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

Ladies and gentlemen, good day, and welcome to the Tata Power Q2 FY '22 Earnings Conference Call. [Operator Instructions] Please note that this conference is being recorded. We have with us on the call today Dr. Praveer Sinha, CEO and MD, Tata Power; and Mr. Ramesh Subramanyam, CFO, Tata Power. I now hand the conference over to Dr. Praveer Sinha. Thank you, and over to you, sir.

Thank you, Melissa. Good evening to all the analysts who have signed for the Q2 earnings of Tata Power. I have with me my colleagues, Mr. Ramesh Subramanyam, CFO; my senior colleagues from the finance department and Investor Relations. And let me share with you some of the main highlights of this Q2 results. Tata Power continues to move forward on its ambitious journey to become a utility of the future. And our focus and attention has demonstrated remarkable progress in achieving scale in our operations. Solar farms achieved its best quarterly revenue. Similarly, EPC as well as renewable generation portfolio recorded very strong growth in this quarter. Our leadership position in rooftop solar and EV charging continued. And we also see very satisfactory performance in our Odisha DISCOMs. And as we also pursue various opportunities to grow our transmission business. While we continue to usher growth in new areas of business, our existing assets have continued to perform very well on back of strong operational expertise, which has led to improved probability of all our assets. Our clean growth aspiration continues to deliver results as we saw a very robust performance from all our components of renewable business. We commissioned 266 megawatts of solar projects in this quarter. With strong operations in our renewable operating generation portfolio and growth in various solar EPC business, the company achieved 58% year-on-year growth in revenue and 41% year-on-year growth in profits from the renewable business in H1 of FY '22. Coupled with steady state operations for all our other assets and interest savings from debt repayment, we achieved 36% growth in reported PAT, which stands at INR 506 crores, as compared to INR 371 crores in the same quarter last year. This is now the 8th consecutive quarter of delivering year-on-year profit growth. Our Solar EPC business, namely Tata Power Solar, has delivered on all fronts with a very strong performance in large-scale EPC business, rooftop solar and solar farms, which have all registered almost 50% growth in quarterly revenues from INR 1,014 crores last year to INR 1,500 crores this year. The large-scale utility EPC order book continues to grow, with orders worth nearly INR 3,000 crores won in Q2, taking the total order book to INR 9,264 crores as on 30 September. Among projects were 1 gigawatt won in this quarter, approximately 580 megawatts pertains to Tata Power's own asset development while balance pertains to third-party contracts. In addition, Tata Power Solar has also received a letter of award to build 100 megawatts of distributed down-mounted solar project for EESL at a total value of INR 538 crores. Margins have improved slightly compared to Q1 of this year. With the continued higher module prices, execution of some of the projects were deferred, and we expect the execution to pick up further in the coming quarters. Our solar pump business has shown excellent quarter with sales of INR 8,277 pumps. With strong sales this year, we have been able to achieve almost FY '21 revenue in the first 6 months of this year only. This quarter also is very significant as our solar pump business achieved the milestone of cumulative installations of nearly 53,000 pumps. We expect that the next 50,000 pumps will be installed much faster than it took us to reach this number. Taking a step forward towards creating a niche for ourselves, we have now launched Tata Power branded solar pumps, which have been launched across 22 cities in 6 states. Similarly, in our rooftop solar business, we saw a very successful quarter winning orders of 264 megawatts worth nearly INR 750 crores, from both residential, industrial and commercial customers. Our rooftop order book as on 30 September stands at 417 megawatts worth nearly INR 1,200 crores. We executed almost 105 megawatts of rooftop solar projects in this quarter, leading to higher revenue bookings. We have also started seeing success on the various financing schemes, which were launched in partnerships with different financial institutions and close to INR 111 crores of orders were financed through these schemes. Our success in rooftop is evident from our market share, which has gone up in 12 months ending June 21 to 10.8%, and we have been ranked as #1 