Ladies and gentlemen, good day, and welcome to JSW Energy Limited Q4 FY22 earnings conference call, hosted by Edelweiss Securities Limited. As a reminder, all participant lines will be in the listen-only mode, and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during the conference call, please signal an operator by pressing star then zero on your touchtone phone. Please note that this conference is being recorded. I now hand the conference over to Mr. Suyash Mishra from Edelweiss Securities. Thank you, and over to you, sir.
Good evening, everyone. On behalf of Edelweiss, I welcome you all to JSW Energy Q4 and FY 2022 annual results conference call. From the management today we have with us Mr. Prashant Jain, our Joint Managing Director and CEO, Mr. Pritesh Vinay, Director of Finance, and Mr. Ashwin Bajaj, Group Head IR. I would now hand over the call to Mr. Ashwin Bajaj for the opening remarks, post which we will have the Q&A session. Over to you, Mr. Bajaj.
Yeah. Thanks, Suyash, and thanks for organizing the call today. Good evening, everyone. This is Ashwin Bajaj, and welcome to JSW Energy's results call for Q4 FY22, and also an update on our renewable-led growth strategy. We have our CEO and CFO, as Suyash introduced. With that, let me hand it over to Mr. Jain for opening remarks, and then we'll open it up for questions.
Good evening, everybody, and Eid Mubarak to each one of you. The power sector has been in focus after a long time. If you look at the power demand per se, the Q4 power demand grew 3.1%, and for the entire year it was up by 7.9%. The total demand was 1,375 billion units for the entire year. In the current financial year, in the month of April, we have seen power demand growing at the rate of 12.26%. In the month of May, for the first four days, the power demand is up by 18.8%. Similarly, in terms of the generation, we have seen Q4 power generation was up by 3.4%, and FY 2022 it was up by 7.8%.
We have seen the renewable energy generation up by 15% in the last year, and thermal generation up by 8%. If you look at the total mix per se, then the thermal generation was constant at 74.8% in the last year. Hydro percentage was lower at 10.2% as compared to the previous year of 10.9%. Whereas the renewable component went up from 10.6%- 11.4%. The total installed capacity was at 399.5 GW. We saw the capacity addition of 17.3 GW, primarily from renewable, which was 15.5 GW. Majority was solar, which was 13.9 GW. We saw a capacity retirement of 1.6 GW. The interesting trend came in the merchant volume.
We saw the merchant volume at 65 billion units out of the total demand of 1,375 billion units, which was up by 7.8% during the entire year. In the month of March, this volume came down drastically. Now this volume came down to 28% at 4.1 billion units. If you look at last week of April onwards, this volume is down by 60%. Typically, we have been seeing 200-230 million units every day being sold in the merchant market. Since the last week of April, this volume is as low as 40-50 million units. On average, it is 70-75 million units. Whereas the purchase bids are in the range of 700 million units.
That's the kind of a contrast which is coming up with, which is because enough capacity is not available, which is having coal to supply in this particular market. Because of which you are seeing the purchased power prices are at a constant rate of INR 12 , at which regulator has already capped it. API 4 coal prices are at a very high elevated level. If you look at Q4 average is $238. Year as a whole is $161. If you see the highest price we have seen was $427 in the month of March, on 11th March. After that it has corrected. In the entire April month, average was $294, and now it is moving in the 10, ± 10, 15 dollars since the month of April.
If you look at the Coal India production, which was up 6.3% in the entire year, including all its subsidiary, and dispatch was up by 16.8%. Captive coal production was up by 34% and dispatches were also up by 36%. Whereas the imported coal is down by 12% at 191 million tons, and further in the current financial year, it is further going down. I'm giving all this data to give one part, is that there is a higher price of the thermal coal in the international market, because of which the fuel price at which the power can be produced at the international prices are, is north of INR 8-INR 9. That's the price at which you can produce power, only I'm talking about the variable cost.
Because of which the power generation based on imported coal is consistently coming down. In spite of higher production and dispatch by Coal India and Coal India subsidiaries as well as the captive mines, there is not enough capacity available which can feed the demand, which is growing at 11%, 12%. This kind of a trend for the time being is going to continue. In terms of the JSW Energy performance, for the quarter, our generation was up by 15% and for the year it was up by 4%. Hydro generation grew 15% during the quarter and for the year it was down 2%. The thermal generation for the quarter was up by 15% and for the year it was up by 6%.
