Powergrid Infrastructure Investment Trust (PGINVIT) Earnings Call Transcript & Summary

Ladies and gentlemen, good day, and welcome to Powergrid Infrastructure Investment Trust Q2 FY '25 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, sir.

Thank you, [ Tanmia ]. Good morning. On behalf of ICICI Securities, I wish warm welcome to the new management team to Q2 FY '25 earnings call of PGInvIT. We are privileged to join today with the management team. We have with us Shri Naveen Srivastava, Chairman; Shri Sanjay Sharma, Director; Shri Amit Garg, Director; Shrimati Neela Das, Chief Executive Officer; Mr. Gaurav Malik, Chief Financial Officer; and Mr. Shwetank Kumar, Company Secretary and Compliance Officer. We'll start with brief formal opening remarks by the management, which would be followed by Q&A. Over to you, sir.

A very good morning, everyone. On behalf of Powergrid Unchahar Transmission Limited, the investment manager of PGInvIT, I would like to extend my appreciation to all participants for joining this call despite their busy schedules. Today, I'm joined by Mr. Sanjay Sharma, Director of PUTL; Shri Amit Garg, Director of PUTL; Shrimati Neela Das, CEO of PUTL; Shri Gaurav Malik, CFO of PUTL; Shri Shwetank Kumar, Company Secretary; and other senior officials. On November 7, 2024, PGInvIT released its financial results for the quarter and half year ended September 30, 2024, along with distribution details for the quarter. These results are now accessible on the BSE, NSE and our websites. A presentation detailing PGInvIT's Q2 and H1 FY 2025 results has been uploaded to our website. In the interest of time, I'll provide a concise summary of these results. Our investor base has shown steady growth, expanding from approximately 15,000 unitholders at the time of IPO to over 170,000 unitholders as on September 30, 2024. We extend our heartfelt appreciation to our diverse investors for their trust and confidence in PGInvIT. For our new investors, let me introduce the trust. PGInvIT is an infrastructure investment trust with Powergrid Corporation of India Limited in Maharatna CPSE and India's largest power transmission utility as its sponsor and project manager. Powergrid Unchahar Transmission Limited, a wholly-owned subsidiary of Powergrid, serves as investment manager, while IDBI Trusteeship Services Limited act as a trustee. PGInvIT owns 5 SPVs, namely VTL, PKATL, PPTL, PWTL and PJTL. Currently, PGInvIT hold 100% equity in VTL and 74% equity each in of the other 4 SPVs. These power transmission SPVs, which includes 11 transmission lines, spanning around 3,699 circuit kilometers and 3 substations with a transformation capacity of 6,630 MVA are operational and revenue generating assets. The transmission service agreements for these projects have an average remaining life of more than 28 years. These 5 operational revenue-generating inter-state transmission system, ISTS assets, with a strong track record in availability, reliability and safety were implemented under the tariff-based competitive bidding, TBCB mechanism on a build, own, operate, maintain basis. They come with a 35-year contract agreement, minimizing regulatory risk on transmission charges and providing long-term assurance to the unitholders. PGInvIT is backed by India's largest transmission utility as both the sponsor and project manager, which strengthens its position in the sector. Additionally, with availability-based fixed tariff under long-term transmission service agreement, PSAs, PGInvIT offers high visibility on cash flow while maintaining low leverage, a key advantage that supports its debt-funded acquisition strategy for future growth opportunities. With these strength, PGInvIT is dedicated to creating value for its unitholders. PGInvIT aims to deliver consistent, stable and predictable returns to its unitholders. Let us now turn to the Q2 FY '25 distribution. A distribution of INR 3 per unit was announced on November 7, 2024 for the quarter ending September 30, 2024. This marks the trust's second distribution for fiscal 2025 and 13th consecutive distribution since listing. Unitholders will receive this distribution on or before November 20, 2024. Including this Q2 FY '25 distribution, PGInvIT has declared a total distribution of INR 40.50 per unit at listing for an IPO price of INR 100 per unit, totaling amount to over INR 36.85 billion. As informed in our previous earnings calls, we aim to achieve a distribution of INR 12 per unit for the fiscal year 2025. Our quarterly distribution follows our distribution policies and SEBI regulations, ensuring that at least 20% of the net distribution cash flow NDCF is distributed to unitholders. As per the policy, distribution are declared and paid at least once every quarter. Now the highlights for the quarter ended September 30, 2024. Utilizing the latest technology and advertising safety, our project manager has ensured that our transmission assets are operated safely without accident and with high efficiency throughout the quarter. The average availability of each SPV exceeded target levels, underscoring their higher performance and reliability. As per the provisionally available data, the Q2 FY '25, the average availability has surpassed 99.75 across all SPVs, maximizing the potential incentives. Currently, this data is provisional, except the VTL, as we await the monthly availability certificates from respective regional power committees, RPCs and the Ministry of Power, Government of India covering July to September '24. As you know, one of our SPV/PVTL is currently executing a project under a Regulated Tariff Mechanism, this project