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

Good evening, everyone, and welcome to the Q4 earnings call. We hope all of you and your family members are safe and sound and taking care of yourself. This quarter has been very challenging for all of us, and we would like to thank all of you for the support that you have provided us during this period. Your support has motivated the company and our employees during this period to continue serving the nation. The company and its employees have contributed to various medical supplies, awareness drives and voluntary, including telehealth lines. And our COVID response efforts are ongoing across 63 locations including all our thermal plants, all our distribution businesses and all our renewable sites spread across various states. As we reflect back on FY '21, Tata Power is proud of the significant progress achieved on various strategic areas and is confident of achieving the targets as we had laid out during our last interaction with investors in August last year. As informed to you, we have successfully completed the takeover of the port distribution license in Odisha, The Northern Distribution company, effective 1st April 2021. With the acquisition of The Northern Distribution company, our total consumer base has grown from 2.6 million as on end of March '20 to 12 million customers as of now. In line with our aspirations to grow in the distribution business, we have now become the largest private power distribution company in India in less than a year's time. The progress in TPCODM, which is the central distribution company in Odisha and which operates the [ earth ] while CESU license area has been very encouraging with the AT&C losses seeing a sharp decline within 10 months of operations and is below 30% in a record 12-month period. In fact, from the time we took over from 1st of June in the 10 months of operations, the AT&C losses has actually gone down to 25.5%. This has proved our execution capability in being able to achieve the targeted AT&C losses. And therefore, create value for the customers in Odisha, including providing them reliable supply and customer services. The beginning of the SOUTHCO and WESCO distribution companies in Odisha from 1st January has been very promising. And we are confident to write the same story in terms of better reliability, better quality service to the customers as also improvement in the financial parameters and much better AT&C losses as we move forward. Cumulatively, all the 3 discoms in the limited period of operations has been able to give profits against the originally planned losses for the first and second year of operation and we can definitely expect a more powerful performance in the coming years from Odisha. The focus on clean growth business areas are showing results with robust performance from the renewable businesses. As a result, we achieved a stellar growth of 20% impact before exceptional items, which grew from INR 366 crores in Q4 last year to INR 440 crores in Q4 of this year. With this focused growth and deleveraging, we achieved 16% growth in FY '21 to end the year with the PAT before exceptional items of INR 1,424 crores, up from INR 1,231 crores last year. Of course, the high coal prices in the last quarter have impacted CGPL, but the coal companies have benefited from the price increase. With the full year saving of CGPL's interest cost of nearly INR 380 crores through the debt repayment, which we did during the year, we expect CGPL will need very small support from Tata Power in the future. The increase in tax was led by renewables cluster, which reported a 2x growth impact from INR 88 crores in Q4 last year to INR 175 crores this year. This growth has largely been driven by the performance in our focused areas in solar businesses, namely solar EPC, rooftops and pumps despite part of the year loss in COVID-19. We clocked a 2.4x growth in Tata Power Solar's annual revenue growing from INR 2,147 crores last year to INR 5,119 crores this year. Our solar EPC orders continued a healthy growth with orders worth INR 2,294 crores won in Q4 taking the total order book to INR 8,742 crores as on 31st March. Amongst various projects, we won 320 megawatts of solar projects from NTPC valued at approximately INR 1,200 crores. And a 55-megawatt solar project from GSECL from Gujarat valued at approximately INR 230 crores, reaffirming the position that Tata Power Solar is the prime choice as the EPC contractor for large developers of projects. In rooftop solar business, we have seen a major uptick in orders and execution in this quarter. Our rooftop revenue in this quarter crossed INR 300 crores, order book stands over INR 600 crores as on date. We installed 79-megawatt of rooftop solar in this quarter itself and the total installation for the year reached 175 megawatts. We have seen very good response to our solar roof digital campaign, which was created more -- which has created more than INR 5 crore digital impressions and given us more than 41,000 leads. We have also entered into a partnership with SIDBI to offer easy and affordable financing scheme to MSME customers in the rooftop solar segment. On solar pumps, our business sold 6,500 tonnes in this quarter, recording its largest quarterly revenue and a total sales of around 13,000 tonnes during the financial year. While one of the quarter was mostly lost in COVID-19, our teams have done a remarkable job in achieving such large-scale growth. The expansion in doubling of capacities in the cell and module manufacturing plant at Bangalore will make our domestic content projects much more competitive and thereby allowing Tata Power Solar to grow its business further. With the stellar performance in these businesses, Tata Power Solar's revenue for this quarter increased 5x from INR 579 crores last year to INR 2,777 crores in this quarter. Our renewable development portfolio has received LoA and signed PPA for 88 megawatts solar in last quarter, which will have -- and we will have 1,314 megawatts of projects under implementation. With nearly 2,693 megawatts of operational wind and solar projects, our total portfolio with the existing orders with us will cross 4,000 megawatts. We have also won a