NLC India's Capacity Expansion Plans
Transcript
00:00Good having you, Mr. Prasanna Kumar. Thanks for joining in.
00:03Some of the quarter, was it in line with what you estimated because it's turned out to be a very flat quarter.
00:10Could you have done better and do you expect to do better as the year goes by?
00:15What I see is that the quarter one is an outstanding quarter for NLP India.
00:21There is an all-round improvement in the performance of the company,
00:26both in lignite production, coal production and power generation.
00:31There is an increase of around 26% increase in the lignite production,
00:3535% increase in the coal production and more than 10% increase in the generation.
00:41And the profit also increased by 37%.
00:46So I don't think it's any flat type of performance.
00:51It's an excellent performance compared to last financial year.
00:55Mr. Kumar, sorry, the reason why I said it's a flat performance is because when I look at the revenue numbers,
01:00reported revenue is up 1.8% and reported EBITDA is down 9.4%.
01:07The reason being, although the operational performance, operational income improved a lot,
01:14there was some regulatory order because of which the operating margin reduced by 400, which is 0.4%.
01:25And as we are expecting the improvement in the performance, operating performance going forward,
01:32I think an excellent year ahead, the 24 to 25 and subsequent years.
01:39Okay. So could you tell us what is the kind of improvement that you expect in the operational performance?
01:45Because if indeed it was due to one offs, then I'm sure you will revert to normalcy in quarter two itself.
01:50What's the kind of improvement that what can see and why so?
01:54The last financial year, our plant availability factor was around 62%.
02:00And that was mainly because of the land acquisition problems we were having.
02:08But with support from central government and state government, we could solve the land acquisition problems.
02:14That is the reason why, since January onwards, we are doing full generation.
02:19So compared to last year, 62% plant availability factor, this year, quarter one, it is more than 75%.
02:26And plant load factor also increased to 60% this year, this financial year, it is more than 70%.
02:35And as the lignite production and coal production is increasing rapidly,
02:41we see better performance in the quarter two and balanced part of the current financial year.
02:48Okay. Okay. Let me try and ask about the capacities and then we'll come to the longer term plan.
02:55So when I look at what your guidance and your capacity expansion plans are, right,
02:59on renewable energy capacity from 1431 megawatts to 8,000 megawatts,
03:05thermal power capacity nearly more than doubled two and a half times, if I'm not wrong, to 10,465,
03:10mining capacity to be increased as well, nearly doubled by 2030.
03:14One, when do these capacities start coming on stream? By 2030 is a long way away.
03:21So do some of the capacities come on stream in the next one, two years? Part one of my question is that, sir.
03:26Part two of my question, are you adequately funded for all of these capacity expansion plans?
03:33As you rightly said, although our target is to increase our thermal capacity almost double
03:41and renewable capacity almost seven times,
03:45we are targeting to increase it to 10 megawatts in the recent revalidated corporate plan.
03:52This will, the capacity will be added in phase by phase.
03:56Immediately we are going to add our Gatampur thermal power station, which is three to 60 megawatts.
04:03The first unit of the Gatampur thermal power station near Kanpur,
04:07that is on the verge of commercial operation declaration.
04:11We are going to declare the commercial operation within the next one month.
04:15Subsequently the unit two also we are targeting for November of this financial year
04:20and unit three in the March of this financial year.
04:24So in this current financial year, two gigawatts of thermal capacity will be added.
04:29In addition to that, our many renewable projects are in pipeline.
04:36They will be coming, most of them will be coming in 2025-26,
04:40and 300 megawatts of our Barsingsar Rajasthan solar power plant,
04:45that we will be adding in the current financial year.
04:48So in the current financial year itself, we are targeting 2300 megawatt capacity addition.
04:54And in the pipeline, our Talaveera thermal power station, three to 800 megawatts,
05:01the foundation stone was laid by Honorable Prime Minister in the month of February.
05:06The activities are in fast progress, and the first unit will be commissioned in the year 2029-30.
05:13So similarly, all the solar projects which are in pipeline, almost around two gigawatts,
05:19the entire capacity will be added by next financial year 2025-26.
05:25Okay. So, and I presume you are adequately funded for these.
05:30Would you need to raise any equity capital?
05:32Exactly. For increasing the renewable capacity seven times,
05:38and increasing the thermal capacity from 4 gigawatts to 12 gigawatts,
05:42and increasing the mining capacity from 50 million metric tons to 100 million metric tons,
05:48we require capex of 1,25,000 crores.
05:51We are going to increase capex of 1,25,000 crores by 2030.
05:58And for that, the equity requirement is around 25,000 crores.
06:02And we are hopeful to fund it through the internal sources and the asset monetization program
06:08which we are doing for our existing renewables.
06:11Okay. So how much money will come in for the asset monetization program, and when does it...
06:16I mean, do you see some benefits of that in the current year itself?
06:21No. In the current year, the process is already started.
06:27The assets have to be transferred to our fully owned subsidiary.
06:31The process is on. We are expecting by March of this financial year,
06:39or by quarter one of the next financial year.
06:42What's the amount, sir? What's the amount from this asset monetization?
06:45The amount is around 8,000 crores.
06:478,000 crores. Okay. Now, just one final word, Mr. Prasanna Kumar.
06:52Your numbers as I look at them, for the longest time, right, you've been between this 11,000...
06:58March 2017, you clocked in sales of 11,000 crores.
07:02You've ended the year with 13,000 crores.
07:05You've been in this 11,000 to 13,000 crore range for the last six to seven years.
07:09The capacity expansion plans look very robust.
07:14What happens to the top-line growth for NLC India in the next two, three years?
07:20Does it show a meaningful uptick at some year, FY25 or 26 or 27?
07:26We are mainly into three businesses.
07:29One is the thermal power generation, coal lignite production, and third one is renewables.
07:35Out of this, the thermal power generation and coal production, both are regulated.
07:43So, the returns of 14.5% to 15% is assured.
07:49And renewable business also, we are taking the projects after doing due diligence to get the overall return of around 14% to 15%.
08:00So, there is a certainty that going forward, the returns will be more than the 15% level because of regulated nature.
08:12Out of the total 9,500 crores regulated equity we are having, we are going to increase that regulated equity to 20,000 crores by 2030.
08:23So, the returns of 14.5% to 15% is assured.
08:28Which is fine, sir. Sorry, just so that I get my point clear.
08:31Would your top-line go up at any point of time in the next two, three, four years from this 11,000 to 13,000 crore bank?
08:38Certainly. The capacity of our Gattanpur thermal power station is getting added.
08:45So, the top-line also is expected to increase at a CAGR of around 15% to 16% going forward.
08:52CAGR of 15% to 16%, okay, with slightly better operational metrics too.
08:56No fundraising and good capacity is coming on stream.
08:59Mr. Kumar, thank you so much, Mr. Prasanna Kumar for joining in today and giving us your thoughts and all the best for the quarters ahead.
09:05Thank you. Thanks, sir.