Q1 21/22

Aug 6, 2021

Ladies and gentlemen, good day, and welcome to Tata Power Q1 FY 'twenty two Earnings Conference Call. As a reminder, all participant lines will be in listen only mode and there will be an opportunity for you to ask questions after the presentation concludes. Please note this conference is being recorded. Today, we have Doctor. Pravesh Sina, CEO and MD, Tata Power and Mr. Ramesh Subramaniam, CFO, Tata Power with us on the call. I now hand the conference over to Doctor. Pravesh Sina. Thank you, and over to you. Doctor. Sina? Thank you. Thank you, Vikram, and good evening to everyone, and thank you for joining us for the Q1 earnings call. I hope all of you are doing well and keeping safe and taking care of yourselves. Today in the call, I have my colleagues Ramesh Subramaniam, CFO Mr. Anand Agrawal, Financial Controller Mr. Kasturi and Rahul Shah from Investor Relations and few more colleagues. And once again, thank you for joining for the call. As we come out of the second wave of the COVID, we would like to express our heartfelt condolence to all our fallen heroes and their families who continued to support us during this period. During these trying times, Tata Power had ramped up its COVID relief work, including providing hospitalization support, organizing camps, arranging oxygen as also providing all support during the medical emergencies. Tata Power also ran a huge vaccination drive, And 90% of our employees, 23,000 employees, have been vaccinated for the first vaccine. And the second vaccine, most of them will complete in seven weeks' time in the month of August and will get completed. The second wave of COVID has been equally challenging for everyone as we went into another set of lockdowns and saw our businesses get marginally impacted mainly with billing and collections dipping in distribution business as also in our other renewable business and generation business. As also, it impacted execution of some of our projects at locations, especially in these solar projects in remote locations. Despite all this, we ended the quarter on a high note as our revenues and profits went up significantly with very good all round operational performance. This was again possible because of the relentless work that all our employees, suppliers and all our stakeholders who provided us and supported us to run our businesses and operations properly. Our aspiration to build a very strong renewable focused future for the company has started showing results as we saw a very robust performance from our renewable business. With strong operations and impressive growth in various solar EPC businesses, the company achieved 87% growth in revenue and approximately 60% growth in PAT from renewable businesses on year to year basis. Coupled with very steady state operations of all our other assets and businesses as also the interest saving from debt repayment, we have achieved 75% growth in reported patents, which stands at INR466 crores as compared to INR268 crores in the same quarter last year. This is the seventh consecutive quarter of delivering year on year profit growth. Our solar EPC business of Tata Power Solar continues to perform very strongly despite COVID related constraints, clocking nearly 5x growth in quarterly revenue from crore last year to INR1949 crore this year. This growth has been based with well rounded performance from large scale utility EPC, solar rooftop and solar pump segments. The large scale utility EPC order book continues to grow with orders worth INR743 crore won in Q1, taking the total order book as of on thirtieth June at INR7257 crore. Among various projects, we won 150 megawatt from NTPC valued at approximately INR $6.50 crores is also in the same. Also in July, we were successful in EPC tenders of around 800 megawatt, for which letter of awards are expected to come very soon. The pace of wind reaffirms our position as a choice EPC partner for large solar developers. In some of the ongoing contracts, the module prices have increased, thereby putting pressure on the margins. However, the new contract factors the current prices, and therefore, margins are expected to improve going forward. On that of Tata brand and our extensive channel partner in marketing networks, solar pump business has done exceedingly well with the sales of 7,419 pumps, recording the highest ever quarterly sales. Our solar pump business is growing stronger day by day as we have become the largest player in pump business with total installation of close to 44,000 pumps till date. We have seen similar success from our rooftop business, where we won orders of 148 megawatt worth INR434 crores in Q1. Our rooftop order book as of thirtieth June stands at two ninety four megawatts worth $7.20 crores. In addition, we have been impaneled and won a contract from Kerala State Electricity Road for 84 megawatt rooftop solar project for domestic customers across all districts of Kerala in July. With this order of nearly INR 400 crores, our current order book for rooftop solar has gone above INR 1,000 crores. We also launched schemes in partnership with institutions like Bank of Baroda, HDFC Bank, Sidvi and Electronica Financing to provide easy, hassle free financing for residential and MSME customers. On the execution side, Tata Power Solar has successfully completed the installation of many projects, including the six megawatt carport project in Tata Motors, Chicagi plant in Pune, which is today's India's largest grid synchronized solar carport. This quarter, the generation from these assets have been improved significantly due to several preventive maintenance works carried out to resolve recurring issues. And as a result, we improved the availability of the plant of all the plants put together to 98.6% this quarter, the highest till date. Solar assets also operated at very high availability. However, generation was slightly impacted due to cyclonic activity in the region. Coming to our integrated CGPL and coal portfolio, international coal prices have touched new ten year highs recently. As a result, we have reduced the supply of power from the units to contain the losses. As the tariff life unwinds, generation can be increased in subsequent quarters to meet the yearly obligation. On the other hand, due to the increased coal prices, the profits from the coal companies have increased significantly, resulting in the net profit growing from INR 21 crores last year to INR 148 crores in this year. This was before the impact of Aptel order for change in law relief, which was awarded to CGPL in this quarter. We will do everything possible to contain the CGPL losses in the coming quarters. This quarter was also very important for us in Tata Power as we welcome customers and employees from the Northern Odisha distribution circle to the Tata Power family. On first April, Tata Power acquired 51% stake in TP Northern Odisha Distribution Limited and added 2,000,000 customers to reach a total customer base of 12,100,000 customers. As all of you are aware, Odisha was impacted by Cyclone Yash in the first quarter. Within a short time of taking over the Northern Circle, we were able to demonstrate that Tata Power, with its operational strength, was able to restore supplies to vital consumers like hospitals