NLC India's CMD, Prasanna Kumar Motupalli, Discusses MoU Signing with Rajasthan for 7000 Crore Investment

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00:00 [MUSIC PLAYING]

00:03 Welcome back.

00:10 You're watching the Small and Mid-Cap Show.

00:12 This is Mahima Vacharajani.

00:14 Well, the other company on our radar on Small and Mid-Cap Show

00:17 today is NLC India.

00:19 The company recently won an MOU with Rajasthan government

00:23 of around 7,000 crores to set up a joint venture for adding

00:28 thermal renewable capacity.

00:30 Additionally, the government has opened an offer sale

00:33 on March 6 to raise capital worth 2,100 crores.

00:37 Furthermore, the company is targeting

00:40 to double the mining and renewable power capacity

00:43 by 2030.

00:45 Prasanna Kumar, CMD NLC India joins us now.

00:48 Welcome to the show, sir.

00:51 Thank you, madam.

00:52 Right.

00:53 Good morning.

00:54 So my first question to you is that this JV with Rajasthan

00:58 government, it's around an investment of 7,000 crores.

01:02 Now, first question is that what is your stake in this JV?

01:07 And when will this be operative?

01:10 And what kind of revenues are we expecting out of this?

01:15 Madam, as you know, Rajasthan is blessed

01:17 with lignite resources.

01:20 And NLC is having expertise in utilization of lignite.

01:26 That's why this JV is formed to utilize the lignite

01:29 in Rajasthan and setting up of thermal power generation there.

01:33 And we are also setting up a 1,000 megawatt solar power

01:38 plant also in Rajasthan.

01:40 So the total investment will be 7,000 crores.

01:44 And the majority of stake will be with NLC.

01:47 And it will be operated by NLC.

01:49 And we are expecting, after making it operational,

01:55 we are expecting a return of around 15% to 16%

01:58 from these investments.

02:02 And also, recently you signed a power purchase agreement

02:05 with the Gujarat government, the JVNL,

02:07 for 600 megawatt solar power in Gujarat.

02:10 What are the kind of synergies that you're

02:12 expecting out of this?

02:13 What kind of revenues will flow to your PNL through this MOU?

02:18 Madam, this 600 megawatt solar project

02:21 is the largest at one place for NLC India.

02:25 And it is being constructed in Kavda solar park, where

02:31 the radiation level is the highest in the country.

02:34 So we are expecting very, very good efficiencies out of it.

02:40 And we will be investing around 4,000 crores for this project.

02:44 And here also, we expect a return of around 15%

02:50 from this business.

02:51 Right.

02:52 So considering both of these projects,

02:54 where does this take your margins at once

02:56 when you start realizing gains from these projects?

03:00 Madam, we will be completing these projects in the next one

03:04 and a half year.

03:05 And we expect that it will add to our revenue

03:11 as well as the profit substantially.

03:13 And that will improve our bottom line.

03:19 Right.

03:20 Can you just give us a number as to how much your margins will

03:23 improve by?

03:26 It is very preliminary to talk about the margins, madam.

03:29 But the margins will be substantial.

03:33 Right.

03:34 OK.

03:34 And so considering these two plus the entire order pipeline

03:38 that is there with NLC right now,

03:40 what is the pipeline at present?

03:42 And what does the execution timelines look

03:44 like for the entire pipeline?

03:47 Madam, as on date, we are 1.4 gigawatt renewable capacity

03:51 company.

03:52 And we are targeting to become a 6 gigawatt company by 2030

03:56 with an investment of more than 24,000 crores.

04:00 So as on date, 2 gigawatt projects are in pipeline.

04:07 600 megawatt in Gujarat, 810 megawatt

04:10 in the state of Rajasthan and in the Pugal Park,

04:16 and 300 megawatt in the Bikaner district total.

04:19 2 gigawatt projects are in pipeline.

04:21 And these 2 gigawatt projects will be completed

04:23 in the next one and a half year.

04:25 And subsequently also, we are having projects in pipeline.

04:29 We are installing solar power plant in the mine reclaimed

04:33 land also, which is the first time in the country

04:35 of 50 megawatt capacity.

04:37 With all these things, we will become a 6 gigawatt company

04:39 by 2030, madam.

04:40 That is our plan and target.

04:43 Right.

04:44 And what is the capacity utilization of all your plans

04:47 at present?

04:49 The capacity, when you are talking about the solar plants,

04:54 these plants are in operation for the last 4 or 5 years.

04:58 It is capacity utilization is in line with the design.

05:02 It is different from different projects.

05:04 For some projects, it's 19.

05:05 For some projects, it's 20.

05:07 They are in line with the design.

05:08 They are operating in line with the design.

05:12 Apart from the focus on the installation of the solar

05:15 plants, we are focusing on the windom of the solar plants

05:18 also so that we can get the maximum benefit out

05:21 of the solar plants.

05:24 Right.

05:25 And in terms of lignite versus power,

05:27 what is the revenue mix at present?

05:29 Madam, actually, our lignite production and power production

05:37 both are interrelated because we feed our own lignite

05:41 to our thermal power stations.

05:44 So most of our revenue comes from the power generation

05:48 portfolio.

05:49 More than 70% of our revenue comes from power generation

05:54 portfolio.

05:54 But it is a combined revenue, both for mines as well as

06:01 thermal power generation.

06:03 Whereas in our coal sale, we are also

06:08 going for the sale of the coal substantially.

06:12 And it is more than whatever we did in the last financial year.

06:17 Right.

06:17 And in terms of your under-recovery,

06:21 what was the under-recovery total for the nine months

06:23 that have gone by?

06:24 And where will this stand at by the end of FY '24?

06:29 And how has this impacted your top line and bottom line?

06:34 Actually, madam, last financial year,

06:36 there was a problem in land acquisition and the Naiveli

06:40 area.

06:41 And also, there were a number of problems

06:42 because of the heavy rains that happened.

06:46 Because of that, one of our unit was under shutdown.

06:50 So the approximate under-recovery

06:53 is around 400 crores.

06:55 And we will end up with around 400 crores

06:57 of under-recovery, which will be less than the last financial

07:00 year.

07:01 Right.

07:02 And how has this impacted your top line and bottom line?

07:06 This under-recovery, 400 crores, is a direct impact

07:10 from the top line and bottom line.

07:15 But this we are compensating by increased production

07:20 in the last quarter of this financial year.

07:22 Already, our lignite production reached 1 lakh metric ton

07:26 per day.

07:26 And also, we are compensating through the sale of the coal

07:29 that is happening at Talabira.

07:32 With all these things, we are trying to reduce the impact.

07:36 Right.

07:37 And with reference to your OFS sale,

07:41 you must have met your investors.

07:43 Are there any concerns that the investors have been raised?

07:46 And have you addressed those concerns?

07:47 What are these concerns, if you can tell our viewers about it?

07:52 Madam, overall, in whatever interaction we had,

07:55 the investors are very happy about the performance

07:59 and the strategy we are following

08:01 in balancing the conventional power generation

08:04 and the renewable power generation.

08:07 And there is positive feedback from all the investors.

08:12 And whatever doubts are there, those doubts

08:18 we already cleared.

08:19 And the investors are--

08:20 overall, they're happy with the performance and strategy

08:23 being followed by NLC.

08:26 Right.

08:26 Thank you so much for speaking with us at NDTV Profits, sir.

08:29 It was a pleasure talking to you.

08:31 [MUSIC PLAYING]

08:34 (electronic music)

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