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

Ladies and gentlemen, good day, and welcome to the Tata Power Q2 FY '24 Earnings Conference Call. [Operator Instructions] Please note that this conference is being recorded. I now hand the conference over to Dr. Praveer Sinha, MD and CEO of Tata Power. Thank you, and over to you.

Thank you. Good evening to all of you, and thanks for joining the call. On behalf of Tata Power, I would like to extend my best wishes to you and your family for a very happy and safe Diwali in advance. I'm joined today with my colleague, Sanjeev Churiwala, CFO; Mr. JV Patil, Financial Controller; Mr. Kasturi and Mr. Rajesh Lachhani from Investor Relations. And other members from my Corporate Finance and Corporate Communication team. At the outset, let me talk a little bit about the power sector. We have seen that the power demand in the last quarter has gone up by nearly 13% compared to the previous year. And this -- the increase in demand has been seen right through in this financial year. We have seen on a cumulative basis, there has been a growth of more than 10% this year as we have seen last year, where the growth has been 10% compared to the previous here. And I think the cumulative growth in the last 2 years is nearly 22%, which is a record. The peak demand of power was 241 gigawatts, which was nearly more than 10% of the previous years. And we see that this demand continues to be very high even in the month of October. We expect that this will continue for at least another 3 years considering that the demand has gone up not only for the industries but also for our commercial and industrial consumers and including residential consumers where a huge demand of the air conditioning load has led to this urge in demand. Because of these reasons, Ministry of Power has been trying to ensure that there is adequate supply of power in the country and has extended the Section 11 so that all the imported coal-based plants continue to operate and supply power, as also they have mandated that terms, the domestic coal plants also use up to 6% of imported coal for purpose of blending so that there is no shortage of power in the country. And I think this has given good results in the sense that the country has been able to meet the enhanced power requirement, where many of the other countries have struggled to do that. Moving to our financial performance. I'm extremely pleased to share that this will be the 16th successive quarter in which we have shown the PAT. And this has been based on very strong fundamentals of all our existing businesses, including new businesses in renewable and distribution in Odisha. This year, in this quarter, the consolidated PAT is INR 1,017 crores, which is a 9% increase compared to last year. Similarly, the revenue growth has been 9%. And the EBITDA growth has been 51%, just because of much better performance of all the plants, including the Mundra plant. And what we have seen is that in the half year, our PAT has gone up over INR 30,000 crore, which, if you remember 3 years back, it used to be at annual revenue. And our EBITDA has also grown to more than INR 6,000 crores, INR 6,092 crores in the first half of the year. And our PAT has grown by 6% on a half yearly basis to INR 1,924 crores. This has been possible because of a large number of initiatives taken by Tata Power. We have been steadily working on our renewable capacity where capacity additions have taken place during this quarter. And today, our clean energy portfolio stands at 5,500 megawatts, which is nearly 38% of our installed capacity. This is on back of nearly 3,200 megawatt of solar, 1,000 megawatt of wind and the balance being hydro and off-gas plants. And with another 3,760 megawatt under implementation, which will get completed in the next 2 years, we will achieve an installed capacity of 9,300 megawatts of clean energy, which will be nearly 50% of our total capacity. So we have actually set up a very ambitious target that by 2030, we'll have 70% of our installed capacity will be clean energy. I think we will be able to achieve because this does not include the 2,800 megawatts of pumped hydro, which we will be setting up in our hydro plant starting next year -- mid of next year when the work will start and it will get executed in 36 months thereafter. In all our renewable business, including large EPC, large-scale EPC business, our own utility as well as rooftop and group captive, we have seen huge growth, and there is a huge pipeline of projects which are under implementation. We have also been able to start the brand production from our 4.3 gigawatt cell and module plant. The first of the module units have started the trial production. And we expect in the next 2 to 3 months, they will stabilize the module production and the cell production will start in the month of January and will stabilize by March, April. So one of the big challenges of supply chain management and having a much better control on the input cost for solar plants will be taken care once this 4.3 gigawatt plant gets fully operational. In fact, we are the first one in the PLI scheme who have been able to start production. And we do hope that the 4.3 gigawatts, which will become the single largest manufacturing of solar cell and module, plant will get not only operational but will operate at a very high yields and throughput. The other business, especially in our EV charging has also been doing very good. We have nearly 62,000 home chargers and we have nearly 4,900 of public chargers. We have also been able to implement a lot of bus charging facility starting from Kashmir up to various cities, such as Jammu, Srinagar. And we have in Delhi, Jaipur, Ahmedabad, Bangalore and Mumbai. So I think with widespread projects of bus charging, we'll see more and more public transportation also going through EV. Our Odisha Discoms have been doing very good, and we have a PAT of nearly INR 90 crores in Q2 and INR 154 crores in H1. We have been taking huge number of initiatives to clean up the data after the implementation of ERP, and also moving away from provisional billing, which is, in a few cases, less than 5%, which will help us to bring better control and visibility in the billing and collection divisions. We have until now replaced nearly 25 lakh meters in last 3 years, and it really shows that how discipline is being brought in doing the right billing and collecting from the consumers. Our balance sheet continues to be very steady with a net debt declining by nearly INR 1,140 crores in Q2. And our net debt stands at a very healthy INR 36,609, which means that our net debt to underlying EBITDA is 2.65 and net debt to equity is 1.02, which is I think a benchmark for infrastructure industry. We expect the CapEx to pick up significantly in the second half with large number of projects planned in Q3 and Q4, and we will be able to see many of them getting implemented and the benefits of that will start extending to us especially in the utility scale and group captive projects in the subsequent year. We have been able to tie up the arrangement with the Zambia unit, where we had 120-megawatt hydropower plant, which was not able to conclude the power purchase arrangement and receipt of payment. That has been resolved. And we have received a payment of 100 -- we have received -- the company has received the payment of $102 million, out of which our share is 50%. So we've received the payment of $51 million. And all of this has left to -- has led to a very solid balance sheet. And this has also led to the upgradation of Tata Power's credit rating from Ba2/Stable to Ba1/Stable. As you would have noticed Tata Power is continuously working to stabilize its operations and bring consistency in the performance. And every quarter we have shown improvement in our performance because of the stable operation performed of all our existing and new businesses . And this will go a long way in making the company much more stable and with a very healthy balance sheet. We would also be closely monitoring all our financial and operational metrics to ensure that there is consistency in the performance in the future quarters. With this, I would request Yashaswi to open the floor for questions.

