JSW Energy Limited (533148) Earnings Call Transcript & Summary

Ladies and gentlemen, good day, and welcome to the JSW Energy Q3 FY '21 Results 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 of Axis Capital Limited.

Thank you, Monica. On behalf of Kotak Institutional Equities, I welcome you all on the earnings call of JSW Energy for 3Q FY '21 results. From the management, we have Mr. Prashant Jain, Joint Managing Director, and CEO; Mr. Pritesh Vinay, Chief Financial Officer; and Mr. Ashwin Bajaj, Group Head, Investor Relations. I would now hand over the call to Ashwin for his opening remarks and for the management to follow through. Thank you.

Good evening, ladies and gentlemen. This is Ashwin Bajaj. As [indiscernible] introduced, we have Mr. Prashant Jain and Mr. Pritesh Vinay with us. So we'll start off with opening remarks by Mr. Jain, and then we'll open up the floor to Q&A. So with that, over to Mr. Jain.

Thank you, Ashwin. The quarter gone by was very interesting quarter for all of us. And in terms of the power demand, we saw a robust recovery in power demand. In quarter 3, we saw power demand went up by 6.4%. And interestingly, in the month of October, we saw the double-digit power demand growth at 12%, which was due to lower base effect and also rebound in the economic recovery. And in the current quarter also in the January month, we are seeing the power demand is growing at the rate of 4.5%. So till 9 months, we are seeing that the power demand contraction of close to 4%. I'm expecting that we will be closing year below 3% in power demand contraction and close to 5%, 5.5% demand growth in the H2. Due to lower base effect in the H1, next year, H1 we'll be seeing a robust power demand growth. And I am quite confident that we will be seeing power demand growth of 4% to 6% in next 10 years' time frame, consistently. So that gives us a very good opportunity. In terms of the company net generation, the long-term power generation -- net generation was up 6% year-on-year. And in total, net generation was up by 1%. So that demonstrates that our merchant volumes were lower. Because of lower merchant volume, our EBITDA was down 6% at INR 655 crores. But due to lower interest cost, our PBT was higher at 14% year-on-year, and profit after tax was higher 12% if you take out one-off which was there in the year last. Now during the quarter, we did exceptionally well in terms of receivable. We have seen the receivable at INR 1,693 crores at the end of the quarter, which is 7 quarter low and which is 22% lower year-on-year. Because of strong cash flows and strong recoverability in the receivables, we reduced our debt by INR 952 crores net debt was reduced during the quarter. And during the first 9 months, we have reduced our debt by INR 2,226 crores in the first 9 months. Therefore, at the end of the quarter, we are at INR 6,719 crore of net debt with a weighted average interest cost of 8.29%, which will be also further going down due to the resets, which will be coming up in the coming quarters. And with this, our net debt-to-equity is 0.46x, and I don't have the numbers in front of me, but I believe that this will be the strongest balance sheet in the country with the net debt-to-equity of 0.48% and net debt-to-EBITDA of 2.17%. Now going forward -- before I speak about going forward, during the quarter, also, the JSPL loan has been settled in totality. So we don't have any outstanding from JSPL. Going forward, as we talked about 810-megawatt of the SECI tender, which we have received LOI last quarter, we are expecting that the PPA will be signed for 540-megawatt in the current quarter, and that is 270-megawatt will be signed in the Q1 next year. We are absolutely ready in terms of the execution of the project, whether it is with respect to the sites, with respect to the placing the orders. And we will be in a position to commission the project well ahead of the schedule of 24 months from the date of the PSA. With respect to the 240-megawatt of the Kutehr project, the project execution is going on fast track. And we are running as per the schedule. In terms of the PPA, we are expecting in the current quarter, PPA will be signed and sent for -- to the regulator for approval. And we are also working very actively with the group companies to finalize close to 1,100-megawatt of RPO obligation, which will be met by solar and wind projects. And during the course of the current quarter and next quarter, we are expecting to finalize those terms and conditions. And we expect that those projects will also get completed in next 18 to 24 months' time frame. Therefore, we believe that we will be in a position to execute close to 1,800-megawatt of solar and wind capacity and 240-megawatt in next 36 months' time frame. So that's how we see that the capacity is going forward. That means that we have seen the end of the deleveraging of our balance sheet. So what you are seeing the net debt of INR 6,719 crore is the lowest one. And we are -- we exit the bottom of the net debt. There are a couple of further developments we did during the quarter. And during this Board Meeting, we have approved for slump sale of 18-megawatt of the thermal power plant, which was set up in -- at Salboni to sell this asset to JSW's Cement. We are -- we have appointed a valuer who will be valuing the transaction. And it will be -- the transaction will be done at the carrying value -- investment value at our books or more than that, and we will be able to disclose it and during the end of this quarter, as and when the transaction is consummated. We are expecting that the transaction will get completed by 31st of March, and sales proceed will be received before 31st of March. The company has been focusing very strongly on ESG compliance and that has demonstrated in its rating. We have received the highest rating achieved by any power producer in India from CDP. In fact, it is the highest rating, probably close to -- in the world by any power producers because average rating for the world is B and then in Asia is C. And we are looking forward that, going forward, maybe next year or year after that, we will be aspired to achieve the highest leadership rating of A. Similarly, our MSCI ESG rating has been also upgraded from single B to BB, which is also highest-rated power producer in India. And there also, we are aspiring that to achieve BBB and subsequently A rating going forward. So we are making a substantial progress on towards the ESG compliance and also making this company as a growth company in the renewability space. We are also very, very much excited with the government policies in that regard. Today, Ministry of Power has notified HPO obligation trajectory also. And thereby, I am expecting close to 10,000-megawatt of the PPAs will be signed up from now to be in the next 5 years' time frame based on those HPO obligation. That demonstrates our commitment in the hydro sector also, and we are really working very aggressively towards building the portfolio. In addition to this 2,000-megawatt -- 1,800-megawatt of wind and solar and 240-megawatt of hydro, we are trying to build a large book of resources in solar, wind, and hydro sites because we believe execution time in solar and wind is very small. But you need to have those locations or the sites in your control and -- including the right of fee and then connectivity. So your company is working aggressively in acquiring such locations in various states, which are having a high potential of wind and solar resources, and we are continuously investing on that. And therefore, in time to come, we will be able to leverage upon as and when good bids come at attractive return ratios, we will be able to participate on those -- in those bids and then grow the business. And with this, I end my opening remarks, and we are happy to take any questions you are having. Thank you very much.

