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

Ladies and gentlemen, good day, and welcome to Indian Energy Exchange Q3 FY '26 Results Call hosted by Axis Capital Limited. [Operator Instructions] Please note that this conference is being recorded. I now hand the conference over to Rohan Gheewala from Axis Capital Limited. Thank you. And over to you, sir.

Thank you. Good evening, ladies and gentlemen. On behalf of Axis Capital, I'm pleased to welcome you all to the IEX Q3 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 Market 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. A very happy New Year to all of you, and a warm welcome to the IEX earnings call for Q3 FY '26. With me today on this call are Shri. 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. Aditya Wali. India continues to be the fastest-growing major economy in the world, posting a strong GDP growth of 8.2% in the second quarter of FY 2026. In the backdrop of continued global uncertainty, the International Monetary Fund, IMF, has recently revised India's GDP growth estimate for FY '26 to 7.3% from its earlier forecast of 6.6%. This growth path has been driven by a robust domestic demand, heightened investment activity and steady performance across industry, services, agriculture and construction. Policy reforms such as rationalization of GST rates, new labor laws and the recently concluded India EU free trade agreement have also finally firmly positioned India on a long-term trajectory towards becoming the world's third largest economy by 2030. On the power sector front, electricity demand picked up during December, with an increase of 6.6% on a year-on-year basis. However, prolonged monsoon in 2025 led to a lower electricity requirement across the country. Consequently, electricity demand during Q3 FY '26 remained flat at 392 billion units. For 9 months FY '26, demand also remained subdued at 1,286 billion units, similar to the corresponding period of FY '25. Going into January, demand has increased to 6% compared with the year ago. During the first 9 months of FY '26, an additional 44.7 gigawatts of installed capacity across thermal and renewable sources was added, taking total installed capacity to over 500 gigawatts. Renewable energy accounted for more than 50% of the total installed capacity. Notably, India achieved the milestone of sourcing 50% of its cumulative installed electric power capacity from renewable sources, 5 years ahead of the 2030 target. On the fuel side, ample fuel has been available at competitive prices. India's coal production reached 272 million tonnes in Q3 FY '26, similar to 273 million tonnes produced in Q3 FY '25. At nearly 722 million tonnes, production in the first 9 months of FY '26 has also remained similar compared with the same period in FY '25. Coal inventory as of January 17 stood at 25 days, but the quarter imported coal price for 4,200 GAR coal declined to nearly $47 per tonne, a decline of 10% compared with the same quarter last fiscal. Overall, the fuel situation for the sector has remained comfortable. Let us now talk about a few important regulatory updates and policy initiatives. The government has released Draft National Electricity Policy 2026, aimed at aligning the power sector with Viksit Bharat goals over the next 2 decades. Draft prioritizes cost-reflective tariff reforms, a phased reduction in cross subsidies and time-of-day peak hour pricing to improve efficiency and strengthen Discom finances. It sets ambitious consumption targets per capita electricity used rising from 2,000 units by 2030 and over 4,000 units by 2047 and calls for stronger generation, transmission and distribution planning. Key strategies span resource adequacy planning, cost-reflective tariffs with AT&C loss reduction to single digit, RE expansion with storage, thermal hydro nuclear enhancements, et cetera. For deepening power markets, suitable policy and regulatory framework shall be established for generation capacity addition through market mechanisms such as bilateral contract settlements. Standardized contracts for collective transaction will be executed on power exchanges. Electricity from long-term PPAs may be encouraged to be routed through power exchanges or any other platform recognized by the Central Commission. Recently, key amendments were proposed to the Draft Electricity Amendment Bill 2025, wherein state electricity regulatory commissions have been specifically empowered to determine tariffs, Suo-Moto to ensure timely cost recovery and avoid 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 consumers, Discom may be exempted from their obligation of supplying to C&I users with more than 1 megawatt load. Also, Discoms would provide