and oxygen plants in less than four hours and to other consumers within forty eight hours. Similar works were carried out in Central Lurissa, which was also impacted by the Cyclone Yaas. We were able to achieve this despite COVID related constraints through meticulous planning and large mobilization of people and materials. The efforts of the Orissa team has been applauded by various government agencies and the people over there, and once again highlighting the efficiencies and benefits of an experienced distribution player can bring in power supply distribution. However, you would see that the double blow of COVID and cyclone has affected significantly works towards the restoration of the network and has also impacted collection during this quarter. As a result of which, the AT and T losses in the four DISCOMs increased this quarter because for both April and May, there was virtual lockdown in Odisha. However, the technical losses have been brought very close to the trajectory under the vesting order for these discounts. The reduced collections are reflected in the higher receivable, which will be realized over the upcoming months, we are confident that all these four discourse will meet the ATM target much before the expected dates. As a result of the above business performance, the consolidated revenue for the first quarter stood at INR9831 crores compared to INR6671 crores during previous year, a 47% growth during this period. The increase was largely driven by the inclusion of Odisha DISCOMs operations and also because of the increase in revenue due to execution of large scale utility, EPC projects, rooftop and solar pump business. Capitalizing on the low interest regime, we prepaid INR 1,500 crores of 11.4% perpetual debt, which will reduce our overall interest outflow with the debt numbers having increased because the perpetual debt was classified as equity. With CapEx underway for our renewable projects, the net debt slightly increased to INR3898 crores. The selective prepayment of high cost debt has helped us to reduce the interest cost from 7.99% last year to 6.95% in this year. Going forward, this reduced interest cost will give us a competitive edge. Our net debt to equity stood at 1.757 compared to 1.81 last year. Net debt to underlying EBITDA has also come down to a healthy 4.1 times. Many of you often ask us about our intent in the transmission space. We witnessed a crowding of bidders leading to unviable pricing. As a result, we deferred our plans. We have now revisited the current conditions in the transmission space and feel that the industry has consolidated quite a bit and has space for a large player like us. We are partnering with our own group company, Tata Project, and will bid for good quality transmission projects going forward. We will factor this in our capital allocation plan for the next few years. Our EV charging business has also made remarkable progress with strategic tie ups with fuel retail outlets providing us access to important locations to our existing extensive network as we have reached more than 110 cities. The recent announcement by states like Gujarat and Maharashtra by providing various shops for EV purchases will also propel this segment, which is critical to sustain and nurture the EV environment. Our Tata Power two point zero vision focused on environmentally sustainable businesses and the transparency through our reporting framework has been appreciated by you and has also helped us to be recognized by reputed rating agencies like We take immense pride in topping the Crystal ESG score for power companies in India, scoring 67 out of 100 points. Such recognition boosts our confidence to march ahead with the future ESG goals. We are future ready for a cleaner tomorrow and aim to capitalize our opportunities across the hybrid renewable projects, floating solar and new technologies in battery storage. Lastly, we want to thank all our analysts and investors for their support in this Institutional Investors All Asia team pool. And with your support, we were able to secure top rankings in several categories, including the best IR program and ESG disclosure outside Mainland China. Once again, thank you for joining in this call. With this, I hand over back the call to Vikram for the question and answer session. Thank you. Thank you very much, sir. Ladies and gentlemen, we will now begin the question and answer session. We have a first question from the line of Sumit Kishore from Axis Capital. Please go ahead. Good evening, Doctor. Senha. Let me congratulate you upfront for a strong performance in Q1, particularly in the solar EPC business despite the second COVID wave. My first question is on the solar EPC business. For solar pump EPC, could you give us the revenue in Q1, a sense of the orders that you have in hand for solar pump EPC currently? And a status of the EESL tenders and how they are shaping up for execution this year? That will be my first part of the solar EPC question. So first on your you asked about solar pumps. Yes. The pending order, we have about INR 175 crores. INR 175 crores? INR 175 crores. INR 175 crores. Yes. Okay. Then what is the next question you ask? The and the status of the EASL tender. Right. The revenue in pumps is INR140 crores for the quarter. Then you asked about EAS agenda. Yes, I will update you on that. There is a court case going on in Delhi High Court by some of the bidders who were not selected. The hearing is expected to be on August 12, and ESL is confident of getting a positive order. Also as a backup, both MNRE and ESL are proposing to come up with another set of bids along with the state governments so as to meet the yearly target of three lakh pumps. So the ambitious program that Government of India has under Khusum, they want to go ahead and implement it. And they have alternate plans also to ensure that this year's target is met. Sure. My question on solar rooftop EPC is you mentioned that the current order book is now INR 10,000,000,000, if I heard you right, versus June number, which was around INR $7.20 crores. So basically, what is the execution time line for this $10,000,000,000 order backlog in Solar Rooftop? And what was the revenue in Q1? So depending upon the size of the orders, they can be executed from one month to six month period. So most of the orders are executed within that time line. So we expect that most of these orders will get executed within this financial year. Okay. And the revenue in Q1, sir? For Rooftop, EBITDA 147 crores. Okay. My second question on the EPC business is around margins, where we've seen weak margins in Q1, but we also understand that the safeguard duty saw a sunset in July. So given that nothing has been put to replace that SGD, do you think for the EPC business in the balance fiscal that will be a relief on margins? No. So you see the Sumitri margins are some of the older orders in which we had some module purchasing remaining, certainly there's been a hike in prices. And therefore, in some of the older orders, we've got a far less margin than the original plan. But in the subsequent orders and recent orders, since they are all benchmarked to the new level of pricing, it will get restored. So I think this quarter, we've seen an impact of some of the