[Operator Instructions] We have a first question from the line of Puneet Gulati from HSBC.

Congrats on the good numbers. Can you elaborate a bit more on what you're seeing in terms of profitability for Mundra and the coal mine separately as well?

Yes. This is Sanjeev Churiwala, CFO Tata Power. First of all, let me wish all of you a very happy Diwali in advance. I think in our previous calls, your question has been asked on the Mundra and the coal mines. So what we have done this time for the benefit of all of you, we have included a separate slide which gives you the cluster-wise performance. If you have access to that deck, if you go to Slide 36 and 37, all the details are available for you. But just for the sake of your understanding, this year, when we see our EBITDA going up by 51%, PAT going up by 9%, that is in spite of our coal mining profit significantly going down. Last year, for the same period, the coal pricing was close to about $135, $140. And we are now witnessing coal prices of about close to about $80. So our coal profits have significantly come down, but that has been more compensated by profits coming from all our core business, including overall generation business, our existing thermal business, including transmission, distribution, renewal, new businesses like in Odisha and renewable. So I think this is a big shift that we kind of delivered on, our PAT, almost 80% of that plus is coming from the core profit, and we want to continue delivering that. When it comes to Mundra, Mundra is just a cost plus model under Section 11. So we will be recovering all the cost. So it's just a little -- and the normal PPA would have had a loss under Section 11, it's just a cost recovery. So of course, there is no loss, but it's almost a breakeven on the PAT as well.

