Adani Green Energy Ltd

NSE:ADANIGREEN

Earnings Call Transcript 2022-Q2

[Operator]

We have with us today Mr. Vneet Jaain, MD and CEO; Mr. Kaushal Shah, CFO; and Mr. Viral Raval, Investor Lead or Investor Relations. We will have an opening remark from Mr. Kaushal Shah, CFO, followed, we will have Q&A for that. Over to you, gentleman.

[Kaushal G. Shah, Chief Financial Officer]

Hi, good afternoon, friends. Thank you for joining this call. A warm welcome to all the participants in this earnings call of Adani Green Energy Limited to discuss the operational and the financial performance for the half year ended on 30th September 2021. We have uploaded the earnings presentation on our website. And I'm sure that you would have a chance to go through the same. Let me take you through some of the recent developments and accomplishments followed by an overview of our operational and financial performance. So let me start with the capacity growth. So as you are all aware that the largest acquisition of 5 gigawatt of the solar portfolio of SB Energy, we have successfully completed on the 30th September, with a EV of USD 3.5 billion, the USD 3.5 billion on fully completion basis where some of the projects are under construction. Now SB Energy is a 100% subsidiary of AGEL. The acquisition was completed within a record time of 4 months with all the statutory clearances and smooth handover of the assets. The most important part is that the portfolio comprises of almost 100% of the sovereign rated counterparties. This acquisition includes addition of a high-quality operating solar portfolio of 1.7 gigawatt with the plant agreed availability of near to 100% and [ CF ] of around 27%. This value-accretive acquisition enhanced the AGEL operational portfolio to 5.4 gigawatts as we speak and its overall portfolio to 20.3 gigawatt implying ForEx locking growth. Just to highlight, 4.5 gigawatt of EP, which we have won, that is a subjudice. And once that -- if that comes in our favor, then this portfolio will go to 25 gigawatt almost. And with this overall counterparty mix of this 20.3 gigawatt is 88% sovereign rated counterparties, and the remaining is the state counterparties. One of the updates, friends, you were asking all the time was the progress on the SECI manufacturing-linked solar projects. And I'm happy to report that we have been able to -- PPA has been commenced with the SECI. And in September and October, we have signed PPAs for 867-megawatt and the tariff of INR 2.54 per unit for a period of 25 years. And further, we have also aligned contract agreements with the SECI for setting up of solar PV manufacturing plant for a capacity of 2 gigawatts already. One important another highlight is that we have been awarded a 450-megawatt wind projects from SECI in October 2021. So the tariff for this is INR 2.70 and this is a wind portfolio. Now I shall brief you about the progress and important milestone in respect of the -- our journey towards the ESG commitments. So AGEL is the title founder for the -- funder for a New Climate Change Gallery at the Science Museum in London. Now the gallery named as Energy Revolution. Adani Green Energy would explore how the world can undergo the fastest energy transition in the history to cut the climate change. So in this quarter, also AGEL has become founding member of the global alliance on Sustainable Energy, joining hands with the several other large global players committed for the growth of renewable energy. The alliance has been formed with the aim to ensure that the Renewable Energy segment is fully sustainable and respects human rights across the entire value chain. Moving forward on the UN Sustainability Development goals. AGEL has also signed the UN Energy Compact for alignment with SDG 7, which is a clean and affordable energy. So this is one of the big focus area apart from the other 3 focus areas which we have. AGEL has also joined CDP, The Science Based Targets Initiative Incubator Project in order to advance its SBTi commitment. On corporate governance front, our Board today has approved the revision in the Board charter in favor of more independent board committees and formation of a new Board committee to monitor the key aspects of the business. Among the new committee, one of the important highlights is that now the Audit Committee will only comprises of independent directors. So that is one of the important development. Apart from that, there is a Corporate Social Responsibility Committee has been formed. This committee has been assigned with the regular monitoring of the ESG program assurance at AGEL level and it again consists of 100% independent directors. So these are big steps, which we are taking towards our commitment on improved corporate governance. Now let me brief you about the operational and the financial performance. The robust capacity addition and the built-in class O&M process have led to a continued impressive operational and financial performance. Coming to the numbers. If you look at the Solar, CUF has improved by 50 bps year-on-year to 23.2%, and Wind CUF has improved by 710 bps year-on-year to 40.7% in H1. The Solar CUF improvement is backed by significant improvement in the grid availability and consistently high plant availability of almost 100% even in this pandemic time, so we have been able to deliver this solid performance, thanks to our O&M team. And Wind CUF improvement is backed by the technology advancement and more efficient newly-added wind turbine generators. This has improved the plant availability and then the improvement in the wind speed. So all of this has led to a solid financial performance. If you look at the Sale of Energy, it has increased by 54% to 3,954 million units in the first half. Similarly, this is backed by the addition of overall 2,610 megawatts of renewable capacity over the last 1 year. This is supported by the strong operational performance. AGEL revenue from Power Supply has again increased 48% to INR 1,682 crores in H1. The EBITDA from the Power Supply has increased by 50% year-on-year basis to INR 1,577 crores, which is 150 bps improvement in margin to 93%. The cash profit has increased by 45% to INR 859 crores in first half of the year. Overall, if you look at the -- for the 54, 50 -- 5,410 megawatt of the operational capacity, which we have, the run rate EBITDA we anticipate by March 2 will be INR [ 6,734 ] crores. And if you look at the net debt, which is INR 29,292 crores, we have overall cash balance as on 30th September of close to INR 5,080 crores. So again, a very, very strong and robust performance, which we have delivered on all fronts, and we are committed on the net-debt-to-EBITDA by the year-end, which we have promised to the various bondholders. So in conclusion, the robust Solar and the Wind portfolio performance led by considerable improvement in the CUF sustained that we are on the right track in terms of incorporating the finest O&M practices and adopting the latest technology. Our team is working relentlessly towards the target of 25 gigawatts of operational capacity. And we are very, very positive that we should be able to reach target even ahead of 25. In terms of the ESG, I already covered up both on the environment and the social front as well as on the governance front. Again, for the sake of repetition, I would like to say that our Kamuthi plant, which is the largest 648 megawatts is water-positive. It is a plastic-free already, and we are committed to do this across all of our plants in India. So thank you very much. And now we can open a floor for the question and answer. Thank you so much for patiently hearing.

