NTPC Q2 FY 2009-10

NTPCQ2 FY 2009-10TRANSCRIPTION REPORT1

Operator:Thank you all and welcome to the Q2 FY10 post result conference call for NTPC hostedby Religare Capital Markets Limited.At this time, all the participants are in a listen-only mood. There will be a presentationfollowed by a question and answer session at which time if you wish to ask a questionplease press *1 on your telephone. Please be advised this conference is being recordedtoday.I would like to hand the conference over to Mr. Kunal Seth, Power Analyst at Religare.Over to you sir.Mr. Kunal Seth:Thank you.I would like to welcome you all for the Q2 FY10 earnings call for NTPC.From the NTPC management we have Mr. A. K. Singhal (Director – Finance),Mr. Chandan Roy (Director – Operation) and Mr. I. J. Kapoor (Director – Commercial).Now I would like to ask Mr. Singhal to give his opening comments post which we canopen the floor for a Q&A session. Over to you sir.Mr. A. K. Singhal:Thank you Mr. Kunal.A very good afternoon to everybody. As told by Kunal I am A. K. Singhal (Director –Finance, NTPC). I have with me Mr. I. J. Kapoor (Director – Commercial).Mr. Chandan Roy (Director – Operation) is not available at the moment as he had to go toMinistry of Power urgently.2

Today the company has announced the unaudited financial results for the second quarteras well as for half year ended on September 30, 2009. The performance of the companyfor the quarter as well as half year has been promising. I would take you through theperformance of second quarter and half year.So far as the operational performance is concerned, we have a total commercial installedcapacity of 28,350 MW as on 30 th September, 2009 as against 27,850 MW as on 30 thSeptember, 2008. A 500 MW unit was commissioned at Kahalgaon, on 28 th June, 2009.We have commercial capacity of 27,912 MWs in comparison to 26,912 MW as on 30 thSeptember, 2008.Gross generation is up for Q2 of current fiscal by 3.348 billion units as compared tocorresponding quarter of last fiscal, registering a growth of 7.12%. For H1, it has shownan increase of 8.53%. Similarly, commercial generation has also shown an increase inboth Q2 and H1 of current fiscal as compared to corresponding period by 7.35% and9.09% respectively. The increase is mainly on account of higher generation from gasstation due to improved gas supplies, synchronization of 500 MW of Kahalgaon unit on28 th June, 2009, better performance by existing stations, additional commercial capacityon account of 500 MW of Sipat stage II declared commercial with effect from 1 stJanuary, 2009, and one unit of 500 MW of Kahalgaon Stage II declared commercial witheffect from December 30, 2008, also 500 MW each at Sipat II declared commercial witheffect from June 20, 2008, and Kahalgaon II declared commercial with effect fromAugust 01, 2008 has contributed to generation for entire half year of current fiscal ascompared to a part of previous half year.The total generation and energy sent out data is as follows:So far as gross generation is concerned for the quarter ended September 2009, it was50.381 billion units in comparison to 47.034 billion units in the corresponding quarter ofthe previous year. Similarly, commercial generation was 50.306 billion units incomparison to 46.862 billion units. Energy sent out was 47.086 billion units against43.816 billion units in the corresponding period registering an increase of 7.46%.Similarly for the half year, gross generation was 105.859 billion units as against 97.535billion units and commercial generation was 105.780 billion units as against 96.964billion units. Energy sent out was 99.226 billion units as against 90.790 billion units,registering an increase of 9.29%.3

