Power Grid Corporation of India Ltd
NSE:POWERGRID
Power Grid Corporation of India Ltd
In the vast landscape of India’s power sector, Power Grid Corporation of India Ltd emerges as a pivotal entity, akin to the spine that supports a thriving organism. Established in 1989, the company has meticulously developed into the backbone of the nation's electric grid, tasked with the crucial role of transmitting bulk power across varied and challenging geographies. Its expansive network, consisting of thousands of kilometers of transmission lines, functions like arteries, transporting electricity from generation points to load centers with remarkable efficiency. This central responsibility is underscored by its management of nearly the entire nation's interstate and inter-regional electric power transmission system. Their network reliability and operational efficiency are anchored by cutting-edge technology and stringent maintenance protocols, ensuring seamless operations across India's diverse landscapes.
The company's revenue model mimics the dynamics of a toll-based system where compensation is primarily sourced from regulated tariffs designated by the Central Electricity Regulatory Commission. Acting akin to a road that charges tolls for facilitating transportation, Power Grid charges various generation and distribution utilities for the use of its extensive transmission network to transport electricity. As India embarked on an ambitious path to expand renewable energy capacity, Power Grid adapted adeptly, integrating green energy corridors to channel new sources of power, such as solar and wind, into the mainstream grid. By doing so, it not only sustains its revenue streams but also aligns with national objectives on sustainable energy, reinforcing its status as a linchpin in India's ongoing energy transformation.
Earnings Calls
In the latest earnings call, Power Grid reported strong financial growth, with Q3 income at INR 11,609 crores and PAT of INR 3,894 crores. CapEx surged to INR 7,649 crores for the quarter, significantly up from INR 3,444 crores last year, and INR 17,651 crores year-to-date versus INR 7,690 crores previously. The company capitalized assets worth INR 3,417 crores in Q3. Forward-looking, Power Grid anticipates revenues of INR 23,000 crore for FY '25, alongside a robust growth pipeline with INR 1,76,000 crore worth of projects planned over five years, ensuring continued expansion and stability.
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Good morning, everyone. On behalf of ICICI Securities, I extend a very warm welcome to all of you for the analyst meet of Power Grid Corporation of India Limited.
Today, our senior management team is there to discuss the company's business post Q3 and 9-month financial results. It is my pleasure to introduce senior management team of Power Grid. We have with us Shri R.K. Tyagi, Chairman and Managing Director; Shri G. Ravisankar, Director Finance and CFO; Dr. Yatindra Dwivedi, Director Personnel; and Shri Naveen Srivastava, Director Operations; and Shri B. Vamsi Mohan, OSD Projects.
Thank you, and over to you, sir.
Good morning, everyone. I'll just give a brief about Power Grid achievements in Q3 and up to Q3 or 9 months. Brief agenda for today's meeting is overview of Power Grid as a highlights, performance highlights, what is our growth outlook, sustainability and awards, which Power Grid has won during quarter 3.
Next. As you know that Power Grid is India's flagship power transmission utility, one of the largest transmission company in the world. As per Public Enterprises Survey '23-'24, we have been given first rank in net profit, first rank in dividend declared, second rank in gross block, second rank in net worth and second rank in contribution to exchequer. Our international credit rating is at par with Sovereign rating, BBB- and domestic credit rating is AAA.
Next our transmission lines, we have transmission line across width and breadth of our country about 1,518 number of lines are there. We have 1,79,594 circuit kilometer, 280 substations, 5,52,961 MVA capacity. Our interregional transfer capacity is 99,580 megawatt, which is 84% of total interregional capacity of India. Our transmission system availability is maintained at par with world best utilities, and it is 99.81%.
We have assets of HVDC 18 station; 765 kV substations, 63 numbers; 400 kV, 168, SVC and STATCOMS 20 numbers; and GIS stations, 64 numbers; and transmission line towers about 2,90,000; and transformer and reactors more than 3,800 numbers.
During Q3, we have won the 7 ISTS TBCB projects with levelized tariff of INR 2,077 crores. It includes transmission system for the evacuation of power for Rajasthan REZ Phase IV Part 3 or Part A and Part B and transmission system for power evacuation from Kudankulam Unit 3 and 4 in Southern region.
Then transmission system for power evacuation in Rajasthan, Phase IV, Part 4, Part A. Then system is strengthening at Koppal-II and Gadag-II for integration of RE power in the grid. 6 one is augmentation of transformation capacity at Khavda area KPS1 and KPS2, Phase V, Part B1 and Part B2.
Then augmentation of transformation capacity 3x500 MVA transformers and 1x1,500 MVA transformer at Bidar substations. Up to Q3, we have share of 50% in annual tariff in TBCB projects, 58% in terms of NCT cost and 57% in terms of project -- number of projects won.
In asset management, for the first time in India, we have implemented dynamic line weighting for controlling power flow in transmission line, depending on temperature, wind speed and other ambient conditions. Also, we are implementing e-vegetation management program for our 6 transmission lines in Northeastern region, which will assist us in inspection and maintenance by mapping of transmission lines, managing vegetation and awarding trippings of transmission lines. This has been done for the first time in India.
