-
PTCIndia Q32014EarningsCall 21Jan14
Operator Ladiesandgentlemen,gooddayandwelcometothePTC
IndiaLimitedQ3FY
'14EarningsConferenceCall.Asareminder,allparticipant lineswillbe in
the listenonlymode.Therewillbeanopportunity foryou
toaskquestionsafter
thepresentationconcludes.Pleasenotethatthisconference
isbeingrecorded.InowhandtheconferenceovertoKomalIyerfromFortunaPR.Thankyouandovertoyou,Ms,Iyer.
KomalIyer,InvestorRelations
Thanksfortakingtimeforparticipatinginthiscall.RepresentingthecompanyareMr.DeepakAmitabh,theChairmanandManagingDirector;Mr.ArunKumar,ExecutiveDirectorandCFOandMr.RajivMalhotra,ExecutiveDirectorandChiefRiskOfficer.SomeoftheinformationsharedorstatementsmadeinthisconferencecallcouldbeforwardlookinginnatureandadetaileddisclaimerhasbeenincludedinthequarterlyInvestorPresentation.FollowingtheopeningremarksbyMr.DeepakAmitabhandtheCFO,thefloorwillbeopenedforquestion.IwouldnowinviteMr.Amitabhtoopentheconference.
DeepakAmitabh,ChairmanandManagingDirector
Goodafternoon,everybody.OnbehalfofPTC,Iwelcomealltheanalysttothisconference.AlongwithmeareMr.ArunKumar,theCFO;andMr.RajivMalhotra,whoistheCRO.OnethingistherethatIwillbeavailableintheconferencefornotmorethanhalfanhour,becauseIhavetoleaveforameeting,soI'dliketokeepourdialoginitiallyasshortaspossible,sothatthereissufficienttimeforthequestionanswersandwhateverbalancequestionanswer,myteamisgoingtohandlethat.
I'm happy to present a very robust quarterly performance for our
company. As you allmust have seen, the volumes
haveincreasedto8.2billionunitsinthequarter,showinganincreaseof40%.Thecompanyhasalsobeenabletorealizeasurchargeamountof
INR138croresmainly fromUPPCLforthedelayedpayments,ofwhichabout
INR73crores isthenetrealization forPTC.
Onemoreimportantthingthatduringthisquarter,wealsocommencedsupplyof250megawattpowertoBangladesh,whichaddstoourinternationalportfolio.So,wehadbeendoingbusinessfromBhutanandNepalearlier,nowBangladeshhasalsojoinedthis.Also,thecompanyhastiedupthroughLOIsandPPAs,saleofpoweronlongtermbasisforabout1,100megawatttotheutilitiesofRajasthan,UttarPradeshandTamilNadu.
Thesearethestepswhicharegoingtoensurethatourvolumeskeepgrowingupfornextthreetofouryearsonacontinuousbasis.Despitethewaggeriesrelatedtothepowersector,weremainoptimisticaboutthegrowthinourbusinessvolumeandexpectahealthypacetocontinuegoingforward.
Strongbalancesheet,robustcashflowsandobviously,thecaseofexperienceinthesectorputsPTCinapositiontobenefitfromanyopportunitythatcomesitswayandsuccessfulperformanceofoursubsidiariesisatestamenttothesame.OnemorethingwhichIwantedtosaythatcompanywillremainfocusedorincreasingitspresenceinmultiplebusinesssegmentslikelongterm,mediumterm,shorttermsalestoutilitiesaswellastotheretailthatisdirecttobusinesssegment.
Wehavementionedearlieralso,thisactivityofours,westartedoneandahalfyearsago,andnowtheresults,wecanseetheresults,whicharecomingup,becausethecompanycontinuedto
increase itspresence inretailsegmentwithmorethan1,750millionand
itbeingcontributedbyretail
inninemonths.Similarly,wehaveseenthat,sotheexchangealso,ourvolumeshavebeengrowingup.Onemore
thingwhich Iwanted toemphasizewas,during just
coupleofdaysback,whileourDirectorofMarketing,Mr.SNGoel,hegotajobintothisplace,IndiaEnergyExchangeasaManagingDirector.
Asyouallknow,PTChasbeenthe initial
throughoursubsidiarycompanyPTCFinancialServiceshad
initiatedthisconceptoftradingthroughexchangesandwewerethe our
financecompanywasacopromoter,soobviously,withhimgoingthereourrelationshiparegoingtobemorestrengthenedandhehasjoinedthereasMDandCEOforafiveyearcontract.Now,otherthanthis,
I thinkwehad been showing wehave seen a solid growth in the EBITDA,
PBT, PAT, even if you take out these
thesurchargeincome,stillourEBITDAfortheninemonthsandthreemonthshavebeengoingveryrobustly.Withthis,IjustwantedtohandoverthemictoourCFO,Mr.ArunKumarforfurtherdialog.Thankyou.
-
ArunKumar,ExecutiveDirectorandChiefFinancialOfficer
Thankyou,sir.I'mArunKumar.Goodafternoon,everybody.ThegrowthinvolumeshavebeenalreadysharedbyourChairman.Wehaveonquartertoquartercomparisonbasisfrompreviousyear,weareupby40%andoncumulativebasis26%.Iliketomentionhere
thatweachieved27,645millionunits in the lastyear, (inaudible)
inninemonthsduring
thisyear.Andourgrossoperatingmarginshavebeen31%moreascomparedtothequarterofthecorrespondingyearoftheprevious.
Total gross operatingmargin is 46 crores and surcharge has also
been explained by our Chairman thatwe have been able
tosuccessfullycollectthesurchargefromUPPCL.Andtotaloperatingmarginforthequarterhavebeen89croresandcumulativelyforthreequarters,itis108crores.TherehavebeenincreasesintreasuryincomebecauseoftheUPPCLduescollectedduringtheyear.Theinterestincomeanddividendincomehavebeenmoreascomparedtothecorrespondingquarterofthepreviousyearandprofitbeforetaxhavebeen133.94croreduringthequarterandforninemonthsitstoodat260.35crores.Profitaftertaxis90.78forthequarterandfortheninemonths,itis182.29crores.
Soinsummary,thesearethefinancialresults.YouarefreetoaskonceourCFOornowfreetoaskthequestionsorthequeries,wewillbehappytoanswerthat.
QuestionsAndAnswers
Operator Thankyouverymuch.Ladiesandgentlemen,wewillnowbegin
thequestionandanswersession.The firstquestion
isfromthelineofHardikShahfromICICISecurities.Pleasegoahead.
PrakashGoel,Analyst
Hi,sir.ThisisPrakashGoelhere.Congratulationsonagoodsetofnumber.Hello?
DeepakAmitabh,ChairmanandManagingDirector Thankyou.
ArunKumar,ExecutiveDirectorandChiefFinancialOfficer
Yeah,thankyou.
PrakashGoel,Analyst
Okay.Ihavetwoquestions.Firstwithregardtocashdeployment.Whatisthecurrentcashbalance,cashinbankbalanceandwhatistheplantousethecashbalancegoingforward?
ArunKumar,ExecutiveDirectorandChiefFinancialOfficer
See,thecashbalanceason31stDecemberwasroughly781croreswithus.The(TechnicalDifficulty)onaparticulardatemayvarybecauseofthedebtorsandcreditorspositionasondate.
PrakashGoel,Analyst
Okay.So,basicallywhatIwaswantingtoknowisthathowwouldwhatistheplan,longtermplanofdeploymentofcash,becauseweunderstandtheyearendcashbalancewillbecloseto1,000crorelikewhatwillbethedividendpolicyandhowyouwouldutilizethecash?
DeepakAmitabh,ChairmanandManagingDirector With regard
todividendpolicy, itwillbe slightlyearly tocomeoutwith
thedetails,but certainly,we'llkeep the interestof the
-
investorsinmind.
PrakashGoel,Analyst
Okay.Soanyspecificplanwithregardtoutilization,anyacquisitionandotherthingsthatisbeingplannedthat?
DeepakAmitabh,ChairmanandManagingDirector
Canyoupleaserepeatthatquery?
PrakashGoel,Analyst
Yeah.Thequestionisthatanyspecificplanwithregardtoutilizationofthecurrentcashorlikethecash,whichislikelytobe?
DeepakAmitabh,ChairmanandManagingDirector
Thecompanyisworkingoutonadetailedbusinessplan,butletmesharewithyouthatweforwardourlongtermvolumesarecomingonstream,thatisin'14'15,'15'16and'16'17,whichwillbesubstantiallyincreasingourworkingcapitalrequirements.
PrakashGoel,Analyst Okay.
DeepakAmitabh,ChairmanandManagingDirector
Wewillbetouchingaroundfromlongtermitselfaround11gigawattofthecapacity.
PrakashGoel,Analyst
Okay.Sothatbringsmetothequestionthatlike,whatwillbethevolumethisyear?Like,beginningoftheyear,thecompanyguidedfora32billionunitvolumeandwehavealreadydone29billionunitinthefirstthreequarter.Sowhatwillbethetotalvolumethisyearandnextyear?
