Q1 21/22

Jul 30, 2021

Ladies and gentlemen, good day, and welcome to Q1 FY 'twenty '2 Earnings Conference Call of JSW Energy Limited hosted by GM Financial. 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 complete. Should you need assistance during the conference call, Please note that this conference is being recorded. I now hand the conference over to Mr. Subhadeep Mitra from JM Financial. Thank you, and over to you, sir. Thank you, Margaret. Good afternoon, friends. On behalf of JM Financial, welcoming you all to the q one f y twenty two earnings conference call of JSF Energy Limited, I would now like to hand over the call to mister Ashwin Dajaj, group head investor relations of JSW Energy. Over to you, Ashwin. Yeah. Thank you, Subhadeep, and thanks for hosting this call today. Good evening, everyone. This is Ashwin Dajaj. It's my pleasure to welcome you to JSW Energy's results call for q one and five twenty two as well as an update on our renewable led growth strategy. We have with us today the management team represented by Prashant Jain, CEO of JSW Energy, and Pritesh Vaneh, CFO of the company. We'll start with the opening remarks and then open it up for q and a. So with that, over to you, mister Chen. Thank you, Ashwin. Good evening, ladies and gentlemen. For the quarter going by, there was a very robust power demand, which we observed at a at a growth of 16.4% during the quarter, which was primarily due to the lower base effect, which was with net due to the lockdown in the year gone by and which was moderating over a period of time. In the month of April, the power demand growth was at 38%, which moderated to 6.3% in the month of May, and in the month of June, it was 8.6%. Again, in the month of July, the power demand is has been growing at the rate of over 13%. So we believe that, during the current year, we will be seeing the robust power demand growth because of the robust economic recovery and lower base, which was witnessed in the year before. That was also reflected in our total net generation growth during the quarter as compared to previous year at the rate of 4%, which was also reflected in the same long term net generation growth of 4%. The thermal generation was up by 13%, but the hydro generation was lower by 15% due to the lower availability of the quarter. Because of which, the EBITDA was almost flat, but our profit after tax was higher by 23% if I remove the exceptional item, which is 92 crore higher cost, which was primarily due to the green bond which the company has issued. Adjusted for that, our profit after tax was at 261 crore. During the quarter, we also commenced the operation of our custom one to plant at higher capacity, which was approved by CEA in two phases. So 45 megawatt additional capacity has been operational since then, and it will be increasing to 91 megawatt in the next financial year I mean, the next season. The receivables during the quarter declined 30% year on year, and it went up quarter on quarter by 600 crore due to seasonality of the hydropower business because of the excess billing which we do, and also the poor collection in the month of April and May due to the COVID wave too. We are seeing that this is moderating, and, it will adjust to the normal receivable cycle in one quarter. The net debt of the company went up by another 360 crores, primarily due to the CapEx and also the lower cash due to the higher receivables. Otherwise, the company repaid more than 200 crores of the debt during the quarter. The strong liquidity is also maintained. As regards to the projects which we are implementing. The 59 PPA has been completely signed. So now total 810 megawatt PPAs are signed with Citi. Earlier, we had signed 540 megawatt in the month of May. Now in the month of July, as I had guided last time, this 270 megawatt PPAs are signed with Best in Wall and Chuttaswad. With regards to City 10450 megawatt PPA, it will this is will be signed in the current quarter as it has been outlined. Also, the 958 megawatt of the group captive PPA with JLWC has been signed. In addition to this, we have already got the connectivity approvals for entire City 9 and City 10 projects. We have also placed orders for all solar modules as well as the wind turbines with the leading OEM manufacturers. So the construction is in full swing, and as we have explained that the solar plant of 225 megawatt will be commissioned in the current financial year. And next financial year onwards, every month, hundred to 50 megawatt capacity will get commissioned in the city projects. So we are quite satisfied with the progress which we had outlined for our 2.5 gigawatt of the renewable power capacity. In addition to this, there are two developments which are there in the renewable business. Number one, we have, yesterday signed a collaboration agreement with FFI, which is a % subsidiary of F and G Group, which is a listed company and a large iron ore producer and exporter having a close to $80,000,000,000 market cap with a more than $5,000,000,000 of net income with a strong liquidity cash flow. This company has been working relentlessly for the green hydrogen and green ammonia projects for industrial application and mobility. JZ Blue Future Energy and FSI had joined together to bring large pool of capital and industrial application and technology together to build green hydrogen and green ammonia for various industrial application and mobility in India. If I give you some background, close to 6,000,000 ton of the gray hydrogen is produced in India at this point of time, which is produced primarily from the natural gas, coal, and fossil fuel. And this gray hydrogen is used for chemical sector, refineries, fertilizers, steel plants. The green hydrogen is can