Neyveli Lignite expects its generation capacity to increase to 270 lakh tonnes for lignite this year, B Surender Mohan, Chairman, Nevyeli Lignite, told CNBC-TV18.
“We will generate the amount because lignite production mainly depends upon the consumption in the power generation and our entire 99 percent goes only to the power generation,” he said.
Neyveli had entered petroleum coke (Petcoke) and lignite market which led to its growth, he said.
With the increase in power tariff as per the Central Electricity Regulatory Commission (CERC) guidelines, the company's revenue grew to Rs 345 crore in last quarter, Mohan said.
The company had the highest turnover of around Rs 6,088 crore last year, he said.
Neyveli Lignite Corporation Limited (NLC) is expected to grow with the commissioning of two new power plants of 1,500 megawatt each in two months, he said.
Below is the edited transcript of B Surender Mohan’s interview with CNBC-TV18's Reema Tendulkar and Sumaira Abidi. Sumaira: Can you tell us what is it that lead to this margin improvement in this quarter and is it sustainable? A: No, it is not sustainable because now the market is down. Coal prices have come down and petroleum coke (Petcoke) and Lignite have entered the market. It is very difficult, the market is not encouraging but mainly last quarter we had a good growth because of our – we have one exceptional item that is due to our power tariff got increased because of the Central Electricity Regulatory Commission (CERC) guidelines on Lignite price.
So, that is how we got growth of around Rs 345 crore in the last quarter. We had the highest turnover of around Rs 6,088 crore. But this cannot be the trend.
One more thing, NLC may grow because we are going to commission two plants of 1,500 megawatt in two months. So, definitely the growth will be there for NLC. Though the market is down but because we are going to have the power generation in that aspect we will be having growth.
Reema: If the market conditions and not encouraging and your margins are not sustainable can you walk us through what will be a sustainable margin range in FY16? A: FY16 definitely we already have higher target for next year taken into consideration our next year generation and definitely they are going to have a better growth in the next year. Sumaira: Can you share the generation targets for FY16? A: We are going to have 21,363 million units generation against 19,000 odd now. We are going to have 21,000, more than around 2,000 million units we are going to generate more in the current year because of the commissioning of the power units and our plan is also we are going to spend Rs 4,200 crore in the next year in our new projects also. Reema: For the lignite business what is the company targeting in FY16 because that seemed to have clocked in a fairly decent performance in this January to March quarter? A: We had produced 265 lakh tonnes of lignite last year with which we achieved more than 100 percent target last year. Next year our target is 270 lakh tonnes.
That also we will generate because lignite production mainly depends upon the consumption in the power generation because our entire 99 percent goes only to the power generation.
So it all depends on power generation. Nowadays there is some power surrendering also taking place. In the last two months nearly about 60 million units power were surrendered by defence states; they are not consuming power. So during night time there is a power shut down.
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