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NTPC Ltd.

BSE: 532555 | NSE: NTPC |

Represents Equity.Intra - day transactions are permissible and normal trading is done in this category
Series: EQ | ISIN: INE733E01010 | SECTOR: Power - Generation & Distribution

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Jan 21, 15:57
134.10 -0.80 (-0.59%)
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Annual Report

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Director’s Report

The Directors are pleased to present the 32nd Annual Report and the audited accounts for the year ended March 31, 2008. FINANCIAL RESULTS Rs. Million Income 2007-08 2006-07 Sale of Energy 369462 325344 Consultancy 1039 608 Other income (Including energy internally consumed) 29612 27814 Gross Income 400113 353766 Expenditure Fuel 220202 198181 Employees Remuneration & Benefits 18960 11632 Generation, Administration & other expenses 16284 15567 Interest 10312 9746 Finance charges 7669 8848 Depreciation 21385 20754 Total Expenditure 294812 264728 Profit before tax, provisions and prior period adjustments 105301 89038 Tax 28401 20427 Profit after tax but before provisions and prior period adjustments 76900 68611 Less Prior Period Adjustments (Net) 2745 (109) Provisions (Net) 7 73 Net Profit after tax 74148 68647 Appropriations 2007-08 2006-07 Transfer to Bonds Redemption Reserve 3822 3487 Interim Dividend 22263 19789 Proposed Dividend 6596 6596 Tax on Dividend 4905 3896 Transfer to General Reserve 39000 36000 Transfer to Capital Reserve * 4 *Rs. 12,723/- FINANCIAL PERFORMANCE The total income of the company for the year increased by 13.10% to Rs. 400,113 million from Rs. 353,766 million during the previous year. The profit after tax but before provisions and prior period adjustments increased by 12.08% to Rs. 76,900 million from Rs. 68,611 million. Net profit after tax increased to Rs. 74,148 million from Rs. 68,647 million registering a growth of 8% over last year. DIVIDEND In addition to interim dividend of Rs. 2.70 per share paid in February 2008, your Directors have recommended a final dividend of Rs. 0.80 per share for the year 2007-08. The total dividend for the year is Rs 3.50 per share as against Rs. 3.20 per share paid last year. The final dividend shall be paid after your approval at the Annual General Meeting. The total dividend pay-out for the year amounting to Rs. 28,859 million represents 38.92% of the profits after tax as against 38.43% in the previous year. The total dividend payout including tax accounts for 45.54% of profit after tax. The dividend has been recommended in accordance with the Companys policy of balancing dividend pay-out with the requirement of deployment of internal accruals for its growth plans. Your Directors believe that growth of the company through capacity addition, backward and forward integration and strategic diversification of its operations would lead to increase in shareholders value. OPERATIONAL PERFORMANCE During the year, the power stations of your Company generated 200.863 billion units of electricity which was 28.51% of the total power generated in India with a share of 19.12% in the total installed capacity of the country. The power generated by the company has registered an increase of 6.46% over the previous years generation of 188.674 billion units. During the year, the coal based stations of the company operated at a plant load factor of 92.24% (highest since inception) as compared to 89.43% during the previous year. However, the gas stations of the company operated at a plant load factor of 68.14% as against 71.90% last year due to non-availability of gas. The average availability for coal and gas based stations for the year was 92.12% and 85.93% respectively. A detailed discussion on the operations and performance for the year is given in the Management Discussion and Analysis included as a separate section in the annual report. COMMERCIAL PERFORMANCE During the year, your Company realized 100% of payment of current bills raised for sale of power. For the fifth consecutive year the Company has been able to achieve 100% realization of current bills. All the beneficiaries are paying within 30 days of billing except UP and J&K who are paying in 60 days cycle. All the beneficiaries have opened and are maintaining LC equal to or more than 105% of average monthly billing as per One-Time Settlement Scheme except New Delhi Municipal Corporation (NDMC) and Military Engineering Services. NDMC is in the process of establishing LC shortly. NTPC Payment Rebate Scheme for the year 2007-08 resulted in realization of nearly 68% of the energy bills within a week of presentation of bill for the month. One unit of 500MW of Vindhyachal STPP stage-III was declared commercial with effect from 15.07.2007. Due to non-availability of water at Sipat Super Thermal Project, the 500MW unit of stage-II could not be declared ready for commercial operation although the same was commissioned in May2007. However, this unit was declared commercial with effect from 20.06.2008. INSTALLED CAPACITY During the year, a total capacity of 1740 MW was added to NTPCs installed capacity. Your Company commissioned one 500 MW unit at Sipat-II (Unit-IV) and one 500 MW Unit at Kahalgaon-II (Unit-VI). In addition, 740 MW (Module-III) was added through its Joint Venture, Ratnagiri Gas and Power Private Limited (RGPPL) at Dabhol. Further, one 250 MW unit at Bhilai Expansion Project was commissioned on April 20, 2008 through its Joint Venture Company, NTPC-SAIL Power Company Pvt. Ltd (NSPCL). Thus, the total installed capacity of the NTPC Group has increased from 27,904 MW to 29,394 MW. Detail of the installed capacity is given below: Owned by NTPC MW Coal based projects 23,395 Gas based projects 3,955 Sub-total 27,350 Joint ventures NSPCL (Coal) 564 RGPPL (Gas) 1480 Sub-total 2,044 Total 29,394 CAPACITY ADDITION PROGRAM In order to actualize the vision of becoming a world class integrated power major, your company has embarked upon a substantial capacity addition program so as to become 50000 MW plus company by the year 2012 and to have installed capacity of 75000 MW plus by 2017. Your Company has adopted a multi-pronged growth strategy which includes capacity addition through green field projects, expansion of existing stations, joint ventures and takeover of stations. By 2017, the power generation portfolio is expected to have a diversified fuel mix with coal based capacity of around 53000 MW, 10000 MW through gas, 9000 MW through Hydro generation, about 2000 MW from nuclear sources and around 1000 MW from Renewable Energy Sources (RES). As a step towards promotion of generation of electricity from RES, your Company had signed an MOU with Asian Development Bank for establishing a generating capacity of about 500 MW through Renewable Energy Sources. Your Company is expected to have a stake of 40% alongwith other global core investors contributing the balance 60% of equity. The global core investors are expected to be finalized shortly. PROJECTS PLANNED During the year, projects having aggregate capacity of 6570 MW were approved covering an investment of Rs. 359,734 million. This will help to achieve the capacity addition target of 22430 MW during XI plan. As against this target, your Company commissioned 1740 MW last year. In addition, a unit of 250 MW was commissioned at Bhilai expansion project in April2008. Various projects having aggregate capacity of 16680 MW including 3750 MW to be added by projects undertaken by Joint Venture companies are under construction. For the balance capacity addition, Feasibility Reports have been finalized and Main Plant Bids have been received/invited. A list of the projects expected to be commissioned by your Company as well as under its joint ventures with other companies till the year 2012 and beyond are as follows: Name of the Project Capacity Capacity (MW) Addition by 2012 Projects under NTPC LTD. A. Coal Based-Ongoing Projects 1. Kahalgaon-II, Phase II, Unit - VII 500 500 2. Sipat -II, Unit- V 500 500 3. Sipat-I 1980 1980 4. Barh-I 1980 1980 5. Korba-III 500 500 6. NCTPP-II, Dadri 980 980 7. Farakka-III 500 500 8. Simhadri-II 1000 1000 9. Bongaigaon 750 750 10. Mauda 1000 1000 11. Barh-II 1320 1320 Sub Total (A) 11010 11010 B. Hydro Electric Power Projects(HEPP)-Ongoing 12. Koldam 800 800 13. Loharinag Pala 600 600 14. Tapovan Vishnugad 520 520 Sub Total (B) 1920 1920 Total ongoing projects (A)+(B) 12930 12930 C. Coal Based-New projects 15. North Karanpura 1980 660 16. Rihand-III 1000 500 D. Gas Based-New Projects 17. Kawas- II 1300 1300 18. Jhanor- Gandhar- II 1300 1300 Total of new projects (C) + (D) 5580 3760 Grand Total (A)+(B)+(C)+(D) 18510 16690 Korba- Stage-III, Farakka-Stage-III, Loharinag Pala HEPP and Tapovan Vishnugad HEPP are being developed as merchant power projects. The company is also exploring/identifying new sites for setting up of power projects based on availability of infrastructure and fuel etc. These locations would be added to the plans at a future date. Capacity addition through Subsidiaries and Joint Ventures (JVs) Besides adding capacities on its own, your Company has also plans to add capacities through some of its subsidiaries and joint ventures. By leveraging our project execution strength, out of the total capacity addition of 22430 MW during XI plan, your Company is setting up 4000 MW (about 18% of the capacity addition) with JV partners giving them a better dispensation in terms of allocation of power, resulting in a win-win situation for both. Four projects having a total capacity of 4000 MW are under construction. The detail of JV Companies/Subsidiaries alongwith details of Joint Venture partners for addition of capacity is as under: JV Partner Company Details Steel Authority NTPC-SAIL A 50:50 Joint Venture of India Limited Power Supply Company formed to (SAIL) Co. Pvt. Ltd. own and operate captive power plants at Durgapur(120 MW), Rourkela (120 MW) and Bhilai Steel Plant (74 MW). The JV Company has undertaken expansion at Bhilai by adding two coal based units of 250 MW each. Tamil Nadu NTPC Tamil A 50:50 Joint Venture Electricity Nadu Energy Company formed for Board Company setting up a coal based Limited. project having two units of 500 MW each at Ennore, Tamil Nadu. Main plant & offsite civil work package for Phase-I has been awarded. Indraprastha Aravali Power The Joint Venture Power Company Company shall set up Generation Private Limited a coal based project Co. Ltd. (IPGCL) named Indira Gandhi and Haryana Super Thermal Power Power Project consisting of Generation