Chairman Statement 2008-09[1]

8/9/2019 Chairman Statement 2008-09[1]

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Dear fellow shareowners of NTPC,

I feel extremely privileged and delighted in extending my warm greetings andwelcome to all of you to the 33rd Annual General Meeting of your Company.

NTPC: Powering Million Smiles

Your Company generates electricity that lights homes, brightens villages,irrigates fields, powers businesses and moves the railways. With pan-Indiapresence and perspective, your Company is supplying power through its largeand efficient fleet of power generating stations with total capacity of30,644 MW. It has 22 stations, consisting of 112 units of different sizes,vintage and technologies but all have one common feature, that of generatingpower at high efficiency levels. Your Companys stations and projects arelocated in 16 States and the Union Territory of Delhi. It supplies power to 24States and 5 Union Territories. After the completion of its BongaigaonThermal Power Project in Assam, it will be supplying power to all the 28States of India. Your Company has been described as a 'magnificent national

enterprise' and as a 'great success story of our times'. It is a precious nationalasset and a profitable business enterprise.

Your Company provides growth momentum to the sector, createsbenchmarks of operational excellence and promotes sustainable energydevelopment. It is committed to develop and provide reliable power, relatedproducts and services at a competitive price, integrating multiple energysources with innovative and eco-friendly technologies.

Your Company has 5 subsidiaries and 15 joint ventures which strengthen itsbusiness model aimed at related diversification and integration along theenergy-value-chain as an effective growth strategy.

Your Companys stock remained the most resilient during the recent phase ofmarket slowdown and turbulence, demonstrating that your Company has thestrength to maintain its course even in rough weather.

Strong asset base of over Rs. 1 trillion or Rs. 1 lakh crore, robust businessmodel, prudent strategies, growth oriented market and its corporate strengthsguarantee steady progress of your Company over the long term.

In the process of realizing its Vision to become A world class integratedpower major, powering Indias growth, with increasing global presence, your

Company is poised to have 75,000 MW generation capacity with diverse fuelmix, about 47 mtpa coal production from its mines, 25 billion units powertrading volume and an employee strength of about 35,000 by the year 2017.Thus your Company is firmly on course to become a huge and integratedenergy corporate.

I take this opportunity to share with you what our assumptions are, what westand for, what we are doing now, and what we are committed to doing in thefuture.


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RESILIENT NATIONAL ECONOMY

Sound national economic and monetary policies ensured that the globaleconomic crisis affected our economy to a lesser extent than most othercountries. Although the growth rate has come down to 6.7% in 2008-09, thecountry is gearing up to restore the growth rate to the 9% level which it had

achieved consistently during the period 2004-05 to 2007-08. The Indianeconomy has the resilience to withstand the challenges arising out of theglobal slowdown and the domestic drought situation.

According to an important Report of the World Bank, 'Global DevelopmentFinance 2009 : Charting a Global Recovery' released in June 2009, only twocountries, India and China, are estimated to achieve growth rate of 7.5% andabove in the years 2010 and 2011, with both expected to have 8.5% GDPgrowth in 2011.

India aspires to be a global economic powerhouse. Planning for energysecurity, security of electricity supply and rapid execution of plans are

necessary for the country to attain consistently high GDP growth.

THE GROWING POWER SECTOR

To enhance power supply in cost effective ways is one of the top priorities forthe country. During the quarter April-June 2009, the energy and peakingshortages in the country were 9.8% and 12.3% respectively.

The Compound Annual Growth Rate (CAGR) of power demand for the lastfive years has been 6.80% as against power supply CAGR of 5.88%. TheCAGR of your Company's power generation has been higher at 6.79%.Strong appetite for electricity consumption in the country translates into robustgrowth outlook for power players like NTPC.

Gross electricity requirement by the end of the 11th Plan projected by theWorking Group on Power is 1,038 billion kWh and peaking demand estimationis 1,51,000 MW.

The Integrated Energy Policy, 2006 of the Government of India estimatesinstalled capacity requirement of 778 GW and energy requirement of 3,880billion kWh by 2031-32 if the country's GDP grows at the rate of 8%. At 9%GDP growth rate, the capacity requirement will be 960 GW and energyrequirement will be 4,806 billion kWh by 2031-32.

Concerted efforts are being made to enhance power supply at a rapid paceand meet growing electricity requirements. NTPC is playing a major role inthis national endeavour.

Your Company is in an extremely good position to grow in this scenario ofgrowing power demand.


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EXCELLENT COMPANY PERFORMANCE: FOUNDATION FOR FUTUREGROWTH

I will share some of the major highlights of your Companys performanceduring the year 2008-09 and also during quarter ending June 2009.

Highlights for the year 2008-09

Commissioned 1,000 MW new capacity Increased commercial capacity by 2,000 MW, the highest in14 years Contributed about 29% of the country's total generation with nearly 20% of

the country's capacity; NTPC's generation was 206.94 billion units Contributed 31.41% of the total generation increase in the country Plant Load Factor (PLF) of 91.14%; 10 coal based stations achieved

over 90% PLF out of which 4 achieved more than 95% PLF; NTPC-Dadriachieved 99.36%

All time high coal stations availability of 92.47%

Total income crossed Rs. 450 billion mark, reaching Rs. 452.728 billion,an increase of 13% Profit after tax crossed Rs. 80 billion mark, reaching Rs. 82.013 billion, an

increase of 10.61% Highest ever dividend of Rs. 29.86 billion at the rate of 36% Highest ever capital expenditure of Rs.132 billion, 50% higher than the

previous year's Rs. 88 billion 100% realization of billing for sixth consecutive year Total asset value of the Company crossed Rs. 1.0 trillion (Rs. one

lakh crore), reaching Rs 1,052 billion.

The performance trend has continued as reflected in the highlights for the

quarter ending June 2009.

Highlights during the Quarter ending June 2009

Added 500 MW new capacity, taking total capacity to 30,644 MW Gross generation of 55 billion units, marking an increase of about 10%

over corresponding quarter ending June 2008 Contributed around 48% of the total increase in the country's generation Achieved PLF of 92.87% as against 92.19% during the corresponding

quarter ending June 2008 Gas stations achieved highest ever PLF of 79.87% compared to 67.20%

during the corresponding quarter ending June 2008 Profit after tax rose to Rs. 21.936 billion registering a 27% growth

compared to the corresponding quarter ending June 2008.

The trend of high performance will be sustained during the remaining quartersof the year 2009-10. This tradition of excellent performance has resulted inyour Company acquiring mammoth size and lofty stature.


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NTPC: GLOBALLY COMPARABLE SIZE AND STATURE

Your Company's stature is clearly captured by the fact of its having beenranked

# 1 Independent Power Producer (IPP) in Asia in 2008 by Platts, a

division of the McGraw-Hill Group # 317 in the Forbes Global 2000 List of the worlds largest Companies

published in the year 2009, rising 94 notches from # 411 in 2008. # 126 in the world on the basis of market capital in Forbes Global 2000

list published in the year 2009

NTPC is the third largest Indian Company with market capitalization of Rs.1,750 billion as on 31 August 2009.

