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Essar Power Gujarat sees solid performance for FY16

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World Coal,

Essar Power Gujarat Ltd (EPGL), which owns and operates a 1200 MW imported coal-fired thermal power plant at Salaya in Gujarat’s Devbhumi Dwarka district, has seen its provisional EBITDA for FY16 (the financial year ending 31 March 2016) grow by 163% y/y, increase from Rs 199 crore in FY15 to Rs 525 crore.

The PAT is around Rs 35 crore, compared to a loss of Rs 684 crore in FY15. This turnaround in performance is attributed to higher operational efficiency, a reduction in coal prices through e-auction based procurement and normative plant availability.

According to EPGL, a key factor driving its financial performance is the reverse e-auction platform set up by EPGL helped widen the coal supplier base for the company. Vendors from the US, Russia, Columbia 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.

For the third consecutive year, EPGL ensured 80% availability for its single largest client, Gujarat Urja Vikas Nigam Ltd, the state-owned power distributor with whom it has a 25-year PPA.

EPGL has aligned the repayment of the term loan to the life of the power plant under 5/25 scheme of RBI. The company has also upgraded its investment grade rating to BBB-, which will enable it to reduce its interest rates going forward.

The Salaya plant is among the top operated power plants in the country. EPGL has received several accolades for operational efficiency, including the CII Award for Energy Efficiency, the Gold Category Award for Safety from Greentech Foundation and the Peabody Award for lowest emission of SO2 and NOX.

Ramesh Kumar, Managing Director stated: “I am delighted with EPGL’s performance. We have worked relentlessly amid a challenging business environment to deliver more than a 150% jump in EBITDA. We are on course to harness greater efficiencies in the current financial year once the sea water intake system and coal conveyor corridor are commissioned. These are expected to add Rs 150 crore to the EBIDTA. We therefore expect better operational efficiency, which will sustain and improve performance in FY17.”

Edited from press release by Harleigh Hobbs

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