Ladies and gentlemen, good day, and welcome to Adani Energy Solutions Limited Q1 FY25 investor update call. Should you need assistance during the conference call, please signal an operator by pressing star and zero on your touchtone phone. As a reminder, all participant lines will be in the listen-only mode, and there will be an opportunity for you to ask question after the presentation concludes. Please note that this conference is being recorded. Today, we have with us on the call Mr. Kandarp Patel, CEO, Mr. Kunjal Mehta, CFO, and Mr. Anupam Misra, Head Group Corporate Finance. I now hand the conference over to Mr. Kandarp Patel. Thank you, and over to you, sir.
Thank you. Good afternoon to all, analyst and investor friends. Welcome, all of you, to this call. We have already uploaded the press release as well as presentation on the website. I hope you must have got an opportunity to have a look at it, those documents. Before we get into a detailed discussion on operational and financial parameters, just to highlight that, in this quarter, you must have seen that the growth at AESL now has been in excess of 20% in all financial parameters and especially EBITDA. Now, therefore, AESL is now entering into high growth period, and you will see almost similar numbers on a quarter-to-quarter basis as we progress.
These numbers are based on the solid pipeline of projects that we already have in our end in transmission, distribution, as well as smart metering. Another purpose that we are trying to achieve and we are making sure is that we become the leading energy transition company. Now, all the transmission projects that we are developing is for evacuation of renewable powers and mostly in the Khavda region, where AGEL is setting up the world's largest renewable power plant at a single location of 30 GW. Similarly, in transmission, distribution segment, and on the line of commitment that we made, we have already integrated about 38% of renewable power in our total portfolio for our distribution power purchase.
And we will keep on pushing that number and meet that commitment, commitment of 60% by 2027. In fact, we plan to achieve that much ahead of it. The third intervention or third business vertical which is now going to give us a significant push in terms of profitability and the revenue, which is smart metering segment. The aim of smart metering is to make the grid efficient and also to make sure that a higher amount of renewable is integrated in the grid by virtue of time of the tariff. So in all the verticals, we are trying to make sure that we facilitate in energy transition in the country.
In fact, that is another reason why, we made a commitment that we will, at appropriate time, will carve out Dahanu power plant. Now, the board has decided to carve out Dahanu power plant. Soon this power plant will get separated, out of, AEML. After that, AESL and AEML both will become a pure, transmission and distribution utility managing energy transition. The value at which it is getting carved out is about INR 815 crore, which is equivalent to the regulatory asset base of Dahanu. So the asset base of AEML will reduce, temporarily, to that much extent, and the proceed that we will receive will be reducing, will be used for reducing our indebtedness.
But by the end of the current financial year, again, we will build up that rate in distribution and transmission in AEML. And before we close this financial year, we'll be able to achieve, in fact, incrementally higher rate than what we are having prior to carving out of Dahanu. Now, when we carve out the Dahanu, we also make sure that all the electricity demand is met, and in terms of PPA approved by MERC. So the power supply will continue to AEML will continue to get the power supply from Dahanu power plant, even in lieu of that.
But, because the regulatory nature of the power plant doesn't change, and the supply will continue as long as MERC approves that or extend the PPA for Dahanu. Now, because of carving out of Dahanu, there is an exceptional item, impairment, and amount of INR 1,500 crore that you must have seen in the financial statement. If we remove that one-time item, all the financial numbers, like revenue from operation has increased by about 46%. The EBITDA adjusted of that one-time item has increased by about 28%. Even the operational EBITDA has increased to the similar number. On operational part, we continue to do better as we have done in many, many years since last.
The availability remains in the range of 99.7 in terms of transmission. In terms of distribution, it is in excess of 99.9%. We continue to reduce our distribution losses in AEML, and we have also seen a significant increase in sales, not only in AEML, but also at MUL because of strong demand growth in our geographies. So in a nutshell, then, one of the best performing financial quarter, we have got into that growth zone and also backed by strong operating parameters. So now we hand over to investors and we will answer those questions.
Thank you very much. We will now begin the question and answer session. Anyone who wishes to ask a question may press star and one on their touchtone telephone. If you wish to remove yourself from the question queue, you may press star and two. Participants are requested to use handset while asking a question. Ladies and gentlemen, we'll wait for a moment while the question queue assembles. First question is from the line of Mohit Kumar from ICICI Securities. Please go ahead.
