & Karani Securities India (Pvt) Limited. First and foremost I wouldlike to extend my sincere thanks to Mr. Singhal of NTPC for sparing time today for thisconference call and sharing his views with us. Thank you so much sir. Firstly I wouldlike to request Mr. Singhal to give us a brief update on the Q3 results and the recentdevelopments of the company. And then we can move on to the Q&A session. Thankyou and over to you sir.Mr. A.K. Singhal: Thank you very much Mr. Subhadip. A very good afternoon toeverybody. I am A.K. Singhal, Director Finance of NTPC. The company had announcedon January 30, 2008 the un-audited financial results, with limited review carried out bythe statutory auditors for the quarter as well as 9 months ended on December 31, 2007.The company has shown a stable performance for the quarter. The Board of Directorshas declared highest ever interim dividends at the rate of 27% that is Rs.2.70 per shareamounting to Rs.22.263 billion in the said meeting.I would now like to take you through the performance of the third quarter and 9 monthsperiod: First on operational performance for 9 months, installed capacity as on31/12/2007 was 26850 megawatt which has increased from 25350 megawatt existing on31/12/2006. Similarly, commercial capacity has gone up to 25912 megawatt from 25202megawatt. On a year-on-year basis installed capacity on 9 months basis had increasedby 5.92% and commercial capacity has gone up by 2.82%. So far as PLF is concernedfor the quarter ending December 2007, NTPC coal based stations performed at 93.23%as against 91.14% for the quarter ending December 2006. And all India PLF was79.19% for the quarter ending December 2007 in comparison to 77.69% for the quarterending December 2006. So far as gas stations’ performance, during the quarter isconcerned, their performance was not as good as it was for the quarter endingDecember 2006. During the current quarter it performed at 63.81% as against 77.17%.It was lower by about 13.36%. For the current 9 months period the gas based stationshave performed at a PLF of 66.36% as against 68.12%. Similarly coal based stationperformed at 90.19% as against 87.16% for the nine month period.

2 of 20All India performance was 77.20% as against 75.30% for the corresponding period i.e.nine month for the fiscal year 2006-07. Although the PLF of coal stations of NTPCproject has improved by 2.09% for the quarter and by 3.03% for the 9 months periodending 31 st December 2007 as compared to corresponding periods of previous year,there is a reduction in the PLF of gas stations. The reduction in PLF of gas station isattributed to low demand for generation schedules based on liquid fuel for 9 months.Overall generation was, however, better compared to the last year as a result ofimproved PLF of coal based stations as well as due to addition of new generationcapacities. For the third quarter, the generation in coal stations has grown by 6.16% ascompared to 5.6% of national average over the corresponding quarter.The generation and sales data are as follows:Gross generation during the quarter ending December 2007 was 50.734 billion units asagainst 49.301 billion units in the corresponding period. Commercial generation was50.734 billion units in comparison to 48.812 billion units in the corresponding period. Sofar as ESO is concerned during the quarter it was 47.7 billion units as against 45.876billion units in the corresponding period. During 9 months period the company hasgenerated 147.296 billion units as against 137.015 billion units registering an increase of7.5%. So far as energy sent out is concerned, it was 137.628 billion units as against127.840 billion units in the corresponding period thus registering an increase of 7.66%.I would like to go through the financial performance. As you may be aware sales hasgrown by 9.44% on quarter-to-quarter basis. Other income has reduced by 2.89% andprofit after tax has gone down by 15.37%, it is because of the one off items which I willbe discussing subsequently. Similarly, during 9 months period our sales has grown by10.79%. Other income has grown by 6.43% whereas profit after tax has grown by18.43% as compared to corresponding period in the previous year.Now coming on to the adjusted profit, if we take out one off items from both the quartersand 9 months, profit after tax has gone up by about 14% during both the periods.Now the items:First item is the pervious year sales. In quarter ending December 2007, we hadrecorded additional sales of Rs.1.124 billion. This is on account of ATE and CERCorders. In the corresponding period it was Rs.1.152 billion. In this quarter, ForeignExchange Rate Variation was Rs.422 million expense, whereas in quarter endingDecember 2006 it was Rs.1.567 billion gain. Prior period adjustment was Rs -24 millionin this quarter and in the corresponding quarter it was Rs -4 million.During this quarter, we have made a provision for wage revision, pension and additionalincentive which was not there in the corresponding quarter of the previous year. Onaccount of wage revision and pension, provision of Rs.1.867 billion has been made.Additional incentive has been provided as Rs 351 million. Because of income taxassessment for the pervious period, there is an additional demand or additional taxamounting to Rs 607 million. Further, in the corresponding quarter of previous year, wehad received an interest from income tax department which was accounted for as anincome amounted to Rs.896 million. If we add all these items for the quarter endingDecember 2007, there will be an adjustment in plus of Rs.2.1 billion whereas in quarterending December 2006 it will be minus Rs.3.619 billion resulting in adjusted profit of Rs.

