The company's consolidated net debt was ₹43,559 crore at the end of March
The renewable energy division and power distribution are the two focus areas of growth for the company
Mumbai: Tata Power will bring down its gross debt to around ₹25,000 crore by the end of FY21, chairman N Chandrasekaran told shareholders at the company’s annual general meeting on Thursday. The company's consolidated net debt was ₹43,559 crore at the end of March.
“By fiscal 2017, Tata Power had reached a gross debt figure of close to ₹49,000 crore. We decided to focus on reducing this leverage by half," Chandrasekaran said. “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 to 2,000 crore during this year; restructuring our renewables business by transferring it into an infrastructure investment trust and by Tata Sons injecting 2,600 core in preference equity."
With these measures, the company expects to end the year with a debt of around ₹25,000 crore, bringing down the debt to equity ratio of the company to close to 1. "This will also move the net debt to Ebitda (earnings before interest, tax, depreciation, amortisation) ratio to closer to 3, (significantly) strengthening our balance sheet and lowering financing costs," he said.
Chandrasekaran expressed his dissatisfaction over the progress on Coastal Gujarat Power Ltd (CGPL), the 4GW power plant that required investment of ₹24,000 crore, loss funding of ₹10,000 crore and is a millstone around the company’s neck. “CGPL Mundra continues to be a drag on the financials and will likely require 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. However, for now, we see some relief from lower coal prices."
Mint reported earlier this month that the Gujarat government had decided to reverse its 2018 decision to amend the power purchase agreements it signed with three producers -- Tata Power, Adani Power and Essar Power -- to raise tariffs in order to offset the rising cost of imported coal.
The renewable energy division and power distribution are the two focus areas of growth for the company. Chandrasekaran said the company will scale up both its manufacturing of solar cells and modules as well as the solar EPC business and intends to add additional capacity of 10 gigawatts in the next five years. "We will focus on building scale into our new consumer-facing businesses like EV charging, microgrids, home automation, consumer roof top etc."
“As you aware the company has acquired CESU (state power distributor) in Odisha and will evaluate similar opportunities in the future to be a leader in the space. Our aim is to growth the current 2.5 million consumer base to 10 million in the next five years," he said.