I now hand the conference over to Dr. Praveer Sinha, MD and CEO, Tata Power. Thank you, and over to you, Dr. Sinha.
Good afternoon to everyone, and thank you, Gavin, for the introduction. We have with me my colleagues, Sanjeev Churiwala, CFO, Mr. Jigar Patel, Financial Controller, Mr. Kasturi and Mr. Rajesh, from the Investor Relations, and some of my colleagues from Corporate Communication and Finance team. Before I share with you some of the salient features, let me just briefly cover about the power demand in the country. Last year, like the previous year, the demand of power grew by nearly 8%, both in terms of the peak demand as well as in terms of energy.
But what we have seen in last 2 months, month of March and April, even before the summer has really started, there has been an increase of nearly 10.5% in terms of energy, and peak also reached a level of 224 GW on 29th of April. And this, on a corresponding basis, last year was 208. So there is a huge increase in demand. The expectation is that we will have a peak of 260 GW, and there is a lot of work that needs to be done to ensure that this peak demand is met, as also the energy requirement is also met. We have, from our side, in Tata Power, taken all steps to ensure that all our plants operate at full capacity.
All our coal-based plants, whether it is domestic coal-based, have full availability of coal, as also our imported coal-based plants at Mundra and in Mumbai, have full availability of coal, and we will be producing at 100% availability all these plants. Similarly, all our renewable plants are operating at full capacity, and we do expect that in the coming months these will be able to generate enough quantity of coal for the requirement of the consumers. We are tied up in our distribution business also, the total quantity of coal. And we do expect that the power that is required for all the distribution companies will be adequate to meet it.
In fact, we have seen in the month of April, we have nearly 25% growth in demand in many of the places in Odisha, including Bhubaneswar, and we have been able to successfully cater to that. And, in fact, some of the places in Odisha, we have seen that this is the second consecutive year of growth of demand by nearly 20-25%. So, I think we are well poised to meet the demand, though it is growing at a very, very fast pace. On Tata Power, we have shared with you both the Q4 results as well as the annual FY 2024 results, and the details are already there. The presentation has also been uploaded, and I'm sure you would have got time to go through that.
I'm not going to repeat the numbers, but I will just take you through some of the important aspects of our business. Our coal-based and hydro plants, our generation businesses have done exceedingly well in the last quarter. They have performed at full capacity, and that is why it gets reflected in higher revenue as well as higher EBITDA and PAT for all these businesses. Similarly, in transmission and distribution, we have seen our transmission businesses have also done exceedingly well. Our distribution business in Odisha, Delhi, and Mumbai, and Chennai have also performed exceedingly well. There were a lot of challenges in Odisha. We have been able to overcome most of them.
Going forward, you would see substantial improvement in the financials of Odisha because we have been able to clean up a lot of issues which were there about the earlier billing and debt collection. What you would see now is a huge improvement of the performance of Odisha Discom. In fact, within a short span of three years, all the four Discoms have started making profit, and this is much better than what was initially planned when we had bid for these projects. Coming to our renewable business, I, I think, we have done exceedingly well in this year. Many of the projects which we could not do it in FY 2022 and 2023, whether they were third party or our own utility scale, we have been able to implement.
We have a huge backlog of projects, both third party and utility scale, which we will be implementing in next 24-36 months. A lot of it is planned in FY 25. We expect nearly 4 GW of projects that will get implemented in FY 25, out of which nearly 2.5 will be third party and 1.5 will be our own utility scale. And then we will be doing into 5 GW of our planning in FY 26. So, you know, a lot of capacity addition will happen. We have also been able to commission our manufacturing facility in Tirunelveli. Our 4 GW module plant is commissioned and it's fully operational.
And, our cell plant of 4 gigawatt will start getting commissioned from next month, and over 3 months it will stabilize and reach the peak capacity of 4 gigawatt over there. So, we will start then producing 100% domestically manufactured cell and module, which is a requirement for many of the bids, including the rooftop, program of the government. We have also done exceedingly well in our rooftop business in last quarters, and, the performance, has shown not only very good margins, but also, very good quality of service that has been provided to the customer. And we continue to have a leadership position in rooftop.
And with the PM Surya Ghar Yojana program, we expect that we will play a very, very active role going forward in the market to create the rooftop solar for the consumers under the government scheme. So, we are expecting that our renewable business will really start showing great results as by 25 onwards. Similarly, in our EV business, we have nearly 86,000 home chargers, and we are number one in the market with more than 5,500 public chargers and nearly 900 bus chargers. And our emphasis has been that fleet chargers, bus chargers, home chargers and the public chargers will support the e-mobility initiatives of the government and many of the OEMs with whom we have tied up.
