Indian Energy Exchange Limited (IEX.NS) Earnings Call Transcript & Summary

Ladies and gentlemen, good day, and welcome to Indian Energy Exchange Q2 FY '26 Investors Conference Call, hosted by Axis Capital Limited. [Operator Instructions] Please note that this conference is being recorded. I now hand the conference over to Mr. [ Rohan Gheewala ] from Axis Capital Limited. Thank you, and over to you, sir.

Thank you, Bhoomika. Good afternoon, ladies and gentlemen. On behalf of Axis Capital, I am pleased to welcome you all for the IEX Q2 FY '26 Earnings Conference Call. We have with us the management team of IEX, which is represented by Mr. Rohit Bajaj, Joint Managing Director; Mr. S.N. Goel, Chairman and Managing Director; Mr. Vineet Harlalka, Chief Financial Officer; Mr. Amit Kumar, Head of Operations, New Product Initiatives and Exchange Technology; and Ms. Aparna Garg, Head, Investor Relations and Corporate Communications. We will begin with the opening remarks from Mr. Rohit Bajaj, followed by an interactive Q&A session. Thank you, and over to you, sir.

Good evening, friends. I welcome you all to the IEX earning call for Q2 FY '26. With me today on this call are Mr. Satyanarayan Goel, CMD, IEX; Mr. Vineet Harlalka, CFO and Company Secretary; Mr. Amit Kumar, Head of Market Operations and Exchange Technology; Ms. Aparna Garg, Head of Investor Relations and Corporate Communications; and Mr. Adityawali. At the macroeconomic level, India remains the fastest-growing major economy in the world, posting a strong GDP growth of 7.8% in the first quarter of fiscal 2026. This trajectory has been powered by a strong domestic demand, investment activity and a steady expansion of all major sectors, including industrial services, agriculture and construction. The Q1 number offers optimism amidst global political uncertainty as India remains a source of stability and opportunity in the international landscape. The Indian Metrological Department has reported 8% higher rainfall during this year's monsoon, the highest rainfall in 5 years. This good monsoon is likely to strengthen the agriculture sector, potentially lifting rural incomes and supporting broader consumption trends. In addition, fiscal policy measures to reduce the GST and simplify compliances are expected to further support economic activity going forward. Consequently, the RBI has revised India FY '26 GDP growth forecast to 6.8%, up from its earlier forecast of 6.5%. On the power sector front, weather continued to play a key role in this quarter as well. Electricity demand growth during the second quarter remained moderate with a power demand of 449 BUs, higher by 3.4% on year-on-year basis. In the first 6 months of FY '26, however, power demand has remained largely flat at 894 billion units compared with 886 billion units in H1 FY '25. On the fuel side, ample fuel has been available at a competitive prices. India's coal production reached 203 million tons in the second quarter of FY '26. At nearly 450 million tons, production in the first 6 months of FY '26 has also remained similar as compared with Q2 FY '25. The coal inventory as of today, as of October 2025 stood at nearly 20 days. For the quarter, imported coal price for 4,200 GAR coal declined to $42 per ton, a decline of nearly 19% compared with the same quarter last fiscal. For Q2 FY '26, prices of imported gas remained favorable at nearly $12 per MMBtu compared with $13.6 per MMBtu in Q2 FY '25. Overall, the fuel situation for the sector has remained comfortable. Let us now talk about few important regulatory updates and policy initiatives. Recently, key amendments were proposed to the Draft Electricity Act Amendment 2025, wherein state electricity regulatory commissions have been specifically empowered to determine tariff, [ suo moto ] to ensure timely cost recovery and avoiding delays. Cross subsidies are to be progressively eliminated within 5 years for sectors such as manufacturing, railways and metro operations. In a push for C&I and open access consumer, DISCOM may be exempted from their obligation of supplying to commercial and industrial user with 1 megawatt and above load. One of the DISCOM in the area shall be assigned as a supplier of last resort. The proposal should open up DISCOM resources for supply, avoid trying up standard power and enhance competitiveness of the C&I segment. Draft provides for specific penalty of INR 2.45 per unit for RCO nonfulfillment. Further, the draft also allows for contract for difference, CFD-based products for the development of the market. In an earlier order, CRC streamlined predefined time slots for trade under TAM contract across exchanges. Public consultation for these predefined slots have been conducted and the final order has been reserved by the CRC. The regulator also proposed modification in the price discovery mechanism