As regards gas stations, due to improved supply of gas there is a substantial improvementin Plant Load Factor from 58.20% to 76.89% for the quarter. This improvement in PLFin Q2 coupled with PLF in Q1 is reflected in improvement of H1 as well which has shotup from 62.68% to 78.37%. Improved gas supply has resulted from increased purchaseof gas on spot basis, fall back RLNG and also due to improvement in APM gas supply.In fact the gas stations have registered highest ever H1 PLF till date.PLF for coal station for the half year is marginally up by 0.08%. Due to plannedmaintenance schedule undertaken during the period, the PLF for coal stations in Q2 everyyear is generally lower. PLF of coal stations of NTPC is 82.42% for the quarter endedSeptember 2009 as against All India PLF of 72.21% in comparison to the quarter endedSeptember 2008 of 83.10% and All India of 70.20%. Plant Load Factor for gas stationfor quarter ended September 2009 was 76.89% as against 58.20% for the correspondingperiod.Similarly, for the half year period the Plant Load Lactor for gas station is 78.37% asagainst 62.68% in the corresponding half year of FY 2008-09. For the coal stations, theNTPC Plant Load Factor was 87.62% as against All India Plant Load Factor of 75.95%for the half year while for the corresponding period, it was 87.54% as against All IndiaPlant Load Factor of 73.94%.As far as the new CERC Regulations are concerned, the incentives have been linked toplant availability factor. Our Coal stations had achieved availability of more than 85%.For quarter ended September 2009 the AVF on bar for coal was 85.61% as against85.21% and for gas it is 91.88% as against 79.46%.Now I come to the financial performance.Our sales for the quarter ended September 2009 is Rs. 107.828 billion as against Rs.96.614 billion in the corresponding period registering an increase of 11.61%. Otherincome is Rs. 7.410 billion as against Rs. 7.448 billion. Total income recognized is Rs.115.238 billion as against Rs. 104.062 billion registering an increase of 10.74%.Similarly, for the half year our total income is Rs. 243.028 billion as against Rs. 206.629billion in the corresponding period registering an increase of 17.62%.Profit after tax for the quarter ended September 2009 is Rs. 21.520 billion as against Rs.21.105 billion in the corresponding period registering an increase of 1.96%. For the halfyear, PAT has increased to Rs. 43.456 billion as against Rs. 38.370 billion in thecorresponding period registering an increase of 13.25%.4

If we carry out one off adjustments in our profitability which has been declared for thequarter ended September 2009 and half year ended September 2009, our adjusted PATafter carrying out one time adjustments of previous year’s sales, exchange rate variation,wage revision, and income tax impact, works out to Rs. 22.519 billion as against Rs.18.490 billion in the corresponding period, resulting in an increase of 21.79% as against1.96% before adjustments. Similarly, for the half year ended, PAT would have been Rs.47.138 billion for the half year ended September 2009 as against Rs. 36.850 billion forhalf year ended September 2008, registering an increase of 27.92%.Sales for H1 is up by 18.67% over H1 of last year and for Q2 over Q2 of last year it is upby 11.61%. This is in line with increase in commercial generation by 9.09% primarily onaccount of generation contributed by new units.Also sales have shown improved growthon account of Tariff Regulations 2009 effective from 01-04-2009. Sales also included anamount of Rs 2776 million being surplus AAD now recognized as sales during H1 andQ2 in line with Tariff Regulations 2009.Cash and bank balance was at Rs. 186.972 billion as on 30 th September 2009. PBT is upfor H1 by 28.62% and for Q2 PBT is up by 23.70%. PAT for H1 is up by Rs. 5.086billion over last year, for Q2 PAT is up by Rs. 415 million. After adjustment of one timerefund of income tax amounting to Rs. 5.319 billion received in Q2 and H1 2008, growthin PAT is 31.48% for H1 and 36.32% for Q2 over respective corresponding periods.Employee cost has reduced primarily due to decrease in provision towards pay revision.Other expenditure for Q2, which includes prior period item (in published format) hasreduced primarily due to write back of excess provision on employee’s benefit amountingto Rs. 829 million pertaining to prior period.Let me give an update on various activities.Our capital outlay for 2009-10 continues to remain at Rs. 177 billion. The expenditureon PB coal mining project is likely to be enhanced from Rs. 1.613 billion to Rs. 3.303billion for 2009-10, an increase of 104% mainly on account of cost of land acquisition.The capital outlay for the 2010-11 is likely to be around Rs. 24,000 crores. Substantialprogress has been made at projects under construction. In addition to commissioning of aunit of 500 MW Kahalgaon project, it is expected that 2800 MW consisting of followingprojects will be commissioned during 2009-10:Sipat Unit 1 and 2 of stage IDadri Unit 5 and 6 of Stage IIKorba Unit 7 of stage III1320 MW980 MW500 MW5

