Ladies and gentlemen, good day and welcome to the Q2 FY 2023 earnings conference call of Adani Transmission Limited, hosted by InCred Equities. As a reminder, all participant lines will be in the listen-only mode, and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during the conference call, please signal an operator by pressing star then zero on your touchtone phone. Please note that this conference is being recorded. I now hand the conference over to Mr. Rajarshi Maitra from InCred Equities. Thank you, and over to you, sir.
Yes, thank you, Rutuja. On behalf of InCred Equities, I welcome you all to the Adani Transmission first half FY 2023 conference call. From the management today, we have with us Mr. Anil Sardana, MD of Adani Transmission. Mr. Kandarp Patel, CEO of the Distribution business. Mr. Bimal Dayal, CEO of the Transmission Business. Mr. Rohit Soni, CFO of Adani Transmission Limited. Mr. Kunjal Mehta, CFO of Adani Electricity, and Mr. Vijil Jain, Lead Investor Relations. Without further ado, I would like to hand over the call to Mr. Anil Sardana for his opening remarks, post which we will have the Q&A session. Thank you, and over to you, Mr. Sardana.
Thank you, and very good morning to all the analyst friends. Welcome back to the Q2 FY 2023 call. Let me start, like all times, to mention about the operational highlights. The commissioning of the assets that have been under execution has been constantly coming on bar. We've commissioned one of the largest substations in the country in Gujarat. It's a part of the Lakadia-Banaskantha Transmission System project. More importantly, and simply stated, it's going to be the largest evacuation hub for the renewables that are placed between the northwestern part of Gujarat and the southwestern part of Rajasthan. That project has been commissioned and in addition to the projects that we had mentioned to you about last quarter in UP.
Now they add to the existing portfolio and therefore reaching very close to what we had mentioned about 20,000 circuit kilometers and 40,000 MVA of substation capacity. Moving on to the operational performance. As we always have stated, the throughput is not our accountability in our businesses. We therefore monitor the availability. Both in the transmission business as well as in the distribution business, the availability has clocked in much higher than the normal requirement, and therefore, they all earned incentives, and they've gone beyond the incentive thresholds. The distribution loss in the Mumbai scene with regard to the current at the end of the current quarter is 6%. The good part is that the million units sold were higher. We sold 2,233 million units during the quarter.
This is higher for the reason that, the base in the previous year was impacted because of COVID. Now it's all getting back. For those who are interested in the regulated asset base, the Mumbai regulated asset base is INR 7,500 crores, out of which the regulated equity is INR 4,400 crores and the balance is regulated debt. Coming to our commitment on ESG, the company has, as we are all aware, pledged with SBTi for net zero targets, and we are therefore committed to 1.5 degrees above pre-industrial levels. The good part is the company is happy to have done that scientifically and with proper measurements and not without a plan.
We have been bringing before you the fact that we have repeatedly been subjecting ourselves to external and global accreditation. I'm happy to report that the 2022 S&P Global scores have come in, and we have maintained our scores. We are almost double of the world electric utility average of 32, and our score is 63 out of 100. That's the highest within the Indian context of utilities that they have declared. The FTSE score of 2021 also gives us high ranking compared to the world average. The world average is 2.6, and we have scored 3.3.
We will continue to spearhead on these aspects as we clearly have taken a vow that one of the key disciplines that we will enforce on the ESG side is to be within the top global companies in our sector, and we'll maintain that. We are also happy that recently we were awarded by CII for in the global climate rankings within the energy and mining category. We will continue, as I said, to not only just take steps internally, but also make sure that we will subject ourselves to various accreditations from time to time. Moving on to the results which are there before you and since you are also keen on ratios, the debt service coverage ratio continues to be healthy. It's 1.8 for the first half of the year, 2023.
The fixed asset coverage ratio is 1.5, so then maintained similar to what FY 2022 is. The net debt to EBITDA is 4.4. To our commitment, we will continue to remain lower than 4.5. Net debt to net worth is 2.2. The operational results are with you and, since you are the analyst colleagues, therefore you would have noticed the one-off mark-to-market. That's because of the options that we have in our Adani Electricity Mumbai. Though of course, on the net basis, we are still saving compared to the other hedging options in that. Therefore, we are continuing with the option side of the hedging of the currency.