of the day ahead contingency segment from the current continuous matching to uniform price step auction through draft amendments in the Power Market Regulation 2021. Stakeholder comments on these amendments have also been completed. This order will help improve liquidity in TAM and DSE segments. CRC had issued draft guidelines for virtual power purchase agreement, VPPAs earlier this summer. Consultation and due proceedings with regard to this have been completed. The draft recognizes power exchanges as authorized platforms for sale of electricity by RE generators under VPPA arrangements. Renewable generators entering VPPAs may sell the electricity component in the collective segment on the power exchanges. This would help increase volume on exchanges. In another development in reference to the carbon market, the CRC issued draft regulations for trading of carbon credit certificates for both obligated, as well as nonobligated entities through power exchanges. The stakeholder consultation have been completed and final regulations are likely to be issued in due course. Further greenhouse emission intensity targets have been notified for 271 obligated entities across sectors such as aluminum, chlor-alkali, cement and pulp and paper. The final notification regarding this has been published by Ministry of Environment, Forest and Climate Change after conducting stakeholder consultations. This development marks an important milestone for commencement of carbon credit certificates trading on power exchanges in the near future. In August, the CRC issued amendments to general network access, GNA regulation, introducing network access for solar and non-solar hours for all RE-based projects. The amendment aims to tackle the inefficiencies by introducing time block-based restrictive access to ISTS system, thus aligning capacity allocation with resource generation. This provisions would improve network utilization and optimize costs going ahead. During the second quarter, the MOP issued the final notification on renewable consumption obligation, RCOs. The notification defined RCO fulfillment method to also include RECs acquired under VPPAs, among others, and also provided for fungibility of obligation under wind, hydro and other components. We have sought CRC's approval to align our green contracts with the revised RCO components. The order in the matter is reserved. Once aligned, the contract will provide due clarity through the market participants for RE sale or procurement, which may increase RE participation going forward. CRC issued an order on implementing market coupling on 23rd July, in which regulator decided to initiate process of implementation of market coupling of the end market. This is to be done by January 2026. In the same order, it is mentioned that coupling of real-time market RTM will be considered at a later stage. The order also talks about running a shadow pilot for coupling of term ahead market and stakeholder consultation for RTM and [ scat ] coupling. Further in this order, CRC has directed staff to initiate consultation with GRID India and all exchanges on the operational and procedural aspects of their market coupling, including identifying and proposing amendments required in various regulations. IEX has filed an appeal against this order in Appellate Tribunal for Electricity, APTEL. The next date of hearing is scheduled on 28th of November. During Q2 -- now moving to the performance. During Q2 FY '26, IEX recorded electricity trading volume of 35.2 billion units, a Y-o-Y growth of 16.1%. Revenue for the company grew by 9.2% year-on-year, increasing from INR 167.8 crores in Q2 FY '25 to INR 183.3 crores in Q2 FY '26. Profit after tax increased by 13.9%, rising from INR 108.3 crores in Q2 FY '25 to INR 123.4 crores in Q2 FY '26. In Q2 FY '26, nearly 44 lakh renewable energy certificates were traded, lower than nearly 63 lakh certificate traded over the same quarter in FY '25. The RTM segment continues to demonstrate strong growth with 36% share in volume at IEX, surpassing the share of DAM segment for which for the first time ever. For Q2 FY '26, RTM volumes at nearly 15 billion units were higher by 39% on Y-o-Y basis, highlighting the segment's critical role in helping DISCOMs open access consumers efficiently manage short-term needs. RTM's ability to offer flexibility and immediate responsiveness underlines the opportunity to efficiently integrate renewables with the grid. Green market volume in Q2 FY '26 rose 17.7% on Y-o-Y basis to 3 billion units compared with Q2 FY '25. This segment advances integration of clean sources such as solar and wind into the grid and helps obligated entities, including DISCOMs, meet their renewable purchase obligations. With an increase in hydro, wind and sustained supply from coal-based generation, supply liquidity on power exchanges