Then other highlights. We have secured our first green loan, green loan agreement of USD 200 million was signed with Sumitomo Mitsui Banking Corporation, Japan, for funding RE projects of Power Grid.
Next. We also collaborated with EPRI, it is a research institute in U.S.A. We have signed a 10-year master agreement with EPRI U.S.A, a nonprofit energy research and development organization. It will help us in transmission system construction, operation and maintenance and promoting energy transition and sustainability.
Also, Power Grid has been granted patent for system and method for health assessment of transformers and reactors. We are remotely operating 281 substations from our control center at Manesar, as on 31 December 2024.
The performance highlights about project execution, operational performance, financial performance, other business and commercial performance are as below.
We have commissioned 1,399 circuit kilometer of transmission lines in Q3 and also 9,185 MVA capacity of transformers. It includes 2 numbers transformers at Sikar, 1 ICT at Banaskantha, 1 ICT at Kotra, 3 number ICT at Bikaner-II station, 2 number ICT Banka, and 1 ICT at Bahadurgarh. Then upgradation of 315 MVA ICT at Rengali substation.
In transmission line, 765 kV Sikar-II Aligarh, circuit 1 and circuit 2; Bhadla-II to Sikar-II, circuit 1 and circuit 2; 400 kV Sikar-II to Neemrana, circuit 1 and circuit 2; and LILO of 220 kV Jhusi Phulpur at 400 kV Jaunpur UPPTCL substation. During Q3, new station at Sikar-II was commissioned in October.
Then in project execution, our performance in Q3 has been -- we have done expenditure of INR 7,649 crores as against INR 3,444 crores in last year, FY '24. And during last 9 months, our CapEx has been INR 17,651 crores as against INR 7,690 crores last year.
In capitalization also in Q3, we have capitalized assets worth INR 3,417 crores as against INR 1,784 crores asset in last year. And in the last 9 months, we have commissioned INR 7,423 crores worth assets as compared to INR 5,780 crores last year.
In operational performance, we have been maintaining availability more than 99.75%. For last 9 months, it has been 99.81%. And in reliability, trippings per line is 0.24 trippings per line during the last 9 months.
As regards financial performance. On a standalone basis, our income in Q3 has been INR 11,609 crores and profit after tax INR 3,894 crores. On a consol basis, income is INR 11,743 crores and PAT INR 3,862 crores. For the last 9 months, on a standalone basis, total income is INR 33,843 crores and PAT INR 11,017 crores. On consol basis, total income for last 9 months was INR 34,869 crores and the profit after tax INR 11,379 crores.
The financial performance in details in 9 months for FY '25, transmission charges, INR 32,368 crores. Consultancy services about INR 427 crores, telecom INR 722 crores. Other income, INR 1,352 crores. Total income, INR 34,869 crores and EBITDA INR 30,148 crores and profit after tax is INR 11,379 crores.
On a standalone basis, for 9 months, transmission charges, INR 30,092 crores; consultancy, INR 357 crores; other income, INR 3,394 crores and total income INR 33,843 crores. And on a standalone basis, profit after tax INR 11,017 crores.
Other financial parameters, our gross fixed assets as on 31st December 2024 is INR 2,88,801 crores. CWIP, capital work-in-progress, INR 29,603 crores. Net worth -- sorry, debt INR 1,29,288 crores. Net worth INR 91,620 crores. Earnings per share, INR 12.23 per share. Book value per share, INR 98.51. Debt-equity ratio 59:41, and return on net worth in 9 months is 12.42%.
The key financial parameters, the income for previous periods, INR 63 crores as against the last year in Q3, INR 237 crores. Interest on differential tariff is INR 102 crores as against INR 184 crores during last quarter of '24 -- Q3 quarter of '24. Interest from subsidiaries, INR 560 crores as against INR 371 crores last year. Incentive from transmission assets, INR 150 crores as against INR 151 crores. Dividend from JVs, INR 3 crores as against INR 1 crore. Dividend from subsidiaries, INR 423 crores as against INR 149 crores, and dividend from associates and others, INR 32 crores as against INR 20 crores. CSR expenses, INR 161 crores as against INR 23 crores last year.
FERV, because of foreign exchange, INR 238 crores as against INR 77 crores last year. Equity in TBCB operations, INR 4,390 crores as against INR 3,763 crores. Equity in TBCB under construction, INR 302 crores as against INR 504 crores last year. We have a short-term loan of INR 1,960 crores as against INR 1,279 crores last year. Average cost of borrowing is 7.54% in Q3 financial year '25.
In our telecom subsidiary, in Q3, our income has been INR 236 crores and up to Q3 in last 9 months, it has increased from INR 594 crores to INR 722 crores. There is an increase of 22%.
In Q3, we have added 12 numbers of new customers and our backbone availability of telecom network has been 100%. We have won -- received first International Long Distance business order in Q3. And PowerTel also enabled fiber to home broadband for providing reliable Internet for the end users in Tura town of Meghalaya in Northeastern region.
Then land has been procured from SIPCOT in Chennai for Disaster Recovery Zone-2 Data Center at Chennai.