3 of 2019.899 billion for the quarter ending December 2007 and Rs.17.414 billion for quarterending December 2006 registering a growth of 14.27% as against a reported negativegrowth of 15.37% in profit after tax on quarter-on-quarter basis.Similarly, for 9 months period previous year sales have been adjusted to the extent ofRs.11.492 billion in the corresponding period it was Rs.2.811 billion.Exchange rate variation adjusted to interest cost results in a gain of Rs.2.591 billion asagainst Rs.411 million gain in the corresponding period. Prior period adjustments areRs. 5 million and minus Rs 40 million for nine month period of Y-O-Y/08 & Y-OY/07respectively. Wage revision and pension provision is Rs.4.171 billion. Additionalincentive is Rs.2.470 billion. Additional impact on account of IT assessment for currentperiod is Rs.607 million. Interest on income tax refund amounting to Rs.956 millionreceived in the corresponding previous year is not there in the current nine monthperiod. With these adjustments the adjusted profit would work out to Rs.53.923 billionfor 9 months ending December 2007 and in the corresponding period it would have beenRs.47.082 billion thus registering a growth of 14.53% as against 18.43% on reportedbasis.Coming on to the fuel supply, the coal supply position was quite satisfactory during the 9months period. We received 89.576 million metric ton of coal as against 80.791 millionmetric ton during the same period last year. This includes imported coal of 1.742 millionmetric ton. Coal stock position was also satisfactory with the stations having a coalstock of 2.895 million metric tons at the end of December 2007 as against 4.337 millionmetric ton in the previous year.Due to non-availability of APM gas and also the RLNG at a reasonable price, theaverage consumption of gas for the quarter October to December was 10.38 MMSCMDas against 14.03 MMSCMD during the same quarter of the previous year resulting inlowering of PLF for gas stations for the quarter. However, the average consumption ofgas for the 9 months period was 12.25 MMSCMD as against 12.08 MMSCMDconsumed during the same period of the previous year.On our realization front, during this quarter also we have been able to realize 100% ofthe amounts billed to the customer. Coming on to the funding arrangement, we haverecently signed a USD 380 million loan facility with JBIC, Japan under their guarantee topart finance the 1980 megawatt Barh Super Thermal Power Project (Stage I) in Biharstate. The loan agreement was signed on 20 th December 2007 at Tokyo. The facilitywill have floating rate of interest linked to the LIBOR and door-to-door maturity of 18years. This is the first facility extended by JBIC without Sovereign guarantee. We havealso signed a loan agreement of Rs 1000 Crores along with a bond subscriptionagreement of Rs 1000 Crores with Life Insurance Corporation of India on December 26,2007 to finance capital expenditure of our power generation project and coal miningbusiness, renovation and modernization activity and LNG business. The door-to-doormaturity of both the agreements is 11 years. The repayment shall take place in 14 halfyearly installments commencing after 4 years. The interest rate coupon is linked to 10year G-sec rate plus margin. Subscription amount towards bonds has been receivedfrom Life Insurance Corporation of India.Let me now give an update on various other activities.

4 of 20During the current year we plan to add 2490 megawatt capacity. As against this, 500megawatt has already been commissioned at Sipat project and 740 MW have beencommissioned at Dabhol on November 3, 2007. Work on another unit of 500 megawattof Sipat (Stage II) is in progress and this unit is expected to be commissioned in thisfinancial year. The steam blowing was completed in second unit of 500 megawatt ofKahalgaon Stage II. This unit is likely to be commissioned in this financial year. UnderNTPC SAIL Power Company (Private) Ltd, a joint venture company with SAIL. First 250megawatt unit is likely to be commissioned during the current financial year.17350 megawatt capacity is under construction, under XI plan which includes 500megawatt already commissioned during 2007-08. This is about 77% of the capacityscheduled to be commissioned during XI plan period. We expect to place the orders forthe balance capacity so as to add about 22000 megawatt during XI plan in the remainingperiod of 2 to 3 months.So far as our new forays are concerned, we have recently signed an MoU with UttarPradesh Rajya Vidyut Utpadan Nigam Ltd for setting up a power project of 2x660megawatt coal based at Meja Tehsil or any other suitable site in Allahabad district in thestate of Uttar Pradesh in a joint venture . We have also formed a joint venture companyor a subsidiary company under the name and style of Bhartiaya Rail Bijliee Company Ltdon November 22, 2007 for setting up a captive power plant of 1000 megawatt 4x250megawatt at Nabinagar, Bihar. NTPC shall contribute 74% equity and the balance 26%equity in the share capital of this company shall be extended by the Ministry of Railways,Government of India.Pursuant to signing of MoU with BHEL on 10 th September 2007 and signing of a jointventure agreement of 17 th December 2007, NTPC has signed with BHEL Ltd asupplementary agreement on January 11, 2008 to engage in manufacturing and supplyof equipment for power plant and other infrastructure project in India and abroad. NTPCand BHEL shall have an equal participation in this joint venture.So far as awards are concerned, NTPC has received a certificate of Commendation forSignificant Achievement among the large business organizations at the secondsustainability summit in December 2007. Dun & Bradstreet India has selected ourcompany as the Top Indian Company in the Power Sector and has awarded Dun &Bradstreet American Express Corporate Award 2007.These are some of the highlights I wanted to give before the Q&A begins. Thank youvery much. We can now start the Q&A.Mr. Subhadip Mitra: Right sir.Moderator: Ladies and gentleman we will now begin the question and answer session.If you have question please press * and 1 on your push button phone and await yourturn to ask the question when guided by the facilitator. If your question has beenanswered before your turn and you wish to withdraw your request, you may do so bypressing the # key. Participants are requested to restrict the number of question to 2 ata time.Mr. Subhadip Mitra: Sir I have a couple of questions first.