[Operator]

[Operator Instructions] The first question is from the line of Mohit Kumar from DAM Capital.

[Mohit Kumar, Research Analyst]

Congratulations on decent set of numbers and acquisition of SoftBank's portfolio. So my first question is on the SoftBank portfolio. Is it possible to tell us the date of acquisition? And I'm assuming that this is not -- this has not to do anything with the consolidation on the P&L. But it seems like balance sheet has been consolidated. Am I right?

[Kaushal G. Shah, Chief Financial Officer]

Yes, Mohit, you are right. Actually, this transaction was completed on 30th September itself. So as per accounting standards as well as balance sheet, normally, we prepare as on date. So we need to incorporate all the balance sheet items, but the P&L is not covered into these results.

[Mohit Kumar, Research Analyst]

So what is the expected EBITDA you expect from the operational portfolio of SoftBank? And what is the kind of the commissioning you expect for our entire portfolio by exit of FY '22 and exit of FY '23?

[Vneet S. Jaain, MD, CEO & Executive Director]

About the, Mohit, this is Vneet here. As far as the commissioning schedule is concerned, this portfolio consists of the operational asset of 1,700 megawatts, which is operational. Another expecting that the around 400 or something will be completed by the end of this financial year, by March '22. The remaining because there are certain -- the portfolio just for which, the commissioning as per the PPAs are in the financial year '22-'23 and few may spill over in '23-'24. So this is on this. As far as the EBITDA numbers are concerned, yes.

[Kaushal G. Shah, Chief Financial Officer]

So EBITDA number, Mohit, will be in the range of around INR 1,100 crores for this 1.7 gigawatt of the operational portfolio.