In commercial performance. We have done billing of INR 27,989 crores with realization of INR 28,404 crores, with -- realization efficiency has been 101.48%. Our outstanding in Q3 -- up to Q3 of '24 was INR 6,633 crores. In Q2, it was INR 4,735 crores. And at the end of quarter 3, it has become INR 4,380 crores with major dues from Tamil Nadu, UP, Telangana and Madhya Pradesh.
As far as growth outlook is there, sectoral outlook, works in hand and what is CapEx plan of Power Grid, the details are given. As far as sectoral outlook concerns, our growth drivers are that India is committed to become a USD 5 trillion economy. This will lead to rapid industrialization, urbanization and e-mobility. Then there is a nonfossil capacity addition target by government of India to add by 500 gigawatt RE power as installed capacity. The green hydrogen mission requires about 125 gigawatt RE power for producing green hydrogen up to 2030. Then energy storage target BESS is about 47 gigawatt, pumped hydro about 36 gigawatt up to 2032.
Then international interconnections under One Sun, One World, One Grid also, there are possibilities that there will be international interconnections. So that will also lead to growth of transmission sector in India also.
And as per National Electricity Plan, the CapEx summary, the interstate transmission system from '22 to '27, about INR 2,69,150 crores worth transmission systems are to be added. From '27 to '32, INR 3,91,624 crores. And put together in interstate, it will be INR 6,60,774 crores. Then in various states for intrastate transmission system, as per NEP, about INR 2,55,368 crores worth transmission assets are going to be added. And total CapEx summary for transmission system will be INR 9,16,142 crores up to 2032.
For Power Grid, we have today INR 1,43,749 crores worth transmission works in our hand. And today, only we have 1 more project about INR 3,500 crores transmission project in Karnataka. So with this, it will become about INR 1,47,000 crores (sic) [INR 1,43,749 crores] works in hand. This includes RTM projects, TBCB projects and other works going on like metering and solar generation.
For financial year '25, our CapEx plan is now INR 23,000 crores, which includes RTM projects worth INR 3,914 crores, then TBCB projects about INR 14,209 crores and other works INR 4,877 crores. Till 31st January, our CapEx has been INR 19,480 crores and capitalization till 31st January '25 INR 7,906 crores.
Regarding sustainability and awards. We have a target of 50% of renewable energy consumption by 2025. We are now tying up with various states for green tariff for our substations to offer the facility of green power.
For RoW resolution, we have formed a women cell and RoW cell for resolution of RoW in construction of transmission line. 4 numbers of substations, 1 at Yelahanka, Tughlakabad in Delhi, Mariani in Assam and Chandigarh has been declared as pink stations which will be managed by all women employees. So this is being done for the first time for women empowerment in Power Grid.
Next. Our Director of Finance has been conferred with prestigious role model recognition at CMA Achievers meet: Vision 2030. Also, Power Grid has been conferred with World Congress on Disaster Management-Disaster Risk Reduction 2024 Award in category response during disaster and emergencies.
Power Grid received appreciation of support from Honorable Union Jal Shakti Minister, Shri C.R. Patil for CSR contribution as highest donor to National Mission of Clean Ganga.
We have also received a Special Jury Commendation in FICCI Women Empowerment Awards '23-'24 under the category Impactful Care Ecosystem for Employees under Public Sector Companies category.
Our Executive Director, Dr. Sunita Chohan has been awarded with NPSC Woman Engineer Award 2024 for her contribution to the India's Energy Sector during the 23rd National Power System Conference held at IIT Indore.
Then appreciation plaque in FICCI Women Empowerment Awards '23-'24 under category Career Development, Skill Development & Mentorship was also received by our women employees.
Thank you very much.
[Operator Instructions] Sumit, please go ahead.
My first question is, if we look at the capitalization in the 9-month period, there appears to be a steep increase implied for the fourth quarter to meet the target of about INR 180 billion that you had spelt out for FY '25, are we on track?
And if I look at the works in hand position as of the -- mentioned in your presentation. It's similar to what we had heard in the November '24 analyst meet at about INR 1.43 lakh crore. So what has been the win -- fresh wins that we have seen in the last couple of months? Has that been equal to recapitalization roughly? That's the first question.
Okay. Sumit, what we have shown in the last quarter, actually, this is the works in hand which are to be executed, that is excluding the CWIP. If you see that last quarter, we have done a CapEx of around -- maybe around INR 10,000 crores, we have done a CapEx. So whatever we have added to that extent, whatever we have done the CapEx, it will come down. That's why it's looking like as if it stands still, but it's not so.
Fair point. And for the fourth quarter, are we on track for capitalization for the full year?
Yes. So we will -- we are targeting in the same range about that INR 18,000 crores. That range we are targeting.
Okay. My second question is that what is the impact in Q3 and 9 months results of the FY '25-'29 CERC tariff regulations pertaining to O&M and what has been the performance of PGCIL JV EESL in 9-month FY '25? There were losses in 1H, if I remember.
