Q2 2023 Renew Energy Global PLC Earnings Call
Thank you for standing by and welcome to the renewable power second quarter 2023 earnings Conference call. All participants will be in a listen only mode. There will be a presentation followed by a question and answer session. If you wish to ask a question you will need to press the star key followed by the number one on your telephone keypad I would now like to hand, the conference over to Ms.
Nathan Judge Please go ahead Sir.
Thank you and good morning, everyone and thank you very much for joining us today.
On Tuesday evening, the company issued a press release announcing results for its fiscal second quarter 'twenty to 'twenty three.
At September 32022.
A copy of the press release and the presentation are available on the Investor Relations section of renews, but right now.
At Www dot renewable power dot tightened.
With me today are Seamark seen huh, founder chairman and CEO .
Kadar, a P. J C F L Amboseli, Nick I'm, seeing huh, Chief Sustainability officer.
Demand will start the call by going through an overview of the company and recent key highlights.
Well then go through the results followed by an update on ESG from Bush Ali.
And then we will wrap up the call with some aren't discussing our guidance for 'twenty.
Full year 2023.
After this we will open up the call for questions.
Please note our safe Harbor statements are contained within our press release presentation materials and available on our website.
These statements are important and integral to all our remarks.
There are risks and uncertainties that could cause our results to differ materially from those expressed or implied by forward looking statements. So.
So we encourage you to review the press release, we furnished in our form 6K and presentation on our website for a more complete description.
Also complaint [noise] also contained in our press release presentation materials and annual report are certain non <unk> measures that we reconciled to the most comparable ifr S measures and these reconciliations are also available on our website and the press release presentation materials and on you'll reap.
Sure.
It is now my pleasure to hand, it over to some odd.
Yes, Thank you Nathan and good morning, good afternoon, or good evening, everybody, depending on where you are.
Oh, let me dive right into the presentation itself.
Starting on page four of the presentation.
Oh God operation's fundamentals remain on track and through the first half of fiscal year 'twenty two 'twenty three.
All in line with our internal targets, excluding the contribution from the 528 megawatt acquisition, which is in process.
For the first half of the year revenues and EBITDA grew more than 20% year on year in line with robust expansion in our commission capacities.
Bringing the total to seven seven gigawatts of operating capacity.
The total capacity under construction currently it's five seven gigawatts, which is targeted to be operational by end of the next fiscal year.
And that's the exact order portfolio size to 13th one four gigawatts currently.
Our revenues from customers rose, 28% year on year in the first half of fiscal 'twenty to 'twenty three.
And cash flow to equity increased by 48% in its one from last year.
Higher revenues from operating capacities and improving dsos.
We are making good progress on our accounts receivables and are seeing regular payments coming in from the state distribution companies that had the highest amount of what would use.
And can I will cover this in greater detail in his section.
Onto signing of new Ppas on page five.
We signed one gigawatt of new P. P. S. This quarter.
And we have also derisked, our group as only less than 1.5% or about $13. Four gigawatt portfolio. Now has been linked P. P is that there's been one and a half per se.
The corporate PPA portfolio itself grew 41% from Q1.
It's now at one five gigawatts.
Almost 247% higher than the prior year with many additional conversations occurring right now, which we would hope to convert to some ppas in the coming months.
We have signed more than 400 megawatts of corporate Ppas in the quarter ended September 30th.
Customers include well known companies such as Amazon Suzuki Mahindra.
In the Haynesville and Toyota and we believe that this sure that differentiated advantage in this business segment.
Corporate Ppas off a higher that does take place on the law renewable energy projects given higher barriers of N T.
Our ability to partner with corporate customers.
And provide them energy sooner than our competitors.
We are currently having discussions with many corporate customers and we do believe that then you will have a four to five gigawatt called P. P. A portfolio by 2025.
Well below the growth environment remains bullish.
We'll continue to be the lowest cost option for new power capacity in India.
And this can be seen on page six.
Increasingly our customers are seeking complex public solution that can be delivered consistently over the full year and we had business expertise by offering a full suite of renewable products.
With digitalization and the proprietary technology.
We believe this is a truly differentiated offering in the renewable sector.
Given the need for electricity to be delivered round the clock.
We have seen increased interest not intelligent energy solution.
We expect that over five gigawatts of auctions for complex projects.
But over the next several months with.
With another eight gigawatts under discussion at checking.
And that is over 100 gigawatt opportunity by 2030.
Now keep in mind, very importantly that one megawatt of RTC Palmer.
I treat acquired more than three megawatts of renewable energy Pablo.
The addition of <unk>, which I'll talk about provide even greater differentiation to our offerings.
Our operational expertise across to the noble energy technologies combined with our leading digital platform provides us capabilities that few have and this can be seen and how few bidders are participating in the complex all dissolution auction relative to the plain vanilla projects.
This continues to present opportunities for higher than average are done and I'm. Most recent 300 megawatt hybrid win is evidence of this.
In this context.
I'll now speak more about our new growth initiatives.
