Monnet Ispat & Energy Ltd registered a flattish growth in revenue and profits for the quarter-ended March 2011 reeling under the impact of declining merchant power tariff.
Monnet reported a 5.6 per cent growth in net profit at Rs 76.57 crore for the quarter against Rs 72.47 crore in the corresponding quarter last year.
Revenues for the period stood at Rs 445.55 crore against Rs 438.39 crore in the corresponding last quarter.
For the year-ended March 2011, Monnet reported a net profit of Rs 285.06 crore on revenues of Rs 1573.72 crore, against a net of Rs 269.10 crore on revenues of Rs 1480.70 crore in the previous year. Shares of Monnet ended flat at Rs 513.50 on the BSE on Thursday
Mr Sandeep Jajodia, Executive Vice-Chairman and Managing Director, attributed the flattish growth to the declining merchant power tariff. The merchant power prices fell from Rs 4.78 a unit at the beginning of the year to Rs 3.10 towards the end of the year, because of the decline in demand from various cash-strapped state utilities, Mr Jajodia said.
The power business accounted for 23 per cent of Monnet's total revenues during the year. However, the steel business made up for the decline in power business revenues. Better sales realisations from the sponge iron segment improved the overall profitability and margins.
“We expect a stable pricing and demand-supply regime in the current financial year in steel business and improvement in price realisation of power going forward,” Mr Jajodia said.
The company plans to raise a debt of Rs 800 crore to fund its expansion plans in the power business, said Mr Ajay Bhat, Group CFO.
The company, which has a cash reserve of Rs 600 crore, plans to spend about Rs 1,200 crore towards capital expenditure for steel business and another Rs 1,500 crore towards the power business, he added.
The company is exploring a suitable location on the coast of Andhra Pradesh, Tamil Nadu or Gujarat to locate its second power plant.
It is also looking to acquire manganese and coal mines in countries such as Botswana, Mozambique and South Africa, Mr Jajodia said.
The company has earmarked about $100 million towards overseas buyouts. Last quarter, the company acquired a coal mine in Indonesia for $24 million.