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NTPC Ltd
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Ladies and gentlemen, good day, and welcome to the NTPC Limited Q3 FY '19 Earnings Conference Call hosted by ICICI Securities Limited. [Operator Instructions] Please note that this conference is being recorded. I now hand the conference over to Mr. Rahul Modi from ICICI Securities. Thank you, and over to you, sir.
Thank you. On behalf of ICICI Securities, I welcome you all to the Q3 FY '19 Earnings Conference Call of NTPC to discuss the results and share the performance outlook. Today, we have the management of NTPC, which will be represented by Mr. S. Roy, Director, HR and Finance; Mr. A.K. Gupta, Director, Commercial; Mr. S.K. Roy, Director, Projects; Mr. P.K. Mohapatra, Director, Technical; and Mr. Prakash Tiwari, Director, Operations; and Mr. Sudhir Arya, CFO and ED, along with other key members of the finance team. I would like to thank the management for the opportunity and hand over the call for the opening remarks, post which, we can have a Q&A session. Over to you, sir. Thank you.
Yes, thank you very much. At the outset, let me apologize for some delay. But then...[Technical Difficulty] And I have with me Shri A.K. Gupta, Director, Commercial; Shri S.K. Roy, Director, Projects; Shri Prakash Tiwari, Director, Operations; and Shri Prasant Mohapatra, Director, Technical. I also have with me Shri Sudhir Arya, CFO and the Executive Director of Finance, and other key members of NTPC team present over here.Today, the company has announced audited financial results for the third quarter of financial year '18/'19. The key performance highlights for the quarter and the 9 months ended 31st December 2018, has already been disclosed on both the stock exchanges.Now let me just briefly touch upon the operational highlights for Q3 and 9-months performance in the financial year of FY '19. NTPC's [ standalone gross generation ] increased by 2.28 billion units to 70.06 billion units, registering an increase of [ 0.36% ]...[Technical Difficulty] [ NTPC ] Group increased by 3.32 billion units to 78.16 billion units, registering an increase [indiscernible] during this [indiscernible] in the 9 months of financial year -- current financial year...[Technical Difficulty]
Sorry to interrupt you, sir, but your voice is cutting off.
Okay. Is it audible now?
Yes, much better.
I think there is some disturbance in the line. Let me apologize for the disturbance. Is it audible now or slightly better?
Yes. It's a bit better, sir.
Let me continue despite some disturbance here. So in the 9-months period of the current financial year, NTPC's standalone gross generation increased by 8.02 billion units to 205.26 billion units, registering an increase of 4.07% over the corresponding previous period. Gross generation of NTPC Group increased by 10.01 billion units to 228.21 billion units, registering an increase of 4.59% during this period. NTPC has posted highest quarterly generation of 78.16 billion units during Q3 of current financial year, surpassing previous highest quarterly generation of 76.91 billion units during the Q1 of current financial year. NTPC Group has generated 5 billion units of electricity [indiscernible] until 30th of November 2018, from its power stations spread across the country. In third quarter of current financial year, 220 megawatts of Barauni has been added to the installed capacity and 705 megawatts of Badarpur was decommissioned. With this, the installed capacity of NTPC on standalone basis and for the group has become 44,615 megawatts and 53,156 megawatts, respectively; and the commercial capacity of NTPC on standalone basis and for the group has become 44,815 megawatts and 51,706 megawatts, respectively, as on 31st of December 2018.For 9-month period during this current financial year, 3 coal stations of NTPC were amongst the top 10 performing stations in the country in terms of PLF: Sipat with plant load factor of 92.49%; Vindhyachal with 90.27%; and Talcher thermal with plant load factor of [ 88.07% ]. They ranked second, sixth, and seventh, respectively. Six stations of NTPC clocked over 85% of PLF.During the 9-month period in the current financial year, PLF of the coal stations was 76.09% as against the national average of 61.12%. We have suffered loss of generation due to grid restrictions. For coal-based stations, the loss was 6.49 billion units in the third quarter of the current financial year and 24.27 billion units in the 9-month [ period ]. Similarly, for the gas-based stations...
I'm sorry to interrupt you, sir, but your voice has started to cut off again.
[indiscernible] [Technical Difficulty]
Ladies and gentlemen, thank you for patiently holding your lines. We have the line for the management reconnected. Over to you, sir.