rooftop solar EPC company for 7th year in a row by Bridge to India. This quarter, the wind speeds were very good, leading to very high PLF in our wind portfolio, leveraging on high availability of 98% at our wind sites. Similarly, our solar assets have operated at very high availability and PLF. This improved PLFs led to higher generation, thereby increasing the revenue and profit from this renewable generation portfolio. Coming through our integrated CGPL and coal portfolio, international coal prices have continued to touch new highs, forcing us to reduce the supply of power from the units to contain our losses. As a result, this quarter, we have booked the reversal of fixed charges of nearly INR 216 crores. As the tariff lag unwinds and as coal prices come down and the existing arrangement of supply at higher tariffs through the beneficiary continues, generation can be increased in subsequent quarters. For the short term, we have agreed with a procurer on a onetime passthrough mechanism, which will reduce the losses to CGPL. And we expect that this extension will happen from the existing 4 weeks to at least end of this year. On the other hand, due to the increased coal prices, the profit for the coal companies have increased, providing us a natural hedge against under recovery and losses in CGPL. Excluding the above provision CGPL, CGPL's coal-integrated portfolio generated a profit of INR 79 crores in this quarter compared to INR 39 crores last quarter. We'll continue to do all that we can to contain the CGPL losses. As we had mentioned, last quarter, the AT&C losses in the 4 DISCOMs increased because of the double blow of cyclone YAAS and COVID-related lockdowns. Subsequently, another cyclone came over there, cyclone Gulab, has also the flooding took place in many parts of Odisha. However, the Odisha team has worked relentlessly to restore the network and continue improving the operational metrics. As a result, we have been able to bring down the AT&C losses across the board, in all the 4 DISCOMs. And we have taken steps to further improve in the coming quarters. As a result of all this performance, the consolidated revenue for the second quarter stood at INR 9,502 crores, compared to INR 8,428 crores in the previous year, a solid 13% growth. This increase was largely driven by inclusion of Odisha DISCOMs and higher generation in renewable portfolio and increased order execution in solar EPC business compared to last year. Also, this quarter saw a very robust performance by our existing generation business and transmission business. And we continue to get very good traction on all our existing assets. As we have mentioned earlier, we have been selectively repaying high-cost debt that has further helped us to optimize our interest cost. Our gross debt has reduced by approximately INR 3,000 crores in last 1 quarter, while the net debt has largely remained unchanged at INR 39,719 crores, despite the CapEx of more than 1,600 crores in this quarter on our renewable projects, distribution business and transmission business. Our net debt to equity stands at a healthy 1.63, and net debt to underlying EBITDA is at 4.29x. Seeing the performance, S&P Global ratings have upgraded the company's credit rating by 2 notches to BB Stable. As we mentioned in the last quarter, Tata Power is now actively looking at growth in transmission space and our partnership with Tata Projects gives us a huge competitive edge in this opportunity. We are actively pursuing both greenfield and M&A opportunities, and we will inform you in due course once these opportunities convert into rewards. Our EV charging business has achieved a very important milestone, installing 1,000 public EV charging in around 180 cities, along with more than 5,000 home chargers. And we expect that this will lead to a rapid transition to EVs in India. We have also entered into strategic tie-ups, which will help us to expedite the expansion of our charging network, both with reputed builders as well as OEMs to ensure that we are present in all markets. We also thank you for voting us once again as the outstanding utilities sector company in Asia's Outstanding Company for 2021, conducted by Asia Money. We similarly were ranked among the top 10 companies in sustainability and CSR responsible business ranking in the ET-Futurescape and 8th Sustainability Index. Such recognition boost our confidence to march ahead on our aspirations to transform Tata Power from a conventional utility to a new-age technology-driven customer-focused utility. Such a transformation is founded on pillars of strong balance sheet and healthy return metrics. With this, I hand over the call back to Melissa for the question-and-answer session.

