Power Grid Corporation of India Limited (POWERGRID) Earnings Call Transcript & Summary

We don't have Mr. [indiscernible] with us. Sure. Nikhil, can we go live now?

We are live.

Okay. Thank you, Nikhil. Greetings. On behalf of IIFL Securities, I welcome you all for the Fourth Quarter and FY '21 Annual Analyst and Investors Meet of POWERGRID to discuss company's performance in FY '21 and share the outlook. Today, we have the entire senior management team of POWERGRID, represented by Mr. K. Sreekant, CMD; Mrs. Seema Gupta, Director of Operations; Mr. M. Taj Mukarrum, Director of Finance and CFO; Mr. V.K. Singh, Director, Personnel. Without much of a delay, I would request CMD POWERGRID to make his opening remarks, subsequent to which, the floor will be open for Q&A. Over to you, sir.

Good morning. Thanks, Harsh. I'll start with a brief presentation about the performance. Can we have the presentation, please? I will briefly talk about the major highlights of this year and then about the company and then the '21 financials, the outlook for the future. The major highlights are the -- first is the POWERGRID InvIT, which has been listed on 14th of May. It has been a roaring success. We had 0.83x of subscription against the offer size of INR 7,735 crores. And what is gladdening is the extensive support we have received from a wide spectrum of investors. About 25% was from foreign investors; 15% from mutual funds; 11% from insurance companies; pension funds, about 8%. And even in the noninstitutional segment, we had the confidence of more than 15,000 individuals and noninstitutional investors in the offering. We have acquired 5 TBCB projects, which have been won by us, all these projects have been acquired. I think 2 have been acquired before 31st March, and the rest have been acquired very recently. These are for the solar generation in the Rajasthan region, the ISTS projects. In terms of our CTU role, this has been now given to the Central Transmission Utility of India, which is a 100% subsidiary of POWERGRID at present, but soon it will be made a separate government-owned entity. We continue to be a deemed transmission licensee. These are mainly regulatory functions as per the act and the regulations, which will be done by the Central Transmission Utility of India. We have acquired the Jaypee joint venture, where we had 26% and Jaypee had 74%. This was for a noncash consideration of INR 351 crores. These are regulated assets. And this is an operating asset and has a very high availability. Recently, the government of India has handed over to us the Srinagar-Leh transmission system. We take pride in this transmission system, which provides connectivity to the Leh, Ladakh region. This was initially constructed by POWERGRID as a consultancy assignment under the Government of India brand. 5% was subscribed by the states. Now we are going to put in that 5%, about INR 89 crores, and then further strengthen and augment this with some more investment. More than the investment, it is the privilege of serving the people in the remote corners of Ladakh, which is the biggest plus point for this. Today, POWERGRID has 1 lakh 68,256 circuit kilometers. This is after the monetization of 6,900 circuit kilometers, about 438,000 MVA transformation and 90,090 megawatt of interregional transmission capacity. Now I will focus on the highlights of FY '21. As you are aware, and the year gone has been one of very tough, and the challenge was pandemic. And despite the pandemic and the difficulties we faced in all aspects, be it construction or operation, I'm very happy to share with you today that whatever has been the commitment in the last year, the company has been able to achieve. We did a CapEx of INR 11,284 crores on a consolidated basis. Our target was INR 10,500 crores. The capitalization was INR 21,467 crores on a consolidated basis. On a standalone, it is INR 19,533 crores, 6,500 circuit kilometers of lines, 9 substations, 27,300 MVA transformation capacity and 3,000 megawatts of interregional capacity. So I'm very happy that what we have committed in the last annual analyst meet we have definitely surpassed. In terms of the quarter 4 performance, the capitalization has been about INR 9,000 crores; and the CapEx, INR 3,782 crores. Some of the major projects we have capitalized in this year, plus-minus 800 kV Raigarh-Pugalur system, it is a 6,000-megawatt system, of which we have commissioned the first Bipole 3,000 megawatts. The line -- DC line, Raigarh-Pugalur, 3,530 circuit kilometers and a part of the AC system. The Bipole-II testing is under progress. Actually, the work is complete. We are waiting for the small stretch of AC lines. Roughly about 17 kilometers is now pending. Once this is done, this whole project can be commissioned, so we are really having a challenge in getting the right-of-way clearance in Tamil Nadu. And also because of the pandemic, it is a bit more aggravated. People are fully committed to it and working on it, and we hope that sooner, it will be completed. The second leg of this system, which is the 2,000 megawatt Pugalur-Thrissur VST-based HVDC system, I'm very happy to share with you, is fully commissioned and capitalized. We have done the first Monopole of 1,000 megawatts in the fiscal '21, and the second Monopole has been commissioned in June '21. This is a unique technology first time brought into the country by POWERGRID. We have used the combination of overhead and underground cable to supplement the right-of-way challenges in Kerala. And this technology also is going to be used in