Tariff hike will help recover rise in employee costs: NHPC

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Tariff hike will help recover rise in employee costs: NHPC

NHPC, India's largest hydro power generation company, posted a net profit of Rs 212 crore in the third quarter of FY12, a slump of 29.6%. ABL Srivastava, CMD, NHPC says the downfall has been due to one time provisions such as survey and investigation projects which were about Rs 80 crore.

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NHPC , India's largest hydro power generation company, posted a net profit of Rs 212 crore in the third quarter of FY12, a slump of 29.6% as compared to Rs 301 crore in the corresponding quarter of last fiscal.

The company's total income jumped 17.4% to Rs 882 crore from Rs 751 crore during the same period.

Other income increased 22.3% to Rs 203 crore in the October-December quarter of FY12 versus Rs 166 crore YoY.

ABL Srivastava, the chairman and managing director of NHPC says the downfall in the company's third quarter results has been due to one time provisions such as survey and investigation projects which were about Rs 80 crore.

He says expenditures incurred due to the increase in wage costs will be recovered through a tariff hike.

Below is an edited transcript. Watch the accompanying video for more.

Q: It's been a disappointing quarter for you in terms of what's happened on your topline and how much expenses have shot up by. How do you intend to finish the year in terms of sell and how much you want to cut down expenses and improve margins by?

A: Let me tell you that the quarter has not been a disappointment because of the fact that the reported profit which is Rs 212 crore as against Rs 300 crore last year is because of the one time provisions which has been made towards survey and investigation projects which is about Rs 80 crore. The Kotli BHEL Projects where we have been working for a long time but since clearances had not been conveyed, as a matter of abundant precaution, the management inline with the suggestion of the statutory auditors to make a provision thereof.

If we see the April to April comparison, the quarter's PAT is higher at Rs 265 crore as against Rs 163 crore last year. Definitely, there is an increase in some of the implied cost which is normal because of wage provisions, because pension schemes which we are going to introduce inline with the Pay Commission recommendations. But overall the quarter is not a disappointment. The expenditures in employee cost which has been increased will be recovered through a tariff hike while the petitions will be filed and this provision is covered up in a tuning up exercise.

Q: The bigger concern for your investors is what's going on with the two plants in Jammu and Kashmir? Will it be sold back to the government at a depreciated cost? Do you have clarity on that because that's a big overhang on your stock?

A: We are very clear on the issue of the two projects that is Salal and Dulhasti and the Ministry of Power has also made it very clear that these projects will remain with NHPC. We are very clear that these projects will remain with us. There is no decision from the Government of India that at any stage, even today, that these projects will be given back to J&K.

Q: What kind of capacity addition do you foresee this year in FY12 and in FY13 because on that progress it has been very tardy? Last year was bad in terms of capacity addition and this year too you will probably fall well short of the 500 megawatt plus that was indicated earlier?

A: It is true that in the capacity addition front our commitments have not been up to the mark. Heavy snow in J&K and Himachal regions affected our timelines for completion of Uri-II and Chamera-III projects. As per the latest indications and discussions which we have with our project team jointly with the Central Electricity Authority we are hopeful to complete two units of Chutak, one unit of Uri-II and all the three units of Chamera.

Therefore roughly a minimum capacity addition of 313 megawatt should come in the remaining two months of the current financial year. As far as the next financial year is concerned, we are hopeful and working towards a capacity addition of 1,059 megawatt. This will be twounits of Chutak - 22 megawatts, then the remaining three units of Uri-II - 180 megawatt, Teesta Low Dam-III - 132 megawatt, one unit will be operational and all the Parvati-III units - 520 megawatts will be commissioned and Teesta-IV - 160 megawatt and Nimoo Bazgo - 45 megawatt. The entire benefit of 520 megawatt of Parvati-III will not come to us but as far as capacity addition is concerned it will be adding 1,059 megawatt.

Q: On your money raising plans, have you finalized the mode? How much do you want to raise because you wanted to do it by the end of financial year 2012?

A: We have already tied up Rs 1,500 crore from different banks which has been drawn out. Another Rs 1,000 crore we are intending to raise through bonds in the next month.