Okay, thank you. Sorry for the -- some kind of interruptions. So I was talking about our performance -- operational performance. And during this 9-month period in the current financial year, the plant load factor of coal station was 76.09%, whereas against the national average was 61.12%. We have suffered losses of generation due to grid restriction. For coal-based stations, the loss was 6.49 billion units in third quarter of the current financial year and 24.27 billion units in the 9-month period in the current financial year. Similarly, for the gas-based stations, the loss was 6.2 billion units in the third quarter of the current financial year and 18.78 billion units in the 9-month period in the current financial year. The generation loss on account of fuel supply constraints in the coal-based stations was 4.17 billion units in the third quarter of the current financial year and 7.56 billion units in the 9-month period in the current financial year. NTPC has participated in the 550-megawatts tender floated by Uttar Pradesh New and Renewable Energy Development Agency, UPNEDA, for grid-connected solar projects, for which the revenue auction held on 3rd of December 2018. NTPC participated for 85-megawatts capacity and has won the entire capacity bid [ bite ] at a levelized tariff of INR 3.02 per unit, applicable for 25 years. This solar project shall be set up by NTPC and shall add to the installed capacity of NTPC. NTPC has acquired Barauni Thermal Power Station with 720-megawatts installed capacity in the district of Begusarai, Bihar from Bihar State Power Generating Company Ltd. on December 15, 2018. The 720-megawatts coal-based power station has 2 units of 110 megawatts each, which is under [ renovation ]; and 2 units of 250 megawatts each, which are under construction. The units of the power station will be progressively put under commercial operation. The project has linked Badam coal block, which is also part of the transfer scheme notified by the Government of Bihar on June 27, 2018, and amendment dated December 14, 2018. 100% capacity of the project is tied up through power purchase agreement with Bihar Power Discoms.Unit 6 of 500-megawatts capacity of Feroze Gandhi Unchahar Thermal Power Station has been synchronized with the grid after boiler restoration in December 2018. Investment approval has been awarded for 160 megawatts of solar capacity won by NTPC, comprising Bilhaur Solar PV project of 140-megawatt capacity; and solar -- Auraiya Solar PV project of 20-megawatt capacity. NTPC renewable energy station recorded generation of 769 million units in third quarter of the current financial year against 712 million units in corresponding period previous year. During the third quarter of current financial year, approximately 2.2 million metric tonnes of coal has been excavated from Pakri Barwadih coal mine. Total 4.9 million metric tonnes of coal has been excavated during the 9-month period in the current financial year. Cumulatively, 7.6 million metric tonnes of coal has been excavated until December 2018. 1.2 lakhs tonnes coal has been excavated from Dulanga coal block until December 2018. I think the call has been disconnected, no?
No, we are there.
It's okay, sir. You may go ahead.
Okay, okay. I will continue. The NTPC has invited bids for 240 charging stations across 62 in the first phase for creation of the charging infrastructure ecosystem. MOU has been signed with Assam State Transport Corporation for providing EV bus charging stations at their bus depots. NTPC has been registered as a [indiscernible] under the Myanmar Companies Law or under [indiscernible] International Business in Southeast Asia. Environmental management initiatives for preserving environment, for compliance of new norms and the control of SOx Flue Gas Desulphurisation Systems, FGD, are under various stages of implementation in 63.82 gigawatts of capacity. The first FGD of 500-megawatts unit has already been commissioned. The FGD system package for 31.81 gigawatts had been awarded. The award of FGD system packages for 28.05 gigawatts capacity is under various stages of tendering. For compliance with NOx control in the coal-fired power plants, units will require installation of appropriate de-NOx system based on the emission level. Eight selective catalytic reduction and 2 selective non-catalytic reduction pilot tests are being undertaken in order to assess performance on high ash Indian coal and are likely to be completed by May '19. Further, as part of this commitment to the environment, NTPC has taken new initiative to utilize agro residue for power generation. The utilization of agro residue-based biofuel for power generation will not only reduce in-field crop residue burning resulting in lower air pollution but will also reduce carbon footprint of the coal-based power plants. Up to 10% agro residue-based biofuel coal-firing with coal has been successfully demonstrated at NTPC Dadri and is operational from December 2018. With this, NTPC Dadri has become the first plant in the country to commercialize the biomass coal-firing.Now coming to the financial highlights. The gross sales for the third quarter of the current financial year is INR 24,064.47 crores as against the corresponding quarter of the previous year gross sales of INR 20,698.09 crores, registering an increase of 16.26%. On a 9-month basis, there is an increase of 14.89% in the gross sales, that is, from INR 59,930.07 crores in 9-month period in the current fiscal to INR 68,853.56 crores in the 9-month period in the -- so in the current financial year. The earlier figure was registered to the previous 9-month period in the previous financial year.The total income for the third quarter of the current financial year is INR 24,308.01 crore as against the corresponding quarters of previous year's total income of INR 21,087.84 crore, thus registering an increase of 15.27%. On 9-month basis, there is an increase of 13.06% in the total income, that is, from INR 61,590.12 crore to -- in 9-month period in the previous financial year to INR 69,633.95 crore in the 9-month period in the current financial year. The profit before tax for third quarter in the current financial year is INR 3,889 -- INR 3,489.54 crore as against INR 2,644.09 crore in the corresponding quarter of the previous year, thus registering an increase of 31.98%. On 9-month basis, there is an increase of 2.06% in PBT, that is, from INR 8,950.89 crore in 9-month period in the previous financial year to INR 9,135.35 crore in 9-month period in the current financial year. The profit after tax for third quarter in the current financial year is INR 2,385.41 crore as against INR 2,360.81 crore in the