future RE integration particularly in the Leh or any such high-volume RE evacuation is required. In terms of our operations. The availability of the system was 99.76%. The trippings were about 0.36. We have adopted many latest technologies such as the use of application apps developed in-house by patrolling, drones for patrolling of transmission lines. The remote operation of our network from the National Transmission Asset Management Center or the Regional Transmission Asset Management Centers, we have about 11 all over the country. This has been a big boon and facilitated operation of our large network despite the pandemic. We have also developed the in-house tool for monitoring and condition monitoring of the transformers and reactors. And going forward, we are going to develop similar tools for other critical equipment such as circuit breakers and isolators as well. I would like to show a few pictures of the -- I mean showcasing the commitment of our operating and maintenance personnel because in this pandemic situation, it has been not easy with restrictions on movement of men and materials to ensure the availability of the system at such high levels. These are some pictures of people working at night or crossing the river to reach to a line in the northeast, which is -- had a breakdown. We also developed a lot of competence in in-house maintenance of gas insulators which we have substations in the company. And the dependence on the OEMs has reduced substantially in these operation -- in the maintenance or breakdown maintenance of these systems. We have encountered 3 cyclones. Super cyclones are, I think, given more higher related cyclone, Amphan, Tauktae recently and Yaas in the East Coast. Very happy to share that the advanced preparedness and the robust infrastructure we have built, we did not -- our network has no material damage. And we would lend a helping hand to the states in restoration of their systems. As we mentioned, this year has been one of performance and fighting the pandemic. Nearly 25% of our employees were affected by COVID particularly in the second wave. We have seen supply chain restrictions, restrictions in the movement of men and material. Despite that, as you have seen, we had achieved very high operational performance and capitalized a large volume of assets. Now if we look at the fighting of pandemic, we took care of our employees. We had set up isolation facilities. We had control rooms and task force 24/7 assisting the people. Vaccination is one thing we are very much focused. Nearly 80% of our employees and 59%, 60% of the contractual workers have received at least one dose of the vaccine. We are targeting to complete the vaccination by the end of July. We have also contributed to the society in terms of providing cold chain equipment in the Ladakh, Mizoram, Punjab and Sikkim. We facilitated supply of oxygen to nearby hospitals. We provided an oxygen plant to the district hospital in Jaisalmer, and one more is on the way for Gurgaon. Coming to the financial performance. There has been a 6% growth on the income on a consolidated or stand-alone basis. PAT has grown by about 10%. One significant improvement has been the performance of the subsidiaries and the dividend which we have received. Prior to monetizing these assets, there has been a significant jump in the dividend by almost INR 320 crores. I will not delve too much on this slide. The EBITDA gross margin has been about 6% growth, and overall profit after tax has grown by about 10%. In terms of our debt, you can see that the leverage is slightly coming down. It is now 67-33, fractionally down from the 70, 71, 70-30 kind of levels we had a couple of years back. On a consolidated basis, the [ economic growth ] has been 17.21%. EPS has grown by INR 2 -- almost to INR 23.01. And the capital work in progress is now at about INR 25,000 crores as of March. Dividend, we have declared already INR 9 as interim, and INR 3 is now proposed as final dividend. If you look at it, this INR 3 will effectively work out to INR 4 on a pre-bonus basis. So it is, in fact, INR 13 versus INR 10, which we have given last year. The payout ratio has also gone up from 54% to 57%. I'm very happy to share that last time we are proposing a bonus offering in the ratio of 1:3. And this is another milestone, and I hope that the investors, particularly the retail investors, will find a lot of share in this. Some of the numbers which you are all very eager to know, I have put them in this slide. Surcharge this year has been INR 744 crores. One thing I would like to mention in the results that we have provided a rebate of about INR 1,079 crores onetime rebate, which was shown as an exceptional income -- expenditure. Surcharge has gone up INR 744 crores. Initial periods, there was delays. But as you will see, the realizations have significantly improved. Incentive for the year has been INR 481 crores; interest from subsidiaries, about INR 1,067 crores; dividend from subsidiaries, INR 547 crores, as I mentioned previously. Trade and receivables have shrunk to INR 3,676 crores, a significant improvement even in terms of base receivables. The short-term debt is now at about INR 1,800 crores compared to INR 3,000 crores last year. Our receivable position has improved. This year, the realization has been 103.78%, 104%. What was looking -- whether we will cross this 100% number was looking very difficult in the half year or even the third quarter. But thanks to the Atmanirbhar Bharat Package and various other initiatives taken by the company, we could