[Mohit Kumar, Research Analyst]

Understood sir. And for entire company, what is our exit capacity, which you expect by the end of FY '22 and FY '23, if it's possible, can you please share?

[Vneet S. Jaain, MD, CEO & Executive Director]

So Mohit, by the end of this financial year, we are expecting something ranging between 7,500 to 8,000 megawatts operational. By this March '22, we are expecting approximately between 8,000 to 8,500. No, sorry, 7,500 to 8,000 by the end of this financial year.

[Mohit Kumar, Research Analyst]

Secondly, sir, coming back to the solar manufacturing-linked tender. I think you have agreed for a lower rate of INR 2.54. Do you think the balance, of course, only 867 megawatt has got tied up, I think the balance around roughly 7.2 gigawatts is still to be tied up? Will all the remaining portion will happen at a similar rate? Or could there be a case where it can go further lower as we go ahead?

[Vneet S. Jaain, MD, CEO & Executive Director]

Mohit, as definitely reported in the media also, SECI has signed [ PSA ] for 500-megawatts with Orissa, 300 megawatts with Chattisgarh and around 1,000 megawatts with Tamil Nadu at discounts. Additionally, we also understand that another 7, 8 gigawatt, the discussions are going on between SECI and Orissa government. For this, we are expecting that very soon some outcome will come. As far as we are concerned, we have sent the PPAs of around 867 megawatts, which consists of Chattisgarh, 200-megawatt; and Tamil Nadu, 667 megawatt; the tariff at which we have sent the PPAs were INR 2.54 per unit. And Mohit, if you see the -- given the changed market dynamics, since we submitted our bid, we feel that we will be able to maintain our expected return threshold, for the revised tariff, and therefore, this is the reason we have sent the PPAs. Because there is a cost savings as compared to 2019 when we submitted the bid, because of the large -- the enhancement in the efficiency of the modules, also the bigger side of the modules and the saving in the balance of system cost. So we are not thinking if there is any compromise on the return expectation at this year of INR 2.54 per unit.

[Mohit Kumar, Research Analyst]

And last question on the Science Based Targets Initiative. The other one in London, I think, you've done something in London for some event, right, if I'm not wrong? Some committee you have joined. Does it mean that our basket of work we do will enhance? I'm asking this question primarily to understand that whether we'll be doing only renewable [ PCP ] or will be delving into hydrogen or, let's say, some other new areas?

[Vneet S. Jaain, MD, CEO & Executive Director]

Mohit, I would say, as Adani grow, if you have heard our Chairman, the speech also in this Investors summit, we are good in the bucket of energy transition, which includes the battery storage, which includes the renewable generation, which includes the green hydrogen. In all these areas, we have a lot of focus and we are working as a group in all these areas.

[Mohit Kumar, Research Analyst]

So trying to focus a little bit, yes, do we have -- as our company Adani Green, what will be our focus? Will we be delving into any other areas? Or are the other areas are completely no go for us?

[Vneet S. Jaain, MD, CEO & Executive Director]

No, no. Mohit, as I mentioned, as Adani grows, we are focusing on all these the green energy initiatives. But now other than the renewable generation, which is the solar, hybrid and the wind, whether the green hydrogen and others will be a part of Adani renewables, this will be decided in a due course.

[Mohit Kumar, Research Analyst]

One last question, sir. All the other hybrid portfolio, which we have under our portfolio, are all of them are on track? And do we expect all these 3 -- I think there were 3 -- all these 3 to be installed by end of FY '23?

[Vneet S. Jaain, MD, CEO & Executive Director]

No. The -- All these 3 will be completed not in financial year '23, but even by financial year '22.

[Operator]

[Operator Instructions] The next question is from the line of Puneet from HSBC.

[Puneet Chaddha, Business Head]

My first question is on your Q2 FY '22 capacity of now 5.4 gigawatts, what should be the run rate EBITDA associated with this?

[Kaushal G. Shah, Chief Financial Officer]

So 5.4 -- the run EBITDA for 5.4 will be INR 4,555 crores -- INR 4,600 crores.

