Ladies and gentlemen, good day and welcome to the India Grid Trust Q3 and 9 months FY 'twenty results conference call hosted Aedel by Securities Limited. After the presentation concludes. I now hand the conference over to Mr. Swani Maheshwari from Edelweiss Securities Limited. Thank you, and over to you, sir.
Thanks for that. Good evening, everyone. We welcome you all to Indirectory Corp's Q3 and minus 5.3 conference call. At the outside, I would like to thank the management for giving us opportunity. Mister Harsha, CEO with the day on the call.
And I would like him to, put his pending opening remarks first and then we'll have the question and answer session. Over to yours. Hi, Swannim, and, hi, everyone. Thank you for joining on call. I welcome you all on the 11th quarterly in this call for indeed.
Great. I will just take you through the investor presentation and a summary and outlook. And after that, we'll open for, for the questions. I am on page number 1 of the presentations which earlier described as a vision overview and vision. A vision is to become the most admired vehicle emission, and we do envision to achieve a 30,000 crores of AUM.
While it distributing predictable and growing distribution and focusing on both in cloud corporate governance. To introduce us, I just need to say we are the only power transmission focused lead platform. AUM today is approximately 11,000 crores, and we own 18 transition lines and full substations across 11 states. We are rated AAA by all the 3, replicate rating agencies and our residue, residual contract line of the agreement in about 32 months. However, we continue to own the assets beyond that as well.
I'm slide down, Sarah. I would just take through a few seconds to describe, the shareholding at. So Integrated Center is, majority owned by ATR with 23%. Ah, 15% by Star Lake Power. The sponsor had started the in degrees as an image, and 62% by other unit holders.
Storage Power has also agreed to sell the 15 percent to KKR, which will translate KKR holding to approximately 38%. We will subject to approval from, Sebi as well as some other guidelines. The investment manager, which runs Indiviid, around 60% of that, and 40% is owned by Direct Power. So on the 2nd anniversary of the main transaction, KKR will acquire another 14% and will require 74% holding. Access trustee, as stipulated by Citi guidelines, does a trusteeship role for individuals for the investors of individuals, and the below are the assets which we have acquired since IPO, which is, enumerated in the gray and blue boxes below.
On slide number 8 is our shareholding, as on 27 December. You can see our shareholding is very, very distributed across long term FII between KKR and GSE and other investors. As well as, VPA's mutual fund and life insurance companies, amongst others. Today, we have about 7 life insurance companies who will be integrated for mutual funds. And value of retail and Etcetera investors are indeed approximately two times since we listed in June 2017.
Coming to quarterly results, quarterly financial highlights are year on year, EBITDA increased by 102 percent for the quarter. Our availability has remained greater than 99.5% A debt to AUM is below 49%. Our rating is triple a. And one of the key updates that has happened in the quarter is that Sabi has enabled the right issue guidelines for index, and we'll talk about in detail in the subsequent slides. The and the we are continuing to distribute 3 rupee via a unit interest, and this time we have distributed our interest.
On slide delivery, I will elaborate the key positive regulatory development that has happened in this quarter. And before I run into the specific right issue, guidelines that are published, I would like to take Paul and describe what has happened over the last four quarters. Over the last four quarters, there have been significant changes by regulatory authorities to provide conducive environment for enriching needs. Starting with in April 2019, Citi issued a Cepala, which enabled in which to have higher leverage than 49% under, substantially sick regulation and monitoring. As well as the inventories maintaining AAA.
This and enhance the attractiveness of the milk as a an investment option, considering the fact that you can generate better returns and maintain a table rating. So keep on to that, Seli came along and also reduced the rock size from minimum 5 lakh to 1 lakh Our lot size has reduced from 5103 units to 1701 units. Believe the liquidity has improved because of that and and and I'm sure in general, the participants have seen the benefit of that. Help change, which will happen now. A rights issue, which I believe is, a very important impetus to enrich, considering the fact that invites our proprietary platforms, which is going to raise capital and acquire assets more than normal companies, And therefore, rights issue being the most efficient and flexible way to raise capital, we believe is a very important enabler for inputs for future capital reasons.
Besides that, this will also enable us as managers to offer opportunity to participate in every capital raise to all classes of investors as against an interest issue where, some of the investor class was not allowed. And the last, we are in quarter 3, early part of the quarter 3 also enabled banks to rent to invest subject to certain criteria. So the last four quarters, we have seen the amount of regulatory trust which has, which which makes the environment conducive and the opening team for English and Newton. Turning to operating performance for indie grades. We have presented both Ytd FY 2020 as well as quarterly 20 financial performance.
As you can see in all the assets, we have maintained a substantially higher availability In some cases, slightly lower due to post merger events, and we believe that we'll receive a post merger availability certificate policy. Coming to the financial results for quarter 3 FY 2020, as presented in slide number 30. In this quarter, we have recognized 339 crores of revenue. And earn approximately 353 rand 1314 crores of EBITDA. This is slightly higher than two times the same period of quarter 3 FY2019.
This is largely on account of the acquisitions we did in quarter 1 quarter 2 this year of our SS and OGPPN. In the quarter, we had receiving full impact of both the acquisition. We have maintained a distribution at 3 rupees. And with this distribution in that, we have done 30.56 rupees a unit distribution since lifting approximately 11.35 crores. On a quarterly basis, we have distributed agreed to receive a 175 crores this quarter.