be replaced by green hydrogen, which is produced by water electrolyzer, which will be consuming green power to produce green hydrogen and green oxygen. There is a large synergy between the steel plants and where the hydrogen is used by electrolyzer as well as the heating of the ammonia, which produces hydrogen. In all our DRI plants, in our canning furnaces, in galvanizing lines, the hydrogen is used. Incidentally, JSW Group is already running large electrolyzers to produce gray hydrogen for various applications. This offers us a immediate application to start replacing the gray hydrogen with green hydrogen. In addition to that, there is a big application to replace fossil fuel for mobility applications, wherein the hydrogen fuel cells can be used for a long haul locomotive running, for escalators, dumpers, trucks, cars, and also ammonia can be used for running the ships. FFI has been developing all these kind of technologies and products, which together JW and FFI will be evaluating for various applications to utilize this. Government of India and EPIO had been working on a green hydrogen mission and policy making. The comments have been invited by the industry, and very soon, a green hydrogen policy framework will be in place. The framework is outlined to be on similar lines the way the hydropower and renewable power was developed by way of creating a green hydrogen obligation framework wherein industry will be mandated to use green hydrogen to replace gray hydrogen over a period of time, and that will improve the penetration. The most important thing in this particular area is that it is a proven technology. The only thing is that the cost has to be brought down. If I give you some color, today, gray hydrogen is produced between $1.7 to $2.5 per kg, whereas the green hydrogen can be produced between $3.75 to $4.5 per kg. This cost can be by bringing this technology at a larger scale, improving the efficiency, and reducing the power of the the cost of power. And these things will materialize over a period of five to seven years time frame. And that's where we see a huge potential to replace the 6,000,000 ton market, which is going to grow to 20,000,000 hydrogen market 20,000,000 ton hydrogen market by 02/1950. So there is a huge opportunity in the green hydrogen. In addition to that, this is another market for a mobility, which is the future. And that's where the company is going to work along with FFI to build various projects in this area. And it's development is also during the current board meeting. The board has given a in principle approval to reorganize green and gray businesses, the green power and gray power business, in order to create the flexibility for the company to attract capital or the strategic investors who are making certain choices to look at only green power business or gray power business. So the board has mandated a board appointed committee to appoint financial advisers, legal advisers, and valuers to suggest various options and scheme, which will be considered by the board in due course of time. With this, I would like to end my opening remarks, and I would like to offer the platform for any questions and answers if they are asked. Thank you. Operator, over to you for questions. Thank you very much. We will now begin the question and answer session. Anyone who wishes to ask a question may press and one on the touch tone telephone. If you wish to remove yourself from the question queue, you may press and 2. Participants are requested to use handsets while asking a question. Anyone who would like to ask a question, please press and 1 at this time. The first question is from the line of Anikit Nithal from Motilal Rupal Financial Services. Please go ahead. Yes. Thank you for the opportunity. My first question, sir, is on the green energy technologies that you're looking at. You've mentioned about the framework agreement with Fortescue. It's just to get a bit more details in terms of, you know, how do you think that this technology can become viable over a period of time? And secondly, in terms of, you know, the capital expenditure itself, is there any capital commitment that you are looking to make on this technology? So, you know, the largest scale of operations will bring down the cost. Like, five years ago, the solar power cost will work more than 6 rupees. And today, it is less than 2 rupees. So the learning curve is changed based on the size of the commercial production, and that is what is going to happen in this area. This is what the same story was with respect to the electric vehicles. So this is a proven technology. The only thing is there are three components, as I mentioned. One is 60% of the cost of this, green hydrogen is by power, and power cost is consistently coming down. So if we are deploying certain technologies because of which the efficiency is going up, the power cost comes down, the power cost comes down, the green hydrogen cost comes down. The second part is the electrolyzer cost, which is going to come down because of the larger scale of production. The third thing is the efficiency of the electrolyzer, which is right now running close to 64, 60 five percent, which is expected to grow to 80%. So these are the three elements which is going to happen with the largest scale of production over a period of next five to six years time frame, and this will be, the green hydrogen cost will be lower than the gray hydrogen cost. Like, today, the green power cost is lower than the gray power cost. Already, we have achieved that. So it's a it's a size of the scale of operation, which is because of which it is going to change. So that's that's the thing. And with regards to the capital expenditure, just to give you approximate color, the