Greetings everyone. On behalf of IIFL Securities, I welcome you all to the second quarter and first half FY 2024 investors and analyst meet of Power Grid. To discuss the performance of the company and share performance outlook, we have the senior management team of Power Grid, represented by Shri G. Ravisankar, Director of Finance and CFO, Shri Abhay Choudhary, Director Projects, Shri R. K. Tyagi, Director Operations. I'd request the management to make the presentation, subsequent to which the floor will be open for Q&A. Over to you, sir.
Thank you, Harsh. Good morning to everyone. So post publication of this Q2 results, I welcome you all for this investor and analyst meet, and we start with a small presentation. Am I audible?
Yes, sir. It is.
. Okay. Okay. Next. Next. , we will cover the Power Grid overview and the major highlights and any performance highlights of this quarter, with the growth outlook and any awards we received in this quarter. In the overview... Next. You know that we are a Schedule A Maharatna CPSE, and the third largest. We continue to maintain as the third largest CPSE in terms of market cap. We have a presence pan-India. We have a network in almost every state, every district, and we have growing subsidiaries. Now we have 39 subsidiaries, with 11 joint ventures and 4 associates. The 4 associates are like, we have a 26% stake in the SPVs, which we transferred to InvIT, that is the 4 associates. In the... And we have a global footprints in almost 23 countries.
As far as credit rating, yes, we has enjoy the highest credit rating in domestic, and as far as international, yes, it is on par with the sovereign rating. As far as transmission assets, yes, we have 1 lakh 76 thousand kilometers of circuit kilometers. We have 1,478 transmission lines. From last quarter, we have added one more substation. Now it, the count becomes 275 substations. The system availability continues to be above 99%. These are all just a breakup of like how many HVDC stations and GIS, 765 kV stations breakup out of this 275. Next. This quarter, yes, we have two TBCB companies, we have received with an annual tariff of INR 361 crore. The NCT cost is INR 3,070.
Both are like Rajasthan projects in phase 3, Part C1 and Part H2 projects we won. So with that, up to Q2, we won four projects in the TBCB in the current year, with an annual tariff of INR 703 crores, and the NCT cost is INR 6,393 crores. So this is up to Q2. Subsequent to that, yes, we won one more project in phase 4, Part A.
So that is the NCT cost is something like INR 4,700 crore, with a tariff of INR 273 crore. With that, the current year, yes, we have won the projects worth somewhere around INR 11,000 crore. This is in addition to what we won in the last financial year, in the February and March, something like INR 9,000 crore. We won eleven companies we won last year, and this year, five. So put together, it's around sixteen companies we, SPVs we are- we will be acquiring. Maybe in another few months, we will acquire this one or two SPVs also. And two more bids we have submitted for which the e-RA is to happen. The major highlights covers the the Leh-Ladakh project, where the cabinet approved the phase two, 13 GW RE project.
It is a line from Pang to Kaithal, with a cost of INR 20,700 crore. It envisages 40% of the financial assistance as in the form of grant, and it has a timeline of, like, 5 years is the completion timeline. Being a difficult terrain at a high altitude of, like, 4,700 meters above sea level, and it has a minus subzero temperatures. So this is the working conditions. There is hardly 5 months to 6 months in a year, so it takes 5 years to complete. So this is a evacuation of 13 gigawatts, but the line is a 5 gigawatt line, so maybe the generators may come up with a battery so that the PLF may be little more than that.
So this is one project which is recently cleared by the cabinet, and we are yet to get the formal communication from the government regarding the modalities of how the grant will be given to us. And so subsequent to that, we will take up for the investment approval. But we have already started the studies of Front-End Engineering Design. It envisages in two parts it is to be done, and the first stage study has already started, and then two HVDC players have been given the job. They are already undergoing the study, and then we expect that to complete by the month of March. April, they should be able to give the first phase report. Subsequent to that, so they will undergo the second phase of study, and then we have to take up the bidding.
So this is about the Leh-Ladakh project. Next. In the project execution, yes, we have commissioned one TBCB Power Grid Bikaner Transmission, and two STATCOMs at Bhadla and Bikaner have been commissioned, and six numbers of ICT has been commissioned during this quarter. And this has added 3,100 MVA capacity and one substation and 306 circuit kilometer of transmission line. About the CapEx, the cumulative CapEx in the first half year is INR 4,246 crore. This is against the yearly target of INR 8,800 crore we have envisaged this year. And since we have won some more companies, , this is likely to go up, maybe we may be touching the five figures this time, so it should cross INR 10,000 crore this time.
But as of now, up to September, yes, we have achieved 4,246. And capitalization is also almost equal. We have capitalized INR 4,000 crore. It was INR 1,600 crore in Q1. Now, we have added another 2,400, and then it becomes 4,000 crore up to Q2. As far as operational performance, yes, we continue to be above 99.75%. Now, it is 99.85% for the first half year. And the trippings also, compared to the previous half year, yes, it has come down to 0.16 from 0.20. The standalone performance in the Q2 is... yes, our revenue has slightly gone up from 11,004 to 11,206, and the PAT has also gone from 3,651 to 3,834.
