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

Ladies and gentlemen, good day, and welcome to the Power Grid Corporation of India Q2 FY '26 Earnings Conference Call hosted by ICICI Securities. [Operator Instructions] Please note that this conference is being recorded. I now hand the conference over to Mr. Mohit Kumar from ICICI Securities. Thank you, and over to you.

Thanks. Good evening. On behalf of ICICI Securities, I welcome you all to the Q2 FY '26 Earnings Call of Power Grid Corporation of India Limited. We'll start with detailed presentation, which will be followed by Q&A. And I would like to thank the management for giving us the opportunity. Without much delay, now I hand over the call to Satyaprakash Dash, Company Secretary and Compliance Officer at Power Grid. Thank you, and over to you, sir.

Thank you. Good afternoon, ladies and gentlemen. It's my pleasure to welcome you all to this webinar for analysts and investors of Power Grid Corporation of India Limited. Today, our functional directors and senior management team will discuss the company's business and share our performance outlook based on our recently announced financial results. I'd like to introduce our esteemed functional Director, Dr. R.K. Tyagi, Chairman and Managing Director.

Good evening.

Shri G. Ravisankar, Director of Finance and CFO.

Good evening.

Dr. Yatindra Dwivedi, Director, Personnel.

Good evening.

Shri Naveen Srivastava, Director of Operations.

Good evening.

Shri Vamsi Rama Mohan, Director Projects.

Good evening.

I would now like to invite our Chairman and Managing Director, Dr. R.K. Tyagi, to deliver the opening remarks and presentations. Following that, we shall have a Q&A session. Over to you, sir.