[Puneet Chaddha, Business Head]

And the gross block for this?

[Kaushal G. Shah, Chief Financial Officer]

You want a gross block, will be around INR 25,000 crores -- INR 28,000 crores.

[Puneet Chaddha, Business Head]

And debt associated?

[Kaushal G. Shah, Chief Financial Officer]

Debt associated, I don't have this only for these things. What we are -- I have a number is, for example, I will be ending up with around 8,000 megawatts by March '22, and the run rate EBITDA will be INR 6,700-odd crores, roughly by March '22. And the overall debt on these particular things will be INR 15,000 crores.

[Puneet Chaddha, Business Head]

And debt and gross block on this 8,000 megawatts?

[Kaushal G. Shah, Chief Financial Officer]

The gross block, the addition will be the gross block. The CapEx, I can say, but additional CapEx, which we are going to do will be around INR 18,708 crores -- INR 19,000 crores.

[Puneet Chaddha, Business Head]

INR 19,000 over the existing INR 28,000 crores?

[Kaushal G. Shah, Chief Financial Officer]

Yes. So by year-end, we should be INR 46,000 crores.

[Puneet Chaddha, Business Head]

And I wanted to check, is there any progress on the GIB issue? Has any work being impacted in terms of commissioning time lines, et cetera?

[Kaushal G. Shah, Chief Financial Officer]

No, no, no. We are absolutely bang on target. As of now, an entire hybrid project of 1.6 gigawatts, we are expected it to commission by February. So there is no impact on the time line.

[Puneet Chaddha, Business Head]

So whatever transmission capacity, which needs to be set up is being set up as well?

[Kaushal G. Shah, Chief Financial Officer]

Yes, everything, the work is going on in full swing and there is no issue on that particular front.

[Puneet Chaddha, Business Head]

And what are your expectations on the module costs? And are there any significant model purchases that you need to do between now and as of FY '22?

[Kaushal G. Shah, Chief Financial Officer]

So whatever is required for, at least, FY '22, we have already ordered for the entire modules. And we have the -- because just to as a financial structural management program, what we do is that we have a letter of credit type facility at the [ emerging ] company level. And what we do is that as soon as we won the project, we immediately start opening the LC in favor of the suppliers. We have already, for this entire 8,000 megawatt, whatever is the imported modules further, et cetera, whichever is required, we have already opened the letter of credit. And that all the modules and everything are under control. So we don't have to worry on that particular piece.

[Puneet Chaddha, Business Head]

And the -- so basically, there is still a 2.6 gigawatt that you will commission by next 4, 5 months, right? to take the statement?

[Kaushal G. Shah, Chief Financial Officer]

Yes, so out of these, around 1.6 gigawatt will be the hybrid projects mainly. The larger one will be the hybrid. And then there will be the [ 36 ] of 600-megawatt and there are a couple of more projects and SB Energy project of 400 megawatts. So we are confident as Vneet in his first ever remarks. Mainly out of 8,000, maybe 200, 300 can be [ spilled over ] in April. But more or less, it will be in target. We are on target.

[Puneet Chaddha, Business Head]

And what kind of module costs have you locked in for this?

[Vneet S. Jaain, MD, CEO & Executive Director]

Puneet, as far as the module cost is concerned, fortunately, we have signed the contracts for our [indiscernible] project, the long back 5, 6, 7 months back. And we have locked in at the different part, something we have locked in January this year, something in March, something in November last year and as I said, these are varying. But all the existing projects, for which we mentioned that by the end of the financial year, we will have operation capacity setup of 7,500 to 8,000 megawatts, somewhere in between. We have the complete visibility both in respect of the module also and in respect of [indiscernible].

[Puneet Chaddha, Business Head]

No, no. The visibility is you're just trying to understand, given that module prices have now gone up to $0.25 to $0.27, how low have you been able to lock this up?Just...

[Vneet S. Jaain, MD, CEO & Executive Director]

On the pricing, you frankly finish, I can't say on this thing because as I mentioned, this is as the various schedules we have finalized the package of the module [indiscernible].

