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Last Updated : Feb 12, 2013 03:12 PM IST | Source: CNBC-TV18

Focus on expanding retail arm ahead, says CESC's Goenka

Sanjiv Goenka, Vice Chairman of CESC told CNBC-TV18 that their sales were up about 5.3 percent while profits rose 38 percent owing to improved plant load factor or PLF and lower costs.


Power company CESC reported a net profit of Rs 101 crore in the third quarter of FY13 against Rs 74 crore in the same period last fiscal. Its net sales stood at Rs 1022 crore versus Rs 970 crore year-on-year.


Sanjiv Goenka, Vice Chairman of CESC told CNBC-TV18 that their sales were up about 5.3 percent while profits rose 38 percent owing to improved plant load factor or PLF and lower costs.
 
Goenka also added that their Haldia project is on track and Unit 1 is going to be commissioned in September 2014. Besides, the Maharashtra Chandrapur projects are likely to be ready for commissioning next year. At present, two hydel projects in Andhra Pradesh are under development, he informed.


CESC's retail arm, Spencers have also done well and Goenka said, "There is a renewed focus on opening stores and this year we will be adding about 35 percent area to the existing area. I think all in all it is looking good. It is looking set for breaking even in the next four quarters."


In the meanwhile, Firstsource Solutions' open offer has been completed and Goenka is optimistic about the company, taking into account its improved sales figures and margins.


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


Q: If you could start off by telling us what sales in revenue front have thrown up this time. We have got the headline numbers. But, from the power vertical there was some decline in the sale of power earlier due to seasonal softness in demand. It had led to lower external power purchase, but essentially how have the sales panned out this quarter?


A: The sales have increased by about 5.3 percent and profits of course have gone up by 38 percent. That is largely because we have been able to improve our efficiencies. Our plant load factor (PLF) is marginally higher. Our costs are lower.


We have been able to contain the cost of coal as we have gone along. So all these factors have contributed towards bottom-lines being significantly higher. Bottom-lines are about 38 percent up over the same quarter last year.


Q: You said your PLF was marginally higher. What kind of PLFs are you working with this quarter and also what kind of generation figures did you see in the Q3?


A: Our combined PLF was 91.1 percent and our total installed capacity is 1250 megawatts (MW). So, we were pretty much there.


Q: Could you take us through your realisations, especially any recovery amount that has been included in the profit and loss (P&L) due to the West Bengal tariff increase. Any further tariff increase expected going ahead as well?


A: Tariff increase is always welcome for utility. But, I think what we have been awarded is a multi-year tariff and there is a provision for calculation and correction at the end of each year. I think that's the way it will be and I think unless there is a coal price increase, tariffs would not rise significantly.


Q: What about your gross realisations. Could you give us an absolute number?


A: Our average realisations are about Rs 6.17 a unit.


_PAGEBREAK_


Q: Talking about your retail arm, how has Spencers done operationally, if you could share some sales figure, specifically same store sales? How have they panned out and what kind of margins are you seeing?


A: They are looking pretty good. They are very buoyant. Just to share some numbers with you, last year same time we were at 1,050 per square foot sales. This year we are at 1,230 per square foot sales and this is probably the highest same store sales growth in the industry.


I think overall costs have definitely reduced. Margins have gone up. There is a great focus on apparel. There is a greater focus on HWP. There is a renewed focus on opening stores and this year we will be adding about 35 percent area to the existing area. I think all in all it is looking good. It is looking set for breaking even in the next four quarters.


Q: Talking about breaking even, do you see further improvement in Spencers going forward. Do you see this momentum continuing? In fact, do you have any sort of guidance since we have seen a bit of slowing of consumer discretionary spend? Would you stick by your earlier guidance that the company could see a profit and may even see breakeven in Q1 or even Q2 of the next fiscal?


A: No, my forecast was that by the last quarter of financial year 2014, we hope to get to breakeven. As of now, we stick to that forecast.


Q: What kind of targets do you have for fiscal 2013 for the retail business and any update as far as the Initial Public Offering (IPO) goes?


A: I think the merchant bankers are working on their proposal which they hope to submit in March or early April. Thereafter, we will know whether it will be a demerger or an IPO.


Q: Now onto Calcutta Electric Supply Corporation (CESC) acquiring 49.5 percent equity in Firstsource. What really is the status of the open offer for the stake and how much will the stake rise post the open offer if there is any cash left on the books?


A: The open offer is complete. I think we got a total of just about 7 percent in the open offer and that is complete. Firstsource results are due day after tomorrow and I think we will of course share the results with all of you once they are out.


But, I feel more confident about the company with every passing day that I spend with it. Sales are looking better than we had thought and margins are also looking better what we had estimated.


Q: One last word on your Haldia and Chandrapur projects. We understand that they are headed for commissioning in 2014?

A: Chandrapur would definitely get commissioned within June 2013 and as far as Haldia is concerned, we expect commissioning by September 2014.



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First Published on Feb 12, 2013 02:59 pm
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