titled implementation of 400 kV line bay at 765/400 kV Parli substation for RE interconnection. This was allotted to PVTL and CTYL. An order has been issued to CRC for grant of transmission license. This project is expected to be commissioned in December '25 with an approximate cost of INR 250 million. This is in addition to an earlier project under RTM in PKATL, which has been commissioned in February '24. The project cost is approximately INR 30 crores, which is also adding to our top line. Financial highlights for the year for Q2 FY '24, '25, total consolidated income amount amounted to approximately INR 3,290.35 million, which includes INR 3,199.64 million for the revenue from operations and INR 19.71 million from other income, primarily from interest earned on deposits. Total expenses, including impairment for the Q2 FY '24, '25 on a consolidated basis were around INR 1,123.22 million. In the first half of financial year '24-'25, total consolidated income was about INR 6,557.15 million, comprising of INR 6,355.48 million from revenue from operations and INR 201.67 million from other income. Consolidated total expenses, excluding impairment of -- for H1 FY 2024-'25 were approximately INR 2,250.25 million. The net distributable cash flow, NDCF, calculated at the SPV level has been included in the consolidated financial results. The trust receives cash flow from the SPVs in the form of interest income, dividend income and SPV debt repayments. PGInvIT NDCF for the quarter ending September 30, 2024, amounts to INR 1,699.79 million, and INR 5,228.20 million for the half year ending September 30, 2024. The announcement of INR 3 per unit distribution for this quarter includes the interest component of INR 1.91, taxable dividend component of INR 0.60, exempt dividend component of INR 0.26, repayment of SPV debt of INR 0.22 and treasury income of INR 0.01. The total distribution amount exceeds the stipulated requirement of distributing at least 90% of the NDCF at the PGInvIT level as per InVIT regulations and our distribution policy. As of September 30, 2024, PGInvIT's outstanding external borrowing was INR 5,683.88 million. This is from the INR 5,755.85 million loan raised from HDFC Bank in March '22 to partially fund acquisitions. The loan is floating rate loan linked to the 3-month T-bill with an average debt cost of 8.12% for H1 FY '24. Net debt as a percentage of assets under management -- asset under management, AUM, was approximately 0.13% as of September 30, 2024, allowing ample room to fund future acquisitions entirely through debt. The trust maintained the highest credit rating, AAA, with a stable outlook from ICRA Limited, CRISIL ratings and CARE ratings. Trade receivables as of September 30, 2024, stood at INR 1,321.17 million, equivalent to 38 days of billing. Acquisition of balance 26% equity shareholding, we are expecting to complete acquisition of remaining 26% stake in our 4 SPVs, namely PKATL, PPTL, PWTL and PJTL during the financial year, subject to unitholders' approval of transaction. The Sponsors Board has approved the proposal to sell the balance 26% share. Investment Manager Board has also approved proposal to acquire this 26% stake, subject to approval of unitholders. We emphasize concluding the acquisition process towards the end of this financial year, provided the unitholders approve the transaction. Now the outlook. Our growth strategy focuses on acquiring operational power transmission assets aligned with the InvIT regulations, statutory requirements and unitholders' best interest. While we remain committed to the unitholders, it is important to note the limited availability of assets or execution presents an inherent risk for PGInvIT, which we have consistently communicated. Currently, operational power transmission asset available for monetization are limited. However, between 2022 and 2027, the country plans to add approximately 114,687 circuit kilometers of the transmission lines. 7,000 -- 776,330 MV of transformation capacity at [indiscernible]. From '27 to 2032, addition of 76,787 circuit kilometers of transmission lines and 497,855 MVA of transformation capacities are expected to be added. With these substantial investment in the sector, we expect that these projects, these commissioning, they will present acquisition opportunity for investment vehicles like PGInvIT, seeking revenue-generating assets. We are closely monitoring the progress of these ongoing projects to stay attuned to near term opportunities. Additionally, should any states choose to monetize their operational transmission assets to generate capital, this would open up a new opportunity for us. This process, however, may be gradual and would require sustained policy adequacy, advocacy and with the states. With significant headroom for acquisition, our competitive strength and our position as an established investment vehicle with a large pool of institutional and noninstitutional investors, we believe PGInvIT is well positioned to benefit from various upcoming transaction in the sector. We emphasize that all assets considered for acquisition will undergo a rigorous evaluation process. This process includes assessing these assets, operational history, compliance with InvIT regulations and statutory requirements, adherence to the trust corporate governance framework and alignment with the unitholder interest to ensure suitability for inclusion in PGInvIT. As mentioned previously, we would like to maintain our distribution guidance of INR 12 per unit for FY '24-'25. Thank you. And now I would like to hand over the moderator for further proceedings. Thank you.

[Operator Instructions] The first question is from the line of Aniruddha Arondekar who is an individual investor. Please go ahead.

I have a couple of questions. First is, what are the basic unit regulations that PGInvIT has to follow before acquiring the new transmission project or our power generation project, this [indiscernible] recently launched a platform under which they are also going to acquire transmission projects, and they are also investing in greenfield transmission projects. So can we do similar investments? Why are we not doing it currently? The second question is we have given guidelines of INR 12 per unit for this financial year. So how much of this [indiscernible] is actually being funded [indiscernible]?

So Anirudh, coming to your second question first, the guidance of INR 12. Well, as per the InvIT regulation, minimum 90% of the NDCF is to be upstream taking into consideration cash at both the levels at InvIT as well as SPVs at the overall level. These are the changes. This is the new guidelines effective from 1st of April '24. So if you see, we begin our InvIT journey way back in May '21, and we started with the cash balance of INR 216-odd crores. Now presently, we have the cash balance of INR 578-odd crores. And if you remove the DSA and the distribution for this quarter of INR 273 crores, roughly, we will be landing at a figure of INR 305 crores. So net on net, there has been increase in the cash position. This is primarily due to the reduction in the debtor days that has occurred since IPO till 30th of September. So there is no major dip from the opening cash reserves that has been eaten away to give the distribution. So that reserves is intact as of now. So that is the answer to the second question. With respect to the InvIT regulation, there is no bar as per the regulation, we can invest in any of the infrastructure projects. The infrastructure projects are governed through the harmonized list of the Ministry of [indiscernible] of India. So as per which we can invest in any project, which has been qualified under that harmonized list. So you are very correct that our counterpart, InvIT has been investing in transmission as well as in RE generation asset. So maybe the Chairman, sir, can further...

I'll reply to the first question, Anirudh. And we are thinking in going in a monetization of transmission assets of the states with the policy at the state level that has come out in the various -- they are coming with a definite time line to investment. And as far as greenfield project is concerned, this is -- I feel is coming out with a construction risk which we feel that -- which includes the risk to the investor also. However, in case of RTMs and all, we have already -- in the speech, we have already told you that one already we have commissioned. And secondly, we have got it. And in future also, whenever these -- any assets which is required by CTYL in these areas in our SPVs, they will come as RTM.

Mr. Anirudh?

One more question because the growth acquisition may or may not happen. So the competitors or [indiscernible] seeing the opportunity to acquire new assets. But at the same time, we are not doing any new acquisition. So I want to understand why it is so because if the competitors can acquire new assets or they are seeing the opportunity, but we are not doing the same. So if that continues, the revenue level will not be maintained. So can you clarify anything more on this?

Of course, I understand there is a limited opportunity at present, which is there. But I can say 1 thing that it's a policy guidelines, which is involving various factors, and we apprehend that this MCV procedure is time taking. We are in touch with a few states in this regard that assets and the assets coming up in the acquisition later, and we see that in the near future, so that some assets which we are thinking, it will be acquired. We are in the process of acquiring the assets.

Sir, 1 more question, if you may allow. [indiscernible] regarding the 26% remaining stake that we are going to acquire by the end of this financial year. You said that in earlier [indiscernible] purchase agreement with power grid. So we have to acquire remaining 26%. Today, also in the [indiscernible] you mentioned that this unitholder approval. So is this mentioned or not, [Technical Difficulty] or is it not yet mentioned or [indiscernible]?

