The Tata Power Company Limited (500400) Earnings Call Transcript & Summary

Ladies and gentlemen, good day, and welcome to The Tata Power Q1 FY '21 Earnings Conference Call. [Operator Instructions] Please note that this conference is being recorded. Today, we have Mr. Praveer Sinha, CEO and MD, Tata Power; and Mr. Ramesh Subramanyam, CFO, Tata Power, with us on the call. I now hand the conference over to Mr. Praveer Sinha. Thank you, and over to you, sir.

Thank you. Good evening, everyone, and welcome to the earnings call. I hope all of you are safe and secure. The last few months, we have witnessed a wide spread impact due to pandemic across various businesses, and it has impacted the power sector also, wherein we saw that the demand reduced by more than 25% in the month of April and May as the country went into lockdown. However, we have seen the revival in demand as lockdown restrictions were relax in later part of May and then in June. And in July, we actually see the generation pick up to the same level as previous year. Through our dedicated workforce and very robust and resilient processes and planning, we have been able to operate within Tata Power, all our assets seamlessly, and have continued to provide uninterrupted supply of power [ condition ]. But the distribution area by [indiscernible] has also fell. There has been considerable recovery and demands are now close to the pre-COVID levels. We have also done an excellent job in taking over the management of the Central Odisha Distribution, which is our JV with Odisha Government, TP Central Odisha Distribution company during the pandemic period. And on first of June, this [indiscernible] was taken over by Tata Power. This has 2.7 million consumers. And with this, we have become a 5.3 million consumer utility, becoming one of the largest distribution company in the country. We have been enthusiastically welcomed by all our customers and also the employees and various stakeholders in Odisha, and they all feel very confident that together, we will be able to deliver a performance as good as we have been doing in Delhi and Mumbai. In our renewables assets too, we saw higher availability as we took over operational control of some of these wind sites and improved availability of our solar sites, too. However, due to the delayed start of the wind season, generation was impacted in the month of June. We do see a subdued wind pattern this season. The major -- the major impact of COVID-19 was [indiscernible] in the EPC business. Solar EPC projects have got deferred, leading to lower revenue booking during this quarter. Similarly, Tata projects has experienced a significant decline in revenue and the profit of the EPC business, that is both the solar and the EPC business for Tata projects have seen a reduction in profit by nearly INR 86 crores compared to Q1 of last year. Despite the reduction of INR 86 crore of profit in the TP business and losses and another losses of INR 31 crores in [ S2 ] in the first month of takeover, we have still clocked a 10% growth in the reported PAT to INR 268 crore this year compared to last year. This has been driven by the consistent performance across all businesses, strong performance in [indiscernible] and significantly lower losses in CGPL and reduction in interest costs. With nearly 60% of our capital employed in regulated business or with assured stable returns, our returns have been largely protected from this demand slowdown. As you would see from our results, most of the businesses have delivered consistent performance with significant improvement coming from Mundra where losses have been significantly reduced, which has been, of course, supported by lower coal prices, higher coal blending and better [ for housing ] and logistics management. Due to the fuel [indiscernible] being under recovery has been lower. And this year, it is at [INR 0. 46 ] and it was the same level as was last year. The consolidated revenue stood at INR 6,671 crore compared to INR 7,567 crore in previous year, mainly driven by lower generation in conventional assets, lower profit share costs for distribution business, leading to lower revenues, offset by capacity additions in renewables. The consolidated EBITDA in this quarter was INR 2,037 crore mainly driven by improved performance in CGPS. With lower coal prices in GTC businesses affected the profit from our joint ventures in this quarter, despite which our underlying business EBITDA came in at a healthy INR 2,214 crore in this quarter. During this quarter, the company won bids of 345 megawatts solar projects. We have also recently won another bid of 370 megawatts for which formal letter of award is awaited. With this, the company's solar project pipeline will grow to 1,515 megawatts which will take our renewable portfolio to 4.1 gigawatts. Our existing solar assets improved there -- have improved their availability from 99.3% last year in the same quarter to 99.8%. And wind assets have improved their availability from 93.3% to 96.5% this quarter. Similarly, solar EPC business continued its rapid growth with total order book now at almost INR 8,700 crore, with nearly 2 gigawatts of large projects. The slippages in project execution during the quarter is expected to [ recover ] in the later part of the year, and we have put in place our plans for ramping up the execution during the year. We expect to cover up the delays and achieve our FY '21 revenue target, [ our ] EPC business. We also welcome the policy -- the government policy of local manufacturing, which is going to give us significant scaling up opportunities of renewable business because of the domestic manufacturing in India. TPSSL will support this [ Self Reliance ] policy and is already expanding its cell and module manufacturing capacity to be increased in this year. Let me now move to the divestment process and debt. As all of you are aware, we completed the transaction for sale of [ ships ] during the COVID period and have now received the full consideration. By end of June, we had received USD 350 million and the balance of the total consideration of USD 212.76 million was received in July. The preferential issue of equity shares of Tata Sons was approved by the shareholders in the AGM, and we expect to receive INR 2,600 crores in this fee. Both these amounts will be used for debt reduction. As you would have seen, the net debt has already reduced from INR 43,578 crore at end of March to INR 40,099 crore by end of this quarter. We are also working on monetization of other assets, which we expect to realize within this financial year. Work on creation of InvIT for our renewable assets has progressed well since our Board meeting approved it on 2nd July, and we are on course to sign the nonbinding agreement by end of this quarter. We are confident of completing this restructuring by this year. Creation of InvIT will not only allow us upfronting future cash flows at lower cost of capital but also create a platform for future growth. We intend to use this structure for significant scale-up of our renewable portfolio. While we work on reduction of debt through divestment and restructuring, it is heartening to note that existing businesses have generated strong cash flows to support CapEx as well as debt repayment. So this robust framework, we have been able to reduce our debt-to-equity to 1.81x versus 2.28 a year back, and [ net debt to underlying EBITDA ] from 5.46 to 4.44 during the same period. Let me now move to Mundra. The under recovery with falling coal prices have reduced over the period with the various initiatives undertaken. Loss funding has been also brought down. While we are still working with the [ Proferos ] to resolve the non funding issue of PPA amendment, which has delayed the resolution, the company continues to work on all options to optimize its cost. As you are aware, the government head of Gujarat has moved our case from HPC framework to the [ GRC ] approved framework, which they adopted in case of one of the other power companies in Gujarat. We are in discussions with the states on securing IND approval for the compulsory tariff network framework and hope that all states take a pragmatic view in resolving this issue in benefit of all the stakeholders. In fact, the Maharashtra government has approved the proposal for PPA amendment in line with [ THP's ] direction. And we do hope that the other states will also follow some. Update on Prayagraj and [ CESU ]. Prayagraj continued its strong operational performance, achieving a 78% availability in last quarter. It is now third in the [ UP Medidata defat ] and is a critical asset for servicing demand in UP. While receivables continue to be a challenge, we expect a significant portion that gets liquidated from PFC-REC package, which has been provided by government of India. We have now completed 2 months since we took over [ K2 ] from and through [ PCOD ], we have made considerable progress on rolling initiatives to improve operational performance and bring better efficiencies and better customer service. Work on meter replacement has been kicked off. Similarly, all the other works relating to ERP new billing and collection softwares are going on. And we do expect that in next 1 to 2 quarters, many of these new initiatives will start showing results. The next one year will be very interesting, and we are confident that with the support of our employees from CESU, our employees from [ TPCODL ] and the people of Odisha, we'll be able to replicate the [ deli ] success in Odisha too. I now turn towards the restructuring of businesses that is being proposed. Our decision has been taken on restructuring, which has been announced today. Continuing further efforts with our intent to strengthen the balance sheet, the Board has approved scheme of merger of TPCL, Tata Power Solar and Af-taab with Tata Power, subject to regulatory approvals. This amalgamation, subject to necessary approvals, is part of the strategic initiative to slip the company and the group holding structure and a broader plan to set the company for future growth through fiscal consolidation. The merger aims to achieve the long term objective by facilitating efficient use of cash and is also likely to improve the ability of the project in getting funding to sustain its operation due to their financial position. Despite being one of the most challenging quarters because of COVID, Tata Power has been able to deliver on some of the significant promises it has made on strengthening the balance sheet. We are excited as we set ourselves ready for Tata Power 2.0 journey. At the same time -- as the time available on an earnings call is short, and the focus is more on the results, we wanted to share with all of you in more detail the strategies for turning around the company. Given the [ COVID time ] we now live in, we have now organized a virtual analyst meet on 19th August to discuss the same. We'll be able to share with you more color on our strategy and growth plans during the meet. Our IR team will share the details of the meet shortly. I now hand over the call to Raymond for question and answer. My colleague, Ramesh Subramanyam, the CFO; and my other senior colleagues are here to respond to your questions. Thank you.

