Reliance Power Limited - RESULTS FOR - Q2 FY 2013 - (Q/E SEP,2012) -GOOD PROGRESS IN PROJECT COMMISSIONING - FUTURE BRIGHT

Reliance Power Limited

Q2 FY 2013 RESULTS REVIEW

(Q/E SEP,2012)

HIGH LIGHTS

Performance highlights

Particulars      :: (Rs.) Q2 FY12-13 :: Q2 FY11-12

Operating Revenues  :: 1,079 cr  :: 488 cr – An increase of 121%

Other Income ::                102 cr  ::   263 cr

Total Income   ::              1,181 cr  ::  751 cr – An Increase of 57%

Net Profit    ::                      240 cr  ::   235 cr

EBITDA   ::                          393 CRORE -  An Increase of 227%

Q2 HIGHLIGHTS

Operating Capacity

Ø  1,200 MW Rosa Power Plant in UP generated 1,655 million units (MUs) in this quarter (as against 1,004 MUs the previous year). – An Increase of 65%

Ø  The first 300 MW unit of the Butibori project has been synchronised and is ready for full load operations.

Ø  The 40 MW Dhursar solar PV plant in Rajasthan generated a record 13.8 million units in this quarter which resulted in a net profit of 6.6 crore.

Capacities under Construction:

Ø  Major construction milestone – Boiler light-up of the first 660 MW, supercritical unit – for the 3960 MW Sasan UMPP. Project to be commissioned five months ahead of schedule.

Ø  Coal production commenced from Sasan coal mines. The Moher and Moher Amlori Extn. mines with a capacity of 20 Million tonnes per year, will be India’s largest coal mine.

Ø  Boiler light-up achieved for the second 300 MW unit of the 600 MW Butibori project in M.H. Project to be fully commissioned by end of this year.

Ø  Civil works is in full swing for the 100 MW Concentrated Solar Power (CSP) project in Dhursar, Rajasthan and the project is expected to be commissioned by May 2013.

Ø  45 MW wind project in MH. is in its final stages of implementation. Project to be commissioned by  end of this year.

PROJECT PORTFOLIO

Power-operation

Power – Operation
Project	No.	Capacity (MW)
Coal based	1	1,500
Solar	1	40

Power - implementation

Power – Implementation
Project	No.	Capacity (MW)
Coal based	5	16,140
Gas based	1	2,400
Solar	1	100
Wind	1	200

Power  - Development

Power –Development
Project	No	Capacity (MW)
Hydroelectric	12	5,292
Coal based	1	~5,000

Resources

Asset	No	Resources
Coal blocks-India	3	~ 2 bn tonnes
Coal mine-Indonesia	3	~2 bn tonnes
CBM blocks	4	193.92 BCM

Projects ::                 SASAN                      :: TILAIYA

Projects	Sasan	Tilaiya
1.     Coal block	Moher, Moher-Amlori extn, Chhatrasal	Kerandari BC
2.     Location	Singrauli, Madhya Pradesh	Hazaribagh, Jharkhand
3.     Resources (Million tonnes)	707	1,229
4.     Peak Production (Million tonnes per annum)	25	40

Note  :  65 million tonnes of annual production can support 16,500 MW.

Ø  This apart, there is the secured Fuel supply (Imported Coal from Indonesia – which can support a capacity of 8000 MW; production to start in 2013

Ø  Fuel is said to be secure for all Projects other than Samalkot. (secure for 91% of capacity);

Ø  Captive fuel for all projects other than Rosa, Butibori, Samalkot (captive fuel for 84% capacity)

Ø  PPAS SIGNED FOR 13,720 mw CAPCITY. 84% Of Generation capacity under Operation and construction is tied up through PPAs.

R Power says – it tries to ensure Low Cost of Generation through –

(i)            No dependence on external Resources other than Rosa, Butibori & Samlakot

(ii)           All Projects other than Rosa & Butibori located at Pit head / well head ensuring control over Costs

Implementing projects ahead of schedule :

Rosa I: 600 MW :  Commissioned 3 months ahead of schedule

Rosa II: 600 MW :  Commissioned 4 months ahead of schedule

Solar PV: 40 MW : Constructed in record time of 129 days

Samalkot: 2,400 MW : Gas turbines ready for commissioning in just 15 months

Butibori: 600 MW  :  First unit synchronized in just 21 months

Sasan: 3,960 MW  :  Boiler light-up in just 23 months

Ø  40 MW Solar PV in Rajastan - India’s largest Solar PV Plant – to provide Power to 75000 households in Mumbai (had a NPT of 10.3 cr in H1 FY 13)

Ø  600MW Butibori MH project – To be commissioned by the end of this year.

