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NLC India expects power demand to grow by 9% annually; targets ₹15,000 crore FY25 revenue – EQ

NLC India expects power demand to grow by 9% annually; targets ₹15,000 crore FY25 revenue – EQ


In Short : NLC India forecasts a 9% annual increase in power demand and targets ₹15,000 crore in revenue by FY25. The company plans to leverage growing energy needs and expand its power generation capacity to achieve this ambitious revenue goal.

In Detail : Prasanna Kumar Motupalli, the Chairman and MD of NLC India, said the country’s coal and power situation has improved, and power demand could grow by 9% each year.

He mentioned that NLC India aims to restore profit margins to 36-37% and achieve ₹15,000 crore in revenue in FY25.

NLC India is a “Navratna” company under the Ministry of Coal.

Q: What are your expectations from the new power ministry? Plenty has been done on the ground, but in National Democratic Alliance (NDA) 3.0, what do you expect?

A: As you rightly said, there has been substantial improvement in the coal position and the power position in the country over the last 10 years. From the coal shortage scenario, we reached the coal-sufficient scenario, and the power shortage scenario to the power surplus scenario. Going forward, the power demand is going to increase at a rate of at least 9% CAGR. So, these measures need to be continued in future also, so that the increased power demand can be met through the power generation sources.

Q: We also want to take some questions specific to NLC India. When will execution start picking up pace. Because of execution issues, the Q4 (FY24) numbers were pretty much impacted. Topline was down about 30%, margin moved from 33% to 17%. Can you give us some guidance for overall FY25? How is it going to be in terms of topline growth and break it up into both your segments, mining as well as power generation?

A: Last financial year, particularly in Q1 and Q2, there were problems with land acquisition issues and because of that, there was a shortfall in the production of lignite and corresponding power generation also. But in Q3, we could solve all the land acquisition issues and in Q3 and Q4, our operating performance reached a normal level and compensated for whatever we lost in Q1 and Q2. So now as of date, we do not have any land acquisition issues which is why we are expecting that we maintain the lignite and coal production levels as per the target and the power generation levels will also be maintained as per the target. So, we are hopeful that the current financial year, FY25 will be much better than the last year.

Q: Can you slightly quantify that for us, in the last year, I am looking at full-year fiscal numbers, you did about ₹13,000 crore of topline, but your EBITDA margin was slowly falling; the previous year you were as high as 35-36%. Compared to that, the EBITDA margin came down to around 27%. Could you quantify with a good performance, if mining fires up and if power generation is back on track, and there are no land acquisition issues, what is the topline growth and what is the margin that your investors can expect?

A: We are targeting a top revenue of around ₹15,000 crore in the next financial year. And as you rightly said, there was a slight fall in the EBITDA. Now, with all the issues sorted out, we are expecting in the current financial year, it will reach the normal level of 36-37%.

Q: Could you give us the status of the Ghatampur facility, by when it gets commissioned and also an update on the timelines for the Talabira project because you had given BHEL the EPC contract?

A: Ghatampur, our unit number 1 is about to be commissioned, and COD is about to be declared. We are expecting it by the end of July, the unit number 1. And unit number 2 will be operational by October end and unit number three will be the March end. So, in the current financial year, all three units will be operational, and the COD will be declared. Regarding the Talabira Thermal Power Station, we awarded the engineering, procurement, and construction (EPC) contract to BHEL, and land acquisition activities are in fast progress and all the mobilisation activities, engineering activities, and everything is going on as per plan. So, we are hopeful that we will complete the project in time.

Q: Two questions. One, if you tell us whether your regulated equity targets, whether you are on track, how much do you think you will do in FY25? Second, renewables; apparently, you are also looking at an IPO of your renewable subsidiary. When will that happen?

A: It is a regulated equity. As of date, we have around ₹9,000 crore and in the current financial year, it will be slightly more than that because we will be adding a renewable capacity of around 300 megawatts in the current financial year. But going forward, our regulated equity will become ₹23,000 crore by 2030, progressively from the current financial year.

Q: So, when is the renewable’s IPO happening and tell us the mix, your power capacity; obviously, the large chunk of it is thermal, but how much is renewables, what is the scale-up plan in renewables and when do you bring the subsidiary to the market? When is the IPO?

A: As of date we are having 1.4 gigawatts of renewable power capacity. Most of that is solar and only 50 megawatts is wind. Under asset monetisation, we transfer these assets to our NLC India Renewables (NIRL), the 100% owned subsidiary and we are going to monetise that subsidiary the process of transfer of shares from NLC India to NIRL is on and we are expecting the end of this financial year, FY25 or the Q1 of FY26 that will happen.

Anand Gupta Editor - EQ Int'l Media Network