Now, that of course leads us to do mark-to-market in the Adani Electricity Mumbai as a part of the hedging policy, and therefore it reflects in the P&L. Actual PAT for the quarter is actually INR 338 crore, which is INR 50 crore higher than the corresponding quarter of the previous year, which is reflected in the cash profit, which is in front of you. That's INR 748 crore versus INR 692 crore. I think that's what is important from the point of view of actual performance of the company. Both in standalone in the transmission business as well as distribution business, the EBITDA numbers have been higher. The details are there with you. 834 versus 771 in the transmission side and 528 versus 518 in the distribution side.
That's the performance details, which of course have been shared yesterday, and you must have done your bit to analyze that. I'll be happy to take your questions. Of course, a lot of you also ask in terms of pipeline. The pipeline continues to remain higher.
In fact, the good news is recently in the Power Ministers India-level conference that was held in Udaipur, the Minister of Power, duly supported by his planning agencies, declared that by 2030, a sum of INR 408,000 crore has to be spent alone on the transmission side of the business, and most of it will come through the TBCB route, including the good news is that recently the Empowered Committee on Transmission even approved the HVDC plans to be taken up through Tariff-Based Competitive Bidding. A welcome sign and one of course is seeing a bit of shifting of the bids. That's primarily because of the Supreme Court issue on Great Indian Bustard, as you may be aware, because most of the lines in Rajasthan and Gujarat have got impacted because of the GIB issue.
However, the good news is that the Supreme Court appointed committee has been presented by Government of India on its stance that these lines will continue unhindered and unchanged because these can't be made underground. To which the committee now has to dispose of in front of the Supreme Court bench, and this is which the further decisions will be taken. There is a queue of projects close to about INR 28,000 crore, which has already gone through the RFP process. They will go into the RFQ process. They will go into the RFP process soon enough. That's on the queue part.
Of course our won projects, the projects that we already have won and they are there with us is close to about INR 15,000 crore, and we are well on our way to maintain our CapEx numbers like previous years to be between INR 5,000-INR 6,000 crore. That's the guidance for you. I'll stop here and cover up any of the other aspects which I may have missed out through the questions. Thank you.
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 the touchtone telephone. If you wish to remove yourself from the question queue, you may press star and two. Participants are requested to use handsets while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. The first question is from the line of Mohit Kumar from DAM Capital. Please go ahead.
Yeah. Good morning, sir.
Morning, Mohit.
On a good performance in that quarter.
Mr. Sarvesh, interrupt you. Mr. Mohit Kumar, may we request you to speak a little bit louder.
Am I louder now?
Yes.
Good morning, sir.
Morning. Good morning.
Good to see a very good performance in the quarter, especially on maintaining low distribution loss and winning smart meter order. My first question is on the smart meter order, you know, which one. Can you just quantify the, you know, the amount, the payment structure and the tie-up which you've done for the smart metering? How to see this opportunity unfolding in the next six months? We believe that there are a lot of tender which are still open.
Yeah, Mohit, thank you so much for your generous words. We will continue to maintain the consolidated performance at the levels at which we have been pursuing till now. On the smart meter, may I request my colleague Kandarp, who is the CEO for the distribution business of ATL, to provide the answer.
Yeah. Good morning, Mohit. On a smart meter front, learning from our experience in AEML of deploying smart meters, we also thought that this would be a great opportunity for ATL distribution business to expand. We started getting into various partnerships with meter manufacturers, communication platform provider, as well as software company. We have started participating in the various bids of state electricity board and other distribution companies. We have recently gotten order from BEST to deploy 10.5 lakh smart meters. We will have to deploy the smart meter and operate for 90 months time, and we will be paid annuity, the monthly annuity exactly on the same line of distribution.
For the payment part, we have a direct transfer facility from their revenue account, so that that's improved the payment security mechanism, and we say that this the SPD. As far as the pipeline is concerned and the size of opportunity is concerned, Ministry of Power has directed that all the meters has to be converted to smart meter by end of FY 2025. That will be 25 crore meters at a country level. Out of the 25 crore, roughly about 5 crore meter tenders are going online in next couple of months. That is the size of opportunity that is available in the market.
Okay. Is it, have you tied up for the smart meter in the sense of with the manufacturers?
Yeah. We have tie-ups with the various manufacturers. In fact, there are a lot of other manufacturing companies also coming up in India, considering this size of opportunity.
