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Earnings Call Transcripts
Pursuant to Regulation 46(2)(oa) of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, the transcript of the audio call recording of the Company’s Analyst Call held on 28th October 2022, on the Audited Financial Results (Standalone) and Unaudited Consolidated Financial Results (with limited review) of the Company for the quarter/half-year ended 30th September 2022, is attached herewith.
The transcript of recording can also be accessed on the Company’s website using the following link:
https://www.tatapower.com/investor-relations/analyst-call-recordings.aspx
You are requested to take the same on record.
Yours faithfully, For The Tata Power Company Limited
(H. M. Mistry) Company Secretary
“Tata Power Company Limited
Q2 FY ’23 Earnings Conference Call”
October 28, 2022
MANAGEMENT: DR. PRAVEER SINHA – CHIEF EXECUTIVE OFFICER &
MANAGING DIRECTOR – TATA POWER MR. SANJEEV CHURIWALA – CHIEF FINANCIAL OFFICER – TATA POWER MR. JINENDRA PATIL – FINANCIAL CONTROLLER – TATA POWER MR. SOUNDARARAJAN KASTURI – INVESTOR RELATIONS – TATA POWER MR. RAJESH LACHHANI – INVESTOR RELATIONS – TATA POWER
Page 1 of 16
Moderator:
Ladies and gentlemen, good day, and welcome to the Tata Power Q2 FY '23 Earnings
Tata Power Limited October 28, 2022
Conference Call. As a reminder all participants’ lines will be in the listen-only mode and there
will be an opportunity for you to ask questions after the presentation concludes. Should you need
assistance during the conference call, please signal an operator by pressing star then zero on
your touchtone phone. Please note that this conference is being recorded.
Today, we have Tata Power management team on the call with us. I now hand the conference
over to Dr. Praveer Sinha, CEO and MD of Tata Power. Thank you, and over to you, Dr. Sinha.
Praveer Sinha:
Thank you very much, and good evening to everyone, and thanks for joining for the Q2 Analyst
Call. On behalf of Tata Power, I would like to wish all of you a very happy Diwali and also my
best wishes for the festive season. Today in the call, I am joined by my colleagues, Sanjeev
Churiwala, CFO; Jinendra Patil, Financial Controller; Kasturi and Rajesh Lachhani from the
Investor Relations and a few other colleagues from my finance team.
Let me, first of all, start with giving you some background about the consumption of power in
the country. What we have seen in the last six months is that there has been a huge increase in
the requirement of power. The peak power went and touched something like 207 to 209
gigawatts and also in terms of energy, the increase has been nearly 12% in the last six months.
Of course, in the last quarter, the demand was a little subdued because of extended monsoon,
which actually went right up through September and even in October. This also was a period
when we saw that during the month of especially April and May, there was a shortage of coal
and during that period, the peak prices of power went up in the exchange.
Since then, there have been much lower peak prices. And also, there is a capping of peak price
that has been done by the regulator. During this period, Tata Power has done exceedingly well.
In the last quarter, our PAT has grown and also our revenue has grown and EBITDA has grown.
In this quarter, our PAT has grown by nearly by 85% from INR 506 crores last year to INR 935
crores. Revenue has grown by 49% from INR 9,502 crores to INR 14,163 crores. EBITDA has
grown by 18% from INR 1,732 crores to INR 2,043.
If we look at the H1 data also, we find that in H1 also, like the quarter, the PAT has grown by
87% from INR 971 crores to INR 1,890 crores. The revenue has grown by 49% from INR 19,076
crores to INR 28,939 crores and the EBITDA has grown by 1% from INR 4,097 crores to INR
4,150 crores. This growth has been on back of excellent performance by all our businesses, our
existing generation business, hydro business, coal business, all of them have done very well.
Our coal mines have also done exceedingly well on back of high prices, of course. Mundra, we
have been able to operate the plant under Section 11. And the interim order of the regulator has
ensured that we get the full fixed cost and also states, who were not scheduling the power have
to pay the fixed cost as we had shown the availability of the plant. And now we are, of course,
expecting the order on the full pass-through of coal coast, which will give us a further
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Tata Power Limited October 28, 2022
improvement in our performance in the subsequent quarters. We have also seen all our other
businesses are doing very well.
Our renewable capacity is today, the utility scale is something like 5,660 megawatts on back of
the 850 megawatts of projects that we won in the last quarter. This includes 3,870 megawatt of
operating plants and another 1,790 megawatts of projects, which are under different stages of
implementation.
We expect that in the coming years, with the type of increases improvements that we have seen
in our hit rate in winning projects. We will be able to add a large quantity of such big projects
in different parts of the country and these will not only be just pure solar or pure wind, but will
be hybrid projects also.