few more solar projects for which we are awaiting the LoA, post which we will inform the details. We continue to improve the operability across our renewable assets, both for wind and solar with several operational initiatives, and this is reflected in the steady performance across the assets with solar plants operating at 99% to 100% availability, while wind sites are running above 98%. In addition to that, our over dues from discoms have also consistently come down over the years. And even when in the year, there was stress liquidity due to pandemic. The consolidated revenue for the fourth quarter stood at INR 10,255 crores compared to INR 6,881 crore previous year, mainly driven by the Odisha discoms and increased order execution in large-scale EPC project, rooftop and solar business. The sectoral tailwinds and operational improvements are likely to continue to aid our various businesses, including the Odisha distribution circles and the solar EPC business. Moving to the balance sheet. We have significantly reduced loans across entities, CGPL, Maithon and Trust Energy. We reduced our net debt by more than INR 7,500 crores over the last 1 year through divestment of various assets and strategic fundraise from promoters. With the refinancing of certain debt and the reduced interest regime around the globe, our average interest cost has also reduced to around 7.4% compared to 8.3% last year. Our debt-to-equity has sharply been brought down to a level of 1.4x -- to [ 4.2x ] from 2x last year. Net debt to underlying EBITDA stood at 4.06x. The leaner balance sheet will give us the flexible -- the financial flexibility to pursue growth in strategic areas. In Prayagraj, we continue to see strong operational performance, achieving an 83% availability during the year. With liquidation of close to INR 2,100 crores of dues from the state discom, Prayagraj has been able to both prepay long-term loans as well as to distribute cash to its shareholders, thus becoming a win-win transaction for all stakeholders. This turnaround of Prayagraj has been excellent because of reporting of PAT of INR 185 crores in FY '21 compared to loss in the previous year. Our stake resurgent, representing our share of Prayagraj's profit and interest from debt to Prayagraj, gave us a PAT of INR 100 crores in FY '21 compared to a loss of INR 20 crores in the previous year. Our microgrid ventures also achieved remarkable progress installing 33 microgrids during this quarter, taking our total installed numbers to 161 with another 40 under installation covering total 200 villages and nearly 4,000 customers. This venture is improving the lifestyle and promoting small-scale industries in rural communities, which will be a big catalyst to the rural economy. We have launched last year installation of electric vehicle charging points at all important railway stations in Mumbai as also in suburbs and adjoining MMRDA area in association with Central Railway and UN Environment Programme. During this quarter, we installed 175 new public charging stations, taking the new network of public charges to 456, the largest in the country. We have also installed 80 ultra-high capacity bus charges in Mumbai and Ahmedabad. As you all are aware, we are continuously working to improve our ESG ratings, and we have been ranked #13 amongst the top 200 Indian companies by Sustain Labs Paris on various ESG parameters. The recently bestowed Best ESG Disclosure award under the ES category, Midcap from the IR Society, Investor Relations Award 2020 held recently with BSE and KPMG is a proof that the market and you are appreciating the efforts being made in this phase by Tata Power. We thank you once again for your invaluable goals. We aspire to take our ESG disclosure to a much higher level. And in line with this goal, our teams have set up dedicated ESG portal to provide all relevant information at a single location. We are also working with institutions, like SBTi, to set up scientifically derived emission reduction goals. And in near future, you will hear much more on our ESG actions. The exit of defense business and the focus on cleaner sources of revenue will help Tata Power to further meet its ESG aspirations. As you are aware, for more than a year, we have been working on evaluating options for monetizing our renewable assets with a view to reduce debt. While we did receive very good response from prospective investors, a few developments have happened during the last 1 year. The first is that we have managed to reduce our debt equity ratio to 1.4, which now puts us in a very strong position for future growth. Second is that we have exceeded our targets on building off our consumer-focused green business of rooftop solar, solar pumps and EV charging. The third is Tata Power has a leadership position amongst the Indian utilities and is amongst a handful of few global players to offer such comprehensive offerings of clean and green energy products and solutions ranging from solar manufacturing, EPC, rooftop solar, solar pumps, EV charging and microgrids. Thus, Tata Power is uniquely positioned to deliver on its deep sectoral and market experience to gain market share in these offers. Also, based on very good feedback from investors and other stakeholders that this wide and deep set of offerings makes very comprehensive renewable platform, which can eventually be valued significantly higher given the invested interest. In view of the [ bond ], we are working on a much bigger and wider renewable business growth during the coming years, which will open up far bigger opportunity to create shareholder value. We'll share with you our plans soon. We have invested in last 1 year in various building blocks, and these blocks have now started showing traction. We are excited about the unlimited opportunities available to Tata Power to grow to a leadership position in the Indian utility space and look forward to your continued support in this remarkable journey. I have with me Mr. Ramesh Subramanyam, CFO, along with Mr. Kasturi, Chief of Treasury and Investor Relations; Mr. Anand Agrawal, the Financial Controller; and Rahul Shah from Investor Relations. I now hand over the call to the moderator for question and answer.

