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

Ladies and gentlemen, good day, and welcome to the Indian Energy Exchange Q3 FY '20 Earnings 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. Abhishek Puri from Axis Capital. Thank you, and over to you.

Yes. Thank you, Stephen. Good afternoon, ladies and gentlemen. On behalf of Axis Capital, I am pleased to welcome you all for the Indian Energy Exchange Q3 and 9-month FY '20 Earnings Conference Call. Today, we have with us the top management team represented by Mr. Rajiv Srivastava, Managing Director and Chief Executive Officer; Mr. Vineet Harlalka, the Chief Financial Officer of the company. The call will be initiated with brief management overview and discussion on the earnings performance, followed by an interactive Q&A session. So over to you, Rajiv.

All right. Thanks so much, and good afternoon, everyone. Let me welcome you to the earnings call for Q3 2020. I've got with me right now Rajesh Mediratta, who leads our strategy function and is a Director of the company; Vineet Harlalka, who is our CFO; we got Rohit Bajaj, who leads our business efforts; we got Shruti, who leads our Mar Comm and Investor Relations; we got Aparna, who leads our Investor Relations; and Sangh Gautam, who leads -- who is our CTO. Let me do this. Let me just take you through a brief economic and industry update, our financial performance and then open it up for interaction for everyone. And let me begin by just reinforcing the fundamental unique proposition of Indian Energy Exchange, which is to bring 24x7 electricity to India, to every consumer across the length and breadth of the country in a most competitive, transparent, flexible, reliable, user-friendly manner. And IEX continues to be committed to the pursuit of transforming India's energy landscape by bringing in competition, by bringing availability, improvement availability and accessibility and efficiency just by leveraging technology and markets across as the 2 key dimensions. And I'm happy to share that IEX stayed on course in this pursuit in the Q3 fiscal 2020. The average market clearing price discovered in Q3 2020 at INR 2.83 was 34% below the prices in the same period last year. And that's a huge, huge, huge reduction in the market clearing price, making the market increasingly competitive and attractive for buyers, all kinds of buyers, whether these are in the distribution companies or these are open access consumers, all across all kinds of buyers. Let me also give you a brief update on the sector per se. And it is our belief that the energy sector is up for significant transformation. It is estimated that the per capita consumption of electricity will increase from a current of 1,181 units to almost 1,620 units in the next 5 years. Now this is a huge 40% growth over the next 5 years. And to support this, the government has made an investment commitment of INR 11.75 lakh crores to the power sector, and this is within the overall vision to boost the infrastructure spends by INR 100 lakh crores by 2025. Now this investment will go to increase the power sector installed capacity from a current of 370-odd gigawatts to 620-odd gigawatts over the next 5 years, just to make sure that the demand increase is supported. Then there have been in the budget that got announced yesterday -- or day before yesterday, there have been some nice good provisions for the power sector. And 1 very critical 1 is the distribution reforms, which mentioned that they want to replace conventional energy meters by prepaid smart meters over the next 3 years. Now that's a very significant measure because this allows consumers to really choose the provider that they wish to go with. And so it brings in transparency, it brings in efficiency, operational discipline and fiscal discipline as well. So this is a very important efficiency measure for the sector as a whole. But also in the budget, there have been also other announcements around our commitment to clean energy, our commitment to shifting energy mix to make it more sustainable, and we'll talk about those as well as we go forward. But there have also been further amendments in the national tariff policy through the constitution of a high level group of ministers, led by the Home Minister, which should ultimately pave the way towards rationalization of power tariffs and bring benefit to the industry as a whole. By rationalizing the power tariffs, the economy and consumers and customers and C&I, everybody will get benefited broadly. And just to the broad economic and industry level, India's economic growth in Q3 '20 was -- and you guys are well aware, well [ across it ] was subdued. The GDP for FY '20 is expected to be in the range of 5 percentage points. IIP continued to shrink in October and fell to negative 4%, and it did rebound in November to a plus point 1.8% Y-o-Y. The core sector was negative in October but recovered to 1.3 percentage points in December, after remaining negative in last 4 previous months prior to December. Now there's been a high emphasis on revival of the economy, with initiation of reforms and stimulus measures like how do you rationalize the taxation, corporate taxation structure and other policy measures in various sectors over time. Hopefully, all this will see acceleration to the growth of the country, both GDP and the core sectors growing faster. Quarter 3 for the fiscal 2020 was a bit of mix developments on the electricity front. The energy demand for the sector as a whole, across the quarter, declined 6.2 points. Now this was most severe in the initial month, which is October. October was a decline of 13 percentage points, which is really unprecedented in the electricity sector. It was the highest decline in 12 years. It recovered a bit in November. November registered a 4-point decline, and December was even better, just a negative 0.4% decline. So I think over the course of the quarter, we saw the electricity consumption going up and becoming better. But 1 good thing happened in the month of December, the peak energy electricity demand went up by 4.8 percentage points. Now this is significant, and in part, contributed to 53 points of growth in electricity trade volumes on the exchange in the month of December alone. And just so you know, that momentum is sustained in the month of January as well. So we see a recovery in the consumption patterns across the country and across