Call was addressed by Mr. Deepak Amitabh MD. Key highlights by Capital Mkt;
Short term market is volatile as the contracted power could not flow due to Grid constraint. Nearly 60% of the contracted short term power in April-Dec’14 could not flow. This led to a reduction of 15% in short term volume flow to 4373 M Units YoY and overall volume stood at 7773 M units in Dec’14 quarter down by 5.6% YoY.
Management expects the volatility to continue in short term volume trade for next couple of quarters atleast. There is a mismatch between transmission capacities and generation capacity both existing and the new capacities that are coming up. For example in Jaipur and in States of Kerala, Tamil Nadu, Transmission lines are not completed due to environmental issues and new generation capacities are already ready. Further due to Grid collapse issues in 2013, Grid are behaving very cautiously and are not ready to load additional power in inter grid connectivity.
As per the management, Utilities health is improving but there is a transition period. Some blocking in short term and in medium term will be seen in FY 2016. So overall, there will be some pressure in overall volumes for the company in next couple of quarter’s atleast.
Of the Rs 250 crore due from TNSEB, Rs 220 crore to be paid by TNSEB in March 2015 quarter as duly decided by the court. Balance Rs 30 crore, parties need to seat and settle it out. There will be some surcharge income, but that has not been finalized.
Demand from Bangladesh has come down during the quarter.
Long term power supply trading margin is not capped by CERC. Realization for long term power is better than short term. The margins hover around 7-8 paise on an annualized basis. So far, 11500 MW long term contracts are tied up
The company has made a provision for Teesta Urja project where in it will have about 6.9% stake post divestment of its some stake to Sikkim Government. The company made a provision of Rs 6.92 crore and an additional provision of Rs 26.69 crore on the balance of its holding, which can be reversed, if things improve from hereon.