Income also similarly, in the consolidated accounts also, it has gone from INR 11,349 crore to INR 11,530 crore, around INR 200 crore more, and in the PAT also it is from INR 3,650 crore to INR 3,781 crore. In consolidated financial performance for the half year, the revenue is INR 22,094 crore, and the PAT is INR 7,377 crore, compared to previous half year of INR 7,417 crore. Similarly, in the consolidated also, it is at INR 22,788 crore is the income, whereas the PAT is INR 7,379 crore, compared to the PAT of INR 7,452 crore in the previous year. Because last year we had some one-time incomes, which normally directly contributes to the PAT.
That is why the PAT is slightly more compared to previous half year and the, in the consolidated as well as the standalone. These are all some of the figures which are already available in the BSE and NSE websites, that the detailed results where the transmission charges, total income as in the quarter, it rose by 2% and the PAT rose by 5%. Here you can see that we are showing as continuing operations as well as discontinued operations. This discontinued operations signify the telecom services, which the board has decided to carve out, and then we have formed a separate SPV, Power Grid Teleservices, in which the telecom operations will be taken up from October 1, 2023.
So as per the requirements of India, this is to be shown as assets held for sale and to be shown as a profit from discontinuing operations separately. This is, of course, in the standalone as well as but in the consolidated, there is no difference. It will be, since it is in the same group, you will not find this line in the consolidated. So put together, if you see the profit after tax is INR 3,834 crore against INR 3,651 crore of the previous quarter, and registering a 5% growth in the quarter-to-quarter comparison in the standalone. Next. In the consolidated, yes, we are separately showing the telecom consultancy and transmission charges separately. Telecom income is INR 202 crore this quarter, and the cumulative half year is INR 393 crore.
Yes, last time also we, in the investor call, I think we targeted, like 800 crore of a transmission income for the telecom income. For the current year, I think, according to that, yes, we have already reached 393 in the first half year. And consultancy charges is slightly coming down, compared to the previous years, because, yes, we have a NERPSIP scheme for the last two, three years, and then we have commissioned the major elements in that, and then it is slowly coming down, and then we are looking for other business opportunities in the consultancy so that, it will slowly again improve. And in the consol also, you can see that the profit, after tax, is 3,782 against 3,651. It is registering a 4%.
These are all about some of the balance sheet figures, where we have gross fixed assets has crossed INR 2.70 lakh crore, it is INR 273,000 crore, INR 276,000 crore, like INR 2.73 lakh crore in the consolidated and INR 257,000 crore in the standalone. And we have a capital work in progress of INR 14,900 crore, closely INR 15,000 crore in the consolidated. And our debt equity is now 58/42, from 59/41, it was in the last quarter, and last year it was 61/39. Now, slowly it is touching 58/42. Return on network continues to be 8.51%, and the book value has shown as 93 because we have issued a bonus share. So last time it was 114.
Since subsequent to the issue of Bonus issue, the book value is showing as INR 93.22. Otherwise, there is no decrease in the book value because the company continues to be in profit only. There are some other key important information which are all of interest to you, like this is one income from previous periods and interest on differentials, which contributed more in the last quarter, last year, in the Q2 as well as last year in Q1. So which is lesser in this current year. That is why you can see that the profit in last year was slightly more in the half year compared to the current half year.
Because last year we had the tariff orders for Raigarh- Pugalur, so where we had to account the income of the previous years, so that's why it was more. As regards the equity infusion in TBCB, yes, it has increased INR 2,600 last year, Q2, now it is INR 4,100. INR 500 more equity has been increased in the TBCB in the form of equity. Borrowings, cost is average is 7.61%. The interest rates have slightly hardened. Last quarter, we were showing it as 7.59%.
Subsequent to the increase in the domestic rates, slightly the average rate has gone up because we have some bonds which are of third rates, and then we have some floating interest rates, the term loans and other foreign loans, because of which slightly it is increasing. Of course, some most of the interest rates in the RTM are passed through. And coming to the telecom performance, the income is INR 201 crore for the current quarter, and then we have added 36 new customers, and we have a presence almost in 3,000 locations in the pan-India. So now this business has been transferred to the POWERGRID Teleservices Limited, with effect from first October 2023.
It is a 100% subsidiary of POWERGRID, and this will be taking up the data center business also by the POWERGRID Teleservices, where for which we gave an approval. POWERGRID board has given an approval of INR 713 crore as investment approval. We will be setting up one data center in Manesar as a pilot project. So the award is under progress, and then maybe in another 12-15 months, it is expected to complete. And yes, we are exploring data center in other areas also. As regards consultancy, the income is INR 155 crore in the current quarter. We got two new international assignments. Of course, these are all small assignments at Fiji.
