Ladies and gentlemen, good day, and welcome to the Indian Energy Exchange Q1 FY24 results call, hosted by Axis Capital Limited. As a reminder, all participant lines will be in the listen-only mode, and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during the conference call, please signal an operator by pressing star 0 on your touchtone phone. Please note that this conference is being recorded. I now hand the conference over to Mr. Sumit Kishore from Axis Capital. Thank you, and over to you, sir.
Thank you, Joseph. Good evening, ladies and gentlemen. On behalf of Axis Capital, I'm pleased to welcome you all to the IEX Q1 FY24 earnings conference call. We have with us the management team of IEX, which is represented by Mr. S.N. Goel, Chairman and Managing Director, and the rest of his team members. We will begin with the opening remarks from Goel, sir, followed by an interactive Q&A session. Over to you, sir.
Good evening, friends. Dear all, I welcome you all to the IEX earning call for Q1 of FY 2024. With me today on this call are Mr. Rohit Bajaj, our Executive Director, Business Development and Strategy, Mr. Vineet Harlalka, our CFO and Company Secretary, Mr. Amit Kumar, our Head of Market Operations and Product Development, Mr. Aparna Garg, Head of Investor Relations and Communications, and Mr. Aditya Wali. Friends, the Indian economy has sustained its growth momentum gathered over the past two years. According to the Economic Survey 2022-23, India's baseline GDP growth is projected to be 6.5% in real terms for the fiscal year 2024, strengthening its position as the fastest growing major economy in the world. This sustained momentum can be attributed to improved private consumption, revival of rural demand, and increased manufacturing as input cost pressure relief.
India's average manufacturing purchase PMI was 67.9% in Q1 2024, higher by 6.8% compared with the same quarter last fiscal. The RBI expects investment activity to further improve, drawing strength from the first on capital expenditure in public spending and further moderation of commodity prices. Backed by strong demand, India's average services PMI was at over 60.6 during the quarter, compared with 56.9 in Q1 2022. The index has remained above 50% for nearly two years, the longest stretch since August 2011. India's G20 presidency has highlighted a significant sustainable energy imperative. The country today is 4th largest renewable energy generator and in the world.
Further, according to a recent statement released by the government, an additional 120 GW of fresh renewable energy capacity is at the various stage of implementation. With this commitment to accelerate India's sustainable energy transition, IEX is well positioned to leverage opportunities in the power sector through its Green Market products, certificates and other green methods. On the power sector update, electricity consumption in India for Q1 , FY 2024, stood at 408 BU, a marginal growth of 1.8% year-on-year basis. Ambient temperature kept the demand for power lower than anticipated height. Peak demand, nevertheless, reached 223 GW in June 2023, lower than projection, projected value of 229 GW for the summer months, but higher than the maximum peak of 207 GW, which was recorded in April 2022.
Installed capacity in India reached 422 GW as on 30th June 2023, while installed capacity for renewables grew to 177 GW. India is on track to attain its target of achieving 50% of energy consumption from non-fossil fuel sources by 2030. The proactive measures undertaken by the government of India, along with cooler than expected weather conditions, ensure adequate power supply and lower prices during the summer season. On the fuel side, India's coal production increased by robust 8.6% year-on-year and reached 223.4 million tons in Q1 of FY 2024. E-auction coal premium has witnessed a declining trend since Q1 FY 2024. The premium declined to 28% in May 2023 from 137% in April 2023, and 4.5% in May 2022.
Premium in the recent auction has been down to almost about 50% now. The average imported coal price for 4,200 day of coal during June was $54 per ton, lower by 37% over June 2022. The LNG price has come down to almost about $12.1 per MMBtu, a drop of 46% over Q1 of 2022. Average coal inventory at the, is almost at the 14 days now during Q1 of FY 2024, which is higher over the nine days, which was there in Q1 of FY 2023. This improved supply side scenario, coupled with consistently declining imported coal and gas prices resulted in increased sell liquidity and falling price on the exchange platform.
