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Adani Power’s Rs358 Crore Goes Up in Smoke

  • The high volatility in coal prices as well as depreciation in Indian currency has caused havoc for Adani Group’s listed entity, Adani Power Ltd.In the third quarter ended in December 2011, the Gautam Adani promoted company has registered loss of Rs358 crore.Hike in imported coal prices, fuelled further by depreciation in the currency has led to decline in net profit of the company by 428%.The net profit was Rs109 crore in the corresponding period previous year. On Monday, company indirectly put the blame at the door of Centre. In a press release, Gautam Adani, chairman of Adani Group, said, “These results are reflection of price increase on imported coal and non-availability of transmission line for evacuation of power. Coal availability and price, both have now become important national issues and since Government of India is now involved at the highest level in finding solution, the power industry is hoping for an early and positive solution.
  • Between October 1 and December 31, 2011, rupee had depreciated by around 15%. Simultaneously, the coal cost per unit has doubled in last one year. “We imported coal from Bunyu mines in Indonesia at a higher price as a result of which the overall per unit coal cost has jumped to Rs2.44 per unit, severely affecting the profitability. The overall coal cost was over Rs1.22 per unit last year in the corresponding period,” said Prabal Banerjee, CFO, Adani Power.
  • The company imports coal from Indonesia at around $36 per tonne for the power plant in Mundra, besides sourcing it domestically."The losses on foreign exchange side are Rs337 crore in the books, of which Rs132 crore was provided for in the third quarter, and Rs205 crore (forex losses) are marked to market losses,"he said.Banerjee claimed that of the Rs337 crore losses, Rs295 crore is reversible as of today in wake of an appreciating rupee, reducing the foreign exchange impact to Rs40 crore. A provision for deferred tax of Rs24 crore had to be done in the quarter, he added.
  • Increased sale of power in the open market - 30% of total output in the quarter from 10% a year ago - and a firmer merchant tariff raised the average realisation to Rs3.51 per kilowatt-hour from Rs2.93 a year ago.The merchant tariff, which refers to prices outside long-term agreements, rose to Rs4.09 per unit in the quarter from Rs3.88 in the year-ago period.Adani currently operates capacity of 3,300 megawatts, and will add about 2,000 MW by March, Banerji said. Adani Power, valued by the market at $3.6 billion, ended 2 % higher at Rs82.05 on Monday on the bourses. The net sales of the company for the quarter ended December 31, 2011 stood at Rs1,059 crore, registering a growth of 111%, as compared to Rs503 crore in the same period last year. (With inputs from agencies)

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