three units of 500 MW Co. Ltd. each. NTPC Ltd., IPGCL (HPGCL). and HPGCL contri- buted equity in the ratio of 50:25:25. Most of the packages for the project have been awarded. Civil works are in full swing. Indian Railways Bhartiya Rail A subsidiary of NTPC Bijlee Company formed as a Joint Limited Venture with Ministry of Railways having contribution in the ratio of 74:26 for setting up of a power project of 1000 MW capacity of four units of 250 MW each at Nabinagar. Award of main plant for SG and TG Package has been placed on BHEL. Details of commissioning schedules of the projects being implemented through joint ventures are given below: Name of the Project Capacity Addition by 2012 Projects with JV partners A. Coal Based-Ongoing Projects 1. Bhilai Power expansion 250 2. Indira Gandhi STPP 1500 3. Vallur STPP 1000 4. Nabinagar STPP 1000 TOTAL 3750 In addition to the above, a unit of 250 MW was commissioned on April 20, 2008 by NSPCL at Bhilai expansion project. Vaishali Power Generating Company Limited (VPGCL) is a subsidiary of your Company which took over Muzaffarpur Thermal Power Station having two units of 110 MW each from Bihar State Electricity Board. Your Company has contributed 51% of equity and balance equity was contributed by Bihar State Electricity Board. The equity contribution of your Company is expected to increase upto 74% depending on final transfer value of the station to VPGCL. The second Unit has been successfully resynchronized on 17.10.2007 after four years of being idle. Renovation and Modernization of first Unit is under progress. The Company was rechristened as Kanti Bijlee Utpadan Nigam Limited on 10.04.2008. A JV Company named Meja Urja Nigam Private Limited was formed with Uttar Pradesh Rajya Vidyut Utpadan Nigam Limited (UPRVUNL) for setting up 1320 MW coal based power project in Tehsil Meja of Allahabad District in Uttar Pradesh. Both NTPC and UPRVUNL have contributed 50% each in the equity of the JV Company. Site leveling work is in progress at this project. Your Company has signed a Joint Venture Agreement with Bihar State Electricity Board (BSEB) for setting up 3X660 MW power project at Nabinagar in Bihar. Set up to undertake development of small hydro projects having capacity upto 250 MW, NTPC Hydro Limited, a wholly owned subsidiary of your company, is implementing the following projects: Project Location Capacity Lata Tapovan Uttarakhand 171 MW Rammam-III West Bengal 120 MW The techno economic clearance of CEA and environmental clearance of Ministry of Environment and Forest have been obtained for both these projects. The land for Lata Tapovan HEPP has been acquired. STRATEGIC DIVERSIFICATION-FORAY INTO MANUFACTURING In order to strengthen its competitive advantage in power generation business, the Company also plans to diversify its portfolio to emerge as an integrated power major, with presence across entire energy value chain through backward and forward integration into areas such as coal mining, LNG Value Chain, manufacturing activities, power trading, distribution, etc. Business opportunities are being continuously explored through environment scanning and new business plans are adopted accordingly. Your Company has formed a Joint Venture Company with Bharat Heavy Electricals Limited named NTPC-BHEL Power Projects Pvt. Limited on April 28, 2008 with 50:50 equity participation for taking up activities of Erection, Procurement and Construction of Power Plants and manufacturing of equipment. Another JV Company named BF-NTPC Energy Systems Limited was also formed on June 19, 2008, between your company and Bharat Forge Limited (BFL) for setting up a new facility to take up manufacturing of castings, forgings, fittings and high pressure piping required for power projects and other industries, balance of plant equipment for power sector. Your company will hold 49% equity and the balance equity will be held by BFL. Last year, your Company had signed a Business Collaboration and Shareholders Agreement with Transformers and Electricals Kerala Ltd., TELK and the Government of Kerala for synergy in the field of manufacturing and repair of Power Transformers etc. As per the agreement, your Company had agreed to acquire 44.6% stake in TELK from Government of Kerala and its undertakings. The approval from BIFR has been obtained for restructuring package and action is being taken for delisting of shares of the existing company. On completion of such formalities the acquisition of stake will take place. GLOBALISATION INITIATIVES Your Company is keenly exploring opportunities to mark its footprints in different parts of the world. In line with its Globalization strategy, your Company is making consistent efforts to enter the overseas markets and is focusing its efforts in the Middle East, Asia-Pacific and Africa regions for business. A Representative office is functioning in Dubai. A site has been identified for setting up a 2X250 MW coal based power plant in Trincomalee region, Sri Lanka in Joint Venture with Ceylon Electricity Board. Energy Audit of 15 Units of Saudi Electric Company has been successfully completed. Pursuant to signing of MoU with Government of Nigeria, our team is working on selection of prospective site for setting up one 700 MW Gas based and one 500 MW coal based power