Reliance Infrastructure today reported a 76% jump in its fourth quarter net profit to Rs 725 crore, as compared to Rs 411.4 crore in the same quarter last year. This, the company attributes to a ‘hyper-growth’ phase in its infrastructure segment as three new projects started generating cash.
Also, the electricity distribution business has shown good growth as well as its customers numbers went up, along with revised tariffs. “The inadequate times of tariff orders and others are behind us,” said Lalit Jalan, chief executive officer of the company. Total income from electricity business went up by 917 crore for the quarter as the company added around two lakh new customers in both Delhi and Mumbai.
As many of its infrastructure projects came into commissioning, the captive construction business of the company is growth through a phase of slowdown, almost halved in revenues. This impacted the total income from operations which went down by 15.3% to Rs 6,187 crore, from Rs 7,135 crore, in the same quarter last year. The total expenditure too reduced by 18%, as its construction material consumption reduced by 51%.
The engineering, procurement and construction (EPC) business will not show much growth going forward. “For this year we have guided an annual topline for EPC at around Rs 7,000-7,500 crore based on current and expected orderbook. We expect it to be in the same range, next year as well,” said Jalan.
The company’s infrastructure business however showed a 64% annual increase. Jalan hopes that this business, which contributes to only two% of its revenues, will show this kind of growth in the next three years as well.
“Two more road projects will be commissioned in the first quarter of 2013-14. Mumbai Metro line 1 is also expected to start operations this year. We expect Mumbai metro to breakeven in the second year of operations,” he said. After two years of high growth in the infrastructure business, Jalan expects it to grow at a steady 15% annually.
The company received permission to increase its tariff in Delhi distribution by 4.5% from the regulator. The Maharashtra regulator too increased the extent to cross subsidy surcharge levied on its competitor, Tata Power’s customers. This surcharge will allow RInfra to collect Rs 750 crore annually from Tata Power, and use it to reduce the tariff of its own small consumers, who depend on subsidy from large industrial users.
Apart from the ability to collect, RInfra claims that this move will make them more competitive. “We expect the process of reverse migration to accelerate rapidly. The customers who really belong to us, will now start taking supply from us,” said Jalan.
During the quarter, the company re-evaluated its assets of land, building and machinery in Goa, Samalkot and Chitradurg. “Consequent to the re-evaluation, there is an additional charge of depreciation for the quarter, which has no impact on profit,” RInfra said, in its release.
RInfra’s stock went up by 0.5% in today’s trade, to close at Rs 389.4, as per data available on the Bombay Stock Exchange.
