Tamil Nadu SEB to clear dues in 3 months: PTC India CMD

Power trading solutions provider PTC India announced its FY12 numbers yesterday. The company's net profit fell 13% to Rs 120.37 crore  and net income fell 15% toRs 76,50, year-on-year.  In an interview to CNBC-TV18, the company’s chairman and managing director,Tantra Narayan Thakur said the fall in topline was due to conservative merchant rates.

He further said that amongst other states, Tamil Nadu state electricity board (SEB)have started clearing dues and is expected to settle all bills within three months. However, he further said that there is no timeline given by Uttar Pradesh SEB for clearing dues.
Meanwhile, PTC India's stock had seen a sharp correction since December due to continuous delay in payments Tamil Nadu SEB and Uttar Pradesh SEB. These two states together owe around Rs 1,200 crore
Also, the payment from the SEB will allow the company to resume its business with the state discom, which will lead to an increase in trading volumes. Trading volumes have been disappointing in FY12. Short-term trading volumes were impacted in FY12 due to weak financials of the SEBs that were not able to buy power. Below is the edited transcript of the interview on CNBC-TV18. Also watch the accompanying video. Q: Your total income is down quite a bit in the current quarter. Can you take us through why your trading volumes have dipped and whether you are seeing any reversal now this quarter onwards?
A: The trading volumes have not dipped and the topline that is the revenue has come down because the price of power in the market has fallen. For PTC India, the price at which power is sold is not so important because we get our margins. The topline is not material.
What one should be looking at is the bottomline, that is the PAT and the PBT. The PAT is also down on standalone basis but that is because we stopped supplying power to some states where there are dues and the major ones being Tamil Nadu and Uttar Pradesh (UP). Tamil Nadu is clearing the dues soon and UP will also be clearing it.
So because of these two, the topline has come down. Wherever there are dues, we get what we call delay payment surcharges and if we include the delay payment surcharges, the profit has actually gone up. But, we take that into account only after we get the money.
That is on receipt basis and not on accrual basis because we are following a very conservative and cautious accounting policy in this regard. Let me assure you that we have been collecting the surcharge or delay payments and we will be collecting it so that profit does not come down. Finally, let me tell you that the volumes are slightly lower than the last year but it is almost same as last year.
Last year it was 24.85 and this year it has come down to 24.4 or something like that. This is because we have stopped supplying to some of the states. Otherwise, we would have seen growth and that is what I expect once the dues are cleared. Then we will come back to the growth story.
I do not think the results are down and on consolidated basis you would notice that we have got good results from our subsidiaries, PTC Financial Services, PTC Energy and other associates. On consolidated basis, it has been a good performance. Q: Merchant rates have started moving up. In some parts of the country they are at Rs 5 to a unit. For the current quarter, what would you expect to see in terms of power trading revenues and volumes?
A: As far as the price in the market is concerned, we are neutral to that because we get our margin which is around 5-7 paise per unit of electricity sold. Whether the price is Rs 3 per unit in the market or Rs 5 per unit in the market, it doesn't affect us. Hence, let us not worry about the price in the market.
Yes, the volumes are important for us and you will see that volumes have started growing because power is in demand and we are supplying power. But we have to be cautious. Wherever we see a payment problem, we do not supply because we cannot get our money stuck. So far our experience has been extremely good because we never got stuck with dues, except last year, with reference to UP and Tamil Nadu. But, those are also being cleared. Q: How do you open FY13 in terms of the bad debts that you have, what kind of repayments schedule you have for some of these State Electricity Boards (SEBs)?
A: We do not have any bad debts. Tamil Nadu has started clearing the dues and they are saying that in another two-three months they will liquidate the entire due. Now they are asking us to supply power and we are working out an arrangement with them through which we will supply them power. All the dues will be cleared within three months at the most.
I went to UP, met the chief secretary and other state officials, including the chairman of the electricity board and they have assured me that they are going to clear the dues as fast as possible. I have heard that they are filing a petition for tariff increase of 20% in UP as we have noticed in other states also.
Hopefully, the UP thing will also be cleared but UP cannot give timeline because right now, the board is operating under deficit situation. But they are saying that they will clear PTC's dues and they do need power and expect PTC to supply the power.