Orient Green Power Company Limited (GREENPOWER) Earnings Call Transcript & Summary

Ladies and gentlemen, good day, and welcome to Orient Green Power Company Limited Q4 and FY '20 Earnings Conference Call. [Operator Instructions] Please note that this conference is being recorded. I now hand the conference to Mr. Mayank Vaswani from CDR India. Thank you, and over to you.

Thank you, Ved. Good afternoon, everyone. I welcome all of you to Orient Green Power Company Limited earnings call to discuss the performance for the quarter and the financial year ended March 31, 2020. We have with us today Mr. S. Venkatachalam, CEO and Managing Director; and Ms. J. Kotteswari, Chief Financial Officer. Before we begin, I would like to mention that some of the statements made in today's discussion may be forward-looking in nature and may involve risks and uncertainties. Documents relating to our financial performance have been shared with all of you earlier, these have also been posted on the stock exchange and the corporate websites. I would now like to hand over the floor to Mr. Venkatachalam. Thank you, and over to you, sir.

Thank you, Mayank, and I -- a very good afternoon to all of you. And I must thank all of you for taking the time out in a very different worldwide scenario that we've been experiencing over the last 3 months. We do hope -- sincerely hope that all of you are safe and healthy. And at this juncture, I would definitely like to take the time -- to take a moment to appreciate the medical workers and the great amount of work done by the social workers, police, staff from municipalities, local corporations across the country for their efforts in fighting the COVID-19 pandemic. Coming to OGPL, we are also taking enough precautions as far as the pandemic is concerned. We are predominantly working from home, except very few staff come to the office, basically mainly for the Board meeting purposes, et cetera, for finalizing a few things. But predominantly, we've been working from home. And our PE staff who were working in various remote locations have been working round the clock because they are not the containment centers. They are far from the cities, and they have been working round the clock to keep the machines running, especially with the start of the wind season. They have been provided with all the PPEs and the sanitizers and all the required, these things. So we -- I wanted to take a moment of to talk about what we are doing as far as the COVID pandemic is concerned. Overall, we are very pleased to announce that we've declared a PBT of INR 19.88 crores as against a loss of about INR 48 crores, INR 49 crores in the previous year. Now when it comes to the continuous operations, it is about INR 37 crore PBT as against the INR 33 crore last year. And this is despite what we were talking about in the first 2, 3 quarters that the wind was overall lower. This particular year, we had a low-wind year and that is about a -- drop of about 3.5 crore units. But the lower wind was definitely made up by definitely much better REC trading that we experienced during the year. In fact, the -- that itself has given us a benefit of about INR 13 crore, INR 14 crore. The REC trading, if you see the overall average of the previous year was about INR 1,188 as against the base price of about INR 1,000. And in the current year, it averaged at about INR 1,643 with it crossing INR 1,900 in February. In fact, March, unfortunately, there was no trading because that was the beginning of the close down of the entire India. This March, we were expecting to actually cross INR 2,000 but unfortunately, we lost out in that particular month. But still, with all this, we have gained about INR 13 crores, INR 14 crores in RECs alone. Apart from that, we've had a recovery of -- a onetime recovery from one of our biomass units in the past. We won a court case, and we received the fixed charges for that particular unit, which is in Narsinghpur under OGPL, that is about INR 47 crores. And -- INR 45 crores, sorry. And then the finance cost reduction itself, which you can see from the data, that reduction of about INR 12 crores. Overall, all these parameters have worked out towards improving the overall EBITDA from a level of INR 338 crores to about INR 388 crores. And we have declared a profit at the end of it all. Now coming to the impact of COVID itself, there has been -- I'm sure there'll be a lot of questions with regard to the impact of COVID. A few things that I would like to say is our business has not really impacted much. There will be very little impact I foresee as far as COVID is concerned. The power offtakes, if you really see the -- during the month of April and May is -- the power offtake in month of April had gone down by about 23% to 25%. In May, it had gone down by about 13%, 14%. But it has really picked up because one is because of the summer months, and the second is the industry is opening up. And also, with the 'must run' status in fact, Tamil Nadu is overall evacuating the -- almost the entire wind power because their requirements are back to the earlier levels, which is about between 330 million and 360 million units per day. And they're more or less evaluating the entire wind power. So we don't see -- foresee any impact of the COVID. Only some of the industries will be a little -- they're opening up now as far as the automotive is concerned. IT may not open up that early. But some of the sales of the power which is a bankable commodity will be towards -- a little back-ended towards -- more towards the second half of the year. And so there may be a postponement of some of the power sales towards the second half of the year. Otherwise -- and that will have a little impact as far as the banking charges are concerned, but not -- overall, we don't see any impact as far as the overall power offtakes are concerned. Now at this juncture, I'd like to also give -- introduce Ms. Kotteswari, who has joined us as our new CFO. Ms. Kotteswari has over 25 years of experience in the field of banking and finance. She is also a key member and a CFO of the management team of SVL, that is our promoter company, since January 2013. And prior to joining our group, Ms. Kotteswari was Vice President, Finance and Accounts of the M. A. Chidambaram Group, and I'm sure the company will definitely benefit from her rich experience and expertise. The outgoing CFO, Mr. Kasturi, had completed his term up to March 31, 2020. And during his tenure, I must appreciate that he was instrumental in executing initiatives towards debt reduction, which you can see the impact of. And he's helped in implementing cost rationalization measures, which contributed towards overall operational efficiency and so also in the financial efficiency. It was definitely a pleasure working with him, and we continue to wish him the best in all his future endeavors. Now coming back to the company performance. Now the overall scenario as far as India is concerned, the MNRE over the last couple of months has been taking a number of -- in fact, they have been conducting a lot of meetings over the net with various stakeholders in the various independent power producers, solar, the wind power producers and taking stock as to what could be done to improve the situation in the power industry. As a result, they have actually improved -- removed the tariff caps, which they had in the previous auctions. And the new bids -- okay, we've only had one bid, the SECI bid, which had a supply of continuous solar power, which is the solar power plus the power store -- battery storage, which traded at about -- with about INR 290, but with the levelized tariff of about INR 370 was the overall average because the tariff increases were also provided in that particular contract. Now apart from that, there are 2 things which -- one is the AP outstanding, which at the end of the year was about INR 38 crores as at March 31. And the court will be deciding. We are quite confident that they will decide in our favor that they have been paying at INR 2.43, which has been a -- which is an arbitrarily derived tariff based on the lowest ever quoted -- undiscovered prices in the bids. Now that is definitely something that we will win, but it is only a matter of time that this will be decided in our favor. Similarly, the REC, which has been escrowed from 2018 March onwards of about INR 21 crore is -- has -- I mean the court case is yet to come up for hearing. The -- definitely a few delays because of the impact of the virus and definite -- there are a few things which have happened over the last few months. So these things have got postponed. Further, apart from this, the moratoriums that we have received from the banks up to August 31, definitely help us as a group, as a company to -- in terms of tiding over certain cash flow issues because of the AP delays in payments, and also because the escrowed amount as far as REC is concerned. So overall, we are definitely looking at redoing our finances, and I'm sure these opportunities will arise very soon in the next couple of quarters, again, a little bit of delay as far as that is concerned because nothing much has moved in the last 3, 4 months as far as the banks are concerned. But we are in active talks with the banks to reduce the interest rates by about at least 250 to 300 basis points over the next -- for the next few years. And that itself will see a definite improvement in the overall performance. Overall, I do see a definite -- I mean the predictions as far as the wind is concerned, it looks like a good wind year as against the last 2 wind years, which we had some amount of reduction. I mean we had a kind of a subdued wind years a couple of -- last couple of years. The forecast for this particular year seems good. And we hope it -- the winds do stand by the forecast that we have seen and also should be, I mean, supported with the good uptake that we see. With that -- I mean, with this brief background, I now hand over the mic to Ms. Kotteswari, who will run you through the -- our overall financial performance. Thank you so much.

