CESC Limited: history, ownership, mission, how it works & makes money

A Brief History of CESC Limited

CESC Limited, established in 1899, is one of the oldest electric utilities in India. The company, headquartered in Kolkata, operates in the power generation and distribution sectors. It serves over 3 million consumers and covers an area of approximately 567 square kilometers in Kolkata and Howrah.

In 1955, CESC was nationalized, and it became a public limited company, subsequently listed on the Bombay Stock Exchange (BSE) and National Stock Exchange (NSE). The company's initial capacity was around 130 MW, but it has significantly expanded over the years.

As of March 2023, CESC's total installed capacity stands at approximately 1,700 MW. The company operates multiple power stations, including:

• Southern Generating Station – 500 MW
• Titagarh Generating Station – 250 MW
• Maheshtala Generating Station – 600 MW

CESC operates in the competitive power sector, with its revenue primarily generated from electricity supply and distribution. In the fiscal year 2022-2023, the company reported a total revenue of ₹14,163 crore, showcasing a growth of 9.5% compared to the previous fiscal year.

In terms of financial performance, CESC's net profit for the same period was around ₹1,375 crore, reflecting an increase of 8.3% year-on-year. Key financial metrics for the same period include:

CESC is also focused on renewable energy sources, aiming to diversify its energy mix. The company has plans to increase its renewable energy capacity to 800 MW by 2025, including solar and wind energy projects.

As of October 2023, the stock price of CESC is trading around ₹92 per share on the BSE, with a market capitalization of approximately ₹12,600 crore. The stock has shown a modest increase of 5.4% over the past year.

Moreover, CESC has been proactive in investing in technology to enhance operational efficiency. The company has integrated smart grid technologies, which have led to a reduction in operational losses by 2% in the last fiscal year.

According to the latest reports, CESC’s customer base has grown steadily, with an annual addition of approximately 1 lakh new consumers. This growth aligns with the increase in urban consumption of electricity in the Kolkata region.

CESC’s commitment to sustainability and responsible business practices continues to influence its growth strategy. The company aims to enhance customer satisfaction while maintaining a focus on profitability and operational excellence.

A Who Owns CESC Limited

CESC Limited, a prominent player in the Indian power sector, is primarily owned by the RP-Sanjiv Goenka Group. The ownership structure is characterized by a combination of institutional and individual shareholders.

As of the latest available data in October 2023, the following outlines the major shareholders of CESC Limited:

In the fiscal year ending March 2023, CESC Limited reported a consolidated revenue of approximately ₹10,283 crore (around $1.24 billion), showcasing its robust market presence. The company has maintained a consistent growth trajectory, attributed to its diversified operations in generation, transmission, and distribution of power.

The stock of CESC Limited was trading at around ₹103.45 per share as of the close on October 25, 2023, reflecting a year-to-date increase of approximately 12.34%.

In terms of financial performance, CESC Limited's net profit for the fiscal year was reported at ₹1,150 crore, with an EBITDA margin of 26.53%. This indicates effective cost management and operational efficiency.

The strategic direction of CESC Limited includes a focus on renewable energy, aligning with India's shift toward sustainable energy practices. The company has set a target to enhance its renewable energy portfolio to constitute around 30% of its total generation capacity by 2030.

In terms of shareholder value, CESC Limited declared a dividend of ₹3.50 per share in the previous fiscal year, reflecting a dividend yield of approximately 3.38%.

CESC Limited Mission Statement

CESC Limited, a subsidiary of the RP-Sanjiv Goenka Group, operates in the Indian power sector. Its mission statement is focused on delivering reliable, efficient, and sustainable energy solutions. The company aims to enhance customer satisfaction through superior service, while also being committed to environmental sustainability.

The mission encompasses key objectives: expanding its operational footprint, innovating in technology, and fostering community development. CESC Limited strives to be an industry leader in energy distribution and is committed to meeting the energy needs of its customers while contributing to the socio-economic growth of the regions it serves.

Financial Overview

As of the latest financial year, CESC Limited reported significant figures in its financial performance:

The company’s focus on innovation is reflected in its capital expenditure, which emphasizes investments in technology and infrastructure to enhance service delivery. In FY 2023, capital expenditure was noted at ₹1,500 Crore, supporting expansion and modernization efforts.

Customer Commitment

CESC Limited is dedicated to improving customer experiences through various initiatives:

• Implementation of advanced metering infrastructure.
• 24/7 customer service through multiple channels.
• Regular feedback mechanisms to understand customer needs.

These initiatives aim to foster a reliable energy supply while addressing customer grievances swiftly and effectively.

