NTPC has no fund to pay dividend

NTPC has no fund to pay dividend
Navika Kumar

NEW DELHI, DECEMBER 15: Till the adverse publicity got him, Power Minister PR Kumaramangalam wanted the public sector NTPC to buy NHPC for a whopping Rs 4,500 crore. Well, guess what, NTPC doesn't even have the funds to pay dividend, and has asked the ministry of finance to excuse it from paying a 30 per cent dividend on profit after tax to the central exchequer.

NTPC chairman and managing director Rajinder Singh has written to power secretary V K Pandit, stating that during the Ninth and Tenth Plans, the company has a target of capacity addition for Rs 16,300 MW which would require an investment of Rs 65,000 crore till the end of 2007. ``To manage such a high level of investment,'' the letter states, ``NTPC has formulated a financing strategy according to which, the debt equity ratio of 70:30 is to be considered for investment in all new projects to be implemented in the future.''

This would imply that NTPC needs to generate Rs 19,500 crore from its internal resources to meet the debt equity requirementof 70:30.

Power secretary Pandit in turn, has taken up cudgels on behalf of NTPC and has asked secretary (expenditure) that NTPC be exempted from paying 30 per cent dividend on post-tax profits for the next three to five years. Pandit's letter also states that the ``issue was discussed by the Power Minister with Finance Minister.''

Singh has also admitted in his letter to the Power Ministry, that ``NTPC's actual availability of cash profit is much lower as compared to the book profits'' of the company. The letter gives detailed statistics of how cash profit available to the company is far short of the actual profit after tax shown in the company's accounts. While book profits in 1998-99 was Rs 2,815.73 crore while cash profits were only Rs 188.47 crore. During 1997-98 book profits read Rs 2,153.50 crore while actual cash profits were Rs 518.94 crore and in 1996-97 these were Rs 1,679.43 crore and Rs 711.07 crore crore respectively.

Singh's letter points out that NTPC's ``internal resources, depend ontwo factors - dividend pay-out ratio and timely payment by State Electricity Boards (SEBs) for energy sales.''