CRISIL Research, after carrying out their independent equity research, onJune 30, 2009 assigned NTPC the highest fundamentals grade as perCRISILs fundamentals analysis framework, indicating that the Companys

fundamentals are Excellent among the listed securities in India.

According to a global benchmarking study covering 25 largest powergeneration companies in the world, NTPC is:

The highest in the world in terms of capacity utilization 'calculated astotal generation(kWh) by capacity (MW) during 2008-09

The largest power generation company in Asia and the 7th largest inthe world in terms of market capitalization as on 31 August 2009

3rd largest in Asia and 10th largest in the world in terms of electricityoutput during 2008-09

I take this opportunity to capture the achievements, initiatives and futurestrategies of your Company in the various facets of its performance andgrowth.

GROWTH: SUSTAINING MARKET LEADERSHIP THROUGH FAST TRACKCAPACITY ADDITION

Your Company is ramping up its generation capacity and is expected toincrease its market share from about 19% today to around 25% by 2017. Thecapacity growth of your Company will enable it to maintain its position as themarket leader. Today, the installed capacity is 30,644 MW, including 2,294

MW in joint ventures.

During the 11th Plan, your Company has already commissioned 3,240 MWcapacity. Capacity aggregating to 17,930 MW consisting of 45 units,including 8 super-critical units of 660 MW each, is under construction at18 projects situated in 16 locations. Capacity of 3,022 MW is under theaward process.


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For the 12th Plan, your Company has started the process of capacity additionin right earnest. NIT is to be issued for 5,940 MW capacity through bulktendering of 9 units of 660 MW each by mid-October 2009. Feasibility reportshave been approved for 11,450 MW capacity for further processing and for anadditional 10,100 MW capacity, feasibility reports are ready and are in theprocess of approval. Your Company is aiming to place orders for the 12 th Plan

projects during the next 2 years. Infrastructure work has already commencedin several 12th Plan project sites.

Thus, your Company is fully geared to become a 75,000 MW Company by2017. In other words, it is going to increase its generation capacity by twoand half times between now 2017.

Your Company has revisited its project implementation philosophy in view ofthe CERC's tariff regulation for the period 20092014 which incentivises fasttrack project implementation. Your Company is taking steps to earn theincentives by putting its projects on fast track and commission them on fullload with the designated fuel within the specified project schedules. We are

imparting new thrust on monitoring and planning through sharper focus fromthe top management on the aspects of speed, clarity and early solution of allthe critical issues concerning contracts management, resolving of disputes,progress monitoring and facilitation, boundary management, intensive use ofIT and communications tools for guidance and consultation.

Real Time Web Based Monitoring System has been launched to capture,monitor and facilitate the progress of project construction activities. It will berun through the project system module of the Enterprise Resource Planning(ERP) already rolled out in your Company. It is to be integrated with BHELand other suppliers and agencies for monitoring the status of supplies. Theconcept of Master Network (MNW) and the detailed L2 Networks for eachpackage has been adopted. Each project has been divided into more than30,000 activities. A central server located at the Corporate Centre has thedata and the same is accessed and shared by different users from theirlocations through Internet. Customized dashboards are being created forfunctional heads for obtaining reports from the system. The pilot project hasbeen implemented at NTPC-Dadri II on Primavera platform. The system hasbeen implemented at Simhadri on ERP platform using the project systemmodule which is being extended to all other projects. It is in final stages ofimplementation at Vindhyachal IV, Rihand III and Mouda projects. For Barh-IIand Bongaigaon projects, steps have been taken for implementation. It will berolled out to cover all the projects. A state-of-the-art Project Monitoring

Centre (PMC) will be operational from December 2009. The Centre will haveall the inputs, audio-video conferencing and other IT and communicationsenabled facilities to help in fast tracking and facilitation of all the projects.

Pre-Investment Monitoring Cell has been created and is functioning withinthe Corporate Planning Department of the Company to identify and resolvethe critical issues at an early stage and facilitate faster project approval.


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Land Acquisition Cell has been created and is functioning under the R&RDivision of the Company for quick and effective assessment and coordinationof the issues in order to expedite land acquisition.

High Level Task Force consisting of four Executive Directors from concernedareas has been created to specifically monitor and steer identified projects

namely Barh II (1,320 MW), Mouda (1,000 MW), Rihand III (1,000 MW),Vindhyachal IV (1,000 MW) and Vallur II (500 MW).

Structured and regular video and audio conferencing for project monitoring isbeing done with the projects and vendors.

Due to these efforts to put the projects on fast track, Dadri II (980 MW),Jhajjar (1,500 MW) in joint venture, Rihand III (1,000MW), Simhadri (1,000MW), Vindhyachal IV (1,000 MW), Mouda (1,000 MW), Vallur (1,500 MW) injoint venture, Barh II (1,320 MW), Nabinagar (1,000 MW) in Joint Venture andTapovan Vishnugad Hydro Power Project (520 MW) are going to becompleted on or ahead of schedule.

Out of these, Dadri II (2x490 MW) and Jhajjar (3x500 MW) are specificallyrelated to hosting of the Commonwealth Games in 2010. Your Company willthus contribute to this major international sports event.

Your Company has entered into MoUs for implementing large sized coalbased power projects of 4,000 MW each at Kudgi in Karnataka and at Lara inChhattisgarh.

With the 11th Plan projects under execution, the 12th Plan projects in theprocess for award, the strength of employees who are committed performersand fast track project implementation techniques, your company is targeting toachieve 10% or double-digit growth in generation every year.

GROWTH: SUSTAINING WORLD-CLASS OPERATIONAL EXCELLENCE

Your power stations continued to operate with benchmark performance. Plantload factor (PLF) of 91.14% was clocked in FY 2008-09 bringing yourCompany at top of the top line power stations in the world. Performancebenchmarking carried out with North American Electric Reliability Corporation(NERC), which maintain database of 5,000 units (about ten times of the totalnumber of units in India), reveals that the performance of NTPC units onparameters of capacity utilization, availability, planned and unplannedoutages, has been better compared to global utilities who are members of thedatabase system. In February this year, five power stations of your Companybagged national Meritorious Performance Awards instituted by theGovernment of India. There have been commensurate improvements in otherperformance indicators like thermal efficiency, operating costs etc.

For two consecutive years your Company has achieved a higher than 91%PLF and is poised to do so in 2009-10, thus making the 90% PLF barrier athing of the past. You would agree that it is specially commendable going bythe contemporary national average PLF, state of the Indian industrialenvironment in which your power stations operate and the fact that the fleetsize of your company consists of 112 units which is very large by any


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standards, with an average age of 18 years. Just to remind, only a few yearsago 85% PLF was considered an insurmountable goal as even consolidationabove 80% PLF appeared doubtful. I am proud that your company introducedthe Indian Power Sector to new possibilities in power station fleetmanagement.