Fee rupees a unit, which will be paid out as interest. The next slide is described are a waterfall from EBITDA to distribution. As we said, we earned 313.9 crores of EBITDA in quarter 3. We have paid net net interest expenditure of 107.5 crores. We have repaid loan of 3.9 crores You know, working capital changes are 48.1 crore.
Out of this, a significant number is About 14 crores is the value, which is on account of one time insurance payment as advanced for the rest of the financial year. There is approximately 6 crores of I'm in PNC, which are paid, and there is approximately 23 crores of slippage of receivables. It's calculating approximately 6 days. So we have ended the quarter with 96 days of receive outstanding. As against the normative 90.
We believe that on a quarter on quarter basis, this is a small modification at small event that continues to happen. And we provide, capital reserve, to adjust for this. We believe in quarter 4, the correction will be better. And that has been the trend over most of the years in past quarter 4. And you render here with the plan 90 receivables days.
We spent 3 crores of CapEx as well in this quarter. This has gone towards restoration during one of the all of the post merger events. We have filed the insurance claim for that, and we believe we'll be able to recognize, that we realize the cash for this event. Basic for a patch expenditure largely on the interest income that we earn. In all, we earn 154 crores of NDCF, And on account of the specific one time expenditure of insurance for the advanced year, as well as some small working capital changes we're using the NIM crores N1 crores reserve this quarter, and we have distributed 100 and 75 crores of distribution for the quarter.
Next slide is slide 15, that we provided the distribution of 173 translated into the distribution per unit, 3dpe, entirely paid as interest. The next date would be 27th Jan 2020. Record dated in 28th Jan 2020, and we will be paying the distribution all of the 4th 6th February 2020. Next is on our liability side on our balance sheet. We believe we have, contained the interest rate as well as refinancing risk till now.
As you can see, our repayments are staggered across the year. And we have fixed our interest rate. On account of that, we are ready to have this cost of borrowing 88.75. Our weighted average maturity of net reward 7 years, and we do not have any material refinancing coming in the immediate next quarters. The first refinancing amount or a large amount is coming in FY 'twenty three, and we believe we are adequately capitalized as well as preferred policy.
On slide 17 is a performance in 15. As you can note, on the bottom chart, we are at 0.07 Bika, which is one of the lowest in the indices in comparison to any other indices as well as stocks. May signify that we remain in low volatility stock. On Slide 18, we'll be presenting our total return and a total return as on, January 17th last week when we issued this call. Is 24.1 percent, which this signifies that about 27.6 rupees are distributed as dividends.
They were 3.5% in the negative price at 96.5. In comparison to most indices, we have outperformed the market and this is something which we have, been tracking over the last several quarters. This is while maintaining the beta of 0.07. We believe that with our focus on delivering majority of total returns via distributions over a period of time, a substantial of a return would come from distribution, and it would become it would continue to improve on a compounded basis. On Slide 19, it's a small comparison of how, globally used platforms were performed compared.
And everyone can see that way, we are small in comparison to the global platforms. However, it is a significant size in terms of a market cap. And in terms of a yield, we are trading at a substantially higher spread versus the, GSEK. Which simply is fairly attractive. And globally, these, platforms are treated from 2.5to2.5percent based on the rating, liquidity, growth, as a activity.
And we believe that in India, we have, better stable better and stable platform with the highest rating will be over a period of time this should improve. I would go to slide number 22 where there is a growth pipeline for which we have signed agreements for. The first four projects on the left for which we have signed accretive agreements, including framework assets as well as either post offer, and this put together is approximately 7,500 crores. And as per our earlier guidance, we intend to execute these agreements and malaise in next 12 to 18 months as and when the projects are ready. There are other projects with the sponsors as well as there are third party projects We will continue to expect to be a relevant player in acquiring that one point.
With this, I would like to just take a pause and, so I may open up for the question. Which we then we can, go in detail to the specific savings that they must have.
Thank you very much. On the touch tone telephone. Participants are requested to use handsets while asking a question. The first question is from the line of Mohit Kumar from IDS And Securities. Please go ahead.
Yeah. Good evening, sir. Yes, sir. Two questions. So first is on the year.
I think the total revenue for the quarter compared to the q 2 health decline. Also they did the, I think, had the kind of 40 odd grammar, right, in the same
You're right in saying that this has happened because in quarter 2, there was approximately 40 crores or 44 crores of one time revenue in EBITDA that was, generated based on earlier received of one of the earlier petition. On a comparable basis, the EBITDA has increased. So so this is normal.
The rate should continue, right, to see the current debit cover down the road.
Yes. That is correct. This is about 313, 300 crores at approximately, run rate, which will continue.
And secondly, sir, given the fact that we have to dip on our on our cash reserve to meet the, GPU guidance for the Q3, getting similar risk enhancing because of the fact that you see the the the discounts of not paying in time, and our working capital increases.
Yeah. So I don't think, that this has happened literally on account of working capital increase. I'll tell you there are 2 anomalies that exist in our business if you come to quarter on quarter. In quarter 3, we make a a one time payment of for insurance for the entire year, approximately 16,000,000 gross. And which comes as a quarterly, you know, it looks like the quarterly did, but then it subsequently balances off for the rest of the year because that payment is made annually.
And there are some other one time charges also that have been made. In addition to that, usually the second, what we have seen over the last 5 years, Quarter 4 is not the best connection since the quarter 1 is down when quarter 2 is better and quarter 3 is down. So there's this quarterly cyclicality that exists And we're very confident that this 96 days of this year will become 90 days in, quarter 4. And we're already seeing those trends in the subsequent collections.
