Ratings firm Fitch has assigned its highest long-term and short-term ratings to state-run NTPC with a stable outlook on the back of the sound regulatory regime in the country and the company's strong business position.
"Fitch Ratings has assigned India-based NTPC a national long-term rating of 'AAA(ind)' and a national short-term rating of 'F1+(ind)'...," it said in a statement.
An 'AAA' rating denotes the highest long-term rating and is assigned to issuers or obligations with the lowest expectation of default risk. A 'F1' rating indicates the strongest capacity for timely payment of financial commitments in the short-term.
"NTPC's ratings continue to benefit from a transparent regulatory regime which ensures recovery of all reasonable costs, including fuel, and provides a stable return on capital employed," Fitch Director (Asia-Pacific Energy & Utilities Team) Salil Garg said.
The agency said that NTPC's long-term supply agreements with state-owned coal companies mitigate any risk to availability of the mineral, which is a major component for power generation.
"The agency also notes that the regulatory push toward a competitive bidding regime for new projects from January, 2011, is unlikely to affect the tariff regime for NTPC's future capacities over the medium term as the company has already signed off-take arrangements for capacities up to 91 GW," Fitch added.
It said the ratings also continue to factor in NTPC's strong business position as India's largest electricity generator. The company had a 27.4% share of the country's total electricity output last fiscal.
"Over the past eight fiscals, NTPC has satisfactorily managed its receivables," it said.
The government has a stake of 84.5% stake in NTPC, which is engaged in construction and operation of power plants in India. The company directly owns and operates 22 plants across the country with a total capacity of 30,830 MW.
For the 2010-11 fiscal, NTPC posted a profit after tax of Rs 8,826.16 crore, compared to Rs 8,728.2 crore in the previous fiscal.
The company's net sales increased to Rs 53,721 crore during 2010-11 from Rs 46,169 crore in 2009-10, an increase of 16.36%.