5 of 20Mr. A.K. Singhal: Yeah.Mr. Subhadip Mitra: Yeah with regard to our CAPEX plan that we have for the currentyear, you mentioned that we had a planned capacity expansion of 2490 megawatts.Mr. A.K. Singhal: Yeah.Mr. Subhadip Mitra: Of this 500 MW is already commissioned.Mr. A.K. Singhal: Yeah.Mr. Subhadip Mitra: Another 500 at Sipat and 500 at Kahalgoan, so that is another1000 megawatt that would be coming in.Mr. A.K. Singhal: Yeah.Mr. Subhadip Mitra: And sir with regards to the balance, can you give me a littleclarification please.Mr. A.K. Singhal: There is one unit of 740 megawatt of Dabhol and another is 250megawatt of joint venture with Steel Authority of India Ltd.Mr. Subhadip Mitra: Okay I understand.Mr. A.K. Singhal: So that is how it makes.Mr. Subhadip Mitra: 2490. Right sir, thank you so much. Moderator please continue.Moderator: Yes we have our first question from Mr. Ravindranath Naik, RelianceMoney. Mr. Naik please go ahead.Mr. Ravindranath Naik: Good afternoon sir.Mr. A.K. Singhal: Good afternoon.Mr. Ravindranath Naik: Sir, I had some clarification herein you mentioned that inKahalgaon you are setting over 500 megawatt power plant that will commission thisyear, but earlier we have said that the capacity to be commissioned would be 1000megawatt…Mr. A.K. Singhal: Total capacity of Stage II of Kahalgaon Project is 3x500 MW. Oneunit has already been commissioned on 31 st March 2007 and one more unit we areplanning to commission during the current financial year.Mr. Ravindranath Naik: Okay so in this quarter it will be commissioned.Mr. A.K. Singhal: Definitely, we are planning to commission in this quarter.Mr. Ravindranath Naik: Okay so whether you have started any, generating any interimpower in these power plants.

6 of 20Mr. A.K. Singhal: Had it started, it would have been commissioned.Mr. Ravindranath Naik: Okay.Mr. A.K. Singhal: We would have declared it as commissioned.Mr. Ravindranath Naik: Okay sir. Sir, what is the PLF of the Vindhyachal Power Plantright now.Mr. A.K. Singhal: For commercial reasons, we do not give the individual station wisePLF.Mr. Ravindranath Naik: Okay sir anyway this tax on staff cost has grown upsubstantially. So do we expect any sort of pass through of this increased cost in thetariff?Mr. A.K. Singhal: Definitely staff cost is on account of wage revision which is due from1 st January 2007. And as per the provision of the regulations, any increase in the salaryconsequent to the wage agreement, it will be allowed as a pass through cost under tariff.Mr. Ravindranath Naik: Okay so when, if already, any pass through has happenedor…Mr. A.K. Singhal: Had it happened we would have definitely disclosed that, it is purelya provision which we have made.Mr. Ravindranath Naik: So when should we expect this pass through to happen in thisquarter.Mr. A.K. Singhal: Once the wage agreement is made with the union and associationsand wage settlement takes place, only after that we can go back to the regulator and getthe tariff refixed.Mr. Ravindranath Naik: Okay, okay thank you very much sir.Moderator: Thank you Mr. Naik. We have our next question from Mr. Atul fromCitigroup, Mr. Atul please go ahead.Mr. Venkatesh: Sir this is Venkatesh from Citigroup. Firstly, if you see over the lastcouple of quarters your effective tax rate as a percentage of PBT has been somewhere20% to 23% why it has been suddenly shot up to somewhere around 35% given that theSEB bond income you do not have to pay any tax, any particular reason for the tax rateto go up this high.Mr. A.K. Singhal: See one thing you must remember that in case of NTPC taxes whichwere recoverable from customers were shown separately as tax recoverable. If you lookat our tax liability which we have shown, our tax expense is Rs.9.585 billon as againstRs.5.259 billion in the corresponding quarter of previous year. Out of this our direct taxliability is only Rs.2.021 billion as against Rs.1.369 billion in the corresponding period so…

7 of 20Mr. Venkatesh: So if it is not true about the first two quarters of this year , then why isthe first two quarters tax up?Mr. A.K. Singhal: Well I am coming on to that. In the third quarter we have got anassessment done by an Assessing Officer who has raised an additional demand of Rs.607 million, about Rs.60 Crores. Similarly, if you go to the 9 months period, our directtax liability has gone up from Rs.2.941 million to Rs.4.405 million that is from Rs.294 toRs.440 Crores. As you may see there has been a growth of 6.43% in our other incomein the 9 months period. Further, our income from the tax free bond has come downwhereas income from the fixed deposit with the bank has gone up, because of thatreason there is slight increase in the tax liability. Otherwise, there has not beensubstantial increase in the tax liability of NTPC which is to be taken directly by us.Mr. Venkatesh: Sir, I have another question with your venture with BHEL and someother related questions. First of all does this equipment manufacturing JV includesmanufacture of boiler turbine generator also. If it is so, what is the likely capacity of theBTG facility. Are you looking for manufacturing a BTG facility. And secondly, given thefact that time and again we keep hearing newspaper reports where NTPC has beensaying that one of the primary reasons why their CAPEX is not going on time is becauseof BHEL. And finally you end up with BHEL! NTPC has been forced to form a JV withBHEL, Why would NTPC not look at any other foreign partners?Mr. A.K. Singhal: You see so far as our MoU or joint venture agreement which we havesigned with BHEL is concerned, at this first stage, I cannot share much details with you.Let the company be formed and then the board of the company would decide whichequipment to be manufactured, which equipment not to be manufactured. Coming on toyour second question regarding the blame to be passed on to BHEL, it is notcorrect .Wherever they have delayed we have said that supplies have been delayed byBHEL. And once when we are going with BHEL to form a joint venture, it is with a viewto create more competition and more capacity in the country. We are going into jointventure to supply to the state electricity boards who will be setting up the power projects.Similarly, on these principles we are going with BHEL to setup a manufacturing facilityand take up the EPC jobs.Mr. Venkatesh: Okay sir and lastly on your, again once again in interviews with NTPCthere are talks about NTPC and Bharat Forge JV, now what exactly is going to be donein this JV.Mr. A.K. Singhal: At this moment, it is difficult to comment on this, unless we actuallysign an MOU and sign a joint venture agreement.Mr. Venkatesh: Thank you sir.Moderator: Thank you for your question sir. We have our next question from Mr.Abhishek Tyagi from CLSA, Mr. Tyagi please go ahead.Mr. Rajesh: Good afternoon sir, I am Rajesh here.Mr. A.K. Singhal: Good afternoon Mr. Rajesh.

