Category
🗞
NewsTranscript
00:00We're going to talk to one management and we're going to also talk to an analyst to
00:04get us perspective with regard to elections in this particular segment of the Small and
00:10Mid Cap show.
00:11Let's quickly take it straight off to our first management, NLC India stock.
00:16Under a bit of pressure post the Q4 results, we have Prasanna Kumar Motupalli, who is the
00:20Chairman and Managing Director at NLC India joining us.
00:23So first off, talk to us about margins.
00:25Why have margins compressed?
00:26Of course, the higher base in terms of revenue for Q4 FY23 versus Q4 FY24 is understandable.
00:33But what's caused the margin compression?
00:35Okay.
00:36In the quarter four of the last financial year, our operation performance was excellent.
00:45Whatever losses we had in the first three quarters because of the land acquisition issues,
00:51they could be compensated and we could generate electricity maximum.
00:57And the lignite and coal production was also maximum in the quarter four, because of which
01:03in the last financial year, we could produce lignite plus coal at all time highest quantity.
01:10And all our power generation stations, 17 stations were in operation to meet the requirement
01:16of the grid.
01:17So the quarter four compared to other three quarters, it was a very good performance resulting
01:24in very good performance in the financial year.
01:26Understood.
01:27But Mr. Prasanna, I am trying to understand that the margins have significantly gone down.
01:33So why has that happened, reasons for the same and going forward, do you expect them
01:37to improve?
01:38Yes, madam.
01:39Last financial year, as you know, madam, in the first three quarters, there was problems
01:45in the lignite production because of the land acquisition issues.
01:50Because of that, on a continuous basis, we were losing the generation capacity.
01:55But last year, we could complete the major land acquisition activities and substantial
02:01portion of the land is in our possession.
02:03And also the long pending issue of diversion of river, Paramanar river was also completed.
02:09So that facilitated uninterrupted mining operations for the next 25 years.
02:14So with all these things, we are doing well compared to the previous financial year in
02:20the current financial year.
02:22And going forward, this will further improve and our lignite and coal production as well
02:28as the power generation will be further improved.
02:31Understood.
02:32So are you suggesting that margins will again breach 25% go above 25% Q1 itself?
02:43We cannot exactly say the 25% but there will be certainly an improvement over the last
02:48financial year and the last quarter.
02:50Understood.
02:51Mr. Prasanna, I also want to understand as to, you know, what is the under recovery number
02:56being like in FY24 because, you know, your power generation revenues have been impacted
03:01because of that.
03:02So one, what is the under recovery number being like in FY24 and going forward, how
03:07is it set to be, you know, improved in FY25?
03:12Our under recovery in the last financial was around 600 to 650 crores.
03:18That was mainly attributed to the shortfall in lignite production because of the land
03:22reasons and also the technical problems in TPS2 expansion.
03:28And both the issues we addressed in the land acquisition, we already acquired major portion
03:34of the land.
03:35So that under recovery will not be there in the next financial year and already in the
03:39quarter one that under recovery is not there.
03:42And similarly, the other part of the technical problem in TPS2 expansion, the modification
03:49activity we are taking for the one unit in the next month and the second unit in the
03:57second half of this financial year.
03:59With these things, finally, we are targeting to reduce the under recovery to minimum possible
04:05in the current financial year itself and from next financial year onwards, it will be zero.
04:11Understood.
04:12And so, what's the guidance like for FY25 in terms of top line and margins?
04:17Good.
04:18Top line and margins will be substantially better than the previous financial year because
04:28the major issues that resulted in reduced revenue and PAD are addressed.
04:35So in the next financial year, the performance is much better than the previous financial
04:41year.
04:42Understood.
04:43So, sir, I also want to understand that you have two projects which are set to be completed
04:49in FY25.
04:50So, what kind of revenue potential and margin potential are you expecting from these two
04:54projects?
04:56Madam, we are targeting completion of our Gattampur thermal power project which is almost
05:02two gigawatt project.