plant in Nigeria. In lieu of this, Government of Nigeria shall provide LNG for our stations. FINANCING OF NEW PROJECTS All the planned capacity addition programs shall be financed with a debt to equity ratio of 70:30. Your directors believe that internal accruals of the company would be sufficient to finance the equity component for the new projects. Given its low gearing and strong credit ratings, your Directors believe that your Company is well positioned to raise the required borrowings. Your Company is exploring domestic as well as international borrowing options including overseas development assistance provided by bilateral agencies to mobilize debt required for the planned capacity expansion program. During the year, your Company has tied up a loan for USD 380 million under the guarantee of Japan Bank for International Co-operation and another loan of Euro 68.56 million from Nordic Investment Bank at competitive terms. The company also mobilized new term loans aggregating to Rs. 44,750 million from domestic banks and financial institutions. Bonds of Rs. 10,000 million were placed with Life Insurance Corporation of India to finance capital expenditure of projects. FIXED DEPOSITS The cumulative deposits received by your Company from 367 depositors as at March 31, 2008 stood at Rs 130 million. Further an amount of Rs. 19 million has not been claimed on maturity by 70 depositors as on that date. FUEL SECURITY Your company is the largest consumer of coal in the country. Total domestic coal received by your company during the financial year 2007-08 was 120.20 million tonnes, which was about 9.51% more than the previous year. To overcome temporary shortages in coal supply, your company resorted to import of coal to the tune of 2.74 million tonnes being 2.21% of total coal consumed during the year 2007-08. Your Company also intends to import 5 Million Tonnes of coal during 2008-09. During the year, your company obtained long term coal linkages for its various projects from various subsidiary companies of Coal India Limited (CIL). In order to have long-term fuel security, your company is also exploring the possibility of acquiring acreages in the coal assets abroad for which NTPC teams visited various countries. Coal Mining Your Company has been allotted six coal blocks namely Pakri Barwadih, Chatti Bariatu, Kerendari, Dulanga, Talaipalli and Chatti-Bariatu (South) with estimated Geological Reserves of plus 3 billion tonnes and production potential of about 48 Million Tonnes Per Annum (MTPA). These blocks are targeted to be developed to entail overall coal production of about 14 MTPA by 2012. Process of selection of Mine Developer cum Operator for Pakri Barwadih mine is at an advanced stage. Mining plans for Chatti Bariatu and Kerandari have been submitted to Ministry of Coal. Land acquisition for five Coal Blocks is under progress. Your Company has formed a Joint Venture Company named NTPC SCCL Global Ventures Private Limited with Singareni Collieries Company Limited for undertaking coal mining in India and abroad. As a part of developing strategic alliances as well as deriving technical strengths, your Company has entered into Memorandum of Understanding with RINL, SAIL, NMDC and CIL for sourcing coking coal and thermal coal from abroad. Exploration Activities Your Company, along with M/s Geopetrol International Inc. and M/s Canoro Resources Ltd, has been allotted a block for exploration activities in Arunachal Pradesh, for which it has signed a production sharing contract with Government of India. Your company has 40% participating interest in it. M/s Geopetrol International has been designated as the Operator of the block. Subsequent to the issuance of the Petroleum License by the State Government, the operator had initiated various exploration activities. The geological, geochemical, geo microbiological and 2D seismic survey has been completed. Environmental clearance has been granted and necessary infrastructure is being created for initiating exploratory well drilling. Near Term Strategies For optimum utilization of the capacity of its Gas based stations, your Company continued with the procurement of Spot Re-gasified LNG in order to mitigate gas shortages at its existing gas based stations. RENOVATION & MODERNISATION Your Company considers Renovation and Modernization (R&M) as quick result low investment option to extract higher generation from old power stations. R&M is being undertaken in project mode with focus on feasible and cost effective technology upgrade, with capacity and efficiency improvements to bring the old vintage units near to the latest design. It gives an opportunity to leverage the technological advancement which has taken place in the power industry so as to continue economical power generation. Introduction of advance technologies is expected to result in improvement in efficiency of the units. It may also help to reduce green house gases and avail Clean Development Mechanism benefits apart from life extension of the plant. HUMAN RESOURCE MANAGEMENT Your Company takes pride in its highly motivated and trained Human Resource that has contributed its best to bring NTPC to its present height. The company has continuously added to its installed capacity and the Man-MW ratio has improved