corresponding quarter of the previous year, thus registering an increase of 1.04% on a 9-month basis. The profit after tax is INR 7,399.57 crore as against INR 7,417.58 crore in 9-month period in the previous financial year. An update on various other financial activities [ as given under ] -- The regulated equity as on 31st of December 2018, was INR 52,105.93 crore. In respect of the fund mobilization, the average cost of borrowing for 9 months in the current financial year was 6.85% as compared to 6.99% in the 9-month period in the previous year. The decrease is on account of the lower rate of interest on new borrowings. We have issued bonds aggregating to INR 4,000 crores through private placement of the secured non-covered convertible bonds in nature of debentures at attractive coupons of 8.3% per annum with a door-to-door maturity of 10 years on 15th of January 2019. Keen interest was shown by the investors, and the bid amounting to INR 12,520 crores, we have received in all. Further, in third quarter of the current financial year, NTPC has signed a syndicated facility agreement of USD 300 million equivalent in Japanese yen with an average maturity of 10 years and all-in cost of 1.31% without taxes. Against this, USD 150 million equivalent to Japanese yen of JPY 16 billion were raised on 10 January 2019. With this facility, NTPC has raised second low-cost, long-term syndicated loan from Japanese market.Now coming to the position of the CapEx in 9-month period in the current financial year. We have incurred a CapEx of INR 17,951.40 crores against INR 14,537.18 crores in the 9-month period in the previous financial year. The CapEx by the other group companies during the 9-month period in the current financial year was at INR 3,553.75 crores. Thus, the total group CapEx for the 9-month period in the current financial year was INR 21,505.18 crores. The capital outlay for financial year 2019 has been estimated at INR 22,300 crores for entire NTPC.Now let me discuss the operational performance for the second quarter of the current financial year. Now looking at the fuel, and particularly, at coal during the 9-months period in the current financial year, materialization of the coal against ACQ was 97.35% as against 96.8% in the 9-month period in the previous financial year. The coal supply during 9-month period in the current financial year was 128.58 million metric tonnes. This comprises 128.20 million metric tonnes of the domestic coal and 0.38 million metric tonnes of imported coal. The coal supply during the corresponding previous period was 121.35 million metric tonnes, with 121.13 million metric tonnes of domestic coal and 0.22 million metric tonnes of imported coal. The coal consumption during the 9-month period in 2019 was 129.18 million metric tonnes. This comprises 128.81 million metric tonnes of the domestic coal and 0.3 million metric tonnes of the imported coal. The coal consumption in the corresponding previous period was 124.30 million metric tonnes with 124.04 million metric tonnes of the domestic coal and 0.27 million metric tonnes of the imported coal.In third quarter of the current financial year, NTPC has awarded contracts for 2.5 million metric tonnes of the imported coal. This will be allocated to various stations for rationalization of the coal. This will help in reducing the coal shortages aligning -- [ affecting ] the power and operation.Now as far as the gas is concerned, the gas consumption during the 9-month period in the current financial year was 4.84 MMSCMD, that is million metric standard cubic meter per day, as against 5.6 million metric standard cubic meters per day in 9-month period in the previous financial year. The gas consumption of the 9-month period in the current financial year procured under APM plus PMT mechanisms was 2.87 MMSCMD: under non-APM gas, 0.69 MMSCMD; under long-term RLNG, 0.15 MMSCMD; and under spot RLNG was 1.13 MMSCMD.Now coming to the coal mining operations. The cumulative expenditure of INR 5,648.77 crores has been incurred on the development of the coal mine in 31st of December 2018. The total expenditure incurred in the 9-month period in the current financial year was INR 576.62 crores.Now I will briefly touch upon some of the NTPC Group companies. Starting with NVVN, our trading subsidiary, transacted 12.96 billion units during the 9-month period in the current financial year as against 12.22 billion units during the 9-month period in the previous financial year, thus registering an increase of 6.05%. Units transacted during 9-month period in the current financial year include: 3.97 billion units of solar-bundled power; 2.79 billion units traded through bilateral arrangements; 3.61 billion units under cross-border trading; and 2.58 billion units traded through power exchanges.NVVN has signed agreement with Nepal Electricity Authority for supply of additional 120-megawatt power from December 2018 to March 2019. With this, total 240 megawatts of power is being supplied by NVVN to Nepal Electricity Authority. NTPC continues to win laurels and awards in various fields, and major awards received in third quarter of the current financial year are: NTPC has been presented with Dun & Bradstreet Infra Award 2018 in the power generation category; NTPC has also been awarded as the Best Performing Utility of the Country in the thermal power sector by Central Board of Irrigation and Power. NTPC has been ranked as 512th in the Forbes Global 2000 list of the year 2018. The ranking of the companies is based on revenue, profits, assets and the market value. The Businessworld Magazine has featured NTPC in the list of Most Respected Companies for the year 2018. These were some of the highlights which I wanted to share with all of you. Now I will leave this floor open for any Q&A session. Thank you very much for having a patient hearing.
[Operator Instructions] The first question is from the line of Sumit Kishore from JPMorgan.
My first question is, could you tell us what is the level of disincentives in the December quarter versus the 2Q level of around INR 320 crores and the 9-month level of INR 825 crores? Could you please break this up into various heads such as coal plant-wise, accident at plants, et cetera?
Yes, disincentive in Q3 -- in current Q3 is INR 279 crores as compared to INR 545 crores during the previous Q3. You want it for 9 months also?
Okay. Yes, please.
So for 9 months, in the current financial year, the disincentive is INR 1,101.08 crores as compared INR 1,038.54 crores previous 9 months.
How much of this is on account of coal and how much is due to plant maintenance in Unchahar and others?
Okay. For Unchahar, in the Q3, it is -- sorry...
