Tata Power net falls 7 percent, margins shrink 350 bps

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Tata Power, tata powers, economy, india Fuel cost for the period was higher at Rs 2,491.24 crore, against Rs 2,284.6 crore a year ago, as was the cost of power purchased at Rs 2,070.91 crore, compared with Rs 1,696.74 crore.

Tata Power Company, which is grappling with serious business challenges in the power sector, saw its consolidated operating margins drop by 350 basis points to 17.39% for the quarter ended December 31, 2017 as expenses rose.

Total expenses, including fuel cost, power purchase cost and transmission charges, was up 9% to `7,183.84 crore, while the earnings before interest, tax, depreciation and amortisation was lower by 12% year-on-year to Rs 1,208 crore.

Fuel cost for the period was higher at Rs 2,491.24 crore, against Rs 2,284.6 crore a year ago, as was the cost of power purchased at Rs 2,070.91 crore, compared with Rs 1,696.74 crore. Transmission charges rose to Rs 70.25 crore from Rs 55.82 crore a year ago.

Despite taking credit of a tax reversal of `319.86 crore in the quarter, the net profit dipped 7.17% to `649 crore. The profit before tax was at `9 crore, compared with `246.28 crore a year ago, as the company bore an impact of `142 crore on rate-regulated activities.

The segment revenue, that includes the power business – generation, transmission, distribution and trading of power and related activities – and other businesses was up around 9% to `7,531 crore. The segment profit, however, fell 21% to Rs 885 crore.

With regards to recovery of losses from 4,000 MW Mundra UMPP in Gujarat, the company said, the lenders and the management of Coastal Gujarat Power are in discussions with the buyers of power to arrive at alternative solutions to minimise operating losses including the offer for sale of 51% shareholding in CGPL at a nominal value to procurers subject to grant of compensatory tariff. Anil Sardana, CEO and MD, said, “Tata Power has been focusing on building a healthy energy mix within portfolio that is in line with our commitment towards ensuring a sustainable future. We have been working towards achieving this goal by growing our renewable energy business through the addition of organic and inorganic projects…”

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