Tata Power's net profit slumped 67.42% on the back of lower profits from its coal business and high losses incurred at its ultra mega Mundra power project.

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The company announced its Q3 FY2019 results on Monday, wherein the consolidated profit after tax dropped to Rs 204.61 crore from Rs 628.16 crore during the corresponding period, previous financial year.

In its statement to the media, the company explained that that the slump in profit is due to three factors. Firstly, lower profits realised from the coal business. Secondly, "higher Mundra losses due to fuel under-recovery, however, continued efforts are being made for cost reduction by higher blending of low CV (calorific value) coal," and thirdly, because of the coal mines profits being affected due to the domestic market obligations requirements.

The company's total consolidated income jumped 19.68% to Rs 7,721.52 crore for the quarter ending December 31, 2018 from Rs 6,451.31 crore a year ago. While total expenses spiked 16.78% to Rs 7,721.71 crore from Rs 6,611.71 crore year on year.

In a statement, explaining about pressure on the company's profit, Praveer Sinha, chief executive officer and managing director of Tata Power said, "profit after tax is adversely affected due to coal companies' profitability that is under pressure due to domestic market pricing obligation and increase in fuel prices."

For Tata Power, the fuel cost swelled to Rs 3,189.87 crore from Rs 2,491.24 crore a year ago. Likewise, the finance cost too increased to Rs 1,013.96 crore from Rs 855.28 crore during the same period.

When it comes to the nine months period between April and December 2018, Tata Power's net profit stood at Rs 2,333.09 crore as compared to Rs 1,246.52 crore during 9MFY18. The total income during the nine months period was also higher at Rs 22,537.58 crore as compared to Rs 19 991.94 crore during the corresponding period, last fiscal.

Mentioning the highlights during the third quarter, Sinha added, "All our businesses continue to perform well. Our renewable energy business has added 356 MW over previous year and has a healthy order book of 1,255 MW. The Trombay Power Purchase Agreement with the Brihanmumbai Electricity Supply and Transport Undertaking has received an extension for five years and through the resurgent platform taken up 1,980 MW in the Prayagraj Power Plant in Uttar Pradesh."

SHORT CIRCUIT

  • Higher Mundra losses due to fuel under-recovery  
  • Coal mines profits being affected due to the domestic market obligations requirements