higher coal model I mean, higher model prices reflected in the margins. But this is not a this is probably a short term phenomenon. So making 5% profit margin in solar EPC business is something which is possible on a sustainable basis? Well, we won't quote numbers, but yes, healthy margins are still definitely sustainable. Okay. You mentioned that in your presentation that sorry, earlier in your BSD filing that PPSSL shall not be amalgamated with the parent anymore. So what is the progress now on CGPL amalgamation with the parent, expected time line there? And if you could give us a sense, qualitative color on your plans to monetize a state in renewable portfolio because now TPSSL will not be put inside the stand alone entity. So should we read that will be also bundled with your solar IPP business when you're looking at a monetization? So on the CGPL merger, the last bunch of hearings are in progress. We expect to close the NCLT proceedings very soon and thereafter wait for the order to come. Of course, before that order is executed, we may have to do whatever process is there in terms of regulatory as well as shareholder approvals depending on the order of the NCLG because there's a change in the scheme. So we may have to do some procedure before that. But otherwise, it's on track. And we are confident in the next couple of months, it will be wrapped up. Now as far as the TPSSL thing is concerned, we are working on plans on how best to structure the renewables business. And I think as soon as we have something really ready to share, we will do that. But work is in progress. Yes. Last bookkeeping question. You mentioned that your on your Orissa slide due to cyclone and COVID-nineteen lockdown, collection had reduced resulting in higher AT and T losses. What is the P and L impact and the balance sheet impact of this in Q1? Thank you. It's not a very significant impact because compared to the plans, totally it's about INR 20 crores of impact on that. Balance sheet? Well, I would say balance sheet, I'll give you the we'll send you separately the total of the four discounts. Basically reflects in higher debtors, right, because of the collection. Our P and D losses are pretty much on track, but the collection efficiency billing and collection efficiencies were due to COVID, it was lagging. So since we did very well on the other accounts, overall impact is about INR 20 crores, as I said. But on balance sheet, this means excess debtors. We'll give you that number. No, I'll take that separately. Very clear. Thank you and wish you all the best. About INR 1,000 crore of debtors are to be carried over to the next quarter. Got it. Thank you so much. Yes. Thank you. We have next question from the line of Swarni Maheshwari from Edelweiss Securities. Please go ahead. Yeah. Hi, sir. Good evening and thanks for the opportunity and congratulations for a good set of numbers. On this prepayment of the loan of 1,500 crores, sir, the perpetual debt, Just wanted to get some clarity over here. Was this planned or a very high rate of interest? So what was the nature of this exactly? No, this was a perpetual debenture with 11.5% coupon. So it was due now. So anyhow, we had to replace it, and we've just replaced it by loans. Okay, also had the reason why we took this opportunity was that as per the terms of the bond, we had to we had an option after ten years to prepay, and that's what we exercised. Fair enough. Fair enough. So sir, the impact of this, if I understand this right, is basically that this INR 1,500 crores was never a part of our total borrowings, and it was rather in the equity side. Now this INR 1,500 crores actually moved to our debt side. Is that right? Correct. From equity to debt, it has moved, actually. Okay. Okay. And hence, the sequential increase also Correct. Right. But it is in that sense, in terms of impact on P and L, is positive. Yes. Got it. Yes. Got it. Now you have you are planning to enter the Tata projects on the transmission side. So really excited for that. But what is the, you know, sense over here in terms of bidding? Are we looking for just intrastate projects right now? Are we open for intrastate projects also? So if you can give some color and some color over there. So all kinds. And probably if any stress projects are there, we might look at that also under construction. So the whole idea is to build a good portfolio and eventually to find an appropriate structure for that also. So all that is in the works. So right now, we are more we just we'll just get started. Of course, I have to tell you that we have a platform, as you know, a surgeon platform. We since Saraparro was not doing transmission in any case, we were we had undertaken some transmission stress projects, acquisitions through that. But this would be more focusing on greenfield to start with. And of course, we'll include any nature of project that we feel is creditworthy and within our risk parameters. Fair enough, sir. Clear to me. Thank you so much, All the best, and I'll get back into your more questions. Thank you. Thank you, sir. We have next question from the line of Murtaj Arsivalla from Kotak Securities. Securities. Please go ahead. Yes. Hi, sir. I just want to check, I mean, specifically in terms of CGPL, we saw very low sort of generation and availability. Presumably, that's because of the elevated coal prices. If we assume coal prices to stay where they are, how should we think of the balancing act between the CGPL losses and the profits normalized sort of margins from the coal business? If you could throw some color on that given where coal prices are currently? Okay. So the if I mean, just indicatively, I'm saying that if coal prices remain where they are, the gap between the two in terms of adjustment between loss and profit, that could marginally be higher because of the fact that things like the DMO applications, etcetera, come in at very high prices. So there will be a slight impact negatively, but it will be very slight. And secondly, what we are trying to address that particular issue is that we are trying to also adjust the level of generation and also the source of the coal and the timing of through the year, we will take advantage of price reductions at times during the year to offset that. So overall, it's not going to be a significant impact is what our target is. It's going to be a nominal impact whichever way the call goes. But just as a follow-up to that, what would be a minimum level of generation that you would have to commit to, let's say, in a year's time to keep that equation in order in terms of availability charges not being lost? So this is a slightly complex calculation. Briefly, I'll tell you the contract does provide for 80% as the minimum availability to charge the full fixed charges. But then you have to see that in light of the fact that whether the variable losses, which is the undirectory on the account of variable on a variable basis, how much is that related to the extra fixed charges that you collect. So as long as the prices remain high, there is no commercial benefit in producing more, right? So therefore, the level of generation was purely a factor of how what is the level of coal prices. And also, it's not that we are barred from producing lower. It's