In an interview with CNBC-TV18, Mr Ravi Sharma CEO of Adani Power said that coal shortage is a national issue and not an individual company's concern. He added that companies without integrated business model are likely to be affected by the shortfall.
Below is the verbatim transcript of his interview
Q - Talking about the coal issue, we have noticed that Indonesian coal cost have gone up and that would naturally impact coal importers like yourself how would that damage or at least hurt your bottom-line?
A - I will give the answer to your question in two stages: first, People are aware that our company follows an integrated model. We have our own coal mine, ports, ships which we use in our power plants. In integrated model, any impact would only be marginal or minimal. All the same, this index pricing of Indonesia is not a new phenomenon. It has been going on for the last three years and got implemented about two years ago. So, it is not something new.
Second, coal shortage is not anymore an issue for an individual company. It is the national issue. Coal India produces about 550 million, about two third of that is allocated to power. Now, the allocation for 2012, considering plans which we have for the power plant, there is a shortage of 70 million tonne in power plants. So that means about 15,000 to 20,000 megawatt capacity will not be able to move.
Going ahead to 2017, India will have to import anywhere between 150 million to 350 million tonne to meet its requirement. And, if that is not done then you can understand how much losses of production will happen. So it is no more an individual phenomena on a company, it is the country's concern today.
Q - As per the new pricing, how much has Indonesian coal cost gone up and how would that hurt the industry?
A - I don't think it is going to be in that phenomena which you are talking about that the prices will go up. First of all it will impact more people who are not having their own mines, it will impact more people who do not have integrated model because this is 100% own mine is owned by us and we have our own logistics mechanism in place so I can only tell you in our case it will be minimal whatever minimal it can be. But in our case I don't think it is going to impact our bottom line.
Q - Are you on track to achieve 4620 megawatts?
A - Today, there are six units under operation, which includes four units of 330 mega watt and two units of 660 mega watt. Thus, total capacity under operation today at Mundra plant is 2640 MW. We hope to commission three more units in this financial year to take capacity of Mundra itself is about 4620 mega watt. In addition, we will be commissioning two more units at our Tiroda plant. This will lead our capacity at the end of this financial year close to 6000 mega watt.
Q - If you can also update us on the plant load factor which many of your capacities are operating- have the levels improved that we have seen in fourth quarter?
A - The fourth performance was more than 90% at that point in time. The average PLF of the last year was 85%. Going forward, it would appreciate when every new unit comes as it takes time for stabilisation. So our target for this year is to do better than last year.
Q - Can we drill it down to numbers what kind of profit growth are you seeing in FY12?
A - Well, I would not be able to give any forward statement here in terms of our revenue and profit. Our realization about the capacity, which we sell in the market, has been much better than the average market rate. Furthermore, we have been able to ramp up our capacity much faster than anybody else. Today, we are the largest thermal power producer in the country and I do hope that by March we will be the largest private power producer in the country even if you take all other segments.
Q - Rumours are abuzz that Canada-based Ballard Power Systems is eyeing a stake in your company?
A - It will be difficult for me to tell you that who is eyeing a stake in Adani, but we are not in discussion with anyone as far as the company is concerned.
