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BSES Ltd net up marginally by 2.8%

Jan 31, 2000

BSES Ltd has reported a net profit of Rs 808.9 m for the 3QFY2000, which is an increase of only 2.8% over the 3QFY99 figure of Rs 787 m. Its net sales from sale of electrical energy went up by 20.6% for the 3QFY2000 to Rs 5,103 m. BSES Ltd a power distribution and generating company reported a turnover of Rs 23.5 bn for FY99.

(Rs m) 3QFY2000 3QFY1999 Change
Net Sales - sale of electrical energy 5103.1 4231 20.6%
Income of EPC, Contracts, Computer and International Divisions 425.7 1107 -61.5%
Other Income 179.9 262.1 -31.4%
Total Expenditure 4,069.9 4,021.1 1.2%
Interest 198.0 208.1 -4.9%
Depreciation 471.9 433.7 8.8%
Profit before Tax 968.9 937.0 3.4%
Tax 160.0 150.0 6.7%
Profit after Tax/(Loss) 808.9 787.0 2.8%
Net profit margin (%) 15.9% 18.6%  

Though electrical energy sales showed a buoyant growth this came about not from any increase in the number of units sold or from any increase in tariff, it came about from the increase in fuel prices which as per law the company can pass on to the customers.

Income from EPC, contracts, computer and international divisions fell by 61.5% in the 3QFY2000 to Rs 426 m from Rs 1,107 m in the 3QFY99. According to a newspaper article its order book stands at Rs 13 bn as on the 31st December'99 and hence contract revenues in the 4Q is likely to go up. Its other income fell by 31.4% for the 3QFY2000 to Rs 179.9 m. Its total expenditure rose by 1.2% in the 3QFY2000 to Rs 4,070 m from Rs 4,021 m in the 3QFY99.

Interest charges for the 3QFY2000 were down 4.9% to Rs 198 m due to pre-payment of loans and depreciation costs during the same period rose 8.8% to Rs 472 m. The Dahanu Power Station operated at a plant load factor (PLF) of 88.81% during the nine month period ended 31st December 1999 as against a PLF of 76.59% during the first nine months of FY99. This was due to higher generated electricity in Mumbai.

Some of the new projects of BSES includes BSES TeleCom which is a wholly owned subsidiary of BSES and has got a license from the DOT to take up the business of an internet service provider. This is to be launched in Mumbai shortly. Another project BSES Kerala Power, which is a joint venture with the Kerala State Industrial Development Corporation in which BSES has a 80% stake has commissioned all the three units of the 165 MW naptha-based power station at Kochi. BSES TeleCom has alongwith the National Grid International has participated in a tender floated by the Maharashtra State Electricity Board for developing fibre optic backbone on the transmission system of Maharashtra State.

Market View:
BSES has been rated a "Sell" by many analysts as the earnings growth from its main business is not very attractive. Its Kerala joint venture is unlikely to show any benefits over the next three years and its decision to become an internet service provider without any past experience and tie-up is not likely to show results. However value investors like the utility due to its steady revenue stream.

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