Tata Power welcomes tariff cut, says audit issue sub-judice

Just hours after Delhi Chief Minister Arvind Kejriwal announced that power tariffs will be slashed by 50 percent, Tata Power has welcomed the move terming it a very strong and positive step. "It's a very good and positive step because at the end of the day the consumer will get the benefit of it. It's good that the Delhi government has decided to give subsidy to the consumer. The decision doesn't impact us, the balance after subsidy will be paid by the government," Tata Power CEO Pravin Sinha said. However, the company said that audit issue is sub-judice. "We will submit our reply to the government on the Comptroller and Auditor General (CAG) audit since the matter is before the court and the we are already being audited by the CAG auditors apart from the various audit that is being done at the behest of DERC. 

So all those facts and figures we will present before the government and it's on them to take a call," Sinha added. Meanwhile, public too has welcomed this move of the government. "I am extremely happy that Kejriwal has taken this step for us. I hope he continues to help everyone in every possible way, be it on power, water or houses," said a Delhiite. Kejriwal had on Tuesday announced that the power tariffs will be slashed by 50 percent for up to 400 units. "There will be 50 per cent subsidy to those who consume less than 400 units. The subsidised rates will benefit 28 lakh consumers in Delhi. Rates will be reduced further once the audit is over," said Kejriwal after a meeting of the Delhi Cabinet at the Secretariat. 

The decision to subsidies power tariff, which will involve a cash outgo of Rs 61 crore in the remaining three months of the 2013-14 fiscal. For units above 201 and up to 400, the charges will be Rs 2.90 per unit against the current Rs 5. In effect, the 50 per cent subsidy will amount to 20 percent in the case of the first 200 units and around 35 percent for consumption between 201 and 400 units since Tuesday's decision is applicable on rates revised in August last. The previous Sheila Dikshit government had given Rs 1.20 subsidy on the rates for consumption of up to 200 units and 80 paise between 201 and 400 units. 

Kejriwal said further decision on the rate cut would be taken after the audit of the three power distribution companies - BSES Yamuna Power Ltd, BSES Rajdhani Power Ltd and Tata Power Delhi Distribution Ltd. He said the Cabinet would meet on Wednesday after the three companies submit to the government their views on the proposal for audit of their finances. While ruling out any time frame for the audit, he said a decision on the same can be taken only after studying the replies of the three companies who have been given time till January 1, 2014 to respond. 

Tata Power stock price On January 01, 2014, at 11:25 hrs Tata Power Company was quoting at Rs 89.95, down Rs 1.4, or 1.53 percent. The 52-week high of the share was Rs 112.50 and the 52-week low was Rs 68.25. The company's trailing 12-month (TTM) EPS was at Rs 4.36 per share as per the quarter ended September 2013. The stock's price-to-earnings (P/E) ratio was 20.63. The latest book value of the company is Rs 51.67 per share. At current value, the price-to-book value of the company is 1.74.

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