What is the visibility right now for FY '28 on the capitalisation side?
I don't have the immediate visibility of FY '28. That would be too far. First thing is that this is something which we have immediately on our end.
On data centers - you have mentioned there's a lot of potential for AESL, especially with the group's tie-ups. What indicators should we be tracking for AESL?
Data centers, in fact, we bring a great amount of value when we deal with the data center because the two things where they find it difficult not only in India, but across the globe is getting the power infra or connectivity and also power supply. Now AESL having presence in both, and we are in a portion to offer them an end-to-end solution. And this kind of approach has been well appreciated. In fact, we have been in discussion with multiple players, big players who are planning to enter into India in a massive way. So, it's going to be a very exciting one, especially C&I coupled with our capability of delivering that power infra as well.
On smart metering - we had given a guidance to reach around 6 crores over the coming few years. Currently we have a pipeline with installation in the range of 2.5 crores. Any target by when can we reach this 6 crores number?
So the 6 crores was -- we were talking about that number of a couple of years back. In last -- unfortunately, in the last entire financial year, there was no significant bidding opportunity came up. That -- as I explained to you, there were many states who initially never wanted to become a part of RDSS. They didn't come out with a bidding. Now most of them have submitted their proposal to Ministry of Power, and we expect that bidding to happen in next year. And we will if not reach to 6 crores, but we will at least maintain our market share, meaning thereby we would have about 5 crores of meter concession. Yes. But what's also important is that the capex or the capitalization got translated into the transmission projects because at that point in time, our under-construction pipeline was just around INR15,000-odd crores, which is now close to INR80,000-odd crores. I mean that was the biggest shift which happened when we were talking about 6 crores meters if you were referring to that period. So in fact, that is the biggest advantage that AESL has of diversity in businesses. Like many other similar players in transmission doesn't have that kind of diversity. So we could utilize opportunity in transmission to compensate that was not happening in smart metering.
On the smart meter side, we haven't seen too much traction in the order book - whatever we won was from last year. Do you think in the next 12 to 18 months there will be more opportunities on the smart meter side?
So, Mohit, thank you so much. As far as smart meter bidding is concerned, there are a few states where bidding is yet to happen or yet to conclude. One is Tamil Nadu, that bidding happened, but I think they will reinvite the bid. But there are a few other states like Karnataka, Telangana. They got the DPR approved under RDSS. I believe those states have now filed the DPR with MOP. And on receipt of that approval, they will also come out with bidding. So we expect that significant action we will see in smart metering bidding in next couple of quarters.
On transmission - we've done phenomenally well this fiscal. We have seen INR40,000-50,000 crores worth of new transmission projects. How do you think about the next 12 to 18 months? It seems transmission bids have slowed down. Do you think we can do at least INR60,000-70,000 crores additional bidding in next 12 months?
So, Mohit, the project that has been approved by NCT and those state -- various state STUs, if you add all those projects, it crosses INR1 lakh crores bidding opportunity. Conservatively, we think that bidding for at least INR70,000 crores, INR80,000 crores will happen in the next 12 months.
HVDC commissioning timelines - we were guided earlier that it will get commissioned in Q2. It hasn't happened. What is the new tentative commissioning date? And anything that caused the delay?
So, all the work is completed there. Testing and commissioning is going on. So, we expect that to get commissioned in another 30 to 45 days. So, there were 2 major issues we had to resolve in HVDC on Vasai creek. And there were some working permissions related issue because of which it got delayed. And there is also 4-kilometer of stretch of cabling that is to be done in Aarey Colony. There, we took a little more time because that rain got prolonged, and we have to make a very, very focused effort there that while we do that underground cabling work, we don't damage any ecosystem. And because of that prolonged rain in Mumbai, it got a little late. Both the terminals are ready. Now the terminal testing and commissioning is going on. And the last batch of cabling is also getting ready.
On your KPS-III HVDC. What is the cost that you're now pencilling for this Khavda Olpad project?
That will be about close to INR 19,000 crores.
On the Bhadla-Fatehpur HVDC, what is the stage of execution there? And can you still do it by July '25? Or you think it could be delayed?
So, all the contracts have been awarded. Entire route survey has been done. The necessary application for forest and wildlife has also been submitted. In fact, an environment -- the forest clearance for Rajasthan portion has, in fact, progressed significantly and PSC 1 committee has already given approval. Construction at Bhadla site has already began. Most of the basic engineering has been done, and now you will see a lot of progress in terms of execution on the ground. So, all the preparatory work has been completed. We are finding some challenges in land acquisition for Fatehpur, but we expect to complete that also in 1 months' time. So significant work has been done there. More than 200 acres has already been acquired. Easily, easily. Yes, yes. So, because the entire engineering and other things has been done. The contract is also in place. So we will now very soon mobilize the resources, and we'll start construction there.