In addition to the above, during Eleventh Five Year Plan period, 3240 MW has alreadybeen commissioned and the projects to the extent of 17,930 MW are under constructionat various stages.NIT for bulk tendering for SG and TG for 11 units, 9 for NTPC and 2 for DVC, of 660MW each for 5 projects, 4 for NTPC plus 1 for DVC, have been issued on 16 th October2009 on ICB basis.Stage-I bid which is techno-commercial bid is to be submitted by 28 th January 2010, datefor price bid is to be finalized thereafter. All these projects are to be commissioned in 12 thPlan. All the bidders have to necessarily quote for all the five projects. The successfulbidders will have to set up simultaneously the manufacturing facilities in India. We havealso floated an inquiry for renewable energy for setting up 100 MW for wind powerproject.On the commercial front, during this quarter also, 100% of the amount billed to thecustomers have been realized, thus maintaining the trend of full realization of dues.Coming on to fuel supply, during the first half of the year 63.352 million metric tons ofcoal was received as against 58.505 million metric tons received last year during thesame period, which is 8.28% higher. This includes imported coal of 3.743 million metrictons. During the first half of current fiscal, gas supply was of the order of 13.39MMSCMD as against 10.62 MMSCMD received during first six months of last year.Gas procured on spot basis this year is 2.72 MMSCMD and gas received under fall backarrangement is 1.78 MMSCMD and the balance gas was received under APM and PMTmechanism. The main reason for the increase of gas supply during the first half of theyear is due to incremental gas supply under fall back RLNG from GSPCL.For ensuring fuel security NTPC has executed gas sale agreement with M/s GAIL forsupply of 2.5 MMSCMD of RLNG, 2 MMSCMD on firm basis and 0.5 MMSCMD onfall back basis for a period of 10 years till 31-12-2019 to NCR stations at Anta, Auraiya,Dadri and Faridabad. Supplies are expected from December 2009.The development of PB Coal Mining Project, erstwhile Pakri-Barwadih Coal Miningblock allotted in the year 2004 is progressing well.Our cost of debt in the first half year is 7.18%. Loans amounting to Rs. 143.500 billionhave been tied up with banks during financial year 2009-10 to fulfill debt requirement forthe next three years. Further, the Board of Directors of NTPC have approved loans ofRs. 18.500 billion.Government of India has approved divestment of government’s stake in NTPC Limitedby 5% on 19 th October, 2009 by way of “Offer for Sale”. There will be no issuance offresh equity. The process of divestment is expected to be completed in this financialyear.6

Coming back to our joint ventures, we have signed a Joint Venture Agreement with CILon 12 th October, 2009 for incorporation of a Joint Venture Company with equal equityparticipation for development of Brahmini and Chichro Patsimal coal mine blocks. Thecoal from these mines will be supplied to Farakka and Kahalgaon expansion projects ofNTPC. After meeting the coal requirement of Farakka and Kahalgaon expansion projectsof NTPC, the proposed JV Company will also consider implementation of integratedThermal Power Project, if found feasible.NTPC BHEL Power Project Limited has finalized land for setting up of manufacturingunit at Andra Pradesh.An MoU was signed with NPCIL on 14 February, 2009, to set up nuclear power projectin Joint Venture. JV agreement has been initialed at the level of directors of NTPC and isexpected to be signed shortly.So far as our foray to coal acquisition outside country is concerned, particularly inIndonesia, South Africa, and Mozambique, a proposal for acquisition of stake in coalmine in Indonesia and Australia was received from investment bankers and coal mineowners and the same is under review.On to take over of Patratu TPS, a multidisciplinary expert team of NTPC visited PatratuTPS during May 2009, and subsequently in June 2009 meeting held with JharkhandGovernment and discussed revival plan of Patratu. A detailed proposal regarding thetransfer of Patratu TPS has been sent on 06 July, 2009, to Government of Jharkhand. Thematter was again discussed with Chief Secretary Jharkhand on 16 September, 2009, asper which they will be looking into it.These are some of the highlights I wanted to give before the question and answer session.Thank you very much.Operator:Certainly sir.At this time, participants who wish to ask any questions kindly press *1 on yourtelephone keypad and wait for your name to be announced. If you wish to cancel yourrequest, please press the hash or the pound key.First in line, we have a question from Mr. Abhishek Tyagi from CLSA. You may goahead, please.Mr. Abhishek Tyagi:Good afternoon sir.7

