Indigrid Infrastructure Trust (540565) Earnings Call Transcript & Summary

Ladies and gentlemen, good day, and welcome to the India Grid Trust Q4 FY '24 Conference Call, hosted by Nuvama Wealth Management. [Operator Instructions] Please note that this conference is being recorded. I now hand the conference over to Subhadip Mitra from Nuvama Wealth Management. Thank you, and over to you.

Thanks, Mike. Good evening, friends. On behalf of Nuvama Institutional Equities, welcome you all to the fourth quarter FY '24 earnings call for India Grid Trust. We have with us today the top management of the company, represented by Mr. Harsh Shah, CEO and Whole-Time Director; Mr. Navin Sharma, Chief Financial Officer; Ms. Meghana Pandit, Chief Investment Officer; and Mr. Satish Talmale, Chief Operating Officer. I would now like to hand over the call to Mr. Harsh Shah for his opening comments. Over to you, sir.

Thank you, Subhadip, and thank you, everyone, for joining the call today. I would like to schedule the call in a way that we will start with the results, and I'll take you through the summary of the results in the quarter, this year, indicating to presentation. And subsequently, my colleagues, Meghana and Navin, will take you through the rest of the presentation. And we will address the question-answer after that. Considering these are last quarter results for the last quarter of the year, some of the comments you can also think about the prefinancial year and how it has gone by. I'll start with Slide #3 of our presentation, where we are describing the vision. Our vision remains to become the most admired yield vehicle in Asia, based on focused business model, value accretive growth, predictable distribution and optimal capital structure. I think, as evident in Slide 4 in our portfolio, we have been able to deliver that over the last several years. And our portfolio has grown across different dimensions. Number of substation, number of transmission lines has grown substantially. Our solar generation last year has grown massively, and it turned out to be a 1.1 gigawatt peak, which is almost like an [ 80% ] growth on the capacity. And we also obtained several BESS projects as well as transmission projects for the year. In general, if I start with Slide #6, which is our quarterly update for our business this quarter, we have won another greenfield ISTS project in Maharashtra. Besides that, we have won GUVNL Battery Energy Storage projects for 180 megawatts by 360 megawatt hour configuration. With this, in FY '24, we have won 5 greenfield projects largely in transmission space worth about INR 2,000 crores in outlook. This is a significant step towards our strategy where we are pursuing towards growth via our bidding and adding, I would say, organic growth by focusing on projects that are closer to our assets as well as a closer to our [ skill sets ] in creating organic pipeline for [ IndiGrid ]. In this quarter, we also commissioned our first greenfield projects which we had in [ markdown ] about 2.5 years ago and -- Kallam Transmission Limited. And our new project that we have also won this quarter is also co-located at the same Kallam Transmission Limited, showcasing that having a synergy to present in different regions allows us to be competitive and add more expansion in projects in the same region. Besides transmission and organic growth, we also acquired 300-megawatt of solar project from ReNew. The asset is in Jaisalmer, and this asset was acquired at an approximate value of about INR 1,550 crores. We -- in our first BESS project, which was for customer BRPL, which was [ reissued ] with Rajdhani in Delhi; we have received the approval from DERC. And this is a significant step because this allows us the project to -- allows us to start the project. And many times after the bid, especially battery and solar projects would get stuck on the final regulatory approval. But we are pretty happy with the speed with which we are seeing the customers have moved to get the approval so that we can start and break that. On the financial performance, our quarter 4 revenue and EBITDA both witnessed 31% and 24% year-on-year growth, respectively. Quarter 4 financials now include full-quarter impact for VRET asset and also revenue from ReNew asset on a portion of the quarter. For the full year, revenue and EBITDA stood at approximately INR 2,864 crores and INR 2,460 crores, respectively, which is a growth of 23% and 17%. Quarter 4 collections have been phenomenal in the transmission side with 119% and around 89% for the solar assets. For the full-year collection, we received 103% and 101%, respectively, for transmission and solar, which is also the reason why we are adding substantial amount of NDCF for the financial year. With the phenomenal year, both on financial and growth side, the Board has decided to meet its increased guidance at INR 3.55 a unit, which we had raised up acquiring unit. And further guidance has been increased further by 6.4% to INR 15 per unit annually for FY '24, '25. I would remind that we had raised the guidance midyear last year. If one was to compare our original guidance for FY '24, this 6.4% will almost look like a 9% increase from 12 months-ago guidance that we had guided to. Our net debt-to-AUM still remains at approximately 62.4%, owing to the capital that we raised over the last couple of quarters that are both preference issue and institutional [ posting ]. And we continue to work to ensure that our net debt-to-AUM remains at a level which allows us to grow. Operating performance. Our average quarterly availability was 99.52%, and the annual availability has been 99.74%, which is ensuring the maximum incentives for this financial year. Our solar CUF, including RSUPL, was around 23.9%. We also implemented something called Asset Health Indexing for our entire subscription portfolio to enable both predictive and proactive maintenance. You will recollect that we implemented DigiGrid about a year ago, and this is a further step in the same direction. On Slide 7, while there are a lot of factual updates about the industry as it's growing, I would just describe our [ emotions ]. We are extremely positive on the way the power sector is growing. And we feel that industry is getting a lot of tailwinds from the demand side, from the regulatory circles as well as the supply chain side, which is resulting into the government as well as the need of the customer becoming more and more apparent. And therefore, we are seeing that in transmission lines and substations itself, there is a sizable amount of pipeline that are available for bidding over the next couple of years. And we do see that a sizable amount of this [ we ] would be able to aggressively target or integrate, which will result into a sizable growth pipeline. This also is driven by a large amount of demand on the renewable side. And while we do not bid renewable projects directly, such amount of capital requirement does require many of the developers to [ flip ] assets, and that becomes pipeline for us. And besides that, for this kind of renewable expansion, we are seeing a lot of planning already under -- being undertaken or further expansion into transmission and battery [ serves ], which remains a core area where we need to be. On the quarter 4 of operating performance, I would like to invite Satish Talmale to take you through the performance. Satish?

