For the quarter ended 31 December 2006, net profit has increased 22.95 per cent to Rs279.9 crore, or Rs14.13 per share, from Rs227.65 crore, or Rs11.49 per share, for the previous year quarter. Total revenues declined 2.51 per cent to Rs1,200.51 crore from Rs1,231.37 crore for the previous year quarter. The decline in top line was mostly on account of lower revenues from other businesses.

Operating profits, excluding other income, for the quarter increased by a modest 7.08 per cent over the previous year quarter. Operating margins as a percentage of net revenues improved to 17.56 per cent from 15.98 per cent for the corresponding period of previous year.

Tata Power managed to improve its margins as the cost of fuel declined. Fuel costs and cost of power purchased declined 2.26 per cent over the previous year quarter. Staff costs increased 23.18 per cent while other operating expenses were higher by 4.16 per cent. Cost of contracts executed, which forms part of other businesses of the company, declined substantially from Rs53.66 crore to Rs14.31 crore.

Other income for the quarter was substantially lower at Rs45.98 crore as compared to Rs176.56 crore a year ago. During the previous year quarter, Tata Power had sold its subsidiaries Tata Power Broadband and Alaknanda Hydro Power, which resulted in a one-time gain of Rs131.97 crore.

Interest costs increased 20.3 per cent and depreciation charges went up by a marginal 3.22 per cent. The company wrote-back Rs147.67 crore in tax provisions for the quarter as against Rs32.13 crore provided for the previous year quarter. The provisions were reversed following assessment orders received.

The Maharashtra Appellate Tribunal for Electricity ruled against Tata Power in a dispute related to stand-by charges billed by the electricity board. The company was asked to pay Rs354 crore along with interest of 10 per cent till the date of payment to Reliance Energy. The company has filed an appeal in the Supreme Court and no provision has been made for this amount. The Appellate Tribunal had also ruled in favour of Reliance Energy in the matter relating to supply of electricity by Tata Power to certain wholesale buyers. Tata Power had won a stay from the Supreme Court in this case, pending final orders.

Going forward, the company is on an aggressive expansion spree – including a 4,000 MW ultra-mega power project in Gujarat – which would need very large investments. However, stock performance would be impacted by long standing legal disputes with Reliance Energy and government agencies which are awaiting final rulings of the Supreme Court.