The IPO that everybody has been talking about for so long, and now it's finally opened for subscription. I'm talking about the NTPC Green IPO, which is open for subscription today. The issue, which is an entirely fresh issue of 10,000 crores, is the third largest IPO that you've seen for this year. It will be open until November 22nd, so you do have time to subscribe. It's already raised about 3,960 crores from anchor investors on day one. So far, the retail portion has already been subscribed, and overall subscription stands at about 27%. As you all know, NTPC Green is a leading player in India's renewable energy sector, backed by NTPC. It contributes nearly 17% of India's total installed capacity and 24% of total power generation. To discuss key details about the IPO, the vision going forward, and the journey so far, we are now joined by the top management of the company. Let's welcome Mr. Gurdeep Singh, CMD of NTPC Green Energy, and Mr. Jaykumar Shasan, Director of Finance of NTPC Green Energy. Warm welcome to both of you, and thank you for taking the time. Congratulations on kickstarting this D-Street journey. It's already started on a smooth note. Let me start by understanding with you, Mr. Singh, tell us about your journey so far for NTPC Green. NTPC is a marquee power player that all investors are used to tracking for decades, but NTPC Green is a newer baby. How does one differentiate between the two companies? Even NTPC shareholders who subscribed will get shares or a higher chance of allocation in this IPO, so they will be excited to know what beyond NTPC will NTPC Green offer.
Thank you. Just as you mentioned about NTPC, everybody thinks of power and NTPC's name instantly comes to mind. Similarly, going forward, think of green power and NTPC Green will come to everybody's mind. That is our endeavor. NTPC started the solar journey and signed power purchase agreements for renewable energy way back 10 years ago. Over time, we have developed a lot of core competency in our team. This company, NTPC Green Energy, was formed in 2022, and the assets were transferred to NTPC Green. In 2022, the capacity was hardly around 1,450 megawatts. Today, we have 3,300 megawatts. A lot of work is going on in different projects totaling around 11,000 to 16,000 megawatts. By the end of this financial year, March 2025, we will have a capacity of 6,000 megawatts. By next March, it will be 11,000 megawatts, and by March 2027, it will go up to 19,000 megawatts. In addition to solar and wind, we have also started working on storage solutions. We have already called for 1,500 megawatt-hours of battery storage, and we are working on the next important pillar, which is the future: the green molecule. We are working in all directions, and I am sure NTPC Green will follow much on the similar lines as NTPC has done. As you rightly said, with 17% of supply, we supply 25% of power. Similarly, NTPC Green Energy, with its kind of parental linkage, will be far better than any other company in the country.
Let's also get into the conversation, Mr. Shasan. Tell us how you are going to use the proceeds from the offering. It's a 10,000 crore fresh issue. You've mentioned in your DRHP that for the wholly owned subsidiary NTPC Renewable Energy, a sizable portion will go towards that, and some portion will be allocated for repayment of debt and general corporate purposes. Could you break it up for us and tell us out of the 10,000 crores, which goes where?
Out of the 10,000 crores we are raising through this, the proceeds will go for investment into the joint ventures and subsidiaries. The mainstay would be NTPC Renewable Energy Limited, where the chunk of capital expenditure and capacity addition is going to happen. It will be predominantly for capital expenditure purposes, but for some time in the initial period, we will be retiring some of the debts. There is around 17,000 crores of debt, and part of that will be retired. Subsequently, as capacity picks up, we will be raising more debt to fuel capital expenditure.
So sir, could you tell us from that 17,000 crores, after you repay the debt, how much will still remain on the books?
Close to 7,000 to 8,000 crores would still remain on the books.
And the debt-to-equity ratio, what is the expectation? Right now it's at 2.2. How are you looking to scale that down?
Initially, it will be scaled down, but future projects will be implemented with a debt-to-equity ratio of 80:20, so that would average out.
And for the renewable energy business, how much will be used? Can we say around 7,000 crores will be used?
I think the entire proceeds will broadly go towards renewable energy only, for capacity.
Let's also get into the conversation now, Mr. Singh. You talked about expansion plans, that by FY27 we could be expecting around 19,000 megawatts of capacity. How much of the current proceeds will be sufficient? How long will they be sufficient for your capacity expansion, and by how many years will you be comfortable with this fundraise? How soon will you have to return to the street?
By March 2027, as I explained, we will have 19,000 megawatts commissioned. Along with that, we are also working and investing in the development of new capacities. As of now, we have already infused equity of 7,500 crores in the company, and we have some retained earnings, so together it is 2,281 crores. With the 10,000 crores, we will be almost comfortable to have around 19,000 plus retained earnings as we go along. So we don't have any issue reaching up to 19,000 megawatts. For 19,000 megawatts, the total investment requirement is about 1.7 lakh crores. We are planning a debt-to-equity ratio of 4:1. This is only an intermediate step so that the funds are available for some time. This will be for retiring debt in the very short period, but our growth plans are much higher, and we will require a lot of capital. As you know, our ability to raise debt at a very competitive rate is far better than many others. Our rating is very good, AAA, and for international rating, it is kept at the sovereign rating. So we are in a position to raise debt at very competitive rates, and that will be one of the differentiators. Our investment is also in large-size projects, so those two things together make it a much more valuable company.
Mr. Singh, could you also help us understand right now you pointed out you are big on solar and wind, and you are now going to battery storage and then expanding to green fuel as well. Segment-wise, what is the contribution from solar and wind right now into your overall top line? Going forward, how is the segment contribution in terms of revenue going to be spread across?
As far as this 19,000 megawatts by March 2027 is concerned, there will be approximately 3,000 megawatts from wind and 16,000 from solar. Going forward, we envisage having almost 90% in solar and 10% in wind. But along with solar, there will be enough potential for having storage capacity, so there will be appreciable investment required, which at present we have not given figures for. Down the line, about three to four years, we will have to start investing in the green molecule also, which we are developing at present. Our hydrogen hub, for which we have already acquired land, and developmental work is going on.
So this land purchase is in Rajasthan? Since most of your projects are there, this green hydrogen hub is near Vishakhapatnam, in a place called Pimka. This is 1,200 acres, a coastal location. So this gives you a geographical edge, because right now the concentration was in Rajasthan, and now you are going down south with this expansion.
