NCL Industries owns and operates two hydel power plant with an aggregate power generation capacity of 15.75 MW. One of the plant is at Pothireddipadu (on Krishna river) while the other is on Tungabhadra Dam RBHLC. The company recorded 36% fall in power generation volumes in 2011-12.

Lower power generation in FY12 is largely on account of sharp fall in generation from Pothireddipadu plant. This hydro power plant recorded sharp 68.4%yoy fall in power generation to 7.69 million units. On the otherhand, the performance of Tungabhadra Dam RBHLC was relatively better with a generation of 24.68 million units, translating in a drop of just 6%. On lower volumes the segment revenue and profit (EBIT) of power business of the company for FY12 was down by sharp 41% and 59.6% respectively.

K Ravi, Managing Director of NCL Industries quoted, ‘ We are estimating a power generation of 15 MU from Pothireddypadu and 25 MU from TB Dam Plant for FY2012-13”. Given the fact of the company selling power generated at Pothireddypadu plant at 2.66 per unit under PPA that of TB Dam was sold at Rs 1.98. This translates into a power sector revenue of about Rs 8.90 crore, a growth of 29% yoy.

The power generation of both the hydel plants depends mainly on water releases and adequate head to generate the power. According to the company, in a normal season, the Pothireddypadu plant will operate for about 6 to 7 months and TB Dam for about 7 to 8 months in a year.

Ravi further said, "the two hydel power plants were originally set up by erstwhile NCL Energy (now merged with NCL Industries) and at that point of time 3rd party sales was not allowed in AP. So NCL Energy signed PPA for 20 years and as per our legal counsel, the company cannot come out of the PPA so it can use the hydel power for its cement manufacturing activity. Moreover we also felt that after considering the wheeling charges and transmission losses etc., it is not economically viable to use the generated power for captive purpose.”

The company incurred Rs 38.53 crore on purchase of 10.24 crore units of power, at an average price of Rs 3.76 per unit in FY 2010-11. To bring down the cost of power used in cement business, the company is setting up a 30 MW import coal based power plant with in the premises of its existing Mattapally cement plant at a cost of Rs 150 crore. Of the total project cost, about Rs 100 crore will be debt and balance will be funded through equity and internal accruals. The company already has required land in possession and the public hearing for the same has been completed on July 3, 2012. With smooth completion of public hearing the company is hopeful of environmental and pollution clearance without any hurdles. After meeting the captive power requirment of 23 MW, the 7MW suplus power out of this plant will be sold under open access and will not be sold to SEBs.

The company is already operating two ready mix concrete units at Hyderabad and Vizag. It now proposes to set up another two plants in next few months of which one unit will be located in Hyderabad and location for the other unit yet to be finalized. The second location will be finalised after considering the market potential.