SJVN Limited (SJVN) Earnings Call Transcript & Summary

Ladies and gentlemen, good day, and welcome to conference call to discuss SJVN Limited Q2 FY '25 earnings, 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.

Yes. Good afternoon, everyone. On behalf of Elara Securities, we welcome you all for the Q2 FY '25 conference call of SJVN. I take this opportunity to welcome the management of SJVN represented by Mr. A.K. Singh, sir, Director of Finance; and Mr. Soumendra Das, Company Secretary. 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 Mr. A.K. Singh, sir, for opening remarks. Over to you, sir.

Yes, a very good afternoon to all of you. I am Akhileshwar Singh, Director of Finance, SJVN. I'm extremely happy to share some of major developments in quarter 2 for the financial year '24-'25. One of the major development in this quarter is that SJVN is conferred with the prestigious Navratna status by Department of Public Enterprises, Government of India. The prestigious recognition making company 25th Navratna of India marks a momentous milestone in the SJVN 36 years journey. Further, we have recently commissioned 90-megawatt Omkareshwar solar project on the 8th of August 2024 in the state of Madhya Pradesh with the capacity to generate 196 million units of energy per annum. The project is situated in Omkareshwar Floating Solar Park. Agreement for sale of power already signed with RUMSL, Rewa Ultra Mega Solar Limited, and MP Power Management Company Limited. Thus, in terms of latest addition in our operating asset, 90-megawatt more power has been added, which will add approximately INR 64 crore to our revenue per year. With the commissioning of this project, the total installed capacity of SJVN stands 2,466.50 million units. Another development is that the Cabinet Committee of Economic Affairs, chaired by Honorable Prime Minister of India, has approved the investment of INR 5,792.36 crores for 669-megawatt Lower Arun hydroelectric project in Nepal. The levelized tariff of the project will be INR 4.99 per unit on 2/8/24. The project will be implemented through SJVN Lower Arun Development Company Private Limited, a wholly owned subsidiary of SJVN, incorporated in Nepal. We are excited to inform that in the month of July, Government of Mizoram has allocated Darzo Lui 2,400-megawatt pump storage project to SJVN. That will be the first pump storage project that will be added in the portfolio of SJVN. Darzo Lui pump storage project with installed capacity of 2,400-megawatt is to be developed across Darzo Nallah, a tributary of the Tuipui River. MoU signed with the Government of Maharashtra on 26/9/24 to develop a 100-megawatt pump storage project and 505-megawatt floating solar project. Investment amounting of INR 48,000 crore. On the part of progress of project, another milestone achieved with the completion of hydro test of first unit spiral casing in Arun-3 HAP. As far as our solar project is concerned, supply of solar PV model for Bikaner solar plant, 1,000-megawatt, commenced in the month of July and 100% supply of models of 100-megawatt Punjab solar project has been received at site. Also, we are happy to highlight our power generation achievement in the second quarter. Our Nathpa Jhakri Power Project has achieved the highest ever quarterly generation of 3,450.98 million unit second quarter, surpassing previous highest record of 3,401.83 million unit quarter 2 in the financial year '21-'22. Rampur Hydro Power Station has achieved the highest ever quarterly generation of 955.616 million unit. Further, all the 3 hydropower plants, that is, Nathpa Jhakri, RHPS and Naitwar Mori, have achieved their highest generation in a single day ever since their commissioning. I am also happy to share some recent development in current quarter as well. Boiler light-up of Unit 1 of Buxar Thermal Project successfully achieved on 2nd October 2024. Boiler light-up of Unit 2 marks a significant milestone as it is the most important step that paves the way of unit synchronization and thereafter commercial operation of the unit. Project will generate 9,028 million unit -- 9,828 million units of energy, and 85% of this power will be utilized in the state of Bihar alone. MoU signed with the SPWD for widening of project road of Sunni Dam, HEP 382-megawatt on 21/10/24. Work includes widening of a stretch from Dhali to Khaira, including construction of bridge for an estimated cost of INR 70 crore. So giving a brief of our project as on day 12 of -- 12 projects of 2,467-megawatt and 2 transmission lines are under operation, 4 hydro projects of 1,558 megawatt, 1 thermal project of 1,320-megawatt and 11 solar projects of 1,958-megawatt are under construction. In the recent past, Government of India has launched PM Surya Ghar Muft Bijli Yojana, which aims to provide free electricity to 1 crore household in India. We are extremely happy to share that towards this scheme, SJVN has been allotted 3 states; Himachal Pradesh, Punjab and Arunachal Pradesh. SJVN has also been assigned the responsibility of installation of rooftop solar system on government building, and 18 ministries have been allocated to us in this regard. As far as progress is concerned, process of impanelment of vendors is underway. You must also be aware that SJVN has been listed as one of the renewable energy implementing agency by government of -- by Ministry of New and Renewable Energy to meet the 500-gigawatt target by 2030. In financial year '24-'25 for September ending quarter 2, we are ahead of target and achieved more than 100% target as SJVN has floated tender of 7.5 gigawatt. Overall, SJVN has floated tender of 18.6-gigawatt and awarded capacity of 8.1-gigawatt till date. I'm happy to share that SJVN comfort with the SJVN -- with the Pollution Control, Waist Management and Recycling Excellence Award during PCWR Summit and Awards '24, organized by Greentech Foundation at Guwahati, Assam on 27 July '24. I once again reiterate that SJVN is moving towards -- to achieve our vision of installing 25,000-megawatt portfolio in operation by 2030 and 50,000-megawatt by 2040. Thanks. Now, Rupesh, over to you.