[Operator Instructions] The first question is from the line of Sumit Kishore from Axis Capital.

My first question is regarding your update on the merger of CGPL and Tata Power Solar with parent, where are we? The second question is in relation to your monetization plans for your renewable portfolio either through the InvIT route and now we are trading in media about potential plans to go for an IPO. So could you please elaborate on that as well? I will ask a couple more questions, but I'll wait for your answers first.

Yes. So Sumit, on the first -- on the second question first, you asked about monetizing. Mr. Sinha just mentioned, we are working on that issue. As we said, we now find that during the last 1 year, a lot of improvements have taken place in the whole ESG space. And we're very bullish now that with the kind of more than expected, I would say, progress in our wider greener -- green portfolio, we are now seriously looking at a much, much bigger value-creating opportunity than what we started with during last year. So remember, when we started the InvIT journey we had a high debt overhang. And also, we have just kind of contemplating on a set of noncore sales and capital raise. I think all those plans are very tentative and given COVID, that was a different, I would say, scenario. So we are now in a far better position having accomplished what we've done in the last 12 months. So we are reviewing that situation, and we'll come up with something which is really much, much bigger in terms of validation. So we'll have to wait.

CGPL and TPS merger.

CGPL, TPS merger. So we are -- we are in NCLT. We got all the approvals in place. We are waiting for the courts to open. As you know, they are still -- because of COVID, et cetera, functioning is affected. So in due course, we expect the hearings to resume. But with all the approvals in terms of shareholder approvals, regulatory approvals, this is in the last stage.

The hearings in NCLT are led to...

Yes. Yes.

Okay. So third question is a very strong performance inside of Tata Power Solar Services Limited. So my compliments on that. Could you break up the revenue for the full year, if possible? And since the quarter was so big between EPC, rooftop, solar, pumps, microgrid, EV charging and maybe talk about the profitability in these verticals as they become more meaningful for you over the medium term?

So the -- if you see the presentation, it has the combined number, okay? As you can see, we have given Tata Power Solar separately. And Walwhan and TPREL separately, as you can see. And in one of the charts, also the -- there is revenue detail. So right now, of course, there is -- these are all early-stage growth businesses. So we're not really talking about the bottom line right now. And what's more important is to create the market and grow the market and that we are doing successfully. So I think that you're already getting, I think it's on Slide 19 and followed by the breakup in Slide 47, 48, 49 and also the consolidated view on Slide 51. So you may like to refer to that. So right now, of course, this is what really is the key that probably one should know.

Okay. But to think it operated in terms of EBITDA margin is still early for say, rooftop, solar or solar pumps?

Yes. But then we are doing well, that's all I can say because these are -- these have achieved scale. We are creating a good infrastructure to run these businesses. So we have put that in place. So when it scales up, you will fully see the numbers for itself. So right now, of course, we are in growth mode.

Right. And finally, for CESU, where you took over operations in June 2020, what has been the cash burn after taking operations? Because I'm sure at the AT&C losses would have come down gradually and you would have been below norms to begin with. I mean there would have been a cash loss, right?

See there is -- contrary to what was then perceived earlier when we won the bid, thereafter, when we were finally handed over the company, there was a huge perception that we will burn cash in this initial, surprisingly. And I think the credit goes to our team, which is on the ground during COVID, has done a remarkable job. And we actually end up in this quarter with just negative INR 8 crores. So I think it's been a phenomenal progress considering that these are the first year. The first year was supposed to be the worst. And therefore, we have gone through the first year very, very successfully, both on the network, technical and consumer end. So we -- I think this story will only improve from here. And so far as the full year is concerned, actually, we ended up with INR 28 crores of positive PAT for the entire Odisha discom.

In fact, if you see the Slide 17, it shows that while the AT&C loss last year was 30%, when we took over, it was actually on 1st of June. And for nearly 2 months, there was no collection that had happened, partial lockdown was there. And the AT&C losses were in the range of 40%. And we have ended the year with 29%. So it's a phenomenal amount of improvement that has happened in 1 year or in 10 months that we took over. And on a 10-year -- a 10-month performance, we have something like 25% AT&C loss. So it's a phenomenal improvement that has been done over there, not only in terms of loss reduction, but also in terms of reliability of service and customer services that is being provided.

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

Congratulations for good performance. Sir, couple of questions. First, now sir, we were all waiting for the ramp-up in the TPSL and indeed the ramp up happened. But I think when you look at the EBITDA margins over there, that's just about a shade below 7%. So I think the last time we had spoken on this, this was expected that because of the operating leverage, this would be a bit higher. So any specific reasons despite that we ramp up in the revenues, the margins have not been listed in the TPSL side? That's my first question.

So we are compressor on the module front. But this will ease off as we go through some of the past projects. We've had probably some pressure on the module front. But otherwise, I think we are well on track to deliver the next set of balanced orders. So you know that module prices have tightened all over the world.

Yes. I do understand. So I mean, can you quantify the higher cost that, that has gone for the modules?

We don't give specific module in the details as such, so we would continue that practice. But all we can say is that the -- going forward, we believe there will be 2 things. The new orders will factor in the new prices. So that should take care of the margins. And some of the existing orders may undergo some headwinds until they are complete. But it's a cycle. So at times, we have had much higher EBITDA margins also. So on an average, we should be back to a much higher level than what we achieved last year.

Got it. Got it. Sir, a second question was just a clarification. Now in that Slide #17, when you had mentioned that the AT&C loss has reduced to 29.5%, but then there is a footnote which says that the AT&C losses is basically 25.5%. So this is -- the 25.5% is the average losses for the 10 months, is that the correct understanding? Or what is it?

Correct. That is correct.

But sir, we have -- then March '21 or sir, when you look at the 29.5% loss, which is there in that graph, so that is the exit number for the March month. Is that fair?

This is a rolling average. It's a 12-month rolling average. That's how I see [indiscernible] calculated.

Okay. Okay, okay. Got it. Got it. Got it. Right. And sir, just finally, so you have given enough [ grip ] on this renewable side on the InvIT or the IPO. I just wanted to understand one thing. So this -- have you actually shared it completely or like you are reviewing the situation and perhaps there is something better in the offering, that's why there is some sort of a delay? What is it exactly?

I think it goes without saying that unless something there is better than what we started off with InvIT. We won't be spending so much time. So I think clearly, we're working on -- nothing is ruled out by the way. But clearly, we are working on something, which will have far better shareholder value creation than what could have been achieved by InvIT. Because remember, it was only 1 fleet, which was operational assets, which was on the take for the InvIT. So since -- as Dr. Sinha mentioned, we have now grown far more confident of our wider portfolio. So we believe that we can do something better than it. We are working on it. And sooner or later, we will come up with what we believe is the best way forward.

