I can't hear you.
Thank you. Greetings, everyone. On behalf of IIFL Securities, I welcome you all for the third quarter FY 2022 analyst meet of Power Grid. I'd first like to congratulate the management for their efforts to deliver the performance in a very tough, challenging macro environment, and yet consistently increase the dividend payout. Really appreciate, sir. Moving on, to discuss the performance in detail and share the performance outlook, we have the senior management team of Power Grid, represented by Shri K. Sreekant, Chairman and Managing Director. Mr. M. Taj Mukarrum, Director Finance. Mr. Abhay Choudhary. I would first hand over the call to the management for sharing their initial thoughts, post which the floor will be open for Q&A. Over to you, sir.
Thank you, Harsh. Good evening, ladies and gentlemen. I'll start with a brief presentation highlighting the performance during the quarter and the outlook. Please upload the presentation. I hope it's visible.
That's right, sir. Thank you.
This is a very brief overview of where we are today. Power Grid is having 172,190 circuit kilometers of lines, 1,344 in numbers. 469,000 MVA transformation. Interregional transfer capacity 97,290 MW, consistently above 85% of India's interregional capacity. Third largest CPSE in terms of gross block. Government shareholding remains at 51.34%. Coming to the performance highlights of this quarter. On the project execution side, we have had a CapEx of INR 7,188 crores this nine months on a consolidated basis. This quarter we spent INR 3,493 crores on a consolidated basis and INR 1,588 crores on a standalone basis.
Capitalization, we have done INR 5,238 crores this quarter against, I mean, on a standalone it is INR 3,854 crores. Overall nine-month capitalization is INR 18,513 crores. This is also on consolidated basis. Physical capacities added this quarter, a whopping 18 GVA of transformation capacity at so many locations. Interregional capacity of 1,500 MW was added. This is, I think, the Vindhyachal-Varanasi line, 1,500 MW.
Pole-four.
Pole-four capacity of Raigarh-Pugalur. Transmission lines 1,468 circuit kilometers and 2 substations got added in this quarter. I'm very happy to share that on October 23rd, we completed the Raigarh-Pugalur-Thrissur HVDC system, the entire system, which I have been briefing you the progress since last few quarters. The last pole along with the AC system downstream was completed. This overall project is about INR 22,000 crore, and we have been able to complete it, a major part of it, only in the pandemic period despite so many challenges of mobilization, movement of material and so on. Coming to the operational performance, the nine months we are at 99.82% compared to 99.80% last year, above the 99.75% threshold.
Trippings per line have marginally come down to 0.28 in this nine-month period. Financial performance, the income for the quarter on a consolidated basis, INR 10,724 crores, and our profit after tax on a consolidated basis is INR 3,293 crores. There is reported profits are down slightly, mainly because of a few, one is that last year we had one-off billing in this quarter for about INR 300 crores. This quarter we had to make two major one provisioning for employee contribution to PF and other benefits, about INR 75 crores.
There is also a decrease in the income from subsidiaries on account of transfer to the InvIT, and profit share in the profit of joint ventures has come down by about INR 70 crore. These reductions are basically, you know, they have taken away the sheen of this significant CapEx and project completion, which has been done in this quarter as well as in these nine months. If we look at the nine months on the consolidated basis, the income is INR 31,630 crore and the profits after tax INR 12,668 crore. This also includes the profit on account of the InvIT monetization. Income growth is about 5% and PAT growth is 49%. If we...
I mean, it includes the inbuilt profits. These are some of the numbers, I think that you would have already gone through these. I would only say that there has been an increase in the consultancy income. The telecom income is down on the back of a rebate we had to give to BSNL in the first quarter, so that is one of the reasons for this reduction. Operating expenses are slightly up, also because of capitalization and all because more R&M activity in this compared to the last year because of the easing of pandemic restrictions. This is on a consolidated basis? Yeah.
