Ladies and gentlemen, welcome to the Q1 FY 2023 results conference call of Adani Green Energy Limited, hosted by Emkay Global Financial Services. As a reminder, all participant lines will be in the listen-only mode, and there is an opportunity for you to ask questions at the end of today's presentation. 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 would now like to hand the conference over to Mr. Abhishek Mody from Emkay Global Financial Services. Thank you, and over to you, sir.
Thank you, Yashashree. I would like to introduce the management of Adani Green Energy Limited. Mr. Kaushal Shah, CFO, Mr. Rajkumar Jain, Head of Business Development, and Mr. Viral Raval, Head - Investor Relations. Now I'll hand over the call to Mr. Kaushal Shah, CFO, for opening remarks, followed by Q&A. Thank you, and over to you, sir.
Thank you, Abhishek. Good afternoon and warm welcome to all the participants in this earnings call. Thank you for joining, and hope you and your families are safe. We have uploaded the earnings presentations on our website and we hope that you have a chance to go through the same. What I will do is that I'll quickly take you through the, you know, the achievements and operational highlights. Let me start with the capacity growth. On a year-over-year basis, the operational capacity has increased by 65% to 5,800 MW through a combination of greenfield projects execution and successful acquisition of SB Energy portfolio. In this quarter, AGEL has commissioned India's first solar and wind hybrid project of 390 MW at Jaisalmer.
Over at [Ambo] you know, there is a partial commission capacity of 1,275 MW. That takes overall to 7,775 MW as we speak. But because of the long-term access issues, you know, that is, technically, the COD is not announced for that 1,275 MW. We are in a process to charged, you know, another 607 MW in next two weeks to three weeks. All in all, we are at almost 7.7 GW, which, you know, translates this company from the developing risk to the developed, you know, company having a very strong EBITDA margin. That's what is on the capacity side.
Another important milestone in this quarter, as you are all aware, that we have a strategic partner in the form of IHC, and they have invested $500 million in this quarter. We have received the cash also, and that has helped us to reduce our debt to that extent. You know, that's another important. Apart from the total, you know, IHC is another partner and, you know, they have invested at almost close to INR 2,000 rupees into this, you know, Adani Green. That's a big achievement of this quarter. On the ESG front also, you know, AGEL has received an ESG score of 66 out of 100 in Crisil Sustainability Yearbook, which is the highest in Indian power segment.
We continue to benchmark the, you know, the improvement in the ESG score and making sure that, you know, we deliver this consistently. AGEL has also published business responsibility and sustainability report. We are as well ahead of mandatory adoption required from FY 2023. For taking all the steps, all our plants are plastic free as we speak. There are various other steps which we are taking. Our audit committee on the governance front comprising of the independent board and, you know, there is no executive director or anybody from the company, so it's completely independent. Apart from that, we have various committees, risk mitigation committee. We have a legal, tax, and regulatory committee. We have CSR committee who oversees the CSR activity and the ESG activity.
All of that, you know, the global standard framework on the governance front we have already established. Now let me take you through the operations. AGEL has continued to demonstrate the consistent improvement in its operational performance. If you look at the solar CUF, it is improved by 150 basis points to 26.5%. Wind CUF has improved by 850 basis points to 47%. This is highest ever reported by AGEL. Another important thing, the newly added solar wind hybrid plant, which is country's first as I communicated, has robust CUF of almost close to 44%. This is what is as far as the CUF is concerned.
This is backed by the high plant availability of 100% and high grid availability of almost 99%. At both the front, we are, you know, we have improved. Sale of energy, if you look at this, has increased by 73% to 3,550 million units, backed by the robust addition of 2,280 MW over last one year. Now, this 3,550 is of 5,800 MW. But there is a further, you know, 1,500 million units approximate for, you know, the partially commissioned projects which we have of 1,275 MW. That's the. And that, we are on the revenue on that also, that is part of my CapEx. CapEx has reduced to that extent.