Thank you, Harsh, and hi, everyone. On quarter 4 operational performance, so we achieved quarter with zero harm on HSE aspect. That means no major incident reported for the quarter. On performance, overall average quarterly availability is 99.52% which is largely due to all the scheduled outages, which we plan typically in Q4. But on an annualized basis, we almost hit our target of 99.75% with 100% maximizing [ incentives ]. On solar generation, we achieved 23.9% CUF with a generation of 445.8 million units. On reliability, we achieved 0.13 trips per line, which is one of the best in our sector. And in quarter 4, we achieved 0 trips for entire substation. So we are continuing our efforts to maintain consistent performance based on reliability-centric approach and coupled by digital technology with the [ best-in-class ] operational excellence. With that, I will hand over to Navin on Slide 9.

Thank you, Satish, and good evening, everyone. We are on Slide #9. Another good quarter with robust performance. We have recorded a revenue and EBITDA of INR 786 crores and INR 655 crores, respectively, which translates into 31% and 24% Y-o-Y growth. NDCF generated for the quarter was INR 451 crores, and Board has approved distribution of INR 3.55 per unit that translates into DPU growth of 3% on a Y-o-Y basis. With this, FY '24 DPU stands at INR 41.1 -- INR 14.1 per unit, a growth of around 6% compared with FY '23. Coming on to collections for the quarter, it stood at 119% and 89%, respectively, for transmission and solar business. For FY '24, collections performance at entity level stood at 103%, with both business segments having collection performance greater than 100%. The DSO, as of 31st March '24, stood at 46 and 71 days, respectively, from transmission and solar business. This reflects improvement in DSO in both the business segments by 8 to 10 days on a Y-o-Y basis. Moving on to next slide, #10. DPU for the quarter is INR 3.55 per unit. It will be distributed in the form of interest and dividend, which is INR 2.74 and INR 0.81, respectively. The outstanding units at the end of the quarter is INR 78.37 crores, and the distribution to unitholders comes to INR 278 crores. Record date for the distribution is May 30. And tentative date by which the unitholders will receive the distribution is June 8. NAV, as of March 31, stood at INR 133.15 per unit. Post this quarter's distribution, IndiGrid would have distributed INR 85.97 per unit to the total distribution of around INR 4,945 crores. On the right-hand side, we have showcased the trend of distribution on a year-on-year basis, which has stable and scalable growth of 6% over the years. Further, continuing past [ trend ] of distribution, for FY '25, quarterly DPU guidance has been increased to INR 3.75 from INR 3.55 per unit, which is a growth of around 6%. Coming on to next slide, #11, this showcase a waterfall from our EBITDA to NDCF generation and distribution. At an SPV level, we had a consolidated EBITDA of INR 670 crores. Net of finance income, working capital movement and CapEx at SPV level, NDCF generated at SPV comes to around INR 813 crores. The net of the trust-level expenses, finance cost and tax, we have generated NDCF of INR 451 crores. In Q4 and FY '24, we have added INR 128 crores and INR [ 143 ] crores, respectively, to our reserves. And total reserves stands at us INR 465 crores, which is in excess of 1 quarter's DPU. This is current guidance. So that's all from my side. I hand over to Meghana to take the subsequent slides. Over to you, Meghana.

