SJVN Ltd
NSE:SJVN
| US |
|
Johnson & Johnson
NYSE:JNJ
|
Pharmaceuticals
|
| US |
|
Berkshire Hathaway Inc
NYSE:BRK.A
|
Financial Services
|
| US |
|
Bank of America Corp
NYSE:BAC
|
Banking
|
| US |
|
Mastercard Inc
NYSE:MA
|
Technology
|
| US |
|
UnitedHealth Group Inc
NYSE:UNH
|
Health Care
|
| US |
|
Exxon Mobil Corp
NYSE:XOM
|
Energy
|
| US |
|
Pfizer Inc
NYSE:PFE
|
Pharmaceuticals
|
| US |
|
Palantir Technologies Inc
NYSE:PLTR
|
Technology
|
| US |
|
Nike Inc
NYSE:NKE
|
Textiles, Apparel & Luxury Goods
|
| US |
|
Visa Inc
NYSE:V
|
Technology
|
| CN |
|
Alibaba Group Holding Ltd
NYSE:BABA
|
Retail
|
| US |
|
3M Co
NYSE:MMM
|
Industrial Conglomerates
|
| US |
|
JPMorgan Chase & Co
NYSE:JPM
|
Banking
|
| US |
|
Coca-Cola Co
NYSE:KO
|
Beverages
|
| US |
|
Walmart Inc
NYSE:WMT
|
Retail
|
| US |
|
Verizon Communications Inc
NYSE:VZ
|
Telecommunication
|
If you don’t study any companies, you have the same success buying stocks as you do in a poker game if you bet without looking at your cards.
Utilize notes to systematically review your investment decisions. By reflecting on past outcomes, you can discern effective strategies and identify those that underperformed. This continuous feedback loop enables you to adapt and refine your approach, optimizing for future success.
Each note serves as a learning point, offering insights into your decision-making processes. Over time, you'll accumulate a personalized database of knowledge, enhancing your ability to make informed decisions quickly and effectively.
With a comprehensive record of your investment history at your fingertips, you can compare current opportunities against past experiences. This not only bolsters your confidence but also ensures that each decision is grounded in a well-documented rationale.
Do you really want to delete this note?
This action cannot be undone.
| 52 Week Range |
90.9
153.78
|
| Price Target |
|
We'll email you a reminder when the closing price reaches INR.
Choose the stock you wish to monitor with a price alert.
|
|
Johnson & Johnson
NYSE:JNJ
|
US |
|
|
Berkshire Hathaway Inc
NYSE:BRK.A
|
US |
|
|
Bank of America Corp
NYSE:BAC
|
US |
|
|
Mastercard Inc
NYSE:MA
|
US |
|
|
UnitedHealth Group Inc
NYSE:UNH
|
US |
|
|
Exxon Mobil Corp
NYSE:XOM
|
US |
|
|
Pfizer Inc
NYSE:PFE
|
US |
|
|
Palantir Technologies Inc
NYSE:PLTR
|
US |
|
|
Nike Inc
NYSE:NKE
|
US |
|
|
Visa Inc
NYSE:V
|
US |
|
|
Alibaba Group Holding Ltd
NYSE:BABA
|
CN |
|
|
3M Co
NYSE:MMM
|
US |
|
|
JPMorgan Chase & Co
NYSE:JPM
|
US |
|
|
Coca-Cola Co
NYSE:KO
|
US |
|
|
Walmart Inc
NYSE:WMT
|
US |
|
|
Verizon Communications Inc
NYSE:VZ
|
US |
This alert will be permanently deleted.
SJVN Ltd
You don't have any saved screeners yet
Good afternoon, everyone. On behalf of Elara Securities, we welcome you all for the Q1 FY '23 Conference Call of SJVN. I take this opportunity to welcome the management of SJVN represented by Mr. N. L. Sharma, CMD; Mr. Akhileshwar Singh Director Finance. We will begin the call with a brief overview by the management followed by Q&A session. I will now hand over the call to Mr. N. L. Sharma for his opening remarks. Over to you, sir.
Yes. Good afternoon, and I welcome all the participants in this conference call. This conference is about the Q1 results of SJVN. Before coming to the numbers, let me brief all the participants about the few developments of the quarter 1. Regarding the physical progress, the progress on the front of generation. Our generating stations, primarily 6 generating stations of hydro, solar and wind have registered about 12% increase in the generation. This quarter generation is 2,736 million units against 2,436 million untis last year. So there is about 12.29% increase.