The average market clearing price from DAM, in the DAM market during Q1 was INR 5.7 per unit, a decline of nearly 34% on year-on-year basis. Recently, in the month of July, the monsoon rains DAM prices eased further to INR 4.69, which is 33% lower than over July of 2022. With supply-side constraints expected to ease further and cooler weather conditions, volume on the exchange are expected to increase. Now, we have regulatory and policy updates. In May 2023, a group constituted by Ministry of Power has submitted their report and proposed key recommendations for development of electricity market in India. Power markets have been identified to play an institutional role in accelerating India's energy transition by enabling smooth integration of renewable energy into the grid.
Some key recommendations of the group include mandating renewable energy resources to participate in the market and additional RE capacity to be developed through the Contract for Difference mechanism. These will facilitate faster addition of RE capacity and spur investment in the sector, thus helping attain India's 2030 RE targets. To increase RE participation in the market, a pilot mechanism has been proposed for implementation within a year, and an initial capacity of 1,000 MW will be handled by nodal agency under the CfD model, with a 15 years PPA tenure. Further, almost about 5,000 MW of RE capacity is also being targeted for development under this concept. The CfD model will help further deepen the market by providing certainty to generators by guaranteeing the fixed price over the PPA period.
We are confident that implementation of this roadmap will fast track India's energy transition goals to an efficient, optimal, and reliable market framework. Some important regulatory initiatives undertaken by the power sector during this quarter are as follows: The CERC has issued the Indian Electricity Grid Code Regulations 2023. It proposes to bring about many changes. Generators would now be allowed to meet their commitment in case of unit shutdown or force outage by securing power through the exchanges. Generator would also be able to sell excess power in the Day-Ahead Market of power exchanges without consent of buyers. This regulation is likely to be implemented from October 2023. Along with Grid Code, new Sharing of Inter-State Transmission Charges and Losses Regulations also will get implemented, which will remove anomaly in transmission charge between Collective Transactions and Bilateral Transactions, and will facilitate movement of volumes in the DAM market.
The Ministry of Power has notified much-awaited Carbon Credit Trading Scheme, 2023, approving the formation of India's first domestic regulated carbon market. It also necessitates the formation of National Steering Committee to govern and oversee the functioning of the Indian Carbon Market. According to guidelines, trading of carbon credits will take place shortly through the exchanges. This notification does not include voluntary carbon trading. Through our fully owned subsidiary, ICX, we will be able to leverage the opportunities in the market. In April 2023, we have to align the DSM with other segments for other months. The Primary Reserve Ancillary Services market, the PSM, will now be in the power market before any unscheduled interchange. Final guidelines for resource adequacy to enable adequate generation capacity to meet the projected demand while maintaining necessary reserve.
Resource adequacy creates the basis for capacity contracting and can lead to capacity markets for optimal contracting, long term as well, as well as short term. It will also help ensure security of supply and increased liquidity in the market. Amendments were made in the Electricity Rules 2020 to introduce Time of Day tariffs and simplify smart metering rules. These are expected to help in demand management by shifting demand when supply is available. The long-pending order of CERC retaining the transmission fee to INR 0.02 per kW on measured price, which came in April 2023. This is a positive development for IEX. In May, the Ministry of Power with CERC to look into the market coupling of the Indian power sector.
We are confident that all aspects, such as objective of the coupling, needs in the current market framework, will be examined by the honorable regulator before undertaking the next step. The current market operations of IEX will continue undisturbed. This year, we achieved another significant milestone for the company. IEX, India's premier energy exchange, completed 15 years of operation in June. IEX was instituted with an aim to provide a platform to access electricity in India in the most competitive, transparent, flexible, and reliable manner. From trading 2 billion units of electricity volume in FY 2009, to over 100 billion units annually at present, IEX has indeed come a long way.