Thank you, Mr. Venkatachalam, and good afternoon, everyone. Thank you for joining us in our call. I hope all of you are staying home and safe. As mentioned earlier by Mr. Venkatachalam, I recently took over the CFO position of this company, and my efforts will be largely directed towards continuing the good work which Mr. Kasturi, my predecessor, had undertaken, more on the lines of reducing the debt and improving costs and strengthening the financial position of this business. Now let me run through the quarterly performance, post which we can commence the Q&A session. Starting with the top line. Total income for the quarter stood at INR 160 crores as against INR 56 crores reported in the Q4 of FY '19. While for the year, the same stood at INR 388 crores as against INR 338 crores, higher by 15%. Revenues during FY '20 would have been even higher had it been regular wind season. And we had a soft start to the season, which impacted part of the revenues during the year. The EBITDA for the quarter stood at INR 76.5 crores, while for the year the same stood at INR 282 crores. The margins for the quarter was at 66%. And for FY '20, the same was at 73%. The depreciation for the quarter and the year as a whole remained relatively steady at INR 5.9 crores for the quarter and INR 91.52 crores for the year. The interest outgo for the quarter stood at INR 37 crores as against the previous year's INR 9.8 crores. The full year interest was at INR 153 crores for the current year as against INR 166 crores, which is lower by 8% for the full year. As mentioned by our CEO, we have been successfully lowering our debt in the recent years and are hopeful for driving it down even further. Largely, my effort will be to look at reducing the interest cost and working capital cycle to improve the cash flow position of the company. I would also wish to reiterate Mr. Venkatachalam's -- whatever he has spoken earlier, we will draw confidence from this year's performance, wherein we have performed despite challenging macros. The near-term outlook looks even more challenging with the current pandemic situation as the cash flows will be definitely staggered. However, we are confident that the case of renewable energy is more relevant today, and we will work hard to strengthen our position. That concludes my opening remarks. We can now commence with Q&A session.

[Operator Instructions] The first question is from the line of [ Manish Bakshi ], an individual investor.

Can you hear me?

Yes, you are audible.

Okay. My question is regarding the fixed charge that you mentioned, the court case with Madhya Pradesh Power Management. Have we received the cash of INR 45 crores or that's just a judgment for now?

Yes. Basically, this fixed charge is basically -- since they were not allowing the unit to run, the biomass unit to run, it is a 10-megawatt biomass unit in Narsinghpur. So we fought this for -- over the last 2, 3 years, we've been fighting this. Now out of the INR 45 crore fixed charges, we have received about INR 32 crores have come so far. So in the next -- in fact, 1 tranche actually came a couple of days back. So -- and as we speak, the next tranche is also being ready. Actually, we should have received the entire amount by March. The corona definitely had delayed things a bit because of the -- because most of the discounts adopted a force majeure kind of a clause so to -- I mean with all the developers, in fact, both the thermal as well as the various other wind suppliers in Madhya Pradesh and various other states. So we're glad, at least the -- since the -- this thing force majeure has been now -- I mean, after that, they have started making the payments, and it's -- they're making it in 2 tranches. And we've been in touch with them, and they've -- we've already received a tranche yesterday or day before yesterday, actually.

