RPG group power utility CESC Ltd yesterday unveiled a whopping net loss of Rs 125 crore for 1997-98. This is believed to be the first loss suffered by the company in its operations since 1899.
Unless the company is granted a tariff revision to ensure additional revenue of at least Rs 200 crore, the current year will be no different, the CESC managing director, Sumantra Banerjee, told ===Business Standard, after a board meeting of the company yesterday.
While the net loss was Rs 125 crore according to accounts prepared under the Companies Act, Banerjee apprehended a higher loss under the accounts to be prepared under the Electricity Act.
The RPG power utility increased its energy sales by almost five per cent to give it an additional revenue of Rs 146 crore. However, against a total income of Rs 1,542 crore, the total expenditure was Rs 1,324 crore.
This apart, Rs 237-crore of interest charges, Rs 78-crore of depreciation and Rs 28-crore on account of adjustment of income in earlier years. The result is a net loss of Rs 125 crore. Owing to the Rs 125-crore net loss, reserves would be substantially lower than the previous year.
It will be a surprise if the company still declares a dividend. In fact, the company is likely to ask for a hefty tariff revision, bringing in an additional revenue of at least Rs 200 crore.
Banerjee said that the income includes the receivable fuel surcharge. There are two reasons for the disappointing results. First, the company had to incur high financing charges for its inability to recover the fuel surcharge arrears. Second, the present tariff rates are grossly inadequate. The last increase in November, 1996, was as little as two per cent after adjusting the increasing cost of imports.
Banerjee said that various means of meeting the mounting shortfall included delayed payment of WBSEB's bills and leasing of some assets. But, the price was heavy.
Delayed payment surcharge at the rate of 26 per cent cost the company Rs 11 crore and leasing charges too were Rs 11 crore.
The company's expenditure during the year increased by Rs 102 crore on account of higher power purchase and fuel costs. Besides leasing and delayed payment surcharge costs of Rs 22 crore, water cess costs went up by Rs 6 crore and the ECGD charges rose by Rs 4 crore. Personal costs jumped by Rs 17 crore, thanks to a wage revision.
Banerjee said the company got a net benefit of Rs 16 crore from the revised tariff. This was the first full year with the revised rates of tariff.
He said the government's delay in granting adequate tariff and the long-standing dispute over fuel surcharge has brought the company to such a sorry state. In place of earning a clear profit and reasonable rate of return under the Electricity Act, the company is deep in the red.
The generating plants of CESC improved their plant load factor from 74 per cent in 1996-97 to 75.5 per cent in 1997-98. The adjusted transmission and distribution loss has come down marginally from 18.9 per cent to 18.3 per cent.