We have cumulatively traded about 700 billion units across all market segments, with a 30% CAGR since inception. With technology and innovation at its core, IEX has been at the forefront of introducing new products and market segments aligned to India's economic and decarbonization targets. Update on IEX. Coming back to the highlights of this quarter, IEX added new products and offerings in its continued endeavor to deepen the power market of the country. In June, we launched the IEX Academy to create a pool of skilled professionals for capacity building in the power market. Customized certification courses will be offered to develop skills and expertise in electricity markets across aspects of their power sector policies, regulatory framework, and power exchange operations. The courses are designed based on the in-house experience of IEX and in collaboration with academic institutions and in banks.
Further, we have also launched IEX power price index, PowerX, to provide competitive benchmark signals and enable market participants to make more effective decisions. PowerX, which is India's first electricity price index, is calculated based on weighted average price of Day-Ahead Market and Real-Time Market. In line with our aim to provide seamless experience to our customers, we launched the web-based platform, EnerX. This platform will now provide web-based bidding for all IEX electricity segments, and will provide easy and secure, anytime, anywhere access, automated billing through API, market data insights, and easy financial. IEX also comments Tertiary Reserve Ancillary Services market segment from, delivery from 1st of June 2023, for the Day-Ahead Market Ancillary Services and Real-Time Market Ancillary Services.
In terms of business performance, IEX achieved 25.1 billion units across all segments during Q1 of FY 2024, growing almost 8% on a year-on-year basis. During the quarter, DAM segment registered 12.5 BU volume, 11% increase on a year-on-year basis, due to lower prices. The RTM segment registered volume of 7.3 BU during Q1 , increasing 16% over Q1 of last year, underscoring its relevance and acceptance among distribution, utility, and industries to efficiently balance their power demand-supply condition. IEX update. IEX delivered a total volume of 42.6 lakhs MMBtu during Q1 of FY 2024, a decline of 9% over the same quarter last fiscal, which was largely due to higher gas availability under the long-term contracts and increased domestic gas supply sold on million ton basis.
The profitability of IEX for Q1 , FY 2024, increased to INR 3.46 crores from INR 1.15 crores in Q1 of FY 2023. Let us now summarize the financial performance of the company in this quarter. On a consolidated basis, the revenue for Q1 , FY 2024, increased 12.3% on a year-on-year basis to INR 127.4 crores from INR 113.4 crores in Q1 of FY 2023. Consolidated PAT during the Q1 was INR 75.8 crores, grew 9.7% on a year-on-year basis from INR 69.1 crores in Q1 of FY 2023. With gradual improvement in domestic production of coal and improvement in coal inventory, we expect rationalization of power prices on the exchange and volumes to improve from them.
The NEP Draft Plan projects electricity demand in India to grow at an average rate of almost about 6% up to FY 2023, 2030. This is expected to result in an annual increase in power consumption of more than 100 billion units. Such a scenario presents us with major opportunities to contribute to the ongoing transition in India's energy sector. IEX will continue to introduce innovative products and market segments to strengthen its existing product portfolio. We are exploring options to extend the term and market contract from 90 days to one year, to provide better optimization opportunities for the customers. We will continue to work relentlessly with the ministry, regulators, system operators, our partners and clients, and all other stakeholders to accelerate India's sustainable energy transition. Thank you, and now we can have question answer.
Thank you. Ladies and gentlemen, we will now begin the question and answer session. Anyone who wishes to ask a question may press star one on their touchtone phone. If you wish to remove yourself from the question queue, you may press star two. Participants are requested to use handset while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. Our first question is from the line of Mohit Kumar, from ICICI Securities. Please go ahead.
Yes. Good evening, sir, and thanks for the opportunity. My first question is, sir, how does the grid code help us in building volumes at exchanges? Secondly, the, you just mentioned that there are between GNA and-
Mohit, I'm not able to hear you. I think there is some disturbance in the voice.
Can you hear me now? Better now?
Yes, it is better.
Good evening, sir, and thanks for the opportunity. My first question is, how does the grid code will help us in increasing our volumes? Secondly, you said that the arbitrage between DAC and DAM will go away? Is that regulation finalized, or when do you expect it to be, this to go away?
Yeah. Green Market volumes are picking up?
No, no, my question on the grid code, grid code.
Okay, okay. What is your your question about grid code?