So you're saying INR 32 crores has been received and about INR 13 crores is left?

That's right, absolutely.

Okay. And the next one is around the REC trading. You said that March was a complete washout, but has April and May picked up? And is it coming back to normal?

No, not really. In fact, April and May have been subdued REC tradings because the supply has been far higher than the demand. So this is a typical phenomenon which we see across most Aprils when the first quarter, there is not so much a pressure to meet the renewable power obligation. So we see this typical trend in the first couple of months. And I'm sure once the next couple of quarters -- and the government is also pushing that's what we saw in the last couple of years. From a level when there was hardly any trading 5%, 6% for 2 years, it was going on like that. And then last year, we've seen most of the buy bids were far, far ahead of the sell bids that were available. That's why the prices took a much higher levels. So we expect this to pick up in the next couple of quarters as such.

Okay. And the last one is regarding the capital reduction process. When we took the approval from the Board in January 2020, we had said that it will take about 10 to 12 months for the entire thing to finish. Are we still on track to get it done by end of the year?

Capital reduction in the sense, which...

Yes. You said there was an approval taken from the Board to move reserves from the share premium and offset it against the loss or something like that.

Yes. We're in the process of getting an approval from SEBI. So once we get the approval from SEBI, then we will move the NCLT. We're confident, we'll complete the process within 15 to 18 months.

15 to 18 months. So that means by mid of next year?

Yes.

Correct. That's...

Because of this COVID, it may slightly delay might happen in NCLT.

Normal process would be about 12 months is what we've been told for this particular process of capital reduction. But we are taking a little extra time because things haven't opened up to the full as of yet.

May we have the next question, please? Sir, then in that case, may I just jump in with a question. Sir, if you could just help us on the Andhra Pradesh DISCOM, we've received INR 23 crores out of the INR 61 crores. For the balance, INR 38 crores, sir, is there a split you can share in terms of the amount which is nondisputed as such and the other amount which we are awaiting the judgment, if you can split the remaining INR 38 crore?

Yes. See, the entire -- there is no dispute as far as we are concerned of the entire balance INR 38 crores. See, because they have been paying arbitrarily at INR 2.43, that too with a big delay. So if you really see Andhra, the entire INR 38 crores is due to us. There is nothing which is disputed as far as we are concerned. And because it's a sacrosanct PPA that we have signed with the -- it's a sovereign document, we don't see how they can even push this through. And the central government also has been pushing a lot as far as the Andhra's government is concerned, saying that they will impose a lot of these conditions on them. See the differential amount itself is about INR 21 crores, INR 22 crores out of the INR 38 crores is a differential amount between INR 243 crores and INR 470 crores that we should actually receive.

Fair enough. And sir, the next question, I just thought we could share for the benefit of investors is for Ms. Kotteswari. If you could just give an outlook on the depreciation for the next couple of years and separately, on the interest cost, because we've seen actually interest costs have significantly declined. So if we were to go on the same run rate, what would be the interest cost for the next 2 financial years? And if we were to achieve maybe 100-point or 200-point reduction in the finance cost, what -- how low could we expect the interest cost to be for the next 2 financial years?

On the depreciation, it will be about the same INR 91 crores around that because we have extended the life of the machines and -- which is already explained in our notes to accounts. So it will be around the same. While interest cost, the next -- that is the current FY 2021, we will have only INR 13 crores or about reduction with a 100 basis point if we take optimistically for the second year -- second half of the year, there will be a reduction. Because we are incurring additional interest costs due to the moratorium which has been extended, which would otherwise have reduced the debt in the current year. In the first 6 months, the principal has been given a moratorium to be paid at the end of the year, which is coinciding with my cash flows as well because they take off, so the interest reduction will be around INR 8 crores on a consistent basis due to the reduction in the interest rate of 1%, 100 basis points will be there year-on-year. The rest of the -- around INR 10 crores will be due to normal reduction of payment of principles over the period year-on-year. So overall, it will be close to INR 15 crores, INR 16 crores going forward. But in the current financial year, it will be slightly lower due to additional interest costs carried over the first 6 months.

So I'd like to just remind you that, that the -- we are not -- the group has waived the interest over the last couple of years, see -- so that's another benefit that we have. I mean we were doing at least -- we're getting that particular benefit. So this is -- overall, if you see the -- really speaking, the debt is -- the external debt is the real debt really for us.

Right, right. No, fair point. And sir, just a last point before Ved resumes. Ved, are you there?

Yes, I'm here. I'm back.

Yes. Just I have one last question before we go to the next participant. Sir, on the RECs, it's become a very regular revenue stream, so just could you also share for the benefit of Orient the number of units that we could look to generate -- I mean the number of certificates and if we maintain an average of INR 1,600 as we did in FY '20 for the next maybe 1 or 2 fiscal years, what kind of revenues would we settle at from -- just from the REC trading, sir?