sectors in the month of January. Just from an installed capacity perspective, during the quarter, the total installed capacity increased 6 percentage points to reach 369 gigawatts. Now in line with and you guys are familiar with the fact that India has a huge commitment to the Paris climate control agreement to ensure we are progressively shifting towards a much more cleaner, greener energy, and so in line with commitment to the -- to that agreement, our renewable energy capacity increased 16 percentage points, and it went up from 74 to 86 gigawatts between the year -- within the year, and so I think we are moving in the right direction as our commitment towards a more sustainable ecosystem. During the quarter, Ministry of Power also finalized the methodology of allocation of coal for the sale of power in the short-term market and power exchange. The proposed methodology will enable coal linkages to power plants, not having PPAs. So guys don't -- the industry or the generation units that don't have a PPA will now be able to get coal under this methodology and lead to further available increase in generation, which leads to then availability of more liquidity on the exchange and therefore, leads to either stabilization or a decline in the prices. I think all of it, in a way, has been extremely positive. Let me just move and give you a sense of financial and business performance. And on a stand-alone basis, our revenue for the quarter -- you've seen the way the electricity was such a huge drop. On a stand-alone basis, you saw that our profit after-tax was almost flat at INR 42.3 crores year-on-year, with a revenue drop of 9.8 percentage points. The PAT margin was up at 61%, the EBITDA was at 83%, the PAT margin was up at 61% and the PAT margin went up from 56% at the same time last year reflecting a very, very strong discipline in the way we are managing our operating expenses, knowing fully well the state of the industry. Now starting Q3, you would also know that we have started to consolidate our results of our wholly-owned subsidiary, the Indian Gas Exchange. And the overall consolidated revenue for the quarter was down 9.7 percentage points to INR 69.4 crores in Q3. And our EBITDA decreased to INR 56.7 crores, and the margin -- EBITDA margin stays in the consolidated balance sheet, the EBITDA margin stays at 82 percentage points. And PAT is at 41.7%, which is a 2.2 percentage points drop because of the consolidation, but the PAT margin stays at 60 points versus 56 of last year. Let me focus on the business performance. Similar to the trends in the overall power demand in the industry in the country, business performance during the quarter also is across those 3 months. And the first 2 months, like I said, were extremely down from an overall consumption pattern. And we also saw a reduction in the electricity purchase that are traded on the exchange in the month of October. And it went down hugely to negative 42% in the month of October alone. But when the demand started to recover in the month of November, we saw 6 points growth in November; and December, like I said, was a 53-point growth in December. So that's so much from a day-ahead market business perspective. The company continued to report robust term ahead market performance. The volumes increased 48 percentage points during the quarter, led by an increase in daily contracts initiated by some states. Southern states are more active than the others in the TAM business. Now REC volumes continue to be impacted because of lack of inventory on the sell side, and we did 1,138 MUs in Q3 versus 1,197 MUs in Q3. So it's just a small decline. But owing to our overall decline in prices by 34% procurement of power by commercial and industrial consumers that has increased significantly. And we've seen that the open access consumers, that part of the business has seen a very strong growth of 64%. That's significant and that plays to the fundamental value proposition of the exchange that lower the prices expands, far the number of buyers across the country in the commercial and industrial segment. And also, I just wanted to take a moment to update you there are some of our new product launches are on the annual. We continue to progress and get close launching cross-border, long-duration contracts, realtime products. And there's been -- what we've done is we have strengthened our sort of sales coverage around -- for these products in anticipation of these products. And our sales team continue to reach out to customers across the country, very, very positive sentiment from multiple market participants and stakeholders about the new product launches and the new schemes that we are trying to come up with. Let me also give you a bit of a way forward. And you would understand that we competitively discovered prices on the platform. They continue to be attractive to both distribution utilities as well as open access consumers. Now that is a single biggest gain that has happened over the last couple of quarters that the prices continue to be stable and extremely, extremely attractive to all kinds of consumers. With prices remaining low during the fiscal year because of ample liquidity on the sell-side and increased electricity demand, volumes on IEX should continue to increase, just the way we have seen a rebound, like I said, in the month of December and January 2020. Also, our proactive efforts and collaborative work with our stakeholders and alliance partners, marketing, capacity building initiatives, hopefully, will to aid our volume growth. We continue to very strongly pursue tech-based innovation. So we have made a very, very strong commitment to revamping our technology and making sure that whatever we do has got a very, very strong foundational technology backbone to it so that we can make sure that our user experience to our consumers, customers, DISCOMs and open access consumers continues to be really the best-in-class through robust practices and processes. Now that is a nutshell is all that I wanted to communicate. Given you a story on the way we see the industry moving, some of the government initiatives that are happening right now and the way in which the power sector has been transforming, and the way our volumes have moved and our business performance has been moving. So let me stop here and open it up for any questions that are there on your mind, and we'll be happy to take them.

