It gives me immense pleasure and delight to present the Annual Report
for FY 23 which is a testimony of our robust financial health and operational excellence.
Indian power sector is witnessing the landmark changes that has redefined the industry
outlook. The power industry's future in India is bright, and sustained economic growth
continues to drive electricity demand in India. The favourable policy and regulatory
initiatives taken by the Government of India has instilled optimism among the
stakeholders. The Government of India's focus on attaining 'Power for all' has accelerated
capacity addition in the country. India is the third-largest producer and consumer of
electricity worldwide, with an installed power capacity of 421.90 GW as of June 30, 2023.
Policies are addressing new economic headwinds. These include inflation pressures, tighter
global financial conditions, the fallout from the war in Ukraine and associated sanctions
on Russia, and significantly slower growth in China and advanced economies. Growth is
expected to moderate reflecting the less favorable outlook and tighter financial
conditions. As per the International Monetary Fund, Real GDP is projected to grow at 6.1
percent in FY 2023-2024 which would still make it the fastest growing economy in the
world.
Power is one of the most important infrastructure elements, essential
to national wellbeing and economic development. For the Indian economy to grow steadily,
enough electrical infrastructure must exist and be developed. India's power generation
sources range from conventional sources such as coal, lignite, natural gas, oil, hydro and
nuclear power to viable non-conventional sources such as wind, solar, and agricultural and
domestic waste. As of March 2023, India has a total thermal installed capacity of 237.27
GW of which 86.5% of the thermal power is obtained from coal and the rest from Lignite,
Diesel, and Gas.
Although power generation has grown more than 100-fold since
independence, growth in demand has been even higher due to accelerating economic activity.
Growing population along with increasing electrification and per-capita usage will provide
further impetus. This has resulted in strong domestic demand, with India's GDP growing at
7.2% in FY 2023. This in turn resulted in record demand for electricity as well in 2023,
with daily demand rising by 40-45 GW, with the country recording its highest ever demand
of 216 GW in fiscal year ending 31 March 2023. The demand further increased to all time
high of 234 GW on 17th August, 2023.
Fiscal year 2023 has been a very proud year in terms of our performance
with your 1350 MW Amravati Plant being rated as having been among the top performing
plants not only the state of Maharashtra but the entire country in spite of the strong
headwinds faced in securing fuel in light of a prolonged monsoon and spiraling prices of
imported coal last year, putting significant pressure on domestic coal supplied by Coal
India and its subsidiaries. In spite of this, Amravati Plant ended FY 2023 with an annual
availability of 81.35%, and with an annual Plant Load Factor (PLF) of 77.18%, highest ever
PLF for the year.
Industry Developments:
Despite the three shocks of COVID-19, Russian-Ukraine conflict and the
Central Banks across economies led by Federal Reserve responding with synchronized policy
rate hikes to curb inflation, India is expected to witness GDP growth of 6.0 per cent to
6.8 per cent in 2023-24, depending on the trajectory of economic and political
developments globally. The optimistic growth forecasts stem from a number of positives
like the rebound of private consumption given a boost to production activity, higher
Capital Expenditure (Capex), near-universal vaccination coverage enabling people to spend
on contact-based services, such as restaurants, hotels, shopping malls, and cinemas, as
well as the return of migrant workers to cities to work in construction sites leading to a
significant decline in housing market inventory, the strengthening of the balance sheets
of the Corporates, a well-capitalized public sector banks ready to increase the credit
supply and the credit growth to the Micro, Small, and Medium Enterprises (MSME) sector to
name the major ones.
India's thermal power sector is set to enjoy a growth spurt in power
demand in the 2024 fiscal year, projecting a 5.0-5.5% rise, according to rating agency
ICRA. The country's electricity demand and a clampdown on thermal capacity additions have
been identified as growth drivers. ICRA anticipates that the all-India thermal PLF level
will swell to 65.1% in FY2024, a rise from 64.2% in FY2023, thanks to the healthy uptick
in thermal PLF and a drop in the dues of state power distribution companies (discoms),
following the roll-out of the Late Payment Surcharge (LPS) scheme.