We also won projects under the EPC route, where we won projects of 125 megawatts from
NHPC and 100 megawatt from SJVN and we implemented during this period, 625 megawatts
of third-party EPC projects also.
We have a very healthy order book of nearly 3,800 megawatts with a value of nearly INR 15,000
crores. Our 4 gigawatt manufacturing facility is going well. The work has started at site and
ordering of main equipment’s have taken place and we expect the rollout of the first of the
module from the plan by next year, July-August and the first of the cell by next year December.
So that will help us in meeting our future requirement of cells and modules for our projects and
also for the EPC projects and rooftop projects. In the rooftop business, we commissioned 138
megawatts of capacity in this period and we also won 330 megawatt of orders, totalling to INR
1,233 crores. We are present in more than 265 districts of the country have happened and more
than 100 cities.
And we expect that with our present order book of nearly 400 megawatts with a value of maybe
INR 1,500 crores we'll be able to grow this business many more times than what we have done
in the previous year and quarters. We already have a cumulative rooftop portfolio of about 1,150
megawatts and this keeps on increasing every month and every quarter.
In the solar pump business, we installed nearly 6,000 pumps in Q2, taking our total installation
to 17,000 pumps. And we expect that with more than 80,000 pumps across India, we will have
a major presence in most of the states in the country.
On the e-mobility, we added 722 public chargers and we now have more than 3,000 public
chargers in different parts of the country including highways. And we have nearly 23,000 home
chargers. Apart from this, we have about 240 bus chargers in different cities in the country.
Our transmission and distribution continues to be very steady and has been growing at a very
fast pace. During the quarter, we took over the South-East UP Power Transmission Company,
through the the resurgent platform. And also the work on the NRSS transmission project has
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Tata Power Limited October 28, 2022
started. And we expect that we will be able to complete all these projects in the next 6 months
to 12 months progressively in these locations.
Also, we have been able to push our smart meter initiative and we have nearly 4 lakh smart
meters installed in Delhi, Mumbai and in different parts of Odisha and we expect that soon we'll
be able to cover in next three years virtually all our customers in these places. Our distribution
business in Odisha, which we took over progressively in the last two years, have done
exceedingly well.
We have been able to not only reduce the AT&C losses to a very large extent, but have been
able to also improve the reliability and customer connect and excellent service being provided
to our customers. Many of the legacy issues over there have been sorted out. There were nearly
20 lakh meters that we replaced, which were not working and all were the legacy meters, the
electromechanical meter. And that has helped us in improving the billing efficiency and also
given the current consumption that is being done by the consumers. And the result of that will
start coming in the subsequent quarters.
Moving to our balance sheet. We have been able to ensure that our net debt continues to be less
than INR 40,000 crore. It's about INR 39,000 odd crores. And this is in spite of the fact that we
have done more than INR 3,000 crores of capital investment in this year.
Our working capital also has improved because of better collections in all our businesses
including our renewal business, and we have started getting the money from some of the states,
which earlier where delaying the payment. And we do expect that all the old outstanding will
get liquidated in the next few quarters.
Our net debt to underlying EBITDA has improved from 3.6 in last quarter to 3.5 in this quarter.
Similarly, our net debt to equity has also improved from 1.55 to 1.32. And we expect that going
forward, we'll be able to maintain at these levels, notwithstanding the fact that there's a large
amount of CapEx that has been planned in our renewable transmission and distribution business.
As I had been mentioning earlier, Tata Power has been continuously moving towards a long-
term aspiration and the 12th consecutive quarter of good performance shows that a huge amount
of foundational changes have happened, which is ensuring that the sustained performance and
results are being provided. And I think that the direction of change that we have seen will help
us to further improve in the coming quarters. So we have, of course, shared with you the detailed
data of our quarterly results.
And I now look forward to have your questions and the floor is now open for Q&A.
Moderator:
The first question is from the line of Mohit Kumar from DAM Capital. Kindly proceed.
Mohit Kumar:
Congratulations on a good set of numbers. So my first question is on the Mundra short-term
arrangement. Is it being extended post 31st October 2022? Have you heard anything from the
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government? And secondly, are you booking the tariff completely on cost plus for the quarter,
or is there something which will still be pursued at CRC?
Tata Power Limited October 28, 2022
Praveer Sinha:
So thank you, Mohit. First of all, the existing arrangement has been extended up to 31st of
December. And it is not sure that anything gets further extended, but the supply under Section
11 continues, and continues up to 31st of December.