This impact of CERC tariff for regulations, the windup portion is around INR 140 crores in Q3. If you compare the same with the Q3 of FY '24. And regarding EESL, yes, we have not put any equity in the last almost a year, so whatever we have put the equity, it was in the -- 2 years back. So we are not putting further equity in that.
Was there any loss contribution from EESL in 9 months?
Yes. Around -- for the 9 months, it is around INR 140 crores, it is included in the consol, our portion -- 39% of our stake amounts to INR 140 crores for 9 months.
Okay. So the third quarter will be about INR 40 crores.
Yes. Cumulatively INR 140 crores.
Yes. Just last quick one to check on the large contract that was won by Khavda by your competitor, what was the difference in bid for Power Grid versus L1? And could you give us -- this had first come to Power Grid, so what was the sequence of events? It's a reasonably large contract?
No, it's not Khavda. Khavda, we won.
Yes, Khavda was only like it was -- bid was being given by our competitor, and finally, we won. So there were a difference of only 0.25%. Between us, we were the winner in Khavda and between the other party.
I'm referring to the INR 25,000-odd crore project that was won by Adani Transmission.
Yes. So that was Fatehpur to Bhadla-III. So they have won in about INR 3,500 crores. And considering the land policy in Rajasthan after this 14th June 2024 and we have considered that our -- earlier, we won this project in INR 3,700 crores. So we have revised our bids, and it was not -- for us, the parameters, we want we decided that we will not go beyond the L1 limits. So that was our stand on the project because it was not coming in our range.
[Operator Instructions]. The next question is from Sumit Kishore -- sorry, Subhadip Mitra.
Since we have no response from their end, we will move to [ Ketan Jain ].
Sir, my first question is on the amount of projects won in 9 months in 3Q? If you could tell us the cost of the projects won in 9 months and 3Q?
For Q3 we have won projects worth INR 19,000 crores. And up to Q3, INR 63,000 crores. Up to December '24, it is INR 63,909 crores. And for Q3, it is INR 19,828 crores.
And also, what is your outlook on the awarding of projects for FY '26? Do you expect around INR 1 lakh crores worth of projects were awarded this year -- this fiscal year, what is your outlook on FY '26? Do you think it will take a pause or do you think it will continue?
Like I have mentioned that as per NEP plan, total for interstate is about INR 6 lakhs. So next year also, FY '26 also, it will be similar to FY '25. So similar -- we will also have similar figures for FY '26 also.
Okay. Sir, my last question...
Already, there are about projects worth INR 52,000 crores under bidding.
Understood. Sir, my last question is on the same number which you gave for cost. Can you give for tariff, sir, award of projects?
Q3, it is already in the presentation.
INR 2,077 crores for 9 months.
For 9 months tariff is INR 8,027crores.
The next question is from the line of [ Ketan Jain ].
My questions are done. My questions are done. I just spoke.
The next question is from [ Akhsay Malhotra ].
I wanted to, first of all, understand the progress on the intrastate bidding side. And concurrent to that, I wanted to understand that on the interstate project that we have with Rajasthan, has the work started on that? That's my first question.
Okay. The intrastate projects are being executed by various states like UP and MP and we are also participating wherever opportunity is there. As far as the JV for intrastate with Rajasthan, still -- we have already paid the joint-venture company. Our MDs also joined there and projects are being identified by the government of Rajasthan. As soon as projects are identified, then they will be taken up for execution.
Okay. Also quickly on the CapEx and capitalization side. I think you've helped us with the number for FY '25. Could you also, in a similar manner, tell us the expected CapEx and capitalization for FY '26 and '27?
FY '26 because whatever projects -- like we have projects about, say, [ INR 147,000 crores ] in hand and about INR 29,000 crores in progress. So put together, we have almost INR 1,76,000 crores projects which are to be commissioned in next 5 years, because this includes HVDC Leh to Pang which is to be commissioned in the next 5 years.
And similarly, our Khavda to Nagpur that is also to be commissioned in the next 4 years -- 4 and 4.5 years. And then we have offshore project also, that is also to be commissioned. So if we subtract these costs, so this about -- it will be -- AC station will be about INR 1,08,000 crores projects are to be commissioned in the next 3 years.
So every year, that means next year, we will have target about INR 25,000 crore projects, which will be required to be commissioned. And next year, may be about INR 35,000 crores and maybe next year another INR 35,000 crores. So it will be in that range.
Okay. So that -- this is the capitalization number, right?
Yes, capitalization.
And similar to that on the CapEx side?
CapEx, like this year, we are telling it is about INR 23,000 crores up to March. And for FY '26, it will be in the range of about INR 28,000 crores to INR 30,000 crores. And for next FY '27, it will be again INR 35,000 crores.
Okay. That would be very helpful. Just quickly on the last question. Could you also help us on update...
Could you please fall in the queue, sir. The next question is from the line of Bharanidhar Vijayakumar.
Yes. So I want to ask the regulated equity in the RTM projects as at the end of December '24 that we have been investing?
Can you repeat, please?
Regulated equity in the RTM project at the end of -- or December '24?