realize more than what we have built in the financial year. Our realization was 103.78%. Outstanding dues have come down to nearly 38 days billing. Only Jammu & Kashmir is a very major outstanding customer, and we hope that we will be able to realize this sooner. In terms of our other activities. The telecom performance, there has been growth in the telecom, roughly about -- I mean it's not very significant. It is just INR 10 crores of income. But in a situation where the telecom tariffs fall, maintaining this position itself is a big challenge. And we have successfully connected Leh on the SLTS network. So that is now opening up potential to provide bandwidth for Leh connectivity. Going forward, we are looking to get a license for international long distance. This business was to be held off -- this entire telecom business was to be held off into a separate SPV. Our petition before the CERC is still pending. I think the hearing has been done, and soon, we expect an order, and then this business will be held off. We are also planning to expand into data centers, taking the advantage of land available at the substations, the fiber availability and the electricity availability. So these are 3 ingredients which are major essentials for a data center, and that is what we are looking to expand. In terms of our consultancy, it has been a downward performance. Income has reduced. On the back of reducing PBCB works and also the performance in our other contracts, [indiscernible] comprehensive has not been as it was planned, so there has been a down in this segment. But we are looking to further expand this in terms of our energy efficiency services, in terms of consultancy for Smart Grid and also looking for other international consultancy. Now we are in discussions with -- I mean proposal is being submitted for a work in Nigeria and other foreign countries. EV charging, we have some presence, but it is still nowhere near the scale or anything worth spending a lot of time on this. One of our supports to the sustainability initiatives is establishing rooftop solar systems to replace the traditional supply of power for our internal consumption. At about 74 locations, we have 6 MWP of rooftop, and another 5 MWP under construction. 8 MU of energy has been generated annually, so this replaces the conventional supplies from that grid. Going forward, we have today works in hand of about INR 41,000 crores ongoing projects; new projects, about INR 6,000 crores; TBCB, INR 18,000 crores. Another INR 10,300 crores are immediate upcoming opportunities; in the interstate, about INR 9,300 crores; intrastate, there is INR 1,000 crores. Plus we are also looking at providing an offer for the UP system which was built by a private developer but which has now gone to NCLT. We are considering that. In -- another project which we have been discussing with you was the transmission system for evacuation of 10 gigawatts of renewable power from Leh. This is a system from [ Pang ] to Kaithal about 5,000 megawatts; from Nyoma to Kashipur in East UP, another 5,000 megawatt. This will be a VST-based system with the associated AC network as well. So we have prepared the detailed project report and submitted it to the Ministry. And hopefully, we should be getting the mandate to execute this project. Other areas where we are going to focus now that the CTU is not with us, we can do generation of electricity. There are parcels of land available at several substations. We have identified and are looking to set up solar generation on these land parcels. Intrastate transmission, subtransmission network, this is another focus area we are going to take up in larger states particularly because there is a need for strengthening this segment going forward to increase the reach. Today, we have 100% taxes, but the growing demand for power will have to be met through a more reinforced back-end infrastructure, that's transmission and subtransmission networks, and that is what we will be focusing on. Keeping in view the cybersecurity in the sector, we are working to set up a center of excellence in this area in association with the Indian Institute of Science, Bangalore. And also, we have a Smart Grid Knowledge Center, which also works on the smart grid technologies, promoting the smart grid technologies. And we are going to set up an incubation center there to promote smart grid technology and be in a position to leverage this for any business opportunities which come in this area. If you look at the sector as such, there is a huge pipeline in the national infrastructure pipeline. Vision 2025, the mission is to provide 24/7 clean and affordable power. The installed capacity is to grow by another 200 gigawatts with greater share of RE. In the total, we had initially estimated about INR 65,500 crores of CapEx, which we will be looking to upscale going forward as the progress of our initiatives in the various other businesses come to fruition. And we believe that there is an opportunity for growth in the company. Of course, the kind of CapEx which we have been accustomed to, that quantum may not be there, but still it will not be very -- kind of a stagnation. We would definitely look for some amount of growth going forward. Very briefly, several of the awards we have received in the last '20, '21, I'm very happy to share the 2021 ATD Best Award for our HRD initiatives, both World's Best Employers 2020 list, we made it, and also the CII National HR Excellence Award. So I conclude my presentation here, and we'll be happy to receive your questions. Thank you.

