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Last week, NLC India, the public sector mining-cum-electricity generation company, was in the news for its share having touched a historic high of ₹266. While it is true that the bull run is lifting all shares, especially those of power-related companies, NLC India’s case is notable because a number of happy tidings seem to have got bunched together.
The mood of optimism and cheer is unmissable when you have a chat with Motupalli Prasanna Kumar, the Chairman and Managing Director. Thanks, perhaps, to the government of India coming out of its coal-hesitation and deciding to go the whole hog into coal and lignite power — the idea is to build 90,000 MW between now and 2030 — NLC India is sailing into a clear blue ocean.
Motupalli Prasanna Kumar, the Chairman and Managing Director, NLC | Photo Credit: Manvender Vashist Lav
The plan is to raise its capacity from 6 GW now to 17 GW by 2030 — which is a more realistic target than the ‘20 GW by 2025’ that some of Kumar’s predecessors had set. To add 11 GW, NLC India will spend ₹82,000 crore, of which ₹19,000 crore will be equity, coming from internal accruals.
Upbeat financials
Can the company gain as much by way of internal accruals in six years? The recent financial results indicate that it is not a far-fetched aim. In FY 2022-23, NLC India achieved a turnover of ₹12,955 crore, on which it made a net profit of ₹1,248 crore; but in the quarter ended September 2023 alone its profit was ₹1,121 crore — almost as much as the whole of 2022-23.
And the upsides are just beginning. All its three major businesses — thermal power, renewable power and coal mining — are buoyant, and other ventures such as lignite-to-methanol, pumped storage and hydrogen are, according to Kumar, making good progress.
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The long-delayed, 1,980 MW Ghatampur thermal power plant in Uttar Pradesh is finally ready for commercial operation — the first of the three units will go on stream next month. The next two will come later in 2024. That will ring in cash in 2024-25.
A man stands next to the tracks of NLC’s 30-meters tall Bucket Wheel Excavator that can scoop out 2.4 lakh cubic metres of earth per day weighing as much as 8,600 cars. | Photo Credit: M Ramesh
The turnkey contractor for the 3x800 MW, ultra supercritical (USC) thermal power plants at Talabira, Odisha will be finalised any time now and NLC has decided to add a fourth unit of 800 MW. USCs are state-of-the-art, ranking only one step below the cutting edge ‘advanced ultra supercritical’ (AUSC) technology, which is still evolving.
And, having stabilised another jinxed project, the two 250 MW units of ‘circulating fluidised bed combustion’ (CFBC) boilers, NLC is spending ₹60 crore on modifying them. Furthermore, it has begun work on setting up two 660 MW units at Neyveli. These are unique—they will be the country’s first lignite-fired supercritical units. Therefore, NLC is set to gain experience in handling toughies — USC, CFBC plants and lignite-fired supercriticals.
NLC’s coal business is galloping. Only last week did NLC India get the formal ‘letter of allotment’ for the North Dhadu coal mine, which it won in a recent auction. NLC will be able to pull out 4-5 million tonnes per annum. Further, it is expanding coal production at its other mine in Talabira, Odisha. NLC’s initial plan was to produce 4 mtpa, but seeing the demand for coal, the company decided in 2021 to raise the production five times. Accordingly, coal production in 2023-24 from Talabira will be about 14.5 mtpa.
Renewables push
NLC’s push into renewable energy — it plans to have 6 GW in 2030, after selling off the 1.4 GW it has today (under government of India’s asset monetisation initiative) — is notable because of the natural opportunity it has for building pumped storage projects. As mining scoops out earth and lignite, it ends up in an elevation-depression situation, ideal for pumped storage projects. With pumped storage it can integrate renewables and can supply 24x7 green energy.
The company has won two solar projects through a bidding process — 600 MW in Gujarat and 810 MW in Rajasthan. These will be built in the next 18 months and will start generating cash flow. Selling its 1.4 GW of solar assets will fetch about ₹5,000 crore, which could be used to seed a much larger renewable energy-pumped storage edifice.
Perhaps the most interesting part of NLC’s plan is the Rs 4,350-crore lignite-to-methanol project, which will gasify lignite and convert the gas into methanol — the greenest way of tapping into coal for energy. Technical advice is coming from Air Products of USA — the same company that is providing technology to the Talcher project, the much-touted, multi-PSU joint venture.
For decades since it was set up in 1956, NLC India (then called Neyveli Lignite Corporation) did little but mine lignite and produce electricity. Things have changed a lot in the last few years and the company is honing itself to be future-ready. The stock market has taken due note of this.
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