DeepakAmitabh,ChairmanandManagingDirector
See,asacompanystrategy,wehavebeensharingwiththemarket
thatminimumtargetwillbedoubledigit,that'salmost10%growthyearonyearbasis.Andcertainly,we'llbeachievingmuchmorethanthat.
PrakashGoel,Analyst Sir,10%isnothing,sir,becausethebase
DeepakAmitabh,ChairmanandManagingDirector That'swhat I'm saying.
Earlier, that'swhat I repeated to you that if you see the
comparisonwith the last year. Last
year,wecompleted27,645millionunits.Inninemonths,wealreadycompleted27,475millionunits.
PrakashGoel,Analyst
Okay.Sowhatisthenumberthatyouarelikelytodothisyear?
DeepakAmitabh,ChairmanandManagingDirector
-
Itwillbeaverydefiniteforwardlookingstatement,ifIsharethefigureswithyou.
PrakashGoel,Analyst
Soatthebeginningoftheyear,ifyousay32billionunitandyouwewantthatnumberandyou'vealreadyachieved28billionunitinthefirstthreequarters,soshouldweforecastthatyoushouldbeachievingsomethinglike36billion,37billionunitinthefirstFY'14?
DeepakAmitabh,ChairmanandManagingDirector
Thanksforyourbestwishes.We'lltrytoachieveyourtarget.
RajivMalhotra,ExecutiveDirectorandChiefRiskOfficer
WewillI'lljustaddthesethings.See,whenwesaidwewillbedoing32billionunits,weshouldbedoingbetterthanthat.
PrakashGoel,Analyst Thatisunderstandable,sir.
RajivMalhotra,ExecutiveDirectorandChiefRiskOfficer
Andsecondly,what Iwanttosay,seetill andasyouhavebeenseeing,
Imean,Arunwillgiveyouthedetails,what
istheratiobetweenshorttermtodayalsoandlongterm,thatratiolongtermhastokeepincreasingatleasttillthetimejustwhatever11,000whatArun
issayinggetsexhausted.Andby the time,wehavebeen
talkingaboutandwehavebeen reading in
thenewspapersabouttheproposedamendmentsby
ortotheElectricityAct,wheretheyaregoingtoseparatethesupplysideandthecontentpart,contentand
thewirepartetcetera.SoPTC isworking towardsthat,because
theseamendmentsand
theiractivitytakesatleastcoupleofyears,sowearealsogearingupourselvesoveraperiodoftimetomovetowardsbeingpurertradingcompanytomoreofanaggregatorofsupplyanddemandside.
So,thatisalargerbusinessplan,obviouslyitisgoingtotakecoupleofyearsbeforewegotowardsthat,becauseitrequireslotofchangesintheElectricityActandtheinternationalunderstandingofthethingshowtheyaredone.
PrakashGoel,Analyst
Okay.Sir,justonethingwithagain,likeanothercashdeploymentrelated.Basically,earlierweweregiventounderstandpostourexperienceinUPandTamilNadu,thatwe'llnotbeblockingourcapitalformakingpaymenttothePowerGenCos?Hasthatstrategychangedor
likenow, is
itmandatedbybecauseyouaretalkingaboutrisingvolumeandrisingworkingcapitalrequirement,soIjustwanttounderstandthatpoint?
DeepakAmitabh,ChairmanandManagingDirector
Yeah,yeah,yeah.See,what Imean,Ithink,CROwill liketoaddhis insight
intothewholething,butthedifferencewhichwasthereearlier,thatweweredoingasperthecontractsandIhaverepeatedsomanytimes,what(inaudible)thosecontracts,whichwehavecorrectedoveraperiodoftime.
Secondly,noweverypaymentis,thereisanappraisalsystem,thereisariskprofit,whichseesthesethingsonadaytodaybasisandafterthatonlyitisfilteredandevenifwearegoingtoavailtherebateincome,thecallsaretakenoneachtransactionsnow.Soit'snotthat
likegenerally,but longtermbusiness, inshorttermthepaymentsaremade
in10times
10daystime,15daystimetotaketherebateetcetera,whereas,inlongterm,thestorymaybeslightlydifferent,butI'llaskRajivMalhotratoelaborateuponthispoint.Thankyou.
RajivMalhotra,ExecutiveDirectorandChiefRiskOfficer
Thankyou,sir.JusttoaddtowhatMr.Amitabhissaying,see,wearetalkingoflikeonadailybasisastodayanoutstandingofnearly1,000crores.Ithinkwhatisimportanttounderstandiswherethis1,000croresliesintermsofhowmanydaysofoutstanding.So,whenyoulookatit,somepartofitispurelybusinessasusual,apartfromsomething,whichisanolddisputedamount,whichcomes
-
inthegreaterthan90daybucket,whichweareasacompanytryingtoresolvewithTANGEDCO.Ithinkthatissomethingwhichiscommunicatedtoyouearlier.Wepointthatoneneedstounderstand,isthat,solongasthereceivablesarewithinourradarandwearekeepingtrackofanythingsoonas
itfixthe30dayoutstandingmark.Andtothatextent,redflagwhere
ithastobeanddoaquickfollowup,Ithinkyourmoneyissafe.
PrakashGoel,Analyst
Sir,youwouldhavedonethesimilarthinginthepastalsowhenUPandTamilNaduthingwentoutofhand.So,I'mjusttryingtounderstandlikewhentheUPmoneystartedcomingback,youwouldgiveyes,sir?
DeepakAmitabh,ChairmanandManagingDirector
Prakash,canIinterrupthere?See,aboutUPandTamilNadu,inthesameconferencecallforlastthreeyears,wehavebeensharingwhatwerethethings,solet'snottakesomuchtimeofthewholeconferencecall,whereothersmaybewaitingforaquestionandyoucancomebacktousonthisspecificissue.Yeah,yeah,thankyou,thankyou.
Operator
Thankyou.ThenextquestionisfromthelineofVishalBfromB&KSecurities.Pleasegoahead.
VishalBiraia,Analyst Sir,of late,wehavehearda lotofnoise from
thepoliticalstratathattariffneeds tobecutornomajor tariff
increasearetobetaken,somethingofthatsort.Andwe,yesterday,Maharashtrahadcuttariff,lastweekHaryana.So,anycommentsfromyouonthisthing?Thisisthefirstthingandsothesecondthingisthat,onthelongtermcontractthatwehavePSAs,sowehavereducedthequantumthatwillcomeupinFY'15to3,500megawattsfrom6,000megawattsearlierinthelastpresentation.So,ifyoucanaddressthat?
DeepakAmitabh,ChairmanandManagingDirector
Arun,canyouanswerthesecondquestionaboutcuttingdownthething.
ArunKumar,ExecutiveDirectorandChiefFinancialOfficer
Yes,sir.Asfarasourlongtermvolumesareconcerned,wehaveanalyzedeachandeveryprojects,it'saprogressandwheredowestand
insometermsoftieuporsaleofpoweretcetera.The11gigawatt,which
Isharedwithyou
isaconservativefigureafterbiddingortakingoutthoseprojectswheretherehavebeenaslowprogressorwheretheapprovalshavebeenheldup.
VishalBiraia,Analyst Okay.Sir,willitpossiblefor?
DeepakAmitabh,ChairmanandManagingDirector
Andregardingthefirstquery,seeit'stooearlytocommentaboutthesethings,
it'stooearlytocomment,because
it'sanelectionyearandwedon'tknowtheexactdetailsof,inMaharashtra,theyhaveaskedforcuttingdownthetariffetcetera,wehavenoideathatitisitmaybebecauseofthecostof,Imean,theprocurementpowercostetcetera,howmuchithasbeenandthecharges,whichmayhavebeenverystiff.Sowithoutanalyzingthesethings,itbecomesverydifficulttotakeacallandtogeneralizethatitwillitisapplyingacrossthecountry.Soit'stooearlytocommentaboutthat.MaybeafterMarch,wewillbeinamuchbetterpositiontocomment,analyzingeachandeverythingwhichisgoingon,withoutseeingthedetails.
VishalBiraia,Analyst
Indeed,sir.Sir,justoneasacorollarytothis,sir,haveyoufeelincreasedinqueriesfromthestatespertainingtoshortterm
-
demand,shorttermpowerforthenextthreemonths,sixmonthsorfortheelectionperspective?
DeepakAmitabh,ChairmanandManagingDirector
Itisbusinessasusual.Imean,ithasbeenbusinessasusual.So,therehasbeendemandforthepower,startingfromNovember,Decemberitself,whichhasthatnormallyhappens,becausesummerseasonarequitestrongthisthing,keepingthecountrytheoverallcountryintoapicture.Summerdemandsandsummercropsdemandsareayeartoyearphenomena.Soobviously,itpicksup,thedemandpicksup.
VishalBiraia,Analyst
Sure,sir.Sir,couldyouspecifywhichprojectshavewecutdownfromthe6.6gigawattthatweexpectedinFY'15tothenow3.5gigawatts?
