Key Points
- PSU CFOs are expanding beyond traditional finance into technology, risk and strategic capital allocation
- Technology investments increasingly demand enterprise-wide returns, resilience gains and stronger financial governance from CFO
- AI, data and digital systems are becoming central tools for managing enterprise risk
For Virendra Malik, the financing challenge at NTPC is not simply how much capital India’s largest power producer can raise. It is how to finance several businesses with very different risk and return profiles without weakening the balance sheet that must support them.
Malik, Executive Director (Finance) at NTPC, said the company had been looking at roughly ₹4 lakh crore of standalone capital expenditure over the coming decade, alongside about ₹1.25 lakh crore of investment through subsidiaries and joint ventures.
Thermal generation, he said, would remain part of that equation. Its regulated returns provide cash that can help finance expansion into renewable energy, nuclear power and storage. “That is the way I am getting my cash from. That is my cash, and that is where I need to invest,” Malik said.
The numbers have continued to move since those remarks, illustrating the scale of the financing challenge. NTPC now operates more than 90 GW of capacity and has set a target of 149 GW by 2032, including 60 GW of renewable capacity.
Its more recent public roadmap envisages roughly ₹7 lakh crore of group capital expenditure by 2032 across conventional generation, renewables, storage, pumped hydro, nuclear power and newer energy businesses.
Across India’s public sector, that expansion points to a wider change in the finance function. Capital is being committed to the energy transition, infrastructure, automation and digital systems at the same time that CFOs must contend with volatile commodity prices, climate risk, cyber exposure and increasingly sophisticated financial models.
Technology runs through much of that change, but largely as a finance question: what should be funded, how should its return be measured, what new risks does it create and what existing risks can it reduce?
Senior executives from NTPC, Cement Corporation of India, Indian Railway Finance Corporation, Multi Commodity Exchange of India and National Seeds Corporation recently spoke about these issues at a discussion on financial leadership in public sector enterprises.
Taken together, their experiences show how the traditional finance toolkit of budgeting, borrowing, cost control and project appraisal is extending into a broader exercise in capital allocation and enterprise risk.
The ₹4 lakh crore question
NTPC provides the clearest example because of the size of the capital involved. The company does not intend to abandon thermal generation while pursuing cleaner sources of energy. The existing business continues to produce regulated returns and cash, making it a source of financing for the transition rather than simply a legacy asset to be replaced.
At the same time, NTPC has sought to ring-fence parts of its renewable business and finance them through different channels.
Malik pointed to joint ventures with state governments and other public enterprises, equity participation by partners and access to green finance as ways of avoiding a structure in which the parent company has to provide all the capital.
State governments and other PSUs are becoming equity partners in some ventures, while the renewable business can also tap pools of capital that may price green assets differently from conventional generation. That matters because a power company’s financing problem becomes more complicated as its portfolio broadens.
A mature thermal station earning regulated returns, a solar project, a pumped-storage facility and a nuclear plant cannot necessarily be financed or assessed in the same way. Their construction periods, regulatory frameworks, cash-flow profiles and risks differ substantially.
For the CFO, the task is therefore not merely to minimise borrowing costs. It is to decide which balance sheet should carry which risk, how much leverage each business can sustain and when outside equity or a separate financing vehicle produces a better outcome than funding everything through the parent.
Malik said NTPC’s debt-equity position also gives it room to raise additional debt, while subsidiaries and joint ventures are expected to carry a growing share of investments in renewable energy, nuclear power and pumped storage.
NTPC’s broader capex ambition of about ₹7 lakh crore makes that financing architecture increasingly important. The company is targeting 149 GW of capacity by 2032 and 244 GW by 2037.
The principle extends beyond the power sector. When an enterprise enters several capital-intensive businesses with different risk profiles, capital structure itself becomes part of strategy.
Old ROI calculation stops being enough
Pradeep K Chand, Director (Finance) at Cement Corporation of India Limited, sees a related change on the investment side. For decades, the first question put to many large capital proposals was straightforward: what is the return on investment? Chand argues that the question remains necessary but is increasingly insufficient.
Green-energy investments, automation and other technology spending can affect costs, competitive position, operational risk and the long-term viability of the core business. A proposal may look relatively unattractive when judged only on the cash flows generated by that individual project while producing a much larger benefit, or preventing a larger loss, at the level of the enterprise.
