NTPC Limited (NTPC) Earnings Call Transcript & Summary

Ladies and gentlemen, good day, and welcome to the NTPC Limited Q3 FY '21 Results Call hosted by ICICI Securities Limited. [Operator Instructions] Please note that this conference is being recorded. I now hand the conference over to Mr. Rahul Modi from ICICI Securities. Thank you, and over to you, sir.

Thank you, Malika. On behalf of ICICI Securities, I welcome you all to the NTPC Q3 FY '21 earnings conference call. We are joined today by the senior management of NTPC, led by Director of Finance, Mr. A.K. Gautam. I would now like to hand over the call to Mr. Gautam and request him to introduce the management team, followed by his opening remarks and Q&A session. Over to you, sir. Thank you.

Thank you, Rahul. A very good evening to everybody. I, A.K. Gautam, Director of Finance, welcome all of you to the Q3 FY '21 con call of NTPC Limited. I have with me Shri Dillip Kumar Patel, Director, Human Resource; Shri Ramesh Babu, Director Operations; Shri Chandan Kumar Mondol, Director, Commercial; and Shri Ujjwal Kanti Bhattacharya, Director Project. I have also with me the other key members of NTPC team. Today, the company has announced the unaudited financial results for the third quarter of FY '21. The key performance highlights for the quarter and 9 months ended 31st December 2020, have already been disclosed on both the stock exchanges. The company had approved buyback of 2% paid-up capital in the Board meeting held on 2nd November 2020. We are pleased to inform that all associated activities pertaining to the buyback of shares were handled in conformity with the buyback regulations and buyback transaction was successfully settled on 30th December 2020. Now I will touch upon operational highlights for Q3 and 9 months of FY '21. NTPC stand-alone gross generation in Q3 FY '21 is 65.42 billion units and in 9 months FY '21 is 193.28 billion units, as compared to 61.21 billion units and 191.35 billion units in the corresponding previous period. Gross generation of NTPC Group in Q3 FY '21 is 76.53 billion units and 9 months FY '21 is 22.41 billion units, as compared to 68.87 billion units and 214.17 billion units in the corresponding previous periods. NTPC Group recorded generation of over 1 billion units on 18th January 2021, surpassing previous highest day generation of 977.0 million units on 28th July 2020. NTPC hydro and RE stations recorded generation of 0.71 billion units and 4.1 billion units in Q3 and 9 months of FY '21, respectively. In Q3 FY '21, we have added 865-megawatt to our commercial capacity, comprising 800 megawatt at Lara, 15 megawatt solar capacity at Auraiya and 50 megawatt at Kasargod, THDC. With these additions, the commercial capacity of NTPC has become 51,170-megawatt on stand-alone basis and 62,975-megawatt on the group as on 31st December 2020. For 9 months FY '21, 6 coal stations of NTPC were among the top 10 performing stations in the country in terms of PLF. It included Korba with 93.18%, Sipat with 90.36%, Rihand with 89.83%, Vindhyachal with 89.60%, Talcher Thermal with 88.37% and Talcher Super with 85.02% PLF. NTPC's very first unit commissioned 38 years ago at Singrauli, Uttar Pradesh, achieved a higher sale of 100.24% among all the thermal units in the country during 9 months FY '21. During 9 months FY '21, PLF for coal stations was 62.29%, hedged against a national average of 51.50%. During the period, we have suffered losses due to grid restrictions and field supply. The generation loss due to grid restrictions in the coal-based station was 84.12 billion units for 9 months FY '21. For the gas based stations, the loss was 20.24 billion units. The generation loss on account of fuel supply constraint was 0.18 billion units for 9 months FY '21. Now I will briefly set upon the status of fuel supply. During 9 months FY '21, materialization of coal against ACQ was 88.60% as against 92.40% in the 9 months of FY '20. Coal supply during 9 months FY '21 was 124.69 million metric