How does the Grid Code help us in building our volumes?
Yeah. See, CERC has now notified the grid code, and date for implementation of grid code is likely to be notified shortly, but we understand that this will be.
Ladies and gentlemen, we lost the connection of the management. Please stay connected as we reconnect the management to the call. Ladies and gentlemen, we have the management line connected. We have Mr. Mohit Kumar in the question queue for the answer.
Hello? Yeah, Mr. Mohit, can you hear me now?
Yes, sir. Yes, sir. Yes, sir, I can hear you.
Grid code is expected to be implemented from first of October. That is what we hear, but the date is yet to be notified. As per the new grid code, there are certain changes in that scheduling mechanism. Now, generator will have to give the schedule on day-ahead basis, and daily on day-ahead basis, and based on that, all beneficiaries will have to give the advantages. Whatever power is, URS power is left, that power now can be sold by generator in the Day-Ahead Market without taking consent of the beneficiary. This is a very, very important new change which has been introduced. Earlier, the consent of the beneficiaries was required. If the power is sold in the Day-Ahead Market, then beneficiary cannot revise the schedule to that an extent. This is one.
Second is, in case generator has given schedule, and if generator has given schedule and that has been scheduled by the beneficiary, and during the day, if there is some problem in the generating unit and generation is lower, then generator can make good that generation by purchasing power through the market. This is another important provision which has been made now. Earlier, generators were allowed to purchase power only in the event of outage. Now, they can purchase power even in the event when there is a generation is low on account of the technical reason. These are two important provisions which will, I'm sure will help exchanges to improve their volumes.
As far as the DSP, as far as arbitrage is concerned, the transmission charge sharing regulations were notified last year, but they also will get implemented along with the grid code only. As per the new transmission charge sharing regulation, sellers are not required to pay any transmission charges. It is only buyer. In case of buyer also, if the purchase is within the GNA, no additional charges are to be paid, and if the purchase is beyond the GNA, then only the charges are applicable. In fact, in case of the day-ahead market and RTM market, the collective transactions, the charges will be calculated on to basis after considering the GNA, T-GNA, and all transactions scheduled during the day. Thereafter, if there is some T-GNA required, that will have to be taken for the beneficiary.
This is a very positive development. Voluntary carbon market, we are in the process of developing the software and also analyzing the market opportunity. Hopefully, within this financial year, we will launch that. Mandatory carbon market, something which BEE is working on that. They have now modified the regulation that they will be... I mean, how this will-- I think, detailed procedure, everything is to be notified, for we have to identify the sectors where it will be first applied, and also the parameters for compliance of the carbon emissions, and if there is a non-compliance, then, what is the treatment of that? Who will get certificates, and who will have to buy certificates? All those things are yet to be notified. The only thing is that these carbon exchanges, and CERC will be the regulator for that.
Understood, sir. Thank you. I understood that, sir. Thank you.
Thank you.
Thank you. The next question is from the line of Vikas Jain from Financial Quotient. Please go ahead.
Hi, good evening, Mr. Goel.
Good evening.
thank for, thank you so much for having me ask this question. The recent development that happened about the market coupling, and I got an update from IEX management that in the current scenario, the market coupling may not be something which government should be considering due to the market dynamics which operate in one given country. It is something which should be considered between two countries or between multiple countries. I just wanted to hear your insights furthermore that how IEX future looks like if the market coupling and all is implemented, and what are the chances that the market coupling gets implemented along with MBED? What are the pros and cons for IEX? I just wanted to hear some insights from you, sir. Thank you.
As I told earlier also, market design is something which the regulator has to decide about. Government, via their second June letter, has requested CERC to consider market coupling and initiate the process of discussions with the stakeholders. I'm sure CERC will do detailed analysis about the market coupling. Whether market coupling in the present market framework is relevant, is it required, what kind of benefits it will bring to the market, to the consumers, and based on that, they will initiate the process, if at all it is required. It is too early to say for me whether market coupling will be implemented or not implemented, but I'm sure after examining all these things, if it is something which is good for the market, good for the consumers, yes, that will be done.
