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LEPCL all geared up to commence production this Feb

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February 02, 2022 (MLN): Lucky Electric Power Company Limited (LEPCL) is all set to commence commercial production by the mid of February 2022 where the plant will run on both local Thar coal and imported coal in the near term but in the long run, it would rely more on local coal, said the management of LUCKY cement while holding a corporate briefing recently.

The 660MW plant is already in the testing phase and was connected to the grid in the last quarter.

As per the management, all issues including NTDC and transmission line have been resolved. This will aid profitability significantly. Since the delay was due to impediments in getting the grid connection, the company hence does not foresee any penalty for it.

To recall, the company had disclosed its financial performance for the half-year ended on December 31, 2021, as per which the company posted net profits of Rs17.15 billion, almost 38% YoY higher than the profits of Rs12.44bn secured in 1HFY22. This increase in profitability was attributed to the growth in the top line led by a hike in retention prices in the North and South and government incentives for the construction sector which created buoyant cement demand.

The management anticipates a general slowdown in cement sales due to higher cement prices, rise in other construction materials, and general economic slowdown that may affect gross margins of core business cement in 2HFY22, according to key takeaways covered by Topline Securities.

However, to offset this impact LUCK’s north plant is running 10-12% on Afghanistan imported coal, which is relatively cheaper than South African imported coal.

On Lucky Motor Corporation, the management guided that the issue of semi-conductor chips has improved. However, a recent increase in FED and sales tax in the mini-budget have elevated car prices. This, coupled with the increase in interest rates, pose a threat to demand going forward. But the management believes that Kia models and the recent inclusion of Peugeot are likely to keep the gross margins of LMCL around healthy levels in 2HFY22, said Rahul Hans of Intermarket securities.

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Posted on: 2022-02-02T09:49:27+05:00

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