tonne of coal, comprising of 123.91 MMT of domestic coal and 0.78 MMT of imported coal. The coal supply during the corresponding previous period was 125.81 MMT, with 123.66 MMT of domestic coal and 2.15 MMT of imported coal. During 9 months FY '21, 5.75 million metric tonne of coal has been excavated from our captive coal mine as compared to 7.04 MMT during the 9 months of FY '20. Cumulatively, 28.48 MMT coal has been excavated from Pakri-Barwadih, Dulanga and Talaipalli coal mines until 31st December 2020. Dulanga coal mine, having an estimate peak rated annual capacity of 7 million tonne per annum was declared commercial with effect from 1st October 2020. Cumulative expenditure of INR 7,513.71 crore has been incurred on the development of coal mines till 31st December 2020. During Q3 FY '21, NTPC participated in the 1,070-megawatt tariff based placed competitive bidding tender floated by SEBI for grid-connected solar PV projects on build-own-operate basis in Rajasthan, that is [ Tranche-III ] and won 470-megawatt with the second lowest bid of INR 2, 1 paise per kilowatt hour. Further, we had participated in 500-megawatt auction conducted by Gujarat Distribution Company and won 200-megawatt at a record low tariff of 1.99 kilowatt hour -- per kilowatt hour. This is the lowest tariff discovered so far. NTPC has signed MoU with AIIMS Delhi for providing support to set up tele-recording room, SET, Skills, e-Learning, Telemedicine facility at India's Premier Medical Institute as part of its CSR initiative. NTPC has signed up with IIFM Narmada Landscape to restore Narmada riverbed. Now some highlights about the environment management initiatives taken by the NTPC. Flue gas desulphurisation, FGD systems are under various stages of implementation in 64.85-gigawatt of growth capacity. FGD systems have already been commissioned for 1,340-megawatt capacity. FGD system packages for 58.94-gigawatt capacity are under implementation and FGD system, that is for 4.57-gigawatt balance capacity, are under various stages of pending. For compliance with NOx control, combustion modification has already been implemented at 7 units with 3.48-gigawatt of thermal for capacity. Award for contract for supply and installation of low NOx combustion system for 18-gigawatt of capacity have been awarded or -- are yet to be awarded. Award for de NOx system package for 43-gigawatt are under process. As utilization up to December 2020 was 64.62% for NTPC stations, as it was 67.41% for the group as a whole. NTPC continues to explore and implement initiative -- innovative initiatives, ways to use fly ash generated by our plants. Besides fertilizer, brickmaking, amongst other, we used it as a geopolymer road -- as an alternate to cement for road building in Ramagundam. Now I will touch upon the financial highlights of the company. Gross sales for the Q3 FY '21 is INR 24,471.06 crore as against corresponding quarter of previous year gross sales of INR 23,057.67 crore, registering an increase of 4.77%. On 9-month basis, there is an increase of 3.29% in the gross sales, that is from INR 70,193.78 crore in 9-month FY '20, to INR 72,504.83 crore in 9-month FY '21. Total income for Q3 FY '21 is INR 25,268.56 crore as against corresponding quarter of previous year total income of INR 24,022.62 crore, registering an increase of 5.19%. On 9-month basis, there is an increase of 4.31% in the total income, that is from INR 72,199.66 crore in 9-month FY '20 to INR 75,312.89 crore in 9-month FY '21. Profit before tax for Q3 FY '21 is INR 3,561.59 crore as against INR 3,422.04 crore in the corresponding quarter of the previous year, registering an increase of 4.08%. On 9-month basis, EBITA is INR 10,126.31 crore as against INR 10,082.15 crore in the 9 months of FY '20. Tax for Q3 FY '21 is INR 3,315.34 crore as against INR 2,995.14 crore in the corresponding quarter of the previous year, registering an increase of 10.69%. On 9-month basis tax is INR 9,290.30 crore as against INR 8,860.37 crore in 9-month