Good evening all. I will give a brief presentation about Q2 results. So my presentation will consist of key highlights, project execution, next, operations, financials, other businesses, business outlook and ESG, CSR and awards, which we got. India -- as you know that Power Grid is India's flagship power transmission utility, where Government of India share is about 51.34%. We have MOU rating excellent since 1993 to '94. And we are a dividend-paying company since 1993. Our current ratings -- credit ratings have been at par with the sovereign credit rating, which is in domestic, it is AAA. And in international, it is BBB-. Next. We have our Board Director, Finance; Shri G. Ravisankar; Dr. Yatindra Dwivedi, Director, Personnel; Shri Vamsi Rama Mohan Burra, Director of Projects; then Shri Naveen Srivastava, Director, Operations; and Independent Directors, Shri Tapasya Paswanji, Shri Rohit Vaswaniji, Shrimati Sajal Jha; and Government Nominee Director, Dr. Saibaba Darbamulla and Shri Abhay Bakreji. Next. We have a transmission system about 181,000 circuit kilometer, 287 substations, and Power Grid is the world's largest 765 kV transmission network is being operated by Power Grid. So we have the largest 765 kV transmission network in the world. Next. We have innovation milestone. We have developed insulated cross arm for 400 kV transmission lines, which will reduce right of way. And apart from that, even trees being cut in various areas, so it will be good for environment also. And it is a step towards Aatmanirbhar Bharat. So this insulated crossarm is being used in our 400 kV transmission line between Narela to Maharani Bagh in Delhi. So it will enable about 20% reduction in right of way apart from this trees -- saving trees. Next. To take care this -- any damage because of natural calamities and disasters, we have developed India's first 220 kV mobile GIS in collaboration with Toshiba. This 220 kV mobile bay can be used anywhere any station, it is a mobile, it can be a flood hit station or any other natural calamity, we can immediately use within 48 hours. And in case of RE generation where the bay is immediately required for evacuation of power, so this can be used as a spare bay also. So it will be good for evacuation of renewable power from RE generations. So this has been used, and we are in the process of procurement of another 220 kV and 132 kV also, trailer mounted. Next. Recently, we have been accorded in principle approval for upgradation of Sasaram HVDC project at an estimated cost of INR 3,440 crores under RTM. This will be from 500-megawatt capacity. It was LCC-based HVDC. It will be 1,000-megawatt VSC-based HVDC. And unique feature will be that it will be by developing indigenous semiconductors and supply chain will be from India for HVDC technology. Our asset management practices have been benchmarked by international utility, Ohros Consulting Group from Netherlands. And Power Grid has been ranked in first quadrant that is high score in asset management practices with high operational performance in overall benchmark. And 12 other major utilities from Asia, Europe, Australia, South America and Middle East also participated. We got -- our score was 4.14 out of 5, whereas the global average is 3.68. In 2023, last benchmarking, we got about 3.22. So there is an improvement in our asset management performance. Next. In project execution and commissioning, we have done a CapEx of INR 15,385 crores as against INR 10,002 crores in last financial year. As far as capitalization, it is INR 4,587 crores till date as against INR 4,006 crore in last financial year. These are the elements, which have been commissioned in so far. Transformation capacity at Khavda-III, 3 number 1,500 MVA ICTs have been commissioned. At Ahmedabad, 2 numbers 1,500 MVA ICTs have been commissioned, then 2 number ICTs at Navsari, 2 number 1,500 MVA ICT at Fatehgarh III and 1 number 1,500 MVA ICT at Bikaner. Then 6 number at 400 kV in Kurnool III, 2 numbers at New Navsari, then 1 number at Nalagarh, number at Hassan substation and number at Fatehgarh-III station. In transmission line, we have commissioned Khavda-II, Khavda-III line, then Banaskantha to Ahmedabad 765 kV line, then Banaskantha to Sankhari. Jeypore, Jagdalpur, it is an interregional link between Western region and Eastern region. Then LILO of Agra Jaipur at Dausa. Then Namsai Kathalguri Circuit 1 and Circuit 2 have been -- was commissioned about 5 months before schedule date, ahead of schedule. And substations, what we have commissioned is 765 by 400 kV Khavda-III, 765 kV by 400 kV Khavda-II, and then Ahmedabad substation and Dausa substation. This 220 kV underground cable in Zojilla, it was a very critical project. It has been commissioned yesterday. Then Narela also has been commissioned 765 by 400 kV and Kishenpur-Kishtwar and ICT 4 at Kurnool-III. These have also been commissioned. Next. Our availability is good as normally, it is more than 99.75% at which we get maximum incentive. So this time also, it is 99.83%. Trippings per line is also within limit, it is 0.17 trippings per line. Next. In half yearly result is total income INR 23,115 crores. EBITDA is INR 19,109 crores. Profit after tax is INR 7,197 crores. Net worth is INR 98,932 crores, and our gross fixed assets is INR 2,95,148 crores. Debt-equity ratio is 58:42. If you see from here that transmission charges in half yearly first half is INR 21,356 crores, consultancy services INR 821 crores, telecom INR 495 crores and other income, INR 443 crores. Total income is