Secondly, right now, we have booked the Mundra tariff based on what the Ministry of Power
has given as an interim tariff. The difference between the interim and the actual tariff, that is to
be decided by CERC. As we had shared with you earlier, under Section 11, any generation has
to be on a cost-plus basis. That means actual costs that you have incurred will be paid to you.
And that was the principle on which even the interim order of CERC came whereby they gave
us the full charge for capacity, which is INR 0.90 and no reduction was allowed. And also states
which were not scheduling power, they had to pay because we were showing the availability. So
the Section 11 principle is very well laid out. And we expect that once the final order comes, full
pass-through of coal will be given to us.
Mohit Kumar:
Secondly, sir, what is the status of Mundra long-term draft supplementary power purchase
agreement, where are we right now? And when do you think we will resolve this entire thing?
Praveer Sinha:
So, since the existing arrangement is going on, Gujarat government has been going a little slow
on finalizing the Mundra arrangement. So let's wait and watch if the existing arrangement
continues then this provides us the opportunity to do the supply of power on cost-plus basis, or
if that does not get extended, then of course the Gujarat government would come forward and
finalize an arrangement which is acceptable to both sides.
So I think for the present, we will continue with the existing arrangement. And if there is
something that is required, we will discuss and mutually sort it out.
Moderator:
Thank you. The next question is from the line of Swarnim Maheshwari with Edelweiss. Kindly
proceed.
Swarnim Maheshwari:
Sir, my first question is, during the quarter, in Mundra, was there any reversal of excessive
provision, because posted tariff orders which got effected from 5th of May, before that for about
30 days, 35 days, you were outside the Section 11. So, post this tariff order, is there any excess
provision that has been reversed during the quarter?
Praveer Sinha:
What had happened when the 5th May, notification came, it talked about that the fixed cost of
the capacity charge will be paid as per the PPO or if there's any agreement. Since there was no
agreement but notwithstanding that, Gujarat was only paying access INR 0.70 paisa not the full
amount, because they were considering that the interim arrangement that we were trying to sort
it out with them, the rebate will be given. But the interim order of CERC mentioned that full
fixed cost or capacity charges would be given. So that reversal has happened in the quarter. But
other than that, we have not done any other.
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Tata Power Limited October 28, 2022
Swarnim Maheshwari:
Yes. Sir, what is that amount, sir? If you can quantify, please?
Praveer Sinha:
So it's a INR 0.20 paisa per unit. So whatever we had supplied to Gujarat and Maharashtra and
that has been. And to the other states, they have to pay the full fixed cost even if they are not
scheduling the power.
Management:
And if you see the notes to the accounts where we have very clearly specified the break-up
amount, including amount within previous period. In the total amount that we have been able to
recognize is INR 461 crores and out of that INR 151 crores pertains to the previous quarter.
Swarnim Maheshwari:
Sir, my second question was on the receivable side. So you did mention we expect to see some
sort of liquidation in the ensuing quarters, but this is for the second consecutive quarter, we have
seen that the receivables have been a bit elevated. So any specific reasons? I understand this is
from the likes of Odisha and Mundra. But any specific thing that you would want to highlight
that, is it some sort of a tricky issue somewhere?
Management:
So I think a couple of things. As you said that break that its right given that the energy cost has
gone up and to the extent the revenues are high, the receivables would also be high. But that
doesn’t mean that quality of our receivables are deteriorated. In fact, the overall quantum which
has gone up. So in terms of our receivable days, it is absolutely well within control. The good
part is many of our sticky receivables that we've been discussing in the past, for example, Andhra
Pradesh and other places, they have now started paying us in the installment, including all the
disputed amount. So you would see quite a good liquidation happening in the subsequent
quarters coming in.
Similarly, in Mumbai, where there were delay in payment, now they’re also started paying and
you'll see that the liquidation also happening the subsequent three to four months. So I think the
overall receivables is absolutely within control and as per the plan.
Moderator:
Thank you. Participants if you wish to ask a question kindly press star one. The next question is
from the line of Dhruv Muchhal from HDFC. Kindly proceed.
Dhruv Muchhal:
Sir, you mentioned that there is a gap between the interim tariff and the final tariff based on the
fuel cost pass-through mechanism under Section 11. Possible to share what the gap is, to help
us understand the potential benefit that is likely to accrue?
Praveer Sinha:
Right now, it is premature. We'll share with you because till such time the final order of CERC
comes. We do not know exactly what we ultimately get approved by them. So let's wait for their
orders. We expect that order to come in November, and then we'll be able to work out the exact
quantum and shares.