[Operator Instructions] The first question is from the line of Atul Tiwari from Citigroup.

So just some kind of color on the CapEx and the weighted average tariff that you will have for this 1,800-megawatt renewable?

Okay. So look at this way, like as far as SECI 810-megawatt is concerned, the tariff is at INR 3. So -- and whatever wind capacity, which we are putting up, it is in the range of INR 6 crore to INR 6.5 crores per megawatt. And solar will be between INR 3.75 crore to INR 4.1 crore per megawatt. That's the kind of the CapEx, which will be there, depending upon how much blending we do. And in case of balanced group captive projects, also, the CapEx amount per megawatt will remain same. And we are expecting around 225 to 250-megawatt will be the solar capacity we will be putting up and approximately 800 to 850-megawatt will be the wind capacity, which will be put up. So this is how it will look like. So all in all, it will be in the range of INR 9,500 crore to INR 11,000 crores, I can give you the range, this entire 1,800-megawatt will be set up. And the group captive tariff will be also on a similar kind of range, what you are looking at, SECI 9 tariff. So that's how it will be. Yes.

Okay. And sir, just one clarification on that. So this CapEx around that you mentioned broadly, it includes the cost of land or land is everything?

Increase cost of power delivered at the delivery point. So if the SECI tender is there, it is the delivery point is the CTU periphery. And in case of it as a group captive, it is to the particular transmission point wherever it is. If it is private TRANSCO, then it is to the -- delivered to the customer. Or if it is through STU, then it is at the periphery of a particular substation. So all costs included, including the preoperative costs all statutory fees, everything all put together.

The next question is from the line of Aniket Mittal from Motilal Oswal.

