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NLC India Ltd
Earnings Call Analysis
Q1-2025 Analysis
NLC India Ltd
During the earnings call, NLC India Ltd. provided a comprehensive update on their performance for the first quarter of the fiscal year 2024-25. The Chairman and Managing Director, Prasanna Kumar Motupalli, highlighted several significant achievements, including emerging as the successful bidder for the Machhakata Revised Coal block in Odisha with a capacity of 30 million tonnes per annum and receiving government approval for the Pachwara South Coal Block project in Jharkhand estimated at INR 2,242.90 crores. Additionally, an MoU with DVC was signed for the supply of 2 million metric tonnes of coal from the Talabira II and III mines.
The company achieved a 22.17% growth in lignite production, reaching 61.67 lakh metric tonnes compared to 50.48 lakh metric tonnes in the same quarter last year. Coal production saw a 35.27% increase to 28.46 lakh metric tonnes. Power generation also rose by 13.48%, totaling 6,133.67 million units, including 547.13 million units from renewable sources. The group's overall power generation increased by 10.38% to 7,554.08 million units. Plant load factor for thermal units improved significantly, achieving 70.27% compared to the previous year's 61.20%.
For Q1 of FY25, NLC India reported a stand-alone profit after tax (PAT) of INR 495.98 crores, up 49.83% from INR 331.02 crores in the same period last year. Consolidated PAT stood at INR 566.69 crores, a growth of 37.02%. Total income for the stand-alone entity grew by 7.88% to INR 2,901.53 crores, while consolidated income rose by 6.19% to INR 3,640.60 crores. The financial performance was buoyed by increased lignite and coal production, along with higher power generation.
The company faced challenges related to under-recovery, which decreased to INR 139.89 crores from INR 209 crores last financial year on a consolidated basis, and from INR 183.71 crores to INR 123.86 crores on a stand-alone basis. This reduction was attributed to resolving land acquisition issues, which had previously affected lignite production, and ongoing efforts to improve plant availability. Technical modifications at the TPS-II expansion unit were also underway to further reduce under-recovery.
NLC India is actively pursuing several strategic initiatives, including the development of renewable energy projects. The company aims to increase its solar power capacity to 10 gigawatts by 2030, with 2 gigawatts currently in the pipeline. Of this, a 300-megawatt project in Barsingsar is expected to be completed within the current fiscal year. Additionally, the company is exploring commercial opportunities in mining, having already sold 8.22 million metric tonnes of coal through e-auction this financial year at an average price of INR 1,354 per metric tonne.
To focus on asset monetization, NLC India has formed two subsidiaries: NLC India Renewable Energy Limited and NLC India Green Energy Limited. The former will manage the company's existing 1.4 gigawatts of renewable capacity, while the latter will handle future capacity additions. This structural change is aimed at optimizing the company's focus on renewable energy and enhancing shareholder value through asset monetization as guided by the Government of India.
In conclusion, NLC India Ltd. demonstrated strong operational and financial performance in Q1 FY25, supported by significant growth in production and power generation. The company's strategic focus on expanding its renewable energy portfolio and improving operational efficiencies positions it well for future growth. Management expressed confidence in maintaining this positive trajectory and emphasized their commitment to addressing challenges and achieving long-term objectives.
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Ladies and gentlemen, good day, and welcome to NLC India Q1 FY '25 Earnings Conference Call, hosted by DAM Capital Advisors Limited. [Operator Instructions] Please note that this conference is being recorded. I now hand the conference over to Mr. Prateek Singh from DAM Capital Advisors Limited. Thank you, and over to you, Mr. Singh.
Thanks, Manav. Good evening. On behalf of DAM Capital Advisors, I would like to welcome you all to the Q1 FY '25 earnings call of NLC India. Today, we have with us Shri M. Prasanna Kumar, Chairman and Managing Director of NLC. The call will begin with brief remarks by CMD sir, after which we'll open the lines for the Q&A.
Before we begin, we must remind you that the discussion on today's call may include certain forward-looking statements and hence should be viewed in conjunction with the risks that the company may face. I would now like to hand over the line to CMD sir for his opening remarks. Thanks, and over to you, sir.