just that there are appropriate reduction in the fixed charges and penalties, which are there to go below certain levels. So the decision making is conflict based on all these factors, and then we see which is the one which gives us the best results. Yes. No, I understand. It's very dynamic depending on where coal prices are and how you think of it to the year. Yes, just wanted to get an indication of that. Fair enough. Thank you so much, sir. Yes. Thank you. We have next question from the line of Mohit Kumar from DAM Capital. Please go ahead. Yes. Hi. Good evening, sir, and congratulations on good set of numbers. Sir, one clarification, Did you say last conference call, you said that you update on the new monetization structure. I don't know whether you answered this question, but can you please update again? Are you talking about renewables? Yes. Yes, renewables and the clean portfolio, if you have something. Yes. So I think this question was asked, and I think our answer was, and it will remain the same, that we are in process of coming to what is the best possible approach to renewals in terms of structure. So the one decision which you know we have taken is to not to merge the EPC and manufacturing business of Telepath Solar into the standalone, which was the original plan. So I think in light of that decision, we are still working on it. And as soon as something tangible is worth sharing with all, we will be announcing it. So what's your expected time line, if I may ask? Well, ensure between now and around twelve to fifteen months, we will have time to think over this. Look, we are not today starved of capital. Please understand, we need to do the best thing which is possible for the company. And therefore, there is no time pressure on our end right now. But suffice to say that we are seriously working on it to find the best route. And at an appropriate time, we will do what probably is the best possible thing. Okay. Secondly, on the solar pump business, do you think a delay in EASL tender will have some impact on the kind of volumes you're building for FY 2022? And do you think this could be a sizable roughly around one lakh or 1.5 lakh volume going forward in FY twenty twenty three for us? So we shared with you that in the last quarter, we had a record execution of solar pumps. And we still have a pipeline of orders, which is which we need to execute in this quarter and the next quarter. We are expecting that within August, some decision will be taken, either the court case will get cleared or some alternate purchase mechanism because it's a target of even Government of India under Khusum to ensure that solarization of pumps takes place at a very rapid pace. And so to that extent, the government has assured us that within August, they will decide. And then we will have enough time during the year to complete all the orders that we have planned for this year and in subsequent years also. Sir, qualitatively, can you answer that does your solar margin profile is different in solar pumps compared to solar EPC business? Is it much higher? They are more or less in the same street, range, would say, give or take, half percent, 1%, but they are in the same range. Understood. Thank you, sir. All the best. Thank you. Thank you, sir. We have next question from the line of Deepika Mundra from JPMorgan. Please go ahead. Ma'am, I'm sorry, your voice is not clearly audible. Yes, please go ahead. Hello? Yes, please go ahead, ma'am. Hi, sir. Thank you for the opportunity. So firstly, on the asset monetization side, can you talk about some of the plans on the noncore asset monetization? How are they progressing? That's my first question. Secondly, on the privatization of discount, Jollad highlighted, I think, a bunch of opportunity potential. So I think Chandigarh is one bid which is in the press. Any comments on that and any comment on future opportunities, how soon they can come to fruition? So let me try to respond to the second question first. So on the distribution opportunities, the Chandigarh bid has been opened. We still have to see how the evaluation takes place and what gets decided. As far as the other opportunities are concerned, we are waiting for the Electricity Act amendment. And you have heard that the union power minister and also the finance minister in the budget speech has mentioned about opening up and delicensing the distribution. From our side, we are getting ready for this opportunity and we are scrutinizing various cities, various locations where we would like to go. It will definitely be a multi city plan and not just one city and different states that we will go. So we are getting ready with all our plans that as soon as the parliament approves the Electricity Act and also the regulations for that gets finalized, we will be going to numerous cities and provide the quality service that we have been providing in Delhi, Mumbai and Odisha. And the other one is on asset monetization. Yes. On the asset monetization, we continue to work on the assets in Zambia, Georgia and our coal assets. We continue to work on them. And of course, during because of COVID, there's been a lot of interruption. But we'll continue to work on it and hope to close it this year. Let's see. We are trying our best. Okay. And sir, if I can just follow-up on the Discom bid. Given the wide disparity in what the bids seem to be, are there any other evaluation criteria which are into play? And do you see competitive intensity picking up here as well with more players entering? Yes. There will be definitely more players, but there is that much many opportunities. So we have 28 states and nine union territories. The existing are about more than 70 utilities, state utilities who are working. So it's very natural that we will have more number of players coming in, but there's definitely space for Tata Power, especially our earlier experience and the domain knowledge that we have. So we feel very confident that in many cities, will be able to make an entry. And we will be ready for any sort of competition going forward. And on the criteria evaluation criteria, those are things which between their consultants and legal administration, they need to take a call on that. Okay, sir. Thank you so much. Thank you. We have next question from the line of Puneet Gulati from HSBC. Please go ahead. Yes. Thank you so much for the opportunity. You talked about distribution opportunity opening up post the Electricity Amendment Act. In your experience, what are the steps does the government need to do before the opportunity really opens up? See, the first is that it has to be approved by the Parliament. So once it is approved by the Parliament, each of the states will also have to adopt it. And once that is adopted by each of the states, they can go ahead. Also in the Electricity Act amendment, it is written that the rules and regulations for going through the process of the licensing and the service level agreements and conditions will be prepared by a forum of regulators and that will again get adopted by the state regulators for implementation. So the whole process, even after the approval of the parliament, will take about a year. But I think there's already a lot of groundwork which has been done. And the people are