In an interview to CNBC-TV18’s Latha Venkatesh, Sonia Shenoy and Anuj Singhal, SK Acharya, Chairman of NLC India spoke about the buyback and the interim dividend of Rs 7.34/share declared by the company. He also spoke about the outlook of the company going forward.
Anuj: With the buyback and the dividend, that is quite a bit of cash which is given back to the promoters and of course shareholders. What is the current cash situation now?
A: It is comfortable. In fact, the buyback we did as well as the dividend we declared is well within the affordable capacity of the company. There is no issue regarding our cash position as such. No difficulty is faced by the company by doing these two things which were needed. It is best for the promoters as well as the shareholders.
Latha: You are doing exceptionally well in terms of margin and profits. How is Q4 generally, will you be maintaining at 34-35 percent margins and strike a net profit of about Rs 350-400 crore?
A: The Q4 is very promising; in fact we have eight to nine days more to go, so, no issue on that. However, with the Q4 results coming in, for the entire financial year, all the results are going to be all-time high in terms of turnover and in terms of profit both; that is what I expect.
Latha: What hereafter, what kind of expansion plans can we expect will bear fruition in FY18?
A: Big expansion activities are on cards. So far as the thermal side is concerned, construction activities are going on. For lignite based, it is 1,000 megawatt – they are at Neyveli itself, 500 megawatt at Rajasthan, and then we are also going to add 660 megawatt into two with supercritical boilers lignite-fire, they in Neyveli in the expansion phase.
So far as coal based thermal is concerned, in Uttar Pradesh (UP), we are adding 1980 megawatt. Construction work is already going on and there is a possibility, rather the proposal is in advance stage to bring a pitted power station at Talabira in Odhisha in district Jharsuguda and Sambalpur, there we may add around 3,200-4,000 megawatt.
Latha: We know that these are all on the anvil; I am asking you which will be completed in FY18.
A: Our solar 130 megawatt will be commissioned and maybe the 500 megawatt recently that we awarded, that also we expect to be commissioned by March 2018. It could be difficult but slightly around that it would be done.
Sonia: On the solar projects itself, can you give us more details, you said 130 megawatts in 2018, a total commissioning of 3,700 megawatt is what you are looking at in various states. Can you break that up for us over the next couple of years?
A: Solar, it all depends on me getting power purchase agreement (PPA) from the concerned states. As of now, what we have in hand is 10 megawatt already commissioned and operating at Neyveli complex and then 130 megawatt more which we expect in March 2017, a part of that will be commissioned and rest will be commissioned something around July 2017. 500 megawatt for Tamil Nadu we have recently awarded and that commissioning we are expecting by March 2018.
We are in talks with government of Odisha for which PPA is likely to be signed, that is for 500 megawatt. With UP, before the elections, we were given the consent for 2,000 megawatt. However, all the formalities need to be completed. We are in talks with Maharashtra as well as government of Karnataka. There also we are expecting some more PPAs to come.
Latha: That is a bunch of PPAs you are talking about. All of 2016 we heard of hardly any PPAs, probably one from Andhra Pradesh, now you are talking about a bunch of them. Which is on the anvil, say in the next three to six months, how many PPAs?
A: As of now I can’t tell. All these things are at the stage where the formal things have not come. As of now, my solar strength is going to be 640 megawatt and Odisha is next on the cards for which we have already received the consent letter for 500 megawatt. In UP the next phase as I said, it was before the elections but now we are expecting that that also should be translated into reality. Karnataka and Maharashtra are in talking stage now.
Anuj: What would all this mean for financials going forward because last quarter was good for you at the bottomline front? What kind of numbers can we expect in next financial year?
A: It is too premature to give though I will not hazard a guess. However, definitely it will be more than what we clocked in last year in all fronts.
Latha: What are the merchant rates at the moment for power and what is this Odisha PPA rate likely to be?
A: Odisha PPA rate likely to be -- thought initial consent letter we got for Rs 4.50 for kilowatt; still there is a feeling that there could be some more discussion on that. So, things have now been frozen. So, if I keep the cost into account for which I have already done my tender, it would be somewhere around -- below Rs 4.45 it could be difficult for us to do that because it is basically under the capex based board. So, as the owner and the promoter, I would expect a good margin at least as per the government guidelines to be coming in for investments.
Latha: Merchant rates are at?
A: It depends on the state where the capacity utilisation factor is more so there the price is less. We talk of say Chhattisgarh, their utilisation factor is around 22 percent plus. However, in case of Odisha, the capacity utilisation factor is only 17 percent and the entire land and evacuation is on the part of the promoter. So, all the things have to be factored in.
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