Tata Power reports dismal Q2 numbers, net loss at Rs 1219 crore

Tata Power, biggest private sector power utility has announced its quarterly result. Company reported a net loss of Rs 1219 crore on consolidated basis. The loss has been a result of the Forex loss and a provision for impairment. On standalone basis it has posted a profit of Rs 313.04 crore in September quarter. 

During the quarter, company generated total 3772 million units (MU) compared to 3695 MU in the same period last year. Total sale was higher by 3 per cent to 3793 MU. Its merchant sales from unit 8 remained lower due to extended outage, while Haldia generation was 26 per cent higher than last year. Merchant realization was higher in Unit 8 (Rs 5.22/ Unit) and lower in Haldia (Rs 2.89 / Unit) from same period last year.

Power business Revenues increased by 31 per cent to Rs 3934.43 crore in this quarter. Coal business revenues increased by 47 per cent mainly due to the higher coal prices in Indonesia. Company sold some noncore investments in the previous year, its revenues from other business decreased by 45 per cent. 

Its cost of fuel remained higher by 38 per cent in this quarter mainly due to higher oil prices as well as commissioning of new generation project by North Delhi Power Limited (NDPL). Cost of power purchased remained higher by 40 per cent due to higher volumes of power purchased by NDPL. Coal processing charges remained higher due to higher coal volumes and processing cost. Depreciation charges were also higher by Rs 60 crore as Maithon Unit I of 525 MW and Industrial energy Unit 5 were commissioned. As an impact of increased costs, its EBITDA margins decreased by 200 basis points to 22 per cent in this quarter compared to 24 per cent in the same period last fiscal. 

For the quarter company reported 59 per cent rise in its interest cost from Rs 208 crore to Rs 331 crore. Interest expenditure rose due to higher interest outgo on loan taken in coal business and NDPL. Company also reported Rs 737 crore as Forex loss. Tata Power has made Rs 823 crore as provision for Impairment for its subsidiary Costal Gujarat private limited. As net result it has reported net loss of Rs 1219 crore. 

On standalone basis however its revenues have increased by 19 per cent to Rs 1864 crore. Its EBITDA margins slightly improved to 22 per cent and net profit increased by 24 per cent to Rs 313 crore. 

Company is soon to commission its biggest generation project and countries first Ultra mega power plant, Mundra UMPP of 4000 MW. This project is based on Indonesian coal and will suffer losses due to the new legislation of benchmark pricing and lower tariff.  It has asked government to raise the tariff to include the new coal prices which is still pending. As a reason, company has made the provision of Rs 823 crore. Unless the tariffs are revised upwardly earnings will remain pressure in future.

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