National Thermal Power Corporation or NTPC is the largest integrated power generating company in India and a primary contributor to India’s energy needs. It is a Maharatna Central Public Sector Undertaking under the Ministry of Power, Government of India. Established in the year 1975 as a response to India’s power crisis, NTPC has evolved over the course of half a century and diversified beyond fossil fuel-based power generation to hydro, solar, wind and nuclear power. The company currently holds 17% of India’s total installed power capacity and accounts for 24% of the nation’s power generation. NTPC generates 25 billion units of electricity each month. It was ranked 433rd in the Forbes Global 2000 for the year 2023. Wondering about how NTPC meets a significant part of India’s power requirements? How does it earn money? Read on to find out more.
What Are The Key Elements of NTPC’s Business Model?
Thermal power generation from coal and gas is the backbone of NTPC’s business model and core operations. It owns and operates 24 coal and seven combined gas and liquid fuel power stations across India. However, the company has diversified its portfolio by expanding into solar, wind, hydro and green energy. At present it is operating 2 hydro-power, 1 wind turbine and 11 solar energy projects.
Primary customer segments of NTPC include State and Private Distribution Companies, Industrial and Commercial Consumers, Government Companies and Captive Power Plants. The company guarantees a reliable and stable supply of electricity to its customers.
NTPC has ventured into coal mining through its subsidiary, NTPC Mining Limited, to reduce the costs of obtaining coal. The company mined about 100 MMT coal in the financial year 2023-24. Captive coal mines of NTPC include Dulanga coal mine in Odisha, Talaipalli coal mine in Chhattisgarh and Pakri Barwadih, Chatti Bariatu and Kerandari coal mines in Jharkhand.
NTPC partners with contractors and equipment suppliers for the procurement, installation and maintenance of its power generation and distribution infrastructure. Furthermore, the company also works with technology enterprises to get access to advanced and sustainable power generation technologies.
NTPC is present in 70 locations across India, with 8 regional headquarters. The company is also present in Sri Lanka and Bangladesh.
| Company | NTPC Limited |
| Establishment Year | 1975 |
| Founder/Owner | Indira Gandhi/Government of India |
| Headquarters | New Delhi |
| Industry | Electricity |
| Net Worth | $23 billion |
| Revenue In 2024 | $19.83 billion |
How Does NTPC Makes Money?
1. Sale of Electricity
NTPC earns 98-99% of its revenue through sale of electricity generated from coal, gas, hydro, wind and other sources. State Electricity Distribution Companies account for over 90% of the electricity sales. The tariff is determined and regulated by Central Electricity Regulatory Commission or CERC. This is a two-part tariff, comprising of fixed capacity charges and variable energy charges.
Most of the electricity sales are made through power purchase agreements or PPAs, which are long-term agreements detailing the terms and conditions for the supply of electricity, including quantity, duration and pricing.
NTPC also makes a minor percentage of revenue by selling electricity in short-term and real-time markets at market-determined prices.
2. Other Revenue Streams
NTPC provides consultancy and EPC services for the design, construction, operation and maintenance of power utilities in India and abroad.
Sales of fly ash to cement companies and interest and dividends from surplus cash and investments in joint ventures are other smaller revenue sources for the company.
What Is The Cost Structure?
Fuel costs like coal and gas account for a large part of NTPC’s expenses. However, captive coal mines have served to reduce the expenses in this segment to a large extent. Plant operation and maintenance also contributes significantly to the company’s expenses. Since NTPC is a labor-intensive company, workforce expenses like salaries, perks and other kinds of compensation make up an important part of its total expenses.
Other costs include interests and financing costs on capital investments and regulatory compliance costs.
Recent Financial Performance
NTPC reported a consolidated total revenue of INR 1,65,109.8 crore in FY 2024. This was a decline of around 5.3% from INR 1,74,271.2 crore in FY 2023. The decline was attributed primarily to lower sales volumes and moderated fuel costs. However, the consolidated net profit reached INR 19,355.7 crore, with 25% YoY growth, despite the revenue dip. The reasons attributed were higher incentives and cost efficiencies from captive coal mines.