For our long-term thermal power generation was up by 20% during the quarter and 7% for the entire year. Short-term generation was lower 34% during the quarter and up 6% during the year. In terms of the financials, our EBITDA was INR 4,138 crore, which was up 32% for the year, and PAT was INR 1,729 crore, which was up by 117% year-on-year. There is a one-off item of INR 594 crore for the year due to the true up of our Karcham Wangtoo. Adjusted for that, our EBITDA for the year is up by 15% at INR 3,542 crore, and PAT is up 48% at INR 1,180 crore.
One good news is our receivables are low, lowest point what we have seen in the last three, four years at 59 days in spite of higher generation. The quality of receivable is at its best where, you know, overdues are at its minimum. We recovered close to INR 220 crore in late payment surcharge, which is shown as other income during the year. Including the states like Andhra Pradesh or Rajasthan or other states where we find it difficulties, we have recovered all our late payment surcharges. Our net debt stood at INR 36,963 crore with a weighted average debt cost, which is lowest what we have seen in the history of the company at 7.74%.
We have signed all the PPAs for 2.5 GW capacity for renewable, which we had undertaken. We commissioned 225 MW of the solar capacity and rest of the capacity is on track and we will be commissioning within time. We have also secured 15 GW of resources for solar and wind, and 5 GW resources we have tied up for hydro pumped storage. We are on track to achieve what we have guided for achieving 10 GW by FY 2025 and 20 GW by FY 2030. In addition to that, we will be also undertaking storage projects as well as green hydrogen and green ammonia project, which we are moving at this point of time and tying the resources and securing the technology, which we will be announcing in due course of time.
With this, I would like to thank each one of you for the patient hearing, and I open the floor for question and answer. Thank you.
Thank you very much. We will now begin the question and answer session. The first question is from the line of Mohit from DAM Capital Advisors. Please go ahead.
Hi. Good afternoon, sir, and good set of numbers. My 1st question is, we are seeing very high prices at the exchanges and in bilateral markets. Despite that our PLF of, you know, the Vijayanagar and Ratnagiri was low in this quarter. Does it mean that when we are not able to procure coal and our variable cost is slightly higher, so that we are able to make money at these prices? Is that right assessment?
No, no. You need to understand one thing is that we look at our variable cost and then we look at the merchant market. As and when the merchant market tariff is more than our variable cost, we are pumping full power into the grid. If you see the merchant market analysis, then the power prices started going up in the month of March, post 14th of March only. Before that, power prices were in the range of, on a day average of INR 5.5 or lower. Whereas the thermal coal prices were at its peak at that point of time. Now, when the power prices started shooting up, we have been selling the power into the merchant market. We never had any coal issue at any point of time.
To just give you a color, in the month of April, we sold the maximum number of units as compared to any IPP in the country. In the month of April. Our sales into the merchant market in the month of April was highest as compared to any power producer in the country. I hope it answers.
Understood, sir. Secondly, sir, on the accounting adjustment for the prior three years, specifically for Karcham, is it primarily related to higher capital costs approval by the CERC for 2014-19 or is it something else? Secondly, there is also a reversal of carrying cost of INR 69 crore. Is it related to sharing of the financial gains because of lower refinancing costs? Is it right assessment?
Pritesh, I would like you to.
Yeah.
Take up this.
Mohit, you know, the truing up order that we got for Karcham Wangtoo is for the control period 2014 - 2019, as well as for 2019 - 2024 period. Meaning that the effective implications on the books is for a seven-year period, starting from 2014-2015 till 2021-2022, right? That is number one. Number two is that, yes, I mean, that order is in the public domain on CERC website, so you all can access that.
Effectively what has happened is that if I were to summarize the implication of that, is that, A, there's been, you know, an additional INR 180 crore capital cost which has been approved based on, you know, what was petitioned by the erstwhile owners of this asset. As well as, there are certain adjustments on the tax side. A combination of these two is what has led to, you know, the whole reversal of the provisions. You know, we are carrying close to INR 1,260 crores of provisions, and of which, you know, around, in total INR 665 crores have been reversed. Now, on the second part of your question, the carrying costs.
What we were doing is from the end of last year onwards, part of this provision was basically a carrying cost that we were you know recognizing in our books for these regulatory liabilities. Now that you know this has been reversed, so that carrying cost has also been reversed.
What is the total impact of Karcham? Is it 590 + 64? Is that right?
Above EBITDA and below EBITDA. I mean, if you look at the note number six of the semi-consolidated results, that has the exact breakup, you know, where there is part in revenue, there is part in other income, and there is part which was under the finance cost.