One is on some consultancy, and another one is on the training, capacity building for Fiji. And there are new domestic assignments in the form of like bay maintenance. And then, we have, international, businesses, like we have, talks with Kenya. We have submitted our proposal to Kenyan government in association with Africa50. And then we are in talks with Tanzania, and there is a consultancy, works 220 kV line in Sri Lanka. So these are all some of the opportunities in, international businesses. And one more JV, we have, formed Butwal-Gorakhpur, with a cost of INR 693 crore, with a 50/50 JV with NEA. Commercial performance, yes, the realization has gone up from the last quarter. It is 92.37%, is the percentage realization.
We were getting the payments due against the LPS rules of 2022, notified by the MOP. So far, we have received INR 1,383 crore against the 204, 2,400. This is the monthly installments have been converted against the LPS rules by the 6% discounts, which we are receiving regularly. There are some major dues from Tamil Nadu, J&K, Telangana and Uttar Pradesh. We expect this to liquidate soon because the dues of Tamil Nadu is mounting because there was an issue in the tariff of the Raigarh- Pugalur, which was challenged by them. Then recently, 27th October, the order has been issued by the CERC for making this Raigarh- Pugalur, as a 50/50 component, compared to the earlier regional component of 30/70.
So we expect the dues of Tamil Nadu and Telangana on this account to come down, and there was no alarming dues from other J&K or Uttar Pradesh. As regards the work in hand, yes, it's around INR 50,500 crore. Of course, this doesn't include some more projects which we have recently won and taken up. We can add another INR 8,000-INR 9,000 crore in that. So somewhere around INR 60,000-INR 65,000 crore will be there as a work in hand. Of course, in the new RTM projects, which we show INR 24,300 crore, this includes the Leh-Ladakh, for which investment approval is yet to be granted, because we are waiting for the formal communication from the government. So once that formal communication is received, so we will take up with the board for the investment approval.
So that out of this INR 24,300 crore, that accounts to around INR 20,700 crore, and then INR 16,500 crore, and other projects which we are showing includes around INR 13,000 crore as TBCB and INR 2,800 crore as smart meters. So current year CapEx guidance is like INR 8,800 crore, the one which we projected earlier, against INR 5,000 crore as RTM and INR 3,800 crore as others. Now we see a little upwards in that, and it should be somewhere around INR 10,000 crore. The business outlook, yes, the same slide which we have shown the last quarter also, because only this is out of the INR 240,000 crore, which they envisage against the investment of 500 GW of RE generation by 2030.
So in that, we envisage a portion of like INR 116,500 crore. And intrastate, yes, corresponding, this is only our estimation, like parallel investments in intrastate, somewhere around 70-75% on the INR 240,000 crore as we assumed, and then we assume that some percentage will be coming through TBCB. So that is why, on a conservative basis, we are showing it as INR 37,000 crore. Cross-border, we envisage as INR 10,000 crore. Of course, these are all the targets in the next nine years. On international projects like Kenya, Tanzania, and other African countries or other Nepal and other countries, we envisage something like INR 7,500 crore.
Solar generation, INR 1,000 crore, we estimate, because already there is one plant we are setting up in Nagda, which was recently inaugurated, and then we have awarded the contracts also, and we expect it to commission in another maybe by 12 months. It has got 85 MW of solar generation. And smart metering infrastructure, we project INR 15,000 crore. This includes the 69 lakh smart meter contract, which we got from the two discoms of government of Gujarat. And the data center business, yes, we project INR 1,000 crore. Of course, this is a target for 10 years. Suppose if we are successful in this Manesar, probably this figure has got a potential to be in the upward side. This is about almost the outlay in the next 9 years. And next.
Regarding the sustainability aspirations to comply with the ESG guidelines. So we had an internal target of, like, 50% of our auxiliary consumption through renewable sources by 2025. This is an internal target, though we have a target of 2047 as the net zero, but we have an internal target to achieve at least a 50% by 2025. Net water positive by 2030, and then zero wastage to landfill by 2030. These are all the some of the policies have been adopted by POWERGRID, and we hope to achieve this. And some of the awards which we got in this quarter is the Certificate of Excellence in Learning and Development as HR Excellence Awards. Dun & Bradstreet PSU Award in power transmission.
We have Brandon Hall Group Excellence Awards in learning and development area. So these are some of the awards we got in this quarter. And I think with that, I'll just pause, and then we can take up any question and answers from the investors and analysts. Thank you very much.
So, Nikhil, we open the floor for Q&A. I request the participants to raise hands, subsequent to which we'll unmute your lines, and you can actually ask questions. Alternatively, you can also, you know, type in your questions in chat box, and we can read it out for you, and the management can answer thereafter. So we'll probably take a couple of minutes to assemble the queue.
You will be-
Sure. So we have few of them. Moderator, can you unmute line of Mohit, so that he can ask his question? Mohit, go ahead.
Mohit, we are unable to hear you.
13% normal.
Mohit, we are unable to hear you. Maybe there's some issue with his line. Moderator, can you unmute line for Shreya?
Hello?
Yes, Shreya, go ahead.
