Tata Power consolidated Q3 operating profit drops 6.62% year- on-year on higher cost of power purchased

Tata Power Company’s consolidated operating profit for the October-December quarter of 2021 fell 6.62% year- on-year (y-o-y) to Rs 1,633.76 crore as the cost of coal imported for the Mundra ultra mega power project and the power purchased for the distribution business rose substantially impacting the operational profit.

Lower realisations from the sale of power negatively impacted the operating margins as well for the December quarter of 2021 dropping 805 basis points on year to 14.97%.

The cost of power purchased for the distribution companies during Q3FY22 almost doubled to Rs 3,632 crore from Rs 1,802 crore a year ago, while the cost of fuel (coal) rose to Rs 2,489 crore from Rs 2,250 crore a year ago. The employee benefit cost during the pandemic- affected period almost doubled to Rs 970 crore from Rs 498 crore a year ago.

The independent power producer, however, reported over 43% y-o-y increase in revenue from operations in Q3FY22 to Rs 10,913.14 crore on the back of expanded operation in Odisha distribution companies, higher project execution by Tata Power Solar Systems, and strong performance of all other businesses including the Indonesian coal business.

Net profit for the December quarter jumped 73.72% on year to Rs 551.82 crore on the back of higher sales by the power transmission & distribution business, renewable business and the coal business in Indonesia. The segment revenue from the T&D business almost doubled to Rs 7,126 crore in the December quarter compared with Rs 3,881 crore a year ago. Revenue from the renewables business rose to Rs 1,823 crore compared with Rs 1,240 crore a year ago. Revenue from the generation segment dropped marginally to Rs 3,128 crore from Rs 3,407 crore a year ago.

The higher income from coal business in the December quarter of 2021 was, however, offset by the lower income generation from the Mundra UMPP. Coal business reported a revenue of Rs 3,473 crore and a net profit of Rs 623 crore in Q3FY22.

Coastal Gujarat Power or Mundra UMPPs’ loss widened to Rs 458 crore in Q3FY22 compared with a loss of Rs 95 crore a year ago on account of higher imported cost of coal. 

Praveer Sinha, CEO & managing director of Tata Power said, “All our business clusters have contributed significantly despite facing pandemic-related challenges, demonstrating tremendous resilience, strength and agility. We are committed to focus on key growth areas viz renewables, distribution, and new businesses comprising rooftop solar, solar pumps and EV charging. We’ll focus on utilising technology to offer smart, green energy solutions and provide world class experience to our 12 million plus customers.”

Tata Power in its P&L note said, it is in process of obtaining the stakeholders approval for the composite scheme of merger of Coastal Gujarat Power with the holding company for capital reorganisation. The merger will help Tata Power to bring the entire debt of loss making subsidiary that operates Mundra ultra mega power project in the books of the parent company.

As of December 31, 2021 company’s net debt rose to Rs 39,536 crore compared with Rs 36,870 crore a year ago. Net debt to equity at the end of December 2021 rose to 1.58 times compared with 1.51 times a year ago.