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Home News Power Sector News Rinfra make good profit from lucrative electricity business

Rinfra make good profit from lucrative electricity business

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RINFRAAt a time when most infrastructure companies have reported losses, Reliance Infrastructure has managed to show a profit growth in the December 2011 quarter thanks to its steady and lucrative electricity business. Going ahead with the policy of passing on any rise in fuel prices to consumers via tariff hikes would help the company maintain its margins in the electricity business. The company reported a marginal growth of less than 1% in net profit for on a year-on-year basis. Revenues from electricity business were bolstered by a hike in power tariffs. The 22% hike in tariffs in Delhi from September 1, 2011 helped it clock a 20% rise in revenues YoY. Besides this, the company got a clearance to collect accumulated dues of Rs 2,316 crore.

The Engineering Procurement and Construction (EPC) division showed a two-fold increase in revenues, indicating strong execution of projects. The company has a large EPC order book consisting also of in-house projects. The EPC order book now stands Rs 24,000 crore, nearly eight times its FY11 EPC revenues.

The company's infrastructure business is making losses at the earnings before interest level. As projects have long gestation periods, it would take a while for the segment to break even. The unit has five operational road projects and expects another five to go on-stream this quarter.

Going ahead, though electricity unit would continue to drive earnings of the company, revenue from infrastructure segment is also set to increase with several road and metro projects becoming operational. Moreover, the company has plans to buy a few distressed road projects.

Source- Economic Times


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