Coming to our some of the other initiatives, we are the only power company in the country which has taken the Science Based Targets initiative, and we have a very, very robust plan to implement it over a period of time. Similarly, now we have taken a lot of initiatives in our other operations, including HR, where we have been awarded number of recognitions we have got, and in terms of the best employer. Our rating also has improved in the last quarter, and it is today AA-.
Double A plus.
AA+. So I think what you would see is that all in all, the performance of the company has improved drastically. We do expect that this will continue. We also expect that the Section 11, which was up to June 30, has now been extended up to October 15. And with the type of demand of power in the country, we expect that we will be able to continue generating from Mundra plant. And since in merit order it is still very, very attractive, it will continue to schedule power to the beneficiary customers. So we are very confident that whatever we have done this year and in this quarter, we will continue to work on that.
A very strong foundation has been made in the company. This is the eighteenth consecutive quarter in which we have shown a growth in profit. And the strong foundation and the fundamentals of the company will ensure that our performance in the future also continue to have similar trend. And we look forward to your continued support in this regard. I would now request Nirav if any questions are there, you can ask.
Thank you. Thank you very much. We'll now begin the question and answer session. Anyone who wishes to ask a question may press * and one on their touchtone telephone. If you wish to remove yourself from the question queue, you may press * and two. Participants are requested to use handsets while asking your question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. Participants, you may press * and one to ask a question. The first question is from the line of Puneet from HSBC. Please go ahead.
Yeah, thank you so much, and congratulations on your numbers. My first question is with respect to the Tata Power Solar Company. You know, rooftop seems to be a big opportunity. Do you have any target revenue from that for the same? And the second part of the same business is, how should we think about margins from TPSSL?
So, let me try to respond to this, sir. One is that, based on the scheme that the government has announced, sir, the main benefit is to consumers who use 1, 2, or 3 kW of rooftop solar. The trend that we have seen based on the people who have registered in the first 1 crore household, more of it is 3 and 2 kW. So what we can expect is, the average of about 2.5. So it means about 25-30 GW of rooftop has to be implemented in next 3-4 years.
... and considering that we already have a market share of nearly 20%, we are looking at something near to that. Mind you, that we already have nearly more than 2 gigawatts of rooftop solar already installed in the country. So we have the largest penetration, with a 20% market share. And the number two in this is someone with a 2% market share. So we have a huge gap between us and the next, the number of players in that range. And we expect that we will maintain our leadership.
Okay, but do you expect any constraint in terms of DCR availability of modules there, or you think you'll largely do based on your own capacity?
So we are setting up this plant only for meeting the DCR obligation.
Okay.
So the whole purpose that we will be able to use it for our own utility scale, group captive, as well as for rooftop opportunity that comes from. Puneet, Sanjeev Churiwala here. Just kind of wanted to tell you and all the analysts on the call that every quarter, including this quarter, we upload a very comprehensive financial analysis deck. This time the upload is about 66 slides, where you will find all the segmentation, dissection, trends to help you do a much better analysis. We just want to thank that, you know, the quality of the analysis that is happening of late, it has significantly improved, as it gives the reader of those reports, including all our investors, a good confidence on where the company is performing.
To your question on how the solar rooftop, EPC and other EPCs are doing, you know, you can look at the slides number 35, 58, and there are a lot of slides which gives you a complete insight into that.
Correct. It talks about roughly 8% margin. Is that the margin that we should be running with?
So, if you look at the EBITDA margin, yes, it's about 7.6. For the full year, it's about 6%. Our endeavor is on the PAT margin, that we work on a 4%-5% PAT margin. That is what we have always been telling. This quarter, we have landed up with 4.3%. And all of you are aware that the market was quite choppy at the beginning of the year. But with our own module manufacturing now going live and the solar cell, the cell and the module prices coming in, we are confident that, you know, we'll be delivering the margin expectations that we have. So both our EPC business as well as the solar EPC overall is doing phenomenally well.
As you can see, over the last five years, it's had a CAGR of 17%. You can expect, you know, perhaps a better growth coming in.
Okay. And in terms of just disclosures, can you also talk a bit about your core infra business and Tata Projects? What kind of, you know, profits are they contributing?
So the Tata Projects is quite a turnaround, this year. In fact, when you look at, the quarter four numbers itself. Pardon me? INR 7 crore is the profit this quarter. Yeah. Sorry. The profit for this quarter is about INR 32 crore, and it was a significant loss-making company till last year. This year, for the full year, the company is now completely turned around with a very solid order book position, and the company is making profits. So hopefully, with the order books that we have, we are sure that Tata Projects will be delivering better results going forward as well.
