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Tata Electric 1QFY01: Fuel costs hit margins - Views on News from Equitymaster
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  • Jul 28, 2000

    Tata Electric 1QFY01: Fuel costs hit margins

    Tata Electric Companies' (comprising Tata Power, Andhra Valley and Tata Hydro) combined turnover surged 29% in 1QFY01, as compared to the corresponding quarter in FY2000. But the company was not able to translate this growth into margins growth, simply because its total expenditure during the period surged nearly 36%.

    (Rs m) 1QFY00 1QFY01 Change
    Sales 6,693 8,663 29.4%
    Other Income 558 488 -12.6%
    Expenditure 4,992 6,786 35.9%
    Operating Profit (EBDIT) 1,701 1,878 10.4%
    Operating Profit Margin (%) 25.4% 21.7%  
    Interest 522 581 11.3%
    Depreciation 505 512 1.3%
    Profit before Tax 1,232 1,273 3.3%
    Tax 441 446 1.2%
    Profit after Tax/(Loss) 791 827 4.6%
    Net profit margin (%) 11.8% 9.5%  
    No. of Shares (eoy) (m) 225.3 225.3  
    Earnings per share* 14.0 14.7  

    The surge in expenditure was largely on account of a whopping 82% jump in its fuel costs to Rs 4,469 m in 1QFY01. The cost of power purchased was also up by a marginal 5% to Rs 1,005 m.

    Strangely, its contemprorary BSES's fuel costs surged by a marginal 5% during the same period. However, in case of BSES, cost of power purchased was the spoilsport. The company's cost of power purchased surged by a significant 45% during 1QFY01.

    Tata Power Company (50% stakeholder in Tata Electric Companies) declared a similar 29% increase in its topline in 1QFY01 as compared to 1QFY00. Its margins were also affected by the 82% jump in fuel costs to Rs 2,234 m.

    (Rs m) 1QFY00 1QFY01 Change
    Sales 3,347 4,317 29.0%
    Other Income 275 242 -12.0%
    Expenditure 2,496 3,384 35.6%
    Operating Profit (EBDIT) 851 933 9.6%
    Operating Profit Margin (%) 25.4% 21.6%  
    Interest 264 290 9.7%
    Depreciation 252 254 1.0%
    Profit before Tax 610 631 3.4%
    Tax 221 221 0.3%
    Profit after Tax/(Loss) 390 410 5.2%
    Net profit margin (%) 11.6% 9.5%  
    No. of Shares (eoy) (m) 115.5 115.5  
    Earnings per share* 13.4 14.2  

    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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