Regarding the CapEx. This year, in the quarter 1, we have spent a CapEx of INR 1,990 crores against INR 622 crores last year. So there is an increase of 320%. INR 622 crores to INR 1,990 crores. Then as you will find a power purchase agreement with Punjab State Power Corporation Limited for 100 megawatts color project for 25 years at the rate of INR 2.65 per unit. This project cost will be around INR 600 crores and annual generation will be 250 million.
Then SJVN also awarded an EPC contract of 1,000 megawatt solar project in Bikaner. This cost of the -- the watt hour cost of the project is INR 5,491 crore. This is a major RE project, which SJVN and I think this largest project so far signed by any company in the solar sector. Then SJVN also awarded 2 more projects, the 75-megawatt Gurah solar project in Uttar Pradesh and another Gujarai solar project 50-megawatt project at Uttar Pradesh during this period.
Then power purchase agreement for 200 megawatts, solar power projection Bihar has been also signed during this quarter, the tariff is INR 3.11 per unit. Then in Nepal, MOU for dormant of 490 megawatt Arun-4 project through a JV mode has been signed in the presence of the honorable Prime Minister Narendra Modi and honorable Prime Minister Nepal Sher Deuba. SJVN also bagged 90 megawatt floating solar power project in Omkareshwar reservoir in Madhya Pradesh. And to that effect, PPA has also been filed. So these were the few highlights of the quarter.
Now I will come to the numbers. As you know that the generation during this quarter has registered an increase of 12.29%. And similarly, the financial numbers also. Revenue from operations has increased by 52% during this quarter, quarter 1 of FY '23, the numbers are INR 663 core, numbers are INR 1,006 crore against INR 663 crores last year. So there is an increase of INR 342 crores in increase in the revenue from generation. The total income has also registered an increase of 52%.
Total income during this quarter of this year is INR 1,070 crore against INR 702 crores last year. Similarly profit before tax, profit before tax there's an increase of 53%. This year, profit before tax in the quarter 1 is INR 650 crore against INR 425 crores last year. Profit after tax has registered an increase of 79%, INR 607 crore profit against INR 339 crore last year. There is an increase of INR 268 crore profit after tax, which is 79% above the last year.
Then about the generation. Generation, I have already told about the total generation. But if we analyze it, sector-wise hydro and renewal. In hydro, Nathpa Jhakri has generated 2,090 million against 1,866 units last year. Rampur hydro power station has generated 587 million units against 523 million and incease of 64 million units. Similarly, wind and solar projects, they have also registered an increase of about 25%. 57.95 million units generation this year against the last year's quarter 1 of 46.12 million units. So there is an increase of 11.8 million in wind and solar project.
Plant availability sector. We were already making the machines available to the extent of 109% or close to under 110%. So this year, we have also registered an increase, and we are making the machines available to the extent of 110.11% in case of Nathpa Jhakri 110.2% in case of Rampur. So availability of the machines has been at its highest. So similarly, there is an increase of incentives, whether capacity incentives or UI that is the division settlement mechanism, UI also. And in the field of project progress, all the projects are progressing well despite during the monsoon season, but we are trying to complete the project as per the schedule. So this is all about from the management side. Now we are open to the questions from the investors as well as analysts.
[Operator Instructions] The first question is from the line of Mohit Kumar from DAM Capital.
Congratulations on very good set of numbers. So my first question is how much of the surcharge income in the other income? And has [ J&K ] accepted the late payments surcharge rules and freezed the amount. And my question is that, is the other surcharge will go away in the coming quarters?
Yes, Mohit, regarding the other income. Though there is an increase in the generation, so resultantly revenue from operation or revenue from sales has increased. But the major increase in the income, through the other income, there is areas, we have gotten the areas for the [indiscernible]...
[indiscernible]
Other income?
[indiscernible]
The interest from banks for this quarter June '22, it is INR 31.31 crore. And last year, it was INR 9.79 crores. So variation is around INR 21.52 crores. And the interest from employees contractors that has also increased from INR 4 crores to INR 10 crores, INR 10.97 crores this year. So INR 6.97 crores increase in the -- from this line also. Then late payments surcharge has marginally increased by 1.21%. In this quarter, it is INR 20.55 crores and other miscellaneous income, is INR 1.42 crores. So other income totaled INR 64.25 crores against INR 38.72 crores last year, the increase of INR 25 crores.
