Tata Power Company reported a consolidated loss of Rs 246.9 crore in the fourth quarter of financial year 2016-17 after the company made a one-time exceptional payment of Rs 651 crore towards Tata Sons’ liabilities to DoCoMo. Excluding the DoCoMo payments, the company reported a profit of Rs 389 crore as compared with Rs 89 crore profit a year ago led by strong performance from the coal mines business in Indonesia that further offset the under recoveries from Coastal Gujarat Power that owns the Mundra project in Gujarat.
The Supreme Courts’ stay on compensatory tariff for the Mundra project did not had any impact on the company’s financials as the company had not recognised any revenue from the compensatory tariffs in their accounts in past, the company said. However, analysts believe going ahead at the current rate of Rs 0.30 per unit to Rs 0.40 per unit under recovery, the company would have an impact of Rs 900 crore to Rs 1,100 crore in financial year 2017-18. In nine months to December 31, 2016, Tata Powers’ Coastal Gujarat Power subsidiary reported a loss of Rs 712 crore. In the fourth quarter also the losses are expected to be in the range of Rs 250 crore, a Mumbai based analyst said.
Going ahead it would be interesting to keep track of how the company will make CGPL viable in the absence of any compensatory tariffs and its inability to convert the plant into domestic coal based plant. “The group regularly reassesses the recoverability of the carrying amount of its assets at Mundra. In view of the estimation uncertainties in determining the future cash flows, the assumptions will continue to be monitored on a periodic basis by the management and adjustments will be made if conditions relating to the assumptions indicate that such adjustments are appropriate,” the company said in a limited liability report.
Tata Powers’ total income for the quarter fell marginally by 0.5% to Rs 7,392.95 crore on lower sale of power and higher fuel cost. Fuel cost for the quarter was up by 30% on year to Rs 2,515 crore while raw material cost rose 24% to Rs 378 crore. Operating profit for the quarter stood at Rs 1,164 crore as compared to Rs 1,648 crore a year ago due to under recovery from Coastal Gujarat Power and the one-off tax impact in Tata Power Delhi Distribution, which however, does not affect the net profit.
On full year basis the company reported a net profit of Rs 1,397 crore (before the one-off DoCoMo impact of Rs 651 crore) as compared to Rs 662 crore a year ago mainly due to higher contributions by the coal mines in the second half of fiscal year, strong performance of the renewables business and the mark to market gain on foreign exchanges, the company said in a statement. Total income for the full year fell 4.3% on year to Rs 27,288 crore due to lower fuel and power cost, and the one off items.