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

Greetings, everyone. On behalf of IIFL Securities, I welcome you all for the third quarter FY '22 analyst meet of Power Grid. I'd first like to congratulate the management for their efforts to deliver the performance in a very tough challenging macro environment, and yet, we consistently increased the dividend payout. Really appreciate, sir. Moving on, to discuss the performance in detail and share the performance outlook, we have the senior management team of Power Grid represented by Shri K. Sreekant, Chairman and Managing Director; Mr. M. Taj Mukarrum, Director, Finance; Mr. Abhay Choudhary, [ Executive Director ]. I would first hand over the call to the management for sharing their initial thoughts, post which, the floor will be open for Q&A. Over to you, sir.

Thank you, Harsh. Good evening, ladies and gentlemen. I'll start with a brief presentation, highlighting the performance in the quarter, the outlook. Please upload the presentation. I hope it's visible.

That's right, sir. Thank you.

Yes. This is a very brief overview of where we are today. Power Grid is having 1,72,190 circuit kilometers of lines, 1,344 in numbers, 4,69,600 MVA transformation. Interregional transformer capacity, 97,290 megawatt, consistently above 85% of India's interregional capacity. Third largest CPSE in terms of gross block. Government shareholding remains at 51.34%. Coming to the performance highlights of this quarter. On the project execution side, we have had a CapEx of INR 7,188 crores this 9 months on a consolidated basis. This quarter, we spent INR 3,493 crores on a consolidated basis and INR 1,588 crores on a stand-alone basis. Capitalization, we have done INR 5,238 crores this quarter against -- I mean on a standalone, it is INR 3,854 crores. And overall, 9-month capitalization is INR 18,513 crores. This is also on a consolidated basis. Physical capacity is added this quarter. A whopping 18-gigawatt MVA of transformation (sic) [ transformer ] capacity at so many locations. Interregional capacity of 1,500 megawatt was added. And this is, I think, the Vindhyachal-Varanasi line, 1,500 megawatt, [ 4-4 ] capacity of Raigarh-Pugalur. Our transmission lines, 1,468 circuit kilometers, and 2 substations were added in this quarter. I'm very happy to share that on October 23, we completed the Raigarh-Pugalur-Trichur HVDC system, the entire system, which I have been briefing you the progress since last few quarters. And the last [ pole ], along with the AC system downstream, was completed. This overall project is about INR 2,200 crore that we have been able to complete it, a major part of it only in the pandemic period despite so many challenges of mobilization movement of material and so on. Coming to the operational performance. The 9 months, we are 99.82% compared to 99.80% last year, above the 99.75% threshold. Trippings per line have marginally come down to 0.28 in this 9-month period. Financial performance. The income for the quarter on a consolidated basis, INR 10,724 crores. And our profit after-tax on a consolidated basis is INR 3,293 crores. There is -- reported profits are down slightly mainly because of a few -- one is that last year, we had one-off billing in this quarter for about INR 300-odd crores -- INR 300 crores. And this quarter, we had to make 2 major -- one provisioning for employee, contribution to PF and other benefits, about INR 75 crores. And there is also a decrease in the income from subsidiaries on account of transfer to the InvIT. And profit share in the profit of joint ventures has come down by about INR 70 crores. So these reductions are basic -- they have taken away the sheen of this significant CapEx and project completion, which has been done in this quarter as well as in these 9 months. If we look at the 9 months on a consolidated basis, the income is INR 31,630 crores; and the profits after-tax, INR 12,668 crores. This also includes the profit on account of the InvIT monetization. So income growth is about 5%, and PAT growth is 49%. But if we -- I mean it includes the InvIT profits. These are some of the numbers. I think that you would have already gone through these. I would only say that there has been an increase in the consultancy income. The telecom income is down on the back of rebate we had to give to BSNL, one of the -- in the past quarter. So that is the one of the reasons of this reduction. Operating expenses are slightly up also because of capitalization and because -- more random activity in this compared to the last year because of the easing of pandemic restrictions. If we -- this is on a consolidated basis. Yes. The debt has come down significantly to 1,30,356 on a stand-alone basis and consolidated basis. And net worth is INR 75,971 crores. Book value today is about INR 108.91 crores. Debt to equity is significantly down 63:37. We used to be 70, 69. Now it has significantly pared down because CapEx this year has been mainly out of proceeds of the inventory. Some of the numbers, which are of interest to you, if you see, I think I would draw your attention to the reduction in surcharge income, which is a very big reduction from INR 598 crores in the 9 months to INR 182 crores this year. Incentive is better off. It is up INR 30 crores on the back of better availability. Interest from subsidiaries and JVs has also slightly come down because we have separated those 5 subsidiaries -- operating subsidiaries. Dividend from subsidiaries are also down because of the monetization. I think another point I would like to bring