[Puneet Chaddha, Business Head]

And for FY '23, what is the commissioning plan?

[Kaushal G. Shah, Chief Financial Officer]

Roughly around 4,000 megawatts will be added. Anything between 3,500 to 4,000 megawatts will be added in FY...

[Puneet Chaddha, Business Head]

'23.

[Kaushal G. Shah, Chief Financial Officer]

FY '23.

[Puneet Chaddha, Business Head]

And modules have been locked for that also? Or are you in discussions currently?

[Vneet S. Jaain, MD, CEO & Executive Director]

No, not locked fully, not 100%. Some, yes, some not. We are because in last 2, 3 months, the model prices have gone up quite a bit. So we are just waiting for the right moment.

[Operator]

We'll move on to the next question. That is from the line of Ashwin Reddy from Samatva Investments.

[Unknown Analyst]

So basically, I wanted to understand how is the company thinking about the opportunity in the wind part of the business for now? Especially given what has happened in the wind sector in the last 3, 4 years in India? And given that in India, there is a lot of manufacturing capacity available and it is not -- it is not subject to the fluctuations of the pricing of the raw material and all like what's happening in solar. So how is the company thinking about the opportunity in wind? And in general, overall thoughts on the SECI endeavor today would be very helpful, please.

[Vneet S. Jaain, MD, CEO & Executive Director]

Ashwin, we are wind also like we are doing in solar. So there is a mix of both wind and solar in our portfolio. And going forward also, we will have a mix of both. Ashwin, as as far as the wind, the capacities are concerned, you are correct, there are the sufficient capacities available in the country for wind. But if you see in the past few years, also the large part of that is going for the export because the OEMs, they find because in India, because the prices of wind turbines are much lower at which they have to sell as compared to the exports. So a lot of things are being exporting by this OEM, but the wind, there is a possibility of variation in the prices of wind also like solar, Ashwin, because it is 100% again a commodity driven business. The same copper, same aluminum, same steel and everything, same cement. So there is a possibility, like in case of any other business, there's a possibility of variation. But we, as an organization, which are really serious for the wind also, similar to that, we are serious for solar.

[Unknown Analyst]

Got it. And any thoughts on the regulatory approach that we are seeing towards wind? Because at least from outside as far as it looks like solar is getting much more preferred treatment versus wind, is how we are seeing it is outside. But any thoughts on what has to change in terms of making wind more attractive or it would be helpful to make out, sir?

[Vneet S. Jaain, MD, CEO & Executive Director]

So, Ashwin, from the regulatory side, frankly, there is not anything -- there is a lot of the push from the regulatory side and from the government side for the enhancement of usage of the renewable power and a lot of promotion is there by the government, not only by the central government, but by all the state governments also. But there is no effort, if there is a separate for solar or separate for wind or there's more encouragement for wind, as compared to solar, is not like that. It is for overall renewables, there's a lot of trust and the focus from the government side.

[Unknown Analyst]

So what you're seeing basically, sir, is that market forces are now determining that solar is at a better position versus wind as of now. Is that a fair takeaway? Market forces are determining that solar is a more attractive opportunity versus wind or do or you think wind can also be equally good opportunity as solar at some point? Or if not as wind at least 30%, 40% of what solar can be? Is that something which the industry can do?

[Vneet S. Jaain, MD, CEO & Executive Director]

Ashwin, the -- as far as the -- from the developer point of view like us and even from the consumer point of view, it is not either or. It's not whether it is solar or whether it is wind because the solar and wind, they have their own the plus and minus, and also both the generation comes at a different point of time. We know that wind generally comes early in the morning and late in the evening, whereas the solar is only in the noon period. So the generation profiles are different and both are required for the grid. Not distinctly only solar can fulfill the expectations and the requirement of the country and nor only wind can fulfill that requirement. So both these are required and therefore, if we see the bid also which being issued by the SECI or the other PSU, and even by the state government. We are coming out to bid for both and now to more and more hybrid bids are coming, and that is the reason why hybrid bids going forward will be much more preferable by the governments -- various state governments because they're able to maintain the demand profile and also the grid security point of view.