So, it's mandatory. Unitholder approval is mandatory, and for that, we are -- after this, it will be open for us.

The next question is from the line of Abhinav from ICICI Securities.

So my question is what will be the distribution guidance for FY '26? And also if we can expect any new acquisitions by -- in FY '26, this is over and above the 26% stake that we'll be acquiring from the sponsors.

For FY '25, I can say that we are chasing a DPU guidance of INR 12. And going forward distribution with the line with InvIT regulation and distribution policy. But the guidance for FY '25, '26 will be provided at a later stage, mostly in the earnings call for the annual result when '25 will come.

Okay, sir. And on the acquisition part, by FY '26 and expect some new assets to be added in our portfolio?

As I already told in my this thing in my speech also as we are in the forward direction in that. And we see a good thing in the future. That's it.

And sir, are we looking to acquire any assets from [indiscernible] players or like how is it?

We are open. We are open because now the new policy, which Central authority has come out with this thing. So any thing which come out, we are open and we'll surely quote in that. But I can say very well, there is a little limited [indiscernible] there, but we are open. We are going in that direction.

Okay. Okay. And sir, I mean, you said that limited assets in terms of quantifying it, how many, if you can just throw a number or anything?

That, we cannot at present tell you, but we are rigorously we'll put it in that way. We are moving in that direction. Forward in this direction, we are open in that direction.

I would just like to add on this Abhinav, if I'm right. See, when we say limited, you can, yourself, if you are tracking the part on transmission sector industry, you can yourself see these assets are housed in 3, 4 major players. Apart from that, there are very sporadic cases where 1 or 2 assets are available with some developers. So that's why we mentioned very limited. The details we have not gone into the numbers, but you can see this is public information available on CA website and everywhere. So I think you can do some study on that. But when we say limited because not everybody is willing to monetize, not all are willing to monetize through in this route. So there are conditions to that. That's why we say limited.

The next question is from the line of Sarvesh Gupta from Maximal Capital Private Limited.

So first on the acquisition. So what is the approximate cash outgo or debt that we'll have to take for this acquisition?

We are -- Board has sponsored and IM has already given the approval, and we are in the process of unitholder approval. We cannot disclose details right now. But we'll see that it will have a positive part in that.

Sir, I need a ballpark number. As you are saying it will go for unitholder approval anyway. So I will need a ballpark number.

We'll communicate that soon, as soon as this is...

But why it cannot be communicated now, sir, when you have already approved? Why it cannot be communicated on a public call with the investors? You can give a ballpark number. Whether it is INR 1,000 crores or INR 5,000 crores, INR 10,000 crores, whatever it is, just give a ballpark range.

Mr. Gupta, this information will be available with all the unitholders probably today itself before the end of the day, we will be floating for the approval of the unitholders. So that figure will be available in the public domain today itself rest assured. Coming to the second part of the question, what will be the funding look like? It will be majorly debt funded. Only a limited part will be through the internal approvals.

What will be the IRR given your cost of funding as on today that you will be guiding...

What IRR, we are looking at is a part of the strategic decision making. It is not something which can be disclosed in the public. My cost of funding is something which will be available in the public domain, you can have a look at it. Presently, my cost of debt is around -- it is sub 8, 7.7, so I wish sort of a thing. So obviously, there will be some margin over my cost of debt, and it will be priced accordingly, sir.

Gupta, I just -- I also want to add into this objective acquiring [indiscernible] only and further return to unitholders and allocate the life of the consistent return over some years. And so this is you should see that it will be something give [Technical Difficulty]

So 10% to 11% might be the range for this -- on your cost of debt of 8%?

As our [indiscernible] has already told, it will be [indiscernible] today itself.

I think it will be known to you today itself. IRR part, we would not like to discuss in any public forum. Yes.

Okay. Okay. Okay. And so the expected cash flow is anyways known for these assets. So pricing is the only thing that you are going to disclose, right?

Actually, what is [indiscernible] getting out of this holding 26%. They are getting the dividend. Okay, they are holding in the SPV. So basis, certain assumptions, which are much in line with our valuation report, we worked out what can be the future expected dividend payouts for power grid portion. And accordingly, it has been discounted and appraised which was arable between both the parties have been offered and accepted. And it is ultimately flowing to you, the unitholders for the final approval. So if it comes, the deal will go through. If it doesn't obviously it will fall.

Yes, yes. Okay. Understood. And secondly, in terms of your current NAV, what is the number right now?

