Q1 2027 Power Grid Corp of India Ltd Earnings Call
Speaker #1: I welcome you all to the Q1 FY27 earnings webinar of Power Grid Corporation of India Limited. We will start with detailed presentation which will be followed by Q&A.
Speaker #1: I would like to thank the management for giving us the opportunity to host the webinar. Without much delay, now hand over the call to Mrs. Anjana Luthra, Company Secretary, and Compliance Officer of Power Grid.
Speaker #1: Thank you, and over to you, ma'am.
Speaker #2: Thank you, Mohit. Good morning. I'm pleased to welcome you all. I'm pleased to welcome you all. The webinar for investor and analyst organized by Power Grid Corporation of India Limited today are functional directives and senior management team will discuss company business and share performance, company performance outlook based on Q1 FY26-27 financial results, recently announced on 6 August 2026.
Speaker #2: Now I would like this privilege to introduce our functional directors, Shri Bura, Vamsi Rama Mohan, Chairman and Managing Director, who is also holding additional charge of director projects.
Speaker #2: Dr. Yatindra Dwivedi, Director Personal, who is also holding additional charge of Director Finance.
Speaker #3: Good morning.
Speaker #2: See Naveen Srivastava, Director Operations.
Speaker #3: Good morning.
Speaker #2: We also have with us Shri Venkata Subramaniam Galluri, Chief Financial Officer, and other senior officials with us. Now I request Chairman and Managing Director for the presentation with the investors.
Speaker #3: Yeah. Good morning all. thank you for joining this, webinar. On the earnings update of Power Grid Corporation of India Limited, for the Q1, ending 30 June 2026, we have the standard disclaimer before the presentation.
Speaker #3: This one on the screens. The presentation outline will be in the manner like we started the highlights and overview, execution, and operations, competition, the order pipeline, and the outlook of the sector, financial performance of the company, sustainability and recognitions.
Speaker #3: As far as the highlights and overview, please be informed that, the gross fixed assets stand about 3.25 lakh crore plus, the transmission lines in terms of circuit kilometers, are about 1,86,000 circuit kilometers, the transformation capacity is 6,34,516 MVA, it's about 291 substations if one compares, the system availability continues to be one of the highest in terms of 99.8%, the market position, the shareholding of Government India continues to be about 51.34%, the market cap 2.66 lakh crore, and the FII shareholding, DI shareholding at 24.33, and the 20.70 respectively.
Speaker #3: The credit profile continues to be one of the finest in terms of the domestic as well as international. All these figures are as on 30 June 2026.
Speaker #3: The major elements which have been commissioned in the quarter, FY27, about 1,635 circuit kilometers, and, which is, almost 35% of the last year's, achievement in the first quarter of Q1, we achieved almost 35% of what we achieved the last year.
Speaker #3: The transformation capacity stands about 10,500 MVA, the transmission lines, important transmission lines which have been, commissioned during this period are Mahesh Param, and Rajisthan, and again in Andhra Pradesh, the transformation capacity has been added in three substations, KPS 3, 3, and the 400 KV systems include Jabalpur, Satna, Ananthapuram, and added to this, after June 26, the major systems which have been completed are Rajur Couple, in the state of Karnataka, Gadag Couple, and that also is in the state of Karnataka, and 2, and 3 in the state of Rajasthan.
Speaker #3: These projects are by and large associated with the RE generation in the respective states. Substation and new substation and couple has been also being completed.
Speaker #3: The guidance what was given as 37,000 crore, we please to inform that compared to last year, we have, the capex is more than 10% what we have achieved in this quarter, in Q1 itself.
Speaker #3: And on the capitalization front, the guidance standing at 30,000 crore, it is, 3. almost 3.13 times than what we have achieved in the last quarter.
Speaker #3: So as against 1683, we stand about 5,277 as far as capitalization is there. Availability and the tripping for line continues to be one of the finest in the sector.
Speaker #3: Please to inform that, Power Grid, as far as, as you are aware of, Power Grid had this emergency restoration systems for power which proved very beneficial during, emergencies situations and Power Grid has also been inching towards, bringing in such similar systems on the substation front which you all are aware the 220 KV mobile GS day was successful indigenously developed in association with Power Grid and now we have also got the 132 KV mobile GS day and 400 KV GS days shortly on the end.
Speaker #3: So basically we are well armed with trying to deal with the urgent situations whichever are going to arise during the construction phase and the operational phase.
Speaker #3: PVCB friends, there's competition if you're talking about the success, till July, 2026 in interstate as well as interstate, six transmission projects Power Grid has been successfully, these projects over there.
Speaker #3: with a total, gross, annual tariff about 2,200 crore. The performance stands at about 47% cumulative as well as the ISTS scores and including both interstate and interstate, total 19, projects were bid during this period of which Power Grid was successful in six projects.
Speaker #3: It also includes some interstate projects. And, a new, element added to the asset class in the country and Power Grid was the first in securing this project that is the synchronous condenser the first of its kind in the country itself.
Speaker #3: So, Power Grid's made in Korea, I should say, into the new asset class. It's a 400 KV, level, system base are also associated with it.
Speaker #3: Two such synchronous condensers in two, and, this is, expected to improve the system strength. That is a short circuit ratio. Reactive power support during falls increasing, increased grid inertia and damping of the low frequency oscillations, which are the characteristic of the, which are the characteristic of the synchronous condenser.
Speaker #3: So all these benefits would be accruing once the systems are positioned to us to bring better integration of the RE into the grid. Total outlook for the sector looks very vibrant in terms of 1.75 lakh crore, which are the works in hand for Power Grid, which includes both PVCB and RPM and others.
Speaker #3: The bidding pipeline is also very strong in terms of 1.19 lakh crore and the long-term outlook is also very secure about more than 15 lakh crore, which is there.
Speaker #3: Getting into the details of each of this, the 1.75 lakh crore which work in hand, the TVCB amounts, naturally having the line share about 1.46 lakh crore RPM stands about 25,000 crore and the other business might be bringing data center, and all of that include about 4,200 crore.
Speaker #3: Coming up to a total works in hand about 1.75 lakh crore of which, 50,000 is CWIP. Bidding pipeline under bidding 73,875 crore and which are slow to be floated are about 45,000 crores and with a total, projects which are to be under bidding in the pipeline about 1.1 lakh crore.