[Operator]

The next question is from the line of Apoorva Bahadur from Investec.

[Apoorva Bahadur, Research Analyst]

Sir, as you were giving an update on the AP tender, basically SECI had offered. So I think Media House has reported that the Cabinet has approved at INR 2.49 including the margin. So probably the tariff will come out to be around INR 2.42 for us. Are we okay with that with the pricing? And if this project is offered to us, will we tie up the remaining capacity?

[Vneet S. Jaain, MD, CEO & Executive Director]

Apoorva, frankly, you know so far, we are not aware of that AP government or cabinet has approved this at INR [ 2.49 ]. And if they have approved with margins of what was the SECI margin and how much because there is -- as far as we are concerned, SECI has not informed anything to us so far. So once we will have the input and the communication from SECI, that time, we will see about that.

[Apoorva Bahadur, Research Analyst]

Fair enough, sir. Secondly, on this solar module manufacturing and we are seeing that another PLI scheme as well, a lot of capacity is going to come up. So something which is probably partially owned by us. How do you see Adani Group sort of targeting this area? And what sort of economics, I mean -- what will be the benefit for us as well?

[Vneet S. Jaain, MD, CEO & Executive Director]

Yes. Apoorva, you're absolutely correct. The PLI scheme, which came out by Government of India, we had applied for the integrated 4 gigawatt under this PLI scheme, which includes starting from polysilicon, Polysilicon, then [indiscernible] cells and modules. So we are -- as you are aware that right now, also one of our group companies, they are the largest solar cell and module manufacturer in the country with an installed base of around 1.5 gigawatt. And they are further expanding the scheme by another 2 gigawatts. So without this PLI scheme participation, we will have 3.5 gigawatt in cell and module within Adani group on the manufacturing side. And besides that, the 4 gigawatts, we are applied for PLI. So we are, as a group, are serious about it, and we are working on that.

[Apoorva Bahadur, Research Analyst]

What sort of capital allocation and how much based on the 4 gigawatts that is coming up? And will we be also participating in terms of providing capital to that business?

[Vneet S. Jaain, MD, CEO & Executive Director]

Apoorva, this solar, the manufacturing ecosystem, this is absolutely a separate business line, which is not a part of Adani Green. So frankly, I am not aware of the capital allocation and all for this manufacturing business, Apoorva.

[Apoorva Bahadur, Research Analyst]

Sir, lastly, if I may, I squeeze in one more question, and that is, as you pointed out, the module prices have gone up. So just wanted to know if we have set up some capacity currently and based on current rates, what would the cost on per megawatt basis work out to?

[Vneet S. Jaain, MD, CEO & Executive Director]

Apoorva, as far as the module prices are concerned, so if you see this is the modules right now is like a commodity. So now -- and if you see the prices, which is [ $0.25 ] or [ $0.26 ] right now, [indiscernible] we give our -- we believe that it is a temporary phase which is there. And it is having no logic except that in China, the power cuts has happened in last 3, 4 weeks. And because of that, the polysilicon is the highly power-intensive industry. So because of that, the output of polysilicon has reduced. Because of that, there is a temporary scarcity in the market of polysilicon and that is the reason the prices have jumped in the last 2, 3 weeks, which we hope that it's not a permanent or not a long-term phenomena, and the input which we have, because we are one of the large consumer of the solar panels from China. And we are having a very, very good and close relationship with all the Tier 1 manufacturers based out of China and also in Taiwan. The input which we have, ESG, starting from January, maybe the prices will remain at that level or slightly more or less level for the next few months. But starting from January, the module prices, I think, will go down to their normal level. So this is the input which we have, Apoorva.

[Operator]

The next question is from the line of Girish Achhipalia from Morgan Stanley.

[Girish Achhipalia, Vice President]

I just had one question. There was a discussion on this already earlier, but I was not so sure if I got the right information, so asking again. So on the earlier discussion capacity [indiscernible]?