INR 118 crores.
INR 118 crores. INR 118.97 crores. And for 9 months, INR 382.30 crores.
Okay. And on account of coal shortage?
On account of coal shortage, it is INR 284 crores during the...
9 months.
9 months.
As compared to previous year. For the previous, we don't have. We'll share it with you in due course.
Okay. So close to about INR 84 crores was in third quarter?
INR 284 crores.
Yes, that was around INR 200 crores in first and second quarters.
Yes.
Okay. So was there any other big under-recovery in some other plant? Because it's INR 279 crores, so fuel plus Unchahar is getting us to only INR 200 crores. So was it Talcher or some other thing that impacted numbers?
A number of other stations. Kudgi is the main one, where the figure is...
Shri, INR 129 crores.
INR 129 crores in Q3.
Q3, I was [indiscernible].
[indiscernible]
With the coal, it's INR 129 crores.
The total is small.
Total is small. Due to coal, it's INR 129 crores.
Kudgi total is small. But due to coal, it is INR 129 crores.
In 9 months?
Yes, 9 months last quarter and this quarter also. Until half year, there was no disincentive in Kudgi.
This is the actual total. [ This is dividend. ]
Okay, okay. And sir, the second question then is, what is the interest on working capital not recoverable in PPA due to the advances given to Indian Railways? What is the figure as of 9 months? At the end of 1H, the figure was about INR 170 crores.
Yes.
[indiscernible] the revenue is [ INR 180 crores ]. INR 364 crores.
INR 364 crores.
For 9 months.
INR 364 crores?
Yes, for 9 months.
Okay. So the run rate seems to have gone up from 1H to -- I mean, third quarter, it's been a lot higher.
Yes. This is the total interest in working capital. It may be on account of where advance given to Indian Railways as well as other factors also. Because our bills also are now piling up. So due to slow realization of bills also, the interest in working capital had gone up.
Got it. But the corresponding figure at the end of first half was INR 170 crores?
Yes.
Right.
Okay. And so what is that adjusted profit for the quarter, if at all you are sharing with us? That would be useful.
Adjusted quarter's profit is INR 2,360 crores as against reported profit of INR 2,385 crores.
Okay. So there's no difference in the adjusted profit and the reported profit. The quarter-on-quarter depreciation appeared to be a lot higher as compared to September quarter and December quarter. So given that...
I'll correct myself. The adjusted profit for Q3 is INR 2,184 crores as compared to INR 1,871 crores for previous Q3. So there's an increase of 17%.
Okay. But it's lower as compared to the reported profit.
Yes, it is lower as compared to the reported profit.
And finally, my last question, why is the quarter-on-quarter depreciation higher as compared to September quarter to December quarter?
Yes. Naturally, it will be higher because...
Kudgi unit has come.
Kudgi has come.
Kudgi got commissioned in the last quarter, but maybe it operated for the full quarter this time so that's the impact.
Yes.
Okay. And what is your target for the full fiscal now for capitalization and commissioning?
The target for capitalization is INR 4,880 crores for the group as a whole that we are still maintaining.
[Operator Instructions] The next question is from the line of Venkatesh Balasubramaniam from Citi Research.
The first question is you said total under-recovery in the quarter is INR 279 crores, correct? Out of that, INR 119 crores was because of Unchahar. So everything else is coal -- because of lack of coal, right? I mean, what do you mean by disincentive? Disincentive because you don't have coal, correct? Or am I confusing something?
We have not able to recover our full fixed charges. We have not been able to declare 85% availability. And because of the lower availability, we have not been able to recover the full fixed charges, which we would have recovered had we declared 85% in that particular station.
And so in various -- if INR 119 crores is the Unchahar-related under-recovery, the remaining INR 160 crores is because of coal -- less amount of coal. So that's across various plants?
Coal plus machine not being available. And I have Director, Operations with me. He can share what were the problems in the under-recovery.
Like for example, just a clarification, when you mean by machine not being available, that is because of your standard -- for standard maintenance -- your shutdowns. It's not like there's been unnatural reason why machine is not available.
Yes, correct. Because of the overall maintenance.
Okay, it is standard maintenance only. It is not some exceptional -- some machine broke down. Because of that, you couldn't...
The nonavailability of [indiscernible] reasons, one, for the plant as well as for non-plant [indiscernible]. On both the accounts, it could be possible that the machine is not available.
Okay. Then last year, you said INR 545 crores was your under-recovery. Did Unchahar contribute anything last year? But I think Unchahar under-recovery started only from fourth quarter, correct?
At Unchahar, the accident happened on [indiscernible]
INR 85 crores.
INR 85 crores was the figure last year also -- last quarter also.
Okay, sir. Now on a related note, now you've been trying to solve this coal under-recovery problem. We have seen in the press that you've given a tender of 2.5 million tonnes to Adani Enterprise for importing coal. Is it possible to tell us that when will these coal supply from Adani Enterprise start? And do you have plans to give more tenders out? That is one part of the thing. Second, we've also read newspaper reports which suggest that you've started picking up that coal which Coal India was offering to you, 5 million tonnes of coal through road. So can you give some kind of an update on those 2 things, the import of coal and picking up extra coal?