Speaker #3: And the major projects which are there on the system are the Rajasthan Barmer Complex, HBC, the Jump Kambalia, Jam Nagar, Lakadia project, ERES, Nauda, Durgapur, the pump storage associated transmission system, Lakadia and Jump Kambalia, Jam Nagar system, at Rajasthan.
Speaker #3: So all these things put together about 1.1 lakh crore available in the market. The strategic drivers powering up the transmission system investment cycle as you are aware is the plans of the CEA and the ministry, the National Electricity Plan, the anchor program of 900 plus gigawatt by 2035, 36, 7.9 lakh crore and the hydropotential in the northeast portion of Dharmaputra Basin was 6.4 lakh crore and the data centers emerging to be one of the strongest, intake for the transmission systems to evolve about 71 gigawatt.
Speaker #3: Added to that, the global one son one world one grid, this also getting active traction in terms of, the increasing challenges going to Hormuz.
Speaker #3: So the need for integration is much more visible now. So we, we expect that the neighboring countries, get associated in strengthening the, grid beyond the borders.
Speaker #3: Power Grid has, signed a loan agreement with JBIC, Salama Green Loan Agreement of Japanese and 80 billion. riding on the subsidiary towards hedging which the government of India has announced.
Speaker #3: And their robust collections continue to be there in the sector, but the building standing at about 10,963 crore and the realization, about 104% is 11,404 crore.
Speaker #3: A comparison with the previous quarter and the current quarter, visibly indicates that the number of receivable days comes down from 19.41 to about 12 days.
Speaker #3: The financial performance and the consolidated front, which I would be focusing upon, the transmission charges, there's a 3% increase, standing from 10,620 to 10,905 and the total income, from 11,444 to 11,697.
Speaker #3: The past stands at about, 3,598 compared to 3,631 in the previous quarter. And, I would like to state over here, that the total increase in the transmission charges is about 790 crore going to the new assets which have been commissioned.
Speaker #3: if you appreciate that we are under the regulatory tariff regime which the major of the assets continue to be there. So the regulatory characteristics are the trajectory, I should say, as, has a revenue reduction in terms of the depreciation and interest which are but a natural in the, regulated regime about 330 crore.
Speaker #3: And 230 crore is going to the interest because of the difference between the petitions filed and the orders issued by the regulator. So this amounts to about 560 crore was the downside going to the regulatory nature of revenue.
Speaker #3: While the transmission charges continues to boost forward and move forward, the regulatory characteristic of the assets class which we are on has an impact on the financial figures over here.
Speaker #3: So while the effective path would have been plus 247, but for the regulatory characteristic, it stands about minus 33 crores. Reduction about 1%. The standalone, figures, financial figures also reflect the similar kind of a trend over here.
Speaker #3: The financial performance, was continues to be strong in terms of the gross fixed excess continue to moving upwards from 2,92,000 crore to 3,25,000 crore.
Speaker #3: The capital work in progress from 41,000 to 50,000 crore. And, the increase in debt, an obvious indication of the growth path of the company.
Speaker #3: The net worth improving from 96,482 to 1,04,028 crore. And the ratios accordingly going to the increased, net worth having an impact of earnings per share standing at 3.87 and book value per share about 1,111.85.
Speaker #3: The other key information the income from previous periods you Q1 there was plus eight and, Q1 of 27 is minus 22. The interest in the differential tariff which I was saying so was from 257 stands at 22.
Speaker #3: Interest from subsidiaries continue to be up. And the incentive as a consolidated figure is also growing. The dividends from the JVs and subsidiaries, is first owing to the, status of held on sale of, torrent Sikkim Power and Parvati Coal Dam.
Speaker #3: So the figures, reflect the situation over there. And the CSR expenses continue to be steady. all the other ratios including the equity in TBCB and equity in TBCB both in operation and construction continue to improve owing to the nature of projects were possible establishing.
Speaker #3: On the consultancy and telecom front, the Q1 of FY 27 stands at 252 crore and 391 crore respectively. And, the telecom front, the connectivity to Andaman and Nicobar has also been provided by Power Grid's subsidiary that is Power Tel.
Speaker #3: The first international long distance communication established to Nepal. So adding up more business, to the telecom division. A bulk order from NICN and CAN project continue to move it forward.
Speaker #3: 100% backbone availability is the hallmark of the telecom systems. On the consultancy front, the domestic, front we had 16 orders and on the international three orders.
Speaker #3: And the con country footprint is about 25 countries what the consultancy footprint stands. On the sustained commitment, as previously informed that the target for, its target set for 2025 has been already set, achieved in 2025 as far as the, 50% electricity from RE that's achieved.
Speaker #3: And the other targets, in terms of, achieving zero waste to landfill, more than 90% achieved and we are close to achieving that by 2030 which is the target that's set.
Speaker #3: Becoming the net water positive is also having increasing results with more than 50% achieved and we should be able to achieve much ahead of the target.
Speaker #3: Becoming net zero, the target standing at 2047, 20% reduction already achieved and we are inching forward to that, date. On the accolades and recognitions, increased income that Power Grid has been, let's say awarded owing to the initiative under the CSR scheme with the electronic scholarship scholarship scheme which Power Grid initiated.
Speaker #3: And Power Grid has also been confirmed with the Mecanon award and also, the Power Tel has been recognized by the NICC for its maximum traffic user award.
Speaker #3: And on the industry front, we have technology and innovation award and FICI and D&I award. Thank you. Thank you for the patient care. Over to you, Mohit.
Speaker #1: Ladies and gentlemen, we will now begin the question and answer session. To ask a question, please click on the ask a question tab. When the operator announces your name, please unmute your microphone and announce your company name and proceed with your question.
Speaker #1: The first question is from the line of Prasadh. Please announce your company name and go ahead with your question. Prasadh, please accept the prompt.
Speaker #1: And proceed with your question. Since there is no response, we'll move on to the next question. Which is from the line of Apoorva Bahadur.
Speaker #1: Please announce your company name and go ahead with your question.
Speaker #2: Hi sir. I hope I'm audible. This is Apoor from IIFL Capital. thank you for the opportunity. sir, are you touched upon this on, on the drag which is coming from decline in depreciation normative depreciation as well as some regulatory differences?