[Operator Instructions] We have the first question from the line of Sumit Kishore from Axis Capital.

My first question on your Solar EPC business where it seems that the utility scale solar EPC revenue has fallen sharply quarter-on-quarter. So what could be leading to that outcome because we've seen a very sharp growth in solar rooftop and solar pump EPC revenue?

So, Sumit, I think the EPC business, as you know, there's a strong order book. I think as projects get completed and they progress, you have the revenue and the profit recognized. We don't see any long-term issue with it. There has been, of course, pressure on supply chain. As you know, there's global pressure on module price as well as supply chains in terms of containers, et cetera, which has affected, all such projects, which we also face. But we believe that, that is largely improving now, and I think that we will see even our new orders now take into account these new realities. So I think it's a temporary phenomenon, which will soon wade away. So that's the way we look at it. I think the overall business outlook is very, very strong.

Sure. And in the same vein, if you could comment on the solar EPC business margin, despite 50% growth in top line, the operating profit is down 4% for Tata Power Solar Systems.

So as I said, the margins have been affected, as some of the orders which we executed, which were taken long back and they had some impact of the module price as well as the supply chain delays. But I think those are over and now the new set of orders, et cetera, are in line. Because you must understand that the industry has faced such an increase for the first time. So there's been some pressure because of that. But I think we've managed it pretty well. So things can go up from here.

Okay. My second question is in relation to is there any progress on monetization in the renewables vertical and so if you could comment on progress on amalgamation of CGPL in the standalone entity?

The second one was what? CGPL?

Yes. Amalgamation of CGPL in the standalone entity.

Okay. Good. So on the monetization of renewables, we continue to work on it. And we expect that we will be able do it soon enough. We are on the job, and we have made progress. So that's all I can report at this time. We are -- before the year-end, we are trying to do whatever is needed to -- for that business. As far as CGPL is concerned, the order is concerned, we have achieved the NCLT order to go ahead with the final stage, which is the postal ballot for clearing the NCLT order and the recommendation, which we shall be doing so in the next month or so. So I think in the next couple of months or by early Q4, we are hopeful of closing this whole merger process.

Sure. One bookkeeping question. What is the under recovery due to lower availability factor -- plant availability in Mundra UMPP LPG during the quarter? And what was your EV charging business capacity utilization right now?

So the CGPL utilization is 28%. Is that what you're asking?

CGPL and EV capacity charge under recovery because of lower plant availability factor. The PAT number is there in the presentation.

All right. So this year, of course, we have the under recovery as of now is INR 1.15 per unit, okay? But we must add that this quarter's results have about close to INR 215 crores of fixed cost under recovery, which has come through which pertains to the last quarter generation, right -- or last quarter under generation. So therefore, this quarter's results have to be seen in that light. And of course, we have adjusted it now to the revised estimates for the full year generation, which is what is used for accounting of the revenues -- of the fixed cost recovery. But as far as the variable cost is concerned, now because of the interim arrangement that has been done with the procurer, it is [ quiz ] so whatever is the present price of coal that is being reimbursed and the present energy charges that is given by them virtually taking care of the coal. So there would be no under recovery of that.

And that is applicable for the entire generation of CGPL starting with it?

Yes. For the present generation which started from 13th of October, when the plants were restarted.

It's not entire generation fleet.

It's not the entire generation.

It is to the extent you [indiscernible] Gujarat and Rajasthan.

So right now, we are running 3 units. So it's for the full 3 units.

Okay. And just the EV charging capacity utilization?

We'll give you separately the EV charging capacity, especially the public charging. Of course, as far as the home charging and the bus depot charging is there that gets already covered.

Sumit, I think the only point to be noted is it's too early right now to count capacity utilization in EV because of the fact that the expansion is happening ahead of the demand generation. So maybe it's just premature to practice at this time. But we do, of course, have the numbers, and we'll give you. But we are not publishing because it's still not a stable business to serve for reporting quarter-on-quarter.

We have the next question from the line of Mohit Kumar from DAM Capital.

Congratulations on good set of numbers. So my first question is how are you thinking about CGPL and Indonesia mines combined portfolio? Two, in your talk to the DISCOMs, do you think the probability of finding a resolution has inched up higher, given the higher coal prices? And can you please comment on that?

So this -- as we mentioned that this was a temporary arrangement, which was given for 4 weeks from 13th of October. We are given to understand that they would be extending this till the end of this calendar year. And going forward also, they have plans to extend depending upon how the availability of domestic coal and power cost is there. So this is still a work in progress. As far as the coal companies are there, they have been doing very well. The benefit of higher coal prices has helped them to produce much better results. And we expect that in this quarter also they will continue to perform well. So I think on overall basis, as I have mentioned, we are better off because if we see the cluster of both coal and we have a profit of INR 79 crores, we remove the INR 216 crores that was an additional provision that we made in because of the previous cost...

Sir, my question was more about finding a long-term resolution for Mundra.