, hello, this is Shreya from Cogent Capital. I just wanted to understand this, CapEx target of INR 10,000 crore. While you've given the breakup of INR 8,800 crore, could you also give a breakup of this INR 10,000 crore, which you expect, to finally achieve? And then we have this... I have another question on your international projects, which you mentioned that there's, Kenya and Tanzania in the, you know, as, as targets.
But, can you tell me that, you know, we've read reports on the, undersea cable lines that, India is, having, you know, with, some countries, that Power Grid will play a main role. So have you, considered that also in your CapEx for 2032? If you could just give a little more details on your data center business that you're planning. These are a few questions. Thank you.
. Thank you. Regarding data center, I'll go from that. Data center, yes, we are setting up a data center in Manesar as a pilot data center. We will be setting up 2 floors initially, and then, depending upon the business, it can be scaled up to 6 floors. It is a hyperscale data center, which is being set up in the Manesar. This will be taken up by the Power Grid Teleservices, which is the 100% subsidiary of Power Grid. And then, your question on international business. Yes, we are doing with Kenya, we have a 40-60 JV with the Africa50, and then we have submitted our interest to build a line in Kenya.
It will be a line owned by an SPV, formed for that, and then the project will be executed by that SPV. And on the similar lines, yes, we are in talks with Tanzania also to build transmission lines. In we will be joining hands with the Africa50, and then we are in talks with them how the modalities of recoveries and how the tariff structure will be for that projects. So this is about the projects of Tanzania and Kenya. As regards this undersea cable, yes, there are some, it is in the very preliminary stage. There are talks with like connecting Oman or connecting Singapore or connecting Maldives, Sri Lanka.
So there are some intercountry connection sea cable projects are under study. As of now, there is no concrete any agreement or order from any of the countries. Only we are undergoing the studies about the feasibilities, and then we are studying with the similar infrastructure available in other continents, and then we can submit a proposal. As far as Sri Lanka, yes, we were given the job of preparing the DPR, so we are in the job of preparing the DPR of the project from connectivity from India to Sri Lanka. And as regards the CapEx of INR 10,000 crore, you can assume it is INR 5,000 crore in RTM and then INR 3,800 crore, what we have shown. You can assume 50/50, like INR 5,000 crore in RTM and INR 5,000 crore as TBCB projects.
Very helpful, sir. Thank you. We'll take the next question from Anuj Bhatia. Moderator, can you unmute his line? Anuj, go ahead.
Am I audible?
Okay. Sir, slight confusion regarding to the Leh project. In our last call, we have mentioned the total project cost was envisaged at INR 27,000 crore, of which nearly about INR 9,000-INR 10,000 crore was a grant from the central government, which eventually led to our CapEx target of around INR 16,000 crore. Now, this figure of INR 20,500 odd crore, is this the total project cost or is just a partial cost which has been approved by the central as on date? And how much of this the grant will account for?
No, it was initially INR 20,700 crore. Probably, you would have heard as 27,000 crores, but it is, this INR 20,700 crore includes the grant of INR 8,000 crore. As such, as on date, the envisaged project cost is INR 20,700 crore, which includes the grant of INR 8,000 crore. As such, our CapEx portion will be INR 13,000 crore as on date in the project. So this INR 20,700 crore includes the grant. It's not INR 20,700 crore plus another INR 8,000 crore as a grant.
Thank you. This looks very much-
Sure. Thank you, sir. . Anuj, are you done or you have a follow-up? Okay, moderator, we'll take the next question from Mohit. Can you unmute his line?
Hi. Am I audible now?
. Hi, sir. Good morning, sir, I have a few questions. So first on the outlays, the outlays slide, you were speaking about the target, right? These are targets based on how much you'll win for interstate and intrastate. Is it the right understanding? Secondly, what is the total opportunity size, which you think till 2032 for interstate and intrastate?
We have given that, no, interstate has INR 116,500 crore and intrastate has INR 37,000 crore. Basically, the purpose is like all interstates are either it should come through TBCB, or maybe some portion may be on nomination basis, depending upon the project importance, is it any national importance, or maybe some few base has to come in my substation, means maybe through RTM. So this is how all the, we have visibility almost about the 2.4 lakh crores that is, how this will come. As far as intrastate, why we have considered as the INR 37,000 crore is only. , as far as intrastate is concerned, normally, we consider 80% of this 2.4 lakh crores, and in that only, 33% of the opportunity is offered under TBCB.
With our strike rate of 50%, we are assuming it as something like 30,000, 37,000.
Understood.
So our CapEx, as of now, what we have shown, like INR 50,000 crore in hand and all, that doesn't include any of this intrastate, because intrastate are supposed to come through bidding or maybe through any JV route, which they will have to decide. So that as and when whatever the projects which we have in hand, that doesn't include any of the projects of intrastate. However, the projects, the outlook, which we are showing as INR 180,000 crore for the next nine years, that includes a portion of 30,000-35,000 crore as intrastate, which we foresee. Assuming that some portion will come through TBCB and maintaining a strike rate of 50%, yes, we should be able to bag something like 30,000-35,000 crore.
