Praveer Sinha, the Chief Executive Officer (CEO) of Tata Power, shared in an exclusive interview with Moneycontrol that the company has firm intentions to actively engage in the ‘PM Surya Ghar: Muft Bijli Yojana’. This initiative, which aims to solarize one crore households in India, has garnered significant attention. Additionally, Tata Power has plans to commence work on two pioneering pumped storage projects in FY25.
Tata Power has announced a consolidated net profit of Rs 1,076.12 crore for the third quarter of FY23-24, showing a 2 percent increase compared to the consolidated profit of Rs 1,052.14 crore recorded last year. Let’s delve into the numbers and explore the reasons behind the stable profit after tax (PAT).
To begin with, it is worth noting that this marks the 17th consecutive quarter where the company’s profit has surpassed the previous year’s figure for the same period. This consistent growth is a positive trend for Tata Power.
Furthermore, the quality of profit has significantly improved in this quarter. Approximately 70 percent of the profit generated is from the company’s core business, which is a notable improvement compared to last year when it accounted for only 40 percent. This indicates that Tata Power’s core operations, including generation, transmission, distribution, and renewables, have contributed significantly to the overall profit.
It is important to highlight that the absence of profit from the coal mining business, which was a major contributor in Q3 FY23, has impacted the overall profit this year. However, despite this, the company has managed to maintain a stable PAT.
In conclusion, Tata Power’s consolidated net profit for the third quarter of FY23-24 has shown a modest growth of 2 percent. This can be attributed to the improved quality of profit, with a higher percentage coming from the core business. Despite the absence of profit from the coal mining business, the company has demonstrated resilience and stability in its financial performance.
Certainly! The recently announced rooftop solar scheme by PM Modi, which was also highlighted by the Union finance minister in her budget speech on February 1, holds great significance. As the leading player in the rooftop solar sector, Tata Power possesses an impressive 18 percent market share. With 500 channel partners spread across 400 cities, we are eagerly awaiting the specifics of this scheme. Rest assured, as a trusted vendor and distributor, we will actively participate and make substantial contributions to its success.
Furthermore, the timing of the revamped scheme could not have been more opportune for us. The objective of installing solar panels in one crore households under the scheme necessitates the use of DCR (domestic content requirement) solar PV modules. Tata Power, with its newly established module manufacturing unit, is well-positioned to supply DCR modules for this initiative.
Our 4-GW module plant is already up and running, and it will commence module supply in the current quarter for our large utility-scale and EPC projects that require domestically manufactured modules. The 4 gigawatts (GW) cell manufacturing unit is expected to be operational by Q1 FY25.
With the government’s recent order to reintroduce ALMM (Approved List of Models and Manufacturers) from April 1, domestic manufacturing of solar cells and modules will receive a significant boost.
Tata Power is currently constructing green energy transmission corridors after securing its first-ever project through the Tariff-Based Competitive Bidding (TBCB) process. Is this another sector in which the company plans to aggressively expand its operations?
While we have been involved in the transmission business, our activity in this sector has been limited over the past decade. Therefore, we are now focusing on renewable energy transmission projects. We have already secured two projects — Rajasthan Phase IV Part C (344 ckm), for which we have received the letter of agreement, and Jalpura Khurja Power Transmission Limited (80 ckm), where we have been declared the lowest bidder (L1). The combined capital expenditure planned for both projects is at least Rs 2,294 crore.
We will actively pursue additional projects of this nature, but we will approach the bidding process in a manner that safeguards our margins. We are extremely cautious about this aspect. Consequently, we will bid for green energy corridor projects in a prudent and calculated manner to ensure that we secure projects while maintaining our profit margins.
We have established connections with several states regarding this matter. As you may be aware, there is a significant increase in renewable energy capacity being developed in the country. In order to accommodate this power, both intra-state and inter-state transmission line capacity must be expanded.
In January, Tata Power made commitments to invest at least Rs 70,000 crore each in Tamil Nadu and Gujarat for the development of renewable energy. We are interested in knowing the total capital expenditure planned for the renewable energy portfolio in FY25, FY27, and FY30.
Indeed, we have announced plans to explore 10 GW of renewable capacity in both Gujarat and Tamil Nadu. This will be achieved over a period of five to seven years. However, until 2027, we have allocated a capital expenditure of Rs 60,000 crore. If we focus solely on renewables, excluding pumped hydro, our capital expenditure in FY24 amounted to approximately Rs 15,000 crore. In FY25, it is projected to be around Rs 20,000 crore, Rs 22,000 crore in FY26, and Rs 23,000 crore in FY27.
The estimated capital expenditure by FY30 is still being discussed.
Tata Power has decided that 45 percent of its capital expenditure will be allocated to renewables between FY24-27.
Will Tata Power commence work on its first pumped storage projects (PSPs) in the near future?
Yes, we have plans to begin work on our two upcoming PSPs, which will support 24×7 renewable power starting from FY28.
The first project is the Bhivpuri PSP, with a capacity of 1,000 MW and a capital expenditure of Rs 4,700 crore. Construction for this project is scheduled to commence in the third quarter of FY25. The second project, the Shirawata PSP, will have a capacity of 1,800 MW and an investment of Rs 7,850 crore. Construction for this project will begin in the last quarter of FY25.
While the first project is expected to be completed by the end of 2027, the second project will be finished by 2028.
The cost structure is currently being finalized as we are still in the process of obtaining various approvals and conducting necessary studies. The approximate cost is Rs 5 crore per megawatt.