Sir, just a couple of questions actually on the renewable front. Firstly, I just wanted your broader views on the recent fall in tariffs that we've seen in the renewables market. And how do you look at the competition intensity right now in the sector? And secondly, given the decline in tariffs that we've seen, just wanted to understand, from the signing of the 810-megawatt PPA, you've mentioned that each spectrum 540-megawatt to come in this quarter. Could you highlight which discounts are you in talk with? And is there any uncertainty on the price as well on the tariff rather, given the decline that we've seen?

So look at this way, Aniket. What this solar and wind are different animal. That's number one. And so -- and both are guided by different RPO obligations. So similarly, is now tomorrow, the hydro HPO obligation has been notified, where the power tariff will be in the range of levelized tariff will be a north of 425 or 450. It will be north of that. So each type of renewable power has a different competitive strength and different load profile and generation profile. So -- and discounts need different kind of power in order to manage their grid and as well as to meet their requirement. And then there that's why they are ready to pay that kind of a tariff. So wind, I think the current tariff at [ INR 39 ] is absolutely doable and that's what demonstrate in spite of in solar close to 24-gigawatt of the PPR yet to be signed. Whereas in case of wind, in 3 months, I'm talking that the PPA is going to sign in the current quarter. So that's what demonstrate the certainty of the signing of PPA as well as the viability of the tariff. So we are absolutely confident that this is a viable tariff, and this is why the tariff for the discount point of view also, and the PPA will be signed. Second thing is you asked about the reduction in the tariff that is happening primarily into the solar space. And you need to really see the people who are bidding those kind of a tariff. Every time a new entrant come and they make a bid. And because of certain option value, whatever they are trying to do, but those bids are also not seen light of day in terms of finalization of PPA and also execution by the developers. Even when you see the Badila project, which was done at INR 244 tariff 3 years ago, how many developers have developed it, and how many have surrendered that. And people are ready to put the tariff at a lower intensity even now. And that's where JSW Energy is shying away in participating in such auctions where we feel unsustainable behavior is demonstrated. Therefore, we are ready to look at in certain niche area where we are seeing the responsible behavior, and we continue to look at those areas. And we see that there are enough opportunities are available for people like us. And because the space is large, country's renewable capacity, addition requirement is close to 25 to 30-gigawatt annually, which is going to happen in due course of time. And in that, we can have a very small pie for us. So we would like to look at the niche segments.

Sure. Helpful. But you would say it would predominantly be from a wind perspective. And sir, just to get a perspective based on your discussions, these 550-megawatt that you're looking to sign for PPA? Applying the [indiscernible] are there still discounts that have been shortlisted for this?

Yes, there are, but I cannot talk about that. That's not -- I'm bound by the confidentiality, and then that is being done by SECI. As and when SECI does a PPA with me, I will be able to disclose it. But I can give you a color that it has been already been approved by the particular discount. And it's in the signing process.

Sure. So next question that I had, which was probably more to do from a group captive perspective and the opportunities apply over there. Maybe firstly on the thermal front, just wanted to understand the pending CP that we have with JSW Steel Dolvi, what would be the quantum of this PPA? And when do we get it -- when do we expect it to get operational?

Okay. I think I in my opening remarks, this is one point I have really missed it. I'm sorry about it. At -- as a company basis, we have been operating at 82% of the long-term PPA tied-up capacity, which has gone up now to 87%. With this recent acquisition, whatever we have done in Asian color as well as the increase in the capacity at Dolvi. Now the total PPA tied up capacity at Ratnagiri will be 1,145-megawatt out of 1,200 installed capacity. So only 55-megawatt is the open capacity at Ratnagiri. And at Vijayanagar, we are having 310-megawatt of the tied-up capacity out of 860-megawatt. So we are having 550-megawatt of the open capacity. So that's the situation we are having in the current -- in the next financial year. So in various quarters, you will see the operationalization. But we -- you can reasonably be sure that we will be operating at 87% in the majority part of the year next year. And going forward also, in next 2 to 3 years' time frame, I am seeing that our capacity will be fully tied up, 100% tied up. That means what I'm trying to explain is that Vijayanagar as well as Dolvi 100% will be tied up and -- in next 2 to 3 years' time frame. And whatever incremental capacity, which we are setting up is 100% tied up, be it a key group captive or whether it is Kutehr or any new project because the project execution will be only done once we are securing the PPA. So the company is becoming 100% PPA tied-up company. And that's what we really see.