Thank you, Prateek ji, for the introduction and a warm thank you to DAM Capital for hosting this investor conference call. I also want to extend my gratitude to all the participants for your interest in NLCIL, and to our investors for your unwavering support.
At the outset, I wish all my investors on the occasion of 78th Independence Day of our great nation. Today, I am happy to engage with NLCIL shareholders and address any questions you might have regarding our financial results for the quarter ending June 30, 2024, as well as provide updates on our capacity addition program. Your involvement and feedback are invaluable to us, and I look forward to a productive discussion. I am Prasanna Kumar Motupalli, Chairman and Managing Director of NLC India Limited. And joining with me is Dr. Prasanna Kumar Acharya, Director of Finance; along with other senior management of the company.
Before the interaction, I would like to brief on the highlights and performance of NLCIL during the quarter ended 30th June 2024. The major highlights during quarter 1 of 2024, '25 are: NLCIL emerged as a successful bidder for Machhakata Revised Coal block, Odisha, of 30 million tonnes per annum capacity under commercial auction. This is the second commercial mine won by NLCIL through competitive bidding process.
Approval of Government of India received for implementation of Pachwara South Coal Block project at Jharkhand State by NUPPL at an estimated cost of INR 2,242.90 crores. Mou signed with M/s DVC for supply of 2 million metric tonnes of coal from Talabira II and III mines.
Consent to operate and product approval for OB to M-Sand Plant of Mine-IA was obtained from Government of Tamil Nadu.
Biomass co-firing on trial basis was successfully started at Barsingsar Lignite based CFBC Thermal Power Station.
NLCIL is conferred with Best Exhibitor Award in Coal Category at the Mines Safety Awards (MSA) 2024, organized by the All India Mines Safety Association under the aegis of DGMS.
NLCIL is conferred with Best ESG Report Award for the integrated Annual Report for the financial year 2022-'23 in the 11th edition of The Original National Awards for Excellence.
I was conferred with Best CEO, Corporate Management Innovative Excellence Awards 2023-'24 during the 24th Annual Geominetech International Symposium.
Coming to the physical performance, the company has achieved 22.17% growth in lignite production during quarter 1 of financial year '24-'25, that is 61.67 lakh metric tonne compared to quarter 1 of financial year 2023-'24, that is 50.48 lakh metric tonne. The company has raised its coal production to 28.46 lakh metric tonne, which is 35.27% growth during quarter 1 of financial year '24-'25 compared to previous period of 21.04 lakh metric tonne.
The company's power generation increased by 13.48% from 5,405.17 million units to 6,133.67 million units of quarter 1 of financial year 2023-'24, including renewable generation of 547.13 million units as against 539.59 million units of quarter 1 of financial year '23-'24.
The group power generation has increased by 10.38% from 6,843.42 million units to 7,554.08 million units of quarter 1 of financial year '23-'24, including renewable generation of 547.13 million units. The company has achieved plant load factor -- plant availability factor of all thermals at 73.56% in quarter 1 of financial year '24-'25 compared to the corresponding previous period of financial year '23-'24 of 62.63%. The company has achieved plant load factor, PLF, of thermals at 70.27% in Q1 of financial year '24-'25 as compared to 61.20 in the quarter 1 of financial year '23-'24.
Coming to the financial performance stand-alone. The profit after tax for the quarter ended 30/06/2024 is INR 495.98 crores as against INR 331.02 crores in the corresponding period of the previous year, registering a growth of 49.83%. Profit before tax, PBT, for the quarter ended 30/06/2024 is INR 730.54 crores as against INR 487.58 crores in the corresponding period of the previous year, registering a growth of 49.83%. The EBITDA for the quarter ended 30/06/2024 is INR 1,221.86 crores as against INR 1,028.47 crores in the corresponding period of the previous year, registering a growth of 18.80%. The total income of the company for the quarter ended 30/06/2024 is INR 2,901.53 crore as against INR 2689.65 crores in the corresponding period of the previous year, registering a growth of 7.88%.
