Karachi: The Board of Directors of K-Electric Limited (KE) in its meeting held on November 27, 2020, at the KE head office, approved the Company’s financial results for the quarter ended September 30, 2020. KE reported a net profit amounting to PKR 1.111 billion for the quarter ended September 30, 2020, translating into an Earning per Share (EPS) of PKR 0.04. KE has decided to invest the profits earned back into business.
During the reporting period, the Company made additional investment of PKR 7.97 billion across the value chain which along with resumption of industrial and commercial activities post uplifting of COVID-19 lockdown, resulted in 7.3% and 7% growth in units sent out and units billed respectively. These operational improvements during the quarter in turn resulted in a 7.4% increase in gross profit (Q1FY21: PKR 13.868 billion; Q1FY20: 12.914 billion) of the Company from the comparable period.
The corresponding improvement, however, could not be witnessed in the net profit mainly due to increase in impairment provision against doubtful debts and exchange gain which was recorded in the same period last year. Main cause of increase in impairment provision against doubtful debts was lower recovery ratio primarily due to delays in recuperation from COVID-19. The Company has accelerated its loss reduction initiatives to recoup the lost improvement in T&D losses on account of COVID-19 induced lockdown.
A key concern for KE is the prevailing circular debt situation and inflated mark-up claims that are affecting the sustainability of the power sector. As of September 30, 2020, KE’s net receivables from various Federal and Provincial entities, stood at over PKR 80 billion on principal basis having a consequential impact on the Company’s cashflow position, significantly hampering the power utility’s ability to enhance the pace of investment in power infrastructure. KE remains in continuous engagement with relevant stakeholders and seeks a fair and equitable resolution, with all settlements whether Federal or Provincial, tabled together under one umbrella.
Going forward, the Company remains committed to its planned investments of USD 1.5 Billion over the next three years, spread across the entire power value-chain, including expeditious completion of 900 MW RLNG plant, along with setting up of new grid stations for off-take of additional power of upto 1,400 MW from the National Grid by 2023, subject to required approvals. However, sustainable resolution of the government receivables issue and timely approvals by NEPRA remain critical to the execution of these planned investments.