of FY '20. Now I'll give you an update on various other financial activities. The regulated equity as on 31st December, 2020, was INR 64,786.60 crore. Now regarding some input about fund mobilization. During Q3 of FY '21, NTPC signed term loan agreement of INR 5,200 crore and INR 2,000 crore with Bank of India and ICICI Bank, respectively, totaling to INR 7,200 crore. NTPC has conducted a liability management through buyback and repurchase of Masala bond 2021 and '22. Notes amounting to INR 1,085 crores was standard for repurchase by the eligible noteholders and the same were affected for repurchase by the company. CapEx, in 9 months FY '21, we have incurred a CapEx of INR 12,383.49 crore. The CapEx by the other group companies has been INR 8,871.61 crore. Thus, the total group CapEx for the 9-month FY '21 was INR 21,255.10 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 highlights of the group companies. NVVN, our wholly owned subsidy company, they did -- transacted 12.70 billion units during the 9 months FY '21 as against 10.91 billion units during the 9 months FY '20. NVVN has filed an MoU with Airport Authority of India Limited to set up ground-mounted public rooftop solar PV projects at airports or Airport Authority of India under renewable energy service company model. NVVN will also provide energy solution to Airport Authority of India by supplying electricity through open asset access and to support [Joy's] initiative for adoption of electric vehicles by creation of charting infra and promoting EV at airports of the Airport Authority of India. NVVN had won the tender issued by Bangalore Municipal Transport Corporation for deploying 90 electric buses for Bangalore macro fleet of service. This is the first time NVVN has participated in the tender for e-buses. Andaman and Nicobar Islands public transport system received a fleet of 14 electric buses provided by NVVN under its transit project of supplying 40 e-buses and charging stations, as part of union territory administration's move to reduce pollution. NVVN is working on a pilot project for adoption of hydrogen fuel cell-based electric buses and car projects in Leh and Delhi. NVVN, in partnership with Energy Efficiency Services Limited, had organized technology challenge named as Green Charcoal Hackathon. The purpose of the event was to leverage the innovative Indian mine to bridge the technology gap with the prime objective to clean barrier by eliminating foam fire, producing renewable energy out of Agro residue to promote local entrepreneurship and to increase the income of the farmers. During 9 months FY '21, we have received dividend of INR 520.73 crore from our subsidy and joint venture companies, as against INR 88.75 crore received in the corresponding period of the previous year. NTPC continues to win laurels and awards in various fields. Some of the major awards received in 9-month FY '21 are, NTPC has set the Scotch Award Platinum in the response to COVID category. It is a recognition for the intense effort made by NTPC to help confront the pandemic. NTPC has ranked 14th in 4th June, 2020, ranking for Top 500 corporations in India. NTPC has been confirmed with CSR Times Award 2020 gold category as the best PSU in green and environment stewardship category for its CSR project, Revival of Municipal Solid Waste Plant, [ Karsada ]. NTPC has also won prestigious CIA ITC sustainability award 2020 in the domain excellence of corporate social responsibility. NTPC has also been honored in the corporate excellence category commendation for significant achievement. This is the highest award concurred by CIA ITC in the CSR domain. NTPC is the only PSU to receive the award in the corporate excellence category, second time in a row. NTPC Rihand has received certificate of merit in the thermal power plant coal-based, more than 100 megawatts category from the Bureau of Energy efficiency. These were some of the highlights I wanted to share before the question-and-answer session began. Thank you.