8 of 20Mr. Rajesh: Sir, one question when you gave the adjusted profits you have alsoadjusted the additional wage provisions which you have made.Mr. A.K. Singhal: Yeah.Mr. Rajesh: Okay, but sir, strictly speaking those are the costs which have to beincurred, so in a way they are not exceptional.Mr. A.K. Singhal: Yeah.Mr. Rajesh: Right so should those costs are to be adjusted?Mr. A.K. Singhal: We are adjusting in the sense because these are reimbursablethrough the tariff mechanism. I should not adjust these costs to my profit, provided Ihave included these costs into my O&M to be recovered through tariff.Mr. Rajesh: But do you think because the current tariffs are set for reviewing FY 2010.So do you think by retrospective basis you will get a increase in…Mr. A.K. Singhal: Yes, yes Mr. Rajesh the regulations are clear, any wage increasewhich has happened consequent to the wage agreement would be given by theregulator to us.Mr. Rajesh: Okay sir, second question as you mentioned initially if I did not hear wrongthat PLF of some of gas plants was lower because of lower demand for that power.Mr. A.K. Singhal: Lower demand would happen because of again non-availability ofgas because nobody would want liquid fuel, I said from that perspective.Mr. Rajesh: Actually it is supply constraint rather than a demand constraint.Mr. A.K. Singhal: Pardon.Mr. Rajesh: It is actually a supply constraint rather than a demand constraint.Mr. A.K. Singhal: It is a supply constraint.Mr. Rajesh: Okay fine sir, thanks.Moderator: Thank you for your question sir. We move onto a next question from Mr.Kartik from Lehman Brothers, Mr. Karthik please go ahead.Mr. Karthik: Good afternoon sir, Karthik here.Mr. A.K. Singhal: Good afternoon Mr. Karthik.Mr. Karthik: Yes sir couple of questions, the first one a very similar to your employeeprovision, can I presume that these exchange differences relating to interest would alsobe pass through in the tariff.

9 of 20Mr. A.K. Singhal: Yeah it is a pass through in the tariff. To the extent it is pass throughwe have already reduced the sales to that extent.Mr. Karthik: Okay so they are in sense recoverable so if you …………………Mr. A.K. Singhal: Either recoverable or payable.Mr. Karthik: Okay. And sir second question, is there any updates or anything on coalinitiative abroad is there any investment, the scale of investment and the countries whichare being targeted, any updates on that front.Mr. A.K. Singhal: We are looking for opportunity in Indonesia, Mozambique, SouthAfrica. So far as investment is concerned we have sufficient provision available in ourCAPEX for 2007-2012 as well as 2012-2017. We are on a look out for some assetsoutside the country.Mr. Karthik: Sir now assuming you secure this coal block and you bring imported coalinto India considering that imported coal right now is very-very expensive, will the tariffmechanism allow you to pass the coal cost through.Mr. A.K. Singhal: At this moment, yes, it is a pass through.Mr. Karthik: I see because I was just wondering if coal is so expensive, why would thegovernment actually encourage you bringing imported coal since then the tariff could bevery high.Mr. A.K. Singhal: But you look at it from the perspective of, calorific value of our coal isjust 3000 kilo calories whereas the imported coal which we get has a calorific value of6000. It also has lower ash content. These are the two considerations. With thedomestic coal, if you blend the imported coal to the extent of say 20% to 25%, itincreases the efficiency of the coal stations.Mr. Karthik: Okay. And sir on any of this super critical unit, are you in talks with anyChinese vendors and have you figured up any Chinese vendors.Mr. A.K. Singhal: We have not.Mr. Karthik: Not as of now is it.Mr. A.K. Singhal: Not as of now.Mr. Karthik: Thank you very much.Mr. A.K. Singhal: We do not award contracts on negotiated basis first of all, we do it oninternational competitive bidding basis.Mr. Karthik: Oh yeah, have you come across any Chinese vendors as bidders?Mr. A.K. Singhal: No, no so far no Chinese vendor has come.Mr. Karthik: Thank you very much sir.

10 of 20Mr. A.K. Singhal: Thank you.Moderator: Thank you Mr. Karthik. We have our next question from Mr. Prasad fromHSBC, Mr. Prasad please go ahead.Mr. Prasad: Good afternoon sir.Mr. A.K. Singhal: Good afternoon.Mr. Prasad: My first question is the capacity addition during this first 10 months ofFY2008 sir.Mr. A.K. Singhal: We have commissioned 500 megawatt and 740 megawatt at Dabholso total of 1240 megawatt.Mr. Prasad: 1240, okay Sipat of 500 and …Mr. A.K. Singhal: Sipat of 500 and 740 at Dabhol.Mr. Prasad: And how much is expected in next two months.Mr. A.K. Singhal: 1250 MW during the last quarter 2490 MW for the year 2007-08.Mr. Prasad: Okay. And how is, I mean if we are firing our plant at 93% or 91% howare we getting linkage from the Coal India Ltd. beyond 85%. Are we importing any coalto fire them to achieve such a high PLF level.Mr. A.K. Singhal: We imported a very small quantity, about 1.1 million metric ton ofcoal. I have given the detail while I was talking about the coal stock. I said that out of89.576 million metric ton of coal 1.742 million metric ton is of imported coal.Mr. Prasad: Okay and how is your coal situation in various plants because as we cansee in the 6 plants, the coal stock is at critical level.Mr. A.K. Singhal: Coal Stock is satisfactory. For one or two days, it maybe critical butwe are taking care of that coal stock and it will remain satisfactory.Mr. Prasad: Okay so coal stock is as comfortable level as of now for all.Mr. A.K. Singhal: Yes actually we keep on reviewing the stock situation on day-to-daybasis and since majority of these stations are captive there is no problem of low stock.Mr. Prasad: Do we buy some coal through eBooking or ---Mr. A.K. Singhal: No we are not buying any coal through eBooking.