Mr. A. K. Singhal:Good afternoon.Mr. Abhishek Tyagi:Sir, just couple of queries. If you can just help me with which all plants are targeted forcommissioning in the current fiscal sir?Mr. A. K. Singhal:That is I have already told, two units of 660 MW at Sipat, two unit of Dadri 980 MW,and one unit of Korba 500 MW.Mr. Abhishek Tyagi:Thank you sir. Secondly, on your note number 2, regarding surplus AAD amount of Rs.274 crores, which is booked in sales in the current quarter, sir is this a recurring item orwill this be only in this current quarter?Mr. A. K. Singhal:It won’t be a recurring item, it is one time in the current year, but there may be someamount coming in the subsequent years.Mr. Abhishek Tyagi:Sir, this will be net off from Rs. 1936 crores i.e. the AAD amount which you have in thebalance sheet as of 31 st March 2009.?Mr. A. K. Singhal:Yeah, this is out of that only.Mr. Abhishek Tyagi:Okay sir, thanks a lot. Thank you.Operator:Thank you sir.Next in line, we have a question from Mr. Atul Tivari from Citi Group. You may goahead, please.Mr. Atul Tivari:8

Hello sir. Sir, first of all congratulations on a great set of numbers.Mr. A. K. Singhal:Thank you.Mr. Atul Tivari:Sir, I have two broad kind of questions. Sir, the first question is regarding the capacityaddition in current plan; sir, what is your estimate that how much capacity will comeonline in current plan by 2012 in India?Mr. A. K. Singhal:In a recent exercise carried out by Planning Commission, we are confident that theywould be able to reach almost 70,000 MW of capacity addition during the current planperiod. Some of the units which are to be added on best effort basis have not beenconsidered, may be after considering them, they may achieve the target of 78,000 MW.Mr. Atul Tivari:Okay, but sir is there any likelihood of this being below 70,000 say towards 60,000?Mr. A. K. Singhal:It is difficult for me, you can see estimate has to be done by the Ministry of Power. WhatI am communicating to you is based on the estimates done by Ministry of Power.Mr. Atul Tivari:Okay sir, and my second question is regarding the merchant power rates; sir, currently therates are very high, but with the addition of this capacity, do you think that current ratesare sustainable, and if they are not, then to what level they are likely to fall and whatcould be the long term merchant rates as per your estimates?Mr. A. K. Singhal:I would only say that it is not a sustainable model, beyond that it would be difficult forme to talk on this issue.Mr. Atul Tivari:Okay sir. Thank you. Thanks a lot for answering my questions.Operator:9

Thank you sir.Next in line, we have a question from Kashish Tandon from JM Financial. You may goahead, please.Mr. Abhishek Puri:Sir, good evening, this is Abhishek Puri from JM.Mr. A. K. Singhal:Good evening.Mr. Abhishek Puri:Sir, firstly, regarding the fuel cost, I think the fuel cost has come down significantlydespite you know gas based generation higher, we presume gas rates will be much higheron a per unit basis for the power generated. Any reason why they have come down?Mr. A. K. Singhal:I would say that in the corresponding quarter last year the cost particularly of Naphthawas Rs. 63,074 per metric ton and which has come down to Rs. 36,131 per metric ton.Similarly, oil cost was Rs. 42,919 per metric ton, which has come down to Rs. 29,572 permetric ton. Similarly, gas was at Rs. 11,526 per 1000 SCM, our average cost in thecurrent quarter is Rs. 8405 per 1000 SCM. These are some of the reasons for reductionin the fuel charges although coal prices have gone up.Mr. Abhishek Puri:Okay. Sir, secondly, regarding employee expenses have come down significantly if youcompare on YoY basis or on QoQ basis. Was there an over provisioning which you havedone, which you have already mentioned, and have the final settlement being done on thesixth pay commission?Mr. A. K. Singhal:For the executives, the final 2 nd pay commission settlement has been done, for the nonexecutivesit is yet to be done. The reversal of the provision is primarily on account ofthe actuarial valuation which we did for leave encashment etc. There we considered anincrease of 40% while arriving at the valuation for 31 March, 2009. The final valuationagreed is lower i.e. total salary plus 30% increment. To that extent, we have reversed theprovision.Mr. Abhishek Puri:10

