In 2008-09, Tata Power Trading Co Ltd, a 100 per cent subsidiary, had revenues of Rs 2,167 crore and a profit after tax of Rs 7 crore.
It traded 2,986 million units (MUs) against 1,711 MUs in the previous year, according to a presentation made to investors, a copy of which is available on Tata Power’s Web site. In 2009-10, Tata Power Trading expects to trade 4,500 MUs.
The subsidiary’s operating income in 2007-08 was Rs 882 crore and net profit Rs 4 crore.
Tata Power’s Managing Director, Mr Prasad Menon, told analysts in a conference call after the 2008-09 results were announced last month, that in March, the merchant generation (the power generation capacity that is not covered by a power purchase agreement with a specific customer and which can be sold to any buyer) was about 10 per cent of overall generation outside the Mumbai licence area.
The contribution from the company’s merchant capacity was showing an increasing trend as Haldia (90 MW) and Unit 8 at Trombay (250 MW) stabilised.
“We have realised rates between Rs 6 and Rs 7 a unit for power traded from Haldia and Unit 8,” he told the analysts, a transcript of which is also available on the company’s Web site.
(Just to give a perspective on the power trading business in the country, PTC India Ltd, the largest power trading company, traded 13,825 MU in 2008-09 against 9,889 MU in the previous year.
Its income for the year ended March 31, 2009 was Rs 6,528.88 crore and net profit Rs 90.90 crore.)
The power trading business accounted for about 12 per cent of Tata Power’s consolidated income of Rs 17,587.53 crore in 2008-09, against 8 per cent of the Rs 10,890.86 crore income the previous year.
The Indonesian coal mines – PT Kaltim Prima Coal (KPC) and PT Arutmin Indonesia – in which Tata Power has a 30 per cent stake, performed well during 2008 and were profitable even at current coal prices, Mr Menon told the analysts.
(Tata Power acquired the stake in the coal mines for $1.1 billion in June 2007, which was financed through a $950-million bridge loan.) Tata Power has an offtake contract for 10.5 million tonnes a year.
The company will use half the quantity of coal it gets from the Indonesian mines for its 4,000 MW ultra-mega power project that is under construction at Mundra in Gujarat.
According to the company, the Indonesian mines produced 52 million tonnes in FY09 with an average realised price (f.o.b.) of $77.56 a tonne.
In the previous year, it produced 54 million tonnes of coal with an average realised price of $44.
Mr S. Ramakrishnan, Executive Director – Finance, Tata Power, said that given the current coal prices, the company had started to review all capital expenditure except that which leads to cost reduction.
“We have put all the other capex on hold at this point of time,” he was quoted in the transcript.
He told the analysts that the operations at the coal mines were profitable even at these low prices as the cost of mining operations had gone down with the fall in oil prices.
On the breakeven price, Mr Ramakrishnan told the analysts, “if our realisation goes down further by another $5-10, we will come into an area where the breakeven will come but we believe that the coal prices are at a rock bottom.”
Tata Power will spend about Rs 5,500 crore this year on various projects, including that of the special purpose vehicles floated by it, of which Rs 1,700 crore will be equity.
Next year, it estimates the capital expenditure will be Rs 6,900 crore.
The company’s generation capacity was 2,785 MW at the end of the last financial year and it will add 220 MW this year. It generated 14,807 MUs in 2008-09 against 14,717 MUs in the previous year.
The company had made an impairment provision of Rs 280 crore on account of recognition of goodwill impairment loss relating to its investments in certain overseas joint ventures.
Tata Power has said that it will consider all options to raise finances to meet its equity commitments.
It has raised short-term funds of Rs 1,300 crore, which would see it through this financial year. Its debt on a consolidated basis was about Rs 13,900 crore.
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