11 of 20Mr. Prasad: Okay so even if you do not get coal from the particular coal linkage youmanage it from other sources, from the …Mr. A.K. Singhal: Yeah that is there. We have specific coal linkages. It is not that wemanage from others. We are getting coal from the linkages, which have been providedto us.Mr. Prasad: Okay sir thank you very much.Moderator: Thank you Mr. Prasad. We have our next question from Mr. Sumeet fromGlobal Securities, Mr. Sumeet please go ahead.Sumeet Budhiraja: Thank you for answering my questions. My name is SumeetBudhiraja from First Global Securities. Sir my question is on Pakri Barwadih mine. Asper the original plan, it was supposed to get commissioned by December 2008. So, it ison schedule and you know what will be the transfer pricing for this coal.Mr. A.K. Singhal: Well your first question regarding starting of mine. Because of certainconstraint in acquisition of land, the mining has been shifted slightly. Now the process ofacquisition of land is on and we expect sometime in 2008 we would be able to start coalmining from this project.Sumeet Budhiraja: Right and maybe the initial quantity will be quite small….Mr. A.K. Singhal: It has to be, it has to be ramped up over a period of time, ultimately itwill achieve a quantity of 50 million tons by 2017.Sumeet Budhiraja: And sir how would you determine the transfer price.Mr. A.K. Singhal: Still it is too premature to talk about that, but I can say that we will notearn less than what we earn on power assets, but let us see what happens.Sumeet Budhiraja: As in terms of ROE.Mr. A.K. Singhal: Yes in terms of ROE it will not be less then 14%.Sumeet Budhiraja: Right but you know on the power side we have lot of incentives andefficiency.Mr. A.K. Singhal: You see well that is why I am saying that it is not appropriate at thisstage to discuss this issue, let us wait for the moment to come. As you can not havesame efficiency parameters for a station generating at 90% and another at 70% andefficeiency parameter has to be an average of the two. Similarly, for mining also I hopethat mine regulator will also act in the same way.Sumeet Budhiraja: Sir what would be the direct CAPEX by NTPC and by its JVs forFY2009 .Mr. A.K. Singhal: For FY2009 the total CAPEX would be….… I will just tell you in alittle while.

12 of 20Sumeet Budhiraja: Yes sir, sure, thank you sir.Moderator: Thank you. We have our next question from Mr. Mr. S. Mitra from Jet AgeSecurities, Mr. Mitra please go ahead.Mr. S. Mitra: Yeah very good afternoon to you sir. My question is regarding the taxwhich was answered by you, but I have some other clarifications. Firstly even afterassessing officer has a 60 Crores additional tax, still the tax rate is quite high, this isnumber one. Number 2 is that if the taxes are passed through then should you see theyare passed through in the next quarter.Mr. A.K. Singhal: Taxes are billed on quarter-to-quarter basis.Mr. S. Mitra: Okay. Still even after taking this 60 Crores into consideration, the tax isquite high. Can we get a clarification on this.Mr. A.K. Singhal: That is what I say that increase in tax is partly because of theincrease in the income, in the current quarter on account of higher revenue which wehave generated from other incomes, from our surplus money.Mr. S. Mitra: Okay.Mr. A.K. Singhal: If you look at it from Rs 136 Crores it has gone up to Rs 202 Croreswhich is roughly about 48% higher than what was in the corresponding period. And if weadd Rs 60 Crores in Rs 136 Crores it becomes Rs 196 Crore. There has not been muchincrease in the tax liability.Mr. S. Mitra: Okay, thank you sir.Mr. A.K. Singhal: The CAPEX for the financial year 2008-2009 is 13,588 Crores. Thisis answer to the question of Mr. Sumeet, hello.Moderator: Yes sir can we go to the next question now.Mr. A.K. Singhal: Yeah.Moderator: Okay we have a question from Mr. Vinod from Credit Suisse, Mr. Vinodplease go ahead.Mr. Vinod: Yeah good afternoon Mr. Singhal.Mr. A.K. Singhal: Good afternoon.Mr. Vinod: Most of the questions have been answered, I just had one question, what isthe current status at you know the coal blocks, I mean I think last I heard was expressionof interest had been revised for the contract for mining, and the mining contract hasbeen given out.Mr. A.K. Singhal: We are in the process of issuing final RFP. As you are aware RFQwas issued. RFP has been discussed with various potential bidders. And after theclarifications which were sought by the potential bidders, we are in the process of issuing

