R-Infra March quarter net jumps 76%

Total operating income of the company stood at Rs 6,187 crore compared to Rs 7,135 crore in the corresponding quarter of previous year

Reliance Infrastructure (R-Infra) today reported a 76 per cent jump in its fourth quarter net profit to Rs 725 crore, compared to Rs 411 crore in the same quarter a year earlier. It attributes this to a ‘hyper-growth’ phase in its infrastructure segment, as three new projects started generating cash.

Also, the electricity distribution business grew well, with customer numbers up, as are rates. “The inadequate times of tariff orders (meaning, rate revisions) and others are behind us,” said Lalit Jalan, chief executive officer of the company. Total income from the electricity business went up by Rs 917 crore for the quarter, with the company added around 200,000 customers in both Delhi and Mumbai.

As many of its infra projects were commissioned, the captive construction business of the company almost halved in revenue. This impacted the total income from operations, down 15.3 per cent to Rs 6,187 crore, from Rs 7,135 crore in the same quarter of 2011-12. Total expenditure reduced, too, by 18 per cent, as its construction material consumption fell 51 per cent.

The engineering, procurement and construction (EPC) business is not expected to show much growth. “For this year, we have guided (meaning, we expect) an annual top line (revenue) for EPC at Rs 7,000-7,500 crore, based on the current and expected order book. We expect it to be in the same range the next year as well,” said Jalan.

The company’s infra business, however, showed 64 per cent annual increase. Jalan hopes this business, only two per cent of revenue, will show this kind of growth in the next three years as well.

“Two more road projects will be commissioned in the first quarter of 2013-14. The Mumbai (rail) Metro Line-1 is also expected to start operations this year. We expect the Mumbai metro to break even in the second year of operations,” he said. After two years of high growth in the infra business, Jalan expects it to grow at a steady 15 per cent annually.

The company received permission to increase its rate of power supply in Delhi by 4.5 per cent from the regulator. The Maharashtra regulator allowed an increase to the extent of cross-subsidy surcharge levied on its competitor, Tata Power’s customers. This surcharge will allow R-Infra to collect Rs 750 crore annually from Tata Power and use it to reduce the rate for its own small consumers, which depend on subsidy from large industrial users.

Apart from the ability to collect, R-Infra claims this move will make it more competitive. “We expect the process of reverse migration to accelerate rapidly. The customers who really belong to us will now start taking supply from us,” said Jalan.

During the quarter, the company re-evaluated its assets of land, building and machinery in Goa, Samalkot and Chitradurga. “Consequent to the re-evaluation, there is an additional charge of depreciation for the quarter, which has no impact on profit,” R-Infra said.

The stock went up by 0.5 per cent in today’s trade, to close at Rs 389.4, shows data on the BSE exchange.