Okay. Yeah. So my understanding is most of the, the ECLs receivers are supposed to get paid on the since the penalty, start getting levied on this car for 45 days. Am I right? So for us, it's 90 days.
This is in the higher side, isn't it?
Sorry. So two answers. I have two two questions in this. One yes, the penalty gets levied over 45 days and we also receive the same. 2nd, the comparable number for 45 days is 75 days.
Because in the 45 days, the unbilled amount is not included. Whereas when we communicate 90 days, it includes at the end of the month, the unbilled amount. That is the, I would say, the other accounting difference between the two processes. So I would compare it with the 75 90 days, to compare the same.
Last question, what is the cash, on the books right now, and what is the debt in the books?
To be honest, you know, we have not disclosed the cash on the books and the financials for us to communicate that would not be, possible right now. Having said so, we have a definite outstanding of about 102 crores at, any point in time equivalent for our 3 quarters or 1 quarter of service, and we always maintain higher than substantially higher amount than that in cash. Our debt outstanding is a 5,550,200 crores as on the contrary.
Understood. Thank you, sir.
To answer your question on that one, one more question, we also received approximately 5 crores of late payments are charging quarterly. So I think that works The difference between 75 days 90 days keeps getting paid in the years. Thank you.
The next question is from the line of Aditi Pangi. From Edgardo. Please go ahead. Yes.
Hi, Harsh. You know, congratulations on a solid set of numbers yet again. I wanted to ask, basically 2 questions. One, is that, for the 3 projects, like you have a framework agreement, on which select our, over the next 18 months that we seek to acquire. What kind of monitoring you have in place with them where they're sticking to their commitment of needing the project on time and therefore for you to acquire it.
Under the framework agreement, we have, a very comprehensive monitoring rights starting from inspection, audit or both financials, non financials technical parameters. And for most of the projects, we have already appointed, technical as well as financial advisers to work on monitoring those projects. And I would say that we, not only monitor the progress, but we also monitor the beyond progress qualitative factor as well, which enabled us to finish the due diligence in a more efficient manner in the end. So, yes, we have already appointed advisers to monitor those projects. Are you seeing, any sort of delay, as you stand today with respect to any of the three projects from the timeline that you were expecting?
No. I don't see a delay at the moment on any of the projects that we have expected. To be honest, one of the projects EMICL was planned to be commissioned in the quarter 3, and that has already been commissioned. EMICL has already been commissioned and charged. So the postmodern event have been mitigated there.
So, at the moment, we're not seeing delay in any of the policies. But that's not part of the ROFO project is not part of the 3, but you are seeking to buy first, right? Yes. So it's not about 1st. I mean, we have 4 projects on which we are excluded.
Right? So GNI said it's a local project, class 3 as a framework project. All of them are exclusive to actually so the solid power to approach anyone else, we need to take our tool first. And therefore, we consider all of them as a target asset and monitor all of them in parallel. Second, related question, you know, how is your O and M structured with solar power?
You know, do they bill you, actual to the bill you quarterly? Just wanted to get a sense of how that is progressing and whether you're seeing any sort of increase in earning costs, you know, as now that you have, you know, a few years of these projects under control. Okay. So I would first answer your question in terms of the structure in which we are operating and then the the performance of ONN. I think there are, there are 3, parties involved over here.
First, at the investment manager level, we have our Chief Operating Officer, Mister Satish Telmayer and our team who monitors and, who has all the authority to make decisions on So he's defining the policy on O and M matters. To him, to support him, there is a team, at manager, to ensure the O and M is overseeing well. 2nd, within the grid itself, we we outsource our contracts to 3rd party O and M contractors in which, the purchase orders are given directly by the integrated subsidiaries by the specific SPVs and all the cost is directly booked in the project SPVs. 3rd, stakeholder historic power, which is acting as a project manager under the statutory capacity as required by Citi. And the fee that they get is 10% are all in an expenditure that we incur under individuals.
So it is an it is, a 10% over 10% of the O and M expenditure that we do at any grid. The decision making remains in the hands of the manager. This number on an annual basis is approximately 8 to 10 crores, the fees that select power gets as against the total 90 crores of O and M expenditure. That is done directly by the SPVs to the 3rd parties. Answering your second question over a period of time, our volume contacts have matured and improved.
So rather than some of the cases we have seen volume cost improve as well. So we do we haven't seen any volume cost increase, materially over the last 3, 4 years. That's good. That's all from my side, and all the best for the coming quarters. Thank you.
Thank you. The next question is from the line of Ravi Shrikan from Muuto's family office. Please go ahead.
Hello? Yes. Thanks for the opportunity. Thanks. I had I had 3, tracking any basic questions actually.
So one is on the presentation. You have mentioned that the revenue model for VITR is based on the line revenue line items. This is the availability, and then there is one non escalation, part of the tariff and an escalation part of the tariff. Now this, availability in 2020, I mean, is it If you told me if the lines are available or the I mean, does there need to be any actual electricity flow through the lines as well? Okay.
So to answer very simple question, electricity flow is not a criteria to calculate availability. Availability is just a measure of availability that was ability to transmit electricity and not actual transmission of electricity. Okay. Okay. And for the estimable as well as nonescalable part, So these are I mean, as per the condition model that we had published last quarter.
