Mundra SPPA signed with Gujarat (4 states in 4-6 weeks).

How do you think about the renewable capacity addition over the next three months? I think the target we have set for ourselves was 2-2.5 gigawatt. I think you added on 600 megawatt in the last nine months. Do you think we will still be able to meet that 2-gigawatt target?

So, our target this year was that we will set up 2.6 gigawatt which included third party and ourselves. We have already done 1.9 gigawatt which includes third party and also it includes 600 megawatt of our own capacity addition. We have another 400 to 500 megawatt of project which we are pursuing which we expect to complete in this quarter and then we have projects which will come up in 2027, wherein most of the projects will be our own because all our so-called third party projects have got over including the SJVN, MSEDCL, NHPC. So, all the new projects that will come up will be catering to our own department.

When I look at the Q3 FY'26 EBITDA to Q3 FY'25 the delta of Rs. 432 crores, it is almost entirely explained by the bump up that has happened in the Delhi distribution business. Although the Delhi distribution business has seen a 2% decline in power purchase and sale, there seems to be some regulatory adjustment there which has bumped up the EBITDA. So, why hasn't it been properly called out in accounts in the presentation and what are the details there because it seems to be explaining the whole growth for the quarter?

What you have to do is this. You have to see the increase in EBITDA considering that last year we had EBITDA impact from Mundra where there was a positive EBITDA of Rs. ~300 crores. That is not there this year and that is being compensated from our rooftop business, from our manufacturing business and our Odisha business. There is a one-off that we have got in Delhi Discom because of the regulatory order that we got for truing up of our tariffs for 2022-2023. But notwithstanding that also, there has been increase in our existing portfolio of businesses and that has helped us for the increase in EBITDA for this quarter.

The trueing up amount has just become congruous in a quarter where you have had the big Mundra impact. What is the amount for the quarter? What is the impact for 9-months that you have trued up in your numbers? At EBITDA or PAT level? And for Delhi distribution, for the 9-month period, what is the true-up benefit that you have taken in numbers? In the third quarter only?

Mundra, there are various provisions that we have to do. I think in the next quarter when we do the complete true up, we will be able to give you the complete picture. I think all put together when we look at 9 months, it is closer to about Rs. 800 odd crores of losses that we have booked. For Mundra only, yes. Because Mundra has been shut for 6 months now and of course when the plant is shut, we do not get the capacity charges. Now 6 months, the plant is still there. So to that extent the Rs. 800 crores have been booked as a loss. At the PAT level because for Mundra and other thermal power plants, PAT level matters the most. For 6 months, which again to your earlier point, we have been reporting that in the earlier quarter and this quarter, the total regulatory impact at TPDDL is about Rs. 344 crores. We also had a similar true-up impact last year of Rs. 333 crores. That is there, plus in the last year, corresponding same period, we had the order impact for Mundra at Rs. 332 crores. All of that have been appropriately reported in the accounts. In the third quarter, PAT impact is about Rs. 344 crores on TPDDL regulatory impact. So, this is net of taxes, of course. Yes, so it is Rs. 460 crores at the EBITDA level. In fact, if you see the notes on accounts, Sumit, that is a complete disclosure around that. You will get the full numbers.

Typically, you have elimination in the renewable cluster under others, which is a negative number. This time, it is a small positive number. Why is the elimination positive this time? Because you are doing projects which Tata Power is setting up on its own books, I am assuming that part of the modules are going from your manufacturing facility to your own projects. So, why is the elimination a positive number?

So, you are right. The elimination that is done, whether it is a positive number or a negative number, everything has to be eliminated. So, whenever there is an intra-transfer and there is some positive number, that is eliminated. So, you see a negative elimination. And whenever there is an intra-transfer loss, that is also eliminated to a positive number. So, the idea is that at the PAT level, there is no impact. And this is basically a true-up on a quarterly basis. So, the way you have to read it is net of elimination. When you look at Rs. 912 crores, you can look at the slide number 52, which has been uploaded. It shows the cluster-wise performance. The break-up is there. That is what I am saying. So, if you look at the renewable, you have this Genco, Solar EPC, TP Solar. So, TP Solar will provide services to the Genco in terms of supply of modules. Similarly, the Solar EPC will also do the services for Genco and as well as the third party. So, of course, there are many, many projects within that. However, if any project is having a negative loss because of the contractual nature of the agreement, that also needs to be eliminated. So, one of the projects could be a negative PAT margins for most likely for the Solar EPC, which now has been eliminated for positive Rs. 60 crores. As you can see, Solar EPC overall PAT is Rs. 183 crores. It is positive. But let us say there are 100 different projects happening, which include in-house supply. So, as per the accounting standard, any contract which even has a loss for in-house supply also needs to be eliminated. So, as a result, Rs. 60 crores is in elimination.