Based on our understanding, in the current scenario, where in India we have voluntary market and the transactions through the exchange is just about 6-7%, there is no case for the market coupling. We have seen in the other part of the world, I mean, market coupling happening in Europe, particularly the market coupling has happened. There they have done coupling of different markets, different countries, geographical different markets. They have coupled 27 different countries and made one market. In that market, they are transacting almost about 1,600 billion units of power. They have taken advantage of diversity in the demand and supply of different countries. There was a reason for doing the market coupling there. In U.K., there are two exchanges operating, in both the exchanges, there is no market coupling.
We haven't come across a situation where Market Coupling of exchanges was done, just for exchanges was done, when the exchanges were operating in the same geography. I'm sure regulator will look into all these things, so it is too early to say anything beyond that.
Thank you so much. Another thing that I just wanted to understand from you, sir, about our business in IGX and ICX. Any tentative timelines by when our businesses would have a meaningful revenue contribution to overall top line and bottom line, sir?
IGX, last year, the business was good. IGX made almost a profit of almost about INR 28 crore last year. This year, the Q1 was not that good, but I'm sure things will pick up in the subsequent quarters. Month of July has been definitely much better than the Q1. Again, you know, in the gas market, there is very high volatility at present. World over, with the gas supply positions and the prices are, there's a lot of volatility. Because of that, we are also seeing on the exchange platform, it is very difficult to make any assessment for the next four, five years. I'm sure about one thing, that gas exchanges, as I have always mentioned, that will definitely do as good as IEX.
If you look at the profit of IEX for the second year and what IGX has done, they're almost similar. In future also, I'm expecting IGX to do much better.
Thanks. Can we expect a similar time from these businesses?
Yes, yes. IEX, yes. ICX, International Carbon Exchange, we are yet to launch that. When we launch that and get into the market, then we will see what kind of opportunities are there in that.
Thank you so much for answering. I've been a shareholder with IEX since IPO, and I'm a happy shareholder. I'm having vision for next 10 years. Thank you so much.
Thank you. Thank you so much.
Thank you. Next question is from the line of Devesh Agarwal from IIFL Securities. Please go ahead.
Good evening, sir, and thank you for the opportunity. Just two questions. First, you multiple drivers, which could improve the overall volume growth on the power side. Any target that you have in terms of what could be the full year volume growth in FY 2024 for us?
... That is one. Secondly, you talked about the ancillary services starting from June for the both DAM and RTM. Some more information about them and the likely revenue potential from those new products. Thank you.
See, our Q1 volume growth has been almost about 8%. Month of July so far has been very good. I think, it's almost about 22% volume growth so far. I'm expecting that, if by the end of the year, we should have a volume growth of at least about 15%. Then in exchange market, it is very difficult to estimate these things. It all depends on the demand and supply and availability of the coal. If everything goes well, because, you know, Q1, we have seen the demand increase only by 1.8%, whereas we were expecting demand increase of almost about 8%, 9%. It all depends on these external factors, but we are quite optimistic about the demand, volume growth.
Second is volume opportunity by because of ancillary market. Ancillary market is basically in a energy deficient country, volume in ancillary market is not expected to be very high. The market has been introduced as per the direction of the regulatory commission, but so far there is absolutely no volume in this, no, no transactions in this market. Whatever power is available, generators are scheduling it in the energy market only.
Understood, sir. Thank you.
Thank you. Ladies and gentlemen, before moving to the next question, a reminder to the participant, anyone who wishes to ask a question may press star and one. Next question is from the line of Nikhil from Bernstein. Please go ahead.
Yeah. Thank you for the opportunity. The first question I had, Mr. Goel, was on the grid code. I think the URS power sale, if allowed, will be a good move for the markets. Just wanted to understand, A, timelines of this. I think I missed it, if it was discussed in the call earlier. And B, whether it will require any changes to existing PPAs or, even without that, it can be done?