The debt has come down significantly to INR 1,30,000 crore on a standalone basis and a consolidated basis, and net worth is INR 75,971 crore. Book value today is about INR 108.91 crore. Debt equity is significantly down, 63 to 37. We used to be 70, 69, now it has significantly pared down because CapEx this year has been mainly out of proceeds of the NBT. Some of the numbers which are of interest to you, if you see, I think I would draw your attention to the reduction in surcharge income, which is a very big reduction, from INR 598 crore in the nine months to INR 182 crore this year. Incentive is better off. It is up INR 30 crore on the back of better availability.
Interest from subsidiaries and JVs has also slightly come down because we have separated those five subsidiaries, operating subsidiaries. Dividend from subsidiaries are also down because of the monetization. I think another point I would like to bring to your attention is this reduction in CSR expenses. INR 171 crore last year, INR 86 crore this year. We have another INR 170 crore to go in this quarter. When you do your calculations for the last quarter, please factor this, because we are scaling up the CSR expenditure in this quarter, and we have an annual target of about INR 257 crore. We will try to meet that by the end of this year. If I look at the telecom performance, nine months it is INR 427 crore. It is slightly down compared to last year.
Performance-wise, 100% backbone availability. The Board has given approval for an investment of about INR 330 crores in setting up a fibre data center at Manesar. We have also applied for the international long distance license. We have acquired through leasing around 2,500 km of OPGW in Assam and Sikkim. This is a part of our strategy to expand our network into those regions, even the Northeast and Jammu and Kashmir, where with our backbone, we will be enabled to provide data services and capture the market there. The process of setting up PowerGrid Teleservices is complete. Now we are preparing the scheme for the slump sale of the telecom business to this entity.
Turning to consultancy business, we had INR 145 crores in this quarter, INR 436 crores in aggregate income. Two key developments. One, we had signed a joint development agreement with Africa50 for the construction of a 400 kV and 220 kV system in Kenya under the PPP framework. We are preparing the project proposal, public private investment proposal, and then after that is approved, then that project can be taken up. We have also signed a shareholder agreement for a joint venture with Nepal Electricity Authority to develop an Indian portion of the new Butwal-Gorakhpur transmission system. We have been successful in a project management consultancy contract in Moldova, Eastern Europe. This is our first entry into the European continent.
Commercial performance, compared to Q2, the receivables have marginally gone up, 50 days as opposed to 48 days at the end of FY 2022, but much better than the end of Q1, 62 days. While there is a concern that the above 45-day numbers are slightly up, but overall situation is under control. Other than Jammu and Kashmir, we are able to make recoveries from most of the other states. Only Jammu and Kashmir is something which is still rather intractable from our perspective. Business outlook. Today, the works in hand are about INR 24,500 crores. New projects ongoing, INR 7,100 crores. These are RTM, INR 4,200 crores. TBCB are INR 13,200 crores. In the upcoming opportunities in the TBCB space, we see about INR 26,000 crores of opportunities.
INR 12,900 crore are under bidding, another INR 10,000 crore to be initiated, and so on. There is this BESS which has been allocated recently to Power Grid, along with some investment in the Gujarat APC. Then we have recently been successful for Part G of the transmission system strengthening scheme for evacuation from solar PV zones in Rajasthan. Besides this, you know, I think if I pause there for a minute on the transmission segment itself, a scheme is being drawn for 500 GW of non-fossil capacities in the country by 2030, in line with the declaration or commitment made at the COP26. We see that there will be need to add about 300 GW beyond what is on the ground today or under construction.
Significant transmission systems will have to be drawn because much of this is in the form of large solar parks, depending on the location of the solar or wind potential in the countries. These are being identified. Going forward, there will be a significant addition to the transmission network. Of course, there will also be an addition to the storage because the future transmission network will also have storage or the generators will have the storage. While there will be some amount of offsetting the network with storage, but still there are opportunities, I believe, in the transmission segment going forward. In addition, outside of this transmission segment, we are looking at solar power generation at locations where there is land available.