05:03The first unit we are about to declare the commercial operation from next month and subsequently,
05:10the balance two units also we are targeting for the commercial operation in the current
05:14financial year.
05:15So, with the start of operation from all these three units, the PAD will be increased by
05:24around 500 crores and because one unit will be from next financial next month and others
05:32will be in the subsequent part of the financial year.
05:35So, from next year onwards, once all three units are in operation, there are around 600
05:39to 700 crores contribution will be there in the PAD.
05:43This is regarding the Gattampur thermal power project.
05:46We are also expecting capacity addition of around 300 megawatt at Barsim Sir in the solar
05:53capacity.
05:54There we are expecting increase in the profit of around 150 crores in the PAD.
06:02Understood.
06:03So, cumulatively put together, you are expecting almost a 900 crore PAD increase only from
06:11these two projects.
06:12Is that correct?
06:13Exactly.
06:14Understood.
06:15And that is by FY26.
06:16Yes.
06:17Exactly.
06:18And this is in addition to the growth that you are likely to clock on your current capacities
06:24as well.
06:25Exactly.
06:26Understood.
06:27So, a substantial PAD increase expected.
06:33What's the new investments that you are looking at beyond FY26?
06:37What's the new growth drivers?
06:39As on date, we are having 1.4 gigawatt capacity of renewable capacity.
06:44We are having 2 gigawatt renewable capacity projects in pipeline, 2 gigawatt in solar
06:55and around 50 megawatt of wind in the state of Gujarat and Rajasthan is already in pipeline.
07:01We are expecting the completion of these projects by the financial year 26.
07:07And subsequently beyond 26, we already entered an MOU with the Rajasthan government for capacity
07:14addition of 1,000 megawatt of solar and 125 megawatt of lignite-based power generation.
07:21That also will be coming after 26.
07:23And we are also having an MOU with the government of Assam for addition of 1,000 megawatt solar
07:28capacity.
07:29That also will be coming after 26.
07:32Also, we are envisaging 2 into 60 megawatt, 1320 megawatt lignite-based power station
07:40at Naiveli.
07:42Already it is tenderized.
07:43So, that capacity will also be coming in the financial year 29.
07:48In addition to that, our Talabhera thermal power project, which already, the work has
07:52already started, 3 into 800 megawatt, that will be coming in the financial year 29.
07:58And the second stage of Talabhera thermal power project, we are going to tenderize and
08:02that is, we are expecting by the next month.
08:05So, that also will be coming after 26.
08:09So, then, sir, I want to understand that all of these projects that you have mentioned,
08:14what is the kind of revenue contribution you are expecting from all of these projects,
08:18you know, going forward beyond FY26?
08:21And how quickly do you think that you will get to a break-even for these projects?
08:27From the existing 6 gigawatt capacity, we are targeting more than 17 gigawatt capacity
08:32by 2030.
08:34And also in the mining fund also, from the existing around 44 million metric ton, we
08:40are targeting more than 100 million metric ton by 2030.
08:44For all these activities, a capex of around 1 lakh crore, we are planning to invest.
08:49And as on date, we are having regulated equity of around 9,000 crores.
08:54And by 2030, this will become almost 24,000 crores, where a return of around 15% is assured.
09:01So, we are expecting a substantial improvement in the PBT and PAT going forward.
09:09Understood.
09:10And, sir, one last quick question.
09:12So, if you're expecting your capacity to go from 6 to 17, that's almost triple of your
09:16capacity, do you expect this to be fully utilized by 2030?
09:22And secondly, what are the capacity utilizations right now and FY25, how are you expecting
09:27them to be?
09:29See, madam, as on date, the power requirement is growing like anything.
09:33If you take the CAGR of last 10 years, it is 6 to 7%.
09:37But last two, three years, the growth is more than 9%.
09:41And that growth is expected to continue in future also.
09:44So, taking all these factors into consideration, the capacity utilization factor of our thermal
09:50power stations is going to be maintained at more than 75% level.
09:59And we don't expect any backing down from these thermal power stations because there
10:05is a huge power demand going forward.