to your attention is this reduction in CSR expenses, INR 171 crores last year; this year, INR 86 crores. We have another INR 170 crores to go in this quarter. So when you do your calculations for the last quarter, please factor this. Because we are scaling up the CSR expenditure in this quarter, and we have an annual target of about INR 257 crores. We will try to make that by this -- end of this year. If I look at the telecom performance, 9 months, it is INR 427 crores. It is slightly down compared to last year. But performance-wise, 100% backbone availability. We have now -- Board has given approval for an investment of about INR 330 crores in setting up a pilot data center at Manesar. And then we also applied for the International Long Distance license. And then we have acquired, through leasing, around 2,500 kilometers of OPGW in Assam and Sikkim. This is part of our strategy to expand our network into those regions in the Northeast and Jammu & Kashmir, where with our backbone, we will be able to provide data services and capture the market there. And the process of setting up Powergrid Teleservices is completed. Now we are preparing the scheme for -- from sale of the telecom business to this entity. Turning to consultancy business. We had INR 145 crores in this quarter, INR 436 crores in aggregate income. Two key developments. One, we had signed a joint development agreement with Africa50 for the construction of a 400 kV and 220 kV system in Kenya under the PPP framework. So we are preparing the project proposal of public-private investment proposal. And then after that it is approved, then that project can be taken up. And then we have also signed a shareholder agreement for a joint venture with Nepal Electricity Authority to develop an Indian portion of the new Butwal-Gorakhpur transmission system. And we have been successful in project management consultancy contract in Moldova, Eastern Europe. This is our first entry into the Euro continent. Commercial performance. Compared to Q2, the receivables have marginally gone up 50 days as opposed to 48 days at the end of Q2 FY '22, but much better than the end of Q1, 62 days. While there is a concern that the above 45-day numbers are slightly up, but overall, situation is under control. And other than Jammu & Kashmir, we are able to make recoveries from most of the other states. Only Jammu & Kashmir is something which is still rather retractable from our perspective. Our business outlook, today, the works in hand are about INR 24,500 crores. New projects ongoing, INR 7,100 crores. These are RTM, INR 4,200 crores. TBCB are INR 13,200 crores. In the upcoming opportunities in the TBCB space, we see about INR 26,000 crores of opportunities. INR 12,900 crores are underbidding, another INR 10,000 crores to be initiated and so on. There is this Leh system, which has been allocated recently to Power Grid, along with some investment in the Gujarat ATC. And then we have recently been successful per Part G of the transmission systems strengthening scheme for evaluation from solar energy zones in Rajasthan. Besides this, I think if I pause for a minute on the transmission segment itself, scheme is being drawn for 500 gigawatts of nonfossil capacities in the country by 2030 in line with the declaration or commitment made at the COP26. So we see that there will be a need to add about 300 gigawatts beyond what is under -- on the ground today or under construction. And significant transmission systems will have to be drawn. Because much of this is in the form of large solar parks, depending on the location of the solar or wind potential in the countries. These are being identified. So going forward, there will be a significant addition to the transmission network. Of course, there will also be an addition to the storage because the future transmission network will also have storage or the generators will have the storage. And while there will be some amount of offsetting the network with storage, but still there are opportunities, I believe, in the transmission segment going forward. In addition, outside of this transmission segment, we are looking at solar power generation at locations where there is land available. We have identified about 200 megawatt potential within the Power Grid stations, of which at Nagda, there it's not a station asset, we have acquired the land for a substation. So we have land enough for about 100 megawatts of solar. So preliminary surveys are over. We are going to engage a consultant for providing us the feasibility report, tender evaluation and the support. This is something, which we will take up very shortly. Smart metering is another area where we see investment potential. The government is committed to get about 10 crore meters installed by '23 and 25 crores by, I think, 2 years thereafter. And that is a big investment, which is coming up. We are mandated to interact and even engage with the states for setting up a crore of smart meters through kind of an MoU route. So we have started the process of procurement, and we will be taking it up with the states for these solutions -- end-to-end smart metering solutions. So that is about -- INR 6,000 crores of investment is expected here. And finally, very happy to share that we have been ranked 44th among the Fortune 500 India rankings for 2021. This is where we were last year as well. I think one of the criteria is turnover, and that is where we lag significantly to other [indiscernible]. But we are -- I conclude my presentation here, and we'll be happy to take your questions. Thank you.