[Operator Instructions] The first question comes from the line of [ Marshall ] from -- an individual investor.

My first submission is that like in the last conference also, we requested that while giving this notification of analyst intimation, Mr. Soumendra Das can also attach the link of the Diamond Pass Link also because it's very difficult to navigate through your website to find the link. So I'm sure that like this is a reminder and the next time, he will -- Mr. Soumendra Das will make sure that he will attach this Diamond link, this page also while informing about the intimation of the analyst conference like being done by all other listed companies.

Okay. Noted.

Number two, sir. Like we didn't find the presentation.

Okay.

So the presentation is uploaded in your SJVN website or in the BSE website?

No, no, we have not uploaded the presentation.

Okay. So this also like -- because like we have made a very huge investment in SJVN now, and SJVN itself is making huge investment in 1 gigawatt in terms of many like this power projects, so it is a humble request that please to make sure that in the next time before the analyst meeting conference call this presentation is uploaded so that it will be much easier for you people also to answer questions, and lesser questions will be asked because majority of the answers will be available within the PPT itself.

Okay. Soumendra Das has some questions to you.

That PPT in which form, sir?

Hello?

Sir, the results have been published in the website, sir. And what kind of PPT, sir, you want?

I'm not able to hear you, sir.

Sir, what sort of PPT, sir, you need? Accordingly, we'll have to prepare and we'll...

No, no, PPT, presentation, all listed companies when they are conducting this analyst conference, they always give the PPT, presentation, like -- so you can see announcement of any listed company, you will find presentation there.

Okay. Okay.

Because this is a very healthy development, like this will be transparent, and a lot of answers will be there itself.

Okay. Okay. And next time, definitely, we will do this thing.

So in the PPT, you can give -- you can delve in detail. For example, you have under construction project, you can go one by one, okay that this project is going to commission on so-and-so, this is so-and-so state. So you can explain more in details because now the company has -- is having 100s of projects. So it is very much required to give the PPT, sir.

Yes, sir. Yes, sir.

Sir, like my first question is that like you have many projects under construction like hydro, 4 projects; renewable, 10 projects; and thermal, 1 project. So can you please give us a timeline that when these projects are going to be commissioned?

Yes, yes. For '24-'25, Buxar Thermal Project, 660-megawatt, is expected to be commissioned by January '25. Bagodara 7 -- 35-megawatt will be commissioned by December '24.

This is what, again, thermal or hydro?

No, no. This is -- we are having only 1 thermal project.

Okay, okay. Fine. Okay, okay. No, because see, in thermal the capacity given is 1,320. The majority Phase I will be...

Yes. I'm talking about the -- for the financial year '24-'25.