The next question is from the line of Vishal Biraia from Aviva Insurance.

Sir, my question pertains to the integrated operations of CGPL and coal companies. On Slide 42, you've given the EBITDA and PAT. Could you also give the cash flows after what has been the case from operations on an integrated basis and if any FCF was generated?

Do you have it ready yet?

Cash flow. He wants the cash -- so let me tell you that in terms of coal companies, the PAT is capped because there's very little application there. So -- but we can give you separately the cash numbers. But I just want to add that in this quarter, one of the things that is kind of increasing the deficit in CGPL is that the coal prices shot up in the last 6 months. And there is this CRC Index, which kind of index used for calculating tariff. So this is based on the previous 6 months. So we are currently going also suffering due to the lag effect that the coal price -- lower coal price in the first half is being charged to revenue in the current quarter. And the effect of the last 6 months increased, the coal prices will be reflected in the subsequent 6-month notification. So we will have probably the second half better than the first half of this year because of this lag because whenever there's a sharp rise, it affects that particular quarter and March quarter was one of them.

The next question is from the line of Atul Tiwari from Citi.

Yes, sir, again, a question on this renewable InvIT or the potential. So is it fair to assume that at least over the next 6 months to 1 year, we are not going to see any kind of -- it's either a strategic sale or IPO? And the portfolio will be kind of grown over a longer time to a much bigger scale and then we will see some kind of capital action on that one.

No. I don't think we've said any of that, which you mentioned. Neither we said that it is -- we are not going to do anything in the next 6 to 12 months. So therefore, I don't think that's what we mean. I think we are in the -- it is in the works as to what is the best way to go about it. We are taking more time because we want to ensure that that's the best thing for the company, and you will hear it as soon as we decide. But it's not something which is going to take a year or 2 or 3 as you were probably suggesting, yes.

It will happen in sooner than later. It's very much on in the world, and it will happen very quickly.

The next question is from the line of Puneet from HSBC.

Yes. Sorry to harp on this renewable thing again. But is the understanding correct that now the idea is to monetize not just the renewable assets, but to bundle it with some of the more exciting parts like, microgrid, EV charging, et cetera?

No. What -- the correct way to understand that is we -- the current in which proposal was only operating assets. We have now -- because of the important positive development, a, that our desperation to get debt down is slightly less because of the good thing -- that good thing that we've been able to do in the last 1 year on the balance sheet. I think we are far more confident now that let us look at not just that asset, but see whether there is a bigger opportunity here. So as I said, I think suffice to say at this point, that this is a -- we are looking at it more positively as to whether we can do something different or bigger. But certainly, it is not clear. At this point, I can't tell you exactly that whether one business or the other will be part of it or not part of it. But certainly, we have a huge canvas to now choose from given the fact that the other businesses have picked up very well, far better than what we expected. And they also look to be on track to achieve far better growth in the coming years. So therefore, that confidence is very different level now.

Yes. So can you talk a bit about the business model that you now have on the EV charging and the microgrid?

We've been maintaining that the business model is evolving. And I think that you have to give some time for these businesses to mature to a level where you can call it as a fixed business model. Right now, it's evolving as we learn on the go. And as we are growing on the -- across the nations, we are also learning a lot on how to make this profitable and scalable and modular in business.

Yes. On the EV, let me tell you that there are 3 components of EV. One is the home charging where it's a very good business model. We have tied up with OEM partners starting with Tata Motors and some of the other manufacturers. And we are virtually 100% providing home charging facilities wherever they sell their electric vehicles. The second is the public charging where we have already put nearly 500 public charging. And these are not only in cities. They are in 100 cities, and they are also on highways. And we have, again, big plans to scale this up, both for public charging as well as highways and we'll do something like upward of 3,000 in the next 1 year. The third is for fleet owners and bus charging. Again, in 3 cities, we are putting it for the public transport. This is in Mumbai, in Ahmedabad and Jaipur, where we are already working over there. And going forward, we expect -- so each one of them have very different business models. The fleet is captive and, whereby, we have assured revenue model. The home charging is a captive where we have -- the public charging is based on the type of penetration of electric vehicles that will happen. But considering that the type of ecosystem we are creating, we will be the biggest player, and we will have a huge market as and when the penetration of electric vehicle increases and the usage of the EV charging systems increases. On the microgrid, as Ramesh mentioned, that we have installed about 161 microgrids in different parts. Last 1 year, because of COVID, this was not the best of the time to launch the microgrids. But have got very good success in many of the places. We are enhancing the capacity. And this is an evolving area that we have. And of course, the other businesses that we have -- I've already shared with you, whether it was for rooftop or it was for solar pumps, we have got very good traction, and this is going to grow multifold in the coming years.

Sir, my other question is, is there any progress on the sale of the other smaller entities which you are looking at? Or is that also now shelved for the time being?

You mean -- sorry, sale of the...

The other small assets that you have jointly at [indiscernible].

It's very actively going on. And of course, because of the COVID, et cetera, a lot of -- I think a lot of things are slowing down a bit, but there has been substantial progress otherwise. We hope to see this year FY '22 to close some of these ongoing sales initiatives.

And is it fair to assume that the CGPL settlement with the offtakers is now on the backbone and it's done because of COVID?

