Q2 20/21

Nov 10, 2020

Good evening, everyone, and welcome to the earnings call of Tata Power for quarter two FY 'twenty one. With me on the call is my colleague, CFO, Ramesh Subramaniam, Financial Controller Ananda Agrawal and the Chief of Investor Relations, Mr. Sondarajan Kasturi. Quarter two has been an eventful quarter for Tata Power with a robust operational performance across all businesses and significant deleveraging through a number of measures that we had laid out in our long term strategy. Despite COVID-nineteen, the company has achieved very good progress in this quarter. We have seen a sharp recovery in demand with sales in our distribution circles picking up almost 35% compared to quarter one, though it's little below than the previous year. Collections in the distribution business has been has improved, though it was severely impacted in the quarter one, and we expect that it will become much better going forward. Our overdues from state discounts have also come down in the last two quarters. All our thermal assets have run on higher availability. CGPL under recovery reduced sharply with the falling coal prices, better coal sourcing and logistic management. The fuel FOB under recovery has reduced from PHP52 in quarter two FY twenty twenty to PHP46 in quarter one FY 2021 to PHP30 in this quarter. With the fall in FOB prices led to reduced profits in the coal companies, on a combined basis, CGPL and coal related businesses generated a combined profit of 39 crores without one offs. We now have two back to back quarters of profit in this cluster. With the planned debt reduction in CGPL and the merger with Tata Power, CGPL issues are now fully contained and it is likely to become self sustainable in future. We continue to improve our ability across the renewable assets with the company taking over the operational control of certain wind sites and certain preemptive maintenance activities carried out through RCM. However, in the last two quarters, we saw very good very low wind speeds across India due to weather patterns, which led to significant reduction in generation. The pickup in the economic activities as lockdown restrictions have been relaxed have helped in our EPC businesses returning to normalcy. Tata Power Solar's total revenue jumped from INR405 crores in quarter one to INR1014 crores in quarter two. Solar EPC business continues its rapid growth with orders received in Q2 of INR $15.56 crores for three forty seven megawatt of solar projects, taking the total order book to almost crores as of end September, with nearly 2.2 gigawatt of large projects in pipeline. The delays in project execution during the last quarter will be made good in subsequent quarters as we are seeing increased site activities. The current order book is likely to be executed over next twelve to eighteen months. Similarly, Tata projects turned to profit of INR 41 crore this quarter compared to a loss of INR 35 crore in the last quarter. With all these improvements, we have clocked a 10% growth in reported PAT to INR371 crores compared to reported PAT of crores last year. The company has now reported an increase in profit on year on year basis for the last four quarters, and this is the second consecutive quarter of PAT increase of 10%. The consolidated revenue stood at crores compared to INR7329 crores in the previous year, mainly driven by higher generation in conventional assets, PPCODL acquisition and solar EPC business, which of course has been partially offset by lower wind generation. The consolidated EBITDA in this quarter was INR2276 crore, up by 7% compared to last year, mainly driven by lower under recovery in CGPL and higher solar EPC business offset by lower wind generation. The lower coal prices affected the profit of coal JVs in this quarter, but due to improved business in Tata projects and Praia Garage, the underlying business EBITDA is 7% higher at INR2472 crore this quarter. During this quarter, the company won bids of three forty seven megawatt of solar projects. With this, the company's renewable project development pipeline moves to twelve thirty seven megawatts. With further three seventy megawatts of solar project awaiting letter of award, the total renewable portfolio of the company will grow to 4.4 gigawatts when all these projects gets implemented. Moving on to the balance sheet and the progress on deleveraging. We have seen a meaningful reduction in the debt with the receipt of balance ship sale consideration and completion of differential equity issuance. This helped us to reduce the net debt from INR 43,578 crores as on thirty first March to Rs. 36,840 crores by the end of this quarter. Our debt to equity ratio has sharply reduced to 1.52 from 1.81 times in previous quarter. Similarly, debt to underlying EBITDA has improved to 4.01 times by September. This significant improvement in debt metrics achieved over last few quarters has helped the company to secure an upgrade in its credit rating from CRISIL upgrading the long term rating to AA stable and Ikra changing the outlook to positive on its rating of AA negative. The improving credit rating and the reduction of debt will assist the company in reducing the interest cost and optimizing its finance cost. We are also happy to inform the completion of the defense sale transaction at INR1076 crores and Tata Power has received cash of INR539 crores net of the debt of SCD. Besides reducing the debt of the company, this sale also addresses many investors' concerns on Tata Power's indirect involvement in defense related business, and therefore, we expect positive impact on Tata Power's overall ESG ratings. Work on setting up of an in Vit for renewable assets has progressed very well with the nonbinding term sheet now signed and due diligence underway. The progress has been as per the plan, and we are expecting to complete the restructuring in next two, three months. We'll share the terms once the binding agreements are in place. The various pieces of our strategy to strengthen the balance sheet is shaping up as planned, and we are very confident of achieving the INR25000 crore net debt target at the end of this financial year. While we work on reduction of debt through divestment and restructuring, the