Sir, thank you very much for a detailed presentation. Nikhil, can we open the floor for Q&A?

[Operator Instructions] First question is from Mohit Kumar.

Am I audible?

Yes.

My first question is, sir, how will you book the profit per EBIT gains for the portion you have done in this quarter? And what is the portfolio which you will transfer into InvIT in next 12 to 18 months? That's my first question.

We have not booked any profit in March results. In Q1, there will be, so I would request you to wait for Q1 results. Definitely, it will be there. In the next 12 months, we are yet to finalize the pipeline. I expect about INR 5,000 crores of assets to be monetized in the next 12 to 18 months.

Okay. And my second question is, sir, what is the commissioning and CapEx likelihood for FY '22 and FY '23 given the current portfolio of assets? And if we can break up between the stand-alone and TBCB, it will be helpful.

Sorry, Mohit, I couldn't get your question at all.

So my question is, sir -- am I audible? The question is, sir, what is the CapEx and capital expenditure and commissioning guidance for FY '22 and FY '23 given our current portfolio of assets? And if we can break up this into stand-alone and TBCB, that would be helpful.

Okay. In '21, '22, we expect to capitalize somewhere around INR 17,000 plus crores. Around 10,000 -- INR 9,000 crores to INR 10,000 crores, TBCB; INR 6,000 crores to INR 8,000 crores -- sorry, it is other way around: INR 9,000 crores to INR 10,000 crores in RTM and around 7,000 to -- to INR 6,000 crores to INR 8,000 crores in TBCB.

And the capital expenditure?

[indiscernible] overall.

So do we have a similar number for FY '23 right now?

Now I would not like to venture past...

For capital expenditure for FY '22?

FY '22, the CapEx is INR 7,500 crores.

And sir, breakup between cost plus and the TBCB?

Significantly, it is TBCB. I think around INR 4,000-plus crores will be TBCB.

Sir, we lost you for a brief moment of time. Maybe if you want to repeat the answer.

No, I think Mohit has been answered. For the next question I didn't get.

Sure. Next, we have Puneet Gulati.

Congratulations on good numbers. Can you comment upon there was a recent Supreme Court ruling which talks about underground of cabling in certain areas of Rajasthan and Gujarat. Can you talk about any potential impact that may have on you and whether do you think there is a feasibility of that action as well?

This is a judgment of the Supreme Court regarding protecting the great Indian bustard, which is a good thing and I think a specie under threat. Now the Supreme Court order talks of undergrounding low-voltage conductors. And the high-voltage conductor, where it is not possible to underground, should be provided with bird diverters. Now in the implementation of this, there are issues because what is low voltage, what is high voltage, and those issues are yet to be decided. Whatever POWERGRID is building, they are all certainly high voltage. We are doing only 400 to about 765 kV lines in that area, so we need to put bird diverters, which we will do. Having said that, the state utilities and the solar developers who need to get connected, I think they are having more impact. So there is a discussion around this, how to -- because in decision, I think in this judgment which was given, many of the utilities or the affected parties have not responded. So I think there is a debate around this, how to implement this as well as how to bring before the court the implications of these, the implications on the renewable growth and so on. But as far as POWERGRID is concerned, I do not see this directly impacting us.

So you don't need to take anything underground? And secondly, current construction work also does not get hampered?

See, the -- that is what I said. The voltage at which we are operating, 400 kV or 765 kV, it is not technically feasible to underground them for long distances. So there is -- if at all, we have to go to one committee the Supreme Court has constituted and prove to them that it is technically not feasible. So we believe that when that is to be -- when that is done, we will definitely be able to go ahead with the construction.

And in the interim, construction progress can continue?

We are carrying out, yes.

Okay. Understood. That's all for me.

Sir, if you don't mind, can we take a question from the chat box? It actually comes from [indiscernible]. The question is, can management clarify the annual CapEx and capitalization opportunity for POWERGRID given their current orders in hand, and the NIP vision to 2025?

See, we are having the NIP plan of INR 65,500 crores. We have done out of that nearly INR 26,000 crores already. So our plan in the NIP was of roughly of the order of INR 10,000 crores annually. So if we put INR 10,000 crores into CapEx year-on-year, that is what will come out as capitalization going forward because this -- what we are doing right now has been invested a few years back that is getting capitalized now. That is why you see the difference -- big difference between CapEx and capitalization. But if we do CapEx of INR 10,000 crores, INR 12,000 crores, INR 15,000 crores annually, that is what will come going forward as capitalization also.

Sure. So then we have a question from Sumit Kishore.

My first question is India currently has about 95 gigawatt of installed renewable capacity. Clearly, the 2022 target of 175 gigawatt is nowhere going to be met, and possibly we'll end up with a number between 120 to 130 gigawatts. So in that light, do you think that a per annum run rate, what is the annual award on TBCB that is likely for FY '22, '23, '24? If you could give some road map and also break your answer into potential opportunities not only in interstate but intrastate as well. That's my first question.

When we talk of 95 gigawatts of renewables, I'm sure you are not counting the hydro, which is also a renewable.

Yes, I'm not counting that.

Yes. So when we aggregate all these renewables, I'm very sure that 175 will be met.

But 175, sir, the government target of 175 did not include hydro, so let us not mix numbers.

Okay. Fair enough. It had the -- still there is a lot under construction in renewable. And more tenders are coming particularly in the Gujarat, [ Tawra ], that 20 gigawatt has been planned. Another 20 gigawatts in Rajasthan is being planned, and the network plans are being developed. So yes, the pandemic has impacted. There has been a time extension given due to the pandemic. So I will not foresee or I can't predict how much of 175 will be met or not met. As far as transmission network is concerned, these are the ones which are coming right now in Gujarat [indiscernible]. Plus Rajasthan, 20 gigawatts, these are big systems which will be coming for TBCB going forward. See, when we have planned, I believe that the opportunity for TBCB, the aggregate will be, say, around INR 15,000 crores to INR 20,000 crores annually going forward for our integration of these renewables. And the work on taking from 175 to 450 gigawatts will also have to commence sooner than later. So that is another aspect which will come. So when we -- another work, which I mentioned in my presentation, which will be taken up sooner than later is the Leh transmission system for a 10 gigawatt of solar integration into the network. So it's very difficult to give you a breakup the way you wanted in terms of how much ISTS, how we see intrastate, interstate and so on. But these are the broad areas where there are investment, and that is where action is currently taking place.