See, basically, last year, we sold close to 3 lakh REC units in the previous year and with an average price of about INR 1,688 -- INR 1,643 is the average price that we sold the 3 lakh RECs. Last year, it was about 2,00,094; this year, probably it will be a little extra on that. Now of course, it depends a lot on what is the average realization of the traded price which, as I said, should be much better in the couple of -- next couple of quarters, it should definitely improve. Normally, the first months, you find a subdued trading and plus, okay, the -- because the shutdown in various industries, the -- there are not many buyers at this point in time and far more sellers at this point in time. So at least 3 lakh RECs we should be able to sell, if not more, depending on the wind that is generating in the Tamil Nadu assets.

[Operator Instructions] Our next question is from the line of Vijay Kumar from TrustLine.

See, currently, our total debt is INR 1,351 crores and we have a market cap of INR 230 crores, which gives a total enterprise value of something like INR 1,581 crores, so let's say, INR 1,600 crores. Now we have a total capacity of 421 megawatts. If I look at a greenfield or a replacement cost between INR 4 crores and INR 5 crores, it comes to something like INR 2,000 crores. And considering that assets are old and its machines are running for more than 10, 15, in some cases, 20 years. If we assume that you gave some 25% to 50%, it comes to something like INR 1,000 to INR 1,500 crores. Now as an investor, where do we expect the value creation? Is there anything I'm reading it wrong here because I feel currently, our prices we are overvalued as an enterprise value of our company than considering the value of our assets, any clarifications you can give because...

See, basically, you have to look at couple of things. One is the EBITDA potential, which is between INR 250 crores and INR 300 crores is the overall thing. See, the life of the asset, the older assets were also bought at lower capital costs. So it cannot be equated with the newer assets, which have been bought at higher capital costs as such. So if you really see the EBITDA -- okay, we can put a particular EBITDA multiple and then look at the debt -- overall debt. Now the overall debt, as you said, is about INR 1,400 crores and of which about 400 -- INR 350 crores to INR 400 crores is a group debt itself. Now since we are not paying the group debt, you can always factor only the external debt as such. I mean you can work it out that way. I wouldn't like to give a forward-thinking on that particular thing. But if you look at it that way and look at the EBITDA multiples, you yourself can probably work out the kind of trade values because there are something like 75 crore shares, which are there. So it can be worked out definitely, in my opinion, and I guess, with the EBITDA potential and with the kind of support that the center is giving, okay, there are intermediate hiccups you find from state to state in between but I definitely see a much higher potential. I would not like to put a value to it because that will be definitely a forward-looking statement. But at least my personal opinion is it's far, far higher.

Sir, just give an idea of how much will it cost to put a 1 megawatt unit currently? What is the greenfield...

Basically as far as wind is -- see, solar is going down to about INR 4.5 crore to INR 5 crore per megawatt. That's why solar tariffs are going down significantly. Wind, we started off -- in fact, when the bids came at INR 2.43 itself, they had assumed something like INR 5.25 crores megawatt (sic) [ per megawatt ], and they were not able to buy the machines at those prices. Therefore, wind further bids -- more or less, there have been no bidders and there was also a cap on the bidding prices that was imposed by the central government, MNRE or the SECI bids had a cap. Now ideally wind is definitely around INR 6 crores to INR 6.5 crores. In fact, we've been in touch with various majors like Gamesa, Suzlon and Vestas who are the main wind energy suppliers. They're saying that if people are quoting at INR 5.25 crores, it is their bad luck. I mean we cannot supply at anything less than INR 6 crores. And at that point in time, when the bids had reached an all-time low, there were instances where they got much lower quotes because there was a big stock build up at that point in time. But they are no longer willing to sell it at less than INR 6 crore per megawatt.

Okay. Out of the -- out of our 421-megawatt of assets now, how many do you think are -- will need replacement in next 5 years? Or it has become pretty old or it is not giving the enough PLF, so you have to change it? Or what percentage do you think will need replacement in the next 5 years?

Basically, at least 50, 60 megawatts should come for replacement in the last -- in the next couple of years or 3, 4 years because they have lived over 20 years of life. Now unless there is a repowering policy -- because these 50, 60 megawatts are in the best wind sites in the country. If you really see this the southern [Technical Difficulty]

Participants, we have lost the line for the management. We would request you to please take connected while we reconnect them again. We have the management line connected now. Sir, your connected again.

Yes. Sorry, we lost you. In fact, I think I'd at least answered that earlier question. Any further questions?

No, you didn't -- that you talked about the replacement and you told that the wind sites are in the...

See, in the middle of the sentence we lost. Okay. See, basically, the replacement I mean at least 50 megawatts would come -- or 50 to 70 megawatts, I would say, would come for replacement in the -- would have crossed 25 years of its life, though it can be run a little longer also. But we've got some of the best sites in the country that is in the southern part of India, where in Tamil Nadu, that is the Muppandal and closer to Kanyakumari belt where there are 2 excellent passes and some of the best wind sites in the world exist with us. So there are ample opportunities for repowering. But then we have await a repowering policy and at least the tariffs should pick up a bit. I'm sure, the next couple of years, there will be some ample opportunities for expanding those sites because all these repowering sites are in Tamil Nadu itself.

Okay. When you repower in these sites, which have got a good wind power potential, do you need to still have to spend that INR 5 crores, INR 5.5 crores for replacing that machines? Or does these places offer you some competitive edge over the others because you got it earlier, so somebody has to buy that, they are to pay more? Is that these kind of an economics work? Or is it just that you still have to pay that INR 5.5 crores, INR 6 crores for 1 megawatt or whatever it is?