[Operator Instructions] The first question is from the line of Mohit Kumar from DAM Capital.

First question, sir, what was the under recovery 9-month FY '21 and 6 months FY '20?

What was that?

Under recovery, fixed cost and the recovery?

Okay. This was for the 9-month FY '21, it is INR 569.53 crores, and INR 499 crores for the half year ended.

Okay. And secondly, what was the receivables at the end of September '20 and December '20 for greater than 45 days? And what is the outlook on liquidation for the rest of the fiscal year?

Now I will request my -- our Director, Commercial, to respond to this question.

Good afternoon. As on 30th September, this receivables beyond 45 days was INR 19,164 crore. And as of 31st December '20, it was INR 16,720 crore.

And sir, what is the outlook on liquidation of this receivable? It has nearly declined over INR 3,000 crores. Our expectation was slightly higher given the [ GST ].

I'd just tell that from July onwards, we have been able to realize more than 100% of amount. So whatever outstanding is accumulative until 30th of June, that is basically we are yet to liquidate entire amount. And this -- under this Atmanirbhar scheme, the tranche 2 is yet to be released -- yet to be cleared. So once we are getting the tranche 2 of Atmanirbhar -- under Atmanirbhar. So we'll be able to get another INR 8,000-plus crore amount. And now we see this commercial load is increasing and this collection is improving. We hope that by the end of March, we'll be able to bring down substantially [indiscernible].

Okay. My last question, sir, what is the kind of cost and PLF you're expecting in the newer solar power plant, which are run in -- especially in the third quarter? Is it possible to give broad numbers?

Well, just repeat your question.

What is the kind of cost and cost -- capital cost expectation is for the power plant, which you're running Gujarat and Rajasthan? And what is the kind of PLF you are expecting in this solar power plant?

Right now, I'll not be able to share that chart because I do not have -- we can't abstractly provide these details to you to [ each other ].

Sure. Understood, sir.

[Operator Instructions] The next question is from the line of Subhadip Mitra from JM Financial.

Just wanted to get a sense of what would be the adjusted tax number for the current quarter?

Yes. Just a minute. For the current quarter, the adjusted price would be INR 3,308.34 crore against the corresponding quarter of INR 2,677.52 crore.

Okay. And what would be the broad adjustments here?

Broad adjustment would include previous year sales, then [ PVC at will ]. Mainly, these 2 adjustments. And tax impact on the award adjustments.

Okay. Sir, secondly, is it possible to get a little bit more sense on the recent AP renewable wins that -- where we won some 600-odd megawatts? Some bit more color on that? And what is the projected tender pipeline that you look at for renewables for the rest of the year?

Well, in case of Andhra, we had submitted 2 bids, 1 for 600-megawatt, another for 1,200-megawatt. As far as 600-megawatt is concerned, that we have owned that as a loan. But 1,200-megawatt, we have some clarification from Andhra, why they have not opened out it. So we have given a letter. Let us see -- we'll not know why they have not opened out.

And -- okay, go ahead.

Yes. And in future, we are participating -- we are participating aggressively. Do not depend on how much this is invited by the discount. We cannot give a certain number, okay, how much it will come.

Okay. Understood. Just 2 more questions. One would be on the Airport Authority of India partnership that you're doing with NVVN. Any projected number in terms of how large in terms of megawatt the rooftop solar can be for these airports?

I hope that that figure, I can share afterward. But it will be a small number, definitely, but right now, I do not have.

No, no. Initially, we are vetting very initial stage only. This -- we plan to introduce this rooftop solar and solar plant at most of the airports. Initially, we will start at -- with some small airports. So right now, it is very premature to predict those numbers.

Understood. Okay. Lastly, for the rest of FY '21 and FY '22, if you can also chart out, which are the plants which are set for commercial trade?

For commercial -- you are asking about solar power plant or thermal power plant?

Thermal power plants, sir. Thermal plant commercialization expected?

Okay. Now Mr. Bhattacharya will be…

We had commented in June during this con call that we'll be having a [ COD ] of 4,490 in this financial year, and we are happy to announce that we have already completed 2,799 and well on track for another 2 to 7 sites, totaling 5,074-megawatt.

Understood. So this is for FY '21?

This is current financial years. And for the next financial year, we have kept a provision of roughly 4,852 plus one on to solar, roughly 6,000 megawatts.

Will this be all on stand-alone or we're including the subsidiary?

I'm talking of the group capacity on a group basis.

Okay. It would be great if you could also give us a split between stand-alone and group, that would be very helpful.

Okay. I'll give you that. For the current financial year, just 1 second, 2021, that NTPC group, only 5,074, out of which NTPC stand-alone will be 3080, except THDC and NEEPCO.

Understood. So has this -- the stand-alone capacity addition of 3080, most of it is already completed?

Yes. We are well on track. We have already completed more than 50% of that.

Okay. And for FY '22, what would be the stand-alone [ business ]?

That will be NTPC group will be 6,000, approximately. And we're fine-tuning based on our solar capacity, out of which NTPC will be 4,962.