DeepakAmitabh,ChairmanandManagingDirector
IwillrequestAruntosharethecompletedetailsaftertheconcalloroncethequestionhourisover.
VishalBiraia,Analyst Sure,sir.Thankyouverymuch.
DeepakAmitabh,ChairmanandManagingDirector Yeah.Thankyou.
Operator
ThenextquestionisfromthelineofMohitKumarfromIDFCSecurities.Pleasegoahead.
MohitKumar,Analyst Sir,congratulationongoodsetofnumbers.
DeepakAmitabh,ChairmanandManagingDirector Thankyou.
ArunKumar,ExecutiveDirectorandChiefFinancialOfficer
Thanks,Mohit.
MohitKumar,Analyst
Sir,Ihavecoupleofquestions.First,regardingthewehavecontractedaround700megawattofadditionalPPAinthequarter,amIright,sir?
ArunKumar,ExecutiveDirectorandChiefFinancialOfficer
Howmanymegawatt?
DeepakAmitabh,ChairmanandManagingDirector Exactfigures,Arun.
-
MohitKumar,Analyst Additional700megawattPPAinthequarter?
ArunKumar,ExecutiveDirectorandChiefFinancialOfficer
No,Chairmansaidthatwehavesignedfor1,000megawatt.
MohitKumar,Analyst Right.400wassigned
inthefirsthalf,additional700megawatthasbeensignedinthe
lastquarter.Canyoujustdetailoutthosepowerplants,whichhave?
ArunKumar,ExecutiveDirectorandChiefFinancialOfficer I can give
you on that details of the for Rajasthan. Rajasthanwas there,UPwas
there, TRN Energy,Maruti Clean. I
don'tremember,DainikBhaskarPower.Somanyofthemwerethere,wecontinuetobe
RajivMalhotra,ExecutiveDirectorandChiefRiskOfficer
400megawattsinTamilNaduandAdhunik,one.MaruthiClean250MWinRajasthan,DBPower410megawattinRajasthan.
MohitKumar,Analyst
Sir,whathappenedtothisTamilNadubidwhere(inaudible)wherewehaveinvestedconsiderableamount.HavetheysignedPPAthroughus,PSAthroughus?
DeepakAmitabh,ChairmanandManagingDirector TamilNadu?
ArunKumar,ExecutiveDirectorandChiefFinancialOfficer No.They
TamilNadu theyhave signeddirectly.Theyhave signeddirectly,because
thereyou see,wheneveranyPPAsaredone,
it'snotthatfullcapacityisgiventous,
let'sgobacktoKarchhamWangtoo,JP.Itwasa1,000megawattplant,theyonlyoffered700megawatttousonalongtermbasis.Soitalldependsupon,it'snotnecessarythatthefullplanbethereandthefullloadtheyaregoingtogiveittoPTC.So,asandwhenwhat
MohitKumar,Analyst
Sorrytointerruptyou,ifIremembercorrectly,wehadaPPAwiththeIndBarath,Utkal.SoideallytheyshouldhaveenteredaPSAwithusright?
ArunKumar,ExecutiveDirectorandChiefFinancialOfficer See,
thewhole issue is,wehave invested themoney through finance
companyand therewere two
setsofmoneywhichwereinvested.Firstsetwasinvestedandtwoyearsback,weboughtanEBITof24%interestalso.Andanotherthisthingistherewheretheexitwillbecominginnextoneyearorso.So,financecompanyisaseparatecompanyandtheyaredoingtheirjobwhichtakingcareoftheirinterest.
Now,PTChasPPAs,therearePPAswhereinitialsarethere,therearelotofconditionprecedentwhicharethere.Allthosethingshavetobeanalyzed,soyourqueryabout
IndBharath, I'msurethemarketing marketingpeoplearenotthere justnow
intheconcall,theywillanalyzethethingsandsenditbacktoyou.
MohitKumar,Analyst
-
Andsomyotherqueries,IthinkAndhraPradeshhasfinalizedtheirPPAforthenextyear,ifIamnotwrong.So,haveyouenteredintoanyPPA,finalPPAforSimhapuriandMeenakshiTPSforourportion?
ArunKumar,ExecutiveDirectorandChiefFinancialOfficer
LookSimhapuri,Simhapuri,thePSAisthere,theSimhapuriandthisthingtheywereinatollingarrangementsearlier.
MohitKumar,Analyst Correctsir.
ArunKumar,ExecutiveDirectorandChiefFinancialOfficer
AndfromtollingwehavemovedtoPPAandPSA.So,tillMay,thepowersaleagreementsarealreadythereandasandwhenitwillbeforfurtherperiod,PTCwillbesigningthem.
MohitKumar,Analyst
Sir,that'swhyI'mtryingtobelievethatAndhraPradeshhavealreadyfloatedthebidsforthenextyearfromJune2014?
DeepakAmitabh,ChairmanandManagingDirector
So,I'msuremymarketingpeoplemustbeonthejob,I'msureaboutthat.
MohitKumar,Analyst
Okay,okayjustwantedtofigureoutwhetherwehaveconcludedPPA,sir.Andsir,isthereany?
Operator SorrytointerruptMr.Kumar.
MohitKumar,Analyst LastquestionIknow.
Operator
Sure.MayIrequestyouto,andthen,togobacktothequestionqueue.
MohitKumar,Analyst Thisisthelastquestion.
Operator Yeah,sure.
MohitKumar,Analyst
Sir,whicharetheexitwhicharelikelytohappenthisyear,wheredoyouseeitwasamomentum?
-
DeepakAmitabh,ChairmanandManagingDirector Exitfromwhere?
MohitKumar,Analyst Exitfromourpowerprojectinvestment?
DeepakAmitabh,ChairmanandManagingDirector
No,PTChasthenonlytwolargeinvestments.OnewastheTeestaUrja,andanotherisAthenaEnergyVenturesLimited.ButTeestaUrjashouldgetcommissionedbytheendofitwillstartgettingcommissionedbytheendofthiscalendaryear.Meaningthereby,thatobviouslyin'15,'16onlywhentheplantisfullyoperationalandsettleddown,thatisthetimewe'llstartseeingwhetheranexitwillrequirenoworwhatisthebestvaluewecandetermine,yeah.
MohitKumar,Analyst
Okay,sir.Thankyou.Thanksforyouranswers,sir.
Operator
Thankyou.ThenextquestionisfromthelineofJaiprakashToshniwalfromIndiaFirstLifeInsuranceCompany.Pleasegoahead.
JaiprakashToshniwal,Analyst
Goodafternoon,sir.Mostofmyquestiongotanswered.Justwantedtoknow,wehadacommitteewhichsortoftoworkoutonthecash
DeepakAmitabh,ChairmanandManagingDirector
Yourvoiceisnotaudible.Hello?Hello?
Operator Mr.Toshniwal?
JaiprakashToshniwal,Analyst Hello?
Operator Yes.Pleasegoahead.
JaiprakashToshniwal,Analyst Yeah,sorrysir.Goodafternoon.
DeepakAmitabh,ChairmanandManagingDirector Goodafternoon.
-
JaiprakashToshniwal,Analyst
Mostofmyquestiongotanswered.Justwantedtounderstandthereisacommitteewhichisworkingonrequirementforthecashrequirementforworkingcapital.Anyresultfromthatoranyreportfromthatcommittee?
ArunKumar,ExecutiveDirectorandChiefFinancialOfficer
Ifyouseethecorrespondingincreaseinthegrowth,theworkingcapitalrequirement
intheupcomingyearsisgoingtoincrease.We'llgiveyouaroughestimatethatitwillalmostgothreetimesinFY'15.
JaiprakashToshniwal,Analyst Okay.Fairenough,sir.Okay,thanks.
Operator
Thankyou.ThenextquestionisfromthelineofSanjeevPfromSharekhan.Pleasegoahead.
SanjeevPanda,Analyst
Congratulation,sir,foraverygoodsetofnumber.
DeepakAmitabh,ChairmanandManagingDirector Thankyou.
SanjeevPanda,Analyst
Sir,Iwantedtounderstandabitsorryforapingonthesamething.Lookingatthenumbersorvolumethatwehavegeneratedwehavealreadytradedtilltheninemonth.Whatarethekindofnumberswecouldseeinaveryforthewholeyearandgoingforward,ifatallthenumberswillgrow,whatarethesourcesofyouknowthekindof,likeintermsoflongtermandshorttermorcrossbroder,whereweseethegrowthcomingfrom?
ArunKumar,ExecutiveDirectorandChiefFinancialOfficer
See,asfarasthefiguresfortheyearareconcerned,theChairmanhasalreadyreplied,givingadefinitefiguresforthisyearornextyear
isaforwardlookingstatement.Youcanseethegrowthhappeningeveryyear.Asfaras
longtermsareconcerned,therearedefinite projects from where we drive
these figures. And rather we reduce our projection from 14 gigawatt
to 11
gigawattconsideringthedetailedanalysisoftheprojects,theprogressbeingmadeandthesalesbeingtiedup.
SanjeevPanda,Analyst
Okay.Sir,onthebalancesheetside,itisareceivablenumbers,ifyoucansharewithus?