13 of 20the RFP. Hopefully very soon, say, within next 6 weeks we will get a bid for coal mining,Mine Development cum Operator.Mr. Vinod: And so sir what is this 5.5 billion ton of reserves? The actual mine reserveswould be just 2.8 billion .Mr. A.K. Singhal: Yeah.Mr. Vinod: Okay sir thanks a lot sir.Moderator: Thank you Mr. Vinod. We have our next question from Mr. Aman Batrafrom Kotak, Mr. Batra please go ahead with your questions.Aman Batra: Good afternoon sir.Mr. A.K. Singhal: Good afternoon.Aman Batra: Sir can you just upgrade us on the international forays for Sri Lanka andNigeria which we have been talking about, any updates on that?Mr. A.K. Singhal: So far as Sri Lanka is concerned, they have identified some site. Ourpeople would be visiting Sri Lanka shortly and try to finalize the site. Only after that theactivities will start. As regards Nigeria, it is too premature but some discussions aregoing on, once some conclusive agreement is reached we will come back to you.Aman Batra: And sir if the things with Nigeria work out, any projects that we areprobably going to see on the Indian side based on the Natural Gas contacts?Mr. A.K. Singhal: Let us wait for gas supply agreement to be completed. Because ourexisting gas projects have sufficient land for any capacity enhancement. Let us first havethe fuel and then we will decide about where to add further capacity.Aman Batra: Okay sir thank you sir.Moderator: Thank you Mr. Batra. We have our next from Ms. Shilpa from JP Morgan,Ms. Shilpa you may please go ahead with your question.Ms. Shilpa: Yeah good afternoon everybody.Mr. A.K. Singhal: Good afternoon.Ms. Shilpa: Just had a few questions, could you give us an account of the equipmentsorder that you have placed over the last one quarter and while answering this could youalso touch upon the status of Barh Phase II and North Karanpura.Mr. A.K. Singhal: So far we have placed orders for 17,350 megawatt till date included500 megawatt already commissioned. The order which we have placed recently is forBongaigaon 3x250 megawatt, Nabinagar 4x250, Mauda 2x500, Vallur JV of TNEB2x500, Aravalli 3x500, Tapovan Vishnugad for 520 megawatt that is hydro, Simhadri II,2x500 megawatt, Lohri-Nagpala 4x150 megawatt, Farakka 1x500, Korba 1x500 and

14 of 20others which are already under construction. So far as Barh II is concerned, bid for SGpackage is under evaluation and TG package bid has been opened and which is alsounder evaluation. For North Karanpura, main plants bids are expected to be openedsometime in March and after that it’s evaluation would be done.Ms. Shilpa: Okay and that was a very detailed account thank you. Sir, the 750megawatt Bongaigaon for which you have disclosed the current cost recently, wenoticed the cost even if you exclude the IDC is higher compared to conventionalbenchmark. Is there any particular reason for that?Mr. A.K. Singhal: Yes, we are installing FGD. We are using the Flue GasDesulfurization system because of the coal quality which will incur additional capital costof about 0.70 Crores per megawatt.Ms. Shilpa: You are using flue gas desulfurization technology sir.Mr. A.K. Singhal: Yeah because of the coal quality there and environmental norms.Ms. Shilpa: Okay the coal is coming from the same source is it...Mr. A.K. Singhal:coalmines.Yes coal is coming from Assam itself and partly from BCCLMs. Shilpa: Okay but is it due to environmental norms in Assam that you are using this…Mr. A.K. Singhal: The coal has got a higher sulfur contents so to control the sulphurcontents we have to use this FGD system.Ms. Shilpa: Okay sure, thank you. And sir and my final question is with relation to thehydro projects that you proposed in XII plan. Arunachal Pradesh apparently is asking forupfront deposits and all that for its new hydro projects. So is there any change in yourhydro projects target for the XII plan.Mr. A.K. Singhal: We have not yet changed any target, we have already signed anagreement with Arunachal Pradesh government for setting up power projects inArunachal Pradesh.Ms. Shilpa: Okay sir, thank you so much.Mr. A.K. Singhal: Thank you.Moderator: Thank you Ms. Shilpa. We have our next question from Mr. Atul fromCitigroup, Mr. Atul please go ahead.Mr. Atul Jain: Yeah good afternoon sir. Sir recently there were some reports in themedia that in certain parts of the country the regulator is considering to increase thetariffs because of increase in the price of coals and other cost. So are you seeing any

15 of 20increase in the price of electricity either in parts of the country or on an overall basis innext 3 to 6 months, due to increase in price of coal?Mr. A.K. Singhal: You see Coal India has recently issued a notification with effect from7 th December 2007 increasing their coal price. And as per the tariff policy the cost of thefuel is a pass through. So irrespective of whatever increase takes place in the cost ofthe fuel, it will be a pass through.Mr. Atul Jain: So sir how much price increase you are expecting on an average inpercentage termsMr. A.K. Singhal: They have increased by about 10%.Mr. Atul Jain: So the increase in the price of electricity will be on an average 10%.Mr. A.K. Singhal: No it would not be because you look at your variable cost, it is justabout 60% of the total cost.Mr. Atul Jain: Okay so around 5% to 7% we can assume, is that, fair to say?Mr. A.K. Singhal: It could be, it could be, but it is difficult to say because your total cost,your total batch includes hydro, coal. Only on the coal capacity, this will be increased;not on the total electricity, because electricity supply comprises of nuclear, hydro, gas.The increase maybe around 3% on overall basis.Mr. Atul Jain: Okay and sir how much time roughly it would take for all this price hike tocome in play.Mr. A.K. Singhal: It is automatically.Mr. Atul Jain: Automatically, thanks, thanks a lot.Moderator: Thank you Mr. Atul. We have our next question from Mr. Sumeet from FirstGlobal Securities, Mr. Sumeet please go ahead.Sumeet Budhiraja: Sir thanks for giving that CAPEX number 13,588 Crores. Justwanted to understand sir what would be the new capacity which we will commission inFY2009 in megawatts.Mr. A.K. Singhal: 2670 megawatts.Sumeet Budhiraja: 2670 and from the JVs.Mr. A.K. Singhal: It includes everything.Sumeet Budhiraja: Sir direct would be how much.Mr. A.K. Singhal: Except 250 MW , balance is direct.Sumeet Budhiraja: Right sir, thank you so much.