Understood.
Sir.
The third question. Our target is to reach 10 GW of renewable capacity by FY 2025, and we are already in beginning of FY 2023. When can we expect to see this pipeline going up of under-construction projects?
With 2.5 GW, which is under construction, we will be completing our 7 GW of capacity and another 3 GW is under development at this point of time. We are going to start talking about those projects in pretty soon. We are on course to achieve 10 gigawatt. Maybe we can do better than that.
Understood, sir. Thank you and all the best, sir. Thank you.
Thank you. The next question is from the line of Vivek from DSP Mutual Fund. Please go ahead.
Good evening and happy Eid to you all too. I had two questions. The ROE on renewable power, would that get affected by the high capital cost 'cause all raw material costs have gone up? In that context, let's say you know you had to bid and win Mytrah, is it better to buy rather than build at this point of time? Is the 1st question. Should I also ask the second question?
Yeah, yeah.
Okay. In terms of merchant power, if I hear you correctly, at the current coal prices, that INR 12 is it low or is it still profitable for you? That's the 2nd question. That's all from me.
Okay. The 1st question, which I am you know, as far as the projects which we are building, we had secured and finalized all the contracts based on whatever we had planned. There is an impact of some component which is primarily the steel, which we have been open because we have to purchase the steel for making the foundation as well as the towers as and when it is required. Otherwise, all our contracts were the fixed price contracts, so there was no implication. On an overall basis, there is very marginal impact on our capital costs, which we had already built in in majority of our projects as a part of the contingency.
We will be achieving what we have planned, which is mid-teen IRRs will be certainly achieved in all our 2.5 GW of the capacity. With our efficient planning of the project management, we will be doing that. In fact, if you see that what we build our solar project, it is the fastest ever project built in the country in 11 months short, including the COVID wave. In case of our SECI nine and 10 projects, people have not even, for SECI seven and eight, people have not done the financial closure and PPA, and we are on a path of commissioning the first turbine in the month of July, and we have also shared the photographs of the foundation as well as the substation.
We are on course for commissioning very expeditiously and much before the time in the project. As regards to, you know, taking over the assets versus the building, you know, everywhere, you know, we need to see whether the returns are there or not. It is case to case basis. It cannot be generalized. I don't think the transactions which are being done in the secondary market, which you are seeing, like you might have seen, the valuation at which the Spring Energy has been sold, there is enough return available or some of the transactions which are being done.
It is o ne needs to be really prudent that what you are going to do and what you are going to get. We are very, very mindful about that part and we have been maintaining. That is why we have been chasing growth at a stipulated return and we are getting enough of it. We are pretty sure. The 2nd question which you are asking about INR 12, whether it is profitable, yes, it is profitable, but it is not as profitable as when the cap was at INR 20. I think the CERC has also come out with this cap on the basis that there is not enough margin available for the IPPs to make money at this point of time.
If you look at the domestic coal at which the auctions are being done, the fuel cost will be in the north of INR 10, even for the pit head plants. Similar is the situation as for the imported coal-based plant, the fuel prices are in the range of INR 9-INR 10. You will be recovering anything between INR 2-INR 4, at these prices, not more than that.
Okay, sir. That's great. Congratulations on the execution and good luck, sir.
Thank you.
Thank you. Next question is from the line of Rahul Mody from ICICI Securities. Please go ahead.
Hi, sir. Good evening. Congratulations. Super set of results. I believe what you've been talking since the last one year about, you know, we getting into a power deficit situation has now panned out. Just further to this, sir, just a couple of understanding on the numbers. Just reconciling, you mentioned INR 655 crores of the current order impact. I believe Pritesh was mentioning there is something on the EBITDA and below EBITDA impact on other income and interest as well. If you could just give me a breakup of that to understand that better. What was the LPS, the late payment surcharge component, which came extra this quarter?
Yeah. Rahul, hi. Rahul, I don't know if you have access to the presentation that we have put up on the website as well as the results that were uploaded at SEBI. Do you have access to that? Then it'll be easier for me to walk you through what I was trying to explain.
Yes. I've seen the press release. I just missed on the presentation.
I'll just explain to you. If you look at slide 26, which gives the EBITDA bridge, right?
There's an element of INR 596 crores bump up, which is clearly been mentioned as due to the Karcham Wangtoo true-up order impact. Now, what you have to do is this, that you have to look at Note number six, you know, of the consolidated financial results. There are three items mentioned. You know, revenue of INR 553 crores and other income of about INR 43 crores. This total is 596. This comes above EBITDA, right?