Timeline for implementation of Grid Code, as I told you, we are hearing that it may get implemented from 1st of October, but no timeline has been notified so far. Because NLDC has to finalize some procedures, and they have to do some software tweaking. They are working on that, so based on that, our expectation is 1st of October. For selling URS power through the exchange, no change in the PPA is required. Grid Code supersedes all PPAs. The scheduling mechanism indicated in the Grid Code supersedes the PPA, and as per that, the generators will be now free to sell URS power on the exchange platform.
Got it. Got it. That's helpful. The second question I had was, then on the other point you made, that after GNA, the, the, contingency market volume will, will move to collective bids. Understand from a competitor standpoint, the competitor exchanges largely operate in the contingency market. For them, will they be able to sustain, do you think, without something like coupling coming in, even DAC volume, RTM?
The point is, today, if you look at, five years back, Day-Ahead Market was constituting just 95% of the volume transaction through the exchange. Today, Day-Ahead Market is constituting only 50%. There are lot many new products which have been introduced in the market in the last two, three years. We have Day-Ahead Market, we have RTM market, we have Day-Ahead Contingency, we have Term Ahead Market, we have Long Duration Contracts, contract for delivery up to 90 days. That also can get extended to delivery up to one year. I think there are many opportunities for the other exchanges to also pick up their volume. It is up to them.
If you look at the long duration contract for delivery up to 1 year, the volume transactions happening in the market is something about 40- 50 billion units. That's the market size which is available. I'm sure if exchanges work, they can get good volume from that market.
Understood, sir. Thank you for answering my questions. Good to see the good volumes in July.
Thank you. Thank you.
Thank you. The next question is from the line of Mr. Sumit Kishore from Axis Capital Limited. Please go ahead.
The first one is, assuming, that Market Coupling happens, and the exchanges don't, discover prices, directly, what will the exchanges do? You know, what is the incentive for individual exchanges to invest in coming out with new products if everyone is discovering the same price for a given time slot?
You asked a very relevant question, but I have no answer to that. The point is, the role of the exchange has been defined in the PMR, and as per the PMR, exchanges are supposed to do the price, price discovery. If they are not doing price discovery, will they be called as exchange or something else? I don't know that. I'm sure all these aspects will be examined by the regulator before taking the next step.
Sure. The Contract for Differences are a very promising, you know, step forward for deepening the exchange markets. What is the expectation? How many gigawatts can happen over the next one year or the next two years?
See, Contract for Difference is now being considered by the government. One is for the renewable generation capacity addition. If you recall, in the earlier earnings call also, we have been always saying that other countries, they have very efficiently used CfD model for renewable capacity addition. U.K. has added almost about 30 GW of capacity through this, in that cases, in case of Germany and other European countries. In India also, because, otherwise there is a lot of delay in signing the PPA, there are scheduling the power and then getting the payments. If you do to the market, then all these problems are over. Government is first now considering 1,000 MW capacity addition to the CfD model, where one of the nodal agency will issue the tender and contract the capacity at a fixed price.
Generator will get the fixed price, and that capacity will be sold in the market. Whatever is the difference in the price between the market price and the strike price under PPA, that will have to be taken care by the nodal agency. The expectation is that nodal agency will be able to, in fact, make money out of the process. And based on the result of the 1,000 MW, maybe they will contract additional 4,000-5,000 MW in the next subsequent years. This is basically, you know, I mean, other projects making, showcasing a project to the market so that other developers can also set up capacity with this model. In fact, the CfD model is also now being considered for ensuring additional generation capacity during the peak hours.
If you recall, this year, Government of India, they had invited bids for purchasing imported coal-based power during the summer peak, for meeting demand during the summer peak time.
Yes.
They said that whatever, rates are received by them, the generators will be selling the power in the Day-Ahead Market, and difference in the price between the Day-Ahead Market and the price quoted by them will be borne by the Government. Similarly, they also contracted gas-based capacities for meeting the peak hour demand. They also, in fact, identified 5,000 MW of NTPC and Ratnagiri capacity to be utilized under the peak hour, under the CfD model. CfD model is now being used extensively for bringing more liquidity in the market, and this is a welcome step. We have been working on this from the last couple of years, and finally we see that it has been happening.