Okay. And, and also, can you talk about, how much more money should we expect to come from the ITPC dividend? And also Agreement.
Sorry?
So how much more money should we expect to come from ITPC, dividend, which came in this quarter as well, along with Q3? And also, how much balance remains from Agreement that can still come through?
So Agreement, we have already sold, and that disclosure is already made in the notes of accounts. The sale was signed off a few years back, and we were expecting all the money, the sale proceeds, to come. So that has come last year and this year, and accordingly, in quarter four, that investment in the books is now, you know, transferred. So we don't have anything coming from Agreement.
Nothing more from Agreement. Okay.
Yeah. When we look at ITPC, ITPC is a good, good turnaround story for us.
Yeah.
Good turnaround story for us. We had last year entered into a settlement agreement, which Agreement with ITPC, which was duly acknowledged by the regulatory bodies over there. As a result of which, we have received $90 million of dividend this year in cash. We also expect around $40 million-$60 million of dividend that next year as well. Besides, the company is making about $30 million of profit now every year. So hopefully, we would expect $10 million-$15 million of dividend on an ongoing basis.
So INR 10.10 million ongoing and INR 90.60 million for next year?
Yeah. So INR 40 million-INR 60 million is what we're targeting. That will include the entire dividend for next year.
Okay, so including the INR 10 million?
Yeah. INR 10 million is going forward as a run rate.
Yeah. And, and lastly, if you can also share, if there are any remaining tax benefits from the merger of CGPL, what is the quantum of that?
Sorry? Could you repeat the question?
What is the quantum of that? What is the quantum of tax benefit that is remaining from the merger of CGPL?
You're talking about the carry forward losses and business losses?
Yes. Yes.
It's a significant amount. And then, of course, given our profitability is improving every year, and we have business profits also, business income also, that is, resulting in inflation of the carrying forward losses and business. But of course, this is a tax position, so, you know, if you want, we can send you the break up separately.
But just the unabsorbed number, the remaining one-
Yes.
Will be very well. Okay. Cool, I'll come back in the queue. Thank you so much.
Thank you. Next question is from the line of Mohit Kumar from ICICI Securities. Please go ahead.
Good evening, sir. And thanks for the opportunity. So first question on the utility scale renewables. So the last year, I think the huge bidding which happened in the industry, but I think we didn't participate in most of them. What do you think about, you know, the way forward for FY 2025 and FY 2026, so?
Last year there were nearly 50 GW of bids which were supposed to come. Of course, all of them could not come. We expect this year also that the government has plans to bring 50 GW of this. So, there are large number of bids coming. We are since one large quantity of bids, especially the ones which are the bids which are hybrid bids or the firm and dispatchable renewable energy, that is FDRE bids. So we do expect that this year also, many of those type of bids will come hybrid, as well as ones with solar, wind and storage. And we will actively participate in all of them.
We, of course, expect that since these are little complex bids, there would not be too many players who have the capability to execute projects like this, and thereby we will be in a much better position to win better bids and also win with the much better margins.
My question was about the role. Our participation was very selective last year. Was there any particular reason for us to not participate aggressively in the bid?
We always have selective. For us, it's about getting good margins. And we have earlier also expressed that it's not question about participating and winning, but it's participating in right bids and winning them at good margins. And we will continue to have similar focus in the coming years.
If I could add, if you have a look at slide number 24, you'll get a trend in terms of how the reverse auction tariffs have moved significantly. As such, we have actively participated in the bids. In fact, the bid position that we are into today, we already have a 5 GW+ of project execution in the pipeline, which was never the case. And to that extent, we have a very healthy bid position also last year. Overall, we have won close to about 1.8 GW, and largely that being complex, which is a combination of hybrid as well as FDRE projects.
So I think we are in a much better position than we were a few years back. So I do think that comment that we are not active, which is correct, in the sense that we are, yes, we have not participated deliberately into pure solar or pure wind, because we are getting better returns.
Understood, sir. The second question on the 4 GW solar module capacity, which will be up and running in the next couple of quarters. Do you still intend to use the entire capacity for captive, or do you think there is a market outside your own requirement?
Well, yes, of course, there is a market outside as well. So as and when we are ramping up, as of now, we have sufficient, you know, contracts ourselves to kind of deliver this modules and cells. But yes, as and when we ramp up, we will also get an opportunity of selling outside.