DeepakAmitabh,ChairmanandManagingDirector
Youwantreceivablesason31December?
SanjeevPanda,Analyst Yeah.
DeepakAmitabh,ChairmanandManagingDirector
-
Yeah,certainlywecansharethat.Thedebtorsare2,368crores,creditorsare1,556ason31stDecember.
UnidentifiedParticipant
Okay.Thankyousir.Thanksverymuch.That'sitfrommyside.
Operator
Thankyou.ThenextquestionisfromthelineofDeepakAgarwalfromElaracapital.Pleasegoahead.
DeepakAgarwal,Analyst
Yeah.Goodafternoon,sir.Firstofall,congratsforgoodsetofnumbers.
DeepakAmitabh,ChairmanandManagingDirector
Canyourepeatlouderplease?
DeepakAgarwal,Analyst Yeah,okay.AmIaudiblenow?
DeepakAmitabh,ChairmanandManagingDirector Yeah.Itsbetter.
DeepakAgarwal,Analyst
Congratsforgoodsetofnumbers.Ihavecoupleofquestions.Firstlyon,whenyousayyouhavescaleddownfrom14gigawattto11gigawatt
in terms of longterm arrangements, so do you think there is some
specific set of projects or some specific sort
ofpromotersarereallyfacinglotoffinancialstress,despitesomuchofworkdonebyCCIandlotsofreformstakingplace?AndsecondquestionishowdoyouseethevolumeifyoucansharetheguidanceforFY'15?Thanks.
ArunKumar,ExecutiveDirectorandChiefFinancialOfficer
Asfarasvolumesareconcerned,Ithink,it'sbeingrepeatedlyaskedfor,andcompanyviewshavebeengivenbytheChairman.Andwith
regardto reducing thevolumeby3gigawatt, Iagain
repeatthatweareseeing
theprogressoftheproject,theirapprovalstatus,theircommissioningschedulesandtheirssincerityaswell.Takingaholisticview,wecometoafigureof11gigawatt.
DeepakAgarwal,Analyst
Okay.AndthelastthingisonwhendoyouseethiscontractsforRajasthan,GujaratsorryRajasthan,UPandTamilNadutostartintermsofactualvolumedelivery?
ArunKumar,ExecutiveDirectorandChiefFinancialOfficer
Thatwecangiveyouthetimelineswhentheindividual
RajivMalhotra,ExecutiveDirectorandChiefRiskOfficer
TheyarespecifictotheirImean,theirsigningthisthing.Ithink,itmustbefrom'16onwards,butwe'llhavetocheckupwiththemarketingpeople.
-
DeepakAgarwal,Analyst Forallthethreestates?
RajivMalhotra,ExecutiveDirectorandChiefRiskOfficer
Yes,from'16.
DeepakAmitabh,ChairmanandManagingDirector
Yeah,becausenormallyitiseffective,RajivMalhotracanexplain,butIthinkthebiddingdocumentcontainsthatsupplyhastobeginaftersomanymonths,Imean,thatisthepartofthat.
DeepakAgarwal,Analyst Okay.
RajivMalhotra,ExecutiveDirectorandChiefRiskOfficer
Whilewe'llbehappy to share theexactdetailsof the supply
foreveryoneof those tieups, roughly, it is
somewherearoundSeptember,Octoberof2016andthereon.That'swherethepowerstartstoflow.
DeepakAgarwal,Analyst WhichistheFY'17then?
RajivMalhotra,ExecutiveDirectorandChiefRiskOfficer
You'retalkingabout'16and'17,yeah.
DeepakAgarwal,Analyst Okay.Thankyou.
DeepakAmitabh,ChairmanandManagingDirector However, theremaybe
some volumeswhichare flowing in the shorttermbefore that.Therefore,
Iwouldnotwant tomakeaqualifiedstatementonlyfortheFY'16,FY'17.
UnidentifiedParticipant Okay.Okay.Thankyou,sir.
ArunKumar,ExecutiveDirectorandChiefFinancialOfficer
Yeah,whatRajivistryingtosaythatifthepowerplantsgetcommissionedearlier,let'ssay,in'15only,soobviously,tillthatpointoftime,wemayhavetosellitinamerchantbasis.
UnidentifiedParticipant
Yeah,sure.Thatyouhavethatoneyearlevyyoucandothat.
ArunKumar,ExecutiveDirectorandChiefFinancialOfficer
-
Yeah,yeah.Yeah.
UnidentifiedParticipant Okay.Thankyou.
DeepakAmitabh,ChairmanandManagingDirector Iwillhave
toexcusemyself,becausehalfanhour is theupper limit,which Ihadkept
formyself,but I'm sureArun
jiandRajivMalhotra,theywillbeabletotakeanyfurtherquestionsfromyouall.Thankyou.Okay,I'mjustsigningoff.
Operator
Thankyouforyourtime.ThenextquestionisfromthelineofSachinShahfromEmkayInvestments.Pleasegoahead.
SachinShah,Analyst Hello?
ArunKumar,ExecutiveDirectorandChiefFinancialOfficer Hello?
SachinShah,Analyst
Yes,sir.Thankyouforthisopportunityandcongratulationsongreatsetofnumbers.Sir,justwantedtounderstandcoupleofthingsonyourbusinessside.Sir,inthelast,ifyouseethelastfiveyeardataofthePPA,ofwhichinthelasttwoyears,therehasbeennotmanymajorcontractsthatyouhavesignedinspiteofabout40,000megawattto50,000megawattprobablyavailableinthePPA.Soanyparticularreasonforthis?
ArunKumar,ExecutiveDirectorandChiefFinancialOfficer See,
thepowerpurchasehas to correspondwith the sale tieupaswell.Wemean
to say, the caseonbidding,outof the totalbidding,whatever have
taken place in spite of some of themwhich has been cancelled last
two, three years.We have beensuccessfulin70and50megawatts.
SachinShah,Analyst
Okay,okay.Andsir,whenyoudothis,whenyousignaPPA,isthereaminimumguaranteetariffthatyougivetotheproducer?
RajivMalhotra,ExecutiveDirectorandChiefRiskOfficer Not.
SachinShah,Analyst Okay.Right, sir.And sir,onemore
fundamentalunderstanding about it is thatwhen thePSAs are
available, theproducers
canactuallyalsodirectlygoandsign,likeforexample,IndBarathUtkaldida500megawatt,theysigneddirectlyaPSAwithTamilNadu.Ithinkinspiteoftheyhavingsomearrangementwithyou.So,howdoyouwhereisthePTC'svalueadditioncomingtoavoidthiskindofthing?
ArunKumar,ExecutiveDirectorandChiefFinancialOfficer
See,bygivingoneexample,youmayhaveaperceptionthatwearenotbringingvalueaddition.Butatthesametime,thereare
-
peoplewhoarestillwillingandwhohavebeendoingthroughPTC.AndPTChasbeenabletodemonstrateitsvalueadditioninthebiddings.
SachinShah,Analyst Right.Sir,canyouelaboratea
littlebit,theproducerswhoaresigningupwithyou.Whatexactlyadvantagethey'reseeing
inbeingwithyou?Canyoujustgivealittlebitmoresothatthismisperceptionactuallygetsclearedout?
ArunKumar,ExecutiveDirectorandChiefFinancialOfficer
Rajiv,I'mjustsupplementingandtakingthisquestionfromMr.ArunKumar.
SachinShah,Analyst Yes,sir.
ArunKumar,ExecutiveDirectorandChiefFinancialOfficer
See,IthinktheproducerwhosignsupwithPTChasaveryclearchoice.Eitherherunshisplantstotherestofhiscoreconfidenceorhetakescareofmarketingtheoutput.Ifheisinabetterpositionthanustomanagethetraderiskandmanagethemarketriskoftheirproject,verygood.Buttherestillmaybeopportunitiesforthemtoworkwithusintheshortterm.So,Ithinkit'smoretodowithwhattheywanttodowiththeirownorganizationsetupandskillset.
Now, ifyougobacktomarketregulations,wheretheregulator itself,
ittalksofatraderbuying inthe longterm,tying
itupandbeingabletodoOTCproductsintheshort,mediumandlongterm.NowthatistheifImaysayinfewlines,wevalueaddwithinwhichPTC'sbusinessaregoingtowork.And,thereareotherlicensetraderswhomaynotbeworkinginallthesesegments.
So,therefore,thereisthiswholeissueaboutatradingcompanyrunbyoneofthemajorIBPwiththefocusspecificallyonmanagingtheirownproductionorownedassetsandparticipating
intheshorttermutilitymarket fromnowand thenor
invariouskindofthreemonthskindofsaleopportunities.So,PTCifImaythenrecap,one,itistheissueofmanagingcreditrates,whichwe'vebeendoingandthereisatrackrecordtosayhowwellwehavebeendoing.Ineednotgointodescribingitmyself.