We have signed definitive agreements to.
Shares of C E.
It is a leading European sauce platform that enhances renewable energy asset performance through analytics and AI.
The transaction to be completed in two stages, a 40% now and 40% in 'twenty 'twenty four.
So do you currently already has about 20 gigawatts of assets under management.
And as we see the energy complex today efficiencies through Digitization will be key to continued differentiation and high returns as I P. P is increasingly require customized products.
We have tremendous confidence in the company.
And have been using please state of the art software put out one asset for the last four years.
The three platform along with our internally developed digital capabilities.
Over the years of experience.
We believe will make <unk> a worldwide leader in asset performance management for solar wind and started assets.
There are many global opportunities for this digital platform that can enhance our returns for the incremental capital that we're putting into this investment.
We continue to pursue enhancing that it does on your capital that's been deployed through capital recycling.
We have recently entered into a partnership with nor fun.
The Norwegian government investment fun.
For developing countries.
The T L P. Norway's largest pension company to co invest in our transmission projects.
And they have signed definitive agreements to invest in the very first project.
Our investment in trunk transmission projects is synergistic to our renewable energy project development.
And further enables higher done somebody called renewable energy business.
As we have built almost 6800 kilometers of transmission lines already over the past decade long distance transmission as a natural extension of our core capabilities.
By taking on the execution of transmission line that connected without all of these projects.
We are able to bring on these the noble energy projects sooner.
With greater predictability.
And allow us opportunities to capture additional revenues from our renewable energy projects in the public markets.
Well not initiatives on green hydrogen.
You may have seen our yesterday's announcement on the signing of a framework agreement with the government of Egypt.
Set up a green hydrogen plant in the Suez Canal economic zone.
As per the agreement.
Final investment decision will be made over the next 12 to 18 months.
This project is scheduled to be implemented in phases. The first of which is a pilot phase to produce 20000 tons of green hydrogen along with data and believe in.
And the next phase.
Election of 200000 tons per year of green hydrogen along with data. It is we'd be achieved thereby bringing the projects total green hydrogen production capacity to 220000 tons per year.
Wonder if that you frequently asked about is inflation risks to capex as.
As well as security of supply.
Which is discussed on page seven.
We believe that we have managed this well and there is limited risk to our Capex budget at this point.
We have locked into a bank prices. So there is essentially no material exposure on this front.
We continue to build module and cell manufacturing facilities that ensure supply at an advantaged cost relative to imports for future growth.
Even if module prices were to rise by 10% from today's level of Capex would only change by about 2% to 4%.
As most of our wind turbines that locked in that is it.
Essentially no material exposure on this front.
We continue to expect that our new projects.
They live our project level equity at us within our targeted range of 16% to 20%.
If in the event that any additional you've called it has unexpected either below or at a minimum thresholds, leaving.
We were simply not proceed.
We will remain disciplined.
With your capital.
With that I would like to turn it over to Curt ought to go with the latest quarter's financials give that over to you.
I think this one.
Very good a very good morning, good afternoon, and good evening to everybody on the call.
Turning to page nine as we have highlighted many times over the past year, we have been focused on improving collections on the alert you receivables from the state distribution companies and we are pleased to announce that we have made significant progress in this regard.
Quarter to FY 'twenty, three DSO improved over a month.
Compared to the end of Q2 last year.
Has it been salons that have been late on payments almost group keep watching them play with receivables.
I'll be making a payment.
Normally there is a seasonal increase in DSO in the second quarter, but this there'd be useful actually improved from quarter one.
The AP, Andhra Pradesh discount, which represented about 42% off on one well where do you see them as on March 31st.
Grid in June 2020, you do compete Pas goes over the next 12 months in equal monthly installments and now made about 45 minutes or up 12, so far.
Yeah. The other states that have also been making payments we continue to expect a substantial improvement in nordea. So by year end.
Two knowing what we need to and as I mentioned have made for a rockwell payments to clear response balances.
In other states, including Madhya Pradesh Telangana.
Martha and modest not also making a positive dynamics in fact, we improved our cash position by 60 million.
Second quarter, two better collections in the quarter that normally sees higher accounts receivable balances.
It is worth empathizing, the DSO should fundamentally improve over time as an increasing percentage of our sales will go to central government and there was a woman owned cheeky.
Which business will promptly on on time.
To date with two one shouldn't be that much operating about two people or something about what our thoughts are with Pfizer just comps.
Literally higher dsos.
As almost all of them are committed projects started with tiki and schools are with corporate customers.
They exclude despite its country called about 33% by the time, we complete our 13.4 gigawatt portfolio.
This customer to make shipboard itself represent an incremental two five days in order what I'll do here so just by itself.
I'll now move to slide bandwidth, Hawaii highlights of the fiscal second quarter of 'twenty. We are that's the only time they go back to this quarter.
To bring the total.
Two seven points you want to go back to I'll put it this.
Besides I don't know one gigawatt up EPS, which brings the total under construction to pipe on San Juan.