keen that they take it forward once the decision on this is taken. Okay. So even if a few states agree, would that be good enough to start the process? Or will everybody have to agree and then a forum of regulators come in place? Typically, in all the states, like any amendment that takes place in the concurrent listed issues, whichever states agree based on their individual timelines, it can go ahead. And others subsequently, it is not that the states will not be agreeing to it. It's just a question of timing. So it's not eitheror. It has to be done. But yes, some of the states may take a little longer period of time, but it will eventually get done. Okay, understood. And can you give us a more light on your EV business model? Now you have substantial number of home chargers, some 3,000 plus already installed. How does the revenue mechanism and profitability work out of those? So let me try to explain to you that in EV charging, there are three types of models or three business model. One is the home charger where the EV OEM asks us to go and set up the home chargers, which we go and provide whenever a person buys electric vehicles. So and that has is based on the revenue model whereby we get upfront money for providing that facility. The second is the public charges, in which you get the necessary approval either from the corporations or whoever is the owner of the land, in many cases, if it is petrol farms or banks or any other owner who is there of a public location, they will give you permission to put the and you go and put it on your own commercial risk basis. Based on utilization, you will get a revenue. And that depends on what sort of penetration of electric vehicle is taking place and what is the usage pattern for public charging. The third is fleet owners, bus depots and all, where again you are a service provider and you get paid and there are two models, you either get paid upfront or you get paid on a yearly annuity based structure, whereby there is a subscription model and you get paid on a monthly basis. So those are the three models that we typically are working on. Yes. But in terms of home charger, what kind of percentage of the electricity charge do you get paid? No, we don't get paid electricity charges. So it's a service charge for the service that we provide. And then there is also a subscription for the other services, customer related services in terms of the app that has been given and the update information that is provided to them. No. No. Is it possible to get some unit economics there? What kind of, you know, per charger revenue would you be generating from a home charger where the penetration is quite decent now? We should we'll be able to provide you with the details. It's a different rate. Different cities have different electricity rates for EV chargers, and then you have your own service charge for that. Understood. My last question is on the merger of CGPL. Would you still get the benefit for FY 'twenty one? And despite not including solar EPC, would you still be able to make use of the entire unabsorbed losses? So the petition remains the same, right, as it was originally. The only modification we are doing is that our solar piece is no more part of the merger scheme. So all the other benefits will remain the same. Okay. So even for the regulated business, you can get the benefit of lower taxation? Yes. At a corporate level, yes. We have next question from the line of Subhadeep Mitra from JM Financial. My first question is with regard to the EPC business. In your opinion, are you seeing clients progressively moving to procuring the modules on their own and giving out the EPC contracts ex of modules? Would you be seeing that happening, say, for the larger clients like ATTC, etcetera? No. In fact, large clients like NTPC only give EPC because they want end to end responsibility. And not only they give you the EPC, but also ask you to do the O and M for five years. So they are looking at a guaranteed good quality supplier and not trying to make save some money by procuring panels, which may not be of the quality that Tata Power with its experience will be able to provide. Understood. Secondly, given the higher targets that the government has come up with on the solar side and probably more visibility in terms of pipeline of tendering. Are you looking at upping your target, you know, capacity addition and the EPC target, you know, put together? I think you talked about about two gigawatt per annum. Could we be looking at upping that number now? So we are not looking at upping our number because, again, we are very cautious in terms of bidding and the type of tariff that we would bid and we would like to get the margin for. Secondly, we are also very particular what is the risk profile of the states in which we will be bidding. So we are definitely sticking to our existing target. And we feel very confident that with the type of numbers that the government is talking about and the plans in next ten years, we'll be able to meet our targets going forward. Understood. Lastly, on the EV charging business, would it be possible to share as to what is your overall investment that you're planning to have in this particular business segment, say, the next two, three years and any target revenue number? Sure. We should be and you can check our analyst presentation made last year. We have given a five year visibility. And if you have want some more details on that, please contact Rahul and Kasturi, and we'll happy to help you. That presentation is there also on our website. So your presentation is also there on the website. Perfect. Thank you, Thank you, Sauri. Thank you. We have next question from the line of Anupam Goswami from B and K Securities. Please go ahead. Hi, good evening, sir. Sir, you mentioned in your opening remarks about some transmission bidding that got crowded, and we are now looking for different sort of transmission bidding afterwards later with Tata projects. So what actually happened there? And And also, you mentioned about reallocating your CapEx plan. So what's going forward? What is our CapEx plans? And what is our target? Anupam, we what we were saying is that, although Tata Power is not new to transmission, you remember that we have done a large greenfield long back called Powerlink transmission. So after that, we've been doing Mumbai related transmission for quite some time. So while we were doing the we were in the area, but we were not wanting to get into the new greenfield build because of the fact that it was quite crowded in the last five to ten years in terms of new players coming in and outbidding each other. And as a result, lot of NPAs have happened in that sector. So we were always kicking away. A lot of consolidation and cleanup has happened. A lot of lessons have been learned. And we believe that there is still a lot of steam in the transmission sector and it's becoming a more level playing field. So that's why we've decided to come back and bid for greenfield projects. And the whole idea is to also take the expertise, as Doctor. Sina said, of startup projects with our sister company and they are the leading EPC player in the country today in T and D. And therefore, we wish to explore this. And for this, what we meant