This is Director, Operations, Prakash Tiwari. About this imported coal, we had awarded contract in the month of December. And we have started receiving delivery already around -- 70,000 tonnes have been delivered to NTPC. And it will continue. It will be followed by another tranche of 2.5 million tonnes. And as regards to this 5 million tonnes that was offered to us by Coal India, we have already lifted 1.15 million tonnes. And we have plans to lift the entire 5 million tonnes of coal from special -- that was promised to us by Coal India.
Okay. Sir, if I could just ask one more final question, which -- on something which you've already mentioned, where you said that because of that extra interest cost, where you've given Coal -- Indian Railways advance. It's been a -- you've taken an impact of around INR 340 crores so far in 9 months. Now again, you will have a number in the fourth quarter also, which might be INR 350 crores or INR 200 crores. Now this is like almost INR 550 crores of extra cost, which you are bearing for which you don't have a regulatory pass-through. Now what is the problem here? Indian Railway doesn't have money to do CapEx on [ rakes ]. Is that the problem? And how can you be expected to give them money to do their CapEx?
The 340 crores is the total interest on working capital, which has been charged in our profit and loss account in these 9 months. It is not and correct to say that it is entirely because of the advance given to Indian Railways. Because INR 5,000 crores was given in March that was adjusted by approval. Then we gave only another tranche of INR 2,000 crores, which is also because our monthly freight bill itself is about INR 700 crores to INR 800 crores. So it's not as if INR 5,000 crore advance is only incremental. And then freight hike has taken place in November. We are protected from that. That is the advantage we have got from the advance given to Railways. And our coal realization, coal logistics have been improved by Railways. So more coal has reached to our [indiscernible] stations. The interest on working capital has accrued partly also because we have our dues amounted. And basically, we are paying to our suppliers and to Railways in advance. But our realization is taking more than 60 days now. So Director, Commercial can share his thoughts on this.
Okay, let me share 2 things. First thing, what we are talking about this -- for the Railways advance, whatever we've given, and as Director [indiscernible] has clarified, that there has been freight hike. And that freight hike, the advantage, we are approaching CRC that, that advantage will be passed on to NTPC so that there is a conversation on account of this besides the increase and improvement in our coal availability [indiscernible], that's number one. Number two, as far as the payments are concerned, this year, we have the provision which is tighter than last year. And as on date, there are 4 major defaulters. One is Andhra Pradesh, Telangana, UP and J&K and small number is there with the, Karnataka. Now this, we have been taking up with them. And Andhra Pradesh comes out with a bond issue of INR 2,000 crores, which can increase to INR 500 crores. And this is based on our continuous follow-up and insistence that this payment has to be made. At the same time with the UP, we are having -- trying to have some discussions whether we can take over one of their equity in the Meja. And so that will offset this payment part. And similarly, Telangana is also issuing a bond. So we are trying our level best to find this realization will take place. And we are also issuing a regulatory notice to [ AP ] Telangana and -- [indiscernible], that's Karnataka, for recovery of the dues. I think by end of February, the situation should improve drastically.
[indiscernible]
And in any case, just to clarify that whenever we are billing beyond 60 days, there is a surcharge which is levied at 1.5% per month. And that's something which is a conversation for this to further -- let me clarify again that whatever we are spending on working capital in terms of that, that we're just partly compensated by the surcharge.
Sir, correct me if I'm right, but this payment delays by the state government -- by the state electricity board, at least I am hearing after almost like a very, very long time. I mean, what exactly has happened that suddenly so many states are delaying their payments? We thought things should have improved after the financial restructuring under UDAY. So is there some difference between what we are all understanding that there's no problem with the state electricity board? You've named UP. You've named Telangana. You have named Karnataka. There are quite a few states who are delaying payments. So what exactly is happening?
So there are 2 things which has happen in this. Number one, last year, the payment situation was improved because under UDAY, there are a lot of -- this thing was done. And under UDAY, the payment position was improved because a lot of these bonds were issued by state governments. This year, there are 2 things that could happen. Number one, our billing on NSM, that's for the solar business, that has improved drastically. And the payment delays are mostly on account of the payment on this renewable energy, this thing which is a little bit costlier than our [indiscernible]. So this is one contribution. Second contribution is that these states, they have committed many steps to this and which has really impacted that we must formally [ sell ] that. But then there are issues, which I think they are handling that. And our situation should improve. But hopefully, with the bond issue that things will improve.
The next question is from Subhadip Mitra from JM Financial.
Yes, my question is with regard to the under-recovery number. I think in the previous call, you had mentioned that the overall coal under-recovery that you are looking at for the full year was supposed to be somewhere around INR 600 crore or an INR 800 crore number. So if you can just throw some more light as to what you're looking at the coal under-recovery number being for the full year. And how do you see that number going ahead?
[indiscernible] Prakash Tiwari here, Director, Operations. We have [indiscernible] a recovery plan for this financial year '18/'19. Compared to last year, [indiscernible] [ INR 1,400 ] crores under-recovery, we are hopeful that it is going to be under INR 800 crores and around INR 750 crores to be precise, which I think is quite doable with this recovery plan that I have -- we have made. The recovery plan comprises mainly of our R&D for coal, which will represent a number of measures in coal and a special offering by Coal India. And as far as under-recovery related to equipment outages are concerned, they're a thing of the past that we have taken care, no major unit or machine is under -- shows outage. So I hope it will be in the range of INR 750 crores and then...
