Reliance Power Q1 net loss widens to Rs 296 crore, on lower power generation, higher fuel costs

Reliance Power Limited (RPower), an Indian power generation company, reported a widening net loss of Rs 296.31 crore in the first quarter (Q1) of the financial year 2023-24 (FY24), as against a net loss of Rs 160.79 crore in the corresponding quarter of the previous financial year (FY23).

The company’s total income declined to Rs 1,958.72 crore in Q1 FY24 from Rs 2,144.97 crore in Q1 FY23. Its expenses rose to Rs 2,182.69 crore in Q1 FY24 from Rs 2,145.90 crore in Q1 FY23.

The widening of RPower’s net loss was due to a number of factors, including:

• Lower power generation: The company’s power generation declined by 8% to 5,079 million units (MU) in Q1 FY24 from 5,557 MU in Q1 FY23. This was due to lower availability of coal and gas, as well as planned maintenance outages at some of the company’s power plants.
  • The company’s coal-based power plants operated at an average plant load factor (PLF) of 56% in Q1 FY24, down from 62% in Q1 FY23.
  • The company’s gas-based power plants operated at an average PLF of 42% in Q1 FY24, down from 50% in Q1 FY23.
• Higher fuel costs: The company’s fuel costs increased by 25% to Rs 1,280.92 crore in Q1 FY24 from Rs 1,031.85 crore in Q1 FY23. This was due to the increase in the prices of coal and gas.
  • The average price of coal that RPower purchased in Q1 FY24 was Rs 2,946 per tonne, up from Rs 2,350 per tonne in Q1 FY23.
  • The average price of gas that RPower purchased in Q1 FY24 was Rs 27.5 per million standard cubic feet (MMSCF), up from Rs 22.5 per MMSCF in Q1 FY23.
• Forex losses: The company incurred forex losses of Rs 58.05 crore in Q1 FY24, as against forex gains of Rs 6.24 crore in Q1 FY23. This was due to the depreciation of the Indian rupee against the US dollar.
  • The Indian rupee depreciated by 4% against the US dollar in Q1 FY24.

RPower said it is taking steps to improve its financial performance, including:

• Reducing costs: The company is working to reduce its fuel costs by optimizing its fuel mix and negotiating better prices with suppliers. It is also working to reduce its operational costs by improving the efficiency of its power plants.
  • The company is exploring the possibility of importing coal at lower prices.
  • The company is also looking to sign long-term contracts with gas suppliers at fixed prices.
• Increasing power generation: The company is commissioning new power plants and taking steps to improve the availability of its existing power plants.
  • The company is commissioning its 3,960 MW Krishnapatnam Ultra Mega Power Project in Andhra Pradesh.
  • The company is also taking steps to improve the availability of its 2,400 MW Taloja Power Plant in Maharashtra.
• Selling non-core assets: The company is looking to sell some of its non-core assets to raise funds, which will be used to reduce debt and invest in new projects.
  • The company is in talks with potential buyers for its cement business.
  • The company is also looking to sell its wind energy assets.

RPower’s stock closed at Rs 18.25 on the BSE on Wednesday, down 0.25% from its previous close.

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