You are breaking even on PAT as well?

Yes. Yes.

And secondly, on the renewable side, there has been a lot of bids which happened during the first half of this year. How are you positioning yourself for that opportunity? Or you think the pricing is still quite tough and competitive intensity is too high? If you can elaborate a bit there?

Our strategy is very clear. We're kind of still looking at delivering 1.5 to 2 gigawatts of renewables on an average. Even this year, we will be commissioning close to about 1 gigawatt of renewable. We already have a very healthy pipeline in terms of the wins that we had, including our good captives. So our focus when we look at overall solar, it's a combination of group captives, rooftop and large scale projects put together. In both of them, we have a healthy pipeline. And that, of course, includes hybrids and as well as RTCs. There's a combination of all of that.

Okay. So you don't want to build further pipeline right now, the way some of the other peers have been talking about building 10, 20 gigawatt of potential pipeline...

I think when it comes to the long-term pipeline in case we have set our aspiration that we will be delivering 15 gigawatts plus, right, in the next couple of years. As we speak, we already have a commission capacity of 4.23 and about 3.6 is in the pipeline. So overall, we're talking about an 8 gigawatt, say, commissioned and under pipeline. But of course, we have almost 3.6 gigawatt of overall pipeline capacity that is coming up. So I don't think that we are not building it up. We are kind of sticking to our aspirations and most likely with our aspirations for the pump storages, coming through in the next 3 years' time, we're likely to want to exceed our targets that we have set for ourselves.

Right. That's very helpful. And lastly, what stage are you on your pump storage business? Do you have all approvals, environment clearance in place or still applying for the same?

See all the approvals have been applied for, some have been received, and we expect all our approvals to be in place by March, April. And that's why we are saying that we will start the work by mid of next year. Still this is in our existing reservoir and existing locations where we have the hydro power plant. There's no fresh land acquisition or anything that is required, and we will be able to complete it in 36 months. So that's our time line that we are looking. So mid '27, we will have the pump hydro plant operation.

We have our next question from the line of Apoorva Bahadur from Goldman Sachs.

Sir, if I see the financials, the Trust Energy has reported meaningful swing in profits. So I just wanted to understand what's driving this? And how should we view this business in future?

Yes. So I think when you look at the Trust Energy, the way we are reporting here is basically entity wise. Best if you look at a cluster-wise performance. But what is Trust Energy. Trust Energy is simply nothing else but a shipping company. So more coal we bring in, which is part of any case of coal cost, it is the profit attributed to the Trust company. But best is to look at Mundra and other coal companies together. If you go to Slide #36 or 37, you can look at here -- go to 37, which is H1. Yes. If you look at the line, which says Mundra, Coal and Shipping, this gives you the combination of all the things, which includes the Mundra, which includes the shipping and which includes the coal mines profit.

So it is completely linked to the volume of freight, which we are moving and not to the shipping rates at all?

Yes, correct. It is largely related to the volumes.

Okay. So in every quarter, whenever we -- Mundra operates more for sort of Trust will make a higher profit, understood.

So actually, that is kind of a cost-plus model. So we will not look at kind of a very small amount sitting over there. Best to look at the Mundra, Coal and Shipping, which if you look at Slide 37, I'm sure you have access to that, you will find all the combined numbers here.

Sure, sir. Sir, secondly, also, if I see the same slide, I think eliminations used to be quite significant historically. I think that number is down meaningfully. I believe some part of it could be attributed to probably not utilizing own coal at Mundra, but -- I mean if you can throw some light...

Elimination is basically all the intercompany thing, right? We are an integrated company. So while the overall numbers are only coming down, not going up, in terms of elimination, but the fact that this all depends. Higher the intercompany transactions, there will be higher elimination. So I think the best way to look at it is post elimination because otherwise, the numbers are getting in the gross and thereafter there's an elimination. This is more of an accounting entry.