Management:
And to add to what Dr. Sinha, I think our apologies, again, and there was a lot of discussion in
quarter 1 that in our Investor's deck, we're not giving the separate breakup of our full profit and
Mundra profit. And we did mention over there that time there is certain discussions, which is
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Tata Power Limited October 28, 2022
under progress both at the CERC level and as well with the COD and we did not want to get into
a dispute by putting a certain amount.
The good part is as we had mentioned last time that we will see some claw back happening in
quarter 2, which has now happened, the amount of INR 460 crores as we mentioned. We are
kind of also expecting that depending about the kind of order we get, good material amount
should come and hit bottom line positively in quarter 3. But at this moment, and as Dr. Sinha
said we're not in a position to share you the exact breakups.
Moderator:
The next question is from the line of Abhineet Anand from Emkay Global. Kindly proceed.
Abhineet Anand:
On the solar EPC side, the order book is quite healthy. I just wanted to understand in the last few
months or maybe in the last two quarters, have you seen an increased competition? We saw a
major number of contracts that Tata Power won earlier was from state PSUs like NTPC, SJVN
and all. Recently, we saw one of your competitors seeking a large project in excess of INR 2,000
crores. And they have now a backing of large corporates. So any increased competition that you
see in the space?
Management:
I think the players are the same. Only thing is what we are seeing is that the bids are coming at
a much higher rates, unlike earlier when it went up to INR 1.99 and INR 2, they are now all in
the range of INR 2.50 to INR 3, depending on the location of the plant and whether the land is
being given, what sort of profile of the generation that is required. So I think there is much more
seriousness and credibility that is coming in the bidding process rather than many who are
coming and bidding a number which they are finding it difficult to reach.
Abhineet Anand:
Secondly, I understand that obviously Mundra has been merged, is it possible to give some
ballpark number what has been the performance of Mundra Corp. in their 1H of '23?
Management:
We're not giving a separate breakup here. I think it's kind of all merged in the overall generation
business. But as I mentioned earlier, definitely all of this kind of partly covered because of the
fixed charge that we received, the INR 452 crores program that we did. And of course, the
difference between what has been allowed at the tariff and what is actual tariff you'll see on the
CERC, so once we get a clarity on that, we'll have a better understanding on the Mundra profit
and the coal mines. For us, both of them are clubbing to one, because it is made for each other.
Abhineet Anand:
You mean that Sinha sir also told that this arrangement is till 3Q, least that let's assume current
arrangement doesn't continue and your long-term arrangement that you are talking about still
takes some time. I mean, what's the larger picture, I mean on some picture that you can
understand on Mundra?
Management:
What we need to understand is that even with the present pass-through cost, we are still very
competitive in Gujarat. And so they will definitely like to schedule power from this plant
compared to many others who are at a much higher price.
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Tata Power Limited October 28, 2022
Secondly, once the principles are being laid in the CERC order and all that. So hopefully, around
that only the final discussion and negotiation will take place. It will not be on a principle which
will be very different than what is decided by CERC. So that's what is our expectation.
Abhineet Anand:
And broadly, the principle is near about the cost pass-through, right?
Praveer Sinha:
Yes, absolutely right.
Moderator:
Thank you. The next question is from the line of Sumit Kishore from Axis Capital. Kindly
proceed.
Sumit Kishore:
My first question is that net cash flow from operating activities at consolidated level has reduced
from INR 2,412 crores in H1 FY '22 to INR 2,148 crores in H1 FY '23, if I look at the BSE
filing. What qualitatively explains the decline in the net cash flow from operating activities given
that there has been strong P&L performance?
Management:
Are you talking about the cash flow from operating activities?
Sumit Kishore:
Yes.
Management:
At the consolidated level, H1 FY '23 compared with H1 FY '22.
Management:
If you look at the particular sheet, which is a complete long page has a complete various analysis
and there are items which are moving up and down, but we have it, by and large from INR 2,400
crores that we see in '21 almost INR 2,200 crores. This side of the business, there will be small
items going up here and there, but we don't see any significant change in the trend.
Sumit Kishore:
I mean, I should be asking this question, lot of moving parts. It's difficult to decide, sir, because
there are regulatory deferral account, the assets also swinging. But obviously, the P&L growth
has been quite strong in the first half of the year, thanks to the elevated coal price, among other
factors. But somehow, the working capital seems to have gone up, meaning to me?
Management:
Yes. So as I said earlier, working capital, if you see it's important to link it with the growth in
the revenue because at various locations will have credit pay, and to that extent, our higher revenue leads to higher receivables, which are kind of all good and not overdue. So I think there
will be a higher working capital linked to a higher revenue, but in terms of the overall aging of
our debtor that our DSO, those are all within control.