Let's see, but we have -- now that the government has accepted the procurer, states have accepted the new revised tariff, we do expect that they will find -- they like to find a permanent solution because the challenge of higher availability of power will continue in the future with the restricted supply of domestic coal and the demand increasing leading to very high tariffs in the day ahead markets. So I think there is a desire from both sides to conclude an arrangement which is acceptable to both parties.

And my second question on the coal mines under the new regime, which is likely to be -- I think, your KPC will get lower from December 31 under the new regime. When do we expect to get complete clarity on the new taxation structure? I think at present, Arutmin is foregoing 10% additional outgo from its PAT. Do you think is this the regime which will be there? Can you please comment?

So just to clarify, Arutmin, we've already sold. We are in only process of collection. I mean that has been not part of our performance. As far as the KPC mine renewal is concerned by end of this year, before the end of this year, we should have full clarity. In fact, there's only item, which is in discussion on the Indonesian political system, which needs a finality. But all other things have been sorted out in terms of transfer conditions. So we believe that, that will be soon sorted out and before the December '21 expiry of the license.

And just to add, the changes that are happening over there is virtually [ quiz ] in the sense that while they are increasing the royalty from present 13.5% to 22%, depending upon the grade of coal, they have marginally reduced the corporate tax from 45% to 21%, and then 20% beyond 22. And some other taxes have been added. So virtually, it will be more or less [ quiz ] as far as the new taxes and the old taxes are there. There will not be much of this.

Understood, sir. Lastly, the solar pumps, where are we in the new tender of EESL and we're expecting the speed to be materially high post the new tender finalization?

For the EESL pump, the tender has been sorted out. And there was court order in the month of July and subsequently in the month of August, the court has cleared it. And they have decided that to who are the bidders, who will be given the allotment of. And we are in all categories, and we expect that hopefully, by mid-November to end November, we will get the allotment from all this states.

What was the expectation of the industry, sir?

Can you repeat that? What did you say?

What is the expectation of the industry post the finalization of 3 lakh tender from EESL? Do you think it will go up to 2 lakh per year?

As you know that the KUSUM program, the value is being enhanced by government of India because they feel that this is a unique opportunity to do distributed generation and make these farmers capable of their own generation. So we are expecting that in the next budget also, there will be much more allotment of money from the government under the KUSUM program. We will, of course, be the biggest player in this because not only we do the solar system, but also, we have now launched our own pumps, and we have launched it in 16 states, and we expect that the benefit of high-efficiency, better-quality pumps along with the solar system will help us to have a much larger market penetration compared to anyone else.

We have the next question from the line of Swarnim Maheshwari from Edelweiss Securities.

Yes. Sir, two sets of question. First, there was a news article, there was a media article which said that there was some issue with our -- one of the orders where EPC order is won from NTPC. And there were some issues which actually could lead to cancellation of that order and it's a sizable one. So any clarity over there, sir?

So this was a letter that was written by NTPC to our team because of the delay in execution of this order. This order is being executed in Jaisalmer area where because of the Supreme Court intervention on GID, that is the Great Indian Desert, there has been no clarity in terms of setting up of the plant as well as in terms of evacuation arrangement. We had quite some time back, more than 6 months back, informed NTPC that either we can change the location to other places or you will have to wait and get the clarity from Supreme Court. Our responsibility is to set up the plant. While the responsibility of NTPC is to arrange the evacuation arrangement. Their evacuation line, which is through PGCIL is only coming in the GID area, while we have the flexibility of moving it to some other. So it is expected that once the matter is heard in Supreme Court, there will be more clarity that such issues about providing protection and underground cabling and all the for evacuation of power will be for subsequent projects or for existing projects. And that is why there has been delay. From our side, we have done whatever has to be done. Now it is basically NTPC's call in terms of whether they want to use the existing evacuation arrangement or they want the new one to be made in the new location where we will set up a platform.

So sir, will NTPC actually go for a rebidding if the location was to be changed? Or what's the arrangement? Are we clear over there?

There's no rebidding required. They have contractual -- it's only that they will have to identify whether they want a new location where they will have to tie up with PGCIL for evacuation.

Sir, if I understand it right, out of over 9,500 crores of order backlog, this order still fits in -- this order is still part of our order book, right?

Yes. This is part of that total INR 9,000-odd crores order. This is some, I think -- this is a INR 400 crore order. So it's a very small value on the overall.