16 of 20Moderator: Thank you Mr. Sumeet. We have a question from Mr. Mr. RavindranathNaik from Reliance Money, Mr. Naik please go ahead.Mr. Ravindranath Naik: Thank you first giving an opportunity again to ask youquestions. Sir I want to know just this you have said that in Bongaigaon thermal project,you are planning to spend 4.4 Crores extra for megawatt.Mr. A.K. Singhal: No, Rs 0.7 Crores per MW.Mr. Ravindranath Naik: Extra for this desulphurizing plant, are you planning any sort ofCAPEX in any other power plants in the country.Mr. A.K. Singhal: Pardon your question.Mr. Ravindranath Naik: Are you planning such type of project in any other thermalpower plants in the…Mr. A.K. Singhal: Only in Bongaigaon we are doing this at the moment.Mr. Ravindranath Naik: Okay, sir okay thank you.Moderator: Thank you Mr. Naik. Participants who wish to ask any further questionsmay please press * and 1. We have a question from Mr. Ketan from Kotak Securities,you may please go ahead with your question.Mr. Ketan: Yeah good afternoon sir. Sir I just had a question regarding the Sipat plant,now this plant was commissioned way back in May 2007 and the publicly available datasays that there has been no generation from this Sipat plant.Mr. A.K. Singhal: May 2007, sorry.Mr. Ketan: May 2007. And what would have been the generation from this plant,because the data suggest that there has been no generation from this plant till data tillDecember.Mr. A.K. Singhal: You see for an event which has not happened, we should not talkabout that, once that happens only we will give the figure.Mr. Ketan: I mean what should we take, there has been no generation, I believealmost…Mr. A.K. Singhal: Definitely there is no generation, because there were certain issues,which we are trying to sort out and settle. And definitely we are planning tocommercialize this plant during the current quarter.Mr. Ketan: Okay so the issues were on fuel supply front or what was the kind of issuethat we faced.Mr. A.K. Singhal: That we can discuss separately once you come for one-on-onemeeting. It is not appropriate to discuss these issues here.

17 of 20Mr. Ketan: Alright sir, alright that is all from my side. Thank you very much.Moderator: Thank you for your question sir. Ladies and gentleman for any furtherquestions you are requested to press * and 1.Mr. Subhadip Mitra: Sir this is Subhadip, I just had another question, could we haveyour debt and the cash figures as of the December 2007.Mr. A.K. Singhal: Our cash is Rs. 15,000 Crores and our debt would be around Rs.27,000 Crores roughly.Mr. Subhadip Mitra: Okay, okay thanks a lot.Mr. A.K. Singhal: Debt is Rs. 24,816 Crores.Mr. Subhadip Mitra: Cash is ….Mr. A.K. Singhal: Cash is Rs. 15,138 Crore and Debt is Rs.24,816 Crore.Mr. Subhadip Mitra: Okay I got it, thank you.Moderator: Thank you Mr. Mitra. Participants who wish to ask any further questionsare requested to press * and 1. We have a question from Mr. Ravindranath Naik fromReliance Money, Mr. Naik please go ahead.Mr. Ravindranath Naik: Sir I want to know whether the regulator is planning to reducethe ROE from 14% to 12%. So what kind of impact it would have on your tariff or canyou please throw some light on this.Mr. A.K. Singhal: As I said that let us wait for the regulation only then we will talk abouthow much it would impact. It cannot be that everything would be negative. Theremaybe some positives also. First of all it is not happening, if it happens then we have tolook at the tariff policy in totality, not in parts.Mr. Ravindranath Naik: But you are a dominant generator. You are having somesuggestions to make for the regulator. So what are the kind of suggestions you arehaving in your mind, sir can you please…Mr. A.K. Singhal: We are making suggestions to the regulator, we are also doingadequate policy advocacy for these suggestions.Mr. Ravindranath Naik: Okay, okay thank you sir, thank you.Moderator: Thank you Mr. Naik. We have a question from Ms. Manjari from TaurusMutual Funds, Ms. Manjari please go ahead.Ms. Manjari: Your tax component was increased a lot, if you could explain that a bit?.Mr. A.K. Singhal: Yeah as I had already earlier explained it has now gone up becauseearlier we use to show our tax liability purely of NTPC. Consequent to the change in the

