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

No, we are repaying around INR 100 crores. And this year, because we have taken new loans for repowering other INR 535 crores by year-end.

By the end end. That will mean more or less it will be constant for a quarter, right?

Correct.

Correct.

Okay. Yes. Sir, from the last quarter con Call, I can see that you have made some provisions for Andhra Pradesh government up to INR 30 crores around. So what is the state of it?

No, that is basically the -- there was a couple of years back [indiscernible] Andhra Pradesh government, which after the association went to the court, we won the cases and we got the principal back. As per the PPA, they have to pay us interest on the delayed amount, so that interest amount we are spending, we are kind of in, should we say, there is a dispute with the AP government on that. Unfortunately, the Andhra Pradesh Electricity Regulatory Commission, which has to rule on this and we have to give the instructions for this payment is currently nonfunctional because they don't have the necessary members to run commission. So once the EPRC starts functioning again, we hope to push it. Since this interest has been delayed for some time by a measure of prudent this thing, we are making provisions for the receipt. But legally, we are entitled to that interest, and we are certain that we will collect this money over a period of time.

[indiscernible] the provision percentage still now?

As of now, we are making the interest of about 5% on the -- on an annual basis.

[indiscernible] You expect expense. Total provision is -- we have made a provision.

Can I know the percentage of it like 100%, 30%, 40% for the exposure?

No, no. Until now, we have provided around INR 6.5 crores on the INR 20 crores. But on an annual basis, 5% to 6% depending on the cost of borrowing and the cost of capital, which auditors will work out and -- it's part of India AS we have to provide for the expected credit loss. So that's what it's provided. So it will be around 6% of the total outstanding amount.

As of now, it is about INR 6.5 crores on a total outstanding of around INR 20 crores. So about 30% of it has been provided for, okay?

Okay. Do you have any further plans for the solar development? Are you focusing clearly on repowering?

No, no. We will do repowering. We are looking at solar possibilities. We are also looking at battery storage for the existing solar projects. So both these, we will look at during the coming quarter. We will look at it. There are still certain regulatory kind of things that we need to resolve before we look at battery for the existing solar projects. So that's something that we are working with the government of Tamil Nadu for getting the regulatory situation straight for implementing battery storage. Only even the battery storage, should we say, regulation is clear, we can do more solar because for -- as a supplier, solar without battery is not making sense anymore.

Yes, than we can expect in the next year in upcoming year?

We can expect in the next year. Yes. Yes. Yes.

Next question comes from the line of [indiscernible] Capital.

Sir, how much revenues are we targeting for this year and can we sustain like 50% margin?

Yes. See, the margins will be sustained because for us, the major cost is the O&M cost is more or less fixed. Interest and deposition are also kind of predictable. So margins are reasonably predictable. In terms of top line, we are dependent on the wind. So we can't really I mean precisely predict how much is going to be a top line. But definitely, we will be able to maintain what we have done last year. We are hoping that we will exceed, but that depends on

Our next question comes from the line of Faisal Hawa with H.G. Hawa & Company.

Sir, what are our blended interest rates for all the projects? And what is the best interest rate that we can achieve and are we making efforts to go towards that?

See, currently, the blended interest rate is at 9.1% and the best rate, which we got for the old assets loan, which we took from HDFC that was at around 8.2%. But current interest rates are actually slightly strengthening. Going forward, the interest rates will be -- we can make it around 8.75% lowest, but that is on the not on beta. Beta, which is a major project is with and there again, we had come down from 9.75% in the last 3 years to 9.15% right now. So we are approaching them for internal rating also to reduce another 15 basis points. Let's see how it works out because they take time being a government NBFC. But overall, the interest rates, if you see from last 4 years, we've been constantly dumbing down. The external credit rating agencies generally don't see that change and accept faster. So we are going -- moving step by step from like BBB, BB, so we have to achieve BBB+ and then a for increase in external perception. But in terms of bankers and our new lenders who want to come. They are looking at it positively. I think we will be able to achieve 9% as the interest rate going forward

Can you give me the division in our sales between corporate and government? And what is we are realizing from the corporate and how much is from the government per megawatt?

See, per megawatt more or less, it will be except for solar because even with Andhra also the net rate of PPA, which we have contracted, will be the same transmission lines here with the corporates, whatever rates which we have contracted less transmission cost will be around same. All of them will be around INR 4.75 net rate to us.

And do we have any outstanding above 90 days?

No, we don't have at the moment anything above 90 days -- anything material above 90 days other than the Andhra outstanding, the interest standing which we already discussed. We are quite comfortable...

So suppose you want to expand our overall how much can we expand through debt alone?

No, we can't expand only through debt. We have probably another about 20, 25 megawatts, we can do by just leveraging the existing assets. Beyond that, it can't be done only through this. There has to be some equity coming in. That's something that as I said we are working on.

So the promoters are not even thinking of increasing their stake by some kind of a rights issue or...

Those are conversations that are going.

Okay. So that is a chance that even the promoters increase their stake and actually do something and...