non-discriminatory open access to multiple distribution licenses on payment of wheeling charges. These proposals should open up Discom resources for supply, avoid tying up standard power and enhance competitiveness of the C&I segment. Draft provides renewable purchase obligation, RPO, not be less than central RPO trajectory and proposes a specific penalty of INR 0.35 to INR 0.45 per unit for RPO non-fulfillment. CRC issued final guidelines for virtual power purchase agreements, VPPAs in December. These guidelines recognize power exchanges as authorized platforms for sale of electricity by RE generators under VPP arrangements. Renewable generators entering VPPAs would be selling the electricity component in the collective segment on power exchanges. This should help increase volume on exchanges. In reference to the carbon market, final notification regarding greenhouse emission intensity, GEI targets have been published by Ministry of Environment, Forest and Climate Change for obligated entities across 7 sectors such as aluminum, chlor-alkali, cement, pulp and paper, petrochemicals, petroleum and textiles. Final notifications are awaited for the iron and steel sector. The baseline emission of these 7 sectors with base year FY '24 is 480 million tonnes equivalent, with targeted reduction to 465.32 million tonnes equivalent by FY '27. These sectors cover around 16% of India's GHG emissions. This development has laid the foundation of trading of carbon credit certificates on power exchanges. The MoP had earlier 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 approval to align our green contracts with the revised RCO components. The order in the matter is reserved. Once aligned, these contracts will provide due clarity to market participants for RE sale procurement, which has the potential to increase RE participation going forward. CRC issued an order on implementing market coupling on 23rd July, in which the regulator decided to initiate the process of implementation of market coupling of Day Ahead Market. According to the order, this was to be done by January 2026. IEX has filed an appeal in Appellate Tribunal for Electricity, APTEL, and today, the hearings is concluded. We expect the final order to be released shortly. Moving on to performance. In Q3 FY '26, IEX recorded electricity trading volume of 34.1 billion units, a year-on-year growth of nearly 12%. For the first 9 months of FY '26, electricity volume touched nearly 102 billion units, higher by 14.3% on a year-on-year basis. Revenue for the company grew by 14% year-on-year, increasing from INR 160.5 crores in Q3 to INR 183.1 crores in Q3 FY '26. Profit after tax increased by 11%, rising from INR 107.3 crores in Q3 FY '25 to INR 119.1 crores in Q3 FY '26. For the first 9 months of FY '26, profit after tax was higher by 16.4% from INR 312.1 crores in 9 months FY '25 to INR 363.1 crores in 9 months FY '26. The Board of Directors have announced an interim dividend of INR 1.50 equivalent to 150% of face value of the equity share. In Q3 FY '26, nearly 18.6 lakh renewable energy certificates were traded, lower than nearly 27 lakh certificates traded over the same quarter in FY '25. During the 9 months till December, over 115 lakh RECs were traded, higher by 4% over the same period last fiscal. The RTM segment continues its strong growth, maintaining 40% share in the electricity volume at IEX. For Q3 FY '26, RTM volume at nearly 13 billion units were higher by 36% on a year-on-year basis. In the first 9 months, RTM volumes have grown 38.6% on a year-on-year basis to reach 40.5 billion units. This segment has been playing a critical role by offering flexibility in power procurement, providing immediate responsiveness to efficiently integrate renewable with the grid. Green market volume in Q3 FY '26 rose 7.2% on a year-on-year basis to nearly 3 billion units compared with Q3 FY '25. In the first 9 months of FY '26, the segment traded over 8 billion units to be higher by 23% over the same period in FY '25. The green market helps obligated entities, including distribution companies, meet their renewable purchase obligations. With capacity addition, increase in solar, hydro, wind and sustained supply from coal-based generation, supply liquidity on power exchanges improved and led to substantial drop in prices. In Q3 FY '26, sell bids in Day-Ahead Market of IEX increased 44% on a year-on-year basis. As a result, the average Day-Ahead Market price was INR 3.22 per unit, down 13.2% Y-o-Y, while price in the real-time market averaged INR 3.56 per unit, a 16% Y-o-Y drop. Even on a 9-month basis, sell liquidity in the Day-Ahead Market in FY '26 has been higher by 43% compared with FY '25. The average DAM