Okay. Okay. Fair enough, sir. Sir, my second question is looking at where the coal prices are and overall transition that we are witnessing from gray to green, but the interim transition actually with thermal would be required and supported. Are any plans over here to actually divest our stake completely in Indonesia and get rid of the coal mining business, which will not only be ESG accretive but also provide you the next round of growth funding?

Well, that is firstly, something which we are aware of. It is part of our strategy. I think timing will be depending on what is the best time to do that funding.

But sir, we are scouting it actively. Is that a correct understanding?

Sorry, say that again, Swarnim.

So we are considering this proposal actively to exit.

Yes, yes. You see the moment, we have announced our carbon targets as well as our part that we are exiting thermal, I think it is a corollary that all thermal assets will be under scrutiny depending on their contractual position. So this is certainly one of them. But I can't say a definite time line in the immediate future, which we can put on the table, but definitely it's on the cards.

We have the next question from the line of Puneet from HSBC.

My first question is on the EV charging business. Are you recording any revenue from that business as of now? And which entity is it getting [indiscernible]?

EV is part of our stand-alone entity, and we do record it as new. Right now, because of materiality, we don't report it.

Understood. And what kind of capital allocation have you done for those 1,000 chargers in public space?

It's a mix of own and franchise, but we would probably give you that separately. It's about -- to my mind, it will not be more than INR 15 crores.

So total INR 15 crores for 1,000 chargers.

Yes. But our team will give you a little more detail on that.

Right. Understood. And I think the plan is to go all the way to 100,000 chargers, and that will also be done in a similar way on the franchisee?

Yes. We will have various other ways, also innovative ways to ensure that we have a capitalized business. Those are things which are evolving.

This is only for public chargers. As far as home chargers and fleet chargers and bus chargers are there, that we can't see.

That is onetime payment, right?

Yes. And also subscription model where we provide [indiscernible].

So even for home chargers, there's a subscription model?

Yes.

Okay. Interesting. And can you give some unit economics for those per charger, what kind of payment...

I think, Puneet, it's too early. I think we are on an implementation mode, but I think we will be able to share with you soon when we reach a certain level where the platform is in a shape that we could talk about, I would say, margin target. Right now, our whole emphasis is on, first, laying down the REIT, building the platform, building the customer-related software. So I think it's just too early to talk about the unit economics right now.

Okay. Understood. That's very useful. On CGPL, for the variable pass-through component, what kind of agreement have you signed with the states? Is it likely to get rolled over into next quarter as well? Or is it a hard stop at the end of the year?

So right now, it is more a temporary arrangement to -- not a formal contract but just intimation from the government on the pricing, as Dr. Sinha explained. So we have been given a price based on the current -- old price, the last month's import price. And therefore, we have full recovery. And we expect, probably because of the ongoing situation, maybe extension for some time. And clearly, Gujarat has clearly given that [ rising ] apart from other -- a couple of other states. But whether it will be extended for a longer period, I think we will come to know. But until the situation improves on the ground on overall coal, we expect maybe this kind of interim solution to continue.

So basically for 66% of your volume, there should be no under recovery for the current quarter.

That's what we're trying to do. In fact, whatever we are generating, there is no under recovery from that.

Okay. Even for the other states?

Since we are not generating, there is no question of recovery. So whatever we are generating is -- there is no energy charger under recovery.

For the 3 units, 66%, which you said?

For that, there is no under recovery.

Okay. Okay. And on capacity chargers, is the under recovery likely to happen this quarter as well?

No. Being the Q3, you were saying?

Yes, Q3.

So the way it works is every quarter, you take a view on the annual capacity [ inflator ] availability. Based on this, you book your capacity revenue. So as long as we see within the estimates that we have put out now for the year-wise -- year -- for the full year, we will be -- we'll not have further under recovery. And we believe that we have a strong chance that we will not have under recovery.

But what really was the reason for an under recovery in Q2?

No. The reason for that is if you generate lower, then 65%, there are -- there is a contractual obligation that if you don't produce the required annualized 80% to -- anything less than 80% on an annual basis, you get a proportionately lower capacity charge. That's the capacity charge under recovery we're talking about. On top, there is a penalty to go below a certain threshold, okay? So both of these were operating in the first 2 quarters. And if they continue in the third and fourth quarter, that is a separate issue, which we'll come to know later.