We have identified about 200 MW potential within the Power Grid stations, of which at Nagda, that is not a station as such. We have acquired the land for a substation so we have land enough for about 100 MW of solar. Preliminary surveys are over. We are going to engage a consultant for providing us the feasibility report, tender evaluation and the support. This is something which we will take up very shortly. Smart metering is another area where we see investment potential. The government is committed to get about 10 crore meters installed by 2023 and 25 crore by, I think, two years thereafter. That is a big investment which is coming up.
We are mandated to interact and, you know, engage with the states for setting up 1 crore smart meters through a kind of an MOU route. We have started the process of procurement, and we will be taking it up with the states for these solutions, end-to-end smart metering solutions. That is about INR 5,000 crore-INR 6,000 crore of investment expected here. Finally, very happy to share that we have been ranked 44th among the Fortune India 500 rankings for 2021. This is where we were last year as well. I think one of the criteria is turnover, and that is where we lag significantly to others. I conclude my presentation here, and will be happy to take your questions. Thank you.
Thank you very much, sir. Ladies and gentlemen, now the floor is open for the Q&A session. Participants who would like to ask questions, please, either you type them in the chat box or you raise the hand. I'll unmute you in a sequence so that you can ask the question. First question is from Mohit Kumar. Mohit, please go ahead.
Yes. Hi. Good afternoon, sir, and congratulations. Good set of numbers, especially the dividends were quite high in the quarter, for the nine months. My first question is, has your CapEx estimate changed after the new identified cost plus element? And where are we all awarding for this cost plus HVDC asset? And what is the cost of HVDC Leh Ladakh, and what is the grant portion? This is the first question.
Okay. You are asking whether our CapEx target for the current year has changed?
Yeah. I'm talking about FY 2023. I think the number which you have mentioned in the budget is roughly around INR 75 billion, right? Does that number undergo a change because of, you know, the-
That will undergo a change. That is under review. We are looking to increase it. It will be up, I think at least by INR 1,000 crores. We are still reviewing it. Current year, we had targeted INR 7,500 crores. At the pace at which we are incurring and, given that the government is also pushing us to increase the CapEx, we are likely to do close to INR 85 billion in the current year, INR 8,500 crores. Next year also, we will be increasing the CapEx. From the initial target of INR 7,500 crores , it is likely to go up to INR 8,500 crores or + . As far as the Leh-Kaithal project is concerned, the cost is approximately INR 26,000 crores.
The grant component and all those details are yet to be finalized.
Understood, sir. My second question is, how is the bidding activity under smart metering? When to expect this line of business to see the momentum? And why are you procuring, you know, INR 5,000 crore or INR 6,000 crore worth of smart metering without any, I know, MOU or, you know, let's say, bid which you have won?
Because see, the government has, I think, identified about seven roads to be done by the CPSEs through MOU routes. Those discussions are in progress. We want to do first the tendering, get the most competitive price, and then be in a position to offer to them in the MOU route the best prices. We believe that there is this potential. Of course, when we are giving the number INR 5,000 crores, it is our tentative estimate. Only when we get the bids and all, we will be able to finalize.
Understood. Last piece, sir. Are you looking to monetize other tranche of assets in the InvIT in the next ESCO? Is there any, you know, anything, is finalized?
In the NMP pipeline, we have a target and we have a trajectory given. That is what we will be following. Only deviation what is likely is that this year we have another 26% in one of the companies to be monetized in February that will be eligible. Then there are a few cash flow streams on account of change in law which we have received. Which we have the right under the share purchase agreement to receive over the lifetime, but we would like to monetize it and, you know, kind of settle it on a lump sum basis. Other than that, by and large, we have INR 7,500 crore, I think, next year, which we would be targeting in the fiscal 2022-23.
Understood, sir. Thank you, and all the best, sir.
Thank you.
Next, we have a question from Vijay Bharani. Vijay, please go ahead.
Yeah. Good afternoon, sir.
Yeah.
If I look at the pipeline of renewable projects, there is a number of around 60 GWs under construction and probably about 30 GWs. Sorry, are you telling me something, sir?
No, nothing. Sorry. Please go ahead.
