Indian Utility Giant NTPC’s Profits Rise With Power Demand

  • Profit rises 4 percent from year ago to 23.7 billion rupees
  • NTPC’s sales increases 11 percent to 189.4 billion rupees

NTPC Ltd., India’s biggest power producer, reported a 4 percent increase in its first-quarter profit on the back of higher energy sales.

Profit for the three months ended June 30 rose to 23.7 billion rupees ($353 million) from 22.76 billion rupees a year ago, according to a stock exchange filing. Revenue climbed 11 percent to 189.4 billion rupees from a year earlier. The state-run generator reported earnings based on the newly introduced Indian Accounting Standards, which is in line with International Financial Reporting Standards.

Electricity generation was boosted by higher demand from states that have taken up distribution reforms, NTPC’s Operations Director K.K. Sharma, said last Friday. A drop in hydropower generation during the period also helped boost generation at coal-fired power stations, which account for 85 percent of NTPC’s capacity.

The company’s plants produced 64.56 billion kilowatt hours of power, compared with 58.48 billion kilowatt hours a year ago, according to a company presentation earlier this month. Operating costs rose to 152.5 billion rupees from 147.5 billion rupees a year ago, while electricity sales climbed 11 percent to 60.28 billion units. The company sold electricity at an average tariff of 3.12 rupees a kilowatt hour, compared with 3.26 rupees a year ago.

Electricity Demand

India’s electricity demand increased 8.1 percent to almost 295 billion kilowatt hours in the three-month period. Distribution utilities in states including Uttar Pradesh and Rajasthan led the recovery in demand as they benefited from a restructuring of their debt.

Coal plants ran at a higher capacity to make up for a drop in hydro-power generation caused by inadequate rains in the period. Hydro generation in the country declined 11.4 percent to 30.83 billion kilowatt hours in the last quarter. NTPC’s coal-fired plants utilized 81.35 percent of their capacity, compared with 77.6 percent a year ago, it said in a statement.

NTPC used 40.85 million tons of coal during the quarter, compared with 41.35 million a year ago. Use of imported coal declined almost 86 percent to 0.56 million tons, according to the company. The company spent 116.3 billion rupees on fuel, or 61.4 percent of sales, compared with 115 billion rupees of fuel expenses in the year-earlier period, comprising almost 68 percent of sales.

New Delhi-based NTPC’s 47.2 gigawatts generation plants account for about 16 percent of the nation’s total capacity.

Assured Return

The company’s entire power output is contracted under long-term purchase agreements, which fetch an assured return on equity and keep NTPC immune to volatile spot market prices, it said.

The company has permits for 10 coal blocks with a combined potential to produce 107 million tons a year, enough to feed a generation capacity of 20 gigawatts. The first among these is expected to start production this fiscal year, according to the presentation.

NTPC’s shares declined 1.9 percent to 163.65 rupees in Mumbai on Monday, while the benchmark S&P BSE Sensex ended 0.3 percent lower. Shares have advanced 12 percent this year, compared with a 7.2 percent gain in the Sensex.

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