Home >Companies >News >Tata Power to cut debt to 25,000 cr by FY21 end: Chandrasekaran

MUMBAI : Tata Power Ltd is working to cut its gross debt to less than 25,000 crore by the end of this financial year, chairman N. Chandrasekaran said. The company had a consolidated gross debt of 48,376 crore and net debt of 43,559 crore as on 31 March.

“By fiscal 2017, Tata Power had reached gross debt of close to 49,000 crore. We decided to focus on reducing this leverage by half," Chandrasekaran said at the company’s annual general meeting on Thursday.

“We have a clear plan to achieve our target by the end of this fiscal year by completing the balance non-core asset sale and raising nearly 1,500-2,000 crore; restructuring our renewables business by transferring it into an infrastructure investment trust and by Tata Sons injecting 2,600 crore in preference equity."

“With these measures, we will end this year with a debt of around 25,000 crore, bringing down the debt-to-equity ratio to close to 1. This will also move the net debt-to-Ebitda (earnings before interest, tax, depreciation, amortization) ratio closer to 3, (significantly) strengthening our balance sheet and lowering financing costs," he said. Expressing his dissatisfaction with the progress on the 4- gigawatt (GW) Coastal Gujarat Power Ltd plant, which needed an investment of 24,000 crore, and loss funding of 10,000 crore, Chandrasekaran said: “CGPL Mundra continues to be a drag on the financials and will likely to need further support. While a number of discussions have happened with the five state government procurers, it is unfortunate that we do not yet have clarity on a resolution. But for now, we see some relief from lower coal prices."

Mint had reported that Gujarat has decided to reverse its 2018 plan to amend power purchase pacts with Tata Power, Adani Power and Essar Power that allowed them to hike tariffs and offset rising cost of imported coal. Renewable energy and power distribution are two focus areas for growth, said Chandrasekaran, adding the firm will scale up both manufacturing of solar cells and modules, and the solar EPC business. It also plans a capacity addition of 10 GW over the next five years.

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