Sure. So just a follow-up there, like you said INR 150 billion to INR 200 billion per annum, that is just interstate? Or is it including intrastate as well?

I'm only talking of interstate because all the things I mentioned are interstate schemes. Intrastate, that is much more difficult to predict via the sequence, the size, the timing; these are much more complex.

Fair enough. So when you say that INR 100 billion run rate for POWERGRID, and if the interstate market is going to be INR 150 billion to INR 200 billion, the implied market share for POWERGRID, I'm not talking about the works in hand but the new wins, is implied to be more than 50%. My question is also if you could corroborate that, plus the fact that the recent wins that you have had in the last few months, you have practically got a dominant market share. Has it been at the cost of a lower IRR? So if I were to compare the IRR for your portfolio, for instance, the one that you shifted into the InvIT versus the last 5 assets that you have won, how would you compare the IRR profile for these 2 buckets of assets?

Okay. Let me answer in the reverse. The assets which we have monetized are by far the most profitable assets, there the returns are way beyond even the RTM. So those were the assets where the TBCB market was still nascent, completion was not that high, everyone was learning the ways. Now the competition is much more. And let me assure you, when we have bid out, we have not significantly or in any way compromised the return expectations. We had benefit of certain competitive equipment prices. And we believe that what we offer is a deliverable and a reasonable return proposal. As regards to question are we expecting a larger market share, no, we have not in our INR 10,000 crores kind of a CapEx target. We have tempered our -- I mean, win percentages. As per the past, we have not put a very high number there. We have been looking for other opportunities, as I mentioned, in the intrastate in other segments, and that is how we expect to make up this INR 10,000 crores of CapEx.

Sure. So what is the size of the Leh project? I know it to be a multiyear project, but what is the phasing likely to be in terms of award? And is it a given that POWERGRID is the nominated authority to implement the project?

It is not a given yet. We have submitted -- we have been mandated to do the DTR. We have submitted the DTR. We are very hopeful that it will be given to us. The phasing, the size and all are still under discussion, so I won't be able to disclose it at this point.

Sure. So just a last bookkeeping question. You have paid almost 95% of profit of the subsidiaries have been paid as a dividend to the stand-alone entity in FY '21. Going forward, should we expect a similar number in terms of dividend payments from subsidiaries to stand-alone? Because in the past, it has been a lower payout.

In the past, they were not material, and they were just coming into operation. But definitely, what is the point in keeping any money with the subsidiary when they don't have growth opportunities? The growth will happen through the parent.

Next, we have Murtuza.

Yes. So there's been a discussion paper on market-based economic dispatch. And our sense is that transmission infrastructure will be a key to implement the same. Would be happy to hear your views on the feasibility in terms of time lines of implementation and overall implementation. And what kind of an opportunity could we think of from POWERGRID or the transmission sector's perspective if one were to actually go ahead with this market-based economic dispatch?

I think here, you see the transmission at the stage on which this market base, the economic dispatch will be played. So I don't think we are, as a transmission utility, much impacted in a commercial sense by this. As far as the network growth which may be required because of this if it is fully implemented, right now, I understand it is only for NTPC, but suppose this concept clicks, it is to be implemented across the board. If there is a condition, then there will be a network growth opportunity. So if I look at it from a transmission utility perspective, it is some base of it because this is to start from '22 fiscal, '22, '23. And then once it is implemented, and if there is a condition or some such thing, then it will have to be evaluated with the new investment in transmission, does it make sense, and so on. So it is -- as a transmission utility, I do not see this to be a big -- I mean I think it is development in the market we are watching. We are keen to see how it evolves. But as a business opportunity or anything, I don't see immediate implications of this to POWERGRID.

Next, we have Bhavin Vithlani.

Congratulations for a good set of numbers. My question is on the capital allocation. In the presentation, you did mention about avenues like data centers and other opportunities. If you could help us, what's the kind of capital that PGCIL is looking to commit towards these new ventures?

We have yet to figure out the numbers what kind of opportunity sets which are there in this, I'll be very frank with you. But I'm very sure that these are not numbers which will be very significant given the balance sheet size and the CapEx which we are doing. Even if we allocate a couple of thousand crores there, it is not going to make any dent. And if we can make a good return there, I mean, fine.

Sorry to dwell on this, but in your view, what is the right to win for POWERGRID in a data center?

What is the?

What is the competitive advantage that POWERGRID gets for a data center?

