NLC's turnover goes up but profits dips marginally

Chennai: Integrated lignite mining-cum-power generating company, Neyveli Lignite Corporation Ltd (NLC), is considering the American government's grant offer to hire a consultancy organisation to study ways and means of bringing down the mining cost in its proposed Mine III project.

A 2,000mw power project is linked to the mine. The company finds the mining cost too high, as the lignite is located at considerable depth, resulting in higher costs.

Meanwhile, NLC has closed its 2003-04 accounts declaring a turnover of Rs2,807 crore and a net profit of Rs1,143 crore as compared to the previous year's figures of Rs2,681 crore and Rs1,148 crore.

Announcing the company's performance, chairman cum managing director S Jayaraman said, "Net of extraordinary items like the power tariff arrears, interest income, provision of Jayamkondam project the net profit has increased by Rs120 crore."

According to him, NLC mined 205.57 lakh tonne of lignite last fiscal and generated 16,338.97 million units as against 186.24 lakh tonne and 14,969.95 million units.

Speaking about the arrears from the state electricity boards he said that NLC got 8.5 per cent tax free power bonds worth Rs2,590.77 crore under the securitisation scheme. The bonds issued by the state governments on behalf of the state electricity boards are guaranteed by the Reserve Bank of India (RBI).

According to J N Prasanna Kumar, director (finance) the company will hold on to the bonds that yield an interest income of Rs220 crore per annum. Given the sliding interest rate regime that exists now, disposing the bonds does not make sense.

Even for its proposed projects the company plans to meet the outlay through internal accruals and borrowings.

During the period under review NLC commenced operation of 2x210 mw power generation station.

"The Government of India has approved a plan outlay of Rs14,133.58 crore for various projects during the 10th plan period. NLC has proposed to meet the fund requirements out of internal accruals and market borrowings," remarked Jayaraman.

According to him, the public investment board has given its green signal for expanding the mine-II at an outlay of Rs2,161.28 crore and its linked power station-II expansion (2x250mw) power plant at a cost of Rs2,030.78 crore at Neyveli. "Now the proposal is before the cabinet committee on economic affairs."

NLC has received the necessary clearances from the ministry of environment and forests for its mine in Rajasthan (2.1 million tonne) and the linked power projects (2x125 mw). This project awaits public investment board's clearance.

The other projects that being considered by NLC are:
(a) coal-based 1,000mw thermal power plant at Tuticorin, in partnership with the Tamil Nadu Electricity Board (TNEB) and Tuticorin Port Trust
(b) 2,000 mw coal based power plant at Ib Valley Orissa
(c) 125 mw power plant at Neyveli and
(d) 500mw refinery residue based power plant at Chennai partnering with Chennai Petroleum Corporation Limited.

"For the 4x500mw Orissa project, land and linkages for coal and water have been identified. The project will be commissioned within four years of government's sanction," said Jayaraman.

Similarly at Tuticorin land belonging to the Tuticorin Port Trust have been identified to house the project. The documentation process is currently on.

According to R N Singh, director (power), the per mw cost of new project works out to Rs4 crore.