For a company stuck with unviable power off-take contracts and heavy debt, one way to improve returns is to rework the original contract terms and lighten the balance-sheet.
Tata Power Co. Ltd has been working on both for some time now. But given the slow progress till now, investors are taking the company’s latest debt reduction plan with a pinch of salt.
The company told analysts that it aims to cut its debt by ₹23,000 crore, almost half of its total debt of ₹48,376 crore. But the company’s shares haven’t budged since the time this shared by the company on 19 May.
Of course, debt reduction is the need of the hour. Last fiscal, more than half of the company’s operating profits (54%) were taken away eaten by interest costs.