No. It's not a COVID issue. I think we have mentioned in the past calls also that the current formula, which the offtakers have offered doesn't make sense for us. And we have indicated -- deviated quite a bit from the original ask and therefore, for us it doesn't make sense. And we are only bound by many conditions and without the corresponding relief, which we were seeking, it does make sense. So certainly, we will continue to kind of keep a watch. But right now, that's not acceptable to us in the current form. I think one of the speakers also asked about what is the combined cash position of coal and CGPL. The answer is, for the last year, it was about INR 450 crores. That is a cash positive not burn.

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

Am I audible?

Yes, Aniket. Sure.

Sir, my first question was actually on the CGPL and loans, if you don't mind. I think the HBA prices have now crossed $80 per tonne. Is there any impact that we're seeing because of the DMO regulation over there?

So it's a bit unclear whether the DMO regulation, how they were applied because already the industry is under pressure there. So there's a lot of -- the government is being approached for relief on that. So yes, theoretically, it is still applicable. But the industry is talking to the government on the various release on this. So we don't know where it will end up. So right -- and remember that this whole DMO obligation is, as you know, is 25% of the output to be sold to domestic market. That's something which actually only when the year goes through, then one starts to worry about that. Half of the year will -- probably first half, there will be no worries, but thereafter if it is likely to fall short, et cetera, then that issue will come up. Right now, we are not very sure how that's going to pan out.

Just to get some clarity then. So the HBA prices were at around $85 per tonne now, I think the price ceiling at DMO would have been $70 per tonne. Is that still applicable? And are you selling at $70?

No. So the domestic -- the initial domestic sale will follow the rule. But the industry has been making a request for relaxation on that due to the fact that the industry went through a very bad time in the last 2 years. So we are awaiting the results of that from the government. Otherwise, yes, it will apply.

Okay. And the other thing, again, on the KPC mine, [indiscernible] a decent amount of increase on the cost of production as well. I just want to understand, has there been any renegotiation of contracts happening which has led to the rise in cost of production?

So many of the contracts, as you know, when the cycle of coal prices come down, they are negotiated. And then when the prices go up, they also go up, okay? So what you have to see is the gross profit per tonne. And that is the key thing because contractors also work along with the miners to adjust their pricing to ensure that everyone survives, so -- and fuel prices, higher prices, they all are also playing a part in this commodity prices generally have gone up. But normally, we see a cycle that when the prices are good, there's a little bit of relaxation on the input cost, but you should really look at the gross profit margin.

Understood. But from a, let's say, a near term or 1-year perspective, this $35 per tonne cost of production is something that we can assume to continue.

I must say that our mines are actually working hard to cut this down. Let's see how successful they are. There are various programs going on there to cut the production costs.

Sure. My second question is on the execution front. If I look at the order book that we have, firstly, on the EPC front, it will be around INR 8,600 crores on the solar EPC front, another INR 600 crores on the rooftop front. Could you just help me understand from an execution cycle perspective, when do we expect these orders get completed? That is point number one. And secondly, from a developer perspective as well, we've got a 1,300 megawatts of renewable capacity. How would execution for that pan out?

So all -- in fact, the internal, what we call the projects which are there within the company, they are already -- some of them are going to be as early as the second quarter. Normally, none of these will exceed 18 months in general. There will be 12 to 18 months. And we also will take advantage of profit timing on purchase of modules, et cetera, and expedite some projects even earlier, so currently, about 900 megawatts of unit. Our own captive projects are going on, out of which about 600 megawatts are likely to happen in the first half. So a substantial commissioning is happening in the first half itself.

Yes. Sir, I wanted to understand because of, let's say, the [ busy ] will come again next year, is there any additional we're expecting, let's say, within FY '22 itself for this project from an execution point?

Aniket, you're not very audible.

Yes. Can you please say that again?

Sure. Can you hear me now?

Yes.

Sir, as was my point, I mean given -- had [indiscernible] [ BCD ] is expected to come in next year, right? Is there any sort of increase in the execution cycle or the execution period that you're expecting? What I'm trying to understand is this INR 8,600 crores that we have on the solar EPC front and INR 800 crores, INR 600 crores on the rooftop front. Just from a time line point of view when do we expect this to actually happen, let's say in the next 15 months or so?

So let me tell you that there are 2 types of projects. One is where we are using imported cells and modules. And the other is where we are using domestic cells and module against some of the orders of NTPC and public sector undertaking. So those which are domestic, we have to use domestic and we have shared with you that how we have expanded our capacity, and it has now become 1,100 megawatt of sell-in module put together. But those will happen based on the requirement of the customer. We are, of course, targeting that most of these projects will get completed in this year. As Ramesh mentioned to you, there is nearly 900 to 1,000 megawatt of our own project development, which is happening. And many of them will get commissioned within this quarter within this first half year. So we are expecting that most of the projects that we have, we'll be able to execute in this financial year. And whatever gets built over, we will try to see that in the early part of the next financial year, they are implemented.

And sir, in terms of your projects in development the one that you own, which is around 1.3 gigawatts, how would the execution for that look like?

So we said 900 out of that is going to be in the next 6 to 9 months. And the balance will be somewhere in the end of next year -- end of this year. And of early -- first quarter of next year.

Yes. And Just turning on that front, could you tell me what would your overall capital expenditure looks for FY '22? And if you could pick that up for me for your different segments.

Yes. So we are expecting close to INR 8,000 crores of CapEx next year.

Sir, could you be specific for me?

So depending on the execution and timing, it could be anywhere between INR 7,000 crores to INR 8,000 crores.

INR 7,000 to INR 8,000 crores of CapEx?

Yes.