Understood, sir. Secondly, on this transmission pipeline, of course, I just heard you that INR 4.1 trillion. The CEA has come out with the Draft National Electricity Plan, where they want to add generation. What is delaying this national transmission plan, either from CTU or from the CEA, in terms of assistance, given that we have a very huge challenge of adding generation capacity?
Yeah, Mohit, as I mentioned, typically, most of the capacity addition that is likely to take place is envisaged on the renewable energy side. The locations which have higher share of such capacity additions are on the western block of India, and mostly fall in the southwestern region of Rajasthan downwards. Most of it is in the Jaisalmer area of Rajasthan, then in the Kutch part of Gujarat, and then going down to the coastal belts in Maharashtra, Karnataka, all the way then into Tamil Nadu. If you look at it from the entire solar perspective, the wind perspective is in the southern part. The solar is entirely in the Rajasthan and Gujarat area. This evacuation path is incidentally in the areas which have the impact of Great Indian Bustard.
What's been happening is that Supreme Court had last given its order saying that these lines should be converted underground. Realizing the fact that they themselves may not be the technology expert, and based on the activist who had brought this to the attention of Supreme Court, that order was given, but with a clear caveat that we will create a committee which will evaluate from time to time the feasibility of such conversion or future additions. Now all of that has got. Those waters have flown under the bridge, and the government has now clearly got its recommendations prepared, which says that it can't be done underground. 765 KV, 400 KV, 220 KV, 132 KV, 66 KV will be overhead only, and the only possibility is 33 KV and 11 KV could be underground.
Now, those are not used anyway for the transmission system. Transmission system is with the higher voltage. Now this whole issue has to get this final endorsement from the bench of the Supreme Court. Once that happens, then you'll see all of this pipeline getting awarded one by one and the work to be taken up in the right earnestness. That we'll have to wait and see whether it gets cleared in this quarter, and then we will see beehive of all the contracts. The investment opportunity exists. It's just that it is getting queued up because of this key issue.
Understood, sir. On bookkeeping questions, why receivables has gone up from March 2022 level very sharply. I think it was INR 10 billion, which has gone to INR 16 billion. Is the entirety due to distribution? Is it right to say?
No, no, it's not in the distribution side.
It's in the transmission side.
I'll explain you. See, we had commissioned two lines in UP, which is Ghatampur system and Obra system. While the Obra system is against the commissioned generating assets, the Ghatampur asset, which is being done between a joint venture of Neyveli Lignite and UP, that generating station is getting delayed, including the Lignite minings are getting delayed. With the result, the deemed commissioned assets today have got sort of piled up in terms of receivables. We have gone to UPERC, and yesterday, in fact, there was a hearing in which UPERC has clarified to the Genco that you are supposed to make the payment irrespective of the fact that whether you have come or not. We will earn the late payment surcharge.
We are fully qualified to get that money, but that is where the receivable has got, accumulated.
Understood, sir. Thank you. Best of luck, sir. Thank you.
Thank you.
Thank you. The next question is from the line of Apoorva Bahadur from Investec. Please go ahead.
Hey. Hi, sir. Thank you for the opportunity.
Hi, Apoorva.
Sir, just wanted to understand, get your views on this plan to monetize the state transmission assets. I think it was recently quoted in the media as well.
Yes.
How do you see this panning out? What type of model will be deployed and, what's the opportunity side? Also, are we interested in participating over here?
Apoorva, the last question first. We have been one of the key advocates across various forums suggesting that transmission assets are one set of assets where holding vested in the government-owned enterprises does not help anyway. For the simple reason that the operations in any case is handled by the state transmission utility and the Central Transmission Utility, which are in any case an independent system operator. By holding the asset, it doesn't help at all because the operations is in any case in the government hands. The asset could be held by private sector, and therefore the government can easily monetize that without actually impairing any customer interest or any aspect of the national security. I think this has dawned well into the central government as well as the states.
The central government therefore has issued an advisory to the states that you should quickly look at the possibility of monetizing these assets through a bidding process. We'll be very keen. We've been advocating this for quite a while. Not only here, I'm happy to tell you that even this has been bought by our neighboring countries. You will see some movement in our immediate neighbors as well, where we have been able to do advocacy stating that why should the state invest into building these assets when you don't gain anything incremental by just the ownership issue. Rather allow private sector to have the ownership and you continue with the independent system operations where the available asset will be operated in the way the grid wants various elements to be operated.
This is absolutely a viable aspect and we will continue to push for it.