Ø  The 3960 NW Sasan UMPP MP : Boiler light up has been achieved in October 2012. Project in Progress.

Ø  R Power expects to commission All Units ahead of Schedule. As far as the Mine is concerned, it is in fast progress mode – and over 85000 MT of coal -  produced.

2400 MW SAMALKOT, AO : HIGH LIGHTS ;

Ø  4 Gas Turbines - ready for Generation. Combined cycle commissioning based on Gas Availability.

Ø  Company is evaluating multiple options for Gas sourcing

Ø  It is planning to set up FSRU in Kakinada in partnership with Shell

100 MW SOLAR CSP, RAJASTHAN

PPA signed with NVVN at a levelized Tariff of Rs.11.97/Unit

All contracts have been awarded.

It is on track to be commissioned by May,2013.

45 MW Vashpet Wind, MH

Entire capacity to be commissioned by the end of this year.

Other projects under development are :

1.    Chitrangi Power Project : 3960 MW : To commence construction after  forest clearance of Chhatrasaal Mines

2.    Tilaiya UPMM & Coal Mines : 3960 MW  :  Progress on all aspects of Project Development; Likewise, in respect of Tilaiya Coal Mines, progress is made on Land acquisition and Mine planning

3.    Hydro Projects  : 5292 MW ::

Project	Location	Capacity (MW)
Tato II	Arunachal Pradesh	700
Siyom	Arunachal Pradesh	1,000
Kalai II	Arunachal Pradesh	1,200
Urthing Sobla	Uttarakhand	400
Emini	Arunachal Pradesh	500
Amulin	Arunachal Pradesh	420
Mihundon	Arunachal Pradesh	400
Purthi	Himachal Pradesh	300
Teling	Himachal Pradesh	94
Shangling	Himachal Pradesh	44
Sumte Kothang	Himachal Pradesh	130
Lara Sumta	Himachal Pradesh	104
Total :: 5,292

Indonesian Coal

Ø  51,000 m of drilling completed in all 3 concessions

Ø  JORC Resources and Reserves certified by Marston, USA

Ø  All major clearances obtained

Ø  Detailed mine plan for commencement of mining prepared

Ø  Coal production to start in 2013

Reliance Power, reported a net profit of 2.4 billion rupees for 2nd Q/E September 30, compared with 2.35 billion rupees for the Q2 of last Year. Net sales more than doubled to 10.79 billion rupees. Its fuel costs more than doubled to 6.37 billion rupees and finance expenses jumped 82.7 percent to 1.37 billion rupees.

Reliance Power generated 1,655 million kilowatt-hours, up 65 percent from the previous year in the quarter from its Rosa plant in Uttar Pradesh.

The first unit at its 3,960 megawatt (MW) Sasan power project and the second unit at Butibori project should be commissioned in the next few weeks.

Two of Reliance Power's projects totalling 6,400 MW have been stalled due to scarcity of cheap fuel and it faces the risk of losing one of those due to a legal wrangle with four state  governments.

Q2 FY 2013 CONSOLIDATED REULTS

Income from operations

(a) Net sales/income from operations Rs.1079.21Cr

Expenses

Cost of materials consumed  : Rs.      646.95 Cr

Employee benefits expense  : Rs.       20.29 Cr

Depreciation :  Rs.71.90 Cr

Other expenses : Rs.19.02  Cr

Total expenses  :  Rs.  758.16  Cr

Profit from operations : Rs.321.05 Cr

Other income Rs.102.24 Cr

Finance costs  : Rs.137.35 Cr

Profit before tax  :  Rs.285.94 Cr

Tax expense    :  Rs.45.72  Cr

Net Profit :  Rs.240.22 Cr ;  onsolidated Net Profit :  Rs.     240.22 Cr

Face Value : Rs.10;  Paid-up equity : Rs.2805.13 Cr

Earnings per share (not annualised):

(a) Basic          .86   ;   (b) Diluted      .86

Current Market Price : Rs.99.60. While the company is making good Progress on operational front, It will take some time, before the EPS can rise to a more respectable figure.

Assuming an EPS of around Rs.4 for current year, the PE Ratio on a price of Rs.96 comes to 24.

