Tata Power Company

Capital Market / 10:43 , Aug 13, 2010

Consolidated net down by 43% dragged by higher forex loss & inflated base

Tata Power Company, India's largest private power company, has registered 7% growth in consolidated revenue for the quarter
ended June 2010, but its net profit (after minority interest) was down by 43% to Rs 317.67 crore. Fall in bottom-line is largely on
account of higher base as well as higher forex loss for the quarter. Profit for the previous year stood at Rs 552.76 crore which
included Rs 232.40 crore due to MERC tariff orders and judgment of ATE received. Profit for Q1FY11 is after considering Rs 154
crore of forex loss on account of realignment of CGPL borrowings.

On the other hand the standalone revenue was down by 7% (to Rs 1867.90 crore) on a higher base and the net profit was lower by
29% (to Rs 268.98 crore). For the previous period (i.e. quarter ended June 2009), the revenue & profits were inflated by an amount
of Rs 232.40 crore received on account of MERC tariff orders and judgment of ATE received.

Operational Highlights

Company's operations during the quarter continued to be strong. Sales volume for the quarter increased by 8% at 4533 MUs as
against 4180 MUs in the corresponding period last year. Overall Generation was up by 3% at 4386 MUs as compared to 4260 MUs
in the same period last year.

Trombay Thermal Power Station and Hydro Power Stations generated 2799 MUs and 358 MUs of power respectively as compared
to 2779 MUs and 369 MUs in the corresponding period previous year. The Jojobera Thermal Power Station recorded a generation
of 850 MUs during the quarter as compared to 803 MUs in the previous year. Belgaum and Haldia reported generation of 94 MUs
and 180 MUs as compared to 107 MUs and 116 MUs in the corresponding period last year. PH#6 Jamshedpur recorded a
generation of 143 MUs. Wind Farms also recorded a higher generation of 105 MUs as compared to 87 MUs in the same period last
year.

Standalone performance

Revenue from power supply and distribution for the quarter was higher by 11% to Rs 1872.53 crore. However with income to be
utilized in future tariff determination being Rs 70.18 crore as against a recoverable of Rs 50 crore in the corresponding previous
period the income for the period stood lower to that extent. Moreover the revenue pertaining to prior year was nil for the quarter
compared to Rs 232.4 crore in the corresponding previous period. The Rs 232.4 crore is on account of MERC tariff orders and
judgment of ATE received. This has dragged the net revenue for the period down by 9% to Rs 1802.35 crore. After accounting for
other operating income the total operating revenue for the period stood at Rs 1867.90 crore, a fall of 7%.

Apart from prior period revenue, the decrease in net revenue was mainly due to lower fuel cost in the Mumbai regulated business.
Further, the Company also reduced the fuel cost by replacing oil with cheaper RLNG gas, thereby reducing the tariff for the end
consumers. However, the cost of power purchase has gone up as the company was prevented from scheduling power generated by
it to its distribution business in Mumbai.

Operating margin was lower at 24.1% compared to 31.4% in the corresponding previous period. With sharp contraction in operating
margin the operating profit was lower by 29% to Rs 450.89 crore.

Other income was higher by 51% to Rs 125.65 crore due to increased earnings out of the FCCBs funds and interest on tax refund.
Interest cost was lower by 32% to Rs 79.58 crore due to repayment of short term borrowings and refund of interest paid on tax
pertaining to previous years. The depreciation was higher by 13% to Rs 126.70 crore. Thus the de-growth in PBT before (forex
gain/loss) moderated to 24% to Rs 370.26 crore.

Forex gain for the quarter was Rs 1.89 crore compared to Rs 24.34 crore in the corresponding previous period. On an escalated
base the PBT after EO was lower by 27% to Rs 372.15 crore. Taxation was lower by 23% to Rs 103.17 crore. And thus the PAT
was lower by 29% to Rs 268.98 crore.

PAT after Statutory Appropriations stood at Rs 262.98 crore.

Consolidated quarterly performance

Consolidated revenues for the quarter were up by 9% to Rs 4932.35 crore. Adding income to be recovered based on future tariff of
Rs 219.27 crore (up 138% from 92.07 crore) and prior period revenue of 0.0 crore for the quarter compared to Rs 232.4 crore on
account MERC tariff orders and judgment of ATE received the net revenue for the quarter was up 6% to Rs 5151.62 crore. Further
adding other operating income which was up 190% to Rs 33.22 crore the total revenue for the quarter was higher by 7% at Rs
5184.84 crore.
Operating profit margin was lower by 290 bps to 22% and thus the operating profit was lower by 6% to Rs 1138.87 crore. The other
income was higher by 168% to Rs 61 crore. The interest was lower by 16% to Rs 171.84 crore and the depreciation was higher by
17% to Rs 235.0 crore. Thus the PBT before Forex gain was lower by 4% to Rs 793.03 crore.