Sure. And sir, just to correct, so you think after the tie-up for Dolvi, which should happen next year, the open capacity at Ratnagiri would be 55 megawatts?

That's right. With the current Board approval, we have tied up. Now the point is, as far as the PPA is concerned, it will be signed probably in the current quarter itself. But the issue is open access. So open access delivery will be happening in phases, as and when their units are getting commissioned. So which we have been given to understand, in Q1 next year, they are going to commission. Q4 of this year and Q1 next year, they are commissioning their facilities in phases. And probably it will be ramped up into the Q2. So you will be seeing in Q4 this financial year and Q1, Q2 next year, this entire capacity gets ramped up. That's why I'm saying majority of the year, you will see this PPA tied up.

Understood. And sir, just on Vijayanagar, where do we see the visibility coming for the tie-up in Vijayanagar?

So there is a thermal RTC combined with the renewable 5,000-megawatt tender from SECI, that's one opportunity. And second opportunity we are looking at is the group captive also where JSW Steel is planning to increase at some point of time their capacity in -- at Vijayanagar. So that's why we are looking at a 2 to 3 years perspective, we will be able to secure all entire capacity.

Okay. And just a note of growth captive. I think you mentioned around 1.1 gigawatt of obligations that you plan to tie-up with the captive. If you could just throw in some timeline as to, a, how this could probes? And also the model for this? I mean, would this largely be on a regulated basis, given the business with a group captive?

So it will be -- as I said, is timeline, you can look at it that by March 2023, this entire 1,800-megawatt capacity should get commissioned in and around that one quarter here and there. And in terms of the tariff, you will be seeing, as and when we are finalizing between the parties. But it will be -- the format will be seemed like SECI controlled PPA format. It's a single tariff kind of a construct like SECI is having. Because whatever group captive transactions we have been doing, we have been doing it in arms-length either based on the CRC formula or prevailing market conditions. And today, the renewable contracts, our prevailing market conditions are identical to the SECI PPA. So it will be the construct will be similar to that.

So -- okay. I mean, that was actually the doubt that I have given that it's -- if it was in a group captive level, how would the tariff get decided in now there? Would it...

We will disclose it to you as and when we find.

Sure. Sure. And just one last question, if I may. Just wanted some color on how is the merchant market progressing for you? I think there's been a sharp pickup in the merchant prices that's happening in January. So just wanted to get a sense in terms of the possibility of any new contracts that you signed as well as what are the [ dark space ] that we're looking at right now?

Yes. Anything -- my comment about that is to volatile market very highly unpredictable. And so what we have been seeing that economic recovery is taking place and so is the merchant tariffs. But I'm not sure that how long they will continue at -- on a sustainable basis. And I'm not sure when you will be seeing the average prices picking up. So -- that's why if you might have noticed that, as a company, we are migrating from a merchant capacity to the long-term capacity. So yes, we will be in a position to capitalize whatever we can do in due course as and when any kind of opportunity comes, but that does not split in our long-term strategy for keeping any capacity open for merchant. So our focus is to tie-up as much as possible and have as much as possible assure cash flows for our projects.

The next question is from the line of Mohit Kumar from DAM Capital.

And sir, 3 questions. Firstly, on the SECI wind project. Let's say, we are able to sign the PPA in next 1 month or 2 months, will we be able to commission this in the next fiscal, somewhere, 12 to 13-month down the line? Or do you think it will take more than that?

I -- see, as I said, is that -- we are obligated to complete the project in 24 months' time from the signing of PSA, and we are quite confident that we will do within that pipeline. And -- so one good part, which I can explain to you, is in case of renewable projects, on any format, they are mandated to be commissioned in a modular format. So the PPA terms suggest that even in a block of 50-megawatt, you can complete and declare COD. So quarter-on-quarter, we will see the progress and those kind of things, which will keep on happening. And as and when PPAs are signed and probably what we will be coming out as a disclosure from the company in time to come, we will be making a progress report before the investors and telling you in advance that what kind of a schedule we are seeing in which quarter. What commissioning schedule we are anticipating towards that particular project. So we will keep you posted on that. But I can assure you on one part is that it will be well ahead of the schedule, and it will be in a modular format.