One time expense?Mr. A. K. Singhal:It is one time. It has to be one time.Mr. Abhishek Puri:Okay. Sir, thirdly, regarding the news item which was appearing a couple of days backin the papers that Kahalgaon and Farakka have been closed for last 45 days. Sir, anyupdate on that front?Mr. A. K. Singhal:No unit has been closed, they are being run on a part load, but saying that unit has beenclosed completely is not correct, the unit is operating to the extent coal is available.Mr. Abhishek Puri:What extent is units will be operating, what will be their current PLF, if you can sharewith us?Mr. A. K. Singhal:Let us not get into, when we meet we can talk to you and share with you these.Mr. Abhishek Puri:Sure sir. Thank you so much for taking the questions.Operator:Thank you sir.Next in line, we have a question from Mr. Dhaval Doshi from MF Global. You may goahead, please.Mr. Dhaval Doshi:Hello sir.Mr. A. K. Singhal:Yes.11

Mr. Dhaval Doshi:Sir, if you could just once again mention the adjustments which are done for the adjustedprofit, I just missed that part sir.Mr. A. K. Singhal:The adjustment which we have done on the previous year sales…..Mr. Dhaval Doshi:Yeah.Mr. A. K. Singhal:Income tax impact and wage revision; these are the major which we have done.Mr. Dhaval Doshi:Sir, can you quantify it?Mr. A. K. Singhal:Pardon?Mr. Dhaval Doshi:Can we get a quantification for the same sir, item wise?Mr. A. K. Singhal:Previous year sales in the current quarter is + Rs.11 million with the correspondingquarter -1,111 million rupees. As regards foreign exchange variation, 748 million rupeesin the current quarter, the corresponding quarter 923 million rupees. Deferred FERV -377 million rupees, in the corresponding quarter -1,159 million rupees. Prior periodadjustment -781 million rupees, in the corresponding period 869 million rupees. Wagerevision is + 1399 million rupees, and in the corresponding period it is + 3,182 millionrupees. Income tax impact is zero and -5,319 million rupees respectively.Mr. Dhaval Doshi:Okay, thank you sir.Operator:Thank you sir.12

Next in line, we have a question from Bhavin Mitlani from Enam. You may go ahead,please.Mr. Bhavin Mitlani:Hello sir.Mr. A. K. Singhal:Hello.Mr. Bhavin Mitlani:Sir, just one query, the UI rates which have now been changed, do you perceive anychange for NTPC with that respect?Mr. A. K. Singhal:I don’t, there may be partly but so far as coal UI is concerned that has remainedunchanged. So, therefore there wouldn’t be much impact on NTPC.Mr. Bhavin Mitlani:Okay, the UI rate which NTPC would get is Rs. 4.50?Mr. A. K. Singhal:I do not know, whatever rate is there, we will get. At what level the frequency is there itwould depend on that, it wouldn’t be that for all the units we will get Rs. 4.50.Mr. Bhavin Mitlani:Okay, but do you perceive any reduction in volume because of that?Mr. A. K. Singhal:Why do you want to talk on our commercials? We have been saying that we cannotshare these numbers.Mr. Bhavin Mitlani:Okay. One final question is if you can actually share the timeline for the commencementof the Sipat I and II, the Dadri and Korba for current year?13

Mr. A. K. Singhal:We are trying to do it, it will happen in the last quarter of the current year.Mr. Bhavin Mitlani:Okay. All the capacities will…..Mr. A. K. Singhal:All the capacity will come in the last quarter of the current year.Mr. Bhavin Mitlani:Okay, so the true benefit will be reflective next year?Mr. A. K. Singhal:Partly it may come; for Dadri I unit it may come.Mr. Bhavin Mitlani:Okay fine, thank you so much.Operator:Thank you sir.Next in line, we have a question comes from Shubadip Mitra from BNK Securities. Youmay go ahead, please.Mr. Shubadip Mitra:Good afternoon sir.Mr. A. K. Singhal:Good afternoon Shubadip, how are you?Mr. Shubadip Mitra:Great sir. How are you doing?Mr. A. K. Singhal:Fine, thank you.14