About 60 GW under construction and 30 GW under bidding. That's the kind of number in the public domain. That ties in with the number that you also mentioned, 100 GW under operation. This 100 GW that will come up in the next, say, three to five years. Then beyond that, we need to construct another 300 GW to meet the FY 2030 or 2032 target. Now, in the medium term of the next, say, three to five years, this 100 GW under construction and under bidding stage, what kind of interstate transmission CapEx is required to enable this capacity addition? Of this, what would be our opportunity, Power Grid's opportunity, sir?
See, as far as this target is concerned, I mean, I think. Just give me a minute. Right now, there is about INR 39,000 crores of total transmission for 66.5 GW, of which about INR 18,000 crores is either commissioned or under construction. Under tendering and what is likely to come is about INR 21,000 crores. This is for 66.5 GW, which is more firm. You can use this as a kind of ballpark and then, you know, use it for another, say maybe INR 40,000 crores for 66.5 GW. Maybe INR 50 lakhs per MW kind of a number is a reasonable estimate.
Okay. Understood. Of this INR 39,000 crore, you said INR 18,000 crore is commissioned or under construction and INR 21,000 crore yet to come up, right?
Yeah.
Does the number we have put in the PPT, which includes say INR 27,000 crore upcoming opportunity and the Leh-Ladakh of INR 26,000 crore , does it all include this or is it not included in this?
Leh-Ladakh is not included in any of this.
Okay. The number you mentioned in your PPT, around INR 25,000 crore, will be part of this INR 39,000 crore.
It is 12,900+ 10,800. Yeah, that is what I was giving you.
Right. Okay. Despite these large numbers, not able to understand how our yearly CapEx numbers still is in, say, INR 8,000 crore-INR 9,000 crore range. When do you expect this to, say, scale up?
This is a function of winning those projects and then taking those projects forward, right? Assume, let us say that these are INR 22,000 crore which are opportunity set that is available. Let us say half of it we will win. Okay? Then what happens? It comes down to something like INR 11,000 crore-INR 12,000 crore. Then when you build this over two-year period, your annual CapEx will come down to INR 6,000 crore. I mean, this is what the math would look something like.
Understood. Like this, regulated tariff mechanism, Leh project, are we expecting any other nominated project?
The last time, I don't know, I said something here, there was a human cry from the association. I think, let us see as you go and let us see what is available.
Great, sir. Nice talking to you. All the best, sir. Cheers.
Sir, I'll take a couple of questions from the chat box. The first one is from Devanshu Sampat. His question is, will the investment towards setting up solar power generation transmission system as well as the smart metering, etc. , be on regulated ROE regime? If not, what should be the payback period for such incremental investments?
The smart metering system is having a life of about seven and a half years, 90 months operation, and two and a half months construction.
Two and half.
Two and a half years plus seven and a half years. That is the period. There, kind of WACC-based guidelines have been given by the government. Of course, one has to discuss and negotiate with the state utilities, but a kind of general WACC of 10% has been allowed. Ceiling, plus some project management expenses and so on and so forth. One needs to go. When we see the discussion with the utilities, we'll be able to come to understand what is the return. As far as the solar is concerned, it will be mostly market driven. There is no regulated system there.
Sure. Understood. We have, you know, a couple of questions from Deepika Mundra. The first one is, when is the INR 6,000 crore, the pipeline of transmission projects, why there is no change from INR 26,000 crore despite some green energy corridor and interstate projects getting cabinet approval?
See, the most of those are in the intrastate segment, and those are being built. The one the cabinet has approved, the green corridor, I believe is the intrastate segment, and that is what is going to be built by the utilities themselves through their own RTM route and all. Limited amount of that may come to the TBCB market.
Understood. The second question is, when is the INR 6,000 crore of smart metering CapEx to commence, duration of the CapEx, and any update on distribution strengthening investment for 33 kV lines?
The smart metering investment is most likely to come in the next financial year. FY 2022-23, FY 2023-24, that is where I see it to be panning out. The distribution under the 33 kV, still in terms of on the ground, there is not much of a progress. Now the schemes are getting approved under the RDSS. You know, I think it will still take some more time before those schemes are coming to ground. Because they were to submit all their schemes by December, and then there is a committee which approves them, and then it is still taking time.