You have 4 projects due for completion this calendar year - Khavda-IV, Jamnagar, Navinal and Pune-III. Are these all 4 on track? Can you give the revised timeline for all these 4?
Yes. So Navinal got a little delayed because the issuance of transmission license from CERC. We already commenced the work and foundation for half of the land has been done. But in absence of that license, we were not getting 164 approval. Now we will get that, but given the progress, even though it is late from original schedule, but we expect it to complete it in the current year. As far as Jamnagar project is concerned, there we are acquiring the substation land, which is government land, so that process is going on. And we already started working on the transmission line. Those ROW order under government policy is under process, and we expect those orders to come out in 1 month to 1.5 months for the entire region. Yes, Jamnagar and Navinal both will get complete in last quarter of next financial year – FY27. Khavda-IV A, will be -- 1 element will be in the second quarter, one -- another element will be in third quarter of the next financial year and Pune-III in the last quarter of next financial year.
Your smart metering execution has picked up. Anything that has changed from policy support side or anything that you are doing to pick up pace there?
So we have been making all those efforts in picking up that execution rate. So we are installing about 22,000 to 25,000 meters a day. We keep on getting those challenges in the ground, but now having installed so much of meter and with this kind of exposure, our team has been able to do a fabulous work on ground.
We are hearing about policy relaxation on the Chinese side in some sectors - most recently thermal power. Is there anything that we can benefit from? Is there positive benefit on the transmission side specifically that can come to us going forward?
So Gaurav, if that happens, obviously, it will help because that will increase our options for equipment sourcing. But even if -- even if it is not done, we are not affected because we have that kind of strategic relationship with all our major OEMs. We have been doing all these projects. And so far, with the restriction on Chinese players, and we will be getting all the supplies at the right time and at an appropriate pricing. So obviously, it will be an incremental advantage. But even if it doesn't happen, we are not affected.
On the transmission side - we are seeing lower tendering. First half was slow, we expected third quarter to pick up - there is some pickup. On execution side also there have been some delays. We are hearing other developers also report delays. Is there something structurally hampering both on tendering side and execution side?
So Gaurav, the challenges in execution is known to all of us. So essentially those are relating to equipment supply or manpower ability or our ROW. But this year, the additional challenge that we faced, especially us because our mainly concentration of project execution is in Mundra, around Khavda and then Gujarat and also in Maharashtra, where rain continued for quite some time. It was abnormal. It continued up to almost Diwali period, and that has affected our execution. As far as manpower ability is concerned, what we have done is that now the skilled manpower was the most critical one. In fact, in last 6 months, we have set up our own training facility at Gorda, where we -- it's a catchment area for people who works on a tower erection and that facility is up and running. Now we will be having 200 people trained available to us from this month. And every quarter, we will have about 400 to 500 people available to us in the stinging, which we will provide to our EPC partners for execution. So as I said earlier, we expect that about INR80,000 crores of bidding will happen combined together state as well as central. And that INR80,000 crores is also a significant number. And if we even continue to maintain our market share, we will have a significant opportunity there.
To better understand the phaseout of capitalization of your works in hand. Of the INR780 billion works in hand, would it be right to say that roughly INR400 billion is non-HVDC? How is the capitalization spread over FY '26, '27 and '28?
Yes, sure. So based on the timelines which we just mentioned, the Mumbai HVDC and the NKTL project, which will get complete -- I mean the NKTL which just got completed, will give around INR10,000-odd crores of capitalization. With HVDC which will get completed in the next 2 months itself, which will give an additional tariff of around INR1,600-odd crores. We expect the additional ones, especially the Khavda Phase III, that is the Halvad project and the WRSR projects that will get commissioned in the next 3 to 5 months period, which will lead to an additional capitalization of close to INR4,800-odd crores. And then all the 3 projects, which Kandarp mentioned will lead to an additional capitalization of INR10,000-odd crores by the end of the next financial year. So, all put together, we have INR10,000 crores in the next 1 or 2 months, INR5,000 crores odd in the next 4 to 5 months, and the balance INR10,000 crores coming up by the end of next financial year.
On the 2 large HVDC projects you are executing - broadly what would be the capex phase out as you complete these projects by 2029, 2030?
Yes. So roughly, the capex in transmission per year on an average, there could be a variation year-to-year. But for next 5 years, it would be in the range of about INR18,000 crores to INR20,000 crores. Correct. On the later years, it might go up as we add new transmission project in our kitty. But given the project pipeline in the country, it will be about on an average INR18,000 crores to INR 20,000 crores. Yes. So there are few HVDC projects under bidding pipeline, and we certainly would be participating in those bid sincerely. Yes, there is one project, HVDC project from Barmer HVDC, which comes up to Maharashtra, South Kalamb that is the immediate -- yes, that we expect to come in the bidding process. I think that it will be done in the first quarter of the next year.
