Volumes will pick up from April onwards: PTC India

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Volumes will pick up from April onwards: PTC India

In an interview to CNBC-TV18, TN Thakur, chairman and managing director of PTC India says, volumes have depressed because of the stoppage of supply to the major states. “Going forward, from April onwards, the volumes will catch up as in the past."

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Excerpts from Markets Midday on CNBC-TV18 Watch the full show » ALSO READ See latest News about PTC India See previous management interviews See what other Experts & Brokerages are saying about PTC India PTC India BSE | NSE 25/05/12 Are Mutual Funds betting on PTC India?

PTC India has declared its third quarter results. The company's net profit was at Rs 9.5 crore versus Rs 38 crore on year-on-year (YoY) basis. It net revenue was at Rs 1,330 crore versus Rs 1,757 crore on YoY basis.

In an interview to CNBC-TV18, TN Thakur, chairman and managing director of PTC India says, volumes have depressed because of the stoppage of supply to the major states. "Going forward, from April onwards, the volumes will catch up as in the past. Therefore, next financial year will have much better performance. This financial year we are likely to end almost at the same level as we did in the last financial year, maybe marginally better," he adds.

Below is the edited transcript of his interview with CNBC-TV18's Latha Venkatesh and Ekta Batra. Also watch the accompanying videos.

Q: Your profitability is the one that has surprised the street the most, which is down 75%. Can you just take us through what happened on the bottom-line this quarter? What exactly affected the numbers so badly this time around? 

A: If you compare on quarter to quarter basis then the volumes have come down and the profits also have come down. But if you compare on nine monthly basis, then you would see that our volumes are up by about 3.4%.

What is missing in this quarter is the trend of growth. For the last five-six years, we are growing at about 25-30% every year and that growth trend has not been maintained for this quarter. Not only that, the growth was little lower. The main reason was specific to the quarter. We have stopped supplies to Tamil Nadu and UP who were the major buyers of power because of over dues from them. Because of the over dues, we had to borrow money from the market to pay to the suppliers. That is why there was increase in interest income and also the fall in treasury income.

But all the fall in treasury income or increase in interest income would be more than offset, once we realise the surcharge on the over dues. If we had accounted for surcharge on the accrual basis then the profits in this quarter would have been anywhere Rs 65-70 crore more. We follow conservative policies. So, we account for the surcharge only once we receive, whereas all other things payable or whatever has been paid, we account for on the basis of accruals. So that is why you are seeing this depression. But it is not really a depression. Volumes have depressed because of the stoppage of supply to the major states.

Secondly, most of the states have financial problems now because the banks have stopped lending to them. As a result of it, they are not buying power. So, you will that trading volume itself overall has come down. We are still maintaining our markets here.

Going forward, from April onwards, the volumes will catch up as in the past. Therefore, next financial year will have much better performance. This financial year we are likely to end almost at the same level as we did in the last financial year, maybe marginally better.

Q: This is a little disappointing because this is the third quarter when we are seeing your interest cost rise or atleast the second quarter. You did point out that this is because the receivables are stuck with the state electricity boards (SEBs). But do you see the problem getting resolved at all?

A: Yes, in case of Tamil Nadu, for example, the state government has already agreed to give them some money. That is being provided for in the supplementary budget which is before the assembly now. The state government has also allowed the SEB to raise some bonds guaranteed by the state government. They have also allowed the SEBs to file petition for tariff revision to the extent of 38% in Tamil Nadu.

Now, tariff revision will take place any time now, may be from March 1 or effective April 1. So, those cash flows will start coming to the SEB only in course of time. The SEB chairman has repeatedly told us that as soon as they start getting this money, our payments will be on their priority list. We are worried because for the last so many months it is stuck. But I am not worried that it is going to be stuck for a very long now because they have taken action.

As far as UP is concerned, before the elections, they have filed petition for tariff revision. The state government has allowed SEB to raise resources from the market. The SEB chairman has been going from Bank to Bank and to other lending institutions. As soon as they are able to raise money, they have said that they will make payment to us. But see that even during the election time UPA is not able to buy power because of lack of money. So, as soon as election is over, tariff will also be increased and may be things will improve and they will pay. But they are also saying that they are going to pay.

Around Rs 500 crore is stuck in UP and around Rs 700 crore in Tamil Nadu. This Rs 700 crore I am very hopeful that they will start making payments from next month. UP also I have been repeatedly assured that they are going to make payment as soon as they are able to get some money from the state government after the election or if they are able to borrow. So, I am not worried on that note.

Second quarter was a major problem because UP and Tamil Nadu were not paying. So, second quarter the interest started going up only from September. Therefore, the impact in second quarter you are seeing less in this quarter where the impact is for three months.