Regulated equity, see, we have given you that the our net worth is like INR 91,000 crores and then we have INR 4,390 crores, plus another INR 400 crores in the TBCB companies. If you deduct that and then you deduct another around INR 2,000 crores to INR 3,000 crores, which we have put in another JVs and in telecoms, roughly, you take out around INR 10,000 crores. So maybe in the range of INR 80,000 crores to INR 83,000 crores will be the regulated equity. It's very simple mathematics. Just you see in the net worth and then remove JV's investment and TBCB, SPV investment and then you get the regulated equity. We don't have any other business in the standalone.
Understood. So related question to that is how much of equity would be required to be invested in the upcoming projects over the next 3 years?
Normally, we put 80-20 for the TBCB projects and all the regulated projects, we stick to 30% at least today equity because we get the 15% return. If we reduce less than 30, it's loss for us, so we put maximum threshold 30% in regulated projects. And TBCB, it's -- free for us to put any equity but so far, we are almost maintaining 20%.
So if you consider say INR 25,000 crores CapEx next year, so maybe between INR 5,000 crores to INR 6,000 crores will be required for -- including TBCB and RTM projects.
Got it. My second question is on the execution challenges in developing transmission projects. Some of the equipment manufacturers and other developers are highlighting challenges in land acquisition and equipment supply, say, be it high voltage transformers or some conductors. So what is your view on it? And would we be able to execute and commission our pipeline of projects within time? Or in your assessment, what could be a contributor estimate of risks? And how much can project we have delayed on an average?
Yes. The challenge of the procurement of these high-value items, especially transformer and GIS is a real challenge. So we are mitigating this challenge by procuring bulk -- under bulk procurement, transformers we are procuring irrespective of the projects in hand. So we are ensuring that we have adequate number of transformers and reactors with us for meeting the requirement of future projects.
And as far as GIS is concerned, so there are challenges, especially for GIB part. So we are discussing with the GIS suppliers so that they can start manufacturing in India. And they are also ramping up their manufacturing capacity, GIS as well as transformers and reactors.
Sure. Okay. That answers. But if you could give some estimate of -- would project be delayed? Meaning if project time line is, say, 1.5 years to 2 years, in the best case scenario, would you expect for our projects on an average, the project commissioning would be, say, 2.5 years, 3 years? Would that be the -- in reality, would that be the case?
Yes. Normally, whatever 2 years' time period, we are trying to achieve, especially for any substation wherever transformers or reactors or base are to be commissioned. So we are ensuring that all the equipments are commissioned on time, but especially for transmission line where RoW issues are being encountered.
In some cases, there are challenges. So some delays are happening because of RoW issues. But still, we are taking up with the Ministry of Power and the state administration to minimize the delays, but let me accept that there are challenges in the completion of these transmission projects within 2 years.
The next question is from the line of [indiscernible].
Yes. Sir, so actually, I am a shareholder in Power Grid and the Power Grid InvIT as well. Sir, I had a simple question. This Power Grid InvIT was set up with the vision of monetization of Power Grid assets, but that plan seems to have been dropped. So there are a lot of shareholders, including our parents and senior citizens who have put their hard earned money in Power Grid InvIT.
And if you see it raised funds at IPO around INR 100. Today, the share price is nearing INR 80, primarily because it is unable to get any assets and raise it's DPO. Now I understand that Power Grid is the sponsor there. So I just wanted to understand, so much faith we are putting in the government and Power Grid, doesn't Power Grid have any plans to monetize assets via this trust?
Yes. In -- when we came out with this PG InvIT, as per that guideline existing at that time, we were planning to disinvest some assets in PG InvIT. But after new NMP guidelines, now we are not able to disinvest our assets in this PG InvIT, so we don't have plan in near future to disinvest our assets -- Power Grid assets because of NMP guidelines.
Sir, then what does that -- I mean what will be the entire purpose of that trust? I mean if the parent itself -- the sponsor of parent is itself is going to just abandon this particular trust and how is it supposed to function?
No, see, the initial -- the InvIT was found to monetize the commissioned assets and subsequently, when you see in the August '21, the National Monetisation Pipeline guideline says that the assets of the shareholding is not to be transferred permanently, it is only permitted to transfer the revenue rights.
So when we examine the revenue, rights are to be transferred to the InvIT or any other entity, it attracts a GST of 18%, which is, again, not lucrative to the shareholders of Power Grid because ultimately in the transmission charges, if you get after discounting 18% GST, it's not value accretive. So that is why this process could not be carried out. So that is the reason that Power Grid has started doing the securitization of the SPVs. So it is because of the guidelines.
Yes, sir, I understand that, sir. But then in that case, the purpose of that InvIT itself, I mean, it's -- there's no purpose of it, right? I mean how will it grow?
You see, this is -- I think we should have to take out this in the investor meet of the other listed entity because this is a separate listed entity. I think this will have a conflict of interest of answering the questions of PG InvIT here.
Yes, sir -- with that management...
I request you to, please, join the queue again, if you have further questions.
The next question is from the line of Balchandra [indiscernible].
Sir, can you provide HVDC pipeline over the next 2 years with the value worth where we see traction, means where we can add up in our CapEx?