Understood. And I think, sir, lastly, on the realization of dues from KPC sale and also from Itezhi. So I believe that sits in reduction in the unbilled revenue in your cash flow.

You're looking at a particular slide?

The Itezhi tariff order, right. Maybe a resolution which happened, I think $102 million which is given for us and also the receipt of...

That is not in the previous quarter. So the Itezhi will come in the subsequent quarter. So it is not in the previous quarter.

Okay, sir. And for Arutmin, we have received already during this quarter?

Yes. Arutmin money has received and your question was ITPC, ITPC has received the money from its procurer, that is ZESCO, right? And we have received the dividend this month. So nothing is reflected in September, but the profits will be reflected in quarter 3, and will not be shown as receivable because we already received the money.

We have our next question from the line of Subhadip Mitra from Nuvama.

My first question is that in a scenario where we are looking at the Section 11 benefits continuing for the entire fiscal year, would we going to be still be at net breakeven or will there be profits?

No. I think as of now under Section 11, the whole idea of Section 11 is cost pass-through, right? So eventually, the purpose is that whatever is the cost and the overheads we're able to recover fully in the tariff and hence, you will likely see a breakeven scenario.

So this is at the net level. So maybe at the cash level, there might still be some cash profit. Is that the right understanding?

When we're looking at overhead scenario, you kind of include all the Ind-AS adjustments, you look at the depreciation. So yes, on a PAT level, it will be neutral. On a cash level, it will be slightly positive.

Okay. Understood. And with regards to the long-term resolution on Mundra. Are we looking at it following the lines of the Section 11 tariffs or thereabouts?

Yes, something very close to that. So that the tariffs become more cost reflective. And it is under discussion, but I think somewhere close to that.

Understood. Secondly, with regard to the renewable business profit, which have certainly offsets the loss of profits from coal and UMPP in this quarter, so on the renewable piece, clearly it's visible that I think the EPC side of the business is throwing up a good amount of profitability. So I just wanted to understand that for this business, are we still looking at doing more third-party sales and hence this can continue to become a growth center?

For renewables, typically, you would see that we have a huge pipeline, 3,800 megawatts of projects, which we need to commission apart from the rooftop that we need to sell. And many of the projects will get completed in the next 2 quarters. So I think you can expect a very good performance by the revenue -- by the renewable business in the next 2 quarters. And also in the next 12 to 18 months, when many of these projects will get commissioned. But I think a renewable business, you will see a huge improvement over a period of time.

Understood, sir. But my question was that if we are continuing to do more of self EPC then in the consolidation, it will get knocked off. So only the third-party related EPC would actually start showing up as your profits in the consolidated numbers. I just wanted some clarity on that.

No. Even when we do our own project, there is a profit in that. So they work as separate entities. So the EPC business will have a profit on inclusion of those.

In fact, even in this current quarter, more than 50% of the business and the profit that you see is basically coming from third party. So I think it's a combination of third party as well as in-house.

Understood. Understood. And on the coal front, which I think recent uptick in coal -- in the international coal indices, would you again see a jump back to, let's say, coal profitability over the next couple of quarters?

I think all indicators are showing that the coal prices possibly globally are stabilizing now. We have seen a sharp drop every month over the last 6 to 9 months. In fact, when we compare over 12 months, some about $135, $140 have come down to $80. And over the last few weeks, we are seeing the price stable in that quarter. It's unlikely that we will see a big swing going forward. But you never know what happens. We never predicted this kind of high prices earlier. And then such a sharp fall drop again. So it's very difficult to predict. But as of now, we're kind of thinking that it should remain range bound.

Understood. Last question from my side. This would be with regard to the large tendering activity that we're seeing on renewables, whether it's solar or hybrids, et cetera. Is there any ballpark target number that you have -- or market share number that you have in terms of winning across this market size of maybe 30, 35 gigawatts, which is understandable?

