Fuel shortage, interest burden hit infra cos Q2 profits

Shortage of fuel supply to power plants coupled with high interest burden have impacted the profits of infrastructure companies during the July-September quarter of the current fiscal.

Lanco Group, which has interests in construction and power projects, has posted a net loss of Rs 136 crore for the quarter ended September 30, 2012, while its revenues rose.

The group recorded revenues of Rs 3,184.77 crore in the latest quarter, much higher than Rs 1,896.31 crore in the year-ago period.

Lanco Infratech COO (Finance) T Adibabu had said lower operations of power plants, especially at 1,200 MW Anpara in Uttar Pradesh, due to various issues related to fuel and infrastructure affected the performance of the company.

Besides, Lanco incurred Rs 527 crore towards financial costs in Q2 against Rs 251 crore in the year-ago period.

SMC Global Securities Strategist and Head of Research Jagannadham Thunuguntla expects that trend to continue for some of the companies unless they try to cut their debt burden.

"The balance sheets of many of these infrastructure companies are extremely over-leveraged. Interest burden is an obvious consequence. The trend may continue in the current quarter also from some companies," Thunuguntla said.

There is also a growing clamour from corporates for a cut in lending rates by the Reserve Bank. The tight monetary stance of the RBI to tame inflation has affected growth, say industry officials.

Consolidated profits after minority taxes of another infra major NCC Ltd declined by 62 per cent to Rs 11.35 crore for the quarter ended September 30, while its revenues increased.

The company had said the dip in net profit was largely due to higher finance cost. The company incurred Rs 151 crore towards interest and other financial cost in the quarter under review against Rs 136 crore in the year-ago period.

GVK Power and Infrastructure reported net loss of Rs 43.66 crore for period under review mainly due to interest burden and shortage of gas supply to the group's power projects.

ALSO READ

Playboy club to miss date with sun-kissed Goa

Lack of affordable housing forces India's poor into death traps

Hotel companies find a short cut through India's red tape

DDA opens a window to freehold for pre-2001 flats