Understood. So you are expecting to win 30%, or 50% share in the transmission bidding for interstate, and that's how you arrived at the number. Is that right?
, because the intrastate-
Understood.
-normally, uh-
Intrastate
... it's not mandatory that they will have to come through bidding. Something they may execute on their own, or they may even give it on consultancy. They may form a JV, they may form a, like, they can give it as an EPC contractor. So there are so many ways of handling the intrastate projects. So since we are not, and it may differ from state to state also, like now, UP has come up with two, three projects in TBCB. Some they were executing on their own. MP, we executed one, UP, we executed three. So, there are, maybe other states will follow that and then, we may get. So that's why the assumption is on the little conservative side.
Understood. So my second question was, why the bidding activity is low in H1? Are you seeing a strong possibility of culmination of a lot of bids in the H2, and any update on the quantum of bids where tenders have been floated already?
No, I see that the bidding is slow. Now, if you see in this, especially this calendar year, 2023, we have won almost around 9 plus by 14 projects we won, and if you assume this as a 50% strike rate, around 25, 26 projects have already been bid out in this calendar year itself. It was low in the, during COVID period, like in 2020, 2021, there were not much projects coming up through bidding. But now that it has picked up, and then, we foresee that, the bidding to come. And even if you see, there are so many projects which have already been identified, and then it was in the BPC websites also, which, for which we will have to submit the bids.
Like, already there are around 59,700 crores of projects which are under bidding, which covers the Rajasthan, Khavda, and others. So I don't see that it's very slow. Now, it has picked up. Compared to last two years, if you see this current year, 2023, yes, it has picked up.
Understood. My last question is, when do you expect to award Leh-Ladakh project, and when do you expect to commence work? Do you think this will get bid out in FY 2025? You know, you could, you'll award it.
FY 25, it's a little tough, yes, but we see that how the FEED study of phase one and phase two to conclude. After that, probably when the phase, phase two study completes, yes, we should have a clear-cut vision that how the BOQ should be there, and then even the HVDC players will be very clear that how their equipments will perform in that such high altitudes or zero climatic conditions. So it should be maybe award FY 25 in the last quarter, we can try in that. So we are also targeting in the FY 25 last quarter or maybe in the first quarter of FY 26. So, so maybe your assumption is almost is matching. Yes.
Understood, sir. Thank you and all the best.
... Sir, if you don't mind, I'll take a couple of questions from the chat box. So first one is actually from Bharanid har. His question is: What is the total CapEx on 11 TBCB projects, 1 in FY 2023, plus 5 TBCB projects, 1 thus far in FY 2024? Second part is: What is the total equity component of this? How much equity has been invested so far? And then what is the total transmission revenue once these 16 projects are fully commissioned?
. 11 TBCB projects will be something like INR 8,500-9,000 crores as the CapEx, and then the tariff quoted is INR 950 crores. For the five TBCB projects, it is something like INR 11,000 crores, and the tariff quoted will be something like 800 and-
Nine seven.
INR 975 crore. So put together, if you see, it will be something like INR 1,800 crore-INR 1,900 crore when we commission all these, 19, the 16 SPVs. As regards the component, yes, it can be 80/20 or, 90/10. Depending upon the requirements, we can put the, equity.
Very helpful, sir. Thank you. Second part of this question is: What is the regulated equity of all the RTM projects as of September 2023?
Regulated equity-
Return on equity.
No, return on equity is 15.5. So regulated equity is, you see, suppose we have predominantly all as RTM projects, and then it is something like 90-95% is only RTM only. So you can assume something like INR 80,000-INR 86,000 crore is my reserve and surplus, and then you can assume something like INR 82,000 crore as regulated equity in that.
Sure. That is nice.
Any businesses which we put equity, so we are putting equity only in transmission businesses, and then consultancy, yes, we don't need to put anything, and, telecom, we are not putting. It's not a very major investment we have done. So whatever appearing in our reserve and surplus, and we have shown, like, INR 4,100 as the equity infused in TBCB, and if you deduct that, it is INR 82,000. Simple arithmetic, I'm just telling you, like, figure appearing in my balance sheet is INR 86,000, and INR 4,100 I have shown as equity in TBCB, means maybe RTM is INR 82,000.
Got it. Very clear, sir. The second question from the chat box is from Vipul Kumar. So this relates to the balance 26% stake in four assets you transferred to POWERGRID InvIT. When are you going to transfer, you know, the balance 26% stake to InvIT?
Actually, last year, last financial year, only one project completed five years, that is the Kala Amb, and the quantum is hardly something like INR 20-30 crore. Current year, so far in balance, out of three, two projects have completed five years and one more to complete by December 2024. So I think we can take a call in the fourth quarter, and we can take a decision of how mutually, if we are agreeable, we can transfer the balance 26% also. So as such, since these are all small, small amount, and then hardly this involves a stake of hardly INR 500-600 crore, so we thought that, yes, we can get the valuation done once all the projects gets completed, the period of five years.