[Operator Instructions] The first question is from the line of Puneet Gulati from HSBC.

So my first question is on Mundra. So you said that there is a progress in Maharashtra side. Can you give us an update on what's happening with Gujarat and some of the other [ things ]?

As far as Gujarat is concerned, I mentioned to you that they have moved from HPC to the GRC order, which was passed sometime back. For another in [ coated ] coal-based plant. And there has been certain recommendations of GRC. We are in discussions with the Gujarat government to understand what will be the implication of these on CGPL. And hopefully, we should be able to come to an arrangement so that the amendment of the PPA can be agreed. Maharashtra, of course, has approved as per the HPC. So based on that, we will be picking up with the other [indiscernible] sales also.

But can you not start aggregating the PPA now? Is it there some hurdle in segregation of [ PPA ]?

The principal, of course, as you know, the government had also indicated that there's legal reason for separate PPAs. Right now, the [ Mark government ], as it is approved, I think it will all happen at GRC level. So we have to first kind of finalize the PPA, which is our comment. And then I think we can -- from there, we can handle it.

And we expect the payment?

Well, it depends on now when we have, of course, with our comment for requisite changes in the PPA. So let's see what -- when that happens. Because of profit and other situations, the governments are focused on other issues. So we are hoping that will be taken out.

Okay. Okay. My second question is on CESU. So within a month, there was an EBITDA loss of INR 36 crores. Is that how one should think about it? Or if you can give more color on what is the project of profitability for [ 10 ]?

So our advice is, I think we see such a large distribution company. I think we can't come into conclusions in one month. This will have to run for 2 quarters before we get a handle on the trajectory. So I would say that we should avoid discussing really stable financial numbers until it get stabilized. And so I think right now very quick in an interim stage.

Okay. But at least for the next 2 quarters, is that the run rate one should assume?

Again, you're wanting to quote numbers. The point is, it all depends on how quickly work start and how quickly our CapEx program and improvement programs take shape. So what we can do is probably in September we could report how that is shaping up. And it's too early right now to really speak about run rate.