So this INR 750 crore number is primarily on the coal under-recovery, right? It has got nothing to do with Unchahar. Unchahar will be [ over and above this ].
This is total coal as well as outage of [ quantum ] machinery.
So it will be almost half of what was there last year.
Last year.
In December, it was INR 1,101 crore. As of today, we have already recovered a part of it. We can share that number if it is available.
Yes. Until the end of December, it was INR 1,100 crores. Now it is INR 1,035 crores. And coming down at the rate of around INR 2 crores per day. And the major improvement has taken place in Solapur and Bongaigaon. Since Unchahar unit is operational, there it is now capped at INR 400 crores. It's not going to increase. But these numbers [ are no ] doubt.
So if I might -- if I am to understand this correctly, the Unchahar-related under-recoveries should not be there in fourth quarter at all. Am I right in understanding that?
Yes, yes, yes.
Okay. And going ahead in FY -- for the next fiscal, that is FY '20, how do you see these coal under-recoveries panning out? I mean, what is the plan for that?
Yes, keeping that in view, and we have taken into account that 4,800-megawatt is coming onstream, we have made arrangements for coal from various sources. We have been -- we have succeeded in increasing our agreement for coal supply from Coal India. And we have planned to import almost 11.94 million tonnes of coal. So with these efforts, we are confident that the under-recoveries related with coal will not be there next fiscal.
Understood. So you mentioned about 11.9 million tonnes of import supply in FY '20. Am I right?
Yes.
Just to add, I would like to answer that our Pakri Barwadih mine is a basket mine. And we are able to produce coal, which is 4.9 million tonnes during the past 9 months, which we have compared to 1.27 million tonnes last year. And we are also going to increase in FY '20 going to this level to around 18.5 million tonnes [indiscernible] allocated to [indiscernible] basket mine. This will also help in reducing our coal situation.
Understood. Lastly, the railway under-recovery, I believe, I think last call we had discussed that number would be about INR 400 crores for the full year is what you had mentioned. That number will probably continue until CRC decides to take a decision [indiscernible].
There is no railway under-recovery. This is only [indiscernible].
I believe interest on working capital, that's what I meant.
[indiscernible] for the entire INR 400 crores. That's what we have told. We'll let you know what is the amount on it that was given to Railways. That will be substantially lower.
Every day, that gets adjusted. Every month, we are spending about INR 800 crores to INR 900 crores on railway on -- so that is a self-adjusting phenomenon. [indiscernible]
Understood. So yes, if you could guide us as to what the FY '19 hit because of this number will be and also what you're expecting that number in FY '20 as we roll forward. Would that be an impact on FY '20 as well?
Okay, we'll give that number to you separately.
The next question is from the line of Bhavin Vithlani from SBI Mutual Fund.
Could you give us a detail of...
Bhavin, I'm sorry to interrupt, but we can barely hear you. If you could maybe use the handset and speak a little louder.
Is this clear now?
Yes, please go ahead.
Could you give us the details of the projects which are expected to get commercialized in the current financial year as well as the next financial year and incremental coal requirements for these projects, please?
I'm S.K. Roy, speaking. During financial year '18/'19, the projects which will be commercialized [indiscernible] already we have done Kudgi in [indiscernible]; and then Bongaigaon Unit 3, 250 megawatts; the BRBCL Unit 3, that is 250 megawatts; the NPGCL Unit 1, that is 660 megawatts; Solapur Unit 2, that is 660 megawatts; Gadarwara Unit 1, 800 megawatts; Lara Unit 1, 800 megawatts. And totally, [indiscernible] it is totaling 4,800 -- I mean, including Meja, sorry, 660 megawatts. So total capacity COD will be 4,880 megawatts during this financial year '18/'19.
Which is in the next 2 months, sir?
Yes, in the next 2 months, we will add 4,000 COD -- [ 4,080 ] COD.
And how much will be the incremental coal requirement for these projects?
[indiscernible]
Around, I believe, 18 million to 30 million.
Okay. So out of that, you mentioned about 12 million tonnes will be import, which is roughly 15 million tonnes on a domestic equivalent. And 3 million tonnes will be incrementally Pakri Barwadih and balance can come from Coal India's linkage. Is this math correct, sir?
Yes. That meets out our requirement for the next fiscal.
Okay. And for the fiscal year '19/'20, how should we look at new COD of the projects?
During '19/'20, we will do COD around 5,000 megawatts.
Okay. And so would it also be more like toward the fourth quarter, so hardly any incremental coal requirement for these new projects?
It will be almost in the last quarter -- current fourth quarter.
Current fourth quarter, I understand. Sir, my last question is the CERC draft regulations, which have come out, and that speaks about reduction in the regulated equity for projects greater than 25 years. And we understand about 12,000-odd megawatts, where the regulated equity is broadly 7,000 crores gets impacted. So what is the way forward that we should look at? How is the management going to move with this change in the regulation?