Total forex loss for the quarter was Rs 150.41 crore compared to a gain of Rs 45.98 crore. The forex loss is mainly due the Rs.154
crore of forex loss reported on account of realignment of Coastal Gujarat Power (CGPL) borrowings. Thus the PBT after forex
gain/loss was down by 26% to Rs 642.62 crore. After accounting for taxation (up 1% to Rs 288.33 crore) the PAT was down by 39%
to Rs 354.29 crore. The Prior period tax was Rs 68 lakh compared to a write back of Rs 11 lakh. Thus the PAT after PPT was down
by 39% to Rs 353.61 crore.

Share from profit/loss from associate was Rs 4.35 crore compared to loss of Rs 48 lakh. The minority interest was up 33% to Rs
40.29 crore. Thus the Net profit (after MI) was down by 43% to Rs 317.67 crore.

On consolidated Segment-wise, the segment Revenue of power business was up by 5% (to Rs 3504.81 crore) and that of coal
business was up by 19% (to Rs 1539.06 crore). However the PBIT of Power business was lower by 22% (to Rs 517.32 crore) due
to MERC/ATE orders explained above. Whereas, PBIT of Coal Business stood higher by 14% to Rs 423.97 crore on the back of
higher production and increase in coal prices.

JVs/subsidiaries Performance

North Delhi Power (NDPL):

NDPL, the company's distribution subsidiary and Joint-Venture with Delhi Govt., has posted revenues of Rs1115.66 Crore during
the quarter, a growth of 45 % as compared to the previous year of Rs. 771.14 Crore. The net profit stood at Rs. 56.71 Crore as
compared to Rs. 41.40 Crore in the corresponding period last year. While NDPL reported an increased PAT, its cash accruals since
1st April 2009 are under pressure due to a substantial increase in power purchase cost which is yet to be recovered through
appropriate adjustment in tariff. This has

Resulted in a significant increase in working capital of about Rs. 640 Crore (including Rs. 290 Crore this quarter) since 1st April
2009 .which has been financed through additional borrowings.

Powerlinks Transmission (Powerlinks):

Powerlinks, the first public-private joint venture in power transmission in India has earned Revenues of Rs. 71.52 Crore as against
Rs. 71.54 Crore in the previous year. The PAT also increased to Rs. 25.96 Crore from Rs. 18.62 Crore in the same period last year.

Tata Power Trading Company (TPTCL):

TPTCL traded at total of 1347 MUs during the quarter as compared to 960 MUs in the previous year, thereby resulting in an
increase in its Revenues by 7% to Rs. 716.35 Crore from Rs. 671.07 Crore in the previous year. The PAT also increased to Rs.
6.45 Crore as against Rs. 1.79 Crore in the same period last year.

Added 18300 retail consumers in the Mumbai License Area in Q1FY11

During the quarter, the Company added 18300 new customers out of which 17760 changeover customers taking its total customer
base to 76800 with in 8 months. The Company had 26,005 direct consumers before it started expansion of its retail business in the
Mumbai market.

Raises US$ 300 million in Coal SPVs to fund additional acquisitions and/or reduce outstanding debt

During the quarter, Tata Power signed an agreement to raise US$ 300 Million in Bhira Investments and Bhivpuri Investments Coal
Special Purpose Vehicles (SPVs) through shares with differential rights to be issued to Olympus Capital Holdings Asia (Olympus
Capital). Taking current position of debt and cash in coal SPVs, the post money shareholding of Olympus Capital may be in the
range of 14-15% for an investment of US$300 million. These funds could also be utilized to secure further long term coal supplies
by investing in coal

Mines or to reduce the outstanding debt in the SPVs.

NCD

The rating exercise with ICRA and CRISIL was undertaken for the Rs. 350 Crore 15 year 9.15% NCD that was placed in the market
to prepay a loan for Company's wind projects. The issue was fully subscribed and the money has been drawn down to prepay the
outstanding loan. The NCD is amongst the finer priced issues done. The rating also allows the flexibility to raise an additional up to
Rs250 crore of such NCD.

Project Update

The Company's growth plans include steady capacity addition year-on-year, taking its current installed capacity to 2975 MW. Some
of the projects commissioned in FY09 and FY10 include 120 MW in Haldia, 120 MW Power House# 6 owned by IEL,182 MW from
wind farms in Maharashtra, Gujarat and Karntaka and 250 MW Trombay expansion project. The progress on Company's upcoming
projects is as follows:

Mundra Project (4000 MW): Mundra UMPP is progressing as per schedule with engineering, procurement and construction
activities in full swing. Overall project progress achieved is 53%. Ordering of all critical items/major packages has been completed.
The first unit is expected to be commissioned by September 2011.