[Operator Instructions] The first question is from the line of Mohit Kumar from IDFC Securities.

Congratulations on good set of numbers. Sir, my -- I have -- the first question I have is regarding the launch of new products. I believe that we have pushed, launched 3 products: one is the RTM, second is cross-border and third is long-term duration. Is it possible for you to share the launch -- the time when you're supposed to launch these 3 new products?

Yes, I can give you a more definitive answer of 1 of the 3 and that 1 is the RTM. The real-time market product should begin trading from 1st of April onwards. The regulatory body, which is CRC, along with POSCO, will go in for testing of a trial run of that product in the month of Feb and March, and so to be ready for launch 1st of April. So I think that's an absolutely definitive one. The other two, you're familiar with the case that is going on, on the long-duration contract. That hearing -- final hearing of that case is on 2nd of March, and we hope to get a clearance by then so that we can start trading immediately after that -- get into the business immediately after that. And the third one is cross-border. We are almost -- we are -- in my opinion, my personal opinion, we are in the final last leg of that to get the regulations out. And so that even should see the light of the day very, very soon. If you recall in my last call, I had mentioned that by end of Q1 -- calendar Q1 this year, which is Q4 -- fiscal Q4, we should be in a position to see through all of these, and that's where it stands right now.

Sir, one clarification on long-term duration contracts, you had mentioned in one of the calls that the -- we were supposed to withdraw petition, and that means the chapter would have been closed, but now you are saying the case is still ongoing.

That's misnomer. The petition withdrawal is going to happen on -- the petition withdrawal -- because it has to be withdrawn from the Supreme Court, so technically, it's a legal filing of the case, and that has to be withdrawn on 2nd of March. That hearing has now been fixed for 2nd of March.

Understood, sir. Understood. And secondly, sir, on gas, is it -- has something happened on the gas trading side? Is there something which you can throw some light?

Yes. Look, I can't share with you gas launched it, that's still under wraps.

No, no, just a broader environmentally, is something incremental which has happened during the quarter?