Yes, sir. Hi, good evening, sir, and my two questions on my side, sir. First is, can you just, can you just throw some color on the smart meter, you know? Have you received the go-to life for most of our, most of our, you know, the pipeline? And the related question is that, how do you see the pending activity as of now? Which are the large deals which are still pending to, you know, to award the smart meter orders?
Oh, hi, Mohit. As far as smart meter is concerned, we already have a pipeline of around 23 million meters already concession awarded to us. We have already started implementing in BEST, in Assam and in Bihar. Now, in next couple of weeks, we will start implementing in Uttarakhand as well as in Maharashtra and Andhra Pradesh. So we have already implemented close to about 3 lakh meters in BEST, Assam and Bihar, and we also implemented about 5 lakh in AEML. So now that implementation is progressing well, and it is getting momentum. As far as bidding pipeline is concerned, about 12 crore meters are yet to be auctioned.
Probably, that will, now, the state who, whose bidding is pending, ill you will see actions on those part, and those states are Telangana, Tamil Nadu, Karnataka, part of, Madhya Pradesh. So these are the four major states which are yet to issue bid for smart meter. Then even in West Bengal, they have yet not covered the full one. In Gujarat as well, there is some meters which are pending. So we see a robust growth coming from smart metering segment.
Is it possible to give some guideline on how they see the smart metering, you know, installation for next three years, year 2025, 2026, 2027, based on the current order, based on the current order book, yeah. Some broad outlook, sir.
Yeah. So, Mohit, we are targeting about 50-65 lakh smart meters in the current year. And then, from next year onwards, we will reach to about 1 crore smart meter implementation. So we will try and finish the existing one in next 2 to 2.5 year, and then we will continue to implement as we get new order book.
Understood, sir. Thank you and all the best. Thank you.
Thank you. Before we move to the next question, a reminder to the participants, to ask a question, you may press star and one. Next question is from the line of Ravindranath Nayak from Sunidhi Securities. Please go ahead.
Good evening, sir. Thank you for the opportunity. Sir, my question regarding this transmission line, transmission business. The margin in this business thing actually has come down substantially, but it is now this quarter it is at 40%-45%. So once upon a time, it was 60%-70%. So how do you see this margin going ahead? Because majority of the new businesses on the transmission line would be completed in on the TBCB model. So how do you see the margin going ahead from this upcoming projects? And about this GTD business, you know, this you have sold this asset, the Dahanu power plant, at INR 800 crore consideration for a book value of around you know INR 2,200 crore.
So what is the regulatory impact from this tariff? And also, in terms of ROE, how is it going to impact the business of the company? And when this PPA with the Dahanu will finish, with the, you know, from the distribution?
I'm sorry to interrupt, Mr. Ravindranath, your voice is breaking, and there is some background noise from your end.
Is it now okay?
This is little better. Please repeat your voice.
So, regarding the transmission line, okay, but what about. I, again, I'm repeating. The margin in the EBIT margin in the transmission business is, you know, continuously declining. What is the reason for that, and how do we see the margin going ahead? And about the regulatory impact on tariffs, and also, for this sale of Dahanu power plant, what is the, how do we see the tariff going ahead? What is the impact on the profitability of the company going ahead, in the GTD business? And, regarding this PPA with Dahanu, when it is going to finish?
So I think, Ravindra, as far as transmission segment's margin is concerned, you must have seen that we continue to maintain that 90%, 91%-92% EBITDA margin on our revenue, and we will continue to have that number. The outlook is because there is a lot of opportunity coming up in the market space, and because of that, we think that the intensity of competition will reduce significantly, and that will give us also to improve that margin better.
As far as Dahanu is concerned, though the book value of Dahanu is INR 2,200 crore, but the regulatory asset base on which MERC approves the tariff is around INR 800 crore, so there will not be any impact on the tariff. Whatever is the impact is that impairment in the financial statement, and that's also a book loss. It is not an actual loss. So your cash profit and EBITDA doesn't change. Neither tariff changes under the PPA, nor the EBITDA and cash profit changes under the financials.
Okay, and also PPA with the, with the discount right now, where with the, from Dahanu, when it is going to, you know, finish?
