SJVN Limited (SJVN) Earnings Call Transcript & Summary

Ladies and gentlemen, good day, and welcome to the SJVN Limited Q4 FY '24 Earnings Conference Call hosted by Elara Securities Private Limited. [Operator Instructions] Please note that this conference is being recorded. I now hand the conference over to Mr. Rupesh Sankhe from Elara Securities Private Limited. Thank you, and over to you, sir.

Good afternoon, everyone. On behalf of Elara Securities, we welcome you all for the Q4 FY '24 conference call of SJVN. I take this opportunity to welcome the management of SJVN represented by Mr. Sushil Sharma, Chairman and Managing Director. Congratulation and all the best sir, for new role. And we also have Mr. Akhil Singh, Director of Finance. We will begin the call with a brief overview by the management followed by Q&A session. I will now hand over the call to Sushil Sharma sir for his opening remarks. Over to you, sir.

Thank you. Thank you very much. A very good afternoon to all of you present here. I'm accompanied by Shri Akhileshwar Singh, Director of Finance of our company. I am extremely happy to share just with the latest commissioning of our 2 projects, Gujrai Solar project, 50-megawatt and Raghanesda Solar project 100-megawatt in quarter 4 of our financial year '23, '24. With this, our installed capacity stands at 2,377 megawatt. 50-megawatt Gujarat solar project situated in the state of Uttar Pradesh, this generate 107 million units of energy per annum. The power from this solar project is being sold through Uttar Pradesh Power Corporation Limited. We have also commissioned Raghanesda solar project, 100 megawatts in the state of Gujarat with the capacity to produce 253 million units of energy per annum. The power from this solar project is being sold to Gujarat Urja Vikas Nigam Limited. Thus, in terms of these latest additions, 150-megawatt more power has been added, which will add approximately INR 99 crores to our revenues per year. I'm happy to inform that in the month of March 2024, our honorable prime minister of India dedicated 4 of our projects, namely 75-megawatt Parasan Solar Power Project, 75-megawatt Gunrhah power project, 50-megawatt Gujrai solar power project and 60-megawatts Naitwar Mori hydro projects to the nation and also near the foundation stone of 3 projects of namely 382-megawatts Sunni Dam Hydro Electric project. 15 megawatt floating solar power project in the state of Himachal Pradesh. And 70-megawatt of solar project in the state of Assam. Also during quarter 4 of financial year 2023 and '24 as we went through its subsidiary has [ bagged ] 5 solar projects with a capacity of 2,252 megawatts through open competitive bidding process, giving you a brief review of our project. Projects as on date, 11 projects of 2,377 megawatts and 2 transmission lines are under operation, 4 hydro projects of 1,558 megawatt and 1 thermal power project of 1,320 megawatts and 12 solar projects of 2,048 megawatts are under construction. We are excited to inform that SJVN Green Energy Limited, SGL, a fully-owned subsidiary of SJVN has formed a joint venture named SGEL, Assam Renewal Energy Limited with Assam Power distribution company limited from execution of 1,000 megawatts renewable energy projects in Assam. The other JV with Mahagenco, Maharashtra State Power Generation Company Limited for acquisition of 5,000 megawatts of near energy projects is also under process of formation. As a first among PSUs, the season has also secured INR 10,000 crores construction line of credit facilities for its upcoming renewable energy projects from a group of leading domestic and international financial institutions. In the recent past, government of India has also launched PM Surya Ghar Muft Bijli Yojana, which aims to provide free electricity to INR 1 crore households in India. We are extremely happy to share that toward this scheme, SJVN has been allotted 3 states, namely Himachal Pradesh, Punjab and Arunachal Pradesh. SJVN has also been signed the responsibility of installation of rooftop solar system on government buildings and 18 ministries have also been allocated to us in this regard. You must -- also be aware that SJVN has been designated as 1 of the renewable energy implementing agencies via a ministry of new and renewable energy to [indiscernible] 500 gigawatt target by 2030. During financial 2023 and '24, SJVN has voted tenders of 9.9 gigawatt out of target given to us of 10 gigawatt capacity. The PPA and PSA's for 2, 360 megawatt has been -- has already been signed with developers and distribution companies. I'm also happy to share that SJVN is comforted with SCOR excellence award in institutional categories in January 2024 for the commitment of the company in the growth of power sector for rapid expansion and capacity addition journey. Also, SGEL, a wholly-owned subsidiary of SJVN won Prestigious Diamond Award for large-scale solar project developer of here in Uttar Pradesh in the PSC category during Uttar Pradesh annual solar awards held at SuryaCon, Luckhnow 2024 -- in February 2024. I once again repeat that SJVN is moving forward to achieve our vision of installing to 25,000 megawatt portfolio in the operation by 2030 and 50,000 megawatt by 2040. Thank you very much.