Around [indiscernible] 83.07.

Okay. And this acquisition of these assets so they will be done by end of this financial year. And assuming that unitholder approval will come?

Yes.

So next full year, you will at least have 100% in all these 5 assets, assuming unitholder approvals?

Yes.

Given that -- I mean, is there a ball park guidance that can be given for FY '26 because let's say these acquisitions come through, which is very much possible what can be the FY '26 [indiscernible]

No. I think Amit just mentioned in his previous response also. I think for the next financial year's guidelines, I think we will have to wait until the annual results and as you can see in the last 2 years also, we have been consistent in informing you about our guidance along with the annual results. So please request you to be patient until that time, yes.

Okay. Now on the state transmission assets that you may want to acquire. So anything which is already there in the pipeline, number one? And secondly, what is the kind of counterparty risk that you have assessed on these assets as compared to the usual non-state ones. These are intrastate I'm assuming?

Yes Sarveshji, you are right that these are intrastate assets, number one. Number two, regarding the counterparty risk, that is one of the major things in the intrastate assets. And as and when the opportunity arises, we'll definitely ensure that there are sufficient safeguards built in the manner in which we end up acquiring these assets towards the counterparty risk as far as the payments are concerned. As regards to the state or at what stage we are. So see, as we have mentioned earlier also in the report also, we have always mentioned that this particular thing is something new for the states. The government of India has issued some guidelines. The states are trying to work on it being the first InvIT and from the CPSE background, we are trying to policy adequate with them, we are trying to share our experience with them. So as and when they are ready and they are willing to monetize, we'll be there to participate in any which way they want to come up with. But as of now, which state we are talking about, it will be more generic. We have been called by various states. We would not like to name a few, but we have been called by various states to share our experiences, and we have done that.

Understood. And my final question is, has the power grid's policy of not giving any further assets to us as of now, that stays as it is as [indiscernible] on that?

This is as it is. Percentage is as it is.

The next question is from the line of [ Krishnan P.S. ] from HNI Investor. Please go ahead.

Good day to the PGInvIT management team. I have 2 queries. I just [indiscernible] value assets decreased from [Technical Difficulty] in Q1 to around INR 10,032 crores in Q2 FY '25. And also the NAV for [Technical Difficulty] in Q2 FY '25. And it's also the [indiscernible] linked to the drop in the fair value assets, and you can also explain the impairment in detail. This is the first query. And the second query is, how much of total cash reserves have we utilized since the IPO? I mean, I know this first question has been answered in parts by you based on the [indiscernible] from the previous...

Yes. So Mr. Krishnan, actually, this impairment is nothing, but is accounted for in accordance with the Indian accounting standards. And it is basically derived from the valuation that the valuer does in accordance with the InvIT regulation. So basically, I mean, you view it like an annuity structure. With transmission, it is intrastate transmission for SPVs, the top line or the revenue is fixed -- almost fixed till the end of the life of the project. So we estimate or the valuers estimate the express motion of it and works out the cash position of each SPV. Now it applies a WACC, the weighted average cost of capital basis certain assumptions with regard to the cost of debt, with regard to the cost of equity, the market scenario of EBITDA and things like that and ultimately discounts the cash flows to arrive at a value. If you have noticed the valuation report, the weighted average cost of capital increased to 8.95% from 8.79% from March '24 to September '24. So as the VAT goes up, the value on the NPV method is bound to come down. That is 1 part of the story in the decrease in the enterprise value. And the second part is that since the cash flows are for a specific period of time. So as and when you eat into the given time frame, the value left over is lesser. So since 6 months have already elapsed from March to September, for which the cash flows are already out of the system. So the value any which ways, even if the WACC remains constant, is bound to come down. So these 2 factors ultimately resulted in decrease in WACC. And ultimately, basis, whatever the value was earlier, whatever the value is now. The difference was routed through in accordance with the Indian Accounting Standards as an impairment. And the same thing resulted in decrease in WACC. So this is one part of the story. Regarding the cash utilization, I mentioned earlier that we started with a cash of around [indiscernible] in '21. And we stand at INR 578 crores now. which includes the INR 273 crores of distribution cash position, which includes INR 273 crores capped for the distribution and some amount of roughly around INR 12.5 crores for different other things. So net on net, I'm having a cash balance of INR 305 crores against INR 216 crores but this is 1 part of the thing. The other thing is that the data days have also decreased since May '21 to September '24. So net-on-net, nothing much we have eaten away from the opening reserves.