And if you could break that up for me, let's say -- so how much of that will be related to renewables and how much of that would be, let's say, the Odisha distribution part and then the remaining regulatory distribution?

So about half of that would be renewable at least.

Half of that is renewable. How much would be the Odisha distribution before put together?

Just a minute.

On the CapEx, it's about INR 1,000 crores, yes.

So the -- Odisha all of those discom put together is about INR 1,000 crores.

All INR 1,000 crores, okay. And probably just one last question actually on the Odisha discom front. I see in one of your slides that you've mentioned that there is a certain amount of incentives that you've earned on the collection of arrears for, I think, [indiscernible]. If you could just help me, does that process the total arrears outstanding over there? And how does this incentive actually work? Like what is the incentive percentage you [indiscernible]? And do you see this on a recurring basis coming through, let's say, '22 as well?

Okay. All 4 put together, we don't have -- I don't have a ready number. We'll have it given -- we'll have sent to you.

And just maybe one last housekeeping question. If you could tell me what's the overall cash level that you have for Odisha discom.

Overall?

The net cash at your Odisha discom, that is the total net cash number at your Odisha discom.

Net cash. Okay. Rahul will send you that detail.

The next question is from the line of Anupam Goswami from B&K Securities.

Most of my questions have been answered. Just last on the CapEx part, you were contemplating about INR 15,000 crores of CapEx target. And we have shown a visibility in the slide about INR 9,500 crores. So how much of cash have we incurred till now and approved? And also on the balance of INR 5,600 crores, when will the new kind of projects will come and what kind of biddings are we expecting on that?

Well, I just heard partially correctly. Can you just repeat for me?

Yes. Sure, sir.

A little louder.

Yes, sir. So we were targeting INR 15,000 crores CapEx, and we have -- showing in our Slide #16 that the visibility of INR 9,500 crores CapEx through regulatory orders. Now my question is on how much CapEx we have already incurred and how much we are approved out of that? And also on the balance, INR 5,600 crores, where do we see the new projects coming up on this?

So the balance, you're talking about the balance because I think that we are -- so remember that in this list in distribution, the new -- there are 2, 3 possibilities. One is that we do expect a much higher number on the transmission in Mumbai. Then the new -- we also plan to grow further and acquire further new discom that could give us that balance. And secondly, in Odisha, as we go along, if the requirement goes up, which is quite likely right now, it's a very conservative number, that is the other area where we could see an improvement.

Okay. And sir, just how much we have incurred...

Sorry. Say that...

Sir, how much we have incurred till now and approved also?

Around INR 900 crores.

Okay. On the whole Odisha or...

The transmission distribution and Delhi, that -- just 1 minute, I'll give you the exact one. So Odisha is about INR 132 crores in the last year, okay? But another INR 900 crores is the rest of the discoms. So it's about INR 1,000 crores to INR 1,100 crores.

And the proposals have been submitted. The order is awaited in this month. The hearing has been completed by OERC. So once -- but when we had -- we had given a certain number of CapEx that we will do in the first 5 years, so we will be complying to that requirement. And those numbers, we will be able to share with you separately.

The next question is from the line of Mohit Kumar from DAM Capital.

Sir, 3 questions, sir. So AT&C losses have gone down to 25.5% in CESU. Is it primarily laid by reduction in losses or increased collection for past areas? That's the first question.

Both. But remember that the previous area, there's a separate account, which is to be kept for incentives. But otherwise, it includes both collection as well as the actual or technical loss reduction.

So the AT&C loss is a sum of billing efficiency and the collection efficiency. So that is -- the sum total of all that makes the AT&C loss.

Second on CGPL, sir. Are we still negotiating it? Or we have dropped the idea of getting any arrears? And second related question is that the KPC concession contract, has it been extended?

So KPC contract is under extension. The government has approved the rules for extension. There is some procedural clarity that is required for all the license renewals. We are not the only mine. Therefore, once -- that's relating to tax. So once that happens and all the licenses, which are due for renewal will come up are due at the end of this year. So before that, expectation is that, that issue will be sorted out by the government and the license will be renewed.

Thirdly, on the solar pump, are we expecting a massive jump in FY '22, given that the CY '22, there was a huge target of 1.75 lakh solar pumps. So -- and are we booking subsidy in the top line for solar pump? And how much is that subsidy, a rough proportion?

So let me share with you that Government of India has a huge plan for solar pumps under Kusum. So from the present 3 lakh pumps, they are talking of taking it to 38.5 lakhs by 2024. And we are one of the biggest players in the solar pump area. And because of that, we are expecting that our growth is -- solar pump area will be very high and exponential, in fact, in the next few years.

And there is no subsidy asset. There's a tender-based allocation. Just collect the money and...

So the subsidy is paced by the government directly to us once we complete the work. So the scheme under the government is that 30% is paid by the central government, 30% is paid by the state government and 40% is paid by the consumer. So it's a single digit that comes with -- so someone like ESL or someone comes with a bid, and that money comes directly to us. So what we mentioned about the 3 sources is the back end of how the [indiscernible]...

[indiscernible] share by the agencies. But we are -- we have a single window from [indiscernible].

Understood. Sir, last question, sir, of course, we understand they're working on the new plan on the deleveraging or, let's say, asset monetization. What is the time line you think where you'll be able to tell the market or tell us about the way forward?

All we can say is that we are trying to do that as early as possible. But right now beyond that, we can't give you a date, but remember that we are very seriously working on this.

The next question is from the line of Rajesh Majumdar from B&K Securities.