Coming to the financial performance of consolidated. Profit after tax of the group for the quarter ended 30/06/2024 is INR 566.69 crores as against INR 413.57 crores in the corresponding period of quarter 1 of financial year '23-'24, registering a growth of 37.02%. Profit before tax of the group for the quarter ended 30/06/2024 is INR 821.66 crores as against INR 613.53 crores in the corresponding period of the previous year, registering a growth of 33.92%.
The EBITDA for the group for the quarter ended 30/06/2024 is INR 1,444.38 crores as against INR 1,305.80 crores in the corresponding period of the financial year '23-'24, registering a growth of 10.61%. The total income of the group for the quarter ended 30/06/2024 is INR 3,640.60 crores as against INR 3,428.48 crores in the corresponding period of the previous year, registering a growth of 6.19%.
I wholeheartedly thank all the investors for their support and encouragement all these years, facilitating outstanding performance of the company, and hope the same would continue in the future also. Thank you all.
Sir, should we begin the question-and-answer session?
Yes, we could.
[Operator Instructions] We have our first question from the line of Mohit Kumar from ICICI Securities.
My first question was what was the under-recovery in the quarter on a stand-alone and consolidated basis?
Sorry, the question not audible. Can you repeat the question, please?
Yes, sir. I'll try again. So what was the under-recovery in the quarter on a stand-alone and consolidated basis?
Okay. See, there is a reduction in the under-recovery in the quarter 1 of financial year compared to last quarter. Last quarter, the total under-recovery was around INR 261.88 crores -- sorry, the last financial year, the under-recovery of the total group was INR 209 crores, whereas in the current quarter, it is INR 139.89 crores. And if stand-alone basis, NLCIL first quarter of the last financial year, INR 183.71 crores, which reduced now to INR 123.86 crores.
Understood, sir. What is the status of land acquisition for the mines at Neyveli? Is it still affecting our plant availability? And how soon we think we will be able to mitigate the entire under-recovery?
During the first and second quarter of the last financial year, the generation and lignite production got affected because of the nonavailability of the land. With the support from the district administration, state government, and central government, the issues were sorted out and the long pending permanent diversion of the Paravanar river was done and around 560 hectares of land was taken into possession. After that, our production levels reached to normal levels by January of this calendar year. And the same is continuing. As on date, no generation loss on account of lignite production. And we are putting further efforts to take into possession the land for future requirements also. That activity is also fast progressing.
Question is, why there is under-recovery?
The under-recovery, I think, as you know, the major portion of under-recovery is in TPS-II expansion, where we are having some technical liability. So as I explained earlier also, we carried out the short-term modifications. With that, there is some improvement in the availability of the unit, but the problem will be solved once we carry out the long-term modification, for which the material is already procured from BHEL, and the activities are going to start in the month of September. And once that is done, the availability of our TPS-II expansion units will improve substantially and the under-recovery will reduce substantially.
Understood. My last question, sir. Can you please help us with the notes of account. Actually, there are number of notes of accounts, which seems to have impacted our profit. Is it possible to tell us what is for the past period which has impacted in this quarter? I think it seems like it has impacted our profit positively. I wanted to figure out what is the adjusted PAT.
Actually, we could not understand. There is some -- voice is not that clear.
Sir, my question is on the notes of accounts. There are a number of notes of accounts which suggest that there is an impact for the past period in this particular quarter, and that's why profit was high. Is it possible to quantify that impact for the past period? Let us know the...
So during the quarter, there were some orders in favor of NLCIL and some orders unfavorable to NLCIL. But the net impact is hardly INR 21 crores only. Whatever increase in PAT is there, that is on account of increase in lignite production, coal production, and the power production. So because of regulators, the negative impact is only INR 21 crores.
We have our next question from the line of Aditya Welekar from Axis Securities.
My question is on status of the commissioning of the first unit of Ghatampur Power Plant, and whether the other 2 units are on track for commissioning by November and March? And same for the timelines, if you can update us for Talabira Power Plant and TPS-II expansion?
