The Telegraph
Since 1st March, 1999
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NTPC weighs July flotation

New Delhi, Sept. 27: National Thermal Power Corporation (NTPC) hopes to raise close to Rs 1,500-2000 crore from its initial public offer, tentatively scheduled for next July.

The company will be offering Rs 400 crore worth of shares (each with a face value of Rs 10) but is hoping to garner a premium on its flotation. The expectations seem a trifle ambitious given the current state of the market and the fact that the state-owned power utility has just reported a 5.4 per cent fall in net profit at Rs 3,539.62 crore for the year ended March 2002 against Rs 3,733.80 crore in the previous year.

Turnover also dipped from Rs 20,344.16 crore in 2000-01 to Rs 18,584 crore in 2001-02. This is the first time that the power utility — wracked by poor dues recovery from state electricity boards — is reporting a decline in net profits since its started operations in 1974.

The public sector company has received the approval from government and will now approach the Securities Exchange Board of India (Sebi) for clearance.

The company attributed the dip in profit to the availability-based tariff imposed by the Central Electricity Regulatory Commission (CERC).

NTPC will appoint the lead managers for the flotation by February and approach the regulator in April. The power PSU will inform the Registrar of Companies (RoC) in June and expects to hit the market in July.

The Rs 400-crore issue accounts for 5 per cent of NTPC’s equity. The government has already increased the authorised capital of the power PSU from Rs 8,000 crore to Rs 10,000 crore.

The public sector power company decided to go in for an IPO, anticipating that the tariff policy to be announced by the government later this year may strain its efforts to generate capital through internal resources. NTPC is also mulling the possibility of skipping dividend payments to the government over the next 10 years.

“We had appointed ICICI/SBI Capital Markets to suggest ways to generate necessary funds. They have suggested that if we do not pay dividend for 10 years, we will have the resources to generate 20,000 MW,” said NTPC chairman and managing director C. P. Jain.

The company has tied up Rs 6,289 crore from Indian financial institutions and banks to part finance its projects. It plans to start power trading through a new company — NTPC Vidyut Vyapar Nigam — for power trading. Close to Rs 80,000 crore would have to be invested over 10 years to add 20,000 mw of generation capacity.

The new power trading company is set to clash with the existing Power Trading Corporation (PTC), in which NTPC has an equity of about Rs 6 crore. “The power trading company will sell surplus power available with us. Currently, we have about 360 megawatt of surplus power, 180 mw each from Kayankulam and eastern region,” said Jain.

As part of its expansion into new areas, NTPC will also enter the distribution sector, coal mining and washing. it will start distribution of power in Kanpur, Guwahati, Goa and Pondicherry through its new company NTPC Electric Supply Company Ltd.

The company will enter the coal mining and washery business soon and plans to launch the operations under build own and operate (BOO) scheme. NTPC will pick up a 26 per cent stake in the project.

The power utility also plans to add 9160 mw during the 10th plan. It also plans to add 3,500 mw through hydro power projects.

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