price, during this period at INR 3.85 per unit has been lower by 14% compared with the same period in FY '25. Similarly, the average price at INR 3.56 per unit in RTM segment over 9 months since April has been lower by 16% on a year-on-year basis. These prices presented an opportunity for Discoms and commercial and industrial consumers to meet their demand at competitive prices and to replace their costlier power brand procuring through exchanges. On the product front, we continue to await approval from the CRC on our petition to extend the Term Ahead Market contracts to 11 months. With regards to our green RTM petition, CRC has reserved its order. As mentioned previously, to facilitate merchant storage capacity in the country, we have filed a petition with the CRC for introduction of peak Day-Ahead Market and peak Real-Time Market segments. This segment would facilitate trading of power during high-demand hours such as late evening and early mornings. Stakeholder consultation of the same has been completed and the matter awaits further proceedings. Moving on to IGX performance. December 2025 marked 5 years of operations for the Indian Gas Exchange, IGX. IGX currently represent close to 3% of India's overall gas consumption and 20% of the spot market. Over the years, IGX has steadily expanded its market footprint, increasing the delivery points available from 4 in FY '22 to 23 today, covering both domestic as well as RLNG. The product portfolio at IGX has also grown over the last 5 years, up from 6 contract types available initially to 10 contract types currently available. For Q3 FY '26, IGX traded gas volumes of 17.5 million MMBtu, an increase of 8% over Q3 FY '25, led by volumes from domestic gas producers, heightened power demand and demand from city gas distribution. For the 9 months period April to December in FY '26, IGX traded gas volume of 58.2 million MMBtu, a growth of 46% on a year-on-year basis. IGX recorded a profit after tax of INR 8.8 crores in Q3 FY '26, which was higher by 6% compared with INR 8.3 crores in Q3 FY '25. For the 9 months till December, IGX recorded a profit after tax of INR 32.5 crores, higher by 47.9% compared with INR 22 crores in the same period in FY '25. As gas price continue their downtrend, the policy initiative remained positive in the sector. Volumes at IGX would continue to be robust. Even as weather-related events soften power demands this year, CA projection of consumption nearing 2,500 BU by 2032 would continue to drive exchange volume in the coming years. To meet this surging demand, nearly 4 to 5 gigawatts of capacity is being added in the country on a monthly basis. The power sector also continues to evolve with the emergence of market mechanisms such as battery storage arbitrage, firm and dispatchable renewable energy, FDRE; virtual power purchase agreement, VPPAs; electricity derivatives, battery energy storage solutions, BESS; already 13,200 MWH of BESS projects have been awarded under the first tranche and tenders for nearly 1/3 of 30,000 megawatt projects in the second tranche under VGF have also been awarded. The reduction in the battery storage cost has further accelerated BESS adoption. As recently as November 2025, AP Transco discovered INR 1.48 lakh per megawatt per month for 2,000 megawatt 2-hour, 2 cycle tender under the VGF mechanism. This is the lowest price discovered for BESS under the VGF mechanism, and a big positive start for BESS in the country earlier this month. We witnessed the first merchant BESS trades at IEX from Juniper Green Energy Limited, the largest operating BESS asset till date in the country. These developments are set to play a pivotal role in deepening BESS power markets and facilitate a successful energy transition. Our diversification initiatives are also gradually gathering momentum. For Q3 FY '26, the International Carbon Exchange, ICX, issued 51 lakh I-RECs, higher by 219% compared with Q3 FY '25. For the first 9 months of FY '26, cumulative 133 lakh I-RECs were issued, surpassing 59 lakh I-RECs issued in FY '25. Revenue for ICX in Q3 FY '26 stood at INR 1.8 crores and INR 5.5 crores for the first 9-month period, respectively. With regards to the Coal Exchange, Ministry of Coal has appointed Coal Controller Organization as the regulator for the coal exchange. MOC has also come out with the revised draft rule for exchange and invited public comments, which were open until January 19. IEX has been working with stakeholders to explore setting a first coal exchange in India. As India advances towards its net zero goal, energy exchanges are expected to play an 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 is from the line of Pritam Jain (sic) [ Ketan Jain ] from Avendus.