consistently. The attrition rate among the executives during the year was 3.1%. The total employee strength of the company stands at 24,547 as on 31.3.2008 as against 24,375 as on 31.3.2007. Fiscal 2008 Fiscal 2007 NTPC Number of employees 23674 23602 Man / MW ratio 0.87 0.91 Generation per employee 8.48 7.99 Subsidiaries & Joint Ventures Employees of NTPC in Subsidiaries & Joint Ventures 873 773 Total employees 24,547 24,375 NTPC follows People First approach to leverage the potential of its employees to execute its business plans. Employee Relations Employee relations scenario in NTPC continued to be cordial marked by industrial harmony and mutual trust during the year. The scheme for Employees Participation in Management continued to function successfully all over the Company. The unions and associations and also the individual employees complimented the efforts of the management in developing and sustaining an enabling performance culture in the organisation. There has been continuous interactions between the management and the apex fora of workmen and executives. Safe methods are practiced in all areas of Operations & Maintenance and Construction & Erection activities for the protection of workers against injury and diseases. Occupational safety at workplace is given utmost importance. Training and Development Your Company, as part of its endeavour of being a learning organization, has created training and development infrastructure both at its sites as well as at the corporate level. The employee development centers at our projects and at Power Management Institute (PMI), Noida impart training in diverse areas including managerial skill, power station operation and maintenance and project construction, erection and commissioning and information technology. Special emphasis is given to developing knowledge and skills of the employees in the new business areas of coal mining, hydro power, nuclear power, power trading and distribution etc. In addition to training its own employees, your Company has been providing a platform for imparting training to other constituents of the power sector State Utilities, Independent Power Producers, Central Power Sector Undertakings. In the year 2007-08, a total of 324 programmes were conducted at PMI which were attended by a total of 8529 participants. CORPORATE SOCIAL RESPONSIBILITY Vitally engaged in the endeavour of nation building, your Company is not only a partner in powering Indias growth, it is also a partner in making Indian society more humane and just. Corporate Social Responsibility is an article of faith for us. Your Company is providing sponsorship to candidates from villages in the vicinity of NTPC projects for ITI training at Government/ Government recognized private ITIs in the trades of welder, fitter, instrument mechanic and electrician. Close to 750 village youth have been sponsored during the year. Your Company also proposes to set up an ITI at Chatra District in Jharkhand State at an estimated cost of Rs. 67.10 million on land to be provided by the State Government of Jharkhand. As a health care measure, your Company is providing support to Hyderabad Eye Research Foundation for three specialized Eye Centers at Bhubaneshwar Eye Hospital. In the field of education, your Company is committed to provide support for setting up two technical polytechnics at Uttarakhand at Kaladungi District Nainital and a womens Polytechnic at Gopeshwar District Chamoli. Support has also been extended by NTPC for delivery vehicles for mid-day meal programme for the children of Government schools located in the National Capital Region through Food Relief Foundation of ISKON and for assistance in self reliance for 200 tribal girls/ women in the tribal area of Jhamar Kotra in Udaipur District of Rajasthan. Committed to its social responsibilities, your Company became a member of Global Compact, a voluntary initiative of the UN for CSR. Your Company confirms its involvement in various CSR activities in line with the 10 Global Compact principles and share the experiences with the representatives of the world through Communication on Progress. A report on progress made in this area is enclosed at Annex-IX to Directors Report. NTPC Foundation NTPC Foundation has been established by the Company under Indian Trust Act, 1882 for addressing the identified areas of social development at national level through supportive interventions. NTPC Foundation provides loans, training and medical treatment to physically challenged persons and economically weaker sections in a phased manner. Rehabilitation & Resettlement Your Company is committed to help the populace displaced for execution of its projects and has been making efforts to improve the Socio-economic Status of Project Affected Persons (PAPs) and also undertaking community development works in and around the projects. Social Impact Evaluation (SIE) for Simhadri and Sipat projects were completed during the year. IMPLEMENTATION OF OFFICIAL LANGUAGE Your Company has made vigorous efforts for the propagation and successful implementation of the Official Language Policy of the Government of India. Several Hindi workshops and competitions were conducted at projects, regional offices and corporate centre during the year to encourage the employees to use maximum