Tata Power Board Okays CGPL, TPSSL, Af-taab Merger; Q1 Profit up 10%

Utility giant Tata Power Company said that its board has approved the proposed merger of its three entities i.e. Coastal Gujarat Power Ltd (CGPL), Tata Power Solar Systems Ltd (TPSSL), and Af-taab Investment Company (Af-taab) with the parent company for greater synergies in financing, compliance, and oversight.

However, the merger is subject to necessary approvals, and is part of a strategic initiative to simplify the group holding structure and a broader plan to set the company for future growth through fiscal consolidation and strengthening of balance sheet, Tata Power said in a statement.

Through this merger, the company aims to achieve the long-term objectives by facilitating efficient use of cash and making available corporate support to the businesses of the said wholly owned subsidiaries as needed.

Commenting about the merger, Praveer Sinha, CEO & Managing Director, Tata Power said that “the Board approved a scheme to merge CGPL, TPSSL and Af-taab with the parent company. CGPL has already suffered large losses and is facing difficulty in financing its operations. Given the inordinate delay in resolution of the tariff matter, the merger will provide relief through direct support from the parent company. The company continue to be in discussion with various state governments and state Discoms. We do hope that the State Governments will take a practical view and resolve the PPA amendment issue in the interest of all stakeholders.”

Besides, the company has also reported a 10 per cent rise in its consolidated profit at Rs 268.1 crore for Q1 FY20, against Rs 243.08 crore during the same period a year ago, helped by lower tax cost and exceptional gain.

However, it’s revenue from operations dropped 16.9 per cent to Rs 6,453 crore during the June quarter of FY21, as compared to Rs 7,767 crore in the same quarter previous year.

The company’s major chunk of revenue comes from power generation and transmission & distribution business segments.

About the financial performance of the company, Sinha commented “all our business clusters have reported a robust performance despite the challenges presented by the ongoing pandemic. We aim to continue our progress in our low carbon journey by achieving 50 per cent generation from clean and green sources by 2025 and set new benchmarks in operational efficiencies.”

On the company’s future plans, Sinha added “the company plans to scale-up the growth of the consumer-facing energy solution businesses like EV Charging, Smart Metering, Retail Rooftop Solar, Solar Pumps, Home Automation and Solar Micro grids in rural areas.”

“The aim is to become a leader in distribution business space by evaluating similar opportunities and achieving 10 million consumer base over the next five years,” he added.