This is Ketan from Avendus. Sir, I had a question on the hearing. When would be the expected announcement date of the verdict? I understand we have to submit our written submissions by 4th Feb. When can we expect a verdict date?

Can't say, but it should happen within a month's time.

Okay. Within a month. Okay. So, just a follow-up on this. So in a scenario where things don't go in favor of us, what is the next possible situation or next possible thing we are planning to do?

First of all, why are you saying that if things don't go in our favor? Things will definitely go in our favor. In any case, even if they have to go with the coupling, lot of things have to be done yet. I mean, if you are following up the hearings, they have to issue the draft regulations, invite comments on that and give statement of reason for that, why they want to do coupling. Everybody will have opportunity to comment on that. Then they will have to issue final regulations, procedure to be finalized. I think a lot of work is to be done. So, we will have an opportunity to express our views at each and every stage. And let's see.

I just want to understand how long it can get drawn down for. I will get back in the queue, sir.

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

My first question is in relation to the volume growth that we saw for electricity volumes on IEX in the month of December where power demand growth improved, your volume growth was about slightly under 3%. And so I understand the merchant price sort of firm up as the demand increases on the grid. But even in Jan, the demand is not as good as December in terms of growth. But so how is the -- is the slowdown likely to remain? Let us say, if India's power demand grow 5%, 6% instead of 0% to 1% like it has been last few months, how would your power demand grow? How would your volumes be impacted in the electricity segment?

See, in calendar year '25, the demand in the country was subdued mainly because of the weather reason. We had more than above monsoon. So because of the good monsoon, the agricultural load that crashed and also because of the good weather, the air conditioning load was also low. So overall, the demand did not increase because of that. But otherwise, if you looked at the industrial production, there is definitely -- there is an increase in that. And since the demand growth was not there, but the availability of power was there, we have enough capacity. We had enough coal to generate power. The rate [indiscernible] is lower than what it used to be. And because of the low rate, it provided opportunity to the distribution companies for optimizing their power procurement cost. So as a result of that, even though there was no demand increase in the country, we saw reasonably good volume growth. I think it was almost about 14%, 15% kind of volume growth in the first 9 months. And January month is also going strong with a volume growth of almost about 18%, 19%.

So, January is 18%, 19%. Okay.

Yes.

So, I mean, is there any correlation that if power demand actually firms up, like December volume growth was 3%. So, I was just wondering whether -- is there anything to read there?

You cannot make any correlation on month-to-month basis. Yes, we have seen that on a yearly basis, if the demand increases, definitely, it leads to increase in the volume. But this year, when the demand did not increase, then also there was a volume increase because of optimization opportunity because of the low prices. So, I think exchange provides both ways. One can purchase power to meet the demand and also when the demand is less, they can optimize the power under the PPA.

Yes, sir. Very clear. The second question is on the REC volume. In the 9-month period, you've seen that REC volume growth has been in low single digits. So what is -- and we are hearing so much on RPO obligations and everything. So how -- I mean, why is the slowdown and what is the outlook?

See, REC volume in the first 6 months are reasonably good. But subsequently, what happened there was -- one is that the compliance, which was to be done by 30th September, that time line has been extended up to 31st of March. So, some of the buyers now they have shifted their buying to the month of February, March. Second is CRC also came out with a discussion paper on REC and wherein they have specified that in case somebody is not able to meet the RPO obligation, he can deposit amount with the government, which is equivalent to 1.05% of the average price of REC in the preceding year. So with this kind of provision, many are thinking that maybe let see, maybe can even meet the RPO obligation by just depositing the money with the government. So because of this, the REC purchase is slightly low. But in any case, I think if you -- by the end of the year, we will be able to still do better than what we did last year.

This sounds like a very regressive step, right? And if you are able to deposit money and not...