Speaker #2: would be helpful if you can quantify this drag in depreciation and its impact on revenue. How much would that be for this quarter?
Speaker #3: So Q1, owing to depreciation and interest, it stands about 330 crore. And owing to the interest, because of the differential between our filing and also the CRC order date, that stands about 230 crore.
Speaker #3: It should be about 560 crore. The drag on account of the regulatory characteristic.
Speaker #2: Okay. Okay, sir. And, and how, how do we, see this are going ahead especially because I think depreciation, probably will pick a little bit more pace.
Speaker #2: I recollect in the last cycle we added a lot of capacity. around 2014, 15, 16 that time. So that would be completing 12 years.
Speaker #2: how should we think about that, sir?
Speaker #3: Yeah, as you rightly said, what, capitalization happened 12 years ago that will definitely have an impact. because that's the characteristic of the industry itself, the transmission industry under the regulated regime.
Speaker #3: So basis the quantum of capitalization what has happened in the previous 12 years, it would have an impact. But then that is a part of the regulatory characteristic.
Speaker #3: So that should not be a cause of concern because that is the way how the, the revenues and the expenses are taken care of.
Speaker #2: sir, if I'm not wrong, this should be this should have been profit neutral, right? Because there's a reduction in revenue and a reduction in the expense as well.
Speaker #2: yet I believe it, it had an impact on profitability. could you help us sort of reconcile that because the despite the 28,000 crore capitalization last year, profits have remained largely flat.
Speaker #3: Yes. One is that certain components which otherwise were, available in the previous quarters, some couldn't have been available. Like for example, the interest owing to the differential between the, CRC orders standing at 230 crore is no longer available now.
Speaker #3: And also the write back on account of a particular, asset class which was there in the previous quarter is not available over here. So this has an effect of bringing it down.
Speaker #3: Added to that, the, the, Siddharth, the, the depreciation what is being accounted for as well as the tariff which is there, there would be always a differential in that.
Speaker #3: That also is having a marginal difference in depreciation and interest.
Speaker #2: Yes.
Speaker #3: Because it will not match the what is the notional what has taken in the regulation. Because of that, there is a marginal impact. Marginal impact.
Speaker #3: But Bharanidhar's impact is the because of the interest on differential between provisional.
Speaker #2: Major impact is basically interest on the differential between the, CRC's orders and also the write back on account of one of the projects. So last year which has happened.
Speaker #2: So that differential is actually what is, visible on the financials.
Speaker #1: Understood. understood, sir. Just one last question. if you can share of the 13,000 crore of equity which we have invested in the TBCB business so far for both operational and under construction projects, how much of that would have been funded by taking debt at the standalone or parent level?
Speaker #1: Or is it all of it is through, through equity itself or cash?
Speaker #2: All of it is through equity. All of it is through equity. Higher on.
Speaker #1: Okay.
Speaker #3: Through revenue.
Speaker #2: Power Grid has a strong, internal revenue mechanism and it is capable enough to take care of the quantum of growth what we are forcing.
Speaker #1: Sure, sir. Understood. Thanks a lot. All the best.
Speaker #2: Thank you.
Speaker #1: Thank you. We take the next question from the line of Bharanidhara. Please accept the prompt and announce your company name and go ahead with your question.
Speaker #2: Am I audible?
Speaker #1: Yes, please go ahead.
Speaker #2: Great. Yeah. I'm Bharani from Avendas Park. my first question is on the, 7.9 lakh crore of estimated capex by 2036, by the government in the transmission space.
Speaker #2: to augment non-fossil fuel-based capacity additions in the country. So my question is in how many years in your opinion, you think that would be bitted out?
Speaker #3: The 7.9 lakh crore. This one, I should say that is kind of a medium part. Immediately it's standing as 1.19 lakh crore and 7.9 lakh crore is to be immediately bid out.
Speaker #3: Based upon the traction what we are receiving, there is going to be continuous inflow of projects. Into the system. So the 7.9 lakh crore will be spread across maybe another three years or so because we need the systems by 35, 36.
Speaker #3: The next three to four years this will have to be spread across. So that the systems will have to be available in 35, 36.
Speaker #3: So considering about two to three years as the construction period. So these projects should be visible should be on bar in the next three to four years.
Speaker #3: But having said that, it will be by and large dependent upon the others. Also because transmission is an offshoot of generation. So the quantum of generation coming up.
Speaker #3: Not only generation, understand. Here it would be the data centers, the green hydrogen. These are new, new set of requirements where it is going to push the transmission system.
Speaker #3: Not limited to merely a generator. It also has a new specific loads which are coming in terms of green hydrogen, data center, green ammonia.
Speaker #3: And you already see few of the projects already taking position in terms of the eastern and western parts of the country. So this is going to give further boost and it could be that much faster as well.
Speaker #2: Understood. Related to the same thing, is inflation and other cost escalation, built in this estimate by the government or is there a scope for increase in this total 7.9 lakh crore in the future?
Speaker #3: See, these are general estimates. Obviously, it would be difficult to factor in the quantum of escalations what would be happening on during this period of time.
Speaker #3: So should there be a massive escalation, it obviously would get reflected in these costs.
Speaker #2: So there is a scope for increase in this number. Okay. And, again related to the same 7.9 lakh crore number, just to clarify, this will also include, cost of acquiring land, right?
Speaker #2: And if so, whether the new land rates, according to the new guidelines by Ministry of Power in the last one year, two years, is it, being incorporated or you think that will also you know, result in some scope increase in the cost because it may not have been included?
Speaker #3: That's quite an interesting question, I should say. you see, the guidelines which have been notified by the government of India, regarding the land, compensation in terms of, the right of way challenges what we are what are witnessed in the transmission line.
Speaker #3: Few of the states initially it was Delhi and Haryana who have adopted it. You see, recently Gujarat also adopting it and other states following suit.
Speaker #3: So obviously, this has not been factored while working upon the estimates. And it is presently not possible to actually even factor in the quantum because that would be emerging only once the MRG rate has been finalized.
Speaker #3: So as we move forward, we get more clarity as to what extent of compensation it could be included in these systems. It could be project specific depending upon the location.
Speaker #3: I, urban areas, and, rural areas, that would have a different impact. As we move forward, we get more clarity on this. But these are the quantum of systems which would be coming up, keeping in view kind of the growth trajectory, achieving 900 gigawatt non-fossil capacity by 25, 36.