INR 23,115 crores. Operating expenses, INR 3,903 crores, and after depreciation, profit after tax is INR 7,197 crores. Next. On a stand-alone basis, our income is INR 22,605 crores. EBITDA is INR 19,330 crores and the profit after tax is INR 7,208 crores. These are some financial performance parameters. Gross fixed asset, INR 2,95,148 crores. Capital work in progress, INR 47,782 crores. We have debt as on today INR 135,000 crores, net worth INR 98,932 crores. Earnings per share, INR 7.74 per share. Book value per share is INR 106.37. Debt to equity 58:42. Return on net worth is about 7.27%. Then these are some other key financial information for Q2 financial year 2026. Income for previous period is INR 93 crores, interest on differential tariff INR 296 crores, interest from subsidiaries and joint ventures INR 794 crores, incentive INR 159 crores, dividend from JVs INR 24 crores, dividend from subsidiaries INR 300 crores, dividend from associates and others INR 18 crores. Then FERV INR 491 crores, equity in TBCB, it is INR 4,956 crores. Equity in TBCB under construction, it is INR 3,448 crores. Short-term loan, we have INR 2,209 crores. Commercial performance has been good against billing of INR 18,248 crores, realization INR 18,737 crores, which is 102% realization. Outstanding dues is INR 2,899 crores as against Q1 of INR 3,151 crores. Major dues are from Tamil Nadu, Uttar Pradesh and Telangana. In telecom, our revenue is INR 570 crores as compared to last financial year H1 results, which was INR 544 crores. We got orders from worth INR 84 crores for a multiyear project, then customer added 22 numbers. Backbone availability has been 100% as always. We have telecom network of about 1 lakh kilometers. Next. In consultancy, our income has increased up to INR 821 crores from INR 255 crores, mainly because of smart meter business being done by PESL. In domestic, we have opportunities in RE, intrastate, diversion, BESS, green hydrogen. And in international, we are pursuing transmission opportunities across South Asia, Africa, America, Europe and Australia. We got 15 new orders domestically and ongoing about 81. So TBCB and other projects, we have 187. Then in international, we got 3 orders, ongoing 14 numbers. We have footprints in 25 countries. Next. As you know that key enablers for our growth are a $10 trillion economy. This is vision of our honorable Prime Minister, which will require rapid industrialization and urbanization. There will be a lot of EVs, green hydrogen, data center, which will demand electricity. Then there will be a huge requirement for energy storage. There will be BESS 47 gigawatt by 2032 and pumped hydro storage will be about 36 gigawatt by 2032. And in global energy integration, One Sun, One World, One Grid that will require a lot of opportunities for Power Grid also. Next. In Brahmaputra Basin, recently, there is a scheme or plan announced by Ministry of Power, which will require about INR 1,91,000 crores up to 2035. And beyond 2035, it will require about INR 4,51,935 crores. So put together, we will have an opportunity for INR 6,42,944 crores. It will have HVDC, 42 gigawatt of HVDC corridors will be there. And it will mainly have HVDC stations at Namsai in Arunachal, Roing in Arunachal, Niglok, Silapathar, Gogamukh and Rowta for bulk power transfer from Northeastern region to rest of the country. And there will be PSP integration, 3.7 gigawatt by 2035 and 7.4 gigawatts beyond 2035. So there is a huge opportunity in Brahmaputra basin. This is our -- what we have works in hand. We have about INR 1,52,000 crores worth projects in hand, out of which INR 1,03,000 crores projects are from TBCB. Next. So these are the details of our works in hand. So INR 1,52,287 crores, out of which INR 1,02,992 crores in TBCB. Then the new -- under RTM, INR 37,100 crores, and ongoing RTM, INR 9,542 crores and others about -- like data center and cross-border smart metering, about INR 2,653 crores. Our commitment for CapEx for financial year '25-'26 is about INR 28,000 crores, which will have TBCB projects worth INR 19,062 crores and RTM projects INR 3,554 crores and others will be about INR 5,384 crores. We are having 8 pink stations, which are headed and operated, managed by only female employees. Four were announced in last financial year and 4 have been added recently. These are mainly in Gurgaon, then Lucknow, Pune and Bidadi. So 8 stations, 4 were earlier there. So today, we have 8 pink stations, which are headed by female employees. In environmental energy management, we have 29% of power from green tariff, 33% share of renewables in total power consumption. Water management, we have 43% capacity. We have increased for rainwater harvesting. Our 90% of waste generated is being diverted from disposal through recycling and reuse. In green mobility, we have recently donated electric buses to AIIMS New Delhi. And in Homi Bhabha Cancer Hospital & Research Centre, Vizag, we have donated India's first ring gantry linear accelerator machine at this center. Honorable President of India conferred SCOPE Eminence Award For Human Resource Management to Power Grid. Then Rajbhasha Kirti - First Prize was given to Power Grid on the occasion of Hindi Diwas. Then our Director Personnel was conferred People's Leader of the Year 2025 Award. Then Exceptional Employee Experience - PSUs, we got award in ETHRWorld Awards 2025. Then Education for Violence Affected Children in Chhattisgarh, we also got award in that, and Star Performer award was also given to Power Grid. Thank you.