Okay. So stand-alone capacity would be 4,962 addition for FY '22?

Right.

Yes.

Okay. Perfect. That answers my question.

The next question is from the line of Sheena Barbosa from Pro Price (sic) [ T. Rowe Price ].

Hello, can you hear me?

Yes, yes, Sheena, please.

Okay, yes. Sir, just wanted to ask you, in terms of the renewable capacity addition plan, how much have you won in the current financial year and can add in the current year?

We have -- I'll just give the figure total. We have totally commissioned as NTPC Group 1,275-megawatt of RE projects which we have already commissioned. And under incremental 2,759-megawatt. And then under tendering, around 1,448-megawatt. Out of this year, we have owned 200-megawatt from -- in Gujarat, 470-megawatts in Rajasthan, and 90-megawatt in Kerala -- for Kerala, and very recently, the 600-megawatt in Andhra.

Okay. Got it. And can you give us some idea about the kind of competition and the kind of economics and returns for these projects?

Yes. As you are knowing that we already own this won SECI Rajasthan at INR 2, 1 paise and as far as Gujarat INR 1, 99 paise. This return will be similar to equity that we are earning in coal-based units.

And was there a lot of competition for these projects, like how did you win them -- this just purely competitive bidding, right?

Yes, yes. It is -- there was a lot of competition.

Okay. And your equity -- I mean are returns for you better because of lower cost of funding? How are you funding these projects?

Yes, that is definitely due to the lower cost of funding and lower cost of, definitely, due to the lower cost of debt. But since this implemented on time, it takes much lower than the thermal power projects. So it will be or IRR will be comparable with the thermal one.

Okay. So it's like 11%, 12%? Or…

Yes, yes. [indiscernible]

12-plus percent.

12-plus percent. Okay. Got it. And in terms of upcoming pipelines, like how do you see the tendering for solar projects happening in India over the next couple of years?

We -- that will definitely depend on this -- how much [indiscernible] is coming from SECI as well as [ Dadri ] each day. But as far as we are concerned, we have a plan that we should achieve at least 30,000-megawatt by 2030. But we are expecting much more than that.

And so what sources are they coming in terms of [indiscernible] for you -- can you give us an idea of when that will start to like really pick up?

Not just -- repeat your question. When this…

So in terms of -- you said you're expecting much more than 30,000-megawatt, right? And sir, when will be the inflection point in terms of you think?

We'll tell you that we have already signed with various states for this ultra-mega renewable energy power plant that is like Gujarat, Maharashtra, Rajasthan, Andhra and Uttar Pradesh. These 5 locations, we have already planned to have some 16 -- 17-gigawatt of capacity. So it will not depend. The exact number, we will not be able to tell right now like how much capacity will come. But year wise plan, I think we can share subsequently that is as for our business plan is concerned that we have met. Right now, it is not available with me. We can say it subsequently.

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

Yes, sir, just 2 questions. One -- the first one is again, on the receivable. So we read in the newspaper before that now that the receivable has been pending for a very long time, NTPC have issued multiple notices to states to liquidate them and institute the LC mechanism. So can you update on that front? What is the pickup of those notices? And has LC payment mechanism has been reinstituted, that is the first question.

Yes. We have -- we issued earlier these notices to a number of DISCOMs. And subsequently, there are certain improvement in the payment as well as this LC. Of course, we have -- all these states are having LC except J&K. J&K does not have. But we have taken up with the Ministry of Power also for recovery of the balance of turning dues to tripartite agreement.

Okay. So sir, is the tripartite agreement being invoked finally? Because it doesn't look like that the receivables are coming down any recently.

Receivables have come down definitely by -- from last quarter to this quarter, it has come down by almost INR 3,000 crore. And once the second tranche is approved by PFC, REC, we will be getting another INR 8,000-plus crore. And definitely, last few months, we are able to over this -- overall we did 100% realizations, so we are able to achieve.