Targeting 90% PLF for an enterprise with an installed capacity of 30,000 MW+

posed several challenges both in terms of breaking mindsets about it beingunachievable and of course creating the right strategy. The strategies had tobe tailored to suit the specific requirement of your company, businessenvironment realities and keeping in mind that the performance improvementtrend must be achieved not only on a one-off basis but built in the DNA of thecompany. The strategies therefore not only included focusing on day to daymanagement but also on creating layer after layer of such foundationalsystemic elements, which will ensure par excellence performance consistentlyin the future.

Some of the innovative strategies which were developed and put in place arecreation of knowledge teams for 3600 feedback across the enterprise in nichespecialized power plant O&M areas; strong focus on overhaul quality ofvarious units; adoption of high productivity maintenance technologies for

reducing the time required for unit overhauls; intensive planning andmonitoring of overhauls which now typically start two years in advance of theoverhaul event through home grown IT enabled tool OPI (OverhaulPreparedness Index); cost optimization through RCM (Reliability CenteredMaintenance); initiatives for achieving high quality of overhauls byidentification of weak areas; etc. In addition, the entire chain of Operationswas revamped to realize and sustain 105% design capability of units. Almostreal time tracking of plant deficiencies has enabled timely and right correctiveactions by the power station through interventions of central expert groups.

The strategy can be outlined in simple terms but its application was a complexprocess of gradual roles emphasis and redefinitions, creating focus onknowledge work, resources planning and intensive and close centralmonitoring in real time. Powerful monitoring and follow up processes had to

be developed based on homegrown IT enabled tools. The management stylehad to be tailored for our very unique domestic conditions. Issues concerningavailability of quality MRO services, spares, fuel availability andtransportation for an Indian Power Station made the task challenging . Thesewere factored in and therefore the strategy to improve the power stationperformance is on strong foundations for sustaining our world-classoperational excellence. The specific strategic interventions can be seen to beclubbed under four broad approaches:

Institution Building: Formation of knowledge teams, equipment conditionmonitoring focus, Reliability Centered Maintenance (RCM), efficiencyimprovement initiatives, creation of gas sourcing group, strengthening ofoperation services function, establishing Centralized Repair Facility (CRF) atNTPC-Rihand to reduce the down time of equipment etc. are certain key

initiatives.

Resource Availability: This consists of initiatives taken to maintain and bringin qualitative improvisation in the supply of resources like fuel, spares andservices. Coal/ gas imports, , modular spares purchase, long term overhaulingplanning, services/ spares preparedness planning, removal of bottlenecks inachieving 105% plant capacity, service provider development, focus on craftand skill-sets etc. Fuel security has been top of the agenda and tangibleactions have been taken for developing own mines, acquiring mines abroadand long term tie up with Coal India.


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Follow up Process: This consists of initiatives taken to effectively monitor thestation processes so that issues arising can be resolved systematically andtimely. These also act as a control tab over other initiatives. Periodic regionaloperations performance reviews, Peer reviews, Technical Audits, ORT(operation review team) strengthening, extensive follow-up of preparednessfor unit overhauls, real time overhaul guidance, efficiency gap removal follow-up etc. are some of the key efforts.

Information Enablement: This consists of initiatives taken to improve theinformation flow and data analysis and have been a great help in facilitatingmanagement decisions. IT enablement of planned outage, generation andother MIS has been a key initiative. Introduction of outage preparedness index(OPI), station performance evaluation matrix, knowledge sharing throughregular workshops, best practice inputs, etc are a few other strategicinitiatives. We are going ahead with installation of CO2 monitoring systems inall our existing and new stations.

Best-practices-adoption has always been our centre of attention. However,the new practices are always seen from the lens of our domestic conditionsand are deftly adapted.

Achieving sustained 90%+ PLF is any generating companys dream and yourcompany has already achieved it. The key to performance sustenance is tocontinue improving maintenance quality and time response. In this context,the importance of our ongoing initiatives like knowledge teams, OPI (overhaulpreparedness index), work check-lists, tooling improvements, craft training,etc cannot be overstated. We are creating a world-class centralmonitoring control room at the corporate centre which will becommissioned by December 2009. In anchoring all these initiatives,effective usage of the already implemented ERP applications will provide avery effective centralized platform.

TECHNOLOGY FOR HIGHER EFFICIENCY AND ENVIRONMENTALGAINS

Environmentally alert and sensitive people should actually be pleased to knowthat NTPC is among the cleanest fossil fuel based large power generators inthe world as its CO2 intensity is comparable with the best. As the largest andmost efficient power utility in India, we are committed to play our role indealing with the climate change related issues and we are playing an activerole in finding solutions. We are driven by our Vision on Climate Change,which is, "Going Higher on Generation reducing GHG emissions".

Clean Coal Technologies

Adoption of Super-critical and Ultra Super-critical Technology

NTPC has been pioneering introduction of new technologies in the Indianpower sector. The Company is adopting super-critical and ultra super-criticaltechnology for raising the cycle efficiency of power units from 38% to over40%.

Progressive adoption of super-critical technology is aimed at raising the cycleefficiency to 39.96% from 38% by adopting steam pressure of 247 kg/cm2,


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higher Hot Reheat Temperature of 5930C and Super Heater Temperature of5650C in 2x660 MW Barh-II project presently under construction.

Your company is also considering to further increase the steam parametersand is presently conducting a study to introduce ultra super-criticaltechnology in the unit sizes of 660/800 MW units for future power plants.

This has the potential to achieve efficiency levels of over 41%.

Eight super-critical units of 660 MW are already under construction. Out of thetotal coal based capacity to be developed during 12th Plan period, over 90%will be based on super-critical technology.

CO2 Reduction through Super-critical Units: An approximate estimationshows that by adoption of super-critical technology with unit configuration of6X660 MW or 5X800 MW, the coal consumption over the 25 years' life time ofthe power plant reduces by 26 to 30 million tons as compared to coalconsumption by a typical sub-critical 4,000 MW power plant with unitconfiguration of 8X500 MW. The consequent CO2 emission reduction is

also expected to be about 33 million tons. Considering that your Companyis going to undertake super-critical units in a large number of projects, andeven ultra super-critical units in the longer term will save substantial amountof coal and thereby substantially reduce CO2 emissions.

Going forward, your Company intends to stop setting up sub-critical unitsin its new green-field projects.

Induction of IGCC technology for Indian Coal: Your Company is makingefforts for induction of Integrated Gasification Combined Cycle (IGCC)technology which has potential to achieve higher efficiencies and reductionof CO2 emissions. With this objective, your Company has decided to appoint areputed consultant to assist in preparation of technical specifications andproviding services as owners engineers.

Other Technology Initiatives

Your Company is now adopting numerical relays with IEC-61850protocol standard in medium and low voltage systems. We have alsoadopted high efficiency motors for LT drives and energy efficient lightingsystem.

