Date| July 12, 2017:

In a chat with ET Now, L Kulshrestha , CFO, GMDC says that the lignite demand is increasing day by day and because our lignite is cheaper now.

Edited excerpts:

GST brings an era of significantly low rates for you. Firstly tell us what are the other savings and other monetary benefits that you are going to be witnessing in the post GST regime.

Lignite prices have come down due to implementation of GST. The present rate of GST on lignite is 5%, previously effective tax rate was 30% approximately. And we have not decreased our prices or increased our prices so there is no saving as on date but benefit has been passed on to the customer. In addition to this, demand is good. We hope that our production will increase by 20% as compared to last year and this will result into financial benefit to the company.

We understand also that the final landed prices of your company lignite delivered to customers has gone down by close to 20%. Would this be completely on account of decline in taxes post GST or would you attribute another reason to this?

It is between 19% to 24% and this is due to lower rate of GST.

What is the trend in prices then, I mean at a time when coal prices are down, are lignite prices mapping what the coal price trend is?

As far as lignite price, there is no change. We have not revised because we are the merchant seller in Gujarat so there is no effect. However, in case of pet coal and imported coal, we have noticed that price have increased.

Are you getting a sense that the demand from some of the major industries from Gujarat for lignite and pet coke could remain weak?

Lignite demand is increasing day by day and because our lignite is cheaper now a days because of GST implementation and we expect that cement industry and power sector bill will procure the material from us.

Give me a broad sense of what could be your projected demand forecast for FY18?

For FY17-18 we expect that our demand will be around 95 lakh metric tonne.

And I am assuming that everything is going to be coming out from your mines and you would not be doing any kind of merchant trading here?

No we will not do. All material will come from the mines.

What is the contribution from the Panandhro mine?

We will be able to produce around seven to eight lakh metric tonne in the current financial year from Panandhro mine.

Can you give me a breakup of how much will come from the Mata-No-Madh mine, who much will come from Panandhro and how much new mining capacity you will be able to add in this fiscal?

Maximum revenue will be generated through Mata-No-Madh mine. Their capacity is 24 lakh metric tonne and other Umarsar mine will continue around 10 lakh, then Tadkeshwar 15 lakh and substantial material will also will be supplied through Bhavnagar mine.

And minus your mining operation you also have a wind power business. What kind of PLF do you project from your wind power business or from your power business?

Wind power project at present our capacity is 200.9 megawatt and wind power capacity and we expect that PLF will be around 25% to 27%.

How power prices have moved in India?

In case of thermal, our PLF will be… we expect that our PLF from thermal power station will be around 65% and total revenue generation will be around 320 crore. In case of wind power, our revenue generation will be around 166 crore in the current financial year.

Now the power prices in India have come down. We could blame it on variety of factors. If I look at the power tariff for solar power, for wind power the alternate sources have come down and thermal power prices are also not going up. So how much of your current capacity is committed via PLF route and how much of your current power capacity you are looking at selling in the open market via the merchant power route?

We will not sale any energy in open market but we are supplying our power to Government of Gujarat undertaking. We have PPA with them for 25 years.

What is the price which you are getting per unit from the Gujarat Government?

In case of wind, we are getting Rs 3.56 in some project, in respect of some of the projects and recently we are getting Rs 4.19 per unit.

(Source: http://economictimes.indiatimes.com/)