See the only ballpark is that there should be good returns on them. So that is what it is. If it is not a good return, then there is no point in picking orders. And you have seen that many of the developers took orders at INR 2 and INR 1.99 and all that and have lost money. So the only ballpark is that we should get good return. And also, we are now leveraging more towards hybrid projects. So it's not just coal, solar or pure wind but they are solar and wind combination. They have solar, wind and storage combination which we won yesterday. So we will be moving more towards complex projects, which requires a combination of solar, wind. And once we have our pumped hydro, then we will begin in 24/7 renewable power.

We have our next question from the line of Sumit Kishore from Axis Capital.

My first question is regarding the trajectory of margins expected for TPSSL. Once the 4.3 gigawatt module cell manufacturing capacity will be commissioned by the end of the year. So for next, what will be the bump-up that you expect in margins here?

Mr. Kishore, may I request you to mute when you're not speaking. There's some background disturbance. Thank you.

I think when we look at EPC business, per se, while in quarter 2, we are about 4%. That too in a very, very difficult environment situation where the sales and model prices are moved significantly, our desire is to kind of deliver an EPC margin on 4% -- about 5% of the EPC business. When it comes to cells and modules, of course, it's a combination of largely using in-house where we ensure that whatever costs we have incurred, which is roughly about INR 4,000 crores plus, we get a different return on that, right? So we will ensure that the cost plus markup happens to get back our return. We're not linking directly to the EPC business per se, but we will be setting it up as a separate profit center.

Right. But ultimately, it will get used up in your -- for the 40 EPC projects as well as your in-house projects. And it would be reported under TPSSL. Is that right?

No. So when the manufacturing business starts, so the rate is for almost 2/3 of the production, which is 3 gigawatt, that will be used, of course, in-house. So TPSSL will buy that material from our new manufacturing plant. And then it will be basically the billing to our large scale utility project, and that's the way we want to do. So we already have a new company called TP Solar, which is in Tamil Nadu, where this 4.3 gigawatt setup is coming through. And of course, that company might also sell 1 to 2 gigawatt depending upon the need in the international market and domestic market. And whatever profit it comes over there, will be sitting over there.

So could you give us a sense of the capital cost for the project as well as a number of hours of storage now that you would have in your projects in Maharashtra and the associated RE capacity that you would have to set up?

I think you're asking about the pumped storage?

Yes, yes, yes.

Yes, I think we have already tied up with the Government of Maharashtra for 2.8 gigawatts, which will be setting up in the next 3 years. And of course, it is basically to cater to down the clock delivery of renewable energy. And of course, depending upon the models, either we can sell the storage capacities or tie up separately. But that will depend once we commission the plant as to what the need of hour. But yes, again, that will be a separate profit center and will be delivering its own profit.

So what is capital cost sort of targeted for this project...

Capital cost?

Yes, [indiscernible] how does the project mechanics work?

As of now, for the capacity that we are planning is roughly about INR 13,000-odd crores. in terms of the capital outlay.

Okay. And are there any nonrecurring items in Q2? We see some other income from partial sale of Unit 6 equipment of Trombay of INR 52 crores. And what is the treatment of this INR 2.3 billion of Arutmin sale proceeds?

Arutmin sales is part of the consideration, right? It's nothing to go with the P&L. That is purely the cash flow that has come, because Arutmin was sold many years back, this was the final last leg of the consideration, which is now coming. So there's no impact of that on the P&L.

Right. Right. The only P&L impact is on the other income?

Sorry.

The only P&L impact is on the other income for this Trombay Unit 6?

Yes. Yes. That unit 6 is INR 50-odd crores.

Got it. There's no other nonrecurring items in this regard?

No, there is nothing.

We have our next question from the line of Anuj Upadhyay from Investec.

Sir, question relates to the 1,158 megawatt of EPC project that we have canceled off. Could you just elaborate further which project in fact it was and why the need to cancel it of now considering the fact that the module prices have almost come down subsequently.

