The distribution business of CESC Ltd beyond the Calcutta licence area turned up mixed results in FY24 as widening losses from Maharashtra overshadowed the positive tidings from Rajasthan franchises.

The distribution franchises (DFs) of Kota, Bikaner and Bharatpur swung to profit after tax for the first time since CESC acquired the businesses in 2017 as part of the company’s strategy to expand its distribution footprint beyond legacy licences in Calcutta and Noida.

However, the performance of Malegaon DF in Maharashtra was a drag for CESC’s distribution business as losses widened in FY24. The company acquired this franchisee in 2019 for a period of 20 years.

In Rajasthan, CESC’s DFs in Bikaner and Bharatpur enhanced profitability in FY24 over previous years, while the company’s operations in Kota, the largest among company’s DFs, contained losses (see chart). The trio posted a profit after tax of ₹13 crore in the last fiscal compared with ₹24 crore loss in FY23.

The Kota DF witnessed an operational turnaround and became EBITDA positive. All the three DFs reported a further reduction in the transmission and distribution (T&D) loss on a year-on-year (Y-o-Y) basis. In contrast, Malegaon posted a loss of ₹95 crore in FY24 compared with ₹77 crore in FY23. It reported a marginal (4 per cent) growth in sales.

While the DFs are in early stages of evolution, the Calcutta licence remained the bedrock of the company and biggest money-spinner even as profit fell to ₹775 crore in FY24 from ₹830 crore in the previous fiscal. Distribution and generation (Budge Budge and Southern Generating Station) assets are bundled in the business which are reflected in the standalone operations of the company.

The city distribution business witnessed a 5.4 per cent demand growth during FY24 and T&D loss further reduced to 6.89 per cent in FY24 from 7.28 per cent in FY23. It has signed a long term hybrid renewable power purchase agreement aggregating 250 MW in 2023. The power supply is scheduled to start from FY25 end, significantly reducing the power procurement from the short term/day ahead market.

Noida Power marginally increased its profit to ₹169 crore in FY24 from ₹161 crore in the previous fiscal, with sales increasing 9.3 per cent.

Generation business

Haldia Energy and Dhariwal Infrastructure are two of CESC’s principal generating companies, each having an installed capacity of 600 mega watt. Once a pain point for CESC, the Chandrapur, Maharashtra-based power plant is now the second most profitable business of the company, registering a ₹283 crore PAT in FY24 compared with ₹244 crore in FY23. Dhariwal has PPAs with TANGEDCO, NPCL and Central Railways. HEL posted ₹254 crore PAT in FY24 compared with ₹261 crore in FY23. The company supplies the entire generation to the Calcutta licence area.

Green energy

Purvah Green Power is going to be the renewable power business vehicle by the company. It has entered into a binding framework agreement with Inox Wind for a capacity aggregating 1500 MW of wind turbines to be commissioned over the next 3-4 years. It also plans to develop a 300 mega watt solar energy unit in Rajasthan.

CESC also submitted an expression of interest to the Gujarat government requesting allotment of 20,000 hectares of land for a solar-wind hybrid portfolio in Gujarat.