We have the next question from the line of Anupam Goswami from B&K Securities.

Sir, my first question is on the normative tariff on Mundra. Just a follow-up on the previous question. So do we get the reinvestment of the coal prices that have happened? Or do we get a normative tariff for this arrangement?

There is a fixed tariff, okay? And which, of course, behind that calculation is the latest prices, but it is not based on reimbursement. It is based on fixed price, that is correct normative price.

This is till the end of this year? Or do you think we can get an extension beyond that?

So we have not received a formal extension, but whatever we receive is for 4 weeks on Gujarat.

But they have been discussing with us and wanting whether we would be in a position to supply them until end of December on same terms and conditions. They are also taking it as things move. And if they feel that this has to be extended beyond, they'll take a call possibly in later part of November.

Okay. Okay. Sir, another question is on the regulatory asset reversal. That's about around INR 300 crores. If you can throw some light on that.

Okay. That is last quarter, regulatory orders. This is the other one. We see it this quarter. There is no regulatory order. So can you be more specific?

Yes. P&L, INR 324 crores, some movement in -- net movement in regulatory deferral balance. What is the source of that?

Regulatory deferral balance. Okay. That will be tariff -- recovery through tariffs in various companies, whether it's TPDDL or whether it's regulatory. So it's all a bunch of assets where there are regulatory assets recovered through tariff. Normal method is that through the tariff it gets [ out ].

Okay. Okay. Okay. Sir, can you just once repeat on the full JVs, the royalty that has increased and also the corporate tax?

No. So there's no increase. What we were talking sometime back is that in the proposed licensing regulations in Indonesia, there is a proposal to increase the royalty based on swaps of sale price. But there is also -- and there is an imposition of a new VAT tax. But on the other hand, there's a corporate tax reduction, which today was 45%. It's likely to come down to 20% to 22%. So that is the kind of changes that are there. Right now, there is no immediate royalty change.

This will happen only from...

January '22.

Okay. And what is the quantum of that royalty, which is proposed?

So as we've mentioned, the royalty presently is 13.5%. And it will be in different class, 20%, 21%, 22%. Similarly, the corporate tax, which is today 45%, will be for FY '21, 21% and thereafter 20%. So that's the change. And then there are certain other taxes that have been added. So that's -- basically, it will -- if they have reduced corporate tax to that extent in different taxes, they will increase it and make it virtually [ equal ].

So our profit will more or less be same going forward? Or will there be any such expenses more and margin will come down from this?

I think if we wait for another month or so, I think we'll get the final order instead of -- because still it is to be -- the stamp -- the final stamp of that is yet to be received. Right now, we are going by what proposals have gone to the Indonesian government for approval. So I think we all get room to wait for a month or so. I think they will issue the final licensing regulations.

Okay, sir. Okay, sir, one last question on the transmission project. Any opportunities that is coming up from the government or any new tender that is still happening?

Yes, there are lots of them. And we are right now also looking at some stressed asset opportunity through our resurgent platform. So yes, we are in the queue in terms of the transmission base.

[Operator Instructions] We have the next question from the line of Apoorva Bahadur from Investec.

Sir, I wanted to understand the impact of this upcoming first phase of MBED. I believe Mudra will be under the [indiscernible] central generation station. So what impact do you foresee given on the PPA level that the tariffs are quite low? So...

Sorry, what did you say, MBED?

Sir, M-B-E-D. Just want to know if Mudra would be under the MBED on that?

No. This is not that -- we are not selling any power. It's only whatever is allocated to them. That much quantity is being given to them. With the provision that if any other state wants the quantum in lieu of the other, they can take. But definitely not in the market.

No, sir, I just wanted to understand, will this be on MBED mechanism? Will Mundra be under the MBED mechanism?

No. No. Because -- yes.

Yes. Sir, secondly, on this, the interim arrangement which we have spoken about on the [indiscernible] in Gujarat and another states, so does this also entail some of the coal mine profit sharing, which was there under the [indiscernible]?

We have shared with you that it is INR 4.50 -- where is the question of coal mining profit. It's a variable cost of INR 4.50 and a fixed cost of INR 0.90. Why are you asking...

I think you are referring to probably the old HPC and other things which are going on. This is a way -- this is completely different. It's just giving us a fixed price based on the current cost. It has nothing to do with the coal mine.