Sumit Kishore:
My second question is in relation to Slide 18 of the presentation where again, Q2 FY '23
EBITDA before elimination has gone up sequentially from quarter 1. It's gone up INR 3,022
crores and 2798 crores. However, any issue that increased quite sharply, there almost INR 1,229
crores in Q2 versus INR 691 crores in Q1. So when we look at a segment-wise analysis to try to
understand the performance. This elimination increase is simply too high, and that is driving a
reduction in EBITDA on a sequential basis. So what explains such a sharp eliminations?
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Tata Power Limited October 28, 2022
Management:
Yes. This is basically on a consolidated basis, we have the dividend which will get eliminated
within the two companies, right? So, and of course that also reflects that they have received
higher dividends. And to the extent that elimination is purely on account of dividends.
Sumit Kishore:
So that basically, a reflection of the higher dividends received from the coal mine?
Management:
Yes, you're right.
Sumit Kishore:
And finally, on Mundra, following the Section 11, what is the under-recovery basis tariffs that
you have charged so far. So what is it that you're expecting from the regulator to get a cost-
reflective tariff?
Management:
Well, I think this is the indirect way of asking the same question. Given that we are already with
CERC the hearing has happened and the expected outcome very soon. I think it's better to wait
for a couple of months so that we can give you a very precise answer.
Sumit Kishore:
Last question is on the solar EPC revenue and margins. So for both utility scale solar and solar
pumps, the revenue seems to have come off a fair bit year-on-year. Margins in Q2 have gone up
sharply on a sequential basis. If you could please help us with that, what explains this volatility?
Management:
Yes. I think the observation is absolutely correct and I think this goes back to the quarter one
conversation that on the EPC we had a negative PAT margin. We went back to the drawing
board to see how best to claw back our profits. So a couple of things that we have done is, a,
look at some of the projects which were dragging down our profitability.
We have agreed with the parties to defer those projects and to take the benefit of the reducing
cell-and-module on the prices as well as, of course as you are aware, the steel prices also came
down to 25%. So that is one. And because some of the projects were deferred, we were able to
re-estimate the cost to completion, which is resulted in a write-back of some of those positions
that we are making.
I think the better way to look at it is look at the H1 EPC margin in totality, which is close to
about 2% Ideally would like to have a higher PAT margin going forward, but at least the situation
is improved from where we were in quarter one.
Moderator:
Thank you. The next question is from the line of Koundinya N from JPMorgan. Kindly proceed.
Koundinya N:
A couple of questions. Firstly, on Mundra plant. So just trying to understand, you were referring
to a bit of slowdown on the part of Gujarat Government. Is it got something to do with subdued
demand in government in the second quarter? Or how should we look at it?
Management:
Subdued demand; no the demand was not subdued in Gujarat, in fact, we have been operating
three plants exclusively for Gujarat during this period. The demand has been very much there.
And this is one of the big suppliers. In fact, in terms of single plant, it is the largest supplier of
power to Gujarat. And going forward also, our confidence is that those this Section 11 is only
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Tata Power Limited October 28, 2022
up to 31st December. They will continue to have a similar requirement in next year also and in
the summer period and all. So they will definitely come to some arrangement and this month
we’ll continue to supply and be one of the main suppliers of power to Gujarat in the coming
years.
Koundinya N:
Sir other than Gujarat, are there any other states that are also asking for power from Mundra,
there was some media article quoting that Rajasthan was also looking to tap from Mundra plant.
So just trying to understand that part.
Management:
So apart from Gujarat, Maharashtra continues to take power and also for a certain period of time,
Rajasthan had taken. So these states have been regularly procuring power from Mundra.
Koundinya N:
And sir, I think you explained it in previous quarter, but just trying to understand better. So can
you help us understand what is the way the accounts are being booked? The tariffs are being
booked at the moment from Mundra plant?
Management:
So right now, we have booked based on the full capacity charge and also whatever is the notified
interim tariff by Ministry of Power. So every two weeks they come up with the notification of
the, based on the cost of the IC/IGD cost of coal. But the final cost of coal will be whatever is
the actual cost of coal that we have incurred for operating the plant.
Koundinya N:
Just clarifying on that second part, sir. So essentially based on under recovery either on the fixed
cost part or on the variable cost. Is my understanding correct?
Management:
So on fixed there is no difference. On the variable, there is a difference right now on the --
whatever is the interim notified price and the actual price. That different calculations have been
given to CERC. That delta difference whatever is there. And once CERC notifies it, we will
account for it.
Koundinya N:
And secondly, bookkeeping, sir, what is the dividend amount from the subsidiaries to parent in
Q2 and first half?