Yes. Cost of land it's something which is -- the land part of it, you don't have to bother. The development of the land. But there are few aspects of repowering, which I'd like to highlight here. See, in a 250-megawatt -- sorry, 250-kilowatt machine, the blade size is about 25 to 30 meters kind of blade size. Whereas, when you go to the megawatt class, about 2 megawatts and more, which are the ones which are prevalent nowadays, you will have something like 100 meters-plus, 100 or 110 meters is the wingspan that you find -- blade span that you find because the swept area that you see, the power generated is directly proportional to Pi r-squared, which is why you see if you double the radius, you will actually see a 4x the kind of generation from the swept area point of view. So when you repower, there is also an aspect of the distance between windmills that need to be maintained. Earlier, there was a 5x diameter in the sideways direction and the back direction, there was something like a 7x diameters, 5D and 7D is what it is called. So when you have larger blades, you'll have to use -- you'll have to relocate the placement of these machines. You can't place them as close as you had placed a 250-kilowatt machine. So people have got various models for this. That's not a big challenge. If you have the land parcels available with you. You can always place them according to the new blades -- blade diameters. But the land -- definitely land this thing, you can definitely save a lot as far as the land prices are concerned.

Okay. Another one, I saw recently a bulk deal wherein [ Edelweiss ] have sold some of the shares to some [ Chennai- ] based entity. It's part of the promoter group entities? Or is it a -- it's not a promoter group entity?

There -- it's not a part of the promoter group entity because there's a bulk deal he says...

No. Bulk deal? We are not -- no, no. That is not part...

No that is not the -- that has happened last week of March, that is not the part of promoter group.

It's an independent entity product.

Okay. There -- okay. Just one last question. How does this year wind season looking? And can we expect this kind of an earnings to be maintained this year or do you think -- because we have been listening to you, and we are always optimistic, and we stick on to this share. But somewhere there is -- eventually, the -- not -- I'm not blaming Orient Green Power, but I don't know, the government policies or something like that, the sector will always face new, new challenges every time and by the time you get out, there's something else comes in. But what -- how do you see the next 1, 2 years?

Yes. Basically, you've rightly pointed it out. See, as I mentioned, this promises to be a good wind year as far as the forecasts are concerned, good wind year, good monsoon year and so on and so forth. In fact, only -- there are rare instances when a cyclone takes away some of the wind, which we hope will not happen. But overall, promises to be a good wind year. But these challenges will remain in a kind of federal structure. We've had this challenge -- I mean for 3, 4 years, we went through the grid back down challenge in Tamil Nadu, which we overcame. And the last 3 years, we've been seeing a consistent evacuation of over 95% from Tamil Nadu, which -- that is one thing which we solved by working closely with the Tamil Nadu government. In the meanwhile, something new came up as far as the Andhra government is concerned. They used their own judgment as far as the PPAs are concerned and they tried to renege on the PPAs, which is definitely wrong. So let's hope these challenges don't come up in future and PP -- and the at least -- especially the state governments, I'm quite sure the central government is quite bullish, and they want to promote renewable energy in a big way. They have already made various commitments. But we only hope that the state governments don't fall back. And this challenge will always exist in industries and various sectors such as ours.

The next question is from the line of [ Chintan Ramakrishna ], an Individual Investor.

Sir, there is one big transaction on March month, around INR 2.6 crores have been bulk transaction. Could you give any insight? I mean what was the group that was transacted?

In fact, this was also asked by the previous questioner whether it is related to the group. It is definitely not related to the group. Mr. Srinivasan, our company Secretary will further throw some light on that.

The bulk is happened, outside the SEBI, the promoters. It has happened in the last week of March. That is not related to promoters group.

Okay. And could you tell what was the month that we have applied to SEBI on the equity change from face value INR 10 to INR 5? I remembered earlier, we were expecting the time lines 12 to 18 months, but could you transparent at which month we have applied to SEBI?

No, no. We are going to apply only next week to SEBI. Hopefully, within a month, we get the approval from SEBI.

Because of the pandemic, things got delayed. We were supposed to apply a couple of months earlier. We got all the legal advice in the meanwhile, and that was a little bit of delay, and then we further took it up in the Board meeting yesterday, and we'll be applying to SEBI. Now everything is clear as far as -- things got delayed only for the last 2, 3 months because of this. It should have happened before March.

Okay, sir. And then after that, once we have the SEBI approvals, we also need to go through the stakeholders' approvals?

No. Actually, we have to move with the NCLT. NCLT will convene in the shareholder meeting and creditors meeting. It's a court general meeting.

Okay. And I mean, when we say that 12 to 18 months, that is imagine maybe the SLA kind of thing. But in general, if relation in everything goes good, what is the reasonable time that we may expect this one, sir?

Actually, we are targeting to complete by 12 months. If at all any delay, maximum another 3 months will get delayed because we can't expect the NCLT to move fast because of COVID-19. So hopefully, we'll complete -- we target to complete by 12 months.

Okay. And normally, first 2 quarters, we will see good wind so now we are almost middle of the June. So how it was -- it has been last 2, 2.5 months in this quarter, sir?

Yes. See, the wind, really speaking, starts by 3rd week of May, et cetera. It starts -- goes on until October end -- October middle, rather. And that is the peak of the wind season, wherein we generate about 70% of the power for the year. So it has started off pretty well. In fact, the wind has been -- patterns have been fairly decent over the last few weeks. Evacuation is also good. And hope and pray that this sustains over the next few months. The forecast look good, but I really hope and pray that everything stands by the forecast.