improved and led to substantial drop in prices. In Q2 FY '26, sell bids in day-ahead market of IEX increased by 39.3% on a Y-o-Y basis. As a result, average day-ahead market price was INR 3.93 per unit, down 12.5% on Y-o-Y basis, while price in the real-time market averaged at INR 3.51 per unit, a 16% drop. With regards our product pipeline, we continue to await approval from CRC on our petition to extend term head market contracts from 3 months to 11 months. As regards green RTM, CRC has reserved order on IEX Green RTM petition. Green RTM would be -- would provide an opportunity to reduce deviation exposure due to weather events by providing an avenue to trade green power 1 hour in advance. Further, to facilitate merchant storage capacity in the country, we have filed a petition with CRC for introduction of peak DAM and peak RTM segments. This segment would facilitate trading of power during high demand hours such as late evenings and early mornings. Stakeholder consultations on the same have been completed and the matter awaits further proceedings. Moving on to IGX volume. IGX traded gas volume of 16.1 million MMBtu in Q2 FY '26, a growth of nearly 37% over Q2 FY '25, led by volumes from domestic gas producers and heightened power demand during the months of August and September. For Q2 FY '26, IGX recorded a profit after tax of INR 9.6 crores, which was higher by 57% compared with INR 6.1 crores in Q2 FY '25. As gas prices continue to remain stable and policy initiatives continue to remain positive in the sector, volumes at IGX would continue to be robust. The arrival of early and prolonged monsoon this fiscal moderated power demand. Nonetheless, with CA's forecast of power demand at 366 gigawatt by 2032 and power consumption to reach nearly 2,500 BUs, demand growth will continue to drive exchange volume. In response to this expected demand growth, the MOP has been regularly monitoring the road map of thermal capacity addition of 80 gigawatt by 2032. Recently, the country's leading power producers also outlined investment plan to increase their thermal capacity by over 50 gigawatt by 2032. In addition, policy measures undertaken by government and regulators to ease supply side liquidity is expected to further rationalize power prices on the exchange. Power sector is undergoing rapid transformation with the emergence of innovative market mechanisms such as battery storage arbitrage, firm and dispatchable renewable energy, FDRE, virtual power purchase agreements, VPPAs and electricity derivatives. To support battery energy storage solutions, the Ministry of Power has finalized 2 tranche of the viability gap funding mechanism. Nearly 13,200 megawatt hour of BSS project have been awarded under the first tranche, while tenders for over half of the 30,000 megawatt project in the second tranche under VGF have already been issued. As per the CA, BSS based storage of 47 gigawatt is to be made available by FY '32. The reduction in battery storage cost has also accelerated the government push for BESS. As recently as October 2025, RUVNL discovered INR 1.78 lakhs per megawatt per month for a 1,000-megawatt 2-hour 2 cycle tender under the VGF mechanism. This is the lowest price ever discovered for BESS under the VGF mechanism. As mentioned on the earlier occasion, BESS would be able to store surplus solar power during daytime to deliver electricity during hours of peak demand by leveraging power exchanges. This would increase liquidity and potentially increase volume on exchanges during daytime as well as during evening hours. These developments are poised to become key enablers in expanding and deepening the country's power market to support the successful energy transition. Our diversification initiatives are also gradually gathering momentum. For Q2 FY '26, the International Carbon Exchange, ICX, issued 38 lakh IRACs, adding to a cumulative of 82 lakh IRAC issuance in the first half of FY '26, surpassing 59 lakh IRACs issued in FY '25. Revenue for ICX in Q2 FY '26 stood at INR 193 lakhs. The IRAC is globally recognized digital certificate that serves as a transferable proof of generation of 1 megawatt of energy from renewable sources. With regards the coal Exchange, Ministry of Coal has been exploring options for market development in the coal sector and has created enabling provision under the Mines and Mineral Development and Regulation Act to set up a mineral exchanges. Recently, draft rules have been issued for appointing coal controller as a regulator for the coal exchange. IEX has been working with the stakeholders to explore setting up the first coal exchange in India. As India advances towards its net zero goals, energy exchanges are expected to play increasingly significant role in shaping the nation's energy ecosystem. Thank you. And now we can have question and answers.