One classification, sir. Does PPA has an option to supply prior to 24 months? And what is that kind of tariff?

Same tariff. You can -- you can do at any point of time. It's outer limit is 24 months' time. You can commission it before, and same tariff. And you can do it in a modular format of 50-megawatt.

Understood, sir. Understood, sir. Secondly, on the service since JSW Steel we are going to -- we will be supplying more and more project with steel or group companies. And I believe the group company need to have 26% stake in that company -- in that particular project, right? So does it mean that JSW Steel will have to buy more and more share of JSW Energy to comply with that particular norm from group captive?

So it is certainly required to meet that norm. And now those things will have to be seen that whether there are existing, whether they have their shares in their hand or from the other interfere promoter transfer, which will be done in order to mitigate that part. And for new generation solar and wind projects, it will be the equity, which will be taken probably in the -- at the SPV level instead of doing in the main listco level. For existing thermal projects, it is at the listco level, but because the assets are owned by the JSW parent, both Vijayanagar as well as Ratnagiri assets are owned by the listco. But when we are building renewable projects, it is at SPV level. So there, the equity will be owned at that SPV level right then. So they will be subscribing to the new capital, which will be issued.

So thirdly on the Kutehr. Sir, is this tariff of 4.5 fixed for 25 years? Or is it possible to share some kind of...

It's a regulated tariff. You will -- the regulator will be deciding the final tariff based on the total expenditure as per the CERC regulation. And based on our estimates, it will be close to INR 4.50 or lower.

Okay. Understood, sir. So you say cost-plus project is not a big project. Am I right?

Correct. Correct.

Sir, lastly, on this sir, if I look around 24 to 36-month down the line, can you list out the kind of growth projects which we are considering at this point of time, even the 5 that we are nothing -- we have done absolutely nothing in the last 24 to 36 months. So apart from wind and -- wind and hydro, is there anything in your mind, is this something which we really want to deploy our capital and grow our profits?

So keep following us, then you will see quarter-on-quarter is a differentiation, which we have done in the difficult to challenging environment in last couple of quarters. Also, we delivered what we promised. And we did differently than the industry. And as we promised, we are on the execution table for close to 2,200-megawatt or 2,100-megawatt of the renewable project. Some are already started, some are getting started, ready to just take off with this. And then quarter-on-quarter, you will see the progress. And as I said, that the opportunity is huge. We are operating in a niche segment, niche -- we are very selective. And you will continue to see that our order book or the growth book is also -- will be built up. So keep following us quarter-on-quarter, you will be surprised.

The next question is from the line of Rahul Bhangadia from Lucky Investment.

Sorry, if you have picked up this topic maybe in some of the calls before, but you just mentioned you are going to be selective -- you are selective with the project that you're going ahead with. If you could just give us a sense of what equity IRRs or ROEs, are you looking at with what debt equities you are speaking about, for all the projects that you mentioned in the call previously, all the INR 10,000 crores to INR 11,000 crores that you're going to invest over the next 2, 3 years?

So typically, we look at 25% to 30% equity and balance as a debt. And typically, we look at mid-teens equity IRR. So that's what we have been looking. So we are not comfortable in assuming absolutely low-interest environment. We are not keen on -- in assuming that you can operate the assets at 11%, 12% of equity IRR. We are not comfortable for P50 or P75 generation profiles, we are only comfortable at P90 generation profile. So that's how we have been very conservative. And that's why we have been -- we could survive in a difficult environment. And that's why our receivables are 7-quarter low, whereas the industry receivables are 7-quarter high.

And Rahul, if I may add to that to the other question that you asked on the leverage profile of the projects. If you look at Slide #5 of the presentation that we put up, SECI 9 will be funded with a debt-equity of 70/30 and Kutehr with INR 6,733 crores. As Prashant was mentioning, as and when in the subsequent quarters, we finalize the group captive projects, and we talk about that, we'll also talk about the indicative leverage profile for funding of those projects.

And it demonstrates -- our capability in the last 10 years' time frame, first greenfield project of the hydro project has been the financial closure or the approval has been received at the door-to-door for the 22-year -- the financial -- the term loan and at a more attractive interest rate terms. So that's how we have been operating. And no power -- hydropower project has been constructed with a PPA upfront. We have done it first time in the country.

