Covid-19 has ensured that 2020-21 will rank as the most devastating year for the worldeconomy since the Great Depression of the 1930s. According to the International MonetaryFund's World Economic Outlook published in April 2021 the global economy declined by3.3% with advanced economies shrinking by 4.7% and emerging markets and developingeconomies by 2.2%.
After a terrible first quarter of 2020-21 when virtually all activities ceased andIndia's real GDP collapsed by 24.4% followed by the second quarter that saw a decline of7.4% many believed that the country was in for a truly catastrophic economic situation.
Thankfully India's innate entrepreneurship took over from the third quarter. And with0.5% growth in the third quarter followed by 1.6% in the fourth India ended 2020-21 witha negative growth of 7.3%. In all fairness this has been a better performance in ourannus horribilis than what most economic commentators originally believed.
Your Company was not only affected by sharply falling power demand on account oflockdowns but also a terrible natural calamity: Super Cyclone Amphan which occurred on 20May 2020 right amidst the nationwide lockdown during the first Covid-19 wave.
As I shared with you in considerable detail in my last year's letter with sustainedwind speeds of over 120 kmph with gusts of over 190 kmph Amphan was the strongest stormto hit South 24 Parganas Kolkata and Howrah in over a decade. It toppled over 4000electric poles; triggered widespread flooding; and caused damage estimated at around US$ 1trillion.
I had then written that despite shortage of staff on account of Covid-19 "yourCompany worked around the clock on a war footing to restore full power for 92% of itsconsumers within four days. And for the rest in another couple of days. We were among thefastest in the world in doing the restoration that we did."
Amphan and the general shortage of power demand due to Covid-19 induced lockdowns andslow start-up has seen a decline in power usage. The peak power demand in 2020-21 was1865 MW versus 2337 MW in 2019-20; and the energy requirement came down by 11% from11018 million units (MU) in 2019-20 to 9796 MU in 2020-21. About 91% of this requirementwas met by CESC's own generation including that of Haldia Energy Limited.
Consequently on a standalone basis total income (including other income) of yourCompany in 2020-21 was Rs. 7101 crore compared to Rs.7982 crore in 2019-20 reflecting a decline of 11% mostly due to the Covid-induced lockdown in the first half ofthe year.
To combat this your Company made strong efforts to control costs on all fronts:operating expenses employee costs and others.
Consequently on a standalone basis total expenses including depreciation and financecosts was brought down by over 9% from Rs. 7395 crore in 2019-20 to Rs. 6711 crore in2020-21.
Even so profit before taxes (PBT) after incorporating regulatory income was lower atRs.847 crore in 2020-21 versus Rs.1119 crore in 2019-20. Profit after taxes (PAT) for2020-21 was Rs.814 crore compared to Rs.918 crore in the previous year.
On a consolidated basis total income of CESC was Rs.11874 crore in 2020-21 which was4% lower than the previous year. With sustained cost control measures total expenses werereduced by over 6% to Rs.10546 crore in 2020-21.
Consolidated PBT after incorporating regulatory income remained stable at Rs.1752crore in 2020-21. And consolidated PAT grew by 4% to Rs.1363 crore in 2020-21.
These are creditable results given the combined effects of two
Covid-19 waves and Super Cyclone Amphan.
Your Company has all the tools and technology at its disposal be it ingeneration distribution billings and in proactively and expeditiously reaching out toits vast customer base to continue as a strong power generation and distributionentity. I am confident that it will leverage these tools and continually introduce newerones to further improve performance profitability and shareholder value.
There Is a long Ingrained CESC culture of excellence; of doing the utmost for theCompany; and of serving the social interests of the people and the communities where itoperates. This culture that will help us overcome the travails of Covid-19 and get us backon to a solid growth path.
Of this I am confident.
Thank you as always for your support. My plea to you Is please get vaccinated asquickly as you can if you haven't already. Even after that please maintain safety andsocial distancing. Please wear masks properly and not as occasional chin-guards. If weall do these things the third Covid-19 wave will be combated with far less pain. As itshould.
Stay safe. Stay healthy.
With my best regards Yours sincerely
Dr. Sanjiv Goenka Chairman
Place : Kolkata
Date : June 16 2021