Understood. My last question on the rooftop solar scheme, have you guys got any color on the implementation? Is it right to say that there will be more bidding like solar pump, because solar pump, I think it went, it was all, you know, not to the desired way, right?
You are asking about solar pump or the rooftop solar?
My question, rooftop solar scheme. Is there any color on the implementation, how this will get implemented? Because like, because rooftop, because the solar pump scheme, I think everything were not to the desired way, right?
No, I think rooftop solar is more of a bilateral arrangement between you and the consumer. And there is a certain amount of subsidy that is provided by the state government or central government. Now, the new scheme, of course, there's a central government subsidy, and in some cases, the state government are topping up with some subsidy from their side also. So, we will be executing that. There is a portal which has been created, where people have to go and register, and then, we will execute through an arrangement, whereby we will respond to the consumers and implement the project, and they will get the payment of subsidy directly from the government.
All of these are summarized in slide number 34. We've kind of decoded the entire scheme in a very simple fashion to understand for everyone. We're kind of very bullish about this scheme.
Understood, sir. Thank you, and all the best, sir. Thank you.
Thank you. Next question is from the line of Vijay Kumar from Avendus Spark. Please go ahead.
Yeah, good evening, sir.
Sir, sorry to interrupt you, you're not audible. Can you please speak with the handset?
Is it better?
No, sir. Sounding a little distant.
Yeah, I'll try my best. I'm talking on the handset only. So my first question is on the recent RBI regulations on project financing, where they have asked lenders to provide more, which is likely to have some impact on cost of funding in the future. Though it is in the draft stage, what is your opinion on how this will impact us, and you before all? That's my first question.
So I think the scheme has just come out, the draft, and we have looked at the scheme very initially. A couple of very high-level observations that come in is the requirement to make a provisioning during the project stage, and this could take up the financing cost a bit more. But that's more on a project financing basis, which smaller projects would normally do. Our funding is largely on a corporate loan basis, which we take at the infra holding company level. So I think we are kind of comfortable to that. The second big requirement is about the company owning about 50% of the land before they could disburse.
You know, I would think that would bring about a bit more discipline in terms of companies who go for bids without the land and end up in a problem. So hopefully, that will bring a little more discipline, you know, in the way execution happens. But yes, we have been given three months. We're also trying to understand that better and make appropriate representations.
This is still a document for discussion, so I think it is too premature to say anything what will eventually come out. Let's wait and watch rather than trying to really judge based on what has been provided.
Okay. My second question is on your Mundra coal and shipping cluster-wise numbers disclosed in the PPT. So for this quarter, we are seeing that the EBITDA and the PAT for this cluster is lower than the last quarter. So can you give a color of how the Mundra separately is performing and how the coal is performing? What contributed to this sequential drop in profitability?
Yeah. So I think quarter-wise number is very, very difficult to decode because a lot of things, changes keeps on happening. But I think the best way to look at on an annualized basis. On an annualized basis, the entire Mundra plant has run on Section 11 for the year, which is cost plus. And as we have mentioned earlier, this is, we're trying to work on a cash breakeven point.
Okay. How about the sales and realization and the gross margins at the coal mining business side?
So, coal mining, if you see the last year, the coal prices, especially in FY 2023, was very high. Of course, now the coal prices have stabilized. So this is the trend that we have been seeing for last six months, and it may remain in the same manner for some more months. So, the huge increase in coal prices and the dividend payout which we saw, that was possibly a one-off and may not happen in near future.
Thanks a lot.
Okay.
So the cluster-wise fact at the full year level comes to around about INR 600 crore. So would this be like a number that we can expect in the next year also?
If you see for the year, there is, it's there in, I think in slide number 7. In slide 7, you can have a look in that and see that how this good type of pre-projection is expected, sir.
Okay, sir.
Thank you. Next question is from the line of Satyadeep Jain from Ambit Capital. Please go ahead.
Hi. Thank you. Two questions. First was on the impairment you've taken on the renewable energy assets. Can you talk about what drove that impairment?
Yeah. So this impairment we have taken on the acquisition that we did for the Welspun assets, Walwhan assets. And during the acquisition, we had paid a goodwill of about INR 1,600 crore, where during that time was allocated over 22 different assets. Overall, when we do the impairment test, there is a surplus available, so that's not a concern. But in some of the assets, there, there's a need for unwinding of the goodwill, which is a non-cash write-down, which is shown as an exceptional item. So this year or this quarter, we have provided for about INR 100 crore this quarter.
Given that this is more unbinding, and the goodwill at some point in time needs to be unbinded, we're kind of expecting INR 100 crore-INR 150 crore of unbinding happening every year, which is again a non-cash charge and is reflected as an exceptional item.
