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Adani Power second quarter profit falls 99% on poor sales

FE Bureau

Adani Power’s consolidated net profit for the September quarter of 2019 got decimated on poor sales and operating margins, missing Bloomberg analysts' estimate of Rs. 33.25 crore net profit. The company on Wednesday reported a 99% year-on-year (y-o-y) fall in net profit to Rs. 3.88 crore, even as revenue from operations fell 17% on year to Rs. 5,916 crore.

The power generator's earnings before interest, tax, depreciation and amortisation (Ebitda) for the September quarter fell 52% on year to Rs. 1,348 crore, while operating margins for the quarter fell 891 basis points to 22.8%. The drop in operating profit and operating margins was triggered by lower volume and poor realisations during the quarter. The company said its average plant load factor (PLF) for the September quarter fell to 63% from 65% a year ago, while volumes dropped to 13.6 billion units from 14.6 billion units a year ago. The drop in performance has been attributed to lower grid demand and higher renewable energy generation during the July-September quarter.

Consolidated total income for Q2FY20 stood at Rs. 6,815 crore, as compared to Rs. 7,657 crore a year ago. This includes revenue recognition towards compensatory tariff and carrying cost of Rs. 805 crore in Q2FY20 as compared to Rs. 1,164 crore a year ago.

As far as 4,620 MW Mundra power plant (APMUL) is concerned, which recently received compensatory tariff for its units 5 and 6, on standalone basis, reported a loss of Rs. 522.34 crore, and had accumulated losses of Rs. 10,980.57 crore as on September 30, 2019. Further, its current liabilities exceed current assets by Rs. 2,443.92 crore, which includes net payables of Rs. 1,461.36 crore to related parties. The net worth of APMUL has been completely eroded based on the latest financial statements, the company said in its statement to exchanges.

"The management's long term assessment of recoverable amount of APMUL's power generation assets has factored better operational parameters such as coal prices, borrowing cost, power tariff, leading to better operational and financial performance of APMUL. The management believes that over foreseeable future, APMUL would be able to establish profitable operations and meet its liabilities as and when they fall due and hence, no provisions and adjustment is considered necessary to the carrying value of the said investments loans aggregating to Rs. 11,772.17 crore as on September 30, 2019.

Separately, Adani Green Energy also reported a 53% on year increase in revenue from operations to Rs. 688 crore and an increase in net profit to Rs. 102 crore from a loss of Rs. 188 crore on better realisations.