Revenue from the power supply has increased by 57% year-on-year to INR 1,328 crores. EBITDA from the power supply has increased by 60%, but we have been consistently able to maintain 92% EBITDA margin. Normally, you know, when we look at the numbers, we look at the cash profit. That is increase of 48% to INR 680 crores in this quarter. If my friends, you know, if you are evaluating the PAT, then you know in the last quarter of FY 2021, we had, you know, INR 80 crore as one-time exceptional income. If you remove that exceptional income, that my increase in the profit is almost 30%. That exceptional income was generated because we have got rid of a small operation we had in the U.S.
That was the profit we had in that last year Q1. You know that was a one-time exceptional. If you remove that, we are at 30%. Compared to Q4, you know, we are almost at 58%. You know there is a big jump in the operations and the performance. As far as the run-rate EBITDA, some of you would like to know that for 7,075 MW we will be expected is around INR 6,100 crore roughly will be the run-rate EBITDA. For another 600 MW which we are making it operational, we are talking about roughly around INR 500 crore as a run-rate EBITDA. This is what is the number as far as the run-rate EBITDA is concerned.
You know, on the cash side, we have a cash and bank balance of around INR 4,000 crore in this quarter. You know, consistently maintaining the cash balance, which is sufficient to make sure that whatever is the requirement we can meet immediately. You know, my net debt to EBITDA is 6.16%. You know the overall net debt is coming at around INR 37,158 crore. All in all, you know, very, very strong quarter we have. Some of the friends have a question on the rising interest rates. I'm happy to tell you that my 76% of the overall portfolio is linked to the fixed project cost, so there is no impact of whatsoever in nature.
Around 14% of the portfolio we are about to refinance that in a near future, mostly in this quarter itself. We are locked more or less for 90%. Remaining 10%, you know, I have a reset due over a period of next couple of years. You know that's the only limited exposure we have. Having said that, overall cost of borrowing is only 8.9%. That is also, you know, you should know. As far as the, you know, some of the questions you might have is on the depreciation of the INR. We as a company has a policy to completely hedge whatever is the, you know, the Forex exposure on the loan front.
You know, we have that already fully hedged. There is nothing pending and nothing is pending on that front. I'm happy to report that Vneet Jaain has joined on this call. You know he's available for the answers of any questions if you have. This is what is the, you know, the update from my side. If you have any specific questions, we are happy to respond. Thank you so much for patiently hearing.
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 handsets while asking a question. Ladies and gentlemen, we'll wait for a moment while the question queue assembles. We have our first question from the line of Mohit Kumar from DAM Capital. Please go ahead.
Hi. Good evening, sir. Am I audible?
Yes, Mr. Kumar. Can you speak a little louder, please?
Yeah, sure. Okay, I'll try. My good evening, sir, and congratulations on a very, very good set of numbers, especially on the big delta side. My first question is, given that we have a large portfolio, is your appetite for taking more projects on bidding basis is limited at this point of time. The related question is that if and when the opportunity for hydrogen arises from the group company, will we participate in that entry in setting up renewables from this company or it's completely independent?
Yeah, yeah. Mohit is here. Yes.
Yes, sir.
Mohit, you know, in respect of, first I comment on your question number two about the hydrogen. See, about the hydrogen, you know, we are working and as you are aware of that, you know, our group company, that is Adani New Industries Limited, we are working, you know, very at the macro level for this whole, you know, green hydrogen value chain. Starting from manufacturing, then the green hydrogen generation and then the downstream, which is in respect of the ammonia, urea, methanol. This, you know, the whole strategy of this green hydrogen, you know, is being formed, you know, at our group level. Now, what could be the role of Adani Green in that? Okay, we can't say right now because we have not finalized the strategy on this.
However, one thing, you know, wherein we are working quite aggressively is on the pumped hydro. Because, Mohit, as you are aware of that, you know, the either solar or wind, okay, or a hybrid of solar or wind has a limitation of the higher CUF. If suppose, you know, the government requires the round the clock power, so we require either, you know, pumped hydro or, you know, we require the battery storage. We as an organization believe that the battery storage won't be a good, you know, the long-term solution. We in Adani Green are working very, very extensively on the pumped hydro. This is in respect of your, you know, the reply of question number two.