So the existing PPA has a 10-year term till April 2025. But we understand that PPA will get extended at least for a couple of years. And the reason is because Dahanu is very, very important for supply of power within Mumbai. And till the time sufficient transmission capacity is created for to import power into Mumbai, that PPA will continue. Our transmission project, HVDC transmission project, which is meant to bring 1,000 MW into Mumbai, is expected to commission around September 2025. And they will also take some time to you know make sure that they are comfortable with the performance, line performance.
There is another line which we have set up, which is, Kharghar-Vikhroli, but that line is not in a position to, utilize full capacity because the, transmission line, which was to get connected to Kharghar is yet to come. So we, we think that, once the transmission system is stabilized, it is proven that import, Mumbai can import, power in excess of 2000, then they will, till that point, they will continue to extend, Dahanu PPA.
Okay. And sir, sir, regarding you clarified this transmission business. I'm not asking this, you know, EBITDA margin. I was just, you know, looking at the EBIT margin, which has come down, you know, from 67%-70% to around 53% in FY 2024, and 46% in this current quarter. So if you add the depreciation, then the things are, you know, the margins are coming down. How should we look at this? Because if the, the, whether the, the tariff, the tariff you are bidding at a lower price, due to that, the margin is coming down, EBIT margin is coming down, how should we look at in the future projects?
There are two reasons. One is obviously, in the past, that competition was intense and those margins were not very high. The second thing is that there are also a lot of regulatory issues pending before various forums. Now, we believe that those claims will get approved, and the moment it approves, that will start getting reflected into profitability. We have not booked all the claim in our account as a revenue. Once we get the clarity, you will have a better number in terms of profitability.
So from when we can see that better profitability come, any ballpark timeline you can throw?
So, Ravin, so the one of the case which was for delay and shifting of tariff, that matter was pending since a long time. For one of the assets, we got a order of CERC in couple of months back. There are some issue regarding two, three parameter, which we are challenging after. Now, we expect that on the similar line for the balance other asset as well, we will receive the orders on those lines. Like, one of the major one, which is pending is in UP for our UP asset, and we expect that the those orders will be available in next six-month time.
Okay. And, sir, regarding smart meter space, you know, can you please explain this quarter? The profit is high, but the sales is low, because there is a, you know, disparity in the between the performance of last quarter, when fourth quarter and the first quarter. Can you please explain what has happened, in this quarter and what was there in the last quarter?
Yeah. So you are right, in terms of the increase in the profits during this quarter. Because what had happened is that in the last quarter, since the meters had not been installed, the margin on that meters was not recognized under the accounting standards. Now, since those meters have been installed, the profits on that CapEx, which has been incurred, has been recognized under the accounting standards. So around INR 8 crore of that is an additional margin which got recognized for the meters which got installed during the current quarter.
Okay. Okay, sir. Thank you very much. Thank you.
Thank you. Next question is from the line of Nikhil Nigania from Bernstein. Please go ahead.
Yeah, hi. Thank you for taking my question. My question first is on transmission business. When we listen to competitors, especially the biggest one, Power Grid, they talk about equity IRRs of about 11%-12%, in the business, in TBCB project. I just wanted to get a sense of I mean, they borrow cheaper than anyone else. Are you seeing similar returns in that business? And as you were highlighting earlier, do you see it improving substantially, or do you see it being broadly in this range?
Yeah, Nikhil. Certainly, we are looking at much better return. In fact, our internal target is always around 15%. And certainly, Power Grid has a certain advantage as compared to us, but at the same time, we also have a certain advantage in terms of project implementation. And when you are implementing in a place like Khavda, obviously we have a much, much better competitive edge as compared to any other player, because we will be able to make sure that projects are implemented in time and commissioned in time, without attracting any penalties or any defaults. So, and as there is a good pipeline, we expect that the competition intensity will certainly reduce.
Understood. Just on the related point on execution then, are you facing challenges in sourcing, equipment, especially high voltage transformer, which is seen as a problem everywhere in the world?
Nikhil, you are spot on. Everyone is facing that problem. But what we are doing is, because we have a clarity as to what kind of project that we wanted to do and what is our timeline, so usually we plan our project much ahead of even the contractual timeline. So, as a practice, we do strategic buying, and then we get into a long-term arrangement with those equipment suppliers who are allowed to supply equipment in India and qualified under the TBCB. So you have to fulfill those guidelines, where you don't procure from company who is or importing from somebody who is neighboring to us, or importing in India, but having ownership neighboring in a country neighboring to us.
