Reliance Power Posts Biggest-Ever Quarterly Loss On Gas, Solar Write-Offs
Anil Ambani’s Reliance Power Ltd. reported its biggest quarterly loss as it wrote off investments in gas-based and solar generating units.
Net loss stood at Rs 3,560 crore in the quarter ended March compared with a profit of Rs 188 crore in the year-earlier period, according to its exchange filings.
The company took one-time write-offs and impairments worth Rs 4,170 crore during the quarter because of lack of gas for its generation plant and unviable solar assets. The exceptional loss, according to the company, would have been higher had it not withdrawn Rs 1,017 crore from the general reserve.
The write-offs reflect the troubles of Ambani group as its power, defence and infrastructure businesses struggle with debt. Its telecom unit voluntarily approached the insolvency court after failing to sell assets to repay lenders. The group sold other assets, including its power business in Mumbai. Still, Reliance Power’s debt more than tripled in the previous financial year.
The company put off the announcement of fourth-quarter results to June 7 citing unavailability of directors on May 29. The company finally declared its fourth-quarter earnings on June 8. It’s parent Reliance Infrastructure Ltd., however, again deferred its results on June 14.
- The power unit’s revenue dropped 32 percent year-on-year Rs 1,586 crore in the three months ended March.
- Operating profit tumbled 35 percent to Rs 650 crore.
- Margin contracted 180 basis points to 41 percent.
Cash Falls, Debt Swells
- The company’s cash and cash equivalents dropped 95 percent to Rs 29 crore.
- Financial liabilities jumped 2.3 times to Rs 8,939 crore while other current liabilities nearly tripled to Rs 586 crore.
- Finance costs jumped 59 percent to Rs 1,096 crore, while other expenses rose 42 percent, impacting margin.
The company said it sought restructuring of loans — to gas unit Samalkot Power and solar plant Rajasthan Sun Technique Energy — obtained from U.S. Exim and a consortium of international lenders led by Asian Development Bank.
The U.S. Exim agreed to restructure its term loan for Samalkot Power as Reliance Power is looking to sell certain assets, the company said. Rajasthan Sun, whose repayments depend on financial assistance from the parent, is also actively engaged with the lenders for restructuring the terms of the loan, it said.