Speaker #2: Understood. So essentially, essentially even the land, compensation which can, be higher is not in this number. It can be higher. My final question, is on, on basically the general execution delays that the transmission space is, facing including us.
Speaker #2: as it stands now, is there anything you would like to highlight on status of these, reasons why delays are happening meaning is there still, delays due to equipment availability?
Speaker #2: What is your view on delays in acquiring land or labor shortage or, or, or this entire process of, finding out the land, rate based on new circular rates or market rate, to give compensation for right of way?
Speaker #2: So do we have the, it will be good to, hear your views on the execution delays and the status?
Speaker #3: Sure. The earlier as you recall, the timeline taken for a transmission line was about 36 to 40 months. Subsequently, there was, a lot of, demand that from the private parties that they would be implementing the systems in much faster.
Speaker #3: Tighter timelines. And it has gone to the extent of 18 months was the timeline given to a 765 KB double circuit line. It's quite a challenging timeline.
Speaker #3: So over a period of time, it has been now recognized and realized that these timelines are not practical in terms of implementing transmission systems.
Speaker #3: So now, the government of India has revisited these timelines and have adequately, revisited these, timelines and improved upon which now stands about 26 to 30 months plus.
Speaker #3: So this is going to make sure that whatever projects are there are having adequate timeline for them to implement. So as far as the policy goes, yes, it has been recognized that transmission lines do take time in terms of implementing them.
Speaker #3: The second part of it is the land compensation with the guidelines coming in and with the states taking, forward few of the states taking over.
Speaker #3: they, there has to be they, there will be some settlement settling time for them to actually arrive at the mechanism for the MRC. There could be a nuances in each of the state as to how they would be dealing it.
Speaker #3: So as and when this particular issue is overcome, I'm sure it will be that much faster. Rather than me finding it difficult in building up transmission systems, if these, guidelines are well accepted and it's translating into reality, with the compensation duly being paid to the landowner, I'm sure it would be bringing that ease in implementing of the transmission systems.
Speaker #3: Having said that, the challenges of ROW is there. Cannot be wished it wished away with more increased urbanization, increased other infrastructures coming into the picture.
Speaker #3: So we will have to coexist and build these systems to ensure adequate evacuation in the country.
Speaker #2: Sure. That answers except, if you can highlight if there is any challenge due to equipment also. That will be my last question. Thank you.
Speaker #2: Equipment supply.
Speaker #3: Equipment supplies. Equipment supply, equipment supply, with the high intensity growth in the sector, obviously the existing capacities at times have a challenge in trying to provide these supplies.
Speaker #3: And, looking into the power, power grid has taken an initiative of trying to give much more visibility to the manufacturers in terms of procuring it in bulk rather than project specific procurements.
Speaker #3: This has given the confidence to the OEMs so they started establishing a good amount of capacities which I'm sure is now reflecting in terms of, better discovery of prices and also better timelines.
Speaker #3: And, eventually, it is going to be doing good to the sector. So the stress on the equipment supplies which was there sometime back should not be as much what it was before.
Speaker #3: So that is going to ease.
Speaker #2: So, so you're telling that the equipment supply challenge we had in, high capacity transformers or TIF substations is, significantly lesser now.
Speaker #3: This will be yeah, it would not be as bad at what it was before. Because the, the manufacturers are also now ready to take on the additional capacity requirements.
Speaker #3: So there are, there is ramping up capacity in the country as well. So that is going to do a lot of good to the sector in terms of timely availability of the equipment.
Speaker #2: And obviously because government has recently, allowed a few, Chinese companies also to be, able to bid that will also probably ease the equipment supply project, right?
Speaker #3: It should. It should. With more capacity, obviously more players in the field will definitely ease the situation.
Speaker #2: sir. I enjoyed my conversation.
Speaker #3: Thank you so much. Thank you so much.
Speaker #1: Thank you. Participants in the interest of time and fairness to others, we request you to restrict to two questions per participant. We take the next question.
Speaker #1: From the line of Ketan Jain. Please accept the prompt. Announce your company name and go ahead with your question.
Speaker #4: Hi. good morning, sir. my name is Ketan. I'm from Avindus Park. just wanted to double click on a follow-up question, for previous participants. On the difference in, tariff from CERC and our filing, what is the reason behind this?
Speaker #4: Is it that, CERC has not approved, some of our expenses?
Speaker #3: no. I think I should get put some parity over here. The trajectory of the tariff of the regulator is that they recognize the tariff towards the, cost of loan, that is the cost of, debt.
Speaker #3: They recognize that depreciation and they, they, they unwind that particular cost in 12 years. That is the nature of the tariff for the regulator here.
Speaker #3: After 12 years, the entire debt is supposed to be done away with and then it's only the equity portion. So the characteristic of the tariff in itself will fall, fall down after 12 years.
Speaker #3: Because the component towards the repayment of the loan is, to be addressed within that time. So that is the way how the tariff has been governing.
Speaker #3: So that is one part. The trajectory of the tariff of the regulator. The second part of it is as we file a petition towards the for the tariff and if there is a delay in the issuance of the order by the regulator, then during the intervening period, there is an interest which is, accrued to the company power grid, SBI, MMCLR plus 100 basis points is what we are, what we are, what we are, entitled to receive during the period because the order has not come into position by the regulator.
Speaker #3: So all of that is also an additional revenue which comes into power grid. As and when the orders are issued by CRC, that particular component obviously wouldn't exist.
Speaker #3: Such component was significantly available for us in Q1 in the previous year. And as, as the, as the year progressed, the orders started being issued by the regulator.
Speaker #3: So that particular component dwindled. So presently that component is not significant. So you find a variance between the Q1 of the previous year and Q1 of the current year.
Speaker #3: To the extent of 230 crores for the Q1 of 26 and 27. So this is the nature of the regulatory regime which we are bound with.
Speaker #3: There is no other concern in terms of regulator not allowing any tariff under absolutely there is no such issue. The time taken by the regulator because he's also stressed with a good number of petitions and he has a cycle to dispose them of.
Speaker #3: But during that period, he makes sure that the, that the developer is not at, loss so there is a component of interest which is accrued to the developer in this case as what I was saying 230 crores was the quantum which was available to us in Q1 last year.
