* Revenue growth of 45% yoy backed by sharp rise in realizations
* OPM down 580 bps yoy due to steep rise in fuel costs
* Net profit growth of 1.7% yoy not comparable due to change in accounting
policy
* Growth plans intact with funding and fuel tie-ups in place for most projects
under implementation
Revenue growth of 45% yoy backed by sharp rise in realizations
Revenues grew 45% yoy on the back of 64% yoy rise in average realizations per
unit sold (from Rs3.5 to Rs5.8); despite 11% yoy de-growth in units sold (from 3.8
BUs to 3.4 BUs). The sharp rise in realizations was due to escalation in fuel prices,
which are a pass through for Tata Power (TPWR). Sales volumes declined due to
6% yoy decline in units generated (mainly in hydro power plants). Also, up to
Q1FY09, TPWR used to purchase extra power from outside and supply to
distribution entities in the Mumbai License Area (LA) (pure pass through). This is
now being done by another licensee. To that extent, the sales volumes for the
quarter have declined as compared to Q2FY08. Revenues from Mumbai LA
comprised 85% of total revenues in Q2FY09 as against 87% in Q2FY08.
OPM down 580 bps yoy due to steep rise in fuel costs
Contraction in OPM by 580 bps was due to 1,230 bps yoy sharp rise in cost of fuel with prices of coal, gas and oil
reaching their all-time highs in July 2008. However, further erosion in margins was restricted by an aggregate 650 bps
yoy decline in cost of power purchased, staff cost and other costs.
Net profit growth of 1.7% yoy not comparable due to change in accounting policy
Profit before tax was higher by 6.6% yoy on account of 34% yoy rise in other income, despite higher depreciation and
interest expenses. Other income comprised forex gains, dividends received and profit on sale of long term investments.
The effective tax rate for the quarter was higher at 15.2% as against 11.1% in Q2FY08. As a result, net profit was
higher by only 1.7% yoy. However, the PAT is not comparable due to change in accounting policy. Regulatory
adjustments, which used to be made on an annual basis in the last quarter of the year, are made on a provisional basis
every quarter from Q1FY09 onwards.
Business update
* Progress in implementation of generation projects: Management is confident that the company’s growth plans
will not be majorly impacted by the ongoing global financial turmoil. This confidence stems from the fact that funding
and fuel tie-ups are in place for most projects under implementation and construction work is progressing as per
schedule.
o During the quarter, the first unit of the 120 MW Haldia power project was commissioned, synchronization of the
second unit with the grid was completed and the third unit is expected to be commissioned by end FY09.
o The 4,000 MW Mundra ultra mega power project (UMPP) is progressing as per schedule and the first unit will be
commissioned by September 2011.
o For the 1,050 MW Maithon power project (JV with Damodar Valley Corporation), most equipment orders are in
place and overall progress is 20%, in line with the schedule.
o The synchronization of the 250 MW Trombay Unit 8 is scheduled for November 2008.
o The 50 MW wind project at Khandke will be commissioned in Q3FY09. TPWR is developing two more wind projects
of 50.4 MW each in Gujarat and Karnataka.
o The 120 MW each Jamshedpur and Jojobera captive projects for Tata Steel are progressing as per schedule.
* Hydro power initiative in Bhutan: During the quarter, TPWR entered a partnership with the Royal government of
Bhutan to develop 114 MW hydro power and acquired 26% stake in the project. Tata Power Trading will off-take all
the power from the project for a period of 25 years.
* Foray into geothermal energy: The company has widened its presence in the renewable energy space by
investing Rs1.65bn in Geodynamics Ltd, Australia. Post acquisition, TPWR holds 10% stake in the company.
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