Station LAN Concept has been adopted for DDCMIS based controls forall plant and off site facilities in order to have integrated plant and off site

control system. This would also result in on-line integrated managementsystem for top and line managers.

Your Company is now adopting distributed architecture for powerstation switchyards in line with current trends. Adoption of distributedarchitecture system with bay control units located in outdoor kiosks willsubstantially reduce control cable quantities, size of switchyard control


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room and reduction in cable trenches and would have better energymetering accuracy.

NETRA building at Greater Noida has been designed meeting therequirements of the Energy Conservation Building Code (ECBC) 2007.This is the first NTPC building engineered as per ECBC requirement. For

upcoming projects, it is proposed to design administrative buildings andservice buildings as energy efficient green buildings.

Tunnel boring machine has been adopted in Tapovan Vishnugad (520MW) project for speedy construction of tunnel. Diaphragm wall forseepage control for Barrage foundations has also been adopted in theproject.

As a step towards increasing self-reliance in the area of criticalcomponents of gas turbines, your Company has succeeded in casting ofFirst Stage Hollow Blades with the association of Defence MetallurgicalResearch Laboratory (DMRL), Hyderabad.

Technology Roadmap 2032

NTPC is developing a long-term technology roadmap for the period up to2032. This roadmap is inspired by the objective of making NTPC economicallyviable and sustainable electricity provider by adoption, development andpromotion of safe, efficient and clean technologies.

Main target areas of the technology adoption plan are energy diversity,efficiency increase, climate change, improvement of reliability, improvedsafety, better affordability, energy conservation, automation, increased use ofinformation technology and speedy execution of new projects.

The targets under the Technology Roadmap will be scheduled in threephases covering the time frames up to the years 2017, 2025 and 2032 withmeasurable progress markers.

FINANCIAL WISDOM: BEDROCK OF INVESTOR CONFIDENCE ANDBUSINESS GROWTH

Your Company has been given the highest credit rating by reputed agencies.Analysts and market watchers are bullish about your Company.

Your Companys strong balance sheet, healthy cash flow and strong overallfinancial position allow it to reinforce its competitive edge by enabling it tomake big ticket investments in the long-term growth, cutting-edge researchand technologies and other long-term and business builders while paying outattractive dividends.


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Strong operational performance boosts our top-line. We budget carefully forour business activities. We have all the wherewithal to lead, so that we cancontinue to ensure security of power supply for our customers and returns toour investors.

For the year 2009-10, your Companys capital expenditure target is Rs. 177

billion. For the Group NTPC, capital expenditure outlay is around Rs. 245billion, an increase of 62% over the last year.

Your Companys new projects are to be financed with a debit-equity ratio of70:30. Internal accruals are sufficient to finance equity portion of thescheduled investment of your Company.

Keeping in view the large requirement of raising debt, your Company hasalready increased the borrowing power of the Board to Rs. 1 (one) trillion fromthe earlier limit of Rs. 400 billion.

Your Companys current debt to equity ratio is 0.60. The low gearing ratio

ensures favoured borrower status for your Company among the lenders. Therobust debt service coverage ratio of 3.67 and interest service coverage ratioof 10.19 also helps your Company in resource mobilization. Your Company iscommitted to maintain the robust financial ratios to remain a strong favouriteamong the lenders.

During the year 2008-09, your Company raised term-loans of Rs. 115.75billion from banks and financial institutions and raised Bonds of Rs. 19 billion.

During the year 2009-10, so far, your Company has tied up the single largestcorporate loan of Rs. 85 billion with a public sector bank and has signed loanagreements of Rs. 48.5 billion with domestic banks. The success of yourCompany in raising such huge amount of loans in a time of slowdown speakshighly of its creditworthiness.

SOUND CUSTOMER RELATIONS STRATEGIES AND IMPRESSIVECOMMERCIAL RESULTS

Your company strives to remain the first-choice-power-supplier for its existingand potential customers.

Your Company has realized 100% payment of current bills from its customersfor the sixth year in succession for the year 2008-09 and also for the quarter

ending June 2009 indicating sound commercial performance. The incentivescheme devised by your Company for encouraging prompt payment by itscustomers has proved very effective. Letters of Credit to the extent of 105%of average monthly billing have been established by all customers. About65% of the monthly energy bills are realized within a week of theirpresentation. Bonds under the One-Time-Settlement Scheme are beingserviced on time.


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The unit selling price of NTPC'S power has been very competitive at Rs. 2.12per unit in 2008-09 even including power from gas based stations. The unitselling price of coal based power stations was Rs. 1.84 per unit.

The CERC tariff norms declared for the period 2009-2014 ensure stability ofearnings for your Company.

Your Company has an effective payment security mechanism in place tillOctober 2016. To ensure payment security beyond the year 2016,supplementary agreements providing for escrow cover have been signed withall the beneficiary States. During the year 2008-09, Power PurchaseAgreements have been signed with 24 beneficiaries for 5,820 MW. Power off-take has been secured for the entire output.

Customer Relationship Management (CRM)

Customer focus is an article of faith for the Company, and not a mere slogan.Customer Relationship Management (CRM) is at the core of the Companys

business approach.

Your Company strives to source fuel and inputs at low cost in order to providepower at the least possible cost. It also reaches out to the customers throughvarious initiatives.

Performance Improvement Support: Under Partnership in Excellenceprogramme, your Company became an expert partner in 15 Stations,aggregating 6,000 MW, belonging to 8 State utilities. Your Company deployed130 executives to help improve their performance, resulting in additionalcumulative generation of about 3,700 million units.

With the same approach of benefiting the State utilities, your Company isengaged in improving the performance of power stations in 5 States covering17 stations aggregating to 14,767.5 MW capacity, through providing help ingap analysis, process optimization and other measures of performanceimprovement.

Extending Training Facilities: Customer utilities participate in varioustraining programmes on O&M Practices, Project Management, HR, GeneralManagement etc in the Power Management Institute of your Company. Inevery such programme, 2 free seats are offered to each utility.

Customer Support Services: Customer support services are being providedfree of cost by way of workshops and seminars related to power plantperformance and other issues of the customers as per their specificrequirements. During 2008-09, 76 customer support services were deliveredto various customers.

Customer Meets: State Level Customer Meets and Regional Level CustomerMeets have been organized periodically by your Company to discuss theissues concerning customers. Your Company has decided to organize a


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National Level Customer Meet from the year 2009-10 onwards to haveinteraction with our beneficiary States.

Customer Satisfaction Index: Your Company has developed a CustomerSatisfaction Index (CSI). All Regions have been covered during the year2008-09 under CSI and we are in the process of further refining this Index on

the basis of feedback received from our customer utilities.

EFFICIENCY IMPROVEMENT INITIATIVES AND CenPEEP

Energy Efficiency Management Systems (EEMS): Your Company hastaken initiatives to improve efficiency and reliability of its units which arethe thrust areas of its O&M strategy. There is an Energy EfficiencyManagement System (EEMS) which covers:

Continuous monitoring of key operational & efficiency parameters Identification of improvement potential by equipment specific performance

tests and using state-of-the-art diagnostics tools such as air-in leak incondenser by Helium Trace Method, Acoustics and InfraredThermography; ultrasonic flow measurement, video-scope.

