REL records 50% profit growth

CORPORATE SCORECARD

Energy distribution business boosts company's revenues in third quarter.

Reliance Energy Ltd (REL), the power company that is part of the Anil Dhirubhai Ambani Group (ADAG), has announced that its quarterly profit rose by half, helped by higher returns from its core energy distribution business.

The company registered a net profit of Rs 301 crore in the third quarter of 2007-08 against Rs 201 crore in the previous corresponding period.

Net sales increased marginally (1.81 per cent) to Rs 1,853 crore in the period, while net revenues from electrical energy (mainly distribution) were 34.35 per cent higher at Rs 1,229.41 crore in the quarter, as compared with the previous corresponding period.

Other income in the period was up 18.84 per cent to Rs 347.92 crore, against Rs 292.74 crore last year.

REL's erection, procurement and construction and contracts business posted a negative growth of 54 per cent at Rs 280.51 crore, as compared with Rs 613.94 crore in the previous corresponding quarter.

The company, which supplies electricity to parts of Mumbai and New Delhi, has diversified into engineering and construction such as building roads and airports and analysts say the new operations would be a key driver of growth in coming quarters. The company said it had orders worth Rs 8300 crore at the end of December.

The company said it earned Rs 60.02 crore in foreign exchange gains in the December quarter. "We have foreign exchange borrowings and we do some hedging. From June 2007 we have started booking profit or loss based on actual realisation," said a company official.

The company has a capacity to produce nearly 1,000 mw of power, and owns 50 per cent of Reliance Power Ltd whose record Rs 11,700 crore initial public offer was fully subscribed within a minute of its opening on Tuesday. Reliance Power aims to use the money to fund its projects for 28,000 mw across the country.

For the nine months ended December 2007, the company posted a net profit of Rs 773 crore, a 37 per cent increase from Rs 564 crore in the previous corresponding period. Total income stood at Rs 5,525 crore, 17.9 per cent more than the Rs 4,686 crore in the corresponding period last year.

Aggregate revenues from energy sales in the nine months were Rs 3,774 crore, 38 per cent higher than the Rs 2,726 crore in the corresponding previous period.

The aggregate sales of electrical energy increased by eight per cent to 7,197 million units from 6,637 million units in the corresponding period last year.

The consumer base in the Mumbai supply area increased by about 17,000 to 26.15 lakh consumers in the nine months of 2007-08.

Power generation improved in the nine months with the Dahanu Thermal Power Station operating at a plant load factor of 101.1 per cent (100.6%), Samalkot Power Plant at 49.6 per cent (47.1%) and wind farms at 37 per cent (33%).

The power plant in Goa had a lower PLF of 83.2 per cent during the period under review against a PLF of 93 per cent in the corresponding previous nine months.

Reliance Energy shares which jumped more than four times in 2007, outperforming a 47 per cent rise in the main BSE index, ended 2.4 per cent (or Rs 53.90) down at Rs 2,212.70 rupees on the Bombay Stock Exchange on Thursday in a weak Mumbai market.