Essar Power logs profit for first time since 1997

The Dollar Business Bureau

Almost two decades after entering the power generation business, Essar Power finally logged profit of Rs 39 crore for FY16.

The management is optimistic of continuing healthy business for the latest fiscal and is even expecting Rs 550 cr net income by the end of the financial year 2017, provided that the coal prices and further variables remain stable, revealed Sushil Maroo, Vice-Chairman of Essar power.

Against the net loss of Rs 684 crore in FY15, Essar closed at net profit of Rs 39 cr in FY16.

Low coal prices, reverse e-auction of coal, other effective measures and average Plant Load Factor of more than 80% gave a push to EBITDA (Earnings before interests, taxes, depreciation and amortization) by 168% to Rs. 533 cr in FY16 from Rs 199 cr logged in previous fiscal.

Meanwhile, net sales also climbed to Rs 1,905 crore from Rs 1,867 crore in FY15. Income operations also increased by 80% to Rs 160 crore in FY17’s first quarter from Rs 89 cr registered in first quarter of FY16.

The reverse e-auction of coal led to lesser input cost due to huge supplier base from high competition, said Maroo. He further revealed that since the operational assets are under 5/25 scheme of RBI, the burden of interest also lowered to certain extent. However, the company paid over 2,000 crore worth of interest to the creditors.

Maroon is positive about lowering the standalone debt of Rs. 2,050 cr by half this fiscal as the company has over Rs. 1400 cr stuck in litigations.

Maroo expects the revival of the 1,200 MW Mahan power plant of Madhya Pradesh in next three months. The Mahan power plant has its shutters down for the past 3 years due to loss of captive coal mines after the Supreme Court’s judgement to cancel the mine.