Second,how, like
ifsomebodycommissionsourproject,wherejustaquestionago,weweretalkingabouta
longtermtieupwiththe stateutilityhappeningon inOctober16.Theproject
iscommissionedaheadof that.Whocreates?Aworld,whomakes
themarketforthatshorttermorinterimperiod,basicallycomestoatraderorwe'reagenerator.See,inanyguessthetraderisnotamandatoryrequirement,heisapartofthe,shallIsay,themarketsector,leadingthemarketandwhichiswherewearetoday.
ArunKumar,ExecutiveDirectorandChiefFinancialOfficer
See,asasupplementtowhatRajivhassaid,youhavetoseethePTC'sroleinthewholepowersectorasawhole.Today,marketmightbesamethatonegeneratorhasgonedirectlyandbiditforit.But,seethepositionofthegeneratorswhentheycametothemarketforestablishingthesepowerplants.Howmanyofthefinancialinstitutionswereabletocarryoutduediligenceandtakenindependentcalloffinancingthem.ItwasPTCwhereamajorityofthisdeveloperhadcome,PTCcarriedoutaduediligence,seethatwasworkedoutwhatsortof
figurestheycanarriveat.Sothe
isolationthatsomebodyhasmovedaway,okay,there
istheroundcallasRajivexplained.ThePTCroleyouhavetoseeinamuchbroaderperspective.
UnidentifiedParticipant
Sir,butwhatIunderstandisthatearlierthePPAsignedwithPTCwasacceptedbythefinancialinstitutionsforfinancialclosure,soprobablythatwasonereason.ButIthinkthatisalsonownotprobablyacceptedbythefinancialinstitution.Isthatacorrectthingandsothatisone
ArunKumar,ExecutiveDirectorandChiefFinancialOfficer
WearenotyethavegotafeedbackthatwherePTCisagreeabletosignaPPAandfinancialinstitutionisnotagreeabletothem.Sofarwehavenotreceivedafeedback.
-
UnidentifiedParticipant Okay.Okay.
ArunKumar,ExecutiveDirectorandChiefFinancialOfficer
Butthewayforward,youhavetoseethemarket,howitisdeveloping.Allthedeveloperhavetoeithergoformerchantofforacasefrombillingroute.SotheFinancialInstitutionhastolook,hisviewpointfromallthesedevelopingmarketscenario.
UnidentifiedParticipant
Okay.Andsir,inCase1bidding,PTCwillstillbeparticipating?
ArunKumar,ExecutiveDirectorandChiefFinancialOfficer
Icanjustanswerthat.SeetheCase1bid,asitexistedtillrecently,youareawarethatanewsetofbiddocumentshavebeenfloatedby
theGovernment of India it has been notified. So, as on date, the
provision for a trader or participation through an
SPD,althoughtheclosuresthereareprettyidenticaltotheearlierCase1bid,it'sprettyhazy.NowthereareviewsintheindustryabouthoweffectedparticipationthisdocumentwillgiveandIdon'twanttopredictthat,becauseIthinkitisforustosee.
Icanonlysaytwoorthreethingshere.Onewherewehavetieupsandtowardsexistingprojectsone,thereareopportunitiesforwhichareavailableintermsoftheexistingguidelines.Theissuesthereistheact,thentherearetheguidelines,whichcomeunderthe
tariffpolicyof2006.And then there isa standardbiddingdocument, that
is thehierarchy inwhich the lawor
thepolicytowards.Now,oneSPDwhichhascomeasrecentlyasacoupleofmonthsago,Ithinkstillthemarketisyettoobserveit.
UnidentifiedParticipant
Okay,right.Thankyousomuchandwishingyouallthebestsir.
RajivMalhotra,ExecutiveDirectorandChiefRiskOfficer
Thanksverymuch.
Operator Thankyou.Participantsarerequestedtoplease
limitthequestiontotwoatatime.Thenextquestion isfromthe
lineofSantoshDesaifromEdelweiss.Pleasegoahead.
SantoshDesai,Analyst
Hi,hello.Thankyousir,fortakingthequestion.Onethingis,canyoujustelaborateonthepreviouspoint,Ididn'tgetit.SoaspertherevisedDBFOOnorms.
DeepakAmitabh,ChairmanandManagingDirector
Couldyouspeakupalittlebit.
UnidentifiedParticipant Canyouhearmenow?
ArunKumar,ExecutiveDirectorandChiefFinancialOfficer
Alittlebetter.Ifyoucanspeakintothemic,itwillbeveryeasiertocatch.
-
UnidentifiedParticipant Isitbetternow?
ArunKumar,ExecutiveDirectorandChiefFinancialOfficer Yeah.
UnidentifiedParticipant Okay. Justwanted to ifyoucouldclarifyon
theearlierpointevenabitmoreunder the revisedDBFOOnormsa trader
isnotallowed to signaCase1 in somekindofaPPS.Nowhowareyou trying
tomitigate thatbecauseyouhavequiteabitofopencapacity in
termsofPSA?YouhavePPS,butyouhaveaPSA.So ifyouhave to tieupunder the
revisednorms sohowwillyoumanagetodothat?
ArunKumar,ExecutiveDirectorandChiefFinancialOfficer
Seetherevisednormstoanexistingproject,Iforthelikeofme,somebodycanexplainhowitwillapplyI'dlovetobeeducated.Tworeasons,onethereviseddocumenttalksofapartthroughofcoalandbasicallythecoalbelongingtotheutilityattheendoftheday.Thecutsofthishasbeenthecoalshortageandwe'retryingtoworkthatout.
UnidentifiedParticipant Right.
ArunKumar,ExecutiveDirectorandChiefFinancialOfficer
Inanexistingproject,where thecoal
linkageoracoalblock,whateverbedomesticcoalbasedFacilitiesAct
isallocated to
theprojectandwhichispartlytiedup.TwoactuallyparticipateinaDBFOObidsandwe'venotbeenabletounderstandhowitcandothat.
UnidentifiedParticipant
Okay.Sobasicallyyoustronglybelievethatthesethingstogetmodifiedinbothform,bothfromathosekindofoperatingissuesaswellasallowingtraderstoparticipateinthatbecauseononehandthegovernmentwantsa15%,20%ofthepowercapacitytobeareopenedupfortrading,ontheotherhand,ifyouaredisallowingatrader,itdoesn'tobviouslymakesense?
ArunKumar,ExecutiveDirectorandChiefFinancialOfficer
Okay.Therearetwothings,I'dliketorespond.One,Idroppedthewordstrongandwhenitcomestostrongbelief,let'ssaythisfromsuperlatives.
UnidentifiedParticipant Okay.
ArunKumar,ExecutiveDirectorandChiefFinancialOfficer
Restofitwhatyousaidmaybeareasonablebelief.
UnidentifiedParticipant Okay.
ArunKumar,ExecutiveDirectorandChiefFinancialOfficer
-
Second,whenwe'retalkingofcreatingthat15%or20%oftradedmarket,thetraderisnotmandatory.Wehavetobecompetitiveandinthemarkettryingtogetourshareofthebuy.Sogeneratorwantstotradedirectlywiththedistributorandwiththecomingamendmentoftheactisfreetodoit.
UnidentifiedParticipant Okay.
ArunKumar,ExecutiveDirectorandChiefFinancialOfficer
Sogenerallythedriftthatyou'vegotis,Iguessfine.Wehaveafeelfromtheindustryalso.Havingsaidthat,Iwouldnotlooklikedomakeanystrongcommentsonthepolicy,whichisthelargerlanetoday.
UnidentifiedParticipant Okay.The second things is, justwanted
tounderstand in thepast, therewere these three
contracts,onewaswithTorrent,secondwaswithKarchamandthirdwaswithLanco,wherethePPA,thecounterpartieswalkedoutortherewassomedisputeandthatPPAgotcanceledandall
RajivMalhotra,ExecutiveDirectorandChiefRiskOfficer
Ididn'tgetthefirstname,please.Sorry,LancoandKarchamIgot.
UnidentifiedParticipant Torrent,Torrent.
ArunKumar,ExecutiveDirectorandChiefFinancialOfficer Okay.
UnidentifiedParticipant
Yeah.Andnow,wearehearingthisIndBharath.SowhatwaskeydifferentbetweenIndBharathandtheearlierthreeandhowarewemitigatingthisriskgoingforwardthatsuchthingsdonothappen?
ArunKumar,ExecutiveDirectorandChiefFinancialOfficer
Okay.I'lljustdoIthinkhavingsinceyouhaveboughtupbothKarchhamandLancoasthecases,Ithink,itshouldbeawareofwheretheyaretoday.ThatdisputehassomewhereendedandwearelookingattariffdeterminationofKarchhamalongwithandKarchhamorLanco,ourJPsareworkingalongwithPTC,tohaveatariffdeterminationbytheCRCthat'sthepositiontoday.
UnidentifiedParticipant Right.
ArunKumar,ExecutiveDirectorandChiefFinancialOfficer
SameforadisputeregulationofLanco.
UnidentifiedParticipant
-
Right.
ArunKumar,ExecutiveDirectorandChiefFinancialOfficer
Pleaseunderstandthatthedisputesaroseinacontextoftheindustrywheretheywasextremeoptimismorwherethemerchanttariffslie.