Yes, there are 3 advantages. One is the fiber which we have at the substations connecting to the entire country; second, the availability of electricity, assured electricity. Data centers require a lot of power, and there is an assurance at these ISTS points. Third, we have land available at these locations, and some of them are close to cities. So there is the opportunity to set up there. We have identified some 7, 8 locations which are reasonably good locations for setting up data centers.

Just last question. So we would like to compliment you that you have been increasing the dividend payout. But I just would like to get your thoughts on buyback versus dividends because the cost of equity is considerably higher than the debt and it's always better to pay back the equity.

See, there is a technical challenge in buyback because our leverage even today is beyond 2:1. And as per the regulations, we can't do -- even post buyback, it cannot exceed 2:1. So when we are -- before buyback, 2:1, it is not feasible to do a buyback. That is one point which comes in the way.

Next, we have Aniket Mittal.

Am I audible?

Yes, sure.

Sir, my first question is on the dividend front. We've been consistently increasing our payout ratios. But in the current scenario with our CapEx further declining to around INR 75 billion and the money that we have received from the InvIT as well, how do we look at payout ratios, let's say, from an FY '22, '23 perspective?

You are not audible. It is breaking.

Am I audible now?

Yes.

So my question is on the dividend front. Now CapEx trajectory is on the decline at around, let's say, INR 75 billion for FY '22, and if you've got sufficient money coming in from the InvIT as well. So I just wanted your thoughts on the payout ratios, how do we see that going for FY '22 and '23?

They will go upward.

You've got any trajectory? Because the money that we've got from the InvIT is pretty sizable.

Yes, at this point. But if you see in my presentation, we have given you the trend which has been going since the last 5 years, and it has been only in 1 direction. So we will not like to keep idle cash in any big way, and we will definitely up the -- bonus also, when we declared the final dividend of [ 3 ], it is effectively becoming 12, 13. So it is a INR 4 dividend. So in a similar fashion, we would like to maintain, ultimately, simply pushing up the dividend because this year, the CapEx is low, so I take it to 90% payout. And then next year, I'll bring it down. That is not a very fair way of dealing with the investors. So there is an upward bias definitely. And we would like to balance between what we need for CapEx, how to strengthen the balance sheet and also taking care of the investor returns.

Okay. Sure. Sir, my next question is actually on the ordering front. What's happened is, is I think you won quite a few orders this year. If you could just quantify that, what's the overall new orders that you won in FY '21 both from an RTM and a TBCB perspective, firstly?

The orders which we won are the ISTS combined tariff, about INR 550 crores. This will have an investment about INR 5,500 crores. About INR 2,000 crores in the RTM, we got a mandate?

Yes.

INR 2,000 crores in RTM.

So roughly INR 7,500 crores is the total order that we won this year?

You can say that, yes.

Okay. Understood. And just to dwell a bit on that, because the orders that we've done in TBCB as well are fairly sort of lumpy in nature. I mean the entire 5 projects that we won are all related to the Rajasthan transmission scheme. And I think you've highlighted that certain new projects you're expecting to come in Kerala and Rajasthan. Could you quantify the size of that? How large could the project cost be for, let's say, the Kerala transmission project and the Rajasthan one?

I expect them roughly, if I take a thumb rule of 60 lakhs per megawatt kind of investment, so that is 30 -- 27 plus 20, 47, 47 into 60. So that is about INR 27,000, INR 30,000 crores of investment.

So that will be for Kerala?

All together, Kerala and Rajasthan.

Okay. Kerala and Rajasthan together. Okay. Just one question on the TBCB front. Could you tell me which assets have you capitalized or commissioned this year and which are TBCB assets would you be commissioning in FY '22?

This year, we have started with one in the Bihar, one system in Ajmer Phagi. That system is complete. Then Mithilanchal ERSS XXI were partly commissioned. And partly Jeerat-Medinipur system also partly commissioned. Going forward, in the next couple of months, a few more projects in Rajasthan. At Jawaharpur intrastate system, we have completed almost all the lines except for 1. Out of 6, 5 have been commissioned. One is left that will be done very shortly. One foundation or one tower, something is left in that. So then now we can see more of this TBCB coming to fruition.

Okay. So from an FY '22 perspective, you're looking at Jawaharpur, Ajmer, Medinipur and Mithilanchal to be fully commissioned?

As I mentioned, around 6 to -- INR 7,000 crores, INR 6,000 to kind of number I can see in FY '22 from TBCB capitalization.

Okay. And just maybe one last question on the TBCB front as well. The 5 assets that we monetize now have been essentially been transferred to the InvIT. Could you tell me what were the contribution at the PAT level for FY '21?

Okay. I'll just come back -- wait a minute. These 5 companies which we transferred -- [indiscernible] 5 you are asking?

Yes.

INR 370 crores.

INR 370 crores, okay.

INR 400 plus crores.

Sir, if okay, can I take a couple of questions from the chat box?

Please go ahead.

