NLC India Ltd Q3 FY23 Earnings Conference Call Insights

Key highlights from NLC India Ltd (NLCINDIA) Q3 FY23 Earnings Concall

Q&A Highlights:

• [00:09:09] Mohit Kumar at DAM Capital enquired about the one-off in the results and the tax impact. Mukesh Agrawal ED Finance said the company’s operations are stable and better than the previous year. INR749 crore was accounted for due to a regulatory order regarding lignite prices which is still sub-judice.

• [00:10:35] Mohit Kumar from DAM Capital asked about the status of the tender of Talabira II. The technical bid for the tender has been opened, and we are doing the technical evaluation. Mukesh Agrawal ED Finance said NLCINDIA is expecting to complete the evaluation in the next month and then open the bid. Additionally, the Govt. of India has allocated 400 mw of power to the State of Orissa which it will be signing the PPA for shortly.

• [00:14:07] Rahul Modi from Nippon India asked about the information on the current level of under-recovery for coal and thermal plants. Mukesh Agrawal ED Finance said that for 3Q, the annual fixed cost under-recovery is INR152.07 crores. Out of that from TPS 2 it is INR30.14 crores under-recovery.

• [00:14:48] Rahul Modi from Nippon India enquired about the progress of Ghatampur. Mukesh Agrawal ED Finance answered that the Ghatampur project is now a prestigious project and NLCINDIA is aiming to complete and achieve commercial operation of all three units by the end of this calendar year.

• [00:20:59] Rahul Modi from Nippon India queried about renewable capacities going ahead. Mukesh Agrawal ED Finance answered that NLCIND currently has 1,400 megawatts of capacity and is planning to add 500 more through a tendering process, 1000 more in Assam on a cost-plus basis, and more in Rajasthan and Orissa. In total, NLCIND hope to add substantial capacity in the next 2-3 years.

• [00:23:07] Rahul Modi from Nippon India asked to provide more details on the 7.5 million tonnes of coal production, including segmented sales, auction quantity and price. Mukesh Agrawal ED Finance said the target was 8 million tonnes initially which was surpassed, and now the target is for 10.5-11 million metric tonnes in the current financial year.

• [00:25:57] Ashwani Sharma of ICICI Securities asked about the capex of methanol project. M. Prasanna Kumar MD said it’s a 0.40 MTPA capacity plant and the estimated project cost is INR4,394 crores. And the project is expected in the year 2026-2027.

• [00:27:59] Akhilesh Bhandari with ICICI Prudential enquired that on the Talabira mine, what’s the expected output in FY24 and FY25. M. Prasanna Kumar MD said that ’23-’24 it is 12 million tonne, and ’24-’25 16 million tonne.

• [00:30:24] Akhilesh Bhandari with ICICI Prudential asked about the standalone receivable level as of 1 Dec.  Mukesh Agrawal ED Finance replied that on a standalone basis, receivables is INR6,493 crore vs. INR4,580 the previous year. The increase was driven by TANGEDCO opting for liquidation of INR724 crore and taken advantage of the Vivad Se Vishwas Scheme, as well as a wage revision order from the CRC that added up to around INR1,000 crore in billing.

• [00:46:33] Rahul Modi from Nippon India asked about clearing of regulatory orders and delays causing changes in P&L. Mukesh Agrawal ED Finance replied that NLCINDIA has already started to improve its financial situation by getting payments from Tangedco and other states, and is working to pay off its debts quickly.

• [00:48:46] Jitendra Sriram from Baroda BNP Paribas asked about strain on the mining segmental performance.  Mukesh Agrawal ED Finance it’s mainly due to the requirement of land and the regulatory accounting regulations, which added up to INR210 crores from 2014-2019 and INR116 crores with surcharge of INR94 crores. The commencement of land possession caused production to improve by 15%.

• [00:52:24]  Nikhil Abhyankar from DAM Capital enquired if the ordering for Neyveli 1.3 gigawatt will happen in 1H24 or 2H24. M. Prasanna Kumar MD replied that it will to 2H24. The 1,320 megawatt project is expected to be completed by October 2023 due to the new technologies being used and limited technology available.