NLC India Ltd Q3 FY22 Earnings Conference Call Insights

Key highlights from NLC India Ltd (NLCINDIA) Q3 FY22 Earnings Concall

Q&A Highlights:

• Rahul Modi from ICICI Securities asked about the company’s targets in the renewable, solar and wind space going forward and the opportunity size. Rakesh Kumar MD said that in renewable segment, an installed capacity of 1,421 megawatt of renewable projects was achieved, in which 51 megawatt is wind and balance is solar. Most of it is in Tamil Nadu, except for 20-megawatt solar plant in Andaman.

• Rahul Modi from ICICI Securities also asked about the opportunity size of solar. Rakesh Kumar MD replied that the company wants to ramp-up this capacity. Recently, NLCINDIA got 150-megawatt hybrid project and 510 megawatts of solar. NLCINDIA wants to ramp up its capacity in solar to the extent of 4,000 megawatt plus.

• Rahul Modi from ICICI Securities enquired about the EBITDA and revenue from the renewable segment. Rakesh Kumar MD replied that EBITDA from renewable is INR552.35 crore and profit to the extent of INR 185.86 crore.

• Anshuman Ashit from ICICI Securities asked about the status of the Ghatampur project. Rakesh Kumar MD said that on the Ghatampur project, up to December, NLCINDIA has spent more than INR 12,700 crore on the capex front and achieved physical progress of more than 77% and financial progress is more than 75%. And the expected commissioning for the first unit is October 2022. And targeting second and third unit four months thereafter each unit.

• Anshuman Ashit from ICICI Securities also asked about the Talabira mines. Rakesh Kumar MD replied that Talabira project is already commissioned. And against the target of 4 million tonne this year, the company has already achieved more than 5 million tonne by 31 December. NLCINDIA is going to target its Talabira mines for much more production in the next year.

• Anshuman Ashit from ICICI Securities asked about the receivables at the end of nine-months FY22. Rakesh Kumar MD said that total receivable as on 31 December, 2021 is INR4,580.82 crore as against last year corresponding figure of INR8,746.17 crore, reducing the dues by INR 4,165.34 crore.

• Apoorva Bahadur from Investec asked if the company has any other direct clean energy derivatives other than renewable capacity additions. Rakesh Kumar MD replied that so far, NLCINDIA has not explored on power storage. But have shown some interest in green hydrogen.

• Anshuman Ashit from ICICI Securities enquired how much late payment surcharge have the company booked for nine-months FY22. Rakesh Kumar MD said that the surcharge income, the late payment surcharge that’s billed to the beneficiary of power for the nine-months ’21-‘22 is INR296 crores.

• Anshuman Ashit from ICICI Securities asked about the status of the issue raised with CERC on the coal mining cost approval and any impact on profit. Rakesh Kumar MD replied that the company has sought extension of petition because the pricing of coal and lignite will be based on the truing up of the earlier tariff period of ’14, ’19, which has not yet been finalized. Therefore, CERC has accepted the request and given the extension up to 2 months from the date of the order. NLCINDIA is preparing for filing the petition simultaneously. And after filing the petition and decision of CERC thereon, the company will be able to know the impact of pricing on profitability.

• Anshuman Ashit from ICICI Securities asked about the dividend policy, if the company is looking at maintaining what it has. Rakesh Kumar MD answered that DIPAM has issued the guidelines on the payment of minimum dividend, which is 30% of PAT or 5% of net worth, whichever is higher. So NLCINDIA will be guided by that. However, depending on the profit levels and the capex plan, appropriately dividend will be decided.

• Pawan Bansal from LTS asked about target production for next year in coal mines. Rakesh Kumar MD replied that the company’s coal mine, this year has already crossed 5 million tonne against the plan of 4 million tonne. Next year, the company is going to ramp up depending upon the enablement. Right now, there is no firmed up figure, but may like to go up to the normative level of 20 million tonne.

• Dhruv Muchhal from HDFC AMC asked about the timeline for commissioning of the Ghatampur project. Rakesh Kumar MD said that as of now, the company envisages the first unit of Ghatampur plant may likely to be commissioned by October 2022, and other units, four months thereafter each unit.

• Rahul Modi from ICICI Securities asked about the amount of money spent in the Talabira coal mines. Rakesh Kumar MD said the capex incurred so far up to December is INR918 crore against the sanctioned project cost of INR2,401.07 crore. And in the current year nine-months, the company has spent INR125.43 crore out of INR918 crore. And debt equity is 70-30.

• Rahul Modi from ICICI Securities also enquired about the cost of production that NLCINDIA is currently booking in the Talabira mine, all inclusive. Rakesh Kumar MD replied that the company has got a profit of around INR260 crore during the nine month. And cost of production is INR700 per tonne.