Tata Power Plunges Most in 9 Years on Unexpected Loss

Tata Power Co. (TPWR) plunged 15 percent in Mumbai trading, the biggest decline in more than nine years, after unexpectedly reporting a first-quarter loss.

The shares of India’s second-largest power generator declined to 71.40 rupees, the most since May 17, 2004. The stock has fallen 35 percent this year, compared with a 3.6 percent drop in the benchmark S&P BSE Sensex.

Tata Power reported a group loss of 1.15 billion rupees ($19 million) in the three months ended June 30, compared with a profit of 1.46 billion rupees a year earlier, the company said in a stock exchange statement. A Bloomberg survey of 19 analysts had estimated a profit of 2.2 billion rupees. The rupee’s 8.6 percent plunge in the quarter increased interest costs and led to currency losses.

Tata Power, which reported losses for two straight years, has written off 26.5 billion rupees as impairment expenses on its 4,000 megawatt Mundra power plant in the western state of Gujarat after a regulatory change in Indonesia raised imported coal prices.

“Forex losses have hit the company at the operational level,” said Sachin Mehta, an analyst with Centrum Broking Pvt. in Mumbai. “A depreciating rupee makes imported coal costlier and raises costs for the Mundra plant which was anyway unprofitable.”

Total Cost

The total cost for the quarter was 79.2 billion rupees, compared with 63.5 billion rupees a year earlier, according to exchange filings. Finance costs almost doubled to 9 billion rupees.

The rupee touched a record low of 61.64 per dollar today. The currency has weakened almost 11 percent this year, the biggest decline in Asia after the Japanese yen.

The power utility earned a profit before finance costs and taxes of 961.9 million rupees from its coal mining business in the quarter, down 63 percent from a year earlier.

The company is seeking cheaper coal assets in the U.S., Canada and Colombia, Managing Director Anil Sardana said in an interview in April.

To contact the reporter on this story: Bhuma Shrivastava in Mumbai at bshrivastav1@bloomberg.net

To contact the editor responsible for this story: David Merritt at dmerritt1@bloomberg.net

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