Yes, yes. Look, so you would have seen that we have consolidated the gas functioning into our -- gas financials into our balance sheet for the quarter. So obviously, we've made some expenses. We've made some investments. These are investments -- early investments in technology and people and office space and some of the administrative things like setting up the company, all that. So we are readying ourselves up to launch gas as soon as we can.

The last question, sir, how do you see the REC volume panning out in the FY '21, given the fact that the inventory is quite weak?

Let me -- Rohit, do you want to take that?

Yes. As for the inventory, rightly said, it's not there and hence, volume is also down this time. In fact, every quarter, we are seeing lower numbers. But the good news here is, we are expecting some new issuance in the months to come. Some of the distribution companies, some of the state utilities where they have some surpluses that can get issued. So that is one thing. And it is down in volume terms, but our revenue -- in revenue terms, it is not so much down because our realization has increased the incentives, which we used to give earlier that we have withdrawn. So yes, it will continue to be under pressure as far as volume is concerned, but we are expecting a little bit improvement in the volume in the coming few months.

And sir, my question -- broader question is that, are we to expect a decline in volume in FY '21 over FY '20? Or do you see we can witness or do you think it will be flat Y-o-Y?

So going forward, in FY '20, it can be a little better because with more renewable capacity with the state distribution companies, the issuance will increase. So one is the projects, which are registered under REC mechanism, they are getting their eligible entities, they are getting these RECs. And the other portion is state unities who are meeting their RPO and doing surplus, they are also entitled to get this. So on the second front, we are expecting more issuance, and we hope that inventory should improve going forward in FY '21.

[Operator Instructions] The next question is from the line of Ankush Agrawal from Stallion Asset.

Just 2 questions. Firstly, once the real-time market starts, how do you think the current product of intraday market that would like exist parallelly to the realtime market? If so, like how it would be different from the real-time market? And secondly, in case of, if I see, we have more than 99% market share in case of day-ahead market. But if I see the term-ahead market, our share compared to PXIL is around 60%. So why is there such a difference in term-ahead market share and day-ahead market share?

Yes. So your first question is, our real-time market is different from intraday for some shifts or what will happen to the volume. So intraday is today done about 3 hours in advance. So when you have -- you should have minimum 3 hours window, then only if you buy it now, after 3 hours delivery will start. Delivery time is going to be more closer to the real time. This will happen just 1 hour in advance and trading will be done for every 30 minutes, 15 minutes, 2-time block. And another difference -- big difference here is a real-time market will operate on the principle of collective transactions, which is double-sided closed auction. Now this is exactly same as what we are doing for our data market. Intraday, it is more of a matching. It's a matching concept, where you can place your best bid and then the matching is done on the multiple buyers and sellers. This is how it is going to be different. Now the second question is in the TAM side, our share is about 65% today. It is little excess of 65% today. Yes, it is not as high as, as it is in the case of day-ahead market. Here, it is more of a one-to-one transaction. So they are also active there and both the participants are trying their best. We are maintaining a [indiscernible] here as well, but it is not as high as in case of day-ahead market.

But I think...

Ankush, here is that the way the day-ahead market works, that really plays to the efficiency of the whole trading platform, right, because when -- and plays to the extent of the exchange. The exchange survives following discovery on a multilateral basis and then discovery and supply on a multilateral basis. Whereas TAM survives on one-to-one. [indiscernible] so the whole element aspect of exchange fundamentals really plays out the technology aspect, the way in which transactions come, the way the liquidity is available on the exchange and the way the prices are optimized, that goes in the day-ahead market. And that's the reason why you'll find that world over the DAM market is really the market which really everybody is kind of aligning to. The TAM -- the reason it is [indiscernible] one-to-one, it is a higher-priced market and hence, there will be obviously a lot of share from the TAM perspective. Otherwise, the exchange fundamentals play out in the DAM market only here.

Yes. So is it okay to assume that once the long-term contracts are in place, so the market share would be similar to that like of TAM and not DAM?