Mr. Shubadip Mitra:Sir, this is with regard to Kahalgaon and Farakka, I understand that currently at least forthis month, the PLF is on the lower side. What I want to understand is would theshortage of coal, whether it is with regard to the problem from Coal India side or becauseof a problem on the railway side, it is beyond our control per se. So does that affect ourmandated ROE from these two plants also?Mr. A. K. Singhal:It wouldn’t be. We are making an effort to implement a contingency plan to ensure thatto the extent what we can do it. We are trying to salvage the situation.Mr. Shubadip Mitra:I see. And, the JV that we have signed with Coal India for the further capex of those coalmines, these are expected to be operational by when sir?Mr. A. K. Singhal:We have first signed the Joint Venture Agreement and now company will be formedshortly. It will take quite some time. By the time we will start actually mining the coal itwill take three to four years time from now.Mr. Shubadip Mitra:I understand. Sir, lastly, is there any portion of the imported coal that is coming in goingto be getting allocated towards Kahalgaon and Farakka?Mr. A. K. Singhal:Definitely it will be.Mr. Shubadip Mitra:So, have we started receiving the incremental amount of imported coal?Mr. A. K. Singhal:No, not yet.Mr. Shubadip Mitra:I see. So, any timelines on that front sir?15

Mr. A. K. Singhal:We are waiting for MMTC to start importing.Mr. Shubadip Mitra:I understand. Fine sir. That is all from my side. Thank you.Operator:Thank you sir.Next in line, we have a question from Salim Desai from IDFC SSKI. You may go ahead,please.Mr. Salim Desai:Sir, my question was on this adjustment for Advance Against Depreciation. Sir, if youcould please explain what exactly has been done?Mr. A. K. Singhal:I think it would not be possible to explain how we have done on a conference call. If youcan come personally, we will explain you how we have done it. It is primarily becauseduring the tariff period 2004-09, we were being given the Advance Against Depreciationconsidering deemed repayments to the extent of 7% per annum for 10 years. In 2009regulation, there is no provision of AAD and the depreciation allowed is 5.28% for first12 years period and the balance in remaining life of the plant. So, what we have done is,the amount of AAD required to meet the shortfall in the component of depreciation inrevenue over the depreciation to be charged off in future years has been assessed stationwiseand wherever an excess has been determined as on 1 st April 2009, differentialbetween the two has been recognized as revenue.Mr. Salim Desai:Alright. Okay. So, this is basically for what impact you have had in the first year onresetting of these rates?Mr. A. K. Singhal:This has come, whatever has come this will be the impact of it.Mr. Salim Desai:Alright sir. Thank you sir.Operator:16

Thank you sir.Our next question comes from Mr. Shriram S. V. from BNP Paribas. You may go ahead,please.Mr. Shriram S. V.:Good evening Mr. Singhal.Mr. A. K. Singhal:Good evening.Mr. Shriram S. V.:Sir, I had just one question on imported coal. What is the exact quantum of coal, see wehave a target of 12.5 is what we plan…..Mr. A. K. Singhal:We have not yet received anything out of 12.5 million.Mr. Shriram S. V.:Okay fair.Mr. A. K. Singhal:Whatever imported coal which we have got, 3.74 million tons, it is out of the previousyear order of 8.25 million tons.Mr. Shriram S. V.:Okay. And second question sir, your Simhadri plant is it also on some kind ofmaintenance shut down or something?Mr. A. K. Singhal:No, it is not on maintenance shut down.Mr. Shriram S. V.:Because last month the PLF was slightly down, any specific……Mr. A. K. Singhal:17

May be it was, it was one unit was taken a shut down.Mr. Shriram S. V.:Okay, fair enough. Thank you.Mr. A. K. Singhal:It is a normal maintenance, routine maintenance which we did, not because of coal.Mr. Shriram S. V.:Okay sir. Thanks a lot.Operator:Thank you sir.Our next question comes from Mr. Parag Gupta from Morgan Stanley. You may goahead, please.Mr. Parag Gupta:Good evening Mr. Singhal.Mr. A. K. Singhal:Good evening.Mr. Parag Gupta:Sir, just two questions. Firstly, just to understand in Q1 in your notes you show howmuch is the amount that has been billed and how much has been recognized, thedifference between the two was about Rs 4.9 billion, which I presume could have beenpartly because of the change in regulations.Mr. A. K. Singhal:Yes.Mr. Parag Gupta:18