Chand calls the broader test “enterprise ROI”, examining capital allocation alongside risk management, cost leadership, competitiveness and long-term sustainability. “It is important for the business to go for the enterprise ROI, not individual ROI,” he said.
The idea is particularly relevant in industries such as cement, steel, power and refining, where assets are long-lived and technological shifts can change production economics well before an existing plant reaches the end of its accounting life.
That does not mean every technology project can be labelled strategic and exempted from financial scrutiny. In practice, it makes appraisal harder. Management must identify the additional enterprise benefit it expects, quantify that benefit where possible and decide whether the investment is genuinely protecting future cash flows or simply adding cost under the banner of transformation.
Technology has also altered the old boundary between finance and IT. Traditionally, Chand said, IT in asset-heavy industries was often treated primarily as capex or a cost head, with finance scrutinising spending on ERP systems and related projects. That becomes less useful when technology starts changing the business process itself.
“Digital transformation is not an IT project,” Chand said. “It is about strategy and leadership.”
Finance still has to determine whether technology investment creates an acceptable enterprise return. Technology leadership has to ensure that the investment works, remains secure and supports the business. The board has to connect the two.
The issue, then, is not whether finance should control technology. It is that technology decisions can now carry financial consequences large enough that the CFO cannot remain outside them.
Technology moves inside risk management
For a financial institution, those consequences can reach directly into lending, capital planning and asset monitoring. Sunil Kumar Goel, Executive Director (Finance), Indian Railway Finance Corporation said technology is used across IRFC’s financing cycle, from obtaining information from borrowers and appraising projects to raising funds, monitoring assets and tracking compliance.
It also helps the lender assess which funding sources and maturities to use and how changing interest-rate and economic conditions could affect those decisions. “Technology is giving us an analysis to support our decision,” Goel said. The operating scale makes that significant.
Goel described IRFC as managing assets of roughly ₹5 lakh crore with a comparatively small workforce. Public filings broadly support the scale: IRFC reported assets under management of ₹4.60 lakh crore in March 2025 and ₹4.846 lakh crore in March 2026. Its FY2024-25 annual report reported a workforce of 45 people.
Such operating leverage increases the importance of systems that support monitoring, compliance and decision-making as the portfolio expands. Raising and lending money is only one part of the financing cycle. The asset then has to be monitored through the tenure of the loan, sometimes across changing economic, sectoral and interest-rate conditions.
IRFC has sector-specific risk-analysis modules and is implementing digital models to estimate future capital requirements. Goel also referred to expected-credit-loss models and automated monitoring intended to generate an “early warning signal” when stress begins to emerge in an asset.
For finance and risk teams, that is where much of the value of advanced analytics lies. The objective is not simply to automate a credit decision. It is to process more information, identify deterioration earlier, assess capital requirements and direct human attention towards emerging problems.
The greater use of models also creates a governance requirement of its own. The Reserve Bank of India has increasingly focused on responsible AI in finance, including questions around explainability, data quality, bias and governance, while also developing a broader approach to model risk.
As predictive systems influence more financial decisions, finance and risk executives need to understand not only what a model predicts but how it was built, how it is validated, what assumptions drive it and how much exposure is being influenced by its output.
For lenders, the relevant question is therefore not simply whether AI is being used. It is where models are informing decisions, how they are tested and where human judgement and accountability remain necessary.
CFO cannot control commodity prices, but can control exposure
For companies dependent on commodities, a different risk can undermine project economics long after a contract has been won: the price of the input can change before the contract is executed.
Chittaranjan Rege, Head of Department, Base Metals at Multi Commodity Exchange of India Limited, gives the example of a company that wins a tender today but has to execute it over the next six months.
The expected margin may be calculated using current raw-material prices. There is no guarantee that copper, aluminium, energy or another commodity will cost the same when the company actually has to make the purchase.
That uncertainty can matter as much as the price originally negotiated by the procurement team.
Commodity derivatives allow a company to hedge or benchmark some of that exposure so that movements in physical prices do not automatically erode the margin assumed when the contract was signed.
Participants can hedge and benchmark their prices, Rege said, so that “the margins remain as they have been budgeted originally”. For commodity-intensive PSUs, the distinction is important.