[Operator Instructions] The first question comes from the line of Ketan Jain from Avendus Spark.

Sir, my first question is on the status of implementation of market coupling. What is the progress on the ground in terms of operational details where you guys asked to make a software or what has been the progress? And is it on time to get implemented by Jan 2026?

With regard to status of market coupling, we are not aware about any developments which have taken place so far because what we understand is that for working out details for implementing market coupling, there will be discussions which will be required with the exchanges, with the Grid India and procedures will be, I mean, worked out and regulations amendment will be done. Maybe those talks will be issued for public consultation. So, to best of our knowledge, so far, nothing like that has happened.

So, we were not contacted by the regulator in India for developing any software. It's still no contact from them.

See, we are not aware of any such -- I mean, program about how they want to implement it and when they want to implement it.

Understood. Sir, also if you could provide us with how IEX will play a role entering coal exchange and in the carbon exchange, if there is any development in that?

See, as far as carbon trading is concerned, as per the regulations, this will be -- CRC is the regulator for the carbon credits. And the trading of carbon credits will happen on all the 3 exchanges, which are regulated by CRC. So that means the existing exchanges, IEX, [ XIL ] and SPX will be able to do the trading of carbon credits. Coal exchange, yes, Ministry of Coal is in the process of issuing the rules for this, and they will empower -- they will make Coal Controller of India as the regulator for this thing. Then they will have to draft regulations and do public consultations and finalize the regulations. Thereafter, interested parties can apply for the license of coal exchange. So, as we told in the past also, we are definitely interested in this area. And we are doing necessary regulatory work. As and when regulations are notified, we will apply for this also.

Understood. Sir, my last question is on the volume growth, sir. We've been doing 16% electricity volumes growth until now. What is your guidance on FY '26? How will we end and next year, what's your volume guidance for electricity volumes?

I mean, so far in the first half of the year, the demand in the country has been practically flat. In spite of that, we have done a volume growth of almost about 16%. So, for the remaining period also, we expect reasonably good growth. I mean we should be able to maintain a growth of growth between 15% to 20%.

And for FY '27, sir, any view on that?

It will be difficult to say at this stage. It all depends in the sector, how will be the demand work out, weather conditions, what those will be. So -- but I mean, we are saying that we have been achieving a growth of, on an average, almost about 20% growth in the last 5 years. So, we should be able to achieve that. India is a growing economy, developing economy. So, if we have to grow at a rate of 6% to 7% in the GDP, definitely, the electricity demand is also going to grow. And as far as electricity is concerned, the whole electrification of economy is happening. A lot of things are happening in the electricity sector, EVs and data centers. So now the batteries are also becoming commercially viable. So, a lot of storage is happening. If that happens, then the daytime surplus power can be stored and evening hours, the power can be used from the batteries. And Exchange will definitely play a very critical in all these activities. So, I'm sure growth potential what we have achieved in the past, we should be able to sustain in the future also.

The next question comes from the line of Sumit Kishore from Axis Capital.

This is Sumit here from Axis Capital. My first question is the power -- so last fiscal power demand growth was 4.2%, 4.3%. This year, first half has been flattish. So how much of this is really attributable to weather? And in your opinion, is there a slowdown versus what was expected for the C&I power segment also? What is your impression?

It was mainly because of the weather because right from April till October, we are seeing very good rains this time in the country, and there is a surplus rainfall in the country. As a result of that, the agricultural demand has crashed. And also the summer demand -- domestic demand also was much lower than what it was expected. So, in C&I -- I mean Grid India's estimate was a peak demand of 277 gigawatt against that only about 250 gigawatt was the peak demand. So I think looking at all these things, it was mainly because of the weather conditions. C&I side, we don't see any reduction in demand, there is an increase in demand. But I don't have the data about what is the actual increase in industrial consumption.

Right. The second question is that basically, over this period where power demand growth has been muted over the last 1 year, installed capacity has grown by almost 9%, 10%. And during solar hour, say, in the DAM segment also the sell grids are far, far exceeding the purchase bid volume and what is finally cleared and the exchange prices are lower. So I mean, to what extent can this continue? Because would there be curtailment of or what kind of curtailment of power is happening, what can exchanges do to reduce this? You also spoke about capacities coming up for virtual power purchase agreements. There would be even more sell bids on the exchanges. Why aren't customers taking benefit of the lower tariffs during the solar hours and why isn't more power getting cleared on the exchanges?

I agree with your view. I mean capacity addition is happening and daytime prices are coming down. But this stability in the system will need some time. Today, need of the hour is capacity addition that is happening. Solar power is cheaper. It is cheaper than even variable cost of the coal-based power plants. So we need to do solar capacity addition. And when the exchange clearing prices are lower during the daytime, we are seeing lot of demand shifting during the daytime. So if you see the demand curve of the country as a whole, earlier, the peak hour used to be in the evening hours, now the peak hours during the daytime. So the demand shifting is also happening now, not that demand shifting is not happening. People are making use of this cheaper data and cheaper power. And to make use of this now in the last 1 year, lot many battery tenders were also awarded so that batteries can use this cheaper power during the daytime and sell in the evening hours. So all these kind of things are happening now. I mean these things will need some time to balance out and make use of the cheaper data and cheaper power. In the short run, yes. In the short run, yes, lower power during the daytime may continue. And that's good for the market. That's good for the market and exchange. Our volumes are more during the daytime than in the evening hours.