Sure. Sure. My last question is on Prayagraj. Is there any further capital infusion requirement from our side? And how would we earn-out of this business? So when does the dividend gets paid out and what are the other payments that we intend to receive [ on as ] much?

We receive payments in 2 different ways. On our investments, which is in the nature of debt, we get returns as well as we will start to get dividend [indiscernible]. So right now in the third stream we have is a fee because we are also the asset managers. So what you will see in the sort of our numbers is a combination of a fee and the interest that we get on the debt instrument that we have put. So to your first answer -- first question, CapEx, that the company looks like in good shape to take care of its CapEx, although we had planned for some amount going forward, especially on SGD and other fees. So we will -- we have allocated some funds for that. The company is doing very well. So they might even do it themselves.

So they have some receivable issues, which is why the very -- will you need to infuse further? Or do you think they can sustain on their own?

I think they should be able to sustain. And there -- even their recoveries are now getting done. The company is now in the list of top list of [ April ] we any figure from the scheme.

Okay. So just comment a bit. On your INR 24 crore [ CAD ] for your share on displaying power, how much has the cash actually flowed in?

It was a result of converting to that, obviously. It's a matter of probably -- I don't know the repayments have been made out of.

Okay. Sir, because the dividend will probably come later, the debt [indiscernible].

[indiscernible] we affirm the [indiscernible] there, right? We can do interim dividend. And the fee, of course, is a regular one. So the annual fee is a regular one.

The next question is from the line of Sumit Kishore from JPMorgan.

Reduction in net debt has indeed step up in the right direction. The first question I have is, could you elaborate on the timelines, the bottlenecks, declaring size of the effects that will be injected including InvIT? And what state are you looking to operate float in renewable projects for the InvIT?

So Sumit [indiscernible], as you know, the rough size of the assets we have is close to INR 20,000 crores. And that's the business roughly plus/minus whatever you take for valuations. So -- and all of these assets would land up into InvIT in the next few -- a couple of quarters. And as to your question on what is our stake in that. So one of our objectives also is that we would ultimately deconsolidate our debt. So therefore, as you know, it would be probably less than 50%, but will not be much less than [ 30% ], probably thereabouts. So the rest would of course be investor. That's the plan currently.

And so because it would have the operational projects?

Yes.

And the pipeline will get transferred to the?

Today, we are close to 4 gigawatts, including 5x. Our operational assets today are about 2,650 megawatts. That will go. And by the time, [indiscernible] invest, there is a certain qualification criteria for what is operational and what stage some assets can go in the development in [ advantage ]. So maybe some will go in that 2,605 megawatt business in Q2.

So as of date, you would say that against 2,650 megawatt, how much debt is [ taking ] on your book, for the operational asset?

INR 11,000 crores.

Okay. So near [ INR 118 million ] addition in your renewable slide, INR 110 billion is related to the operational level?

So there is projected and also for this. So we can't tell you the date and the kind of transfer.

Okay. I understand.

It also had internal debt also.

Okay. Okay. Sir, the second question is in relation to [ CTFS ], you mentioned in your opening remarks, that the cell and module manufacturing capacity will be expanded. So could you talk about what it is currently for cells and module separately? And what is the plan in terms of increasing it this year? And given the opportunity sustainably [indiscernible] figures roadmap.

No. So we haven't got our plans proved yet, but the plan is in place. We have an existing plant, about 400 megawatts of cell and module.

And it is already under the implementation. So the plan is from cell 400 megawatts, it will go to 530. And the module is 380 to 530. The exact numbers that Rahul will share with you, but it's in that range, and it is under improvement.

That is the expansion. We are talking about the manufacturing -- new manufacturing.

No. This is expansion of...

You're talking about the expansion of the existing assets?

Yes, yes.

Okay. So then you're right.

Okay. And on the solar EPC business, the INR 8,700 odd crore for the book that you have, I mean, how do we look at the profitability of the EPC book? I mean you [indiscernible] in some of the COVID impacts, but how do we look at this?

Well, they have been -- the EPC businesses are launched [indiscernible] nowadays already double digits. Certainly, it's a lower number, but we will not give you the exact number. All we can say is that [ always ] the issues are leading to [ vote ] time overruns. And these time overruns are pretty much taken care of by the [ post major ] process and also the specific notifications from government granting extra time for these projects. So we don't see them seriously affecting the profitability in timing of the project completion.

Got it. And just the last question, I found in your presentation that your working capital has actually reduced in a quarter which was such a disrupted one. And this is something that we can find that [indiscernible] for [ SBS ] has gone up meaningfully. So what is really -- what is really the driver for that reduction in working capital?

First is it -- [indiscernible] collections, okay, number one. Number two, we have also done level of factoring and -- but remember that these are all not factoring for the just selling receivables, they are also getting collected. So these are already crossing one of the cycles. So in that sense, that is one [indiscernible] in many cases, have also helped us in improving our working capital. So for our whole purchase and other things, we have been able to secure very good terms, and that has also helped. Yes, I think the combination of all these things that are actually -- have excellent control over inventory buildup. So all these initiatives we have taken. And truly, receivables have been surprising as [ a sound ] but it is a fact that we have done pretty well in collecting from many of our customers in time.

The next question is from the line of Girish Achhipalia from Morgan Stanley.