[Operator Instructions] The first question is from the line of Mohit Kumar from ICICI Securities.

Congratulations on a decent set of numbers.

Sorry to interrupt you, sir. May I request you to use the handset, please?

Is it better now? My first question is on the renewal portfolio. Can you just let us know what is the operating asset as of now? And what is the amount of projects which are on the pipeline? And any assets where you have won the bid?

Mr. Mohit, I'm Akhileshwar Singh, Director of Finance. Presently, you might be knowing that we are operating 4 individual project under SJVN. Khirvire 47.6 megawatts, Sadla 50-megawatt in Charanka, 5.6 megawatt and 1 power project that Nathpa Jhakri 1.3 megawatt. Besides that, we are putting 4 projects in SGEL, 75-megawatt Para-san project and 75-megawatts Gujrai project and 50-megawatt, Gurhah project, plus 100-megawatt Raghanesda...

What is the pipeline, sir?

Pipeline.

Pipeline, including the [ L1 ], sir.

Yes, yes. I'm giving you. Including under construction is 2,048 megawatt. Please go forward.

Hello. I think number is on the lower side? Is there isomer numbers must be around 3 to 4 gigawatt.

Yes, it is totally 7.2 gigawatt, out of that 2,048 megawatt is under construction and the balance is under the [indiscernible]. [indiscernible] 777 megawatt is under the process of [indiscernible].

Understood. What is the time line? What is the capacity of looking to install our commission in renewables in this fiscal and next fiscal?

Next, this fiscal and next fiscal. This total capacity of about 2,048-megawatt is coming in the '24, '25. And the balance quantity of 4,777 megawatt will be commissioned in the next fiscal, '25,'26.

Understood, sir. And sir, what is the plan to -- detail plan to monetize the -- your green energy SGEL?

In fact, we are planning to have some QIP in current year. And we are in the process of initiating the approval and thereafter, we will be almost 10% to 15% equity of SGEL will be offer to the public.

Understood. My last question is what is the timeline for Buxar and Nepal, has it changed? Or it is the same?

Regarding Buxar thermal project, one unit we are going to target in quarter 3 and the second unit in quarter 4. And regarding Nepal, this 900-megawatt will be in second quarter of this next year.

Is this FY '26, right sir?

October, November of 2025.

The next question is from the line of Apoorva Bahadur from Goldman Sachs.

You mentioned you're planning QIP of SGEL this year. So any sort of understanding that you can provide on what could be the size of this offering?

Almost 10% to 15%, up to maximum 20% we will be offering of the current equity in this year.

Okay. So any sense on the size in terms of the amount that you're thinking?

It will be determined that we are not in a position to tell you immediately.

Sure, sure. I understand. Sir, secondly, can you throw some light on the incentive in terms in this quarter? And also if there's any under recovery.

Incentive current total incentive is INR 182 crore. Out of that capacity, incentive is INR 157.71 crores and the UI is INR 24.48 crores. Last year, it was -- total incentive was INR 253.92 crore. Out of that capacity, incentive was INR 210.29 crores and UI was INR 43.63 crores. Now the incentive, in fact, after September, the government has put on restriction for operating the plant above 100%. Earlier we were operating the plant up to 110%. But now the restriction has been put what we can only operate during the peak season. And that's why there is some less income on the incentive. So for the current quarter is concerned, current quarter the total incentive is for Q1, INR 5 crore has debt in last year same Q1 was INR 24.45 crores.

