Essar Power pops the champagne on turnaround performance

It brushed the dust off with 168% earnings growth to Rs533 crore (US$79m).

Essar Power Gujarat, which owns and operates a 1,200 MW imported coal-fired thermal power plant at Salaya in Gujarat’s Devbhumi Dwarka district, has recorded a 168% growth in EBITDA in the financial year ending 31 March 2016—three years after commissioning. The PAT is around Rs 39 crore, compared to a loss of Rs 684 crore in FY15. This turnaround in performance can be attributed to higher operational efficiency, a reduction in coal prices through e-auction based procurement, and normative plant availability.

EPGL’s EBITDA in FY16 stood at Rs 533 crore, compared to Rs 199 crore in FY15. The FY16 EBITDA margin is 28% compared to 11% in FY15.

A key factor driving financial performance, the reverse e-auction platform set up by EPGL helped widen the company’s coal supplier base. Coal miners / suppliers from the US, Russia, Colombia and other countries placed competitive bids in a transparent manner. Global competition helped EPGL source coal at prices lower than those prevailing in the market.

The 2015-16 financial year was also significant for the company for several other reasons. During this period EPGL completed a planned major overhaul of the Salaya plant without the support of the OEM—which is a first for any Indian power plant. It was also a time when the Company aligned the repayment of its term loan to RBI’s 5/25 scheme. The Company won the Peabody Award for lowest emission of SO2 and NOX; it also won Energy Efficiency award and the Gold Category Award for Safety from Greentech Foundation.

EPGL has an ongoing 25-year PPA with the country’s highest rated discom, the Gujarat Urja Vikas Nigam Limited (GUVNL; Rating A1+), for 90% of its capacity, ensuring timely payment of receivables. For the third consecutive year, EPGL ensured 80% annual availability and in Q1 FY 17 EPGL has already achieved GUVNL availability of over 80%.