Yes. We have made our submissions with the honorable commission that in case of REC, REC is based on the generation of green power. But in case of depositing money, it is not promoting the renewable energy. So, we should continue with the existing process. We have made our suggestions and let's see what is the outcome of that.

Sir, just last one question. Typically, if I divide the stand-alone revenue of the company by the total gross volume, the ratio comes to less than INR 0.04. But this time, it is coming at INR [ 0.04 ]. So typically, there is some discount that is there, which shows up in numbers because REC, I remember the pricing is lower and also you have some discount in TAM. But this time, it is not showing up. I mean, is there anything I'm missing?

No, in case of REC, the transaction fee is reduced to INR 20, in fact, for part of the year. This year for the full year, it is INR 20. And even out of that, also looking at the market conditions, we have to give incentives to the buyers and sellers some amount of incentive. But in case of that -- otherwise, in case of electricity, I think it is around INR 0.04.

Yes. But if you divide the revenue for December quarter stand-alone, INR 1,439 million by the volume, the ratio is coming to INR 0.04. It is typically less than that.

Revenue also includes annual fees by the...

In the past few quarters, it was always less than INR 0.04. So, I was wondering if there is something else this time.

Maybe there is a variation in the monthly -- I mean, yearly fees.

Trade volume, sometimes the delivery is related to the revenue recognition, it happens. So that also impacts slightly with [ many times ] realization than the trade volume.

The next question is from the line of Devesh Agarwal from IIFL Capital.

Sir, first question again on the market coupling case. If you could help us understand, is the case now boils down to whether the process was followed while the implementation of market coupling rather than the market coupling regulation itself? What are we kind of doing in the APTEL? Is it the process that we are challenging or just the whole regulation?

What we had challenged in the APTEL was that this order should be set aside because the order has not followed the due process of order making. The transparency was not ensured, and there was no merit in implementing market coupling. But during the discussions, it also emerged that CRC has mentioned that they will be doing this market coupling only after making the regulations. And during the regulation-making process, everybody will have the opportunity of making the submissions. So the complete transparency will be maintained during that process. So, this order is basically to initiate the process of regulation making. So, let us see what is the final outcome of this.

There was one round of public comments that were invited on market coupling. So, you're saying for the regulation, again, CRC is required to be intact.

Staff paper. That was on the staff paper that what are the -- I mean, views on the staff paper. But when you make regulations, you issue draft regulations, which indicates the intent of the commission and why they want -- why that intent is and on that, they invite the comments.

Right. And there was some news article mentioning...

Staff paper is invariably out of commission. Staff paper is something a discussion paper initiated by the staff of the commission. But draft regulations are by the commission.

Understood. And so most likely post the APTEL, there is a possibility that CRC will start the process of the market coupling regulation.

Let us see. I mean, I can't say anything on that.

The next question is from the line of Abhir Pandit from Old Bridge Mutual Fund. Due to no response, we will move to the next participant. [ Pranav Jain ] from [ Angel Capital and Finance ].

I just had a couple of questions. So the first one being, in your opening remarks, you said that electricity from long-term PPAs might be routed through the exchanges, if I heard correctly. Can you explain me more on that? How will that work? How will the tariffs work on that? Will it be the same process? Just a little idea on that.

Okay. Yes. So, this was point related to deepening of power market where as per the National Electricity Policy Draft, suitable policy and regulatory framework shall be established for generation capacity addition through mechanisms such as bilateral contract settlements. So, they are relating it to contract for defense model where the exchanges are used to dispatch that power and whatever realization is there from exchange, that will be kept by developer and whatever is the missing money as compared to the strike price, which is discussed, that is settled outside the market through balance bilateral contract settlement. So, that's the intent of this thing. And this is similar to what is being done globally across the Europe and other places and India also, this has been discussed for a long time. And in fact, the VPPA guidelines, which has come in the month of December, very recently, this is also very similar to it. It is also on the basis of bilateral contract settlement.