focus on generating strong cash flows and recalibrating CapEx in line with the cash position will help us to achieve sustainable ratios. Our discussions on the revised GRC framework for compensatory tariff for Mundra is continuing. However, with the significant fall in coal prices, which have resulted in CGPL and coal businesses reporting profit, CGPL is likely to become sustainable on its own cash flow. We foresee coal prices to remain low in the future, which will make the compensatory tariff maybe less relevant in overall context. In the recent businesses taken over, both Priyagrad and Sesu have good quarters. In fact, in Prahagaraj, we continued to see very strong operational performance, achieving a 76% availability in this quarter. PPGCL also recovered significant part of its receivables under the COVID-nineteen package of Ministry of Power, Government of India, which was received by the state. Along with the share of PPGCL's profit, Tata Power is also providing O and M services, which is paid separately. We have now completed a full quarter since taking over Sesu through TPCODL, and we have seen significant improvements in the operational and financial parameters. Despite COVID-nineteen related challenges, we have achieved the parameters that we originally planned. We have been able to reduce the provisional billing by almost half and improve our collection efficiency from around 85% in June to almost 99% in the last quarter. We are confident of the turnaround of this business as per our plan in the next twelve to fifteen months. The growth in our consumer oriented businesses continues to be promising, and we continue to build partnerships for the future. For EV charging, the geographical presence of our EV charging network has been enhanced from 19 to 23 cities, and two zero three public charging points have been installed. Tata Motors has recently issued a letter of intent to Tata Power for development of EV charging ecosystem required for deployment of 300 e buses in Mumbai. We have also entered into agreement with MG Motor for setting up public charging infrastructure at their dealer places. Similar agreement has also been signed with JLR. Similarly, we have received LOA for almost 5,000 solar pumps during the quarter. And we have also been awarded a 6.2 megawatt order for the largest carport from Tata Motors. Our rooftop business presence has now expanded to more than 100 cities, and we have 27 market share as per the latest Melcom report. Our microgrid installations continue to rise with a pipeline of more than 130 installations and we have been able to reach to nearly 800 customers across 190 villages as of end September. Agreements have been signed with partners to provide efficient electrical appliances and also along with Grassroots Energy to explore electricity generation through biomass and biogas technologies. We continue the company continues to make considerable progress towards its long term strategy and appropriate actions have been set in motion to address challenges of individual businesses so that the company can deliver an overall value to its shareholders and investors. We are excited about this journey and are grateful for the support and patience shown by all of you in this journey. I now hand over the call to Raymond for question and answers. Thank you very much. We will now begin the question and answer session. The first question is from the line of Mohit Kumar from DAM Capital. Congratulations on good set of numbers. So my first question is, sir, I do understand that you're not able to share the, you know, the the evaluation of InVit. So, sir, can you broaden the standing of the time line? And are we confident that we'll be able to know the close the deal by March 21, including the entire transfer of the new asset to Invict? Yes. I think by before the end of the year, definitely, we are we are confident it will be it will get done. In fact, we are trying earlier, but definitely before the financial year we'll we'll we'll be completing this. What about the binding term sheet and any kind of idea on the leverage you are expecting in the Inuit? Well, as you know, the the unlisted invoice don't have any particular leverage. This will go by finally what the rating agencies and banks agree upon finally when they give out the ratings. And normally, has to form the invoice to get the final rating and the sanctions. So therefore, you can be I think the the the the rough ballpark is that the traditional debt equity ratios cannot be applied to an in wait situation. They are lower. Now how much lower would finally depend on what the rating agencies and the banks agree upon to give a optimal rating as well as a good lending terms. So that's that's a broad indication we can give you. And you know that in the listed in which segment the SEB's starting debt is 49%. So in unlisted, there is no such limit. So it will be definitely not constrained. Okay. So secondly, on this quarter, we have seen a sharp turnaround in CSU and there is some higher profit in this TERPL. Is there some kind of one off in both the entities? Sorry. Can you repeat? You you talked about Sesu? Sesu and ERPL, the shipping company. Oh, sorry. Shipping company. Shipping company and Sesu. Both the q o q and y y number, q o q numbers are, you know, slightly off. So I just figured, is there something one off there? So shipping company is only because of the tariff or because it is also linked to the CRCs escalation indices. So when the indices are favorable, they they make higher profits. When they eventually catch up, they match the market rates. So it's it's what we call the corollary is that when the shipping company charges high, the CGPL pays them higher freight. So for us, in a consolidated manner, it doesn't matter because the earnings of the shipping company is the cost of CGPL. Right? So individually, it doesn't matter. But but to your question that why is it different, that's because it is influenced by the CRC indices. And the other question was on Yeah. Tesu. Yeah. Tesu few days sharp improvement. Yeah. Yeah. So one that is more because of the application of the relevant accounting standards in such acquisitions, where the accounting standards require you to follow a certain