Okay. So despite the number of constraints, now the unit 1 is on the verge of COD. And we are expecting it by end of this month or latest by 15th of September we are going to declare the COD of the unit, and all the activities are in fast progress, and more than 3,000 people are working there on continuous basis for making it possible.
Coming to unit #2 and unit #3, we are targeting to declare the COD by November '24 unit #2, and March '25 unit #3. So in the current financial year, we want to declare the COD of the entire station. In line with this, the activities are progressing in the other units also. And we are hopeful that before the target line, we will be able to declare the COD of the Ghatampur Plant. And the coal tie-up for this Ghatampur Thermal Power Station is also ensured. We got the bridge linkage from Government of India. And our Pachwara South Coal Block, which is linked mine to this NUPPL, that also will be starting its production from the month of January 2025 onwards. So the fuel security is also ensured for continuous running of the plant.
Understood, sir. Sir, any update on Talabira Power Plant and TPS-II expansion?
Talabira Thermal Power Plant, as you know, in the month of February, we awarded the main plant package to BHEL. And the majority of the main plant land is in our possession. Around 125 acres of land possession is yet to be done. We are hopeful that in the month of September that will be completed. BHEL has already started the project activities. The geotechnical survey is already on the verge of completion. And the borehole study also is completed 50%, and BHEL mobilized its entire manpower and things are moving very fast, and we are hopeful that the Unit 1 will be commissioned in the month of July 2028. All actions are in place for that.
Coming to TPS-II expansion. We tenderized for 2x660 megawatt lignite-based power stations and we extended the tender date several times. But because of nonavailability of technology, nobody was participating. And the only bidder, BHEL, also expressed their inability to quote in this one because of nonavailability of technology. So this was discussed with the Ministry of Power, and taking guidance from them, now we are going for 2x500 megawatt at the same location. The feasibility report is under finalization. I think within next 1 week to 10 days that will be finalized. Then immediately, we will go for tender and start the activities at the earliest.
Yes, that's helpful, sir. Sir, my second question is with respect to commercial coal mines of North Dhadu and recently of Machhakata coal mine of Odisha. So any color you would like to state on how do you see the ramp-up of these mines? How much you target? And when any commercial coal can be expected from these 2 mines?
See, for this North Dhadu project, the timeline given by government under commercial auction is 57 months, whereas we are targeting to extract coal within 36 months. So all activities for facilitating coal extraction within 36 months are on. The GR is prepared and the mine plan is also prepared, and we are going for the MDO contract for North Dhadu. So we are hopeful that within the 36-month period, we'll start production from North Dhadu. And another good part is that the siding for evacuation of coal at North Dhadu is just side by, so that also will facilitate us if we're starting the production and evacuating the coal from North Dhadu. This is regarding North Dhadu.
Coming to Machhakata. Recently, we won that and we got the order from government. Vesting order is still yet to come. We have deposited all the requirements. We completed all the formalities. And as you know, this block is a huge block having almost 1.38 billion metric tonnes of coal and with 30 metric tonne per annum rated capacity. I mean, this is also very good quality coal of G10 and G11.
Before the allotment also, we started all the activities proactively. Now our GR is already prepared, and we are submitting it for the approval for the ministry. And subsequently, we'll be preparing the mining plan. And we are taking all the activities in fast-track mode, so that we'll complete all the activities and start expecting coal within 36 months. For this Machhakata coal, the timeline set by government is 55 months. So we want to do it well ahead, that is within 36 months.
[Operator Instructions] The next question is from the line of Somnath Saha from B&K Securities Private Limited.
Sir, I had a question on the renewal side. Can we commission any capacity in the current year? If so, how much we can expect for the current and the next year, sir?
Sorry, can you please repeat the question? Your voice was shaky.
Sure. Actually, my question is on the renewal side. Can we expect any capacity additions in the current year, sir?
Yes, yes. See, our capacity as on date is around 1.4 gigawatts. And we are targeting to reach 10 gigawatt level by 2030. So in line with that target, already actions are on and around 2 gigawatt solar power projects are in pipeline. Out of this 2 gigawatt, projects are there mostly in Gujarat and Rajasthan. And out of all these projects, the 300-megawatt project, which we are constructing in our own land in Barsingsar, that will be completed in the current financial year. And the balance 1.7 gigawatt plant in the state of Rajasthan and Gujarat, the work is in fast progress, and they will be completed in the first half of the next financial year or latest by the third quarter of the next financial year. But in the current financial year, we are expecting addition of 300 megawatts from our Rajasthan, Barsingsar solar power station.