Great, sir. Around the opportunity size and what model of monetization do you foresee over here? Like will it be InvITs or some sort of securitization or wholesale, I mean, sale directly to the private participants?
No, that will all be matter of detailing as they right now gear themselves in terms of first putting consultants to get the inventory completely on board. As you know, many of the state-owned enterprises won't even have a proper inventory in terms of the value and all the details. That's the task that they have undertaken, some of them have undertaken now. Once they do that, then they'll go to the next step, whether it will be InvIT or outright sale or a PPP model. Some of them are even contemplating to say we could be 26% and we could offload 74%. So all of that one will have to wait and see.
The good part is that you will start seeing presence of private sector in the transmission side much more than what it is today.
Fair enough. That will be great actually for the overall sector. Another question on basically your smart metering story. Can you help us with the type of pre-tax IRRs or project IRRs that you're expecting from this?
Apoorva, it will be unfair to, you know, kind of give guidance on the unexecuted contracts. Of course, you've known our thresholds. We won't go below those thresholds, and we will only look at healthier thresholds than those because this is non-regulated business. I think I'll stop there only, rather than putting any particular number.
Sure, sir. Thank you. Thank you so much.
Thank you.
Thank you. The next question is from the line of Nikhil Abhyankar from DAM Capital. Please go ahead.
Thank you, sir, for the opportunity. I've got a couple of questions.
Mm-hmm.
What portion of AEML debt is hedged, sir? Even when 75% of our debt, almost 100% of our foreign debt is hedged, why do we have these Forex losses?
Now that's a good question. That's what I tried to explain in the beginning. You know, whether it is transmission business or it is distribution business, all our foreign debt is 100% hedged, both for repayment as well as for interest component. So there is no exposure that we have to the changing rupee to dollar price. That's first part that I want to clarify. The second part is in terms of hedging methodologies. There are different instruments available for hedging methodology. As far as the transmission assets are concerned, they are all with the long-term hedges, you know, five years and in few cases, even 10 years. But in the case of distribution business, when we had done this, sustainability-linked bond, at that time, depending on the various hedging methodologies available, we opted for option methodology rather than the forward methodology.
When we took the option methodology, that's where you are required, then every quarter, to do mark-to-market to represent it in line with the prevailing guidelines from Institute of Chartered Accountants. It's for this reason that you get to see a mark-to-market entry every time only in the distribution where the methodology adopted is not a forward cover but an option. Both are similar. The limited point that I want to give you reassurance, because you guys understand this better, a common man may not understand, that the reason why we are still persisting with options and not converting to forward, because we are still 50 basis points more competitive through this option than the other alternate.
That's the reason why we are staying put, despite the fact that non-cash entry genuinely bothers us because the media management and the highlights that are normally done by the guys who don't understand the subject is to put headlines saying that, you know, the quarter PAT was INR 194 crore, little realizing the fact that the PAT is actually INR 338 crores. So the good part is that now we are talking to Eskimos who understand the refrigeration. Therefore, it is expected of you to bring this out clearly to all your investors. Thank you.
Thank you, sir. Sir, just one last question. Just going by the trend, our distribution losses are skewed higher in the first half, and they tend to go lower in the second half. Any specific reason for it, sir?
You know, you should not worry about quarterly distribution loss because the distribution loss, AT&C distribution loss is a derivative of the amount collected by the, divided by the million units for which the collection has been done. To arrive at the million units which have been collected for. A million units collected divided by total million units is what is the loss. Therefore, the figures depending on what exactly is the constituents of the tariff from which we derive the million units that have been collected, at times gives you this kind of a bit of shift here and there. You don't have to worry about these type of things because the distribution loss eventually at the end of the year, done for the 12 months, gives you a right comparison on year-to-year basis.
Understood, sir. Thanks a lot. That's all from our side.
Thank you.
Thank you. The next question is from the line of Tushar Pendharkar from Ventura Securities Limited. Please go ahead.
Yeah. Thanks for taking my question.
Yeah, Tushar. You can be a bit louder. Madam will say otherwise.
Sir, my question is on the old transmission lines, low KVA old transmission lines in India, which need to be replaced in the next three years with the high KVA transmission lines. What could be the opportunity in terms of CKM in the next three years? I wanted to understand.
