Equity Analysis

• Fall in operating profit margin to the extent of 30 bps to 24.3% was largely due to rise in all cost heads barring cost of electricity purchased and other expenses. Fuel cost as proportion to sales was up by 90 bps to 30.8%. Similarly the material cost (including cost of traded goods) was up by 140 bps to 3.7% and that of staff cost was up by 70 bps to 5.3%. But the cost of electricity purchased was down by 180 bps to 28.2%. And that of EO was down by 90 bps to 7.7%.
• In compliance with new accounting standard IND-AS 115 revenue from contract with customers that comes to effect from April 1, 2018 there was a change in accounting policy. Thus the company from fiscal 2018-19 onwards started recognizing revenue on fuel & power purchase price adjustments (FPPPA) claims and other true up adjustments, as per the applicable tariff regulations, management's probability estimate and the past trends of approval, by applying the guidance on variable consideration under Ind AS 115 unlike earlier accounting policy practice of recognizing FPPPA claims as and when approved by the regulatory authority and the truing up adjustments claims as and when these were billed to consumers subsequent to approval by regulatory authorities. The company has not recognized those truing up adjustment claims which are subject of dispute and for which the Company is in appeal with regulatory authorities. Consequent to adoption of Ind AS 115, Revenue from Operations and Profit for the quarter ended March 31, 2019, are higher by Rs 121.44 crore.

Yearly performance

Consolidated sale was up by 14% to Rs 13150.97 crore. But with OPM contract by 280 bps to 24.3%, the growth at operating profit was restricted at 3% to Rs 3199.48 crore. However the PBT was down by 10% to Rs 1263.61 crore hurt by lower OI, higher interest and depreciation cost. With taxation stand lower by 20% to Rs 359.78 crore, the fall at PAT moderated to stand at 5% to Rs 903.83 crore. Eventually the total comprehensive income was down by 7% to Rs 892.69 crore with minority interest stand lower by 50% to Rs 4.89 crore and other comprehensive expense stand at Rs 6.25 crore, a negative swing of Rs 19.59 crore from an income of Rs 13.34 crore in corresponding previous period.

Consequent to adoption of Ind AS 115, Revenue from Operations and Profit for the year ended 31st March, 2019, are higher by Rs 318.26 crore. Accordingly, as at 31st March, 2019, retained earnings are higher by Rs 965.38 crore, unbilled revenue higher by Rs 955.71 crore and sundry payables lower by Rs 9.67 crore.

Other developments

The Board of Directors have recommended final dividend of Rs 5.00 per equity share of Rs 10 each fully paid up for the financial year 2018-19 in its meeting held on 15th May, 2019.

Torrent Power : Consolidated Results

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