The future prospects are bright for Reliance Power, as its Project commissioning is proceeding at a Brisk pace with costs kept under reasonable control. The latest moves by the Union Cabinet for FAST TRACK APPROVALS for power and other Infrastructure projects could be a Major Plus for Reliance Power in the months ahead.

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NEWS & VIEWS : 01st, JUNE, 2012 : BHARAT BANDH- HOW JUSTIFIED IS IT? = GROWTH SLIPS TO 5.3% IN Q4 - A WAKE UP CALL = POWER GENERATION WOES & R POWER

NEWS & VIEWS TODAY

01st, JUNE, 2012

BHARAT BANDH- HOW JUSTIFIED IS IT?

GROWTH SLIPS TO 5.3% IN Q4 

- SAID TO BE 9 YEARS LOWEST- A WAKE UP CALL

POWER GENERATION WOES & RPOWER

1.    NEWS :Yesterday (31^st,May) was Bharat Bandh, called by BJP. 

VIEWS : It was ostensibly against the Petrol price Hike. Of course, it was justified. A huge petrol hike at one go hurts common man – very badly. People are angry at the insensitive way  Government does such things. On top of it, many Ministers are arguing for hiking the prices of LPG, Kerosene, Diesel etc similarly – saying that these unpopular measures are a MUST RIGHT NOW. The petroleum Minister may view from the OMCs’ point of view. But, the Government must see from the common man’s point of view. 

Any big dosage of such Hikes hurts very badly. The common man can go nowhere. A man who pays Rs.5 for Bus fare will feel very bad about paying Rs.10 the next day. A minister’s home budget may not suffer, but a common man’s home (only) budget suffers very badly. Unfortunately no one in Government now seems to remember what Mahatma said – that Government should think of the poorest man in the country and think how his actions affect him. Western Educated Ministers are good at theory from the west -   but, very poor when it comes to Gandhian economics. And, it is showing. So, the Bandh was Justified. 

On one side, Government pleads of shortages of oil and gas and high international prices, which any way, have fallen now. On the other side, Government puts all conceivable constraints on exploration and production efforts of CAIRN, RELIANCE etc. Too many approvals are needed for moving the left foot or the right foot forward. 

Why don’t you give them total freedom in the Blocks given to them – and just ask them to perform – without the DGHC or the ONGC or the oil Ministry breathing down their necks. The country needs performance – and these companies can perform. Government’s revenues will come anyway – if they perform. Government must find a way with any objections from CAG. They are bound to be there – if there is lack of transparency and lack of written record on why this, this, this was done.

If everything is documented and absolute freedom is given to the companies – CAG cannot find fault with such transparent decisions. There is a saying in my language – cover this today, it will stink very badly, tomorrow. That is what is happening.

2.    GROWTH SLIPS TO THE LOWEST : THIS IS A WAKE-UP CALL :CSO says, GDP Growth in Q4 FY 12 is a mere 5.3%, said to be the lowest in 9 years. Somewhere in the figures, there is a huge, baffling trade surplus of $10b in Q4 FY 12, and based on this, the GDP growth has crawled to 5.3%.

VIEWS : It is becoming increasingly difficult to put total reliance on CSO’s figures which don’t add up to our sense – many times.  And, we don’t find any attempt being made, to modernize and make accurate the figures coming from CSO. Their job is tough; there is no doubt about it; but, they seem to be ages behind in their methods. Yet, when CSO says, GDP growth was a mere 5.3% in Q4 FY 12, it is a definite WAKE-UP CALL for the Government. 

Enough of dithering. Enough of blaming the opposition and the allies. The Economic Times says – Act, at least Now! I am of the same opinion.

This writer never believed that allies and the opposition were responsible for the Policy Paralysis of the Government.  

The Lok Pal Bill could be passed. If not in Anna’s way, it could be the BJP’s way. What if, the bill was passed with amendments suggested by BJP? It could have got Majority support and passed even as a constitutional authority. But, if Team Anna always sounds almost sheepishly like – “It’s my way or the Highway”, the same thing is equally true or more true in case of the Government. It never seriously seemed to have wanted a strong Lok Pal Bill. It never seemed to have wanted majority support for Lok Pal Bill. It’s views are almost like the views of those who say – corruption was always there; so, let it be there.

Government’s Lok Pal Bill was almost like creating another secretary’s post in a Government department – and not an INDEPENDENT LOK PAL  to probe into grave corruption charges against top bureaucrats, MPs, Ministers etc. 

