Lower power realisations led to fall in Q1 margin: JSPL

In an interview with CNBC-TV18, Sushil K Maroo, Director & Group CFO of JSPL said the disappointing performance of the power division was mainly because of the fact that demand was lower and supply was higher. This weighed on power realisations and it was lower than what it should have been. According to Maroo this has led to lower margins for the company. At present the realisations are between Rs 3.50 and Rs 3.75 per kwh.

Lower deliveries in Q1 have also impacted the steel division of JSPL and resulted in a high inventory build up, added Maroo.

Here is the edited transcript of the interview on CNBC-TV18.

Q: Your power division performance has disappointed investors because it seems like your realisations were lower than what it should have been. Can you take us through what happened in the quarter?

A: Realization in many cases is going down. In the last 3 years we have seen it because of the financial crunch faced by SEBs. They are not really buying a lot of power. The demand is also low and many power stations are operational now.

So the supply side is already increased and since buying is less, the prices are pretty competitive. Due to this the prices are falling and we have seen it in the earlier quarters also. The fall still continues. So the realization is low and the margins are also low.