February 04, 2004 | Business Standard
The duty cut impact will be positive for power generation companies. Setting up new plants will be cheaper now with the duty reduction in customs, thus bringing down capex levels. Also, the reduction in customs duty on imported coal (Tata Power imports 100 per cent of coal) will bring in savings of Rs 40-50 crore.
The move will not have any major impact on revenues since fuel costs are totally passed on to consumers. The company’s third-quarter results have been impressive with net profit rising 26.39 per cent to Rs 184.49 crore. The main driver was the reduction in fuel costs. By changing the fuel mix in favor of coal, Tata Power has been able to cut down a considerable amount of its fuel costs.