Sir, my question is around the merger of 3 subsidiaries. So I think the benefit of lower tax rate will be enjoyed. I think that hopefully, one of the big things. If you could please help us in terms of time line as to how much time will it take? And what kind of consolidated taxes, I mean, for the stand-alone entity, would you be able to save on? And also are there any other financial benefits apart from rating -- credit rating benefit that you've spoken about on your presentation?

So all the things that you mentioned could happen. But at this point of time, to exactly pinpoint all the numbers would also depend on how the profitability of the stand-alone developed and what would be the taxation-related issues that we can't quantify takeaway. But yes, it's the overall physical optimization exercise. Plus we also remember that we are being the SEB, which is not doing well. The borrowing rates are also higher, which we believe will optimize by this merger because the balance sheet support will be there. And whatever fiscal savings can come in. And of course, there's a lot of compliance synergy and administered synergy have come. So -- but all the factors that you mentioned are to be the drivers for this.

Is this a timeline your [ showing ] how this is going to proceed? And the second question I had was on the receivable side you. Is it -- are you able to quantify like what was the receivable number roughly at the end of Q1? And how do you see it proceeding in future, which is, I would say, receivable collections should be better in due to from these liquidity measures also coming through at this moment?

Your first question you asked is about time line. Setting the time line a very, very soon, we're refining the schemes in the NCLT. So it will be a process which we -- which will be really driven at from our side. Now for the NCLT process, as you know, it's not in our hands. So timing is not -- we are trying to do is invest[indiscernible], for sure, our target is that subject to court for getting the approvals. On -- your second question was on receivables.

So what particularly you wanted to know over receivable?

If you could quantify the absolute number at the end of Q1? And how do you think it should proceed by the end of Q2, given that, I mean, some liquidity infusion measures would be in at discount level?

So in June end, our total consolidated receivables across the company is about INR 1,900 crores. And if your question is, how is it likely to proceed? Given the last 4, 5 months of activity, I don't see a major swing either way. It could lie in a similar level.

The next question is from the line of Lavina Quadros from Jefferies.

Just 2 questions from mine. One is on the Arutmin coal mine, what -- how much of the proceeds was left yet to be received? That's question one. Question 2 on Mundra, just to understand, what we understand is the Gujarat government has also said that they will not be higher than what you have [ to see to say ] for offtake from Mundra. Is that a little bit of a setback? Or how is it that we are not planning to handle that aspect? I mean, will you need all the states to therefore, agree to a certain price? Or will you still look at segregating quickly?

So I missed the second part of the question. Can you just repeat it?

No. I mean are you viewing this as a bit of a setback? Is the Gujarat government just saying that will not be more higher price than any other state. Therefore, will you need all the states to have a buy-in all the price? Or will you still be able to go forward and segregate the PPA? Just want to understand how you're looking at it.

Okay. So let me handle your second question first. So the -- Gujarat is not saying we'll not give you a higher price. What they stated, it should not be a situation that we give you an increase and you sell to somebody else at a lower price. So which could mean that if 2 of the major states, [indiscernible] they agree to [ constand ], which they have today. Barring the technicalities of the result that [indiscernible] order, which Mr. Sinha mentioned. Then the other states, their choice whether they want to take or not. And we will take a stand depending on their feedback. [Technical Difficulty]

We seem to have lost the line for the management. Please stay connected while we reconnect the management. Over to you, sir.

Lavina, did you hear the answers, and did you get your answer or we lost you on there?

Sir, I think your line got cut at that time. If you could please with me. I guess, sir, your line had gotten cut at the time. If you could please repeat.

Your first question was on Arutmin. We've collected about INR 220 million. And we continue to collect in every month. Also, the collection also accelerates or decelerates depending on the coal price movement, which has a lot to do with the surplus that we generated with our founder party. But it is moving steadily. Your second question on Gujarat, that what is the meaning of this that everybody should have the same tariff. The answer to that question is that it always saying is that once we agree to give you a certain increase in tariffs. It should not happen that you go ahead and sell some other state in a lower tariff. So for us, that's not a big issue. You asked whether that is -- that should be a very big negative. No. It is always understood that [ Ratan Aastra ] is there on board. Then the other states are likely to support us. If they don't support us, we have alternatives, which we will work on once we go to CRC after we [indiscernible].

The next question is from the line of Abhishek Puri from Axis Capital.

Congratulations on one good set of numbers, sir. A couple questions. One is on a –- the [indiscernible]. You had mentioned that one should not take this INR 360 million as a base for the current month as you see the customer launch. What could we look at as an overall fiscal year? I mean in your budget, what should be the PMD losses or the projection that we should look forward to? Have you gained a 3-year number last time?

So Abhishek, what we are saying is that today, we are taking -- we have taken charge, we're taking stock. I think, come probably the next quarterly results, we've been a [indiscernible] position to articulate what could be the target. So this is too earlier start. And also at the time in [indiscernible], et cetera. So and generally, these -- we are far more optimistic than we were. So the only issue is that I don't think this is any point in giving guidance right now. I think next quarter, we'll be able to give a much better slide.

Okay. And in relation to this, there is some new [indiscernible]. The vesting order being challenged by kind of par as well in terms of giving up easier loss [indiscernible] versus what was the independent [indiscernible]. Is that -- this item correct or we have not seen any tariff order on the side?

No, nothing. I think it's not that period. I think we have asked for certain clarification because the conditions at the time of takeover and the time of the grid, they were slightly different. So certain questions have been asked, we don't see this as a major issue. I think it's a little bit of in too much have been made in the media on that issue.