Management:
About INR 1,100 crores in Q2.
Koundinya N:
So INR 1,102 crores.
Management:
Yes.
Koundinya N:
This is for first half?
Management:
That is for quarter two and 1800 for H1FY23.
Moderator:
Thank you. The next question is from the line of Aniket Mittal from SBI Mutual Fund. Kindly
proceed.
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Tata Power Limited October 28, 2022
Aniket Mittal:
A few questions, basically on the EPC front, in Slide 9 of the presentation, you've mentioned
that there has been some planned rescheduling of large projects on the EPC. So if you could
elaborate on that, and which are these large projects that have gotten rescheduled?
Management:
I think this is a one-on-one conversation with the counterparties. But I think it's suffice to say
that some of the large projects have been rescheduled. And of course, with the consent of the
parties. To that extent that parties realizes that at the current elevated prices for cells and modules
it will not be possible for many players or if you suffice to deliver the project on time. And hence
it can be mutually agreed.
Aniket Mittal:
So if I were to look at your current order book of almost INR 15,000 crores so how do you look
at it from an execution time line perspective? If you could give some color on that?
Management:
Execution normally for any such EPC project that we do for the third parties or also for in-house
Normally a range from 12 months to 18 months. But depending upon the project by doing the
tenant, the period can differ. But on an average, you can presume about roughly 18 months.
Aniket Mittal:
We are just trying to understand if there are any delays or projects that have stuck because of
this initiative?
Management:
This is planned re-scheduling that I was talking about.
Aniket Mittal:
The other question is when I look at the numbers for TERPL there seems to be a very large
swing on a Y-o-Y basis sitting against the profit of INR 210 crores last year, that being a loss of
INR 29 crores reported this year. So what's the reason for that?
Management:
There was a onetime foreign exchange gain, which was booked last year.
Aniket Mittal:
It's turning to a loss this year INR 29 crores?
Management:
Are you referring to Slide number 19 of the deck?
Aniket Mittal:
Yes, Slide number 19 of the deck.
Management:
You're looking at the TERPL shipping company, right?
Aniket Mittal:
Look at Slide 18, will find the numbers for 2Q. So against INR 214 crores of profit last year it
has come at minus INR 29 crores.
Management:
Yes. So we have booked INR 200 crores of ForEx gains last year for the same period.
Management:
Yes. That was for sale of shipping that was done since that money was at that time pass and
roughly when we brought it over here, we booked it at INR 214 crores of ForEx.
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Tata Power Limited October 28, 2022
Aniket Mittal:
Just a related sort of question on the EPC front. So when I look at the renewable capacity that
we have under development, which is, I think, 1.8 gigawatts, the commission time line, could
you help me on that in terms of...
Management:
Most of them are next 12 to 18 months. So our target is that by March '24, most of all of them
will take commission, that’s the time.
Aniket Mittal:
Okay. How much do you plan to do in FY '23? And how much in FY '24?
Management:
We can share the details. I don't have it right now. We can give you...
Management:
Ballpark for the first H1, we have commissioned 450 megawatt.
Management:
The question was on the own facility?
Management:
On the total.
Management:
Total. That we’ll share with you separately.
Aniket Mittal:
Okay. And just one last question on Mundra. I understand you can't talk about the difference or
the under recovery. Could you help me with the average tariff that you realized from Mundra
for 2Q and 1H that you've actually booked in your numbers?
Management:
It's about INR 550 crores, INR 570 crores right around that. But the notified tariffs have been between INR 6.20 paisa, 248 kilo. So that's the notified, so that's the difference.
Aniket Mittal:
So we booked around INR 550 crores to INR 570 crores.
Management:
Yes.
Aniket Mittal:
And this is for Q2, or this is for 1H?
Management:
Q2, because it started 1H fully. It's only part of 1H.
Aniket Mittal:
So 550 for 1H.
Management:
No, not 550 for 1H. You are mixing up. See, this full modification came from fifth of May. So
it is not 1H. It is only part of 1H.
Management:
It’s kind of not entirely appropriate in giving you a breakup because it's a bit complicated now.
And it's better to wait for the complete clarity to emerge. And I'm very sure before the next
quarter call, we'll have a complete idea as to the exact under-recovery or to what extent we're
losing or gaining.
Moderator:
Thank you. The next question is from the line of Apoorva Bahadur from Investec. Kindly
proceed.
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Apoorva Bahadur:
Congratulations on the good set of numbers. And thank you for the opportunity. So you spoke
on this provision write-back for the solar EPC business. Can you please share the quantum how
much did we write back into solar?