Hindi in official work. All office orders, formats and circulars were issued in Hindi as well. All important advertisements and house journals were released in bilingual form- in Hindi and in English. One Hindi word is being displayed over the intranet daily. Your companys website also has a facility of operating in bilingual form- in Hindi as well as in English. Hindi software Saransh was procured and installed on computers to facilitate working in Hindi. CenPEEP As a proactive measure to address issues concerning sustainable energy development, your Company had established Center for Power Efficiency and Environmental Protection (CenPEEP) more than a decade ago with the help of US DoE and USAID. CenPEEP took various initiatives for improvement in efficiency and maintenance to achieve sustainable GHG emission reduction from existing thermal power capacities. Methodology of acquisition of state-of- the-art technologies and systems, demonstration in local conditions and widespread dissemination in power sector was adopted through technical assistance of USAID and USDoE. A customized Efficiency Management System has been developed and is under implementation in NTPC plants for sustaining the efficiency improvements. Encouraged by the success of its efforts in GHG emission reduction, the USAID extended its technical cooperation with CenPEEP for a period of two years up to 2010. SUSTAINABLE ENERGY DEVELOPMENT Your Company has adopted the following vision statement on sustainable energy development: Going Higher on Generation, lowering GHG intensity A multi-dimensional approach is proposed to be adopted covering reduction of CO2 intensity through fuel portfolio management, adoption of state-of-the-art technology and special thrust on renewable energy sources; developing green building space within your Companys premises; spearheading awareness campaign nationally to orient people at large to support and contribute to measures for sustainable energy development; strengthening Governments efforts for dissemination and adoption of cleaner technologies by the stakeholders, engaging future generation into the cause of promoting clean and green energy through awareness programmes conducted in schools like tree plantation, environment quizzes etc. Your Company would allocate up to 0.5% of distributable profit annually for undertaking/sponsoring research leading to sustainable energy development. RESEARCH & DEVELOPMENT Your Companys Research & Development Centre is ISO 17025 accredited and provides high end scientific services to all the companys stations as well as many outside stations resulting in improving availability and reliability of stations by providing condition assessment, failure analysis, solving and analyzing specific problems, and helping our stations in increasing the availability and reliability of their units. R&D has filed 4 patent applications viz ANN based Expert system for health assessment of high voltage transformers; Heat treatment technique for determining constituents of wear particles in lubricating oil and hydraulic fluids; ready- to-use Fly ash based product through setting properties enhancement by using a dry plasticizer; Fly-ash Based utensil cleaning powder. R&D along with BARC has developed and installed real time monitoring of creep fatigue life of high temperature pipings. The system continuously indicates the life of components consumed and suggests timely actions for inspection and repair. ENERGY TECHNOLOGIES CENTRE Your Companys Energy Technologies Centre has started its research activities in-house and through networking with established research and academic institutes in India. As a step in this direction, Energy Technologies Centre has earlier networked with 8 institutes for 12 research projects in areas like carbon capture, power plant efficiency improvement, waste heat utilization, flue gas conditioning etc. Other research projects would include development of Coal Gasification Technology for commercial use, reducing cost of harnessing Solar Energy, LED lighting etc. Energy Technologies has entered into a MoU with BARC, Mumbai for the Development of Automated Boiler Tube Inspection System for Coal Based Thermal Power Plants. Another MoU was signed with Heavy Water Board, Mumbai for the transfer of Ammonia Based Flue Gas Conditioning technology to NTPC, on non-exclusive basis, for its use in NTPC power stations. ENVIRONMENT MANAGEMENT Your Company is undertaking massive afforestation programme covering vast areas of land in and around its projects and till date has planted more than 18.37 million trees at its projects throughout the country. The afforestation has not only contributed to the aesthetics but also has been serving as a sink for the pollutants released from the station and thereby protecting the quality of ecology and environment in and around the projects. For hydro projects, Catchment Area Treatment (CAT), Compensatory Afforestation, Rim Plantation etc. are finalised and implemented in consultation with respective State Governments. All NTPC stations have been certified with ISO 14001 and OHSAS 18001 by reputed National and International certifying agencies. Your Company has adopted advanced and high efficiency technologies such as super critical boilers for the up-coming