Okay. And just a query on the impairment part. So are you saying that with the interest rate going down, there's a possibility that [indiscernible] going forward.

Yes, most certainly. I mean there is an inverse relation between WACC and the value. But be mindful of the fact that this is only a book entry. I mean, there is no cash involved as far as the impairment goes. This entry is passed only in accordance with the Indian Accounting Standards. So it does not impact the cash flow either the SPVs or of the trust. So it is only a book entry. Even if there is a reversal of impairment, it will be reflected in the books of accounts, and we will go up. But the distribution, there will be no impact.

Okay. But do you also expect this to go down quarter-on-quarter, the impairment based on...

The interest cycle have reversed off late. And. I mean, I don't know there's too much going on in the markets currently. But if there's a rate cut from RBI, say, during December or January anytime during the fiscal, it may reflect in the lower interest costs and the lower WACC.

The next question is from the line of [indiscernible] individual investor. Please go ahead.

Yes. My questions pertain to the market price of the unit, which are around [indiscernible] at present, the NAV has fallen to INR 83 and if I look at your projected cash flows, the cash flows distributable cash flows are projected to fall to almost 30%, 35% compared to the current value. Clearly, the performance compared to any other [indiscernible] you will understand that investors like us are highly disappointed due to this poor performance. Earlier in this conversation, we're talking about the focus on acquisition, could I understand from 2021 when this was launched with much fanfare, how many number of sponsors and third-party assets have you actually evaluated with some approximate value?

As far as the -- what we have evaluated is something that cannot be disclosed. But yes, the transactions that have happened in the market, we have definitely tried to look at them. But if you look at not many transactions, otherwise also have happened in the sector, except for the transactions, which were a part of the ROFO of the other assets -- other InvIT.

Sir, even if you cannot disclose the number of [indiscernible], I don't know why because every other InvIT is disclosing these things. Could we at least know as investors how the number of such assets [indiscernible] 5, 6, 7, 10, how many in the last 3 years?

We have evaluated 3 such assets in the past.

In 3 years, you have evaluated 3 proposals, sir? Is that not a reflection on the kind of importance the [indiscernible] management [indiscernible] on improving investor value. Second question I have is, have you ever considered buyback, if not is the InvIT because I understand this business not allow currently under SEBI guidelines. Have you presented to SEBI, the first question. Second is, your sponsor, which is a government-owned organization. If it is not able to part with any assets to own InvIT, the least it could consider is buying them back from the market from the retail investors like us. If you look at the retail investors today 34% of the unitholders, and they have consistently been loyal to you, whereas the institutional investors have taken their money and gone, we are left holding an asset which is decreasing in value. Is there any possibility for a buyback that has been considered or can be considered to help us recover our value and also perhaps to improve the pricing of the unit?

On the buyback part, as far as the InVIT is concerned, you have rightly mentioned that this is currently not allowed as per the regulations. And as far as the sponsor call to undertake a buyback is concerned, I think we would not be in a position to speak on behalf of the sponsor. It's the sponsor's call. And as and when the opportunity arises, you may kindly discuss the same with the sponsor.

We do. But as a management, we expect the unitholder's interest to be taken care of, right? And we expect you to take those steps. Third is any plans to have representatives of the unitholders as a Director of new Board?

Would you like to answer?

No, I think there is already InvIT regulations on this behalf.

Yes.

I mean there are already regulations with respect to the unitholder nominee Director on the Board of the investor manager, which says that either individually or in consortium, any unitholders holding more than 10% can nominate a director on the Board of the Industrial Manager. Now kindly appreciate the fact that we have been writing to the unitholders to give the nominations [indiscernible] in the InvIT regulations. And being a CPSE, the nominations and appointment ultimately requires the approval of the central government. So in line with those guidelines, we have been writing to unitholders and acting accordingly, sir.

My only request as an individual investor, please try to take steps to protect our interest. We have suffered in the last 3 years. And we don't see any hope as of now based on even what you mentioned in this current call. Please look at our interest. Thank you.

Thank you very much. The next question is from the line of Nidhi Shah from ICICI Securities.

My question is basically on the new -- on the assets that we are planning to acquire. I understand that you are waiting for -- that you will put in for unitholder approval soon. So as per expectations, what is the time line by which once the approval comes in, we can expect to have these assets completely acquired? That is the first question.