process and which has been adopted here. So last quarter, it was not adopted. So as a result, the last quarter's reported loss was reversed in this quarter. As a result, you are seeing that increase. But actually, this doesn't belong to this quarter. What would be adjusted number, if I may ask? Adjusted number would be INR 2 crores. Understood, sir. Thank you, sir. Thank you. Best of luck. Yes. Thank you. Thank you. The next question is from the line of Motuza Arciwala from Kotak Securities. Please go ahead. Yes. I have two questions from my side. One, on the consolidated on the balance sheet, we see the capital work in progress increasing. Would that be largely attributable to renewable assets? Or if you could give some color in the last six months? And second is while I understand that the low under recovery mix, you know, the less dependent on the commentary tariff. Could you give some color on where the commentary tariff is sort of progressing? Because, you know, in in Hong Kong, it's still a risk mitigating sort of measure. So where are we, you know, in terms of signing the comments to tariffs? So to your first question, the answer, Musa. Right? So Yeah. First question is that the no. So you you you asked first about The the capital working progress. The the. Is largely renewable. Okay. Yep. And some we have some transmission projects in the regulated businesses which is going on. So both are the ones, and they are likely to get converted in the next twelve months before next twelve months. So that was one. The second is on the compensatory, where are we? So as Mr. Sina outlined in his initial remarks, we are while we are in discussions with the government, clearly, that progress has to be made. There are differences in the initial conditions and the subsequent conditions that have been put. So we are in discussions with them. But I think we are coming more and more to a conclusion that if the long term outlook on coal is there is not likely to firm up very soon. So really speaking for us, this is becoming less relevant. And what we have done is keeping that in view, we've actually kind of already sized the debt down. And by the end of the year or let's say in coming months, we might see CGPL debt to go down to as low as INR 4,000 crores, which will mean that it will become self sustaining in any case. And as you know, there is a hedge which operates as a result of which, if the coal prices were to go up anyhow, we do have a hedge in the coal companies. So our overall plan has been always agnostic of any solution that is coming out of compensated salary. Okay. Thank you so much, sir. Thank you. Thank you. The next question is from the line of Puneet Kulati from HSBC. Please go ahead. Yeah. Thank you so much, sir. So just continuing on this Mister Sorry. We are not able to hear. Mister Puneet Gulati, we can't hear you. Hello? Can you hear me? Yes, sir. We can hear you now. Please go ahead. Okay. So on the compensatory tariff, is it fair to assume that you are not pursuing the issue with as much bigger as you would have been earlier? I think you are putting words. We are our view is that if they come on our terms, it could have been a different issue. But right now, there is there is no such traction. So, also, you know, for us, see, we can't be running the business on the on on certain things that's going our way. So we are planning completely to to make this business run on its own, and that's the steps. Those those are the steps we're already taking. Okay. Great. My second question is in your stand alone balance sheet, there is a 17,300 crore of debt, which has significantly come down. Out of this, how much would relate to the regulated business? So about 6,000. Okay. 6,000 would be regulated, and the balance 11,000 odd is unregulated, is it? For the other investments? Yeah. All the other investments. And the rest of the noncore asset sale plus the dilution in the renewables business, all this will cut it down to a much, much lower level, which is reflecting more closer to finally something above the regulated debt, which will be there. Okay. Okay. Great. And on the SCD sale, will there be any capital gains tax implication? No. And to what extent? No. No. No. Okay. That's good. That's all from my side. Thank you so much. Thank you. Thank you. The next question is from the line of Swarmin Maheshwari from Edelweiss. Please go ahead. Yes. Hello, sir. Thanks for the opportunity and congratulations for a good set of numbers. Sir, three questions. Firstly, I mean, did mention that you guys are expecting the lower the coal prices to be on the at the lower side on the for the future reference. Now my first question is with respect to that. Do you think that it then really makes sense to, you know, look at the coal mines? Because, you know, for for CGPL, coal can be really outsourced from somewhere else also. So is there any thought process that we will be actually looking to sell our coal mines also at some point in time? So right now, our first focus is to get the license renewal in KPC, as you know. The good news is that in Arushmil, which was the other mine which we sold and we have not closed the transaction because we have not got the full money, There, the license extension has come through. So once the license extension comes through, we will have to look at all these options. And, you know, at the end of the day, everything will depend at what value and and, what is the response we get. All right. Sir, secondly, on the divestment side, now we have actually realized fair bit of divestment proceeds from our noncore investments. If you can just actually share what is now pending to be realized in in q three and q four from the noncore investments. So right now, we are pursuing in our list of assets, the Georgia investment and the which is a hydro investment and the Zambian hydro investment. And lastly, defined as noncore, we have Tata projects. So and and there is a smaller gold mine, which is ESSR. So all these four assets are there, which in the coming quarters and months, and we will continue to pursue. That's that's that's pretty much where we are. This sale of the the proceeds from the different business, this has been realized in q three. So the impact on