Losses of Tamil Nadu Generation and Distribution Corporation Limited (Tangedco) widened in financial year 2018 to ₹7,582.56 crore from ₹6141.54 crore in the financial year 2017, according to a report from India Ratings and Research. Lower sale of power, drop in collection efficiency and higher cost of power led to the higher losses, the report said.

According to sources, the release of the results was delayed and the financials are contrary to the government expectations of achieving a break-even in FY18.

The financials sourced from Tangedco by India Ratings showed that the discom’s revenue from sale of power declined 0.63% to ₹43686.77 crore in FY18 from the previous year. Sale of power accounts for 78% of Tangedco’s total income.

Tangedco’s operating earnings before interest, tax, depreciation and amortization (EBITDA) were negative ₹607 crore in FY18, compared a positive level of ₹2,325 crore in FY17, as per the report.

The EBITDA margin fell to 3.13% in FY18, compared to 7.64% in FY17 on account of the rise in power cost. The cost of power increased to ₹41,071.77 crore in FY18 from ₹37,384.59 crore in the same period last year.

Tangedco’s collection efficiency dropped to 97.78% in FY18 from 100.02% in the previous year, while the aggregate technical and commercial loss increased to 15.96% from 15.39% for the same period.

Debt increases

The utility had receivables of ₹8,804.02 crore against supply of power in FY18, up over 12% from ₹7824.7 crore in the same period last year. The discom’s debt increased to ₹79,630 crore in FY18 from ₹65,897 crore in FY17, while cash and bank balance dropped to ₹1,390 crore in FY18 from ₹1438 crore in FY17. Its interest expenditure increased to ₹9,972.83 crore in FY18 from ₹8,266.66 crore in the same period last year.

The Tamil Nadu government provided a grant of ₹6,738.1 crore in FY 18 to the State’s power utility, whereas it gave ₹5,595.2 crore in the previous year. The agriculture subsidy was ₹2,677 crore in FY 18, compared to ₹2,618 in FY17.

India Ratings and Research downgraded the rating of Tangedco’s working capital facilities to ‘IND BBB’/Stable and placed it on rating watch to closely monitor the further developments.

“The rating action reflects the availability of FY18 financials, which indicate deterioration in the Tangedco financial profile, along with weakening of support from the sponsor (25% of debt under Ujwal DISCOM Assurance Yojana (UDAY) not yet converted into bond/loans backed by the Government of Tamil Nadu),” it added.