Tough one to answer, tough one to answer because it will -- you'll have to figure out what discovery mechanisms or how will you continue to discover prices, what kind of sales outage you will build. And I can only tell you 1 thing, we are extremely, extremely, extremely conscious of that, and making sure that our engine continues to improve and get more optimized. Our sales outage continues to become stronger all the time. And so that's what we want to play. So I think we would love to believe that we will continue the way we are counting right now here.

The next question is from the line of Ravi Naredi from Naredi Investments.

Sir, other income down too much, any specific reason in this quarter?

This is Vineet Harlalka. If you look into the YTD business for the 9 months treasury income, like -- too significantly. The 2 critical factors that impacted this quarter, one was that [ indiscernible ], if you recall the previous year, the first 2 quarters were not good for the treasury. And these 2 quarters for the Q1 and Q2 were quite good. And secondly, because of some inflation concerns, there were some hardening of the yields happened during December. So this was some untamed impact was there, but not very significant if you look on the YTD number.

Okay. And sir, how was the business in January 2020?

On the treasury side?

On the overall...

No, no, this electricity trading side.

It has been very nice. Like I said, I think electricity trading in the month of January is almost a 45 -- close to 50, 50-plus percentage points growth year-on-year.

50% growth. And sir, how many exchanges allow electricity trade in India other than us?

Look, you can set up as many as you want. But right now, there are just 2.

Okay. And MCX is also planning to come in this?

I mean, I have no idea. Maybe you guys might be better informed, are they?

The next question is from the line of Abhishek Puri from Axis Capital Limited.

Just wanted to confirm 1 small data point on the grid code regulations, which came in after the intraday norms are approved by CRC. When I'm looking at one of the provisions, it says that the allocation of transmission corridor between the power exchanges for real-time transactions will be in the ratio of their shares in the DAM market. Would that mean that you will get the lion's share even in the intraday market?

Yes. For real-time market, this is the provision. And we'll get lion's share for transmission capacity as per grid code.

So we can expect the market shares to remain similar to DAM in intraday as well, right?

Exactly, exactly. RTM, because the model of price discovery is also same, so liquidity will play important role in RTM market. And second is the transmission capacity allocation is in favor of those who are already having higher share in the day-ahead market.

Right. Okay. My second question is on competition. So I think PXIL has launched similar platforms. I still don't see any volumes going to them at this point in time. So any comments on that side?

Look, Abhishek, I think one thing is good that we have launched this. And you've heard me talk about our views on competition in every single call over the last 3 quarters since I've been here that we really need more competition in our space because more competition allows companies to work, to develop the market, which is always going to be healthy for all of us here. So I really want to PXIL to ramp up and whoever else wants to should ramp up and get there. So that's one thing. The other thing which the -- and to your point, whether they are getting more volumes or not, I think that really depends upon a couple of other things. One, on the fundamental design of the whole engine and the mechanism of trading is helpful, the user experience that customers get out of us versus anybody else, the manner in which our teams are engaged with the customers across the country, the formality, the way in which we trade and we do an end-to-end settlement. So I think there are goodness to our whole end-to-end sort of mechanism right now, which is helping. And I really wish -- and the fact that PXIL is launching it, it tells us one very, very good thing that they see the market from a very bond perspective, just the way we believe it is over the course of the next couple of years. So in that bond market, more people coming in, it's an absolutely great thing to happen. But like I said, you have to play to the fundamentals of the exchanges.

The next question is from the line of Dipan Mehta from Elixir Equities.

Yes, sir, this is [indiscernible]. So I just want to understand what exactly has gone wrong in this quarter because on one hand, as you said, the electricity consumption is down by 6%, but then we are down 9% in terms of volume. And then in your press release, you have said that there are certain states which have got double-digit growth, then somewhere you have said that the industrial customers have got a 64% increase. So what exactly went wrong for us to have such a dismal performance on the volume side?