Should be begin with the question and answer session, sir?

Please, carry on.

[Operator Instructions] We'll take our first question from the line of Mahesh Patil from ICICI Securities.

Sir, my first question is on the capitalization number. Given that we had achieved around INR 46 billion of capitalization in the first half, and we have guided about INR 220 billion for the full year. Do we still maintain that target? And second related question is what are the challenges we are facing to get this number up? And what are you doing to kind of accelerate the execution?

Okay. So as far as capitalization is concerned, we are committed for increasing capitalization or commissioning of our projects. Mainly we are facing problems from RoW, from landowners. And Government of India is very positive. They are helping us. We have got one guideline issued by Government of India on this 21st March 2025 for increasing land compensation rates as against 30% for RoW in urban areas from 30% to 60% and 45% in semi-urban area. And earlier, RoW and land compensation was paid based on circle rates. Now it is based on the actual market rate. For market rate, there is also methodology given in the guideline that there will be 3 First valuer will be selected by farmers, second valuer will be selected by Power Grid and third valuer will be selected by District Magistrate. Then first valuer of farmer and second valuer of Power Grid, they will submit the report, then average of these 2 will be considered as the base value for market rate. If difference is more than 20%, in that case, the third valuer rate will be opened. And if third valuer is closer to, say, farmer's valuer, then it will be average of farmer's valuer and the third valuer. If it is rate is closer to, say, Power Grid valuer, the average of these 2 valuers will be taken. So this methodology is being used by Delhi, Haryana and now other states. So based on the Government of India guidelines issued in March, the state of Haryana and Delhi have issued somewhere in June and July and other states are also issuing such guidelines. So this Government of India guidelines are being adopted by various states. And based on those guidelines, the rates by valuers is being finalized, which are being adopted or notified by respect to DMs. And based on that, we are working in various lines. So this has taken some considerable time. Because of that, some projects have been delayed, which are likely to be commissioned in Q3 and Q4. So we are still targeting about INR 20,000 crores projects to be capitalized, about INR 20,000 crores by this financial year '25-'26. By March '26, we should be in position to commission up to INR 20,000 crore projects.

Okay, sir. My second question is on the equipment ordering. Have we tied up for the equipment for the, let's say, next 2, 3 years of our execution? And is there any shortage in terms of transmission equipment, HVDC, et cetera?

Yes, you are right that there is a shortage of some equipments like transformer, GIS and HVDC equipment. For transformer, especially, which is delivery time is more than 1 year because manufacturing and testing itself takes more than 1 year. So what we are doing, we are procuring these transformers and reactors well in advance as bulk procurement. And these procured transformers and reactors are allocated for various projects to be what we win in future so that this constraint of transformer supply is not there. As far as HVDC equipments are there, so they cannot be procured in advance because they are specific to a specific project. For that, the Government of India is giving us 4 years to 5 years for commissioning. So in that period, we are able to get the HVDC equipment also. So similarly, GIS also, there is a shortage but still we are getting these equipments on time, and we will be able to commission our projects on time.

And sir, my last question if I may, my last question is, sir, have we started tendering for the Leh-Ladakh HVDC project?

Leh-Ladakh HVDC project, actually, we have gone to the market. We came out with the tender. And we also got one bid, but that bid was not -- it was not acceptable to us because there were so many queries, and it was -- we came to a conclusion that HVDC project may not be feasible in this Leh-Ladakh to Kaithal project. Now Government of India is considering this project to be replaced by AC project. So we will have 400 kV transmission line from Leh-Pang to Kaithal. And that project is under discussion. And very shortly, we will get some information about that.

Next question is from the line of Puneet from HSBC.

My first question is just on Leh-Ladakh. When you move from HVDC to AC, will your commissioning time line increase or reduce and your CapEx goes up, goes down? How should one think about this?

Actually, this project when we considered HVDC project about 3 years back, that time cost was about INR 20,000 crores. And now considering this supply chain constraint, when -- even if we consider that this is a feasible project, we took even cost estimate from our various bidders. The cost is coming about INR 42,000 crores. But considering various challenges and constraints shown by manufacturers or suppliers, so it may not be possible for us to continue with HVDC. And we have already done detailed studies. So AC is another option, which we are considering. And cost of AC will be in the range of about -- it will be close to INR 30,000 crores. So CapEx will not be less as compared to earlier estimate of INR 20,000 crores. It will be more than that.

Okay. And timeline?

Timeline, we'll be able to maintain as of now because all 400 kV and these technologies are already available in the market, except synchronous condensers, which may take some time. So still, we are expecting that by 2029, this project can be commissioned.

Understood. And on your stand-alone accounts, you, in a way, end up paying effective tax rate of 20% or even less than that. How long will that benefit last?

I request Director of Finance to...

Pardon, can you come again?

Yes. So the effective tax rate, when I look at on your stand-alone balance P&L, it comes to less than 20% over the last few quarters, almost 8, 9 quarters. When do you think this will revert to normalized 25%, right?