[Operator Instructions] First question is from Mohit Kumar.

Congratulations on a good set of numbers, especially [indiscernible] quite high in the quarter or for the 9 months. So my first question is, has your CapEx estimate changed after the new identified cost plus element? And where are we awarding for this cost plus HVDC asset? And what is the cost of HVDC Leh-Ladakh? And what is the grant portion? That's the first question.

Okay. You are asking whether our CapEx target for the current year has changed?

Yes. By FY '23, I think the number, which you mentioned in the budget, is roughly around INR 75 billion, right? Did that number underwent change because of the...

That is undergoing. Clearly, that is under review. We are looking to increase it. It will be up, I think, at least by INR 1,000 crores. So -- but we are still reviewing it. Current year, we had targeted INR 7,500 crores. And at the pace at which we are incurring and given that the government is also pushing us to increase the CapEx, we are likely to do close to INR 85 billion in the current year, INR 8,500 crores. And next year also, we would be increasing the CapEx. From the initial target of INR 7,500 crores, it is likely to go up to INR 8,500-odd crores. As far as the Leh-Kaithal project is concerned, the cost is approximately INR 26,000 crores. The grant component and all those details are yet to be finalized.

Understood, sir. My second question is, how is the bidding activity under smart metering? When do you expect this line of business to see the momentum? And why are you procuring INR 5,000 crore or INR 6,000 crore worth of smart metering without any MoU or, let's say, [ bid Tier 1 ]?

Because one -- see, the government has, I think, identified about [ INR 2,000 crores ] to be planned by the CPSU through MoU routes. So those discussions are in progress. And we want to do first the tendering, get the most competitive [ prices ] and then be in a position to offer to them in the MoU route the best prices. So we believe that there is this potential. Of course, when we are giving the number of INR 5,000 to INR 6,000 crores, it is our tentative estimate. Only when we let the bids and all, we will look to finalize.

Understood. Lastly, sir, are we looking to monetize other tranche of assets in the InvIT in the next fiscal? Is there -- anything is finalized?

In the NMP pipeline, we have a target and we have a trajectory given. That is what we will be following. Only deviation what is likely is that this year, we have another 26% in one of the companies to be monetized in February that will be eligible. And then there are a few cash flow streams on account of changing now, which we have received, so which we have the right under share purchase agreement to receive over the lifetime. But we would like to monetize it and kind of settle it on a lump-sum basis. So other than that, by and large, we have INR 7,500 crores, I think, next year, which we will be targeting in the fiscal '22, '23.