the cost of the green hydrogen electrolyzers today are in the range of 600 to $700 per kilowatt hour, which is going to go down by 80% in next ten years' time frame based on the estimate which is going to which has been done. So that's how the learning curve is being projected. And so the costs are going to be at par in next five to seven years' time frame. Until that time, these things will get mitigated by way of the RTO obligation or green power green hydrogen obligations. Like, five years ago, the solar power was sold at 5 rupees, 6 rupees, and there was a solar power purchase obligation because of which there was a PPA agreements which were there. Similarly, the green hydrogen purchase agreements will be coming up, and then in five years, I think this cost will be coming up. So these are with respect to the industrial application, which will be in the refinery and the fertilizer space. Then mobility area, which may be taking little time, but we believe that the large scale, operations like mining, and locomotive ship, These are the areas where it will be, economically viable in probably four to five years' time frame. And just to confirm, sir, in this agreement with SK, does this involve any capital commitments right now? I mean, let's say, the next couple of years. I understand it's still more of an, you know, assessment process that we do. But in the next couple of years, would this entail any sort of capital investment or commitment? Yes. Absolutely. It will be coming as soon as we complete our scoping exercise. There will be the you know, various projects will be conceptualized, then that will be presented before the respective boards, and then boards will be deciding to look at those opportunities and evaluating it and then considering those capital commitments. As in then, the respective boards of both the companies consider that, we will be informing to you. Okay. Thank you. So just maybe one one more question to get an understanding on the current ordering pipeline on the renewable front. It is very evident that our focus has been on the vendor and the hybrid side, especially in the recent business. Just to understand in your assessment, you know, what is the quantum of this that we see coming from SECI and other states, on the wind and the hybrid project for the next fifteen to eighteen months? Because that will give us an idea of the opportunity that you have over there. So I look at this page that, typically, you know, the at 5% demand growth, you are talking about close to nine gigawatt of the, demand, which will be required to be met by the renewable sources. For that, approximately 25 to 30 gigawatt of the renewable capacity is required. So that's the kind of a quantum which I see that various agencies will be coming every year. And particularly on the, you know, build up the hybrid front? It's very tough for me to tell you that what how much will be hybrid and how much will be standalone. But on a consolidated basis, you can consider 25 to 30 gigawatt per year. Sure. That is helpful. Thank you. I'll I'll join back in the queue. Thank you. Thank you. Anyone who would like to ask a question, you may press star and one. The next question is from the line of Shivapit Mitra from JM Financial. Please go ahead. Yeah. Thank you. Sir, with regard to the earlier question where you mentioned that if one can look at a 20 to 30 gigawatt kind of annual pipeline in terms of tenders, you know, based on tariff. In your opinion, you know, given that we have basic custom duty and ALMM, which will, you know, come into force from next year, would you perceive any, you know, short term capacity constraints that can come up given that, you know, domestic solar manufacturing capacity is probably limited to six or seven gigawatts? There are two ways to look at the situation. Number one is that, you know, you can still import panels, but then the price of the panel will be higher, and that will reflect in higher tariff in the base. And that is what you might have seen and observed is that the tariff which was secured before this announcement of 40% duty, the tariff of the in the bridge was close to 2 rupees rather it was 1 rupee 99 paisa, which went up to 2 rupees 43 paisa. So there is effectively 21% increase in the tariff, which has already happened. And, which is reflection of, that higher duty as well as there are new capacities which are coming up for manufacturing panel in India, wherein the cells can be imported where the duty on cells is lower than the panel. And, also, there is a incremental cell manufacturing capability, which are also coming up, which will be on stream in production in calendar year '22, and we'll be importing wafer and, where the duty is zero. So it's going to be a a hybrid situation where some capacity will be imported in the panel form. Some capacity will be imported in the cell form, and the panels are manufactured in India. And some capacity will be in the form of import of wafer, and cell and panel is manufactured in India. So because of which, this blended tariff will be arrived, which is what you are seeing at 21% increase in tariff. We need to really see how the the domestic capacity is ramped up. I believe that with this duty, the the ramp up in the capacity will be pretty rapid. And but there will be upward pressure on the on the tariff on the solar power in time to come. Understood. Thank you for the explanation. Secondly, you know, as you mentioned that with, you know, tariffs starting to move up, you know, my understanding was that the the reluctance from many of the discounts to sign solar PSAs was because of the race to the bottom in terms of tariffs, and everybody wanted to wait for the, you know, next tender which started giving