And sir, you mentioned that for the first time, RTM volumes have surpassed DAM in the mix in first half of the fiscal. So is this going to be a sustainable trend? And in case for RTM, the implementation of MC will happen later depending on the experience from DAM. That's what the market company said. So what percentage can in the corrective market transactions can RTM share can go up even from here?

See, RTM volumes this year are higher than the DAM market, mainly because the availability of power on the sell side was much higher. The liquidity was much higher, the price clearing prices were lower. And RTM prices are practically 10% to 12% lower than the day-ahead market price. So many of the distribution companies are taking advantage of this lower RTM prices and purchasing power during -- in the RTM market. So as long as the RTM prices are lower, yes, definitely, RTM volumes will be higher. And with regard to your question on coupling of RTM, if you look at the order, commission has not taken any view regarding implementation of RTM. So they have said that looking at the time constraints and based on the experience, it will be considered. So they will take a view separately on that if required.

Got it. Just one last clarification. On this IGX equity stake that you have, 47.5%, what is the time line over which this has to be reduced to 26%? And what are your thoughts on how -- what are your plans there?

Can you repeat the question, please?

I believe IEX stake in IGX equity stake, which is around 47.5% needs to come down over a certain time frame, I believe, to below 26%. So what -- can you please refresh our understanding on how we are going to go about it?

Yes. I mean, as per the PNGRB regulations, we have to bring down the equity to 25% by December 2025. That is the provision. We have applied to PNGRB for extension of this time because of the guidance in the past, I mean, there were huge challenges in the gas market and gas exchange. The business ramp-up has not happened at the rate at which we were expecting it. So I mean, we have applied PNGRB regulator was quite supportive, and they have assured that they will give time extension. And we are also working out now options, we are considering different options for divestment and complying with the regulatory provisions.

Okay. So it's only 2 months away, so they will give extension for 1 year?

Yes, yes. I mean we have requested for 1.5 years. Let's see.

The next question comes from the line of Anand B from [ Seema ] Wealth Private Limited.

Can you hear me?

Yes, good afternoon.

So just a couple of questions. First is the transition of the segment from DAM to RTMs. So, in this quarter, we've seen -- and especially in this half, you've seen compared to the previous half of -- the first half of the previous year, that is DAM has -- the percentage of volumes of DAM has reduced from 41% to 35% in this half of this current financial year. RTMs went up to from 30% to 36% as well. But DAM market has remained the same. Can you just give a light on why DAM markets volumes share has remained the same and where do you see that going forward?

First thing, the main product for the exchanges is are the collective transactions, which is the DAM and RTM. So, significantly higher volumes happen only in these segments. And as you can see this year also, the share of collective transactions, which is DAM, RTM and green GDAM, the total share is more than 85% for these 3 products. And it will continue to remain like this. Term market transactions, these are bilateral transactions. And these transactions happen mainly when there is a shortage of power and some of the distribution companies want to tie up power to ensure availability of power under the definite conditions. Fortunately, this year, we had good rains. So that is why there is no growth in that time transactions.

Okay. So even in the RTM segment also, like would you say going forward now considering the market coupling you said that, okay, they have just -- the CRC considered coupling for RTM. Let's say if RTM coupling is not going to happen, would you say that the RTM channel will only increase more and more where the DAM segment would decrease in growth?

I mean looking at the market energy transition, which is taking place, a lot of renewable capacity is getting added, and there is a large variation in the renewable power generation. So, distribution companies also have to, I mean, make good these variations on the real-time basis. And even generators also renewable generators, they also many times sell the surplus power because of the good weather conditions if there is excess generation. So I mean, real-time market volumes under these conditions will continue to increase. Government of India also has mandated that all thermal generators will have to sell their under positioned power in the DAM and RTM market. And these generators are able to assess the surplus URS power more accurately in the RTM market. So, a lot of bids are coming in the RTM market for sale of power from these generators also. I mean considering all that, I personally believe that, yes, RTM volume will continue to increase in the future.

Okay, okay. That was one part. Second, I want to touch upon the virtual PPAs front. I just want to know the current scenario of how much of that is going forward? And what would be the share of the exchanges or what potential the exchanges can have a share of the virtual PPAs?