Next we have a question from Vijay Bharani.

Yes. If I look at the pipeline of renewable projects, there is a number of around 60 gigawatts under construction and probably about 30 gigawatt -- sorry. Are you telling me something, sir?

No, No.

Please go ahead.

So yes, so about 60 under construction and 30 gigawatt under bidding. That's the kind of number in the public domain. And that ties in with the number that you also mentioned 100 gigawatt under operation. So this 100 that will come up in the next, say, 3 to 5 years. And then beyond that, we need to construct another 300 gigawatt to meet the FY '30 or '32 target. Now in the medium term of the next, say, 3 to 5 years, this 100 gigawatt under construction and under bidding stage, what kind of interstate transmission CapEx is required to enable this capacity addition? And of this, what would be our opportunity, Power Grid's opportunity?

See, as far as this target is -- I mean -- I think -- just give me a minute. Right now, there is about INR 39,000 crores of total transmission for 66.5 gigawatts, of which about INR 18,000 crores is either commissioned or under construction. And under tendering and what is likely to come is about INR 21,000 crores. So this is for 66.5 gigawatts, which is [indiscernible]. So you can use these as a kind of ballpark and then use it for another -- say, maybe, say, INR 40,000 crores for 66.5 gigawatts. So that will be INR 50 lakhs per megawatt kind of a number is a reasonable estimate.

Okay. Understood. So of this INR 39,000 crores, you said INR 18,000 crores is commissioned or under construction and INR 21,000 crores need to come up, right?

Yes.

So does the number we have put in the PPT, which includes a INR 27,000 crores upcoming opportunity and the Leh-Ladakh of INR 26,000 crores, does it all include this? Or is it not included in this?

Leh-Ladakh is not included in any of this.

Okay. So the number you mentioned in the PPT, around INR 25,000 crores, will be part the INR 39,000 crores?

INR 12,900 crores plus INR 10,800 crores, yes, that is what I was giving you.

Right. Okay. And despite these large numbers, not able to understand how our yearly CapEx numbers still is in, say, INR 8,000 crore, INR 9,000 crore range. So when would -- when do you expect this to, say, scale up?

This is a function of winning those projects and then taking those projects forward, right? And assume -- let us say that these are INR 22,000 crores, which are opportunity set that is available. And let us say half of it we will win, okay? And then what happens? It comes down to something like INR 11,000 crores, INR 12,000 crores. And then when you build this over a 2-year period, your annual CapEx will come down to INR 6,000 crore. So -- I mean this is what the math would something look like.

Understood. So like this regulated tariff mechanism Leh project, are we expecting any other nominated project?

Last time, I don't know, I said something here, there was a hue and cry from the association. So I think -- let us see, as you go, and let us see what is available.

Sir, I'll take a couple of questions from the chat box. The first one is from Devanshu Sampat. His question is, will the investment towards setting up solar power generation transmission system as well, as well as the smart metering, et cetera, beyond regulated [ ROE ]? And if not, what should be the payback period for such incremental investments?

See, the smart metering system is having a life of about 7.5 years, 19 months operation and 2.5 months construction.

2.5.

2.5 years. Sorry. 2.5 years, plus 7.5 years. That is the period. And there, kind of VAT-based guidelines have been given by the government. Of course, one has to discuss and negotiate with the state utilities. But a kind of general VAT of 10% has been allowed, ceiling, plus some project management expenses and so on and so forth. So one needs to go -- when we see the discussion with the utilities, we will be able to understand what is the return. As far as the solar is concerned, it will be mostly market-driven. So there is no regulated system there.

Sure. Understood. We have a couple of questions from Deepika Mundra. So the first one is, where is the INR 6,000 crore -- the pipeline of transmission projects, why there is no change from INR 26,000 crores despite some Green Energy Corridor and interstate projects getting Cabinet approval?