In fact, what has been issued is a draft regulation and all the stakeholders were advised to leave their comments by 20th of January. And we have also submit our -- submitted our response and our evaluations to CERC. And ultimately, the CERC has to take a call. Finally, we have submitted the rationale behind why we should continue with the [ early availment of the equity ]. And this, we have nearly taken up with the CERC and other stakeholders. We've also had discussions with the customers. The response -- or it is going to impact them negatively. So all this has been done. I think let's hope that there is a hearing on the 1st of February 2019 with the government team, where all the issues will be discussed by the CERC with all the stakeholders and I think we'll put our points across. And I think that, ultimately, CERC will take a balanced [ stand ].
Okay. Sir, my question was more like assuming the draft regulation was also the final, then how should we look at it? Because it would not make any economic sense for NTPC to run these plants.
Actually, we should discuss this after the final revisions are done because today, we have only a draft regulation and your question is a very pertinent question. But I think we should deal with this when it comes true.
The next question is from [ Samit Viswarya ] from Deutsche Bank.
This is Abhishek Puri from DB. My question is on the delayed payments that we are talking about. So you said NSM payment had been delayed largely for the solar. We understood that this was being routed through NTPC trading company, NVVN, rather than NTPC balance sheet. So would your balance sheet be exposed if the payments are delayed for solar companies?
No. I think that most of it is through NTPC. In fact, there was a first NSM -- first tranche, which was done through NVVN, but the second one was done through NTPC. So we did NTPC directly is -- through the mediator and that is the model agency between the developers and the discounts.
Okay, can I have the total exposure there, sir?
[indiscernible] It is NTPC. What I'm talking about here for NTPC. [indiscernible]
Okay. For NTPC, what will be the total exposure in that case? How many megawatts or revenue terms or the billing terms if you can tell us the total bill?
You are talking about total bill of NTPC?
No, no. [indiscernible]
No, for the NSM payments.
Roughly it was around 2,750 megawatts.
2,750 megawatts, okay. So second question on the coal mining returns. So you have spent almost INR 5,500 crores. You're not making any returns on that INR 5,600 crores. You're not making any returns on that. Plus, the draft regulations also talk about FGD CapEx that you would be doing. It would be quite significant CapEx for the overall company as a whole, which will be 100% debt-funded, will not fetch any equity returns. So could you give us some sense as to how you're approaching this with CERC? Or you believe this will be a foregone conclusion that the debt returns will only be made here?
Okay. Let me -- you are asking questions, let me handle one by one. The first one you said about the coal mining investment. On the 1st April 2019, we will declare COD of Pakri Barwadih. We do not get any return on equity in terms of that plant, similarly for coal mines. But once the COD is done, then the returns will start coming. Meanwhile, we have decided to charge as for the Coal India...
[indiscernible]
And this -- whatever we have recovered, this all will get adjusted to [indiscernible] cost for the Pakri Barwadih, and the returns will start flowing through until 2019. This is number one. In terms of number two, again, as I said last, these are the draft submissions, and the draft regulation talks about that for environmental contain an additional capitalization. The funding will be -- the ROE will be as of that rate. Here again, it's only a draft, and we have submitted our observations on this, and we've given the logic that why it should be done on the same return on equity as for other [indiscernible]. And for the new plant, in any case, it is part of the total equity [indiscernible] costs, it will be a service that [indiscernible] present itself. So let's see that the CERC will look at our submissions and -- valuable submissions and take a balanced view.
And in terms of the COD for Pakri Barwadih, what will be the total capital cost and equity?
For Pakri Barwadih, I think I need to really -- I don't have the data right away. We can share with you separately.
Sure. And from the previous question -- I think participant question, the railways data, if you can give us how much is the advance outstanding, how much more we have to provide them and what would be the interests expected for this year and next year.
Next year -- there is no commitment for next year. As of today, the last installment of advance given was INR 2,000 crores, a portion of which would have got adjusted by month. So that is the way that was...
That installment is already done, and the next tranche has been [indiscernible].
So the total [indiscernible].
So the next tranche of 2,500 is given already and that will be offset against the monthly payments?
Yes, yes. So 1 month is -- I think approximately INR 1,000 crores will be the advance with Railways which will get adjusted [ at the end ].
Okay. And in that case, the other interest amount should not be that high, [ no more than ] INR 170 crores for first half?
Definitely it's -- the railway should not be billed for the entire INR 400 crores. It will be hardly INR 150 crores, INR 160 crores. That is the back of a new [indiscernible].
Because INR 364 crores for 9 months is a very significant amount, which is being under-recovered. So how would you approach CERC? How have they taken a view on this? Because it is on a reducing balance basis, and the amount looks to be INR 364 crores, it looks like. If I assume at 8%, 8.5% interest cost for you, this amount -- outstanding amount can be pretty significant in that case.
As Director of Commercial told, it has not been clear that we are earning 1.5% surcharge on a monthly basis. So we feel total interest is to be given by the [ benefit ] if we don't pay on time. And ultimately, that is -- we have never returned any of our dues.
On [indiscernible].
I'm sorry. I didn't get you, ma'am.
So I'm just saying, on a cash basis, if you look at our realization, it is still around 86% to 88% at the same level, which was the end of last year. So there should not be any concern on the realization as such. The sales have also gone up.
And let me tell you, it is always the last quarter which these customers deliver.
[Operator Instructions] The next question is from Rahul Modi from ICICI Securities.
