Adani Power's losses widen to Rs 586 crore in Q4

Analysts say losses a result of bad cost management

Adani Power’s losses widened in the quarter ended March. The company posted a consolidated net loss of Rs 586 crore for the quarter, against a net loss of Rs 292 crore in the corresponding period last year. It attributed the widening losses to the ongoing fuel crisis, as well as infrastructure bottlenecks.

For the year ended March, Adani Power’s consolidated net loss stood at Rs 2,295 crore, against a net loss of Rs 294 crore in 2011-12. Today, the stock ended at Rs 48.35 on the BSE, down 0.6 per cent compared to the previous close.

“The challenges of limited resources and evacuation bottlenecks affected our profitability in the past year. However, with the signing of the fuel supply agreement (FSA), the timely delivery of domestic coal and the fully-operationalised capacity, the company is confident of posing a strong operational and financial performance to bring value to its stakeholders,” said Chief Financial Officer Prabal Banerji.

This was the sixth consecutive quarter when the company recorded losses. Analysts said the sustained losses had resulted from bad cost management. “The reason for the fourth quarter losses isn’t convincing. The industry’s trend is in the other direction. In its recent results announcement, JSW Energy showed an improvement in costs. Internationally, too, coal prices have fallen in the past quarter,” said Daljeet Kohli, head of research, IndiaNivesh Research.

“It is not clear why the Adanis could not get the benefit of a long-term tie-up for international coal linkages. It could be the company wasn’t following the right strategy,” Kohli said. In a recent order, the Central Electricity Regulatory Commission (CERC) had ordered a committee be constituted to decide a compensation rate to offset the losses resulting from an increase in international coal prices and the unavailability of domestic coal for Adani Power's 4,620-Mw imported coal-based project at Mundra. Adani Power Chairman Gautam Adani said, “We welcome the CERC order as a step forward to resolving the issue, as it would be in the best interests of all stakeholders and consumers.”

“There is no clarity on the government’s move on the CERC order. Would it challenge the order or would it accept it? It remains uncertain. Hence, relief through the CERC order would take longer than expected,” said an analyst with a Mumbai-based brokerage.

Adani Power’s consolidated income for the quarter ended March stood at Rs 1,889 crore, against Rs 1,055 crore in the year-ago period. For the financial year ended March, consolidated income rose 66 per cent to Rs 6,779 crore, compared with Rs 4,092 crore in the corresponding period last year, the company said in a statement on Monday. Earnings before interest, tax, depreciation and amortisation fell 22 per cent to Rs 1,150 crore on a consolidated basis, against Rs 1,475 crore in the year-ago period.

On a standalone basis, the company registered a net loss of Rs 1,952 crore for the year ended March. Total income during 2012-13 rose 60 per cent to Rs 6,333 crore, compared with Rs 3,951 crore in 2011-12.

In 2012-13, Adani Power sold 20.7 billion units of power, against 12.4 billion units in 2011-12. For the quarter ended March, it sold six billion units, compared with 3.5 billion units in the year-ago period.