Development of Unit specific maintenance priorities and efficiencyrecovery action plans

Reliability improvement strategies by Failure mode analysis throughReliability Centered Maintenance (RCM) and risk mitigation by FinancialRisk Optimization (FRO)

Maximization of condition based maintenance through systematicPredictive Maintenance Program.

Restoration of equipment performance during overhauls Thrust on combustion optimization, improvement in performance of

condenser and cooling tower Real time efficiency gap analysis using advanced analytical tools Studies on capacity / efficiency enhancement of specific equipment like

mills, air-preheaters

Utility Partnerships have been established with some of the US and Japaneseutilities with support of USAID and JICA to exchange best practices forefficiency and reliability improvement. Initiatives are taken to support AsiaPacific Partnership (APP) program on Climate Change. These activities haveresulted in substantial CO2 reduction on sustainable basis.

Centre for Power Efficiency and Environmental Protection (CenPEEP):

CenPEEP is a symbol of NTPC's commitment to GHG reduction. Reduction ofCO2 emission per unit of electricity generation through programmes toachieve higher efficiency is an approach with proven benefits, asdemonstrated by CenPEEP. Over the last 10 years, CO2 reduction of over 7million tons has been achieved through CenPEEP's initiatives in the powerstations of NTPC and the State utilities. CenPEEP is going strong on itsefficiency improvement driven GHG mitigation initiatives with tremendous CO2reduction potential.


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LONG TERM GROWTH STRATEGIES AND BUSINESS INITIATIVES

Strategic Management Group: We have constituted a StrategicManagement Group (SMG) to brainstorm on key strategic issues on aregular basis and provide suitable direction. The Group includes the Chairman& Managing Director, all Functional Directors, all Regional Executive

Directors, Executive Directors heading various strategic functions and otherheads of strategic functions. Supported by the Corporate PlanningDepartment, this forum provides strategic continuity, sustained direction andsteering of the strategic priorities of the Company.

Fuel Security

Foray into Coal Mining: Your Company is working on its captive coal mineswith production target of 12 mtpa by 2012 and 47 mtpa by 2017 from the 6coal mining blocks allotted to it. Your Company is taking steps to acceleratethe development of these coal mining projects.

Your Company has taken steps towards forming a joint venture company withCoal India Limited (CIL) to develop, operate and maintain two coal miningblocks allotted jointly to NTPC and CIL in Jharkhand and develop integratedpower plants.

Long Term Model Coal Supply Agreement: Your Company has signed along-term Coal Supply Agreement with Coal India Limited for a period of 20years with the objective of ensuring guaranteed coal supply at 90% of annualcontracted quantity for its generating stations. A dedicated group is workingon this area.

Exploring coal mines and stakes abroad: Your Company is also scoutingfor opportunities for acquisition of stakes in coal mines abroad and isexploring possibilities in Indonesia, Mozambique and South Africa.Your Company has formed a joint venture company with RINL, SAIL, CIL andNMDC for sourcing coking coal and thermal coal from overseas.

Gas Sourcing and Exploration: For sustained long-term supply of APMcategory gas by GAIL, we have renewed our APM Agreement up to the year2021 and PMT Agreement up to the year 2019.

Your Company is also working for tie-ups of additional domestic gas on longterm commitment basis to further augment its gas supply. With increased

availability for domestic gas, your Company has plans to build more gasbased power plants.

Your Company is working on its exploration blocks in Arunachal Pradeshacquired through NELP V. Your Company is going to participate in the NELPVIII Round for acquiring more blocks.


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In order to secure the supply of 132 trillion mmbtu gas per year for a period of17 years as per its contract with the supplier, your Company is taking all stepsin consultation with its lawyers and will continue to take appropriate steps toprotect its interest at the relevant forums.

Power Trading: Your Companys trading business, conducted through itssubsidiary NTPC Vidyut Vyapar Nigam Limited (NVVN), promotes optimumutilization of generation and transmission assets in the country and alsoresults in substantial earnings for the Company. It traded 4.8 billion unitsduring 2008-09, which was 21.8% of the total power traded. It has a target oftrading 25 billion units by 2017.

Power Distribution: Entry into power distribution business has potential toprovide downstream business synergy to your company along the energyvalue chain. NTPC Electric Supply Company Limited (NESCL), a subsidiary ofNTPC, has been set up primarily for the distribution business and a target of2000 MW by 2017 has been set. NESCL has formed a JV with Kerala

Industrial Infrastructure Development Corporation (KINFRA) for retailelectricity distribution in SEZs developed by KINFRA.

Manufacturing

JV with BHEL: In the area of manufacturing equipments your Companyhas formed a JV with BHEL to manufacture and supply equipments for powerplants and other infrastructure projects in India and abroad. This JV has beenassigned EPC jobs by the promoters NTPC and BHEL on nomination basis. Itis expected to commence manufacturing from the year 2013-14.

Stake in Transformers and Electricals Kerala Limited (TELK): YourCompany has acquired 44.6% stake in TELK for manufacturing and repair ofhigh voltage transformers and associated equipments. With the ageing of avery large number of transformers in the country, this venture would meet animportant need of the sector.

JV with Bharat Forge Limited: Your Company has formed a JV with BharatForge Limited for manufacture of BoP equipment for the power sector andmanufacture of castings, forgings and fittings etc for power and other sectors.

Acquisition of Power Plants: Taking over power plants and reviving themhas been very effective growth strategy of your Company as demonstrated in

the examples of the take over and turnaround of Badarpur, Unchahar,Talcher, Tanda and Muzaffarpur power stations in the past. Your Company isexploring the possibility of taking over Patratu power station of 770 MW inJharkhand.


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FORMULATING LONG TERM CORPORATE PLAN 2010-2032

Your Company has decided to prepare its long term Corporate Plan for theperiod 2010 2032. This Plan shall include strategies and growth targets,fuel choices, technology choices and measures to deal with the likely changes

in the business environment. During the course of implementing this proposedPlan, your Company would aspire to be the most valuable Indian companyas well as the world leader in power generation. Your Company aspires tobe a leader in GREEN POWER.

TOWARDS LOW-CARBON ENERGY MIX BY DEVELOPING HYDRO,NUCLEAR AND NEW RENEWABLES

Your Company has a target of setting up hydro power capacity of 9,000 MW,nuclear power capacity of 2,000 MW, and renewable energy capacity of 1,000MW by 2017.

Hydro Power: Besides the environmental benefit, diversification into hydropower would help NTPC in bundled pricing and peak demand management inthe future. Your Company has signed Memorandum of Agreement for takingup 460 MW Kolodyne Project at Mizoram, to be set up during the 12th Planperiod. It is also exploring the huge hydro potential in the Upper Siang area ofArunachal Pradesh.