Okay. Okay. I think the issue has been that [ Arista ] had difficult experiences in couple of other players historically. So that's why we should do [indiscernible] realize it.

I agree. But I don't think that's the feedback we have. Things are pretty much going as the plan and we are working together very closely with the government.

Okay. Great. So 2 more questions. One, even for including investments, I believe it was a holdco for telecom shares only. Does it have any further business? And what is the value wide in giving them together.

Now more or less, nothing is there. Some small investment there and it's not really work much. So it's pretty much in operating to that sense. There is no other operation there.

Okay. Okay. So you are more like extinguishing the entity.

Exactly, exactly, which we found as a better extinguisher than any other manner.

Understood. And lastly, on the discount, I see that the numbers that you have given in [ penthouses ] distribution in your presentation. [indiscernible], given that your counting the [indiscernible] in the mobile transmission business has actually seen a significant increase in their distribution losses. And similarly, if you look at foreign power results in [indiscernible] given beyond even they are seeing more significant increase in CMD markets. So how did we manage to keep exchange in such a radar?

First of all, [indiscernible] through digital collections. So during the period, we reached out to all our customers and gave them the option for digital collection. And during period, nearly 75%, the digital collection crossed 91%. So I think, generally, the collection was good. And we're aware that there were some delays. All those are being collected in the month of July. So I think, as I mentioned to you, the consumption has also improved. And so also the collection has improved in the last 2 months.

I think even in -- I would say that, we actually think there is in [indiscernible] in that case also because for us, but you are seeing you're comparing with the other, that's the issue. We've also had pressure, but not such a high pressure. So you well managed it, I think that's the reason you should give it to us.

Yes. Just to understand it a little better, in terms of commercial and industrial load. How much would that be in your Mumbai distribution and [indiscernible] distribution? There are 2 large circles. And there, you see maximum reduction in volumes and the mix change of how the company is [indiscernible] the residential has increased and that investment in [indiscernible] has increased?

Absolutely right. That trend is exactly right. I don't have the ready numbers for P&I reduction versus consumer increase, but this trend is clearly noticed. And but of course, sales, [indiscernible] sales have come down, okay? That's clear. The collections have stood up, but sales have come down, and that is reflected entirely by C&I segment. So some of the cash that has happened from the domestic consumer segment. But we can give you the numbers. We don't normally refer to [indiscernible] whether it will be up, so we don't carry it here. But we can share with you that.

The next question is from the line of Swarnim Maheshwari from Edelweiss.

Sir, so first question is -- I mean, sorry to hop on this. But I mean, on the working capital reduction that we see, I see that majority of that reduction is actually coming from [ CPP ] of about [INR 150-odd cores ]. So is this kind of a temporary phenomenon? Or -- I mean, I do take your point on the working capital reduction from the distribution businesses that is likely to sustain in everything. But how about this booking capital reduction in CGPL? How is that working on?

So this is both basically excellent supply set, okay? So now this has been working. But this is not very long before that we tied up. And so as new [indiscernible] happen increases, working capital is getting stretched. So well, this is a proper arrangement of or [indiscernible] for -- so whether it will sustain it, we don't see any reason why it would not sustain. But incrementally, going forward, every quarter, I want it filled up for the maximum capacity of [indiscernible], of course, incrementally, it will stop at companies, right? So it's only because of last year versus this year, previous quarter versus this quarter, you will see an improvement. But sure, it will reach the saturation mix.

Fair enough. Fair enough, fair enough. Got it. Sir, the second one is actually on the CapEx side. Now in your last commentary, you did mention that the CapEx is likely to be [ distracted ] to the cash flow generation. And at what is the number that we are actually looking at for FY '21 and [indiscernible]? And is it that majority of it was renewable or now incremental CapEx and what you are planning on the CESU side also?

Yes. So first is we have close to 650 megawatts of under construction renewable assets, for which CapEx will start to happen in the coming quarters. That is one clear that's about INR 3,000 crores of CapEx that is going to happen in the next 18 to 24 months, right? Then the CESU, of course, will happen. So CESU also at least INR 400 crores to INR 500 crores we are seeing in the 6 to 12 months. Mumbai transmission will happen. Mobile distribution, every distribution will also -- normally, there'sa INR 300 minimum, INR 350 crores to INR 450 crores of CapEx that happens. So we have CapEx wind up. In terms of staggering, we are trying to just ensure that -- we are ensuring that we also run along with cash generation. So that's the cycling challenge that we have set for us. And of course, in the next year or so, we have regulatory CapEx of over INR 3,500 crores coming from [indiscernible] and other stuff, which will happen from next year onwards, which is, again, fixed return Capex. So CapEx is clearly planned for the next 24 months, and it will start from now on.

Sorry, the INR 3,500 crores of regulatory CapEx from FX will decrease, is that just on a fact, is it true or [indiscernible] point, will it stand over 2 or 3 years?

Sorry, say that again.

So you mentioned that there is a regulatory CapEx coming starting from FX will decrease, that was about INR 3,500 crores.

Yes.

So that is just in FY '22 itself?

No, no, it's '22, '23 and '24. The CapEx is spread over nearly 3 years. That is significantly for all these environment on [indiscernible].

Got it. Got it. Sir, just in the opening remarks, Praveer was mentioning that there is about $300 million of divestment that has come in July 20. Sorry, this was with respect to our shipping assets?

Yes. [indiscernible]. Yes. [indiscernible] So total price was $214 million, out of it $150 million came in June, the balance in [indiscernible] July.

