Rise in capex increased interest costs, says Power Grid

State-owned central transmission utility Power Grid Corporation of India (PGCIL) declared a profit of Rs 807.11 crore for the first quarter of FY13, an increase of 23% YoY. The company's sales also grew 31% to Rs 2,888.25 crore. However, the company's other income was down 36% to Rs 92 crore from Rs 143 crore while interest costs increased 37% to Rs 610 crore from Rs 445 crore during the same period.

In an interview with CNBC-TV18, RN Nayak, CMD of Power Grid said there has been a 32% jump in its transmission revenue, while consultancy has gone up by 7% in Q1. He attributed the increase in interest costs to a rise in capex. Here is the edited transcript of the interview on CNBC-TV18. Q: While the transmission business revenues have increased YoY, it's the consultancy segment revenues that have declined on a QoQ basis, can you highlight the reasons for that?
A: If you see, the transmission revenue will jump by 32% compared to last quarter of FY12. Consultancy also has gone up by 7% compared to Q1 of FY12. But when you compare Q4, you find there is a dip.
But actually transmission takes more work from October-March because of monsoon and other things. It affects the transmission work, so if you compare like to like between Q1 FY12 and Q1 FY13, we have increased by 7%, it is not a dip. Q: What about interest costs, they have increased almost 34% YoY. Any reasons for that?
A: Last year we did capex of Rs 17,800 crore and this quarter we did Rs 3700 crore, so the interest rate will be more. We are a growing corporation, our growth is substantial. Only thing you have to see is when you go for borrowing, how the bankers perceive you and we are getting the least interest in the country.
The interest rate that bankers are asking for borrowing is the lowest in the country. Few days back we lifted a bond of Rs 4000 crore at an interest rate of 9.3%. So they perceive that it's a safe company.