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Andhra Valley 1QFY01: Fuel costs hit margins

Jul 28, 2000

Andhra Valley Power Company (30% stakeholder in Tata Electric Companies) has declared an impressive 29% increase in its topline in 1QFY01 as compared to 1QFY00. But a whopping 36% jump in its expenditure has taken a toll on its margins.

(Rs m) 1QFY00 1QFY01 Change
Sales 2,008 2,599 29.4%
Other Income 167 148 -11.9%
Expenditure 1,498 2,030 35.6%
Operating Profit (EBDIT) 510 569 11.4%
Operating Profit Margin (%) 25.4% 21.9%  
Interest 154 173 12.7%
Depreciation 151 153 1.5%
Profit before Tax 373 390 4.5%
Tax 132 137 3.6%
Profit after Tax/(Loss) 242 253 4.9%
Net profit margin (%) 12.0% 9.7%  
No. of Shares (eoy) (m) 65.9 65.9  
Earnings per share* 14.6 15.4  

The jump in total expenditure is largely because of a huge 82% jump in the company's fuel costs to Rs 1,341 m in 1QFY01.

To control its fuel costs, Tata Electric has recently decided to invest a sizeable Rs 5.5 bn in setting up an LNG Terminal and jetty. This move should improve margins when the terminal come up. Till then, the company's profitability will continue to be adversely affected by rising fuel prices.

The board of Tata Electric Companies has recently decided to merge all 3 Tata Electric Companies (viz. Tata Power, Andhra Valley and Tata Hydro) in one single entity. The books of all the 3 companies will be consolidated in the current financial year i.e. FY2001.

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