Got it, sir. Understood. And sir, just another question on -- just to understand, sir, even if coupling comes in DAM, I just want to understand how -- because now also it will take time for it to get implemented in the Day-Ahead Market at first. How much longer will it take if that happens -- for that to happen in the RTM market as well? Because my understanding is it is very complicated, but just wanted to get your idea on it.

So first of all, for implementing in the DAM market itself, a lot of work is to be done. As I told you that there are going to be draft regulations, public hearing, final regulation. process to be finalized and a lot of things will be done. And after that, commission is already -- in the order they have mentioned that they will look at the experience of this and thereafter decide whether they want to go for the RTM or not. Because in case of RTM, the complications are more. You have to do it 8 times in a day and the time lines available for execution of market is very short. And in case of coupling even whether the time lines is available, within that, whether the coupling will be possible or not, I think they will study all these things and then decide about that.

Got it, sir. And sir, just lastly, sir, there was this news article that mentioned that the tariffs like the exchange fees might be cut from INR 0.04 to whatever [ INR 0.05 ] on each side. What is your idea on that? Do you see that happening?

I haven't heard any such thing. I mean, there are many news items, so I don't really pay any much attention to that. But as far as the commission is concerned, we haven't heard anything like that from the commission.

The next question is from the line of Abhir Pandit from Old Bridge Mutual Fund.

Sir, my query is first related to market coupling. Sir, assuming if market coupling happens and if the round robin fashion is adapted, is it necessary that the volumes will flow to a particular exchange for a particular period of time? Or will it be open for all the exchanges at that period? How will it be?

It will be open to all the 3 exchanges on everyday basis. Buyers and sellers can submit their bid in any of the exchange. Only thing is the bid of all 3 exchanges will be aggregated at one place for the purpose of price discovery.

Okay. So basically, price discovery moves to GRID India from the exchange currently.

No, no. Price discovery will be done on the round robin basis. Maybe for 1 month, one exchange will do. For next month, another exchange will do. For next third month, another exchange will do. And we'll keep on rotating between the exchanges on round robin method.

Okay. Fine. Sir, my second question is in the terms of new products that was shared at the start of the call, right, I mean, which has come based on the recent government paper. Sir, how do you see IEX ability to introduce those products and the acceptance or reception of those products by customers and the time line for the launch of these products?

See, when we file petition with the Honorable Commission, before that, we do the market survey. We interact with the customers. And based on the requirement of the market, we file petition for introduction of the contracts. And in fact, when we do public consultation also, in that also, we have received good response from the market for introduction of these products, which we have filed with the Honorable Commission. The commission has done the hearing. So, let us see if this order is resolved in 1 or 2 cases.

Okay. Sir, just one final. For these products, sir, what would be the total market size or TAM as such in a sense? How big will it be possible?

See, for long-duration contract, the market size can be another 15 billion, 20 billion units.

15 billion, 20 billion units. Okay.

And green RTM is something -- because a lot of renewable capacity addition is happening in the country, it's going to take place in the country now. And renewable capacity has large variations. So on real-time basis, they will be able to make -- put those variations to the Real-Time Green Market. Today, they don't have any such product. So as the renewable capacity additions increases, the transactions to the green RTM volume will keep on increasing. And third product is basically peaking power. Today, we have a shortage of power for maybe 2 months -- 2 hours, 3 hours in a day during the peak hour time. And generation capacities like battery storage or the pump storage or the gas-based plants where the cost of generation is slightly higher, maybe they can participate in this market. And if in this market, the cap price is made slightly more, it will incentivize this kind of capacity additions in the market and help in meeting the demand during the peak time. So, that is the intent of the peaking power tariff.

The next question is from the line of [ S. Ramesh ], an Individual Investor.

So in terms of your gas exchange and the carbon exchange, how would the growth in these 2 markets pan out, say, in the next 1 or 2 years compared to the growth in the power exchange? And how would that impact your growth in revenue and profitability?

