Tata Power Co. Ltd’s threat to snap electricity connections from the loss-making Mundra plant if states do not revise tariffs did little to quell investor concerns. The stock continued to slip, hitting a new 52-week low last week.
The company warned about the potential fallout of the delay in raising tariffs. “Should compensatory-tariff approval from states be delayed based on cost-benefit analyses, it may perhaps be better to shut the plant down during April-June 2020,” analysts at Antique Stock Broking Ltd said in a note presenting Tata Power management’s views after a conference call.
Losses at the Mundra power plant in Gujarat have shrunk in recent quarters, reflecting the downtrend in fuel (coal) costs. But that brings little solace.
