Tata Power Reports Q1 FY2021 Results, to Merge Solar EPC Business

Tata Power reports Q1 FY 2020-21 results, reporting a 10% increase in consolidated PAT at Rs 268 crore, and that it plans to merge its solar EPC business.

Tata Power, one of India’s largest privately-owned power producers has announced its first quarter (Q1) FY 2020-21 results. The firm has reported that for the quarter, consolidated PAT (profit after tax) after exceptional items was up 10 percent at Rs 268 crore as compared to Rs 243 crore in Q1 FY20. And that it will be merging three of its wholly-owned subsidiaries in Tata Power Solar Systems Ltd (TPSSL), Coastal Gujarat Power Ltd. (CGPL), and Af-Taab Investment Company Ltd (AfTaab) with Tata Power.

The Company stated that it maintained stable performance despite lower profits from Solar EPC businesses mainly on account of lower financing cost and stable performance across all clusters. And that the consolidated EBITDA stood at Rs 2,037 crore for the first quarter, which also included Renewable EBITDA of Rs 588 crore. The renewable business saw a drop in the quarter, represented by the lower EBITDA as compared to Rs 663 crore in Q1 FY20 mainly due to delay in the solar EPC projects due to COVID 19.

The firm has also reported that unlike its consolidated PAT, the standalone PAT after exceptional items stood at Rs 45 crore as compared to Rs 297 crore in Q1 FY20 due to higher dividends from subsidiaries. And that consolidated revenue stood at Rs 6,671 crore as compared to Rs 7,567 crore in Q1 FY20.

The firm also announced that it won renewables bids totaling 220 MW during the quarter and that its solar EPC order book stands at Rs 8,700 crore including GST.

On the merger, the firm stated that the three wholly-owned subsidiaries in Tata Power Solar Systems, CGPL and Af-Taab are proposed to be merged with the parent company for greater synergies in the financing, compliance, and oversight.

“This merger, subject to necessary approvals, is part of a strategic initiative to simplify the group holding structure and a broader plan to set the company for future growth through fiscal consolidation and strengthening of balance sheet. The merger aims to achieve the long-term objectives by facilitating efficient use of cash and making available corporate support to the businesses of the said wholly-owned subsidiaries as needed,” the company stated.

Key Business and Growth Highlights:

• On 1st June’20, Company took over management of CESU, Odisha for distribution and retail supply of electricity in Odisha’s five circles consisting of Bhubaneshwar, Cuttack, Puri, Paradeep and Dhenekal.
• Tata Power Solar received the Letter of Award for Solar EPC contract from NTPC for 300 MW solar project. With this order, the order book of Tata Power Solar stands at approximately Rs 8,700 crore including external and internal orders.
• Tata Power Renewable Energy Limited (TPREL) received a Letter Of Award (LOA) from Gujarat Urja Vikas Nigam Limited (GUVNL) to develop a 120 MW solar project in Gujarat and LOA from Maharashtra State Electricity Distribution Company Limited to develop a 100 MW solar project in Maharashtra. Tata Power Green Energy Limited (TPGEL) also received the LOA from Mumbai Distribution to develop 225 MW Hybrid (solar and wind) Renewable Project. Tata Power has also recently won another bid of 370 MW for which formal LOA is awaited.
• The Company has announced the formation of Infrastructure Investment Trust (InvIT) for its renewable business.
• Preferential equity issue of Rs 2,600 crore approved by shareholders.
• The Company announced expansion plans for its network of smart EV charging points from the current 170 to over 700 by end of this financial year, under the brand name Tata Power ‘EZ Charge’.
• It also signed an MoU with MG Motors India to deploy 50 kW DC Superfast chargers at select MG dealership locations and offer end-to-end EV charging solutions to MG dealerships spread across India.

Commenting on the Company’s performance, Praveer Sinha, CEO & Managing Director, Tata Power said, “All our business clusters have reported a robust performance despite the challenges presented by the ongoing pandemic. We aim to continue our progress in our low carbon journey by achieving 50 percent generation from clean and green sources by 2025 and set new benchmarks in operational efficiencies.”

Further adding that the proposed Renewable InvIT, will be the growth engine and we intend to grow this to be India’s largest renewable InvIT. At present, it has about 2.6 GW of operating plants and 1.5 GW of capacity in pipeline taking the total capacity to 4.1 GW. This InvIT provides the option to recycle capital once the assets are operational. Further, the InvIT strategy enables Tata Power to raise capital at lower cost post stabilisation of assets and grow the portfolio whilst we deconsolidate our debt. Apart from adding capacity in the renewable generation in the next five years, we will also be scaling the Solar Cells and Modules Manufacturing business along with the Solar EPC business.