Nuclear Energy: Your Company believes that nuclear power has a key roleto play as part of the solution to climate change issues and ensuringsecure and affordable supplies of energy. The Planning Commission'sestimate of India's need to scale up its nuclear power generation to 20,000MW by the year 2020 and 62,000 MW by 2032 indicates ample opportunitiesin the nuclear power space. Hence, nuclear energy is another importantbuilding block in our capacity growth strategy. We also believe that NTPCis ideally positioned to drive a Nuclear Power Generation Program with thehelp of Nuclear Power Corporation of India Limited (NPCIL) to begin with.NTPC, as of now, has envisaged 2,000 MW nuclear capacity target up to2017. An MoU has been signed with NPCIL to set up nuclear power projectsthrough a joint venture. A Nuclear Project Engineering Group has been setup. A core group of 30 engineers have begun their training in nuclear powertechnology as part of your Company's effort to build a core team of nuclearpower professionals.

Your Company will utilize the challenges of climate change as anopportunity to re-position itself as a future oriented energy enterpriseand will utilize the business opportunities emerging out of the climate-change-induced energy business scenario.

New Renewables:

Your Company is entering the renewable energy space with capacityaddition target of at least 1,000 MW by 2017. This portfolio is likely to consistof wind energy (650 MW), hydro energy from plants smaller than 25 MW


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(350 MW), solar energy (50 MW), geothermal energy (30 MW) andbiomass energy (15 MW).

Wind Energy: The first 100 MW renewable plant based on wind energy islikely to be commissioned by the end of 2010. Your Company has signed aMemorandum of Understanding with Karnataka Power Corporation

Limited (KPCL) for setting up wind energy projects aggregating to 500 MWcapacity.

Small Hydro Energy: Feasibility studies for 8 MW hydro energy basedproject at NTPC-Singrauli has been finalized and the NIT is being issued inthe near future.

Solar Energy: Solar energy is a major focus area as one of the 8 NationalMissions under the National Action Plan for Climate Change formulated by theGovernment of India. Your Company is planning to implement solar thermalenergy projects of 15 MW at NTPC-Anta, 25 MW at NTPC-Rihand or Singrauliand 6 MW solar photo voltaic based projects at Andaman and Nicobar

Islands.

Distributed Generation: Your Company is engaged in promoting off-gridDistributed Generation (DG) projects based on locally available resources forintegrated growth of the villages. Ten Distributed Generation projects with 220KW capacity are already operational. Six projects amounting to 140 KWcapacity are under implementation and detailed project reports have beenprepared for 35 projects aggregating to 1,200 KW capacity.

OTHER INITIATIVES FOR CLEAN ENERGY AND GREEN ENVIRONMENT

Right since its inception, your Company had recognized that taking care ofenvironment should be a very high priority. We began intensiveafforestation, among the several environmental initiatives taken by us. YourCompany has planted more than 18.5 million trees. This green wealth is asizable carbon sink.

CO2 Monitoring and Ambient Air Quality Monitoring Systems (AAQMS):Your Company has taken action to procure equipments for online stack CO2monitoring for all the existing stations. Such on-line CO2 monitoringequipments will be installed at all the new projects starting with Barh. Formonitoring key environmental parameters including presence of CO2 in theambient air, 61 AAQMS have been installed at 20 power stations.

Research for CO2 Mitigation: Your Company is leveraging its state-of-the artresearch facility, NTPC Energy Technology Research Alliance (NETRA) forcarbon fixation and utilization related research technology development,development of solar power plants, development of clean coal technologiesand IGCC suited to Indian coal. NETRA is imparting very special focus onstudies concerning gainful utilization of CO2 and capture of CO2 throughdifferent projects undertaken by it. NETRA is engaged in a study using micromarine algae for CO2 absorption. NETRA is engaged in CO2 related studies


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in association with leading research institutes like CSRI, National Chemicallaboratory (NCL), Pune and Indian Institute of Petroleum, Dehradun.

Clean Development Mechanism (CDM): In order to take care of the globalclimate change concerns, your company is making use of the CleanDevelopment Mechanism (CDM). Your company has made a pioneering

effort in getting approved the methodology for super-critical thermal powerprojects under the United Nations Framework Convention on Climate Change(UNFCCC).Several projects of NTPC are in the CDM approval pipeline.

Flue Gas Desulphurizing Technology (FGD): FGD is being adopted at thecoal based 3X250 MW power plant at NTPC-Bongaigaon.

RESEARCH AND DEVELOPMENT (R&D) IN POWER: NTPC ENERGYTECHNOLOGY AND RESEARCH ALLIANCE (NETRA)

Your Company has earmarked 1% of its profit for research and technologydevelopment.

In order to integrate the efforts of the Research and Development Departmentwhich was doing applied R&D to support station performance and the EnergyTechnologies Department which was engaged in fundamental research anddeveloping cutting edge technologies, your Company merged the twodepartments and created NTPC Energy Technology and Research Alliance'(NETRA).

NETRA is working under the guidance of a Research Advisory Councilconsisting of eminent experts. Besides carrying out research on climatechange-related and other future-oriented technology options, NETRA'slaboratories will also provide high-end scientific services to all the stations ofNTPC as well as to other power stations. It has already provided consultancyservices to Fujairah Combined Cycle Gas and Desalination Plant in the UnitedArab Emirates.

Concepts for the energy supply of the future need to be translated intopractical solutions through advancements in research and technologydevelopment. NETRA will be engaged in this very important future orientedmission.

NETRA has filed 12 patent applications for various processes. NETRA isengaged in collaborative research work with other premier academic and

research institutions and laboratories on various projects. These institutionsinclude IIT-Guwahati, IIT-Mumbai, IIT-Roorkee, IIT-Delhi, University Instituteof Chemical Technology (UICT)-Mumbai and Indian Institute of Petroleum-Dehradun.

NETRA is housed in the first Energy Conservation Building Code (ECBC)compliant building in the Company. We are planning to have 1 MW solarthermal power plant at NETRA.


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ASH UTILIZATION

Your Company looks at ash generated in the process of power generation asa resource and not as a waste. It has been exporting fine ash to the Middle-East from NTPC-Simhadri and NTPC-Talcher through its trading arm, NTPCVidyut Vyapar Nigam Limited (NVVN). It has also been supplying ash to

cement and RMC manufacturers in India. The target of ash trading is over 45lakh tons by the year 2013-14, including 5 lakh tons of export.

The Ash Utilization Division of your Company has been exploring andexecuting innovative methods for utilizing the ash generated in its powerstations. During 2008-09, it achieved 56.7% ash utilization.

Back-filling of coal mines has enormous potential for ash utilization. NTPC-Talcher TPS utilizes 100% ash by back filling of South Balanda Mines.Besides exploring the opportunities of back filling of abandoned mines, yourCompany is pursuing the option of random filling of ash with external dumpsof overburden of operating mines.