Maithon Project (1050 MW): is also progressing well and has achieved 82% completion. The target of synchronizing Unit 1 on oil
is by October 2010 and commissioning soon thereafter, the major challenge being the railway linkage from the main line. All efforts
are being taken to commission the unit by end of 2010.

IEL: 120 MW Unit 5 being constructed at the company's existing site at Jojobera has been synchronized. The project is expected to
be commissioned in the first half of FY11.

Dagachhu Project (114 MW): in partnership with The Royal Government of Bhutan (RGoB) is progressing well. Major ordering for
the project has been completed. All statutory clearances, land, water and environment clearances have been received and PPA for
the entire quantum of power has been signed for the project. The first unit is targeted to be commissioned by FY14.

Partnership with SN Power: The Company has signed an exclusive partnership agreement with SN Power, Norway to set up joint
ventures for developing hydropower projects in India and Nepal. Tata Power and SN Power have already begun pursuing potential
project opportunities based on the vast reserves of renewable energy in the Himalayan region.

Coastal Maharashtra Project (1600 MW): During the year, the Company has made substantial progress in this project. The R & R
authority of the GoM has approved the R&R proposal of the company. Land acquisition is in progress. The plant is expected to be
commissioned within 3 years of land acquisition.

Naraj Marthapur (1320 MW), Orissa: The major clearances for the 1320 MW Naraj Marthapur project have been obtained.
Process is on for obtaining environmental clearance from MoEF. The plant is expected to be commissioned within 42-45 months of
completion of the land acquisition, which is expected to be completed during the year. The Company has been allotted the
Mandakini coal block located in the Angul district of Orissa, along with Monnet Ispat and Energy Limited, and Jindal Photo Limited,
which will feed coal to the plant.

Tiruldih Power Project, Jharkhand (3 X 660 MW): The process of land acquisition is expected to take around 12 to 18 months.
The first tranche of land (300 acres) is expected to be acquired around October 2010. In principle clearance has been received from
Railways for transportation of coal from Tubed Coal Block. Tubed Coal Block has been jointly allotted to Tata Power and Hindalco
in Jharkhand.

Renewable Projects:

Wind Power: Tata Power is the leading private wind generation company with an installed capacity of 200 MW and added another
first to its credit by commissioning 2 MW-class wind turbines designed by Kenersys Gmbh of Germany and manufactured and
installed by Kenersys India. Currently, Tata Power's wind power capacity is spread across three States namely Maharashtra
(100MW), Gujarat (50 MW) and Karnataka (50 MW). The Company has placed an order for 150 MW additional wind capacity to be
set up in Maharashtra and Tamil Nadu.

Solar Power: The Company is implementing a 3 MW solar photo-voltaic plant at Mulshi and will be one of the largest grid
connected plants in Maharashtra. The plant is expected to be commissioned by October 2010. The Company has also applied for
allocation of 25 MW solar capacity to be put up in Gujarat under the new policy of Government of Gujarat.

Management Comment

Speaking on the performance for the quarter, Prasad R. Menon, Managing Director, Tata Power, said, We have started the year on
a strong footing. All our businesses have performed well in this quarter. We are encouraged by the strong performance and growth
of our retail business in Mumbai. Our generating stations have also recorded robust increase in power generation. Further, we are
making good progress on our new projects under implementation. We are entering an important and exciting leg of our growth
phase as most of our large projects are in advance stages of completion. We believe that the growth momentum in Renewables
may gather impetus with the strict implementation of RPO obligation and the Renewable Energy Certificate (REC) mechanism.
These additional steps can trigger demand from various States in the country. We are well placed to capitalise on the increasing
demand for renewable energy sources through a substantially expanded portfolio including wind, solar and geothermal energy
sources.

He added further, Our Joint-Venture with SN Power for Hydro projects provides the potential to expand our presence in hydro
projects in India and Nepal. We are progressing as planned and today around 20% of our power generated is from 'clean' sources.
We are glad that we are one of the leading wind power generators in the country. Our 3 MW solar PV plant will be the first and
largest grid connected solar plant in Maharashtra and we are exploring opportunities for geothermal energy. Our wind project in
Maharashtra has been received the first CDM certified project which further recognizes our commitment towards reducing carbon
footprint.

The stock hovers around Rs 1329.