Speaker #3: But as, as the year progressed, CRC started giving the orders because their cycle will have to come through. So presently that particular revenue provision is naturally not available now.
Speaker #3: We get the dollars. The final orders are already on the, on the, on the board. So we can.
Speaker #2: Understood.
Speaker #4: that's very thanks for the elaborate answers. just so if I understand, if I have to calculate the adjusted profit, I need to add 230 crores to the Q1 F27 profit.
Speaker #4: And also adjust the base for the writing back of any, liability. What was that amount, sir?
Speaker #3: Yes. Write in there was a write in how much was that amount?
Speaker #4: 230 crores.
Speaker #3: 230 crores which was available in the last quarter is not available to you. There was there was one provision of write in of a particular company.
Speaker #3: KSK Mahanadi? KSK. KSK. That was not available.
Speaker #4: So write in the adjusted profit, I should reduce the base profit by 33 crores and increase the current profit for to, by 230 crores.
Speaker #3: Yes.
Speaker #4: Yes. That's, that's it. Those are my questions. Thank you.
Speaker #3: Thank you.
Speaker #1: Thank you. We take the next question from the line of Atul Tiwari. Please accept the prompt. Announce your company name and go ahead with your question.
Speaker #5: Yes, sir. so this is Atul here from JP Morgan. so my question, is on again on equipment supply status. So especially for some equipments like transformers, you know, the industry has seen quite a bit of increase in price rise over past few years because of a lot of ordering.
Speaker #5: but now has the situation started to normalize and are the prices stable and are they coming down? Because we gather that a lot of capacity is being added by vendors, which you also alluded to.
Speaker #5: And does it have a scope for reducing at least to some extent the cost of implementing the projects?
Speaker #3: Yes. as far as the increase in capacity, as the nature or the law goes, with more players, more capacity in supplies, obviously it would have it would have a, a, a reducing impact on the both the price as well as the timelines.
Speaker #3: Availability of the systems. But having said that, the raw material which is required for the transformers and all, that is the factor which will continue to impress upon the costing of these equipment over here.
Speaker #3: A combination of increased price and a combination and the, and the raw material cost would have an eventual impact on the price line of those equipment.
Speaker #3: So we see that the prices are quite stabilized over here and, the year, in the days or the months to come, we should see much, much better progress as far as the, the price goes.
Speaker #3: While we would be w and definitely obviously if the price is coming down, it will have a much better impact in terms of sweetening the revenues of, power grid in terms of the earnings of power grid would be that much sweeter as we move forward.
Speaker #5: And sir, what is the status of the award of Rajasthan phase four barmer complex HVDC project? What are the timelines here?
Speaker #3: The timelines, sir, are these bids have been submitted to the initials offers have been submitted. They have been evaluated by the bid process coordinator.
Speaker #3: And, the next steps as what the, BPC will have to take will have to be announced. So the bids have been submitted. That's the status.
Speaker #5: Is there a date for announcing, out yet or the date is still not out?
Speaker #3: The date is still not out. The date is known just before the date of ERA, one day before it's known. So it is not known.
Speaker #5: Okay. Thank you. Thanks.
Speaker #3: Thank you. Thank you, Tiwari ji.
Speaker #1: Thank you. We take the next question from the line of Janesh Karya. Please accept the prompt. Announce your company name and go ahead with your question.
Speaker #6: Yeah. Hello. Am I audible?
Speaker #3: Yes.
Speaker #6: Oh, yes. Thank you for the opportunity, sir. So you have mentioned, very strong pipeline going ahead from the Brahmaputra basin re requirement data center GH2 opportunity.
Speaker #6: Any thoughts on, how can we see the HVDC, pipeline for the next three to five years and any, thoughts on whether we can, have preponement of, any of the, capex, that we have mentioned beyond 35?
Speaker #6: Any thoughts on that front? That is the first question.
Speaker #3: see, as you are aware, one of the project of HVDC is already in the pipeline. And, by 27, there's traction for another project to come into the pipeline out there.
Speaker #3: We look forward for that. And having said that, almost 21 HVDC projects are there, depending upon the evolution of the generation and the load centers because we need both the points for us to identify the projects.
Speaker #3: So the 900 gigawatt, report of CA has about 1,400, HVDC projects and the Brahmaputra basin has about six HVDC projects. And the international HVDC projects, linking Sri Lanka and Andaman and, Myanmar, they also have actively in their consideration.
Speaker #3: Depending upon the evolution of the technology, the ease and availability of these systems and the costing of the systems will have an impact in the planner deciding to go towards the HVDC.
Speaker #3: To, to tilt towards HVDC, we need to have the availability of it because they have a long gestation period, these HVDC projects. And also they have significant costs.
Speaker #3: So the planner will have to carefully examine the availability of these projects and the requisite timelines and accordingly plan these systems. So there is good traction as far as the HVDC projects which are working for the country.
Speaker #6: Got it, sir. So like you mentioned, cost overruns, would one be one of the factors that could determine the timing and, timing and quantum of HVDC projects.
Speaker #6: Any thoughts on how BESS as a system would, play a role in the upcoming five years given pricing side pressure from, OEM, capacity coming in?
Speaker #6: Might, go down but commodity inflation, for, for the OEM's raw material will still, drive up can still drive up the pricing. So any thoughts on HVDC being complemented with BESS or getting converted?
Speaker #6: through BESS or to some other, technology. Any thoughts on that front? And just to follow up on that, what kind of equipment, would we or any other, transmission player would be procuring from Chinese OEMs who have received, approvals from the government?
Speaker #6: So yeah, those were the last two questions from me.
Speaker #3: Yeah. Multiple questions are here, I should say. The, the replacement of HVDC with the best, I don't I don't think so it will be exactly so in that manner.
Speaker #3: best has its own utility and HVDC comes with its own utility part. So these two, components in the planner planning part will be taken by the planner and CA put together.
Speaker #3: They will be seeing because it is not a static scenario. What we need to appreciate is that, the power sector is not a static scenario.
Speaker #3: With more generation coming in different locations, more data centers or more roads having in a different positions, this is continuously dynamic in nature. So given the situation, given the costing of these systems, best HVDC and other alternative systems, including 1,200 KV HVAC systems, all these things are actively considered before finalizing upon that particular, component which will have to be taken out, which is most suitable at that point of time.