Look, I think -- first of all, I won't -- if you've been tracking us and you were tracking the electricity market per se, there is bound to be a very close sort of relationship, an almost disproportionate relationship between drop and recovery both sides. When the electricity market hasn't recovered in the month of December and it's down about 0.4 points year-on-year, but the electricity peak demand goes up 4.8%, you see the exchange performing 51 points better. But when the electricity market is down 12 points in the month of October, that was a significant drop year-on-year because electricity -- October 2018 was an all-time high for electricity consumption. That month was a very, very high month. And this year, in October, and you would have heard us say in over the last call as well that in the month of October, a couple of things happened, one -- and across those 2 big types of customers that we've got. We've got agriculture and we got commercial and industrial customers. The industrial activity in October was very down. You've seen the IIP numbers for month of October being extremely, extremely low. And the core sector per se, whether it is coal or fertilizers or refinery or electricity or steel, everybody was down in the month of October significantly. The other thing that happened in -- so the industrial activity was one part of the whole story. The other thing that happened in October was that we had a very serious change in the weather pattern. Climate activity in the month of October, monsoon activity in the month of October was very high. And this year was a delayed withdrawal of the monsoon. So when you have a delayed withdrawal of the monsoon, then the agriculture consumers do not buy enough electricity, they generate, and hydro is very active there. And so both are 2 most potential sectors -- segments, C&I as well as the agricultural customers had a much reduced dependence and much reduced requirement of electricity. Now you've seen the recovery bounce back much faster in the month of December and January, and that is also because hydro is no longer an option right now because it's gone down. And then the industrial activity happens to be coming back on track. The IIP is positive in December, also positive in January now and some of the core sectors are becoming much positive. And that's the reason you are seeing the electricity demand go up across, specifically in the month of January, electricity has gone up by 2.5 percentage points. So there are factors -- some factors which are in the larger alignment with the economy, GDP and IIP and some factors which are in the domain of the climate control or climate change that is happening. Now the way we're trying to buffer ourselves is on 2 fronts. One is, clearly -- this is like a strategy question, if somebody has -- you might have a question, so what is the exchange doing? One thing we're doing is we are spanning ourselves out to more customers and more consumers to make sure that whenever there is a demand, and we are there to fulfill that demand. That's something that is important. And the fact that there is liquidity on the exchange allows for the prices to be lower. The government has announced 2 other things. One, all plants that are beyond the emission control norms will have to shut -- will have to be phased out and shut down. So that will require more electricity provided through some other sources and that demand gets fulfilled through the fuel exchange. And the second thing that has also happened is provisioning of coal to merchant power plants, which are not linked to PPAs, now that liquidity also comes to the exchange. So when the liquidity comes on the exchange, you will find that the price on the exchange will continue to be lower, and that attracts, that appeals to the open access consumers across the country. So our one activity is very clearly go across to as many distribution companies and as many open access consumers through our sales efforts and convert those customers for buying on the exchange. That's one thing. The second thing, which is our effort, again, is making sure that the new products that we are launching, some of them you heard earlier, cross-border or real-time market or long-duration contracts, those ones should get launched, but also we are tweaking new products, and we are engaging with our distribution customers and to our open access customers to customize products from their requirement perspective. And those are the products that if you go to a website, you will find that we have launched a couple of products very recently. So we are expanding our portfolio. Expansion of portfolio allows us to serve the same customers in a deeper way and allows us to find new customers. So those are the 2 things that we are doing. So that's -- it's a longish thing. It's a very -- relatively per se is subject to a huge shift in vagaries. And that's what has happened over the course of the last quarter. That's the reason I said Q3 -- fiscal Q3 or calendar Q4 was a tale of 3 different months for us.

Okay. And one quick question, I think you already answered, the other expenses have come off for what reason, I did not get it, quarter-over-quarter, INR 827 lakhs to INR 473 lakhs?

It came down significantly because of the 2 factors. First of all, there was a lot of expenses we've done during the last year for the people exchange -- Indian Gas Exchange, and we are looking to hire the management team and 5-year celebration -- or 10 years celebration. So a lot of onetime expenditure was there. And as Rajiv has said, because of the lower volumes, we had also been in control on our expenses. That was also one factor. We reduce on the cost side.