Tata Power: Standalone Financial Results

1006 (3) 0906 (3) Var. (%) 1003 (12) 0903 (12) Var. (%)
Sales 1867.90 2015.62 -7 7098.27 7236.23 -2
OPM (%) 24.1 31.4 26.2 15.5
OP 450.89 632.32 -29 1862.26 1118.97 66
Other income 125.65 83.24 51 229.60 488.02 -53
PBIDT 576.54 715.56 -19 2091.86 1606.99 30
Interest 79.58 117.65 -32 406.64 305.79 33
PBDT 496.96 597.91 -17 1685.22 1301.20 30
Depreciation 126.70 111.83 13 477.94 328.85 45
PBT before EO 370.26 486.08 -24 1207.28 972.35 24
Forex Gain/Loss 1.89 24.34 -92 51.98 144.33 -64
PBT after Forex Gain/Loss 372.15 510.42 -27 1259.26 1116.68 13
EO 0.00 0.00 0.00 0.00
PBT After EO And Before Share of Profit from Associates 372.15 510.42 -27 1259.26 1116.68 13
Tax 103.17 133.34 -23 320.50 194.48 65
PAT 268.98 377.08 -29 938.76 922.20 2
EPS (Rs)* # # 39.6 38.9
* Annualised on current equity of Rs 237.33 crore.
Face Value: Rs 10
# EPS cannot be annualised due to the seasonality in business
Var. (%) exceeding 999 has been truncated to 999
LP: Loss to Profit PL: Profit to Loss
EO: Extraordinary items
EPS is calculated after excluding EO and relevant tax
Figures in Rs crore
Source: Capitaline Corporate Database

Tata Power: Consolidated Financial Results

1006 (3) 0906 (3) Var. (%) 1003 (12)

Sales 5184.84 4852.79 7 18985.84
OPM (%) 22.0 24.9 20.1
OP 1138.87 1206.04 -6 3819.97
Other income 61.00 22.75 168 133.43
PBIDT 1199.87 1228.79 -2 3953.40
Interest 171.84 205.54 -16 763.87
PBDT 1028.03 1023.25 0 3189.53
Depreciation 235.00 201.07 17 877.68
PBT before Forex G/L & EO 793.03 822.18 -4 2311.85
Forex Gain/Loss -150.41 45.98 -427 455.45
PBT before EO 642.62 868.16 -26 2767.30
EO 0.00 0.00 0.00
PBT After EO And Before Share of Profit from Associates 642.62 868.16 -26 2767.30
Tax 288.33 284.68 1 657.67
PAT 354.29 583.48 -39 2109.63
PPA 0.68 -0.11 -718 -29.01
PAT after PPA 353.61 583.59 -39 2138.64
Share of P/L from associate 4.35 -0.48 LP 61.66
Minority Interest 40.29 30.35 33 233.46
Net Profit after Minority Interest 317.67 552.76 -43 1966.84
EPS (Rs)* # # 67.0
* Annualised on current equity of Rs 237.33 crore.
Face Value: Rs 10
# EPS cannot be annualised due to the seasonality in business
Var. (%) exceeding 999 has been truncated to 999
LP: Loss to Profit PL: Profit to Loss
EO: Extraordinary items
EPS is calculated after excluding EO and relevant tax
Figures in Rs crore
Source: Capitaline Corporate Database

Tata Power: Consolidated Segment Results

Segment Revenue 1006 (3) 0906 (3) Var. (%) % to total 1003 (12) % to total
Power 3504.81 3342.97 5 67 12550.05 66
Coal Business 1539.06 1298.06 19 30 5620.95 29
Others 172.12 211.76 -19 3 906.95 5
Total 5215.99 4852.79 7 100 19077.95 100
Less: Intersegment Revenue 31.15 0.00 92.11
Net sales 5184.84 4852.79 7 18985.84
PBIT
Power 517.32 662.41 -22 56 2076.36 66
Coal Business 423.97 373.16 14 45 999.20 32
Others -9.30 21.62 PL -1 65.92 2
Total 931.99 1057.19 -12 100 3141.48 100
Less: Interest 171.84 205.54 763.87
ADD: Other unallocable income (net) -117.53 16.51 389.69
PBT 642.62 868.16 -26 2767.30
Capital Employed
Power 23449.25 15771.06 49 173 20886.25 159
Coal Business 5948.68 6045.51 -2 44 5384.45 41
Others 1209.22 1230.74 -2 9 1102.49 8
Unallocable -17031.79 -12571.91 35 -125 -14229.44 -108
Total CE 13575.36 10475.40 30 100 13143.75 100
Figures in crore
LP: Loss to Profit
PL: Profit to Loss
Source: Capitaline Corporate Database