So we tie up with them in advance, and we make sure that those equipments are delivered in time, and we make that commitment right up front. So normally we don't go to them once we win the bid. We go to them prior to that and commit that quantum.
Understood. Understood. And then just on the pipeline, if you could just quantify that, I'm sorry if I missed it earlier, what kind of tender pipeline you expect in the 12-18 months?
So it is, Nikhil, already those bids, in fact, the projects which are already been declared to be under TBCB, which will happen in one year time, is around INR 90,000 crore-INR 1,00,000 crore. And these are mainly from those central projects. We are not considering any project that some state might come up. And we see that a lot of traction on state side as well, though everyone is talking about those state projects since long, but we sincerely see that traction coming from state side as well.
Got it. Understood. Understood. Thank you. Those are my questions. Thank you for asking them.
Thank you. Next question is from the line of Bharat Shah from ASK Investment Managers Limited. Please go ahead.
Adani Energy, I was, like, happy to listen to that opening commentary, where you mentioned that, there has been all round growth in all parameters in the current recent. And, in your opinion, Adani Energy Solutions has now entered a high growth phase. I had met with Kunjal Mehta a few days back, a few weeks back, and jokingly, I was saying, Adani Energy seems to be slow-moving train among all the Adani Group businesses. So I'm happy as well as intrigued by, that statement as to having entered high growth phase. So would you describe what is the newfound energy, in Adani Energy Solutions? And, what will be the key drivers, vertical by vertical, transmission, distribution, smart meters? And I think district cooling is still some time away.
We'd be happy to hear your perspective as to what is going to drive on a more sustained basis the superior growth.
Yeah, thanks, Bharat, for this question. In fact, Kunjal has decided to prove you wrong. So see, if you understand Indian energy market, there are three things that is happening. One is obviously energy transition, and you see energy demand for the projects or CapEx coming for energy transition world over in most of the economy. But the very unique is, in India is that the additional factor, which is growth in energy demand. Now, you see a growth of about 8.5%-9% every year in terms of energy demand, which brings a lot of demand for the projects and CapEx. And the third one is obviously a modernization of grids, where the smart meter and other projects comes in.
Now, if you see all the three segments, the kind, size of opportunity that is available in India, and if you see the competitive canvas in all the these three segments, we feel that, we are much better placed as compared to, many other companies to capture these opportunities. And one of the important advantage to AESL is that we, we have a diversity in terms of, business model. So we have a transmission, distribution, smart metering, and now those district cooling coming up. So, even if some segment is not moving very fast, we will have an opportunity to focus on other segment, which is moving fast. So that kind of diversity advantages is available, with hardly anyone, other than us.
No, but, these are generic factors. I mean, these are evolving over the period of time. Very clearly, energy demand is growing at a rapid pace, probably one of the fastest in the world. Energy transition, therefore, modernization and new energy generation, all these are known factors. What is suddenly making you say that Adani Energy Solutions has entered a high growth phase? That was a bit intriguing to me, so just wanted to understand in more detail as to what you meant by that.
Yeah. So, Bharat, let me be a little more specific. When I say we, we entered into high growth phase, is because, s ee, we already have about 17,000 crore of transmission project already under implementation. And we have those smart meter projects of about 22.6 million meter. And we continue to do CapEx in excess of 1,500 crore in AEML. Now, if you add all these three opportunity, which is already in hand, and you compare to the past number, you will realize that we will continue to do 20% every year. Now, this is the first part, that we already have that kind of concession available in hand, project under implementation.
The second phase, which I was trying to convey, is that all the three elements in which we operate, you must have seen that the size of opportunity which is left out is humongous. So obviously, even if we continue to maintain our existing market share, we'll continue to grow in excess of 20%.
You mean it at an aggregate level for all each of the three businesses will grow at that rate?
So we, when we are talking of 22% or 20%, we are talking at AESL level.
Okay. Because, distribution, I can't see why it will grow at 20%, and even transmission is unlikely to grow at 20%. Hello?
Yes, we are saying 20% at AESL level, combined together-
Smart meter-
All, all verticals.
Growth will pull up the growth rate is what you mean?
Correct. Correct.
On each of those three verticals, can you kind of highlight likely growth rate over the next three to five years? Separately for district cooling, what is in offering? Is there any near-term really prospect, or it's a more medium to long-term kind of an aspiration?
Hello? Am I audible?
No, just now heard it.