So we have a question from [ Seetha Rawan ]. His question is, will the 26% stake across the 5 units held by POWERGRID will be transferred completely to the POWERGRID InvIT? Second part is, what is the cash expected across different points of time? And when do you expect this cash to come back to you?

Roughly 26%, so the 26% will be transferred from February '22 to January '24 progressively. There are 5 assets, so 5 of them will have different days. We expect something around INR 800 crores, INR 900 crores of cash out of this 26% residual. And it will be spread over these 2 years.

Second, we have a question from Mehul. He wants to know what is the plan for EV business. I think EV means EV charging.

EV business we want to expand, but at the same time, in terms of contribution to the top line or bottom line, it is absolutely not there today. Okay. We can expand, but it is still -- we are trying -- we have now submitted a bid for setting up EV stations in Navi Mumbai, some 30 EV stations, each with 16 points or so. We are looking at these opportunities, but at the same time, we are going a little slow on this because, as I mentioned, the revenue generating potential there, addition to the bottom line is so miniscule.

Sure. Can we take the next question? Next question is from Subhadip Mitra.

So my question refers to the fact that given that we have had significant TBCB wins in the latter half of FY '21 and we are also looking at some more projects coming up for awards in FY '22, do you see a possibility of an uptick in your FY '23 CapEx number?

Possible. It is possible, definitely. With whatever we have in hand, this is projection. But suppose tomorrow, we win 2 more projects, then best target is 18 months. A new month will add to this. And we are also trying to improve upon what we have on this target. But there has been some setback in terms of the second wave, so we have almost lost 2 months in the first quarter. But we have a lot of push from the government also to speed up the CapEx.

Understood. Second question is with regard to the employee cost that has come in fourth quarter. There seems to be a spike of about close to about INR 150-odd crores on a Q-o-Q basis. Just wanted to understand if there is a one-off item over there.

Okay. One, it is partly because of the new builds, so there will be a little bit more from -- shift from CapEx to OpEx. That is one. Second, there has been -- we are required to contribute 30% of our basic -- employee basic towards retirement benefits. So what was estimated as contribution towards our gratuity or other liabilities, when we take the actual valuation at the end, the actuarial valuation, those things came out a bit less. And we had to make about INR 50 crore contribution more in the last quarter for all the year. So that is the kind of, you can say, one-off. And another is that this year, our [indiscernible] earnings were lower than the statutory limit of 8.5%, so we had to contribute there as well. So these are the reasons which have come in the last quarter. But I'm sure next year onwards, we will definitely be accruing it in a much more better fashion.

Subhadip, can we take the other ones? The queue is like...

Yes, please go ahead.

Next question is from Dhruv Muchhal.

Sir, 2 quick ones. Sir, on the PBCB side, you mentioned that the leveraged tariff is INR 550 crores for the new wins, and the CapEx is INR 5,000 crores. So this implies revenue yield of about 10-odd percent, which seems a bit low. I don't have the detailed tariff schedule, so -- but the revenue seems low. The IRRs probably are low. So what am I missing? Is INR 5,000 crores a bit conservative?

No, no. If you see the past in terms of TBCB assets, the leverage tariffs have been -- the winning bids have been in this range.

Okay. Because I see your history, it has been -- versus the executed project cost, it has been higher. So probably you will have a detailed work on this later.

[indiscernible] because it depends if it is a line, the tariff will be much lower. If it is a substation, it will be higher. So there is no one size fits all for getting this kind of a relationship.

Yes, but I'm looking at from the project cost perspective, so that handles everything, right?

Project cost, if it is a line, for example, the entire thing is only line, your tariff will be much lower. If it is entirely substation, you will have a much higher percentage of substation.

Yes, all right. Got it. But related -- got it. Probably I'll take it off-line. And sir, secondly was on the solar thing you mentioned. Is there any concrete plans on the quantum of capacity that you’re planning to put?

We have initiated the discussion, and we have identified land. I think around 2,000 acres of land is there in aggregate. Around 2,000 acres of land, 1,700 to 2,000 acres we could identify at different parts of the country. We are exploring that. So maybe it can potentially give about 350 to 400 kind of megawatts of installed capacity.

Right. So this is only for -- the objective is just to utilize the surplus land. It is not about entering the solar generation space.

At this point, no.

The next question is from Swarnim Maheshwari.

Sir, just one question. If you can just tell us what is the rationale for not buying the -- for not transferring the entire 100% stake. We understand that there are CERC guidelines about 1, 3 and 5 years for transferring the stake. But then doesn't it make sense to transfer the economic interest right in the one book?

There is a transmission service agreement which provides the kind of lock-in. So we, as a developer, are required, as per the bid document, to keep at least 26% for 5 years. So that is the genesis for base. Transferring economic interest was not feasible in totality because of the regulatory regime. We would have been very happy to give lock, stock and barrel all the monies coming out of this project, but it could not be done. We are required to do another valuation at due date for the 26% and accordingly besides the valuation. There is a commitment to transfer 26% in the share purchase agreement, so we will be transferring it. And the valuation which has been done, factors that this will also be transferred in future.