Most of it should be operational by end of the next year.
Although they will lose some customers.
Rules to India question, you're running in the first half.
And cash flow to equity increased 48%.
Compared to last year.
Due to higher revenues from operating capacity and improving dsos.
Turning to page 11, which provides the reconciliation of adjusted EBITDA in quarter, two which stands at INR 18.2 billion.
The windows sorts, followed a different pattern this year, which well where there was more production in April and May this year related to normal.
I'd, just say within quarter two.
We would also point out that there were some impacts of timing related to carbon credit sales and other items.
We recorded three news related to the second quarter of last year.
I expect the majority of what carbon credit sales.
To get recorded in the second half of the current fiscal year.
<unk> had been taken out of two COO of long steel EBITDA would have increased about 9% of Yolanda.
Turning to slide 12, we continue to execute multiple initiatives on the financing front and repaid 300 million bond this quarter.
We had USD 1 billion of maturity, they probably wouldn't be off which majority has already been repaid through various refinancing initiatives.
I will also provide a source and use reconciliation statement on our funding plans.
We're in a really strong position with almost dollar say, one or 2 million of cash on balance sheet and anticipate that we should trade at a similar amount to internal cash flow capital recycling and improvements in working capital by FY 'twenty five.
With regards to Capex or internal actually wasn't capital recycling is more than the equity requirements of our plan.
13.4 gigawatt Capex that we're seeing from lenders and also give us additional capacity to grow for the without any need to issue new shifts.
Which is not in our current plan.
Do you want to what I believe due to financing projects with so many proportionate debt combined with cash flow generation and capital recycling.
I anticipate that we will have more cash on the balance sheet.
After the completion of the 13.4 Gigawatts that you currently have.
With regard to interest rate risk on page 13, it is worth noting that inflation in India is under control and well below levels seen in the U S.
Long term interest rates in India out of more comfort to do that what is generally seen globally.
We haven't been equal or additional borrowing dry powder available and we believe we can fund all of our growth and our current plans are domestically.
It's currently being offered rates for refinancing of about an eight or 9% in INR terms, which is below the average interest rates on debt maturing over the next couple of years.
That risk is also limited with fixed rates on some of the reports and a whole deck.
And 100 basis point increase only impacts already quite well the pre Castro peak would you buy.
2%.
Despite the increase in interest rates, we still expect to refinance the debt that is maturing at rates that are lower than our current prevailing interest rates.
We have been capitalizing on the refinancing savings are partially this year and we are on track with your finance more than 1 billion, which also shows that what really access to affordable capital.
With that I.
Don't need or want to wish all eco update everyone on what he or she initiatives. Thank you.
Thanks, Kelly K dark Hum Hello, everybody and thank you for joining us.
Today for doing he's calling how can we go to slide 15, and does she have has been an interesting year for us from an ESG perspective.
We ramped up our efforts significantly and be disclosed I referred to in our sustainability report for fiscal year 2022.
As have community members are important stakeholders I'm delighted to share that we released a report at my no fuss ESR sites addiction in the state of Rajasthan in the presence of the local community and the newest global bought.
The sustainability report is aligned to G. III standards and P. C of the guidelines given our NASDAQ listing it in order to align with Chesapeake.
What has been tighter partnering for transition progressing sustainably plus betting to get prosthetic together.
We believe that this sums up like a pool a push towards sustainability very aptly.
In line with the idea of progressing sustainably, we have restricted our carbon intensity of electricity generation to just 32.83 grams of carbon dioxide per kilowatt is which is 95% lower than the Indian pavlicek to average and 94% lower dander no.
Average.
To a clean energy operations, we have avoided 11 million tons of carbon dioxide and generated electricity, which is enough to power 4 million Indian households.
We've deployed the Baltic dry cleaning, which has enabled us to save 216000 kilo liters of water, which is enough to serve the daily consumption of one 6 million Indians.
But the view of partnering together that employees suppliers and communities for a carbon free future and you have taken up the following initiatives.
We have derisked, our supply chain from sustainability related risks and have released a cent sustainability code of conduct with suppliers, which is available on our website for you to see our employee strength has also grown by 38% as compared to last year.
Extra news aimed to be the employer of choice.
When you have a target of achieving 30% women by multiple initiatives such as the COO, Tom mentoring sessions Madness sessions Smith senior experts, including our board members safety trainings conducted over the past year have increased by 41%.
When you our mission is to contribute to addressing climate change through impactful scalable and market driven solutions to create a sustainable and equitable future.
And also in the process of finalizing a decarbonization plan for operations, which will be disclosed in the coming months.
Apart from this venue has disclosed scope three emissions across all applicable categories for the first time in our sustainability report.
With respect to community engagement to be aimed impact with 2.5 million lives by 2032, various community development initiatives across many women empowerment youth engagement, providing access to clean electricity climate literacy.
And all of these are in alignment are in alignment with various mtge's and STG five 717, and a few others.
When he was also a signatory to U N G C and Ah you in women empowerment principles.