Yes, yes, yes. So this is Anupam Mishra. I was just trying to speak on this. I think, I will try to articulate this question in a different way now. Earlier, if you saw before 2018, Adani Transmission, what was the earlier name of AESL, was purely a transmission company. So the canvas that AESL operated was on transmission, and, we had, the first four projects we had at an EBITDA of INR 2,000 crore. Then after that, we've added about 25 more projects, which have gotten us to an EBITDA in transmission to about INR 4,000 crore, right? Now, that, that's a part of what we have today.
Going forward, based on the projects that we have in hand, which are under construction today, one of them is a very large project, close to INR 1,200 crore EBITDA, and overall, once all of them are operational, INR 2,200 crore. So transmission standalone will grow by 50% based on the existing projects in hand. This is just locked in. All we need to do is ensure that we execute these projects to plan, which we have done over and over again over the past, say, 8-10 years, not only in AESL but in other group companies as well. That's the hallmark and strength of the group. Going on to the-
What time is INR 4,000 crore-INR 6,200 crore?
This will be, this will be September 2026 will be the last project operation date. So on a run rate basis, you will see this on, in, in September 2026 quarter end, but on an annual revenue basis, we'll see this in FY 2027 basis. So that is-
It will go up by 50-odd%, so about 50% compounded.
Yes. Now, this is not counting for the new projects, which we will go on to win once the bids are going to come in, right? So that's, that's going to be on top of that. The second business is distribution, where the business model is fairly straightforward, is you actually have an existing regulated asset base on which you add the regulated CapEx that you do year-on-year, and on that regulated CapEx, you earn a return on equity as well as a return on debt. So there is a RAB-based approach. That in itself will continue to grow with a steady growth rate of 10%-15% year-over-year, based on the RAB growth. And that, that is something that you will see every year. We will do a CapEx, and based on that CapEx, we'll get the return.
Again, repeated year after year. 2018 is when we introduced this business model into AESL. The third one, that is smart meters, is where a bulk of the growth is coming. Today, I mean, if you look at FY 2024, smart meter had negligible contribution to EBITDA. Over the next three years, there is the 23 million meters which are going to be implemented. So that EBITDA will come in over a course of next three years, and then that will be a steady revenue stream that will come. Now, basically, that's where the bulk of the growth comes from, because it's zero going to 23. But more importantly here, there are more projects to be awarded. Till now, out of about 120 million meters, we've secured 24 million, 23 million meters.
That's a 20% market share. Assuming we maintain that or slightly improve that, which looks like the case, we will end up with a lot more, more than double of what is currently there in hand. So that's how we drive the growth on this. And, Bharat, I think what we can do is, potentially we can get in touch with you independently to explain this in more detail. But yeah, this is what I thought we could articulate.
Yeah, sure. No, thank you. And then, of course, we'll meet separately again. But when this last point on smart meters, over three years, when we implement about 2.3 crores smart meters, what kind of profits would be generated in this three-year period of installation? And what is the kind of revenue we can visualize after the installation is done?
So basically, the 23 million meters which we have currently won, we have won at an average tariff of close to around INR 12,000 per meter. These contracts are for a period of 10 years, where out of 10 years, 2, 2.5 years have been given for the deployment of the meters, and the balance, 7.5 years or 90 months, is towards the revenue earning period. So the INR 12,000 is earned over that period of 90 months. And the margins on this business are pretty high, in the range of around 85%. So that's how this entire economics works for this smart meter business.
The average CapEx cost, in terms of the initial CapEx cost that the company has to put, is in the range of around INR 5,800, 5,800 rupees per meter, which the company has to incur. So that, that lands to an IRR of, at least, 25% or minimum 25%, on, on, on the smart meter business.
On an average, if we visualize in terms of smart meter per se, how will the outflow of that INR 5,800 would occur when in, I suppose most of it is in the initial phase. And how much of the revenue would accrue in that 10-year period, at what time frame, so that some kind of idea of IRR can be understood?
So the INR 5,800 has to be incurred upfront, and the INR 12,000 will be earned over the next 90 months. So just to simplify for us, when you install the meter, you first get that INR 900, which distribution company gets from central government as a grant. So every meter installed and commissioned, you'll get INR 900 in the first year, and rest about INR 11,000 that you receive it in 10 years. So roughly around INR 1,100 per meter per annum, that you will receive. So all the meter that are installed, let us say in first year, we have installed 6,000,000 meters.