[Kaushal G. Shah, Chief Financial Officer]

Girish, in your call, there is an echo which is coming up. We are not able to listen.

[Girish Achhipalia, Vice President]

Is this better now?

[Kaushal G. Shah, Chief Financial Officer]

Yes. It is better.

[Girish Achhipalia, Vice President]

Yes, my question was around the financials. I just wanted to understand that whether it is Adani Green organic portfolio or whether it is SoftBank, [ the under construction ] we've ordered the modules, maybe 5 months back, maybe there's something more or less. I just wanted to understand if you have done some analysis on the equity IRR versus at the time of bidding versus now, how the modules have moved? There are 2 things that have happened. Obviously, the interest in the system and for you have come down a little. And also the module costs have gone up. So just wanted to understand what is your targeted range of equity IRR, how much is it going to have an impact of? Is it 100 basis points? Is it 200 basis point? And is there any risk mitigation measures that you've taken to ensure that the damage is minimum on this increase in module costs that have happened?

[Kaushal G. Shah, Chief Financial Officer]

No, see, it is a good question, and we are conscious about the IRR, which we are earning. So there are 2 steps which we have taken. One, obviously, as you all are aware that there is an increase in the module prices. At the same time, what we have done is that there is an other areas where we can save some of our cost. So overall, impact of the cost is not more than 3% to 4% in the -- in our overall portfolio basis. That is number one. Secondly, what has happened is if you look in our presentation, the interest cost which we were having, which was 11.2% in 2017, which has now come down to almost 9%. The recent bond issuance at the HoldCo level also, we have done at 9%. So and then the efficiency on the EBITDA front on all the operational, which was at 91%, it has now moved to 93%. So in all-in-all cost, based on the efficiency, which we have achieved, both in terms of the capital management program, the saving in the other components of the project cost and the improvement in the operational performance, all put together, we are not impacted by any of these events. And for you, if you need some numbers or any other calculation, you can contact Viral, they can share off-line and we can explain you in detail all of that stuff.

[Girish Achhipalia, Vice President]

Just one clarification, sir. The 3% to 4% increase in cost that you mentioned was on CapEx side? Or was it more on -- was it more on something else?

[Kaushal G. Shah, Chief Financial Officer]

On the CapEx side. On the CapEx side.

[Girish Achhipalia, Vice President]

Okay. And just one small clarification and it's a little bit general question. On the interest that you would have assumed on the debt when you are bidding, let's say, a year back, and what you can realize today based on the different forms that you are drawing the debt from. How much is the difference roughly? I mean, is it 50 basis points lower? Or is it even much lower? Let's say, you were borrowing 12 months back and today, what could be the...

[Kaushal G. Shah, Chief Financial Officer]

No, I can explain you. No, no, it's a good question. And let me clarify. See, what is happening when we bid conservatively always, in terms of all the prices of the module as well as the cost of borrowing. So it will be in the range of 10.5% to 10% depending on the kind of risk and other stuff which we have. But what we do is that we have a nonfund-based limits available at the holding company level. So we are able to open the letter of credit in favor of the supplier, the cost of which is only 50 bps. And then, even in the discount LC, that is a cost of 4%, 4.5%. So overall, at the time of manufacturing the cost range in the case of 5%. So there is a huge saving which is coming up. And when we take the actual project disbursement, these ranges to 8.5% to around 9%, 9.5% depending on the counterparty risk and other stuff with the lender assesses. But even there also with the construction facility tie up, our overall cost of borrowing is in the range of 9%. So all in all, there is a substantial saving, which we are making it when we do this -- the capital management program. And hence, we are saving substantially.

[Operator]

[Operator Instructions]The next question is from the line of Mohit Kumar from DAM Capital.