the balance sheet, that will be reflected in q three? I you know, while while we are trying everything, I must say that because of COVID and because of the sentiments in the market on the assets which we are out in the market, both in Africa as well as in Indonesia, I don't think that we can expect a closure in Q3. But certainly, we are trying to do it in the the quarter thereafter. Because the process is on, by the way. We are not letting up the process, but it the traction is something which we have to keep a close watch on. But we are confident of getting it through sooner than later. Okay. But I must tell you, in addition, that our target for net debt, we will we will meet nevertheless. Even if we are delayed on these, because these are not very high ticket items. These are not going to move the needle. Our broader target of going under 25,000 is on track. Right. Right. Right. And, sir, did we receive anything from Arteman this quarter? Yes. We did. I'll give you that number separately while we discuss. I just asked him to review. How much? Yeah. And maybe if you can also give the pending amount, the last time So thirty thirty three sorry. How much? 33 crores. So it says about 6,000,000. Oh, 5,000,000. 6,000,000. Okay. So the pending amount from Artham and Nava would be about $160,000,000. Yeah. Correct. Okay. Sir, finally, one last question. What will be the captive order book in our solar EPC? Would it be about 50 odd percent? Captive. Captive. What is the balance of per year? So about half is captive. Right, sir. Perfect. Thank you so much, sir, and wish you all the very best. Thank you. Thank you. The next question is from the line of Anupam Goswami from BNK Securities. Yes. Hi, sir. So my first question on the stake sale of premium based to the Invesque platform. From a point of consideration point of view, how much premium also can we look at? And the next question is on, sir, if the as you said, the coal prices you foresee as subdued prices on a net to net effect taking CVCL as well as the coal SUV, where do we see our profit in those two segments going forward? Okay. To your first question on the premium on the sale of renewable assets, I'm afraid we can't share with you right now because the transaction is still in process. So as and when the final value will be available, we will be informing formally. But you know the market, so you are in a good position to assess that. But and your other question on net net on CGPL and coal. So once we complete our debt restructuring of CGPL, then we expect that together, these two assets will be a slight positive, and they will continue to be so regardless of the coal price because one or the other will take the benefit of the movement in coal prices. That is the whole objective of ensuring that we don't put any more equity or support into the combined assets. Okay. So just to as you mentioned that the consideration and transaction taking place and can't disclose, Just what what is the benchmark that you that is being decided on, you know, taking on a premium on this? What kind of parameters that, you know, looked at? So, Anupam, I think you are in this business. You know the standard parameters are in these kind of businesses and EV to EBITDA or or price to book or DCF or a combination of all these things. This is the standard valuation, and we follow the same methodology or even the investors follow the same methodology. So the only limited point is we can't guide you with the number because we are in transaction mode. So we can't disclose that number. But you can see the latest deals that are happening in the market, and I'm sure that you'll be able to get to a ballpark. Right. Right. I'm getting there. And, sir, last question on the when can we expect the restructuring as in the merger of CPPL to the stand alone as well as Tata Power Solar? So both these are now the merger proposals are in NCLT, and hearings have begun. And we expect, you know, of course, it's difficult to to say that on behalf of NCLT, but I think next three to six months should be a reasonable time period by which these things will be over because in between, we do have processes of creditors meeting or shareholders meeting, etcetera. So that process has to be followed up. Sir. And then We will expect to get it done before the year end. Okay. Thank you, sir. I'll definitely take it. Thank you. The next question is from the line of Anikit Mittal from Motilal Oswal. Please go ahead. Yes. Thank you for the opportunity. So firstly, I think we we want sort of put this on the renewable front itself. So, yeah, just trying to understand what would be the overall CapEx that we're expecting for FY twenty one and for FY twenty two, particularly on the renewable front? So we have currently about six fifty megawatt of assets under construction. And, typically, that would be about close to 3,000 to 3,500 crores. We will be spending probably more than half of it or or or majority of that CapEx will be over in this year. Some will be lower depending on the progress will be there in the next year. Okay. And how much of that do we expect to commission this year? So commissioning this year, we're targeting six fifty megawatt, but maybe it'll get below to next quarter. That will because because of COVID, loadout for our delay has happened in the first half, so we are catching up. Okay. So we also have other projects that are lined up. I the work would have started, but still have so what did the order if anything is higher than six fifty megawatt. Right? The six fifty is our own development. Okay. Okay. That is under construction. Okay. Understood. Understood. And, you know, just from an overall perspective, let's say, 3,000 to 3,500 codes in the renewable fund, how much on your regulated businesses can we expect the CapEx to be? Because I think there are total SGD plans that we had for Yeah. Yeah. If I'm not mistaken. So so I will tell you the number. The total CapEx that we expect in this year, FY '21, is going to be about 3,800 crores, in which half of them would be renewable and the rest would be amongst various regulated businesses. And there will be some for the new businesses, which is essentially EV and some would go into some of the non regulated businesses. But largely, about 85% to 86% of this is going to regulated and fixed tariff businesses. Sure. Sure. And and also from the solar manufacturing front, we we see now now decent uptick in in the execution during this quarter. You know, what sort of execution can we expect, let's say, over the next twelve months or so? We do have a healthy order book. I'm just trying to understand in terms of, let's say, revenues. Is everything normalized? I mean, what sort of prediction do we see over there? I think the current order book, as you know, is 2.2 gigawatt. Right? That is the order book. Right. 