For Q2, that same number is about 2.8 billion. Just want to understand would the numberhave gone down primarily because of the availability factor being lower this quarter orcould there be something else as well?Mr. A. K. Singhal:It could be because of that factor only.Mr. Parag Gupta:So that would be the primary reason for the drop in that number?Mr. A. K. Singhal:Yes.Mr. Parag Gupta:Okay. And secondly, as far as your coal mining operations is concerned, now what areyou looking at in terms of coal output on an annual basis and when do you think that willstart and how much will that peak out to be?Mr. A. K. Singhal:We are looking at maximum coal output of about 47 million ton by 2017.Mr. Parag Gupta:And when will the first coal start coming in?Mr. A. K. Singhal:First coal we are expecting somewhere around …, by 2012 we expect about 14 millionton of coal production, and first coal we are expecting in 2010-11. Let us see how soonwe could be able to start producing coal from that, out target is during 2010-11.Mr. Parag Gupta:Sure, thanks a lot.Operator:Thank you sir.Next in line, we have a question from Mr. Pankaj Sharma from UBS. You may go ahead,please.19

Mr. Pankaj Sharma:Good afternoon Mr. Singhal.Mr. A. K. Singhal:Good afternoon.Mr. Pankaj Sharma:Sir, just two questions. One is that the ordering activity of this 11 super critical sets, whatdo you think in terms of timeline achievement you can do. Can you do this in this year orit will go in the next year?Mr. A. K. Singhal:Most probably it will go into the next financial year. It cannot happen in current financialyear because the first stage bid is going to be opened sometime in January 2010.After thereceipt of the first stage techno commercial bid, we will be discussing with bidders onfreezing the terms and conditions of the tender, and after that finally the price bid wouldbe called. So, it will go into the next financial year.Mr. Pankaj Sharma:Sure sir. And another question would be on the gas availability for the Ratnagiri plant,like what is the agreement and because I just couldn’t get it when you were explainingthat.Mr. A. K. Singhal:As for Ratnagiri, it has no relation with NTPC’s supply. It is a separate company forwhich they have signed and for the entire capacity of 1900 MW Government hasallocated gas to them. Already they are generating almost 970 MW out of 990 MW Weexpect additional two units to be become operational by the end of this year, so thatwould make the entire capacity available for generating power.Mr. Pankaj Sharma:So sir, no issues in terms of gas availability?Mr. A. K. Singhal:I think there is no issue so far as gas availability is concerned for RGPPL.Mr. Pankaj Sharma:20

Great sir. Thanks very much.Operator:Thank you sir.Our next question comes from Mr. Shankar K. from Edelweiss. You may go ahead,please.Mr. Shankar K.:Congratulations on a great set of numbers sir.Mr. A. K. Singhal:Thank you Shankar. How are you?Mr. Shankar K.:Fine, thank you sir. I just want to ask a couple of questions, basically has the overallterms of the entire, under the new regulation. Is it changed wherein the responsibility ofsourcing the fuel is it still with the developer or the fuel supplier?Mr. A. K. Singhal:It is with the developer. It continues to remain with the developer.Mr. Shankar K.:Okay, so in the sense that technically if your plant is available for 95%, but if the fuel isequivalent to only 70%, would you get efficiency gains or not?Mr. A. K. Singhal:We will not. I can make plant available only if I have the fuel available, I have todemonstrate, any time the beneficiary can ask me to demonstrate, and if I fail to do it Iwill have to pay the UI charges equivalent.Mr. Shankar K.:Agreed. But since you are not able to generate, technically you can consider the fuel hasbeen made available to you, you would have generated….Mr. A. K. Singhal:21

Mr. Shankar, I will put it this way. I have made the plant available to generate at 95%and if I am given a schedule at 85% or 80% then I am eligible to get incentive to theextent of 85%-95% that incentive would be available to me.Mr. Shankar K.:Okay, I got it. And secondly, in your entire initial comments you mentioned that orrather and to the reply to one of the questioners, the adjustment that you have done withrespect to AAD is it will once again recur in future years every year once …..Mr. A. K. Singhal:It will.Mr. Shankar K.:So, just wanted to understand why would it because if you are adjusting it right now foran accumulated basis, why would it recur every year?Mr. A. K. Singhal:Because we are taking the 12 year’s period cycle at a rate of depreciation applicable at5.28% and balance at a different rate of depreciation. Once you sit down we will explainyou in detail. This is difficult, and it will take long time for me to explain that processitself, it may take half an hour to explain that process.Mr. Shankar K.:Okay, and any guidance on the capacity additions that you are planning let us sayanticipated in fiscal 11 and probably in fiscal 12?Mr. A. K. Singhal:We have been talking about 5600 MW next year and balance in the last year, but it willkeep on updating. We are still continuing to maintain 3300 MW in the current year, 5600MW next year, and balance capacity in the last year.Mr. Shankar K.:Okay, understood. Lastly, just wanted to know, in this quarter’s earnings because ofhigher availability of gas, has there been any efficiency gains from gas also booked?Mr. A. K. Singhal:Why do you want…, as we have been saying that we don’t provide input on our ….22