I think we have already 2 projects in our hand, 1 is Khavda to Nagpur, which is almost about INR 35,000 crores, although NCT cost was INR 24,000 crores, but as per the market conditions that cost is going to be about INR 35,000-worth crores.
Second one is Pang to Leh, which is, again, more than INR 20,000 crore project, which is -- will be executed in the next 5 years. Already it is under bidding. And other than these 2 projects, 1 project had been won by Adani, which is Bhadla to Fatehpur.
Then 2 more projects are coming under bidding. 1 is already under bidding from KPS3 Khavda to South Olpad, which -- with NCT cost of about INR 12,000 crores. Then there will be 2 or 3 more HVDC project, 1 from Rajasthan to Maharshtra and then 1 in Andhra Pradesh. And -- so these are the -- in near future, these projects are visible, which will be under bidding shortly.
Got it. And sir, the figures which we have mentioned in our NEP plan framework, when we add up based on your guidance, overall CapEx for next 2 years translates to around something around INR 3 lakh crore. Is it fair to assume that INR 3 lakh crore kind of a CapEx will happen as per the plans in NEP?
For Power Grid or for total?
For total.
Yes. Definitely. Definitely.
The next question is from the line [ Aman Jain ].
Sir, my first question is regarding the Bhadla-Fatehpur HVDC line where bid was annulled. So, a, what was the reason for cancellation? And b, in the rebid another player won the project for like INR 25,000 crores, while we had secured it earlier or INR 12,700 crores. So like was there any change in the scope of work? And if not, what led to a significant lower bid compared to the final awarded amount, which was almost twice? So if you could give some color?
You're talking about Fatehpur-Bhadla?
Yes, yes.
Like NCT cost in case of Khavda-Nagpur was INR 24,000 crores, whereas actual cost when we go to market, it is depending on various factors. Now I'm saying that total executed cost will be somewhere INR 35,000 crores.
So similarly, in the case of Fatehpur-Bhadla also, although NCT cost was INR 12,000 crores, but the executed cost may be about INR 24,000 crores or INR 25,000 crores. But now we are not executing that project. So exact figures can be given by the transmission developer, which is Adani. So we cannot comment on that.
Okay, sir. Got it. Sir, my second question is regarding revenue from operations declined 3% Y-o-Y. So any reason for that?
See, the structure of the regulated tariff income means that it will decrease every year because of the interest on loan, which will be reducing based on the depreciation of recovery. So if I recover around INR 12,000 crores, INR 13,000 crores of a depreciation, to that extent, if you say thumb rule like 7.5%, 8% at the interest, so naturally around INR 700 crores to INR 800 crores, INR 900 crores for transmission income is bound to come down every year.
But the fact remains that the PAT will remain same because that is based on the return on equity. So the transmission income of the regulated business is bound to come down. This is what the structure, the one-time expenditure will increase, whereas the interest on loan will come down, but the PAT will remain same.
So that is why the reason that it will come down. But when we commission new assets, it is again added. That is why it's not reducing to that extent. So when I say that when the revenue is supposed to come down by like INR 800 crores, INR 900 crores in a year and if you compare for the 9 months, maybe around INR 600 crores, INR 650 crores, it is bound to come down, but it is not coming down because we are adding more assets.
The next question is from the line of Satya. Since we have no response from we will move on to [ Mayank Bora ].
I just wanted to know what is the borrowing cost of this $200 million from Sumitomo?
It is based on the dollar reference rate and the borrowing rate is -- interest rate is around 1%, including the spread -- we'll have a foreign exchange rate variation. Whatever is depends on the movement of the Japanese currency.
Okay. So we have any plans to reduce our domestic debt and replace it with the fund debt?
No, not required to be replaced. But since we have a huge pipeline of CapEx and we have to raise more and more debt, we can explore further debt through the other markets instead of domestic. We should have a mix, so we can mix something as to the other currencies instead of sticking to only to INR because last 4, 5 years when this SOFR was trading at close to 5, 4.5, so we refrained from going to the other markets for the last 4, 5 years.
Now since the [indiscernible] is almost at a very competitive rate, we are exploring the other markets. So maybe since this comes up with a -- greenshoe of another $150 million, so this is $200 million plus another $150 million will be close to INR 3,000 crores, if you convert it into Indian rupees. So further, we will explore the same similar type of markets.
We have the next question from the line of Swati Jhunjhunwala.
It's kind of a follow-up to the previous question. So I just wanted to understand that by taking these green loans, is there any material change in your cost of debt that you're expecting going forward?
Yes. Naturally, the other markets, whoever the lenders, encourage the green loan, and we expect that there should be a benefit in the rate of at least 5-- for a few bps.
Got it. And just secondly, could you highlight your CapEx and capitalization numbers for the standalone company?
Standalone, you can take for a consol because for a consol it will be in the range of INR 17,000 crores, INR 18,000 crores for the current year. As our Chairman has already told that we have a pipeline of almost INR 1 lakh crore of our projects, excluding the HVDC and offshore projects, which have a time line of another 3 years for commissioning. So in the range of -- maybe in the range of INR 25,000 crores to INR 30,000 crores, the commissioning will happen for the next 3 to 4 years.