This takes me to the last but most important aspect of partnering for transition.
He was always believing the positive collaboration and is building synergy synergistic relationships with likeminded institutions, like academia think tanks and industry associations to serve a common purpose in the fight against climate change.
Can you go to slide 16, now. Additionally, we have also disclosed that targets across ESG badger meters light, we have validated them as we have been validated as carbon neutral for scope, one and two emissions for the second consecutive Yep Yep.
We have achieved 30% diversity at the board level we.
We have submitted a G H a G H G reduction targets to S. P T Eiffel validation.
We have impacted the lives of 650000 people across 10 states and 250 villages to our social responsibility programs you have rolled out human rights policy and approach notes on circular economy, and biodiversity, which are all available on our website.
We will be disclosing the progress across all of these targets in the coming a sustainability report.
I'll now turn it back to two months for closing remarks and guidance.
Thank you Shelly.
With regard to our guidance outlined on slide 18, the core operations of the company continued to execute as expected this year.
As you mentioned earlier that there has been a headwind year to date, but we provided for this in our initial FY 'twenty three guidance.
In addition, we continue to work on closing the acquisition, we announced which has had some delays we are reiterating our guidance at this point with the obvious caveat.
That our full year EBITDA will depend on normal weather for the remainder of the App and timely completion of the acquisition.
Are they fight twenty-three EBITDA guidance is for between INR, 66, and 69 billion rupees and our cash flow to equity guidance is 21 to 23 billion rupees.
On the buyback we.
We have repurchased about 20 million shares since we implemented the program, which leaves about $120 million of authorization remaining under the program.
We continue to see considerable value in our shares with an 11% cash flow to equity using our current portfolio.
Arlene W. Also trades at a meaningful discount to what we can sell assets for.
As I shared that one of the highest return investments of scale, we can make.
I've been actively buying back stock when you believe it will provide the highest return opportunity.
I would also like to highlight that we have been added to about six in this is this calendar year.
Including the most recent ICL and what I can.
This not only has average daily volume, but also increases the madness of RTW to a broader audience.
With that let me. Thank you for your patience and we would be happy as supposed to take any questions. Thank you.
If you wish to ask a question. Please press Star then one on your telephone and wait for your name to be announced if you wish to cancel your request. Please press Star then two.
If you're on a speaker phone please pick up your handset to ask your question.
We will pause momentarily to assemble our roster.
And the first question will come from Julien Dumoulin Smith with Bank of America. Please go ahead.
Hi, This is Morgan on for Julien, Thanks for taking the questions and congratulations on a nice quarter here and it.
It seems like you've had some really healthy improvement in the Dsos. This quarter can you talk about your expectations for how this is going to evolve through the remainder of the year and how does this increased headroom kind of maybe change your latitude for further investments and your thoughts on that.
Yeah cause our why don't you take that.
Yeah.
Yeah.
Yeah. So as we explained a dump it gets debt, which accounted for I used the word you used was Andhra Pradesh.
And all of the Coty at September balance sheet, we have about two installments at the grille installments I'll forget somebody over another two installments alone there.
And 30 post March which is your question are we going to get six more in total and this year, we will get about eight installments up substantial value and that will improve the dsos are up to a level, which will go back almost equally days and that will substantially contrast, with the elevated levels of their vehicles, we have seen.
For the past several quarters.
So I'm really isn't going to court decides on Walmart I'm confident are the Dsos will go down.
To a level, which is around 175 days or so in fact that October we have already seen the DSO exclusivity.
So naturally this really this cash and to your point has allowed us to invest more.
More equity to fund future growth and all of that is part of the plan. So the slide on the source and use of financing, which we have included in our deck this quarter, which we reported during the initial commentary.
Factors the improvement in the receivables as well.
Yeah.
Great. Thank you and then I I guess can you also talk about the co investment that was announced this quarter and in the transmission projects in and how you view these opportunities as a part of your broader capital recycling recycling plan and any plans to kind of continue these co investment strategies or any commentary.
So when do you want to take that question.
Yeah sure sure I'd take it up.
Yeah look of Morgan.
A few chassis transmission projects still down a bit.
As I mentioned in my remarks are very strategic for us because they link into the renewable energy projects that we had to wait and see.
So therefore help us bid commissioning those projects on time and make the whole project.
Much more predictable from a timing standpoint.
Now the investment that you've got some more fund and AR and the other company can't be is is basically fall.
Partnering with us and undertake a 49% stake in the first of those projects with a view that eventually they will continue to partner with us for other projects as well. So we do have a broader understanding with them for coming into more of our transmission projects.
And as we win them and get them to the point the expectation will be for us to continue to get them to come in at school investors along with US right at the beginning itself.
As far as recycling of assets is concerned as we have stated in the past that is going to be core to our strategy going forward.
We do see that.
Recycling of assets as being a very important way for us to do that even better value from our own capital invested in those projects.
And also get capital out, which we can then reinvest to further grow our portfolio.
And it also allows us the opportunity of tweaking.