[indiscernible] of course we have all this creeping acquisition requirements and things like that. So [indiscernible]

Our next question comes from the line of [ Manoj Bagaria ] with [indiscernible].

If you talk about the solar, the 25 megawatts, is this a pure solar or as a part of the setting up to be able to have a BESS or battery storage also along with that?

At this point, it is a pure solar because when we started this project, the requirement of a BESS were not that currently at is still not there in Tamil Nadu. But we are looking at the possibility of retrofitting the BESS which we'll probably do in the next year.

Okay. So anything that you do in future, apart from this 25 megawatt in solar battery storage will be included in that, right, which reduces your returns on the investments.

Any further solar that we do will almost certainly have a better storage element. Wind does not require because battery storage is not really help in wind, but definitely solar.

So this 25 megawatts, even if you don't put a battery storage, you have enough transmission capacity available that you can have?

Yes, these are already contracted to customers for supply of the entire product. That is not a execution is not a problem. [indiscernible] Consumption is also not a problem. But we are looking at battery storage because we feel that we can serve the customer better and probably improve our realization if we are able to provide with batter.

But then if you talk about the return, like when I see the project, right, you have a repowering. You can put a fresh wind capacity. You can put a fresh solar versus battery storage, how does the return capital employed or payback defer on all these actually?

See on this, the repowering is probably the best then between batteries the solar with battery storage and new wind, they are not -- they are more or less equivalent. Choice between the 2 is on 2 sides. One is what my customer wants because here, we are doing We are not doing selling power to the grid. So we don't have long-term So basically, we look at our customers' demand portfolio, I mean, demand spread. And then based on that, we have to balance.

Okay. And on your existing sites, where the wind is there, if you have to put the solar, that will be driven by the new policy only with BESS only or you would have some leeway because...

No, no, not necessarily. There is a repowering hybrid policy in Tamil Nadu, which allow you to put solar within wind farms, that also there is some fine tuning and notification of the policy that is pending. But we can do a solar, wind existing wind farm without adding the BESS. Whether it makes economic sense in the calculation that we have to do it, nothing preventing us from doing battery without any solar without battery. But whether it is economically better to put battery or not put battery is something that we calculate within.

So how much hybrid potential is there in the policies, right? Because what I understand from the industry is hybrid is the best in terms of the economics as of today?

Yes. See, on our existing wind farm sites, we can probably do at least another 100 megawatts of solar, probably more as hybrid, but it also defines some places we have to buy land, we have to see what is the cost of the land. So we have acreage. We have a point And in hybrid, you always have the problem that during the peak wind season, there is amount of element of backdown of solar because you cannot generate more power than is permitted to be connected to the grid in that substation. So during -- especially in the afternoon during wind season, you will have excessive generation. So that's the balancing that has to be done. Definitely, hybrid as technical solution is better than fuel wind pure solar, but each project, you have to look at the economics.

So practically, hybrid will come with BESS, right, battery storage and then the economics would again change because of the battery storage.

But again, we'll have to see because BESS, the problem is that you target once during the afternoon and then you restage it at night. So we are able to use the battery for only 1 cycle per day. that costs quite a bit of money in terms of if you convert it into cost per kilowatt hour, it is quite significant. So unless we are able to make more than that money from my customer it's unfortunately, battery costs have gone up a little in the last year. They have dropped quite a bit, but they are now back on the uptick. So -- but still, on a single cycle charging, discharging, it's just about okay. We are trying to find a structure which we are allowed to be able to use it twice a day, that's still kind of still requires certain government modifications, which we are working with them on.

So hopefully, all these things will be maybe by end of this year, right? I mean, hopefully...

[indiscernible] As far as Tamil Nadu is concerned, they're expecting that all the open issues will get close in the next 2, 3 months. now that the new government has taken charge and are beginning to understand the subject because as you are aware, all the ministers are new. They have not been ministers before, so they are taking time to kind of get a grip of the subject, which is happening. I mean we are working very hard on it. So we are expecting that in the next couple of months, we will get clarity in Tamil Nadu.

And when I see your target of 1 gigawatt, right? I mean what kind of solar is improved impact. I mean in case everything goes according to what you are planning and you get money...

No, [indiscernible] you see but the 1 gigawatt will be a combination of acquisition that is inorganic and organic. So the organic would probably be more of winter than solar because that's more available. the solar projects are relatively new and expensive for acquisition. Our C&I, at least for the next 1 year, I am seeing to be more wind continue to be more wind-focused and solar focused. Until we have a good group of battery, we are hoping for at least some small reduction in battery prices, then

Okay. acquisition you think there are enough opportunities in the wind sector [indiscernible]

There are enough opportunities.

Okay. So if we have the equity or the cash, then you can do the acquisition?

There are enough and more opportunities. See, we are still at a very low penetration of renewables compared to the target that is required. And as far as our industry customers are concerned, they all want to go to 100% renewables. So definitely, there are opportunities. even the government sector there are opportunities because governments start wanting to -- want to buy more noble power, particularly more wind power.