18 of 20account policies based on the opinion of the Institute of Chartered Accountants of India,we have to show the tax liability in totality which includes NTPC’s direct tax liability andthe tax liability to be recovered from the beneficiaries. Our actual tax liability on quarterto-quarterbasis has gone up from Rs.136 Crores to Rs.202 Crores. And this Rs.202Crores includes additional tax consequent to the assessment done by the assessingofficer for the previous years by making some additions which should not be there, butwe have accounted for that as tax expense of the order of about Rs.60 Crores. Similarlyfor the 9 months period from 294 Crores it has gone up to 440 Crores. Again the taxliability on this account is on account of 60 Crores additional. If we add back that, thereis a nominal increase which is on account of higher income earned from the taxable part.The moment bonds gets encashed on account of repayment, the income getscategorized under the taxable income group.Ms. Manjari: Okay fine. Thank you.Moderator: Thank you Ms. Manjari. Participants who wish to ask any further questionsmay please * and 1. We have a question from Mr. Ankit from Dolat Capital, Mr. Ankitplease go ahead.Mr. Ankit Bapel: Good afternoon sir, just one question from which companies do youbuy your carbon filters.Mr. A.K. Singhal: We have not bought any carbon filters from any company at themoment.Mr. Ankit Bapel: Carbon filters, the equipment which are used for you know pollutioncontrol and all those?Mr. A.K. Singhal: We source equipment on international competitive bidding basiswhosever quotes the lowest, we buy from them.Mr. Ankit Bapel: Not from India.Mr. A.K. Singhal: I would not be able to give answer to this at this stage.Mr. Ankit Bapel: Fine thank you sir.Moderator: Thank you Mr. Ankit. We have a question from Mr. Vishal Khandelwal fromEquity Marster, Mr. Khandelwal please go ahead.Vishal Khandelwal: Good afternoon Mr. Singhal I had a question regarding somenewspaper item recently which cited that power companies in India and China areamongst the largest or the biggest polluters in the world. And the newspaper item alsocited the case of NTPC. So just wanted you to divulge more on that matter about theconcerns that extra capacity based on coal, what kind of impact do you see on thepollution side and how is NTPC taking care of that issue.Mr. A.K. Singhal: So far as NTPC is concerned we meet all the environmentalstandards which are prescribed by Government of India for setting of the power plants orfor releasing the CO2 into the atmosphere. And I can say that we are performing betterthan the norms prescribed by the Government of India.

19 of 20Vishal Khandelwal: Okay.Mr. A.K. Singhal: So far as pollutant is concerned, it is developed countries who arepolluting the atmosphere. Coal is the cheapest source of generating the power. I do notsay that we are going to pollute the country with the pollutant, but we will ensure andtake all steps to ensure that we do not become the main polluters in the country.Vishal Khandelwal: Right sir, I appreciate that. Another thing you talked about 17000megawatts of capacity which is already under construction for the XI plan period. Sohow easy or difficult it is for you now to get the land required for these power plants orare you already have that kind of a land under wraps currently.Mr. A.K. Singhal: Yeah whatever capacity which we have ordered, the land for thesame is in our custody.Vishal Khandelwal: Okay and what about the manpower issue, what kind of attrition doyou have at this point in time in the middle management side.Mr. A.K. Singhal: Our attrition rate is around 1.91%. Such attrition is bound to happen due to enhanced economic growth taking place in ourcountry. However, we have so much of depth in our manpower that junior people cantakeover from the senior people . We have about 24000 plus manpower as on date.We feel rather proud when our people go and head other companies.Vishal Khandelwal: Right sir, thanks a lot sir.Moderator: Thank you Mr. Khandelwal. Mr. Mitra.Mr. Subhadip Mitra: Yeah Mr. Singhal would you like to take a last question.Mr. A.K. Singhal: I can, it is up to you.Mr. Subhadip Mitra: Okay, moderator are there any other questions.Moderator: Yes we have one question, should we take it.Mr. A.K. Singhal: Yeah please.Moderator: Okay, we have a question from Mr. Abhishek Puri from JM Financial, Mr.Puri please go ahead.Mr. Pradeep: Yeah this is Pradeep here sir, I just wanted to understand with recentlyNational Tariff Policy outlining tariff recovery on the basis of Case 1 and Case 2biddings. So going forward whether this cost competitive bidding shall be good forNTPC? We just wanted to have a picture how things will move on. And if we arerequired to sell our power under case 1 biddings, where exactly we stand?Mr. A.K. Singhal: You see so far as NTPC is concerned, the state utilities areexempted to bid based on competitive bidding. So we can continue to setup powerplants till 2011 on PPA route, but that does not mean we are not preparing for going in

20 of 20for competitive bidding. We are preparing ourselves and we have participated in earlierprocess and we would be participating in the future also. And we have got specialrelaxations on the Government of India for making investment of more than 1000 Croresin one subsidiary company. The basic purpose of getting that relaxation is that that wemust win some of the projects based on competitive biddings.Mr. Pradeep: Sir I am not able to understand this provision. Does this mean thatFY2011 means for the projects which will get commissioned up to FY2011 or conceivedup to or which will have financial closure up to FY2011.Mr. A.K. Singhal: Which are conceived up to 2011.Mr. Pradeep: Okay for all those projects you are exempted from the competitive biddingand then onwards you will have to sell whatever power you will produce from projectson competitive bidding. Recently if I am not mistaking the bid that was carried out forMP, Haryana and Gujarat, can we have some idea where exactly NTPC tariffs stood visà-visthe competitiors?.Mr. A.K. Singhal: Our cost of generation is the lowest at the moment, if you see theweighted average cost we are supplying to the state electricity board is Rs. 1.75.Mr. Pradeep: Sir that should be due to all those older plants which have beendepreciated, can we have some idea of recently commissioned plants? What is the costof generation in any particular two-three plants which have been recentlycommissioned?Mr. A.K. Singhal: That we could discuss separately because of the commercialreasons let us not discuss those issues here.Mr. Pradeep: Okay, okay sir, thank you.Moderator: Thank you Mr. Puri, Mr. Mitra.Mr. Subhadip Mitra: Yeah I think we can now conclude the call now.Moderator: Yes I handover the call to you.Mr. Subhadip Mitra: Right I think we have had a very interactive session today, I wishto once again thank Mr. Singhal of NTPC for giving us an insight and sharing his viewswith us, thank you once again sir.Mr. A.K. Singhal: Thank you very much, thank you Subhadip.Mr. Subhadip Mitra: Right sir.Moderator: Ladies and gentleman this concludes your conference for today. We thankyou for your participation and for using Tata Indicom Conferencing Services. You mayplease disconnect your lines now. Thank you and have a great evening.

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