Sure. Helpful. The next question is from Apoorva Bahadur. Your line is unmuted. Please go ahead.
Hey. Hi, sir. I hope I'm audible.
Yes.
Right. Thank you so much for the opportunity. Coming to the latest tender, can you please share what is the size of the storage component over there for the transmission line?
1 GW is the capacity. 4 GWh is the total.
In four hours.
1 GW.
1 GWh.
1 GWh.
Okay.
Thank you so much. Sir, second question is, again, on the transmission planning side. You said that some detailed work is being done, probably on the 300 GW renewable capacity addition plan. Sir, wanted to understand by when can we expect concrete numbers around this?
It will take at least another three months, sir. Right now, the exercises of identifying the potential zones is in progress where, because the renewable resources are spread out all over the country. We have them in the state of Rajasthan, Gujarat, Tamil Nadu, Andhra Pradesh, Karnataka, MP. All those potential areas are being identified to also check whether there is land availability kind of in principle consent of the states. These once this exercise is done, it will provide the input to the CEA and CTU to do the transmission planning. This is, I expect at least three months more to come with some kind of a formal understanding of the network that needs to be built and the network investments that will be required.
Sure. Fair enough. Sir, last question from my side, and that is on this future storage tender. Now that we are probably already into storage execution of storage tenders, so will we go for standalone storage projects as well, or we'll stick to transmission lines?
The recent guidelines of the government have made storage a very kind of, you know, I think it has a very neutral kind of a color. It can be a transmission element also, it can be. They have made it an independent storage service provider also. Definitely as we gain experience in this, we will look at those opportunities.
Sure, sir. Thank you so much, and all the best.
Next we have a question from Anuj Upadhyay. Anuj, if you can go ahead.
Yeah, hi. Thanks for the opportunity. Am I audible?
Yeah, please.
Sir, few clarification. First on the Leh project, you mentioned that it has been allotted to under the RTM mechanism. Is it been given to Power Grid or it. Hello?
Yeah.
Has it been given to us or provided?
I'm sorry, I couldn't hear your operative part.
Sir, it's regarding the Leh transmission project. As it would be allotted under the RTM route, so would that be given directly to Power Grid or there are few other participants as well who can opt for that RTM thing? Sir.
It has been given to Power Grid.
Sir, I mean, we have not included that in a work-in-hand kind of a thing. That's the reason why I was a bit.
We have not included because the investment approval for that has not yet been made.
Oh, fair point, sir. Thanks for the clarification. Secondly, sir, of the INR 39,000 crores project which you have mentioned, you said 21,000 projects are yet to be awarded. Any timeline for that?
Yeah. There are 12,900 under bidding. I think these all will be speeded up now. There has been a significant change in the transmission planning process, approval process. Previously there used to be a requirement to go for regulatory approval and all, so that has been taken off. The approvals have been delegated authorities. A CTU can do up to INR 100 crore approval, the national commission can do up to INR 500 crore. Only beyond that, they go to the government. These are now going to come in in quick succession for bidding and award.
Probably in 1 or 2 quarter we can see the tenders coming up.
Yeah. Definitely.
Okay. Next on the Khavda project, sir. First phase have already been tendered out. Can we have any kind of a timeline or clarity about the other phase? Because I believe the Khavda itself provided around INR 13,000-INR 15,000 crore of transmission opportunity.
Those are again being relooked in terms of, you know, how to integrate storage into it and optimize the transmission network. Particularly in Gujarat and all, there is significant right of way constraints. That is one thing which is being taken up in phases, but I think another 4 GW is coming up immediately. Thereafter, it will take at least another couple of quarters before we can see the tenders.
Fair point, sir. Thank you.
I go again back to the chat box where we have few interesting questions. One is from Pratik Kothari, and he asks, "It is being perceived that the asset monetization will happen via PG InvIT only without a competitive bidding as Power Grid is the sponsor of it. Any thoughts, clarity on the same? How do we ensure fair value is being accrued to us or is being assigned to the assets?" Any thoughts?