Okay.
Then there is a write back of carrying cost of INR 69 crores, which was used to be part of the interest cost and therefore below EBITDA. The sum total of all these three items is INR 665 crores, is what I was explaining.
Okay. Perfect.
Yeah.
Okay. This is very helpful. Sir, secondly if you could just, you know-
Rahul, can you please speak up a bit? It's a bit muffled, your voice.
Is it better now?
Yeah, yeah. This is better.
Okay. Just, you know, we read in the papers and there was, you know, on the exchanges also you had given an update on the issue with regard to Barmer, the lignite mining. Sir, any thoughts on exactly what happened and what is the course of action going forward?
Rahul, again, you know, with Barmer, what had happened was that, you know, this, if you just to put things into context, JSW Energy (Barmer) Limited, which is a pithead lignite-based power plant, 1,080 MW. This has 100% offtake from the Rajasthan DISCOMs, and this is a regulated return project under the purview of the RERC. Now, this project was built as part of the implementation agreement signed, you know, way back in 2006 with the Government of Rajasthan, by way of which, this is an integrated project. There is a mining part, which is, you know, a 51-49 JV, where 51% shareholding is by the Government of Rajasthan's mining entity called RSMML, and 49% is JSW Energy (Barmer) Limited, right?
This is an integrated project. Now, there is a technical issue with respect to, you know, the mining lease transfer that was done by RSMML to BLMCL, under the provisions of the law. If you look at note number five that we have put up, you know, this kind of gives people context in a crisp way that, in 2014, the Ministry of Coal, Government of India had granted an approval for the transfer of mining lease. In 2016, they wrote back to the Government of Rajasthan saying that this transfer of mining lease from RSMML to BLMCL was without the previous approval of Government of India. And advised Government of Rajasthan to make a fresh proposal for transfer of the mining lease.
Thereafter, there have been multiple deliberations between the Government of Rajasthan and the Government of India on this particular matter. In that context, you know, we received this notice in the first week of April, for which we had made a suitable disclosure saying that RSMML on directions by Government of Rajasthan asked BLMCL that you please stop mining activities in 15 days. At the same time, RSMML was asked by Government of Rajasthan to ensure that uninterrupted lignite supply was continued for the power project.
Mm-hmm.
Thereafter, we made representations, you know, because there are a lot of nuances involved in this. There was an implementation agreement, there was a JV agreement, there's a fuel supply agreement, there are PPAs, you know, the whole works. You know, we also, you know, there are legal recourses also available. Based on the representations made, et cetera, on 28th of April, we received a communication, saying that the Government of Rajasthan had kept its order of the first week of April, in deferment for the next period of three months. Therefore, you know, lignite mining has continued, since then. This is the whole issue, what had happened. Prashant, you would like to add anything?
Yeah. Basically, as Pritesh explained, this is a PPA as governed by an implementation agreement wherein Government of Rajasthan is going to secure the 100% of the power supply, and they were responsible to provide us the lignite for this particular power plant. Because of this technical issue, there is an approval which is again being sought from the Government of India by Government of Rajasthan. Government of India has been actively working upon it, and they are taking necessary steps. As far as JSW Energy is concerned, we have been assured of the full lignite supply and that is what we are getting the return on our fixed cost, what we have made into the power plant. That is what we continue to receive, and we are quite confident that that will continue to happen.
Sure. This is very helpful. Sir, can you give us some update on the 5 GW of some hydro projects that you signed with various states? Any timeline? What can be the tariff structure like and so some economics around it? That would be very helpful.
We are at this point of time at acquiring the land, and as well as we have applied for the environmental clearances at various locations. We have already received the water approval at some of the power, some of the hydro pumped storage locations also. We expect that in the current financial year, at least one hydro pumped storage project we will be starting, which will be an integrated project for our green hydrogen project in Karnataka.
We have not talked anything about the Karnataka pumped storage project, but we are in the last stage of getting the approval from Government of Karnataka, and that will be the 1st project which we are going to start construction, which will be a integrated project with wind, solar, and then which will be used for production of the green hydrogen and green ammonia. Eventually, there are various policies which will be coming up, but at this point of time, there are no policies. We believe that this will be the need of the hour for renewable energy going forward and that's why we are building all these locations and sites.
In next couple of months when we start the project, we will be sharing with you a lot of economics and data about it.
