Weak rupee to hurt IPPs, may offset gains from lower global coal prices
Analysts said companies, such as Adani Power and JSW Energy, which are more reliant on imports, will be hurt more by the weakening of the rupee than others like Tata Power, which owns coal mines in Indonesia.
Almost all of JSW's operational capacity relies on imported coal, while Adani also mostly sources the fuel from abroad at present for its flagship 4,620-MW Mundra plant. Tata Power imports roughly half of its coal consumed.
"Primarily, we are concerned about the cost of coal as about 12-15% of total coal demand is expected to come from imports this year and shipping costs would also rise," said Kameswara Rao, executive director, power, PwC India.
The cost of debt is also a worry as a result of a weaker rupee, while power equipment costs will also rise, including for the renewable space, as almost 40 GW of projects under development source imported products, Rao added. Adani Power and Tata Power declined to comment on the story, while JSW Energy could not be reached for a comment.
Power companies benefited in the previous quarter from the sharp appreciation of the rupee in the month of September. A stronger rupee helped boosted JSW Energy's profit by R92 crore, while Adani Enterprises, which holds a 68% stake in Adani Power, registered a forex gain of R130 crore. However, strengthening
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