You know, Tushar, this actually category is huge in the states. This category does not exist in the central system or ISTS system, what we call as intrastate transmission system. Interstate transmission system is all modern and has been built in the last 30 years, and therefore, a maximum that you need is reconductoring. You don't need to upgrade the voltages. The system that needs upgrade is in the states, so it is part of the intrastate transmission system. In fact, it's exactly akin to the job that we are right now doing in Mumbai, where we are upgrading the existing 110 KV and 220 KV system to 400 KV and 220 KV system between Kharghar and Vikhroli, and first time bringing 400 KV voltage level to Mumbai.
Now, this is the kind of jobs that every state has to take up. As you know, states have their own challenges in terms of fiscal equations, as also the fact that they have been very close-fisted with regard to sector's evolution. Some states have become progressive, and they have started to do. For example, if you see Gujarat, UP, Rajasthan, Maharashtra, you'll find many of the lines have been already taken up for upgradation. Whereas many other states are right now very, very reclusive and not been able to spend nor been able to focus on this area. I would only say that the circuit kilometer opportunity is huge, in fact, humongous.
It's only time that will push them to the wall when they will have no alternative but to, again, through panic, get to upgrade these lines. That's the unfortunate part, but that's reality. Therefore, the opportunity size though being humongous, one is not likely to see many states opening up their transmission systems too soon until they get compelled. It's almost like, you know, kind of, the vested interest playing to their advantage. Whenever they are therefore able to put a bit of budgetary allocation, they want to do it all by themselves.
Now even one sees very little of that because the distribution system, as you know, is not able to do enough collections in the state level, and therefore not much budgetary allocations are happening to the transmission system. That's the situation. One will only hope that right now the ISTS system connected with renewable energy will keep us busy because the amounts involved are large, and the country is really gearing up to spend INR 400,000 crore in the next nine years. Thereafter, perhaps, in next 4-5 years, one will start seeing the elephant turn its tide in terms of state waking up to the reality of their problems. Those lines will start figuring in.
Okay. Great, sir. Great. My next question, sir, is on the Mundra Utility Limited. Mundra is attracting many industrial investments from many heavy industries. What would be the CapEx for our system to upgrade to that level in the next three years?
You know, it's a question that keeps us all awake. In fact, I can only give you a few guidance points rather than putting numbers right now because we are in the middle of getting them approved by the regulator and by the concerned transmission authorities. The Mundra Utility will emerge to be perhaps the largest DISCOM in the country in terms of the million units and the load that it'll handle. You rightly said, it's seeing mushrooming of agencies that wish to set up shop owing to the fact that the port has become the largest, and perhaps the turnaround times give them the allurement for them to set up shop for their import and export.
As we see things today, the system has recently been approved for it to be upgraded with connectivity at 765 KV level. CTU, which is the Central Transmission Utility in the recent approvals, has granted dual connection to Mundra Utility Limited at 765 KV. There'll be a central feeder substation of 765 KV that will come in proximity of that distribution utility. From that substation, the entire Mundra utility will be catered to. In parallel, you know that our distribution team has already applied for extension of the distribution area into the larger Mundra Taluka. That's the second part, so that we will have mixed load.
We will have not just the industrial load in the SEZ area, but also the load in the precincts of SEZ, which is domestic as well as the other commercial loads. All in all, this will be growing into a much larger utility. I will refrain from putting numbers right now because we are in the middle of our approvals. Sooner we have got those approvals and in place, we will share those numbers with you. I can only tell you that they are huge.
Okay. Thank you, sir. That's all from my side, sir. Thanks.
Thank you.
Thank you. The next question is from the line of Anshuman Ashit from ICICI Securities. Please go ahead.
Thank you, sir, for the opportunity. Apologies if I may have missed it earlier, but the receivables are on a bit of a higher side. Is this a seasonal phenomenon, and will it revert to the previous year levels by the end of the year? Is there any particular reason?
We did cover this part, so I will repeat that very quickly. These are not on account of distribution business. These are on account of transmission business, where our two assets that we had commissioned in UP are deemed commissioned because the generating assets which were to utilize these haven't come up because of the delays at their end. We had taken up this matter with the appropriate regulatory authorities, and yesterday in the hearing, they have directed the GenCos to start making payment along with the late payment surcharge. We will get all these receivables, though we have not indicated in those receivables the late payment surcharge because we recognize LPS only when we get paid. We will get both, and it's only on this account that the receivables are showing high.