Okay. Got it. Last question, if I may, and this is on the recurring storms in Odisha. So probably there were some discussions around moving a part of the distribution, et cetera, to underground. Do we see any of that happening? Or is this -- I mean will that entail an additional CapEx opportunity for us?

Sorry, which distribution thing? Sorry, can you repeat?

Moving a part of the Odisha distribution infrastructure underground to basically offset or reduce the impact of recurring cyclone.

See, what happens is because of cyclones coming in certain areas, the government of India and Odisha government have been discussing that can we move some of these. So if that thing happens, then the government gives the contribution for carrying out any work like that. And that will be executed by us. And we gain a certain percentage for execution of these government-funded projects.

We have the next question from the line of [ Navaj ] from [ Ashika ].

Yes. Actually, I just had one question regarding EPC execution. So the thing is that going forward, how exactly should we look at it in terms of execution of the orders and the margins as well from -- particularly from Q3 onwards? Do we see like a sequential improvement immediately for Q3 versus 2Q? Or would it still take some more time for the older orders to get executed and then maybe you see like a high single-digit kind of margin?

I think our long-term target on margins will be similar to last year or -- and higher. But there is -- as I described, there is a temporary pressure on the supply chain. And the newer orders would pick up. And if your question is when will the older orders end, I think there is a gradual end in this year. And some of the orders which you've got in the recent past would all be materializing in the next 6 to 18 months. So you will see that recovery back.

And also, you need to consider that in the last quarter, just last quarter, the manufacturing capacity of modules in China increased by 27 gigawatts. And that's a huge quantity of add-on capacity that has happened. And for them to ensure that this capacity is fully utilized, we expect the prices will come down. So this is a function of demand and supply. Now that the supply is more because of new capacity additions, so we expect that, especially from quarter 1 of FY '22, calendar year FY '22, we will start seeing these prices softening. We have already started seeing prices of containers going down, which had in between gone up very much. So also, we will start seeing the changes even in the prices of modules and cells.

Okay. Also one more question I had regarding...

This is the operator. [ Mr. Navaj ], please come close to the instrument. The audio slightly low from your line.

Sorry about that. Yes. So my other question is actually regarding the overall emphasis on domestic content requirement. So has there been any issues in terms of either cost or availability for -- especially for the solar pumps? Has there been any issue on solar pumps or for that matter, rooftop solar on that part?

So as we had shared with you earlier, we expanded the capacity of our solar manufacturing in India. So from 270, we went to nearly 540. And similarly, the old line that we have now reinstalled that with some changes. So we have adequate capacity for selling modules at our Bangalore capacity plant. And that is more than adequate for meeting the local domestic obligation for the CPSU tenders, including solar pumps and rooftop solar.

We have the next question from the line of Swarnim Maheshwari from Edelweiss Securities.

Sir, sorry to harp on this. There have been many questions on Mundra. I just wanted to understand one thing. This INR 216 crores of fixed charges reversal -- fixed tariff reversals, this takes into consideration our new long-term -- our new PLF for the entire year. Is that correct?

New available -- our revised availability estimate.

Availability.

Correct.

Sorry, your availability for the entire year, right?

Correct, correct. And we are also [indiscernible] that availability would not be way off.

Okay. Okay. And would this also include all the contractual penalties as well as SEB penalties? Because now I believe this year is above 65%, so the penalty amount would also reduce substantially.

So I must tell you that we have already provided for penalties in this quarter, up to date, okay? So that has already been provided. So it's -- so therefore, only for the coming quarters that if we fail, that we will have to provide for it.

Okay. So sorry, apart from the interest costs, can we say that broadly then this is just going to be a cash loss equivalent to the interest cost loss for the second half?

So you're saying EBITDA would be 0? Is that what your question is?

Yes, because our tariff will be coming...

Sorry, you're right. If the future delineation that's going to happen in the next 2 quarters, the reimbursement is full to the extent of the actual cost, which is there today this month. But we can't say that for the future months. But if that is the way it's extended, certainly, it will be there. On the fixed charges, if we have an extra cost due to penalties or any other thing, then that would be extra charge. But by and large, you are right. If we are continuing to get reimbursement, which is close to the market price of coal, then we would have a 0 EBITDA and therefore little interest.