Okay. By -- okay. And by any chance, do we have any plans to delist from the stock exchange, sir?

No. Not as of now. I mean no -- not even a thought on that -- in that direction as of now.

Okay. Good. And on these -- the amount that we are supposed to recover from the state governments, particularly the AP one, do we see that -- do we expect that will be recovered in this year, in 2020?

Yes, definitely. So in fact, we are only waiting for the Supreme Court. And see, the recovery also depends on these finances of -- that the state governments are in or the state DISCOMs are in. Now definitely, like Tamil Nadu and various other state DISCOMs, AP is in pretty bad shape. AP, Telangana, Maharashtra, Tamil Nadu are in pretty bad shape. Now the center had offered a INR 90,000 crore kind of a bridge for -- just to at least help them tide over and make payments only to the vendors or the power suppliers. And -- but those are also -- I think they made this announcement when they made that INR 20 lakh crore announcement, that INR 90,000 crore is going a little back and forth over the last couple of weeks because there are certain terms and conditions, which the center would like them to comply in terms of the transmission and distribution, AT&D losses and also that they have to be profitable within a year or 2. Those conditions have been put -- in fact, these conditions have always been there whenever the center gives some kind of a helping hand. So once these disbursements take place, definitely, AP and others will have to pay. In fact, we've been telling the center that AP has to pay at the full rate, and they cannot go back to a INR 2.43 rate and start -- still assuming that it is only a INR 2.43 rate. So we are putting pressure with various associations through the center as well for this. So hopefully, this year, once the court cases are decided, definitely, there is no going back. The courts have to decide in our favor. It's a sacrosanct all purchase agreement, it's a sovereign document. But then after that, it comes to the state's finances itself.

Okay. And another one, another Supreme Court decision, the final judgment we are waiting on the RECs that the INR 500 crore amount that we are holding, any timeline on that one, sir?

Yes. The judgment was supposed to take place in the end of March, we were expecting that to happen in end of March, things got delayed. Now we are awaiting fresh dates for the Supreme Court hearings on the same matter. In fact, the associations have been following it up rigorously and very closely with the central government saying that you please decide this fast because there is cash which is available in the system, which is blocked at various ends.

Okay. And on the bank interest rates and extending our loan terms, I think we have got some improvements, but this is one of the thing, I think, look, has been going long and long. Is there any timeline that we are going to complete this exercise?

Yes. See, basically, as you rightly pointed out, interest rates have been going down. Our ability to pay has been improving. There's been a moratorium also which we have received over the last few months, the central government has given us a moratorium till August. So those things definitely help. But at the same time, the cash flow inputs depend on Andhra, it depends on REC, it also depends on the -- I mean, opening of industries, which, as I said, is a little back-ended. So we'll be able to take a call in September if we are able to come online as far as these -- I mean instead of being an SMA, the special mention accounts, 0 or 1 or 2. So I'm hopeful that we should be able to close it by September.

Okay, sir. Sir, one last question from my end sir. I think after many years, first time we got the net profit for the quarterly-wise as well as the year-end results. We are happy to see. And thanks to the management for putting the great efforts to get into the profits. From now onwards, can we expect that every quarter we will be able to get the net profits?

Yes. Thank you so much for the kind wishes, and I'm -- we are all -- I mean, we only hope year after year, we sustain this. And I'm quite confident. See, from our side, we are putting in every effort. Okay, wind patterns may change, but this also looks to be a good wind year, but every year, some new challenges come up. As I said, the Andhra challenges had come up. Now there is this corona challenge, which has come up in terms of the industry. But barring these challenges, I'm quite hopeful that we will put up another good performance for the coming year.

Next question is from the line of [ K.P. Singh ] from [ H&I Investments ].

Myself, K.P. Singh. Venkatachalam, sir, my question, first one is what is the real impact of corona for the Q1? And my second question is related, you have already previously discussed regarding about 70 megawatts at Tamil Nadu, the best side of the world in wind side. So there absolute where your machine -- 250-kilowatt machines in 2020 or 2021, so what is your plan to repower? Or will they continue for 2, 3 years or not? And my third question is related to you have already given INR 110 crores 3, 4 years back to our parent company to establish the wind farm at Andhra Pradesh, so what is your plan, please clear on these 3 questions?

Yes. See, basically, if you really look at -- I mean, one is the repowering of wind over the next few years, we are also awaiting a clear repowering policy, and the potential is immense because we've got some of the best wind sites, as I've mentioned as far as the repowering is concerned. And I -- we already worked out some plans. And as I said, the repowering changes, the dynamics in terms of the spacing between the machines from a 250-kilowatt to the megawatt-class machines, the spacings, et cetera, will have to change. We already worked out this preliminary things. And we've got the plan ready, but it is too premature to discuss because it's still about 3 to 4 years away. And see, the first question was? Sorry.

So will they -- will we continue up to 3, 4 years, these old machines?

Yes, yes, yes. In fact, these machines can -- see, really speaking, these machines can run for another 7, 8 years, if necessary. In fact, these are all very sturdy machines, which we have got...

And sir, lands are with you? Land -- you are landowner?

Lands are with us. With these sites -- see, lands are with us. So especially in the Tamil Nadu part and the -- even the Andhra part where some of the machines are getting a little old, the Bharat Wind Farms are about 25 megawatts, those plants also...