These projects were basically where we had to do third-party EPC work. And the client was supposed to provide us the land and they could not provide us the land and other clearances which were required to set up each project. So that's why it was decided that we terminate it after we have come out. Other than that, all the other projects were, of course, going on.

Okay. And considering your earlier remark to question which was asked by a few of my colleagues, is it that a shift in the strategy that our focus would largely be catering to move towards the C&I category of consumers rather than the Discoms from the IPP scale, because the scale of tendering which has been happening in the first half and the rate of the project movement which we are having specifically for the IPP side, it doesn't match it. On the other hand, we have been getting good orders from the C&I and the rooftop. So just to understand is there any strategic shift or calculated bidding which we are doing?

So our stand has been consistent. Those places where we will get better margins, we will execute those projects. So we have seen that in group captives, we have been able to get much better margins. And that's why we are doing. And also some of the utility scales that we have won, we have won large projects in Delhi and from Delhi Discom, and then from Mumbai Discom and some of the others. We have been doing those projects. Those are typically hybrid projects. So I think focus is that we need to get better margins and those are the type of projects we need.

Fair enough, sir. And on the Odisha, sir, we have been seeing Western Odisha again reporting high AT&C losses. Is this something cyclical or seasonal impact which actually has led to a drop in the profitability as well over there? Or is...

So Odisha what is happening is, as I mentioned to you, a lot of cleaning up operations have been going on in terms of the number of consumers and the type of billing. And you have seen that in the past 3 years, we have replaced 25 lakh meters and discontinuing the provisional billing and cleaning up the books. So that's what we have done. And hopefully, by next 2 quarters, we will have completed all the 4 Discoms. And many of the consumers who were earlier so-called ghost customers, they have been doing. So I think you would see that we will bring huge amount of consistency in the Odisha operations and also ensure that proper billing and proper collection takes place.

Okay. And lastly, on Mundra, sir. So till when the Section 11 will be in force as on date? And our expectations going ahead, considering the fact that the country is moving into a deficit zone, so I'm pretty sure...

So Mundra right now is till June '24. And there is -- as you rightly mentioned, that there is a huge demand of power, and this is expected to continue next year also. So I think for at least next 2 years, it looks like there will be a shortage of power, and there will be huge demand. And we expect that if we have to meet 100% requirement, some of the imported coal plants have to operate under Section 11.

If I just slip in for last question, you mentioned INR 13,000-odd crores as overall CapEx for the PSP project. So it includes the renewable capacities as well, which will be filling the PSP plant or is only the PSP equipment or the setup for which you have mentioned INR 13,000 crores?

This is only the PSP. The energy that will be required for [ mopping up ] will be a separate investment, which will come in the renewable basis.

We have our next question from the line of Rajesh Majumdar from B&K Securities.

So I have a few questions. First question is on the regulatory equity, which is at about INR 11,850-odd crores as of 30 September. So considering the CapEx you are planning for the next 5 years on the existing operations as well as Odisha Discoms and pumped hydro, where should we see this regulated equity for FY '27 or FY '28?

I'm not clear. You want to respond?

Yes. So I think this is -- if you're looking at the regulated equity, it depends upon the kind of CapExs that is required to be done and the percentage of money that will come to the equity. So there is no direct correlation per se, right? It will all depend upon the opportunities that we'll have in the next 3 years. So for example, this year, if we're doing a CapEx of, let's say, INR 12,000-odd crores, right, and we look at 25%, 30% of equity coming in, we'll also have to look at the cash flow. So I think it's a combination of various things. This per se on the regulated equity will not be able to decode and give you a perfect answer. But yes, if you see between quarter 2 of '23 and quarter 2 of '24, some INR 10,900 crores, it is gone up by about roughly [ INR 1,900-odd crores ]. So of course, to that extent, we contribute equity, it will keep on going up. And this is might be all regulated equity, which will be giving a return of 15% plus.

Right. So the pumped hydro storage will not be part of this regulated equity income or it will be separate?