So is that the actual number, or, I mean, that is subject to change? Okay. So the non escalation component is an actual number mentioned in the contract. The LCMable component that is mentioned the 1st year which is the evaluation here which we are doing is the actual subsequent is compounded based on the inflation assumption disclosed in the in the adviser value. In reality, the same valuation, valuations, the escalation happens based on ERC published, escalation numbers on a semi annual basis.
Okay. Okay. So out of DC, which would be the biggest chunk of revenue? So I'm not as eligible. So we have, if I look at our entire revenue sheet, about 95% will be non at killable, 2%, a 2 to 2 a half percent will be at killable, and about 3% will be infringers.
Okay. Okay. So that's sort of answered my first question. The second question I had was, so from what I understand, the trust sort of gives wants to be underlying as to either as interest or equity. And based on the flows received, it is given out from the trust, either as interest or dividends.
So now the floors actually has all been in the form of interest. So, I mean, is there any process given by the entire investment has been made to lose. I understand there's an attraction part of it. So after the reduction in tax rate, does it make, I mean, I'm not so sure, but does it make sense to have some part of equity as well? So there's a dividend component to the cash payout as well?
Yes. So I think your question is very pertinent, but you know, eventual flexibility in the hands of investors is substantially different in India between our investors, domestic institutions, the domestic family office, retail investors, etcetera. So there's a variety of taxation that is levied in India on the investors. So what we, what we really resolve for is that if we earn, let's say, a 100 rupees of EBITDA. Our attempt is to distribute entire, as much as possible and leave the taxation on the investors because that is where there are very drifts.
In the absence of that, we believe that there will be inefficient, tax treatment that may happen. Harish, so I think it is it is, it is different from different perspective. So we will not be able to answer an absolute balance. Okay. But going forward, I mean, is this how it will stay in the thing that primarily the distribution would be in the form of interest sales only?
We believe so. For for a substantial period, we believe that is better for, overall value chain, and we will be, disputing substantial part of it. Okay. And the last question was actually related to the, I mean, amount of details. So assuming that, I mean, you do not acquire any further assets to your report law.
So this 3 to 3 for you, I mean, how long will you be able to sustain this, payout numbers? Okay. So let's see a scenario where we do not assume and do not acquire me. First of all, I would urge you to not think that they will not be able to inquire on the projects, but let's see. In Escario, we do not acquire any other projects, but we'll be able to continue this one of the 10 years.
So there's a substantial visibility of this year. Oh, okay. Okay. So for 10 years, I mean, even without the report, in fact, you would be able to maintain 33 weekly payout. Oh, beautiful in Flintoc Assets, which are visible to us for acquisition for which you already changed.
Beyond this, if you go back to us, we'll give it a good color of the tenants. Okay. Okay. Perfect. Thanks a lot.
Thank you.
Thank you. The next question is from the line of Santosh Hiradesai from SBI Cap Securities Limited. Please go ahead.
In terms of the growth strategy. So if you need to be on the
Santosh, can you please repeat your question?
No. I I was just trying to understand, you know, get some color in terms of the pipeline of assets that we have. Where where are we on that? And, are we also open to look at, let's say, intrastate projects in terms of acquisitions as and when, let's say, the sponsor is bidding for those assets and getting those commissions? Okay.
So we see a pipeline into two buckets. One bucket is the asset in which we already have an exclusive agreement. So that is about approximately 7000 per 100 crores. Whether it is a report of rainbow asset, the 4 projects that we see in the presentation. That is our immediate goal where there's higher certainty of acquisition and we have fully capitalized for that.
The second group of asset is any future assets with Intercontinental Partners at IFC as etcetera. So that's the future, the Spirit Power or other, completed projects. And the call, as you mentioned, about the interstate projects. Now to be honest, whether it's a select power product or other projects, we will evaluate interest in project as well. However, we recognize the fact that they are, I would say the they are run lots lower than the interstate transmission pool.
And therefore, we will ensure that it does not become substantial part of our portfolio. It will be very small in size and would be resulting in a better indication as well as we would be evaluating the contracts in a far deeper way, and different interest rate assets would have a different answer, to be honest. So to share specifically, would we acquire all intrepid assets? Maybe no. Will we reject all intrepid assets?
Maybe no. The answer would lie somewhere in between based on the and the state with which, the contract is made. And, the next very speaking, it will remain a very small percentage of up to tell you if at all convert such opportunity. Sure. Does it mean that we're also open to, let's say, diversifying to, let's say, renewable assets or something like that?
Or would stick to the transmission assets. So, yeah, so I think at the moment, our charter charter is focused on transmission assets. And as in when, if at all, there is an opportunity that comes along, we would come for investors for their use and approval. Before any such step is taken.
Thank you. The next question is from the line of Sarvesh Gupta from Maxim Capital. Please go ahead.
So first question is, you know, on the current assets that the, you know, outside of the roof and the framework, if it's what kind of project are or what kind of IRRs are available for you to acquire. So, thanks, Harish. I think it's let's say I mean, it's not available to acquire. I I won't be able to answer that question, Viro. Most of the M and A, I would say transmission assets are fairly stable, liquid, and, sendable assets.
And that the most of the transaction that we have seen, there are 2 or 3 bidders that compete for a particular asset. So I wouldn't say that there are some assets which are available at a particular RR and we'll get it, which is, which is, I would say, very high level statements. So we we I mean, I don't know the number. We evaluate every opportunity on a specific merit in terms of capital structure, financing, credit rating, counterparties, and therefore, it's a variety of factors that contribute the eventual yield that you buy. Having said so, what I can, I would say, direct the word is that we look for one most important factor when we apply a project?
