Tata Power net dips 45% in Q2; H1 profit lower by 34%

Our Corporate Bureau
23 October 2002

Mumbai: Tata Power Company has reported a net profit of Rs 1,349.5 million for the quarter ended 30 September 2002 as compared to Rs 2,448.1 million for the quarter ended 30 September 2001.

The company’s net sales have increased from Rs 11,044.8 million in SQ-2001 to Rs 12,021.4 million for the quarter ended 30 September 2002. The other income has decreased from Rs 984.6 million in SQ-2001 to Rs 564.6 million in SQ-2002.

Crisil had recently downgraded the AAA (highest safety) ratings assigned to the long-term non-convertible debenture programme of Tata Power by a notch due to the company’s commitment to fund the Rs 500-crore capital expenditure plan of Tata Teleservices.

The rating agency is uncomfortable with Tata Power’s increasing exposure to the Tata group’s telecom ventures, particularly Tata Teleservices, where returns are only expected in the long term.

These investments, which have now become significant in relation to the company’s net worth, have resulted in considerable increase in Tata Power’s net debt levels and will impact its credit protection measures, both through lower accruals and reduced liquidity, a release said.

The rating change also reflects the company’s diversification plans in the power sector - which would expose it to significantly higher credit risks - whether it is in the Mumbai licencee area or in its captive power business, feels Crisil. The company has been ramping up its exposure to group companies.