Understood. Just wanted to understand because the RTM projects would be in the standalone company, if I'm not wrong. So for that, I just wanted to understand the broad kind of CapEx.
RTM, we have offshore and Pang-Kaithal are in offshore, which is around INR 22,700 crores plus another INR 13,600 crores. If you add this, this will be around INR 36,000 crores. And then few extension, the others will be there. Around INR 40,000 crores to INR 45,000 crores you can assume we'll be adding up in the regulatory report also.
[Operator Instructions] We will now move on to Anuj Upadhyay.
Okay. So majority of the questions have been answered. Just to get one sense, you mentioned that the current year capitalization target is INR 18,000 crores. We are already halfway mark of the Q4 numbers -- Q4 quarter. You said until Jan, the capitalization number had been closer to INR 8,000 crores. So could you elaborate further on which are the big ticket size project and at which stage that gives us the confidence that in the next 45 or 50 days, you'll be adding INR 10,000 crores of project?
Yes. I will give the names of the projects. One is Narela project. Narela is almost -- this station is almost ready. Station is ready to be commissioned. But because the connecting transmission line because of RoW issues are yet to be completed.
So we are expecting that at least 1 or 2 lines will be completed by March. So with this transmission line and substation at least INR 1,500 crore assets will be added here. Then Khavda-II and Khavda-II KPS2 and KPS3, these are 2 GIS stations. Each will be in the range of about INR 1,000 crores. We have GIS, transformer, then transmission line between Khavda-II to Khavda-III. Similarly, Khavda-III is also GIS, where transformers, reactors and the GIS station is there. So each will be INR 1,000 crores and INR 1,000 crores, so put together INR 3,500 crores.
Then we have Ahmedabad, Ahmedabad-Banaskantha transmission line, then Navsari station; Navsari, again, GIS station. Then Navsari to Magarwada, this line is almost getting ready by February, and we are hopeful that this project will also be commissioned by February, this will again be in the range of about INR 1,500 crores.
And 1 more project in Kurnool, Andra Pradesh. Kurnool station is getting ready in another 20 days and transmission line from Kurnool to Kurnool from existing our -- we have Kurnool-II station. And from there to new Kurnool-III station transmission line is almost an advanced stage of completion. So that will also be commissioned. So that, again, it is going to be in the range of about INR 1,500 crores.
And similarly, we have projects in Northeastern region like Namsai to Kathalguri, GIS at Kathalguri and Namsai both and transmission line and some projects in NER and Eastern region reconductoring projects and in Odisha. So if these are all projects are in advanced stage of completion.
One more project in Rajasthan is Bhadla to Sikar-II, which we are trying to complete, but it is very difficult, but we are trying to complete this project also. So put together, we are expecting that around INR 10,000 crore assets are likely to be completed by March because all are in advanced stage of completion.
This is super helpful, sir. And if I just ask one more question on the smart meter update on the Gujarat contract and any new states where we are in advanced stage of getting an opportunity?
For smart meters, we have this order of about 67 lakh meters to be installed in a Uttar Gujarat and Madhya Gujarat. And what we are planning that, once we have experienced with these meters in Gujarat, then only we will consider next state. But so far, we are not considering any other state other than -- we are focusing on completion of this project.
The next question is from the line of Apoorva Bahadur.
Sir, we noted there was a reduction in the interim dividend per share, right, for the 9 months so far. Can you throw some light on that, why it was a requirement for this?
Like, as you understand that last year, our CapEx was INR 12,500 crores. This year, it is going to be INR 23,000 crores. And in FY '26, it will be still more. So we require more and more equity to be infused for our CapEx requirements. So that is the reason we are slowly, slowly, we may go further down.
We now -- today, we have INR 4.5 was the first dividend, and this is a second interim dividend, INR 3.25, so put together INR 7.75. So we are hoping that we will be somewhere in the range of about INR 9 in this financial year. So it is because of the CapEx requirement.
Understood, sir. And when I see your CapEx guidance for the next 2 to 3 years, it seems like we plan to do almost INR 60,000 crores, INR 65,000 crores of CapEx for FY '26-'27 and maybe around a similar number for '28 as well. But the work in hand is still higher, right?
So in case even if it is spread out over 4 to 5 years, do you think that there is a possibility of further upgrading the CapEx number, especially for '27?
'27, there are possibilities because there are a number of projects which are under pipeline. So considering those projects, maybe FY '27, it may go more than INR 35,000 crores also.
Okay. Sir. And lastly, on the HVDC project orderings, when do we expect to see those for both the projects in which year?
HVDC project Khavda-Nagpur is already ordered, it is ordered on Hitachi. And work has already started, our design engineering work is going on. And at site also, we have already done Bhoomi Puja. So now execution will start very shortly.
As far as this second project of Pang-Kaithal because it is a very challenging project, so now -- or still there are queries being raised by prospective bidders like Hitachi and Siemens. And we are expecting that queries will be clarified to these bidders and then we will get that bid. And maybe in the first quarter of FY '26, we are -- it is likely to be awarded.