up maybe a slightly lower tariff. So given that now that trend has reversed, are you seeing, you know, some kind of traction in incremental PSAs getting signed? So I believe that they will be getting signed now because that was the problem which was happening in in solar PPA. And I don't think tariff is a problem. It's a trend and fluctuation is a problem, and that's why you can see that 810 megawatt of our 69 PPA, a % of the capacity is tied up and PPAs are fine. And it is the shortest span of time, which was not even seen in the solar, bits. So it's more of the fluctuation and more of the the, you know, variation. That is what has been a detriment in signing of the solar PPA, which I believe will be signed as because the tariff will start moving up. Understood. Understood. So just last point of clarity is on the 39 PPA signing where you're mentioning, the back to back PSAs with the respective discounts have also also been signed. Absolutely. They have been signed and made it. Correct. Got it. Thank you so much, sir. That's it from my side. Thank you. The next question is from the line of Mohit Kumar from DAM Capital. Please go ahead. Yes. Good evening, sir. And congratulations on decent set of numbers and the number of the new initiatives you have taken. So my first question is, sir, we have chopped out 10 gigawatt target till FY twenty. In this particular 10 gigawatts, sir, how much is expected to be capped with PPA? And how and second is the other question is, how are the pricing? So firstly, it is not 10 gigawatt. We are talking about 20 gigawatt capacity by by 30. Second is, it's all PPAs are tied up by your competitive bidding, whether it is captive or whether it is third party. And we have to participate, and we are not sure whether we get it or we don't get it. So captive also, it was not our choice to get it from JSW Steel. It was a competitive bid which was organized by JSW Steel, and we participated. And, we became l one, and we part we got it. The 50 bids also be secured because we became l one. So it is not in our hand how do we get it. Understood. During the quarter, sir, operational question one, two, the capacity went up 2,045 megawatt. So are you selling the excess capacity in merchant market, or is it under under the cost of life? So these are the bilateral agreements under which we are selling, and we will be signing up the PPA in the course of time. This 45 megahertz additional. Right? This additional over and above the PPA. Yeah. You got me right. Yes, sir. Last thing on this, sir, on on on the hydrogen, is this agreement with SFI is exclusive to us? And are you willing to pursue the the the PLI scheme, like, you know, which most likely will come up in the in the the next eight to nine months, especially in the electrolyzer. So we are not talking anything about the manufacturing. Okay. Understood, sir. Understood. Thank you, sir. That's it. Thank you. Thank you. The next question is from the line of Swanli Maheshwari from Edelweiss. Please go ahead. Yeah. Hello, sir. Good evening. Thanks for the opportunity. Sir, you mentioned on the green energy side, green hydrogen side that the mobility area is is likely to take some time, maybe, like, about nine to ten years. And now, on the on the other end, that we are just witnessing that there is the ramp up of the EV that we are looking at. And maybe in the next five to seven years, there could be meaningful adoption to it, baby. So just wanted to understand your thoughts on this one that whether both the things will code this or the green hydrogen kind of seconds to eclipse the the EV five really. Thank you for your question. See, right now, we need to understand one part is that there is this is a proven and established technology, which is already prevailing to produce green hydrogen, and there is a market which is available in the country. So there are the two ask in the current environment. One, there is has to be a policy environment for developing this technology on a massive scale for replacing the gray hydrogen. So that's one side which I have explained that the way the gray power was replaced by the green power by a policy intervention with a certain purchase obligation, the same way the new policy framework is being institutionalized, and government of India has already started the consultation, and stakeholder consultation has started. And probably, we can see in next twelve to eighteen months time frame that policy will be in place. Second thing is to reduce the cost, which will be happening by by increasing the size of such market because then only the commercial production and more and more investments are going to come up in this area, and that will be reducing. And that's why I said that with these two initiatives, in next five years' time frame, they'll the green hydrogen will be at the cost parity with the gray hydrogen. So this these are the two sites on which it will be working, and we will have to be this is this is space will be evolving the way you have seen the renewable power has evolved or the way you have seen the electric cars have evolved. Electric cars were not economically viable six years ago. Today, they are economically viable. And you can do the commercial production, and then you can sell them. Same is the renewable power. So same way, it will be happening in the green hydrogen. In case of the mobility, it is going to take time because, you know, you need to see the hydrogen is going into the fuel cell, and then fuel cell is generating electricity. And then the it is that electricity is running the car. Okay. Now the technology is being developed that directly from the hydrogen, the car is powered or the or the, you know, engine is powered. Then the real efficiency will