GMDC eyes increased share of revenue from power

This comes in the wake of GMDC seeing a growth in its plant load factor from 28% last year to 36% in wind power

At a time when availability of fresh lignite and bauxite reserves is strained, state-run Gujarat Mineral Development Corporation (GMDC) is turning towards its power business for increased revenue generation.

According to company sources, from a current ratio of 70:30 between its mining versus power segments, the state enterprise has set a target of moving towards 60:40 ratio even as it looks to add more wind and thermal power capacity.

"While there is a steady revenue being generated in lignite, with volumes of over 8 million metric tonnes, there are challenges in availability of fresh reserves. On the other hand, our power business is doing better. Hence, in near future, we are looking at over 40 per cent of our revenue coming from our power business," said a company official on condition of anonymity.

The move comes in the wake of GMDC seeing a growth in its plant load factor (PLF) from 28 per cent last year to 36 per cent in wind power. In the first quarter it had generated around 123 million units from wind power.

GMDC has power purchase agreement (PPA) with Gujarat Urja Vikas Nigam Limited, the state discom where it sells wind power at Rs 4.15 per unit.

Recently, in its guidance for the year, GMDC had stated that for the financial year 2016-17, it expects to generate around Rs 1,600 crore revenue, of which over Rs 500 crore is likely to come from power.

Moreover, as part of the move, GMDC is also looking to strengthen its position as a value addition player in minerals by setting up a Rs 5,400 crore alumina refinery in north Gujarat in a joint venture with NALCO.

The state-run mining player had seen both its net profit and revenue falling for the fiscal 2015-16, thereby raising concerns over its mining business.

Apparently, Gujarat Mineral Development Corporation (GMDC) is banking on the Centre's decision to allow the state-run company to reserve 100 million tonnes of lignite mined on 3,015 hectares of land for itself. The Centre's decision recently came after the Gujarat government's request to reserve lignite for GMDC.

Currently, GMDC produces 10-11 million tonne of lignite annually from its mines from roughly four districts in the state amidst fluctuating demand.