There is some positive impact for FGD recovery in Q3 and 9 months for Maithon, which also seems to be bumping up the number quite dramatically on a year-on-year basis in Q3 particularly. So, what is that impact?

So, we have commissioned the FGD for Maithon. And given that this is a regulatory asset, we are getting the regulatory returns. So, that impact of that is about 15 odd crores. And you will see that reckoning happening in the subsequent quarters now.

You briefly mentioned about more opportunities on the distribution from the PPP side, possibly due to some sort of a package for the discoms. Can you give some more color on that? What sort of package are we posing over here? When should we expect this?

So, there are many states who have huge financial losses. And so, some of those states will be given the opportunity of a long-term loan at zero rate of interest. But there will be certain caveats in terms of they need to go for PPP and only against that they will be given. So, those are states which are already identified in terms of the type of financial losses they have. And it is expected that once that is announced, we will have a few states who will be availing that opportunity and going for PPP. I think in the next 6 to 9 months, this should happen.

On the Delhi distribution side, there was this talk about reducing regulated assets. But in this quarter, the number has gone up again. Any progress that you're seeing there or it's a slow outcome?

So, the regulatory asset per se has gone down. But what has happened is that there is one more order that has come. The true-up order has come for 2022-23, which has given another Rs. 400 crores additional regulatory assets to the company. So, that's why it's looking high. But in actual, during the quarter, it has come down by Rs. 460 crores. So, it's come down by Rs. 460 crores.

Which are the big renewable projects that you will commission in FY'27? And what should be the run rate for the year that we should assume for your own and separate?

I think some of the Tata Steel projects, we already commissioned 198 megawatt wind project. There are some more wind projects which will get commissioned in this quarter. So, I think many of the wind projects will get commissioned, as also some solar projects will get commissioned between this quarter and the next quarter. So, this year, we will do something like another 500 megawatts. But next year, the so-called 2.5, we will do 100% for ourselves.

On the rooftop side, what's your outlook on the rooftop addition in India? I think, year-to-date, we have added around 7 to 7.5 gigawatts. Will this continue going forward in '27 and '28?

I think if you look at the stage of rooftop addition in the country, as also by us, it has increased tremendously with much better supply chain, much better channel partner, much better arrangement to supply and erect information. I do expect that the speed will go much further. Also, the government has come up with a new scheme, which is the state discoms have been asked to go ahead and implement it. We are doing it in Odisha, which is known as the ULA scheme, utility-led scheme, which is there. And I think the capacity adds that you are seeing last year, at least 50% to 60% more will happen in this year and we will continue to see the increase going forward.

On module manufacturing - we have sold around 960 megawatt of modules. And we have also produced 960 megawatt of cells. So, is it right to assume that all of these cells are DCR module cells? So, the 962 megawatt is all the external sales which we have done? External would be just 20%-25%? So, the realization is a blended realization of the DCR and non-DCR module, both? And what would be the current realization in the market for a DCR and a non-DCR?

So, in the last quarter, we had some ALMM, that is, imported cells we had used, because the order was for supply of imported cells with domestic modules. But I think in the next two quarters, we will have more of our own cells and our own modules, because from 1st June only DCR cell and DCR modules are utilized. So, you will see more or less that whatever cell that we produce is fully consumed internally. (Sanjeev Churiwala) Largely, as mentioned for Rooftop and our own businesses. And the rough breakup is a small quantity of about 168 megawatt peak for ALMM and DCR we have done 795 megawatt peak. Both put together is about 962. External would be even smaller than that. Very small percentage. (Yes blended.) (Dr. Praveer Sinha) It's very difficult to... It depends on the type of it because they are 540 and 580 and also which ones are Mono PERC, which ones are not. (Sanjeev Churiwala) I think it's difficult for us to give a breakup because a large quantity of that is in-house consumed in our various businesses. But if you look at the P&L, which is also uploaded, we will have an EBITDA margin of close to 28% for the quarter. And for 9 months, we are delivering close to 24% of EBITDA margin.

On the renewal execution part. You mentioned 2.5 gigawatt next year. So, 2.5 gigawatt in FY'27 is the target, right, sir? For our own capacity? And what are the challenges are we facing in execution of our own capacity? Or is it a strategical call that we are first finishing our third-party order book and then focusing on our existing, our own capacity or is there any challenges you're facing in execution?

Our own capacity. This was timing issue only. So, the third-party orders we had received much earlier. And our own capacity, our orders that we got last year. So, based on the timelines that have been agreed with, these are getting executed.