This, as you rightly said, this is likely to get liquidated before end of the year end.
Sir, on our distribution front, now that we are implementing smart meters, will we see a downward trajectory in terms of receivables, because we'll see better payment, better collections? Will we have a positive impact on our working capital from that implementation?
If I've understood your question right, you are alluding to inclusion aspects of smart meters within our own distribution area.
Yes, yes.
The answer is yes. If we are spending on smart meters, we are doing that with that purpose in mind. In any case, we have no receivables either at MUL or at Adani Electricity Mumbai. What we will perhaps assume is that we will offer better services, better insights into the consumption pattern, better machine learning, better artificial intelligence, and above all, the fact that we will be able to do remote operation wherever there are delays in payments. That's related to what we will be able to reap benefits other than the point that you alluded to in terms of working capital alone. We are now doing smart meters beyond our distribution area, and it is in that respect that some of the other analyst friends had asked the question.
We are very bullish in terms of the fact that we are trying to work through almost 10%-15% of the share of wallet that will be offered in the marketplace by various DISCOMs, and that'll be outside our distribution areas until of course we get to those areas also, which from time to time we will share with you all. There, yes, you are right. Those DISCOMs should get benefited with better improved collection, better metering, better billing, better improved collection and better working capital management and also of course lower losses. That's the premise on which this entire chain management, transformation management is being done.
Sir, in our distribution areas is a time of day tariff also one of the points that we are looking forward to after the implementation of smart metering?
See, all of that becomes very, very much possible. Therefore the time of day is up to the regulator to decide. We have been always a votary of the fact that the time of day metering should be done because we are all aware of the fact that Mumbai, the entire consumption is sort of centered during the daytime and the evening hours. Of course, in the night, the consumption goes much lower. That doesn't augur well except for the fact that we have matched that curve with the solar generation and with the other renewables, hybrid renewables. But all DISCOMs will eventually tend to get benefited if they are able to have the time of day metering.
To cut the long story short, smart meters give you benefit in terms of, number one, time of day metering, number two, remote operation, and number three is to share the details with customer and above all, have more insights into the consumer's consumptive behavior. Therefore, a lot of upselling and cross-selling can be done based on the customer's consumptive habits.
Sir, one final question on privatization opportunities in the distribution space. The past one year we have seen muted discussions on it. Earlier there was Chandigarh and Dadra and Nagar Haveli were in fact vetted out, but after that nothing much has happened. Mostly the wait is for the Electricity (Amendment) Bill to now be passed and after that maybe once that clause where multiple distributors can function in a particular area if that is included that will help. Sir, any particular reason for why privatization is not being discussed as vigorously as it was earlier?
Perhaps you missed out, you know, the news that Government of India has already announced privatization for Puducherry. Their commitment to privatize UTs stays steadfast. They are moving ahead with Puducherry as the next target. They have already started working on Lakshadweep and various islands. That is next one in the offing. Then perhaps they will go in for the other remaining ones like Andaman and Nicobar as also J&K. The Government of India is moving ahead with their UTs. As far as states are concerned, yes, you could say they are all waiting in the flanks to perhaps wait for either the Electricity Bill amendment or for them to take those calls depending on the political situation.
As far as we are concerned, as I told you in the previous calls, we are going ahead applying for the second license. We have already applied in GERC for extension of the Amul area as the second licensee in the western DISCOM of Gujarat. We have already applied for second license, you must have read it, in the Navi Mumbai area, and more announcements would follow.
Thank you so much, sir, for answering my questions and good luck for the future.
Thank you.
Thank you. The next question is from the line of Bharani Vijayakumar from Spark Capital. Please go ahead.
Good morning, sir. I just heard you mention an opportunity of about INR 400,000 over the next nine years in the transmission-
INR 400,000 crore.
INR crore. Yeah, exactly. Which is INR 4 lakh crore over the next nine years. This is, I believe, in the inter-state transmission, right? Or does it include state also?
Vijil, you are there?
Yeah, I'm there.
Okay. No, no. That 4.08 lakh crores, which you rightly mentioned, is right now for evacuation of the RE capacities that are planned to be commissioned by 2031. It is based on that. This estimate has been floated by the Government of India. Now, in addition to that, the inter-state strengthening of their transmission and sub-transmission system will be additional.
Okay. This INR 4.08 lakh crores, does it include the already announced and ongoing green corridors, or it's incremental from today, extra?