We have the next question from the line of Ankur Deore from Bank of America.

Sorry for the repetition. I understand there was a question earlier on your EV charging business on overall unit economics. I do understand it's difficult to share given the early stage in terms of margin, profitability, et cetera. But sir, would it be possible to share anything on the revenue side the way you shared for some of the other businesses like rooftop solar and solar pumps, et cetera? Any details on that?

Well, it's not about sharing. But right now, we believe that this is -- probably we will have to -- we will discuss and decide from which date we will start. We want to just build first a base level...

Set up.

And I think that then it's worth talking about revenue as well as utilization. It's not that we don't have the numbers, but we feel that this is not -- the comparisons will not be right. But we'll try and see how early we can start putting those numbers. [indiscernible] really network expansion and building the entire customer service network. So as you can see, that's an ongoing project right now. So we are treating it like a project right now.

Okay. And sir, just one thing on the expansion bit. Is my understanding correct that the 1,000 public stations you have, the plan is to reach 2,000 by the end of this financial year and about 10,000 in another 4, 5 years?

Yes. So we are definitely expecting that end of the year, we should be 2,000 plus. And we are now wanting to ramp it ourselves in the subsequent year with more of the EV, electric vehicle, coming in. So we will be adding more than 3,000 going forward for the year. And 2025, '26, we expect that we would be about 10,000. And by 2030, we will be between something like 50,000 type of numbers that we have.

We have the next question from the line of Gopal Nawandhar from SBI Life.

Am I audible?

Yes. Yes, Gopal. Go ahead.

Yes. So the question was on the EPC business...

Mr. Nawandhar, I would request you to come closer to the instrument.

Sure. Is it better now?

Yes.

Yes. So the question is on the EPC business. Sir, in the existing order book, how much is on the variable cost pass-through? And how much is on the fixed cost, largely on the module prices and the other raw materials?

So these contracts are not on variable costs. But if there's any change in law that takes place, like GST happens, so there is significant changes that happens because of force majeure conditions or -- then only you can ask for a revision. Otherwise, these are fixed term -- fixed price contracts.

Okay. Okay. And is it right to assume that we would have already taken some prudent provisions on many of these projects wherever we are seeing the cost price going up? Or it will be taken up when -- as and when the projects get executed?

Substantially, yes.

Sorry, sir?

Substantially, yes. We have taken care of it.

Okay. Okay. Okay. And in terms of receivables, can you give some color on EPC in terms of number of days, how it is and in terms of aging? Can you give some color?

Sure. Can I ask the team to give you the details on that so that then we save time? So we will send it to you.

No problem. And lastly on this -- there is this negative contribution in the JV and associate from Tata projects. Can you just help us understand this?

Yes. That is -- periodically, they do a review of some of the projects where if there is a cost pressure due to which margins may be reduced. So as to the accounting standards, they have to provide for it. And this is probably some of the projects that they have reviewed has resulted in this. So that's what you see there as a provision.

Ladies and gentlemen, we will take the last question from the line of Swarnim Maheshwari from Edelweiss Securities.

Well -- but I just wanted to extend my many thanks to Ramesh. Actually, he's moving on with the new position in Tata Group. So I just wanted to say thanks to Ramesh for patiently listening and for wonderfully explaining all the nuances of a complex company. So thank you very much, Ramesh.

So my pleasure. Thank you for those compliments, Swarnim, and to all the analyst friends. I'm still in the group, and I will be in touch with all of you. But many thanks for all your support to me during these years. And also thanks for all of you to be so cooperative and you're always understanding. So therefore, thank you once again. I will be in touch.

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

Thank you very much, Melissa, and thank you all for attending the analyst call. Really appreciate all of you joining late evening. I know that we had not many other results which were introduced today and we have covered all of that. Look forward to catching up with all of you. But if you have any questions, please don't hesitate to connect with my colleagues, Kasturi and Rahul Shah, and we'll be more than happy to respond and give you all the responses. And all of you take care, and take care, especially now that the vaccination is there, I hope all of you have taken. And happy Diwali and happy festival season for all of you. Thank you.

Thank you, members of the management. Ladies and gentlemen, on behalf of Tata Power, that concludes this conference. Thank you for joining us and you may now disconnect your lines.