Our portfolio in ways that we think eventually might be better for us from a capital hold standpoint in the longer term. So capital recycling is a fundamental part of our overall strategy.
In transmission as we've said, we've just started off that business and right off the bat, you've got very high quality partners to come along with us without existing other renewable energy assets. We continue to be in conversations with a number of different investors and as you know for that first RTC project, we have got Mitsui as a partner with a party.
9% stake.
And we anticipate that we will be selling more assets are potentially brought to them as well as to other investors as.
As we go forward.
Great. Thank you I'll take the rest offline.
The next question will come from Justin Clare with Roth Capital. Please go ahead.
Yeah, Hi, thanks for taking our questions.
So first off year, you signed a one gigawatt of Ppas are just all in the last quarter here, so pretty significant amount of progress. There. So I'm wondering have you seen a meaningful change in the demand for power and an acceleration in your ability.
To get these ppas signed.
I was wondering just how broad based is the demand and then you know how should we think about the time. It takes to go from winning at an auction to getting a PPA signed.
Given the current environment.
Yeah Justin.
In the one.
Yeah I saw that was just something that yeah, and the one gigawatt. There are 400 megawatts worth of corporate Ppas, which we had talked about.
And 600 megawatts were P. P is that was a that was a lowest that you had earlier, which have now been converted into P. P. S O.
Those are the one gigabit that's how the one gigawatt shows up but fundamentally I think your question is around the momentum that we're seeing in the market right now in terms of power demand and and therefore, the the frequency of bids and are therefore, the accretion to our portfolio.
I think that Oh, you know power demand as you know in India has been growing very robustly at about 6%, but you are right now and that has been I would say a fairly significant shortage of pod in India over the last many months.
And as we look forward that is likely to continue to be the case, and therefore distribution utilities and corporates are both looking to procure new sources of energy and renewables being the cheapest source of electricity right now becomes the obvious candidate now seki is all coming out of the number of auctions.
In fact that have been a couple of auctions that you have submitted first on bids for these at all there around the truck powered by product type of projects are the more complicated projects and those bids will be happening very soon in the next month or so and then behind that also when you see a lot of other bids that have now.
<unk> teed up by psyche working in conjunction with the states with the discover and Toby talked about the fact that we do see a imminently about five gigawatts of RTC auctions coming to the market. Some of those as I said, we've already submitted firsthand bids for some of them coming up very soon and behind that there is another eight gigawatts.
Our RTC auctions that'll be coming up.
So our sense is that public demand is now beginning to translate into bidding activities and now the bids that are happening are sick. He's doing those are with a fairly clear identification of the off taker rather than put a bid and then go find the off take up and so therefore, we expect that.
The process from bidding to signing off Ppas will go relatively more smoothly than it has in the past.
In the past of course as we all know was disrupted by the Covid situation.
That is now all getting normalize so we do expect these beds to translate relatively soon into P. P is typically used to take three months earlier pre COVID-19 and we expect that that will come back to that same timeframe.
And then as you know we have to we used to construct the projects once the ppas are fine. So any bids that happened now in the remainder of this financial year FY 'twenty three we need to be built out by financial year 'twenty five so that's really where we are right now.
Okay got it and then and then I guess, just just along the lines of the demand that you're seeing are you seeing any upward pressure on PPA prices, whether they are in the corporate market or are at auctions. You know is is this demand.
Being translated into those are ppas moving upward.
So you know Justin what had happened is because there is more uncertainty on the commodity price side and interest rates have gone up obviously both of those that would be passed on them the formal Hyatt Paris.
And so therefore that is in general have gone up in the market are reflecting the higher higher input costs. Because obviously, we are passing goes onto our end customers.
So I think that's really what is happening I think the specific question of returns on these bids really is a function of the competitive intensity, which is a function of the nature of the bed and the potential offtake. So for example in the corporate PPA market as we've said.
A lot depends on the kind of solution that you can provide so we do see fewer bidders that are and in the round. The clock power solutions that are getting beat up by secchi against you feel better that because these are harder to execute more complex larger size projects, which all of those needs a lot of advantages and so on all of these therefore, we expect to see.
That should be certainly within a range of 16% to 20%.
I I I don't want to give you, but that is higher than the lower end of that because obviously these bits still need to happen but.
But I can just say that we expect a very comfortably be within.
IRA arrange for a lot of these things that are coming up and yes Baba prices have gone up because of input prices haven't gone up.
Right. Okay, great. That's that's really helpful. And then just based on you know where you are in the various stages of the projects that you're developing I was wondering if you just speak to any notable hurdles that remain to commissioning.
The 13.4 Gigawatts are that Youre planning you know by the end of fiscal 'twenty four.
Are you feeling about how you're positioned with your access to solar panels are given the ramp up of your manufacturing then and then how are you feeling about the the wind.
Why change as well.
Yeah, So look as well as supply chain is concerned in fact I just answer your question more broadly as well.
Looking at some of the other aspects also so supply chain clearly as I said in when we.