Your Company is also taking up steps for promoting fully automatic brickmaking plants and cement manufacturing plants at its stations.

Your Company believes that user industries must be actively involved andmade responsible in ensuring adequate ash utilization. Effectiveimplementation of the existing Government mandates in this regard is alsorequired. Your Company has been taking up this issue with the concernedauthorities and will continue to do so.

DEEP AND EXTENSIVE SOCIAL CONNECT

Committed to the cause of inclusive and sustainable socio-economicdevelopment, your Company believes in fulfilling larger societal purposes,going beyond power generation and wealth creation.

We are focusing on being more accessible and becoming a strong localcommunity partner. We support the local communities through a wide varietyof CSR programmes

We believe that our resources and employees can profoundly impact theworld around us. The spirit of volunteerism promoted by the Company hasresulted in 25 NGOs being run by our employees for CSR activities.

Your Company has promoted the cause of gender justice and womenempowerment through setting up women's polytechnic at Nainital,Uttarakhand, a hostel for girls belonging to SC and ST communities at Gunturand Ongole Districts of Andhra Pradesh, providing education in self-relianceto tribal girls and women in Udaipur, Rajasthan and construction of a girls'school-cum-multi-purpose-building at Ghaziabad in Uttar Pradesh.


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Your Company has been promoting skill development and employability ofthe youth through vocational education and training. The Company hasadopted 16 Industrial Training Institutes (ITIs) and is setting up 6 new ITIs.It is also setting up Solapur Power Training Institute in Maharashtra. Theseinstitutions will also help meet the requirement of skilled manpower in thepower sector.

Besides providing access to its health-care infrastructure in its units to theneighbourhood population and organizing frequent health care camps for thepeople in the areas close to its projects and stations, your Company isproviding support to Hyderabad Eye Research Foundation for threespecialized eye centres at Bhubaneswar.

By way of contributing to community development and infrastructurebuilding, your Company is focusing on areas like sanitation, drinking water,rural roads and education.

Your Company is formulating a new CSR Policy in association with TERI with

a view to aligning the policy and actions to the changing ground realities andexpectations of stakeholders.

Your Company is engaged in reaching electricity to villages that never had itbefore through implementation of schemes under the Rajiv Gandhi GrameenVidyutikaran Yojana (RGGVY). We are engaged in electrification of nearly38,500 villages, including 27,00,000 households living below poverty line insix States and one Union Territory.

Your Company has been sensitive to the needs and aspirations of the ProjectAffected Persons (PAPs). Accordingly, the Company has always tried for thebest possible Rehabilitation and Resettlement (R&R) package for the PAPs.In keeping with this tradition, the R&R scheme adopted for the PAPs atNTPC's Pakri Barwdih (PB) mining project in Jharkhand is one of the bestsuch schemes in the country.

NTPC Foundation: Your Company has set up NTPC Foundation to carryout focused CSR activities in identified niche areas of helping the physicallyhandicapped and other marginalized communities.

ICT Centres: The Foundation has set up Information and CommunicationTechnology (ICT) Centre for the physically challenged at Delhi Universityand similar Centres for the visually challenged at Mysore, Thiruvananthpuram

and Ajmer. One more such Centre is coming up at Lucknow. Similar ICTfacilities are planned to be set up at all the States in a phased manner.

District Disability Rehabilitation Centre (DDRC): We have also set upDistrict Disability Rehabilitation Centre (DDRC) in collaboration withNational Institute for the Orthopaedically Handicapped (NIOH) at NTPC-Tanda which is serving the beneficiaries in nearby areas.


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DOT Centres: Your Company is running Directly Observable TreatmentCentres (DOTs) in its hospitals at 10 power stations to take care oftuberculosis patients in the vicinity of 25 km radius of these stations. Besidesproviding space and doctors services, your Company has also given mobilevans and diagnostic equipment to the Centres.

CORPORATE SUSTAINABILITY REPORT

Your Company is in the process of completing its Corporate SustainabilityReport with the Triple Bottom Line approach of covering economic,environmental and social aspects. The reports have been compiled for 20stations for the year 2007-08 and are being put together for the CorporateReport. The process of compiling the reports has begun for the year 2008-09also.

CORPORATE GOVERNANCE: EMBEDDED IN NTPCS DNA

NTPC is a value based enterprise. We believe in integrity as a necessary

condition for enduring success. Fairness, transparency, accountability andresponsibility are pillars of NTPC's business activities. Your Company is fullycompliant with Clause 49 of the Listing Agreement requirements relating toCorporate Governance prescribed by SEBI. The Company has a strongcorporate governance architecture. Your Company believes in going beyondcompliance and takes proactive measures through self-regulation.

Your Company had set up an Audit Committee before it became mandatory. Ithas the Committee on Management Controls and it has also a FraudPrevention Policy, which, again are not mandatory. Your Companys board iscomposed of 7 full time Functional Directors, 2 Government NomineeDirectors and 9 Independent Directors. Independent Directors, thus, constitute50% of the Board and this enriches the decision making process.

Various Committees of the Board oversee the important aspects of theCompany's functioning, including award of large value contracts, investors'grievances, financial reporting, management control systems, approval ofFeasibility Reports and investment decisions. The Company's disclosurepractices are transparent and practical.

The spirit of transparency and good governance already embedded in NTPC'sworking has been formalized through its MoU with Transparency International,India to implement the Integrity Pact programme.

There is an elaborate Internal Control Framework in place on financialreporting.

Your Company has set up a very sound enterprise-wide risk managementframework under which an Enterprise-Wide Risk Management Committeeconsisting of 24 Executive Directors who represent the entire spectrum ofyour Company's business areas and concerns meet regularly to focus onidentifying and mitigating enterprise risk.


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GLOBAL FOOTPRINTS OF A NAVARATNA

In keeping with its globally comparable size and excellence, your Company istaking steps to have global presence also. It is in the process of developing a2x250 MW power plant in JV with Ceylon Electricity Board in Sri Lanka. Weare exploring R&M work in Kazakhstan and are preparing a bid for O&M

contract in Bangladesh. We are also preparing to bid for engineeringconsultancy for coal based power plants in Vietnam. We are preparing DPRfor 620 MW Amochu hydro project in Bhutan. We are doing the engineering offour 400 KV substations in Dubai.

Your Company is going beyond national boundaries to secure fuel for itsgeneration business and we are looking at acquisition of coal blocks inIndonesia, Mozambique and South Africa and is pursuing for procurement of3 mtpa LNG from Nigeria in lieu of NTPC setting up coal and gas basedpower plants in that country.