The next question is from the line of Rahul Modi from ICC Securities.

Thank you for your time and detailed answers. Sir, just a couple of questions. Sir, any progress on the Ind-Barath NCLT approvals?

So we are also keeping our fingers crossed and working along with NCLT. So at this point of time, it is moving slow due to the ongoing pandemic and a lot of pendency before them. And -- so I'm not sure how much time will it take, but we continue to work with the various authorities.

Right. Sir, in terms of -- you, had mentioned in your opening remarks that the JSPL loan has been repaid. So what was the amount that you closed this quarter? And was it an all-cash deal? So you mean because of...

Yes, yes. It's 100% cash deal along with the accrued interest, 100% was repaid. Pritesh?

Yes, yes, yes. So Rahul, the outstanding balance at the end of the quarter is 0. Just to give us tens of tons at the start of the financial year, it was about INR 261-odd crores that was due. So within the 9-month period, they have paid out everything, including the interest on that. Yes. So there's nothing outstanding from December onwards.

Okay. Perfect. Sir, just lastly, I would like to understand, sir, any reason for the sale of the 18 megawatts of plant at Salboni to JSW Cement?

The only reason, Rahul, is that, as I mentioned, that we could not synchronize the plant because of the necessary discount approvals. And the asset was -- we could not get commissioned. So -- and the asset was built for JSW Cement. And that's what it demonstrates our -- the prudence also between the related party that if something is a -- some investment has been made by a company where the minority shareholders are present and asset has not been put to use, the counterparty has come forward and then ready to take over the asset, even if it is not being totally used. So that's what the 2 parties have done. And that's what demonstrates the credibility between our counterparty.

The next question is from the line of Shantanu Mantri from MKVentures.

Yes. Sir, really impressive to see the deleveraging. The net debt is below INR 7,000 crores. So very happy with that. Sir, I just wanted to know that this figure, INR 6,719 crores excludes working capital and acceptances. So what would be that amount?

So Shantanu, at the end of the quarter, about INR 623 crores was the outstanding acceptances plus [indiscernible].

Sure, sure, sure. Okay.

[ In this quarter ] it went up by about INR 23 crores. I think at the end of September, that was around INR 600 crores.

All right. All right. All right. And sir, next question, say, we have this INR 10,000 crores, INR 11,000 crores investment coming ahead in the next, say, 36 months. So if I just do a rough calculation, 70-30 debt equities around INR 3,500 crore equity will be infusing. And -- so would it be -- like I just wanted to know that the current thermal asset cash flows, will it be sufficient to meet this equity requirement?

Sorry to enter Mr. Mantri, there's a disturbance coming from the background. I would request you to mute your line while the management answer your question.

Sure, sure.

So it's like that we have been generating close to INR 2,000 crores -- INR 2,200 crores of free cash from our existing business, which will be used for this growth in order -- and also, if you look at our existing debt-to-EBITDA and debt-to-equity profile. We can lever up our balance sheet even at the parent level and then use that money as an equity at the subsidiary level. So there is enough headroom, which is available. If you do the math, any project in power sector is done at 5.5x debt-to-EBITDA and 3:1 debt-to-equity. And with a 0.48x debt-to-equity and 2x debt-to-EBITDA, you are having enough headroom to get concerned about such leverage ratios. And -- so the need of the hour is to grow the balance sheet.

Sure, sure. Sure sir. And sir, last question. So as you see on your balance sheet, we have a few investments like in JSW Steel and this is like now what the stock price of JSW Steel is. So is there any chance of monetizing those investments, say, having a big opportunity in the renewable space. So freeing up some of those investments, is that on the cards?

As and when I need money, I will look at various options. At this point of time, I have enough money and -- to grow the company. So should the need be there, we are open for all kind of opportunities.

The next question is from the line of Aniket Mittal from Motilal Oswal.

Sir, I think most of my questions have been answered, but just to get a sense on the receivable front, you've obviously managed it pretty well this quarter. But if I look at the overall receivable amount, I think it's still hovering around 80 to 90 days. So let's say from the year-end perspective or you're going into the next year or so, do you see this number decreasing further?