See, we have created the PGInvIT as a preferred vehicle for monetization of Power Grid assets. At the same time we would like to be fair to both our shareholders as well as the PGInvIT investors. I mean, we are absolutely neutral between the two and would like to do the fair you know valuation of the assets and do an asset transfer.
Sure. Thank you. The next question is from Rohit Natarajan. The question is: In the Leh transmission project in Pang block, MNRE SECI has identified 22,000 acres of non-grazing land. Here, however, there is a presence of water body with fresh water body et cetera, with fresh application sought for an alternative site. Is this issue being resolved? What is the ROW issue revolving around, if at all there is?
The site location is not yet finalized. As I understand, a team from SECI is right now at Leh to decide on all these things. There is plenty of land available. They will definitely take care of all these issues, what is to be set aside for grazing or, you know, those. There is a wildlife area also there. They have to avoid that near Nyoma.
Sure. There is another question from Atul Tiwari, and he says, "Can you please elaborate more on Leh transmission project? What is the size and how much of that will be added to work in hand?
The Leh transmission project, as I mentioned, is about INR 26,000 crore. Once approved, that will add to the work in hand. I mean, how much of it will add, it is at least five-year kind of a project.
Understood. Sure. Next we have Subhadip Mitra. Subhadip, you can go ahead with your question. Your line is unmuted.
Hi, am I audible?
Yes.
Sir, I just wanted to understand that beyond the current basket of INR 21,000 crore, which you mentioned is under the tendering process, what could be the potential addition to this basket, you know, once this INR 21,000 crore gets extinguished? Are we looking at an annual number of between INR 15,000 crore-INR 20,000 crore that could, you know, come under the TBCB pipeline?
No. I think that is a bit difficult to say annual number what it will come because I mean that detailed planning is not yet made, so I would not like to hazard a guess at this point of time.
No, understood. I completely understand that, you know, while the numbers are probably still not finalized, but in your opinion, let's say over the next 2-3 years, what kind of a ballpark number could we look at which could potentially get added to this basket of INR 21,000 crore?
I think around, you know, INR 15,000 crores kind of transmission investment can be expected on an annual basis.
Understood, sir. Thank you. That answers my question.
Okay. We have a question from Mr. Bharat Jain. Mr. Jain, go ahead.
Yeah. Very good evening, sir. Two things in my mind. One, the company has been delivering good growth over past years and also sharing it well with the shareholders. Do you have any plans to make the similar payouts by a buyback route instead of dividends? Because that will help share value appreciations also on the board.
There was a time when we were having leverage in excess of 2:1, and it was not possible to do a buyback. Now that the leverage is not in those levels, it is an opportunity which is possible.
Okay. That is one thing. What is the kind of numbers we see going forward in the new financial year 2022-23 on the top line and bottom line? What is the kind of growth we see?
No, I would not like to give any guidance on that.
Oh. All right, sir. Thank you.
Can we go back to the chat box where we have a few questions lined up? One is from Mahesh Shah. The question is: What is the update on mechanism for monetization of assets into the InvIT after the change in government stance on complete sale of assets under monetization pipeline? I think the question is, can you update us on the proposed monetization plans, given the fact that there is a change in stance of government?
Yeah. See, the last monetization we did by transfer of shares. Therefore it is a complete transfer of ownership. Now in the monetization pipeline, there is a requirement that right to use or a right for a certain number of years without total transfer of ownership is to be made. The existing structure is not working. If we do in the form of a fee or any such arrangement, there seems to be a significant loss of revenues through taxation. There is a GST which we have to resolve, and those deliberations are in progress. We have also engaged a consultant to evaluate various modes and suggest mechanisms where there is least or no revenue leakage on account of such taxation. That is a work in progress.
Hopefully in the next few months we will be able to solve that and then get it finalized with the ministry and the DIPAM and the authorities and then adopt that process. If you say do we have a model right now which is approved and to be implemented? No. We have the 2022, 2023 available with us to do this, so we hope to do it. Definitely first quarter or four months of the next financial year, we should be ready with some model there.