I had a question again on the CapEx, which was discussed a little while ago. This INR 15,000 crores CapEx excludes the FGD CapEx at Maithon?

Yes. Yes. That's outside, yes?

So it was only transmission and distribution.

And distribution. The CapEx for Maithon, Mundra and some of the other Jojobera plant is outside that. That's a statutory requirement and we need to [indiscernible] CapEx. But those are all regulatory CapEx, and they will have the returns, which is determined by us.

And this 5,607 does not include the transmission TBCB contract that we've been talking about, is that included in the CapEx?

No.

It's not included. So we are fairly confident of this CapEx target being achieved?

Yes.

Okay. Okay. Fine. And secondly, my question was on the -- your solar pumps. 12,928 is the number of pumps installed in FY '21. How much of the scheme is on the Kusum scheme?

This is all under the Kusum scheme.

So because as I understand the total orders, which were given in FY '21 were about 52,000 odds, much lower than what was anticipated earlier.

Yes. So it is either under Kusum or this is a program of the state government. So it's either under that program that it is up. But it's through the government programs on solarization of pump sets in the villages.

And this year's target on Kusum I believe is fairly aggressive, a figure of 4 lakh is being talked about. So what is the realistic figure that we are looking at in terms of the orders to be given under the Kusum scheme?

I think what you said is absolutely right. The government program is aggressive and so is our program, but we don't give forward-looking numbers. But rest assured that we are also targeting a very aggressive growth, yes.

And we are the biggest player in solar pumps.

And sir, just to ask a little bit more on this. What are our economics on the solar pumps business? Because see, we are actually assemblers who are outsourcing possibly maybe 60%, 65% of our requirement rather than the planning, which we make. So our margins will be significantly lower than the pump motor manufacturers. So what is the economics in terms of the return on the assets or something if you can share with us? Because the margin profile would be lower than the integrated manufacturer of a pump motor assembler, right, if I'm not mistaken.

No. Let me share with you that -- how we are looking at this business. And that's where our understanding on technology and efficiency is very important. So we have -- we do a backward integration, whereby, we tie up with pump manufacturer and also work with them on designing of these pumps so that they are a high-efficiency concept. And they can be used, in some cases, exclusively manufactured for us. And then along with the solar panels that we supply to them. So our -- the whole concept of supplying of solar pump is to provide an integrated service and also the back-end digital integration so that we give the information to the user, the farmer also in terms of how the usage is there, and how much he's generating and how much saving that they are getting. So it's a very comprehensive solution that we provide. And we have very good margins when we carry out these works.

So do we look at EBITDA margins or return on capital in this business more? I mean...

There is very little capital. There's only working capital. There is no other fixed capital. It is -- the key is really how to churn the maximum sales with minimum investment and cycle times, therefore, become very critical, both on collection payments, installation. All these cycle is the key, and that's where we believe our edge is going to be.

And also the O&M is integral part. So since we do the O&M for 5 years, so that also gives us the edge of providing better quality service to the consumer.

Right. And receivables is not a big issue because these projects are more or less -- the orders are placed and the funding is in place, right? As I understand by the [indiscernible] agencies.

Yes. But then there is a procedure aspect of it, which is where we believe that digitization of the whole process enables us to speed it and upgrade the bills, get the verifications done, et cetera. There's a lot of -- I think that those are also intricacies from a commercial side.

Okay. Just last bookkeeping question. This higher dividend income from Trust Energy in the stand-alone numbers in Q4 of 2020. Could you just give us some more details on that?

Okay. Rahul will explain you that. We'll just separately -- he'll explain you that. It's a one-off thing.

The next question is from the line of Bhavin Vithlani from SBI Mutual Fund.

A couple of questions. On the Delhi distribution side, my observation was that the average power purchase cost actually reduced to INR 6 -- shade under INR 6 from INR 6.5, which seems to be an excellent performance. If you could help us what drove this and the regulation change, which came where more than 25-year plans where you can go out of the PPA and where you're paying fixed charges without going lower, has that helped? Or that's something which is a futuristic which we can see going forward?

So the difference between the previous year and this year was that in the previous year, there was a huge arrear payment that had happened to both the generating companies as well as the transmission company. That was not there in this year and that is why the power purchase cost came down. As you know that CRC comes up with a 5-year regulations on tariff for transmission and generating companies, especially the CPSUs. So the lag in issuing the orders led to arrears that had to be paid in the previous year. This year, there was nothing like that, and that is why the cost has come down. The benefit of 25 years and coming out of some PPAs with the 25-year period is expiring. That will come in the FY '22.

Sure. Will that help in reducing the regulatory assets, which has, I mean, the trend actually which was going down has actually turned and it's been started moving up?

Yes. It will help in bringing down your overall cost and thereby, reducing your net outflow. Apart from that, there has been also a Government of India notifications to state regulators and state government that no new regulatory asset has to be created and whatever has been created has to be amortized over the period of time as per the tariff policy. So there is a lot of push now from Government of India also as well as APTEL that the regulatory assets needs to be amortized and it cannot keep on adding in the future.

Sure. The second question is on the renewable side. So I mean, since you're disappointing to see only 10-megawatt incremental addition, we had a similar kind of a pipeline last year. So what actually resulted in this low-capacity addition? We all -- the aspiration of 4 in 5 years has actually will come in 4 years.