Okay, okay. Next, sir?

I'm giving you the detail of 1,888-megawatt, which is expected to be commissioned by '24-'25.

Very good, sir.

In that, Buxar is 666-megawatt, the only thermal project. We are expecting by January first unit, by January '25. Then solar, Bagodara, 35-megawatt by December and 35-megawatt -- another 35-megawatt by March '25. Bikaner, 500-megawatt, by March '25, Bikaner Solar Project under CPSU. Omkareshwar, we have already commissioned. Then, PSPCL Punjab, 100-megawatt, we are expected to commission by December '24. BBMB 18-megawatt, we are expected to commission by March '25. GUVNL 100-megawatt by March '25. GUVNL 260-megawatt by March '25. And Jamui Solar Project, 75-megawatt, by January '25.

Sir, like just -- like a humble input...

We'll share the details.

No. What I'm saying that like many projects are being like targeted in March '25, so like I'm sure that like this will be commissioned within March, and it will not be further postponed to the next financial year, right?

Maybe some slight changes may be there because of the many problems during the execution stage. Some -- might be some shortfall or some slippage will be there.

Okay. No problem, sir. My -- connected to this question, sir, like now we have many projects in the -- especially in the solar, so the EPC construction is being done by our own in-house EPC wing or are you outsourcing it to the third-party for the...

We're not doing any EPC. Basically, our work is only for supervision and control, monitoring and supervision. We are outsourcing. In fact, we are awarding the contract in different forms, somewhere it is a land with everything like module or all the balance of plant, somewhere we are purchasing land and module also, and we are awarding balance of plant. But all EPC work had been awarded to the contractors.

But sir like here is like a major input I'm giving you, sir, here because I also come from the construction background because we have now got a 21-gigawatt under allotment and a 5-gigawatt almost under construction and like 2-gigawatt you already gone, okay. So 26-gigawatt we have. In 20-gigawatt, hopefully, I think you will be spending how much money, for example, maybe like about -- you'll be spending like more than INR 10,000 crore or even much beyond that. So what I'm saying, I think there is some scope for cost efficiency, either in terms of procurement or in terms of EPC also, because so many projects you are going to have, so maybe if you set up your own EPC team also, so maybe like 1 project they can do on a test basis, and thereafter, like it's O&M is very easy because I've also done solar projects in my career. So like, otherwise, if you give this O&M to this company, any company, for example, like who is doing solar, so it means like they are making money on our behalf, like at our cost. So what I'm saying because now your scale is too big, so -- and like in the future it will be even bigger, so it's high time that we start setting up -- we make the backward integration. Otherwise, like this -- otherwise, it's like a good amount of cost is being debited to the project, which is being paid to the contractor. So like we can have efficiency once we've set up like 1 small project, then it's cleaning, the O&M. The word is given O&M, but it's basically cleaning, so it's not a rocket science. So what I'm saying, instead of like going -- yes, instead of following only the method of just like being a supervisor, I think our cost of construction will be definitely at a higher level and our ROE and ROC will also get reduced. So it is very much required that like -- that the company creates an EPC division wherein 1 project can be set up by ourselves. And thereafter gradually it can increase the number of projects, number one. Definitely, O&M cost, which is going to pay for the next 25 years, can be substantially reduced by having our own, like this, O&M team, two. Number three, and now this is like a lot of companies are -- a lot of companies are coming in a mega way in terms of production of all the solar module, so there is a lot of scope lies in terms of like bargain in terms of purchase. So I'm sure that like you are looking all kinds of what I'm saying this better strategy.

Mr. Marshall, sorry to interrupt, please get these -- I request you to get back to the question queue for...

They didn't answer yet. Moderator, you are not following what I am asking. So far I gave only 2 inputs only...

