State-owned National Hydroelectric Power Corporation (NHPC) fell by a whopping 32 percent in the last three trading sessions due to heavy selling by the investors. The reason for the sudden correction is yet to be identified. ABL Srivastava, director – finance at NHPC, told CNBC-TV18, that the company has spoken to BSE, NSE and Sebi regarding the issue and expects a detail report on the same.
Sudden sell-off led to worry among investors on which Srivastava assures that there is no change as far as fundamentals of the company are concerned.
"The fundamentals of the company are as strong as they were a week before. There is nothing adverse in the Budget that may impact the hydro sector. As far as investors are concerned, there is no matter of concern," he adds
Below is the verbatim transcript of ABL Srivastava's interview on CNBC-TV18
Q: Could you tell us why there was a steep reverse in your stock in the past three-four trading sessions? We heard about some operator being in trouble, but what struck your shares?
A: On Friday evening, there was some reduction in the prices and there was a major crash on the Monday morning. The moment we saw it on the television, we tried to inquire into the matter and also spoke to Bombay Stock Exchange (BSE) and National Stock Exchange (NSE) and Securities and Exchange Board of India (SEBI). We have requested them to inquire into the matter and give us the details. We have also requested our registrars to give the summary of the transactions, held during these two days. We will be in a position to get some details today, more by tomorrow and will then come to know who sold the shares and who purchased it.
As per the market news, newspapers and analyst reports there has been some major sale and because of margins they had to push up their sales. We have already assured our investors that there is no change as far as fundamentals of the company are concerned. The fundamentals of the company are as strong as they were a week before. There is nothing adverse in the Budget that may impact the hydro sector. So, as far as investors are concerned, there is no matter of concern and I can reassure that once again.
Q: Any suggestions from the BSE, NSE or Sebi in terms of what could have gone wrong on Friday and Monday?
A: Nothing has been received from BSE, NSE or Sebi as of now.
Q: You started your reply by saying that on Friday evening the prices were cut. What were you referring to? Were you referring to stock prices or did you announce any power prices?
A: I was referring to the stock prices.
Q: One key concern for NHPC has been the Jammu and Kashmir (J&K) state government’s demand to take over some of J&K projects at a book value of about one time. Could you apprise us of the recent developments on that front?
A: This issue has been coming up for many years and has been raised at various forums. The management has been telling every time that as far as NHPC is concerned, there is no issue of giving these projects to J&K. The government of India, ministry of power have also clarified more than once that there is no question as of now of reverting these projects to J&K government. Whatever decision is taken by the government, we will put up our interest, and company's interest will be placed before company's authority before taking any decision. As of now there is no issue of transfer of projects to J&K government.
Q: Is there not even a single project demanded by the government to take over some of J&K projects at a book value of about one time?
A: As of now, there is no single project that is being transferred to the J&K government or is issued under consideration of the ministry of power to the best of my knowledge and the knowledge of the company. We have formed a joint venture (JV) where NHPC is holding 49 percent, 49 percent is held by the J&K government and 2 percent by PTC India. With respect to some projects, joint venture has been formed; there is no question of transfer of any project as of now to the J&K government.
Q: What is the total revenue you get from your projects in J&K?
A: Roughly 28 percent of the total revenue comes from J&K.
Q: So far, how has the business been in the fourth quarter in terms of units sold and likely revenues for Q4?
A: As far as generation is concerned, hydro generation in the country as of now is lower than 7 percent as compared to the previous year. As far as NHPC is concerned, our generation as on February 28 has been 17670 million units, slightly higher than the last year’s total generation.
Q: You also have outstanding receivables from a few states like J&K, Delhi, Bihar. Would you be collecting anything in March which would show up in your P&L?
A: There are two issues, one is dues and the other is correction in the P&L. As far as P&L is concerned, whatever dues are there they have already been taken in the profit. It is not on cash basis but accrual basis and therefore that has already been taken into P&L account. The issue of default is definitely with regards to a few states and we are trying our level best to get them recovered. In some states we have already regulated the power.
Q: You are planning to exit the hydro electric exchange, the exchange itself? Will you make some money on it, when are you likely to exit that exchange?
A: We have decided in principle to the exit. Whether we will get money, what will be the final impact; will be possible only when the transaction is there, where we get some profit or loss.
Q: But are you sure you will make money on it?
A: Let us hope for the best.
Q: We understand that the CERC has permitted 1 percent extra ROE for reservoir as well as run of the river hydro project? What kind of benefit would that have?
A: This amendment in the CERC regulation has come with effect from January 01, 2013. The total annual impact is likely to be Rs 60 crore per annum so definitely in the current quarter it should be around Rs 15 crore.
Q: When are we expecting the delays to get arrested at one of your large projects that is Subansiri, where work has been halted since December 2011?
A: I am not in a position to give a definite timeline about when the issue will be resolved. NHPC and the ministry of power are jointly trying to resolve the issue as early as possible. Two days back a team led by joint secretary hydro and chairman of NHPC had gone to Guwahati to discuss the issues, but still the issues have not been finalised. Therefore, a definite timeline as on date cannot be given.