Is that after acquisition, this or without dilution, the incremental project must result in accretion or IRR accretion on the immediate portfolio. So that is one of the, I would say, the bare minimum criteria that we apply. That as long as we are our returns are improving after cost of financing, the debt or equity, that will be an accretive acquisition. That I understand, but, let's say, you know, you have 100 rupees, you know, came up. Some asset is being sold at 100 rupees.
And what is the error that will approve to you if you buy it given that it's a stable market? What is what are the current rates going on in terms of error? No, sir. Mister Barigaramanjan, there are no current rates. It's a private market.
If it was listed market, I would say that, you know, the price is trading at a particular price. In a private market when we buy project and a long term cash flow. The price discoveries are subject to many pack, interest rates, liquidity, quality of counterpart a lot more. So, unfortunately, there is no one answer available for me to provide to you that for 100 rupee acquisition, what we would get? Okay.
Understood. Now secondly, on this receiver part, I could not understand, related to one of the documents that were a tedious color. That you are getting a CTCIL as a 45 days kind of a time window out of this payroll charge penalty. And in your case, you explained that, you know, if we subject the account to become 75 days. So what is this the difference, and, can you just explain that part a bit more?
Sure. Sure. So first of all, even for us, parties applies as is. It's just a day of looking. In our books, we recognize the, let me say, 90 days.
On 30th the month or the last day of the month, we recognize that the under the amount is due to us, even though it is not billing. Because we are recognizing, revenue based on the contract. Whereas, our grade has a process of billing on 5th the next month, and therefore, they recognize the revenue the next month. And therefore, for the same outstanding with the power grid accounting and communication philosophy, it will be communicated 60 days outstanding, whereas we will communicate 90 days out standing. So that is just a day of communication, the same receivable days.
And the other it is power grid showing a separate under the amount, and that is how it is separately shown. That's a question. Yeah. So my question was that now now I understand how cars it collects. After that, you you would collect from power grid in some manner.
Right? How much time did last year? That takes about a day or 2. We don't need to connect Power Grades as a CTU within power grid have a responsibility to distribute the money that they receive within about 48 hours to all the transmission licenses. On the average, I would say about 48 hours gap is there.
Okay. Okay. Understood. And you get the penalty, what are your charges connect, collects, that energy is also connected in case it is, delayed beyond 45 days. That's correct.
For example, in this quarter, it shall be collected about 5 crores of penalty on late payments or charge. Okay. Okay. And what can be the norm for this penalty as a percentage of overall receivable that you collect. Okay.
So what is icon? What can be the nonmessage number? So, yeah, so I think it's a good question. I think now communicate the number. I'll give you the parameters.
They charge 18% beyond 45 days. And on an average, let's say, if you assume 15 days, the length of that, then you can do a math with respect to that. For example, perhaps this quarter, it was cycle over revenue of 330, 339 crores. So approximately a percent, a percent and a half. On the other end, there are also incentives taken by some of the people who pay early.
Right? So if one looks at late payment of charge, minus the incentives, on an average approximately 0.5% of revenue is something that we take. Okay. And now my final question is with regards to this new rights issue of, you know, framework which has been announced So now, can we establish that going forward? We will just, go for the rights issue for 100 equity fundraising?
So, I think you have any question. I think the decision of bringing it to specific fundraising is taken by the board. And considering several factors. So I would say that, yes, right issue is the most favorable for several reasons. 1, it is, including all the investors.
2nd, it provides pricing flexibility to the management and the board. In in a normal preference, the risk remains that if the news leaks in a 2 week pricing gets modified, the capital raising itself can be, jeopardized. So there is, you know, I would say flexibility for management or other incentives to go for both, to go for right issue. Having such a, it is tough for me as a management to commit that this is the only way we are going to use it in future. But clearly, this is, we are incentivized as well as this is a better way to go for the catalyzing in future.
Thank you, Richard. All the rest of the coming quarters. Thank you. Thank you.
Before we take the next question, reminder to the participants,
The next question is from the line of Ritesh Parekh
from Barclays. Please go ahead.
Thanks for the opportunity. My, sir, can you just tell me what is the resolve unit level deficit right now at the end of Q3. Okay. At the end of Yeah. So at the end of the Q3, we have a balance of 66 crores.
60 six crores of the deficit or Okay. They're not the business, the balance. Okay. There is surplus available for the resolution is required. Okay.
Secondly, in the past, we had been, giving the, table of indicative with you considering, so last 1 or 2 quarter, we are in stock. So that will be helpful if you can share that going forward. Sure. We did the feedback. Is this I said Pradeep gave you to give it when there are subsequent acquisitions happening.
And after the last acquisition, we have stopped closer to the next acquisition, we'll certainly add to provide the guidance on that. Sure. K. Very good. And last, we have a a meaningful addition to what I said in this, calendar year.
So the all the, I think, my understanding is that we are already tied up for the debt component, for the revision of the asset. So, are the payments made to the company on the post acquisition, or it is made in advance assistance? Sorry. Can you repeat the last part of the question? I didn't get it clearly.
Yeah. The we already have a pipeline or visibility of our assets. So we have already agreed to acquire in the current year. So are the payment made in advance or we, we may make at the time of transfer of the Okay. No.