Okay. Thank you. Just on another staff paper on the power market pricing, and you also have some exposure through Haldia and some through Nayagaon in the merchant market, and also in the FDRE also, you're actually you're oversizing the capacity, so there is some excess generation. Any initial read? I know it's still early stage, it's still for discussion. Any early stage maybe thoughts on that? And when you look at power sale, renewable power excess generation?...How do you have figure out the variable costs in that excess generation through FDRE?
No, I think FDRE is a combination of, you know, solar, wind, battery. You cannot decode a separate variable component as yet. And what we really look at during the bidding as to what is the appropriate cost and, you know, what kind of returns we need to generate. So I think it's too early to talk about the variable cost on that. And you spoke about the merchant power, right?
Mm-hmm. Yes.
Yeah. So we have about 300 MW of overall merchant power available from Haldia and from some of our other plants. And of course, the relations have been good this year. Hopefully, depending upon the energy, demand/supply situation, we are positive that we should be able to, you know, continue to earn good money, from our merchant sales.
But this, the CERC staff paper, would this have any implication on that?
CERC what? That is on the DSM.
On the, it's in a way capping the merchant power, if we read it correctly, the price that you offer for merchant power.
The merchant power already, there is a cap. Earlier, it used to be two years back, INR 20. Now, then it was reduced to INR 12, and now it is at INR 10. So at this stage, there is no discussion on capping it, the merchant power. Because if you cap it, then no one will generate it, your ECR is higher than the merchant power rate. So I think now these are, you know, general discussions that keeps on happening, but there is no plan as such to reduce the merchant power.
Just one quick question, if I can, please, on the pumped storage, I know you're starting construction soon. Any thoughts or developments on contract signing for that?
We are in the process of obtaining all the approval, and also, we will start the process of bidding for the civil, electromechanical, and balance of plant. We expect the later part of this year to start the construction activity.
Good. Thank you.
Thank you. Next question is from the line of Amit from SMIFS Limited. Please go ahead.
Hello, am I audible?
Yes, sir, you are.
Good evening, and thank you for giving the opportunity. My question was regarding the usage of CRR, Capital Redemption Reserve, which can be taken to give bonus shares, which will help to save the interest expense by reducing the debt.
What is your specific question?
My question is, like, is the company planning to use the capital redemption reserve to issue bonus shares so that the debt can be redeemed and interest elements of the expense can be saved?
Well, it's a hypothetical discussion for us, because we are not issuing any bonus share, so we have not examined it. But if you're kind of wanting to understand the implications of that, we can look at all and discuss with you separately.
Okay, thank you.
Thank you. Next question is from the line of Sumit Kishore from Axis Capital Limited. Please go ahead.
Good evening. Thanks for the opportunity. My first question is that in the last annual meet, you all had laid down a plan to double revenue, EBITDA, and profit over a FY 2023 to 2027 time frame. FY 2024 has ended with a 10% consolidated revenue and 12% reported profit growth. And in the renewable EBITDA profit growth was in single digits. So, I mean, at this stage, would you review the roadmap of FY 2027 growth and basically sum it up for the three main business segments you are in?
So, when we had presented, we had said in 5 years' time, we will be doing that, right? And we are on track, and so we will be doing that. All the capacity add that we mentioned, more than 5 gigawatt of renewable returns from the manufacturing plant are in project, the pumped hydro project. So all these will start generating the revenue and the profit. Similarly, our projects in transmission, where 2 of them are in very advanced stage of implementation and will get operational by end of this year and another 2 by next year. So I think, all of them, whatever we have planned, we are very much on track to deliver what we had presented last year in the analyst meet.
Sure. My second question is regarding DISCOM privatization over the next one year. Do you have any expectations or progress in privatization of DISCOMs, and what opportunities are on the angle?
Yeah, we are expecting, based on our discussion, that large number of states are planning to go for something similar to Odisha. Many of them have gone and seen in Odisha the type of changes and type of improvements, and how it is a win-win for everyone. The consumer benefits by getting better service, better reliability, better customer experience. And also, the tariffs have not gone up, because whatever loss reduction happened, the benefit went to the consumer. The government has benefited by, they don't have to incur any further losses, financial losses in running.... And, the DISCOM has benefited because it has been able to generate enough cash to provide, better technology and services to the consumer.
So I think it has been a win-win for everyone, and many of these states are now looking at replicating similar opportunity, and I do expect that post the election, many of the states will take up this initiative.
Oops! Is there any large state which is-
I'm looking at all the states. So there, apart from Odisha, there are 27 states, and apart from Delhi, there are eight union territories, so all of them are my potential customers.