On the debt stack - you've had multiple bond buybacks earlier and given the surplus cash this year, what is the prioritized use? Further bond buybacks or more capex? Also given the scale of transmission and smart metering ramp-up, what leverage ceiling should we look at?
Yes. So you're right. So the company did by bond buybacks, and we did bond buybacks in our electricity Mumbai Distribution Company. We did a bond buyback of 120 million last year followed by a bond buyback of 90 million -- 95 million up to the 9 months that we did. We did a 1 buyback of 50 million, and then we again followed it up with a buyback of 45 million. So AEML distribution business because of the surplus that it is generating. And as we have guided, we will continue to de-lever that company after meeting all its capex and its opex requirements. So that company has roughly a capex of around INR1,500 crores to INR1,600-odd crores. And after meeting that capex, the company still has that surplus, which we will use to de-lever the balance sheet. And at the right time, we will continue to do the bond buybacks in that organization. As far as the consolidated debt profile of the company is concerned, we have always guided that we would be in the range of around 4 to 4.5x based on our capex cycle over a sustained period. But it would be in that guidance range always.
Given the progress in the newer verticals, can you reshare the margin structure, especially for the C&I business - the expected growth and the capital intensity to scale the vertical? What are the timelines?
So, C&I, especially C&I and district cooling business, like you see in a smart meter, which is the margin as compared to the conventional transmission and distribution business, there are very high margins in smart metering. We expect similar kind of margin structures, both in district cooling as well as C&I business. In fact, C&I business will be a very interesting one where we won't have any capex to do. But despite the fact that because of our solutioning capability, the margins would be significantly high of the order of INR 0.75 plus per unit. And that will be a massive segment too – so we are also very excited.
How are we going to fund the future capex? Are we going to raise debt or it will be funded through internal accruals?
Sure. So I'll split that basis the business divisions that we have. So, in AEML, as I just told, that business, whatever capex that is there is being funded through its internal accruals. So is the case with respect to the smart meter business. Smart meter business has a low gestation period. And because of that, it is able to fund its own capex. In fact, the -- what we are actually doing is that securitizing the receivables of smart meter based on the meters that we have installed, we are securitizing that meters, and that is funding more internal accruals for my transmission projects. And in case of transmission business, we generally lever these assets up to 70%, 75% at the inception. And then once the asset gets completed, we again launch it into the bond market. So we try to lever it further up to 80%, 85% once the asset gets operational. So based on that and based on the internal accruals and the fund flows that the company is generating, we do not envisage any further equity borrowing, which is required to fund all our under-construction projects that we currently have.
In terms of tendering this particular year - can you give some color on the last 3-odd quarters of FY '26 and in terms of NCT cost, how much we could have won this year?
So, this year, so far, we had up to INR 44,000-odd crores worth of tendering which happened. And this is again based on the NCT cost estimates. And as you know, the actual cost estimates project to project differs. For example, HVDC especially, right? So, the numbers are elevated in terms of actual cost. But so far, I think what we are seeing is close to INR 80,000-odd crores worth of bidding should come through by end of this year, again, which is a large number. Yes. So we've got two projects. One is the HVDC, which is as per NCT, about INR12,000-odd crores, and one more project which is at Talegaon, which is about INR1,600-odd crores. So INR13,600-odd crores in terms of NCT costs, which broadly gives us a market share of about 30% to 32%.
Regarding the refinancing of your U.S. dollar bond - would the company consider more of onshoring option or offshore? What are the considerations - currency perspective and also headline today on Adani so probably from corporate governance side it could be some negative sentiment. How would the company approach this?
No, sure. So, what we generally focus is that we keep our options open, whether it is offshore or onshore. And at the right time, we look to refinance our bonds. So the options are always open, whether it is offshore or onshore. Our focus is always to ensure that our bonds are always rated investment-grade, whether it is offshore and onshore. And therefore, you would see is that in onshore markets, most of our projects have AA plus and AAA ratings. And similarly, in the offshore markets, our bonds have sovereign ratings. So our focus is to ensure that we get the highest ratings. And based on that and based on the market conditions, we would tap either the onshore market, offshore market for our refinancing of the existing bonds that we have. Yes, yes, we are working towards that, and we would refinance that at least in the next 2 to 3 months and complete the refinancing.
On the ESG side - how does the company assess the rates with supply chain partners, especially labor practices and environmental compliance?
So we are very much working with our vendors, especially the EPC vendors and we ensure that they follow all the governance, especially the safety practices that we follow and also comply with our own ESG standards that the Adani Group as well as the AESL as a company is following. So from our vendor ecosystem, we ensure that all our vendors are also in compliance with the ESG standards that we have set for us as well as for the Adani Group. And all effort you must have seen that is translating into our continuous ESG rating, whether it is international or domestic one.
