In spite of all the hype around the power sector, the two private sector behemoths, GMR Infrastructure Ltd and GVK Power and Infrastructure Ltd, had a disappointing December quarter. Net sales contracted on a sequential basis due to lower sales from the power segment.
GMR’s net revenues for the quarter at Rs1,066 crore was up 11% compared with the year-ago period, but down sequentially by around 10%. A revenue shortfall of 20% year-on-year at Rs442 crore in the power segment precipitated this, mainly on account of its plants operating at lower plant load factor (PLF) in Chennai and Mangalore.
For GVK, too, poor performance from its Gautami power plant in Andhra Pradesh affected revenue, which fell 4% on a sequential basis to Rs474 crore, though it was higher by 354% year-on-year. The management says an unscheduled shutdown led to this drop.
Graphics by Yogesh Kumar/Mint
In fact, there does not seem to be much succour on the power front even during the fourth quarter. For GMR, for example, the barge-mounted plant at Mangalore, where rains hamper efficiency (PLF was 31% this quarter) will be shifted to coastal Andhra Pradesh which, according to analysts, would contribute to revenue again only from the first half of the next fiscal.
GVK, though, is battling with the power regulatory commission in Andhra Pradesh to allow merchant sale of 20% of the power generated in two of its locations. This move, which was expected to boost revenues and profit margins from the fourth quarter of the current fiscal, is now awaiting government orders.
But both companies have had some respite in the roads and airports segment. The rise in passenger and cargo traffic in airports since August has turned out well for both companies.
There are also concerns in both companies on rising interest and depreciation costs in the coming quarters.
GVK’s operating profit margins have already shrunk both year-on-year and sequentially to around 29% in the December quarter.
However, while GMR has maintained margins with a marginal fall at around 30%, it has a series of power projects lined up for the next 24 months. Financial closure of these could see higher interest costs and, hence, impact profitability in the next 12 months.
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