Notwithstanding the volatility in coal prices and freight, the company’s medium-term and long-term fundamentals remain unchanged
The company said in a trading update it delivered strong cash generation in a year blighted by the coronavirus (COVID-19) epidemic in India.
The developer and operator of power generation plants noted that despite the epidemic, India’s economy is projected by the World Bank to grow by 8.3% this year and by 7.5% in 2022.
India is currently experiencing a second wave of COVID-19 cases, prompting state authorities to impose various lockdown restrictions but these are being implemented more narrowly with companies and individuals adjusting behaviour in ways that cushion the effects, OPG said.
In the year to the end of March power generation declined to 2.11bn units from 2.72bn units the year before, largely as a result of lockdown restrictions in India.
The plant load factor fell to 58% from 75% the year before, although by the final month of the fiscal year (March) it was running at 75%; in April it rose to 85% but in May it receded to 65%.
The average tariff for the year was Rs5.52, down from Rs5.67 the previous year.
The group paid off a chunk of debt during the reporting period, repaying £8.2mln on its term loan. Total borrowings, including non-convertible debentures, reduced by 17.9% to £46.6mln from £56.8mln at the end of March 2020. Since the period end, another £5.7mln has been collected from a customer in respect of historic contractual claims.
Robust cash collection, continued deleveraging and the extension of the deadline for meeting emission norms (from 2021 to December 2024) have significantly strengthened the company’s balance sheet and its liquidity position, OPG told investors.
Notwithstanding the volatility in coal prices and freight, the company’s medium-term and long-term fundamentals remain unchanged with strong cash flows and a reduction in debt enabling the long-term profitable business model and sustainable returns to shareholders, the company added.
“Despite the disruption caused by COVID-19, OPG delivered very strong cash generation and achieved a significant reduction in debt during the year and has also continued its strategy of deleveraging the business,” said Arvind Gupta, the executive chairman of OPG.
“We continue to work tirelessly to implement plans to limit the business disruption to OPG and the associated human, financial and commercial consequences of the second wave of COVID-19,” he added.
Shares in OPG were up 3.4% in early dealings.
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