So -- okay. So this number will -- it is still to be reflected in our net cash position?

Yes, yes. $17 million is still to be reflected.

The next question is from the line of Murtuza Arsiwalla from Kotak Securities.

A couple of questions from my side. You put out a INR 70 crore and INR 80 crore of cash flows from the disinvestments. How much more is your profit for the current first year and for [indiscernible] come from, number one. Also, you put out a slide on your overall debt [indiscernible] ROI of our stand-alone of the INR 20,000 crore invested. Can you tell me how much of that would be attributable to CGPL, which has shown a number of that [ INR 8,000 crore ] noted and for the renewable, which is show about INR 11,000-odd crore. On the third one, what would be the time forward tax losses, which could be beneficial on the merger of CGPL with Tata Power?

So you asked first about -- this is just to [indiscernible] on for us. So the balance left is some of our overseas assets in Zambia and mall of [ whole ] assets. It will -- in the next 6 to 12 months is a target but it will take a little extra time. So they will be close to INR 2,000 crores all put together. And then, of course, the renewable assets when the InvIT is formed, we may get -- we'll get our share of it depending on the size of share. So that is another flow that is expected. What else you asked?

Sir, with the debt profile that you put out on Slide 29, should Tata Power [indiscernible] roughly about INR 20,000 crore, and Mundra at about INR 8,000, crores. The renewables [indiscernible] combined about INR 11,000 crores. Just wanted to get a sense of up to INR 20,000 crores in Tata Power stand-alone, how much would be on account of loans extended to significant [indiscernible] than set of business orders and for sort of kind of outstanding on business debt?

So Tata Power, when you -- [indiscernible] INR 6,000 crore. Because we have the -- if you remember, the Welspun acquisition? And we are also funding lot of [indiscernible] this year. We still to put together [indiscernible] short of [ INR 8,000 crores ].

Sure. And on the carry forward tax losses available in Mundra, that should be available on merger with Tata Power?

Okay. So together with this losses and depreciation could be close to [ INR 80,000 crores ].

The next question is from the line of Subrat Dwibedy from SBI Life.

So just wanted to understand, from a group point of view, Tata Sons is increasing citing some of the key companies. Some can understand also being under a greater Tata purpose for us in [indiscernible]? For the Tata Power, so any things going on positively divestment target in working capital doesn't seem to have improved yet. So what was the reason for the [indiscernible] arising now?

Well, all this while we will ask exactly the opposite question as to why the parent company's [indiscernible] capital so well. So I think the whole idea is as you know, the CGPL funding as the rule the company set. So there has to be an effort to cut it down to a more sustainable level. And we believe that once this exercise is over, CGPL is virtually on its own overall, in the overall scheme of things. I mean it's all tangible in that sense that, that comes to the parent and you can decide to keep it wherever. But at the end of the day, what we're trying is to make a hire overall operations of the company in a manner where the debt servicing on a little anymore. So to that extent, all the concerns around what happens if the tariff resolution does not happen, et cetera, kind of got baked in now to ensure that we have sustainable kind of EBITDA -- I mean, debt linked to the EBITDA that generated. And at the same time, there is enough capital for growth in the chosen lines that we have got to play with. So I think this is part of a larger plan to ensure that the company doesn't now have any kind of a stress situation. And now it's just that we will focus on growth and growth alone. So that's the whole idea behind it. So it is -- maybe you could question whether you needed it today or not, but actually, our plans are quite ambitious. So therefore, we're adding some part of the larger plan.

Okay, sir. And my second question is on the cash position. So that has increased substantially in Q1 at INR 6,600 crores. So will this remain like this or because the repayments are not that high for the full year? Or is it likely to come down?

Of course, with cash position is not something which we could tell you on line this. There are timings for payment of -- as we are also paying that loans, as you will hear in the next month. So obviously, it will all come down.

The next question is from the line of Pulkit Patni from Goldman Sachs.

I think most of my questions are answered. But just one doubt appeared when you asked -- when you answered the question on what part of the INR 20,000 crore debt is allocated to renewable and to CGPL. Now when I look at your slide number 28, I see a total number of about INR 10,000 crores between both the renewable assets. And on the renewable assets slide, the number is close to about INR 12,000 crores. So is it fair to assume that the number is close to INR 2,000 crore, that has been given from the parent company to the renewable assets? Or is it a different number?

INR 2,000 crores has been pumped into TPREL to fund the purchase, which we did a few years ago. That continues to be the funding for renewables. Now -- So -- so you tell me. What is your -- you tell me.

So what I'm trying to understand is the EV number, which you said is about INR 20,000 crores, would it not be slightly higher if I actually add the total debt? Because in which case, the total debt at the renewable portfolio would be about INR 12,000 crores plus another INR 2,000 crore. Is that understanding correct?

Don't mix the 2 things. That was just an indicative number based on all the debt, which is both internal and external, I don't think you should go into calculating EV using all this. So I think otherwise, you will land up in different conclusions totally.

So what is the total debt at the renewable assets, which will be considered for the purpose of paying debt?

INR 11,500 crores thereabouts.

The next question is from the line of Mohit Kumar from IDFC Securities.

Sir, 3 questions. Sir, primarily. First is, sir, why are we merging CGPL with the parent company right now? Why don't wait for the resolution to happen?