Okay, sir. That's helpful. And my second question is on the e-auction for coal. So can you quantify the volume for the quarter as well as the relation from e-auction rate versus the CIL linkage rate, sir?
Yes. See, through e-auction, there is a substantial improvement in the quantity of coal e-auctioned. The last financial year, in the entire financial year, we auctioned 9.10 million metric tonne. And this financial year, till now we already sold 8.22 million metric tonne. And last financial year, the average price was INR 2,369. But due to coal excess scenario, here it is INR 1,354 per metric tonne.
Sir, this INR 1,354 per tonne you have mentioned, this is the current e-auction rate, right, sir?
Current e-auction price is INR 1,354. And a small correction, the quantity...
[Technical Difficulty]
Ladies and gentlemen, we have the management line disconnected. Please be patient and stay connected while we reconnect the management.
Ladies and gentlemen, we have the management back with us. Over to you, sir.
Okay.
Mr. Somnath, you can go ahead with the questions.
Yes. Actually, you were discussing about e-auction volume and the realization over there.
I'm talking about actual realization of e-auction. In the last financial year, quarter 1, it was 9.1 lakh metric tonne. In this financial year, it is 8.22 lakh metric tonne. Last financial year, the average price was INR 2,369 through e-auction. This financial year, it is INR 1,354 per metric tonne.
That's helpful. And lastly, can you give us some update on the active order for the time period 2009 to 2014? What is the current status over there, sir?
Yes. During quarter 1, we received -- as I already told, during quarter 1, we received some favorable orders and some unfavorable orders. The net impact in the quarter 1 is around INR 21 crores only.
[Operator Instructions] The next question is from the line of Arihant from Bowhead Investment Advisors.
My question would be what would be the CapEx for FGD and when it is expected to be completed?
See, our FGD activity is going on in almost all the plants. And they are in different stages of completion. The CapEx is different from different stations. And if you take NTPL, the FGD cost is around INR 625 crores. Similarly, for other plants also, for NTPC, it is INR 665 crores; and NUPPL, it is INR 979 crores; and TPS-I expansion, that is yet to be awarded, we are in the process of awarding that. Similarly, the FGD is at different stages of completion in different units, and we are hopeful that we'll be completing the activity before the timeline set by Government of India.
Okay. Sir, and my second question would be like can you provide some update on 2014-'19 tariff order. Have you received that? And what is the expected reversal of provision from that order, once we receive that?
Actually, there is no reversal because of that order.
Have we received that order? Or is it yet to be received?
Yes, that is received and there is no reversal requirement.
[Operator Instructions] The next question is from the line of Ragini from Elara Capital.
Yes. Sir, what is the regulated equity for mining? And does this equity number include the regulated equity from coal mining as well?
Okay. The total regulated equity as on date is INR 9,529 crores. Out of that, for mines, it is INR 3,598 crores. And for thermal, it is INR 5,931 crores. This is the regulated equity as on date.
Okay. So mining includes the coal mining as well?
Yes, yes, mining includes both.
And generation includes renewable or it is excluding renewables?
No, it is excluding renewables, because renewables is not a regulated sector. So generation, it is only for thermal, that is INR 5,931 crores.
Okay. And sir, how will the regulated equity for mining change going ahead? I mean, how will that number increase?
See, we are having, as on date, around 44 million metric tonnes, and we are targeting to become a 100 million metric tonne company by 2030. So the current regulated equity of INR 3,598 crores, that will be almost double. Almost it will become INR 5,952 crores by 2030. Similarly, thermal as on date, it is INR 5,931 crores. That will be increased to INR 12,932 crores by 2030. The total regulated equity in 2030 would be INR 18,885 crores.
