Chairman's Statement

Good Morning, Ladies and Gentlemen,

It is my privilege to welcome you all to the 16th Annual General Meeting of your Company.

The Board of this Company has been chaired by remarkable leaders, who have over the years, set very high benchmarks. I take this opportunity to salute my predecessors and pledge to uphold the high standards set by them

Fiscal 2015 was a challenging year for your company particularly because of the generator failure at Bhilai PP-II TG 3 and LP turbine blade failure at Bhilai PP-III Unit-1. Bhilai PP-II TG 3 Unit was brought back within 22 days with intense coordination with BHEL. Bhilai PP-III Unit 1 was brought back within 96 days with all-out efforts and top level coordination with BHEL on a day to day basis and your company has successfully brought back machine in to operation & controlled the impact of machine outage.

Operational highlights

With a capacity of 314 MW, CPP-IIs at Bhilai, Durgapur and Rourkela have operated at an availability factor of 93.16% and generated 2429.06 MU in 2014-15.Bhilai PP-III had generated 3241.07 MU, with a DC of 80.01%, in spite of the 96 day loss in generation in U#1 due to LP turbine blade failure and about 227 MU loss due to low schedule from grid. NSPCL’s total Generation in 2014-15 was 5670.13 MU in 2014-15.

During the year SECL had supplied 1.734 MMT coal to Bhilai PP-III in line with FSA signed in September 2013 for Annual Contracted Quantity of 2.408 MMTPA. Further, 0.674 MMT coal was arranged by your company through other sources i.e. its contract with MMTC, e-auction route and coal procurement from SCCL/ ECL through MOU route. Thus FSA coal supply in 2014-15 constituted to about 72% of the total coal supply quantity and the balance 28% is from other mentioned sources

Financial Performance

Your company recorded a total income (including cost of PP-II coal) of Rs. 2325.93 Crs. during 2014-15 against Rs. 2490.39 Crs. in the previous year with a marginal decrease of 6.60%. Your company recorded Net Profit of Rs. 227.41 cr. during the year as compared to Rs. 246.59 cr. in the previous year, registering a marginal decrease of 7.78%. While the marginal decrease in total income was due to lower fixed charges earned in PP-III due to forced outage of Unit 1, grossing up of ROE with MAT rate (against full rate of tax in previous year) and no incentive earned during the year, the marginal decrease in Net Profit was due to the lower fixed charges earned in PP-III and no incentive.You may appreciate that this is a laudable performance keeping in mind the loss of generation of PP-III Unit 1 for 96 days.

An interim dividend of Rs. 80 Crs. has already been paid. Final dividend of Rs. 20 Crs. is proposed to be paid after approval in AGM. Total cash out flow on account of dividend and tax amounts to Rs. 120.07 Crs. (52.8% of Net profit).

During the year, energy bills of Rs.1282 Crore was raised against power supply from Bhilai PP-III (2X250 MW) and the same as well as PP-II bills were fully realised from the Beneficiaries

Thrust areas

Thrust areas of your company have been capacity optimization, reduction in O&M cost and increase in overall efficiency. In order to achieve these, best practices in all facets of management have been adopted for implementation. Third O&M conference was organised on 14th March 2015 which provided a valuable platform for knowledge sharing and innovative practices in NSPCL stations. All the R&M Packages pending for award have been awarded and are under execution except two schemes which are under review at present. Your Company’s Board is putting focussed attention in the area of cost reduction.

Corporate Plan 2015-2025

As an agile business entity, your Company had taken steps to update the Corporate Plan 2010-2022 to 2015-2025 in line with the changing sectorial scenario and macroeconomic environment. Consultancy work for Corporate Plan 2015-25 had already been awarded to M/s PWC India and the Plan shall be in place in the current year.

Growth Plans

It is a matter of satisfaction to state that substantial progress has taken place with respect to Rourkela Power Plant II Expansion(1x250 MW) and Durgapur Power Plant III (2x20 MW). Environment Clearance for Rourkela Expansion has been accorded in May ’15 and the Price Bid for EPC Package has already been opened. In principle equity confirmation for the project has been obtained earlier. Now with signing of Loan agreements with State Bank of Mysore (Rs. 250 Crs.), Dena Bank (Rs. 200 Crs.) and REC (Rs. 1000 Crs.) the financial closure for the project has been completed. In case of Durgapur Expansion, Environment Clearance has been recommended by Thermal EAC in July ’15 and Techno- commercial bids for EPC Packageare planned to be opened shortly. Durgapur Expansion is proposed to be funded through internal accruals and promoter’s confirmation has been obtained in this regard. Loan for the project has also been tied-up with HDFC Bank (Rs. 125 Crs.) and Kotak Mahindra Bank (Rs. 150 Crs.). Both the Projects are targeted for award in 2015-16.