On renewable energy execution. You're looking at 1 gigawatt broadly commissioning this year. In the last nine months, it's been 600 megawatt against industry at 38 gigawatt. Even if you strip out solar rooftop, that's about 30 gigawatt, 2% market share for Tata Power. The initial expectation was 1.5 to 2 gigawatt. So, there seems to be a miss across the board for some of the larger players. In case you do meet the target next year, the industry commissioning has to more than double or some smaller players lose market share. Just want to understand, how is that going to play out?

If you look at Tata Power this year, we have already commissioned 2.2 gigawatt of projects. And that means that we have inherent capacity to execute such large capacity and we will add another 500 megawatt in this quarter. So, 2.7 gigawatts we will be doing in this financial year. If we look at next year, we have a capacity to execute 2.7. We may do more than 2.5 while we have taken the initial estimate of 2.5, we can go up to 3 gigawatts of capacity add. As you are aware, we have a pipeline of nearly 5.5 gigawatts of projects, which we need to execute. So, within the next two years, we will execute. Also, it's not just executing the project, but also the timeline when the transmission line comes up. As you are aware, many of the transmission lines got delayed and we are now timing the project completion with the transmission line completion so that it should not be that these projects are left stranded and unutilized when the transmission lines are not available. So, I think it's a question of better planning, better phasing, and staggering it in such a way that it is able to produce as soon as they are implemented and the power can be executed.

On Odisha. Just we are seeing increase in income. Largely, it seems to be reduction in ECL losses. Just wanted to understand what is driving that reduction in ECL and is it also reflected in actual increase in cash profit? Is it mainly accrual or actually your cash receipts have also increased significantly in Odisha and what has led to that ECL reduction?

Well, I think our collection efficiencies have improved. Our billing efficiency has improved. And the performance of Odisha discoms have improved tremendously. If you track it in last three years, the performance has been improving every quarter. And the coverage of billing has been better. Loss reduction has happened. Spilling of electricity which was there has reduced drastically. So, I think overall the performance of all the 4 discoms has been very good. (Sanjeev Churiwala) And to add to your question whether it is converted to cash, absolutely if you look at Quarter 3 itself, when we look at the distribution cash flows, largely Odisha, we have earned about close to Rs. 800 crores of cash only for the quarter.

On the margin front across your EPC and the rooftop. During the quarter, the margin has fallen across both the segment. With the complete operation of your cell and module capacity, this margin volatility across the EPC should come down significantly. Could you just explain the reason for this fall in EPC margin and rooftop?

I think on the EPC side, we kind of target PAT margin of close to 5% to 6% every quarter. But if you look at within quarter-to-quarter, depending upon the true-up, there could be challenges. But by and large, that's what we have been targeting. Because if you look at the overall solar EPC margins, it's a very healthy margin overall. Solar rooftops, about 14.5% and then we look at large projection rooftops, it is close to about 9.1%. And PAT margin, we are kind of delivering on a consol basis which is about close to 8%. That's what we think. Because even Quarter 3, when we look at the Quarter 3, PAT margin is 7.6 and 9-months is also 7.8.

On a debt profile, sir, I can understand on the regulatory side where debt can go up. But say for companies like Maithon and your Coal SPV, the debt across the respective businesses has largely remained stagnant. So, any timeline on when can we expect the debt reduction happening over there?

I think the debt, what we see from a console basis, we have a debt equity of 1.2, a debt to underlying EBITDA of 3.4. So, we are on a very comfortable journey, given that we will be spending close to 15,000 crores-20,000 crores-25,000 crores of CAPEX every year. We will have debt in the books, but we want to ensure that we maintain our debt equity and debt to EBITDA profile on a very conservative basis. Maithon is a regulatory asset. We are not doing any CAPEX. So, as per the regulatory asset, we will keep on earning the cash over there and to that extent, the debt will only reduce.

How do you look at certain country level renewable addition happening? Last year has been a fairly good year for India, but do you see this number sort of slowing down for the next couple of years? For all the renewable projects that Tata Power builds on their books, you will be using your own manufactured cells. Is that understanding correct? And within that, 2.5 gigawatt of renewables expected to get commissioned next year, how much would solar be out of that?

I think at least for the next two years, we have a lot of renewable projects as also transmission line projects which are under implementation. So, to that extent, I don't think this will slow down to a very large extent. And we should see a good momentum at least for the next year. Absolutely right. I think it's now about 50-50.

How's the Indonesian law situation evolving? Have they levied the export tax and who's kind of bearing it because the market realization, I mean are you passing it on? Are the producers taking some impact on the margins? How is it brewing through in Q4 now?

There is no impact. At least we have not heard or seen anything. So, we are not expecting any impact.