NTPC Green Energy Ltd

We are promoted by NTPC Limited, which has a legacy of around five decades, is one of India`s largest power companies, and has experience in operating and maintaining power stations efficiently and in acquiring land for large power projects throughout India.

As of September 30, 2024, our Portfolio consisted of 16,896 MWs including 3,320 MWs operating projects and 13,576 MWs projects contracted and awarded. We are in the process of constructing 36 renewable energy projects in 6 states consisting of 13,576 MWs, contracted and awarded.

We along with the NTPC Group have a strong track record of developing, constructing and operating renewable power projects, driven by our experienced in-house management and procurement teams. Our superior execution capabilities are demonstrated by 5 decades of successful operations by NTPC Limited.

With strong parent support and diversified portfolio with long term PPA, the Company is able to maintain a healthy interest coverage ratio. (Source: CRISIL Report, November 2024). As of September 30, 2024 and March 31, 2024, our interest coverage ratio was 2.60 times and 2.64 times (on a restated basis), respectively, and, as of March 31, 2023 and March 31, 2022, was 2.80 times and 3.17 times (on a special purpose carvedout basis), respectively.

We benefit from a strong balance sheet and AAA rating from CRISIL as of May 8, 2024. We believe that our ability to leverage the NTPC Group`s outstanding credit and its long-term relationships with financial institutions will continue to provide us with access to a low cost of capital.

Our senior management team led by the Board of Directors, have decades of experience in the Indian power industry.

There is a concentrated pool of utilities and power purchasers for electricity generated by its plants and projects. Accordingly, the company derived a significant portion (more than 87%) of its revenue from operations from the company top five offtakers in Fiscal 2024, with its single largest offtaker contributing around 50% of the company`s revenue from operations in Fiscal 2024. Loss of any of these customers or a deterioration of their financial condition could adversely affect its business, results of operations and financial condition.

Its business and profitability is substantially dependent on the availability and cost of solar modules, solar cells, wind turbine generators and other materials, components and equipment for its solar, wind and other projects. The company is dependent on third party suppliers for meeting its materials, component and equipment requirements, and its top 10 suppliers accounted for 92.65% and 77.71% of the company supplies in the six months period ended September 30, 2024 and in Fiscal 2024, respectively. Any disruption to the timely and adequate supply, or volatility in the prices of required materials, components and equipment may adversely impact its business, results of operations and financial condition.

The company renewable energy project construction activities may be subject to cost overruns or delays which may adversely affect its business, results of operations, financial condition and cash flows. Further, its future growth is significantly dependent on successfully executing its contracted and awarded projects. In the event, the company is not successful in executing its contracted and awarded projects, the company`s business, results of operations and financial condition may be adversely impacted.

In the six months period ended September 30, 2024 and in Fiscal 2024, 62.20% and 61.74%, respectively, of its operating renewable energy projects are concentrated in Rajasthan. Any significant social, political, economic or seasonal disruption, natural calamities or civil disruptions in Rajasthan could have an adverse effect on its business, results of operations and financial condition.

Its Special Purpose Carved-Out Combined Financial Statements and Carved-Out Operating Data for Fiscal 2023 and Fiscal 2022 may not be representative of its results as an independent company.

Its Power Purchase Agreements may expose it to certain risks that may adversely affect the company`s business, results of operations and financial condition. In addition, the company is required to give performance bank guarantees guaranteeing the commencement of supply of power which could adversely affect its results of operation if invoked. Further, the company revenue from operations are exposed to fixed tariffs, changes in tariff regulation and structuring.

The acquisition of the purchased renewable energy assets is subject to certain post closing actions, which are currently in the process of being fulfilled. Any failure to fulfil the post-closing actions may reduce the anticipated benefits of the acquisition, may impose limitations or costs on the Company or result in a material adverse effect on the business, results of operations, financial condition and prospects of the Company.

The company intend to use a majority of its Net Proceeds from the Issue towards the repayment or prepayment, in full or in part, of certain outstanding borrowings availed by its wholly owned Subsidiary, NTPC Renewable Energy Limited.

The company is dependent on its relationship with its Corporate Promoter, NTPC Limited, and any adverse developments in such relationship may adversely affect its business and reputation.

The company has incurred substantial indebtedness, and an inability to comply with repayment and other covenants in its financing agreements could adversely affect the company`s business and financial condition.

The company faces significant competition from both traditional and renewable energy companies and any failures to respond to market changes in the renewable energy industry could adversely affect its business, financial conditions and results of operations.

Its inability to collect receivables in time or at all from its utility offtakers which adversely affect the company`s business, results of operations and financial condition.

The company faces risks and uncertainties when developing its renewable energy projects, which may result in delays in commissioning which could materially and adversely impact its business, results of operations, financial condition and cash flows.

Its in-house procurement operations for solar projects expose the company to certain risks. its may incur unexpected expenses if the suppliers of components in its power projects default on their warranty obligations.

The Company accounts are subject to a supplementary audit by the office of the Comptroller and Auditor General of India, and any qualifications in their report on its financial statements could adversely affect the trading price its Equity Shares.

