It gives me immense pleasure to write to you after another eventful year of progress, transition and transformation. We performed well across all segments, with our conventional generation, transmission and distribution (T&D) businesses delivering solid results, Odisha Discoms stabilising and the renewables business firing on all fronts. Today, we stand strong, serving more than 12 million consumers through our distribution and new‑age businesses.
We continue to be aggressively focused on growing our clean energy portfolio which today constitutes over one-third of our total generation portfolio and we aim to increase it by more than 60% over the next five years. We are facilitating this clean energy transition through new technology adoption in collaboration with our customers and partners. With BlackRock and Mubadala investing ₹ 4,000 crore in our renewables business, we are well positioned to pursue even larger opportunities in the RE space and continue to retain our leadership position in the new consumer centric businesses - Rooftop Solar, EV Business, Solar Pumps etc.
A year of standout financial performance
That said, FY22 also came with its fair share of challenges, with headwinds emanating from elevated commodity prices, residual effects and variants of COVID-19, geopolitical conflicts and erratic weather patterns. However, we were able to deliver a strong financial performance, with revenue at ₹ 42,576 crore (up 28% y-o-y), EBITDA at ₹ 8,191 crore (up 3% y-o-y) and PAT at ₹ 2,156 crore (up 50% y-o-y).
We also made solid progress on some of our key issues and continued to strengthen our balance sheet. Leveraging our robust operating cash flows, we brought down our net debt to underlying EBITDA to 3.92. Our domestic as well as international credit ratings received an upgrade in FY22, with our average borrowing cost narrowing 36 bps y-o-y to 6.82%.
An all-round progress across businesses
Tata Power’s focus on becoming a consumer-oriented, renewables-led company continued to deliver sustained results in FY22. Our Solar Utility Scale EPC order book stood at 3 GW worth ₹ 12,000 crore. We achieved our highest-ever quarterly revenue in our rooftop solar business and doubled our revenue from solar pumps on a y-o-y basis. Tata Power EZ Charge has cumulatively installed 13,000 + home chargers and 2,200+ EV charging points at the end of the year. On the T&D front, we have been able to consistently reduce the AT&C losses in the four Odisha discoms and have stabilised the operations with a three-pronged growth-reliability-collection model. Transmission availability has been constantly maintained at or near 100%. The aquisition of two transmission assets through our Resurgent Platform- NRSS XXXVI Transmission Limited and South-East UP Power Transmission Limited has further enhanced the portfolio of our transmission business. From a generation standpoint, availability has been at or near 100% for hydro, wind and solar assets and over 85% for thermal units (excluding Mundra).
A global energy context set by climate change
There is irrefutable evidence that points to the reality of climate change and its disastrous impact on the planet and its people. Following COP26 and the preceding conventions, countries across the world are taking measures, with specific commitments being drawn up for coal phase-out and carbon mitigation. Large nations/blocs such as the US and the EU have committed to net zero targets by 2050, China and Russia by 2060 and India by 2070.
This global transition provides a huge opportunity for energy companies to lead the decarbonisation agenda by enabling renewable energy installations at scale with solar and wind leading the pack and through deployment of novel technologies. Installed renewable power capacity has grown by over 9% in CY21, and as per the IEA, 32% of the global electricity demand will be met via renewable sources by 2024. The mainstreaming of EVs is also paving the way for newer opportunities in the public utilities space, together with new energy storage systems and microgrids.
A volatile global operating environment
The world economy recovered strongly at an estimated growth rate of 6.1% in CY21, post the year of pandemic-induced de‑growth. As economies opened and mobility normalised, demand for electricity bounced back proportionately, at a decade-high rate. This spike in electricity demand coupled with unforeseen weather patterns, stressed the limited inventory of coal and natural gas. This scenario of energy crisis got further stretched with the geo-political tensions between Ukraine and Russia. As a result, input costs rose sharply, with prices of coal and natural gas more than doubling from the previous fiscal, hitting multi-year highs, and intensifying the need for sustainable energy solutions. All this intensified the need for sustainable energy solutions that assure availability, affordability and predictability.
