Tata Hydro 1QFY01: Fuel costs hit margins - Views on News from Equitymaster

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Tata Hydro 1QFY01: Fuel costs hit margins

Jul 28, 2000

Tata Hydro-Electric Power Company (20% stakeholder in Tata Electric Companies) has declared an impressive 31% increase in its topline in 1QFY01 as compared to 1QFY00. But a whopping 37% jump in its expenditure has taken a toll on its margins.

(Rs m) 1QFY00 1QFY01 Change
Sales 1,339 1,748 30.6%
Other Income 116 99 -14.8%
Expenditure 999 1,371 37.3%
Operating Profit (EBDIT) 340 376 10.7%
Operating Profit Margin (%) 25.4% 21.5%  
Interest 104 118 13.4%
Depreciation 103 105 1.7%
Profit before Tax 248 252 1.5%
Tax 89 88 -0.3%
Profit after Tax/(Loss) 160 164 2.5%
Net profit margin (%) 11.9% 9.4%  
No. of Shares (eoy) (m) 43.9 43.9  
Earnings per share* 14.5 14.9  
*(annualised)      

The jump in total expenditure is largely because of a huge 82% jump in the company's fuel costs to Rs 894 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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