Sidhartha Shuklamoneycontrol.com
After turning profitable in the last fiscal year for the first time, Essar Power Gujarat Ltd (EPGL) is confident of maintaining this momentum and has reported a good set of earnings numbers for the first quarter of FY17.
Revenue increased by 30 percent to Rs 514 crore year-on-year (YoY) and EBITDA grew by 80 percent to Rs 160 crore (YoY).
With a 12 percent reduction in coal cost to Rs 1.88 per Kwh (YoY) and decrease in auxiliary consumption the EBITDA margins increased by 9 percentage point to 31 percent in Q1FY17.EGPL owns and operates a 1,200 megawatt thermal plant in Salaya, Gujarat.
Addressing a group of visiting journalists, the company’s Executive Vice Chairman Sushil Maroo attributed the improved financial performance to higher operational efficiency, reverse e-auction platform set up by EPGL to import cheaper coal, and a jump in plant availability factor (PAF) of around 82 percent.
As Essar's five plants out of the total seven (generating over 3500 MW of electricity) have become profitable, the management is confident of further improving the earnings in FY17 and sees this fiscal to be PAT positive.
“We are on course to harness greater efficiencies in the current financial year once with the imminent commissioning of a sea water intake system and coal conveyor corridor. These are expected to add Rs 150 crore to the margins,” Ramesh Kumar, MD of EPGL said.
On the company’s debt, Maroo said that the outstanding term loan stood at Rs 20,369 crore, out of which Rs 2,045 crore is the standalone debt of the parent company, Essar Power Holding.
Maroo had in April said that he plans to make the holding company debt free in the next two years. He maintained that Essar Power is on track of reducing its debt burden and with help from RBI’s 5/25 scheme, the interest burden has come down as debt repayments match the cash flow of projects.
Power sector outlook
Providing his outlook on the power sector, Sushil Maroo said that government’s plan of providing 24x7 electricity by 2019 will increase demand and schemes like Ujwal Discom Assurance Yojna (UDAY) will help State Electricity Boards (SEBs) in raising fresh finance and procuring more power for customers.
He said that transmission remains to be a bottleneck for the sector and a plausible solution for this will be Piyush Goyal’s idea of “one nation, one grid, and one price.”
It is a very good concept that will push the government to bring transmission network across the country and provide and even flow of electricity, he said.
With the absence of robust transmission network, people will set up a plant where there is demand, which is economically wrong as a power plant should be established where there is coal and power needs to be transmitted from there onwards.
Despite the increasing share and regulatory thrust on renewable energy, Maroo pointed out that that coal dominates India’s power generation and will continue to do so for the at least the next 10 years.
When asked about Essar’s expansion plan for its photovoltaic plant in Bhuj, Maroo said that despite solar energy being the future and solar prices falling in the coming days, the company has no immediate plans to expand as it is focused on debt reduction, completing its 1200 MW coal based power plant in Tori, Jharkhand and the second units at Hazira and Orissa.
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