See, virtual PPAs are normally done by the industries or multinationals when they want to comply with the RPO obligations or their sustainability targets. And under that, what they do is they get into a contract with the generator and they commit them a fixed price. The generator sells power in the market. And difference between this market clearing price and his contracted price is to the account of the multinational who has contracted this. In turn, the green attribute goes to the multinational. Now under this kind of a contract, what we understand is that, yes, a couple of VPPAs have been signed. And I think almost about 2,000 megawatt of PPAs are under operation or under execution. So -- and that power is coming to the market for sales.

2,000 megawatts of virtual PPAs?

Yes. And in any case, most of these VPPAs are for the solar power. And during solar time, in any case, we have lot of sale available. We have sale available to the extent of more than 50,000 megawatt. So if there are more virtual PPAs, there will be more sale during this hour.

Okay. And you're saying in the 2,000 megawatts virtual PPAs, how much the entire share is coming to the Exchange or only a certain portion of it?

Entire is coming to the market.

Okay. Okay. Any estimates of how much can come to IEX specifically or [indiscernible]?

Can you repeat, please?

Any idea how much of that can come to IEX specifically?

No. In fact, entire is coming to the IEX because they are mostly selling in the day ahead market.

The next question comes from the line of [ Vikas Kasturi ] from Focus Capital.

I had a couple of questions. So, the first one is, when I see the gas exchange prices, I think these are U.S. numbers, we are somewhere close to about $4 per MMBtu, whereas our [ GigSea ] prices are somewhere closer to about $11. So why is there so much of a difference between the prices? That is one. And the second question was on the carbon exchange. Are there any business development initiatives that we are doing to scale it up, sir? Could you just speak about that?

Yes. In case of the gas market, U.S. prices are based on the Henry Hub. And Henry Hub is a index, which is basically determining the gas price in U.S.A. It is not international gas trading exchange. It is basically for the transactions happening in U.S.A. And since U.S.A. has surplus gas available, their trading price is around $4, $3.5 to $4. If that gas has to come to India, then that gas will have to be liquefied, transported and regasified. The rate for that gas also will work out to be something around $10 to $12, which is the rate of the GigSea. But mostly in India, the gas is coming from the Middle East side and because that is nearer to India, transportation cost is lower. And the rate of that gas today is almost about $10 to about $11, and it was about $12, $13 a couple of months back. Is this clear?

Mr. Vikas, you are not audible. Mr. Vikas, please unmute your line.

Let me answer his second question. And second question was regarding market development activities about carbon trading. Regarding carbon trading, CRC has issued draft regulations, public hearing was held, order is reserved on the carbon trading regulations. And Ministry of Environment has recently issued guidelines for greenhouse gas emissions for 4 industries. And after that, these industries will have to comply with this. There will be a audit for that. And thereafter, the industries who are overachieving the targets, they will be issued carbon credits and industries which are not achieving it, they will have to buy the carbon credits. So, I think all this process will need another 1.5, maybe 1 to 1.5 year. And thereafter, the carbon trading will happen. And we are regularly in touch with the different authorities. And we are also in touch with the different industries for the trading of carbon credits. So, we are doing all necessary preparative work for this. Thank you.

The next question comes from the line of Yashodhan Nerurkar from Ionic Wealth.

So I just had 2 questions. The first is, I mean, I just wanted a clarification. In the event of market coupling, say, the entire volumes are split in the ratio of, say, 70% and the balance to Exchange is like 15-15. So, will IEX be responsible for clearing the 70% of the volumes as in -- even if the price is discovered by, say, third entity like the market company operator, would IEX be responsible for clearing the 70%? So, would they be getting paid for all the buys and sells that they have got in the exchange? So that's first question. And second question is, you always, in every call, talk about the different developments and draft amendments that the regulator has been looking to sort of implement. I mean, what is the progress of all these developments? And how soon can we expect some of the key developments to actually materialize? And how -- what sort of benefits would IEX actually accrue from these developments is the second question.

Your first question was clearing of -- yes, clearing of the volumes. See, whatever buy bids and sell bids will come on the IEX platform and whatever is cleared after the market coupling, we will settle those bids. I suppose I got sell bid of 500 million units, buy bids of 200 million units. Out of that, after the clearing -- I mean, after the price discovery happened at the centralized location, out of that, my 200 million units of sell bids are cleared and 150 million units of buy bids are cleared. So that means I will get from this 200 million units buyers money, I will get from them. I'll pay it to I'll get from 150 million unit buyers. And this money, I'll pay to the sellers who have sold 200 million units. In addition, I will also get money from the other exchanges whose buyers are cleared against the sell from my sellers. So, there will be interexchange settlement also. So whatever volumes are cleared on IEX platform, we will do a settlement for that.

