Today was a golden day for NLC India, as it formally bagged a large coal mine in Odisha—one that has the potential to double the company’s lignite-cum-coal production.
The company signed a Coal Mine Development and Production Agreement with its parent ministry, the Ministry of Coal, formally taking over the Machhakata coal mine in the Angul district of Odisha. NLC India expects to spend around Rs 12,000 crore in developing the mine. It was won on a ‘revenue sharing’ model. Production is likely to commence in 2030.
NLC India won the mine in the 8th round of auctions held by the ministry recently.
Bagging the coal mine is a big deal for NLC India, as it the mine could yield 30 million tonnes of coal annually. Last year, the company’s total coal and lignite production was 36.32 m t.
The stock market took note of the development. NLC India’s share touched ₹302.60 before closing at an all-time high of ₹297.75 (21 times its earnings and 2.42 times its book).
NLC India, which started as a thermal power generator with captive lignite mines, has become more of a coal and lignite producer than electricity. In 2023-24, the company earned revenues of ₹8,363 crore from power sales and ₹7,902 crore from mining, but the latter yielded more profits—₹1,550 crore (56 per cent of total net profit), compared with ₹907 crore from power.
Net profit from mining is 19.61 per cent of sales from mining operations; for electricity, it is 10.8 per cent.
Future perfect
Revenues from coal sales are only set to increase. In a recent chat with businessline, NLC India’s Chairman and Managing Director, Prasanna Kumar Motupalli, said that coal production from its Talabira mines would increase to 16 m t in the current year, compared with 12.64 mt in 2023-24. Also, the company bagged the North Dhadu coal mine last year, which can yield 4-5 m t of coal a year. Motupalli told businessline that the company would sell the entire production from the mine in the open market, as opposed to entering into a long-term supply agreement with an offtaker.
Furthermore, NUPPL, the company’s joint venture with Uttar Pradesh Rajya Vidyut Utpadan Nigam—in which NLC India has 51 per cent stake—has been allotted the Pachwara South coal block in Jharkhand. The mine can produce 9-10 mt of coal annually, but the NUPPL’s 1,980 MW Ghatampur thermal power plant, set to go on stream in a fortnight, will need only about 5 mt of coal—the rest of the production can (shall) be sold in the market.
In its corporate plan for 2030, the company has targetted coal and lignite production of 100 mt.