Mr. Shankar K.:No, I don’t want that number, I am saying that ….Mr. A. K. Singhal:We are definitely, why shouldn’t it be? If I have made the plant available at 95% and Ihave been given schedule of 85%, I will earn incentive on that.Mr. Shankar K.:Okay, and lastly, the depreciation figure that you have introduced and incurred in thisyear, does it to some extent incorporate this 274 crores also?Mr. A. K. Singhal:No, it does not incorporate that Rs. 274 crores.Mr. Shankar K.:Even to a partial extent?Mr. A. K. Singhal:Not even to a partial extent. See, this is primarily because of new capacity added andalso some procurement where some mandatory spares we procure and capitalize, thosehave to be charged as depreciation, that has come in the depreciation.Mr. Shankar K.:Okay sir. Thanks a lot, that is all from my side.Mr. A. K. Singhal:Thanks.Operator:Thanks you sir.Our next question comes from Mr. Amit Golcha from NK Global. You may go ahead,please.Mr. Amit Golcha:23

Good evening sir.Mr. A. K. Singhal:Good evening.Mr. Amit Golcha:I have two questions, the first question relates to the tax refund which we got in Q2 09 ofRs. 5.3 billion, just wanted to understand whether we repaid or passed that amount?Mr. A. K. Singhal:This Rs. 5.31 billion was on account of our income, it was not on account of generationincome. Whatever refund …, that way we received a total refund of almost Rs. 2000crores, but the income tax which was to be refunded is not part of this Rs. 5.31 billion.Mr. Amit Golcha:Okay, so this was retained by NTPC?Mr. A. K. Singhal:This was on the income of NTPC other than generation, non-generation income.Mr. Amit Golcha:Okay. And secondly sir, out of the exchange differences regarding the interest plus theloan, which is immediately pass through to SEBs?Mr. A. K. Singhal:100% on normative loan outstanding, the interest cost as well as exchange rate variationis pass through.Mr. Amit Golcha:So, whether you have adjusted the same in the current quarter in the revenues?Mr. A. K. Singhal:Yes, whether we have adjusted in the current…., whenever on actual basis whenever Iremit the money, repay the loan, at that stage whatever actual currency fluctuation comesthat will be recoverable from them.Mr. Amit Golcha:24

Okay sir, so should we then ignore this amount in the PAT because you have alreadygiven price impact of this, you have reduced it from revenues and shown it as incomebelow?Mr. A. K. Singhal:This adjustment we did last year based on the expert advisory committee of the Instituteof Chartered Accountants of India. We have to create reserves, then subsequently aprovision came, they restored that the old provision of AS11 where we could capitalize it,so because of that those adjustments have come, other than that there is nothing.Mr. Amit Golcha:Okay. And thirdly, if you can you know the third question is related to wage provision,how much provision is yet to be created related to pay revision?Mr. A. K. Singhal:There is no provision which is yet to be created all the provisions have been made.Mr. Amit Golcha:Okay, till this quarter?Mr. A. K. Singhal:Yes, till this quarter, and in the future for the non-executive we will continue to create theprovisions, for executive it will be on actual basis.Mr. Amit Golcha:Sure, okay thank you very much sir.Mr. A. K. Singhal:Thank you.Operator:Thank you sir.At this time, there are no further questions from the participants. I would like to hand thefloor back to Mr. Kunal Seth for final remarks. Over to you sir.25

Mr. Kunal Seth:I would like to thank everybody on the call and especially would like to thank NTPCmanagement for taking the time amount and giving us this opportunity. Thank you somuch sir.Mr. A. K. Singhal:Thank you very much.Operator:Thank you sir.That does conclude our conference for today. Thank you for participating on RelianceConferencing Bridge. You may all disconnect now.26