Got it, sir. So, Nikhil, we'll take the question from the audio line. Can you unmute the line for Sarvesh Gupta? Sarvesh, go ahead.
Hello.
, I have Sarvesh.
, sir, one more question on the previous lines only regarding POWERGRID InvIT. So at the time of IPO, I think, you know, it was thought that this will be a vehicle for POWERGRID to monetize their operational assets, and it will free up the resources for POWERGRID to probably grow at a faster pace. But what we have seen in the last one year has been a complete U-turn in terms of that policy. So, A, they have not been able to get these stakes from you as per the scheduled timeline of all these five assets, and, B, there is no visibility whatsoever in terms of the additional assets which could have flowed from POWERGRID, either for POWERGRID InvIT specifically or for the world at large.
Sir, then going forward, what is the sort of, you know, stance of the management on these two issues?
Now, one is about PG InvIT. Yes, I won't be able to comment on them, because that is a separate listed entity. Yes, so this is the there is an agreement where we can, if we are mutually agreeable, we can transfer the balance 26%. So that, I told you that this is a very small amount, which we thought, yes, we can see the fourth company also gets completed, the period of 5 years, and then we can get the valuations done, and then we can do that. This is one thing. About the other one, this other projects, yes, subsequently, yes, because of the NMP guidelines, yes, the transfer of subsequent assets through the earlier mode is not feasible.
So that is why we have adopted the method of securitization of the cash flows, and then we were monetizing the assets, which is as per the NMP guidelines, and it complies with the NMP guidelines.
So going forward, you will not be downselling any of your assets to Power Grid Limited. Is that right assumption, sir?
No, like, we can't assume like that. As of now, the NMP guidelines doesn't permit to transfer the shares permanently to an SPV. Not, not only PG InvIT, to any, anyone. So this is what the NMP guidelines says. So as of now, this is the position.
Understood, sir. On the normal, sir, on your transmission business now, you know, we've been hearing a lot in media as per the, you know, the CapEx plans, which is ahead of us and-
Your voice is breaking. Can you be little louder? Because it's-
, sorry. Is it better now?
, it's better.
. So the second question was on the transmission assets. So there have been a lot of media reports that, you know, we are seeing a very large pipeline of sort of transmission assets coming in, into play in terms of. Because, you know, the old assets also need to sort of get into newer ones as they come to 50, 60 years sort of a life cycle. So given that, sir, are we seeing a sort of an extraordinary growth opportunity for us in the coming few years? Or, we feel that we will be continuing along the same sort of a growth path that we have been doing in the last few years.
INR 180,000 crore in the next years is little. I think it's a decent figure. It's it should normally go up from the present level. So there are opportunities. That is why we have shown in that slide that, yes, there are more opportunities. And then, of course, this includes only the RE generation related transmission assets. In addition to that, also, there may be some assets coming up. And from the present level of like INR 9,000 or 8,800, in the future years, yes, there are possibilities of the CapEx going up. Like next year, we have an initial target of INR 12,200 as of now.
So this year also, when we projected 8,800, now we see that it's going a little upside, and then we should touch at least a five-digit figures this year, and then next year it should be 12,500 as of now. And, of course, the HVDC projects and are in the cards, and then depending upon the outcome, the CapEx for next year will be formed up maybe in another 3-4 months. But, as you say, yes, there are opportunities in the next few years to a higher potential CapEx.
Sir, finally, on the data center business, so what exactly is our strategy in this? Because there are many big players like Reliance and Adani have also entered this sort of a business. And, then you need some specific capabilities for building the data centers as well as for putting it out on rent. So what exactly are we planning? Are we planning, joint partners, JV partners, for building it, or are we planning to rent it out? So do we need some JV, or do we have existing, tenants who would be occupying this? So how are we thinking about the data center business?
No, it is like, like competing with other players only. As of now, we didn't think of joining hands with either Reliance or Airtel or somebody. So we can also... Since we feel that, yes, we have done the communication business for a quite long time, last 20 years, and we feel that, yes, we can get ourselves adopted in this one. And being a government entity, we feel that, yes, we may have an edge about some of the storage orders. We may get it, and then this is the purpose, like we can-- And we have like a piece of land in Manesar, so we thought we can utilize this for the setting up of data center.
And not only this one, we can even go in for other private lands also, where there are the data centers in existence, we can set up, and then we can do. And then, as of now, there is no plan to join hands with anybody or joining a JV with any of the players. We thought, yes, we can, we feel that we have the capability to do that on our own. If required, we can have some consultants to advise on that, advice we can take, experts, and then we can carrying on. So this is only. That's why we are setting up one pilot data center. Depending upon the success, we will have a co-location there.
Also, we can have a storage, we can do the business there, and depending upon the success, we can escalate that, we can expand that.
This is for how many megawatts?
It is about 10 MW.
Okay.
Initially, about 8 MW, and in second phase, it will be 14 MW.