Once the unitholders comes out, will surely within 1 month or within 1.5 months, we'll be able to do it. This financial year, we'll do it. In this financial year, we'll surely do it.

And with the acquisition of these assets, is it that we will be able to maintain the current DPU guidance that we have of INR 12 per unit over the next couple of years? Or is this going to give us incremental DPU where we can probably move to a 13, 14, 15 number?

As far as incremental part is concerned, there will be a nominal increase in NDCF. As you can see from our previous distribution, we declared INR 3 per unit distribution. And after that, INR 3 an average taxable dividend come out to be around INR 0.30. So it is around 12%. So now you realize the fact that this dividend, which is INR 0.30 dividend, which is currently going through corporate InvIT, which is 74% holding the 4 SPVs. What will happen that balance 26% will also start during this [indiscernible] InvIT in the form of dividend. And if you take this balance 26% rate, however, having said, we have to take either the additional loan to fund distribution, and that loan will have to be serviced. There will be interest cost attached to it, and there will be a capital repayment also. So loan repayment is to be done to the financials. So all in all, financials, there will be not any very significant gain. It's only from the control perspective, as you will be 100% owner for that now, which we already told of all the SPVs.

The next question is from the line of Vipul Kumar Shah from Sumangal Investment.

So my question is InvIT takes up battery storage projects, they take up greenfield renewable projects. So why we are not taking it? Are we lacking any management bandwidth? So what is the reason which is preventing us from taking such type of projects. And we strongly feel that sponsored Powergrid has totally abandoned us. Means the units were issued at INR 100 and now they are hovering around INR 85. And you are asking us to put this to power grid, I don't think this is -- this is a sign of good corporate governance on the part of Powergrid, which is India's premier utility. They have a responsibility towards unitholders. So I would like to clarify at these points.

Thank you for the question, Vipulji. As far as the other assets -- other sectors are concerned, we believe that InvIT as a structure as an instrument is supposed -- not supposed to bring in more risk even if you look at the regulations, they also permit only a very small portion of the overall asset value to be put into construction assets for the greenfield projects. So we, as the entire right from day 1, we have believed that we should look at operating assets. That is the first part. And we are continuously looking at operating assets, wherever the opportunity comes up. We are not close to any of these things. but such opportunities are coming up -- on your other question regarding the involvement and saying that Power Grid is a governance issue, I think Power Grid is a separate listed entity. So it would not be proper for us to comment anything on their behalf. However, rest assured, your views would be conveyed to the sponsor.

Yes. So of course, Power Grid is a separate entity, but it is your duty to convey the views of the minority shareholders and the value erosion which they have done to the minority shareholders, then who is responsible for?

No, sir. As I just mentioned, your views would adequately be conveyed to the sponsor. But I must just also add a little bit that we -- Power Grid or power PGInvIT as management setting here, we do not have a control on the way the price of the unit moves. It's driven by market movements and how they perceive different things. So we -- if you look at the performance of the InvIT with these assets, the performance has been in line and consistent to what was -- has been showcased right from the time the assets were takeover by this InvIT. So...

No, sir. I beg to differ because the unit is moving southward because it forces that distribution will be reduced substantially in the near future. It is as simple as that, sir. And management is not addressing that fundamental issue that how do you fill that gap.

Vipulji, your all the points are very well taken, but kindly appreciate the fact that all these facts were published in our offer document, final offer document and we can assure that whatever projections we gave in our offer documents filed with SEBI for our consumption and the regulatory consumptions are being maintained. It is only -- I mean look it from the perspective that we issued the units at 100, we already have paid more than 40, 40.50. So logically, the price should have been INR 60 or sub INR 60, but it is still 37 odd. So there is still premium. So debating that whether this swing -- I mean this product per se is not equity. We have to be very, very fundamentally clear about it. Why the price shot up from INR 100 to INR 140 is it was not something which was in our hand. And why the price has fallen from INR 100 to INR 87, INR 86, INR 85, INR 83, is also not in our hand. What is in our hands is maintaining the assets, maintaining the cash flow which we are doing. However, the point well taken for the growth perspective, there has not been any growth since '21 until '24, that's a fact. And rest assured we are seriously pursuing on the growth part. Hopefully, there will be something good to break to the unitholders in the times to come. That is only I can submit sir.

In addition to this...