There is a time gap between making significant upfront investments in its solar, wind and other renewable energy projects and receiving revenue which could have an adverse effect on its business, results of operations and financial condition.

The company operates in a competitive industry and as such may not be able to acquire rights to develop and generate power from new solar projects through the competitive bidding process.

Its Corporate Promoter, NTPC Limited has, in the five years preceding the date of this Red Herring Prospectus, faced regulatory actions by regulators and had certain fines levied on it. Any further non compliance by its Corporate Promoter of the SEBI Listing Regulations or any other regulations applicable to it in the future, may adversely affect its business, results of operations and prospects.

The regulatory and policy environment affecting the renewable energy sector in India impacts its business, results of operations and financial condition and may become more stringent in the future.

The company does not own its Registered and Corporate Office. A failures to renew its existing lease arrangements at commercially favourable terms or at all may have a material adverse effect on its business, financial condition and results of operations.

Certain unsecured loans have been availed by the company which may be recalled by lenders.

Due to its substantial indebtedness, volatility in interest rates could adversely affect the company`s business, results of operations, financial condition and cash flows.

All its employees are on secondment from the company parent company, NTPC Limited, the terms of which may be altered at any time. Its may be subject to industrial unrest and increased employee costs, which may adversely affect its business and results of operations.

The company`s business is seasonal and its operating results may fluctuate from period to period, which could make the company`s future performance difficult to predict and could cause its operating results for a particular period to fall below expectations.

Any downgrade of its credit ratings or NTPC Limited`s credit ratings could adversely affect the company`s business.

The generation of electricity from solar and wind sources (including its capacity utilization factor)depends heavily on suitable meteorological and climate conditions. Unfavourable weather conditions could have a significant impact on its business prospects and future financial performance. Further, the physical conditions surrounding the wind turbine generators and solar farms may interfere with the operational performance of these assets.

The Company is not in compliance with certain provisions of the SEBI Listing Regulations and the SEBI ICDR Regulations.

Its funding requirements and the proposed deployment of Net Proceeds have not been appraised by any bank or financial institution or any other independent agency and its management will have broad discretion over the use of the Net Proceeds.

The company has substantial capital expenditure requirements and may requires additional financing to meet those requirements, which could have an adverse effect on its results of operations and financial condition.

In the six months period ended September 30, 2024 and in Fiscal 2024, 90.78% and 93.77%, respectively of its revenue was from solar energy projects, and 4.65% and 2.40%, respectively, of its revenue from operations was from wind energy projects. The limited operating history of its solar and wind projects may not serve as an adequate basis to judge its future prospects, results of operations and cash flows.

Load dispatch centres may order the curtailment of renewable energy operations. Any such curtailment may adversely affect its business, results of operations and financial condition.

The company is subject to credit and performance risk from its suppliers and contractors. If the company suppliers and contractors fails to perform as required under its agreements with them the company`s business, results of operations and financial condition may be adversely affected.

Restrictions on solar equipment imports and wind turbine generator imports and other factors affecting the price or availability of solar equipment, may increase its business costs.

The operational failures of existing interconnection facilities or transmission facilities or the lack of adequate capacity of such interconnection or transmission facilities or evacuation infrastructure may adversely affect its ability to deliver electricity to the company`s counterparties which may result in lower revenues. In addition, its business, results of operations and financial condition are exposed to the extent and reliability of the Indian power grid and its dispatch regime.

Technical problems may reduce energy production below its expectations which materially and adversely impact the company generating capacity.

If the company does not successfully develop new renewable energy sources or systems like its green hydrogen, green chemicals and energy storage systems initiatives in a timely and cost-effective manner, its business, financial condition, cash flows and results of operations may be adversely affected.

The renewable energy market in India is at a relatively early stage of development and trends in the renewable energy industry are based only on limited data and may not be reliable.

Its profitability is dependent in part on the company ability to manage costs during the terms of its project PPAs and operate its solar and wind power projects at optimal levels. If the company unable to manage the costs effectively or operate its power projects at optimal levels, the company`s business, results of operations, financial condition and cash flows may be adversely affected.

Any failures by it to adapt to industry trends and evolving technologies in the renewable energy sector to meet its customers` demands may materially adversely affect the company`s business and results of operations.

The reduction, modification or elimination of government and economic incentives may reduce the economic benefits of its existing renewable energy projects and the company opportunities to develop or acquire new renewable energy projects.

Changes in technology may render its current technologies obsolete or requires the company to make substantial capital investments. Failures to respond to current and future technological changes in an effective and timely manner may adversely affect its business and results of operations.

Its inability to successfully implement some or all of the company`s business strategies in a timely manner or at all could have an adverse effect on its business. Further, the company failures to manage growth effectively may adversely impact its business, results of operations and financial condition.

The company is dependent upon the experience and skill of its Key Managerial Personnel and Senior Management. Except for its Executive Directors, all Key Managerial Personnel and Senior Management of the Company are on secondment basis from NTPC Limited. If the company is unable to attract or retain such qualified personnel, this could adversely affect its business, results of operations and financial condition.