So the delay in the completion of some of the projects was because some of the panels that we had ordered, they came late. But these were primarily planned for this year only. It was not that they were planned for last year. And as Ramesh mentioned, that many of these projects are in final stages of completion. And within first half, you will find that large number of these capacities will get commissioned. And these projects have a certain -- it's not just setting up of the project, but also it has to be tied along with the evacuation arrangement, some of the projects in Gujarat and other location. The evacuation lines are expected in this month and next month, and then only these projects can be commissioned. So the timing is very important with the evacuation arrangement.

And we were to commission 600-megawatt odd in this quarter, but that's because of the initial period of pandemic and projects came to a halt in the initial first 4, 5 months. We have to push it to the next quarter and thereabouts. So that's why you see that last year, we couldn't do [ air out ] substantially.

Okay. Just last bit, if you could help us with the total receivables on both the TPREL and Andhra.

Yes. We'll be able to share that. And there has been a huge improvement in the collections from all discoms, notwithstanding the COVID. And excepting for Andhra, where there is a litigation. Rest of the places, the situation is very good.

The next question is from the line of Murtuza Arsiwalla from Kotak Securities. [Operator Instructions]

Yes. Just on -- while several people have asked on the in-rate versus the larger opportunity and a potential renewable IPO. Just wanted to check, would this just be of the development portfolio or it could also include Tata Power Solar? So to that extent, is the Tata Power Solar merger contingent about how the plans sort of work out? That's one part. The second is any target you could give me outside of the renewable piece? Any targets on -- divestment targets for FY '22 from asset sales?

Yes. No, on the -- InvIT, I want to just reiterate, I don't think we can say today anything like IPO and offer, that word which you used, I think they are looking at the whole spectrum. Could be IPO could not be IPO. Could be InvIT, may not be InvIT. So I think they're looking at the whole space on a whiteboard. So we'll -- as soon as we decide, I think it will come through anyway. Certainly, we're looking at all angles. The other question you asked is are there targets? Yes, we are targeting over nearly INR 1,300 crores of divestment this year on various assets, which are under process and some collecting the balance receivables on the ones we have sold also. So that's the other thing we'll be chasing.

The next question is from the line of [ Abhinit ] from Emkay Global.

My question is if you look into Slide 51, it gives you the company...

Can you please speak a little louder? Can you speak a little louder?

Sorry. Am I audible?

Yes.

So if I look into the renewable piece consolidated view for F '21, which on Slide 51. So we have done phenomenally well on the sales side, around INR 4,000 crores to, I think, around INR 6,000 crores. But both the EBITDA and PAT looks to be flattish on a Y-o-Y basis with debt almost INR 1,000 crore higher. So I mean, in some of the pieces that you said are still in early evolving. Is this something that we are growing at -- the incremental growth is coming at a lower margin? Is something of that sort you can explain?

See, I think that you'll have to appreciate that the additional -- capacity addition has been very minimal in this year. But as soon as we hedge the balanced capacity, I think you will see a definite shift in numbers. So I think FY '22, that rate may be significantly better because there's going to be a much higher capacity addition straightaway. Along with, of course, the fact that we had one of the worst windy year last year. So that also will be -- it's not that -- these are cycles. So we expect that the overall portfolio will deliver a much better result next year. And also remember that there's a good EPC pipeline also there. So we expect the numbers to be improving in next year considerably.

Ladies and gentlemen, we'll take the last question from the line of Subhadip Mitra from JM Financial.

A couple of questions from my side. Firstly, if it's possible to share the actual operational cash flow number that you're looking at and [ orders ] are subsidiaries and if you break up in terms of how much is coming from the arrears, is that possible to share?

The incentive on past recovery was about INR 40 crores last year.

Okay. And what would be the operational cash flow number that's [indiscernible]?

So as we said, the PAT was INR 28 crores for all, put together. Cash flow, we will say as it is.

Understood. And lastly, with regard to your targets in terms of the capacity addition on the solar front, where even on the EPC side, we are looking at about 2 gigawatt of annual capacity additions. Given the current scenario where at least what we hear is there is a bit of a slowdown in terms of SECI tenders. The current pipeline for FY '22 seems to be anywhere between 3 to 4 gigawatts. Are you seeing some near-term speed breakers coming up maybe in FY '22?

Yes. We are definitely expecting, in fact, we have already started the year winning a 250-megawatt project at Maharashtra. And we are expecting the bids in Maharashtra and in Madhya Pradesh and Gujarat and Rajasthan. So we are expecting large number of bids. As per our assessment, there is nearly 10,000 megawatt of bids which are expected in the next 6 months. We are also expecting a large number of bids also for hybrid solutions, which consists of both wind and also thermal and solar. So I think there is a huge pipeline. And considering the ambitious plan that the country has -- and also that the RPO obligations many of the states are not able to meet and the Electricity Act Amendment, which is going to enforce it, we do expect that the pace will pick up once the COVID situation reduces a little bit.

Ladies and gentlemen, that was the last question. I now hand the conference over to Dr. Sinha for closing comments.

So thank you very much for the opportunity to interact with all the analysts and investors today in the call. And I do expect that we will continue the conversation and discussion on this. In case anyone of you have missed out any question or have further questions, so please connect with my colleagues, Kasturi and Rahul, will be able to provide you all the information that you require. We have been improving in the quality of dissemination of information. And you would have seen in this times presentation, there has been a lot of details providing as well as also some of the initiatives that we have taken on ESG front. And I do look forward for your feedback to improve the quality of presentation and the data that is being provided to you. So once again, thank you very much. Please take care, stay safe. This is a tough phase. We'll all come out of it.

Thank you very much, sir.