That is only our expectation that take care of growth price will automatically move up. That is our only submission. And regarding your argument that we have received 40 -- so sir, you have to calculate interest also annual interest, it is more than 3 years. So you yourselves AAA rated still you are [indiscernible] INR 9. So that argument is not valid anyway. We essentially -- I don't want to be in the argument. Please look after growth, price will automatically recover. That's my only humble request, sir.

Vipulji, I just want to add into that. Really, yes, we are also concerned. Because I just want to add certain data, which is you have seen the NEP [indiscernible] plan, October 24. It is telling that INR 9 lakh crores are going to be invested in transmission sectors. So this is clear cut is that these are going to come, and it was also states are going to monetize their assets. These are also areas that in the transmission sector, also, there are areas where we all start -- we'll see that. We'll move into that. And of course, we are with you, and we will see that your points are well taken.

Thank you very much, sir. One small clarification. With the acquisition of 26% of this 4 SPVs, how much of this year will increase annually?

This reply we have already given last time also, there will be not major but nominal increase in NDCF that I can say.

Because in the previous question, I think the Chairman has given a very detailed reply to this.

If you want, we can repeat that.

The next question is from the line of Aniruddha Arondekar who is an individual investor.

Sir, when I look at your valuation report, the calculation for weighted average cost of capital mentions that on the internal rate [Technical Difficulty] 16. And then consider another post [Technical Difficulty] around 6.5%. So there is no clear discussion about [Technical Difficulty] this June. So can you throw light on this? Or is it -- I have to put a discussion to I think [indiscernible]. Another question small is [Technical Difficulty]

We didn't get your second question, regarding 26%. What is it, sir?

So [Technical Difficulty] acquisition approval [Technical Difficulty] approve the acquisition, what happens then?

Nothing, the deal will not go through [indiscernible]

Sorry, sir, in that case, we don't have to acquire this remaining [indiscernible], right?

Yes. We will not be able to acquire.

Okay. And regarding the first question?

Yes. I mean in the valuation report, I mean, the actual debt downstream from InvIT to the SPV is at the rate of 14.5%, this is the part of the restructuring exercise that has been done. But what value add has done, that it has given a notional cost of debt, post-tax 6.75 odd something.

Reduction tax of 25% we will get the benefit of [Technical Difficulty]

So the valuer generally calculates WACC in an idealistic manner. So this is while cost calculating the cost of equity also, it takes certain assumptions, which are in line with the market practices. But it may differ or they are subjective. The 2 persons may have 2-point of views regarding the same concept. In the same manner, the valuer assumed post-tax cost of debt of 6.23%. So this is what the valuer felt will be -- or could be the rate at which the SPVs can borrow.

Okay. But there is no other reason given why the jump from 13 points or something to 7.5 because [Technical Difficulty]. But there is no rationale is given because this [Technical Difficulty] affects our value, right? So I expect now a little bit more explanation why that jump because ultimately, it affects NAVs.

Yes. Just give me 1 minute, Anirudhji.

Okay.

So in the valuation report, it has written [indiscernible] in order to arrive at the fair value of the enterprise. We have considered this -- that means the cost of debt is 6.23 as post-tax cost of debt for the company as a reasonable basis in normal course of business without posing any advantage or disadvantage due to special arrangement. So what the valuer is saying that 14.5% is something for the restructuring part. So in a normal course of business basis what he has observed in the other kind of companies, the real cost of tax should be around this 6.23 post tax. So what kind of reasoning other than this do you want? I mean maybe we can connect off-line and maybe we can communicate your thought processes to the valuer.

So if I want to connect offline how [Technical Difficulty]

So there is a mail ID given on our website, investors. You can write over there and that mail that will be landing to our compliance officer, and he can accordingly arrange for a call or something.

Thank you very much. We will take that as the last question. I now hand the conference over to the management for closing comments.

Thank you very much, everybody, especially Mohit Kumar and your team. And also a heartful thanks to all the participants for joining us through this call. We generally value your active involvement in PGInvIT's earnings calls and we eagerly anticipate continued interactions with our investors through these calls. As PGInvIT, we remain committed to provide consistent, stable and visible returns to our valued unitholders. Once again, I, on behalf of my whole team, express our deep gratitude and anticipate that your ongoing support and confidence in our PGInvIT. Thank you very much.

Thank you very much. On behalf of ICICI Securities, that concludes this conference. Thank you for joining us, and you may now disconnect your lines.