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Tata Power: Powering Solutions

Tata Power plans to turn into an energy solutions company from a power developer

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The financial year 2018-19 saw steady growth in demand for power, led by an improvement in the overall economic environment in India. Addressing shareholders, Tata Power CEO and Managing Director, Praveer Sinha had said, “Over the next decade, the Indian economy is set to grow at a record pace and a key enabler of this growth will be India’s ability to fulfil its energy needs”. He said, “We expect the growth momentum in the Indian power sector to continue, led by government’s infrastructure push and various structural policy reforms, which should augur well for the country’s power demand growth.” 

Tata Power posted a consolidated profit after tax (PAT) of Rs 2,441 crore in FY 2019, which was a wee bit lower than in the previous financial year, because of lower profits from coal companies. In FY 2018 the company had earned a PAT of Rs 2,611 crore. The profitability of coal companies was adversely affected by the domestic market pricing obligation in Indonesia and increased fuel prices, Sinha said in the company’s last annual report. 

In FY19, all the subsidiaries and operating divisions of Tata Power reported robust performance despite sectoral challenges. The renewable power business brought in 200 MW in FY19 and another 400 MW was in the pipeline. The solar EPC business, the company said, possesses a healthy order book of Rs 1,360 crore.  

“We also launched residential solar rooftop solutions in several cities and installed 65 EV charging points across the country. The Trombay PPA with BEST and Tata Power’s Mumbai discom received an extension for five years,” Sinha said. Through the Resurgent platform, Tata Power said it was in the process of acquiring the 1,980 MW Prayagraj power plant in Uttar Pradesh.   

In keeping with the recommendation of a High Powered Committee set up by the Government of Gujarat, Tata Power is in discussion with various state governments and state discoms on Coastal Gujarat Power Limited. The company says it expects a compensatory tariff soon. 

In FY19, Tata Power continued to exit from non-core investments and raised about Rs 1,897 crore from the disinvestment in Tata Communications and Panatone Finvest, in keeping with the management’s commitment to deleverage the balance sheet by divesting in non-core assets. “The proceeds from such sale would be re-invested in core areas as well as emerging areas where there is a huge growth opportunity,” said Sinha. 

“Our future growth would be in conventional power generation with emphasis on renewable power, power distribution and service-led businesses and this will bring in greater value and help us align with the emerging consumer needs,” he said.  

India is encouraging automotive makers to build electric vehicles in a bid to control pollution and to contain the country’s fuel import bill. Car makers have pleaded that a charging infrastructure needs to be set up first and that battery costs are too high to make affordable electric vehicles for the Indian market. 

Sinha said recently that Tata Power had set up 100 charging stations and aimed to add another 650 stations across more than 20 major Indian cities over the coming year.  

According to the Tata Power CEO, all such EV charging stations would support fast charging and be linked to a mobile application. The application developed with Tata Consultancy Services, will be used for payments and to check the availability of chargers.  Going forward, Sinha said, Tata Power would become an energy solutions company, moving away from the narrow definition of a power developer or distributor. It is also looking to acquire stressed thermal power plants instead of building Greenfield units or expanding its current capacity. 

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