Management:
We will be able to send you separately because there are many projects and the provisioning
Tata Power Limited October 28, 2022
right back is on account of various things. So it will be difficult to just quantify one number and
give it to you. I think, as I said in the previous question, that depending upon the time of
completion and then towards when the project is getting completed, we do a true work for cost
to completion. And normally on a conservative basis, we try and make more provisions to be on
the safer side. So given that some of these projects have been rescheduled now, and the cost of
cells modules see that started coming down, we have done a revaluation of the cost to completion
and find that we are in a position to claw back some of these provisions.
Apoorva Bahadur:
Okay, so secondly on your overall green company portfolio, the profitability has been lower year
on year. Now I understand that some part of it would be because of finite depreciation and rise
in interest costs. But the EBITDA margins also appear weak, especially for TPREL. So can you
share the breakup between this operational – I mean, the decline in profitability due to
operational issues and also the impact of INR depreciation and interest costs on the renewable
portfolio?
Management:
So we'll share with you. If you see our H1, the EBITDA has actually gone up. So it also depends
on what sort of wind speed and what sort of solar intensity is there. So in the first quarter we had
very good wind speed and better solar intensity. In the second quarter, because of the extended
monsoon, the solar generation was slightly lower. But the details we can share with you. We can
give you that how much the trend change helping.
Apoorva Bahadur:
Sir, also, just wanted to check, in this quarter, this Western Odisha Discom number appear quite
strong. So is there any one-off or incentives that were booked in the quarter?
Management:
No, we have not booked any incentives. The performance has improved, and as I mentioned to
you, our AT&C loss has reduced. Our billing efficiency has improved, our collection efficiency
has improved. I think it's a general performance of the business which has added to and better
billing and better being be able to show much better performance in the future quarters.
Apoorva Bahadur:
Sir, I understand that just, specific to Western Discom because that appears a bit better than the
other Discom, so we have Discom which we took over around the same time. So anything
specific over there?
Management:
So Western Discom has more of industrial consumers. So EHD and HD consumers are very high
over there, and that's why it has been much higher increase in consumption compared to others.
Apoorva Bahadur:
So just 1 last question, if I may, and I'm sorry for harping on again with Mundra issue. But just
for sake of clarity, while we notified tariff is around INR 6.20 paise kilowatt per hour we are
booking around INR 5.50 paise since notification came, and this INR 6.20 paise is a further
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possibility for further upside, which CRP comes up with a favorable order. Is my understanding
correct?
Tata Power Limited October 28, 2022
Management:
No, your understanding is wrong. And I've mentioned to you that they notify the tariff every 15
days. And the tariff has changed because the price of ICI index coal has changed. It started from
620, it went down to 470 and now it has gone to 596. So it keeps on changing every two weeks.
But when you get the coal, you get coal over a period of time and based on the actual cost of
coal you are going to bill them. So that is the delta difference that will happen. And in such time
order of CRC does not come out, it would be speculative to give you a number and say that this
is the number.
Apoorva Bahadur:
So sir, the average notified tariff would be around INR 5.50 paisa?
Management:
No. That's what I'm saying. We don't get into averages, and there is a different price on every 15
days basis they are giving. You should then see the 15 notifications that have come. One that I
will send it to you.
Apoorva Bahadur:
Yes, sir, that will be very helpful.
Management:
Otherwise, it’s there on the Ministry of our website also, you can see over there.
Moderator:
Thank you. The next question is from the line of Dhruv Muchhal from HDFC Mutual Fund.
Kindly proceed.
Dhruv Muchhal:
Sorry, I got disconnected earlier. Some of the questions have been answered since. So just one
question on the Odisha Discoms. We see the performance is improving. We understand the circle
developing but we also notice that the regulatory assets are increasing. So should we understand
this primarily because of the fuel cost? Or is there some other element to this?
Management:
So the regulatory asset adjustment takes place on an annual basis. So it's a question of timing of
some of the regulatory assets, which is there, which will get adjusted at the end of the year. So
it has nothing to do with the fuel costs and all that because in Odisha there is one single tariff
that is a charged there by the generating company.
And we also charge one single tariff on the consumer So this is because of whether it is the
O&M cost or it is on billing efficiency and things like that. So at the end of the year, that's two
of take place, and you will get see that number whether there is an increase or decrease. And
depending upon that, the tariff fixation takes place for the next year.
Dhruv Muchhal:
And sir, the second, just a follow-up on one of the earlier questions on the shipping company.
We understand the delta movement because of the FX, but we wanted to understand what's
driving the loss in the current quarter. And probably also in the first half, the profitability is a bit
lower because you understand that we used to understand that this was a leasing arrangement
where the profitability was largely assured. So just trying to understand what's driving the loss?