be coming up, and for that, we believe it is going to take some more time. However, for certain commercial applications as well as the long haul mobility applications, it will be absolutely economically viable in five years' time frame. Right. So that that implies that, basically, both the things can coexist in in, say, next five to seven years? Yeah. Yeah. So green power and gray power are going to coexist maybe more than ten years, fifteen years also. So I don't see that everything will be switched over overnight. Even the electric cars are not going to replace the IC engine cars for even for next ten, fifteen years completely. But, yes, the penetration is becoming much faster because the moment the cost parity comes, the the the replacement or the transition happen very quickly. Like today, you know, our power demand is growing every year by 5%, but the incremental power which is going to be generated by the renewable sources only. Because Okay. Positive. The cost parity has already come. The the power of, whether it is produced from the gray, fossil fuel or from green power, it's the same. But the tariff is lower by the renewable power. So it is cheaper to do that. Only that is the transmission cost is higher because of the intermittency. So that intermittency is also being taken care by the new technological intervention, which you will be seeing in next, one or two quarters we will be talking about. And, that is also is going to change the future globally and also in India. So we are taking certain decisive steps to take care of this intermittency and and solving that issue for the grid. Got it, sir. But second thing, on this recent dollar issuance of about $700,000,000, you know, just wanted to understand that that what was this hedge cost and and then what level are we hedged? That's first. And just a clarification for more, you know, dollar loans in terms of cost. So this yeah. So I mean so, you know, the the coupon of the bond is 4.125%. It's a ten year duration. What we've done is that we've done a call spread for the entire ten year, for the entire $707,000,000. This was a 10 n c 5 bond. Right? So this is a callable bond in five years. So what we've done is in the first five years, we've covered spot to ATMF. Right? And after that, you know, there's a range. So therefore, because at the end of five years, there's an option for a liability management subject to, you know, the markets and levels and spreads at that point of time. So the all in inclusive cost, on in INR terms basis is about 8%. Okay. Okay. So the the two two two two things, Swindon. First is this that, you know, the current IRR loans, which are all linked to bank MPLR, are essentially a floating rate loans. Right? And given where we are with inflation coming back, it is broadly understood that, you know, the rate curve should be steepening going forward. Right? So what we've essentially done is this, that by doing this, either the headline cost reductions because the IMF loan was more than 8% that we have replaced at the current MCLR. And but more importantly, this this not this 8% over the next ten years, right, in a rising rate environment. So that is the other unquantifiable benefit, so to say. Understood, sir. Thank you. Thank you so much, and all you do. Thank you. The next question is from the line of Abhinit Anand from MK Global. Please go ahead. Yeah. Thanks for the opportunity. Now this this the coupon that you have bond that you have raised, is it fair to assume that for all your RE power that you are going to put in, the average cost would be near about the same? Abhinif, I wish, you know, I was able to give a a clearer answer on this because, see, at any point of time, there are different components of you know? So so let me give you what are the possibilities. Right? So for example, this was a double b plus. Right? This was not an investment grade. Now depending on, you know, the counterparties you have, especially, for example, or any other sovereign entities or counterparty, you can potentially have a one large higher rating, which means a tighter coupon. Right? But then the unknown is where do you think the ten year US treasury will be, you know, at the next time when you are trying to tap into the market? And what what will be the credit spreads and the term premium outstanding at that point of time? So there are too many moving parts, but clearly, purely everything else remaining the same given that, you know, here, our counterparties for this particular bond were non sovereign entities, and therefore, it was a double t plus. The expectation is this, that if we are potentially tapping future issuances for a renewable project, especially with techies counterparties, they are likely to be investment grade bonds, and there, the coupon should be even tighter than this. Everything else remaining the same. Yeah? So put it in the perspective, had it been a SECI bid like what we have done, and in the same condition, it would have been anything between 3.5 to 3.75 as against 4.125. Okay. Okay. Now secondly, I think I think Prasanthar did mention that the tariff that has increased. Right? And it did mention basic customs. Isn't the basic customs duty appeal from 04/01/2022? Yeah. So the present tariff for if correct me if I am wrong. But present tariff is more of a function because of solar module prices globally have gone up because, you know, the way Chinese prices have gone up. Right? Both. Because you need to understand the bit when the bidding happens. After that, PPA is signed, then it becomes effective, and then you get eighteen months to complete it. So so if any bid is happening today, it will be after three months, it will be EPA will be signed, and then you get eighteen months