NTPC pays back Rs10,307 crore as bonus debentures to govt, other shareholders

26 Mar 2015

NTPC limited has issued more than 6,180 million bonus debentures amounting to Rs7,725.76 crore to the central government as part of a of Rs10,306.83-crore issue, which is the biggest offer of bonus debentures in the country and also the first by a PSU.

The bonus debentures carry a coupon rate of 8.49 per cent per annum, payable annually. NTPC has already issued, by way of bonus, one fully paid-up, secured debenture of Rs12.50 each, for every one fully paid-up equity share of Rs10 each held by its members.

The government of India holds 74.96 per cent equity stake in the state-run power producer.

In addition to the bonus debentures, the government also received Rs2,060.75 crore as dividend distribution tax on the debentures.

As of 30 March 2014, the company had free reserves of over Rs72,000 crore and a cash balance of Rs15,300 crore.

Since the company is in regulated generation business, there is little room for improvement of profitability. High net worth of around Rs85,000 crore depresses return on equity (ROE), which works out to only around 12.78 per cent on reported basis. And, hence the issue of bonus debentures to ensure capital optimisation.

Since the company has entered in its 40th year of incorporation, there was no better way to reward the shareholders than issuing bonus debentures, NTPC said in a release.