Only INR 5 crores in this quarter?

Yes, yes.

And this is about the capacity?

Yes.

And sir, you mentioned about this.

Yeah. This capacity incentive during the quarter was INR 1.37 crores and UI was INR 3.66 crores. Last year capacity in [indiscernible] the first quarter was INR 25.36 crores for the quarter.

What was our -- [indiscernible] has been declared by from June to September. So that's why we have deepened this capacity challenges -- incentive.

Okay, sir. And you mentioned about this restriction which the government had put on operating the plan beyond 100%. So why was this the case? I mean, what's the rationale of the government for doing this?

This is the new regulations given by the CRC. It is applicable to all the partitions, all [ PCOs, hydro PCOs ].

Understood, sir. Sir, any under recovery that we witnessed this...

No. There's no under recovery, but we have not achieved the green energy. In that case, we have [ TMD ] INR 41 crores against the shortfall in the generation. And that we have built to the beneficiaries.

And sir, at an overall portfolio number what's the shortfall?

Shortfall in energy generation?

Demand energy generation.

Yeah. Energy, demand energy has mostly 8,533 million units, we have generated 8,131.38 million unit. Almost 250 million units is shortfall.

And sir, we have built this entire amount, so it's all recorded in revenue or...

It has been reported in the revenue. We have since INR 41 crores.

Understood, sir, sir. Sir later, there is no sort of requirement of approval from the commission for recovering this?

No, it is as per the regulation. It is as per the regulations.

The next question is from the line of Aniket Mittal from SBI Mutual Fund.

In the finance statement your...

[Operator Instructions].

I am on the handset, am i audible?

Yes, yes. Go ahead, but speak loud.

Sure. Sir, the depreciation and amortization line item seems to be a very big jump this quarter. Could you elaborate on that?

In fact, we have gone from the impairment of some of the assets like the Sadla power project Khirvire power projects and Charanka wind power project. [indiscernible] with the capital investment was not up to the level and that's why as per the index 36, we have gone for the impairment of the assets. And total INR 138.70 crores has been booked to the impairment.

Okay. Sir, could you explain the difference of the revenue not being commenced to our expectations, why is that?

The study for the -- in fact, if you go -- this value for this, mainly it is on account of the Sadla Wind power project. This tariff of the Sadla wind power project is INR 2.43 per unit, whereas during the period, it was commissioned in '18, '19, and the tariff was almost above INR 3. But somehow we were not having the PPA and we were compelled to sign the PPA with the Juvenile at the lower tariff. And that's why we have to go for the impairment loss. And after doing exercise, it is coming to INR 101 crore in the Sadla project. And it can be reverse in the next year. If situation will improve. And similarly, in Khirwire, the designed energy of the project was 85 million units, but it has not -- touched the energy. Maximum generation has come to 73 million units, and it is average generating per year 60 million units. That's due to less generation of the project during -- consistently during 5, 6 years. We have to take almost 10 years. You have to take the impairment. And that's why in Khirwire, it is coming to INR 34.88 crore.

Okay. The other question was around Buxar I understand earlier there were issues related to land acquisition that we were facing. What's the progress on that?

We have roughly said that we are facing -- we were facing land issues. The land issue is still going on, but for this -- making this our project commissioning, we have gone for alternative arrangements. So with those alternative arrangements, we are -- we will be capable to commission the project.

Sir, could you elaborate on that what are the alternative that is going for? What's the amount of land that we still need to acquire, if any?

Mainly this -- we were facing problem, this election's railway corridor and water corridor. For water corridor, government of Bihar has already given us the government land so that we can lay a pipeline on that government land. And for this railway corridor, we have taken land, some land from the railways and some land we are in the process of having agreement with some stakeholders. And with this -- this arrangement, we are able -- we will be able to run the project.