to complete it. So that time, the duty will be applicable. Okay. Okay. Thanks. Thanks. Those are the questions. Thank you. The next question is from the line of Apoorva Bahadur from Investec. Please go ahead. Hi, sir. Thank you so much for the opportunity. Sir, at the beginning of the presentation, you stated that the board has approved green and gray power business reorganization. Could you throw some light on that as to what are the timelines expected and what sort of outcome is likely over there? So there will be a separation of two business verticals in in this, and then which will be examined by by various, you know, advisers. So we are expecting that in next ninety to one twenty days time frame, the options will be crystallized and presented to the board. And then once board approved, then necessary steps which will be required to be taken will be taken, which will be various stakeholder approval including lenders, shareholders, and maybe we need to go to the NCLP to do this reorganization or restructuring of the business. So that will be step a. Step b will be then at right point of time, we need to decide that if any strategic investor is coming into the green power or any IPO of the green power business or demerger of, green power and gray power. So there are number of options which are on the table, and, we will be evaluating all those options in due course of time. For that, we are keeping first, the structure ready and with all necessary approval in place. And then accordingly, all those options will be packed. Yeah. Apurva, if I may add to that, so, you know, additionally to what Prashant mentioned, see, essentially because you also asked what kind of scenarios, can be likely. It would be a bit premature to comment on that because, you know, when this evaluation so the board's approval is to evaluate various options to reorganize and go into the merits of each of those options. Right? What are the transaction costs? What kind of approvals, etcetera? You know, there are stamp duty tax implications. There are compliances with companies that study LOD requirements, etcetera. So a very holistic, view has to be taken. So all the all that we have got an approval at this point of time is to go ahead and start working with advisers, etcetera, to start evaluating the merits and demerits of various options. Once we've completed that exercise, as Prashant mentioned, we'll go back to the board and present. And at that point of time is when, you know, the things that Prashant was talking about will kick in. Right? So I just thought that I'll I'll make that very clear. And, however, from an intent point of view, there is absolutely no ambiguity because today, if you look at our corporate structure, you know, we have days of the energy, and then we have hydro as a separate % owned sub. We have future energy as a % sub, which is basically the vehicle at this point of time. But for, you know, all the wind and solar initiatives. So you know, what is the most efficient way to house potentially all of them together so that if there is an opportunity to get a potential investor for, you know, all the exposure to the green assets only, one can have the flexibility to do that. So that is the broad thought process. You know? But but but I just wanted to make it very clear that the approval now is to start evaluating various options and go into details of the merits of multiple options available. Yeah. Understood. And hydro assets will fit in the. Right? So, again, you know, I so the point of giving my previous answer was this that, you know, it is premature to preempt what is likely to happen. You know? The idea is what are the pros and cons of different functionalities, and is it that route the board would want to follow. Right? So I would not want to preempt the discretion of the board at this stage by trying to second guess what is likely to happen. Yeah? Okay. Sure. No worries. Thank you so much for that. Just one more question on our agreement with SFI. Now I understand it's more of a long term debt, and we are seeing the way this cost of clean hydrogen goes. But so I mean, hopefully, it's your fault to the range where it becomes viable. Then what sort of business model are we looking at over here for the energy? Apurva, you were not very audible. Can you please repeat the question? Sure, sir. I was asking about our agreement with SFI. Now one once the cost of green hydrogen to the viable level, wanted to understand what sort of a business model are we looking at for JSW Energy over here? Oh, see, look at one thing is it will be economically viable day one. But then but the thing is that whether you are able to match the price with the gray hydrogen, then there will be no production of the gray hydrogen incrementally in the country. That's what it happens. Like, you were producing the renewable power. It was higher the than the gray power or the the thermal power, but they were economically viable. But the tariff at which PPA was being signed was 6 rupees, 5 rupees. That is what I explained is that the government government globally as well as in India is coming up with the gray green hydrogen purchase obligation in which the industry will have an obligation to purchase green hydrogen or green ammonia for various industrial applications. So there would be economic viability day one, whatever projects are undertaking. But in five to six years time frame, the cost of the green hydrogen will be at par with the gray hydrogen at that point of time. All incremental capacities will be by the green hydrogen. That's what we mean. Okay. Got it, sir. So so we will be looking at producing green hydrogen or supplying the power green power which is required for producing green hydrogen. It