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BL Research Bureau
Rising interest and raw material costs weighed heavily on Tata Power’s consolidated net profit in the fourth quarter of FY19. This limited the impact of the renewable business on the company’s consolidated performance.
The company reported a consolidated net profit of ₹107 crore, down 92 per cent over the same period last year. Consolidated revenue rose 5.6 per cent to ₹7,574 crore.
Excluding an additional ₹106.41 crore impairment provision for its 108 MW Rithala power plant and a ₹45 crore provision of entry tax for the Trombay plant and other exceptional items, net profit before exceptional items stood at ₹259 crore compared to ₹119 crore a year ago.
Also read:Tata Power reports strong Q4 performance
The EBITDA of its renewable businesses, housed under various subsidiaries, came in at ₹575 crore for the quarter. The improved performance of its renewable businesses led to its consolidated EBITDA to rise 35 per cent to ₹1,879 crore in Q4 compared to last year. For the whole year, the renewables businesses’ EBITDA rose over 13 per cent to ₹2,288 crore.
The overhang of Tata Power’s inability to pass higher fuel costs to consumers for the Mundra plant subsidiary firm Coastal Gujarat Power continued to persist, but the under-recovery during Q4 seems to have ebbed a bit.
The price of coal for CGPL during the quarter was down nearly 10 per cent to $55.3 per ton. This, coupled with blending of low gross calorific value coal, helped arrest fuel under-recovery at the Mundra plant to ₹0.64 per unit, compared to ₹0.94 a year ago.
Higher EPC project sales saw subsidiary Tata Power Solar revenues more than double in Q4. This led to a near five-fold rise in the subsidiary’s profits to ₹85 crore. Issues relating to the right of way for its wind power plants hampered subsidiary Tata Power Renewables Ltd (TPREL) performance during the quarter.
This, coupled with higher interest cost and lower dividends from subsidiary Walwhan Renewable Energy Ltd (WREL), led to TPREL reporting a ₹5 crore loss. WREL used its profits to prepay some of its loans, so that it would mean lower interest costs in the future.
Tata Power is in discussion with various states for a resolution on CGPL’s under-recovery issue. Once a conclusion is arrived at, it will file a petition with the Central Electricity Regulatory Commission.
The extension of the Tata Power’s Mumbai distribution business for another five years bodes well for the company. But an early resolution of the CGPL’s under-recovery issue continues to remain a key for an increase in profitability.
Even after its profitability took a beating in Q4, Tata Power has recommended a ₹1.30 final dividend to its shareholders.
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