Thanks, Navin. Hi, everyone. I'm on Slide #12. Looking at the balance sheet for IndiGrid as on 31st of March, we continue to be AAA rated by all the 3 rating agencies. And we closed the fiscal year with an average cost of debt of about 7.68% and a very healthy cash balance of about INR 15.94 billion, of which 1 quarter's distribution -- Q4 distribution is already included, plus about INR 440-odd crores of [ DSRA ]. Also includes the cash balance part of that. More than 75% of our borrowing book of INR [ 192 ] billion is in the form of fixed-rate borrowing, to that extent, insulating the borrowing book against short-term deviations in the interest cost. Related to AUM, the leverage ratio remains at healthy 62.4-odd percent on the back of the equity raise that we did around INR 1,070 crores in the last fiscal. EBITDA to interest coverage ratio remains very healthy at around INR 1.86x. The gross borrowing book is almost 50-50 divided between NCDs and bank loans. Even as far as NCDs are concerned, they are subscribed by a lot of different classes of investors, including mutual funds, banks, financial institutions, FDI investors like IFC, PSU banks, so on and so forth. The graph that you see at the bottom of the chart reflects the refinancing schedule. And as you can see, it is smoothly divided over the next few years, ensuring that we do not bunch up any debt maturities in any particular year trying to maintain that level at not more than 14%, 15% of the gross borrowing book. Moving on to Slide #13, talks about the total returns that we have been providing to all the investors. The total returns comprised of distribution utilities, which is about 79%, and the price change, price appreciation of 33%, translating into an absolute total return of 111% and that annualized translates into 12-odd percent. We compare ourselves, on the left-hand side, with pure-play debt instruments like GSEC bond, 10-year and 30-year. And on the right-hand side, with pure-play equity indices like NSE 500 and NSE Infra, BSE Utilities. More importantly, with the run-up in the equities, you can see that the annualized return on equity has certainly gone up. But on a risk-adjusted basis, which is reflected through Beta, IndiGrid Beta being 0.08; on a risk-adjusted basis, IndiGrid still consistently has been outperforming both the debt and the [ equity businesses ]. Moving ahead on Slide #14 on the business outlook for FY '25. On the portfolio strategy basis, we continue to focus on ensuring operations remain stable by ensuring predictable and sustainable distribution on the back of value-accretive acquisitions, both on the transmission and renewable assets. On the back of the 5 greenfield projects that we have recently won, complete focus remains on execution of this work on both the transmission as well as the BESS projects, synergistically also looking at participating few more opportunities that will come our way in the current fiscal, as well as deliver on the DPU guidance of INR 15 for FY '25. Balance sheet strength and focus on ensuring that, that continues remains, again, as one of the top priorities by ensuring that we optimize the interest cost and try to see that we elongate the tenors as and when there are refinancing opportunities or acquisition opportunities that come through. Similarly, we try and maintain the leverage ratio as much as possible by ensuring that there is enough headroom that is available for future growth. On the asset management side, both on the digital asset management or Health Index that we have introduced, reflects on our priority and on ensuring maintaining at least 99.5% availability across the portfolio as well as ensure world-class EHS and ESG practices throughout. Industry stewardship again continues to be a focal point for us as index, wherein we try to participate in ensuring investor education happening regularly and at the same time, ensuring private sector participation gets priority in the electricity sector, both in greenfield projects as well as national monetization pipeline. Moving on to Slide #15, this reflects on how our DPU trajectory has moved on the back of accretive acquisitions that we have done since the time we got listed. The various color banks that you see talk about the acquisitions that we have done over the years and on the back of these acquisitions, how we have been able to grow and maintain the increased DPU for the sustainable period over the future. So that is what is reflected by this slide. I'll just take a pause here and open the room for question and answer, please. Subhadip, over to you.