See, most of those are in the intrastate segment, and those are being built. What the Cabinet has approved the Green Corridor, I believe, is the intrastate [indiscernible]. And that is what is going to be built by the utilities themselves through their own RTM route and all. So a limited amount of that may come to the TBCB market.

Understood. So the second question is, when is the INR 6,000 crore of smart metering CapEx to commence, duration of the CapEx? And any update on distribution strengthening the investment for 33 kV lines?

The smart metering investment is most likely to come in the next financial year. And '22-'23, '23-'24, that is where that seems to be panning out. The distribution under 33 kV still in terms of, on the ground, there is not much of a progress. Now the schemes are getting approved for the -- under the RDSS. Therefore, there is the -- I think it will still take some more time before these schemes are coming to ground because they were to submit all their schemes by December. And then there is a committee, which approves them, and then it is still taking time.

Helpful. So the next question is from Apoorva Bahadur.

Sir, coming to the Leh tender, can you please share what is the size of the storage component over there for the transmission line?

1 gigawatt hour -- 1 gigawatt is the capacity. 4 gigawatt-hours is the total...

1 gigawatt, 4 gigawatt?

1 gigawatt-hours.

Okay. Okay. Sir, second question is, again, on the transmission planning side. You said that some detailed work is being done probably on the 300 gigawatt renewable capacity addition plan. So sir, wanted to understand by when can we expect concrete numbers around this.

It will take at least another 3 months of -- right now, the [indiscernible] identifying the potential zones is in progress because the renewable resources are spread out all over the country. We have them in the state of Rajasthan, Gujarat, Tamil Nadu, Andhra Pradesh, Karnataka, MP. so all those potential areas are being identified to also check whether there is land availability, kind of in principle consent of the states. So these -- once this exercise is done, it will provide the input to the CEA and CTU to do the transmission planning. So this is, I expect, at least 3 months more to come with some kind of a formal understanding of the network that needs to be built and the network investments that will be required.

Sure, sir. Fair enough. Sir, last question from my side, and that is on this future storage tender. Now that we are probably already into storage execution of storage tender, so will we go for stand-alone storage projects as well or we'll stick to transmission lines?

See, the recent guidelines of the government have made storage a very kind of -- I think it has a very neutral kind of [ a color ]. So it can be a transmission element also. It can be -- and then they have made it an independent storage service provider also. So definitely, as we gain experience in this, we will look at those opportunities.

Next we have a question from Anuj Upadhyay.

Sir, a few clarification, first on the Ladakh project. You mentioned that it has been allotted under the RTM mechanism. So has it been given to Power Grid or it -- hello?

Yes.

So has it been given to us or provided?

I'm sorry, I couldn't hear your operative part.

Sir, it's regarding the Leh transmission project as it would be allotted under the RTM route. So would that be given directly to Power Grid? Or there are a few other participants as well who can opt for that RTM thing?

It has been given to Power Grid.

Sir, but it -- yet -- I mean we have not included that in a work-in-hand kind of a thing. That's the reason why I was a bit...

It was not included because the investment approvals for that has not yet been made.

Fair point, sir. Secondly, sir, of the INR 39,000 crores project, which you have mentioned, you said [Foreign Language] INR 21,000 crores projects are yet to be awarded. Any time line for that?

Yes, there are -- INR 12,900 is under bidding. So I think this all will be speeded up now. There has been a significant change in the transmission planning process, approval process. So previously, there used to be a requirement to go for regulatory approval and all. So that has been taken off. The approvals have been dedicated authorities. So if you can do up to INR 100 crores approval, the National Commission and do up to INR 500 crores, only beyond that, they go to the government. So these are now going to come in at quick succession for bidding and award.

So probably in 1 or 2 quarters, we can see the tenders coming up.

Definitely.

Okay. Next on the Khavda project, sir. First phase have already been tendered out. Can we have any kind of a time line or clarity about the other phase? Because I believe that Khavda itself provided around INR 13,000 crores, INR 15,000 crores of transmission opportunity.