We receive INR 900 for those 60 lakh meters and INR 1,100 for that annual annuity payment.
Got it. So IRR would work out to what on a one meter basis?
More than, more than 25%. If you look at equity returns, on project returns, it will be excess of 18%.
Sure. Sure. Sure. Thank you.
Thank you. Next question is from the line of Dhruv Muchhal from HDFC Mutual Fund. Please go ahead.
Yeah, sir. Thank you so much. Sir, the regulatory asset base that you mentioned for Dahanu, INR 800 crore-INR 850 crore, that is the regulated equity or the overall capital base?
It's a combination of regulatory debt and equity both.
Sir, I'm just trying to understand, how is the book value INR 2,200 crore in the regulatory asset base. I mean, the overall base asset is INR 800 crore. So is that the disallowed CapEx or what is that?
So what had happened is that when this asset was acquired, five years back, the acquisition cost was allocated to various assets at that point in time. And, and, Dahanu, I mean, Dahanu asset, the generating asset had been allocated a higher value than the regulated value. And that's why you have the book value having been higher than the regulated value.
But just to confirm, Dhruv, there is no regulatory disallowance as far as RAB is concerned in Dahanu.
Okay. So when with the acquisition that happened, you had increased the, so effectively, the allocation led to an increase in the book value of the Dahanu asset and which now gets written off?
Correct. So, Dhruv, if I can explain this. When the transaction had happened, the entire distribution business was carved out of R Infra and was sold to SPV. That transfer had happened at a fair valuation, which was about INR 10,000-12,500, which is the book value of the asset.
The regulated asset base at that time was about INR 5,000-INR 5,500 crore. That is the reason why you have a disparity in book value and regulated asset base. There's no disallowance of CapEx of any form.
Got it. So the asset gets transferred, now at the book value, I mean, at the regulated asset value?
Yes.
One time regulated asset value. Got it.
Yeah. And you have to think of it this way. You have to think of it as a thermal power asset with one year of PPA left. It's got 25-year life already expended. And in addition to that, there is potentially a view that a buyer can take that the PPA can be extended for two more years. So that's. The, all of those factors that were taken into consideration when we work out the value of the asset.
Got it. Got it. Makes sense. And this will have some small implication on your regulatory asset base, but you say that can be offset based on your CapEx plans in the regulatory phase.
Yeah. So, we will need the RAB immediately will reduce by about INR 800, but by the end of year, because we continue to add that CapEx, it will reach back to the same level. In fact, we'll, there'll be some additional RAB as well. And see, most important point to note here is that now in the entire RAB of AEML, there will not be any thermal asset.
It is pure transmission and distribution assets only.
Makes sense.
And see, this also, this also, Dhruv, drives a reduction in cost of capital for AEML as well as AESL, because a larger pool of capital, which is, ESG pool of capital, can then start, playing into this because of the negative factor that was there, and the thermal asset sitting there has now been carved out.
Yeah, yeah, makes sense. And, sorry, and last question. Is just on the transmission segment. I just wanted to reverify. So assuming the under construction projects, they will require about. So you have to complete them over the next 2 years. They will require about INR 8,000-7,000-odd CapEx every year for the next 2-3 years. So that's the number. Do you see any upside to that number based on the bidding that you have?
All bidding that we do now, the related CapEx to that happens from probably FY 2027 onwards.
So if I can take an attempt at answering that question, out of the INR 17,000 crore of CapEx that we have for the projects under construction, about INR 4,000 crore is already spent. So the balance INR 13,000 crore will be spent this year and the year next year, so FY 2025 and FY 2026. So that's 6.5 thousand crore, broadly, a year. The projects that we win this year, we normally enter into starting expending CapEx. Year zero is the winning year, and then year one, two, three. One, two, depending on the kind of the project and the design of the project, we spend it. So you should actually start seeing that also in 2026, 2027.
Got it.
Yeah.
Okay.
KC, if you can add to that, I mean, unless there's something you wanted to add to that.
Yeah, Anupam, that, that's perfect.
Yeah, perfect. Thank you.
Yeah, that's all.
Yeah. Thanks.
Thank you. Next question is from the line of Nidhi Shah from ICICI Securities. Please go ahead.