Greenfield Projects. Your Company has also designed plants for use of beneficiated coal and imported low ash coal. These measures will not only help in reducing pollution and minimizing use of precious natural resources but also lead to reduction of CO2 emissions and thereby reducing global warming. CLEAN DEVELOPMENT MECHANISM (CDM) Your Company is a pioneer in the power sector in development of CDM projects in India. The methodology developed by your Company for supercritical power plants in respect of North Karanpura project has been approved by United Nations Frame Work Convention on Climate Change (UNFCCC) as ACM 0013 which will be globally used for CDM projects related to supercritical power plants. It is indeed a path breaking effort in power sector. Host country approval has already been accorded by national CDM authority for three projects viz. North Karanpura STPP, Tapovan Vishnugad HEPP & Loharinag Pala HEPP. More projects are in the pipeline for posing for host countrys approval. These endeavors shall help in getting/ earning Certified Emission Reduction and will facilitate development of advanced energy efficient technologies. ASH UTILISATION During the year 2007-2008, about 23.7 million tonne of ash was utilized accounting for 55.1% of total ash generation. Important area of ash utilization were of Manufacturing Cement, Concrete, Ash based products, Asbestos sheets etc., Construction of Road Embankment, Ash Dyke Raising, Mine filling, and Land Development. During the year, issue of fly ash to cement and concrete industry was 8.69 million tonne, 16.6% more than last years issue. All coal based stations are having Pilot ash brick manufacturing plants. Construction works at all expansion projects like Dadri-II, Kahalgaon-II and Rihand-II including their townships are being done with ash bricks only. Ash Bricks have also been used in green field project at Sipat project. MoU has been signed with Railway Design & Specification Organization (RDSO) Lucknow to explore use of ash in Railway embankments. A number of studies have been taken up to explore new areas of Ash utilization in association with various research Institutes- such as Central Road Research Institute (CRRI), New Delhi, Institute of Mineral and Materials Technology (IMMT), Bhubaneshwar, National Institute for Interdisciplinary Science & Technology (NIIST), Thiruvanthapuram etc. for increased usage of ash in bricks and other building products. Ash is also being exported to Middle East, Bangladesh & Nepal from our stations located at Simhadri, Farakka and Unchahar respectively. MANAGEMENT OF CHANGE-IMPLEMENTATION OF ERP Your Company believes in keeping pace with latest technology and acquiring the latest know-how, in line with its growth and diversification plans. The company is in the process of completing Enterprise Resource Planning (ERP) implementation, covering most of the processes of the organization at all its locations. The ERP package has been implemented at 28 locations of NTPC, its subsidiaries and is being implemented at the balance locations. In addition to the core business processes and Employee Self Service (ESS) functionality, ERP solution also includes e- procurement, Knowledge Management, Business Intelligence, Document Management, and Workflow etc. The SAP Implementation in NTPC has been honored with SAP ACE award for best implementation in Utilities. LEVERAGING COMPANYS CAPABILITIES FOR SECTOR REFORMS AND DEVELOPMENT The Government of India reposes a lot of confidence on your Companys abilities in implementing plans and projects. This confidence has led the Government of India to make your Company a partner in a number of its initiatives. Some of the key initiatives are: Rajiv Gandhi Grameen Vidhyutikaran Yojana (RGGVY) Your Company has been entrusted by Government of India for rural electrification work under Rajeev Gandhi Grameen Vidyutikaran Yojana in 6 States and one Union Territory (UT) covering approximately 40,000 villages. The work is in progress in 8 districts i.e. West Midnapore (West Bengal), Ashok Nagar & Guna (Madhya Pradesh), Janjgir- Champa (Chhattisgarh), Angul & Nayagrah (Orissa) and Deoghar & Jamtara (Jharkhand) during the X plan. 22 more projects have been sanctioned for XI plan period. The work is under progress in 9414 villages. Out of these, 1253 villages have been charged/ made ready for charging. Partnership in Excellence In a mission to increase capacity addition and meet the objective of Power for all by year 2012, Ministry of Power launched the Partnership in Excellence (PIE) Programme to improve the under performing stations in India. Under this programme, 13 stations with an operating capacity of 5050 MW were entrusted to NTPC. Performance turnaround has taken place at all the 13 power stations. The plants entrusted to NTPC recorded an additional generation of 2859 MUs in the year 2007-08 from the existing installed capacity which is equivalent to 440 MW of additional capacity. JOINT VENTURES AND SUBSIDIARIES Your Company has formed a number of joint venture and subsidiary companies for undertaking specific business activities. The names of these companies and the percentage of your Companys stake in these Companies is as follows. The name of Vaishali Power Generating Company Limited has been changed