You have pretty much procure all the turbines.
All these for these for the megawatts that we have to commission and when I say it procured I mean that we've locked in the supply of course, the airlines will get delivered at the time that you required to get them installed at the time, we'd need to get them installed but fundamentally all the turbines have been locked in.
As far as solar modules is concerned a number of these projects are grandfathered with respect to customs duties and so doors for those projects were allowed to import and so therefore, we have locked in doors as well and for the ones that we won subsequent to April of last year a.
For those of course, we were going to be expecting to have our own supplies of modules and that is something that we will stop getting from the first part of the module plant commissioning and that on the Q1 Q2 timeframe of next year.
So it's even modules module supply is pretty much a locked in as well. So we don't anticipate any equipment issues R&D equipment.
Each supply issues, causing delays in the sub in the construction of these projects as far as financing is concerned I I, let you answer that question.
But I think fundamentally our work is going on a base right now.
And at this point.
You know they might be the usual implementation issues that we have in India around right there'll be a problems and so on it was of course, we'd have to solve as and when they come up but our expectation is that basis August all the work that you've done so far and the road that we continue to add sites and including land acquisition and so on that we will be.
Able to commission the vast majority of the 13.4 Gigawatts by the end of next financial year to be on track for getting that done.
Is that if you want to just talk about the financing piece as well.
Yeah sure. So I'm not sure yeah. So I think financing is the access and affordability of our capital it's quite smooth these days.
We have taken a target to tune the portfolio more in favor of our Indian rupees.
And sometime back we were almost good cuts in the dollar terms you know and now we are almost half so.
So half of the portfolio is in Indian rupees and hoppers in dollars will stop the dumb dumb shoots that we're getting for your financing or so.
In the range of eight or nine on the rupee basis.
And that's really helping us to build a natural hedge.
Domestic access to capital as we said have improved.
There are a couple of Goldman backed institutions, which are coming forward too.
Lend to companies like us that is also helping so all in all good on financing.
Okay, great. Thanks very much.
No go ahead sorry.
The next question was just saying you are getting.
Go ahead, Sir sorry go ahead.
No no I'm Fine go ahead go ahead shocking.
The next question. The next question. The next question will come from Nikhil Gonia with Bernstein. Please go ahead.
Alright. Thanks Sidney question. My first question is on hedging Pakistan It could give some clarity on.
It's a mix of swaps what's as options.
Is it for the entire duration of the day.
And also can if its an option till what exchange rate.
Got it.
Yes.
It was a mix up.
Yeah, because we use a mix of instruments and you know what you are going to get back to still be affected when there's a page in practices that that goes but we want to be a quite.
Quite appropriate for us.
So while the depreciation of rupee start on in a particular quarter will be able to take the accounting charges, which is noncash but from a commercial logic the mix of planned cohorts.
The at the money for words.
And cross currency swaps as we wanted to be useful for us I can give you offline in terms of the kind of rates like we have been able to lock in what are almost household behaviors or in terms of lean forwards, where we lock in the current rate.
<unk>.
With a premium on a year on year basis, and the balance is split into a T. M. If options and as I said some of these are at 90 R. B.
Between 90 to 95.
Understood.
The second question was regarding their own pop culture to that new construction there.
There was some albeit that the bottom has been.
Locke, Oh, so what I'm.
Some sense of what was the bottom.
I think this has been at nine a M.
And still hold.
Oh, well that project.
Yeah.
I'm still holds for that are that was a large alone almost $1 billion and we had a conjunction them up more than 10 banks and backwards or USD.
We'll put linked loan.
Approximately 9% notes for nickel.
And are you still are.
A quiet in the.
Range of items like that.
Target towards these kind of projects.
I should ask it all that's obviously been dealt with the bombed out too.
Mitsui, the Idaho has actually become even sort of a lot better.
Understood.
One follow up question on back to the 9% is interesting.
At Christina Lake.
You're not a dollar and so forth plus a spread plus the hedging cost. So now it is all in fully loaded cost of a colleague.
Okay.
And then my last question is.
Regarding.
So many competitors had been exporting pumped storage opportunities.
People understand.
But in your views.
Any plans on that.
Yeah. So you know pumped hydro is a it's a very long.
Long gestation business.
And I would say the first pumped hydro projects coming up would probably be in 2025, and that's only that's really bombed under the others might take a little bit longer, but having said that we do believe that pumped hydro has a role to play in some of the applications in the country and so we are looking at pumped hydro opportunities, but as I said, it's a law.
Long gestation ER business and therefore, they will take time for our for those kinds of projects to come on stream.
I view continues to be all saw that the batches and have a very important role to play from a storage standpoint and.
Eventually that is going to get deployed at scale has been of course over the last year or so battery prices had gone up but our sense is that of course now with commodity prices easing and with government policy is hopefully turning a little bit more supportive we should be able to see battery prices come down and make them much more competitive.
With respect to the shorter to medium term storage.
Activities.
Both batteries and pumped hydro have different roles to play batches of course as I said can be deployed much faster and in a much more.