Okay. And sir, this mining capacity, you intend to increase to 100 million tonnes. So what will be the tie-up of this incremental capacity, like the capacity will be tied up with which power plants, or will it be sold on the commercial platform?
See, we participated in the commercial auction in 1, 2 mines. That coal we will selling commercially. We're free to sell to any sector at any rate. So North Dhadu and Machhakata, both are the commercial mines. As on date, we'll be selling in the open market. Whereas our Pachwara South Coal Block, which is expected to start production in the last quarter of this financial year, that is linked to our Ghatampur Thermal Power Station and the entire capacity will go to Ghatampur Thermal Power Station. And whatever the balance coal is there, that we will be selling in the open market through e-auction.
Okay. And sir, just one last question. This e-auction volume which you mentioned at [ 8 MT ], that is from Talabira plant mine?
Yes, the coal auction which we are doing is from Talabira. That quantity is from Talabira only.
The next question is from the line of Rabindra Nath Nayak from Sunidhi Securities.
Sir, you mentioned that the PAT impact for this quarter is around INR 21 crores negative. So can you please give us the number for -- same numbers for Q1 '24?
So you are asking about the impact of CERC orders?
No, no. Net impact of the regulator or adjusted, you have mentioned in the previous question that INR 21 crores negative this quarter. So what is that number in Q1 '24?
No, I'm talking about the Q1 '24 only. Whatever orders are received in Q1 '24, the net impact on the financials is INR 21 crores negative impact.
Previous year quarter. I was just talking about Q1 of last year.
I'm talking about the current quarter only. Current quarter '24-'25, whatever orders we received and accounted for, the negative impact is INR 21 crores only.
Can you give this number for last year first quarter?
Okay. Last year first quarter. We will come back. We'll communicate to you.
Okay. And sir, in this quarter, what was the coal profit -- profit related to coal. What would be that? Can you please quantify that?
I think, for your earlier question, previous financial year, quarter 1, there were no orders against or for NLCIL. So there was no impact. There was 0 impact in the last quarter. And in this quarter, it is INR 21 crores.
Okay. Okay. About the coal profit, sir?
The profit, PBT is INR 90.24 crores.
Okay. And sir, you mentioned that you have signed an agreement with DVC to supply coal. So how the coal distribution is now from Talabira to different entities like NTPC and DVC, and also our own requirement in Tuticorin. Can you please give the distribution? What is this for this year as per your plan for production from Talabira?
See, as per the government set target, our production this financial year is 16 million metric tonnes. And of the 16 million metric tonnes, around 4 million metric tonnes is required per NTPL. And we are having MoU with NTPC for 5 million metric tonne. And with DVC MoU, that is for 2 million metric tonne. So this is around 11 million metric tonne. So another 6 million metric tonne is there. This 6 million metric tonne, we are going for the long-term e-auction, spot e-auction, and midterm e-auction. So this 6 million tonne, we will be selling through the auction process.
Okay. That is a lot, because in the previous interactions, you mentioned that a significant amount of e-auction we cannot get from this mine. So will it be possible, the 5 million tonne?
As per government order, we can sell 75% of production at Talabira. So our 16 million metric tonne is our production. So 12 million metric tonne we can sell through the other routes. So it is permitted.
Okay. Okay. So nothing will go to Ghatampur from Talabira, you mean to say?
No. Actually, for Ghatampur, we are already having the linked mine, Pachwara, which is going to start production from January of next calendar year -- next financial year, January '25. And over and above that, we got bridge linkage for Ghatampur from Coal India subsidiaries. So if some gap is there, if there is some delay is there in the production of coal, then the bridge linkage coal will be used for the production at Ghatampur. But in case if any requirement is there, any emergency is there, and if generation getting affected at Ghatampur, then we can think of sending some coal from Talabira, but as on date, we don't have any plans to send the Talabira coal to Ghatampur.
Okay. Sir, can you please help me with the realization, whatever and the price which we sell to NTPL and NTPC and DVC?
For Talabira coal?
Yes, yes.
Okay. See, in the current quarter, through e-auction, the price is INR 1,354. To sell to NTPC through MoU, INR 1,036. And coal sale to NTPL, it is INR 810.53.
