Hyderabad: GVK Power and Infrastructure Ltd, the company modernizing the Mumbai airport, has reported a net profit of Rs10.57 crore in the fourth quarter (Q4) of fiscal 2007, more than double it earned in the same period a year ago, on revenues of Rs81.41 crore.
The company’s net profit was Rs5.23 crore on revenues of Rs68.93 crore, including Rs1.31 crore of other income in the last quarter of fiscal 2006.
Most of the profit in fiscal 2007 came from consultancy services to projects, such as the Mumbai airport, which boosted the company’s other income to Rs11.96 crore for the January-March quarter.
The growth in fiscal 2007 profit and revenues reflects GVK Power’s expanded operations after it merged into itself an affiliate company, GVK Industries Ltd, which owns and runs power plants in Andhra Pradesh. The power unit’s business reflected on GVK Power’s books only for six months in the last financial year since the merger took place in September 2005.
For the year ended 31 March, GVK Power announced a net profit of Rs35.01 crore on revenues of Rs2,92.97 crore, including other income of Rs26.1 crore. In the previous financial year, it posted Rs10.87 crore of net profit on revenues of Rs1,54.69 crore, which included Rs1.79 crore of other income. “The biggest contributor to the profits in the quarter and year ended March 2007 is other income,” said GVK Power’s chief financial officer Issac A. George.
“This is mainly through deploying our staff to several projects, such as the Mumbai International Airport, to extend consultancy services in financial closure. Such other income may not be available from the current financial year unless we get similar projects.”
GVK Power has reduced interest costs despite climbing borrowing rates, but depreciation and tax have impacted its net profit, an analyst said. “Quality of earnings is poor, with other income making a significant contribution to the growth in the bottom line,” said Nitin Khandkar, vice-president of research at Keynotes Capital.
The company’s decision to use relatively expensive naphtha as fuel instead of natural gas as earlier planned at its upcoming power plants may “further impact Ebitda (earnings before interest, tax, depreciation and amortization) margins in the coming quarters,” Khandkar said.