UnidentifiedParticipant Right.
ArunKumar,ExecutiveDirectorandChiefFinancialOfficer
Andyouknow,therehasbeena learning in the last three, fouryears,
Ineednotget into that.Soyeah,
thecounterpartieshavelearnttheirlessons,we'velearntourlesson.WhatitmeansisthatourcontractprovisioninadifficultPPAhavebeentightened.Andthe
issueatstakesometimes like intheKarchhamcase is
infactattheendoftheday, itsaprojectwhich is
largelyfinancedbypublicmoney.Andifstateutilitiesareatthe,let'ssaythebenefitsspendofthis,youjustcannotwalkawayfromthatdeal.So,it'sanissueofsanctityofcontractswhichIthinkthisismuchlargerthanadisputethatPTCmayhavewonorlost.
UnidentifiedParticipant
Right.So,howcomethishappenedagainafterallthistimeinthis
ArunKumar,ExecutiveDirectorandChiefFinancialOfficer
Yeah,wewillnottobeabletosaythatithashappenedagain.Thisspecificsofthecase,theydid.
UnidentifiedParticipant
InIndBarath,whydidithappen,that'swhat.Andhowarewetighteninginthefuturesothatsuchthingsdoesnothappen?
ArunKumar,ExecutiveDirectorandChiefFinancialOfficer IndBharath,
Iwillnotbeabletosaythatthesamethinghashappened.
I'llneedtogetbacktoyouandwhatthisspecificswere,whatwasthecapacitytiedwithus,whichpartofthecapacitytheybid.Second,howdoweavoidthisinfuture?Ithinkit'saquestionofwherewehavethreeorfourprocessgoverningtermination,whetherandvariousissueslikewhatisthepenaltyofwalkingoutofthesecontracts.ButwhatI'monlytryingtounderlinehereisthatwhiletradingispurchasedforresaleandwasthatprincipletoprinciplecontract.Thefact
isthatthere'sanexcessbetweenthesaleswemaketoutilities
inthecontextandthepowerthatwehavebought.SoitisnotthatPTCistheonlyparty,whichiskindoflearningfromthisoristryingtofightthisout.
UnidentifiedParticipant Okay.
ArunKumar,ExecutiveDirectorandChiefFinancialOfficer
It'sanissuethatyou'veraisedthattheprinciplelevelitisandwhatthesanctityofcontractsinthesector.
UnidentifiedParticipant Right.
ArunKumar,ExecutiveDirectorandChiefFinancialOfficer
-
Notthefirsttimethatit'shappened.Idon'tbelievethisisgoingtobethelast,ifnotnow,three,fouryearsfromnowandtheirphasesinwhichtheindustrygoesthrough,(inaudible).
UnidentifiedParticipant Okay.CanIaskonemorequestion?
ArunKumar,ExecutiveDirectorandChiefFinancialOfficer
Thatyouneedtoaskthemoderatorbecause,wewouldmayhavealotofpeopleonthequeue.Idon'tmind,speakingthatup,evenoutlinediftherearequestions.
UnidentifiedParticipant
Yeah,okay,thenoperatoriftherearemore,shouldIwaitonthequeue?
Operator Yesplease.
UnidentifiedParticipant
Okay,I'llwaitonthequeuethen,thankyou.
Operator
Thankyou.ThenextquestionisfromthelineofVivekSharmafromICICISecurities.Pleasegoahead.
VivekSharma,Analyst Goodafternoongentlemen.
ArunKumar,ExecutiveDirectorandChiefFinancialOfficer
Goodafternoon.
VivekSharma,Analyst
Sir,justwantedtoknowthestatusofourdisputewithKarchhamWangtoo,what
isthestatus,how,when
istheyearendscheduleandwhatdoyouexpectfromthesamegoingforward?
ArunKumar,ExecutiveDirectorandChiefFinancialOfficer
ThatMr.MalhotrahasalreadyexplainedRajivMalhotra.AlreadyJPhasapproachesERPfordeterminationoftariff,whereevenbeneficiarystatesarealsomadeapartintoit.
VivekSharma,Analyst
So,whendoyouexpectthePPAs,thesupplyfromPPAtostartandwouldwebegettingthepreviousforthelastyear'soperatinglossalso?
ArunKumar,ExecutiveDirectorandChiefFinancialOfficer
Whatloss,sorry?
-
VivekSharma,Analyst
LikeourPPAwassupposetostartfromtheCOD[ph]oftheplant,buttheplantoperatedforoneyearandthemerchant,sowe'velostvolumes?
ArunKumar,ExecutiveDirectorandChiefFinancialOfficer
Wedidn'treallylosevolumes.
VivekSharma,Analyst
Okaysir,PTCwassupplyingunderthePPAalready?
ArunKumar,ExecutiveDirectorandChiefFinancialOfficer
No,youhavetounderstandthatonethecounterpartywentintoadispute,lookedforashortperiodatwhateverthethoughtwasthebenchcoursearethere[ph].CamebacktoPTCforbringthetradesunderthe,inaninterimperiodforthisshorttermcontracts.Secondatsomepointtheydecidedtoendthedisputes,sowewenttocollectivelytoCRC,thatlook,wewanttariffdeterminationinlinewiththeoriginalintentofthepurchaseandsalearrangements.
SotheutilitieshavealsobeenincludedandthatproceedingbeforetheCRC.
VivekSharma,Analyst Okay,okay.
ArunKumar,ExecutiveDirectorandChiefFinancialOfficer
Right.Now,it'saproceduralthing,it(inaudible)inanoticesbeingissued,validationofthepartsbeingdone,etcetera.However,closetotheendofthisfinancialyear,weshouldthinkthatthematteroftariffdeterminationshouldgetsettled.
VivekSharma,Analyst Okay.
ArunKumar,ExecutiveDirectorandChiefFinancialOfficer
Butthen,it'sjustaguesstimate,itdependsonhowfastthisCRCdealswiththiscase.
VivekSharma,Analyst
Perfectsir.Thankyou.Thatwouldbeallfrommyside.
Operator
Thankyou.ThenextquestionisfromthelineofA.JainfromEmkayGlobal.Pleasegoahead.
A.Jain,EmkayGlobalSecurities
Sir,basicallymyfirstquestionwasafollowupquestiontothelastquestion.ArethereanyotherbidderswhicharegoingontheirownandsigningPPAswithorPSAswithSEBasofnow?ApartfromIndBarathUtkalarethereanyothercaseslikethis?
ArunKumar,ExecutiveDirectorandChiefFinancialOfficer
-
Noneoftheseriousonesatleastthat'swhatIcansay.
UnidentifiedParticipant Okay.And
ArunKumar,ExecutiveDirectorandChiefFinancialOfficer
ItfellofftheshelfandithadahistoricalPPAwithus.
UnidentifiedParticipant Who?
ArunKumar,ExecutiveDirectorandChiefFinancialOfficer
Thatwecannotsay.
UnidentifiedParticipant
Okay.Okay.Andsomyfirstquestionisbasicallyonthevalueadditionpartanswered,youansweredearlierinthecall.Yousaidthatmarketriskandcreditriskiswhatyou'readdingvalueto.Andifadeveloperdon'twanttotaketheserisks,hewillcometoyou.So,justwant
tounderstand themarket riskpart,what is it that,basicallyyou take
intoyourbooks from thedeveloper in termsofmarketrisk?
ArunKumar,ExecutiveDirectorandChiefFinancialOfficer
Inlastyearsofexistence,atleastPTChasbeenabletodemonstratetothemarketthattherecanbedelays,buttherecannotbeadefault.
UnidentifiedParticipant
Yeah.That'swhat,it'sthecreditrisk,right?
ArunKumar,ExecutiveDirectorandChiefFinancialOfficer Yeah.
UnidentifiedParticipant
Intermsofmarketrisk,intermsofmarketpriceorofftakeofthepower.Isthattheriskyoutooalsotakentoyourbooks?Becauseoneofthequestionyouansweredthatthereisnoguarantee.Inoneofthequestionsyouansweredthatthere
isnoguaranteeoftariff, which you provide in the PPAs, while at the
same time, you are saying that you're takingmarket risk, so
justwant tounderstandthathowthesetwothingscoexist?
ArunKumar,ExecutiveDirectorandChiefFinancialOfficer
No,no.Withintheriskappetitethatwehave,wecannotobviouslypromisesomebodyatariffwhichislikewayout.
UnidentifiedParticipant Yeah.Okay.
ArunKumar,ExecutiveDirectorandChiefFinancialOfficer
-
Ifthere isatariff,which is,theyhaveagreedas it'sabase line,which
isthereaspartofa longterm,thatreallyseeking isnotaguaranteed
tariff. It'smore like saying thatwith in theworst case scenario,
the debt service of the lenders to that projectrecoveredornot.
UnidentifiedParticipant
Okay.Sothatroughlywouldbelet'ssay,intoday'senvironment,wouldbeaboutINR3,INR3.5perunittype?