Sure. Thank you. There's a follow-up question from Mohit. Mohit Kumar, go ahead.
Hi, sir. One question. How does the GNA mechanism changes the industry? Can I just share your thought?
The GNA mechanism is meant to change the transmission planning growth of the transmission. See, if we look at it, historically, transmission planning was always linked with either one generation or a kind of demand. Though the National Electricity Plan talks of transmission growth being ahead of the growth in generation or, you know, it should be leading. That means that you need to build a network in anticipation of demand. That was not happening in some intermediate period where everything was tied to either generation and so. Therefore, the switch to GNA is expected to kind of deal with this and support the growth of the network, and then provide a platform for the other economic activities to grow.
In that sense, it is a very good development, and it will kind of free this transmission growth. We will build the highways in anticipation of demand.
Sir, how many TBCB assets?
Sorry?
How many TBCB assets are operating at this point of time? What is the revenue? A levelized tariff of all this element, all this.
Let me just get you that number.
Yeah.
Right now.
52, I think.
No, there are plenty. No, not all of them are operating assets. The operating assets are about 10. 10 of them are under operation right now.
Including InvIT, right?
No, no. We will not count InvIT with us anymore. They are not ours.
10 operational now.
Yeah, yeah.
What is the levelized tariff of all these 10 assets?
Tariff is about INR 1,100 crore.
Understood, sir. Thank you and all the best. Thank you.
I think Apoorva also has a follow-up question. Apoorva, go ahead.
Oh, sorry. I forgot my hand down. All my respect. Thank you so much.
All right. No worries.
There is, you know, in the Q&A chat, there is one more question. Can you give the breakdown for FY 2023 CapEx, please?
FY 2023 CapEx, that is 2022/2023. In terms of what is TBCB and what is non-TBCB?
Yes.
I think that is the breakup I think you are looking for. Maybe around, you can say we are targeting about INR 2,800 crore from regulated assets and the balance INR 4,200-odd crore from the TBCB. Then telecom and others will make up the rest.
Sure. Okay. Thank you.
Next, we have a question from Sumit Kishore. Sumit, can you go ahead? We will come back to Sumit. Next we have a question from Mihir Manohar. Mihir, go ahead.
Yeah. I stand corrected. I think the previous question was the breakup on these assets. Sorry, it's the other way around. I would like to correct myself. We expect the next year RTM assets will be roughly INR 5,000 crore and,
TBCB.
On account of TBCB, about INR 2,000 crores.
Okay.
Another INR 750 odd will be telecom and other assets.
Got it.
This is right now not factoring any significant smart metering CapEx. Once we tie up those MOUs, that will get added to it.
Sure. Mihir, you're next. Mihir Manohar, you have a question, please go ahead.
Yeah, sure. Thanks for giving me the opportunity. Sir, I wanted to understand the overall capitalization space. I mean, you know, at some point in time, we were having north of INR 20,000-INR 25,000 crores kind of capitalization from FY 2016 to FY 2018 onwards. Now we are seeing roughly INR 6,000 crores of CapEx opportunity coming up and plus some INR 5,000-odd from the Leh project. I mean, how-
You are not clear. Can you please speak little slowly and loudly?
Yeah, sure. Is it audible now?
Yeah.
Yeah, sure. Sir, I wanted to understand that, you know, say 3-4 years back, we were having like INR 20,000-INR 25,000 crores kind of capitalization per year. Now that number is coming down to INR 6,000 crores on the TBCB front and roughly another INR 5,000 crores from the Leh project. How do you see the overall opportunity in this space? You know, the CEA has also come out with the addition, and it has stated only 20 GW of addition on the thermal side from FY 2022 to FY 2031 onwards. How do you think the overall capitalization panning out from here?