I have seen these sites, they are very nice sites, this Andhra Pradesh, Tamil Nadu sites are very nice. And the wind flow is also good. So if you have made a decision very positive for you?

Absolutely. You have rightly mentioned that this is a very positive thing from -- as far as wind flows are concerned, these are some of the best sites in the country, which we captured around about 2010, even these -- some of these machines, which we bought at that point in time, which were already running. So these were -- I mean, some -- definitely some of the best wind sites as you rightly pointed out. So we can definitely capitalize on this at some point in time. And we already got a plan in place, but we are waiting for also a proper kind of scheme to be announced by the government of India on the repowering process itself. Then, okay, as far as the INR 110 crore, which you're talking about lent to LSML Leitwind, which is for construction of these machines, we have capitalized some amount of it at least, the land part of it, we have capitalized. The others, we are still hopeful that we'll be able to put the project. The -- through an expected credit loss, we have made some provisions in the current year. And which we'll carry forward. And if the project is not coming up, we can at least -- these land parcels are very good land parcels. We can monetize the land parcels or we can do something in future if things open up. So these options are always there with us. We are treating them in...

And sir, you have also -- you have like this biomass plant near to Jaipur, in Rajasthan, Kotputli, so have you sold that plant or still it is in paper?

No, no. See, basically, there was ILFS loan, in fact, which was sitting on that. Once we clear that, the ILFS has to give us the NOC, which we are -- I mean, again, got delayed by the -- we were supposed to meet them in the month of February, March. That got delayed because ILFS...

It's 2 years, 2, 3 years the -- say, this project is also pending from 3 years.

Yes, I agree. Because see, ILFS in the last 2 years has gone into a different kind of a mode. They are -- in fact, had it been the original ILFS with whatever shortcomings they had, it would have been sale through. But then the ILFS -- in the last couple of years [Audio Gap] from ILFS in this particular thing. So we have to really wait and see what ILFS tells us. We've been -- we have given them a settlement offer also, but it's not moving forward as far from their side because they have -- in my view, they have got far bigger cases [Audio Gap]

So it will take time, another 1 or 2 quarters?

Yes, at least 1 or 2 quarters, but we have been pushing them to finish it off fast, but their cases are all -- each case is in the order of INR 1,000 crores or INR 10,000 crores multiples thereof.

Mr. Venkatachalam, great. You have -- by your good efforts you put this company into positive EPS. So I hope that you will maintain this momentum and save the what -- the hard-earned money we have invested in your company. We hope for this.

Yes. In fact, thank you so much. And just as you wish, we also wish that not only the investors, in fact, as employees of the company, we definitely wish that we'll see good times. We've been through enough challenges...

In fact some small investors are hard or impacted very badly by investing in your company.

Sure. I'm sure everybody will see good times ahead. And I pray for that along with you, sir.

Next question is from the line of [ Manish Bakshi ], an Individual Investor.

My question was, actually last year in Q4, ILFS sold their stake in their wind assets to ORIX at about INR 5.5 crore per megawatt. Now since we were talking to ILFS for a merger, can you throw some light on when we were exploring the merger, whether our wind assets were comparable to theirs or -- so that I can get a sense of the valuation. Or whether at that point in time as well, their assets were superior as a result of which the proposed -- explored merger ratios were not actually 1 megawatt of ours if equal to 1 megawatt of theirs?

Yes. See, basically, there are a couple of aspects to this. They had something like 775 megawatts, which they were planning to merge with our 425 megawatt at that point in time. Now of course, you cannot compare because they were all -- the entire 775 megawatts was one class of machines from Enercon, that is the wind world, as we call it in India, which, okay, later got demerged. So they were all Enercon machines of 850-kilowatt capacity. And in our assessment, when we went through the assessment, in fact, we immediately realized that their machines gives that kind of [Audio Gap] that they had projected in their -- this thing. In their projections, so it was not a workable this thing. And of course, our machines are a different class. You can't count the 425 megawatts in a similar fashion because 180 megawatts is that -- is the old class of machines, which have got different levels of PLF between 15% and 20%. And the megawatt class machines are definitely about 25% to 30% PLF. So it's a mix of all that. And their PLFs, definitely, we didn't see how they would -- because they have not achieved those kind of PLFs in the past, so the ratios were not working out. In the meanwhile, when we were looking at the -- after a few meetings that we had with them, ILFS went into its own issues, and the whole thing was shelved after that. In any case, we wouldn't have gone ahead with ILFS.

Yes. Sir now, I mean, given that ORIX owns all those assets, are we looking at exploring a merger with ORIX or any other such company?

See, we are definitely exploring various options with various companies. All -- nothing that we can really talk about in the sense, many of them are in very preliminary stages. In fact, if you really see the investors over the last couple of years have been in a kind of a wait and watch kind of a mode. Reason being the tariffs discovered in the bids are between INR 2.43 and the best was about INR 2.75 or INR 2.80 kind of a tariff. So the potential investors also don't see how these tariffs will really stack up in the long run because they really don't see as to how people are bidding these kind of tariffs. So once the tariffs firm up a bit, I'm sure a lot of investors will definitely come forward, and our tariffs are on an average of INR 4.70 and above. In fact, on the average, I'm talking about after all the charges in Tamil Nadu. Gujarat is at INR 4.15 plus GBI. Andhra is at INR 4.70 plus GBI; okay, they may dispute it and pay only at INR 2.43, but then that's definitely a dispute not valid. In Tamil Nadu, our average is above INR 4.70 net. So we've got good tariffs. We've got a good set of machines. We've got a good experienced manpower, a lot of positives. Only these challenges which keep throwing up from time to time, set you back year after year.