See, in case of power exchange IEX, it is operating from the last 17.5 years. So it has attained that kind of a maturity. So, growth is going to be in the range of 15% to 20%, which we have been achieving over the years. But in case of gas exchange, it's at the nascent stage. And this year, in the first 9 months, the volume increase is almost about 47%, 48%. And the trend in the market is that the gas prices are going to be reduced in the next 1 or 2 years. And if that happens, there will be a good traction in the market. And we expect that the gas volumes will definitely continue to grow at a rate of maybe 25%, 30% over the next 4, 5 years.

And what about the carbon exchange?

Carbon exchange, in fact, earlier, we had idea of starting a voluntary carbon market. But Government of India under the CCTS scheme, they have decided to launch this mandatory and voluntary carbon market under the regulatory framework. So, they are making their regulations for that. And hopefully, that market will start sometime in FY '26 or '27 -- '27 or '28. And as and when that market starts, CRC will be the regulator for that market. So it will be -- it's very difficult to say at this stage what is going to be the opportunity in that when the transaction starts and looking at them. Market participation, we will work out that.

Yes. And request for your final couple of thoughts. Also on the gas exchange, as we see growth, would you also see higher margins in the gas products compared to the power products? And secondly, what is the time line? How are you progressing on the proposed IPO for the gas exchange?

See, in case of power or gas exchange, the margins are fixed. So, our revenue is based on the volume we do. And as I told you that in case of gas exchange, we expect a significantly higher volume growth of 25%, 30% in the coming years. So, I'm sure there the numbers will be much better. And as far as IPO is concerned, basically, as per the regulations, we have to -- our holding in the gas exchange is 47.5%. We have to bring it out to 25% as per regulations. So we are -- we have requested IGX to proceed with the IPO for this. So, we have initiated action. Let's see. And maybe by -- we plan to do it in this year. So it all depends on the different activities to be done and the clearances when we get from the SEBI. It all depends on that.

The next question is from the line of [ Vijay ] from Spark Capital.

Yes. So, there was this concept of taking whether coupling RTM and SCED markets would be feasible and if it's economically good, where is that right now, sir? Or is it like only now regulations on market coupling is the priority after that DAM coupling will happen and only after that, all these things on RTM and SCED, all these things will happen?

As far as RTM and SCED is concerned, I think CRC in their order has already mentioned that this will involve redesigning of a lot of regulations and process and other things. So, they will look at this at a later stage. They have not made any mind on that. So at the moment, they are talking about is the Day-Ahead Market. And based on the experience of Day-Ahead Market, they will think about RTM. They will take a view about RTM.

Okay. And from what I understand this, after regulation, public hearing, final regulations on market coupling [indiscernible] next step? Correct, sir?

Yes, yes. Your voice is breaking.

Sorry. I was just taking how long according to you...

Can't say. Can't say. It's a regulatory process, and we really cannot say how much time it will take. Your voice is cracking, sir. There is some disturbance in the line. I'm not able to hear you.

Is it better?

Yes, it is better now.

No, so I was just...

No, no, no. I think...

Vijay, your audio is not -- can you please work on your audio. The next question is from the line of Vinay Nadkarni from Hathway Investments.

Just one bookkeeping question. What is the cash and cash equivalent as of 31st of December?

We have a total cash of around INR 1,500 crores as on 31st of December. And out of that, the shareholder fund is around INR 1,200 crores.

Okay. And secondly, just wanted some idea of how this virtual power purchase agreements are expected to increase demand for IEX?

See, under the virtual power purchase agreement, a buyer will do the agreement with the generating company for generation of green electricity. That electricity will be sold on the exchanges. And green attribute will be taken by the company, which is getting into this PPA -- virtual PPA. So definitely, it will increase sell volume on the exchanges. And it will have definitely a positive impact on the volume cleared also. But it all depends on the quantum of virtual PPAs, which happen in the market, interest of the market in getting into these transactions.

Okay. And secondly, the total un-requisitioned power that is available for transaction on the exchanges, that is currently at 7%, isn't it?

Currently at?

7%. How much is it?

Yes, it is almost about 9% to 10% now. Earlier NTPC was participating. Now, we find that many other generators are also participating in this market.

