NTPC Provisional Profit Rises 24%:: WSJ

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NTPC Ltd. Wednesday posted a 24% rise in its fiscal fourth quarter net profit based on provisional data, as the state-run Indian power utility benefited from a change in accounting. It also said it will double capital expenditure this financial year.

India's largest power producer by capacity posted a provisional net profit of 25.05 billion rupees ($565 million) in the January-March period, compared with 20.17 billon rupees a year earlier. On the same basis, net sales rose to 144.88 billion rupees from 123.05 billion rupees a year earlier.

"The abnormal rise in fourth quarter [profit] is mainly due to a change in accounting procedures," NTPC Chairman Arup Roy Choudhury told reporters.

The company posted a fall in net profit in the first two fiscal quarters and a flat profit in the third.

Finance Director A.K. Singhal said NTPC calculated its return on equity in the first three quarters by taking into account a minimum alternate tax, but used the normal tax rate for the fourth quarter and the fiscal year. "Otherwise profit could have been bit lower," he added.

The fourth quarter performance boosted NTPC's full year net profit, which grew to 88.26 billion rupees on a provisional basis from 87.28 billion rupees.

"The profit could have gone up more but there were no takers for more power which we could have generated if demand was there," Mr. Choudhury said.

NTPC could have generated 13.8 billion kilowatt hours more power last year, but state distribution utilities refrained from buying more electricity due to various reasons, Mr. Choudhury said.

The company has previously said the weak financial condition of some of its customers is hurting its profit as cash-strapped state utilities are restricting purchase of electricity, despite a power shortage.

India has a target to add 163 gigawatts of capacity in the decade up to March 2017 to provide electricity to millions of households and new industrial units that are driving its economy. It added 34.46 GW capacity between April 2007 and March 2011, Power Minister Sushilkumar Shinde said Tuesday.

NTPC operates about a fifth of India's total power generation capacity, which stood at 171.93 GW at the end of February. The company aims to have 128 GW of capacity by 2032, and currently has 15 power projects under construction, totaling 14,748 megawatts of capacity.

To set up these projects, the company plans to increase its standalone capital expenditure to 264 billion rupees from 128.17 billion rupees last year. It plans to part fund the capex through a $500 million overseas bond issue in May-June and is also looking at similar issues in India, Mr. Choudhury said.

The company has already arranged loans worth about 200 billion rupees from local banks. The utility has also cash reserves of 160 billion rupees.

It plans to add 4,320 MW power capacity in the current financial year, compared with last fiscal year's 2,490 MW. These figures include capacity developed by NTPC's joint ventures.