Tata Power reported nearly 67-per cent decrease in consolidated net profit in the third quarter of current fiscal due to lower profits from coal business and higher expenses (including increased fuel costs and losses) at Mundra power plant.

The company’s net profit for the quarter ended December 31, 2018 stood at ₹204 crore as against ₹628 crore in the corresponding quarter of FY18.

Expenses were up at ₹7,721 crore (₹6,611 crore). The cost of fuel has increased significantly from ₹2,491 crore in Q3FY18 to ₹3,319 crore in Q3FY19.

Total income for the quarter rose by 16 per cent to ₹7,721 crore as against ₹6,451 crore a year ago mainly due to higher plant load factor (PLF) of its coal-fired plants and addition of 356 MW of renewable energy capacity as well as higher shipping revenue, the company said.

Rising fuel costs

“PAT is affected due to coal companies profitability that is under pressure due to domestic market pricing obligation and increase in fuel prices,” Praveer Sinha, CEO & Managing Director, Tata Power said.

The consolidated profit was also impacted by losses at the company’s 4150-MW Mundra plant in Gujarat as higher generation led to increased fuel under recovery.

Tata Power is yet to benefit from the relief provided by Supreme Court’s last year order allowing State distribution companies and power generators to move Central Electricity Regulatory Commission (CERC) to amend the power purchase agreement (PPA) with imported coal-based plants, as per the recommendations of the High Power Committee.

PPAs with discoms

While Gujarat government has already finalised the supplementary PPA with CGPL based on recommendations of the High Power Committee Report, four other States procuring power from the plant — namely Rajasthan, Gujarat, Haryana and Punjab — are yet to finalise the amendments.

During the quarter, Tata Power has received a regulatory approval for extension of PPA for its 677 MW Trombay plants by another by five years until 2024. The company has also closed the deal for acquiring 75.01 per cent stake in Prayagraj Power operating 1,980 MW supercritical power plant in UP through its Resurgent Power Ventures platform.

The company’s gross debt has been reduced by around ₹3,200 crore as a result of monetisation of non-core assets, including sale of its shares in Tata Communications and Panatone Finvest and realisation of Arutmin mine stake sale as well as dividend from coal companies during the year, Tata Power noted in its analyst presentation.

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