Okay. Okay. And lastly, sir, on the -- on the Arun-3 project, I think, timelines for them have kept on increasing. And I think there were some transmission-related issues that we are facing with. Could you elaborate a bit on that?

Transmission related issues, actually, we -- this only issue in transmission line is the land acquisition. And we are constantly in touch with the -- even higher offices of Nepal Ministry. We are also in touch with the -- even we have requested even Prime Minister of Nepal to help us in acquiring to expedite the land acquisition process. So with these help from Nepal government, I think we will be able to commissions us on the [ starfish ] line, well in time.

The next question is from the line of Santhosh Kumar [indiscernible], an individual investor.

You see in the last conference call, which has been in February, you were given several targets for Buxar June '24, for Arun-3, February '25 and for Bikaner 1,000-megawatt by December 2024. Now I want to know whether there has been any slippage in these targets? And what is the renewed expectation of commissioning?

Just answered these questions. Because of education by local farmers and disruption in our smart activities, this Buxar commissioning has been slipped to 3, 4 months from June. And because of challenge in dam area in this Arun-3 project. The commissioning target has slightly also slipped further. And in Bikaner projects, so we were facing some problem with the panels, local domestic panels. So with this -- now, I think the situation will improve by -- we'll be getting panel from June itself, and the commissioning will be done in quarter -- quarter 3 of this financial year of Bikaner 1,000 megawatts.

The next question is from the line of [ Arman ] from BlueSky Capital.

Am I audible?

Yes.

In the previous call, you told a target of in 2026 around 12,000 megawatts. Right now in beginning, you told about 2,000 around, we will be installing in this financial year and next financial year. So that comes to calculation around 6,500. So which are those projects which we are -- which will bring operative index in this financial year and next financial year. And why the gap before we have the target of 12,000 megawatts and now it's only coming up to 6,500 megawatt, what's the reason behind that?

In fact, [indiscernible] 1,000 megawatt to become a project and Arun-3 and [indiscernible] mainly because of the debt, we are lagging behind. But this slippage will be only for 5, 6 months. We will be covering almost 12,000 megawatt by pre-March '26.

Okay. And what are the reason that -- just a perspective is that we are seeing the appointment of CMD not for the years like for 4 years or 5 years has been going on for the 3 months. What is the reason for that? And when can we see a continuous standout for 5 years also for the CMD position?

In fact, the CMD post election has already been done. And in the meantime, this charge has been given for the 3 months, and we are expecting within 3 months, the regular appointment will be issued for the national power.

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

My question is regarding peak debt. You said we will reach 12,000 megawatts by March 2026. So at that time, what will be our peak debt.

Peak debt.

Can you repeat the question?

He is asking about by March '26, What will be our peak debt? [indiscernible].

Yes. We will be intimating -- separately after calculating our -- this debt provision.

No, my concern is it will be sizable amount and your project -- so many projects are facing delays in commissioning. So how will you service such a large debt when your -- current revenue base is relatively small in comparison to the projects SJVN undertaken.

In fact, during the transaction, we had to pay the interest only, not the repayment of the principal amount. And that we are having sufficient projection. We will share also, in fact, it was on our website also. And the minority project in the renewable sectors, we are commissioning in next year. And from that, the revenue generations constitute, we are not seeing any problem in servicing what we take.

So 1 small suggestion, sir. Why don't you put a detailed presentation where each project when it will be implemented, plus what will be the coming requirement for each project. So that will be really helpful.

In fact, if you require we'll share that, sharing this on the website for each project, it will be [indiscernible].

I think your peers already done it, project-wise schedule and -- so this is a suggestion, just think over it, sir.

Okay, okay. We'll think over.

And whom should I contact regarding this debt figure?

Pardon, pardon, can you repeat the question?

No, my question regarding debt you said, you will come separately on that. So I should take it with somebody in your finance department offline?

Okay. Okay. If I do so, and you can have my numbers compensates number, and you can put your questions so that I can get it replied by our finance department.

What's your good name, sir.

My name is Soumendra Das, Company Secretory.

The next question is from the line of Mohit Surana from Monarch Networth Capital Limited.