It will -- it will come to normal when the capitalization comes down and we -- when the income tax profit is more than the -- your profit as per the CERC rate. But again, we don't foresee that because once we -- the capitalization picks up, again, we'll be going into the same MAT and then the profit as per IT -- it will come down. And then again, we'll be switching over to the MAT only.

Understood. That's helpful. And lastly, any progress on the Rajasthan JV on the transmission side?

Can you repeat?

Rajasthan JV.

Rajasthan JV, joint venture company. Yes. Actually their regulator has put some limit on the projects, which are to be considered on nomination basis, beyond which they are considering under TBCB. So -- but they were trying to take some exemption so that those projects can be executed by this JV company. But so far, we have not got any communication from Rajasthan government. So as of now, there is no progress.

Okay. That's helpful. And lastly, your participation on the battery side. Last time you said you will look at it as it progresses. Any further thoughts there?

Battery energy storage participation.

Battery energy storage, we have participated in some tender, but we lost that. And we are again participating in some other projects. And we will continue participation. And hopefully, we will execute some projects in days to come.

[Operator Instructions] We'll take our next question from the line of Ketan Jain from Avendus.

Sir, my first question is on the other expenses. We've seen an increase of -- by 77% of other expenses, O&M expenses. What is the primary reason for this? And is this passed on? Or how is it?

The other expenses actually includes the FRV, which is a pass-through. So that is covered in the net movement of the regulatory deferrals. And then also, you see now we are in the business of the smart metering, where we are doing the accounting through the service concession agreement where it is shown as the income side as well as the expenses side. The expenses side in the consol around INR 450 crores is included in that. So corresponding to that, we have an income also. So that is why it is appearing to be on the higher side, but not like that.

Understood. And also, sir, I have a question, do we have any O&M expense impact from the new CERC regulations, which capped the O&M expenses and we are actually incurring more expenses. Is there any impact from that?

Last time, there was impact that we got less O&M charges, O&M recovery, what we got from the various constituents as per the new regulation. But this year, there is no change from the last year. So the impact was only last year. This year, it is only incremental change because of increased DA and other normal expenditure will increase every year. So it is only nominal expenses, which have increased. Otherwise, there is no impact of our CERC regulations.

Understood. So going forward, we will be recovering all the O&M expenses. There won't be any additional under recoveries on that. Am I right, sir?

Yes, yes.

Sir, also, what is your guidance on capitalization for '26, you told INR 20,000 crores. But what would be that for '27 and '28, any guidance?

This '27, like last year, we did a CapEx of about INR 26,000 crores. This year, we are expecting about INR 28,000 crores. And next year, it will be about INR 35,000 crores. So from CapEx capitalization, there will be a gap of about 2 years -- so like this year, we will have INR 20,000 crore projects are likely to be commissioned capitalized. And next year, it will be -- it will follow like it may be about INR 25,000 crores, INR 26,000 crores because last year, we got CapEx of INR 26,000 crores. So we expect that about INR 25,000 worth projects will be capitalized next year. And similarly, in '26, '27 also -- '27, '28 also, it will be around INR 28,000 crores. So it will be in that range. INR 25,000 crores next year, INR 28,000 crores next to next year.

Understood. Just one last question, ma'am...

Ketan, I request you to join back the queue, please, as we have other participants waiting for their turn.

Okay.

We'll take our next question from the line of Dhruv Muchhal from HDFC AMC.

Sir, in the consolidated numbers, the other income, last year was about INR 560 crores and this year is about INR 190 crores, a sharp drop. So anything abnormal probably in this quarter or last quarter? I think...

I could not get...

Dhruv, can you use your handset more, please to ask question?

Yes. Sir, on consolidated numbers, the other income last year same quarter was INR 560 crores, and this year quarter is about INR 190 crores. There is a sharp drop here. So anything abnormal probably in the last year quarter or this quarter?

Normally, the other income includes some of the like interest and differential tariffs on the CERC orders and all, which are all normally used to be onetime. So on a yearly basis, a difference of variations of around INR 100 crores, INR 200 crores is the normal one.

So nothing abnormal in the numbers, either last quarter or current quarter?

Nothing.