to Kanti Bijlee Utpadan Nigam Limited on April 10, 2008. The performance of these companies as well as the Consolidated Financial Statements are briefly discussed in the Management Discussion & Analysis section. The financial statements of subsidiary Companies along with the respective Directors report are placed elsewhere in this Annual Report. STATUTORY AND OTHER INFORMATION REQUIREMENTS Information required to be furnished as per the Companies Act, 1956, Listing Agreement with Stock Exchanges, Government guidelines etc. is annexed to this report as below: Particulars Annexure Management Discussion & Analysis I Report on Corporate Governance II Information on conservation of energy, technology absorption and foreign exchange earnings and outgo III Information as per Companies (Particulars of Employees) Rules, 1975 IV Statement pursuant to Section 212 of the Companies Act, 1956 relating to subsidiary companies V Statistical data of the grievances VI Statistical information on persons belonging to Scheduled Caste / Tribe categories VII Information on Physically Challenged persons VIII UNGC Communications on progress 2007-08 IX STATUTORY AUDITORS The Statutory Auditors of your Company are appointed by the Comptroller & Auditor General of India. M/s Varma & Varma, B.C. Jain & Co., Parakh & Co., S.K. Mittal & Co., Dass Gupta & Associates and S.K. Mehta & Co. were appointed as Joint Statutory Auditors for the financial year 2007-08. MANAGEMENT COMMENTS ON STATUTORY AUDITORS REPORT The Statutory Auditors of the Company have given an un- qualified report on the accounts of the Company for the Financial Year 2007-2008. REVIEW OF ACCOUNTS BY COMPTROLLER & AUDITOR GENERAL OF INDIA As advised by the office of The Comptroller & Auditor General of India (C&AG), the comments of C&AG and Managements replies thereto on the accounts for the year 2007-08 are being placed with the report of Statutory Auditors of your Company elsewhere in this Annual Report. COST AUDIT The Cost Audit Reports for the year 2005-06 were submitted for the first time to the Cost Audit Branch in August 2006. The cost audit for the year 2007-08 has been completed and the Cost Audit reports are scheduled to be submitted shortly. BOARD OF DIRECTORS Shri T. Sankaralingam ceased to be the Chairman & Managing Director of the Company with effect from April 30, 2008 on superannuation. The Board wishes to place on record its deep appreciation for the valuable services rendered by Shri T. Sankaralingam during his association with NTPC. Shri R.S. Sharma, Director (Commercial), took over as the Chairman & Managing Director with effect from May 1, 2008. Shri V.P. Joy, Joint Secretary (Thermal), Ministry of Power joined the Board of the Company with effect from 30.08.2007 in place of Shri Harish Chandra who ceased to be a Director of the Company with effect from 31.07.2007. The Board wishes to place on record its deep appreciation for the valuable services rendered by Shri Harish Chandra during his association with NTPC. In accordance with the provisions of Article 41(iii) of the Articles of Association of the company three directors - Dr. R.K. Pachauri, Prof. Ashok Misra and Shri R.C. Shrivastav shall retire by rotation at the Annual General Meeting of your Company and, being eligible, offer themselves for re- appointment. DIRECTORS RESPONSIBILITY STATEMENT As required under Section 217(2AA) of the Companies Act, 1956 your Directors confirm that: 1. in the preparation of the annual accounts, the applicable accounting standards had been followed along with proper explanation relating to material departures; 2. the Directors had selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the company at the end of the financial year 2007-08 and of the profit of the company for that period; 3. the Directors had taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 1956 for safeguarding the assets of the company and for preventing and detecting fraud and other irregularities; and 4. the Directors had prepared the Annual Accounts on a going concern basis. ACKNOWLEDGEMENT Your Directors acknowledge with deep sense of appreciation the co-operation received from the Government of India, particularly the Prime Ministers Office, Ministry of Power, Ministry of Finance, Ministry of Environment & Forests, Ministry of Coal, Ministry of Petroleum & Natural Gas, Planning Commission, Department of Public Enterprises, Central Electricity Authority, Central Electricity Regulatory Commission, State Governments, Regional Electricity Boards and State Electricity Boards. Your directors also convey their gratitude to the shareholders, various International and Indian Banks, Financial Institutions for the confidence reposed by them in the company. The Board also appreciates the contribution of contractors, vendors and consultants in the implementation of various projects of the Company. We also acknowledge the constructive suggestions received from Government and the Statutory Auditors. We wish to place on record our appreciation for the untiring efforts and contributions made by the employees at all levels to ensure that the company continues to grow and excel. For and on behalf of Board of Directors Place: New Delhi (R.S. Sharma) Date : 9th July 2008 Chairman & Managing Director

Director’s Report