9 crore is the order book. Now, you know, the whole issue is that since the activity level has just picked up, we would we would assume that about half of that will be probably next year, and and and and most of it would be the rest would be covered in this year. Okay. Okay. Sure. One question on the only shipping business itself. Now now I was actually wondering, given that we've actually sold those three ships, our, you know, EBITDA and part number ideally would have been impacted because the revenue and the EBITDA from that would not have come in our financials is what I was expecting. But still, the overall number seems to be pretty high. So I'm just trying to understand what's happened over there on the shipping business front. So first is that we sold the ships, but we do have the contract. K? So the business operation continues. Only thing is we don't own the ship, but we have the contract. Second is high number, which you're seeing is most mostly to do with the tariff linkage to the CERT index on the fuel price. So those are and in the last revision of the index was high, so the revenue booked there was high. But consequently, CGPL pays it pays also a higher amount, right? So while on a consolidated basis, it is a zero sum game, but individually, the shipping companies would seem to have made a higher profit in this quarter. But this will subsequently get there'll be a catch up because it's a time lag between the actual shipping prices and the final notification of yeah. So so just a question. You said that you don't own don't own the ships, but still have the contracts. Is it revenue and EBITDA from this is still flowing in? Is what you're saying? And this would then sustain. Yes. Yes. Yes. Absolutely right. A certain minimum level of EBITDA was sustained, not as high as this because this is more due to a that carryforward of the, you know, index Once the index is normalized, we'll be having a slightly lower number, but, yes, there will be EBITDA. Okay. And, sir, sir, sir, mentioned that you've done an adjusted part of around 2 crores. So I'm just trying to understand what is the overall T and D loss over the system? Overall Is it now? So it is 28.3. 28%? Yes. 28. And we have brought it down from 40%. Okay. And so what would be the AT and T overall? I mean, it would still be it would be around 8% or so? No. No. This is 28% is the exit quarter end AT and T. Okay. Okay. As of October. Now as per the tariff, which has been fixed in three years' time, we have to reach 23.7. Okay? That's where we are heading. Okay. And, lastly, you know, our trajectory in terms of the reduction of AT and T loss would be similar to to that that has been sort of the normative T and T that has been fixed in the tariff. Is that fair to assume? So so the the the correct statement to make is that trajectory is in line with what was, let's say, targeted in the bid. Because the if it is a if it is higher, then you will see losses in the Right. As long as you are seeing positive, that means we are on track. Sure. So so I mean, with an AT and T loss of 28%, we are, okay, coming with a positive number. That means, okay, largely, it's close to the normative number. Yes. Okay. Okay. And so maybe, like, let's send your PPT. You've you've mentioned sort of a, you know, broad sort of outline in terms of the consumer facing businesses that you're highlighting. So could you give certain, you know, insights into what sort of revenue or or profitability can we expect from some of these, you know, businesses, particularly in the solar pumps front or the on the EV charging front from, let's say, two year perspective? We don't give too many forward looking statements. I think we had shared with you all the FY twenty twenty five target on all these businesses. So we are tracking them on a six monthly basis because Hello? Members of the management, we can't hear you. Participants, please stay connected while we reconnect the line for the management. Please stay connected while we reconnect the management line. Thank you for patiently holding your lines. We have the line for the management reconnected. Over to you, sir. Yeah. I think the question was around what are we doing on the new businesses of rooftops and pumps, etcetera. I must say that this this, of course, quarter as well as six months have been seriously affected by the COVID related issues. But otherwise, we believe that second half would be far better, and we will be able to pick up pace. But we are working seriously now on all the marketing and distribution and launching initiatives. So you will see the results in the next four, five months. Hopefully, year end would be a we'll be able to make good progress on that. But we're on the ground, things are working as per the plan. Okay, all right. Thank you. I'll get back in the queue. Thank you. Next question is from the line of Abhishek Puri from Axis Capital. Please go ahead. Yeah. Thank you for the opportunity, and congrats for a good set of results. Thank you, Vishay. Sir, two things. One, in your presentation, you mentioned for Mundra, there is some Sched Scheme one off. So could you elaborate what is that? Okay. This is a scheme where dispatches okay. There's a central scheme which says that if you are if your cost of variable cost of dispatch is lower in a certain order, then you will be asked to dispatch out of turn. And if and and the difference between the your dispatch rate and what is available in the market is shared with you. So that is the scheme which the Ministry of Power runs. And therefore, we have and it shows actually a sign of competitiveness amongst the merit order dispatch. So that is the