Yes. Those are, again, being relooked in terms of how to integrate storage into it and optimize the transmission network. Particularly in the area Gujarat and all, there is significant right-of-way constraints. So that is one thing, which is being -- this will be taken up in phases. But this is -- I think another 4 gigawatts is coming up immediately. But thereafter, there will be -- I think it will take at least another couple of quarters before we can see the tenders.

I go again back to the chat box where we have a few interesting questions. One is from Pratik Kothari. And he asks, it is being perceived that the asset monetization will happen via PGInvIT only without a competitive bidding, as Power Grid is the sponsor of it. Any thoughts, clarity on the same? How do we ensure fair value is being [ accrued ] to us or is being assigned to the assets? Any thoughts?

See, we have created PGInvIT as a preferred vehicle for monetization of Power Grid's assets. So at the same time, we would like to be fair to both our shareholders as well as the PGInvIT investors. I mean we are absolutely neutral between the 2 and would like to do the fair valuation of the assets and do an asset transfer.

The next question is from Rohit Natarajan. So the question is, in the Leh transmission project, in Pang block, MNRE, SECI has identified 22,000 acres of non-grazing land. Here, however, there is a presence of water body with fresh water body, et cetera, with fresh application sought for alternative site. So is this issue being resolved? What is the RoW issue revolving around, if it all there is?

The site location is not yet finalized. So as I understand, a team from SECI is right now at Leh to decide on all these things. There is plenty of land available. They will definitely take care of all these issues, what is to be set aside for grazing or those under the -- there is a wildlife area also there. They have [ diverted that earlier on ].

There is another question from Atul Tiwari, and he says, can you please elaborate more on Leh transmission project? What is the size? And how much of that will be added to work-in-hand?

The Leh transmission project, as I mentioned, is about INR 26,000 crore. And once approved, that will add to the work-in-hand. I mean how much of it will add -- it is at least 5-year kind of a project.

Understood. Sure. Next is from Subhadip Mitra.

So sir, just wanted to understand that beyond the current basket of INR 21,000 crores, which you mentioned is under the tendering process, what could be the potential addition to this basket once this INR 21,000 crores gets extinguished? Are we looking at an annual number of between INR 15,000 crores to INR 20,000 crores that could come under the TBCB pipeline?

Now I think that is a bit difficult to say annual number, what it will come, because -- I mean that detailed planning is not yet made. So I would not like to hazard a guess at this point of time.

No. Understood. So I completely understand that while the numbers are probably still not finalized. But in your opinion, let's say, over the next 2 to 3 years, what kind of a ballpark number could we look at, which could potentially get added to this basket of INR 21,000 crores?

I think around INR 15,000 crores kind of transmission investment should be -- can be expected on an annual basis.

Then we have a question from Mr. [ Bharat Jain ].

2 things in my mind. One, the company has been delivering good growth over past years and also sharing it well with the shareholders. Do you have any plans to make the similar payout by buyback route instead of dividends because that will help share value appreciations also on the board?

There was a time when we were having leverage in excess of 2:1, and it was not possible to do a buyback. So now that the leverage is not in those levels, it is an opportunity, which is plausible.

Okay. That is one thing. And what is the kind of numbers we see going forward in the new financial year '22-'23 on the top line and bottom line? What is the kind of growth we see?

No, no, I would not like to give any guidance on that.

Sir can we go back to the chat box where we have a few questions lined up? One is from [indiscernible]. The question is, what is the update on mechanism for monetization of assets into the InvIT after the change in government stance on a complete sale of assets under monetization pipeline? I think the question is, can you update us on the proposed monetization plans, given the fact that there is a change in stance of government?