So sir, 1 thing I clearly understand that the demand is there. Demand is not an issue. It's a question of your ability to get -- put it together the project in a viable fashion. And for that the money, I think money is the biggest issue if you can resolve that, then there is no

There's [indiscernible]

[Operator Instructions] Next question comes from the line of [indiscernible] Associates. As there is no response from [ Manav ], we'll move forward to the next participant. Next question comes from the line of [indiscernible], an individual investor.

My question is could you share your capacity addition road map for FY '27 and FY '28 across both wind and solar.

See, I think as far as FY '27 is concerned, we are adding 17.5 megawatts of solar and about 7.8 megawatts of wind. I don't see a -- plus, we've already added 3.3 megawatts of capacity in wind. So there will be a total of about 12 megawatts of -- with 11 megawatts of wind and about 15 megawatts of solar happening this fiscal. Next fiscal, we have a lot of plans, but I don't think we -- there are so many moving parts. I don't think I'll be able to give you a clear number on how much of capacity will be added. We will probably add 15 to 20 megawatts of repowered assets in the next fiscal. But beyond that, what we will do, we will work on -- I think we will have better clarity towards the end of -- towards the middle of Q3.

Okay, sir. My second question is, how should we think about the revenue, EBITDA and profitability for the rest of FY '27, any broad guidance would be helpful? And finally, could you share the management's long-term vision for the business and the key growth drivers over the next 3 to 5 years?

See, as far as this year's revenue and EBITDA is concerned, we are -- should be better than last year. We are working on it. As I said in the earlier -- answer to an earlier question, it a lot depends on the monsoon and the winds. So as of now, would we look to be equal to or better than last year, but we have to see how things move. Going forward, as I think we have asked answered in many of the previous questions, we are looking to expand the capacity in both wind and solar, but we have -- we need some strategic We are working on those to this. And as and when something kind of use we will be in touch with the shareholder community.

[Operator Instructions] Our next question comes from the line of [indiscernible] Management.

Just 1 question. When we say that we are trying to be or we will be equal or slightly more than what our past previous year has been, are we being conservative here because like we are adding capacities and why are we...

Yes, I'm being conservative because I'm not able to predict the wind. If the wind is as good as last year, definitely, I would say we would be significantly better than last year. given the fact that this year's monsoon has been patchy, and it's quite delayed. Now we have lost potential revenue in Q1 because of the monsoon as I said, until that has been okay, but we are still kind of -- it's still not as good as the wings last year. So I think this will probably be from a wind availability perspective, similar to year before last. But since we have better capacity this year and more machines operating this year in terms of machine availability is better this year than it was 2 years back. So definitely, we will exceed last year. But by how much we are -- it's difficult to well exceed last year, but thanks to the additional capacity. But by how much we will exceed will depend on how the rest of the monsoon progresses. -- because, unfortunately, in this business, we don't have too many levers other than ensuring that the machines are fully operational.

Our next question comes from the line of [indiscernible], an individual investor.

Sir, I remember when we completed December '25 results, we are a discussion in the Feb '26 meeting thing that you would promise with our promoters will unpledging the entire 100% share. But even after 2 quarters, it's still not done, why the promoters are not interested in unpledging the shares? Basically, giving the negative impact to your company share value and the shareholders as well.

No, no, no. Please, we have never said that it is going to be 100% released in the same quarter. We had said it will be released in the phased manner depending on the promoter companies loan. The promoter company had taken a INR 300 crore -- INR 400 crore of loan out of which INR 150 already they have paid. So to that extent, the leverage is coming down. And in the current year, the rest of the loan also will be paid by end of financial year, hopefully, we will be releasing the entire pledge. Even though the loan amount is coming down, there is no partial release of shares. That's why the showing has pledged the corresponding loan which has been taken on the pledged shares is coming down because we have been paying the installments regularly. In fact, ahead of the time. So hopefully, by year-end -- actually September '27 is the promoter loans final due. So as per the terms, it will be September '27 that will get released.

Sorry, come again, please?

The promoter loan, which has been taken by pledging of the share is the installments are running as per the loan terms after September '27, so after repayment of debt loan only that will get released. As of now, we have repaid loans close to 40%, which is much more than whatever is the installment. So we are hopeful of retiring the pledged by end of this year if we go ahead in the same manner, the repayment.

[Technical Difficulty]

Sorry to interrupt you [ Shivam ], but your voice is breaking. We can't hear you properly.

[Technical Difficulty] as of 30 June [Technical Difficulty]

We're still not able to hear you properly.

[Technical Difficulty]

[Operator Instructions] All right, as there is no further question from the participants, I would like to hand the conference over to Mr. T. Shivaraman, Managing Director and CEO. Thank you, and over to you, sir.

Thank you all for joining us and for the insightful questions. We will work on upholding the confidence that the shareholders have in us and hopefully start generating significant shareholder returns during the course of this and the next following years. Thank you for joining us, and wishing you a very profitable week going forward. Thank you.

Thank you so much, sir. Ladies and gentlemen, on behalf of Orient Green Power Company Limited, that concludes this conference. Thank you for joining us, and you may now disconnect your lines.