Okay. But just to clarify, these low tariffs were basically for the new capacities, right? So -- but when we already have these existing PPAs then for acquiring assets like ours, why would investors want to wait and watch?

See the investors are also -- because see the Andhra issue also has setback investors saying that if somebody can -- see, basically foreign investors were quite taken aback when a person can really relook at your PPA and say that you come here and it is almost like a -- you can say, they called all the investors and almost at, you can call at gunpoint or whatever. But luckily, none of the investors -- if one investor signed at INR 2.43 or whatever they were talking about [Audio Gap] It would have been a disaster. See, luckily, nobody signed. And it's definitely not negotiable. And that kind of thing has really set back the investors. Otherwise, we would have definitely had some more investors interested in our kind of business where things are at much better prices and definitely far more workable model in my opinion.

Okay. And my last question is for Ms. Kotteswari. Since it was mentioned that she has joined us from our promoter growth, is it possible to get some insights on what exactly -- how is the promoter thinking about in terms of Orient Green Power? For example, whether they plan to convert their -- the loans into equity and if yes, then I mean, what is the kind of valuations they would be looking at? It would be at around market price or at par? Because she's been an integral part of the management team there, I'm sure she's been involved in those discussions.

Yes, I'd like to just start off before she takes over because see, various proposals are being worked out. Definitely, one is, as you rightly pointed out, the loan can be converted to equity and right now, also, it is like an equity only that we are treating it because we are not repaying any of the loans or we are not paying interest, which is subservient to the interest that has to be paid to the banks. Now converting loans to equity also has its own kind of challenges. In fact, it breaches the 75% mark and various other challenges are there. Now I'd like her to further elaborate. So many of these proposals are on the various stages, definitely, a lot of things, the management is very keen on definitely taking this company further.

Okay. The promoters are committed to this company and to grow it in future. That is the reason that last 2 years, we have waived the interest on the promoter loan, which is around INR 30 crores to INR 35 crores of benefit has come to the investors overall equity shareholders, while the promoters have taken a hit. And wherever it is required in future for the growth of the company, the promoter group fully committed to as to the company to grow and enhance the shareholders' value. This in turn will obviously increase our shares as we are closer to 50% of the company's investment. So whatever benefits which we have to derive and what needs to be done, the promoter group will be committed to the company.

Okay. And just a quick last one. We've already discussed the bulk deal in end of March, so Edelweiss has sold about 6.6% in the company. Before they sold the stake, was there any discussion with them to get a sense of why are they looked this because they bought it at INR 14, and they sold it at INR 1.4. So what is their concern? Or what -- did they try to get more information about the operations or anything or they just went and sold it.

No, no. It is their own decision, and we were not consulted. See, Edelweiss also you see a lot of market news, their cash flows, they have to manage and whatever in their wisdom, they have exited. But they have not consulted us while investing as well as exiting. So...

Ladies and gentlemen, we will take our last question for the day now, which is from the line of [ Chintan Ramakrishna ], an Individual Investor.

Yes. Sorry, sir. I have missed to ask earlier, do we -- are we talking to any other companies on any merger plans. Like after ILFS, we thought, we are still continuing looking for the opportunities?

See, we are definitely -- see, over the last couple of years, which I mentioned in the last questioner, we've been looking at definite opportunities, which will -- the overall, the promoters are looking at something that will improve the value to the shareholders. That is the overall objective. Now if a promoter can infuse some funds and reduce interest rates, I mean, help us reduce interest by about 250 to 300 basis points, definitely, that is about 300 -- INR 30 crores to the bottom line, which will help us a great deal. I mean INR 25 crores to INR 30 crores. So we've been talking to various investors. And as I said, the last couple of years, investors have been in a bit of a wait-and-watch mode, especially because what happened in Andhra kind of set back their thinking and also the kind of low tariffs that were discovered. And everybody is wondering as to how people can even put up machines at those kind of low tariffs, and many of the projects have not even come up as a result of these low tariffs for various reasons, that you would know of in terms of availability of sites. Nobody is willing to supply machines at those low tariffs that they had assumed in their capital cost and so on and so forth. We are definitely -- we have continuously been in touch with various investors and various, I mean, groups, but it's only a matter of time that we'll have to see as to how the interest pans out. But definitely, we're looking at something which will enhance the value to the shareholders.

I now hand the conference over to the management for closing remarks. Over to you.

Thank you, all of you. And in these difficult times, and I'm quite glad that there were a number of questions. And I'm quite -- very -- really, very glad that we have been a profitable year that we've been able to come up in a very positive way. And with a good wind year and with -- despite a few challenges, which, in terms of back ending of the corona, I mean, offtake due to the coronavirus, I'm sure that things will be pretty good. We have been working very hard to ensure that things are positive for all time to come. And we are hopeful that there will be no further challenges, and we are hopeful that the Supreme Court judgment as far as the AP case as well as the REC case definitely go in the favor of not only us, but all the other wind investors as well. So with those remarks, I'm quite positive, and I look forward to a good year ahead and look forward to good value to the shareholders. Thank you very much.

Thank you.

Thank you very much, management. Ladies and gentlemen, on behalf of Orient Green Power Company Limited, that concludes today's conference call. Thank you all for joining us, and you may now disconnect your lines.