So, you know, with the sharp dip in battery energy storage, you know, standalone BESS bids, where do you see the load following feasible FDRE rate, now? You know, so do you see this falling and presenting a viable alternative to setting up new green thermal capacity in the next two to three years?
Well, now, we have seen FDRE projects are going to be the new future. And, the number of bids that are expected are very large, where this, you get a certainty of getting renewable power. There is huge pressure. It is not only about supplying, but there is a huge pressure from the customer side also, that they want to transition to clean energy, whether it is industry or commercial or even residential consumer. So there is a strong awareness level which has been created, and I do expect that going forward, more and more people will insist on getting green power, and it is not that we can supply any power to them and they will take it.
Thank you, and wish you all the best.
Thanks.
Thank you. Next question is from the line of Subhadip Mitra from Nuvama, please go ahead.
Good evening, and thank you for the opportunity. So just carrying on from, I think, Sumit's earlier question on your targets of doubling profits over the next five years by FY 2027. So my question is that, is there a certain targeted amount of renewable that you are looking to add, let's say, overall or on, on an annual basis in order to reach that target? Because the assumption was that a larger quantum of your FY 2027 profits would now come from the green energy boost.
So let me tell you that in FY 2021, we had a revenue of nearly INR 28,000-INR 29,000 crore. This year, we have crossed INR 60,000 crore. We used to have a CapEx of nearly INR 1,200-INR 1,300 crore. We increased it to INR 2,200 crore, and this year we are 4,000+ crore. So we had, at that time, said that we will do it 4 times. Not many people believed us. We have, in 3 years, doubled it, more than doubled. And we have said whatever we have said last year, we have said with full conviction that we will deliver it. So please take it on what we have said. We have a track record of demonstrating, and we demonstrate it.
Understood. Okay. And with regard to the dividend, let's say the prior year's related dividend that we have received from ITPC. If we adjust for that number, what would have been the growth in the profits for the current year?
So I think we will not be able to adjust for it for a simple reason, because we also had another dividend last year. So you have to, if you look at for a like-to-like basis, you know, we had a higher dividend last year, right? To that extent, like basis will only go up.
So if I understand correctly, last year, the higher dividend would have come from the coal-related operations, whereas this year, it's come from the Zambian entity. Am I right in understanding that?
Yeah, partly. Not quite-
Yeah
... to the full extent. And as mentioned earlier by Sanjeev, this is part of the old payment that we are getting. There's still some balance that we give. And also, these companies are now making profits, so we will start getting dividends from those profits also. So yeah, these will be over and above our three main businesses, that is, generation, transmission, distribution, and renewable. They will also supplement in terms of the profitability as well.
Understood. Sir, lastly, with regard to the regulatory assets both at Delhi and in Mumbai, that number has been growing every year. Do you foresee a scenario post-elections where, you know, there will be some relief on, on both these points?
So, Delhi, the regulatory assets has reduced by more than INR 800 crore. In Mumbai also, we expect, because of the tariff increase that has been done in the month of March, in this financial year, we will reduce by another, INR 1,200 crore-INR 1,300 crore. And Delhi, last year, what has happened will continue in this year also. So I think, the trend of the reduction of regulatory asset has already started, and it will get amortized in the next 2-3 years.
Understood, sir. Thank you so much for answering my questions.
Thank you. Next question is from the line of Rajesh Majumdar from B&K Securities. Please go ahead.
... Yes, sir, thanks for the opportunity and congratulations on a good set of numbers.
Rajesh-
Sure, sir.
We can hear you, your voice is coming muffled. Can you please hold the handset?
Yeah. Am I audible now?
Yes, much clearer. Thank you.
Yeah. So congratulations on good set of numbers, and thanks for the opportunity. My first question was on the net debt level. There seems to be some kind of working capital release in this quarter of INR 2,150 crores. What is this pertaining to?
So, I think, again, you know, quarter-wide number can be misleading. The way I would really explain is when I look at the complete full year, my average working capital is close to about INR 3,500 crore, and so significantly lower as compared to, to all the past years. Couple of reasons: A, I think a lot of financial discipline has gone in, in terms of how we are collecting receivables. We have a big presence with the, with the retail customers in our discoms, and there's an overall efficiency buildup, which has happened. Also, with, with respect to support from the, securers, all the timely payments are also happening. So all of this put together, plus lot of supply chain and inventory management, has led to a significant reduction in our, working capital.