Speaker #3: With this, the planner will evolve, evolve, and I'm sure that they are looking at it. Having said that, on the best front, the regulator also has recently come up with an amendment to the terms and tariff, regulations under which he's expecting that the integrated storage systems, that is the batteries or such kind of a systems are given a provision that even the transmission developer like power grid also can develop.
Speaker #3: So power grid is also working upon this very clearly, I mean, very intensely. And we also filed petitions before the regulator after obtaining the consent from the northern and the western region RPCs.
Speaker #3: So this is another, opportunity for power grid also to work into the best storage systems under the regulatory portion that is under section 62 of the electricity act.
Speaker #3: So we are working on that as well. But this largely depends upon the traction, what is being given by the other stakeholders.
Speaker #6: Thanks. And just if you could just, follow up on the Chinese OEMs, equipment that we, plan to purchase, the kind of equipment which are plan to purchase from the Chinese OEMs who have, received approvals.
Speaker #3: See, as you are aware, with the recent notification, four of the companies within the country have been allowed by the government of India. having said that, power grid continues to be in adherence to the, guidelines what are notified by the government of India from time to time.
Speaker #3: And, to the extent whatever we have the, opport options for procuring these equipment from the neighboring countries, power grid will be adhering to that.
Speaker #6: Got it, sir. thank you. Thank you for patiently answering all my questions and all the best.
Speaker #3: Thank you so much, Dinesh.
Speaker #1: Thank you. The next question comes from the line of Sumit Kishore. Please accept the prompt, announce your company name, and go ahead with your question.
Speaker #7: Thanks for the opportunity. my question is, the equity investment in operational DGCV projects has gone up from 4,671 crore last year to 9,965 crore.
Speaker #7: Could you give us a sense given DGCV is the main driver of growth? I mean, what is the color that you can provide us on the consolidated performance of DGCV, in terms of revenue, EBITDA, and VAT?
Speaker #7: And, also give us a sense on what kind of return on, the invested equity in operational DGCV projects you have been able to secure.
Speaker #3: Yeah. The operational part associating equity in DGCV operational has moved from 4,671 to 9,965. This is the mainstay as, as what we are saying.
Speaker #3: The lion's share of the projects presently are under the DGCV regime. And there is competition in terms of securing the projects. Obviously, we need to trade a path of both, growth and profitability and power grid is continuing to make sure that there is both growth and growth and profitability in its diverse, whatever we are doing.
Speaker #3: And then the returns are also that the specific person, I should say, returns are also well calibrated to make sure that the investor is comfortable with those, returns.
Speaker #3: Because it's not one single project which will be determining it. The multiple projects, each of the project comes with its own niceties and after execution, the quantum and the quantum of claims which are there, all of this put together will be giving the effective returns.
Speaker #3: And power grid is well safe and also making sure that all the returns are well within the interests of the shareholders.
Speaker #7: One request here is that because your business growth is vaguely driven by DGCV now, could you make a separate disclosure, in terms of what the consolidated, you know, contribution from DGCV projects is to the CNF?
Speaker #7: That is the main growth driver for the company. So what is the consolidated revenue, consolidated EBITDA, consolidated profit for DGCV? That will help us analyze the company better.
Speaker #7: There are periodical, you know, regulatory adjustments which, anyway are in a business where the pace of growth has slowed down quite considerably. But we are not able to appreciate your, results given the key underlying driver of growth, the transparency on, the to evaluate how DGCV performance has been.
Speaker #3: I do appreciate the concern. In fact, it is an equal concern from my side as well that you need to appreciate certain regulatory pulls or pushes actually impacts the power grid's financials.
Speaker #3: I think we will examine that. And, with these kind of meets or such other platforms which are there or maybe better disclosures, we'll try to make sure that this is properly reaching out to the analysts and the investors alike.
Speaker #3: So that they continue to appreciate and, have confidence on the company as to how we are moving forward. We will examine that.
Speaker #7: So as to the regulator, what we have to disclose, we are already disclosed and variant the network.
Speaker #3: We will examine that. We will examine that. We will do that. Thank you so much for that particular, insight. We are also equally concerned that the true reflection of what we are performing should be there with the investors so that he can analyze us that much better as we have seen during this discussions, the primary concern was, their inability to judge that there is a regulatory drag which is but very natural in the pretty much cost of concern as what is happening.
Speaker #3: Which I already explained in my previous statements.
Speaker #7: Just one more question. given the nature of capacity addition is more leaning towards solar, and, could you give us a sense of are there any major transmission lines of power grid which are, grossly underutilized, at the moment?
Speaker #7: Because renewable projects have not come up and power grid transmission lines have, got commissioned. And in those cases, are you facing any challenges, in terms of, you know, both operationally and recovering your dues, from customers?
Speaker #3: Okay. I should say yes. To the extent of, the transmission charges of power grid are not governed by the, power flow.
Speaker #7: Yeah.
Speaker #3: The fundamental part. So it is not that only power flows, power grid starts getting its revenue. So meaning that it is quite safe that once we commission the asset, the revenues start flowing.
Speaker #3: Whatever the mechanisms, what the regulator has identified. So there are provisions where we continue to get our tariff. This may tariff is not rupees per megawatt hour.
Speaker #3: It is a rupees per annum. So, be rest assured that the revenue is not linked to the generation. But having said that, definitely it's a cost of concern in case if the generator has not come on time.
Speaker #3: The load is not there on time. So here I need to bifurcate two parts. One part is that the systems which are built under the regulatory tariff regime, that is the RTM mode, we need to go to the regulator and, get the clearance for the gene proposed status.
Speaker #3: So we have a good amount of revenues which will also flow as when the regulator gives the orders. So that revenue also will start accruing now.
Speaker #3: So it's to the extent of what is that amount?
Speaker #7: 300 crores actually,
Speaker #3: 300 crores of revenue. So these are the these regulators as from when the regulatory, regulator starts hearing these petitions, no, that revenue also will start accruing.
Speaker #3: And as far as DGCV goes, there is no such need to go to the regulator and it is considered as deemed okay after a specified period.
Speaker #3: So the revenue starts flowing. So the re the generation not coming or being underutilized will not have an impact on the revenues of, and the earnings of power grid.
Speaker #7: Yeah. Thank you so much.