Yes. See, the last monetization we did, we did by transfer of shares. And therefore, it is a complete transfer of ownership. But now in the monetization pipeline, there is a requirement that right to use -- or a right for a certain number of years without a total transfer of ownership is to be made. So the existing structure is not working. And if we do in the form of lease or any such arrangement, there seems to be a significant loss of revenues through taxation. So there is a GST, which we have to resolve, and those deliberations are in progress. We have also engaged a consultant to evaluate various modes and suggest mechanisms where there is the least or no revenue leakage on account of such taxation. That is a work in progress. Hopefully, in the next few months, we will be able to solve that and then get it finalized with the Ministry and [indiscernible] authorities and then adopt that process. So if you say, do we have a model right now which is approved and to be implemented, no. But we have the '22-'23 available with us to do this. So we hope to do it. Definitely, first quarter or 4 months of the next financial year, we should be ready with some model of that.

There's a follow-up question from Mohit.

One question. Does the GNA -- how does the GNA mechanism changes the industry? Can you just share your thought?

The GNA mechanism is meant to change the transmission planning growth of the transmission. See, if we look at it, transmission planning was always linked with either generation or a kind of demand. Though the National Electricity Plan talks of transmission growth being ahead of the growth in generation or it should be leading, that means that you need to build a network in anticipation of demand. So that was not happening in some intermediate period where everything was tied to either generation. And so therefore, the switch to GNA is expected to kind of de-link this and support the growth of the network and then provide a platform for the other economic activities to grow. So in that sense, it is a very good development, and it will kind of free this transmission growth. We will build the highways in anticipation of demand.

Sir, how many TBCB...

Sorry?

Sir, how many TBCB assets are operating at this point of time? And what is the revenue, a levelized tariff of all these element -- all this...

Let me just refer that number. Right now -- there are plenty -- not all of them are operating assets. So the operating assets are about 10. 10 of them are under operation right now.

Including InvIT, right? Or excluding InvIT?

No, no. We will not count InvIT with us anymore. They are not ours.

So 10 operational now? 10?

Yes, yes.

And what is the levelized tariff of all these 10 assets?

Tariff is about INR 1,100 crores.

I think Apoorva also has a follow-up question.

Sorry, I forgot to put my hand down.

So there is the -- In the Q&A chat, there is one more question. Can you give the breakdown for FY '23 CapEx?

FY '23 CapEx, that is '22-'23. In terms of what is TBCB and what is non-TBCB?

That's right.

I think that is the breakup. Maybe around -- you can say we are targeting about INR 2,800 crores from regulated assets and the balance, INR 4,200-odd crores from TBCB. And then telecom and others will make up the rest.

Next we have a question from Sumit Kishore. Next we have a question from [ Mihir Manohar ].

I stand corrected. I think the previous question was the breakup on these assets. Sorry, it's the other way around. I would like to correct myself. We expect the next year, RTM assets will be roughly INR 5,000 crores. And on account of TBCB, about INR 2,000 crores. And another INR 750-odd crores or will be telecom and other assets. This is right now not factoring any significant smart metering CapEx. So once we tie up those MoUs, that will get added to it.

So [ Mihir ], you're next, [ Mihir Manohar ].

Sir, I needed to understand the overall capitalization space. I mean, at some point in time, we were already north of INR 20,000, INR 25,000 crores [ kind of capitalization ] from FY '16 to FY '18 onwards. And now we are seeing roughly INR 6,000 crores of [ TBCB ] opportunity coming up and plus some INR 5,000-odd crores on the Leh projects. I mean how...

You're not clear. Can you please speak a little slowly and loudly?

Yes. Sure. Is it audible now?

Yes.

Yes. Sure. So sir, I wanted to understand that 3, 4 years back, we were having like INR 20,000 crores, INR 25,000 crores [ kind of capitalization ] per year. And now that number is coming down to INR 6,000 crores on the TBCB front and roughly another INR 5,000 crores from the Leh project. So how do you see the overall opportunity in this space? And the CEA has also come out with the addition, and it has [ treated ] only 20 gigawatts of addition on the thermal side from FY '22 [ to FY '23 ] onwards. So how do we see the overall capitalization panning out come the year now?