See, I think, I have been telling regularly that the INR 25,000 crore, INR 22,000 crore of CapEx on transmission assets is now difficult to sustain over a long period, right? The opportunity set itself has declined significantly, and most of the assets are going through the TBCB route, where the competition is very significant. I just now gave a number, but maybe around INR 15,000 crore on a annual basis is the likely opportunity set for the transmission segment. That is the reason we are looking at other segments such as data centers or further increase in the telecom, smart metering, solar. These are some of the areas where we are trying to increase the non-transmission revenue and business opportunities.
Sure. The INR 15,000 crore kind of a number broadly can be the reach.
Yeah.
Mihir, your audio is really poor. Maybe, you can join back in the queue or type your question.
Yeah, sure.
Thank you. Okay, next is Sumit Kishore. Sumit, go ahead. Your line is unmuted.
Thanks for the opportunity. My first question is on capitalization for FY 2023. You know, given the state of progress on projects, what is your expectation and how would you break it up into TBCB and RTM? And if I may just add, you mentioned that the CapEx of INR 75 billion targeted for FY 2023 can be upsized by about INR 50 billion. Would that be mainly on account of new TBCB wins that you are expecting next fiscal, or you're including a portion of that Leh-Ladakh project into CapEx?
It is more out of I mean, partly out of the new wins likely, as well as the RTM, which we have received in the recent past. We are expecting around INR 14,000-INR 15,000 crores of capitalization next year. Okay?
Okay.
I won't be able to give you immediately the breakup in terms of RTM and TBCB, but
Sure. My second question.
Yeah.
Yeah.
My second question is, in relation to, the Africa50 initiative. It seems more like project management by Power Grid. Power Grid will not have to make any equity investment there, right? Or what would be investment by Power Grid?
No, no. That is not right. The joint development agreement is for investing into this project through a private-public partnership with Kenyan authorities. Africa50 is the lead partner, and I mean, we propose to have an equity stake, significant equity stake when this project is approved. It's not just a PMC contract.
Okay.
Okay.
Given the size of this project, how much equity would you be required to bring in? I mean, the
The size of the project, I think is about INR 2000 crores.
INR 2,000 crores.
INR 2,000 crores, roughly INR 300 million, INR 280 million or so.
Okay, that's the total project cost.
Yeah. Size of the equity and all that will again be function of what is that equity.
For the investment that you plan in data centers, what would be the return model and, you know, again, what is the pipeline of investments you have planned in data centers in the next few years?
We have just now approved one data center at our Manesar complex. That is about INR 330 crore investment. Another for a hyperscale data center, we are engaging a consultant to provide us the blueprint and all. Little more investment in edge data centers is what we are looking. Right now, I think next year you can say we would be investing about INR 350-odd crore in these data centers. It will pick up going forward.
Okay. In terms of looking at your overall CapEx number, we should add the number for smart meters plus the data centers and plus the guidance that you have given for CapEx on transmission.
Sure.
Yeah.
Yeah.
Thank you.
Ladies and gentlemen, in the interest of time, we have one last question, and that's from the chat box. It comes from Vishal Shah. If the Ladakh project CapEx gets added to the pipeline, will the annual CapEx move from INR 75 billion-INR 80 billion to INR 150 billion per annum over the next 5 years? Is that the right understanding?
No, that is not. Because Ladakh project, you know, is a kind of five-year project. If we have INR 26,000-INR 27,000 crores, even if you say one year designs, annual CapEx will peak at around INR 9,000 crores or so. We won't be able to add another INR 15,000 crores to it.
Understood. Sure. Thank you.
Sure. Thank you.
Ladies and gentlemen, in the interest of time, that was actually the last question. In case you have any further queries, feel free to reach out to me or Power Grid management, and we shall do the needful. On behalf of IIFL Securities, I sincerely thank Power Grid management for giving us an opportunity to host this webinar. Really appreciate, sir. Any last comments you'd like to make?
No, I thank all the investors and the analysts for the support to Power Grid. Look forward to your continuous support, going forward. Thank you.
Thank you, sir.
Moderator, can you disconnect? Thank you.
Thank you.
Can I disconnect now, boss?
Yes, sir. Please.
Thanks.
Thank you.
Bye, Nikhil. Thank you very much.
Bye bye, Darshana.