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BW Businessworld

Legacy Lives On

Once coal-focussed, NTPC is fully-diversified today & still the No. 1 power generation company

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In the financial year 2016-17, NTPC joined the global league by touching the golden figure of 50,000 mega watts (mw) in terms of generation capacity, establishing itself at No. 5 on BW Real 500 rankings in 2017.

This comes at the time when the demand for power in the country remains subdued, challenging the plant load factor of various thermal power plants. However, dismissing all myths, the NTPC group, including joint ventures and subsidiaries, collectively generated 276 billion units of electricity, which was 22.4 per cent of the total power generated in India, registering an increase of 5.07 per cent over the previous year’s 241 billion units of power. The group capital expenditure of the company for the year stood at Rs 33,991 crore.

If a power generation company is able to secure its fuel supplies, it can create a significant impact on the company’s per unit cost. That is exactly what NTPC aimed at. The year witnessed the company’s first coal rake with a long-term plan to secure around a third of its coal requirement through its own captive coal blocks by 2030.

“The company has realised huge cost efficiencies during the year by swapping and rationalisation of coal, appointing agency for third party coal sampling, and reducing imported coal consumption by 85 per cent since last year. By these measures, we were able to reduce per unit cost by nearly 40 paise in FY16-17 compared to previous fiscal,” says Gurdeep Singh, chairman of NTPC.

During the year, the average plant load factor (PLF) of NTPC’s power stations was at 78.6 per cent against the national average of around 60.01 per cent. The company added 3,845 mw of new capacities in the same period and plans to further add 5,430 mw of new capacities.

While the company was able to clock in nearly 10 per cent in revenue growth on the back of increased power generation, the standalone profit of the company was affected due to pay hike related expenses and impairment charges. But according to experts, as NTPC’s new capacities start generating revenue, the company’s earnings are expected to get a boost from the next fiscal year.

NTPC has come a long way from being a coal-focussed company to a fully-diversified power company. It has been able to maintain its legacy of being the number one power generation company in the country and now plans to continue the same legacy in renewables too by diversifying its fuel basket.

With a target of  32 gw of renewable capacity by 2032, the company forayed into wind segment in FY17, commissioning a turbine of 2 mw at the 50-mw Rojmal wind project in Gujarat. However, the renewable capacity targets of the company need to be balanced amidst the plummeting tariffs for renewables, which present a challenge in terms of low PLFs of thermal power plants.

That said, the company’s diversification is not restricted to renewables but also includes its biggest bet on electric vehicles infrastructure. It would be investing about Rs 10,000 crore  to set up infrastructure for charging points and battery swap stations across the country.

With a strong project pipeline, controlled debt and comfortable capex, NTPC is on a steady growth path. “Various projects of the company are under construction across 22 locations, having a total capacity of almost 21,000 mw. This translates into an aggregate capital investment of more than Rs 1.3 lakh crore,” says Singh.