See FY17 lignite volumes around 80 lakh tonnes: GMDC

Gujarat Mineral Development Corporation (GMDC) posted a steady set of earnings for the quarter ended June. The year on year total income was up 27 percent at Rs 399.3 crore versus Rs 314.93 crore. Throwing more light on the numbers, CFO L Kulshrestha, told CNBC-TV18 that the company saw a 14 percent growth in lignite volumes in the first quarter at 21 lakh tonnes versus 18.37 lakh tonnes YoY. Segment-wise, the revenues for mining were up 30 percent at Rs 315.45 crore versus Rs 243 crore reported for the same quarter last fiscal. Year on year power segment revenues were up 16 percent at Rs 114.4 crore versus Rs 98.72 crore. Operating margins for Q1 came in at 34.8 percent versus 31.2 percent YoY.According to Kulshrestha, FY17 lignite volumes would be more than 80 lakh tonnes.With regards to wind power segment, he said the plant load factor rose to 36 percent.Below is the transcript of L Kulshrestha’s interview to Latha Venkatesh, Anuj Singhal and Sonia Shenoy on CNBC-TV18.Latha: How did you manage a rise in income? Can you tell us what was the rise in volumes and what was the rise in realisations or prices?A: Last year in same quarter, our lignite production was 18.37 lakh metric tonnes and for same quarter, in current financial year, it is 21 lakh metric tonnes. So, there is an increase of 14 percent in case of lignite volumes. If we see the power then there is substantial increase in wind power production.Our plant load factor (PLF) was 28 percent in respect of wind power. Now PLF is 36 percent in this quarter. So, we have generated around 123 million units from wind power as against 94 million units in the last year same quarter.As far as pricing, we have recovered some amount from Gujarat State Electricity Corporation Limited (GSEC) and Gujarat Urja Vikas Nigam Limited (GUVNL) towards mine closure fund. And that is why our sales volume has increased.Anuj: If you could tell us for FY16 as a whole; if you could give us some guidance both in terms of volumes and in terms of pricing and margins.A: Pricing and margin, now we are hopeful that our material will be accepted in the market because imported coal prices have been increased. So, we expect that we will achieve around more than 80 lakh metric tonnes during the current financial year and price depends on demand and supply. If possibility is there then we will increase our price.Latha: I had just a doubt about all wind power and solar power. Are you competitive with thermal power or are you competitive and are able to sell a lot because of subsidies?A: We are able to sell because we have power purchase agreement (PPA) with GUVNL, government entity. In that case, we are able to sell and our agreement in case of wind power is Rs 4.15 per unit. So realisation is confirmed, so there is no problem. In case of thermal power also, we have PPA with GUVNL.Sonia: Just two more numbers from your end. You said your PLFs rose to 36 percent in the wind power business. How much could it increase further over the next couple of quarters? And also, you generated about 133 million units in wind power. Over the next two quarters, what could the run rate be?A: This quarter was best quarter and because wind velocity was good, we were able to generate. But in the next quarter, production will be less compared to this quarter in respect of wind power. We expect that our PLF will be more than 25 percent at the year-end.Sonia: In terms of lignite volumes, what could the growth be by the end of FY17?A: It will be more than 80 lakh metric tonnes.Latha: Your power now generates about a third or maybe 35 percent of what your mining generates. For the full year, what kind of a run rate can we expect in terms of revenues? Will you do Rs 400 crore a quarter or because of this wind velocity and stuff like that, we should not be working with a revenue of Rs 400 crore every quarter?A: Rs 400 crore in case of power?Latha: No, total income.A: Total income, we are expecting more than Rs 1,600 crore and more than Rs 500 crore will come from power, rest will come from our mining business.Latha: Can you maintain this kind of a earnings before interest and taxes (EBIT) level as well? Your operating profit overall is Rs 139 crore in the current quarter. Is that the run rate?A: Yes, we will maintain it.