Okay. Okay. Because if I adjust for the other income, your consol PAT is showing a decline Y-o-Y. But if I adjust for the other income, the PAT is showing an increase. So I'm just wondering, it probably -- it's all because of the other income. So just trying to understand if there is something. Sir, the other thing was the awarding seems to has slowed down a bit, tendering has slowed down a bit. Any particular reason why this is happening or probably just the tenders will happen and we'll start seeing momentum pick up again?

TBCB tendering slowdown...

Yes, yes, it is a cycle basically. Sometimes it is very fast, sometimes it takes some time. So it will -- it is likely to pick up.

It's not because there already a lot of...

We have so many projects in pipeline but because of various approvals and you understand that there will be a lot of approvals required for any bidding process. So there will be variations in speed of this bidding process. So it is likely to improve now. So nothing to worry.

Okay. And sir, last quick small question is your CapEx for first half is about INR 15,000 crores. Generally, I believe 2H is much better than 1H given monsoons and everything. So can -- is it possible that we'll exceed our INR 28,000 crore CapEx number or INR 28,000 crores is safe to assume?

It will be INR 28,000 crores plus. So that we can assure it may go up...

I was trying to understand the degree of plus here. How much higher than INR 28,000 crores?

It may be somewhere between INR 28,000 crores to INR 30,000 crores.

Next question is from the line of Atul Tiwari from JPMorgan.

Sir, you gave a guidance of about INR 25,000 crores to INR 26,000 crores capitalization in FY '27 and INR 28,000 crores in FY '28. I believe in some of the previous conference calls, you have guided to INR 35,000 crores to INR 40,000 crores of capitalization in those years. So is there some like persistent slowdown in the pace of capitalization that the company is seeing because of this rights issue? Or is this issue limited to this year only?

What we are saying that there is a time lag of about 2 years from CapEx to capitalization. So that is only because there will be many challenges of ROW and other things will be there. But considering that, we -- you can assume that there will be 2 years of lagging. So last year, it was INR 26,000 crores. So capitalization after 2 years will be about INR 25,000 crores to INR 26,000 crores. And since we are considering INR 28,000 crores CapEx, so I am saying that this will be '27, '28 capitalization will be about INR 28,000 crores.

Okay, sir. And sir, how much of transmission awarding is yet to be done as per NEP over next 3 years?

The exact figure, I will check, but it is somewhere about INR 3.5 lakh crores out of INR 9.15 lakh crores is still pending. So the exact figure I can confirm after this.

So INR 3.5 lakh crores and all belonging to ISTS...

Atul, I request you to join back the queue, please.

Yes, yes. I just have this one doubt on the answer. So INR 3.5 lakh crores is the ISTS or it includes the state...

Only ISTS.

ISTS, yes.

Next question is from the line of Sumit Kishore from Axis Capital.

My first question is in relation to what is the bid pipeline at the moment for the next second half of the fiscal? And what is the status of the 2 HVDC projects, which you had mentioned and we expected to get awarded in this fiscal. So are they still on track? Or are there delays in the tendering and award? That's my first question.

Sumit, your voice is not audible. Your voice is not clear. Can you please...

Sumit, please use your handset mode and repeat the question, please?

Sir, my question was in relation to the bid pipeline for the balance fiscal second half for the market for transmissions and the status of the 2 HVDC projects that were expected to be awarded this fiscal? Is the tendering and award activity on track? Or is there a risk of spillover the next financial year? That's my first question.

Yes. You are talking about this Khavda to this South Olpad is already finalized. And this Barmer to South Kalamb, it is likely to be completed in this financial year. So we are expecting very soon that it is already approved in NCT and it is likely to be finalized in this financial year itself. Other projects may take some time.

Okay. And so what is the total bid pipeline now for the balance fiscal for transmission?

Let me check the figure. We will come back.

Around INR 45,000 crores.

We will exactly tell, but it may be around INR 45,000 crores. It may be more actually considering HVDC, it will be more. So we'll revert. We should not do wrong feedback. So we will revert with actual...

Okay. Sir, when you said Khavda South...

I request you to join back the queue, please as we have other participants waiting for their turn. Next question is from the line of Nikhil Nigania from Bernstein.

Sir, my first question is on the ROW point. The process you laid out on 3 different valuers assessing it seems quite arduous. So if you could tell us how much time is it adding to a project time line in months or so?