is. It's a combination. Okay. So we'll be running the electrolyzers as well. Okay. Okay. Got it. Thank you so much. Thank you. The next question is from the line of Rahul Modi from ICICI Securities. Please go ahead. Thank you very much, sir, for a lot of detailed answers and giving us some, you know, path ahead. So just a couple of questions. So when do you expect the bidding, you know, in terms of whether SECI, non SECI? Because, you know, over the last, four to six months, we've seen a bit of sluggish bidding, bids coming out. So you when do we expect this to, you know, take off in a meaningful way? Because, obviously, we all want that, you know, 20 gigawatt should start getting tender. So what is your, sir, internal thought process on that? No. No. You are seeing a quite a bit of good amount of bids, but, you know, the problem is on the solar side, there has been a little bit of sluggishness in terms of the converting the bids into the PPA. But I believe that that is also going to ramp up over a period of time because, you know, now what is doing is a very different structure. Is, first, they are signing, the, in principle, PPAs with the respective discount, and then they are coming out with the bids. So that is what is eliminating the risk of, signing the PPAs. And so I I believe you you will see a a pickup, now, going forward. So it's it's going to be very rapid. Right. So what's your thought on this recent Andhra issue? Now Andhra has been coming about reducing costs in terms of power purchase cost, but that's also come at a cost of not of, you know, backing down of a lot of renewable power. So any thoughts on on that, sir? How do you see business model of renewable energy going forward? Do you see that we'll be getting into a deemed generation kind of a thing? How will it work according to you? I look at this way that all the power purchase agreement, they have a sovereign obligation documents which have been, you know, held it by all educating authorities in this country. And so I do not see any kind of risk in any of the power purchase agreement which has been signed at any whatever tariff it has been. There had been some hiccups by certain, you know, discounts in the past. But, eventually, the law of the land has prevailed, and, the people are getting the requisite relief from the higher educating authorities. So that is what sometimes you face the challenge in developing technology. Like, when you build a technology in when there's a learning curve which is happening and the costs are coming down, then certain, you know, authorities take a different view. But the way the PPAs have been structured, they cannot be renounced. That's the point number one. The point number two is that that going forward, there are the two, three things which are happening. Number one, the new agreements which are being done is being done by SECI, which is a part of the Ministry of Power. That's number one. So Yep. Which is in changing the quality of PPA. That's number one, which is happening. Number two, there are two structural reforms in this country are taking place and which are in the very advanced stage. Number one is the smart metering concept which is there, which is not only a metering for smart meter for tempering for the test. It is for implementation of a prepaid meter construct, which will be implemented in next three to five years time frame in this country. That digital meter will be enabling that power flow will automatically stop if your your meter is not charged by a way of simple mobile phone SMS. So that's point number one. Point number two is the another structural reform, which is government of India is now pushing. The subsidy which is being announced by the state government in the DISCOMB will be paid directly to the consumer. The moment this happens, then discount will be having enough cash flow. These two reforms will change entire thing. You don't even need the privatization if these two things are taken care of. So the entire economics is also going to change, in next three to five year time frame in addition to the, the the legal entity of the PPAs. Right. So thank you so much. A very, very helpful answer. Thank you very much. All the best. Thank you. The next question is from the line of Sumit Kishore from Axis Capital. Please go ahead. Good evening, Prashant. Thanks a lot for this opportunity. My first question is, after a long time, you have seen an increase in net debt for GSW. So I think we're back on the CapEx part. Could you please elaborate on how much CapEx have been spent for the particular project so far? What is the project progress? When we're going to be commissioned? Satish, you would like to Yeah. Yeah. Yeah. I'll take that. Hi, Sumit. Sumit, you know, on the on the CapEx side, on a lighter note, you know, I just want to remind everybody on the call that I remember my my very first call after moving to this role, in the month of February, Prashant's mentioning, in the earnings call that we are at the end of the deleveraging cycle, you know, and, then two more quarters went by the December and the March, and we kept on reducing the net debt. You know? So that was on a lighter note. So, yes, you know, we are we are two quarters behind the curve and beginning to start deleveraging. But, you know, on the on the Kutaher project, specifically, so far, we have already spent over 650 crores. Construction is on in full swing, but, know, we have already committed close to 1,800 crores in terms of the ordering, placement of orders, etcetera. And, you know, as we have guided to the markets, our targeted COD is September 2024. So we are reasonably and well con We are we are actually working on internal targets to commission well before that, but at