No, I am not sure why, let's say, you believe NOIs that which is connected in the first place because the resolution is for a project whose economics are well known, whether we merge it or not, you have the coal price and you have the tariff and you have a gap. Right? And therefore, where the company lies, where is the SPV, it has got no connection with the with the tariff issue, right? We don't see that way. For us, it's more important that we support this company right now. And therefore -- and also bring down the financing cost. And that's what we are trying to do. Well, if in the process, if we are getting fiscal optimization, most welcome. But first and most importantly is to sustain the company properly.

Okay. Secondly, sir, I saw that we have withdrawn -- there's -- we withdraw our de merger -- some merger process to with Tata Power Renewable stand-alone with the Tata Power Renewable. Am I right? Is it -- and what is the thought behind that?

So if you recall, the whole idea earlier was to demerge these renewable assets and put it as part of the renewable company so that all renewable assets are in one place. Now what is happening is, by the time that petition got done, there were changes in our plans in terms of InvIT and certain assets are now part of the hybrid we bid that we won. So therefore, we had to change the whole configuration. So the revised plan now is that only few assets will go to TPREL, and therefore, they will go along with InvIT. Certain will stay in Tara Power for further development because their contract, PPA contracts are coming to an end. So we would like to wait for them to be tied up before they transfer. And the rest will continue in Tata Power for some time. So it's -- because of this whole InvIT and renewable plans changing and the emerging opportunities coming up, we have to change the plan. So we would drill that old petition.

Does this mean that 380-megawatt in the stand-alone company must win the contracts expiring and they may not be transferred to the InvIT? Am I right?

Not all. There's a small portion whose contracts are near expiry. Some have already expired, some are near expiry. Those we will -- those who are tied up recently in the hybrid wind, et cetera. We will have to develop it here. And only at an operational level, we will have to deliver to InvIT. So we will not transfer now. But all other assets, which have a sufficiently long life period, they will all go to InvIT. That will be done through a normal business transfer.

And currently, sir, we are awaiting the renewal of coal concessions for our Indonesian mine, [ Kaltima ]. Is there any development?

Well, I don't know the development when was the last update you had, but basically, the government, as you know, has approved the law, which governs the change of license and also the procedure involved application post that law, and we are -- we have done it, and we are awaiting now the process at the government level.

Okay. And sir, on the Prayagraj, how much we are charging as O&M for our stand-alone company? And how much it contributes and something on the profitability from that particular O&M contract?

We don't normally disclose individual commercial contracts, so to speak, we do disclose equity investments but not commercial contracts.

Understood, sir. Is it possible to share, sir, how much is CESU investment? How much you have made? I believe, a [$10 billion ] right now, how much you expect over the next 5 years?

Initial equity is INR 175 crores for our share. What was the next question? The quarterly -- going forward...

Capital outlay for the next 5 years?

INR 1,500 crores is the commitment that we made in terms of next 5 years.

And is it possible to share the T&D loss trajectory committed?

Yes. Yes, yes. That's part of the build, the build has a clear trajectory laid out.

Is it possible to share the numbers for the next 4, 5 years?

Are these the bids? What was there in the build? Yes, we can. I don't have it ready to.

I'll take it off-line, sir. Last question Tata Power made a loss of INR 24 crore in the quarter.

Yes.

So how the things to improve in the Q2? And how do you see this contributing to our bottom line for FY '21? I do understand the COVID situation and it's out of our control, but some sense of the number?

Well, the projects have begun to now move on the ground, right? So the last -- of course, the last 4 months was quite -- it was affected. But as we see in the last one month also, we made good progress in terms of project sites commencing. So let's assume that it looks like things will be much better in the subsequent quarters. But you know what, as you know, the country's COVID situation continues to be not so great in the inter land where many of these projects are going on. So therefore, we'll have to wait and see whether there's any significant impact on that. But we are optimistic.

The next question is from the line of Aniket Mittal from Motilal Oswal.

So my first question is on the KPC mine. If I have a look at this quarter, the cost of production has gone down significantly. Could just throw some light as to why that has gone down so significantly and what could be the trajectory going forward?

So typically, what happens is when there is a price pressure in the mines, 2 things happen that you do put a lot of pressure on efficiency. And secondly, you do negotiate with the contractor -- mining contractors to pull down the prices so both has happened. And also fuel prices, wherever they were beneficial to the company in terms of contracts, et cetera, that has also panned out. But generally, it will be the mining contract terms, which generally are the ones which kind of help you drive down the price in such a scenario.

Okay. So going forward, because the decline has been pretty sharp. We were doing somewhere around $35 to $36 per tonne, it's gone down to around $31.9. So what's the sustainable number? Is this sustainable?

No. So at every level, what happens is that depending on the situation and recovery of FOB estimation of that time, the mine just plan, both the mining plan also changed and repricing also for mining activity changes. So sustainability is a matter of, let's say, you can say, short to medium term, this will be sustainable, may not be long term.

Understood. And on the offtake front of this, I mean, you've mentioned on the slide, there has been some impact because of, obviously, the logon coming and the overall demand sort of going down. How is the offtake happening at KPC?

So offtake in KPC is pretty strong. As you will see, normally, they do about 15 million tonnes a quarter, and they are around that time -- around this number even now. Because they have a certain quota, which is given by the government of nearly 60 million tonnes. Normally, that's the range. So that's about 15 million per quarter. So that is continuing to happen.

My second question is actually on Prayagraj. See if I have a look at the Y-o-Y number that sharp increase has happened. Could you just help us understand, led to such a sharp difference in the Y-o-Y profitability? I understand that we've taken out the project, but just throw some light.