Okay. Perfect. Perfect. That answers my question. And secondly, about the developments and how material would they be? And how soon can we expect the progress to happen in those?

See, if you look at the government and regulators, everybody is basically interested in development of the market. And there are many such initiatives which are being taken by the government. In the past also, if you see delayed payment surcharge, which came streamlining the payments for the generating companies, that brought in the financial discipline in the sector. And as a result of that, the capacity addition is happening in the country now. Then there was an amendment in that, that all generators will have to sell the URS power on the exchange platform. As a result of that, we are getting lot of sell bids on the exchange platform. I mean on a few days, what we see is in the day ahead market, we can sell volumes of almost about 150 million units to 200 million units. Similar in the RTM market, also 200 million to 250 million units kind of sell bids are coming. So -- and now there are -- government of India has proposed amendment in the Electricity Act. And as per this, again, this is basically for bringing viability in the power sector, improving performance of the distribution companies. So if that happens, definitely, the demand for the power is going to increase, and this will definitely help exchanges to grow business. Same thing from the regulator also. I mean, VPPA provisions were approved. And in the -- I think 2 years back when the G&A was implemented, that has also streamlined all this network connectivity and charges for short-term transactions. So I think all this streamlining is happening. This is keeping in view how to develop the market in the country. Now we are talking about the capacity market that if a distribution company do not have adequate capacity, which is required for meeting the demand, how can they meet -- how can they buy that capacity, how to develop the capacity market. So a lot of -- I mean, these things are happening. So these things don't happen every day, but it's a continuous process and the government and regulator both are working in the direction of developing the market in the country.

The next question comes from the line of [ Faisal Zubair Hawa ] from H.G. Hawa & Company.

Sir, as far as the legal cases are concerned, what kind of forum are now we've been represented on this coupling matter? And when is the next hearing?

I'm not clear about your first question. The next hearing is on 28th of November.

And this is with CERC?

Next hearing is in APTEL, Appellate Tribunal for Electricity.

Okay. And sir, what is the kind of -- I mean, technology changes that we can bring in so that we don't lose much volume even if coupling does happen?

See we are working in the company, and we are working in the company, what kind of changes in the system we have to do, what kind of technology support we need to provide to our customers to create customer loyalty to -- so all those things are being worked out. I don't think on this call, it will be possible to elaborate on those things. So, we are definitely going to take technology intervention to ensure our customers share.

The next question comes from the line of [ Archit Agarwal ] from Steptrade Capital.

Yes. Sir, my question is what steps is IEX taking to diversify the revenue stream after like market coupling will happen, so the revenue will decrease.

No, why are you saying the after market coupling the revenue will decrease? We are making all efforts to ensure that we retain our market share and volumes are increasing every year. So, I'm sure...

Sir, if you look at the result, right, so volume is not significantly increased, right? So after this market decoupling, actually, it seems monopoly is not there, right? So what I'm asking...

Gentlemen, please hold the line, coupling has not happened, okay? So, coupling only order has been issued, coupling has not happened. So, there is no change in that. And volumes have increased by 16%. I think you are not keeping track of the results. Better do that and then ask question. Next question, please.

The next question comes from the line of [ Aditya Raval ] from Exencial Research Partners.

My question is regarding in the quarter 2 result, electricity traded volume grew by 16.1 percentage year-on-year, but the revenue from operations grew at a slower rate of 10.42 percentage year-on-year, indicating the divergence. Could you please explain the reason behind this gap? Is it mainly due to the lower realization or unfavorable product mix? And what steps is the company taking to address this issue going forward?

See, electricity volume grew by 16%, and then there is a certificate also. So my colleague, Mr. Vineet Harlalka, who is CFO of the company, he will explain you in detail about this.

So, when we look at the total volume, the electricity volume increased by 16% during the quarter on year-on-year basis, but the certificate -- the REC certificates volume was a bit lower. And secondly, if you can recall, last year in the month of August, we reduced our transaction fee on the certificate from INR 40 to INR 20. So, during the previous year quarter, the full INR 40 fees was being charged. And this quarter, it was INR 20. So, it's a mix of both, slightly lower certificate volume and the lower the transaction fee, which has resulted in the overall operating revenue lower than the increase in the electricity volume. I hope this clarifies?

Yes, sir.

On the electricity side, the increase in the revenue is 16%. On the certificate side, the increase in revenue is minus 53%. So, as a result of that, total revenue increase was only 10%.

