Neyveli Lignite Corporation has been showing laudable performance since it inception. Government support for the company’s future plans will surely boost investor sentiment
The 56th Annual General Meeting (AGM) of Neyveli Lignite Corporation (NLC) was held in Chennai two weeks ago, presided by its newly appointed chairman and managing director, B Surender Mohan.
Since its inception, NLC achieved its highest performance to date, in terms of overburden removal (1651 LM3 from all the mines of the company), lignite production reached a record
24.59 million tonnes, power generation of 18,789 million units (Mu), out of which 15,811 Mu was supplied to Rajasthan (where two units of Barasingsar Thermal Power plants are located) and these have attained commercial operation during the financial year under review. Indeed, a creditable achievement for a public sector undertaking.
According to the balance sheet made available to the shareholders, sales reached a peak level of Rs4,868.85 crore and the profit before tax was Rs1983.89 crore, both recording the highest since the inception of the company.
Studying the details further, over the last one decade, the dividend has gradually increased from 14% to 28% for the current year, though it registered a drop to 12% only once in the 2006-07 period.
The book value too increased from Rs35.45 in 2003-03 to Rs71.46 in 2011-12, while the earnings per share moved from Rs6.83 to Rs8.41 for the same period.
The equity capital base, however, remained static at Rs1,677.71 crore while the disposable reserves and surplus steadily increased from Rs4,290.46 (in 2002-03) to Rs20,362.18 by 2011-12. So, no rights or bonus issues were made to reward the shareholders in the last one decade and currently the CMP hovers around Rs87.30 per share, at a comfortable level to the book value.
There are several projects under construction or implementation. The thermal power station (II) expansion under execution of works by BHEL is underway but this had to undergo a revised cost estimate due to delays and now expected to cost Rs3,027.59 crore. The increased cost, due to delays at BHEL end will be borne by them, in line with the contract.
Other thermal, wind power and solar power contracts are in various stages of tendering and it would take some time before these are actually completed, but related work is in progress.
The joint venture in Tamil Nadu—(2 x 500 MW) thermal power plant —is in various (final) stages of completion and the Mahanadi Coalfields, a subsidiary of Coal India is the nominated (linked) supplier. The first unit is scheduled to be commissioned by December 2013 while the 2nd unit may go into stream by March 2014. On the whole, progress has been satisfactory.
Also, several other new projects, such as Bithnok Thermal Power Project (250 MW), Barasingsar Extension (250MW), NLC-UPRVUNL Ghatmpur Power (1980 MW), Sirkali Thermal Power (4000 MW) and the Devangudi Mine Project are also progressing slowly but steadily.
The ministry of coal has been approached for allocating coal blocks for many of the above projects, and it is hoped that these will be cleared well in time, so that work on obtaining the state and ministry of environment and forests (MOEF) clearances can be undertaken.
In the meantime, NLC is also exploring the possibility to tie up with state governments which are in possession of coal blocks, for new projects, besides looking at the overseas markets.
In view of the change in policy of power procurement by states through competitive based tariff rates, except for power projects for which PPA has been signed prior to 6th January 2011, all other projects can be completed only when concerned beneficiaries formally issue a notification of purchase of power through competitive bidding process.
The company has sought ministry of coal’s exemption for the above requirement for lignite based projects. The ministry’s decision is anxiously awaited by NLC, which will boost the investor sentiment.
(AK Ramdas has worked with the Engineering Export Promotion Council of the ministry of commerce and was associated with various committees of the Council. His international career took him to places like Beirut, Kuwait and Dubai at a time when these were small trading outposts; and later to the US. He can be contacted at [email protected].)
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