So just a quick question. Sir, can you just repeat the adjusted PAT for profit for this year 9 months versus last year and 3 months, if you can?
Yes. Adjusted PAT -- the reported PAT is INR 7,399.57 crores this year as against INR 7,417.5 crores. This is the reported one, the INR 7,199.49 crores for the current year as against INR 7,019.8 crores. I'll repeat again, INR 7,199.49 crores as against INR 7,019.8 crores, an increase of 3%.
And sir, for 3 months?
3 months, the adjusted PAT for current Q3 is INR 2,184.58 crores. I repeat, INR 2,184.58 crores against INR 1,871.55 crores in the previous Q3 for an increase of 17%.
Okay. And sir just lastly, are you regulating the payments towards these NSM developers in the renewables space? Because you're getting payments delayed from the discounts. So are you passing this delay on? Or do you think that you'll be doing that in the coming time?
So there is a -- we have an agreement with developers. We pay a certain [indiscernible] at certain period of, say, 60 days and we get a rebate if we pay on time. At the same time, we have an agreement -- back-to-back agreement with DISCOM and hearing they are also having some payments and some rebate and surcharge. Now we really are not delayed. We are allowed to pay within 60 days, and we have not [indiscernible] that we actually make maximum rebate out of this. So alternatively, it's a financial thing that we are able to get the percentages when we pay the same day, and that's what we are doing internally.
So sir, there is a net positive impact then what you're saying?
Pardon?
There is a net positive because...
We have the surcharge. There will be a net positive...
We get a rebate of 2%, and we get the surcharge of 1.5%.
Yes. But until now, the impact that we've been talking about in terms of working capital then, there should not be a negative carry, right?
No, no. I think the financials -- it was shared with the number, not the content.
I think I will just add some bit of clarification. While our endeavor is not to earn money by delayed payments, but at the same time, we are making all possible effort to see to it that our dues are realized in time. But for the -- our best effort, I think we've modeled our agreements in such a manner that the loss is mitigated to some extent. [indiscernible]
And just to supplement what the Director of Finance just has told. In fact, there are many states who pay us on the 1st. At the same time, they are delivered from us. So it's not that we are basically committed to only restart earnings per share. In fact, we are making all our efforts. And I told you earlier that based on our interaction, discussions with state government, they’re using the bonds. It will be much easier to them than we're [indiscernible]. So we are making all our efforts to really help us and help DISCOM so that alternate results are more [ accommodated ].
The next question is from Murtuza Arsiwalla from Kotak Securities.
Just a few data points. One is you decommissioned the Badarpur plant this quarter, and you acquired Barauni 220 megawatts. Can you give us the regulated equity around each of these plants and the closing regulated equity for the quarter? Also, in terms of the acquisition of Barauni, if you could give us the overall asset value [ sector ] that you've acquired at that.
The Badarpur, the capacity of 220 megawatts has been reported in our number, but there is no revenue asset because this unit is not running as of now, if you remember. So there is no revenue, and there is no regulated equity for Barauni. Those are the numbers which have been reported today.
Yes. And the closing regulated equity, sir?
As we mentioned, INR 52,105.93 crores.
[Operator Instructions] The next question is from the line of Mohit Kumar from IDFC Securities.
I have 2 questions. The first one on Kudgi. Why do you have an issue with the availability at Kudgi? And is the issue resolved completely? Can we expect more than 83% to 85% PAT for the fourth quarter?
The Director of Operations is answering this question.
In Kudgi, there are 2 components [indiscernible] under-recovery related with coal is INR 205 crores at the end of quarter 3. This is total, INR 205.05 crores. And related with coal is INR 129 crores. And related with equipment nonavailability is INR 75 crores, which have improved the -- pardon?
Sir, my question was has the situation improved dramatically over the last -- in this year -- from January.
Yes, yes. Since the beginning of January, the machine is available. All machines are available. And also, we have started receiving imported coal. So this has led to improvement in the [indiscernible] for Kudgi.
My second question is pertaining to receivables. How much receivables is greater than 60 days right now? And are we supporting the payment for [indiscernible] payment through our balance sheet?
The total outstanding more than 60 days as on date is -- or 29th of January is INR 7,490 crores. And our total billing as on date is INR 25,868 crores. So more than 60 basis -- something like 10% of total billing done this year, number one. Number two, as far as everything is concerned as -- because it is NTPC, NTPC is the, what do you call...
The purchaser.
Purchaser in this case. So this will go from NTPC's accounts.
[ The back-to-back agreement. ]
But there is a back-to-back [indiscernible] the back-to-back agreement is there for the [indiscernible] with our trading margins. But there are 2 separate agreements, which are conditions are delivered back-to-back. But as far as payment is concerned, I explained to you that there is a rebate and a surcharge with [indiscernible].
And we normally do not hold back the payments of the [indiscernible] just because the discounts are not paid. So those are different context.
The next question is from Lavina Quadros from Jefferies.
No, hi, thanks. My question's been answered.
Okay. Thank you very much for being with us and having been with us and supporting us in terms of our entire good journey. And we look forward to your continued support in the times to come. Thank you very much.
Thank you very much. On behalf of ICICI Securities, that concludes the conference. Thank you for joining us, ladies and gentlemen. You may now disconnect your lines.