The next question is from the line of [indiscernible] Shah.
Sir, I just have 1 question. Could you please elaborate a little more on the regulations around the National Monetisation Pipeline and clarify more on the asset transfer and revenue transfers?
You see, National Monetisation Pipeline guidelines was published in the month of August 2021 and it envisaged that the assets of the central CPSEs are not to be transferred permanently and only the revenue rights are to be given. And that is the reason that we have not further added assets because once we have to add the assets means, we will have to transfer the shares, which is not permitted in the National Monetisation Pipeline guidelines.
So of our monetization, we have adopted the route of securitization of the cash flows and through which we raised the bonds and then we opened the TRA account where we used to put the money from [indiscernible] for servicing the debts.
Okay. Sir. And could you clarify about the GST payment in case of a revenue transfer, please?
Yes. In case of, if you transfer the revenue rights, so that is not treated as a transmission charges. These are all considered as a lease charge, just but we see GST is to be paid. So the reason that if I transfer the revenue rights, so whatever money I get as the NPV, I will have to pay 18% as the GST. So that is not a lucrative transfer.
The next question is from the line of Vikram Datwani.
Just one bookkeeping question for me. Could you please share the 9-month impact of the CERC tariff on O&M? You alluded to the Q3 figure at INR 140 crores, but could we get the 9-month figure as well?
You can multiply by 3, it will be in the range of around INR 450 crores.
The next question is from the line of Koundinya.
I just wanted to check. You indicated about INR 52,000 crores of projects under bidding. So just trying to understand, what is the potential pipeline of projects, which can be added to this, a?
And b, you also spoke about potential HVDC projects in Rajasthan and AP. What is the potential size of these projects? Also, there is a news flow of this Andaman HVDC project on a RTM basis, right? So is it safe to assume that Power Grid will be executing this project? And what could be the tentative time lines over here? If you can provide some color on that, please?
Okay. Yes. This INR 52,000 crores when you say that we have a traditional rate of 50%, you can say that when this bidding happens may be we'll be able to add another maybe INR 25,000 crores to INR 27,000 crores. So when I say today, INR 1,43,000 crores, you add another INR 27,000 crores, so it will become INR 1,70,000 crores. So [indiscernible].
And your follow up question is on the RTM project of Andaman. It is in a mature stage. So as of now, there is no any concrete development or we got any intimation of getting that through RTM. Once it comes, we will naturally inform.
Sure, sir. Sir, and lastly, I mean, what explains the fall in consolidated profit in this quarter despite the rising capitalization. Is it largely driven by the O&M expenses? Or is there something else or if you can help us understand it better, please?
You see, only if you see in Q3 to Q3, there will be a reduction between consol and standalone, that is because the dividends which we have taken from the SPVs is more than the Q3 profits of the consolidation of all SPVs put together. That is the reason. And as far as consol of 9 months is concerned, you see there is an increase from standalone to consol.
Sir, I was looking at consol to consol only, Q3 to Q3, there's a reduction in profit.
That is because actually, we have a loss of some of the JVs like we have one JVs EESL, which was our share of loss is INR 140 crores. So that has slightly pulled down in the consol because that's not figuring in the standalone.
This is in addition to one-time effect. Like per CERC, we are saying that of the order of INR 140 crores. It is also hitting our profit also by almost INR 140 crores each quarter.
And in addition to that, if you see, there are one-off items in the previous years, like we have one-time CERC order impact and interest and differential the orders between the [indiscernible] date and order dates, these are all largely to some extent, it will contribute more to the bottom line, so which is lesser in the current year. That is also the reason that your PAT has come down compared to last year.
Sure, sir. Sir, lastly, if I may, how should we look at the dividend flow from here in view of the rising CapEx? What is the -- to understand what is the outlook on this? If you can provide some color?
Dividend, we have a policy that we will give the dividend, we will not the ideal cash as well as we will -- part of our CapEx also. So we will strike a balance between these 2. And going forward, when we commission more and more projects, naturally, the revenue as well as PAT also with the increase. So that also will add to maintain the dividend to some extent. It's not going to fall very strictly to like INR 2 or INR 3 something like that. It's not even permitted as per the NPM guidance also.
We have our last question of the day from Mohit Pandey.
Sir, just one question. So for the Leh-Kaithal project, has the technology been decided whether it will be LCC or VSC?
No. From the start itself that we have -- we are executing this project at VSC only, not LCC.
With that, we'll conclude this meeting. I would like to thank the senior management of Power Grid for taking the time out for this analyst meet and addressing all the queries. I also would like to thank all the investors and analysts for attending the meeting. Thanks, everyone. So would you like to conclude, sir if you need to make any concluding comments?
So thank you, everyone, for your time and sparing your time and having interest in Power Grid. So I can assure all the investors and our shareholders that Power Grid outlook is very bright. And we have many projects in hand, and our project capitalization and CapEx is going to increase. So that will lead to increase in revenue and profit. So our Power Grid future is bright. So rest assured, you are in safe hands.
Thank you, sir. Thank you, everyone. Thank you. With this we will conclude. Thank you.