That's perfect. Mike, can we please open the floor for question and answer? Thanks.

[Operator Instructions] We have the first question from the line of Pratik Kothari from Unique PMS.

Congratulations for the consistent performance for the past 5, 7 years. So my first question is on this ReNew entry, which we have made for the -- over the last 6 months, BESS, the Battery Energy Storage. Harsh, if you can speak more about that and explain what kind of business that is, I mean what kind of CapEx does it incur, and not just from our side, also from the customer side, given a DISCOM is putting up this Battery Energy story? And what does it cost for them to store this power? Recently, there were talks about central government having to come up with some viability gap funding because they didn't see it economically. How much is it for the project that we have won? Just broadly, if you can help us explain or understand this business or economics of this.

Was the management able to hear the question?

Yes. So thanks, Pratik. For us, Battery Energy Storage projects are almost exactly similar to transmission projects. [ Even within ] framework, it is pretty much similar in terms of [ PVCV ] form, except that instead of transmission service agreement, it is called [ Battery ] Energy Storage Service agreement. So it's identical in terms of the concession agreements that we have followed in the past. The payments or rather the business model or the operating margin is also based on availability. So as long as the battery is that we manage provide a certain availability as well as [ accounted ] efficiency, we continue to get paid. Whether the customer uses the charges and discharging cycles we have provided or not, irrespectively, it is at pace. So practically, it is almost like a substation project that we have [ managed ]. So that's point one. Point two, in terms of the customer CapEx, customers, in this case or rather in most cases, have not been incurring any CapEx. It would be in the substations and therefore, rather they are outsourcing CapEx. So we are doing CapEx on their behalf, and they will pay us an annuity for 10, 12 years as the big [indiscernible]. So the business model is that instead of incurring expenditure on their books, we are calling bids and they are paying an annuity bid for that. Just to provide you a little bit of context of economics. The tariffs at which we have won a few projects would be in the range of around INR 4.5 a unit. And the primary driver for this tariff we will review substantially over the last 1 year [ reviewing ] that product. Cost of batteries have come down drastically over the last 1 year. And I think at a INR 4.5, we are looking at an inflection point because for certain peak demand if one was to use solar plus battery, [ at beginning ], the cost would come around INR 6, INR 7, which is pretty much, I would say, at the great parity to a certain [ floor ] in the evening or morning. So I think there is a real business case where we will see a lot of growth in the Battery Energy segment from different customers as long as the prices remain down. So we are hoping that a lot of growth in this area will take place. But the business model, to your question, remains as normal bid [ on operating terms ] kind of the business.

Correct. And if you can share what was -- what is the CapEx that we'll have to put up for this 180-megawatt, the one we are doing in Gujarat? And when we say 180-megawatt, 360-megawatt, that means we have to keep this [ factory ] available for 2 hours, that is the contract which we have to serve?

It's a little more complex than that. But yes, we need to do 2 hours of availability, but there are also cycles. So this project has 2 cycles, some projects can be 1 cycle. So it is not easily comparable. Each project is not easily comparable over here because based on the cycles and location and customer requirements, there can be, what we call, sizable amount of referrals between [ size ] of projects. [ However ], this project that we have won has got 2 cycles, a 180-megawatt that meets the peak capacity; 360-megawatt, that means of 2 hours of battery storage. And the cost of the CapEx, we're still in place of -- I would say, we are in place to order -- a process of placing -- placing the orders, but it's in the range of somewhere around INR 550 crores to INR 600 crores.

Okay. And this INR 4.5 which is mentioned will be the cost for the DISCOM, this does not include any gap funding that center has to do, right? This is a...

This project is not under any gap, any [ viability ] gap funding. And the project economics is not dependent on any [indiscernible] initiative from the government.

