Neyveli Lignite Corp (NLC) A PSU Stock To Stay Invested

NLC is involved in lignite excavation & power generation business. It supplies power to southern states and has a total installed capacity of over 2070 MW. Its plants are fully integrated with lignite (17 mn tpa) drawn from its own lignite mines. It also has a 129,200 tpa urea plant and a 262,000 tpa briquetting and carbonization plant.

This is one stock which has been in the upward mode right since the time UPA came back to power. It touched a high of Rs.147 on 5th June and today is quoted in the range of Rs.121 and it expected to more or less remain stable at these levels.
Neyveli Lignite Corp (NLC) a drop in production and this has affected the performance for FY09. Though the turnover of the company rose 13% at Rs. 3,355 crore, net profit fell by 25% at Rs. 821 crore.

To spread the risk of dependence on lignite, the company has now decided to diversify into hydro and wind sectors. It is looking at the possibility of setting up a 1,000-MW hydro electric project in Uttarkhand. It also intends to participate in the upcoming ultra mega power projects (UMPP) floated by the Power Ministry.
Its 2x250 MW lignite-based plant at Neyveli, which was to go on stream by Nov 2008 has been delayed and now it is expected to be commissioned this fiscal. The delay was due to the reluctance of technology supplier Lurgi to sign agreements with equipment supplier, BHEL. The matter has since been resolved by NLC accepting that BHEL will assume the full responsibility for the technology.
The Govt holds 93.56% of NLC’s equity while financial institutions hold 4.38%. LIC has a 2.48% stake. For now, stay invested in this PSU. thanks