Reliance Power posts Rs 2,878 crore profit in Q2 driven by subsidiary deconsolidation

Reliance Power reported a net profit of Rs 2,878 crore in the July-September quarter, boosted by a Rs 3,230 crore gain from subsidiary deconsolidation. The company’s income, however, dipped to Rs 1,962 crore amid ongoing restructuring and settlement of major guarantor obligations for Vidarbha Industries Power Ltd

Reliance Power reported a consolidated net profit of Rs 2,878.15 crore for the July-September quarter of this financial year, according to PTI. This marks a significant improvement from the Rs 237.76 crore net loss it recorded in the same quarter last year, ending 30 September 2023. The company’s latest quarterly performance reflects a notable turnaround, primarily driven by the financial impact of subsidiary deconsolidation.

As per PTI, Reliance Power disclosed in a regulatory filing on Tuesday that it realised a substantial gain of Rs 3,230.42 crore following the deconsolidation of one of its subsidiaries. Deconsolidation typically means that the assets, liabilities, and equity of a subsidiary are no longer part of the parent company's consolidated financials, impacting the company’s overall financial standing.

In the same quarter, however, the company's total income decreased to Rs 1,962.77 crore, down from Rs 2,116.37 crore in the corresponding period last year. This dip in income came alongside the gains from deconsolidation and restructuring activities, which have been central to Reliance Power’s financial repositioning this year.

One of the significant moves by Reliance Power during this period involved settling guarantor obligations totalling Rs 3,872 crore for its subsidiary Vidarbha Industries Power Ltd (VIPL). According to the regulatory filing, the settlement has effectively discharged Reliance Power from all corporate guarantees and related undertakings associated with VIPL’s outstanding debt, totalling Rs 3,872.04 crore (or Rs 3,87,204 lakh). With this development, VIPL ceased to be a Reliance Power subsidiary on 17 September 2024.

The company also announced that it had settled all disputes with CFM Asset Reconstruction Private Limited (CFM). Following this settlement, an application filed by CFM under Section 7 of the Insolvency and Bankruptcy Code was withdrawn on 25 September 2024, according to PTI.

In accordance with Ind AS 110, which pertains to “Consolidated Financial Statements,” Reliance Power recognised VIPL’s income and expenses in the Group's consolidated financials only up to 17 September 2024. By the end of September, the Group had derecognised its share in VIPL’s net liabilities, resulting in a gain of Rs 3,230.42 crore (or Rs 3,23,042 lakh) as an exceptional item.

Reliance Power, a key entity within the Reliance Group, stands as one of India’s foremost private power generation and coal resource companies. With a diverse portfolio that spans coal, gas, hydro, and renewable energy, the company’s operational capacity currently stands at 5,300 megawatts. This latest quarter’s financial results underscore the company’s continued efforts in financial restructuring and consolidation.

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