Reliance Power Q2 net profit beats forecast
Reliance Power reported a 2.1 per cent rise in quarterly net profit, beating expectations thanks to higher generation capacity and said new power units would start production in the next few weeks to add yet more capacity despite a scarcity of fuel at other plants.
India's power companies are struggling to source fuel as domestic coal production stagnates and gas production remains below expectations. The fuel shortage has forced other power plants to run below capacity because fuel supply is tied to specific plants.
Earlier this year, India suffered one of the world's worst power blackouts, affecting about half of the country's 1.2 billion population.
Reliance Power, controlled by billionaire Anil Ambani, reported a net profit on Monday of Rs 240 crore for the second quarter ended September 30, compared with Rs 235 crore a year ago. Net sales more than doubled to Rs 1,079 crore it said.
Analysts on average had expected a net profit of Rs 210 crore according to ThomsonReuters I/B/E/S.
The company said its fuel costs more than doubled to Rs 637 crore and finance expenses jumped 82.7 percent to Rs 137 crore.
Reliance Power generated 1,655 million kilowatt-hours, up 65 percent from the previous year in the quarter from its Rosa plant in Uttar Pradesh, the company said.
The first unit at its 3,960 megawatt (MW) Sasan power project and the second unit at Butibori project should be commissioned in the next few weeks, the company said.
Two of Reliance Power's projects totalling 6,400 MW have been stalled due to scarcity of cheap fuel and it faces the risk of losing one of those due to a legal wrangle with four state governments.
The company also ran into trouble in August when the country's federal auditor said it unduly benefited from a government decision allowing the power producer to use surplus coal from its captive block for another project it was not meant for.
Shares of the company, valued by the market at about $5 billion, were flat at Rs 97.35 by 2:40 p.m. when the Mumbai market was down 0.28 percent.
Copyright Thomson Reuters 2012