income which depends on what the market opportunities are available. We sometimes make money, sometimes we don't. So what is the the amount here, runoff amount? This no. I think last year, we had Loss of my earned. Loss of There was a loss. This year, it is not there. Okay. No one off this time? No. Got it, sir. Secondly, it was interesting to know on the Phase two front that you're tracking the trajectory within the second quarter itself. Could you tell us in terms of the accounting change that we would have done or followed here? Well, it's not accounting. Okay. Let me put it this way. It's not accounting change. It is that adoption of the standard. Because remember, in the first quarter, there was not even, we didn't have the proper accounts also from the takeover of the company. So we could do the accounts finally in the second quarter only. And, the accounting standard says that if you have a business acquisition, which has a certain trajectory of investment in the initial period, and then that investment is recovered in the revenues later on, then you can offset or you can take it to the balance sheet because these are plans. And therefore, as long as it's sticking to the plan, you don't you it doesn't affect your bottom line. So, that is why we said that we are tracking it because that's the way the standard works. That if we don't track it, then you'd have to provide for the loss cost by not tracking it as per the plan. Fair enough. That's well understood. So in this scenario, would we put some of the CapEx and interest and depreciation into balance sheet. Right? No. So as far as the new investment is concerned, which is CapEx, that will reflect as ROE just like any other regulated business. Right. Okay. That will come to the P and L. Only the the AT and C related deficit would go into the balance sheet. And If positive you are if are doing better than the plan, then it will be positive, will portion will go to the P and L. If it is worse than the plan, then the negative will go to the P and L. Well understood, sir. Thanks for that clarification. And lastly, the merger tax benefits, what would be that amount and when can we realize this? This is subject to NCLT hearing right now. Yes, subject to NCLT and it is effective first April twenty twenty as per the NCLT application. So whenever the order becomes effective, it will become effective from 01/04/2020. So the tax benefit in that sense, assuming that the scheme will get approved, have started to already tick. But you can't recognize it until the order comes. Okay. And for the regulated business, we cannot take these tax benefits, right, for the Mumbai regulated business? No. No. Until the order is announced, you can't. And if we are able to do the in bit here sorry, just a clarification on this. If we are able to complete in bit, say, before end of this year, so a large part of that gain can be offset against it? Yeah. If there is a capital gain on that, yes, it can be offset, of course. And you also there is a past gain. Lots are also available. So therefore, there is a there's room for that. I was just trying to understand how soon can we utilize it. No. It will be effective. See, the meter started ticking. It's just that you can't click it until the order comes in hand. Right, sir. Right. Thanks so much, and all the best, sir. Thank you, Vishek. Thank you. The next question is from the line of Chubadip Mitra from GM Financial. Please go ahead. Good evening, sir. My questions were around Sesu. So just wanted to get an understanding that given the COVID related impact, is has there been any regulatory relaxation that is available on the AT and T loss thresholds as per the earlier contract? No. There is no relaxation, but I think the regulators promise to look into the trajectory if required. But as of now, since things are getting back to normalcy, we don't see any special relax Okay, understood. Thank you. The next question is from the line of Anuj Upade from MK Global. Please go ahead. Thanks for the opportunity and congrats on good set of numbers. You. Sir, two questions, starting with the three distribution circle in Odisha, we have bidded out. So any time line, sir, when can we expect the final outcome to be? And the follow-up to this would be we have learned that in the NESCO circle, we are the sole bidder. So would it be fair to assume that the NESCO would come to us or there are some condition which we need to comply before assuming the same? As you rightly mentioned, the NESCO, we are the sole bidders. So the regulator and the government is taking a view whether they would give it to us based on our offer or if there's going to be a rebid. So once we get clarity, we'll be able to decide on the next course of action. As regards the two bids where we have submitted, we expect by December, they will possibly come out with the decision on the Second one on the Mumbra, The presentation mentioned that in October, we already repaid around INR 2,600 crores of debt and another INR 1,500 to be paid likely to be paid in November. So with this, we are targeting to repay around 4,000 crores for Mundra. So any targeted level overall for Mundra over next one or two years where we would feel comfortable enough to make the plan self sufficient, the debt level amount, whether we are targeting to bring it below INR 10,000 level, 8,000 or something? That would be helpful, sir. No, it's already we in the next month or so, we will be infusing about 1,500 crores. That is the plan already there. With that, we will be down to 4,000 crores. That's all third party debt. Okay. No more than that. So which will sustain the the company in any case on that because if you see the the EBITDA trajectory, then you will see that that will easily sustain. The next question is from the line of Dhruv Mutsal from HDFC Asset Management. Sir, question on Sesu. You mentioned that the losses have come down, AT and T has come down from 40% to 28%, which just seems quite impressive given that we have taken the circle only about three or six odd months. So, sir, given the initial success, do you think there is probably initial thoughts on can we probably beat the 23% target over the next three years significantly? So first of all, I want to