Sustainability Initiatives

The mission statement also emphasizes the company's commitment to sustainability:

• Investment in renewable energy sources like solar and wind power.
• Achieving a reduction in carbon emissions by targeting a 30% decrease by 2030.
• Community development programs focusing on education and health.

In FY 2023, CESC Limited generated approximately 16% of its energy from renewable sources, contributing to both sustainability goals and energy diversification.

Future Outlook

CESC Limited's focus on strategic growth areas includes:

• Expansion into new geographical markets.
• Emphasis on digital transformation within operations.
• Continued investment in renewable energy projects.

The company’s mission aligns with India's broader energy policies, fostering a more sustainable and efficient energy sector. With an eye on innovation and community responsibility, CESC Limited aims to set benchmarks in quality and service excellence in the energy domain.

How CESC Limited Works

CESC Limited is one of India's oldest and largest private sector power companies, primarily engaged in the generation, transmission, and distribution of electricity. The company was incorporated in 1899 and serves over 3 million customers in Kolkata and surrounding areas.

The company's operations can be divided into three primary segments: generation, distribution, and transmission. As of the latest financial year, CESC Limited has an installed capacity of approximately 1,625 MW, primarily sourced from coal-based power plants.

Power Generation

CESC operates several power plants, including the following:

In the financial year 2022-2023, CESC generated a total of 12,474 million units of electricity, reflecting a growth of 5.1% year-over-year.

Power Distribution

The distribution segment is crucial, accounting for about 45% of the company's revenue. CESC supplies electricity to an approximate population of 14 million people in Kolkata and adjacent areas. The company has made significant investments in infrastructure to improve the quality of service and reduce transmission losses.

The distribution network includes:

• Over 6,500 km of overhead lines
• Approximately 3,000 km of underground cables
• More than 30 substations

Financial Performance

For the financial year ending March 2023, CESC reported the following financial metrics:

The company's financial health is reflected in its consistent profitability and return on equity (ROE) of approximately 14%.

Recent Developments

CESC has been investing in renewable energy as part of its strategic focus on sustainable practices. The company aims to achieve a renewable capacity of 1,000 MW by 2025. As of now, it has an installed renewable capacity of approximately 250 MW, mainly from solar and wind projects.

In terms of regulatory compliance and industry standards, CESC has been striving to align with the electricity regulations set by the Central Electricity Regulatory Commission (CERC) and the West Bengal Electricity Regulatory Commission (WBERC).

The company’s dependence on coal poses challenges, particularly with increasing scrutiny around environmental sustainability. CESC is planning to mitigate this risk through diversification in energy sources and enhancing its grid infrastructure.

How CESC Limited Makes Money

CESC Limited, a prominent player in the Indian power sector, derives its revenue from a variety of operations primarily centered around power generation, distribution, and retail. For the fiscal year 2023, CESC reported a total revenue of approximately ₹13,461 crore, reflecting a steady increase from ₹12,694 crore in the previous fiscal year.

The company's revenue streams can be categorized as follows:

• Power Generation: CESC generates electricity through its thermal and hydroelectric power plants. For FY 2023, the total installed capacity stood at 3,125 MW.
• Power Distribution: The company distributes power primarily in Kolkata and Howrah. For FY 2023, CESC recorded a distribution revenue of approximately ₹9,868 crore.
• Renewable Energy: CESC is increasingly investing in renewable sources. In FY 2023, the revenue from renewable energy sources was around ₹1,200 crore, a significant increase from ₹800 crore in FY 2022.

The overall generation capacity utilization has been robust. In Q2 FY 2023, CESC achieved a plant load factor (PLF) of approximately 75%, well above the national average of 65%.

Expense management also plays a crucial role in CESC's profitability. In FY 2023, the total operating expenses were reported at ₹11,382 crore, resulting in an operating profit margin of around 15.4%.

Furthermore, CESC has initiated several projects to enhance its revenue potential, such as expanding its renewable energy capacity. The company aims to increase its green energy share to 25% of its total generation by 2025.

Customer base expansion is also contributing to revenue growth. As of March 2023, CESC served over 3 million consumers in its distribution area, with a targeted annual growth rate of 5% in new connections.

Investment in smart metering technology and infrastructure upgrades has improved operational efficiency. This has led to a reduction in Aggregate Technical and Commercial (AT&C) losses to 12.5% in FY 2023, down from 14% in FY 2022.

Overall, CESC Limited’s multifaceted approach to power generation, distribution, renewable energy initiatives, and efficiency improvements ensures a sustainable revenue model poised for growth in the evolving energy landscape. The company’s strategic focus aligns with the Indian government's push for renewable energy adoption, further enhancing its market position.