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Tata Power
As anticipated, investor concerns centered around the Mundra UMPP losses
and details of the upfront write-offs taken in Sep-q.
Management reiterated that the asset write-off of Rs8B, taken in Sep-q, was related
to impairment and would result in lower depreciation charge on Mundra, once
commissioned. The company is transferring 75% of the coal mine ownership to
Mundra SPV, and mgt explained that this would neutralize the project losses. The
management categorically ruled out any PPA renegotiation, but stated attempts to
reduce Mundra losses continue – specifically:
1. Advocating tweaking of the CERC index of fuel escalation to tune it with actual
escalations,
2. Attempts to blend lower grade coal, in consultation with the boiler supplier
Doosan, after a pilot attempt at Trombay – mgt thought this can potentially bring
down coal cost by as much as 30-35%, if successful, over years.
The commissioning timeline is Feb-end for the first unit, and 3-6 months for
subsequent units of 800MW. Target PLF is around 75%.
Besides this issue, management highlighted on-the-ground positive developments
on regulatory front – eg – an appellate tribunal order that state regulators should
clear up tariff receivables in 3 years time – this is a drastic and an important
milestone towards state distcom viability. In conjunction with takeaways from other
players, it was evident that most managements expect state distcom related reforms
to provide a big catalyst.
On land acquisition, which was the other important topic, TPWR highlighted efforts
to acquire land at Maharashtra for its upcoming coastal project over 3-4 years, but
uncertainty on land acquisition legislation, is delaying the process as owners are
expecting better compensation. The company also stated that if increased
compensation would expedite the process substantially, it would welcome the
legislation.
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
Tata Power
As anticipated, investor concerns centered around the Mundra UMPP losses
and details of the upfront write-offs taken in Sep-q.
Management reiterated that the asset write-off of Rs8B, taken in Sep-q, was related
to impairment and would result in lower depreciation charge on Mundra, once
commissioned. The company is transferring 75% of the coal mine ownership to
Mundra SPV, and mgt explained that this would neutralize the project losses. The
management categorically ruled out any PPA renegotiation, but stated attempts to
reduce Mundra losses continue – specifically:
1. Advocating tweaking of the CERC index of fuel escalation to tune it with actual
escalations,
2. Attempts to blend lower grade coal, in consultation with the boiler supplier
Doosan, after a pilot attempt at Trombay – mgt thought this can potentially bring
down coal cost by as much as 30-35%, if successful, over years.
The commissioning timeline is Feb-end for the first unit, and 3-6 months for
subsequent units of 800MW. Target PLF is around 75%.
Besides this issue, management highlighted on-the-ground positive developments
on regulatory front – eg – an appellate tribunal order that state regulators should
clear up tariff receivables in 3 years time – this is a drastic and an important
milestone towards state distcom viability. In conjunction with takeaways from other
players, it was evident that most managements expect state distcom related reforms
to provide a big catalyst.
On land acquisition, which was the other important topic, TPWR highlighted efforts
to acquire land at Maharashtra for its upcoming coastal project over 3-4 years, but
uncertainty on land acquisition legislation, is delaying the process as owners are
expecting better compensation. The company also stated that if increased
compensation would expedite the process substantially, it would welcome the
legislation.
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