ERP AS A TOOL FOR CHANGE MANAGEMENT AND BUSINESS

PROCESS IMPROVEMENT

Launched as a tool of change-management and business transformation inyour large and rapidly growing Company to enable integrated informationflow, streamlined business processes standardization and integration,adoption of global best practices, quick and informed decision making basedon real time information for overall productivity enhancement, an EnterpriseResource Planning (ERP) system has been implemented at all NTPClocations and in its subsidiaries. Besides implementation of usualfunctionalities like Employee Self Service (ESS), Finance, HR, Materials,Maintenance and Projects, new generation products like e-procurement,Knowledge Management (KM), Business Intelligence (BI), DocumentManagement, and Workflow have also been implemented. A state-of-the artData Centre with centralized ERP Servers has been set up for the entireCompany. The Data Center is equipped for uninterrupted zero failureperformance.

There are major benefits of ERP implementation for the Company:

Real-time tracking of key project activities and milestones helps identifyand eliminate potential bottlenecks

Complete visibility of asset maintenance history and spare partsmovement helps optimized maintenance

Lower procurement lead times

Improved vendor collaboration enabled by streamlined workflows andstandard processes

Centralized Commercial Billing Functions and Real-time visibility intocash inflows from the customers.

Reduction in books closure cycle time and seamless reconciliation forimproved accounting efficiency

Greater employee satisfaction as they are able to manage/ tracktransactions in the self-service facility.


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KNOWLEDGE MANAGEMENT PORTAL

In NTPC, sharing knowledge among peer groups and through dedicated taskforces has been a part of the work culture. We seek to ensure that the domainknowledge acquired by the members of NTPC team resides in the

organization for use by the organization. We have formalized the system ofcapturing and disseminating knowledge, experience and learning of theindividual and the groups for the whole organization through a portal basedKnowledge Management system. This system is powered by the ERP system,which has already been implemented in NTPC. Through this IT enabledsystem, employees located at various sites and offices can upload and sharetheir experiences and learning, which can be accessed by anybody in theorganization. This system also facilitates collaboration and discussion amongpeers located at distant places for exchange of ideas about any issue orproblem. In the long run, this system will turn out to be a knowledgebank for the organization, with potential to provide in-house solutionsfor most of the problems.

LEVERAGING COMBINED EXPERTISE AND TEAM WORK OF OVER24,000 POWER PROFESSIONALS

One of the most important factors distinguishing NTPC from other enterprisesis the extra-ordinary talent and commitment of our people. The experienceand expertise of the Team-NTPC is widely acknowledged. The professionalsof NTPC are known for their domain expertise and commercial orientation.

Attracting Talent: Your Company is imparting special focus to attracting newtalent, especially young engineers, and managers in order to execute itsgrowth and diversification plans. Besides continuing with its rigorousexamination system for recruiting Executive Trainees, your company hasbeen going to IITs, NITs and IIMs for selecting young talent to enrich itsemployee base. We are building teams for the future.

Developing Talent and Strengthening Culture: Developing and updatingskills on a continuous basis is being given thrust along with ensuring goodquality of life. Your Company provides excellent opportunities for acquiringhigher educational qualifications like M.Tech and MBA to employees incollaboration with the best academic institutions in the country. The focus ontraining and development for grooming young engineers as powerprofessionals and for retaining the skill edge of the senior executives is

comparable with the best anywhere. Your Company provides unmatchedrange of opportunities for gaining professional and technical experience to themembers of 'Team NTPC'. Members of 'Team NTPC' demonstrate very highlevel of 'organizational pride' which is one of the Core Values espoused byyour Company.

Best Employer: Your Company has been acknowledged as one of the bestemployer brands. It has been consistently ranked among the best employersin various prestigious surveys. It provides monetary and non-monetary


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incentives to attract and retain talent and keep the morale and motivationlevels high among the members of Team-NTPC.

Your Company has been ranked as number ONE in the special categoryBest Workplaces for Large Organizations in Great Places to Work 2009Survey by Great Places to Work Institutes India chapter in collaboration with

the Economic Times.

Leadership Assessment and Development System (LEADS): With a viewto developing a pipeline of leaders for key leadership positions in thecompany, an initiative named LEADS has been launched. A LeadershipDevelopment Centre (LDC) at corporate center is to formulate the process ofidentifying and grooming potential leaders. Detailed Individual DevelopmentPlans (IDP) will be rolled out for execution and monitored. Covering middlelevel executives and general managers, this system will help in the creation ofadequate bench strength for key leadership positions.

High Productivity of Team-NTPC: The effectiveness of your Company's HR

initiatives is seen in the continuous improvement in its manpower productivity.During the period 2004-05 to 2008-09, sales per employee increased from Rs.10.9 million to Rs. 17.7 million, profit per employee increased from Rs. 2.7million to Rs. 3.5 million, value added per employee increased from Rs. 4.1million to Rs. 5.9 million and the man:MW ratio improved from 0.91 to 0.85. Infact, the Company is targeting to have a Man:MW ratio of 0.46 by 2017.

COMMITMENT TO STAKEHOLDERS

We are committed to create maximum value for all our stakeholders in asustained manner.

We are extremely indebted to the Prime Ministers Office and the PlanningCommission of India for sustained guidance and support we have beenreceiving on important issues. We are grateful to the Ministry of Power fortheir invaluable guidance and strong support. We are thankful to the Ministryof Finance, the Ministry of Environment & Forest, the Ministry of Coal, theMinistry of Railways, the Ministry of Petroleum & Natural Gas, the Ministry ofCommerce, the Ministry of Heavy Industries including the Department ofPublic Enterprises and State Governments and other agencies and authoritiesfor their help to NTPC. We are grateful to the Central Electricity RegulatoryCommission (CERC), the Appellate Tribunal for Electricity and CentralElectricity Authority (CEA) for their guidance to your Company. We are

grateful to the Statutory Auditors and to the Comptroller & Auditor General fortheir observations and suggestions. We are thankful to the bankers, investors,State utilities and other customers and vendors for their unstinted support aspartners in our progress.

I take this opportunity to place on record my appreciation and thankfulness tomy colleagues on the Board for their invaluable contribution and co-operationin steering the Company. I am indebted to the Independent Directors wholend invaluable perspective and quality to the deliberations and decisions ofthe Board.


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I convey our appreciation for the contribution of members of Team-NTPC whohave happily withstood the relentless pressure of achieving targets amidchallenges.

Team NTPC is committed to place the Company among the greatest

enterprises in the world.

Your Company is gearing up to be future-ready with a new corporate plan ofbecoming the most valuable company in the country, one of the largestintegrated power majors in the world and a leader in GREEN POWER by theyear 2032.

Your Company is powering million smiles.Your Company is powering India's growth.Your Company believes in touching the lives of the people.Your Company believes in caring for the planet.Your Company aspires to make India proud in the global energy fraternity.

Your Company has been acknowledged to be a potential force for change inIndia. With the strength of our collective aspirations and efforts, we resolve tochange the energy landscape of the country.

We resolve to emerge on the global horizon as a model energy company,maximizing value for all the stakeholders.

Thank you,

(R.S. SHARMA)Chairman & Managing Director

New DelhiSeptember 17, 2009

Chairman Statement 2008-09[1]

Documents

Transcript of Chairman Statement 2008-09[1]