You know, you don't have to read too much into the green corridors. That's mostly a name given to the fact that whether the Government of India, in some corridors which are going to connect RE to various states, will not charge for the transmission line. Now, that green corridor word has got absorbed because till 2025, going up to 25% reduction till 2028 June, in any case, ISTS is free if people are to source green power, whether it is DISCOM or even customers. Even a individual customer can source green power on an ISTS system as long as he's entitled to one, he will have no transmission charges. Everything is green corridor in that respect.
Okay.
Even the existing ISTS lines, which were built several years back, therefore become green corridors in that respect.
Okay, where I'm coming from is we have not started this renewable push and capacity addition on the generation side recently. It's been going on. While if you see the transmission capital expenditure in the interstate level, it's INR 44 lakh crore for nine years translates to about INR 40,000-45,000 crore per year, while really on the ground we are seeing more like INR 15,000-20,000 crore per year. This incremental capital expenditure in transmission due to RE, it's slow to pick up. Do you think this.
Vijay, I think you should first, if you're doing a good analysis, but you should first do the generic analysis with regard to how much is the RE capacity one is adding every year.
Mm-hmm.
If the country was to reach 500 GW non-fossil by 2030, which is the target, then how much do I need to add between today and by 2030?
300 GW.
You will get exactly the same proportion that you will see in RE and the same proportion you will see in transmission.
Right.
So-
The answer lies in the fact that we are underachieving the target, so hence it will be the same.
Now you said it all. If the RE capacity is not going to reach 500 GW, then the transmission lines to that extent will not be needed.
Sure. Understood. The next final question is what is the, you know, visible opportunity in ISTS TBCB projects you are seeing in the current year where bids are like or tenders are there, opportunities are there?
I have told you that INR 25,000 crore worth of bids have already done RFQ and are waiting for this vexed issue to get resolved. Sooner that is done, these INR 25,000 crore will go through the RFP process. In addition to that, there is a bevy of all the lines which have got approved in the recent National Committee on Transmission. Therefore they will also start coming in. These allude to that kind of numbers that we have talked about just a few minutes back.
Sure. Sure. Thank you and all the best, sir.
Thank you.
Thank you. The next question is from the line of Dipen Vakil from InCred Equities. Please go ahead.
Thank you for the opportunity, sir. Just a few bookkeeping questions. First one on net debt, sir. In this current financial year, our net debt has gone up by almost 15% to INR 285 million. Can you tell us why? And are we aiming to reduce the net debt by the end of this year?
No, no, that's a function of the growth. See, the projects that we have, including the projects in the pipeline, those are the projects which are all being funded with the debt. As I mentioned to you should not just look at the debt, but you should look at the fact that whether our net debt to EBITDA as well as our debt service coverage is that climbing or that's going anywhere out of whack. I gave you those numbers in the beginning that our debt service coverage continues to be steadfast with 1.8, even at the end of H1. Our net debt to EBITDA also continues to be 4.4. So that's the way that we look at it, because the debt will climb up according to the assets being built by the company.
Okay. It will continue, but it will stay in the range below 4.5.
That's our commitment, because we have given commitment very clearly in the open that management will make sure that we will stay investment grade.
Sure. Okay. Second one on the CapEx. Since net debt, CapEx, how was our CapEx in first year and, I'm sorry, first half, and how do we expect it in the second half?
In the first half we have done INR 2,200 crore of CapEx already, we've capitalized. We will end the year, as I said, between INR 5,000- INR 6,000 crore again.
Okay. Still a lot of CapEx to come in the second half. That's all from my side. Thank you so much, sir.
Thank you. Thank you.
Thank you. Participants who wishes to ask a question may press star and one. As there are no further questions, I would now like to hand the conference over to Mr. Rajshree Maitra for closing comments.
Yes. I would like to thank the management of Adani Transmission for allowing us to host this call and sharing their detailed insight. Thank you, sir. We can end the call. Go ahead and end the call.
Thank you to all the analyst friends and thank you for hosting the call. We will look forward to you joining us at, for the Q3 FY 2023. Until then, if you have any questions, please address it to Mr. Vijil Jain, and we will be happy to respond. Thank you. Good day.
Thank you.
Good day to all my management colleagues also. Thank you.
Thank you.
Thank you. On behalf of InCred Equities, that concludes this conference. Thank you for joining us, and you may now disconnect your lines.