So INR 1,000 crore is for 22 MW?
INR 700 crore. So initial investment is INR 700 crore. So, 1,000, we have projected till 2032. Once we are successful in that, maybe this 1,000 crore will be going up.
Thank you. Thank you, and all the best. Hey, moderator, can you take Abhineet Anand next? Abhineet, your line is unmuted. Thanks.
This INR 60,000 crore bidding pipeline that we have, what is the timeline for that, sir?
You can assume something like 12-18 months maximum.
Then there will be, you know, around a two-year exhibition period for those, right?
, it will be like 24-30 months, you can assume. So something will be at 2 years, something will be at 2.5, something maybe at 3 years. Like, HVDC will have a little longer period.
Just on supply chain, is there some issue around availability of key equipment like transformer and all?
, actually, since so many projects are coming up suddenly, so there is a challenge in that, transformers and other equipment, and even the HVDC equipment, where the RE integration is in full swing in Europe. Because of that, yes, there are issues in that, but still, we are-
... Later the end, 18 months more issue.
Normally, when the timeline is 18 months and above, there are players who can supply the equipment. This is one part, and as far as TBCB, and yes, we, and most of the our contracts are on firm price. We are somewhat insulated from the price escalations. And as of now, wherever the time schedule is above 18 months, we don't have any issue of supply chain issue. And of course, this is the one, one part of our transformers. Otherwise, predominantly, if you see, we have a lot of our structures, conductor, insulators, so many parts, and then this is one portion.
Last one, this apart from the INR 60,000 crore projects, which are under bidding for the next 12-18 months, I mean, what could be a new pipeline that could come from the next 1-year perspective?
, that will be another INR 67,000 crore, which are yet to come for bidding, which is already approved in the NCT, and then another INR 45,000 crore, for which the planning needs to happen. So this completes this INR 240,000 crore. Basically, the transmission envisaged in this 500 GW by 2030 envisaged a INR 240,000 crore. In that, when the excluding things happened, and then the bids, which are in the RFP stages, if you exclude that, another INR 67,000 crore of bidding to come in future, and another INR 45,000 crore is in the initial stages.
Okay, sir. Those were my questions. Thanks a lot.
Moderator, we'll take Kovil next. , his line is unmute. Thanks. Can you go ahead? Your line is unmute. I think there's an issue with his line. Maybe we can take Anuj Bhatia.
. Hi, thanks for the opportunity again. Sir, you just mentioned the cumulative equity we have invested to date across the TBCB projects, and this is excluding those five projects which we have already transferred to InvIT.
. Yes. , whatever we have shown, like INR 4,100 crore.
Is the equity, and the revenue and earnings from the same?
That's which have already been transferred. Maybe, it has got that. That is excluding that five companies, because that equity has already been sold.
No, but for certain projects, we do have 26% still retained, sir. So does this include those 26%?
That is, that we are actually showing as assets held for sale. So that is not forming part of our PPE. As per the standards, and there is an intent to sell, we cannot continue to show it as a PPE, so it has to be showing as investments held for sale.
Fair point, sir. And the revenue and earnings from the same during the quarter, from these assets, TBCB?
... Pardon? The revenue and earnings from these TBCB projects for the quarter, if you can share the numbers, it would be helpful, sir. For which TBCB? All TBCB or all, all, all TBCB, sir. Okay. Got you. As a standalone and consolidated, Thank you. We have a half-yearly revenue of INR 1,300 crore in TBCB, and the profit is INR 413 crore. That's helpful, sir. And lastly, sir, you, you referred about INR 10,000-odd crore of CapEx target, which we are eyeing for the current fiscal. . Can you provide similar number of target for FY 2025, and also if you can throw some light on the capitalization target, which we are eyeing for FY 2024 and 2025 as well? 2025, from 10,000, it should be on the higher side only.
As of now, we are projecting INR 12,500 crore, but that is the figures as on date. But suppose if we are able to win some bigger projects in the like HVDC and all, it should be on the little higher side. Capitalization, current year, we are projecting as INR 10,000 crore, out of which INR 4,000 crore we have already done. Next year, we are projecting something like above INR 15,000 crore, something like INR 17,000 crore we are projecting. That's helpful, sir. Thank you. This includes the TBCB also. , definitely. Definitely.
So I'll take, you know, a couple of questions from the chat box. The first one is actually from Vipul Kumar. Sorry, I think we've addressed that. This one is from Shashi. Have you finalized upon the smart meter supplier yet? If not, will it be through bidding or otherwise?
Smart meters? Suppliers.
That's right. So have you finalized-
We have already a tie-up with the suppliers. Okay. For the two orders which we got from Gujarat, we have a back-to-back tie-up with the vendors, and then they will be executing.
It will start by end of December or early January. Technical parameters have been finalized. Now, these are under manufacturing. By end of December or early January, the supply will start.
Got you. Thank you. The other question is from Shivam Gupta. Sir, is there any progress on, regulated equity draft? I suppose he is referring to the draft, tariff regulations by the CERC.