India's energy sector has witnessed multifaceted growth, buoyed by
policy interventions, reforms and investments. For the Union Budget 2023, the power
ministry has proposed to increase the budget outlay for its flagship Revamped Distribution
Sector Scheme (RDSS) with an aim to cover more households with prepaid smart meters and
reduce the aggregate technical and commercial (AT&C) losses of the country. India's
demand for electricity continues to touch new highs, with the country touching an all-time
high demand of 223.24 GW. In terms of supply side, India's total installed capacity of
421.90 GW continues to be dominated by the thermal sector, with more than 56% being
contributed by thermal power plants.
India's demand is further expected to grow significantly in light of
the Government's push to attain 30% market penetration of electric vehicles by 2030. This
is expected to bring in additional demand of 640 TWh of electricity demand by 2030,
thereby adding to the robust demand outlook for electricity for the country as a whole.
Electrification in the country is increasing with support from schemes
like Deen Dayal Upadhyay Gram Jyoti Yojana (DDUGJY), Ujwal DISCOM Assurance Yojana (UDAY),
and Integrated Power Development Scheme (IPDS). The Centre launched the revamped
distribution sector scheme (RDSS) - a reform-based and results-linked scheme in July 2021.
The aim was to transform the electricity distribution sector at an estimated outlay of '
3,03,758 Crore with Gross Budgetary Support (GBS) of ' 97,631 Crore from the Union
Government. The main objective of the scheme is to improve the operational efficiencies
and financial sustainability of the distribution sector so as to facilitate 24x7 quality
and reliable power for all at affordable price. The scheme envisages target of reducing
the AT&C losses to 12-15% at pan-India level and ACS-ARR gap to zero by 2024-25.
The Central Government has issued Guidelines for Resource Adequacy
Planning Framework for India, in consultation with Central Electricity Authority (CEA).
The Guidelines, issued by the Union Ministry of Power, have been framed under the Rule 16
of Electricity (Amendment) Rules, 2022 which were notified on 29th December
2022. The guidelines will ensure that sufficient electricity is made available to power
the country's growth, by putting in place a framework for advanced procurement of
resources by DISCOMs to meet the electricity demand in a cost-effective manner. Guidelines
provide for an institutional mechanism for Resource Adequacy ranging from National level
to Discom level such that the availability of resources to meet the demand is ensured at
each level. The new generation capacities, energy storage and other flexible resources,
needed to reliably meet future demand growth at optimal cost, will be assessed well in
advance.
Stellar performance in financial year 2022-23
Your Amravati plant continued to be available at normative levels, to
supply and meet its full commitment under the PPA, thereby ensuring recovery of one
hundred percent of its entire capacity charges.
This year also saw your Company securing favourable judgement from the
Hon'ble Supreme Court of India on 27th March 2023 in the long-standing dispute
with MSEDCL, regarding recovery of additional costs of procurement of alternative coal and
changes in taxes & duties, under which the appeal of MSEDCL against the APTEL order
was dismissed. Payments under this have already started materializing, with MSEDCL having
already paid ' 613.01 Crores as on 30th June 2023. Your Company continues to
pursue for early release of the balance amount.
Your company also managed to secure a favourable order from the APTEL
on 22 March 2022 directing MERC to determine the amount payable to the Company towards the
reimbursement of Evacuation Facility Charges levied on coal along with carrying cost and
has directed the MERC to pass fresh orders in light of the APTEL direction within 2
months. In this regard, MSEDCL had filed an appeal before the Hon'ble Supreme Court
challenging the order from the APTEL which was dismissed by the Supreme Court on 20th
April 2023 and the APTEL order was upheld.
