"The power distribution sector in India faces significant challenges"

Suresh Chandra Suman inputs on power distribution sector

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Suresh Chandra Suman

Director Finance (Additional Charge) & Director Mines, NLC India Ltd.

In Q1FY24, the company’s net sales fell by 14.15 per cent from the same quarter last year to ? 3,316.49 crore, while its net profit fell by more than 27 per cent to ₹413.55 crore. What factors contributed to the company’s poor performance?

Lignite and Coal based Thermal power generation is the core business and a significant contributor to the revenue mix of NLCIL Group, accounting for approximately 76 per cent of its total revenue. Owing to hurdles in land acquisition in Neyveli mines, the pit head power plants were unable to generate electricity at the desired level, leading to decrease in revenue generation. There was a generation loss by 25 per cent mainly on account of shutdown of thermal units in neyveli due to lignite shortage to the tune of 4510 MU in QI FY 24 from 6051 MU of corresponding period last year. Plant Availability Factor of Lignite based stations in QI of FY 24 declined from 83.10 per cent to 62.58 per cent of the corresponding period last year.

Plant availability factor in Q1FY24 declined from 83.10 per cent to 62.58 per cent of the corresponding period last year. Despite the challenges faced in Q1FY24, the company maintains a positive outlook and is optimistic about a rebound in the second quarter. This confidence is driven by the positive outcomes of land acquisition negotiations with villagers through district and state authorities. The company believes that land acquisition issues will be resolved very soon and it will unlock significant growth opportunities, leading to an improved financial performance in the upcoming quarters.