Speaker #3: Exactly right. Thank you.
Speaker #1: Thank you. We take the next question from the line of Satyadeep. Please accept the prompt. Announce your company name and go ahead with your question.
Speaker #3: Hi. this is Satyadeep Jain from Amrit Capital. the first, question on the, in the slide you mentioned, new awards which, total 2,200 crore of, annual revenues.
Speaker #3: Maybe can you share corresponding, NCT Capex estimates for the new awards, this year so far? we can get that separately if you're looking into the NCT part.
Speaker #3: I can get you. But, infra state that wouldn't be available. The infra state part of it. But, the NCT is not definitely a guidance factor for us to get the tariff over there.
Speaker #3: we can definitely do share that. I can take the detail and somebody would reach out.
Speaker #7: But then that's not the one which we.
Speaker #3: Okay. Because I'm just trying to correlate 2,200 crore annual revenue seems large, given typically historically revenue by gross block, numbers. Just I'll, maybe take it offline, on the NCT cost estimate.
Speaker #3: Also, the CRC, notification, back in March, it suggested that, and which was also one of the, things you noted on regulated ROE on, transmission projects, or transmission on, sorry, best projects, best is also now part of transmission elements.
Speaker #3: So when do you, realistically expect, to get some best projects awarded to you on regulated, return basis? Is there any visibility you have that you expect some sizable, work in hand from that?
Speaker #7: Yes. With the regulator coming up forth with that regulation, the amendment which you are stating, so, so we have already, had discussions with the concerned RPCs at both at the northern region and the western region and having their, clearance we moved forward and we submitted as the petitions are also filed before the regulator.
Speaker #7: So because see, we have to understand any new system which is coming, there will be a lot of challenges in trying to do it.
Speaker #7: There will be some settling time for this particular concept. The tran the battery is not considered as transmission element as what you are saying.
Speaker #7: It is considered as that element whoever is doing it. The generator is doing it. It is considered as a generation element. But it's a transmission.
Speaker #7: It's a transmission element. But this regulation has actually allowed a transmission company to get into the, the integrated storage business that is battery included.
Speaker #7: So power grid has already taken initial actions and we have moved very fast in terms of about couple of months. It has taken two to three months after the regulation where we could also reach out to the stakeholders in the RPCs and also then file the petition before the regulator.
Speaker #7: Having said that, we will have to await the regulator's position what we would like to look into it. And the other stakeholders, then it will mature.
Speaker #7: Once it is so, we will obviously come forward and, let you know what is the state. But the present status is we have already moved forward.
Speaker #7: We have done all the groundwork, all the homework is done and we already filed the petition.
Speaker #3: Okay. So just, one. This is as per the procedure of the regulation itself. As per the regulation, we will have to move in this manner.
Speaker #3: So we already done all of that.
Speaker #7: Okay. So just one, quick question on the profitability for this quarter. So I know previous participant also alluded, you mentioned there was interest accrued, while you're waiting for tariff, for 200 crore.
Speaker #7: Now that you've got the tariff, it's, seems like I'm not sure on a YOI basis that should, impact your profitability comparison too much. But there is some forex, impact also just wanted to see are you able to pass that on?
Speaker #7: And is there a because we're not able to see pad growth, is does that otherwise mean that the TBCB projects you commissioned, which is was also what the previous participant was asking, that in the first year you don't have much pad, from the entire TBCB projects you've commissioned in the last year?
Speaker #7: Just trying to understand the profitability, bridge better, interest accrued. I, you know, tell the tariff is approved. But now tariff is approved. I don't know if that should have any impact on YOI comparison.
Speaker #7: So the tariff continues to accrue the entire year after the CRC order comes over there. But until then, there is a revenue stream which comes owing to the interest that, because of the differential between the, the, DOCO and the CRC.
Speaker #7: That is the reason there is an upside. Obviously, when we compare with that upside with any other figure, there would be a difference. That is what is visible to the extent of about 230 crores.
Speaker #7: On the track, capitalization which has occurred, the transmission charges could have gone up to 788 crores as far as the earnings go on the on the top line could have gone by 788 crores owing to the transmission lines which have been commissioned.
Speaker #7: And correspondingly, the pads could have been about 247 crore or so that should have moved up. But for the regulatory drag, which is an inherent and a and, and a natural, way how the regulators assets all these years which is moving, that is very visible here, which is actually bringing it down to the numbers what you've seen.
Speaker #7: Otherwise. The transmission lines have increased by 788 crores over here in this quarter.
Speaker #3: Do you think 247 crore additional pad from all the TBCB projects commissioned in the last, one year is that what you think?
Speaker #7: not limited to TBCB. A combination of both TBCB and the trajectory of the RPM projects put together with the lion's share being that of the TBCB.
Speaker #7: Yes.
Speaker #3: Okay. So and the effects losses that you had, in the regulatory account, what is are you able to pass that on? Is that also one off or, there was some.
Speaker #7: Absolutely. It's passable.
Speaker #3: That's passed on.
Speaker #7: The RV part is well taken care of because the, the regulated regime has that particular, comfort which provides to the developers.
Speaker #3: Okay. Thank you so much.
Speaker #7: Thank you.
Speaker #3: Thank you.
Speaker #7: Yes.
Speaker #3: We take the next question from the line of Dhruv. Please accept the prompt. Announce your company name and go ahead with your question.
Speaker #8: hi, sir. Thank you so much. Dhruv from HDFCMF. so first question, we have started well with, 5,000 crores capitalizations, in one queue. is there scope for a meaningful, upside to the 30,000 crore capitalization guidance for the year?
Speaker #7: Yes.
Speaker #8: So, some degree if you can, sir.
Speaker #7: We are, the transmission systems are not coming unlike other businesses which have a cycle of every quarter or every year. The transmission systems do have a cycle based upon the timeline given for implementation over there.
Speaker #7: Taking into account the ROW challenges. So glad to inform as I was stating in my initial statements also, the quantum of, capitalization which has happened in the, Q1 is stands about 5,277 crore.
Speaker #7: And we are also looking for a good number of projects that is the, the copper products and the, these are Mahesh Params. These projects also will be on bar apart from other projects which you are implementing there.
Speaker #7: So as we move forward, the projects come onto capitalization and I'm sure that this number would be that much more steady and improved.