This year, we could not see any benefit of that because, by grace of God, month of April and May were very, very, a cool month, and there was no crisis of power. These gas-based capacities and imported coal-based capacities under the CfD model were not put to use.
Sure. Just one last question. IGX, would it be right to think that, you know, if LNG prices have come off, should there be any correlation in ramp up of local gas consumption and a pickup in IGX volumes in FY 2024 versus FY 2023?
See, immediate effect of cooling of gas prices has been, number one, this year, domestic gas production has increased. Because of the lower, we have GAIL had some long-term contracts, and under those contracts, because of the high gas price, they were not getting the full gas supplies. In fact, maybe some of those suppliers were selling that gas in the European market at high price. Now they have started supplying the gas. In fact, the backlog quantity also is getting supplied. There is enough of gas available under the long-term and medium-term contracts, and that is why the demand in the market is comparatively lower. Going forward, when the gas prices are lower, I am sure the import will increase and participants to the market will also happen.
That should be a good thing for the market.
Thank you, and wish you all the best.
Thank you.
Thank you. Next question is from the line of Apoorva Bahadur from Goldman Sachs. Please go ahead.
Hi, sir. Thank you for the opportunity. Sir, what did you understand, what's our right to win in the carbon credit exchange? I believe, MCX is also looking to enter this.
IEX, we have the experience of running a spot exchange for the last 15 years. We incorporated gas exchange that is also working sufficiently, efficiently from the last three years. We understand this market. We have good connect with the market participants. We have today more than 7,000 market participants who are registered with us in the power exchange and large number in the gas exchange also. We have reached with these market participants, and I mean, that is our strength. I'm sure with this and our expertise of the operating exchange, we should be able to get a good market share in the carbon market.
So you expect the margins to be as lucrative as the current business?
Carbon market, I think let us first launch it, let us see what the market is. Maybe after one or two years from that, we will be able to say something about the margin and profits. At the moment, we are in the process of creating a platform and, you know, launching the exchange. Then maybe initially for a couple of months, we will have to do all promotional activities and see the response of the market thereafter.
Yeah, sir. Secondly, I believe you, you are expecting like 15% type of volume growth year-on-year. It would be very helpful if you can sort of provide a breakup product-wise.
What?
For the 15% growth, which segment do you expect it?
15% growth is our expectation based on the projected demand and supply position. Again, product-wise, giving breakup is going to be difficult because, you know, it depends on the market conditions. Our Day-Ahead Market and RTM market, definitely these are flexible products, and the large volume growth is going to come from these two segments. Thereafter, even the Long Duration Contracts volumes are also picking up, so that will be the next. Green Market, volume is increasing, not really significant. Definitely, the increase is going to be more than 15%, not significant volume growth.
Sir, why we haven't really the long-duration product really picked up? We are still seeing a lot of Bilateral Transactions, which ideally, I think should have shifted to this product. What's holding it back?
Whatever volume we did last year, we have done the equal, same amount of volume in the Q1. The volumes are increasing in the Long Duration Contracts volume, yeah, in that segment. We are expecting this year more than 5 billion units in the Long Duration Contracts segment. The shift from the Bilateral Transactions to the exchange transactions will need some time. You know, for every new product, market participants will... They normally try that, see what kind of benefit they are getting from that. Is the price more competitive here, or the payment terms are more competitive in other market? They will have to assess all these things and then decide. I think in every market, it happens, the shifting happens gradually.
Fair enough, sir. Thank you so much. I'll get back in the queue. All the best.
Thank you.
Thank you. Next question is from the line of Bharanidhar Vijayakumar from Spark Capital. Please go ahead.
Yeah. good evening, sir. Am I audible?
Yeah, you are audible.
Yes, sir. I just want to know what would be the approximate number of participants, on a daily basis, transacting in the forward period and the Real-Time Market? Though we would have, many registered participants, what would be like the average number of participants, transacting through delayed and Real-Time Market?
Yeah, it, it's almost about, 600-700 on an average per day.