ArunKumar,ExecutiveDirectorandChiefFinancialOfficer
ItwouldbeofINR3,yeah.
UnidentifiedParticipant Okay.And
ArunKumar,ExecutiveDirectorandChiefFinancialOfficer
Andthinkingitisapoolofknowledge,itisa(inaudible).
UnidentifiedParticipant Yeah.
ArunKumar,ExecutiveDirectorandChiefFinancialOfficer
Theseindependentpowerproducersmightbehavingaprojectortwoprojects,wherethebiggestbidsprojectsisoneortwostateswherePTCbidsforthecasesacrossourcountryandfornumberofourdevelopers.
UnidentifiedParticipant
Rightsir.So,theoreticallyspeaking,thoughpracticallyIalsoagreewithyou,theoreticallyspeaking,let'ssayiftariffsinthemarketarelowerthanINR3perunitlet'ssay,theoreticallyyouwouldmakealoss?
ArunKumar,ExecutiveDirectorandChiefFinancialOfficer
See,again,Imean,wecanhaveaseparatesessiononhowthecontractsareadministered.
UnidentifiedParticipant Okay.
ArunKumar,ExecutiveDirectorandChiefFinancialOfficer
Theutilityinashorttermsituationfindsthatitneedsdispatchaboveanythingelse.IfthemarketisdiscoveringafaceofsubINR3orsubfiguresthatweagreed.
UnidentifiedParticipant Yeah.
ArunKumar,ExecutiveDirectorandChiefFinancialOfficer
Itisbasicallythegeneratorwhosays,look,Iwantaguaranteeofscheduling,whatisyourfeel.
-
UnidentifiedParticipant Yeah.
ArunKumar,ExecutiveDirectorandChiefFinancialOfficer
That'sthewayitplayoutsisn'tit.Seeit'sallveryfinetosaythatyou'resittingonaliabilityorifyou'resittingonaterminationcostliability,youhavetocomedowntotherealworldtoseehowyouoperatedinthemarket.
UnidentifiedParticipant Rightsir.
ArunKumar,ExecutiveDirectorandChiefFinancialOfficer
Soyoupleaseunderstandthatthesecontractsnottoomanyofthemhavebeenadministeredinthepast.
UnidentifiedParticipant Yeah,true.
ArunKumar,ExecutiveDirectorandChiefFinancialOfficer
Andwehavetomakeadistinctionbetweenlongtermpricingandshorttermpricing.
UnidentifiedParticipant
Yes,sir.Sothisthiswhatyouhavesaidbeenmarketriskandcreditriskislongtermcontractsright?Whatyouexplainedisforlongtermcontracts?
ArunKumar,ExecutiveDirectorandChiefFinancialOfficer
Yes.You'realsoawareof the fact that thereareeven in
theshorttermcontracts, therearecompensationprovisionsunable
tosupply. Imean,youwanttocall itperformancerisk,that isalsotheretoa
limitedextent,butwe'remeteringthatriskandwe'relivingwithit.
UnidentifiedParticipant
Right,sir.Right,correct.Secondmysecondquestionisbasicallyonsir,yousaid,workingcapitalrequirementcouldbeoverthreetimesthecurrentrequirement,whichisthere,ifIhearditcorrectly?Isthatcorrectsir?
ArunKumar,ExecutiveDirectorandChiefFinancialOfficer Yeah.
UnidentifiedParticipant Sirbasically, I justwant to understand,
if you are assigning a backtoback contractwith SEB and
samebacktoback contractawarded in similar languagewith the
developers then howwould theworking capital requirement be there
because youwillgettingapaymentandyouwillalsobemakingapayment?
ArunKumar,ExecutiveDirectorandChiefFinancialOfficer
-
Seetherearemismatchesandthepoweroftakeover,thefinaloftakeoverofPTC,hemaypayonaduedateandavailthathemayorhemaydecidetopayaftertheduedate.
UnidentifiedParticipant Right,sir.
ArunKumar,ExecutiveDirectorandChiefFinancialOfficer
Socontextually,whatyouarereadingonthelineiscorrect,butitdoesnothappeninthecommercialworld.
UnidentifiedParticipant Okay. So, sirwhat is your assessment of
let's say normalworking capital days,which youwill have, Imean
debtorsminuscreditors.Whatshouldbethenormaldays?
ArunKumar,ExecutiveDirectorandChiefFinancialOfficer
Letmefirstreplytoyourinitialqueries.
UnidentifiedParticipant Yeah,yeah.
ArunKumar,ExecutiveDirectorandChiefFinancialOfficer
Somebodyaskedaboutdebtorsandcreditorspositionason31st,Decemberthatsortofdemonstrateonaparticulardate,howmuchmoneyisinvolvedandroughlythedebtorsandcreditordates,ifyoutakeouttheabnormal[ph].
UnidentifiedParticipant SobasicallytheTamilNadupartlet[ph]?
ArunKumar,ExecutiveDirectorandChiefFinancialOfficer
Yeah.It'satverystrong11to15days.
UnidentifiedParticipant Thedifferencebetweenthetwo?
ArunKumar,ExecutiveDirectorandChiefFinancialOfficer Yeah.
UnidentifiedParticipant
Thatiswhatisthenormalthat'swhatyouaresayingbasically?
ArunKumar,ExecutiveDirectorandChiefFinancialOfficer
Andwiththehelp,improvingofthesediscountswayforwardsomethingelseemergeletusseerunrateforthat.
-
UnidentifiedParticipant
Allrightandallrightsir.Thankyouverymuchsir.Yeah.
ArunKumar,ExecutiveDirectorandChiefFinancialOfficer
You'rewelcome.
Operator
Thankyou.Thenextquestionisfromthelineof(inaudible)fromEmkayInvestmentManagers.Pleasegoahead.
UnidentifiedParticipant Good afternoon sir and thanks for
takingmy question. Sir, I just needed a couple of data points. Like
as I can see from yourpresentation youroutstandingexposure
toTamilNaduhas increased to260 crores thatwasa10 crore increase. I
justwant
tounderstandisthe10croresisanetfigureoragrossfigurelike,hasthereanyhastherebeenanycashreceivedfromTamilNaduthisquartersir?
ArunKumar,ExecutiveDirectorandChiefFinancialOfficer
There'snowonlyfigure,thatisnonetorgross,thiswaswhattheopeningofthequarterandthisiswhattheendofthequarter.
UnidentifiedParticipant
Yessir.So,justIwantedtoask,haveyoueverreceivedanycashfromTamilNaduthisquarter?
ArunKumar,ExecutiveDirectorandChiefFinancialOfficer
That'swhatI'msaying,duringthequarter,nocashhasbeenreceivedfromTamilNadu.
UnidentifiedParticipant
Okaysir.Thankyousir.Andsir,canyougivemeagrossmarginforunitforthisquarter,aswellasthecomparablefigureforthelastquartersir?
ArunKumar,ExecutiveDirectorandChiefFinancialOfficer
Comparablefigureforthe?
UnidentifiedParticipant Lastquarter,previousquarterforQ2.
ArunKumar,ExecutiveDirectorandChiefFinancialOfficer
Q2,inaQ3?
UnidentifiedParticipant Q3andQ2sir,basically.
-
ArunKumar,ExecutiveDirectorandChiefFinancialOfficer
Q3wasthisyearwas8,236andlastwas5,871.
UnidentifiedParticipant Okay.AndQ2forthisyearsir?
ArunKumar,ExecutiveDirectorandChiefFinancialOfficer
I'lljustgiveyou.Justforamoment.Totalunitwere10,820millionunitsasforthequarterQ2,thisyear.
UnidentifiedParticipant
Sir,ifI'mactuallyaskingforthegrossmarginperunit,that'swhatI'maskingfor.
ArunKumar,ExecutiveDirectorandChiefFinancialOfficer
Yousaidunits,gross?
UnidentifiedParticipant Grossmarginperunit.
ArunKumar,ExecutiveDirectorandChiefFinancialOfficer
Grossmarginperunit?
UnidentifiedParticipant Yessir.
ArunKumar,ExecutiveDirectorandChiefFinancialOfficer
Itwas0.039intheSeptemberand0.04duringthecurrentquarter.
UnidentifiedParticipant Okaysir.Thanksalotsir.
ArunKumar,ExecutiveDirectorandChiefFinancialOfficer Welcome.
Operator
Thankyou.ThenextquestionisfromthelineofSantoshDesaifromEdelweiss.Pleasegoahead.
SantoshDesai,Analyst
Thanksalotsir.Myquestionwasregarding,ifyoucouldjustprovidesomekindanoutlookabouthowdoseethemarketgoinghigh,bothintermsofvolumesandtheprices.Justanoutlook,notaboutyoursigning,aboutintermsoftheshorttermtrades.Howdoyouseeitsspanningout?Obviouslyifyouthinkthattherewillbesomekindofanaberrationbecauseoftheelectionsandyoucouldalsospellitout.Butapartfromthat,whatisthekindoflevelsandwhatisthelikelyintermsofvolumes?