Fair enough. And Harsh, on the risk part, I mean the battery technology, I mean, keeps evolving every other year. So what happens in case things change a few years down the line? That is one. Second, given this is very new technology, what happens if this doesn't perform as expected? Because transmission line has been an existing part in many decades. This is quite new. And third, what happens after this, say, in 12 years?

yes. I think point one, the technology is evolving massively, and it is evolving from Beta, so efficiencies are improving. So as the new technology is coming, we will see probably reduction of costs, and we are hopeful that it happens. And it will help us in further augmentation that we have to do. To your second question, I think we need to do a little bit more work around it as a country, as a [indiscernible] to raise awareness. So most likely, today, the largest long term battery capacity in the world exist in China. And it is not in 1, 2, 10 gigawatts. It's over hundreds of gigawatts of manufacturing capacity of lithium-ion batteries that exist. This technology itself is not new. Technology exists for decades in satellites, in our phones. It is the same technology at a different skill, different applications. So the lithium-ion technology, I won't call it new. It is extremely stable, extremely viable and huge technology across the world. So I think it is once -- one. And we have a lot of exposure, and we have looked back at a lot of technology as well as manufacturing plants, operating plants in China, where capacity is tremendous, the use case is tremendous. And they are treating it as a base technology, not as an emerging technology. I would say, sodium-ion is an emerging technology. But lithium-ion is a base technology, it is in the existing [ applications ]. So we are not worried about the risk of the technology itself. But we do see the technology improving year-on-year, and that would add edge to us rather than...

And what happens once -- I mean, the battery would have a life of about 8, 10, 12 years, depending on how much you use it. What happens post that?

So a variety of business cases are possible. Battery will have a very long life. Even after 10, 12 years, battery will have a life there. There, I would say, actual [indiscernible] will be slightly different business. Therefore, the charging stuff will be slightly different and may not be wisely used as a utility scale back to surge, and that will kill a battery; and be used in recycle, there are multiple business cases [ in India ]. And depending on the cost, technology and what exists 10,12 years down the line, we can find an application. Rather I'll tell you today, there is a very vibrant battery recycling industry in India itself, forget about China. So -- but to predict that what will be the size of battery recycling 10,12 years down the line would be a little too much [ crystal ball using ]. But I can tell you, very sufficient applications that exists after 10, 12 years.

But none of this is captured when we bid for the project. And even then...

I don't think I can answer that question, Pratik.

Okay. Fair enough. Sir, second, as we -- I mean -- so one is to maintain this DPU -- I mean, first of all -- I mean, on rate increase from where we started, so one is to maintain this DPU of INR 15 for as long as possible. And second is this [ acquisition ] which we intend to keep doing over a period of time. And you have done a fine job over the last 5, 7 years. But as we keep growing larger and larger, does it become harder to kind of capture this increase, given the number of projects or the size of projects that we have to keep on moving?

To your question, yes, as we become larger, it takes more effort to grow on a larger base, 100%. It is -- I mean, 5 years ago, INR 2,000 crores would have added sizable growth, Now, INR 2,000 crores becomes the 8% on the overall book. So as we become large, we obviously have to target larger projects in larger growth pipeline. Fortunately, the market that we operate in has been growing very fast and large. So we are hopeful that we'll be able to keep up our share of growth rate that we are working towards. So -- and then the first question, I think we do publish indicative [ DPU ] profile. The indicator that we have published in Slide 15, you may want to refer that. There is a sizeable amount of, I'd say, past -- [ relative past ] that we can maintain INR 15 a unit without acquiring any more products, which allows us sufficient time to maneuver, find projects, develop projects, acquire projects to ensure that we are able to maintain as well as grow [indiscernible].

Perfect. And last question from my side. I mean, we commissioned Kallam, our first greenfield. So if you can just share some experience how is it putting up, how is the team being developed? Because now we are also taking up a few more greenfield projects...