Modular manner, therefore give more flexibility and a lot less in some ways less good intensive or transmission intensive in fact, if anything they allow you to use a transmission line small favorably pumped hydro is a little bit different because you have to move the baba across long distances potentially.
And so therefore longer term as you are still remains dead batches will prevail, but I don't think this night at all.
You have both happening to some extent.
And we are looking at pumped hydro.
Got it that's it.
Thank you so much.
At this time.
The next question will come from Toni Collette Ing with HSBC. Please go ahead.
Yeah. Thank you for the opportunity. My first question is with respect to the Britain via live participation again, this quarter and I remember last year was a.
So that's sort of a similar event and you had said that you would reevaluate your wins predictions can you comment on where are you in terms of the.
He is stimulating the predictions is.
Yeah Puneet.
<unk> said you are absolutely right that we had said that you'd be at four theres been the hybrid system to finish and then consider doing that evaluation depending on the outcome.
And I do as EBIT deal that wind has been a has been.
On track this year as well, although every year for the last two years the delta from the long term mean has continued to narrow.
That at least has been happening, but it does not revert back to what you have assumed has been to me.
What we will do over the next few months is that we will we will work.
Worked with an external agency to do you look at all the long term assessments of Harbin projects and try to arrive at see whether in fact.
<unk> needs to be made in those forecasts are not.
That is something that we are starting that process now and I think over the next few months.
We should have.
Some initial views coming in on that and we will of course, then be happy to share that with all of you. Meanwhile, I would say that we have taking into account the performance of the wind over the last two years, we have become I think a lot more.
I would not say a lot more but certainly become a lot more mindful of looking at the near term performance of wind over the last few years, but we are making a longer term forecast.
So we are becoming a little bit more.
Careful about our long term forecast of that connection to a future projects that takes into account. The last few years, we are making Ah. If finally, the last two years is seen more as an aberration to the long term mean, then than so much the better we can just be more consequent demand being forecast going forward.
And of course, if it is in fact, a change to what we had thought was the long term mean, then a future bids at least would be more of a mall or on track.
So that's really where we are.
Got it my second question is on the acquisition the I forgot what acquisition, what's driving and the delays in and and this is an all you've also segregated your EBITDA estimate between the acquisition and the organic so instead of this that the acquisition can get pushed into.
Slide 24 O versus 'twenty three.
Get up.
Yeah. So.
We are currently you know end up.
Process.
Integrating this acquisition this.
This is through a slump sale route and slumped Yale group means that you essentially have quite all the underlying assets.
Our land and the P. P N able to ping, an bank's little longer than the company acquisition.
And there are you know, obviously owe to circumvent state level issues regulatory matters and the bank is taking a little bit time.
Stage, it's difficult for us to tell you exactly and precisely what we will end up with in the current year, that's why we own.
So you're going to get that particular item there might be some bodies, but the quantum and the magnitude will be a better place to tell you by February call.
So that's the reason we are seeing that this guidance is subject to completion of that acquisition.
However, I used with the entity that the law.
The lockbox data this acquisition is April between.
Once the acquisition is consumer debit cash and secure.
The only question is you know do they cause them they shouldn't be handled from a revenue standpoint.
Cause additional balance sheet as a reduction in the capital expenditure.
That's the only thing I wanted to actually lock box, where it isn't it.
So the economic Oh, Okay. So interested secured do lithium.
Counting our way.
They didn't stand alone balance sheet.
Got it that's just my last one is on the.
Project someone said that you know he will give up projects where.
You know you won't make below 16 to 20 person dialogues.
Does that mean that you know there are some projects or do you see some projects, which have that kind of risk in your portfolio projects, where there are low tariff soak appointed one eight to 135.
Foresee a point, where you will you do.
For food those projects on our portfolio.
Puneet, let me clarify what I meant to say was not for that existing portfolio, but for any future bids that you might participate in if you've seen that the guy. This is coming to a level that we are not going to make the returns Becky typically target of 16% to 20% then even walk away from those bids and even not to go ahead and window.
Because in that case for things that is already there in our portfolio that'd be more do you want them to boss everybody signed Ppas are first of all by and large I would say that most of our projects are within the defined range.
And so we don't anticipate any issues.
But even if they bought issues.
You know having signed the PPA it would now be difficult for us to walk away.
And we will probably not be looking at doing that it's you know it in the mid east all of it there's some untoward situation, which is sort of unforeseeable, one might consider doing that but.
But you'd have to be very mindful of all the consequences of relationship with Turkey, and with a you know a reputational issues and so on so that's not something that you would do likely once the ppas signed but yes before the bidding process itself of course, if a project doesn't meet our hurdle rates. Then we will not go ahead and win those projects.
And on bad just think they are going to be very disciplined and we have been very disciplined over the last many years and it's actually held us in good stead. So in fact, if you probably while our market share is the largest in terms of big wins over the last several years. If you also see the percentage of losses.
Of Big Smartwatch, you'll find that you probably also among the highest.