In terms of operations, the Company ended the fiscal year 2023 with a
Plant Load Factor (PLF) of 77.18% for the whole year - the highest ever since its
commissioning in 2015. I expect this trend of high PLF to continue in the future, given
the position in the state's merit order schedule, ensuring that it continues to contribute
to the states and Nation's development by providing reliable, cost-effective and efficient
base load supply.
Your Company continues to constantly review and tweak its SOPs and
procedures on a regular basis to achieve excellence in performance under key areas related
to operational, financial and business, in order to have a meaningful impact on the
profitability of the Company. Apart from the above, your Company is also working to make
the existing processes more robust and resilient to deal with the new normal.
In terms of financial performance as well, the Company's performance
for the year ended 31st March 2023 has been the best till date, with the
Company having increased the Profit Before Tax (PBT) when compared to the previous fiscal
2022. RPL has ended fiscal 2023 with an EBITDA of ' 1108.46 Crores and a Profit Before Tax
(PBT) of ' 353.02 Crores compared to the previous fiscal 2022 where it had ended the year
with EBIDTA of ' 1160.73 Crores and Profit Before Tax (PBT) of ' 348.14 Crores
Post successful restructuring, the Company has been meeting and
successfully servicing its debt obligations (both principal and interest) before time, and
by 30 June 2023, has repaid ' 3,371 Crores (including principal and interest). This
includes prepayment of ' 763 Crores and has resulted in the total secured external debt
outstanding (principal) having reduced to ' 1,125 Crores as on 30th June, 2023.
Efforts to resolve stress and improve value to our Shareholders:
The Company is one of the top 10 power generation companies with 2,700
MW of commissioned capacities (1,350 MW at Amravati and 1,350 MW at Nashik). Amravati
Plant is supplying power to Maharashtra State Electricity Distribution Company Limited
(MSEDCL) through a 25-year long term PPA. The Company is focused on continuous improvement
in plant efficiency and availability and has the requisite expertise to ensure that we
have some of the most efficient power plants in the country. We continue to pursue the
path of continuous improvement of our operational process and systems to align them with
the very best in the industry and I am happy to share our Amravati plant continues to be
one of the best performing plants amongst its peers in the country.
Over the last few months, we have also increased our efforts to work
with the Central Government, the lenders and stakeholders for our Sinnar Project at Nashik
to resolve the current stress. The Ministry of Power, Govt. of India, on 02 May 2022,
issued directions to revive select plants which are already commissioned but
non-operational till date to various sectoral headwinds to address the growing gap between
increasing demand and supply. We are working round the clock and have already initiated
all measures with the project stakeholders and institutions to operationalize the plant at
the earliest. Due diligence activities have been completed and discussions with
Maharashtra Government are in an advanced stage.
Impact of Coal Shortage on your Company and our response:
Coal has been in the news over the past few months not without reason.
The recent power crisis in India has moved coal to the centre stage. India's energy sector
depends heavily on coal as fuel for its thermal power plants. The ability of coal-based
power plants to operate round-the-clock and provide base load capacity is central to
meeting the growing electricity demand to fuel India's economic growth. Despite the coal
shortage situation, your company managed to lift highest ever rakes from Coal India
Limited for Amravati Plant in FY 2023. It is evident that in the near to medium term,
India will continue to be significantly dependent on coal. To reduce the severity of coal
shortage that impacts electricity generation and in turn the Indian economy, it is
important to work on a three-pronged strategy focused on better planning, infrastructure
development and increase of domestic supplies.
Conclusion:
Lastly, on behalf of the Board, I take this opportunity to thank all
our stakeholders - Shareholders, Customers, Vendors, Employees, Bankers, Financial
Institutions, partners in the Amravati Project and other partners for reposing their faith
on us and motivating us to excel across all facets of our business. I look forward to your
support and confidence in the Board of your Company to help us to achieve an even better
year ahead. I would like to end by reiterating our continued commitment to excel in
everything we do and in ensuring maximum value to our shareholders.
Thank you and wishing you all the very best.
Sd/-
Rajiv Rattan
Chairman