Yes. So what we have done is we have made a separate business unit within IndiGrid towards projects. It Is headed by an extremely [indiscernible] gentleman, who's got a very deep experience on power sector. And we have put together a business unit on project side as we go for larger projects because we just don't have Kallam, we also have several regulated tariff and [indiscernible] projects going on across country already on our substations. So there is a lot of CapEx happening in our portfolio, put together, INR 2,000 crores. [ PVCV ] plus around INR 400 crores, INR 500 crores of [ cost base ] projects. All in all, INR 2,500 crores of CapEx that we are doing. So we have identified several of our team members within IndiGrid itself, who are doing in CapEx in the past, who have been reassigned responsibilities on the project side. And we are augmenting further as we look for other products. So I think the core talent remained in IndiGrid from the beginning. And wherever there was, I would say, leadership required, we added leadership capabilities on the execution.

[Operator Instructions] We have the next question of the line of Subhadip Mitra.

My first question is, again, with regard to the BESS piece. So if you could just highlight for us what has been changed over the last 6 to 8 months which has led to this sharp reduction in costs? What we understand is, okay, while lithium prices have come off, it may not have come off by more than maybe 20%, 25%. So is it that there is a function of probably some near-term or medium-term dumping by China because they are not able to sell enough batteries to the European EV industry, given restrictions there? Is this more of a short-term event or a near-term event? Or do you see that there is a structural change in battery prices and they will keep on getting cheaper? That's my first question.

I think to answer the first question, I would say -- I won't use it like a -- I won't use the word dumping. There is a significant scale that China has created in manufacturing batteries. And it is a scaled business because the larger the plants are, the lesser the cost is. Second, there is a significant advancement of technology that Chinese have invested. Few years ago, there used to be cell size of 200 ampere hour, then 250, then 280, 314. And now this year, this time, they have announced 350 ampere hour cells. And just to put things in context, between 350 ampere hour cell and a 280 ampere hour cell, in the same volume, we can pack 25% more volume -- more power, right? So essentially, you have reduced the rest of the balance of cost by 25%. So there is a lot of advancement on R&D side that we are working on as well as we've got this thing. Now, the biggest driver other than the lithium prices what we've seen is overall, globally, the EV expansion or rather the growth that we estimated has not taken place. And most manufacturing facilities at the cell level are pretty similar but -- rather same for EVs as well as within the storage. So the EV growth that the world was factoring in has not taken place, for variety of reasons, political, economical, a variety of reasons. This has resulted into a lot of capacity being available for utility [ scale ] battery storage, where the application is kind of very, very viable. So a lot of capacity, technological advancement and I would say, [ advancement ] in the market, all three things are contributing together. On top of it, yes, as you mentioned, especially U.S. is also not importing batteries from China, if I'm not wrong, as well. So that has reduced competition. and that has reduced prices in China. So I think many factors put together are contributing. I would not call it a short term [ sentiment]. But at least midterm, I do see this continuing, a lower battery [ price ]. So hopefully, it can [ even ] further.

Understood. And just like we've seen India also trying to -- we've seen that in solar module, [ right-to-pay ] element, everything, we are trying to become more self-reliant and, let's say, not have as much dependence on China. So do you see things panning out in a similar manner in batteries also? Or that's still some time away?

See, I think it's can because it's not impossible for India to develop that capability. What is difficult is to match the scale, right? For example, battery storage, we are not competitive, we're not even putting 0.5 gigawatt on battery storage. But solar, India's total installed capacity [ 90 ] gigawatt hour, right, approximately. China putting 280 gigawatt hour in last 1 year alone, in 1 year. So the scale is different. Now, will we be able to create the scale, is the question? Yes, the government policy on PLI and another policy of putting trade barriers would help Indian manufacturers for a couple of years to build capacity. There's not a lot of dedicated battery manufacturers in the country, right? And they are the last themselves. So I do see that there is a possibility that we can expand into it. But to stabilize a new plant to produce out of the new plant and customers accepting those battery [ out of the those plants that are ] implementing, in my mind, is at least a 3-, 4-year cycle. So if the government starts today, let's say, 6 months down the line, I see domestic utility scale batteries and when I say domestic, it is still manufacturing; at least 3, 4 years away. But that's a midterm, and I do certainly see that happening and taking place.

Understood. Lastly, on the diversification that we've seen for IndiGrid, right, we've moved beyond just buying transmission projects -- or mature transmission projects from others, you're constructing, getting into greenfield, there is solar, there is base. So in terms of your risk balancing that you tend to do, how much of your AUM do you see moving towards these newer areas? And do you see any incremental risk which can come through the instrument?