In addition, NSPCL is preparing the detailed Feasibility Report for Salem Power Project (2x60 MW). Tie-up of inputs and clearances for Salem Project and Bhilai Expansion (2x250 MW or 1x250 MW) are being pursued.

Further in line with country’s focus in green power segment, your Company is contemplating capacity addition in Solar PV segment to augment its existing solar capacity of 232 KWp added on a pilot scale. Your Company is closely pursuing with SAIL to allow NSPCL to establish their RPO requirement of solar power.

Environment

Your Company has been taking various pro-active measures for improvement in the areas of Environmental Management. Major revamp in the ESP at Rourkela has been completed while scheme for upgradation of ESP at Durgapur is under implementation. Dry ash collection systems at Bhilai, Rourkela & Durgapur are under operation.Commissioning of Continuous Emission Monitoring System (CEMS) and Effluent Quality Monitoring System (EQMS) in NSPCL plants are under progress. Around 50,000 trees have been planted by your company in 2014-15.

Rourkela CPP-II bagged the Greentech Environment Award in Platinum category in thermal power plant for the year 2014 in recognition of its excellent work done in Environment management. Rourkela CPP-II also bagged the prestigious NSCI “Prashansa Patra” for safety for the year2014 for its commitment towards safety.

SAP implementation

It gives me sense of pride in stating that your Company has done a commendable work by rolling out implementation of ERP/SAP in a record time of 9.5 months in this year and the same has now been stabilised. Your company has received Special Recognition at 4th SAP Public Services ACE Awards 2014 for timely implementation of comprehensive SAP solution.

Employee Development

Your company has put a lot of thrust on employee development through training, Competency mapping & Individual Development Plans and succession planning. The company has successfully done recruitment of various category of non-executives as a part of our cadre built up and replacement of retired manpower.

As a result of the above other proactive measures, NSPCL cadre strength has increased to 72.5% in 2014-15 i.e. an increase of almost 2% compared to previous year. NSPCL cadre strength is 75.1% as on 01.09.15.

It is a matter of pride that your company has been conferred with the prestigious Global HR Excellence Awards for Best Corporate Social Responsibility Practices, Leading HR Practices in Quality Work-Life and Best Talent Management Award at the World HRD Congress 2015.

Touching lives through CSR

NSPCL has a well-defined CSR policy and implementation is overseen by CSR subcommittee of NSPCL Board. CSR activities include education to under privileged children, women empowerment, skill development, Health & Family Welfare, Infrastructural facilities, promotion of Sports & Games etc.Your company achieved 100% utilisation of CSR budget of Rs. 4.60Crs. in 2014-15.

Your company has been associated with Swachh Bharat Abhiyan of Govt of India by facilitating construction of 722 toilets around Rourkela and Durgapur areas on behalf of NTPC.

Corporate Governance

In your Company, there are Established systems & Practices for overall management control & governance. Your Company believes in maintaining high standards of transparency and has adopted prescribed Corporate Governance practices. During the last one year, various Policies like Ash Utilisation, Enterprise Risk Management, Banning of Business Dealings, e-Waste management, handling & disposal have been approved in NSPCL. Further in line with CVC guidelines, NSPCL has appointedone Independent External Monitor to oversee the high value contracts.

Acknowledgements

Ladies and Gentlemen, before I conclude, on behalf of the Board of Directors, I would like to express my gratitude to our promoters (NTPC Ltd. and SAIL), Ministry of Power, Ministry of Coal, Ministry of Steel and other stakeholders for their unstinted support. We are indebted to Ministry of Environment and Forests, the State Governments, Central Pollution Control Board, State Pollution Control Boards, Factory and Boiler Directorates, local state administration, Police Department and other agencies for their help to the Company. We are thankful to the Central Electricity Regulatory Commission, Central Electricity Authority and State Electricity Regulatory Commission for their guidance to the sector. We also thank and appreciate StatutoryAuditors of the Company and Comptroller and Auditor General for their observations and suggestions.

I take this opportunity to express my deep gratitude to the Financial Institutions, Banks and other lenders and Investors for their trust and continued support. I wish to thank our esteemed customers, valued vendors and associates who are fully associated with our progress. On this occasion, I would like to thank my colleagues on the Board for their unconditional cooperation and support.

On your behalf, I would like to acknowledge the tremendous efforts of our employees, who are our valuable asset. I am confident that their dedication, hard work, intellect and the values shall drive the Company forward.

Thank you,
Place: New Delhi
Date: September 23, 2015

(Kaushal Kishore Sharma)
CHAIRMAN