No, correct, pumped hydro storage will not be part of the regulated equity, it will be separate. It will not be regulated.

Right. And how do we look at the economics of the pumped hydro storage then, if you see it as a separate business?

The approach to non-hydro to hydro feasibility is very simple. That will enable us to kind of deliver the RTC ambitions that India have because pure solar or pure wind will have its own limitation on a large-scale deployment. And very clearly, given that we are putting up this on our own reservoirs, our CapEx cost and our per unit cost should be very, very competitive.

So we would be targeting the 15% ROE here also or more than that, as per the internal IRR rate of return that we target in projects?

As Dr. Sinha said, anything that we do have to deliver us the cash, deliver us the return. So till such time that is delivered, we will not touch any project.

And that is the minimum.

Okay. Okay. That's helpful, sir. And my other question was, sir, on Mundra, you mentioned that we are breaking even now. So are we breaking even at the cash level or at the PAT level because we have a lot of noncash expenses as well on the interest and depreciation. So where are we breaking even at the cash or the PAT level?

We are breakeven at the PAT level. You can say there's a slight improvement on the cash side because we'll have various adjustments for Ind-AS and the depreciation that you can add back. But by and large, it's not much of a difference. So I think best to kind of consider that at a PAT level, if we continue on Section 11, we like to ensure that we are breakeven at the PAT level.

And sir, my last question is, do we have any merchant power sales from our existing operations? And because the merchant power rates are very lucrative and a lot of -- we see lot of competition running in the merchant power market. And do we have any capacities? Do we plan to increase the capacities there?

Yes. So we have merchant power sales from our 2 locations. One is Haldia, which is the entire capacity is for merchant capacity. Another is at Prayagraj, where there's a small quantity of merchant sales. All put together, we do not have huge capacities on merchant.

Totally what -- how many megawatts will be there on the merchant right now?

It's about 300 all put together.

Okay. And we don't plan to increase this significantly? Or do we plan to?

No, no plans.

We have our next question from the line of Atul Tiwari from Citigroup.

Sir, for this PSP project, has the PPA been signed? Or do you plan to keep it open like on merchant?

No, no, the PPA will be signed with the renewable company, and we will package this as a 24/7 renewable power source.

Okay. So your own renewable arm will sign the PPA, but then there has to be ultimately an end party, right, who will be taking this power. So I'm asking whether do you have visibility of a guaranteed offtake from this? Or how does it work? That's the question.

Right now, we've not signed up, but there are a large number of people who are interested, including Tata Steel with whom we recently signed a group captive of 900-odd megawatt, so there are a large number of people who are interested. We need to be 100% sure as to when we will be able to offer this power. At that stage, we will sign it.

We have our next question from the line of Girish from Morgan Stanley.

I had a question to the CFO. So basically, on Slide 34, we have the total B, which is a gross revenue, EBITDA and PAT and then the elimination. What I observe is at EBITDA line and PAT level, there is a Y-o-Y decrease in elimination of INR 1,000 crores. I wanted to understand which entities are attributing to a lower decline, negative number in EBITDA impact, please?

Yes, that is correlated to the dividend. So depending upon the dividend that we have at a consol level it is eliminated. If you go to Slide #39, you'll find the workings over there.

And this is part of the stand-alone entity only or this is something...

Yes, that's correct. It's part of the stand-alone entity.

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

My first [ question ] you talk about the cancellation of orders. Is there any penalty associated with it? And has that already been accounted for?

No, there's no penalty. These are all third-party EPC orders and all. We have canceled it, because as I mentioned to you, they could not apply to their requirement of giving us land and some other benefits.

Okay. So this was canceled...

I'm sorry, you're sounding muffled, Mr. Gulati. Can you repeat your question?

Sorry, can you hear me well?

Yes.

Yes. So I'm [ talking INR 1,158 crores ] number was canceled by IPP.

I didn't say IPP. These are people who wanted projects to be implemented. So there can be a large number of other people also.