Its Promoters and certain of the company Directors may have interests in the Company other than reimbursement of expenses incurred or normal remuneration or benefits. Further, the company has also acquired certain properties and land from its Corporate Promoter since the company incorporation.

The company has issued Equity Shares during the preceding 12 months from the date of this Red Herring Prospectus at a price which may not be indicative of the Issue Price.

The company may not be successful in pursuing joint ventures, strategic partnerships, and future joint ventures and partnerships. Any failures in developing the projects through partnerships and JVs could adversely affect its business, results of operation and financial condition.

There are outstanding legal proceedings against the Company, its Corporate Promoter and its Material Subsidiary. Any adverse decision in such proceedings may render it/them liable to liabilities/penalties and may adversely affect its business, results of operations and financial condition.

Its inability to make timely payment of the company statutory dues could result it into paying interest on the delay in payment of statutory dues which could adversely affect its business, the company results of operations and financial condition.

Its Statutory Auditors have included in their examination report emphasis of matters that were included in the underlying auditor`s reports on its consolidated financial statements for the year ended March 31, 2024 and its interim consolidated financial statements for the six months period ended September 30, 2024 and September 30, 2023.

The company does not own the "NTPC" trademark, name or logo and there is no formal agreement with NTPC limited for the use of the "NTPC" trademark. Further, its logo and name have not been registered as trademarks. Accordingly, its ability to use the company`s name or logo may be impaired. Its also relies on a combination of trade secret and contractual restrictions to protect its intellectual property. If the company is unable to protect its intellectual property rights, its business, results of operations and financial condition may be adversely affected. As part of its operations, the company might infringe upon the intellectual property rights of others and any misappropriation of its intellectual property could harm its competitive position.

Delays in obtaining, or a failures to maintain, governmental approvals and permits required to construct and operate its projects may adversely affect such projects and the company`s business.

Its operations have inherent safety risks and hazards that require continuous oversight and substantial insurances coverage.

Its operations are subject to governmental, health, safety and environmental regulations, and its may have to incur material costs to comply with these regulations.

Its may not be able to find suitable sites for the development of renewable energy projects. Any failure by it to secure suitable sites may materially impact the development of a project and may also result in noncompliance with related conditions under project agreements.

Land title in India can be uncertain, and it may be subject to onerous conditions which may restrict its use.

The company does not own all the land on which its operate and its leases are subject to conditions and may not be renewed.

One of its borrowing facilities is supported by a guarantee by the company`s Promoter and may need to be refinanced if such guarantee was withdrawn for any reason.

Fluctuations in foreign currency exchange rates may negatively affect its cost of sales and gross margins and could result in exchange losses.

Maintenance and expansion of its power generation facilities are provided by third-parties and involve significant risks that could result in reduced power generation and financial results.

The company is dependent on contract labour and any disruption to the supply of such labour for project execution and Operation & Maintenance or its inability to control the composition and cost of the company contract labour could adversely affect its operations.

Its may not have sufficient insurance coverage to cover the company`s economic losses as well as certain other risks, not covered in its insurance policies, which could adversely affect business, results of operations and financial condition.

The average cost of acquisition of Equity Shares held by its Corporate Promoter NTPC Limited, is Rs. 10 per share, which may be less than the Issue Price.

The company has in the past entered into related party transactions and may continue to do so in the future.

Certain of its Directors does not have prior experience on the board of directors of publicly listed companies which may be detrimental to its Board of Directors when making key decisions.

After the completion of the Issue, its Corporate Promoter will continue to collectively hold substantial shareholding in the Company. Further, its Corporate Promoter is controlled by the Government of India acting though the Ministry of Power.

Any variation in the utilisation of the Net Proceeds would be subject to certain compliance requirements, including prior shareholders` approval.

Its Subsidiaries and Joint Venture may not pay cash dividends on shares that the company hold in them. Consequently, the Company may not receive any return on investments in its Subsidiaries and Joint Ventures.

Failures or disruption of the company IT systems may adversely affect its business, results of operations and financial condition.

Failures to maintain confidential information of its customers could adversely affect the compan`s results of operations or damage its reputation.

Its employees may engage in misconduct or other improper activities, including noncompliance with regulatory standards and requirements.

If the company is unable to establish and maintain an effective internal controls and compliance system, its business and reputation could be adversely affected.

Information relating to the installed capacity, capacity utilisation factor and of its renewable energy projects included in this Red Herring Prospectus are based on various assumptions and estimates and future generation and capacity may vary.

Its Promoters and Directors may have interests in entities, which are in businesses similar to its and this may result in conflict of interest with the company.

Certain sections of this Red Herring Prospectus contain information from the CRISIL Report which the company commissioned and purchased and any reliance on such information for making an investment decision in the Issue is subject to inherent risks.

The company has in this Red Herring Prospectus included certain Non-GAAP Measures that may vary from any standard methodology that is applicable across the Indian renewable energy industry and may not be comparable with financial information of similar nomenclature computed and presented by other companies.