Could you talk about leverage - where are we currently and what should the leverage be in the next couple of years? By March '27, where should total debt be? What portion is financed by U.S. domiciled banks?
Sure. So our total net debt currently as we speak is INR38,000-odd crores, of which INR48,000 crores is gross debt, and we have cash balance of INR9,600-odd crores. Out of the INR47,000 of gross debt we have, we have roughly INR9,700 crores of the U.S. dollar bonds in Adani Electricity Mumbai and INR10,500-odd crores of bonds in the transmission business. So around INR25,000-odd crores of dollar bonds in INR47,000 crores of the debt that we just mentioned. And our leverage currently is 4.3, which was 4.4 in September based on the published results. Currently, we are at 4.3 based on the trailing 12 months basis. And we will continue to maintain that always.
FYTD what has been the total purchase of bonds you have done? And by March '27, with INR25,000-30,000 crores incremental capex, where will net debt be? What is the maturity of bonds coming in the next 2 years?
In this financial year, we did a bond buyback of $95 million. $50 million we did in Q1 and $45 million we did in Q2. So, the immediate one, which is coming up is the $500 million bond, which is in August '27, which I told you we are going to refinance in the next 1 to 2 months itself. The balance we have back dated maturities like the AEML bonds is maturing in 2030, 2031. Our average debt maturity profile of the dollar bonds as well as the INR bond market is currently 7.9 years.
On capex and capitalization - last quarter you had guided transmission INR114-115 billion, distribution INR16 billion and smart meters INR40 billion for this year. Are you on track for that capex this year and maintaining that guidance?
So we did capex of INR9,294 crores till 9 months. By the end of this financial year, we would be in the range of around INR15,000-odd crores once the entire capex has been completed for transmission, smart meter and distribution. So, some of the projects got spilled over by 1 or 2 months in the next financial year. So that's the reason why the INR12,000-odd crores, I mean, just about INR1,000-odd crores, we had guided the market to around INR16,000 crores. We are currently looking at around INR14,500 crores to INR15,000-odd crores. And the downward is mainly in transmission.
On capitalization - last quarter you mentioned in second half about INR120 billion of capitalization in the transmission segment, now you mentioned about INR100 billion. Want to understand the INR100 billion in AEML and NKTL. AEML is INR70 billion project. And NKTL was INR965 crores project. So is that the right number?
You are right. INR965 crores NKTL is the correct number. It has already happened. Just happened in December, yes. Correct, correct.
On the smart metering segment - you mentioned it would be self-funded through internal accruals. With ~1 crore installation by end of current fiscal and annual revenue ~INR1,600 crores per crore of meters, by going to 2.5 crores you'd reach INR3,500-4,000 crores. How does the incremental capex in smart metering get self-funded?
No, what I was saying is that we will not be doing debt funding into it. We would be securitizing those receivables itself. So the INR600-odd crores is over the next 7 years. So I would use the securitization of that receivables itself to fund the new meters, which are going to come up. So I don't have to fund it through the accruals of the transmission business to fund smart meter business. And based on that securitization of the receivables, I would be more than sufficient to fund whatever growth which is there in smart meter business or the existing projects of 2.25 crores meters that I have.
On our 9-month EBITDA bridge - the SCA addition to EBITDA, the jump in smart meter is understandable. Can you elaborate on the transmission side as well? It has also seen a INR300 crores jump.
I mean, the transmission business has grown generally because of the operationalization of 3 or 4 projects that got completed, especially the Khavda-I, the KPS-I and the Sangod-I, resulting in the additional revenues and distribution business gave the steady state of INR1,200-odd crores for the 9-month period. So from that basis, that -- I mean, the largest part is coming from the operationalization of the new transmission projects, which are getting completed.
Could you say that the SCA EBITDA jump could be a leading indicator for our operating EBITDA going forward? Also, the CEA proposal of critical items - 16 items including HVDC assemblies imported. Are you facing some challenges getting the procurement for HVDC valve assemblies?
So SCA EBITDA does not lead to increase in the operating EBITDA. The operating EBITDA largely comes from the -- as the transmission project gets completed, that forms part of my operational revenue and the operational EBITDA. The capex that I do will give you an indication of the SCA margin that we put out in the income statement. No, we are not facing any challenge. In fact, for the recent HVDC project that we have won, which is Khavda-Olpad, we already finalized and closed the contract with OEM. Yes, yes. We have closed that contract with GE. And in fact, we have been able to -- sorry, we have been able to agree with them for a schedule which is far more aggressive than completion schedule given in the bid timeline.