For this finalization of valuer and giving report by this valuer will be somewhere about 1 month. Because it is -- we are in the learning process. So it took more time in Delhi. But Government of India is in the process of issuing guidelines that within 1 month, this should be finalized.

And other states are also close to adopting this guidelines, Rajasthan, Gujarat, et cetera?

So yes, we are following up with all the states, including Ministry of Power is also considering and talking with all the states to adopt similar guidelines.

Got you. So my second question is...

Nikhil, I request you to join back the queue please. Next question is from the line of Apoorva Bahadur from IIFL Capital.

Two questions. Firstly, on the equipment supply. You said it is improving and we are ordering in advance. Any chances of Chinese imports again being allowed in, especially in certain categories? And secondly, sir, we have been one of the early movers in the data center business? Any update on that now that we are finally seeing the traction over there? Any plans?

Yes. This Chinese import, as far as the present situation is there, we are not expecting it will continue, but we will have some progress like the Chinese companies, which has set up their companies in India. So there is some progress or there is some development in that area. So we may have some approval for manufacturers -- Chinese manufacturers who have developed factories in India. So there may be some development in that area. But direct import from China, so far, we are not hearing anything.

Okay, sir. And on the data center bit?

And for data center, actually, it is a learning curve for us. There have been some issues being faced and there are so many clarifications and it is delayed. Data center is delayed. So maybe by Q4 only, we should be able to commission this, not in Q3.

Sir, what size is this?

It is 1,400 -- 1,000 racks.

We'll take our next question from the line of Bharani from Avendus.

So first question is a little bit conceptual. So though we had close to INR 9,000 crores of capitalization last year, the first half revenue EBITDA PAT is flat to down in a minor way. So how should one understand it conceptually because as a fixed cost plus ROE model, there should be growth. So that's my first question.

Actually, so far, we have been executing projects under RTM. And now we are executing projects under TBCB. So there is a difference in financial modeling or revenue modeling of these two project -- 2 types of projects. In RTM, we used to get about 17% revenue on any project. Breakup was that we will get about 15.5% return on equity, which is about 30%. So 15.5% into 30%, which will be about 4.65%. Then there will be 70% loan. So there will be about, say, 7%, assuming 7% interest rate, so there will be about 4.9% will be interest on loan. And depreciation for initial 12 years will be 5.28%. Then there will be O&M charges in the range of about 1.8% to 2% and then interest on working capital may be about 0.2% to 0.3%. So this makes about 17% or 17-plus percent of revenue against any projects. After 12 years, because we have projects which have been commissioned in 2010, 2011, '12, '13 in that range, which are getting completed 12 years of age. So after 12 years, 5.28% depreciation will reduce to about 1.2%, 1.3% because by 12 years, most of the depreciation has been recovered. So only balance may be about 27%, 27% in 23 years. So making it about 1.1% to 1.2% per year depreciation as against 5.28% depreciation in initial 12 years. So there will be a net difference of about 4% revenue reduction only because of this. Second point will be that interest on loan because after 12 years, we will be paying most of the loan. So interest on loan component will also become almost 0. So this 4.9% plus 4%, so almost 9% reduction will be there in our revenue. So assuming that there will be, say, last 12 years back, we commissioned about, say, INR 15,000 crore projects. So INR 15,000 crore projects into 9%, it makes about INR 1,350 crores revenue will reduce each year. And so this financial year also, our revenue has come down because of these 2 reasons, depreciation and interest on loan, whereas whatever projects we have commissioned, so normally, we will get projects because our tariff is fixed for 35 years. So we get about 11% to 12% of project cost as revenue. So if we commission projects last year, about INR 9,500 crores worth projects, so maybe about INR 900 crores will be the increase in revenue because of these commissioned projects. So net difference will be INR 400 crores to INR 500 crores difference will be there in revenue. So that difference you will see in our revenue also. So these are the basic like you can say the rough calculations. The details we can share with you.

