BackAdani Power losses continue, regulatory concerns persist
This is despite the company recognizing revenues arising from compensatory tariffs which are under dispute in various judicial fora
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Adani Power Ltd continues to post losses while fighting regulatory battles. In the September quarter, the company posted a net loss of ₹ 799 crore compared with ₹ 1,072 crore a year ago. This is despite the company recognizing revenues arising from compensatory tariffs which are under dispute in various judicial fora.
In terms of operations, the company reported a decline in power generation to 11.34 billion units in the three months to September compared with 14.47 billion units in the June quarter. A comparison with the September 2013 quarter doesn’t make sense as it had far lower capacity. Plant load factor, or capacity utilization, fell to 60% in the September quarter compared with 77% in June. That could be perhaps owing to limited availability of domestic coal, which was highlighted as a key challenge in the company release.
One positive was that average realization rose to ₹ 3.32 per unit in July to September compared with ₹ 3.17 in the June quarter perhaps owing to higher merchant power sales. That helped boost Adani Power’s revenues 36% from a year ago. But compensatory tariffs, too, added heft.
The most high-profile compensatory tariff case, of course, relates to its Mundra plant. The company has recognized ₹ 145 crore of income for the September quarter. This, after a Supreme Court judgement on 25 August stayed the electricity appellate authority’s order allowing Adani (and Tata Power Co. Ltd) to charge a compensatory tariff which they were granted after complaints that imported coal became more expensive.
That’s not all. The company has also recognized income worth ₹ 289.5 crore from its Maharashtra operations. Here too, the compensatory tariff allowed by the Maharashtra Electricity Regulatory Commission has been challenged by the state discom. Add another ₹ 43.7 crore from Rajasthan operations, total compensatory tariff booked by Adani in the September quarter amounts to ₹ 479 crore.
In the notes to accounts, the company said that based on legal advice, it is confident of collecting these amounts. In the June quarter, too, it had booked ₹ 757 crore of income from compensatory tariffs and prior to that, ₹ 1,843 crore for the previous fiscal year. The company has not made any provisions for these.
The regulatory problems and now, the amounts recognized as income, are points of concern for investors. That is perhaps one reason why the Adani Power stock has lagged the S&P BSE Power index so far this fiscal year.
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