Yes, yes, yes. I'm quite confident this will be decreasing further. And if you look at INR 1,693 crore as we are speaking is below INR 1,200 crore. But it's a dynamic situation. What I can tell you is that we have been able to do better than the industry, and we will continue to do better than industry. But if the industry situation deteriorates, our receivable also deteriorates. But at the same time, we are getting all late payment surcharges because we are into a merit order dispatch. And that's what is demonstrable. Even during the pandemic time, our long-term PPA sales have gone up. And this I'm talking about the distribution companies. So my thermal generation in our Barmer plant is up by 28% in this quarter as compared to last quarter. My long-term thermal PLF is at 77% as compared to 71% last year in spite of almost negligible merchant volume. Last year, my merchant volume was significant. So you can see that we have been operating qualitatively. In spite of the 7% wage bill increase for last 3 consecutive year, our O&M costs have been consistently coming down. And that's -- and our -- we have hit lowest auxiliary power consumption in last several decades, and we -- our plants are operating at the best of the efficiency parameter in the country. So we have done a lot of digitization, a lot of innovation in our operating practices during this tough time. And now we are absolutely ready in a new avatar to take on the growth. And that's what I mentioned in -- to one of the investors who are asking that you will be positively surprised the way we perform in coming quarters.

So -- and sir, just to get a sense, actually you mentioned that the INR 1,600 crores number is now gone to INR 1,200 crores right now. How much of that would be overdue, if you [ return it in 45 days? ]

So Aniket, about 40% would be overdues. Just to give a sense of things, why Prashant did mentioned earlier that on a year-on-year basis, if you see our total receivables are down by 22%. But actually, on overdues, they are down by 30% year-on-year. So the limited point I'm trying to make is, a lot of the incremental collections that have happened have actually happened to bring down the overdues. So the -- so it's a very good quality improvement in receivables. Yes. At peak, we have seen maybe at the end of June quarter, which was the first quarter of the full lockdown. The share of overdues and the total receivables as high as 60%.

And majority of the long-term overdues where -- which were disputable, we have got all favorable order sector, various regulatory bodies. So they will be getting materialized in 1 or 2 or 3 quarters. So that's why we are seeing that the trend will be much better going forward.

Sure, sir. Sir, I think in your opening remarks, you mentioned that this -- there's the possibility of -- our average cost of debt going lower as another interest reset comes into play. So how do we look at this cost of -- I mean, how much can that get [indiscernible]?

Below 8%, you will be seeing next financial year.

Okay, sir. Go below 8%. Got it. And sir, just one question from this -- the numbers that we've reported in this quarter. One thing that I actually saw was if I look at your hydro generation for this quarter, it's actually down, I think, around 4-odd percent, but the EBITDA has grown around 15% year-on-year. So is there something that flips?

It's a 2-part tariff business. So it has nothing to do with the generation. Because as long as I'm above the design energy, I get recovered by the full recovery of my cost. And that's why it is protected, number one. So generation is only for optical purpose. Otherwise, my -- you need to look at the EBITDA, and my EBITDA is better because of lower O&M cost and certain recoveries, which I am getting. 2 years ago, there was a lower generation. Because of which, I got a compensation in the next year tariff. And that is what is reflected in higher power costs and higher EBITDA. So if any year in a hydro business, my generation is lower, that EBITDA shortfall will get compensated next year in the tariff. So that is how it works. So on a normalized basis, you are protected for your EBITDA.

And to add to what Prashant said, Aniket, Karcham also had certain incentive incomes because of higher [ BAFs ] during the quarter. It's the higher visibility. So that was also.

The next question is from the line of Mohit Kumar from DAM Capital.

Just I have only one question on the receivable side. Sir, is it possible to let us know the receivables from Raj WestPower Ltd, as of March '20, September '20, and December '20?

Sorry, can you repeat that, Mohit?

I'm looking at receivable number for Raj WestPower at the end of March '20, at the end of September '20, and at the end of December '20?

Mohit, unfortunately, we do not break out entity wise receivable or customer wise receivables. So I'm sorry, we'll not be able to do that.

Okay. So directionally, can you just tell us what is Rajasthan payment? Is it better than the other states? Or how is it -- is something you can comment on?

