Adani Group, reported 40% jump in the net profit at INR 177 crore for the quarter ended September, on the back of robust merchant power sales. At this point of time, NDTV Profit caught up with Mr Prabal Banerjee, CFO of Adani Power on the robust figures and future outlook.
Excerpts of the interview:
NDTV - You are set to become one of the largest thermal power generation companies in the private sector. Are all your commissioning targets on track?
Mr Prabal Banerjee - I think it is the right question to ask at this, at this point in time. We think our sixth unit is already on and ready. But, we could not tansmit power because the transmission is a constraint. It has to be done by Gujarat government, which we think will be done very soon. We will start transmitting the power from sixth unit as well.
The seventh unit has already been commissioned; we are doing some testing on that and we expect that this will also come through in the next couple of weeks. As far as eighth unit is concerned, the sychronisation is expected in the next maybe one or maximum 6 weeks, 1 month or six weeks. The nineth unit is expected to complete the 4620 MW of Mundra by end of February.
As far as Tiroda is concerned, the first unit of Tiroda 660 MW should come in by December; I am talking of only sychronisation. The second unit should come in March. In case that gets delayed by 10-15 days, then it will come into April. So, we expect everything going right, we should be able to complete the sychronisation of the entire 600 MW by March 2012 and the rest of it, which is about 3240 MW is expected to be commissioned at varying times of the subsequent financial year. We do not see any problem and with God's wishes, it is all on track.
NDTV - We have been hearing that your seventh unit – or rather the third 660 MW super critical unit has been synchronized to the grid . When will actual generation begin?
Mr Prabal Banerjee - It is very difficult to do crystal ball gazing, but I would suspect that we have commissioned it already and we expect that as I have just now said, we will start it running anywhere in between 6 weeks to 8 weeks maximum.
NDTV - Your request for a tariff revision has been turned down by the Gujarat government. What is the next step; will you approach the supreme court?
Mr Prabal Banerjee - I think we would not like to make a comment on this at this point of time. We are assessing the scenario and planning. We will strategise our planning later. This is a sensitive issue and we do not want to comment on it in public domain. My apologies for that.
NDTV - What is the impact you are seeing on profitability going forward, because of the coal shortages, domestically as well as changes in the Indonesian laws, which calls for coal prices to be benchmarked to international spot prices?
Mr Prabal Banerjee - You need to look at in the segments for this. As far as we are concerned, out of the Mundra four phases, 2600 MW is on the basis of the imported coal that is coming in. After this, the latest change in the Indonesain law, where we have to buy the coal at the pre-determined price is obviously going to have impact on the prices. We are looking at all of that; but unfortunately I won't be able to tell, because that increase in prices is effective from 21st 0r 23rd of September. So, the real impact will come on the subsequent period. We would not like to share the real impact in public domain, because as a matter of policy, we do not give out future forecast in public domain.
Now coming back to your question, that majority of it is under PPA. If you look at the scenario of our 9240 MW plant, our 30 per cent is from Indonesia, 30 per cent of our total 9240 MW is from the last phase of Tiroda and the 1320 MW covered plant is actually with the cost escalation clause. That cost escalation clause, if we have got any cost increasing coal, will be passed through. So that is not going to impact our profitability in future.
As far of the rest of it concerned, we have actually got coal linkage. We expect that because we're actually going to supply power under PPA, under competitive bidding processing, we should get priority in allocation of coal and that should take care of our coal requirements. If that is the case, then we should have no problem in getting the coal at the right prices and manafacture power.
The question is that, coal is not only our company issue. In my opinion, it is an industry issue. Not only an industry issue, it is a national issue. I think, any shortfall or deficiency in power generation is going to impact the GDP of the country very hard; because without power, particularly when we are talking about inclusive growth all around, without power, that inclusive growth and GDP growth is not going to come in. If that does not come in, then the ramifications are much higher.
So in my opinion, it is incumbent on the appropriate authority to ensure that whoever has got the specific track record of delivering the power projects in time, the government should give priority allocation of coal towards that. I am seeing a silver lining in the whole scenario where it is in public domain. You can possibly quote the chairman of Coal India that came in public domain, saying that "if i am given land, I will be giving as much coal as possible maybe with the time lag." That gives us a very strong ray of hope that we are possibly going to go out of this scenario in the next maybe 1 to 1 1/2 years. It is very difficult to lay hands on a time frame.
Regarding the cola problem that is happening today to all the power producers, if it is handled well at the appropriate authority level, it is going to be a temporary aberration and should be corrected within 1 1/2 to 2 years in the rest of the country; that is how i look at it.
(Sourced from NDTV.com)