[Mohit Kumar, Research Analyst]

Sir, I have one question on the solar module buying given that the custom -- basic custom duty is getting imposed from 1st April 2022. How will our sourcing we will -- how our sourcing will change under the new scenario? Though I hope -- I think that most of the procuring -- procurement will be done in India itself. Am I right in that? And what is the kind of procurement we'll do in a single year in FY '23 or FY '24? And is there any thought process to get linked for or have a long-term tariff with some domestic module manufacturer for the quantity?

[Vneet S. Jaain, MD, CEO & Executive Director]

Mohit, thanks for your question. Mohit, This BCD imposition from 1st April next year. So far, the Ministry of Finance has not issued the notification for the same. We are not very sure whether it is coming from 1st April or not unless the notification is issued because there is some communication or some media news that the government may be thinking of [ preponing ] the same by 6 months or a year. So this could be the case performing the same for 6 months to a year. The second thing is, as and when this will come, of course, we will have [indiscernible] not only in India, but across the globe. So depending upon the time period, when we require the modules, depending upon the situation there, we will decide whether we will import, whether we will buy from the local market or we will import well and then convert it on the compressed module or whether -- so this all depends upon as a part of our supply chain management, which methodology will be the best suited for that given point of time.

[Mohit Kumar, Research Analyst]

Secondly on the battery storage, I think there's a battery storage center, which you opened. Are we going to participate? Have you worked out on something, some numbers on that? And what is the expectation of some kind of cost estimates if you can provide? [indiscernible] basis?

[Vneet S. Jaain, MD, CEO & Executive Director]

Mohit, cost part, frankly, I can't provide. But we are looking for all the opportunities in the renewables space, including the battery storage, the bid also. And we will decide whether we share bid or not in this one or we will go in the future bidding and what would be the pricing. But as a principle, as we mentioned to you in the beginning, we in -- Adani Green, we are looking for all the opportunities in the renewable space, whether it is only solar, whether it is only wind, whether it's hybrid, whether it's energy storage, end-to-end for the whole portfolio, we are looking for.

[Mohit Kumar, Research Analyst]

Sir, is there any reason for not participating in the RTC 2 tender, which happened recently?

[Vneet S. Jaain, MD, CEO & Executive Director]

RTC?

[Mohit Kumar, Research Analyst]

Round The Clock tender with [indiscernible], it was a combination of actually wind plus thermal.

[Kaushal G. Shah, Chief Financial Officer]

One second.

[Mohit Kumar, Research Analyst]

And do you expect more such tenders in the offing?

[Vneet S. Jaain, MD, CEO & Executive Director]

Mohit, frankly, can you just repeat your question, please?

[Mohit Kumar, Research Analyst]

There was a tender which came, I think which [indiscernible] concluded just a few days, I think, back. There was a Round The Clock tender. And I think we also participated. How do you -- I'm trying to understand, is there a large pipeline, which is expected to come of this kind of tender where you have to supply 24/7? And you have to mix your thermals, renewables or storage?

[Vneet S. Jaain, MD, CEO & Executive Director]

Yes. Mohit, now it was clear. No, this bid, which was there for this [ 2.49 ] gigawatt, we have bidded. From Adani Green, we have bidded in this particular bid. And your second point is going forward, we hope that the similar -- the number of bids will come going forward.

[Mohit Kumar, Research Analyst]

My question is that, does this particular segment appeal to you? Or do you think it's not something [indiscernible] not work with it and...

[Vneet S. Jaain, MD, CEO & Executive Director]

Mohit, again, my reply would be, anything which is related with the renewable, of course, we'll -- we have the interest in that. And this RTC bid also, the constituents, it will be minimum 51% renewables. So when you know there is more than 50% renewables, we are always keen and serious about that.

[Operator]

[Operator Instructions]As there are no further questions, I now hand the conference over to [ Mr. Vneet Jaain ] for his closing comments.

[Kaushal G. Shah, Chief Financial Officer]

Yes. Thanks, everyone, for participating in the call. And I would like again to thank the management for giving us this opportunity to host the call. Thanks everyone.

[Vneet S. Jaain, MD, CEO & Executive Director]

Yes. Thank you.

[Kaushal G. Shah, Chief Financial Officer]

Thank you.