In respect of question number one, Mohit, as you are aware of that, presently we are having a large, you know, the pipeline of our PPAs. The manufacturing-linked, you know, we have 8 GW. Besides that, okay, 1.3 GW we have of the [SECI bank] you know, which are in execution, then again our own bidding. We are having a good pipeline of the PPA projects with us, and we are also working on all the new bids which are coming. We are not very aggressive on the bidding part, okay, but we are bidding it all, okay, and we will continue bidding for the good, you know, the bid. Surely, you know, we'll sign the new PPAs also. I think, you know, I have replied back your question, Mohit.
Understood, sir. Sir, secondly, on the P&L, on the income statement, was there a large income booked in the quarter because of sale on the exchanges in this particular quarter? If you can quantify the contribution in this from the exchanges.
No. Mohit, in the P&L, you know, we have this time we have a revenue of around INR 44 crore from the carbon credit. This is what is, you know, that has started in this quarter. We had eligibility and we sold that in the market. That is one thing. The income which we have generated, which is, you know, just, we have INR 763 crore to be precise generated in this quarter, which is part of my CapEx, not of my, you know, P&L. That has reduced my overall CapEx cost as per the accounting standard.
What is the gross block of the 7 GW which is operational right now?
Sorry?
Gross block for the 7 GW which is operational right now. Gross block.
No, no. It will be reduced from the CapEx. Currently the gross-
No, sir. My question is, what is the gross block for the entire 7 GW which is operational as of now?
I don't have that readymade number because, you know.
Oh, understood.
Balance sheets are not in. We will send you offline on this.
Sure. Okay, sir. Thank you and best of luck, sir. Thank you.
Thank you, Mohit. Thank you.
Thank you. Ladies and gentlemen, to ask a question, you are requested to press star and one on your phone now. We have our next question from the line Of Apoorva Bahadur from Investec. Please go ahead.
Hi, sir. Thank you for the opportunity and congratulations on this good set of numbers. Sir, wanted to understand, you said that the company is planning to go aggressive on pumped hydro. If you can throw some light over there, sir, on the type of capacity which you're planning to build, the timelines over there, and the math behind it, so both the CapEx and the OpEx side of things.
No, thanks, Apoorva, for your question. Apoorva, as you mentioned, you know, we have just started working on pumped hydro, you know, as a business case within Adani Green. We are evaluating right now six, seven projects in Andhra, in Maharashtra, in Gujarat, in Rajasthan, in Bengal. Right now the preliminary evaluation part is going on. Initially, you know, the briefing we get, you know, some very positive outcome.
Therefore, you know, we are going in the second gate of that. Which may be, you know, in another five or six months we will have, you know, some pre-feasibility report of these six, seven projects. Then after that only we can say something, Apoorva. It's very difficult for me right now to say how much would be the CapEx, what would be the capacity, what would be the location, what would be the OpEx. Maybe in next six months or so give me the position, you know.
Your voice is breaking. Can you please repeat?
Now okay?
Can you speak something, sir?
Now is okay?
Yes, please go ahead.
Yeah. You know, I was just mentioning that, you know, from hydro we have started, okay, a few months back, okay, evaluating the various projects which are feasible and which are available, you know, in the market. You know, right now we are working on six to seven projects on the pre-feasibility part, which we are hopeful that in next six months we will complete the pre-feasibility report on these six to seven projects which are located in Andhra, in Maharashtra, in Gujarat, Rajasthan and in West Bengal. It's very difficult for me right now giving any number on CapEx or OpEx or giving, you know, some capacity of the project. Just wait for the next, you know, six to seven months, we will come back on this, Apoorva.
Sure, sir. We will look forward to it. Secondly, I wanted to understand then, again, on this pumped hydro and the entire storage business model. What we understand is that Adani New Industries Limited will take care of industrial decarbonization while Adani Green is more for the grid decarbonization. Right? Does that mean that the storage capacity from this pumped hydro will be exclusively to meet the grid deficits, or will it also be utilized to sort of supply around-the-clock renewable power to C&I customers and for producing hydrogen as well?
All the options are possible, Apoorva. Okay, because as I mentioned in the beginning, the only solar, only wind or hybrid of solar or wind has some limitations on the CF part. Okay, therefore then there is the around-the-clock bids are there, okay? When there is a C&I, you know, the around-the-clock, you know, the requirement is there. Within Adani Green, this pumped hydro, you know, will provide a flexibility, you know, for us, for the grid, you know, the synchronization and the grid, you know, the flexibility. This could be a part of the grid stability, could be a part of the C&I supplier and could be part of something else also, Apoorva.
Fair enough, sir. I think Kaushal Shah provided the run rate EBITDA for the operational capacity. I missed that number. If you can please repeat, it will be very helpful, sir.
For 7,000 MW we have around 6,100. Another 607 MW, which is, you know, about, we are in the process of achieving, that could be around 500.
Okay. Got it. Thank you so much. I'll get back in. Thank you.
Thank you. Participants are requested to press star and one to ask a question. We have our next question from the line of Nikhil from AllianceBernstein. Please go ahead.
Hi, sir. Thank you for taking my question. My first question, just wanted clarification regarding the short-term market sale. What I understood was that about INR 763 crores is the revenue realized from selling in the short-term market. Even the units corresponding to that, about 1,500 MUs, is not part of the 3,500, which has been shown in the presentation. That's over and above, and it's all been adjusted with from CapEx.
Yes, yes, you are right.
Understood, sir. My second clarification I needed was on the Forex part. In the P&L we could see two large Forex items. One was about INR 100 adjusted on interest gain and INR 200 loss outside that. Just wanted to clarify, if you could give some more details on both these items.
See, what is happening is that every quarter I have to do mark-to-market provision in the books. Since dollar has moved from 77 to, let's say, 80, there is a loss on account of that and there is a corresponding income also. Net-net it's a premium which I am paying it around 4% on the outstanding loan of around $2.5 billion roughly. I'm just saying, offhand I'm remembering. That's the number. It's a premium cost net-net you have to see that. But if you need any specific further detailing, what we will do is I will ask Viral to send you separately these details.
Perfect. That'll be helpful, sir. Thanks. My other question was regarding on the debt position. I think you said 76% is fixed rate debt which you have, I think, which is great. If you could just give us clarity on how long is the fixed duration for. Is it fixed for three four years or is it fixed for a longer.
It's more or less more than 10%. You know, 10 years. What is happening is that we have some of the bonds which we have done and some of the ECBs for some of the loans which we have done and then the rupee loan are there. Both combined to put together, you know, we have this percentage coming up.
Sorry, you're saying they're fixed, in general for 10 years almost, or that's the duration for which the interest are fixed?
Yeah. For example, RG2 we have issued a bond for 22 years. That's how, you know, my duration is high. Similarly for some of the rupee also I have a fixed. We have recently done the bond issuance, you know, which is at 7.63%, which is also fixed. There is no increase on the cost on account of this. Even, and I'm happy to inform that we could refinance INR 3,200 crore, and whereby there is a reduction, in fact, in this high environment. We completed just before RBI first time announces the increase in the rate. Thereby we will have a saving of around INR 44 crore annually on this INR 3,200 crore.
Understood, sir. My last question was on receivables. I think great to see receivables improve so much, which is much better than many competitors that we have seen in this space. Wanted to understand, I mean, do you see this sustainable low receivables?
No, I think I forgot in the opening remarks, but it's good that you raised this issue. You know, Tamil Nadu, which was a headache for us. You know, normally we used to receive it in 120, 150 days. I'm happy to inform that that receivable is now absolutely current. At least right from April onwards we have seen this trend. In fact, April we have issued INR 400-odd crore straight at one stroke, and thereafter every month we are receiving the due payment. You know, we feel that the rest of the receivable was more or less not a major issue. Tamil Nadu was one of the concern area which is now resolved. We feel that, you know, this will continue.
Understood, sir. On this, do you see any impact? There was some news going around that, you know, government is looking to give 48-month period to DISCOMs to pay long outstanding dues. Do you see any impact from that, sort of a guidance coming in from the ministry or not really?
I think this is Raj. From the government's notification, Adani Green is barely impacted just because we do not have long-standing outstanding. As Kaushal Bhai has just told you, our largest outstanding has been cleared, so I don't get impacted mainly with this. There may be some minor ifs and buts there, but it is not impacting us. Second, for it to become operational against any counterparty, which is me, the counterparty has to opt for it. Okay? We have not seen those things happening.
At least AGEL portfolio is not impacted. As an industry, it depends, each party and each DISCOM, how they have moved on this. There was also a recent challenge against this in one of the High Courts, although that, there again, there is some movement there in that particular event as well. There is a lot of water to flow in this case, but I am more or less immune in this case.
Okay. Understood, sir. Thank you so much for answering my questions.
Thank you. Reminder to participants to press star and one to ask a question. We have our next question from the line of Puneet from HSBC. Please go ahead. Mr. Puneet?
Yeah. What? Yeah, hi. Can you hear me?
Yes.
Yeah. Okay, great. Yeah, yeah. Thank you so much and congratulations on good numbers. My first question is with respect to your 1,275 MW where you've commissioned. When do you expect it to start throwing EBITDA and not, so that you don't have to charge it to your CapEx?
You know, there is a long-term access issue which is going on. We expect it to resolve in this quarter. You know, we are not sure when we are going. We are putting our best efforts. As long as, you know, we are able to earn the revenue on a short-term basis and which is a good one, you know, that is okay with us.
What kind of revenues are you earning? Does it also mark the start of PPA from your perspective?
No, it is not starting. Unless and until, you know, official COD certificate is issued, my PPA clock starts from the date of issuance of COD. You know, still it is not. 25 years start from that date.
Okay. What kind of tariffs are you able to earn on that?
That is also.
If you can also elaborate on the.
It depends on the market.
Yeah. Last quarter, what would it be on an average?
I have told INR 763 crore, I have told that this is the amount. Actually, I don't have that average number.
Okay.
Yeah.
Thank you. What is the problem with the long-term access issue, if you can elaborate a bit there?
Sure. What happens in an evacuation capacity, when you get it from, say, CTU or whichever is your transmission counterparty, they enumerate multiple elements which needs to be completed for ensuring 100% guaranteed evacuation. Because this process involves multiple such elements. One or two or three of such element out of, say, five or seven may not still be ready, which is delayed by, say, two months, three months, six months, kind of a thing. This is typical where there is a cat and mouse game between the generator and the transmission elements, where we need to generally time that we are commissioning our capacities along with those elements.
What we see is whether our power will actually get evacuated irrespective of the elements, all elements coming in. In a lot of these cases, while 70%, 80% of the element has come in, maybe one or two elements which are slightly delayed. Which is leading to LTA, long-term open access not being operationalized. Once those elements are over, which are very near to their commissioning, the LTA will be operationalized and we will have our CODs. We can evacuate power. That is the reason how we are able to sell it in the market.
Okay. That's what I was curious about. You could evacuate power, but the long-term access is still not sorted.
As I said, there would be at least in every LTA which you ask, because the capacities are no longer 10 MW, 15 MW, and 20 MW. These are 300 MW, 500 MW, and 700 MW. They need to have the transmission lines, multiple transmission lines, multiple substations and all of that being done as part of giving you that 100% guarantee that for next 25 years, come what may, your power will be evacuated. Okay. For that kind of a statement to make, they need to have all those elements. But technically the system can still evacuate, because the substation which you have connected, that has those transformers. There are some transmission lines which are already made, so you can evacuate your power through that.
Okay. Got it. That's just a good explanation. Thank you. The second is for the new plants which you are commissioning, what kind of PLFs are you now getting on the new technology, both on the solar and the wind side?
You know, we have in hybrid projects, we could generate 44% CUF.
Okay. Possible to break it between solar and wind?
Let me just check what is the break-up.
Solar
No. He wants in hybrid.
Yes.
32 and 64.
Solar is 32% and wind is 54%.
Oh, okay. Interesting. The second is if you can also, you know, talk a bit about, you know, what are you experiencing in terms of the bidding environment. Things have slowed down a bit. What kind of bids are you expecting and how do you expect to, you know, participate in that, given that you already have a very strong pipeline with you?
Sure. You know, as AGEL, if you see our history, we have not necessarily chased the price down, despite having the capability. That is the reason why our cash flows are healthy and the performance is good. You would see if you are tracking the market in the recent past, we are not necessarily bidding the prices down. We believe the market needs to correct a bit and with the recent increase in the interest rates and the recent increase in the module prices over the last 1.5 years, some of these projects which have been recently bid out may see a meaningful stress. The market should correct, which is the way it has moved in the last five to six years in the industry.
Given that we have a large pipeline, we don't need to necessarily worry about the near-term execution, whether we have the expansion whatever we want to achieve is there or not. We are watching the market and we bid where we believe that we are making the differentiator. We believe the market should correct a bit and then we would probably be there taking some strategies.
What kind of tenders are you likely to see? Any thoughts there?
You know, Abhishek Mody, in the last two years, three or four things have happened in the sense that the concept of hybrid has helped the country in integrating more renewables. The concept of RTC power is something which is evolving. At the same time, solar and wind has placed its own role just because of what India has solar capacity today. In the daytime, you don't necessarily see the prices in the daytime at whatever peaks you see in the evening. Everything has its own merits. We expect that there will be balance of all the three or four types coming in. In some cases, as Vneet Jaain was just mentioning, pumped hydro will be roped in to cater to that evening peaks being addressed.
All of that is expected to come, and market is expected to evolve as we move forward. The project sizes may become further large if we are talking about RTC solutions, because if we talk about pump hydros being tied up, there needs to be tied up with meaningful capacity. Broadly speaking, we are saying yes, all three or four modes of the bids will come in and there will be some emphasis towards meeting the non-solar hours power as well through some of these solutions.
Okay. Got it. This is very helpful. Thank you so much and all the best.
Pleasure.
Thank you. Ladies and gentlemen, to ask a question, please press star and one on your phone. We have our next question from the line of Rahul Modi from ICICI Securities. Please go ahead.
Thank you for the opportunity, sir, and congratulations for good numbers. Sir, a couple of questions just to understand. Sir, how is the module availability now that we've got both tariff and non-tariff barriers? For the new capacities that we are targeting, both in the hybrid and only solar space, how are you looking to mitigate, you know, availability issues? When do you expect our captive module supplies to start coming in?
That's a very pertinent question, and which is what is impacting a lot of our competitors for their near-term projects. Good part is, we as part of our manufacturing tender got an allocation of 2 GW of solar manufacturing capacity, cell and module. That is being, we have 46% stake in that, and the balance is held by a sister company which is expert in doing solar module manufacturing. That capacity is just nearing its completion. Modules are already done, and cell is about to be made operational very soon now, in the next one and a half months. That provides us or basically gives us some amount of comfort with respect to our supplies if we need to have those supplies coming from there.
At the same time, for the requirements of FY 2023, we are more or less already done in terms of what we want to buy. Going forward, as I said, we will have these capacities. In all, in almost all, not I wouldn't say all, but in almost all the taxes or custom duties on the modules which has been imposed is a pass-through for us in our PPAs. There again, we have an option of buying it from outside India. We have significant flexibility in doing what we are doing. Separately, that particular sister company is further expanding their manufacturing capacity.
By early next year, the manufacturing capacity with that company with cell and module will be close to 4 GW per annum, and they are further expanding that in stages to a significantly higher capacity. From a running perspective, we have significant flexibility in terms of what we want to do based on where the change in law, not change in law or going forward, where how I want to bid where the BCD will not be a change in law. I can always tie up my capacities prior to the bid, even with my sister company. All of that flexibility is available with me.
Sure. That's very helpful actually. This 4 GW we are expecting to get commissioned in the manufacturing over the next 12 months. That will be on an annualized basis.
That's right.
That you are saying that further, obviously. That will be module plus cell, and then you will be backward integrating further over a period of time.
The sister company is further backward integrating. They are going from MG Silicon till the modules fully integrated in phases.
Right.
They have also won some capacity under the PLI tender to do it. That is a mandate. In any which way, they have it. They are moving ahead with that.
Right. Sir, the manufacturing linked tender has been PPAs for around 9 GW out of the 12. Are you seeing an interest for the balance thre or we'll be concluding at least this as for now?
No, no. In my portfolio, I think I have what? 1,300+ or some 2,100-odd capacity to be tied up.
Mm-hmm.
that we already have. We know that we already have proposals to close them. The process is on, and we expect that probably in the next 30-60 days, most of that capacity should be closed.
Right.
See, what is also here, Rahul, because of the recent increase in the power prices.
Yeah.
Some of this backlog is no longer a stress for SECI to place.
Right.
Some of the DISCOMs which were otherwise looking to price it very fine and wait for the projects, prices to go further down in the future bid because they had no compulsion to buy for an immediate demand. All of that chapter is gone out of the picture now.
Sure. This is helpful. Sir, now on this, just taking this further in terms of, you know, the capacity addition now that, you know, the module prices, at least the rack rates from China have stabilized to a great extent. Where do you see the tariffs? Now, I know the only solar bids are not coming as much. But where do you see the tariffs stabilizing, overall? And what is our comfort level as Adani Green?
See, I think it's a difficult question to answer if you ask me just because everyone has their own internal thresholds on the tariffs, okay? Or on the returns and their own cost of setting up the plant, cost of procurement of modules, their own optimization level on configurations. Okay. What at least I can tell you is today's tariff, which we are seeing in the market after considering the impact of BCD and the revised GST, are not remunerative tariffs.
There will be reversal. How much, let's see how the interest rate environment moves. It is fair to assume that we should see at least 8%-10% movement upward. But it's difficult, and it will. How the market moves will decide it. Suppose there are other considerations which can keep the tariff low, fine. What I'm concerned about as a strategy is whether I can get better returns than the market when I execute my project. For that, I have my own capabilities, which I can do.
Sure. You see the market stabilizing when you say 8%-10%, that's on a base of 250?
Rahul, well, I think I don't want to necessarily give a number on this because.
Sure.
You know, it is very subjective. It can be taken in multiple different contexts. It is, as I said, it is the consideration of each and every party. It may so happen some strong parties can actually work with even lower increase. Some parties may not be able to do. It’s different. The question is whether I am able to optimize myself, how am I making the tariff workable for me? Am I better than others? That is what I can drive, and I have been able to achieve. At the same time, I understand your point. The recent bids plus 8%-10% is what you should assume.
Got it. Perfect. Just last question from my side is that at Adani Green, so how much would be an ideal capacity addition that you would like to see you know, on an annual basis, basically, for the next, you know, anywhere between five to eight years?
Yeah. Answer to your question, Rahul, is that we are planning 3.5 GW to 4 GW annually. That is about the greenfield. If something comes up on inorganic, that will be over and above that.
Perfect, sir. That's very helpful. Thank you so much, and all the best.
Thank you.
Thank you. We have our next question from the line of Apoorva Bahadur from Investec. Please go ahead.
Thanks for the opportunity again. I think I understand you cannot share the tariffs probably at the current module prices, but can you please share the capital cost that we are seeing for the projects being built on current modules or including the [BCD and DC] et cetera?
We don't have that offhand number on hand. What we will do is that I will ask Viral to share it separately with you.
Fair enough. Anything on the wind do we have that? If you can share that number for wind capacity as well, what would be the current capital cost?
No, no, I don't have that available. You know, typically it is INR 4-INR 4.5 crores for solar, and wind it is INR 5.5-INR 6 crores. But it depends on individual case to case basis. You know, very difficult to often tell you about general, you know, cost. We will share that separately.
Okay, sir. Thank you so much, sir.
Thank you. Ladies and gentlemen, to ask a question, please press star and one on your phone now. We have our next question from the line of Puneet from HSBC. Please go ahead.
Yeah, thanks so much for the opportunity. My first question is if you can share what kind of hedging costs are you seeing right now in the current environment of sharp rupee depreciation?
In fact, you know, the forward has come down to 3.5%, while the dollar has increased from 78-80, but the forwards cost has come down. All in all, we are seeing that 4% is reasonable cost to assume over and above the, you know, the cost of borrowing. That's what we are seeing this.
Okay. Understood. Second, you know, you also talked about, you know, potential capacity addition from inorganic opportunity. Can you talk about which are the large ones that are on the block currently?
No, no, we don't have currently on the block. You know, I'm just saying that it actually, our internal target is that which is visible clearly from the greenfield angle, which is 3.5-4.
Right.
If some opportunity comes up, then that will be an additional. Now, today, I don't have that opportunity available.
That opportunity is knocking at the door.
Unless and until, you know, we have that return minimum threshold of around 16%, you know, we are not in a hurry or, you know, to buy any asset.
Right. Are there some large assets which are awaiting buyers?
I want to know from you, dear friend. If you have anything, please share with us. We are happy to look at it.
All right. Great. Thank you so much.
You are talking to so many companies on your call, so you must have some information. If you can share with us, that would be great help.
Puneet, see, the last large public process was done for an entity which is under consolidation, which was, if I want to take the liberty, I think Shell i think that was the last large public process. Obviously, you would understand that, privately there are multiple discussions which happen, which has their own, obligations of confidentiality. What Kaushal is saying that, we are open as a strategy to look at large scale acquisitions. We have done that in past, and we have successfully integrated them in our business. For us, the growth side is open both on the greenfield side as well as doing the brownfield slash fully built portfolio as long as these satisfy our returns. That I think should help you in your question.
Right. Are you largely satisfied with how SB Energy acquisition has been going with the execution?
Yes. You know, the good part about that acquisition is, we were in a very good position to integrate that in our current set of stream in terms of project execution. Some of those projects are just coming now for execution. Some of those were there last year. The issues which probably the portfolio was facing were something which we were very comfortable to handle, and those could give us the additional tickers, which I think some of the players in the market could not achieve. From that perspective, it's a very good acquisition which we have done, and we have been able to integrate that very well. Results, obviously, as we move forward, you will be able to see.
Right. Also, can you give some plan or your execution plan for FY 2023, 2024 and 2025 of what all capacity will you execute?
I've told you generally, you know, we will be adding around 3.5-4 gigawatts annually. That's what you should count when you consider the overall numbers.
Okay. 3.4 GW-4 GW annually. This year also similar numbers? This will be excluding the one to seven pipeline number or will it be in addition to that?
Sorry.
The cumulative 0.5 GW-4 GW will be in addition to what you've already done? Including.
It is including, whatever we have done. I am talking about yearly, not quarterly.
Right. Right. Understood.
The schedule of commissioning is already published by us recently in our AGM presentation.
Okay.
For the existing portfolio. It has given year-wise up to FY 2026 how we plan to execute the projects.
I got you. I'll have a look at that. Thank you so much for this. All the best.
Thank you. Reminder to participants to press star and one to ask a question. As there are no further questions, I now hand the conference over to Mr. Abhishek Mody of Emkay Global for closing comments. Over to you, sir.
Thank you the management for participating in the conference. Any more further questions we may have, we may contact Investor Relations at Adani Green Energy. Since we don't have any questions, I think we'll end the call here.
Thank you. On behalf of Emkay Global Financial Services, that concludes this conference. Thank you for joining us, and you may now disconnect your lines.
Thank you. If you have any questions, you know, please reach out to Viral or our investor head, Bala. Thank you.
Thank you, sir.
Hello?