Sir, I understand that. The understanding was that it was possible to transfer the economic interest also. So what are you going to do with the balance of the assets that would be transferred to the [indiscernible]? It will be on a piecemeal basis or that will be again on 100% economic interest?

Sorry, I could not understand this transferring economic interest you are asking.

So for the remainder of the TBCB assets that we have, whether we will be following that TSA protocol only transferring 51% stake after 3 years?

For any asset, we will do the same because what we have learned from this first round is that we cannot transfer this 26% in any manner and get some money upfront. It was not visible, various alternatives. So if there is some better alternative, I'll offline talk to you and take it.

Sure, sir. I'll take it off-line.

Next, we have a question from Anish Tiwari.

Am I audible?

Yes.

Renewable mix in the energy is going up, and you highlighted one of the aspects about storage. Can you help us understand what is the progress either in terms of development or feasibility has been around grid storage? And when do you think we can start putting some money behind it?

Yes. So the storage -- now the CERC has also come up with the ancillary service regulations. And then CEA is also looking for about 27 gigawatts of storage by 2030 in their report. So I believe that the managers said 3, 4 years, this will really pick up. So when we are talking of a transmission system in Leh for 10 gigawatts, that is also a talk of can storage be a part of this so that the transmission system can be optimized. So there is now -- deliberations are now more focused on talking of size, larger size, 100 megawatts, or larger kind of capacities. I believe that in say, 3, 4 years, we should see serious money going into this storage.

And from a unit capital outlay point of view, what is a rough ballpark, let's say, 400 megawatts will be deployed?

That will be very hazardous because the prices of actuarials are falling, so any number you say today will be much higher tomorrow.

Next, we have a question from Ankur [indiscernible].

Sir, there was a question -- most of my other questions have been answered. There was one question related to one-off previously. So just a follow-up on that, on the stand-alone fourth quarter number...

Your voice is breaking, please?

Sir, am I better now? Is my voice audible now?

Yes.

Yes. So sir, my question was a follow-up on the one-off question earlier. I understand on your fourth quarter stand-alone numbers, there's a prior period sales number of around INR 400 crores. Any other one-off other than the employees one that you mentioned earlier, especially on the other expenses part, because they've come in fairly low at INR 550 crores?

There is no such thing.

Okay. No other one-off other than these 2. Okay.

Next, we have a question from Charanjit Singh.

So just want to understand on the state side, what is the kind of opportunity size which you see and where are we planning to do the [indiscernible] to get into the state transmission lines? That's my question.

See, the state side, no, very difficult. We have been giving numbers in the past, but then those numbers have not really come to fruition. So I would not like to put a number there. We need to really go out in more [indiscernible] states. Some of the states are coming up with TBCB, MP, UP. Now Rajasthan has also started. But many states are doing it on their own. So now there is also a talk of making the coastal state infrastructure resilient from the cyclones, so I think there is an opportunity there. They are talking of underground cables or converting the AIS into GIS and so on. So those are the things which we need to develop. And then I think POWERGRID has to market itself, market the product and get into that mindset.

That's all from my side.

All right. So next, we have a question from Puneet Gulati.

No, thanks. My question have been answered.

All right. And we have a question from Apoorva Bahadur.

Sir, there was a certain news item that the government has states to come up with basically the islanding of large metropolitan cities, islanding of the power systems. I wanted to understand from you if you have been involved working with the governments on this and what type of opportunity because I think in Mumbai, recently there was large HVDC order in this town.

I'll ask -- request our Director of Operations to answer this.

I think if I've understood your question correctly, it is the islanding being talked about the cities. Is it right?

Right.

And the opportunity for POWERGRID? Actually, islanding depends upon that we isolate certain load along with the generation. So that is the scheme -- it's only the scheme level. I don't think any new investment would come. It can come in a few cities. If there's more generation available, they can take other generation.

See, typically, islanding means making self-sufficient geographies which have their own generation and distribution network and load so that in the event of any event, you can separate themselves and be independent. So that would be more of identifying which units of generation, which loads and electrically, isolate them. So we don't see much of a transmission investment there. It is more about protection systems and the operating protocols and the grid operation protocols which will come into play there.

Okay. Got it, sir.

We have a question -- wrong. Sorry, give me a minute. We have a question from Krishna Kumar.

No, sir, my questions are answered.

All right. I think completely run out of time. And in case you have further questions, participants, please drop me a line. I'll pass them to the POWERGRID management and have them answer. Alternatively, you can also directly write to IR of POWERGRID, and I'm sure they'll do the needful. But meanwhile, I'd like to thank you all for logging on to the POWERGRID Analyst Meet. And sincere thanks to the management team for giving us an insight into the future and explaining the opportunities ahead. Thank you very much, sir.

Thank you. Thank you.

My pleasure.