The next question comes from the line of from [ Neeth ] from [ Alembic ].

Hello? Am I audible?

Yes, yes, you are audible.

My all the question has been answered.

The next question comes from the line of Chirag from Keynote Capitals.

My first question is, what is the settlement obligation payable as of H1 FY '26?

H1, just a sec, the settlement payable is keep on changing depending upon the volume and price. If you look at the balance, the closing balance as on 30th of September, the total payable amount was near about INR 500 crores.

Okay. My second question is related to product-wise market share. Is it possible for you to share that?

Yes. Mr. Rohit will respond to this question, which can be of the company.

So when I -- if I talk about Q2, so our electricity market share is 84% and certificate market share is a little above 50%. So overall is about 75%. But what we have seen in the past couple of years, product-wise, IDM and RTM is 100%, 99% precisely. And in the other TAM segments, it is 35%. Overall, as I said, electricity is 84%.

Got it. Sir, just one thing I wanted to understand, if market coupling goes forward, apart from the tech, are we willing to go into price war also if that takes place?

Let the coupling happen. We will look at the market conditions and take a call based on that. I don't think we need to decide that thing today itself.

And as you to...

I can tell you one thing, in the termite market, all 3 exchanges are active. And there also, the price war is not there. So, I don't see any such situation that after coupling, there will be a price war in the DAM market. Why should we talk about war? Let us talk about peace.

Fair enough. And as to you, sir, you have been focusing a lot on retention of customers, as you rightly mentioned earlier. So apart from technology, what is the USP what IEX has?

It is hard work of last 17 years because of which we have been able to build this market and the kind of connectivity we have with the understanding we have with our customers, the kind of understanding which we have developed about the requirements of our customers and the value which we provide to them, the market development activities which we have done, I think all these things are our USP, and we'll continue to do all these things. And I'm sure this will definitely give us good market share in future.

Perfect. Sir, just last question from my side. As there is a new thing that is happening in the market, the derivative -- electricity derivative market, right, just wanted to understand what will be the revenue model for IEX from here?

We have a agreement with MCX that they will share a part of their revenue with us because they are doing the settlement based on our clearing price. But if you look at the volumes which are happening in the derivative market for the month of August, September, October, these are negligible. So, I don't think at the moment there is any point in talking about the revenue model out of that.

Fair enough, sir. And sir, if you have this clarity, are nodal-based derivative electricity derivative taking place? Or is there any clarification to that?

I couldn't get your question.

So, in U.S. electricity derivative market stakes has been very flourished because of the nodal-based electricity derivative. So, if there is a node in Los Angeles per se, derivatives are traded based on that node. So just wanted to understand, is such kind of development in...

U.S. electricity market is different, and that is why derivatives are also based on the nodes. In India, we have -- you can sort of uniform transmission price within a state. And the derivatives are also based on that. These are basically zonal -- U.S. India markets are quite different. So, in India, the derivatives are based on the market clearing price of the [indiscernible] market. And that is one price, you can say.

The next question comes from the line of [ Krishna Sateja ] from Smart Sync Services.

Sir, like, all major questions have been answered, but like another small question...

I'm so sorry to interrupt you, Mr. Krishna, but your voice is muffled. Can you please speak through handset?

Okay, sure. Am I audible now? Am I clear now?

Yes, yes, better now.

Yes.

Okay, sir. So, like major questions have been answered, but a small query, like once the carbon trading certificate gets yes node from the all regulations and all that, like you expect from 1.5 years from now. So how significant volume we can expect from that? How significant they can affect the financials?

It's difficult to say that because it depends on to what an extent industries are able to comply with the GHG gas emissions norms. If everybody is complying, then there's no trading. If you few are complying, over complying and if few are under not complying, then yes, the trading will happen. So, it all depends on that. But looking at that trend in the past for the ESCerts and RACs, we believe that the market could be as good -- as big as RAC market.

We will take that as the last question for today's call. I would now like to hand the conference over to the management for closing comments.

Thank you, friends. I would like to thank each one of you for being part of today's call. Throughout the second quarter, we witnessed efforts from the government and regulators to establish a favorable policy and regulatory climate to develop the energy sector. We at IEX remain committed to contribute to the development of a sustainable and energy-efficient future for India. Thank you so much. Have a great evening. Thank you.

On behalf of Axis Capital Limited, that concludes this conference. Thank you for joining us, and you may now disconnect your lines. Thank you.