Actually, the approach paper has already come out, and then we gave our comments and all. Normally, as per the timelines, yes, by November end or December, the draft regulations are published. This is historically we see in the last block year also. So maybe next month, we expect the draft to get published.
. Thank you. The other question is from Diana. I guess she couldn't speak over the line. Does the INR 700 crore pipeline include three HVDC projects approved in NCT? What is the state of these HVDC projects? That's the first question.
No, no, which is to come for bidding.
Twenty-nine thousand.
, INR 29,700 crore is what is included. Other HVDCs, which are to come for bidding, it has not come. So that will be in the second one, which is like, I have told you, like INR 67,000 crore in the... In that runs two HVDCs only.
Okay, got it. Second part of the question is, what kind of feedback you are getting from CERC, towards the tariff, control period?
We don't get any feedback. We only give feedback.
Sorry?
On tariff.
Okay.
We are giving our comments on the approach paper.
Sure. I think we'll come back to the question soon.
. Thank you for taking the question. Most of the questions have been answered, just one on the surcharge. Could you explain the negative revenue OR prior-year surcharge for this quarter?
Negative, the surcharge for the quarter. No surcharge. No, no, there was a... Yes, less of the—no, no. No, no, it was, there is a... In consolidated, we are showing it as minus adjustment - as a surcharge. Maybe some payments would have been regulated, like some collections would have happened, and then it might have been regulated. That's why it is negative. We will check it up and then revert you.
All right. Okay. Thank you.
... Otherwise, you see that surcharges are coming down because of the regulations in place, where, like, after 75 days, regulations happen, so that is why the AT&C approved. But this negative will self-fund.
Okay, that's all. Thank you.
We have the last two questions. The second last one is from Mohit. Mohit, Mohit, go ahead.
Hello. Hi, I'm Mohit. Hi. Yes. Yes, so my question is, do you see any issue in executing a STATCOM project, especially? How many equipment suppliers are there for STATCOM as of now in this country, who can meet your localization requirements?
No, I think there are major problem in commissioning STATCOM, because this is a technology which is not very old. So for... There will be final commissioning this time, and I think there are two or three STATCOM suppliers, like one is, other is Hitachi, then other players, Mitsubishi is also there. GE is also going to come. So three of suppliers are there in the market. So this is not a very old technology. That is why commissioning take a bit of time.
Because I think, our expectation is, investment will go up, right? I think there are a lot of numbers of-
Yes.
STATCOM as approved by the CEA, by the NCT. Is that understanding correct?
. It provides very much dynamic compensation because of this intermittency in the renewables generation. Therefore, a lot of STATCOMs have to be set up in view of this 500 GW target of RE non-fossil fuels. So that understanding is very much all right.
My second question is, what is the dues against Raigarh and Pugalur from the Tamil Nadu and, Telangana? And how the payments will happen? Will the CERC allow them some kind of leeway for the payment, or the payment is due immediately?
So it is, you see, earlier, when the CERC orders came, we were billing, and then they were paying also. In between, they have contested in Madras High Court, and then it was referred to APTEL, and then APTEL has set aside the orders and remanded back to CERC for reviewing it, along with the grid controller and CEA and, CTUIL. So this was... Even, when we approached the Supreme Court, they have also given a timeline of before 31st October, it is to be resolved. And then on 27th October, CERC has already issued orders of making it as, 50% as national component and 50% as regional component. In between, they have adjusted whatever the INR 1,200 crore of payment they have made against that.
So we have again requested them to make payment of whatever the adjustment. Telangana will be paying now, so they have adjusted around INR 450 crore, which they will be paying now. And Tamil Nadu also has to pay because we have requested them. And the billing of 50/50 will be from the 27th October. That is the date of order of CERC. As of now, we feel that, yes, it should see an end.
Thank you. Thank you.
So the last question, Soumya, can you unmute your line? I think, seems to be Soumya's line. I think we're more or less done. I thank management for giving us an opportunity, and wonderful explanation. You know, what is the opportunity ahead of Power Grid. On behalf of IIFL, thank you very much, and wish the entire Team of Power Grid OR Team of Business a very Diwali. For all the participants, in case your questions remain unanswered, do let us know. We'll send these to Power Grid. Alternatively, you can also write to Power Grid team, and they do the needful. So any last remarks you'd like to make?
. We will say that, yes, one is Happy Diwali to everyone, and then company, there is no change in the basics and the main operational maintenance and the availabilities continue to be around 99.75%. And then the lot of CapEx is on the growing side, and we hope that it crosses at least INR 15,000 next year. This is what our aspiration, and then a lot of outlook is bright, and then yes, a lot of projects to come in the future years. So this is what with that, I would like to close. And once again, wishing you a Happy Diwali and Safe Diwali. And I wish that we end post-Diwali, we live Diwali the fast. Thank you.
Thank you, sir. Really appreciate. Thank you. So, Nikhil, you'll stop the recording?