What is the capacity which we are targeting in Karnataka?
You can say that, you know, in all states put together, we are talking about close to 10 GW of the capacity. This is the MWh cap. This is the actual turbine capacity. Typically, all these plants will be having 6-8 hours of storage. 10 GW will be become 60-80 GWh kind of a storage capacity, so that's the kind of a capacity. In Karnataka also, there are three projects which we are contemplating. All three put together, the combined capacity will be 1 GW.
Rahul, if I may add to that, you know, in terms of the exact configuration, you know, once we have, you know, firmed up the proposals and presented and sought board's approval, we will make appropriate disclosures at that point of time.
Sure. Perfect. Just last question from my side. Any bids that you are expecting, either from SECI or any other renewable agencies or any space in both either solar or wind or either both in the near term?
Given the commodity prices and then where the prevailing power prices and the kind of a bid which people have done it, you yourself know whether they will be happening or not. That's why the point which we have been making all the time, that there is a difference between securing the bid and creating a pipeline and actually executing it.
Right.
That's what has been differentiated between JSW Energy and rest of the players. We are executing and building the project which we have secured the bid and signed the PPA couple of months ago, and we are in a phase of commissioning. We don't believe that at the prevailing power prices, commodity prices, and project costs correlate each other. Also the non-availability of the solar panels and only dependence on the domestic capacities, you will be seeing any kind of a renewable capacity addition in next two years timeframe. It will be some time away before you start seeing these kind of bids as well as the projects.
Right, sir. Noted. Thank you very much, and all the best.
Thank you. The next question is from the line of Love Sharma from Lombard Odier Investment Managers. Please go ahead.
Hi. Thank you. I just one question, mainly for JSW Hydro. Just wanted to understand, given this noise around PTC, which is also the counterparty for the project there, any concerns you have seen? I noticed, of course, in the results there, you know, the receivables position remains quite strong. But just from your perspective, have you seen any changes, any kind of concerns?
Love, I mean, I think in a way you answered your question yourself. You know, 29 days of receivables at Hydro at the end of March.
Mm.
Compared to 38 days same time last year, that tells you about-
Mm.
You know, the quality of receivables, collections, et cetera. Yeah, as far as we are concerned, and you know, there's absolutely no issue with PTC as a counterparty. You know, this, I think, is our tenth year that this asset post COD has been operating with PTC as a counterparty, and there are absolutely no issues with that.
Okay, no changes in, of any kind. I think of course they can. The issues there are more financial in nature, but operationally this, I mean, things remain as it is, I believe.
Any changes there is a positive, not negative.
Okay. Can you explain why is that?
Because of the quality of receivables, what we are having, and.
Okay.
Because all the overdues have been paid, and we have recovered all our late payments and charges from all the discounts.
Okay. Okay, understood. No, thanks.
Also, whatever was pending in terms of the regulatory order, that matters have been also put to rest.
Got it. Okay, perfect. Thank you.
Thank you. The next question is from the line of Apoorva Bahadur from Investec India. Please go ahead.
Hi. Thank you. Thank you so much for the opportunity, sir, and congratulations on a good set of numbers. Wanted to understand more on your pumped hydro plants and the green hydrogen plants. I know you are yet to disclose them formally, awaiting board approval, if you can throw some light. Typically we understand that it takes around three to four years to develop a pumped hydro project. Are we looking at around the same timeframe by when our hydrogen production will begin? Or is there a possibility to sort of crash these timelines and then we are looking at something sooner?
Typically it takes that much of time, but, you know, typically, like any hydro project also takes five to seven years timeframe, but we are on course of commissioning our Kutehr hydropower plant in less than four years timeframe. We laid the foundation of that project in October 2019, and we are expecting that we will commission the project in flat 44 months timeframe. Similar activities we have done in other project areas. We are quite confident we will be doing in a much shorter time as far as the pumped hydro projects. We are not that much of concern in terms of the timing wise. We are, at this point of time, we want to just integrate the things.
We are so upbeat about this particular opportunity because we know that this will put us into the product and services business as compared to the only power generation business because which is more and more competitive. Sometimes we find it very tough to compete with our competitors who in order to build a large book, they become unrealistic. That becomes quite a big challenge. That's why we want to produce power for our own consumption, and we want to offer product and services. This is one area which will catapult this company to a product and services company. I think as we start building these projects, you will see that this is putting this company into a different orbit.