by capital reallocation is that ultimately, if the projects if we start winning, then in about twelve to eighteen months' time, really, the full fresh capital needs would come in. What I what we said was that we would be planning for that in our coming in the requirements of equity capital for that. That's what we meant by capital allocation. Okay. Okay. Because our earlier target was INR 15,000 crore CapEx in the next five years. So and the large chunk, if I remember, was in the Mumbai transmission and distribution. And for that, new transmission lines were supposed to come and up for bidding. So are we still interested in that, or are we going for some absolutely new greenfield transmission? This is this is absolutely new greenfield projects. Okay. So so we are in our target. That's what? Yeah. Correct. And okay. Okay. So my next question is on can you elaborate more on the actual order on CGPL and with the DMO regulation? And going forward, what would be our plan and strategy? On the actual order, this is in principle. This order is about what is called the principle of restitution, which means that you are due to a change in a law or a regulation or a policy decision of the government, the bidders or the operators as per the PPA have to be restituted at the same position. This principle has been supported by Supreme Court in various adjustments. So this Appel order is all about restoring the change in law related claims that were there on several accounts, which the Aptel has upheld. And of course, there would be probably an appeal to the Supreme Court, etcetera, which is likely to happen. But basically, we are talking about that. The second question, which you asked is about the DMO obligation. So we haven't seen the impact this quarter because it depends on when they cross the 25% limit for domestic when they reach the domestic obligation, so the timing probably will happen during the year. So the strictly that notification of DMO today is not rescinded. Now whether they actually enforce it is something which we will have to watch out, but strictly it has not been taken away, so we are assuming it continues. The Sir, I'm sorry to interrupt, but you'd like to come back in the question queue. Sure. You. Ladies and gentlemen, in the interest of time and fairness to all participants, please keep your questions to per participant. If you still have more questions, please join the queue afresh. We have next question from the line of Gopal Navandar from SBI Life Insurance. Please go ahead. Hi, sir. Thanks a lot for the opportunity. Sir, two questions from my side. One is that this delay in the monetization of the renewal assets And, you know, last entire year, we have been every quarter, we have been acting upon monetization of these and, you know, handling the balance sheet. And even in the q one when that deal with the deal got, you know, scrapped, we still have been a very short and between a very short term, we'll come up with some new structure, which will be more beneficial for shareholder. And now we are saying that we have fifteen to eighteen months to decide on the structure and all. So what exactly has happened and why we are dealing with? So Gopal, first of all, it is not correct to say that we are just delaying it or is damaging the balance sheet. It is incorrect because the reason why we relooked at Invit is because all the other plans that were there last year, successfully made. So therefore, our balance sheet I mean, you should appreciate that our balance sheet today, by any stage of imagination, whether you take debt to equity or debt to EBITDA, is as good as it can be for an infrastructure company like ours. So the point was that having got it done even in a difficult year like last year, we felt that we should not hurry up and not deliver for our shareholders the value probably the renewable business can deliver. So first of all, we have attained our target of balance sheet ratios. Now the challenge is to achieve growth without increasing leverage greatly. So for that, it doesn't mean that we are on overtime to secure additional capital, etcetera. We have time in our hand. We have this entire FY 2022 plan has already been made. We are last year, we delivered INR 5,400 crores of cash flows before CapEx, and this year is going to only increase over that. So we have good accruals to support our current plan. So we are under no pressure. However, when I mentioned the time line, I did say zero to eighteen months, which could be happening sooner also. But what you are what I wanted to emphasize is we are not in a tearing hurry that has to happen tomorrow. We want to do the right thing. So I think that we are in good shape, and we are on track. And as soon as something really concretely happens, we are working on that very, very assiduously. So as soon as something happens, we will definitely share with you. So I think there is no damage happening or there's no serious problem happening by not taking that decision yesterday. Got you. Yes, that was helpful. Second is on this renegotiation on the PGP and PPA. What is the status on that? So currently, last kind of proposal, if you remember the HPC there was an HPC committee report, which was acceptable to us. But subsequently, there were a lot of developments in Gujarat regarding the cases relating to the other two operators. And in that process, a lot of modifications were made to the original HPC recommendations, which are not acceptable to us. We have conveyed that to the procurers, and we feel that, that is not going to help us. So we will have to because that doesn't really solve the problem for which really we went to the procurers for. So as of now, it's a standstill, and we are trying to contain the CGPA losses as much as we can. And only when there is a solution worth considering that we would really take it up. Okay. And just lastly on this coal side, prices change in the HVA has been more than what we are realizing. What is the gap since you are saying there is no DMO which was there in this Q1? And at what price DMO gets applicable? $70 $70 But there is additional condition there that it has to meet the domestic requirements, okay? So therefore, the whole idea is that the domestic offtake should not suffer from a huge market upswipes I mean, increase in prices. But if the domestic offtake is not there due to any reason, they will not have another issue. So that all depends on what is the domestic demand and whether we are able to supply to that demand. And this gap, like the delta change in the HVA is almost $10 whereas our realization has just moved by $6 Yeah. But the realization, remember that it is at a much higher Sorry? Fixed sales The realization increase is also on a larger quantity. And two things, since you asked that question, the increase in cost in CGPL is a factor of also the carry of the stocks, whereas the increase in the realization is real time sales locked by the coal mines. So there is normally a lag, which we notice, okay? Broadly, meet. That is why our PAT at the there is a chart, I think we always show that the CGPL plus coal companies. So you will see the strength. They are no longer more or less they kind of match the delta in the long run. Sure. Thank you very much. Thank you. You. We