So I think 1, we have made an exclusive agreement. We are not committed to acquire because we need a vehicle to do so. So we have not yet issued, a notice for approval of unit holders. 2nd, the visibility, the visibility connects well to 18 months. So we're not acquiring in in, I mean, there's a mandatory timeline to acquire in particular calendar year.
3rd, we acquire we raise debt we when we are acquiring. And first, we pay the consideration when we are acquiring the transfer, and causing the transfer. At the moment, we have not taken any economic interest in any of the STV. This is only an agreement to acquire subject to meeting several conditions, including investor approval, So we will be raising that as and when, you know, those conditions are met in the terms of approved, and we are acquiring those assets. So if I look at your, asset pipeline visibility, so we have 1 asset available GPT, GPTL, in Feb 2020.
Indicative. So once that asset is available, we will take the shareholder approval and then arrange for the return, make the payment. I see. Is my understanding there? That is correct.
That is correct. Okay. And the last thing, what is our current cost of borrowing right now? Current cost of borrowing is 8.75 percent. The next question is
from the line of Mauriz Kumar from IDF to Securities. Please go ahead.
Yes. I could, sir. First question is on the fact that,
you know, we there have been no cost no acquisition of, of course, of asset in the, in the in with, would you consider, you know, buying out, buying out cost associated, at any point of time? And what are the regulatory challenges you foresee in acquiring to the asset and the boundaries and challenges?
Okay. So to answer business wise and direction, yes, we will acquire customer service. It is part of a mandate and we are allowed to acquire. And we said we believe that it will fit in in our portfolio very well. Considering the fact that in a customer's asset that distribution is provided, there are other difficulties, generated on a post tax basis in is also compensated.
Such acquisition will enable us to distribute dividends to investors directly. So we believe that There is a merit in acquiring costumer assets, and, we will look for it. Coming to your next question is on the challenge. I think, we see an evidence in a very high level use, but we see, some of the key challenges in acquiring a costless asset and approval for regulatory authorities. Because most hospitalizations are not in a in a particular SPV brand, then it can be the entire SPV can be transferred post the lock in.
They need regulatory approval. So that's one, I would say, critical, procedural risk, I would say. 2nd, in terms of, depending on which year we acquire, is it the last 10 years of the customer's asset or the first five? I think that would substantially, defer in terms of value, the capital structure, etcetera. So basically, when are we acquiring the customer's asset will be a critical input as well in that.
And the third is, again, a counterparty. Is this cost plus asset a central asset or a state asset would be another material, differentiation between the 2. But, of course, ma'am, we are reducing the capital restructuring challenges,
given the fact that it's going to be the issue and of all Do you think the latest will will have a relook at the entire infrastructure before approving the team, or is it, or do you think the recruiters are more or less, you know, have understood the product?
No. I'm sorry. Which regulator are we referring to?
It's just still a CRC. This is a CRC for go and check the approval given the fact that your COVID cover sets will be entirely different.
Do you
think it will have a much more challenge? It will it will be not a challenge to convince the regulator to allow for allow an invite to buy to to to buy out the asset?
No, I don't think so, to be honest, I would suggest that we are at an advantage in terms of acquiring particular asset because we can modify our cost for our capital structure in a much more, flexible manner. And CRC concern is always on structure of the asset, then of the parent. And when they evaluate the parent, the criteria is that, is it a first time transmission asset buyer or it's a operator of transmission assets. And I believe Integrated considering its capability and, 11,000 barrels of asset based on transmission, we would meet that requirement, in a, in a, in a, in a, in a, in a, in a manner. So I would say that that would not be a challenge for us to acquire a cost of us.
I have one more question, sir.
Given the given the fact that our acquisition is it will be 80 months away, all the SSR is, to be for us to acquire the assets. Do we have any plan to, you know, the assets. Meanwhile, given that our leverage is leveraging only 49%.
Secondly, what's the challenge?
Do you see in terms of getting a people accredit rating or increasing our leverage to 24%.
Okay. So question, I mean, answered your first question. It's not that we are going to acquire all four assets at the end of 12th, 18th month. As and when assets are completed, we are already monitoring them. And as and when they're completed and eligible for us to acquire and it's a distraction with invoices offered, you would look to acquire it.
So it can happen earlier as well. 2nd, as we acquired, we would be increasing our know, utilizing our debt headroom to acquire those assets. And the third question I'd ask is that we have we have been in discussions with the rating agencies in this subjects. And to acquire all these 4 assets, we already conducted several analytical exercises. We are confident to maintain a capability for that.
Okay. Thank you, sir. Question is from the line of Hitesh Parora from Unifi Capital Private Limited. Please go ahead.
Congratulations on this, asset that you've acquired in the past, You want to get a sense of how many have you or how many of those assets actually you you reviewed? What are the potential assets you reviewed? What is the promotion of assets you actually brought and deal with? Was it 100% or was it probably you left 1 or 2? Okay.
So, I mean, see, it's a let me put it like that. It is not 100%. Right. And, second, I'm not sure we can use the conversion ratio as a number of because there are some assets which are 2 100 crore and some assets which are 4000 crores. Right?
So so to put the acquisition opportunity has one opportunity, it very difficult to compare the two transactions like that. Having said to, to to answer your question in our in our in our strategic books, we have let go substantial number of assets on different considerations. And and, so, therefore, it's not conversion is not 100% for sure. Thanks. Just on this ROFO asset, you know, it's already the in ICL that's already commissioned So how long do you have, this right for before they can select 2 companies?
