Power stocks surge as SC quashes RBI's Feb 12 circular; Adani Power up 2%

Shares of power and sugar companies surged in the morning trade on Tuesday after the Supreme Court quashed the Reserve Bank of India’s February 12 circular via which the banking sector regulator had asked banks to take defaulting power, sugar, shipping and other sector companies to insolvency.
At 10:50 am, shares of Tata Power were trading over 2 per cent higher at Rs 76 apiece while those of Adani Power gained 3 per cent. NTPC was trading nearly a per cent higher at Rs 136 while Power Grid was ruling nearly 2.50 per cent at Rs 200.45.

Select sugar stocks, too, rallied in the trade. EID Parry was trading over half a per cent higher at Rs 206.60 apiece on BSE while Sakthi Sugars was up nearly 3 per cent at Rs 11.49. In comparison, the benchmark S&P BSE Sensex was trading flat at 38,908, up 36 points.
Power companies such as Essar Power, GMR Energy, KSK Energy, and Rattan India Power as well as The Association of Power Producers (APP) and Independent Power Producers Association of India had in August moved the Supreme Court, challenging the constitutional validity of the February 12 circular of the RBI.
On February 12, 2018, RBI had asked banks and other lenders to either execute a resolution plan for big stressed accounts or file insolvency petitions against them in the National Company Law Tribunal (NCLT). The banking sector regulator in this circular had allowed 180 days for debt resolution, failing which the asset would have to be taken to National Company Law Tribunal (NCLT) for initiation of insolvency against them. The deadline got over on August 31, 2018.
State-run banks also gained during the session. Union Bank rose 2 per cent to Rs 98.40 per share, while Oriental Bank of Commerce added nearly 3 per cent. Bank of India was up nearly 2 per cent at Rs 106.70 apiece.

Tata Power's quarterly profit plunges nearly 67%; hit by higher expenses

Tata Power on Monday reported 67.42 per cent decline in consolidated net profit at Rs 204.61 crore for December quarter 2018, mainly on account of higher fuel and borrowing costs.
The company's net profit in the year-ago period stood at Rs 628.16 crore, it said in a BSE filing.

Total income rose to Rs 7,721.52 crore in the reported quarter from Rs 6,451.31 crore a year ago.
Fuel cost of the company rose to Rs 3,189.87 crore from Rs 2,491.24 crore in the year-ago period. Similarly, the finance cost rose to Rs 1,013.96 crore from Rs 855.28 crore a year ago.
The company said its net profit of Rs 628.16 crore in the year-ago period was also higher due to one time exceptional item.
During April-December 2018, net profit stood at Rs 2,333.09 crore as compared to Rs 1,246.52 crore in the year- ago period. Total income during the nine-month period was also higher at Rs 22,537.58 crore as compared to Rs 19 991.94 crore a year ago.
The stock of Tata Power settled at Rs 70.80, down 4.26 per cent from the previous close, on BSE.

SC gives CERC 8 weeks to decide on revised tariffs for 3 Gujarat power cos

India's top court Monday directed the federal electricity regulator to decide within 8 weeks on approving revised tariffs for three power producers in the western state of Gujarat due to increased cost of imported coal.
The Gujarat government sought the top court's intervention to implement a state government panel's report that recommended implementing a cost-reflective tariff, which would mirror any increase or decrease in input costs. The plea also includes a provision to extend the contract period for the plants run by Tata Power Co, Adani Power Ltd and Essar Power.
The two judge Bench led by Rohinton F Nariman said the decision for tariff should not be bound by an earlier single-judge order, which had rejected the power producers demand for higher tariff last year. Tata Power jumped as much as 25 per cent, the biggest jump in intra-day trade in a decade, while Adani shot up as much as 21 per cent, the highest since January.
ALSO READ: Stressed power assets: Gujarat seeks relief for Tata, Essar, and Adani
Higher tariffs would allow these plants, with a combined capacity of nearly 10 gigawatts, to run at full capacity, after lying under-utilised since the Supreme Court last year denied an increase in tariffs. Bringing these plants back into the grid could improve the reliability of supply as well as ward off chances of these projects slipping into non-performing assets.
The plants had bid for a fixed tariff to win the projects, but those tariffs turned unviable after Indonesia changed its coal pricing regulations in 2010, linking prices of the fuel to an international standard.
The revival plan also includes lenders writing off a part of their loans and project developers absorbing accumulated losses, according to people familiar with the plan. The court today asked the Central Electricity Regulatory Commission to hear all consumer groups on the proposals.