Okay. Sir, what is holding back the dispersal of the second tranche? Because, I mean since July, we have been hearing that the second tranche has been approved by PFC IFC, but it has not been dispersed. So where is…

Yes, there are certain conditions of -- where the payment of India, whatever, they are imports [indiscernible], et cetera. Probably some format after we still filled up by the discounts and subject to PFC IFC. But what we understand that shortly, it is going to be approved.

But sir, if those conditions are regarding improvement of P&D losses, then that improvement may not come for a very long time, right? Because we have seen in the sector.

That is -- they are asking the time frame.

Okay. So the discount does have to come into a particular time frame by promising and then the money comes?

Exactly.

Okay. Okay. And sir, my last one is on -- if I heard you right during the briefing, it looks like the total coal production in the 9 months is down year-on-year. Is that right? And why would that be, sir?

Okay. That coal product, yes, it has come down. That is finance of closure of Pakri mine. There is strike in Pakri for almost, I think, 93 or 96 days. So that is how it has come down, but now it has started. And whatever is lost, we cannot, of course, regain. That is how it is going.

Okay. But those issues have been resolved as of now?

It has [indiscernible].

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

Just on the renewable front, I understand that 1-gigawatt of projects that you've recently won under competitive bidding. When can we expect the elevating the PPA for the project, sir?

Which 1-gigawatt you are talking about?

Sir, I'm talking about the 470-megawatt in Rajasthan, 200-megawatt in Gujarat, and 600-megawatt in Andhra Pradesh.

Yes, 600-megawatt has only happened yesterday. But other than that, this 400 existing has already been signed, I understand. But it is already signed for.

No, no. It is that when the awards will be met.

I was thinking, this is already approved, probably is subject to be awarded.

So just to get it clear, the PPAs have been signed for both of them, 470 as well as the 200. And from an execution time line, when do we plan to execute these 2 projects?

Generally, it takes around 15 to 20 months.

Okay, sir. So it is decided we would be commissioning around 1.8-gigawatt in FY '22 and then this product should probably come FY '23.

Right.

Sure. And just on a renewal pipeline perspective, I believe you've actually signed certain agreements with Maharashtra and Rajasthan as well to develop solar plant. So if you could just throw some color over here, what is the capacity that we're looking to install and how much of that would be in EPC mode?

Well, that will -- it will take time. What the capacity, what we have signed from is Maharashtra is 2.64-gigawatt. And in Gujarat, it is 4.75-gigawatt. But it will take time. It is just at preliminary stage right now.

Okay. So maybe I think in Rajasthan, we were actually looking to build some EPC on -- for the north solar park as well, right?

Yes, yes.

Okay. Sir, what would the quantum be? How much of it would be in EPC mode?

It is, I think, 735-megawatt. 735-megawatt will be on EPC mode. For which I think tendering is already under process.

NIT issued on 29th of January '21.

Okay, sir. So 735.

735.

And sir, just to get some clarity over here. Now let's say, again, the 735-megawatt on an EPC mode. How does the tariff for that get determined?

The tariff will depend on at what price I am going to sell it. Only thing I'm doing this in IT, we have kept certain selling price so that it will be within the price at which we'll be able to find a buyer.

Okay. Understood, sir. Oh, okay. Okay. So this would be the under implementation, right? I mean this was the 735 -- got that. Got it. And sir, one question, maybe on the thermal side of things. Fixed cost under recoveries have gone up a bit in 9 months as well. And I think because of Kahalgaon. Just wanted to get some understanding on when do we expect the Kahalgaon issue to get resolved? And from an FY '20 perspective, what's the overall fixed cost under the recoveries that we're looking at?

Mr. Ramesh Babu will address this question, please.

Kahalgaon will be -- The dyke will be restored by the end of March and first week of April. And the total under recovery, we are looking at around INR 300 crores to INR 400 crores at the end of the year. And there will be some -- we'll be able to do some of this under recovery in the coming days. And also, we are talking with CRC for the level of high and low demand season. So that talks comes through, we just recoup some of the territory.

Okay. What's the impact of the high demand, low demand season on your one recall?

That would be around INR 80 crores.

INR 80 crores. Got that.

The next question is from the line of Sumit Kishore from Axis Capital.