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NTPC signs a business transfer agreement (BTA) with its subsidiary

Aug 18, 2023

By: BlinkX Research Team

On Thursday, the state-owned power company NTPC signed a business transfer agreement (BTA) to hive off its mining businesses, which include six coalfields, to its subsidiary NTPC Mining Ltd.

"NTPC Ltd and NTPC Mining Ltd (NML) have executed the BTA on August 17, 2023, in New Delhi. The BTA shall become effective upon completion of the conditions precedent mentioned in the BTA," a BSE filing stated.

The company informed the stock exchanges on July 29, 2023, that the Board of Directors of NTPC Ltd had approved the transfer of its six coal mines and associated coal mining businesses to its wholly-owned subsidiary NTPC Mining Ltd under a Business Transfer Agreement.

It stated that the six coal mines that comprise the coal mining business, together with its associated assets and liabilities, were being transferred from NTPC books to NML.

The Audit Committee and Board of Directors gave their approval to the deal.

Based on book value as of the audited financials as of March 31, 2023, the consideration for this transaction is Rs 7,794.99 crore, and it will be paid in a combination of cash, equity shares, and debt liabilities.

On the day the transfer of the business is complete, the consideration will be adjusted in accordance with the updated coal mining business balance sheet.

Revenue from the proposed transfer of the coal mining business is estimated to be Rs 4,011.93 crore in FY 2022–2023; this is 2.25 percent of the NTPC's revenue of Rs 1,77,977.17 crore (on a consolidated basis) for FY23.

As of March 31, 2023, the net worth of the coal mining business was Rs. 7,794.99 crore or 5.30 percent of NTPC's net worth of Rs. 1,47,023.17 crore (total equity attributable to owners on a consolidated basis) at that time.

On August 29, 2019, NTPC Mining Ltd was established as a fully owned subsidiary of NTPC Ltd to conduct mining activity.

Source: Media Reports