Some states have hiked power tariffs and the power ministry continues to talk big about reforms, but the same problems remain for firms operating in this sector. Power trader PTC India Ltd’s woes continued in the June quarter as debtors such as the Uttar Pradesh and Tamil Nadu electricity boards lagged in payments. Its revenues fell by one-fifth from a year ago, the fifth straight quarter of revenue decline, as beleaguered state electricity boards bought less electricity.
Nowhere does the impact of delayed debt collection show as clearly as in the sharp decline in rebate income. The company said it has booked only Rs.2.2 crore worth of rebate income in the June quarter compared with Rs.23.4 crore a year ago. Earlier, the company used to clear its dues to power producers on time and avail discounts on payments. But now its liquidity is tight, a situation which is unlikely to improve soon.
Photo: Indranil Bhoumik/Mint
Although PTC India cut expenses to match the lower offtake, it had little impact. Operating profit contracted more than one-third to Rs.30.8 crore and margins declined by 30 basis points. One basis point is one-hundredth of a percentage point.
Net profit dipped 44.2% to Rs.25.2 crore as other income slipped from a year ago despite the company receiving some money from the Tamil Nadu utility.
The outlook depends to a great extent on how much dues the firm can recover from these errant utilities. Note that PTC’s debt collection cycle increased to 83 days at the end of March 2012 compared with 31 days a year ago. The Uttar Pradesh and Tamil Nadu utilities owe PTC India around Rs.450 crore each. The former is yet to come out with a repayment plan. With the state electricity regulator yet to approve tariff hikes, analysts are not expecting the utility to start clearing dues until the next quarter.
Naveen Kumar Saini/Mint
The Tamil Nadu board, which began clearing dues early this year, has had hiccups in its repayment plan. PTC has stopped supplying electricity to Tamil Nadu and Uttar Pradesh, but that and increasing competition will only put pressure on its trading volumes.
One positive for the company is that tolling projects (where the company supplies the coal and sells the power produced) will add to trading volumes and bottom lines as new capacities come on stream later this fiscal. But the key trigger for the stock continues to be the debt collection from the Tamil Nadu and Uttar Pradesh utilities. While that looks to be some time away, approval of the central government-sponsored restructuring plan for state boards will come as a relief for investors.
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