So we have the right of first offer agreement is for 7 years since we decided. And, the right of first offer agreement, the rate was is that Starlight Power will send an expression of interest, and then we can express our value, and then we will engage into our discussions. So to answer your first question, it will take mean, for the absolute right for 7 years. Okay. So, you think, so another 4 years left?
Another 4 years left. But from your sense of timing, what is the timing to acquire it? Are you it has to be an expression of interest sent by them first? So only then can be transaction proceed or or or is it gonna work? Okay.
So one is answer first question as the asset is eligible to invest we would be evaluating it. 2nd, as for the contract, when the asset is available to our other commission, the counterparties would like send us the expression of interest within 1st 12 months at least once. Okay. So it's already finished. So they should be sending it to you in the first.
It should be in the 12 months from within 12 months. It can be. Correct. And then you'll make a call. Okay.
To do my you were already doing the diligence for that already. Yeah. So as I said, you know, we keep monitoring all the assets for which we have right So we we already tracked the progress as well as the details of the project narrative needs. So no question on NTL you talk about deal availability. So what happened there?
Yes. So in NTL, there are two incidents that has happened. One is, a rooftop flew and tell her to align and therefore, we had to restore it. It took about 3 days off for one of the lines. And the other one was a tree fence, which caused the line to do.
Both the cases were completely a case of a very heavy rain. And it's like a half a few hours of flying the roof that that kind of incident. And we are considering that we'll receive the availability certificate on a daily basis for that. Okay. Okay.
And so the CapEx that you mentioned, 1 crore was related to this? No. JPCS with the event happened in quarter 2, for which we are gaining personnel certificate and that happened in the CapEx happened in the CapEx are booked in quarter 3. Okay. For these 2 events, the CapEx were hardly few laps.
Oh, current year. Okay. Okay. Thanks. And then everything else will come by.
Thank you.
The next question is from the line of Kunal Agarwal, Individual Investo. Please go ahead.
Hi, Harsh. Thanks for taking my questions. I had two questions. One was, your cost of debt today is about 8.75%. Where do you see that cost of debt, moving in the air future?
And how are you guys thinking about diversifying your sources of debt? And the second is, you know, there's been
a lot of
commentators involved, the financial help of the power sector in Kyungro. And I think, the court of Mahindra called or they told us to stop in specifically about the health of the power sector. I understand in India, immediately, we have a lot of, insights built in. We have the sporting mechanism. We have houses, monopoly, sort of protection behind us, but I just wanted to understand from you as a qualitative point, how do you see the financial health of the sector translate into and, you know, roll on effects for immediate going forward.
Sure. Let me go back one second question, Dural. Thanks. Answer your first question on cost of debt, I think we have a strategy of locking in the cost of debt at different intervals. And therefore, in our portfolio cost of debt is ranging from 7.85to9.1percent, and we communicate a weighted average of 8.75.
Now, going forward, I think we are in a unique macroeconomic scenario. Where the GSEK has come down, the spreads have widened in India. And the global scenario is substantially liquid providing good cost of debt as well. So, at the moment, the way we are looking at it, the scenario is liquid. There is a proof of is available for us to borrow both in India as well as externally.
And therefore, directionally, we see a conducive environment to hit capital especially for a platform like us, which is focused on only, I would say operating projects as well as vehicle AAA. So we we are bullish on that. Whether that will result in immediate clustering or not, it is very difficult to communicate because we have locked in a cost of debt at the moment. So that's one directionally. 2nd question you asked on that was on diversification.
At the moment, In our portfolio, we have, NCD, we have bank loans, we have ATV. So we have tapped into all sets of assets, all types of our cylinders and their capital. Having sector, we keep evaluating many such options And as in when something materializes, I mean, that is one of the key criteria because this contributes to many percent of the balance sheet. Which we track and try to optimize, that that's that's the focus for us. Both in terms of cost as well as long tennis.
Got it.
2nd question you asked is on the health of power sector. I would, as this take out you know, this is a very important question. And so I did a step back and let's say, when do you at the macro level, what is the role of power transmission? Right? The role of power transmission in India, especially their generation and distributions are done at across different locations.
Is to provide an efficient grade. An efficient grade is the backbone of an efficient power system because the consumers or the distribution company will be able to source the power from the cheapest sources. K. Now, unfortunately, if you think about the investment in power generation, we're privatizing in 2000 and 1 in the last 20 years About 85% of capacity addition has happened with Trio Pecta, which means substantial amount of hands and capital growth are contributing towards building the generation side. But the transmission side got prioritized about a decade later.
And therefore, since then, incrementally, substantial capacity addition has happened in transmission, but it is still catching up the investment in generation that happened over the last 20 years. So one is that is underinvested. And if you go to distribution, it is even worse off. Right? There's inflected privatizations that have taken place.
And the bedrock of regulation for prioritization for an efficiency of power sector, which is separation of conductor from, the power is something which Bill is still pending in the parliament. So coming to my commentary on that, to have an efficient power sector, the distribution sector would need to be reformed, which would not only include increase in prices, which has already taken place if you look at an incremental, I would say downgrade, but incremental deteriorating position has slowed down. But the structural change would only replace if the distribution companies are allowed to be more profitable on a growing concern basis. Which will happen when they can really buy the power from where they want to break the PPA, of level, of legacy PPA. Or at least prioritize the infrastructure which enables them to start making money on a unit basis.
