The year 2008-09 has not gone well for the West Bengal State Electricity Distribution Company Limited (WBSEDCL), a state government enterprise. Unlike the preceding three years when its profit margin was substantial, this time its profit after tax has come down to Rs 39 crore, less than 40% of what it was in the preceding year. In the 2007-08 the WBSEDCL made a profit of over Rs 100 crore. Moreover, faced with a severe cash crunch, the company is now forced to dip into its reserve fund to meet its regular expenditure.
According to one of the directors of the company, despite repeated petitions made by the company before the West Bengal Electricity Regulatory Commission (WBERC), the growing cost of fuel did not get proper reflection in the power tariff, which bled the company financially and the enhanced cost owing to the wage revision of the employees impacted the company's profit margin adversely.
To offset these factors, the WBSEDCL is relying heavily on a fresh mandate from the West Bengal Electricity Regulatory Commission (WBERC) to hike its power tariff. For that it has already asked for a hike of Rs 0.90 per unit from its present unit cost of Rs 4.17.
Last November, the WBERC allowed the WBSEDCL to hike its power tariff by Rs 0.78 per unit. The senior officials of the company point out that in 2008-09, the state government has directed the WBSEDCL to acquire Singur Haripal Rural Electricity Cooperative Society Ltd (SHRELCOP) which had accumulated a loss of Rs 43.5 crore and the entire amount had been charged under the exceptional items in the profit and loss account. According to WBSEDCL, this is another factor for which the profit of the company has gone down.
Around the same time, the company acquired West Bengal Rural Electricity Development Corporation (WBREDC), the value of which amounted to Rs 86.56 crore, for which WBSEDCL has issued equity shares amounting to Rs 84.72 crore. The balance amount of Rs 1.84 crore has come under current liability. Also, in the same year he company had to make provision for the upward wage revision of the employees and the terminal benefits with retrospective effect. For that, the total employee cost has shot up from Rs 453 crore in 2007-08 to Rs 2,273 crore in 2008-09.
The WBSEDCL, which was established as a government company in 2007 when the West Bengal State Electricity Board (WBBSEB) was unbundled into two companies, namely, WBSEDCL and WBSETCL, and as of now it has accumulated loss to the tune of Rs 360 crore but it has not incurred cash losses during the financial year under report.
What is worrisome for the company is that its debtors balance, which are outstanding for more than three years, stands at Rs 504 crore, which does not augur well for the company.
On the other hand, the company has made remarkable progress in power trading. In 2007-08, the company's revenue from power trading was restricted to Rs 553 crore, which has gone up to Rs 1,349 crore in 2008-09. But it might come down again as the Central Electricity Regulatory Commission (CERC) has imposed a cap on the pricing on the traded power last September and the WBSEDCL is facing a severe power shortage for quite some time.