NTPC bonds get CRISIL ''AAA'' rating

Rs 5 billion Bond Issue	AAA
Rs 5 billion Bond Issue	AAA (Reaffirmed)
Rs 5 billion Bond Issue	AAA (Reaffirmed)
Rs 15 billion Bond Issue	AAA (Reaffirmed)
Rs 5 billion Bond Issue	AAA (Reaffirmed)
Fixed Deposit Programme	FAAA (Reaffirmed)
Rs 2.5 billion Commercial Paper Programme	P1+ (Reaffirmed)

CRISIL has awarded its 'AAA' rating to the National Thermal Power Corporation's (NTPC) Rs 5 billion bond issue, while reaffirming the rating on all its other instruments. The rating reflects NTPC's dominant position in the Indian power generation sector given that it owns over one-fifth of the country's generation capacity. Moreover, the company has consistently displayed strong operating and cost efficiencies. The rating also takes into account the improving collection efficiencies of the company. NTPC has benefited from the settlement scheme as per the Ahluwalia Committee's recommendations whereby the sundry debtor levels dropped from 237 days of sales in 2002-03 to 9 days in 2003-04.

The rating derives strength from NTPC's strong financial risk profile marked by low gearing, high operating margins and healthy liquidity. In FY03-04, NTPC's topline declined marginally on account of a decrease in tariffs, triggered by a revision in CERC norms. However, net profits surged 46 per cent owing to a one-time boost from an inflow of Rs56 billion during FY03-04. This was on account of interest on bonds and surcharge due to late payments by SEBs recognised as income in FY03-04. NTPC's gearing has remained steady at 0.4x over the last four years.

In FY2003-04, NTPC made a highly successful Initial Public Offering (IPO) of around Rs54 billion (an equal amount in fresh issue of shares and offloading of government shares). Besides improving funds inflow, the IPO has given the company flexibility to tap the market for future requirements. NTPC also has unutilised bank lines worth Rs5 billion and substantial liquidity in the form of cash and deposits worth Rs86 billion as on March 31, 2004. Further, the company has an option to sell part of the bonds obtained under the Ahluwalia Committee settlement in order to augment its resource position.

Incorporated in 1975, NTPC has grown into the largest power utility in India. The company's principal activities include construction and operation of power generating plants and providing consultancy to power utilities in India and abroad. NTPC has an installed capacity of 23,749MW comprising 13 coal-based (19,480MW), seven gas-based stations (3,955MW), and three joint venture projects (314MW). In FY2003-04, NTPC generated 149.2 billion units of power and accounted for 27 per cent of the total power generated in the country.

NTPC is among the world's top 10 power generation companies. The company enjoys Navratna status conferred by the government of India to a few public sector undertakings (PSUs). The company's recently concluded IPO has brought down the government of India shareholding to 89.5 per cent from the earlier 100 per cent. For the nine months ended December 31, 2004, the company generated a profit after tax of Rs35.1 billion (Rs38.8 billion) on net sales of Rs161.4 billion (Rs136.4 billion).