-
ArunKumar,ExecutiveDirectorandChiefFinancialOfficer
Tradingvolumesintermsofinstallcapacityhavebeengrowingyearonyear.Andpresently,it'sroughly11%fortheinstallcapacity.Andwelookforward,ifweseethemarketoverseasandthepattern,whichisemerginginthecountry.Weexpandthatvolumesoftheratingwillgoup.
UnidentifiedParticipant
Okay.Andintermsofrates,atwhatratesdoyouthinkthis?
ArunKumar,ExecutiveDirectorandChiefFinancialOfficer
Rate,youhavetomakeadifferentiationbetweenlongtermandshortterm.
UnidentifiedParticipant Yeah.
ArunKumar,ExecutiveDirectorandChiefFinancialOfficer
ShorttermratesarealsobeinggovernedbytheabilitytopayandhowthesediscountsareabletocomeoutofFRPpackageswhichtheyhavepromised.
UnidentifiedParticipant
Okay.So,whatisyourreadingabouthowthelongtermrateswillpanup?So,assumingtheshorttermrateswill?
ArunKumar,ExecutiveDirectorandChiefFinancialOfficer
Wearealreadygettingthesuccessfulbidswhicharecomingoutofcaseonbidding.
UnidentifiedParticipant
IfyouarereferringtotheUP,RajasthanandTamilNadu?
ArunKumar,ExecutiveDirectorandChiefFinancialOfficer
TamilNadu,UP,Rajasthan,youcansay.
UnidentifiedParticipant
So,ifyouexcludethese,theotherstatesarealsoyouaregettingthesimilarfeelingsinthesimilarrates,evenexcludingthesethreeandyouaregettingthesimilarfeelingabouttheotherstatesalso?
ArunKumar,ExecutiveDirectorandChiefFinancialOfficer
Wecanonlygiveyouwhatithasemergedactuallyinlasttwo,threeyears.
UnidentifiedParticipant Okay.
-
ArunKumar,ExecutiveDirectorandChiefFinancialOfficer
Whathasbeenthesuccessfulrates.
UnidentifiedParticipant Okay.
ArunKumar,ExecutiveDirectorandChiefFinancialOfficer
Anddependsfromwherethegeneratorwaslocatedandfromwhereitoriginated.
UnidentifiedParticipant Okay.Understood,sir.Thanksalot.
Operator
Thankyou.ThenextquestionisfromthelineofShreyasBfromSushilFinance.Pleasegoahead.
ShreyasBhukhanwala,Analyst
Goodafternoon,sir.Sir,justonequestionlike
ArunKumar,ExecutiveDirectorandChiefFinancialOfficer
Pleasespeakintothemike.
ShreyasBhukhanwala,Analyst Yeah.Areyouabletohearmenow?
ArunKumar,ExecutiveDirectorandChiefFinancialOfficer
Yeah,that'sbetter.
ShreyasBhukhanwala,Analyst
Yeah.Sir,Ijustwanttoknowhowmuchofthelongtermcapacityhaveyoucommissionedinlastninemonths?
ArunKumar,ExecutiveDirectorandChiefFinancialOfficer
Thesedetailsaftertheconcallortheoncewehavefinished,Arunwillbesharingwithallofyou.
ShreyasBhukhanwala,Analyst
Okay,okay.Andsir,onemorequestionwasonTamilNadu,whenareweexpectingtheremainingamounttobereceivedprobably,theoutstanding,whichis?
ArunKumar,ExecutiveDirectorandChiefFinancialOfficer
Hopefully,bytheyearend.
-
ShreyasBhukhanwala,Analyst
Okay.Andanypartofsurchargewhichweareexpectingfromthere?
ArunKumar,ExecutiveDirectorandChiefFinancialOfficer
Wearealsotryingifwecanrecoverthesurchargeatleastfortheportiontheyhavepaid.
ShreyasBhukhanwala,Analyst
Okay,okay.Yeah,that'sitfrommyside,sir.Thanks.
ArunKumar,ExecutiveDirectorandChiefFinancialOfficer Welcome.
Operator
Thankyou.ThenextquestionisfromthelineofMohitKumarfromIDFCSecurities.Pleasegoahead.
MohitKumar,Analyst Goodafternoon,sir.
ArunKumar,ExecutiveDirectorandChiefFinancialOfficer
Goodafternoon.
MohitKumar,Analyst
Sir,whatistheissuewithTamilNadureceivable,Iheard,weheardtheChairmanonachannelsayingthatwearelookingtoappointanarbitrator?
ArunKumar,ExecutiveDirectorandChiefFinancialOfficer See, the
issue in all present (inaudible) not per se anythingwith PTC,
because PTC had been demanding for payment of
thatoutstanding.ReplyhasnotcomefromTamilNadu,inspiteofrepeattoremindthis.ThereissomeinternalissuewiththeTNEB.Sosincewearegettingreply,weareoptingforarbitration,aswhatChairmanhassharedwith.
UnidentifiedParticipant
Sowhatisthecomfortthattheamountwillyoupaidbythisfiscalyearend?
RajivMalhotra,ExecutiveDirectorandChiefRiskOfficer
Ibegyourpardon?
UnidentifiedParticipant
Whatisthecomfortthatthisamountwillyoupaidbythisfiscalyearend?
RajivMalhotra,ExecutiveDirectorandChiefRiskOfficer
-
Sinceweareoptingforarbitration,wearehopefulthatresultswillcomeup.
UnidentifiedParticipant
Andsir,thatmysecondquestion,butturningtoCase2bidding,sir,underthenewdocuments,Ibelievethetraderweallowedtoparticipate,amIright?
RajivMalhotra,ExecutiveDirectorandChiefRiskOfficer
Saythatagain,forCase2bidding?
UnidentifiedParticipant
Case2biddingdocuments,thenewdocuments,thetraderyouallowedtoparticipate.
RajivMalhotra,ExecutiveDirectorandChiefRiskOfficer
Yeah,Case2actually,technically,Case2isnotreallyrelevant.
UnidentifiedParticipant No.I'msorry.ImeantCase1bidding.
RajivMalhotra,ExecutiveDirectorandChiefRiskOfficer
Okay.(inaudible)Case1bidding,couldyouagainarticulateyourquestion?
UnidentifiedParticipant
MyquestionregardingthetraderyouallowedtoparticipateinthenewCase1biddingdocuments.AmIrightlysayingthat?
RajivMalhotra,ExecutiveDirectorandChiefRiskOfficer
See,youhavetogooverviewdocuments,thestandardbiddingdocument,whichhaveincludedforthesofarsuccessorwantedtotheCase1bidding,right.TheDVFW[ph]model.
UnidentifiedParticipant Right.
ArunKumar,ExecutiveDirectorandChiefFinancialOfficer
So,one,ithasgotnoparticularprovisionforthesame(inaudible).SecondthereareprovisionslikeparticipationthroughandNHPC.
UnidentifiedParticipant Okay.
ArunKumar,ExecutiveDirectorandChiefFinancialOfficer
However,howthat(inaudible)foreverybidwillbefound,evenbygeneratoralone.AsIsaid,it'sanopenquestion.
-
UnidentifiedParticipant Okay.
ArunKumar,ExecutiveDirectorandChiefFinancialOfficer
That'swhenwetalkoutlongterm,nowthereisasimilarequitywhichhasunderfinalizationforthemediumterm.Youmaywanttogothroughit,youalso(inaudible)availableunderontheMinistryofourwebsite.Incase,ifyoudon'thaveaccess,wewillbehappytosendthemtoyou.Buttherearesimilarissueswhicharefuzzy,thereisnot,Imean,therehavebeendiscussionswithme,theyarealsoengaginginpolicyandsoon.But,atthispointweabletosharetosaythattheimplementabilityofthedocument,plusisnotthere.
UnidentifiedParticipant
Anddoyouseesir,anyotherlongtermcaseonbid,bigfloatinginthenearfuture?
ArunKumar,ExecutiveDirectorandChiefFinancialOfficer
Myownsenseis,we'vegotelectionsthatonthecornerandutilities,andthispointmaybewantingtoexistthechangesinpolicyandsoonanddoingitmuchbetter.Idon'tseethathappeninginthenexttwo,threemonths.Thanksforansweringmyquestions.
ArunKumar,ExecutiveDirectorandChiefFinancialOfficer
I'msorry.
Operator Thankyou.
ArunKumar,ExecutiveDirectorandChiefFinancialOfficer
Sorry.Onegentlemenwantingtosaysomething.
Operator
Iwouldnowliketohandtheconferenceovertothemanagementfortheirclosingcomments.
RajivMalhotra,ExecutiveDirectorandChiefRiskOfficer
Well,thankyouallforparticipatinginthisconference.Andwithregardtothelongtermvolumesprojectwise,ourcolleagueMr.Arunwillbesharingwithyou.Thankyouallofyou.
Operator
Thankyouverymuchmembersofthemanagement.LadiesandgentlemenonbehalfofPTCIndiathatconcludesthisconferencecall.Thankyouforjoiningusandyoumaynowdisconnectyourlines.