Let me reply to you. Partly I agree with you, and we have considered -- we are considering all these options, but sometimes, and why I'm telling that partly I agree with you, see, we are public sector undertaking, our manpower cost is always higher in comparison to the cost of the manpower taken by the -- taken through contractor on hire basis because we have a lot of remuneration facility, which we cannot -- if we are giving it to all the employees or maintenance staff, it will be more costly. And in that case, we have plans to go -- to float another company with the private sector, et cetera, as a joint venture so that we can have a separate manpower for that company. It is under proposal stage. But having a government company, we have to take a lot of approval. And like what you have referred like Reliance or Adani, see their management can take any decision in the favor of the company, even by violating the procedure, et cetera. But here, we are having a lot of checks and balances, controls. There is CAG. There is a CVC. There is a CBI. So we cannot take decision like them to go start a work or start a new venture. We have to take also approval from DIPAM and NITI Aayog for floating a company or having a joint venture with private sector. But we are examining all these aspects, and we are also trying to do it, and we will be adopting whatever possible ways are there to maximize our profit.

Mr. Marshall seems to have disconnected at this moment. We will take the next question, which comes from the line of Vishal Periwal from Antique Stockbroking.

So I have first question. In terms of addition target for FY '25, '26, '27, can you just highlight like how the addition will look like?

'24-'25, we are planning to have 1,800-megawatt almost in '24-'25; plus '25-'26, it will be 6,357-megawatt. And '26-'27, another 3,000-megawatt will be added, plus '27-'28, 1,700-megawatt.

Okay. And then sir, in this year, what is the addition that we have done in the first half?

In this year, we are planning to have -- in fact, I have already replied Buxar, 666-megawatt, 1 unit; Bagodara, 70 megawatt; and Bikaner, 500 megawatt. Omkareshwar, already we have added. PSPCL and Punjab, 100 megawatt, plus BBNB, 1,800 megawatts, and almost 400-megawatt in -- 360-megawatt in Gujarat and 75-megawatt in Bihar.

Sir, in the first half, what is the addition that we have done, in the first half?

First half additions, we have added Omkareshwar 90-megawatt.

90-megawatt in the first half?

Yes.

Okay. So I think on capacity addition, earlier in the quarter 1, we have guided we'll do something like 2.6-odd gigawatt in this year. So it looks like -- I mean like a couple of projects, they are moving in the renewable...

Yes. We are expecting 1.8-gigawatt this year.

Okay. Got it, sir. And maybe 1 last thing. So, I think, addition has not been much, so what explains the rise in or the increase in the interest cost on a quarter-quarter basis this quarter or maybe Y-on-Y also if you can see there is an increase?

In fact, the interest costs have been Naitwar Mori, that has come under operation.

Okay. So that is the only element or any securitization-related expense that is getting booked in P&L? I mean anything on that sort that is coming.

No, I don't think it is much. There's not much expense on the securitization. Only interest cost is there.

Okay. So if one has to understand on a quarterly basis, like in this quarter, we have -- did roughly like [Foreign Language] interest cost, so can this be a similar number in the quarters to come or...

Yes, yes, almost it will be a similar number.

Okay. Okay. And this, Naitwar Mori, when this was commissioned, sir?

In fact, the -- November '23 it was commissioned.

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

Just a couple of questions. One, in the report for this quarter that is published, there's a mention of Devsari Hydroelectric Project wherein we have spent INR 250 crores, and it has been put on hold. Can you please elaborate on what's the status of this? And how -- I mean, can there be a recovery of this amount? My second question is, if you can just give me a status on the Arun-3, is there a delay? Or when can we expect the project to get commissioned?

In fact, Devsari project, there is a hold by Environment Committee and by Supreme Court, but Supreme Court has stopped construction on project under Ganga Basin, but Devsari project is not listed in that list. But somehow, Government of India has not permitted as to go for the construction. But now we have filed a petition with the help of Government of India with the Supreme Court to allow us to start construction. And we are hopeful that very soon we are getting the nod of the Supreme Court to start the construction. And Arun-3, we are expecting to commission by September '25.

September '25, understood. Sir, just 1 last question. There is a small -- very small amount of noncontrolling interest in our results this time. Can you just give some insights on how this noncontrolling interest is coming from?

We have formed a joint venture with the Assam government, APDCL, Assam Power Distribution Company, and 49% share -- we are having 51% equity in that company and Assam -- APDCL is having 49%, so that 49% share of them is noncontrolling interest.

Understood. Sir, any CapEx guidance for the next 3 years on a year-wise?