I'd like to add to this. Actually, you see in the regulatory framework, EBITDA is not actually a right parameter to monitor in the sense that when we commissioned a new project, as Chairman was explaining, the EBITDA used to be in the range of 89%. And when you complete the life of the 35 years, the EBITDA will come down to 74%. But your profit will remain same because I have a return on equity constant for the entire period. So there is no worry that the profit is going to come down, but the EBITDA is not the right parameter to monitor. And another added to that, if you see the half year to half year when you were comparing last half year, actually, we have spent CSR of about INR 100 crores lesser than the current half year, which actually will get normalized over the full year. And last half year, we got order of POWERGRID that is Southern Interconnector Trans System where we appeal to the regulatory authorities for waiving of the penalties and where we got around INR 209 crores as a onetime order impact in the last half year. So these things added to only you are showing -- you are seeing like decline of around INR 300 crores. This is only because of this onetime impact. Otherwise, as such, there is no worry that the EBITDA is coming down or something. And added to that, you see going forward also, we have a smart metering business where the EBITDA is hardly 10% to 15%. So we are merging that in the consol, so where the income and expenditure side, it was added. So that is why you are seeing a lesser EBITDA of like 3% to 4%, it is declining. But as such, there is no worry that the profits are taken away by any expenditure or something like that.

So my followup...

I request you to join back the queue, please. Next question is from the line of Anuj Upadhyay from Investec.

2 questions. One is on a clarification. When you mentioned that the Leh-Ladakh project price has now been revised to INR 30,000 crores. So is this INR 30,000 crores factored in our work in hand of INR 153,000 crores or it is yet to be factored in? Secondly, any further comment on the Brahmaputra opportunity, which you mentioned throws a robust opportunity, when can we expect the tendering to be out or it would be directly allotted to POWERGRID or it would be on a TBCB basis?

Yes. As far as Leh-Ladakh, we are still maintaining INR 20,000 crores only because we have not got this direction from Government of India about DC or AC. So as we get this communication regarding AC network, then we will accordingly revise this guideline also for our CapEx. As far as this Brahmaputra, it is still in this study stage, and it will -- it is likely to take some time. And third point, what you mentioned that whether it will be nominated to POWERGRID, it is unlikely because these are normal HVDC projects in plain area, and it may be under TBCB. So far, we are not expecting that it will be based on nomination to POWERGRID.

We'll take our next question from the line of Mahesh Patil from ICICI Securities.

My first question is on the FY '28 CapEx number. You have mentioned INR 35,000 crores for next year. Sir, what is the estimate for FY '28?

Estimated?

CapEx for FY '28.

Yes. FY '28, we told it is INR 45,000 crores. INR 35,000 crore is FY '27. FY '28 is Rs. 45,000 crores.

Okay, sir. And sir, lastly, on this Andaman-Paradeep project, what is the status there, if you can share some info.

Still, there are discussion and approvals being taken by Government of India. And there is no -- this firm communication. You are talking about Andaman HVDC project undersea?

Yes, sir. Yes.

Yes. So there is no clear approval or direction from Government of India so far.

And if I may, sir, lastly, in terms of -- sir, EESL, if you can share some update what were the losses in this quarter? And what are our plans regarding EESL Energy Efficiency Services?

I request Director of Finance to respond.

Yes. Current half year -- around INR 126 crores in the half year has been included as the loss from EESL compared to INR 92 crores in the last half year. And there is an additional INR 29 crores against last quarter of around INR 58 crores, which is again on the adjustment of the final accounts. You can say that around INR 30 crores has been added loss on account of EESL in our consol.

Ladies and gentlemen, due to time constraints, we'll take that as the last question for today. I now hand over the call to management for closing comments. Over to you, sir.

So thank you very much, all investors for participation, for your valuable time. POWERGRID is committed to take care your interest, and we thank your support and your support in promoting POWERGRID in India. Whatever challenges we are having today because in power sector, especially in transmission business, when we go for erecting any tower in land of any landowner, so there will be obvious resistance by landowner. So we are facing -- on a daily basis, we are facing problems everywhere wherever we are working. But we have a very dedicated team of our engineers and POWERGRID officials to take care and to improve efficiency of our execution. As far as challenges of the supply of various equipments because of a lot of demands in power sector, in ISTS, intrastate, then RE generation and now we will be having more demand because of green hydrogen transmission network, data center transmission network. So these challenges are going to increase in days to come. But rest assured that we are very competent -- we have a very competent team to take these challenges and work for the interest of our shareholders. Thank you very much.

Thank you, members of the management team. On behalf of ICICI Securities, that concludes this conference. Thank you for joining us, and you may now disconnect your lines.