MUMBAI (NewsRise) -- Tata Power, India's largest electricity producer in the private sector, reported a better-than-expected third-quarter profit, aided by a surge in income from its renewable energy business.
For the quarter ended in December, Tata Power posted a consolidated net profit of 6.12 billion rupees ($95 million), compared with 6.19 billion rupees in the year-earlier period. Analysts surveyed by Reuters were expecting a net income of 4.26 billion rupees.
Profit from the renewables business reported a four-fold jump in the quarter, powered by the performance of Welspun Renewables Energy, which Tata Power bought in 2016. Total revenue from operations grew 5.7% to 69.50 billion rupees, the company said in a statement on Wednesday.
The core power generation business expanded 7.1% to 66.85 billion rupees. Cost of power purchased rose 22% to 20.71 billion rupees.
Tata Power is aiming to draw up to 40% of its generation capacity from clean energy sources by 2025. It also set a target to expand the capacity of its renewable energy unit to 20,000 megawatt during this period.
The thrust on renewable energy comes as India seeks to cut reliance on coal-based power plants that account for nearly three-fourth of the country's power generation amid rising concerns about pollution. The government has set an ambitious target of increasing clean energy capacity to 175,000 megawatts by 2022, and is aiming to boost the share of non-fossil fuel in total installed power capacity to 40% by 2030.
The latest quarter included one-time gains of 2.99 billion rupees, which were partly offset by 960 million rupees worth adverse impact from a tariff order at its Maithon plant in northern India.
Tata Power has been grappling with shrinking profits as it incurred losses at its power plant in Mundra in the western Indian state of Gujarat. The project, which depends on imported coal from Indonesia, ran into losses after the country raised levies on the export of the fuel.
Last year, Tata Power offered to sell the plant for a token one rupee to distributors of its electricity in a last-ditch attempt to ensure its viability after a court ruling disallowed it from raising the tariff.
Tata Power said its lenders and the management are in discussions with distributors to arrive at a solution that will help cut down the losses.
The company faced a fresh setback in January, when its chief executive and long-term group veteran Anil Sardana resigned, citing personal reasons. Sardana will step down on April 30. The company has yet to appoint a new CEO.
Tata Power shares rose 0.2% in Mumbai trading, while the benchmark S&P BSE Sensex index lost 0.4%.
--Dhanya Ann Thoppil