We had some large consultancy assignments last year, which we haven't repeated now because those are the onetime expenditure.

The next question is from the line of Sri Karthik from Investec.

A few questions from my end. One is, what is the current proportion of open access on your buy side? How -- what is the market share of open access within that? And what is the limiting factor that you see for this to actually continuously increase?

Okay. The open access right now is 38% in our overall mix, okay? It has gone out -- if you see last year, it was 22%, it has gone up to about 38% right now. And the open access is the one which has grown significantly. It grew 64 percentage points in Q3 versus the same period last year. So I think open access is a good story. The reason why -- and our belief is and here it is, here is the question that only as a proposition that I think we've been taking very strongly to the government is open access allows customers across industries, which have more than 1 megawatt of installed capacity to buy cheaper power from the exchange. Now that's a great thing because it allows their input cost to reduce. But what happened is -- and if you are following this sector, what has happened is, across states, a lot of states do impose conditional access charges and some other subsidies, cross subsidies on open access consumers for -- and that deters them from buying, that makes the whole value proposition uncompetitive. The reason consumers open access, despite all of those charges spiked in Q4, was because the prices were very stable and low. And as long as we continue to see such kind of prices on the exchange, you will find that the open access consumers will continue to find favor for the exchange. The good thing is a lot of our engagement with the ministry and with the Ministry of Power and the regulatory and audit suggests that we are focused on this problem, we are focused on making sure that industry becomes competitive. And one of the factors which lead the industry becoming competitive is reduction of open access across subsidies so that they become -- the power becomes cheaper, which is, again, in a way going to be really, really helpful for the exchange.

In a way, what you are suggesting is the conflict of interest from an ACB perspective to actually lose their most profitable customer is probably the limiting aspect even now.

It's -- what you say is the way it is understood right now. But let me give you a proposition. What happens is, assuming in power, it's about 20 points of input cost a new product manufactured, okay? It is more in cases of some industries like metals industry, it is more. It is less in case of some of the industries which are knowledge or service industries, right? But on an average, it's about in that range of 15 plus/minus their about, right? Now assuming the power costs can be reduced by 30 percentage points or 20 percentage points, at least, okay? What they pay versus -- what they pay today versus through removal of open access subsidies, what they can pay. Now in this manner, about 4 percentage points of their -- the combination of input cost of power and the consumption of power per se can add about 4 percentage points to the bottom line, if you do the math right, okay? Now that 4 percentage point really adds at least at a 25 percentage of corporate tax, it adds 1% of the bottom line to the corporate taxes. Now that's such a wonderful proposition. So if -- and that's how we are trying to approach this topic that there are different ways and I think the country has to step up to find very different solutions to the whole discount distress problem. And this is to our opinion is one of the more brilliant solution that the industry can go to -- the industry can get. In this game, everybody gains, there's not a single loser because 1 percentage point you add to the bottom line and you use that for corporate tax, again, which is equal to much more than the discount distress that the industries are carrying today. And the balance 3 points that you gain on the 4 points gain in the bottom line, you use for capacity expansion, you use for job creation, every single problem that we are going through and trying to solve for today. So there are various means in which we can solve for this. That's the reason I said, at one level, your question is a very safe question, but the solutions are unique and different. And I think all of us need to step up and find those unique solutions, make sure those unique solutions find favor with the powers to be.

Sure, sir. And at this stage, this is...

Mr. Karthik, sorry to interrupt, sir, but for any follow-up request you to rejoin the queue, please. The next question is from the line of [ Dhruv Mittal ] from HDFC.

Sir, the 38% for open access sanctioned is for 3Q or for the 9 months?

Q3.

And can you share a similar number for Jan, if you have?

Jan.

Jan [Foreign Language].

And for 9 months, it is 30%.

9 months it is 30.

For the 9 months, it's...

3-0.

Okay. Okay. And just to understand, on the longer-duration contract which we will have, will the design be similar to the TAM contracts, I mean, not similar to the day-ahead and one-to-one matching kind of contract? Or it will be similar to day-ahead design?