Tata Power Company Q2 Results Analysis

Tata Power Company, the country's largest private power utility, for the second quarter ended 30^th September 2008 posted a 2% fall in PAT at Rs.252.93 crore despite a 45% rise in total income at Rs.1959 crore. What is significant here is that the higher sales was possible to the hike in the per unit charges as sales, in terms of units has actually gone down by 11%. The gross generation for the quarter was at 3459 MUs as against 3684 MUs, a reduction of 6% and this was due to hydro units operating at lower MUs inorder to abide by the Krishna Water Accord which restricts the amount of water that can be discharged.

Profitability was hit due to high prices of crude. For the current Q2, fuel cost increased by 76% to Rs.1,374 crore as against the total expense for the quarter at Rs.1771 crore. The company has stated that accounting numbers were not comparable as the company was making 'regulatory adjustments' on a quarterly basis instead of providing it in the last quarter.

Looking ahead, in Haldia, the first 45 MW was commissioned in August 08’, the second 45MW is to be commissioned in current Q3 and third unit of 30 MW is to go online by end of this fiscal. So from next fiscal, another 120 MW will start contributing to the bottomlines. The UMPP at Mundra is progressing as scheduled, with the civil work currently in progress. The first unit is expected to be commissioned by September 2011. It has acquired 30% stake in two Indonesian coal mines to provide fuel linkage for this UMPP.

All the major projects have already been funded for and for the short term, the company has lined up funding to the tune of Rs.500-1000 crore, hence the company states that it is insulated against any eventuality and is not likely to face any credit crunch.
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