Speaker #8: Sure, sir. so the second thing is, I was trying to do a console minus standalone. trying to imply the TBCB numbers largely. And if I look at the cross block increase, difference between console and cross, standalone, the cross block increase in a YOI basis is about 67%.
Speaker #8: so one queue this year, one queue last year. but the increase in depreciation, the same differential increase in depreciation is only 27%. I'm just trying to understand why this gap.
Speaker #8: Is this because most of the T incremental TBCB projects are coming on under lease accounting method and hence there is no depreciation associated with that?
Speaker #8: And if that's the case, does it change the way, you know, pad gets reported for TBC I mean, reported pad for TBCB moves, under the lease accounting method versus your typical, your normalized accounting method?
Speaker #7: Yes. We are now moving to the new method, right? Yeah. Lease method only we are following here. Where in the depreciation will not come.
Speaker #7: It will be taken as amortization of the lease. So that is the reason why comparing the depreciation component in, TBCB will not be in comments rate with what is the capitalization.
Speaker #7: Because capitalization out of capitalization leaves receivables are also there, which are in book. So further the depreciation component will not be there because that is treated as lease.
Speaker #7: Lease. That is the.
Speaker #8: So does it, in any sense, have an implication how typically we think of pad for a TBCB project versus how it moves on a lease accounting method in the say first three, four years?
Speaker #7: No. Even if with this accounting method, the pad will not have any impact. The difference between either I go through the PPE method or through the lease.
Speaker #8: Okay. Got it. Sure. And so last question is, yeah. So this, regulatory, adjustments that you mentioned about which is happening in the standalone, the reduction of depreciation resulting into reduction of revenue, we understand this has no you know, this is a regulatory process.
Speaker #8: But probably just to give a better understanding, if this is having any implication of pad on the pad number, if you can probably help us, you know, understand what is the nominal or normative loan that you have on your regulatory accounts versus what is the actual loan which is sta sitting in the standalone assets on the operating tra transmission assets.
Speaker #8: Because if there is any meaningful gap, that would probably indicate that there will be some drag because of this regulatory adjustment. And if there's no gap, then probably the market understands that there is, no implication of this.
Speaker #8: Basically, the difference between the normative debt and the, actual debt on the operating, regulated assets.
Speaker #7: I, I will check this back and get back to you, Dhruv. Should that be fine? Thank you.
Speaker #8: Thank you so much, sir, and all the best. Thanks.
Speaker #7: Having difference would be there, but I'll let you know.
Speaker #8: Yeah.
Speaker #7: Thank you.
Speaker #3: Thank you. We take the next question from the line of Mohit Pandey. Please accept the prompt. Announce your company name and go ahead with your question.
Speaker #2: Yeah. good afternoon, sir. Sir, my question is on, on grid strengthening projects. So I understand, there will be, incremental projects for strengthening the existing grid, as renewables penetration.
Speaker #2: So increases, for example, for adding inertia. So in cases where we already have, we are the owners of the assets, will those strengthening projects come to us on regulated mode or will they typically be, via TBCB?
Speaker #2: And whether these projects are already a part of the 7.9 lakh crore pipeline. That would be the first question.
Speaker #7: all projects which have to come are obviously in the pipeline only. Whether it is a, a regulator grid strengthening scheme or a generation associated scheme, all of them are in one particular bracket.
Speaker #7: And as far as the existing systems, substations, what we have, should there be any, ex-extensions which will have to be done there? This is taken care by the NCT.
Speaker #7: They look forward to the best way of implementing it. And at times it is given to the regulated, entity who is already there or the entity who's already owning that asset class over there.
Speaker #7: So he's given the opportunity to undertake this under the RTMO. And sometimes we see that it is also given under the bidding group. It is a combination of both these things.
Speaker #7: There is no specific, mantra or, rule as to how it happens. We have seen both these things happen. It's no specific way.
Speaker #2: Understood, sir. Sir, and, on the one nation one son, one world one grid, when do we realistically see projects or any, any sense on that, yeah.
Speaker #7: Obviously, we need to a-as we have evolved from a state to a region and region to a country, so the more we are integrated, the better we are in terms of utilizing the resources that much more effectively.
Speaker #7: So going beyond the country, it does have an additional component to tide over. We need to bridge that gap with the diplomatic relations with that country.
Speaker #7: If that is done, this would be one of the finest ways in terms of integrating the because the telecom network has already been integrated as you see the entire world is now under one internet.
Speaker #7: So ev-eventually as we move forward, this should be the answer. So that the ups and downs which are there in a typical sector are well taken care of.
Speaker #7: And it should move forward this particular, concept of one son, one world, and one grid. One nation one grid one frequency power grid has already achieved that particular objective and this would be the next extension what we need to reach out.
Speaker #7: So the moment one or two countries we are able to integrate with other countries are doing elsewhere in the world, so we are going to switch this particular network across the world.
Speaker #7: It would be in the interest of the human mankind, I should say, if we are getting through this.
Speaker #2: Okay, sir. Thank you so much and wish you all the best.
Speaker #7: Thank you so much, Mohit.
Speaker #3: Thank you. Ladies and gentlemen, with that we conclude the question and answer session. I now have the conference over to Mr. Mohit Kumar from ICSI Securities Limited for closing comments.
Speaker #1: Thanks, the management, for the detailed presentation. we would like to thank the management team for giving us an opportunity to host the call. Would sir, would you like to make any closing remarks?
Speaker #7: Yes, yes. thank you so much, Mohit. you and your team for, this particular webinar being conducted so smoothly. And, importantly, thanks to all the participants.
Speaker #7: including the investors and analysts, who continue to repost, confidence in power grid and, the human results. Obviously, they do have these kind of a queries which are there.
Speaker #7: We are glad to actually, un unveil the challenges as far as the regulatory regime looks, in terms of the drag, what has happened over to the regulatory regime.
Speaker #7: I'm sure that these clarifications would put them in a better perspective in trying to understand what power grid's growth trajectory is. And, thank you once again for your time and continued support.
Speaker #7: we look forward to, gain your confidence, continuously this, sector. Thank you so much. Thank you. Namaste.
Speaker #3: Thank you. On behalf of ICSI Securities Limited and Power Grid Corporation of India, that concludes this conference. Thank you for joining us and you may now disconnect.