Of course, as a result of that, if you see, while we have done INR 12,000 crore CapEx this year, almost an all-time high CapEx for the full year, our debt levels are almost constant, and our debt equity is almost 1 time. So I think we are at a very healthy, you know, and comfortable debt position and cash position.
Yeah, I was coming to that. So basically, what would be our comfort level of debt for the current year and the CapEx for FY 25?
Well, the CapEx is something that, we have already said that, and some of you already alluded to that, that we are kind of spending, more CapEx, in the current year compared to what we've done in the past. We already have a renewable pipeline of 5.4 GW, will be, will be executed over 2-3 years' time. So that would lead to a significant CapEx of almost INR 10,000-20,000 crore, every year. So this is kind of maybe little higher than what the CapEx that we have mentioned during the investors call.
Okay. And, do you target, you know, debt equity at some kind of level for to meet the high CapEx too?
No, I think debt equity, while we are standing at 1:1, this is a very, very healthy situation. You know, ideally, any debt equity of 1.5 is fine with us. But I think, while debt equity is in our mind, more than that, I think, improving our cash flows every year so that we can self-fund a large part of the CapEx is what we are working at.
Okay. Sir, my second question was on the wind assets. We've seen some kind of improvement in the new equipment in terms of CUF of the wind turbine generators. So, given that and the fact that the CapEx have also gone up, will we be aggressively getting into wind projects in the future? Any direction on that?
The FDRE and the RTC complex project that we do, it's all a combination of solar and wind, right? So we cannot not doing pure solar. It's always a combination of solar, wind and battery storage areas. So yes, the answer is yes. It will always be a combination of all this, and to that extent, whatever wind power needs to be deployed, we'll build those capabilities.
In IRR number on the revised tariff and capacity utilization on wind, solar, et cetera, any new IRR ranges that you can guide on versus what it used to be one year ago?
No, the tariffs are going up, and I think the, there's a bit of a sanity in the market in terms of what returns they are targeting. But, yeah, every company, depending upon their cost of capital, interest rate, will have their own definition of what return, where they want to target. We don't play on the low return ten tariff, and for all the projects wind that we have done so far, we are kind of looking at, you know, a good return on them.
15% plus? Is that a right number to hazard?
I would say better than mid-teens, because that's the type of return we get in our distribution and transmission generation. So yeah, we are... We definitely look at much better returns compared to others.
Thank you. Thank you so much.
Thank you. Next question is from the line of Dhruv Muchhal from HDFC Asset Management. Please go ahead.
Yeah, sir, thank you so much. So the development order book, the development under construction at renewable projects that we have is about 5.5 GW, including hybrid, and we're guiding for about 1.5 GW commissioning, I think, for FY 2025. So would it be fair to assume the remaining about 4 GW would get commissioned in FY 2026?
It will be a combination of 24 months, 36 months. So yes, I suppose, definitely we are targeting 3.5-4 gigawatts by 2026, and the remaining, you know, early 2020 to 2026 probably. So yeah, 2.5 years is something that we can, you know, as of now, assume. Quarter here and there, something that happens. That's the plan.
When you give these hybrid numbers in the order book, I mean, in the under construction portfolio, for the hybrid projects, is it... I mean, does it include wind plus solar, and that capacity is the total capacity, or it's just the AC capacity that we are quoting?
No. So the one that we quote is the installed capacity, right? And the installed capacity for an FDRE or a hybrid or an RTC is kind of 3x of the PTA capacities.
... Got it. So this is the installed capacity number, that clear. Okay, that is helpful. And so secondly, would it be possible to give what is the EBITDA run rate for the current RE portfolio? I mean, the commissioned RE portfolio, which is about 4.5. On an annualized basis, assuming this project, these projects were running for throughout the year, what would be the EBITDA run rate be?
We will give you much more than that. If you look at slide 57, you can, you know-
Yeah. So I was looking at the slide, but that's for the, so for example, a project got commissioned in fourth quarter, the EBITDA only for that quarter is considered. Next year it will be the full EBITDA. Just trying to understand what will be the run rate EBITDA on the commissioned capacity.
I, I think the way you have to look at it is look at the generation units, right? And based on the generation units, you can calculate the first unit thing. Otherwise, to decode which is which dates a particular capacity was commissioned, it become a too complex a thing.
Okay. Okay. Sure, sir. Perfect, sir. Thank you so much. Thank you.
Of course, for your modeling, if you need any help, we're more than happy. You can reach out to Rahul separately, he can help you build your model on that.
Yeah, sir, because, run rate EBITDA is a thing I think, it's a common concept in renewable companies, globally, and I think even some of the Indian companies, which, helps us, you know, adjust for the seasonal or, quarterly commissioning or activities in the renewable portfolio. But sure, probably we'll discuss it offline, sir. Thank you.