have next question from the line of Bhavin Vitlani from SBI Mutual Fund. Please go ahead. Thank you for the opportunity. If you could help us on funding of the renewable capital expenditure, INR 11,000 crores of debt, what is the proportion of debt that is repayable each year or you could refinance? And with a INR 2,100 crores EBITDA, what is the kind of capital expenditure or addition that we could finance from the existing balance sheet of the renewable SPVs? Bavin, if you don't mind, I'll ask Rahul to give you those numbers. Sure. No problem. The second thing is we've seen a considerable increase in the debt, INR 2,000 crores of debt from the solar EPC business. I mean, if you could help us understand the reason for it and when do we see this normalization? Well, this quarter has been a very high activity quarter. And as a result, the end of the quarter, they were sitting with receivables. But this will get liquidated in the next three to six months as is the normal trend. So this is just the higher the activity there in that quarter end, you normally see a high, I mean, increase in debtors, but it will come down in the next two quarters. Generally, three to six months, most of the EPC receivables get liquidated. Understood. Just last question. If you could give us an update on the FGDs, I mean, is the status of the FGD installation? And we have seen an increase in the regulated equity for methane. Is it related to the FGD commissioning? Sorry, please. I don't think FGD has any impact on MPL because the work is still going on. And as per the latest guidelines from MOES, most of these have to be completed by December 24. So we are on track. Orders have been placed in all the locations, and we expect to complete it well before the time line that has been set by MOES. Only Jojoberaj and Shethpur is required to be done by December '2, and that also work is under progress. So all orders which are required for FGD has been placed, and we will complete it well within the time lines. We had a very small equity requirement for FY 'twenty two for this because most of it advanced only the minimum advances we pay. Really speaking, FY 'twenty two, there's not much. It's really coming up in 'twenty three and 'twenty four. Okay. So sorry, just what is the reason for increase in the regulated equity from INR $14.40 crores to INR $16.50 crores in Mythan? Oh, that's the railway. The railway commissioning, which was done, has resulted in that increase in equity. This is in my sense. Okay. Yes. Thank you so much for taking my question. Thank you. Thank you. We have next question from the line of Abini Danand from MKMobil. Please go ahead. Sir, please go ahead. My first question is on CGPL. So if you see ex of capital orders, which have impacted both your revenues and other income, what could have been the loss at CGPL? If you remove that, it will be about INR 150 odd crores. Loss, right? Yes. Okay. And second is we heard some of the EPC guys in solar saying that Chinese module players have been resonating contracts because of the fact that module prices on a Y o Y basis increased by more than 30%, 40%. What has been our experience on that, I think we have had decent relationships. Yes, there is a price increase, and some of the price increases was what has led to some erosion in the some of the older contracts. But I think we are getting into good terms with them for the ongoing and the future contracts. So there's been some minor issues, but I don't think this is so serious that we have a big problem at hand. And majority of our contracts would be from these Chinese only, right? Yes. Majority would be Chinese. Okay. Thank you, sir. Thanks. Thank you. We have next question from the line of Sumit Kishore from Axis Capital. Please go ahead. Thanks for the opportunity again. In case of CGPL, we noticed that the interest and finance cost is lower year on year by about 1,070,000,000.00. The debt repayment actually happened in a major way in second half of the fiscal in TGPL, if I recollect. So would you say that for the full year, given the first quarter itself has seen a billion reduction in interest, for the full year, this run rate should be maintained? Or was there something exceptional out here? Yes. I think this will repeat. So if you're looking at the impact cost savings year on year of over INR400 crores? Slightly less, I would say. This is we can check whether there is a ForEx element in this. So this may continue. This benefit compared to last year will be maxed for two quarters because the as you rightly said, the reduction happened in the second half. So the second half may not see the same savings. Yes, exactly. Okay. Okay. Correct. But the impact of refinancing the cost of debt lower, that may still reflect in third quarter and fourth quarter? Yes. Yes. My second question is on the Trumbay PPA, which is expiring most units by FY twenty twenty five. I mean, your sense on because I mean obviously those PPAs will not get extended for the plants which are more than 25 years old. So would you confirm that those plants would be shut down? How much land will get freed up? And what is your thought process on land utilization? So let me try to put this as two separate questions. The first is that while the PPA is there till March 24, because of the incident that happened last year on December, there is a thinking in the government and which is backed by a report from CA and expert committees that there should be a large embedded generation in Mumbai to take care of such type of transient conditions and to bring more robustness and surety in the supply to Mumbai. So that's and that's the reason that we are now looking at having a PPA to be extended for a few more years, till alternate arrangement is made of ensuring or enhancing the embedded generation in Mumbai. The second is about the land and other things. That will only happen once we take a call what is to be done. So right now, Maharashtra government and MERC and BEST, which is one of the buyers of this power, apart from Tata Power Distribution, has to take a call based on the guidance from the government and the regulator. Okay. However, it may boost our power ESG credentials to shut down a plant which is over 25 years old. Second question third question is This plant has FGB set up way back in 1990. So this is one of the cleanest plant, and that's why the it has been allowed to function over here. Secondly, it uses very good quality environment coal. So it has only ash less than 10%, while the normal Indian coal has 40% ash. So it uses very, very efficient equipments. It uses coal, which has the least pollution and it has FGD and all. So to that extent, it is not that it is enhancing or increasing the coal footprint of Tata Power, it is just maintaining what it is. We are also exploring as a part of the government initiative that if we can put a gas based plant in Prominent, which will take care of the embedded requirement. And at that stage, possibly the Unit 5, which has completed more than twenty five years, can be decommissioned. And then last question on what is your plan to enhance your solar module cell manufacturing capacity? And in light of the announcements at the RIL AGM, what opportunities do you see to work as an EPC contractor