Just one minute. Okay. So this -- what you are seeing in the Slide 13 is actually resurgent, which is consolidated picture of resurgence own numbers plus the Prayagraj numbers. So -- and last year, of course, it was not there. So -- and this is essentially coming from probably the interest on the debt. Yes, it's coming from more of the debt instrument that is put there.

Sir, I'm sorry, we will [ undercome ] this. So this INR 24 crores number of profit that you shown away, what does that include?

INR 24 crores is the fact.

Yes. So -- but what does that include from Prayagraj?

So the company has invested in equity and debt instruments, both C series. So this must be the returns on the C series, which have been booked. So Prayagraj overall made INR 55 crores a pack. Our share is 26% effectively -- 20% effectively because we don't hold -- the whole 100% is not held by resurgence. Effective share is 20%, plus the interest on the C series instrument put together is this INR 24 crore number.

Understood. Sir, another question on the stand-alone front. You've seen a dip from the numbers on a Y-o-Y basis. Despite of going on the operation front pretty well. If you could just help us understand why is the Y-o-Y decline that's coming? And is there any impact of the new regulations that have hit us this quarter?

No. The Y-o-Y number stand-alone is essentially because of dividend. Last year, we had dividend of INR 374 crores. But yes, operating profit, if you are pretty profitable, you're asking that is that we had certain interest entitlement in the distribution, which due to the change in the MYT regulations, there's been some impact, INR 25 crores, INR 30 crores of impact, I think, on that front. Other than that, there's no major change. And of course, wind, yes, in the stand-alone, there is a wind assets and they generally, this quarter has not been very good for wind.

Is it understanding on that? What -- if you could give us a sense, what's the impact of the MYT regulation on the stand-alone business?

[indiscernible] So about INR 20 crores.

So this is for the quarter?

Yes.

Okay. Okay. And sir, another question on the delay that you've given on slide number -- Slide #9. Just 2 points that I wanted to confirm. So this INR 1,780 crores of divestment, this would essentially include profit -- this would include synergy as well as the synergy rate?

Correct.

And so will we get another $5 million to $6 million from cash synergy 2Q. That's the only thing that's mainly on the divestment as of now, right?

No. So from cash synergy, we have to receive another 70 -- I mean, quarter -- these are quarterly numbers. So second quarter has seen $70 million flow.

Okay. And what progress on the SEB front? And can we expect that -- on the sale we sale of SEB?

Oh, SEB. Okay. We are close to now closing the transaction, hopefully, in the next month or 2, we should be able to close the transaction because we are getting all the important approvals already and things are moving fast.

Okay. And just on the slide itself. So there is this 1,600 -- INR 1,006 crores of cash that you received? What is that amount? Not able to understand that? The CESU cash.

Asset to cash. Correct. Correct. There are -- the customer deposits, et cetera, you have to have a corresponding investments to be done in liquid state. So those are the investments.

Sorry, not able to understand it. So that's something that you received upfront for.

So it's not receivable. You take over. It's just the acquisition -- acquisition debt and acquisition investment, both are coming in now. So they are cash and cash equivalents, which have to be maintained compulsorily as per the regulation. So they are not -- they're not usable in the sense that I can't just divert that cash anywhere. They are supposed to be equivalent amount of back-to-back liabilities on customer-funded schemes.

Okay. And sir, one last question, if I may. If you could just let me know on the receivables front, what is the total receivables just for your renewables business, which is [indiscernible]?

So total renewable call for together is INR 1,700 crores.

INR 1,700 crores. Okay. And just on the sensor, I believe, are down a bill discounting at the end of March. On some of our receivables for the renewable project. Has that money then flown through? Because I believe we are a borrowing on that rate. That's how we have accounted for it.

Yes, yes. It has flown through. It has been recycled. Payments are being made.

Okay. So that would have reduced by that amount, right?

Yes. Yes. And of course, the new respondings also keeps happening.

The next question is from the line of Sumit Kishore from JPMorgan.

I just had a follow-up. As you mentioned that Mundra has overall unabsorbed losses, which can use for tax credit of almost about INR 18,000 crores. So I find that in the stand-alone entity. Last year, you paid a cash tax of INR 74 crores net of refunds in a stand-alone entity. The year before that, it was INR 101 crore. So how do we look at it? So for the next few years, the stand-alone entity will not have any cash tax liability after Mundra comes from the parent, what are the tax laws here? I mean, how does it work?

Broadly, Sumit was -- I mean, I'll give you only broad idea about the question which you're asking that we only paid from some INR 70 crores of that. This is a wider restructuring, right? There is startup of solar coming in. And soon, we will have InvIT being held directly by some of us, so that money will come directly. So that's all I want to tell you. The rest, if you want detail some calculations in detail, of course, you can get in touch with our team and will help you understand it.

We'll take that as the last question. I would now like to hand the conference back to the management team for closing comments.

Thank you very much. And if you have any more questions, you can definitely get in touch with our colleague. Both Rahul and Kasturi are here, and they'll be more than happy to furnish you all the details and information that is required. So -- and I definitely look forward to seeing you on next Wednesday, 19, to have a much more detailed discussion and sharing with you our long-term strategy and plans of growth and how we are planning to turn around the company and make it Tata Power 2.0. So that's all, and thank you once again for joining in the call.

Thank you very much. On behalf of the Tata Power Company Limited, that concludes this conference. Thank you for joining us. Ladies and gentlemen, you may now disconnect your lines.