So as long -- as far as we are concerned, we are perfectly fine with the payment history of all the discounts with whom we are working. Of course, there are certain hiccups at times happen with our customers. And because they have cash flow situation. But for that hiccup, we recover late payment surcharge as per our PPA, which is higher than our cost of capital, so we are in a happy situation.

Second is, are we expecting a large payment in Q4 because of discount liquidity scheme?

See, we are talking about our receivables and our receivables are on track, which is consistently going down and doing better. And then we expect that trajectory should be better in time to come because of resolution of certain disputes, which are where we are getting the favorable order. And if there is an improvement in the liquidity of the discount, then certainly, it will be icing on the cake.

The next question...

Can we take the last question, please?

Yes, sir. The last question is from the line of Ashutosh Chaubey from Centra Advisors. [Operator Instructions] There is no response from the line of the current participant.

Hello? Hello?

Yes, Mr. Chaubey, we can hear you. Please go ahead.

Hello? Hello?

Sir, there is no response from the line of the current participant.

Hello?

Mr. Chaubey?

Hello?

Yes. We can hear you. Please go ahead.

Yes. So I wanted to ask that now we know that in the recent years, the solar cost has reduced to as low as 90%. So while signing the PPA, is there any clause that India is protected by all these sorts of duty that is -- that is -- yes, that's the safeguard duty, that is on the Chinese imports on the solar panels and solar glasses? So is there some kind of -- is there some kind of clause in the fee while you signed the PPAs at INR 2 or INR 2.5 that as and when in the prices increase, going forward, the cost of power that is signed in this PPAs will also increase? Is there some kind of a clause?

No, no. It is not -- I can talk about -- as I make a general comment about it because we have not executed any PPA as far as the solar projects are concerned, we have only done -- going to do only a hybrid in the next couple of days. In case of solar, when a -- if a project developer is making a bid, she -- they are assuming what will be the panel prices, and they are assuming what is the current duty structure. Based on that, all cost to them, any changes to them, they have to make a bid. The only thing which can be allowed to have a change in the tariff is change in law. Change in law is any change in the duty structure by the central government. Then you can go and approach that at the time of the bid, this was the current duty structure or the taxes structure, which has changed my economics and because of which, this is the impact. Then subjected to the approval by the regulator, you will get it approved. Otherwise, any other change in the prices is to the account of project developer, whether it is interest rate, whether it is the panel prices, or any other aspect.

Okay. Okay, sir, understood. Sir, could you just give me a figure about -- a rough figure about what would be your regulated equity?

I will ask IR department to provide you offline.

Sir, actually, I've been trying to contact the IR department for a time now lately. 2 to 3x I tried to contact, but there was no response from their side.

They will approach you.

Okay. I've also mailed the same, like, 3 or 4x.

No problem. They will approach you and discuss with you today itself. Thank you for your feedback.

The last question is from the line of [ Varun Thapar from Optum Investment. ]

As I just wanted to ask regarding the Vijayanagar net transition and Ratnagiri short-term sales, which has declined on a Y-o-Y basis. So what would be the reason for that?

So Vijayanagar, net generation was down in the long-term, primarily because last year, there was a capital shutdown of a captive unit of JSW Steel. Because of which, we were operating and we were supplying power to them. And that's why it has -- you are seeing that difference.

Okay. And the Ratnagiri short-term sales has come down?

Because of the poor market condition, short-term sales is lower.

So going forward, what would be the guidance for Vijayanagar, I mean on the capacity side?

So as I said that the long-term is 87% PPA tied up. Balance 13% is dependent upon good merchant environment, which we do not see a very good visibility at this point of time as far as the Vijayanagar is concerned. So as and when any good opportunity comes, we will be able to capitalize it. But our strategy is to tie-up this capacity, which we feel is we will be able to do it in the next 2, 3 years' time frame. Because Ratnagiri is almost completed, now Vijayanagar is pending, which will take another 2, 3 years.

Thank you. As there are no further questions, I would now like to hand the conference over to the management for closing comments.

Okay. Thank you, ladies and gentlemen, for joining us, and feel free to contact IR if you have any further questions. Thanks.

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