Bye.
Thank you. The next question is from the line of Gopal from SBI Life Insurance. Please go ahead.
Hi, sir. Thanks a lot for the opportunity. My question was on this impairment which you have taken for WREL portfolio. So this is on account of what, sir? Is it like, you know, the PPA remaining lives are coming down, that is the reason? Or how do you impair it?
So, when we... I think, I mean, let me just give you a conceptual reply. When we won this asset, we kind of paid INR 1,600 crore goodwill. And then this goodwill, we kind of allocated over the 22 assets that we have. Overall company as a whole, we have a surplus position, but on the certain few assets, because of various reasons, there will be an impairment because the goodwill amount allocated to those assets during that time was done on a certain different assumptions. And of course, this is a common practice. Everyone knows that over a period of time, those assumptions may hold good or not hold. But I think what is important is this is more of an unwinding of the goodwill, which is a non-cash charge and exceptional charge.
This unwinding absolutely will keep on happening every year because we have INR 1,600 odd crores, so you can assume about INR 100-INR 250 crore of unwinding; you'll see in the current year and going forward as well.
What is the remaining life of PPA for WREL?
There are various assets, so, you know, I'll have to get into the detail of it.
Okay, sure. And sir, there are like, you know, a change in the thought process for the government on capacity additions, and
Gopal, sorry, can you speak a little louder, please?
Yeah. So, so there are changes in the thought process of the government, in terms of, you know, putting more, thermal capacities. We, in the past have always indicated that we will focus more on renewables, and even there are thoughts on, basically, you know, UMPPs and all. So will you, ever consider, a change in your thoughts on, adding more coal capacities in the future?
Well, we stay focused on what we have already communicated, so there's no change in our plans.
Okay. And sir, this, what we have seen, in the last year, almost 40 GW of ordering was done in renewables. What is that, we have won out of that?
And so I think roughly, a little less than about 2.2 GW is what we have won. But I was as earlier explaining, we are not now doing the pure play solar or pure play wind bids which does consist of a large chunk of that 40 GW. We are largely focusing on the complex bids.
Okay. Despite there is an improvement in the pricing.
Yeah, if you see the slide number 24, you'll get an understanding on the kind of pricing that is moving.
Right.
Of course, FDRE complex bids, not everyone can do that. To that extent, we are more confident that going forward, we will continue to have a portion of wind there. For example, this year, last year, out of 40 GW, I think the hybrid and batteries is only 10 GW. And out of 10 GW, wind already.
Okay, sure. And sir, on, capacity addition side also, this year, I think we already, we hardly added 600 MW in the renewable portfolio. So, you think, this share can go up? Are there any, you know, on-ground challenges which is restricting us in terms of what, you know, adding more capacities? What is that restricting us, despite having this amount?
Last year, if you remember the prices of the cells, modules-
... availability of land and various regulations, there were lots of challenges were there, and hence we decided to deliberately push out some of the projects, right? And to that extent, that has really helped us to still deliver the bottom line ambition that we have. But yes, we already have 5, little above 5, 5.4 GW in the pipeline.
Correct.
One can expect 1.5-1.2 GW getting commissioned in the current year, and a much bigger capacity getting commissioned in the subsequent years.
Okay, okay. And lastly, sir, on T&D side, on these transmission projects, do we have any targeted market share or any value in mind in terms of the last year, out of INR 40,000 crore, we've been only INR 2,300 crore. So do we have any aggressive plan for the next year on transmission side?
No. So, we are now looking at some of the states very aggressively. We won two of them. Again, we are selective. We want, because considering the timeline in which it has to be implemented and ROW issues in many of the places, we have been very cautious. So, we will bid, of course, but we will be careful in the type of. And we will create a good portfolio of the transmission projects.
Okay. Sure, sir. Thanks a lot.
Thank you very much. Ladies and gentlemen, we'll take that as a last question. I'll now hand the conference over to Dr. Praveer Sinha for closing comments.
Thank you everyone for joining for this analyst call. In case you have any further questions, please connect with my colleagues, and we will be happy to respond to you and also help you in making your model. We have tried to make the presentation much simpler, much friendly, in terms of providing as much detail as possible. But in case there are any further improvements that you would like, please inform us, and we'll try to incorporate that in the future presentations. So thank you, and you take care. All the best.
Thank you.
Thank you very much. On behalf of Tata Power, that concludes this conference. Thank you for joining us, and you may now disconnect your lines. Thank you.