Okay. And what would be the price for DVC, sir?
The price for DVC is same as what we are supplying to NTPC.
Okay. And about, sir, this renewable NLC Green, you are not transferring this current capacity of 1,400 megawatts to that subsidiary? It will remain in the stand-alone entity?
No, actually we formed two 100% owned subsidiaries. One is NLC India Renewable Energy Limited and other is NLC India Green Energy Limited. This NLC India Renewable Energy Limited, we are going to transfer this 1.4 gigawatt renewable capacity to NLC India Renewable Energy limited. And subsequently, it will be monetized. And all the new capacity which we are adding, that will be under NLC India Green Energy Limited.
Okay. Okay. So why these two entities, sir?
See, to focus on asset monetization as set by Government of India, a separate subsidiary is formed. And to focus on the renewable, which we want to increase almost 7x in next 5 years. That's why a separate entity is formed to focus on the capacity addition program.
Okay. Both will be monetized, you mean to say?
The exact structure of the subsidiary is yet to be approved. So as on date, we are targeting for monetization of NIRL. But if vertical structure is there, then consequently the NIGEL also will be monetized.
[Operator Instructions] The next question is from the line of Aditya Welekar from Axis Securities.
Sir, my question pertains to the recent Supreme Court -- today's Supreme Court verdict that the states can levy tax on mineral assets. So from that perspective, is there any tax liability in the state of Tamil Nadu for our mining assets? Or ours being a regulatory mining business, it doesn't impact us? Just wanted to understand that point.
In Tamil Nadu, there is no such problem, but overall impact on the company we are working out, because just today itself that order we got. We are working out the impact in other states whatever coal production is happening. And whatever impact is there, that is a pass-through as it is statutory in nature.
You mean, if the impact comes, we will be able to realize it in our return on equity?
Exactly.
Okay. And as far as this regulatory equity mining is concerned, does it include the CapEx towards this commercial coal mines of North Dhadu and Machhakata?
Yes, yes, that includes the CapEx in the commercial coal mines also.
Okay. And sir, just slightly dwelling on the PLF part. So for TPS-II expansion, I recall you just said in the call that by September, we expect that the boiler issue should be resolved, right? And post that, can we expect no under-recovery from that particular plant?
Yes, yes. Already the material supply is completed and we awarded the execution contract also. So we will be taking up in the month of September, and by October, the work will be completed. And then the unit will be fully available, and that will substantially reduce the under-recovery?
And same for TPS-II, means the coal availability issues, how shall we see it in the foreseeable future? Will it be -- can we assume 0 under-recovery from that from the second half of this fiscal year?
Exactly. TPS-II, all units are performing well. There were some issues because of some rains that happened. Otherwise, all the units are performing well. Only 1 unit is under annual overhauling. And only for the annual overhauling, I think they'll go out. Otherwise, all 6 units are generating. We don't foresee any under-recovery from TPS-II.
Okay. And in the month of June, from the data from the CEA website, we can see that PLF for the Barsingsar TPS has come down year-on-year. So any particular reason why Barsingsar is slightly underperforming?
One of the unit was under planned maintenance, rescheduled maintenance. So it is not underperforming, and it will finally -- again, the unit has started and it will come back and recover whatever PLF is lost during the overhauling.
[Operator Instructions] The next question is from the line of Arihant from Bowhead Investment Advisors.
Yes, sir, I wanted to know, like in corporate plan, you have mentioned that you don't expect any new thermal capacity addition beyond 2030. So I just wanted to understand that whatever new capacity you have thought of, those are the only ones which you will impact in thermal, and we shouldn't expect any new thermal capacity announcement?
See, the statement is that beyond 2030, we will not start any new plants. But already, we are having an aggressive capacity addition program in thermal. We will be adding 3,200 megawatts at Talabira, and around 1,000 megawatts to 1,500 megawatt at Neyveli, and around 500-megawatt in Rajasthan, as we are forming a JV with Rajasthan. So all the plants will be completed before 2030. And beyond 2030, we will not start any new thermal power station. That is the statement.