A procurement team can negotiate a favourable purchase price and still see project economics deteriorate if the underlying market moves sharply before execution. Financial prudence therefore involves not only securing a good price but deciding how much future price uncertainty the enterprise is prepared to carry.
Hedging is less about predicting whether a commodity will rise or fall than about determining the amount of price risk a company wants to leave on its balance sheet. The mechanism for managing that exposure is itself dependent on technology.
MCX is an electronic marketplace. Orders, matching, clearing, margining and settlement depend on digital infrastructure, as do the brokers and other participants connected to the exchange.
Technological changes therefore have to work across that wider ecosystem. Rege said MCX conducts mock sessions so participants can test systems and new functionality before changes are introduced.
Algorithmic strategies are also subject to controls. Rege said strategies have to be approved and tested before they are allowed to transact on the exchange. SEBI‘s framework for commodity derivatives similarly imposes controls intended to maintain orderly markets and liquidity.
The wider point for companies using such markets is that managing one financial exposure can create other operational and technology dependencies. Hedging changes the risk being carried. It does not make risk disappear.
Climate risk as concentration risk
For National Seeds Corporation, exposure has a physical geography. Agriculture is inherently vulnerable to rainfall, temperature, drought, cyclones and other regional weather patterns. Dr Krushna Chandra Sahoo, Director (Commercial) at NSC, said the organisation spreads seed production across different agro-climatic regions rather than concentrating it in one location.
India’s agro-climatic zones do not face identical risks. Some regions are more exposed to cyclones, some to drought and others to variations in rainfall or temperature.
The response follows the same principle used to manage concentration risk in a financial portfolio: avoid allowing a single adverse event to threaten the entire production base.
If drought affects one area or a cyclone hits another, geographical diversification can reduce the probability that the full production programme is disrupted at the same time. Climate-resilient varieties and adjustments to planting periods add another layer of protection.
Climate risk in that sense becomes a supply-chain risk, an inventory risk and a revenue risk. It can also become a capital-allocation question. An organisation may have to spend more today on alternative production locations, water systems, new seed varieties or other resilience measures to lower the probability of larger losses in the future.
The government said in July that 2,996 climate-resilient field-crop varieties had been released and notified between 2014 and 2025, including varieties designed for drought, floods, salinity and heat stress.
NSC is also using technology in its interactions with growers, dealers and consumers and in the management of land and water. “We invest massively in the technology,” Sahoo said, pointing in particular to water-management practices on NSC farms.
Physical diversification and digitalisation may appear to address different problems, but both influence the resilience of the underlying business. One reduces dependence on a particular geography. The other can improve access, monitoring and operating efficiency.
For finance chiefs, the significance lies in how such decisions ultimately affect cash flows, capital requirements and the capacity of the balance sheet to absorb disruption.
That connection runs through each of these businesses. A power project may have an attractive standalone return but still require the right financing structure to prevent excessive pressure on the parent balance sheet. A technology investment may generate value through lower risk or greater efficiency rather than through direct revenue. A profitable contract can lose its economics if commodity prices move sharply. A geographically concentrated supply chain can become vulnerable to climate disruption.
The traditional questions of finance have not disappeared: where should capital go, what return should it earn, how should it be funded and what could put that return at risk? What is changing is the information required to answer them.
As India’s public-sector enterprises commit capital to cleaner energy, infrastructure and digital systems, financial discipline will increasingly depend not simply on raising money or controlling expenditure but on understanding where risk sits before the capital is committed.
Your Questions, Answered
Why is NTPC not abandoning thermal power despite its green energy push?
Thermal generation produces regulated returns and cash that help finance expansion into renewables, nuclear and storage. The existing business funds the transition rather than competing with it.
What is enterprise ROI and why does it matter for PSU investments?
Enterprise ROI examines capital allocation alongside risk management, competitiveness and long-term sustainability. Individual project returns may look unattractive while producing larger benefits at the enterprise level.
How does IRFC manage nearly ₹5 lakh crore in assets with just 45 employees?
The corporation uses technology across its financing cycle, from borrower appraisal to asset monitoring, with AI-driven expected-credit-loss models that generate early warning signals when stress emerges.
Why do commodity-intensive PSUs need hedging strategies?
Input prices can change between winning a tender and executing the contract. Hedging allows companies to lock in margins rather than leaving price risk on the balance sheet.