Okay. And lastly, from your vantage point, when I see the GDP growth at 7.4%, 7.5% and you have the IIP growth also coming up, but the power demand is not catching up. Is there some dichotomy there? What do you see? Why is it happening?

As I told at the beginning of this conference also that this year, we had a very good monsoon, more than above monsoon. And because of good monsoon, the agricultural demand had crashed. In fact, even air conditioning load was also very low. As a result of that, the demand increase was not there. But this year, if the demand -- I mean, if the weather is normal, definitely, the demand increase is going to be not less than 5%, 6%.

Okay. So out of this, the industrial demand continues to increase, but you're saying the agriculture and the household demand has gone down.

Yes, yes, yes.

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

One question is, will the depth and the liquidity of electricity exchanges -- we are constrained on the extent of VPPAs that can be introduced as they are structured as contracts for differences. So at the current moment, how much VPPA can you actually introduce given the volumes exchanges handled?

I think as of now -- Rohit, maybe you can give some figure on that.

See, your point is related to how much buy is there. Let's say, if we start to execute more and more VPPAs, then all the surplus generation will come to market as a sell. So, what I understand is you want to ask how much buy is there and how much this sell can be absorbed in the market, right? So let's take the worst case, which is solar during the daytime and VPPA doesn't mean only solar. It could be hybrid. It could be wind. It could be BESS. It could be anything. So even if we take example of solar, on an average, during the daytime, there is 6,000, 7,000, 8,000 megawatt of demand is always there. I'm talking about average. There are extreme days where it is high. There are days where it is low. So if we go by that logic and VPPAs, since they already have an agreement, there already PPA is there, so there would be price takers, which means they would be putting the lowest price in their base, right, the price point that they are placing for their sell. So by that logic, if I collect both RTM as well as DAM, there is liquidity available to the extent of 10,000 megawatt. To that extent, there should not be any problem. And today, this number stands much, much less than 1,000 megawatts. If I talk about how many VPPAs are today there and who are coming to exchange, this number is much less than 1,000 megawatt, which means there is a large window available for them to come to this market and that will get absorbed.

Rohit, what we also see is that during the daytime, the sell availability is a lot higher than the buy. So the prices are depressed. So if you are just going to increase more liquidity on the exchange in terms of sellers, it will just crash the price, right?

No. See, what is happening here is during the daytime, because many of these thermal power plants are also backed down, they are also participating on exchange. And there is very good quantum of URS power also coming in the market. Now, all these power is coming at a price point. None of these thermal generators are quoting less than INR 2.5 or INR 3, right? They're not going below that because that is their variable cost, coal cost. Now if, let's say, 1,000, 2,000, 3,000 megawatts of additional VPPA power will come, it will bring down the price, no doubt about it. But how much that would be, that is to be seen. So it's not that it will crash it left, right, center and price would come down to 0 level or less than INR 1 level. That will not happen. But yes, if there is more supply, then it will bring down the prices.

In fact, in the Day-Ahead Market, it is more of conventional power, which is coming. But if you look at our GDAM market, in the GDAM market, we have large buy volumes. There is an interest from the buyers, but the quantum available in the GDAM market is comparatively much lower. So when the PPAs come -- I mean, VPPAs come, of course, they will come in the conventional market. But if green power comes to the market, yes, that will help us.

Just one last data question. In the 9-month period, what was IEX market share in REC and the TAM segments?

So electricity overall, we are around 83% in first 9 months. And REC is about 50%. I do not have exact number for REC available right away, but electricity is 83% for sure. REC about close to 50%.

So, TAM is what, 50%?

TAM is -- it varies between 45%, 50%. You have that? So, TAM is generally below 50%, but overall electricity is 83%.

Got it. We can reverse calculate also. Assume 99% for RTM and TAM and rest we can.

83% number will help you arriving at the final.

We take that as the last question. And now I hand the conference over to the management for the closing comments.

Thank you, friends. I would like to thank each one of you for being part of today's call. Throughout the third 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. Have a wonderful evening. Thank you once again.

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