least September 2024 does not appear to be at any risk, whatsoever at this point of time. The project construction, is progressing well. You know, the a lot of you know, more than 30% of the tunneling work has already happened. All the phases, all the sites are are are are are open. You know, all the civil packages are on and full swing. The electromechanical packages are also underway. So, yeah, that's, that's on the side, Sumit. Sure. Well, thanks to this. So the CapEx really went into this project, right, during the quarter, is it? No. So we've also spent, during the quarter, you know, on the renewable projects as well. You know? So I would say it would be a mix of both because, you know, if we are saying that construction is on and full swing, at the renewable sites also, We have already started spending, money, you know, especially on the solar, projects. Starting from this quarter, actually, you know, current quarter, the second quarter as in when they report, you will start to see higher CapEx outflow because as we've mentioned in the presentation and the release as well that, you know, for the solar panels, for example, the ordering is already done. Right? But we have finalized orders for the wind turbine equipments. And during this quarter, we will actually start making advanced payments, you know, under the terms of the, the contract. So the cash outflow will start increasing, materially starting from this quarter onwards. Sure. In fact, next quarter onwards, we'll be good if you can start sharing the capital working progress numbers for both hydro renewables, you know, so that we get a better sense and progress. My my second question is for the nine fifty eight megawatt group capture PPA signed, what is the tariff at which you just signed and who are the other bidders and then what's the tariff that they did at? I don't know what the other bidders have been the tariff that GSOPC can answer with that. And we have already disclosed our blended tariff for the entire 2.5 gigawatt of capacity. Sorry. What is the tariff for nine fifty eight megawatt? For the blended tariff, which we have disclosed already, is 3 rupee 30 beta is the blended tariff of 2.5 gigawatt. Okay. Okay. So my third question is, there is a sunset of the SUV, yesterday, and no new d duty seems to have been announced to replace it. So how are you seeing the, you know, this interim period before the April 22, you know, basic customs will be fixed in? So as I explained just now, there are the three models based on which you every every developer will be working. So as far as we are concerned, what projects we are undertaking, the panels are starting. We will be receiving the panel for shipment. It will be arriving in the September. So all of our capacity will whatever we are building at two twenty five megawatts, the entire panel will be received before December of current calendar year. So there will be no duty incidents as far as what has been announced so far. But in case there is a continuation of the safeguard duty or anything, we will be it will be applicable to us. So and going forward, as I have explained, the there are there is a strategy which people are building either they pay 40% duty, they import panel, or they import, sell, and get the panels contract manufactured in India, or they import the wafer and do the sell and panel manufacturing on the contract basis. So there are a lot of capacity which is getting built, and you can do the contract manufacturing or you can do all three. So there are number of options depending upon the each developer that those strategies will be filled out. Yep. And just to reconfirm, up to 2.5 gigawatt under construction, excluding the hydro project, what would be the mix between wind and solar now? Because it keeps evolving. So in a in this 2.5 gigawatt, two forty megawatt is the hydro, two twenty five megawatt is solar, and balance all is very close to 2,000 megawatt as well. Sure. So just my very last question. You know, I attended a session by TIO where, you know, they they mentioned that, you know, coal based power capacity in the country since it is so dominant, it and and thermal capacity and used to step up production of blue hydrogen as they call it, you know, and utilize the fixed investments better before directly moving on to the green hydrogen economy. So do you have any thoughts around this? No. I'm very clear that it is going to happen faster than anybody is thinking. Like, everybody was thinking that the thermal power capacity will keep on adding in this country, but policy framework does not permit it. Because based on the RPO obligation, even the DISCOMO wants to buy power at 2 rupees and enter into a PPA, they cannot because they have a obligation to increase their RPO obligation. So so the direction is very clear. Number two is there is no capital available either from the lender or from the capital market to build a such kind of a capacity. So the direction is very clear. It depends on individual to individual when they want to accept the reality. Thank you so much. I wish you all the best. Thank you. Thank you. Ladies and gentlemen, due to time constraints, that was the last question for today. I now hand the conference over to missus for closing comments. Thank you. On behalf of JM Financial, I would like to thank the management for this opportunity to host the call. I would now like to hand over the call to mister Ashwin Bazaar for any closing comments. Over to you, sir. Yeah. Thanks, Subodip, and thank you everyone for joining us. Please feel free to contact us if you have any further questions. Thanks. Thank you. On behalf of JM Financial, that concludes this conference. Thank you for joining us, and you may now disconnect your line.