Yes. No, I think one of our core value is agility. We are agile, we will keep evaluating opportunities. On the other hand, we are conservative. So I won't call it any of them in the newer areas. I think we have pondered upon, experimented a lot on every business expansion that we have done. For example, before getting into batteries in this way, we have installed the first battery [ proper ] plant in our substation, match with solar, make our substation grid independent. So we consume, during the day, solar and in the evening, battery. We have made it work in our old substation to [ grid ] alone. So we have our own design and engineering and work done on those plants to learn, get our hands dirty before we expand it to this area. So that's on battery. Same way on solar, we acquired a 100-megawatt plant, operated it for a couple of years before we took it to 1 gigawatt. On the development, we did a INR 200 crores CapEx. We completed it, and now we have INR 2,000 crores pipeline. So we've gone strategically first taking a step, proving the concept, capability, building the capability, learning the ropes and then expanding. So by the time we have really done something meaningful and sizeable, it's no more a new area, right? So that's how we've gone about it. In terms of risk-reward, it's largely homogenous, most of them are annuity linked. So we don't see that as a material risk. And even in the projects that we have won on our under-construction side are fairly derisked. So we would get to move in that direction. We are confident that we're not adding a substantial amount of risk because of that.

Okay. And then, is there an in-house target or a threshold that you have as to how much would get allocated towards these newer areas? Or it's fairly homogenous?

See, the battery storage is kind of a core area as part of transmission. On the development side, we have not crossed 10% of capital deployed, that's what is the part of our overall [ SEBI ] cap. Renewables will remain around total 25%. So that's the overall guardrail within which we'll operate.

We have the next question from the line of S. Agarwal from Max Life Insurance.

Collection efficiency for solar asset has reduced to 89% this quarter vis-a-vis 128% last year same quarter. So is this [ foster ] you expectations better or lower? And is there any specific counterparty where you're seeing the collection efficiency to be lower?

I think -- I mean if you look at the quarter-on-quarter comparison, it looks like 180% now -- 128% to 89%. But on a full-year basis, it's still 101%, right? So it's still collecting [ past dues ]. So our quarter 2 and quarter 3 were very good. And basically, what happens in general is when your couple of quarters are very good. The third quarter is down because the customer has paid out of the substantial amount of dues. So then there is -- we take a breather and subsequently [ increase ]. So this is -- we don't see that as systemic, we don't see as one particular customer delay. It is just a normal trend that we have seen that once you have a large quarter, the next quarter or quarter after that is relatively [ down ].

Do you have any further questions?

No.

We have the next question on the line of Vipulkumar Shah from Sumangal Investments.

So my question is regarding our new acquisition of this solar acquisition. So what type of quarterly revenue and EBITDA run rate we can expect from this asset on a steady-state basis, sir?

Meghana, you want to answer that question? On ReNew -- I believe you mentioned ReNew acquisition, right?

Yes, sir.

So on an annual -- I think on annual basis, the revenue from the ReNew asset would be in the range of around INR 700 crores to INR 710-odd crores. And on the EBITDA basis -- sorry...

Revenue, Meghana, it is...

Sorry, revenue would be about INR 200-odd crores, in that range, INR 190 crores to INR 200-odd crores. And EBITDA will be somewhere about INR 175-odd crores.

We have the next question from the line of Anirudh Singhi from the Broacha.

Just correct me if my understanding is wrong, our NDCF for the year was 1,240 -- around INR 1,240 crores, right? And we have to pay out 90% of which -- of that, which is around INR 1,120 crores. But we paid INR 1,050 crores. So how do we account for the missing INR 70 crores?

Yes. So to clarify, the NDCF formula has two legs, and it has changed with the new [ SEBI ] regulation. NDCF formula requires us to distribute minimum 90% from SPV to IndiGrid, and from IndiGrid investor, another [ 90% ]. So the 90% threshold at [indiscernible] and 90% threshold at [indiscernible]. Therefore, respectively, it is 81% mandated. And therefore, that's the math that we need to run. That 90% at both legs. As we said so, SEBI here has implemented a new NDCF formula, applicable from first April 2024 onwards, whereas they have put in an obligation of minimum 90% at a consolidated level, the [ fees ] you calculate it. So the formula is slightly changed from this quarter onwards.