Interesting. Sir, you said as you said that this green hydrogen will probably change the business model of the company. Can you share what cost are you awaiting at which you will produce some green hydrogen whenever you do that? What type of ROCE business this will be? Will it be like a 20%+ ROCE business or you are expecting something even better?
What I can tell you is, you know, this is something which is going to change the way that we do business in the fossil fuel industry and then how the world is going to be changed. The size of opportunity is quite big. Right now there are a lot of numbers which are there in the public domain, which has been disclosed right from $4-$6 of the current production cost of the green hydrogen, and with a roadmap of people going to $1 per kg by 2030 and beyond, including NITI Aayog and various other corporates. What I can tell you is that we will be quite competitive as compared to what people are talking about and much early what people are talking in terms of the roadmap.
Just give us some more time because, you know, why we are talking about little more time, we are absolutely at a point where we can start placing the order immediately and start the project and could have taken the board approval in today's board meeting also. As you know that world is right now moving through a lot of supply disruption, demand and supply disruption in terms of lot of commodities and because of which the visibility on the prices is not firm. That is what is happening with our suppliers, and that is what we are in a final stage of discussion. As soon as we are seeing a firm visibility, we will be able to concretize these plans and then we will be in a position to discuss with you.
Sure, sir. Sir, last question from my side and, after that I can take next few calls after that. As I think Rahul mentioned earlier that your prediction of power shortage has come through actually it is realizing. Now do we intend to reenter into thermal generation again, sir? Probably Barmer 2nd phase.
We have a stated policy, we have talked about it. I think it's, if we want to, for example, if I want to talk to you about the Barmer project, it was never contemplated based on the merchant power. As a stated approach, what we will be setting up the power capacity, if we are supplying, either we are going to supply to the DISCOMs or we are going to consume on our own. We are not keen to look at any capacity based on the merchant, you know, generation. These are the transitory situations which will last for couple of quarters or maybe couple of years because there has not been enough capacity addition in the sector. Whereas the economic growth has been happening and, that has been resulting into the power shortage.
That does not mean that one should add up a lot of capacity immediately, but I think the energy transition is here to stay. Of course, there will be some more life which will happen to the thermal generation life. You have seen the life which has been given back to oil because everybody has written off oil six months ago, and now everybody's talking very, very positive about oil. These are transitory, you know, volatility. We see that the energy transition is here to stay. We are pretty focused at this point of time. We will continue to work in the trajectory where we are.
Okay. Thank you so much, sir.
Thank you. The next question is from the line of Shyam Garg from Nivesh. Please go ahead.
Hello, sir. Congratulations for a good Q1 . Sir, I have a question regarding the current power crisis. Currently India is facing power crisis. What are your outlooks on the monsoon season because during monsoon?
I'm sorry, but then your voice is not coming very clear. May I request you to speak through the handset?
Okay, sir. Hello.
Sir, go ahead.
Am I audible?
Yes, you are.
Hello sir. My question was regarding the current power crisis. As you can see that the coal demand is rising, power demand is rising. Due to the coal shortage, we are facing this crisis. What are your outlooks with regards to the ongoing power crisis and impact on our business and also for the coming monsoon season?
I think, you know, it's a function of demand and supply and then input cost. These are the two things which are changing the power prices. Because the thermal coal prices internationally are at a pretty elevated level, and India imports close to 200 million tons of coal. That price, at the current price of $300, the variable cost to produce power itself is INR 9-INR 10. As long as thermal coal prices are higher, there won't be enough capacity available to produce power and give it to the grid. Secondly, right now the power demand is elevated. If the power demand comes down, in that situation there will be a moderation on the power prices.
As long as these two conditions are in favor of the higher prices, power prices will remain at elevated level. It is on a general basis, I can say that the power prices will continue to remain elevated, but it will keep on fluctuating depending upon the monthly or daily demand and supply situation.
Okay, sir. Also, I have an additional question.
Yes.
There is a cap of INR 12 per unit on the power. We get our basic raw materials for in thermal power plants like coal from government from Coal India or we get it imported from outside?
We only import. We don't source coal from the domestic sources.
Okay, sir. Thank you, sir.
Thank you.
Thank you. Ladies and gentlemen, we'll take that as the last question, and I'll hand the conference over to the management for closing comments.
Yes. Thank you, operator, and thanks ladies and gentlemen for joining us today. Please do contact us if you have any further questions. Thanks and good evening.
Thank you very much. On behalf of Edelweiss Securities Limited, that concludes this conference. Thank you for joining us. You may now disconnect your lines.