So, we see a lot of news happening, but it is a decade long reformation story that we see over here, and translation will clear to you. Now coming to how we are impacted by that, till now, we are not impacted. And leaving aside all these strategic advantages of a grave and monopolistic nature of politics, So fundamental economic factor for which transmission has remained safe and we believe has remained safe is that the entire country's interstate transmission charges is hardly about 3% of entire power sector, and that acts as a bareback boom. So, you know, for more or another, the worst of the distribution companies, or generating company that acts as a lifeline, and, it costs very less. That is one of the critical reasons for transmission sectors, I believe, will be remaining as is.
Okay. Alright. Thank you. The next question is from the line of Lupein Masalia from RNA Associates. Please go ahead.
Yeah. Thanks for the opportunity. My question is, you know, pertaining to net distributable cash flow. And the current review rate of, rupees 3 for a quarter, if it's, the amount is around 175 crores. And on an annual basis, it comes to 700 crore rupees.
And as a candidate by you, even earlier and due to seasonality in, quarterly of performance, would it be fair to estimate that for the financial year, there is a whole that there would be a sufficient, NDCX, but that is around 700 all crore plus to take care of, try to keep you for the whole year without drawing, into the, you know, capital or resource. Great. So I think, Mr. Natalia, a very apt question on an annual basis. We will have higher NDCs than what we distribute.
Okay. Okay. Thank you. Thank you. The next question is from the line of Hitesh Arora from Unified Capital.
Please go ahead.
Oh, yeah. I'm saying, uh-uh, you know, when I got disconnected, you were you were talking about the diversified sources of funding that you were looking today, and you've been a dollar funding, maybe perhaps I was wondering if you could kindly, repeat on that. Okay. So what I was saying is that we already do borrow from several diversified says starting from banks, mutual funds, as well as we have a ECB in place for one of the STVs. So we already are tapping into several sources of capital.
And, we keep evaluating all the saving opportunities available. So as it went, you know, when we do the next phase of capital, you would come back with the specific update on that. Okay. And for the acquisition, looking to raise It's adding interviews. I mean, it was also available as an option for you.
Yeah. That is correct because I've been in, last year, enabled ACBs for refinancing utilities, which in the past was not allowed. So that is something which allows us to look at ECB is also favorable.
Thank you.
The next question is from the line of Swannim Maheshwari from Fidelis Securities. Please go ahead. Yeah.
I have a couple of questions. But firstly, I mean, just get just going beyond this transfer pipeline. Can you give us some color on the recent visit to BCB bids and this competitive intensity. I mean, we understand that, you know, the last four sizes were quite a competitor. So can you can you throw some light over there?
Okay. So, Swannen, I think she has a competitive base wherein looking from outside, it's always very difficult to communicate, whether it's a bit more competitive or not. But I believe the players which are competing for this PBCD pipeline, which is largely players who have got substantial experience in transmission, the power grid and anti transmission, stolen power, the name of you. I think more or less people have bigger reasonably, for me, because we are not present in the under construction date. So I would not know the exact competitive status.
But from a track record of the last 5, 6 years perspective, I think, most of these videos have been there reasonably. And from our perspective, I think, we only evaluate, to be honest, EBITDA line, which is, the cash flow that the project generates and the project CapEx So so I think we do not get into the efficiency of the billing at the time of bid because, the construction company or other developer in fully incentivized to ensure that they make good returns because they know that in terms of the cash flow, the valuation is pretty much, known based on, you know, what what transaction took place. So, and I think a large capable player being cleared, but we have seen the bits to be fairly limited. Okay. So secondly, I mean, just on this, framework of it, if you can just, you know, give us some timeline indication you know, when are we looking to kind of acquire GPL, GPTL, KPL, and NPL?
So some timelines or or EMI. Okay. So I would just say that, you know, as you're not huge details notice, so until the time we are fully satisfied with the project and the diligence, I think it's difficult for us to do specific timelines having sensor. There are dates provided over here. So, you know, ERC is already commissioned as well as, you know, GPT is on its line to get commission and pay.
So I think that we by considering that we'll buy commission assets goes to become the 1st assets for us to evaluate. Oh, that that's great. So and we would have, you know, the building such as, is already underway. So as I said, you know, we keep monitoring the project in parallel. So the diligence is concurrent for us.
Okay. Okay. And so finally, if you can just quantify the incentive income for this quarter? Okay. Just give me a minute, sir.
So, the overall income is about 7a half crores that I booked in, as intended for this quarter. So where did I ask this? Yes. I'm not frequent for it. Thank you.
Ladies and gentlemen, that was the last question. I would now like to hand the conference over to the management for closing comments.
Thank you. Thank you so much for holding the call and thanks to all the investors who joined the call. I think it's, as I see through the question that has been asked, and we are very happy to know that investors can be interested in our business and to understand as well as ask specific questions. We appreciate that. We see a substantial amount of growth in our business plan both in terms of the legit pipeline as well as future.
And we believe that we will be continuing to be able to deliver a superior total return in comparison to other indices on a risk and distant business. And the substantial part of that return will come from a consistent lead distribution that you need. And look forward for your support as we continue the journey for individuals. Thank you.
Thank you. Ladies and gentlemen, on behalf of Eden Life Securities Limited, That concludes the sponsors. Thank you for joining us, Patty, and I'll disconnect your lines.