Tata Power mulls to double capex to Rs 12,000 cr, focus on renewables

Tata Power has planned to double its capex to Rs 12,000 crore in current public finances, focusing on renewables, distribution and solar equipment manufacturing capacity.

“To achieve the growth targets, your company (Tata Power) is planning to invest around Rs 12,000 crore, which is double the capital expenditure made in FY23,” said Tata Power Chairman Natarajan Chandrasekaran while addressing the 104th Annual General Meeting on Monday.

He explained that this capital expenditure includes investment in the upcoming 4-gigawatt manufacturing plant, renewable energy projects under construction, transmission and distribution works in Odisha, Delhi and Mumbai, and new opportunities.

“Your company plans to fund these projects largely from internal accruals and cash on the books,” he told shareholders.

He assured that the 4 GW cell and module manufacturing plant in Tamil Nadu is on track and we expect the module line to be ready by October 2023 and the cell line by the end of the year.

Tata Power will also focus on the country’s power distribution business and bid for disturbance facilities in the country.

“Given the company’s successful track record of deflecting harassment, it will look to participate in privatization opportunities when policy reforms are implemented,” he said.

Tata Power plans to become the benchmark for environmental, social and corporate governance in the power sector with progress towards the three key targets set – becoming net zero carbon by 2045, 100 percent water neutral by 2030, and having a net impact on biodiversity by the year 2030 and an organization that has zero waste in landfill by 2030.

Based on the performance, the directors have recommended a dividend of 200 per cent, i.e. two rupees for every one rupee equity share, he said.

He noted that as a result of better performance across its business, there was a growth in consolidated revenue of 32% at Rs.56,033 crore as against Rs.42,576 crore in FY22.

Reported consolidated net profit increased by 77% to Rs. 3,810 crore from Rs. 2,156 crore in FY22 due to better performance across all business groups.

He noted that in 2022, the renewable energy sector witnessed the maximum investment of US$500 billion out of the US$1.11 trillion of low-carbon energy investments globally.

In India, Chandrasekaran said the combination of accelerating economic growth, increased industrial and commercial activities, and shifting weather patterns (including heat waves) drove peak power demand in the first months of FY23 to record highs of 216 GW.

India’s energy demand grew rapidly by about 9 percent in FY23, and in the past five years, energy demand growth has outpaced the country’s GDP growth rate by 1.11 times.

He noted that despite high growth, India’s per capita energy consumption remains the lowest in the world.

He noted that in the coming years, renewable energy sources will remain the main focus, aiming to achieve 500 gigawatts of non-fossil installed capacity in 2030.

He said that India is the only major economy using renewable growth to meet the country’s energy demand growth and not substituting/substituting thermal energy.

“Being one of the largest integrated energy companies, it is well positioned to take advantage of the growth opportunities in this sector,” Chandrasekaran told shareholders.

In solar roofs, he told shareholders, the company has established a wide channel network of 450 dealers across 275 regions, providing a huge advantage.

During the last quarter of FY 2013, rooftop solar, along with captive solar EPC projects, crossed Rs 1,000 crore in revenue, a double from the previous year, he said.

For the full year, the company generated revenue of Rs. 2,770 crore with a growth of 83 per cent year-on-year. He noted that the company has a healthy closing order book of one thousand one hundred crores as of March 2023, in the solar roof sector.

The distribution business has been doing well. Chandrasekaran said it continues to serve more than 12 million customers, making your company the largest private power distribution utility in the country.

He noted that while the country is going through an energy transition, it is crucial that conventional power plants continue to operate at optimum capacity given the increase in energy demand.

“In this regard, your company’s traditional factories continued to be available at close to 90 percent,” he said.