So projects like you know 975 megawatt Rajasthan for really two points. One is that if Houston things you can make 16% to 20% dialogues there.
Because some of the peers seems to be giving up those kind of projects with low tariffs.
You can comment on that as most of you know it goes in those projects as I said in one off projects. There may be situations that I don't remember the specific project that you're alluding to are exactly what the numbers that I'll.
But it could very well be that in monarch I'll just hit them dead. Finally by the time you execute the project the other ends up being lower.
That is possible, but by and large as I said, we have we are able to deliver what we are working towards and we only bid towards 16 to 20 and we therefore in the vast majority of cases end up delivering that much or even higher sometimes for example, the RTC project as a case in point.
The farm down we're likely to make more than 20% equity I doesn't that project. So.
So yeah. So from an execution standpoint, it does tend to book Israel decade, depending on certain movements in commodity prices or interest rates or the execution issue, but as I said the vast majority of our projects are all are all hopped on just a bit unwanted between 16 and 20 and the vast majority of our projects stayed within that range close to execution.
Right.
Okay Anthony.
Just quickly to add to that you know somebody mentioned earlier in his comments that we continue to have a lot of conversations with.
Investors.
As it relates to capital recycling.
And that broadly across the portfolio has the opportunity to improve any particular projects are ours.
Yeah understood.
And if I can squeeze in just one last one.
You did the projects before it for 'twenty one.
No grandfather is that cleared now from the government's perspective that there's not a change in law, but more grandfathering.
For projects that are bit out before.
April one whether it goes grandfathering or change in law.
Oh do you have a central bank.
Yeah.
Oh, no I could come back on the specific points a month.
So we'll take it offline and we'll come back to it yeah.
Okay, Great. That's all for my third yeah. Thank you and all the best.
The next question will come from Love Sharma with Lombard Odier. Please go ahead.
Yeah.
Pardon me Mr. Mr. Sharma Your line is open.
The next question will come from Amit <unk> with Morgan Stanley . Please go ahead.
Oh Hello, Sir.
Wanted to get your view on the offshore wind opportunity, that's coming up or there was a new Doctor Briggs would you think that would be about four four.
Four gigawatt.
So how are you looking at that opportunity.
What is the debate Nasdaq behalf or such a person.
Yeah, you know so look I think offshore jobs, it's not clear at this point that when and when the big those common in what form we can come I think of course, I mean, nobody is working in the direction of trying to come up with something on the offshore wind site, but they havent yet.
Come out with anything fall most of them, even a discussion standpoint, so it's hard to comment on exactly what the timing will be and what the contours of the bid might be.
Having said that I mean, not he's also looking to allocate certain blocks of of all four of the ocean floor fault blocking for the future and so that is something that they are that is likely to come out more immediately.
We certainly do intend to participate in those auctions.
For the seabed.
Well.
And of course, eventually whenever and offshore wind does come out we'll of course be very active participants in that are there.
There are in fact, a number of.
Potential partners that we've been talking to all who've been talking to us for partnering on those kinds of bid doesn't been to come. So I think we probably paid for those in collaboration with our partnership with somebody who has specific experience of all children.
Some other geography Ah I should tell you that when at last time when he was looking at some of these things in 2019 at that time, it would get better that can be done a lot of work and we had partnered with.
At that time, a couple of the other thing in one Japanese company.
To to debate of course that never progressed. So you know we did not go ahead as well, but as and when the bid comes up we'll of course participate very actively.
Great that's great to know I know.
Sure.
The lines of a T. I just wanted to understand what kind of lineup.
Oh beyond a certain point or 40 gigawatts commissioning.
So do we have sufficient line.
You have to look for new land acquisitions.
Like I said, it shouldn't et cetera.
Yeah. So you know, we keep evaluating and making sure that we have a pipeline of development assets that go over and above.
The the Ppas that we already have in hand, and it's not just land acquisition. It's also a question of getting transmission and connectivity that is equally critical so we welcome both in conjunction and in certain cases excuse me get the transmission connectivity then you actually don't need to get the man bought.
In that area simply because you're already blocked the connectivity out of that area. So the.
The strategies could be different to lock in development pipelines for future, but at any given point in time I can't give you an exact number because that varies of course, but certainly we would typically have a development pipeline.
In the process, which is typically two to three years beyond what our contracted portfolio is so yesterday, our contracted portfolio 34, Gigawatts typically people would have a development pipeline that would be at least another two three years out and it's really at the basis of that development pipeline that we then baseball future.
Projects beyond the contracted capacity that we already have in hand, so that's a very active program, we have not talked about that in the past, but but that is something that we work on constantly because in some ways that is what gives us the right to keep growing our business and therefore, there is a lot of effort and a lot of the focus that we have in that area.
And we also of course commit development capital to make sure that a we are continue to either block the land or the transportation connectivity as as appropriate.
Okay.
Thanks.
There are no further questions at this time this will conclude our conference for today. Thank you for your participation you may now disconnect.
Thank you.
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