FY17 profitability to be better than FY16: PTC India

Deepak Amitabh, CMD, PTC India while detailing the third quarter performance and the outlook going forward said the profitability in FY17 would be better than FY16.The company has signed 3000 megawatt (MW) projects with solar energy corporation of India, said Amitabh.Although the growth in power sector is subdued the company  had still recorded a volume growth of 26 percent in Q3 on back of business mix, said Amitabh, adding that the growth is seen in renewable space.He is also confident of clocking 40 billion units in FY17 and around 37 billion units in FY16.With regards to success of UDAY scheme, he said it would take about 6-12 months for the scheme to show results.The company reported nearly seven-fold jump in its net profit at Rs 45.33 crore for the quarter ended December 31, helped by rise in trading volumes. It had posted a net profit of Rs 6.63 crore for the corresponding quarter of the previous fiscal. Total income has increased to Rs 2,947.12 crore for the quarter under review in the current fiscal from Rs 2,832.59 crore for the same quarter a year ago.Below is the verbatim transcript of Deepak Amitabh’s interview with Latha Venkatesh and Sonia Shenoy on CNBC-TV18.Latha: There has been a fairly significant growth in terms of profit; that is up to Rs 43 crore from Rs 7 crore, EBITDA margins have expanded a wee bit, EBITDA has done not too badly – 14 percent higher. It is topline that is relatively muted at 4 percent. Can you just tell us what is the performance in terms of volume traded?A: In this quarter, we have increased the volumes by about 26 percent compared to the previous quarter of the previous year. There is no doubt that this is a time where the growth in the power sector is not happening much other than the renewable sector. Still we have been able to maintain growth in the volumes primarily, account of our ability to continuously keep changing the business mix.As we have been telling earlier that long-term and medium-term volumes are going to be much more growth oriented for the company than a short-term market. In short-term market also we have done a very intelligent thing that most of the exchange traded volumes, more than 30-40 percent of the volumes being traded in exchanges also are being done by PTC.Latha: Avergae realisations?A: Avergae realisation is also more about 5 paise per unit. So, we have been able to maintain the margins also which we have been guiding that with more and more medium and long-term coming into the volume mix, the profitability is also going to be shade better than what used to be.Sonia: Will this volume growth of 26 percent, very healthy growth this quarter, will it be sustainable in the next quarter as well and what is the guidance as far as FY17 is concerned? How does the visibility look?A: As we had guided earlier, that last year, in the full year we had done 37 billion units. In spite of lack of demand in the power sector, we said we should be crossing 40 billion units during this financial year which we are quite certain that we should cross 40 billion.In next one to two years, many more long-term power projects where we have the power purchase agreement (PPA), especially large hydro of Teesta Urja, there was a difficulty, there was a slowdown but now it has been revived. In next one year time that plant also should get fully commissioned.There are other thermal projects from which our long-term volumes will start in the next financial year. So, next year, FY16-FY17 should be better than what we have done in FY15-FY16.Latha: Is there any movement at all on the Ujwal DISCOM Assurance Yojana (UDAY) front? We know a lot of states have signed in but beyond the signature we have not seen any progress. Can you update us on what is the progress and do you see any more power purchases because of that or power trading because of that?A: Certainly, like let us say lot of people have been showing apprehension about UDAY but, we believe that even the improvement is 40-60 percent, obliviously it is going to help the trading market. Secondly, doing this massive scheme of UDAY is not going to be happening in one quarter. States have to take over the loans, then they have to go and raise the bonds, so many other issues which also have to be handled so it is going to be taking at least six months to one year time before the whole effect starts setting into the Indian utilities health.In the meantime, as we had said, that PTC has always been reaching more and more industrial customer. So, now all these large refineries also, whether Hindustan Petroleum or Bharat Petroleum, we are helping them in meeting their day-to-day or shifting from captive generation to the power market buying. Railways also we have been helping. So, lot of things we have been able to do in last one year which will lay the foundation that utilities health if it improves wonderful. Even if it doesn’t improve substantially, there will be lot of large buyers in the market. Sonia: Can you give us a little details on any new contracts that you have signed in this particular quarter?A: What we have done, Ministry of New & Renewable Energy (MNRE), there is a Solar Energy Corporation of India (SECI) which is itself a trading company for the renewable, so, we have entered into an agreement currently about 750 megawatt of them, so, our expertise of backend operations, etc actual scheduling, dispatching, so, we have been assisting SECI for a fees based income.So, that has started now and we have also signed about 3,000 megawatt future projects which will come under SECI for 25 years. So, we will continue helping in this whole activity. Our wholly owned subsidiary company, PTC Energy, which has got into a small renewable generation should also commission its 50 megawatt of wind operations by March 31.Latha: Net-net what should we expect in terms of margins and revenues in FY17, growth?A: Revenues as we have always said, revenue is a function of the selling price. So, it doesn’t impact a company like PTC. PTC is impacted by the EBITDA or the operating margin where we have been showing that we have been able to maintain.Latha: How much will that increase?A: It is difficult to give a figure but it all depends upon the volumes. About 4-5 paise margin if we are able to maintain, so, we have to continuously keep increasing the volumes.(Copy edited by Vaishali Karulkar, interview transcribed by Priyanka Deshpande)