See, I think I have been telling regularly that the INR 25,000 crores, INR 22,000 crores of CapEx on transmission assets is now difficult to sustain over a long period, right? And so the opportunity set itself has declined significantly, and most of the assets are going through the TBCB route where the competition is very significant. So I just now gave a number. Maybe around INR 15,000 crores on an annual basis is the likely opportunity set for the transmission segment. And that is the reason we are looking at other segments such as [indiscernible] centers or further increase in the telecom, smart metering. So these are some of the areas where we are trying to increase the nontransmission revenue and business opportunities.

Sure. INR 15,000 crores kind of a number is broadly...

Mihir, your audio is really poor. Maybe you can join back in the queue or type.

Yes, sure.

Can we -- okay. Next is Sumit Kishore.

My first question is on capitalization for FY '23. Given the state of progress on projects, what is your expectation? And how would you break it up into TBCB and RTM? And if I may just add, you mentioned that the CapEx of INR 75 billion targeted for FY '23 can be upsized by about [ INR 50 billion ]. Would that be mainly on account of new TBCB wins that you are expecting next fiscal? Or you're including a portion of that Ladakh -- Leh-Ladakh project into CapEx?

It is more out of -- I mean partly out of the new wins likely as well as the RTM, which we have received in the recent past of -- we are expecting around INR 14,000 crores to INR 15,000 crores of capitalization this year. So I won't be able to give you immediately the breakup in terms of RTM and TBCB, but...

Sure. My second question...

Yes.

My second question is in relation to the Africa50 initiative. It seems more like project management by Power Grid. So Power Grid will not have to make any equity investment there, right? What would be investment by Power Grid?

No, no. That is not right. The joint development agreement is for investing into this project through a private-public partnership with Indian authorities. So Africa50 is the lead partner, and we are having -- I mean we propose to have an equity stake -- significant equity stake when this project is approved. It's not just a PMC contract.

Okay. So given the size of this project, how much equity would you be required to bring in? I mean...

The size of the project, I think, is about INR 2,000 crores. Roughly, INR 300 million -- INR 280 million or so.

Okay. That's the total project cost?

Yes. So size of the equity and all that will again be a function of what is that equity.

And for the investment that you plan in data centers, what would be the return model? And again, what is the pipeline of investments you have planned in data centers in the next few years?

We have just now approved one data center at our Manesar complex. That is about INR 330 crores of investment. Another for a hyperscale data center, we are engaging a consultant to provide us the blueprint and all. And then a little more investment in [indiscernible] data centers is what we are looking. But right now, I think next year, you can say we would be investing about INR 350-odd crores in these data centers. And then it will pick up going forward.

Okay. So in terms of looking at your overall CapEx number, we should add the number for smart meters plus the data centers and plus the guidance that you have given for CapEx on transmission?

Yes.

Ladies and gentlemen, in the interest of time, we have one last question, and that's from the chat box. It comes from [ Vishal Shah ]. If the Ladakh project CapEx gets added to the pipeline, will the annual CapEx move from INR 75 billion to INR 80 billion to INR 150 billion per annum over the next 5 years? Is that the right understanding?

No, that is not because Ladakh project is a kind of 5-year project. So if we have INR 26,000 crore, INR 27,000 crores, even if you say 1-year design, annual CapEx will peak at around INR 9,000 crores or so. So we won't be able to add another INR 15,000 crores to it.

Understood. Sure. Thank you. Ladies and gentlemen, in the interest of time, that was like the last question. In case you have any further queries, feel free to reach out to me or Power Grid management, and we shall do the needful. On behalf of IIFL Securities, I sincerely thank the Power Grid management for giving us the opportunity to host this webinar. Really appreciate, sir. Any last comments you'd like to make?

No. I thank all the investors and the analysts for the support to Power Grid. Look forward to your continued support going forward. Thank you.

Thank you, sir.