The Land acquisition Bill is not even tabled in Parliament, so, how can it blame opposition for not passing it? 

If environmental and other clearances are pending for Major projects for years, who is to be blamed?

Failure in Coal and Gas supply to power plants – is not opposition’s failure – by any stretch of Imagination. It is not that this Government cannot do it. It is just not doing it. It was approximately the same Government in UPA I which did far, far better than most Governments.

John F. Kennedy put a single Goal before the US - of putting an American on the Moon in next 10 years; that one Goal spurred every single industry and even agriculture in US, towards achieving that fantastic objective ; US achieved it in the grandest style; this one goal put America on top of the world in economy , industry, agriculture, sciences, education, and so many seemingly unrelated fields.

It is time, the Government of India also puts such a single, all-encompassing Goal before itself and the Nation, and started achieving it. I would say – DOUBLE DIGIT GROWTH IN GDP in every quarter from now – is such a goal. Align all your policies and actions, including that of RBI, towards this one goal. Let not your taxation policies, environmental policies etc be a block to it.  If double digit growth is there, even lower rates of taxes will achieve much higher revenues for Government. 

Of course, Government will tend to fritter it away good amounts in unproductive schemes like NREGS, instead of building solid, highly productive capital assets for the nation, adding to GDP. This temptation needs to be avoided. 

Inflation must be taken care of by fiscal and other governmental measures – not by repo rate increases. Government must not always be looking at RBI’s monetary policy for tackling Inflation. Given the level of parallel economy in India, the monetary policy did not succeed at all in last 2 years in tackling Inflation – especially in the absence of supportive Governmental measures.

India must achieve Growth – and far more and far superior production. India must aim for surpluses in every field of production – not for scarcities. A BOSTON TEA PARTY of dumping surpluses – or donating to others - is OK. But, having scarcity in the ingredients of our Morning Tea is definitely not OK.

Distributive Justice - is taken care of more than 70 percent if production surpluses are achieved. Productive environment should always therefore precede distributive justice. 

Else GDP growth may slip even further - if Foreign capital is taking a flight and Indian capital is shy of investing. There is TRUST DEFICIT which can be killing, if it continues further.

3.    NEWS :-POWER PRJECT OF RPOWER AT KRISHTNAPATNAM :- This project is just an example of what can happen to projects in India. It depends on Imported coal and the power tariff agreed in 2007 was Rs.2.33 per unit. Now, imported coal from Indonesia has become much costlier due to decisions taken by Indonesian Government. RPOWER is said to have abandoned the Project works at Krishnapatnam a year ago – saying that, at this Rate, the project is unviable. 

RPower is said to be invoking the FORCE MAJUERE clause, as the decisions of Indonesian Government are not within its control. But, the 4 beneficiary state Governments have approached  the Delhi High court against RPOWER.

4.    VIEWS :- POWER PROJECTS are in the Nature of Public utilities, whether implemented by PSUs or private sector Units. The way, differences must be tackled by Governments must be – as of the Power company is a Public sector Unit. ADAG Group is of course not very famous for dealing straight forwardly with its counterparts in Government / PSUs. But, all said – the way out is almost always across the table. If Delhi High court or the Regulatory commission hands down a decision – if both Parties can accept it – can they not sit around, discuss and finalize such a decision in a mutually acceptable way, and then approach the Regulatory commission for it stamp of approval? In all such projects, costs are bound to increase – and there must be a way for the power supplier to get back the additional costs. 

Escalation clauses must take care of such events. If such escalation clauses are absent, it becomes necessary for CAG to comment adversely. The blame is not of CAG – but of the state Governments and the Power Company, which do not think of problems and solutions at the tendering and agreement stages.

One year ago, the project was stated to be abandoned – and till today, there is no way out from either side. Suppose, RPOWER abandons it, and the Governments levy their fines etc – will it solve their problem? If another company is appointed to carry out the project, or if a State/Central PSU were to handle it, will it not seek much higher price for its Power? 

Governments and the power company must both have sufficient foresight to solve such problems. They can approach the regulator with the problem and with their solution for it. It doesn’t seem to be such an unsolvable problem – except that both parties do not seem to know what is good for them in the long run. 

How much time do the state Governments and RPOWER expect that the High court will take to solve the issue? If Court is the only solution giver, the High court also does not have the final say on the issue. There is the Supreme Court too. The Battle goes on. In the mean time, people enjoy their Black days out, without Power.

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