Reliance Power operating revenue increases by 189 percent

Reliance Power has registered flat growth at consolidated net-profit level for the quarter ended September 2011 at Rs. 235.5 crore even while the revenue for the same period was higher by sharp 189% to Rs. 487.55 crore.

Strong topline growth was backed by good operating performance where the operating profit grew by whopping 318% to Rs. 120 crore on the back of expansion in operating margin to 24.6%, up from 17% in Q2FY11. The flat growth at bottomline was largely on account of 23% drop in other income, higher interest charges but for lower depreciation cost and tax incidence the bottomline would have de-grown.

Consolidated quarterly Results:

For the quarter ended September 2011, consolidated total income from Operations jumped by 189% to Rs. 487.55 crore.

OPM jumped by 760bps to 24.6% on the back of 449bps decline in employee costs to 4.6% of sales and 329bps decline in postage expenses to 0.63% of sales. The Operating Profit grew 318% from Rs. 28.7 crore to Rs. 120 crore. While the variable costs were in line with the operation growth, the fixed cost on common facilities remained same it seems, thus the expansion in revenue has resulted in margin expansion boosting operating profits.

The other income declined by 23% to Rs. 263.14 crore. Interest expenses increased by 49% to Rs. 50.41 crore but depreciation charges declined by 22% to Rs. 29.27 crore. PBT was thus down by 2% to Rs. 278.6 crore.

The taxation for the quarter was lower by 13% to Rs. 43.11 crore at effective tax rate of 15.5%, down 200bps and thus the net profit eventually stood flat at Rs. 235.48 crore.

During the quarter and half year ended September 30, 2011, the Group has changed the accounting policy for recognizing income earned on investments in mutual funds having fixed maturity plan from accounting on maturity to accrual basis based on the net asset value on the reporting date as the trustees or the Mutual Fund are obliged in terms of the trust deed to hold income for the benefit of the unit holders. Had the Group followed the earlier policy, Other Income and Profit after Tax would have been lower by Rs 77.1196 crore and Rs. 61.6957 crore respectively.

Half Yearly Performance:

For the half ended September 2011, consolidated total income from Operations grew 234% from Rs. 308.03 crore to Rs. 1029.36 crore.

OPM expanded by 880bps to 29.6%. The Operating Profit grew 377% from Rs. 63.94 crore to Rs. 304.95 crore.

The other income declined by 32% to Rs. 410.57 crore. Interest expenses increased by 90% to Rs. 151.4 crore but depreciation charges declined by 6% to Rs. 57.84 crore. PBT was thus down by 4% to Rs. 506.27 crore

There was tax out go of Rs. 74.67 crore, down by 24% at effective tax rate of 14.7%, down 380bps. After considering minority interest, net profit was flat at Rs. 431.61 crore.

Other developments

Project implementation on track for commissioning of 5,000 MW at Rosa, Butibori, Samalkot and Sasan by December 2012.

300mw first unit of Rosa Phase II (600MW) set to be ommissioned next month.

Strategic partnership between US EXIM bank and Reliance Power reached new heights; become top five global partners with Rs. 8,000 crore financing for Sasan, Samalkot and Solar PV projects.

Financial closure achieved for Rs. 700 crore 40 mw solar PV project with us EXIM and ADB; largest solar PV project in India to be commissioned by March 2012.

Operating Capacity

Rosa Phase I operated at a PLF of 77% generating 1,030 million units (MUs) of power compared with 530 MUs in the corresponding quarter of the previous year.
Operating revenues from the 600 MW Rosa plant have gone up almost three times to Rs. 474 crore from Rs. 169 crore in the previous year.
EBITDA of the Rosa plant grew by more than 168% Rs. 171 crore from Rs. 64 crore in the previous year,
Net profit for the plant at Rs. 75 crore- from Rs. 22 crore loss in the previous year.

Capacities under Construction:

Pre-commissioning activities have started at the 600 MW Rosa Phase II project and the first of the two units is all set to be commissioned next month.

Boiler hydro test of the first unit of the 600 MW Butibori project in Maharashtra has been completed and the project is expected to be fully commissioned by the middle of next year.

All six gas turbines of India’s largest gas-based power project, the 2,400 MW Samalkot Project in Andhra Pradesh have reached India, The first two turbines have already been installed.

Construction activities are progressing as per schedule for the 3,960 MW Sasan Ultra Mega Power Project (UMPP) in Madhya Pradesh and the first unit is expected to be commissioned by the end of 2012.

Financial closure has been achieved for the Rs. 700 crore 40 MW solar PV project with US EXIM and ADB; to be commissioned by March 2012. It is the largest solar PV project in India.

The Company is committed to fast-track implementation of its renewable energy portfolio with three of India’s largest projects – a 40 MW Solar PV project and a 100 MW Concentrated Solar Power (CSP) project in Rajasthan and a 200 MW Wind project In Maharashtra to be commissioned in the next 18 months.

Announcing the results, J.P. Chalasani, the Chief Executive Officer of Reliance Power, said:

Our 600 -… MW operating plant in Rosa continues to be stable and is operating at a high plant load factor. It has nearly doubled generation on a year-on-year basis, reconfirming our strong operational capabilities. The projects’ under construction are progressing satisfactorily and we are well on track to becoming a 5,000 MW operating company by 2012.

The company’s project financing capability has enabled it to expand its sources of funding and secure competitive financing from US-EXIM, Chinese and global banks and our low cost of generation and 25-year long-term power purchase agreements enable stable cash flows and reduce credit risk.