Tata Power’s second quarter revenue and profit missed analyst estimates for the second time this fiscal as cash flows continued to be stressed due to delays in recouping compensatory tariff at the Mundra ultra mega power project in Gujarat due to legislative roadblock.
The company reported a consolidated loss of Rs 78 crore on revenue of Rs 8,394 crore for the quarter ended September 30. Analysts expected a profit of Rs 133 crore on sales of 8720 crore, according to a poll conducted by Bloomberg.
The company swung to loss in the second quarter compared with the Rs 75-crore profit booked in the same quarter in fiscal 2014. Consolidated revenue fell 4% year-on-year mainly due to lower realisation by coal companies and lower fuel costs in Mumbai operations. The company’s profit also fell as it made provisions for certain expenses pertaining to deallocation of coal mines by the Supreme Court last month.
Revenue from the coal business stood at Rs 2,079 crore, a decline of 10% year-on-year due to lower price realisation from coal companies despite higher volumes. “Despite falling global coal prices, losses in coal companies have been minimised by prudent cost control measures,” the company said in a statement.
Tata Power Managing Director Anil Sardana told analysts during a post-earnings conference call that the company would have accounted for compensatory tariff amounting to Rs 160 crore in the quarter had the Central Electricity Regulatory Commission (CERC) order been enforced. Taking into account the first quarter numbers, consolidated profit would have been higher by Rs 385 crore if the compensatory tariff had been received and booked.
The company, unlike peer Adani Power, has not accounted for the compensatory tariff awarded by the CERC in February 2014 as “the amounts associated are significant.”
The Supreme Court, in late-August, remanded the compensatory tariff order back to the Appellate Tribunal for Electricity, saying that firms cannot seek higher tariff on account of force majeure events after securing contracts for supply of electricity to state discoms on the basis of competitive bidding.
The company’s Mumbai power distribution business received a shot in the arm after the Supreme Court upheld its right to expand its reach into an area that was previously served solely by the government utility Brihanmumbai Electric Supply & Transport Undertaking.
“We are working on additional rollout plan for customer acquisition across Mumbai,” Sardana said in a statement.