A dynamic Indian scenario
India’s economy continued its positive growth trajectory, with regional economies coming back into full function. Following the economic revival, power demand increased by 8% in FY22, with peak demand crossing 200 GW mark, majorly driven by the commercial and industrial sector. With India’s energy supply largely dependent on coal-powered thermal power generation, the country stared at the prospect of blackouts with minimal coal inventory and surging prices. However, with the timely intervention of the government (such as utilising imported coal capacities at Mundra by providing a pass through arrangement), the situation was salvaged.
But as the famous saying goes, every crisis should also be seen as an opportunity. The T&D sector needs another wave of reforms and impetus to Privatisation of Discoms can significantly improve the overall efficiency of power distribution and provide uninterrupted electricity to the remotest areas in India. On the renewables side, India’s seminal commitment at COP26 to have 500 GW of non-fossil capacity by 2030, opens up a world of opportunities for companies ready to take charge of the transition.
A relentless pursuit of being future-fit
Tata Power is transforming to be the ‘Utility of the Future’, which stands on the four pillars of solving key issues and securing financial fitness; delivering growth at scale; becoming a sustainability benchmark and creating shareholder value. Our strategic priorities, governance agenda and overall approach to business are aligned to realising this.
A promise of purpose
At Tata Power, we believe that access to energy is an enabler for creating a much larger socio-economic impact in the country. Our stakeholder-centric business model, drawing and delivering on various capitals, provides a clear picture of the various outcomes enabled by our businesses.
We are actively collaborating with our customers to understand their needs and to proactively serve them through innovative solutions. The offtake of our products and services such as microgrids, EV charging, home automation, rooftop solar, solar pumps, among others, validate our approach.
Our people are our biggest assets and we continue to invest in them. Their collective knowledge and skills, combined with their will to win, set us apart. We strive to make Tata Power a truly enriching place to work, with conducive policies, health and safety, meritocracy, opportunities and industry-best practices. We have also progressively improved our gender diversity ratio, with women today constituting 8% of our full‑time employees.
We consider the communities in and around our operational areas as our key stakeholders and partners for growth and future readiness. As a part of our Tata values, volunteering and philanthropic initiatives, we nurture a positive relationship with them, and are always exploring ways to improve their lives and livelihoods. Our targeted programmes, under the 3E model – Education, Employability and Employment, and Entrepreneurship – have empowered lakhs of beneficiaries, and we will continue to enrich and deepen the impact.
In our business, responsibility towards environment is a key focus for us. From emissions management to biodiversity conservation and circular economy, we have established several practices that reaffirm our commitment to conserving the ecological ecosystems around us. We have committed to the Science Based Targets Initiative and are on track to achieve carbon net zero before 2045. Our efforts have been rewarded through ESG rating improvements and recognitions over last year.
A future brimming with confidence
Looking ahead, I am more confident that Tata Power will continue delivering on all its stated commitments across financial, operational and ESG metrics. The future is going to be catalysed by the opportunities in RE across the spectrum, be it utility scale or otherwise, as the global shift to clean energy intensifies. At Tata Power, we are strategically placed to capture these opportunities, with our operational expertise, integrated presence, and commitment to excellence. On the generation front, the resumption of units at Mundra, enabled by the recent government notification, will help in capacity utilisation with fair remuneration. In our T&D business, we will further optimise the Odisha discom operations, stabilise the new acquisition in the transmission business and deliver phenomenal customer service, enabled by digitalisation. At the same time, we will keep scanning the market for more privatisation opportunities that we can profitably pursue and responsibly operate.
The Tata Power family is truly excited for the next phase of our growth as we shift gears to flawless execution to realize our aspirations. As I conclude, let me take this opportunity to thank every stakeholder and request your continued faith and confidence in us.
Dr. Praveer Sinha
CEO & MD, The Tata Power Company Limited