No, right. I'm just trying to understand who initiated the cancellation? Did you have to initiate or did they have to initiate the off-taker and if they paid any penalty for that or if we had to pay any penalty for this?

No, no, it's a mutually negotiated, I think.

Okay. And no, it wouldn't have impacted the P&L at all?

No.

Okay. Understood. Secondly, on the Mundra when you say breakeven, what is the underlying debt that you assumed for calculating interest?

We'll have to look at the Mundra's stand-alone numbers and the debt over there. But the usual debt that stays in the Mundra is roughly about INR 11,000 crores, INR 12,000-odd crores, which is there to support the business over there, which includes both long-term and short-term.

Yes, which is all long-term, short-term commercial paper, term loans all put together.

No, no. Specifically for the Mundra profitability when you attribute that breaking even, there is interest, so that's the entire INR 11,000 crores.

About INR 11,000-odd crores of debt.

Okay. Okay. Okay. So full debt is assumed, not the way it was earlier positioned separately under the SPV?

No. Mundra, as a plant, has its own debt portfolio and we calculate versus that.

We have our next question from the line of Noel Vaz from Union Mutual Fund.

I just have one question on the upcoming cell and module line. So I just wanted to know what exactly is the expected cost of production at this facility?

Sorry, could you just repeat, your voice was...

Cost of production is still being worked out. So it's a little too early to say what will be the actual cost of production. Maybe by February, March, we will be able in a position to give you the exact cost of those.

We'll take our next question from the line of [ Gaurav Kumar from TRP Corporate Ventures ].

Sir, I just wanted to know about your home automation and smart switches business, how is this business doing? And what are your plans to scale up this business?

So these are still work in progress where we are trying to come up with the new products as well as new solutions. So these are still very small numbers where we are trying to test the market and its viability. At this stage, we may not be in a position to give you any specific details for that.

So you're operating this business as a separate business -- strategic business unit or does it come under consumer business?

It comes under Tata Power.

Okay. And sir, my next question is regarding supplementary PPAs that you were about to sign with the state government of Gujarat and other states as well. So have you signed this supplementary PPAs?

No, no, we have not signed. We are now operating under Section 11. So it's not yet time. We are waiting for...

We'll take our last question from the line of Amit Bhinde from Morgan Stanley.

Sir, I wanted to understand that when Mundra was consolidated with stand-alone, it was expected that tax will be there on the stand-alone entity, but we see that the tax is coming -- reflecting at around 20%, 25%. So why is that? And what should be the outlook on that? And the second question I wanted to understand is your CapEx plan for F '24 and '25?

The CapEx plan for F '24 -- for the next year, we are still working on our strategy. We'll let you know as and when we complete that. With respect to the tax, it's largely around the deferred tax reversal. We do not pay any tax at the Tata Power standalone level.

Have we informed?

No, we will be informing.

So you could have been informed today. Everyone was there.

So, as I said, on our stand-alone basis, we do not have any cash tax payment because they are carry-forward losses. So what we would see is the deferred tax reversal only. So there's no cash tax outgo.

Right. And just on the CapEx for this year? Next year, I understand you are still under planning. For this year in H2, what should be...

I think in H1 we have spent close to about INR 4,500-odd crores. And possibly for the full year, we might land up anything getting between INR 11,000-odd crore plus/minus 10%.

I would now like to hand over the call to Dr. Sinha for closing comments. Over to you, sir.

Thank you, everyone, for joining for this call. And in case you have any further queries, please connect with my Investor Relations team, both Rajesh and Kasturi. And we will be more than happy to furnish. We'll try to make the presentation much more simpler based on the feedback. So keep on giving us your feedback, and we'll try to make it more analyst friendly. And once again, wishing all of you a very happy Diwali and hopefully, we'll catch up soon. And thank you, Yashaswi, for arranging the call.

It was my pleasure, sir. Thank you. On behalf of the Tata Power Limited, that concludes this conference. Thank you for joining us, and you may now disconnect your lines.