for RIL or any tie ups that are being explored? So let me tell you that Tata Power set up manufacturing for cells and modules way back in 1991, not only in India, but globally, no one was thinking about it. Last year, we enhanced the capacity. We doubled the capacity of cell and module from two fifty megawatts to 500 megawatts each. We do have plans that we will enhance the capacity of the existing sell in module further depending upon the market conditions. Government has come up the state governments have come up with capital subsidy plan. Government of India has come with a PLI plan. And we are in active discussion with them to examine and see that how best we can avail those benefits and how this will become cost competitive and there'll be enough demand for this. So this is very much under discussion, under work. And we will again do things which are right for the company and right for the country. Sure. Thank you and wish you all the best. Thank you, sir. We have next question from the line of Mohit Kumar from DAM Capital. Please go ahead. Yes, sir. Thanks for the opportunity once again. Sir, is there any plan to increase the solar manufacturing capacity given that all our competitors are announcing a sizable instance, first solar announced three gigawatt and the Reliance Power is doing a very large capacity. Do you have some plan to increase our capacity? That's the first question. Secondly, does the PLI, tell the PLI, PLI, you think is worth changing for us? I just now responded to these questions that these are definitely plans and we are looking at PLIs. So this is already answered. If there's anything more than that, you may please ask. Okay, sir. Going back to the renewable assets, we have 2.6 gigawatt operation, 1.4 gigawatt, if you know the pipeline. I assume that most of these will get commissioned in next twelve to eighteen months. Sir, is there any there medium term target we are looking at in the by the time we do some kind of monetization? In a sense organic and inorganic, are you looking at inorganic opportunity also? No. We are looking at all kinds of growth opportunity. But let me say that it is not just for monetization. It is part of our strategy. Monetization is also a parallel strategy which we are having in mind. But really speaking, for us, the growth is anyway a target. And therefore, there's no specific target only to tell the monetization stage. So we've put it out to you already that a minimum of two gigawatt is what we are trying to achieve in a year. And that target will remain in respect of monetization. The last one is perpetual debt, which you have replaced. So what is the impact in terms of cash flow? What was the original coupon we are paying on a perpetual debt versus the amount we are paying on the debt we have taken to replace this perpetual instrument? So 11.5% is the coupon. And the replacement, there's a one to one replacement, let's understand. We have a basket of debt going currently. Our average debt profile is less than 7%. So therefore, I mean, what number you have to assign within that is a choice. Understood, sir. Thank you, Thank you and all the best. Thank you. You. You. We have next question from the line of Puneet Gulati from HSBC. Please go ahead. Yes. Thanks for the opportunity. Just as a follow-up, is there any update from Indonesia on the mining renewal? The update is that the process is right now, I think there's a lot of deliberations going on with the industry. We've settled it in terms of the key changes that the government wanted. There are couple of things which the government wants to fine tune, and that I think is more of parliamentary procedures, etcetera. So we hope that in the next couple of months, the license renewal clarity would be there in terms of date. But what is important to note is one license of a similar nature, slightly different, of course, in size, etcetera, has already been done. So we expect a similar course of action. Any adverse impact on royalties or any other taxation that you see for this similar license? Yes. So there are multiple, let's say, changes. Royalties change, corporate taxes change, there is a new VAT, but on the other hand, there is some VAT refund procedure. So it is a whole bunch of changes, including land as the total area to be mined. So changes, but I think net net is not going to be a major shift from what we have. They're just trying to make it more disciplined. Okay, understood. That's very helpful. Thank you so much. Thank you. Thank you. We have next question from the line of Dhruv from HDFC AMC. Sir, one thing which I noticed on your debt profile, if you see the cash balance has increased significantly. I believe part of that is because of the UDSA, which I understand from the annual report, but still it seems quite high. Is there I mean, is it temporary? Or is there something else here? No, it's temporary because, in fact, in this month itself, about INR 2,500 crores is already nearly INR 3,000 crores is already reduced from the cash balance because this was the money lying from the various profits and proceeds outside of India in our SPVs. So that has come back. So that's now done. Further, I think June, of course, we had some large collections, a bunch of large collections which were there, which we have sparked for repayments, etcetera, that is also getting used. I think apart from that, we're restarting, I think mostly it will be back to business normal by end of next quarter. Got you. And sir, the second thing was the DTA that we have provided for because of the math change, about I think INR200 odd crores in your notes. So is that sort of pass through in your because I believe that's coming in the stand alone. So will it be a pass through in your tariffs? Or does it have a bad impact? I mean do you get it as a pass through in your Okay. Regulatory Two things in the regulatory business as we get it. No. So it will not be absorbed, but it will also get reversed in the next quarters. Okay. And there is no effect on the consolidated profit. So these are the three inputs we want to give you. Okay. So this I mean, should I was wondering, should I adjust for this 01/1985 or should I not? I think you should not count this January for your purposes. There's no conflict with this quarter, Raj. Okay. So I I mean, I should not worry about this one eighty five. I should not add it back to the PAC number to to the adjusted PAC? Yes. Okay. Okay. So basically, this is not impacting the PAC numbers that way. Got it. No. Sure. Thank you so much. Thank you. Thank you. Ladies and gentlemen, due to time constraint, we are taking the last question from the line of Surnee Maheshwari from Edelweiss Securities. Yes. Lost you. Ladies and gentlemen, that was the last question. I now hand the conference over to Doctor. Sina for closing comments. Over to you, sir. Thank you. Thank you very much to all the analysts who were there on the call, and thank you, Vikram, for arranging the call. And we look forward to catching up if you have any other questions. Thank you. And take care. Thank you very much, sir. Ladies and gentlemen, on behalf of Tata Power, that concludes this conference call. Thank you for joining with us, and you may now disconnect your lines. Thank you. Thank you, sir.