Yes. Thank you so much for taking my question. So, firstly, on, on CapEx, which you, you mentioned, could you give me a segment-wise breakdown of the CapEx for 2025 and 2026? That would be my first question. The second is that the, the transmission bidding pipeline, what do you think is, is the pipeline looking like, and how much will we be able to garner? Those are my two questions.
Sure. So for the projects which are already under construction in transmission business, the CapEx, which is planned, for FY 2025, is INR 7,000 crore, and for FY 2026 is INR 5,000 crore, which will ensure the completion of all the 9 projects that we have in hand. Of the pipeline which is there, which Kandarp mentioned earlier, of around INR 100,000 crore coming up for bidding each year, we will continue to have the existing market share of around 20%. So that's in terms of the planned CapEx in transmission business.
In case of the existing distribution business, in case of AEML and Mundra utility, we have a planned CapEx of around INR 1,500-INR 1,700 in each of the years for that. On smart meters, we have currently 1.23 million meters. As I told you, we have a CapEx outlay of around INR 5,800 per meter, and our plan is to install close to 50-60 lakh meters this year, and which will increase to a crore or more than a crore in the next year. So that's on the existing businesses that we have won, and the CapEx for the future businesses or the additional businesses would depend upon the project that we win.
All right. All right. Just a follow-up on the transmission. Has the competitive intensity there declined, or given that the pipeline is strong? And in the new tenders especially that are upcoming, what do you think, in your experience, is going to be the competitive intensity?
So, Nidhi, certainly the intensity in competition has reduced, but not significantly so far. But we expect that, with the kind of pipeline that is already announced and in the various stages of bidding, we certainly feel that intensity will reduce significantly because we are talking of about INR 1 lakh to 90,000 crore CapEx of a project in a year. So we feel that intensity will reduce significantly.
All right. Thank you so much.
Thank you. Ladies and gentlemen, to ask a question, you may press star and one. Next question is from the line of Abhiram Iyer from Deutsche Bank. Please go ahead.
Hi. Congratulations on a good set of results. Sorry if this question has been answered earlier in the call, but could I just ask what would be the use of proceeds on your disposal of the Dahanu Power Plant?
So Dahanu Power Plant proceeds would be based on the covenants and the waterfall, which is, as per that bond covenant, which we have, and would largely be used to reduce our debt, which is, there in the company. So because the, cash flows of AEML are more than sufficient to take care of the CapEx requirements, this additional cash flow in terms of Dahanu will be used to repay the existing debt of the company.
So of AEML debt, or are you envisaging some flow to AESL debt as well?
AEML debt.
AEML debt. Understood, understood. And second question, on AEML. So if I look at, the revenue increase, on a year-on-year basis, it's about 23%. Adjusted EBITDA is around 15%. Could you please just, clarify on why the margins have fallen for this quarter?
No, margins have not fallen. If you understand the business model, regulatory asset-based business model, it is essentially EBITDA, which will remain constant or will increase.
The revenue has increased because of two reasons. Obviously, there is a increase in tariff because of levy of FSC, and a higher number of, a higher amount of, sale. But, you must have seen, when during the COVID period, when my, sale reduces significantly, but EBITDA remain constant and margin percent, percentage margin improves significantly. But that is not material in distribution business, because it is a regulatory asset-based, driven, model here.
Understood. So basically, if I compare EBITDA plus the change in your regulatory balance, it should more or less be in similar line on a in a similar ratio with respect to the pre- same quarter previous year?
Correct.
Understood. One last question. Could you just please give what would be the current debt and cash balance at AEML as of June?
At AEML or at AESL? AEML, AEML. AEML.
AEML.
AEML has two outstanding dollar bonds. One is of $880 million, which initially was 1,000 million, now it is 880. There is $300 million of SLB bond, which takes to around $1.1 billion of dollar bond. Then there is $282 million of quasi-debt from the parent from the shareholder company.
Understood. So once the transaction for Dahanu complete, the debt will reduce by around. The net debt will basically reduce by around INR 100 million?
Correct.
All right. Thanks a lot for taking my questions.
Thank you. Next question is from the line of Puneet Gulati from HSBC. Please go ahead.
Yeah, thank you so much. My first question is on transmission. In first quarter, how much of bidding has happened, and what is the share of Adani?
In first quarter, there are four projects which got bid, and we have got one. The process is going on for allocation. So they will have to take a decision and then go to Regulatory Commission for adoption of tariff. We expect that should happen next week. So our pipeline, that means our share remains almost same, about 20%. But this project we got at much better, higher.