Okay.
Earlier, earlier, number of participants used to be very high, but because, you know, as far as distribution companies are, and generators are concerned, their participation is limited. Distribution companies, we have almost about 50 distribution companies and generators, maybe 400- 500. Earlier, open access consumers, industrial consumers and commercial consumers, they were participating in a big way when the clearing price used to be low. From the last two years, the clearing prices have increased, and the viability for the open access has been slightly reduced. That is why their participations have reduced now, and average number these days is something around 600- 700.
Total registered participants are close to 1,500. It is dependent on price. As the price will come down, we will see this number going further up.
These 1,500 are active participants. Total registered is more than 7,000. Out of that, active are 1,500.
Okay.
Yeah. Is that clear? Hello? Hello.
It seems that we have lost the connection from the current participant. We'll move to the next question from the line of Saaksha Mantoo from Old Bridge Capital. Please go ahead.
Hi, sir. Thanks for the opportunity. Most of my questions have been answered. Just one on accounts. There is a spike in the other expenses that we see this time around of around INR 12.6 crore in total. Could you just explain, like, is there any one-off that we are seeing here, or this is a regular trend?
If you look at the Q1 numbers, normally what happen, we book the CSR expenses during the Q1, which is tune of around INR seven crore. If you look at the Q1 of financially 2020 also was quite high. This is a one-time expense of CSR mainly, which inflated the number. Going forward, we look it in the range of INR five crore-INR 7.5 crore year during the quarter.
Okay, you mentioned INR seven crore is CSR out of the INR 12.6 crore?
About, it's rounded off by given that. That is number and few other one-time expenses. Going forward, we, we did 15 years celebration this year.
Yeah, we completed 15 years on 28th of June, we had celebration for that. We had organized the event for the participants, and, then the CSR expense obligation for the full year has been already put in the Q1 itself. The total amount is about INR 7.5 crore. This amount will not appear in the subsequent quarters.
Got it. Thank you so much. That's all from my side. Thank you.
Thank you. Next question is from the line of Nikhil Abhyankar from ICICI Securities. Please go ahead.
Just to follow up on the earlier question, sir. Should we expect similar levels of other income as well going forward? It is, for in the quarter-over-quarter, it is flat. Year-over-year it is 40% down.
Yeah, Hopefully, it will remain same, but it's mainly dependent upon the, how the RBA decides. If there is a significant cut from the interest rate by the RBA, it will definitely going to come down. Looking at the current scenario, we hope for this year that it will maintain the same.
Sure. Earlier you mentioned about 1,000 MW of RE CfD contracts. What should be the expected timeline, timeline for it?
I think, there are activities happening on that. Nodal agency will have to come out with a tender for purchase of the power. Maybe this year, at least all these activities should be over. That is what we understand.
The additional 4-5 GW will be from next year?
Yeah, this year, 1,000 MW, next year, maybe another 4,000 MW.
Okay. Any progress on other product additions like capacity markets and derivatives?
Capacity market, I mean, CEA has come out with a paper for capacity building in the sector and renewable resource planning. I think it is too early to talk about the capacity market, because capacity market is going to be mandatory market. A framework will have to be developed for that. We are also working on that. Derivative market is again, that market will be introduced on the CERC regulated exchanges. Once that is introduced, that will also help the spot market, because the participants will have the opportunity to help their position.
We are also actively working with the regulator to ensure early start of this derivative market, but difficult to say any date on that.
Okay, sir. That's all from my end. All the best.
Thank you.
Thank you. Ladies and gentlemen, this was the last question for the day. I would now like to hand over the conference over to the management for the closing comments.
Thank you, friends. I would like to thank each one of you for being part of today's call. During the quarter, we have witnessed a lot of initiatives announced by government and the regulators towards creating a favorable policy and regulatory environment to transform the energy sector. We remain committed in doing our bit towards building a sustainable and efficient energy future. Thank you all.
Thank you. On behalf of Axis Capital Limited, that concludes this conference. Thank you for joining us, and you may now disconnect your lines.