[Operator Instructions] We have our next question from the line of Prateek Singh from DAM Capital Advisors.
So just following up on Aditya's question. So I understand that we don't have any demand from Tamil Nadu as such as of now. What is the scene with Odisha, because that's where we are seeing most demand from major companies. So is Odisha in the past or now asking for any demand in terms of additional sales?
See, there is a huge demand for power even today. And our Talabira Thermal Power Station, that is the Stage 1, is fully tied up with signing a PPA with Tamil Nadu, Pondicherry, Kerala, and Odisha. And in the Stage 2, 800 megawatt -- 400 megawatt, we already signed a PPA with Odisha, and balance 400 megawatts, many states are requesting for that. So that is referred to Ministry of Power. They will be allocating that balance 400 megawatts to the needy state.
Okay. Sir, my question was largely on this Supreme Court ruling, any demand in terms of additional cess from Odisha?
Okay. We are working out on that. We're working out. Today only we got the order. So we are working out on that, any impact of Odisha plant, Odisha Talabira mine. We are working on that.
Okay, sir. And as you said, sir, it's a regulated entity. So it's largely a pass-through. But in your view, how would it work for e-auctions, like you and Coal India, do you think that you would be adding this amount to the base price of e-auction, or we may need to take a hit in e-auction? Just taking a broad view. I'm sure that there is something which you would not have worked on right now. But do you think this will kind of increase the base pricing of e-auctions going ahead?
See, as you rightly said, wherever the regulated this thing is there, there we will get the pass-through. And wherever e-auction is there, we have to go through the order thoroughly, then only we can tell how we will be taking the outcome of the order.
Understood, sir. And my next question was on this North Dhadu block. I understand that it might be too early, but have you started looking for linkage commitments also? Or do we think that we should be selling everything in e-auction?
See, this North Dhadu coal is of good quality. And its main advantage is that it is very proximate to the main railway line, which is just side by that block. So as on date, we are targeting commercial market to fetch more revenue.
Okay, sir. And any plans to set up a plant in that area given that you have a high-grade coal block, or no such thermal power plant plans as of now?
See, we got this Machhakata coal block, which is of 30 million metric tonne, which is huge capacity. And this is going to be 1 of the top 5 largest coal mines in the country. So going forward, we may think of setting up some pit head thermal power station near the Machhakata. But for North Dhadu, we are not having any plan as on date.
Okay, sir. And can you shed some light on the MoU signed with the Rajasthan government a few months back on the lignite-based power plant and solar power plant? How is it progressing right now?
As you know, NLC is having experience of lignite mining and lignite-based power generation of almost 68 years. And Rajasthan is having lignite reserves. So we are going to form a JV, where around 500-megawatt of lignite-based thermal power station will be installed. And also, around 2 gigawatt of renewable capacity, mainly solar, will be added under this JV.
Any timeline for this, sir, as of now?
We are forming the JV immediately. That will be formed within next quarter. And subsequently, we'll be doing the activities in fast-track mode. The renewable power station will be completed within 2 years and this lignite-based power station, it will take 4 years to complete.
And sir, this solar power plant that you're talking about, so this would not be a part of your 100% subsidiary. This would be a part of the JV with Rajasthan government. Is that the correct understanding?
No. Actually, the JV is being formed at around 76-24 -- 74-26. And accordingly, it will move forward.
Okay. And my last question is on any interest in critical minerals. I think we had talked earlier that there is some interest. As of now, what's your thought process there?
See, we are having experience of open cast mining for almost 68 years. To use that experience, we are trying to venture into the mining of critical minerals also. We participated in the auction in the first and second commercial coal block auctions. But because of minimum number of participants condition, both were annulled. Now we are doing due diligence of the coal blocks that are referred in the fourth commercial coal block option. And after doing due diligence, we'll participate and try to acquire some blocks.
As there are no further questions, I would now like to hand the conference over to the management for closing comments.
Thank you all for wholehearted cooperation and expect the same in future also. Thank you.
Thank you. On behalf of DAM Capital Advisors Limited, that concludes this conference. Thank you for joining us, and you may now disconnect your lines.
Okay. Thank you.