But in terms of value, whether you want to talk in terms of transmission income or, the CapEx that was out for bidding in-
The project we have won is about INR 4,000 crore CapEx.
Okay. And is the market share similar in terms of number, I think? Twenty percent is, so should I assume almost similar number, INR 20,000 crore of CapEx for bid out?
Sorry?
Should I assume that INR 20,000 crore CapEx was bid out, and you got the same 20% market share there?
The bid out was about INR 30,000 crore. There was one HVDC project-
Okay.
In Rajasthan. And this was AC project for Khavda. There are two HVDC project coming up for Khavda in next couple of months.
How's the pipeline looking for the second, this current quarter?
In the current quarter as well, we feel that at least one HVDC project will get bid out and another 3-4 projects. Roughly around INR 30,000-35,000 crore worth of bidding opportunity.
Another, another 35. That's helpful. And secondly, if you can talk a bit about your experience on the smart metering side. Some bit of installation has happened. How has the collection behavior been and, and in terms of payment by government, et cetera?
So, Puneet, what we did is that first we focused on standardization of our solution. So all those Smart Meter, ACS, MDM, communication, cloud, and then everything integrated seamlessly with our distribution billing system. So we have completed that aspect. In fact, if you not have done that aspect very well, then you will face a lot of problem not only during implementation but also during operation. So we learned that part when we were implementing smart metering at AEML. So we have concluded that part with other distribution company, where we have got order. We have started implementing in BEST, Assam and Bihar.
We are facing some resistance in BEST, but in Assam and Bihar, the, in fact, there is no resistance. We have reached to combined there Assam and Bihar, we have reached to about 6,000 meter installation a day. Now from in couple of weeks, we will start implementing in three distribution company of Assam. One in Uttarakhand and two at two places in in Maharashtra. So combined together, we wanted to reach to about 20,000-25,000 crore, 20,000-25,000 meter installation a day. And I think that will, that we will be able to demonstrate by end of this quarter.
Okay, very interesting. Thank you so much. Thank you so much. All the best.
Thank you. Ladies and gentlemen, we will take our last follow-up question from the line of Bharat Shah from ASK Investment Managers. Please go ahead, sir.
Anil Ji, or Kandarp Ji, basically, once the smart meter is installed, your job is done, and all the benefits of, you know, avoiding energy leakages and remote monitoring and, all other graduated benefits would accrue to the DISCOMS. How do we derive, because we have a lot of data through those meters, and how do we leverage this data in terms of, intelligent analytics to benefit and convert into revenue over a period of time? Or, would that belong entirely to DISCOM and we have no role to play?
So Bharat Shah, the data certainly belongs to DISCOM. We are the only custodian, and we can have a very limited use, but what probably advantage that we can derive from the smart metering is that you can certainly understand the consumer consumption pattern and payment behavior. And eventually, if you wanted to expand your distribution business in those areas, obviously this kind of insight will be very, very handy, and you can actually plan your investment and operation quite efficiently if you decide to take distribution asset there, or you wanted to apply for a second license.
After the meter is installed, after 10 years, what happens? How do we rejuvenate these revenue streams?
So, as per contract, I have to hand over entire infra to the existing distribution company. But see what happens, that those meter life is also for 10 years. Now they will, once this contract is over, they will have to appoint another meter AMI as the contractor to deploy a new set of meters. Here we see we having a great competitive advantage when they decide to replace this meter through another tendering process, because we will have presence there. We would have understood the entire geography, and we would have operated in that geography for last 10 years.
So the knowledge of that particular geography and working with a distribution company will become a major competitive advantage when they decide to replace this existing meter, smart meter, with a new meter through bidding process.
The life of these typical meter would be what?
Sorry, Bharat Shah, I couldn't get your point.
What is the physical life of smart meter?
10 years. 10 years.
I see. After 10 years, it becomes kind of useless.
Correct.
Okay. Okay. Thank you.
Thank you. As there are no further questions from the participants, I would now like to hand the conference over to Mr. Kandarp Patel for the closing comments.
Thank you, all. Thank you for the questions. And look forward to continuous engagement with all investors. In case you have any clarifications, Vijil is available for any of the additional clarifications that you have.
Thank you, everyone. Thank you.
On behalf of Adani Green Energy Limited, that concludes this conference. Thank you for joining us, and you may now disconnect your lines.