clarify that the 42% number is also aided by the problem in COVID. We had a collection issue. So it is not that it was having initially all along the same number. So it was much lower when we but for the collection issues in COVID. But yes, it is coming down on track. And to your question on twenty three point zero, yes, we are hoping to reach that target much earlier than the target as per the regulatory plan. We are trying to do something in the next twelve to eighteen months, what was supposed to take two years Okay. Or three So, sir, what number did you start with, the AT and T number? See, that this was a temporary phenomenon because we took it on first June. So this was the COVID period. Otherwise, last year, they had AT and C of thirty percent. So the trajectory was made on that basis. So on a temporary basis, because of COVID, it had gone up to forty percent. But, otherwise, we have already reached a level of twenty eight percent. Got it. Got it. And, sir, so initially, at least I was expecting that for a couple of years, CSO will be on a pack level, probably will be a drag, some marginal drag, but some some it will cause some drag. But given 2Q and given probably some change in the accounting, do we expect now that at least we'll be disciplined there from our marginary project at least for the next two years? Well, one can reasonably say so. We are confident of meeting our trajectory, in which case then we won't have to book any additional losses. And then the only CapEx and the equity that's regulated equity that is there will keep us earning the ROE. So your conclusion is right. If we do our job well, which is what we are doing today, I think we should be marginally positive. Okay. So the accounting works this way, right? As long as the target which you have set as per the agreement or as per your internal targets, as long as that is meant, you can that will that is okay. I mean, that will not cause a drag to the P and L. Correct. Correct. Got it. Got it. So the target for earning by the end of next third year by the end of third year will be around 23%, which currently the actual loss is around 28%. Correct. Correct. Got it. Nice, sir. So secondly, if I look at the Mundra plus the coal JV and plus the logistic companies, this quarter is the best ever quarter that you have done probably in the last two, three years. I understand one part is because of the logistics one off that you mentioned. But sir, is it fair to say this is not a one off because you mentioned that Mundra is already paying that amount. So in the next quarter, Mundra will have a higher EBITDA, and there will be lower EBITDA in the logistics company. Correct. So this is not a one off asset. This is a three year old. This is one off asset shipping company is concerned. Okay. But from a pure complete No, no. Sir, if you can say something on what's driving this strong performance, is it the Mundra? I mean, efficiencies that you're probably gaining in Mundra in terms of lower coal cost? Or what's driving this? So because after the shipping company, we thought there should be some impact on the EBITDA. I mean, I understand they will still generate EBITDA, there but should have been some impact on EBITDA. But despite that, the numbers are quite strong. So that was the Yeah. So the reason is twofold. While the market fell, KP the our mines also launched very strong cost control measures, and they've been able to reduce absorb a significant portion of the price decrease in the market. And that is that's something which our coal companies do do it, but they've done a good job in these last six months in terms of cost cutting everywhere. And therefore, they have reduced the impact of the price. On the other hand, in CGPL, we have managed to purchase coal at much lower than the market. And that is also because of, I would say, the advantage of the current market, we have been able to buy good shipments at attractive prices with higher CV. So when you do a combination of good quality and cheaper logistics cost and cheaper FOB price, you end up beating the market price. So I think what has happened is in this quarter, especially, and we have been seeing this for the last six months, that our ability to squeeze costs in a glare scenario is much higher at CGPA level and the coal companies are tackling the price decline by putting severe cost control measures. So it's both ways. Got it. So sir, if I have to put it this way, the under recovery absolute amount will be about INR 200 odd crores for the quarter, if I just do the volume into the under recovery amount that you have given. So how much of that would be would have been higher if this efficiency sourcing would not be there? Oh, it's difficult to give one number for efficiency sourcing because the quality and and quantity and CV factor. Maybe we could give you some rough number. Maybe later on, Rahul will share with you. Okay. Sure. Sure. And so just last two quick ones. In your presentation, you mentioned that one fifty megawatt at Methon is the PPA is expiring. Yes. Yes. So okay. So the PPA is getting over. Is it the long term PPA is getting over? No. There is a right to one of the buyers to call off the PPA at at in a certain interval with their opt with their opting for. So we will find alternate buyers. So we'll tie up that power with others. Okay. Okay. Okay. And when is this expiring, sir? It's September 2 2021. Yeah. September 21. Okay. And, sir, last thing, actually, this was kind of a suggestion, if you can probably help us because at Enabled, it is becoming a bigger portion of your business now. Of the under construction capacity, if you can help us provide what would be the revenue that you will be generating because that will help us model the, you know, business better because there are multiple projects at different tariffs. So for us, building that will is extremely difficult. But if you can help us provide what the potential revenue would be of the under construction portfolio. Sure. So we will Rahul will separately tell you the rough math that when the under construction assets come on board, what generally is the EBITDA and and both pattern of math can be given to you, which we gave guidance. The revenue also would help because probably you would know what is There you can always work backwards. Yeah. Sure. We will we will give you that. Thank you, sir. Thank you. The next question is from the line of Anikat Mittal from Motilal Raswal. Please go ahead. Yes. Thank you for the opportunity. See, most of my questions have been answered. Just one question on the working capital front. You know, you mentioned that there is some amount that you received from the admin reverse scheme, if I'm not mistaken. If you could just quantify that amount and, you know, just trying to understand your trajectory in the receivables fund, could could we receive further amount over there? You're talking to Aruchman? No. No. Ask me money that has come. See, the main Oh, for you. So that is for Priyagra. Yes. That's the main money for Priyagra. So that is the money for Priyagra. We received what what? 1,200? No. The 6 Uh-huh. $7.50. 