How Tata Power Plans To Increase Its Operating Profit

Tata Power Co. plans to improve its operating profit in the next few quarters through a multi-pronged strategy that includes higher tariffs and sustained generation from its power plant at Mundra.

That’s according to Praveer Sinha, the power utility’s chief executive officer, who told BloombergQuint in an interview that higher cost of shipping and solar modules had weighed on the company’s metric so far.

Given the coal shortage in India, states like Rajasthan, Punjab and Gujarat have agreed to buy power from Tata Power at Rs 5.4 a unit, he said. The tariff includes fixed costs and reflects recent inflationary trends, he said.

Sinha said though the company hasn’t signed a medium-term power purchase agreement, it has contracts for November and December.

The company said it has received approval from the National Company Law Tribunal for the merger of Mundra plant with its parent, which should be completed by the fourth quarter of the ongoing financial year.

Tata Power had reduced generation at the Mundra plant to control fuel cost under-recovery, he said.

Watch the full interview here: