Earnings Call: Q4 2021

May 14, 2021

Ladies and gentlemen, good day, and welcome to the Q4 FY 'twenty one Earnings Conference Call of India Energy Exchange, hosted by Axis Capital Limited. As a reminder, All participant lines will be in person only mode. And there will be an opportunity for you to ask questions after the presentation concludes. Please note that this conference is being recorded. I now hand the conference over to Mr. Sumit Kishol from Axis Capital Limited. Thank you, and over to you, sir. Thank you, Rituja. Good afternoon, ladies and gentlemen. On behalf of Access Capital, I'm pleased to welcome you all for the Indian Energy Exchange Q4 FY 2021 Earnings Conference Call. We have with us the management team of 5X, which is represented by Mr. Vineeth Kalalkar, Chief Financial Officer Mr. Rohit Bajaj, Head Business Development and Mr. Aparna Garg, Lead Investor Relations. Now we will begin with the opening remarks from Mr. Bajaj followed by an interactive Thank you, Sumit. Sumit, am I audible clearly? Yes. Thanks. So good afternoon, dear friends. I welcome you all to the Q4 and fiscal year 2021 earnings call. Present with me today are my colleagues, Vinit Haldharkar, Mr. Rajesh Madhiratha, Amit Kumar, Sam Gautam, Hamir Prakash, Deepak Mehta, Indranil Chatterjee, Shruti Bhatia and Aparna Ghar, our Chairman and Managing Director, Mr. Asant Goel is unable to join us today. It has been keeping little unwell and is now recovering. Amidst the surging COVID pandemic, I sincerely hope you all, your colleagues, your families have been keeping safe, healthy and cautious. The second wave has affected us in so many ways. Our wishes for everyone, well-being, good health and speedy recovery. It has been almost a year since we have been confronting the COVID-nineteen pandemic. Its harsh realities have impacted many of us besides market intent on the economy industry as well as life as such. The 2nd wave of the pandemic poses some risks and might offset some of the economic gains made in the last two quarters. The fiscal year 2021 has had its own share of ups and downs. As we face the hardships Caused by the pandemic, the macroeconomic growth indicator dipped to an unforeseen level. The energy and power sector have not been an exception. The first two quarters were difficult, however, the last two quarters have seen good growth momentum led by resilience on the economic and industrial activities front. In fact, in both Q3 and Q4, IEX achieved the highest quarterly volume ever created at the platform. During the fiscal year 2021, we made significant contribution towards supporting the economic and industrial revival through our robust business continuity plan. It ensured round to clock access to our trading platform and facilitated the distribution utilities with uninterrupted access to most competitively priced electricity in the most flexible, transparent and reliable manner, thereby helping them recruit financial savings as well as improved their financial liquidity. Besides the launch of new market segments, the real time market as well as green market, This added much needed vibrancy and dynamism to the market providing great choices in terms of product talking to the market participants. As our nation prepares to revise the economic growth, we are confident of playing a key role in establishing an efficient energy order and supporting India's transition to building a sustainable energy economy. Technology and innovation are the key cornerstones of our vision to build energy markets. As a technology led marketplace, we strive to integrate innovative technologies at both the trading and the enterprise IT levels to provide an intuitive, seamless, customer centric and best in class solutions to the market participants. Fiscal year 2021 has been an exceptional year for us in our journey of the last 12 plus years. We can say that The year was characterized by digital transformation comprising several initiatives, fulcrum, Dawn Technology and Customer Center. Our key role in the energy ecosystem, robots digital and technology infrastructure, growing and diverse market segments and seamless market operations and services have helped us deliver success in these challenging times. During the year, we strengthened an advanced technology, expanded IEX product portfolio with the commencement of new market segments Such as green market and real time market and also diversified our play within the energy sector with entry into gas trading through India's 1st authorized gas Exchange, which is IGX, Indian Gas Exchange. The Indian Gas Exchange has subsequently on boarded several eminent strategic partners such as NSE, ONGC, Gale, Adani Total Gas and Torrent Gas as a key stakeholder. Our sectoral partners had a strong play in both upstream and downstream segments of the gas sector, while LSE, a global market leader With rich legacy expertise and experience in conducting operations at a large scale should help IGS play a key role in developing India as a market based gas economy. With the market participants warming up to the idea of competitive price gas and several key policy and regulatory initiatives, We expect trade to grow at a faster pace in the coming months. Additionally, during the year, IDX also signed a licensing agreement with Multi Under the MCX, we launched electricity derivatives in the country using IEX price as a reference price. Of course, this is subject to approval from government and directors. Throughout the year, we engaged with customers through the outreach and capacity building efforts through series of workshops and webinars focused on electricity market, green market as well as the gas markets. To build momentum in the gas market, we introduced an open auction format and also several market friendly features which have been received very well by the market. In Feb 2021, the CA laid down the much awaited procedure for approval and facilitation of cross border trade of electricity And we are pleased to inform that on 17th April 2021, we pioneered commencement of the cross border exchange. In the mid to long term, our endeavor is to build a vibrant and integrated South Asian regional power market. Nepal is the 1st country to have participated in the Dayhead market on exchange and Nepal has since been trading almost on daily basis. The trading volumes are likely to increase going forward. We also continue our proactive efforts to bring other grid connected to South Asian countries such as Bangladesh and Bhutan. Simultaneously, we have also been doing the groundwork to advance our technology to support the lineup of upcoming news segments that include long duration military contracts and the integrated clean day headband. Our efforts around these funds and invaluable support from our members, clients, partners and employees That's helped us navigate safely through the challenging times during the last month. Continued encouragement and support from all our stakeholders has been key to delivering a great success and we continue to be optimistic about the future growth trajectory. I will now share with you overall economic and industry update and how it played out for our business. The industrial and economic activity and thereby electricity consumption reduced Over 23% during the initial month of fiscal year 2021, primarily due to nationwide lockdowns. In the subsequent months, with the relaxation in the restriction, manufacturing PMI that had dipped to the historic level of minus 57.3 in April 2020 We bounded to plus 58.9 percent, the highest over the last 8 years. The industrial activity Decelerated our rate in Q4 compared to Q3 FY 'twenty one. However, it remained above 50. This has been a good sign so far and indicates the resilience and recovery of Nickel Economy. With the recovery in the economic activities, electricity demand and consumption improved. The electricity consumption had dropped by 23% in April 2020 and remained negative for 1st 2 quarters. A phenomenal rebound was seen in Q3 FY 2021. In Q4 FY 2021, electricity consumption increased By 8.9 percent Y o Y, the national peak demand also met highest level of 189 gigawatts in the fiscal year 2020. As of March 2021, the installed power capacity at 3.82 gigawatts saw 3.3% BOI growth. The renewable energy capacity saw 9% by oi growth with cumulative renewable capacity now at 94 gigawatt from an earlier 87 gigawatts in the fiscal year 2020. This considerable growth in green power reiterates the fast paced energy shift that has been underway and an increased impetus on building a sustainable and decarbonized energy pond. During the fiscal year 2021, IEX witnessed increased participation from the market participants given its robust value proposition of most competitive price besides the flexibility, transparency and no counterparties in the power secured. This was also reflected in the increase in share of exchanges in the short term power market, which has increased from 40% in the fiscal year 2020 to 54% in the fiscal year 2021. This is a significant jump of 14% in just 1 year. Most importantly, power exchanges now contribute about 6% of the electricity consumed in the country. This was 4.4% in the last fiscal 2020. Therefore, the exchange market has seen accelerated pace of growth in the last fiscal year. On the policy and regulatory front, the government introduced many futuristic initiatives to support the revival of power sector With an objective to revise the viability of the distribution segment, especially from the perspective of DISCOM's financial health, The Power Ministry came up with the Electricity Amendment Bill 2020 proposing amendments to the Electricity Act 2000 and 3 with an aim to unleash distribution reforms such as de licensing of distribution business and facilitating competition in the power distribution and supply. This was followed by FM's announcement in the Union Budget 2021, 2022 to introduce Revamped reforms based result linked power distribution sector scheme. This is set to be launched with an outlay of INR 3 lakh crores over time. Further to encourage better efficiency through increased competition within the distribution segment, government will introduce electricity connections In December, the Ministry of Power also introduced a proposal enabling the distribution group to We exit the power purchase agreement after completion of the term of agreement. This initiative will accelerate utility procurement Besides increased pay off power by the generators on the exchange platform, another key development from consumer perspective was notification of electricity rights Consumer Rules 2020, this was a significant step that aimed at streamlining and enhancing the quality of electricity supply and services being provided to consumers across the country. More recently, the government has also issued the draft which underlines the most pertinent issues of power sector with key focus on areas such as The vision of clean and sustainable generation of electricity, development of adequate and efficient transmission system, revitalization of distribution utility as well as the development of efficient power market through an increased roll off market, aiming at market to represent 20 The Ministry of Power also issued a paper on development of integrated daily day head market in Power Exchange with separate price formation for REM Financial Power. Some of the important regulatory initiatives To deepen the power market plus CRC Power Market Regulation 2031, which allows introduction of electricity contracts beyond 11 days, Notification of procedure on cross border electricity trade, market order dispatch and power procedure optimization regulations by some state regulators. On the gas market front, KNGRB introduced the gas exchange regulation in September 2020. Another important step that Would help the development of gas market was the simplification of the pipeline tariff structure by P&G Act. The 2 zone tariff structure which led to A reduction in the transmission charges for distant user of natural gas, thereby making it more conducive for trade on gas market. PNGRB has also notified Anand's final regulation regarding excess code of CGT entities Post exclusivity period wherein 20% of the pipeline network will be available for Open Access. Another important development towards P and G, I'll be notifying the IIT, the Imbalance Management Service Federation. These developments together will help increase competitiveness in the market And increase the consumption of natural gas in the country. On a standalone basis, now I'll talk about financial and business performance. On a standalone basis, revenue for the quarter in Q by 28.3 percent write off line from INR 79.4 crores in Q4 FY20 to INR101.8 crores in Q4 FY 2021. This largely attributed to a 41% increase in transaction revenue. For the fiscal year 2021, this growth was 20.3 percent BOY with revenue at INR367.4 crores for the year. Q4 FY21 saw the highest ever electricity volume growth of 62% y o y during quarter. Also, fiscal 2021 saw the highest ever yearly volume of 73,900,000,000 units traded at the exchange since 2008 since inception, resulting in a growth of 37.3 percent in electricity segment on year on year basis. The growth was driven by the competitive power prices, We have seen traction with the distribution businesses as well as industrial consumers, growing consumption of electricity, availability of adequate domestic coal And that too at a competitive price along with the commencement of new and much awaited market segments such as the real time market and free market. The day ahead market saw an average market clearing price of INR2.82 in the fiscal year 2021, which is about 6% lower than the previous year's time. Low power prices and ample sell side liquidity throughout the year The real time electricity market commenced trading on 1st June 2020 and has received an incredible response from all the market participants. Our market crossed 1 BU mark for 4 consecutive months that has formed December 2020 to March 2020. In fact, In March 2021, it saw the highest ever monthly volume of 1,400,000,000 units on a cumulated basis. In Q4 FY 2021, the market traded 3766,000,000 units. Since its commencement, the market has traded 9,468,900,000 units. We introduced another important market segment this year, Green Turn Ahead Market to support and accelerate India's transition to a sustainable energy economy. The market commenced trading on 21st August 2020 and has cumulatively traded 785,000,000 units since commenced. In Q4, the market traded to 38,000,000 units volume across both solar and non solar segment. As per the Aptel order, the stay in REC trading has been continuing since June 2020. During the fiscal year, The REC market could only cumulatively trade LK6.9730. This has been a damper for the exchange market during the otherwise exceptional financial year. Talking about WayForward, fiscal year 2021 was a year of splendid success And good for us. The year started in a turbulent way. However, demand resilience and positive sentiment in the last two quarters That's a strict economic revival and recovery in a significant way. While we are now going through and experience a second and a much harsher pandemic wave, Our experience to deal with challenges, undaunted spirits and collective efforts will ensure victory in this The localized restrictions and lockdowns may impact the money growth to some extent. However, the industry and commercial ecosystems Seems to be well prepared this time as compared to last year and financials seems to be stable. Going to the current situation, while RBI expects That the GDP will grow at 10.5% in this system, the industry experts have started coming out with revised estimates trending between 10% to 12%. Taking all this into account and looking at the growth momentum IEX achieved in fiscal year 2021, we would endeavor to maintain double digit CAGR growth track that we have achieved over the last 5 years. Overall, we expect the demand to register the robust growth during the next year To go on account of the economic device, further conducive policy and regulatory regime besides increasing power demand and convention, Adequate availability of domestic coal and phasing out of old and inefficient plants will serve as a key growth levers for us. Additionally, the much awaited launch of 2 market segments, longer duration delugation contracts up to 365 days, Integrated Green Day head market, commencement of derivative trading on formulity exchanges and focus on diversification will unleash growth for us. In fiscal 2021, we made considerable investments to strengthen and advance our technology. We will continue the momentum in this fiscal year. Our endeavor is to make IEX a best in the class technology platform, the FY22, we will see 2 soft pass investments and our continuing efforts and investments to the technology innovation and automation. Some new initiatives that our market participants will experience Our provisioning of data insights, APIs, adoption of advanced NILP algorithm and most importantly our web based trading total which we have recently launched on April 28, will make the trading experience seamless and far more intuitive for our participants. Coming to the new product launches, we have already marked the beginning of this year with the launch of cross product electricity trade. We expect to create greater momentum as we engage in the capacity building and create awareness among the stakeholders. After Nepal, we expect countries such as Bhutan and Bangladesh To join soon, we are also working to introduce longer duration delivery contacts up to 365 days in core connectivity and green markets. Another market segment that we expect to launch is integrated themed day ahead market. Once functional, this will allow greater revenues for renewable power sellers and buyers We will continue to work in collaboration with the government, customers and other stakeholders to develop the energy markets as we move forward With confidence and certainty, in this otherwise an uncertain year, we firmly believe that the energy markets play a key role in transforming the sector. IX is committed to playing a proactive role in facilitating the much needed efficiency, compensating our business and sustainability in the NLP ecosystem. Thank you. Over to you, Sumit. Ritu, we can open for questions. Thank you very much. We will now begin the question and answer while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. Rohit, while the questions you assembled, I have a question. What is your Take on resumption of trading in REC, when do you see that happening? And what is your take on the Status of new product launches particularly LDC and the timing of that in FY22. Yes. Rajesh sir, you are there? Yes. So, I want to answer your first question which is about resumption of REC trade. See, we were in fact, Aptel has given multiple dates in the month of April where they wanted to do gearing on continuous basis. We So they came out with a 3 date in the month of April and they wanted to do it on a fast track basis so that in a month or so time, the redemption can be the RTC trading can be resumed. But now the recent development is on the last date of hearing which was 28 because of COVID situation again, The new date given by them is July 14, which is again 3 months away. So this is Little bit said that I would say because we were expecting it to start somewhere later in Q1 itself, but now it will surely go to Q2. So resumption will not happen till Q2, but since REC is one segment where you have to fulfill your obligation on annual basis. And since last year it was not trading didn't happen. So all the RPO has been carried forward to this particular year. And, Ethan, we might start little late, but as and when it will start, all the participants, both distribution company as well as consumer, They will try to fulfill their past entire past obligation which is for FY20 also sorry FY21 also and FY22 also. So, though it is being pushed a little because of this pandemic situation, but we are hopeful that by Q2 and it must start. So similar is the case with eSales market energy saving certificates because we were expecting it to start somewhere in Q3 FY 2021, But for again on similar reasons because of pandemic, it also got worse. So same for energy saving certificates, we are expecting it to start Trading somewhere in the Q2 FY22. So that was your first part. Can you please repeat your second part of the question? Yes, I mean I asked about the status on the new product launches and when particularly LDC when can we expect it to happen this year And what volumes to expect in this market? Okay. So LDC is another segment which we are very excited about And here we have already filed petition with CRP. This we filed about 6 months back, long time since we have filed it. But only thing which is blocking introduction of this new product is the settlement has happened between the 2 regulators which is 3D and CRC, But I think they have to withdraw case from Supreme Court, take a long case which is pending there in the Supreme Court, they have to withdraw that. And once that is withdrawn, Our petition will be taken up for hearing and then we will get everyone. So our expectation is after the Supreme Court withdrawal, We expect 2 to 3 months for the purpose of launching this new contract, which is the commoditization contract. So suppose this happens somewhere in End of Q1 or early Q2, so by Q2 end or early Q3 we should be in a position to launch this particular product. So from our side technology readiness is there, the decisions we have already filed. So nothing is stopping us from this and the thing is So there is a lot of next up there which is taking a little more time. It is taking a little more time than our expectation. That's 1. You also asked about volume. So here On annual basis, about 25,000,000,000 to 30,000,000,000 units are trading under this particular forward contract platform. Today, most of these transactions are done through T platform. We expect that if we go by the similar volume, the TPU potential is there in this particular segment. And depending on our launch in current fiscal, we would like to capture some of that guidance. Yes. Thank you, Rodd. I was on mute, so I could not take question, but you covered very well. Thank you. Okay, thanks. P. Viju, please take the question from the line. P. Viju:] Thank you. The next question is from the line of Naved Kumar from CN Capital. Please go ahead. Hello? Yes, please go ahead. Hi, Madhukul. This is Mohit. Hi, I'm Mohit Kumar, the Dm Capital. Sir, just a few questions, sir. How far are we in terms of readiness for launching Green Day ahead market contracts? And secondly, where do you think RTM volumes can stabilize as a percentage of total electricity volumes, while we had a very good year FY 'twenty, FY21, but how far it will go up as a percentage of total electricity volumes in short to medium terms? So, Mohit, I'll try to answer second question first and then Rajesh sir can take up the first one. So your question is about RTM volume and what we have seen last year RTM volume total which was Available only for 10 months, this particular product was available for 10 months, read about 13% there, its contribution was 13% in our total electricity award. But if you see Q4 particularly, Q4 which was very good, in fact, very exceptional for us in volume terms, The contribution of real time market was close to 17.5%. So it is Picking up really well, we are seeing increased participation coming from almost all the segments which includes distribution VPTs as well as So what is happening here is, they now some of the distribution utilities they are dividing their total requirement in 2 baskets. So one is the firm thing which they are coming to the head market, which is absolute essential which they want to do. And then there is some 10% to 20% some mismatches there, where they have some doubts whether this sort of demand would be there or not. That part they are keeping for real time market. So this is one reason and in fact in the month of April the same trend continued, April we again witnessed more than 1,000,000,000 unit and in fact Yes, ever, monthly volume was recorded in the month of April. So, difficult to put number to it because we have seen consistent growth there, But I won't be surprised if this starts to do somewhere between 20% to 25% also in let's say few quarters from now, Then I won't be surprised. So if this is if I have answered your question. Yes. For the first part, Mohit, GDAM is right something which we have been Pursuing long with CRC, earlier we had applied for GDAM, but it was rejected in 2018. Now again, the Ministry is very keen to launch this GTAM market and already paper was issued and paper sets the target of Deadline of June 30th, the only thing is we don't expect JIAC to clear our application by June 30th. We have already filed our application last month. So we are waiting for approval of GTAM from GRC And post approval, we will be ready to launch this. So as soon as we open the CRC, We are ready for launch with the Zidane. So maybe quarter 2 of this year, we should expect this market to come in. The next question is from the line of Gokul Maneshwari from Abhriga Capital. Please go ahead. Yes. Thank you for taking my question. Sir, our TM market has done really well for us and the market share gains have come from Largely the bilateral market and not from the BSN. So could you just comment on how the how can we really capture more Chair from the DSM market. And secondly, just on the second question is on the Hari, see, Vistin, just wanted to reconfirm that the customer segment will have to make up for the FY 'twenty one volumes as well. So if you could just confirm that as well. Thank you. Yes. So For RBC segment, yes, they have to make up for the FY21 volume as well because this RPO calculation is done on annual basis in most of the cases. And in certain cases, Calculation is done on annual basis in most of the cases. And in certain cases carry forward is allowed. In some other cases, it is not allowed. But then there was no option available. You have to make up for that in the subsequent year. So most of that will get converted into FY22. Now to answer your first part which is about RTM. So, there is no shifting which has happened from bilateral market to RTM, no, because these are 2 very different timeframes. These markets operate in very different timeframes. When we talk about bilateral market, it is normally 1 month and beyond, right. So when those who are participating in real time market, they are doing it on the basis of They have balancing requirements, they have correction in forecasting that they have gone wrong on the head basis, that correction they do in the RTM market. So no relation between the 2. But as far as DSM is concerned, lot of shifting has happened. So if you see absolute number of DSM, you will not find major change there. But if we do some deep analysis of DSM number, we have seen that lot of quantum has shifted from DSM to this. What happens in DSM is then you are over going from grade. There are various slabs where suppose we are drawing more than 12% then there is a 20% slab A penalty which is applicable. Up to 7%, nothing is applicable. You have to purely pay on the basis of DSM prices. And suppose we are Going beyond 15% then 40% is applicable and after that 100% penalty is applicable. So what we have seen in most of the cases, there are certain states which are overdrawing. There is penalty portion, the quantum they were withdrawing and paying high penalty that has gone down. So that quantum has shifted to R. D. Amart, if I can put some more examples, we have seen in many cases where all of a sudden there is a shift, there is a tipping of 1 big state plan. So we have seen in case of many states particularly which have been 2, 3 times, all of a sudden there is 1 plant which was running at 600 megawatt wattage for some reason. And this state was participating in RTM in a very big way. So to wake up for the loss, which has happened on account of this plant going off path, They had no other option but to come to RTMI. So had this market not been there, they would have been determined on DSM market. They would have paid very high penalty So as per our analysis, a lot of shifting has happened. Only thing is absolute number has not gone down. To the extent there is no penalty available, so it's still going and which is right also. There is no harm in that as long as you are paying pure normal decent prices, It is okay to overdo that. Okay. And lastly, just on the dividend, your payout, I mean, the company is sitting on around INR 600 crores of cash. Could you just comment on your dividend payout policy, Especially given that investments are largely done with CIGX as well and there are no major Capital Investment, so is there a form dividend payout policy? I would request Vileep to take up this. Thanks, Rohit. I'd like to inform that we have a dividend policy. And as per the dividend policy, The company tells to individual that 50% of the profit should be distributed in the form of dividend. And keeping in that line, in the January itself, in the last quarter, the complete dividend of 2 50%, 2.5 50 per share. And considering that because this time because of the COVID uncertainties, the event was not declared. But definitely it was on the path. Regarding the 600 core line of funds, you will see the exchange business is a bit of different business. So there is a lot of The company had the deposits on the front. So those fronts align with the company. If you look at the overall shareholders, fund that fund will not be that significant in comparison to the overall business. And company invested the money in the ITI and they are also exploring a lot of other opportunities because the way the platform market and the way the So we are definitely looking at it and at the whatever the call the boards and the management field, Thank you. The next question is from the line of Devansh Singodia from SI NPL. Please go ahead. Yes. Thanks for the opportunity and congratulations on a very good set of numbers. Sir, just one quick clarification on LDC and derivatives contract. So in the interview today, we expressed that there was a positive development, But currently you highlighted that the matter has been settled, but the case has not been withdrawn. So I'm just not able to understand what has really changed here from the past. So nothing changed in last quarter or last few months, I would say. See what we are saying is The settlement has happened. Now, there is absolute clarity amongst both the regulators, which is CB and CIB in this particular case. They have drawn line what falls under whose jurisdiction. Only thing is this settlement has to be vetted by the court Because this is pending in Supreme Court for almost 10 years now. So, this is very close to resolution now. Only thing is they have to Filed 1 joint application for withdrawal which we have already filed, but the problem is for some reason because of COVID only very pressing metals are being taken up at Souken Court level. So, in the past we have seen many dates were given and for some reason all those dates were the hearing didn't happen on that date. It is just one hearing away from From Supreme Court where the final order will come and settlement done by regulators and ministries will be acknowledged and will be authorized. So nothing changed. Only thing is we are waiting for Sotempo to come out with the order so that those can be opened and finally these contracts can be Lost. Okay. And in case of green turmeric market, I mean, there has been an increase in the momentum recently. So is it because that The summers are there which keeps the liquidity from the side of the generator on the higher side. So is there some seasonal effect or something has changed So it's a combination of both the things. We have not many sellers today who are actively participating here And some of the state utilities are also there. So some southern state utilities are actively participating and their own demand has gone down. So when their own demand has gone down a little, they have huge surplus quantum which they want to sell and they are bidding that at our platform. That is number 1. And second important thing is when we launched this market in August 20, So August 20 is normally a time when your wind season is over. In India, we have wind generation starts to take in somewhere in May and it kicks out there in June, July, August and after that it will increase again. So last time we could not take advantage of wind season because By the time we launched this contract, not enough wind generation was there. This time we are rightly placed and initial 5 to 6 months, this volume should be very high because Solar which is largely available throughout the year, Wind is something which is available only mostly in the Ajman. So that is another reason why we are seeing some traction. Okay. And among the generators who are not tied up with CPAs, what is the percentage of the generators we are able to tap on the exchange currently for Trading of GTAM and what are the constraints for the generators who we are not able to tap and who are still not tied up with the PPA? So, for all the renewable plants, you will find that all the renewable generators, they have some sort of Arrangement with either with the consumers or with the distribution company where they are supplying under certain terms and conditions. So most of these are under Long term PPA which is up to 35 years, but there are many small generators where they have small quantum PPAs with the consumers with the C and I segment particularly for 1 year also. So today we have got we have seen participation of over 10 generators at our platform already where they have participated and whatever simplest quantum they had, they have started. And in fact, there are 2, 3 opportunities for us. One opportunity is where they have tie up, very short term tie up. There are many where they have tie up of 1 to 3 years. So, we are targeting those generators because here the realization is pretty good and they can explore this option as well that is 1. 2nd is there is another set of generators where As per the PPA terms, they have to maintain certain utilization factor in a year. So that sometimes what happens is now particularly because of Newer technologies because of some good year where the U. S. Division is little more. They exceed those U. S. Numbers. So what we are trying to tell them is when they are going beyond their PPA commitment, they can also come to this platform and start selling their surplus power and thereby realizing The market price is better clear. But large part of the transition which are happening today, here the sellers are distribution company, there are many distribution company in the country today, Those were surplus. There are states like Karnataka which is surplus in both solar as well as non solar. AP is surplus in both non solar, Telangana So many distribution companies are there who are surplus and we are trying to get them on board so that sell side liquidity can be maintained. And on the buy side, there is no dust of demand because All since REC trading is not happening, most of these buyers they are willing to buy the energy itself for the purpose of making their IPO And prices are also quite decent, very competitive price, power is available. Anshul, in case of cross border, the existing volume that we highlighted was 18 0.07000000000 units in FY 'twenty one. So what percentage would be up to 11 days and 11 days to 1 year and 1 year and above? So the 18,000,000,000 units that you mentioned, the opportunity size of No, no, 18,000,000,000 unit is never an opportunity size for CBET. You're talking about cross border trades, right? Yes, cross border, yes. Yes. So cross border trades that we have started recently about a month back There we have seen participation from just one entity which is Nepal and participation has been quite decent. Some days we have seen Overall participation going up to 5% of our day end market and it is ever increasing as far and they are meeting their requirement depending on their demand supply situation. All these quantum that we are talking about is in the spot market. Today only their participation is allowed only in spot market. So whatever numbers that we are sharing and it is partially of non PUs, it must be 1,000,000 units, all this is coming from spot market because that's the only place where this transaction has started. So nothing beyond 7 days, nothing up to 365 days. Those are separate contracts. Those are separate bilateral contracts which are going on, which has been going on for a long, long time. Today what we are saying when CBET has started, it has started purely from the point of view of their participation at our exchange plan. So we are the one to start the spot volumes, if that's the right understanding in gross volumes as of now. Absolutely. Okay. Thanks a lot, sir. That was really done. Thank you. So let me add what Gohit said, because SEC when we started exchange, there was nothing Up to a week volume or up to a day, so we've been started with converting by letters into debt and other markets. So, this is what will happen. Some part of the volume which is currently happening in bilateral, which is a month or 1 year contract, that part will may shift to day end market Because people would like to all the our neighboring countries would like to I am correct that competition will discover price and bilateral they are not comfortable because the price is never They are not comfortable with the prices because whether it's competitive enough or not always that So we hope that currently what is happening bilateral, A part of that will shift to day ahead. So there is nothing which is currently happening on day ahead of the week ahead basis, But what is happening on a monthly or yearly that will shift too or there? Yes, sir. Absolutely. Okay. Thank you. The next question is from the line of Kunal Tanvi from Banyan Tree Advisors. Please go ahead. Hi. Thanks, Rohit, for the opportunity and congratulations on the set of numbers. So my question was again On the DSM market, so you had highlighted in the previous participant question that we are seeing a shift And in terms because what I remember that we launched RTM as a product to make sure that there is a shift from Yes, and to that, Aarti. And you also highlighted that we are already seeing that shift. However, when you look at the absolute numbers, you don't see that at all, right? You're continuing to see DSM volumes to be there where it were. In fact, In your presentation, you would highlight that 1% off from last year, right, on a 9 month comparing basis. So then it doesn't tie up whereas when you look at the bilateral market, there you see a significant drop in the volumes. So how should one look at this? Because at the end of the day, looking at the overall limit, slab, everything, It has to the DSM volumes have need to go down if we are getting some share from there, right? How should you lean into it? See, as I explained earlier also, within the DSM thing, you have multiple slaps. I won't go into the same detail again. But what I was trying to tell you was, sometimes what happens is when All of a sudden you have got huge imbalance available because this could happen because of some tipping, this could happen because of some renewable intermittency All of a sudden, wind generation going up or down. So what options were available to you was, it was only great, right? You can Start to draw more or second option available to distribution company was load shedding. So suppose all of the 7 600 megawatt Supply gap is there, so immediately we will shut down certain feeders to make up for that loss. So now what has happened with IPL being in place? First of all, that load shedding is not happening because now you have options available where you can execute it from the market and start buying. And second thing which I said was where you were attracting, where your overdraw was attracting huge penalty, right. So this quantum was not very high. This quantum was not very hairy because when they used to watch that and that 100% penalty is being imposed, they used to take certain some decisions of So what has happened is, Rohit probably his question is still not being answered. What he says, Finally, the numbers should reflect the shift, but numbers are not reflecting the shift. But what I Can I add to the understanding is that with the increased renewables coming into system, Probably, if nothing, no RTM or other options are not available, would not have been available, Probably that time the DSM should have increased? What has not increased It is actually coming to the real time market. And so that can be explained like this because As we are going into higher renewable regime, then intermittency and more deviations are likely to take this, which is not being reflected. It means that deviations otherwise which is would have happened are actually coming to real time market. Absolutely. Sure. And also on the in one of the call, last time around, we had discussed this point about the price at which The penalties are being levered is not a block price and a day average price. Any view of that you can share like What will happen to the DSM market if there is a change in the regulation regarding the price that is benchmarked for the DSM? Yes. I think that there is no discussion today happening. But of Of course, it will be more rational if we are linking prices, DSM prices with the time block wide sizes. But currently discussion is not taking place and we have also not raised this issue Because we are also not very confident to what extent this will impact volume, but we will do our own analysis and then pursue with the Just to add here, Rajiv sir, when this regulation came somewhere in 2017 or 2018, at that time they mentioned very clearly that in In a year's time, so they are starting this on pilot basis and within a year's time, they will migrate from RTC average price To time block wise time. So it was mentioned there in that particular regulation, but for some reason they have not taken it up And we have seen increased grid discipline after that. So today frequency is not changing much and you will most of the time find Frequency in the narrowband also, whatever they have designed. So that way, but that's an excellent point Because going forward, if that has to happen, then surely we will see some more conversion from the SM market to RTM market. Yes. Sure. Sure. And sorry, I also missed on the dividend policy part. You had mentioned that we have a policy of 50% profit says payout, right? However, this year that payout looks lower than 50%. You did explain something with the Annual General Meeting notice, but I missed on that. Can you repeat that again, please? Yes. Rohit, I think yes, yes, please. Go ahead. You rightly said the company has a policy of paying at least 50% of their profits And in line with that in the month of January, we paid the interim dividend of 2 50% in the half of the year. So there is a cash outflow almost on 75% growth. And because of this month because of the high end dispute situation, so we have not declared the final dividend looking at the overall position. Sure. Thanks. I will get back in the queue. Thank you so much. All the best. Thank you. Thank you. Thank you. Please limit your question to 2 per participant. If you have a follow-up question, you may rejoin the queue. The next question is from the line of Samin Maheshwari from Edelweiss. Please go ahead. Yes. Hello, sir. Good evening and thanks for the opportunity. So 2 set of questions. First one on the day ahead market. Now I believe we will be launching the LDC market somewhere by December. Now if you see that the demand has basically kind of softened a bit and it is likely to be there in the Low teens for the next 2 or 3 months. And this has also impacted our the volumes for day ahead market. What we also see is that there is some sort of a revival in the short term PPAs. So my question over here is that Can the BAM volumes be under some pressure from, say, Q1 to Q3 till the time we don't want the NDC flat? That's my first question. Yes. So, the DAN requirement DAN market is there to fulfill Certain set of requirement for the market participants. So these distribution companies, they analyze their supply, they analyze their cost of supply Availability on day ahead basis, on that basis, wherever is the deficit, wherever they want to replace or optimize, they participate at our They participate in our day at platform and retail department. So I don't agree with us that since the softening of demand has happened, so our volume would be under pressure. As I can recall, last year in the month of May, volume was down overall demand was down 15% by a while, But that was the month where we registered 40% growth in our volume. So there are it's not purely related to demand. And in fact, if you see H1 also last year or Q3 also, their demand has not picked up so and our volume was going great in particular there. So what happens is, There is a day end market in use for the purpose of meeting deficit. So if you have shortages, you come to market. And second important thing is when the Chief power is available in the day end market. Many distribution companies today, they start to back down their own generation and come to this market to optimize on their power cost. Similarly, if the prices are down, if there is a possibility in the market, we see a lot of C and I participation increasing And when the prices are down, they are taking on their value to increase and they participate. So no reason for us to believe that going forward For Q, let's say next quarter 1, 2, 3, we are expecting the air market to be under pressure. LDC is a different segment altogether. So we do have bilateral market which has been functional for so many years. In fact, it started much before exchange and this has been doing decent volume year on year. As I said, there is about 25,000,000,000 to 13,000,000,000 units potential which is available and we are in the process of launching this market to capture that. So, it's not that we are expecting some shift from here to there. Both the markets are independent market and this is as The global standard, globally also you will find there is market available for different time frame. Market is available for annual buy, quarterly buy, monthly buy, All these markets are as per the standard design which has been adopted by almost most of the countries globally. Arun, so fair point. My best limited understanding was that we are Unlikely to go back to 200,000,000 units, but per day kind of volume that we saw in Q4 specifically, that was my limited point Because the demand has softened and then there is a revival of short term PPs also. So that was my limited point. And hence, in isolation, on absolute basis, the DAN volumes will be strong, but maybe since we have a base effect also, I was talking more from that perspective. So that's it. I said the second question is on IDX actually. So we have actually almost sold the now closer to 45% stake and there is actually no price discovery and we appreciate the fact that this was On account of that percent of the competition clearly. Just wanted to understand the next 30% where we have to Can we get to about 75%? We have to bring it down. So in that next 30%, when is this expected to take place? And importantly, can we expect this 30% stake sale to be accretive to the face value? Yes, very nice. Actually, we have divested about 46%, 47%. And we don't intend to sell this further 30% in near future. So we still have to take a call that when we will be doing it and at what premium that will be done. So I can't say anything on that because the Board will take a call. But is that overall debt investment It's not going to happen beyond the 60% anytime soon. So currently what is there maybe some small investment can happen to 1 of the Strategic investor, which can happen maybe in a month or so. But beyond that, we are not looking for any further And premium we will fix as we go along. Yes, correct. And because the mid-twenty 5 percent, we have got a long window of about Yes, we have 4 years' time, so that we will decide when to do that. If you See, the statement, what was done was from the strategic point of view. So it was not the intention of just giving the And so company has done it to check-in the details of the cash sector in this. I am going forward. We see as Mr. Namrath has said, accept 1 or 2 of the key significant players which they are willing to take. So we should be giving the consultant to the investors to understand the structure. Okay. Got it. Thank you so much and wish you all the best. Thank you. Thank you. Thank you. The next question is from the line of Bilasha Sethali from Dalal and Birsha. Please go ahead. Thank you for taking my question. So my first question is towards the CRC's Order like PRS approval for the new exchange. So this is like Pranujha, which is the which is In offering, so what is update on that? And where are you placed whenever that exchange is coming on stream. So, this is my first question. Yes. So, very recently, there was order from CRC where Registration has been approved by them. And now what we understand is they have to file business rules and they also have to share their technology platform with CRC and obtain approval. So that's the status and as far as we are concerned, we have been maintaining always that we welcome competition. So what we feel is it is just a start. We are just doing 6 as exchanges we are doing only 6%, 2 exchanges are there for so long time And we have to go a long way. Our focus should be on evolving right market designs. There is lot which is to be done. In fact, if you go by National Electricity Policy, Draft 1, which has been released by government very recently, it talks about Exchange is contributing 25% in the total consumption by FY 2024. So if those are our targets And if you want to do if you want to go beyond that, if you want to route the entire generation to exchange and if you want to use exchanges for the purpose of Renewal capacity addition, if you have plans for CFD and all these are things are being considered at various levels in the government and by the regulators and everybody. So those are things which is to be done. We always believe that competition is required. It will eventually help consumers. They will have More competitive power which would be available as an exchange we would be able to do some more innovation, create more Customer centric products and everybody will gain out of that competition. Okay. Yes. Thank you. And sir, after approval, like what is likely time line for the actual the launch of the exchange rate? What it is according to you? VICTOR to say it depends on individual company. But one thing is clear what I mentioned 3 months' Time has been given by CRC for the purpose of obtaining these approval, they have to file. And beyond that, we are not aware of how much time they will take. But developing technology and since now so many new products are there, it is a constant continual improvement basis. We have to do so many things As far as technology is concerned. So it is not so easy thing. We have to invest time, we have to invest money to get all those things in A different So, Doris, there was a media story which said that they are expected by year end. So that is what you can take it because it must be some statement from that Kanuj This has been recorded in the media as well. So they are expecting to start operations by year end. Okay. Yes, yes, sure. And secondly, sir, my other question is on GTAM. So you mentioned about the TAM, GTAM TAM volume, from where the volumes are coming in, we are launching G DAN wherein, as you mentioned, most of the green energy is with PPAs, like, the PPAs are already signed for the whatever the this power plants are coming. So from there, like what kind of opportunity we are seeing in that product, say, G, DAN, like How much volumes we are seeing over a longer period of time coming through green energy? I'll share one example. See, when we started XHAME in 2008, that time there was no concept of merchant and data. So except for one odd ITP where they had no tie up available they were selling at exchange, otherwise entire capacity in the country was tied up under long term Yes. Now if you see today over the years what has happened today we have got 30 gigawatt of merchant capacity available in the country where there are no tariffs. People are investing in the projects where they want to create capacity which is solely dependent on the market. They participate in bilateral market, they participate in the spot market And try to maximize their revenue. So this is what we have seen and it has its own pivots. So initially Some of the IPPs, they started keeping just 15% power for market, remaining 85% with preferred long term PPAs. And same thing is or will happen in renewable as well. So today as I said, there are not many generators where they have tie up, but there are many generators where Yes, TPA's are coming to an end. There are many generators who are following, who are watching these prices. Those who are taking reference of these prices and then They are planning to create some capacity only for supply and combustion route within mid to short term. So, What we do is, first we create marketplace. Whatever is available in the market will come to the market and then market will start giving signals to All the people who are willing to make investments in the sector and take position and try to create capacity and sell. Dyson, you want to add something more here? No, no, no, no. You have covered very well. Yes. Okay. Yes. Sure, sir. Thank you. Thank you. The next question is from the line of Varun Goentha from Nippon Mutual Fund. Please go ahead. Yes. Good afternoon, Rohit and I look to you. Congratulations for a fantastic performance. Thank you. You guys have been delivering for over 10 years now. So, very credible. I think you've answered it in very good detail. Thank you so much. You mentioned a few technology initiatives. If you could lay down some details as to what you have done in FY 2021? What are the key initiatives and implementations in FY 'twenty two? How is it what is it solving at your end and what is it solving at the customer's end? It would be really good to be here. Yes. Yes, Amit, can you please would you like to answer this? Yes, sure. Good afternoon, everyone. So regarding the technology initiatives that we have taken in the current in the last financial year. Some of the key ones, one is that we launched Automated bidding option for the customers through the application programming interface. So with the launch of real time market, Where the customers had to do bidding 48 times during the day, it was important to drive the growth and adoption of real time market to provide Customers with an option to integrate their systems directly with our systems through our API so that the whole bidding process can be automated. And that is something we launched right from day 1 of the launch of the ClearTech market and some of our large members are already integrated To this automated API bidding solutions and almost close to 60%, 70% of the cleared volume in real time market Actually, it's for the bids that gets placed to the automated play bidding model. So that is one of the options that we did. The second option was to continuously from a product and technology perspective, we are innovating and identifying How we can make the whole process seamless and easy for customers to Track with the Retail Exchange platform. So with that objective, we also looked at the opportunity wherein we can provide customers with an option of Auto forwarding their uncleared bids of day head market into term head market. So for example, as we know that once the day head market Hence, post that, customers have an option of placing uncleared bills into the day head contingency market. And the existing process was that if there is unclear bid, then they have to then create The bid for placing in the day head contingency market and placed that bid manually. So we built a solution which was an option of automating this whole Carryforward of unclear day ahead market build into a day ahead contingency market and if it doesn't get clear in the day ahead contingency, it gets carried forward to the intraday market. So customer had that option to pick up that option as well. So those are 1 or 2 examples of solutions that we provided, which eases the bidding experience for the customers. Then in addition to that, we also introduced Some of enhancements that enables easy view of the existing base. So for that, We introduced a dynamic market watch functionality in the term ahead market, which enabled customers with a very, very easy view of the It's bits that which are put into market. So that based on that, for the continuous matching products, looking at the dynamic market watch, they can plan To put in this and be at the right prices to do the deal with matching. So that is another example of customer facing initiative that really helps the customers. In addition to that, we have built in cloud automation of Some of the existing processes which helps us provide much more faster outcome to the customers. One of the examples being We have done automated integration with our trading banks, which now enables us to provide payment credit even Q4 hours faster than what we used to do earlier, so which means that we are earlier on Most of the time the credit used to happen in the second half and now you are able to do that credit in the first half itself so that customers who want to utilize that money To invest in the funds or earnings activity, like there are a lot of afternoon points, we say afternoon cutoffs, they have the money right in the morning And for them to use it for the investment and other working capital needs. So these are some of the examples of automation that we have done and technology that we have used to enhance the customer experience. And so that is from a customer perspective. And then there are a lot of process automation that we have done within our internal company process, which makes our company Internal process is much more effective. We have done SAP rollout within the organization, which makes A lot of internal processes are much more effective. There are a lot of business process automation that we have done Which makes the whole market operations processes through which we provide the registration and the And we scheduled the medical settlement facilities to the customers. That becomes much more effective. And very recently, We have launched the web based platform for our customers. So one of the key initiatives that we are also working on is To provide all our existing platform features through our web based platform to the customers and also going forward through a mobile based platform. So we have in the last week of April lost our web based features on our platform to the customers. So that is something that we have done till now. Going forward, some of the key things that we are going to do is extension of the Webex platform to provide billing for all the products through the web based platform itself and also introduction of mobile based platform, which will provide a lot of deep data insights And also going forward to provide the bidding option to the customers. So that is one important thing that We are in the current financial year going to work on providing. 2nd, I mentioned about the Auto carry forward between day ahead and day ahead contingency, we are with the success of that Auto carryforward functionality, we are working on building auto carryforward integrated pipeline for all the different product segments So that customers could have the option of using the auto carry forward functionality to carry forward like just to give example, Suppose the customer wants that a bid placed in the existing green thumb head market, if it doesn't get cleared, Let's say it's a sell bid, it should automatically move to the real time market. So similarly, we have identified all the different auto carry sort of flow And we are building a pipeline which provides option to the customers to utilize that feature to ease the whole bidding process. So these are some of the initiatives that we are working upon in this financial year. And in the subsequent Quarterly earnings call, we'll keep you updated about what we have done and what more we plan to do from a Thank you. Thank you. Ladies and gentlemen, due to time constraints, that was the last question for today. I would now like to hand the conference over to the management for closing comments. Yes, thanks. So, thank you so much for attending this. We value your time. Today is a holiday for some of us and still we could do it. Thank you so much. We again We expect you to stay safe, be cautious. This is just a passing phase. All of us together will surely win. And thanks to all the management team. Thank you from all of us here to all the participants. Thank you so much. Thank you. Thank you. Thank you, everyone. Thank you. Thanks, everyone. Thanks. Bye.