1,200 and total. $7.50 is the Correct. So so I think currently, we are at about three months odd outstanding in Pragraj. So money is coming in trickles on that. Okay. And can you ask sort of depending on that we expect to come from the scheme? From the scheme? From the scheme, is there is a further amount that we expect to flow from the scheme? Well, only few states have really gone for it. I think Tamil Nadu has also opted for it. We are a recipient of that, but I won't be able to share with you exact numbers. Ghana has gone. But I've taken money from Telangana due money is very small. Yeah. Yeah. Okay. And and overall on the renewables front, what will be your receivables amount? Total received? About Small one plus About thousand crores. Okay. Okay. And, sir, maybe just one question on the, you know, on the trajectory of how interest costs are moving. You know, one is obviously there's an update in our ratings that has happened, and also the overall interest cost environment right now is pretty benign. So I'm just trying to understand from an overall interest cost trajectory, how do we see that moving? Is there any sort of benefit that we can we can get in terms of lower interest cost? No. Certainly. But remember that we have been getting very fine rates all through higher than our rating. So we do expect, it's bottomed already it's bottomed out in some ways. We are also, seeing the first, the next, couple of months, we have some other more monies to be received. Once that happens, we'll have to see how we are to churn between short term and medium term and long term. Maybe that will have some effect, but broadly, our weighted average cost should come down further a little bit in the next two quarters. Sir, just one last question. So I think, Nore, your participants have highlighted about the profit that you have at CGPL plus such a coal mine. Now that number looks a bit high. I was just wondering, is there any sort of lag benefit that you've got at TGP? Because, you know, the prices have gone down, but maybe your tariff has not been revised. I'm just trying to understand from a sustainability perspective for the coming quarter. Is there some, you know, large benefit that you're getting at CGPA because of the So actually, no, there's not much of lag benefit because look at it, there's there's two, three things here. One is that, yes, there is a lag. Okay? Yes. That in the second half, there will be a catch up. But on the other hand, we had a higher PLF in the first half. In the second, second half, will lower PLF. So there will be some benefit around that. So therefore, you know, they may, you know, probably offset each other. So to answer your question in short, I don't think this is a there is a serious one off that is affecting these prices. They seem to be going in this direction because of the fact I mentioned some time back. Right? On the there's a good pressure on cost on the mining side. Okay. Alright. Good. Thank you. That's that's it from me. Thank you. We'll be able to take one last question. The last question is from the line of Swaneev Maheshwari from Edelweiss. Please go ahead. Yes. Hi, sir. Thank you for talking to me again. Sir, have we awarded the Priyagra joined on contract to to our, you know, O and M business, or is it, you know, still done by someone else? No. No. It's Tata Power. Okay. So, I mean, just wanted to understand have the are the benefits of the O and M? Because, you know, we are one of the newest O and M procurers, O and M, you know, guys. So just wanted to understand, you know, what is the, you know, current O and M cost that that is it for Prahagraj? So your your point is right that we are one of the most efficient. But but since it's an individual contract, we normally don't disclose, but we can sufficiently say that we are doing a good job over there, both technically and financially. Okay. So the efficiency are already reflected in the numbers? Yes. Absolutely. Because we do book that in our services. Okay. And sir, lastly, just on Solar EPC, what are the kind of EBITDA margins in this EPC business? And any guidance for FY 2022 as such? So it's generally in the you know, late single, early double, that kind of range depending on which contract to piece. But but it's not it's a you know the market. The market is very tight on EPC. So it's generally in the single digits, but at the end of the late single digits. Okay. And FY twenty twenty guidance on FY 2022, you did mention that you do expect your existing order book to get exhausted over the next twelve to eighteen months. So I think a substantial amount should come in FY '22 then. Yes. That's correct. But we can't give you a guidance on the numbers, but you've seen the order book. That's about INR 9,000 crores, and that will all get materialized over the next twelve to eighteen months. Perfect, sir. Perfect. All right, sir. Thank you so much. Thank you, sir. Thank you very much. We'll take that as the last question. I would now like to hand the conference back to Mr. Sena for closing comments. Thank you very much for all of you for joining the call. And whatever additional information is required, you're most welcome to reach out to us. My colleagues, Kasturi and Rahul Shah, will be more than happy to provide you the required information. And you all take care and stay safe. Thank you. Thank you very much.