NTPC Profit Dips as Tax Costs Jump, Competition Intensifies

  • Nation’s largest generator posts 27.2 billion rupee profit
  • Coal-fired plant use rate falls to 81.3% of capacity vs 82.7%

NTPC Ltd.’s fourth-quarter profit fell 7.7 percent as India’s biggest power producer faced competition from rivals and taxes increased.

Profit for the three months ended March 31 decreased to 27.2 billion rupees ($405 million) from 29.4 billion rupees a year ago, the company said in a stock exchange filing. That beat an average profit forecast of 24.3 billion rupees by 16 analyst estimates compiled by Bloomberg. The company produced 62.3 billion kilowatt hours of electricity during the period, compared with 61.3 billion kilowatt hours a year ago and tax expenses rose almost five-fold to 8.5 billion rupees.

The average utilization at NTPC’s coal plants, which account for more than 95 percent of its generation, was lower at 81.3 percent, as cheaper coal prices failed to counter increased competition from lower-cost producers. Tata Power Delhi Distribution Ltd. is seeking to withdraw from some purchase pacts with NTPC because there are lower-cost options, the electricity retailer’s head of power management, Sanjay Kumar Banga, said in an interview last month.

Sales at NTPC fell to 180 billion rupees from 192.3 billion rupees a year ago, the generator said. The company will pay 1.75 rupees a share as dividend. The shares rose 2.5 percent to 143.60 rupees at the close in Mumbai after climbing as much as 4.1 percent earlier. The stock has declined 1.8 percent this year, compared with a 2.3 percent increase in the benchmark S&P BSE Sensex.

The company received 41.7 million tons of coal during the quarter, it said in a separate statement. The share of imports in NTPC’s total coal supplies decreased to 2.6 percent, compared with 10.6 percent a year ago. Operating expenses were 141.2 billion rupees, compared with 160 billion rupees a year ago. The company spent 101.6 billion rupees on fuel, a 19 percent decline because of lower coal costs.

“Our efforts to reduce coal costs made our power more competitive in the market,” NTPC’s Director Finance Kulamani Biswal said by phone. “Capacity addition during the year led to an increase in generation.”

NTPC sold power at an average tariff of 3.18 rupees a kilowatt hour, compared with 3.28 rupees a year ago.

For a chart showing how India is burning through coal stockpiles, click here.

Coal stockpiles at India’s power plants, including NTPC’s, peaked at 39 million tons in early April, although inventories have been sliding as summer heat drives power consumption.

NTPC, including its joint ventures, has a generation capacity of about 47,200 megawatts, accounting for almost 16 percent of the nation’s generation capability, and plans to expand it almost threefold to 128,000 megawatts by 2032. It added 2,255 megawatts in the year ended March 31.

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