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Tata Power Limited October 28, 2022
Management:
So again, the billing that we are doing on shipping is based on the CRC Index. Now once we get
the actual cost of shipping that is there, then we'll be able to decide on it, whether that needs to
be reversed.
Moderator:
Thank you. The next question is from the line of Ajay Mehta from Wipro Limited. Kindly
proceed.
Ajay Mehta:
So my first question, sir, to you is that considering the environment when interest rates are rising,
so what is Tata Power's plan on reducing the debt because that is still at an elevated level, right?
Even though Y-o-Y we have come down, but still the average debt cost has risen from 6%-odd
to 7%-odd, right? So what is the plan to reduce the debt going forward?
Management:
No, I think when you look at the overall net debt of the company, in spite of all the CapEx that
we have done and incremental working capital because of higher revenues, our total net debt is
still below INR 40,000 crores. What is important to look at it from a perspective of the
leveraging, some net debt to equity position and our leveraging well below a 1.5, our targeted
leveraging was 1.5 was the Tata Power level standing at 1.32, right now as we speak.
Interest level, yes, we are kind of around 7% if you look at the current quarter, and when we
looked at a year back, it was around 6.6%. So we have seen about a 40 bps increase, but that is
against almost 190 bps increase in the base rate, so I think we have been able to manage our
interest rate quite well, including some of the international borrowings that we have done,
including a recent 320 million borrowings that we did our sustainability-linked loans. Together,
we've been able to kind of contain our overall cost of debt quite well.
Ajay Mehta:
And my second question is, I just saw in a notepad there was a cyber attack, right, even though
there's no impact to the financials, and I believe you guys have taken the reports also. So is there
any action still pending to be done which would have an impact on Q3 numbers due to the cyber
attack?
Management:
No, there's no impact on the quarter 2 also. Very clearly the financials, the facts systems and all
have been well protected. It is not having an impact, we did not have any financial loss as well.
Our operations, collections was as usual for us. So yes, we don't see anything happening in
quarter 3 as well.
Ajay Mehta:
And sir, my last question is what is Tata Power vision is respect to the EV charging, right? I
know you guys are increasing your footprint quarter-over-quarter with increase in the number
of cities being added, number of clients being added, number of apartments, connectivity is
improving. So what is like the path going forward from a next year perspective in terms of the
growth that you see in the EV segment?
Management:
So our objective is that we need to provide a seamless experience to the customer. And when
we say that, if you are having automobile in your home, you should have a home charger, which
we should be able to provide. If you are traveling intracity, then whatever charging you need to
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Tata Power Limited October 28, 2022
carry out. You should have a seamless experience over there, then for public transportation, the
bus charging infrastructure.
Now as far as the home charger and the bus charging is there, that is on a cost-plus basis that we
do. As far as the public charger is there, it is on a fee or a subscription model, which is there.
The consumption of that or the utilization of public chargers is much less today because most of
the people still continue to use their home chargers. Also, the penetration of electric vehicle has
not happened to that extent. So we are creating an infrastructure for that over the next two years,
three years when the penetration of electric vehicle, utilization of these chargers should increase
from the present about 2% to about 15% by when it will be able to sustain its operation on its.
Moderator:
Thank you. Participants if you wish to ask a question, kindly press star one. The next question
is from the line of Subarni from Spark Capital. Kindly proceed.
Subarni:
This is Bharani from Spark Capital. Sir, what is your view on the international coal prices over
the next, say, two quarters? And what would be your rationale for that?
Management:
Still as globally the coal prices have been very high. And we do not expect that it will reduce at
least for next 12 months. So we expect that the coal prices will remain high. Now whether it will
be at the present level or little lower than this, I cannot predict that. But yes, the coal will be in
demand, especially imported coal will be in demand considering the global need for energy
substitute.
Subarni:
Could you share the FOB realization per tonne and the gross profit per tonne for the KPC mines
for the second quarter?
Management:
We don't do the sell-off coal over here, so that details we can give you from the KPC reports,
we don't have that with us, we can share with you in the KPC.
Moderator:
Thank you. As there are no further questions, I would now like to hand the conference over to
Dr. Praveer Sinha for closing comments.
Praveer Sinha:
Thank you, Vivian and thank you to everyone for joining in the call. And in case you have any
further queries, any other details that you would require, please connect with Kasturi and Rajesh
Lachhani and we will be more than happy to furnish you with it. Once again, season's greetings
and all the best.
Moderator:
Thank you. On behalf of Tata Power that concludes this conference. Thank you for joining us.
You may now disconnect your lines.
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