ALSO READ: Gujarat govt's panel may bring Rs 1.29 bn relief to Tata, Adani and Essar
Tata Power operates a 4,000 megawatt plant in the coastal town of Mundra in Gujarat, while Adani Power runs a 4,620 megawatt plant at the same location. Both generating plants are fuelled by coal imported from Indonesia. Essar operates a 1,200 megawatt plant at Salaya in the same state.
The plants haven't been running at full capacity after the court ruled last year that a change in regulations overseas couldn't be a ground for increasing power prices.
Adani's plant ran at 44.3 per cent capacity during the first half of the fiscal year that began April 1, compared with 66 per cent in the same period a year earlier, according to the Central Electricity Authority. Tata Power's Mundra station ran at 67.7 per cent capacity, down from 69.2 per cent in the previous year. Both these companies have coal mining rights in Indonesia, which hedges against the increase in coal prices. Essar, which doesn't have a mine, kept its plant shut during the time, data show.

Former Tata Power chief Anil Sardana named MD & CEO of Adani Transmission

Tata Power's Anil Sardana has been appointed as the managing director (MD) and chief executive officer (CEO) of Adani Transmission Ltd with effect from May 1, 2018.
Sardana, who was serving as MD & CEO of Tata Power Group out of Mumbai, brings in over three decades of experience in power and infrastructure sector to Adani Transmission Ltd, part of the conglomerate Adani Group.
An electrical engineer from Delhi University, Sardana began his career with NTPC, followed by BSES and later Tata Group companies in power and infrastructure. At Tata Group, Sardana has worked across verticals like generation, power systems design, power distribution, telecom and project management.

ALSO READ: Tata Power CEO and MD Anil Sardana steps down stating personal reasons
Sardana's appointment at Adani Transmission Ltd. follows the company's recent entry into the power distribution space with the acquisition of Mumbai GTD business.
"We welcome Anil Sardana to the Adani Family.
Sardana comes with a vast experience in the power sector will play an important role in taking our transmission business to new heights. We wish him all the success for a long and fruitful association with the Adani Group," said Gautam Adani, Chairman of Adani Group stated in an official communique.
Apart from being an honours graduate in electrical engineering from Delhi University, Sardana also holds a PGDM from All India Management Association. He has undergone management training from institutes like Indian Institute of Management, Ahmedabad (IIM-A) and 'Specialised Residual Life Assessment course for Assets' at EPRI - USA.

Tata Power sells defence business to Tata Sons' subsidiary for Rs 22.30 bn

Private power producer Tata Power on Thursday said it has sold its defence business to Tata Sons’ subsidiary Tata Advance Systems for an enterprise value of Rs 22.30 billion. The move, the company said, is part of the company’s plan to monetize its non-core assets and improve the balance sheet.
“The Board has approved the sale of its defence business to Tata Advance Systems Limited, a wholly owned subsidiary of Tata Sons at an enterprise value of Rs. 22.30 billion, out of which Rs 10.40 billion is payable at the time of closing and Rs. 11.90 billion is payable on achieving certain milestones,” Tata Power said in its statement. The deal is subject to government and other approvals.

“Strategic Engineering Division (SED) is a non-core business division of Tata Power. The Company has been working on charting its next phase of growth, for which monetization of non-core assets is a critical step. This sale will also help in reduction of leverage,” said Anil Sardana, chief executive officer and managing director for Tata Power
SED is a non-core defence electronics division of the company, engaged in business of indigenous design, development, production, integration, supply and life cycle support of mission critical defence systems. The key products include manufacturing and assembling missile launchers, electronic warfare, night vision systems and gun systems. In its statement, the company said, SED has three dedicated manufacturing units- of which Bangalore Electronic City is operational and Vemagal in Karnataka (and a SEZ near Bengaluru) are under construction.
Last week, Tata Power said it sold its stake in Panatone Finvest to Tata Sons for a value of Rs 15.42 billion and also entered into a sale agreement with Panatone for sale of its stake in Tata Communications for Rs 6.13 billion.