Regarding the recoveries from J&K. Now the J&K has started -- have entered into an agreement with RAC, so they do -- dues [indiscernible] with the J&K to the tune of more than INR 600 crores. So that will be paid via 12 equal installments, first installment of INR 53 crores has started. So every month, we will be receiving INR 53 crores for the dues which were there as J&K. So in a year, I think by the next July, all the dues will be liquidated.
What is the status of PPA for the Nepal project? Do you have any update which you can share?
Yes. Nepal PPA, we have signed an MOU with this PTC and renew, so we'll be exploring the possibility of selling the power through these 2 agencies. We are hopeful that we will get it.
Are you looking for the long-term PPA or short-term PPA? What are the kind of PPA [indiscernible] opportunity?
We'll try to get at least for 15 years. We can term it as long term.
Understood, sir. So what is the status of, sir, the [indiscernible] project? When we expect it to commission now? Is there any delay or something?
[indiscernible] it's scheduled to be commissioned on time, June '23, 1st unit and January '24, second unit.
[Operator Instructions] The next question is from the line of Dhruv Muchhal from HDFC Mutual Fund.
Sir, firstly, sir, Rampur, we have got this prior period of [ INR 288 ] crores. Now we were of the view that the final tariff order was passed and the capital cost was approved. So what is this, and -- firstly. And the second is related to this is, does this lead to an annual increase in your revenue from Rampur now after this order?
Yes. Against the tariff order passed by the CRC earlier, we have filed the review petition. So this is a result of that review petitions, certain items which were...
[indiscernible]
Yes, in the earlier order by the CRC, some expenses were left or right guarantee fee, now we have filed review petition. Now CRC has agreed and is a result of that success of our claim by the CRC to allow that guarantee fees and other costs.
Okay. And sir, how much does this -- I mean, should I assume this is about 5 years or about INR 50 crores, INR 60 crores of your annual revenue will increase. Is that fine?
This is onetime.
Okay. This is onetime. Okay. Sir, the second thing is if you can give the generation and the tariff for the Bikaner project, Bikaner solar project. You gave the project cost, I think EPC of INR 5,491 crores, if you can give this envision and the tariff?
Yes. The cost is INR 5,491 crores, and the tariff is INR 2.45, that is has been fixed by the government of India that is under CPSC scheme. The maximum is INR 2.45 per unit.
Okay. And sir, generation will be approximately?
It is 2,500 million units per year.
And sir, similarly, for the Bihar project, if you can give the Bihar which we have signed to 200-megawatt PPA, degeneration and the project cost.
We are just working on it. It is yet to be -- we are trying to get the land. The generation from 200 megawatts will be around, 900 million -- 800 million to 900 million unit, and the cost will be around INR 1,000 crores.
Sure, sir. Sir, the next thing was in the Arun-3 project. you can help us with the status of the HRT line? I mean I believe the HRT is a critical portion. And where are we? How much of the -- I believe it is about 11-odd kilometers, so how much of that has been heading for how much portion is done? And when do you think that is likely to complete?
The length of HRT is 11.8 kilometers and [indiscernible] is 11.8 kilometer, 8.7 kilometer [indiscernible] then has been excavated. And simultaneously we are working on the lining -- benching and lining. So we can see that out of 11.8, 8.7 kilometers HRT has bee excavated.
And sir, what would be the approximate monthly run rate in terms of work completion?
Monthly run rate?
Yes. In terms of how much work is done in a month for this HRT heading?
Yes, about 3 kilometers that has to be done. So in a year -- we have to excavate in a year. So about 250 meters per month asking rate will be there.
And that is what we are currently operating at. Is it?
Yes, we are trying to achieve that. There are many obstacles but...
Sometimes it is more.
Yes. But average 250 meters a month is required.
Okay. So I was just wondering what -- if you have the number for the last, say, 3, 6 months, what would be the average run rate that we are operating at?
Sir, we can give you the numbers separately. Right now, we don't have that number.
Sure. And sir, similarly, for the transmission line, how much portion is what we call this handing over of the portion is done? I think last 20 years, [indiscernible] it was about 41%. How much for the handing over is done right now?
Exact numbers, we will supply separately, but there has been progress in some areas here, realignment was to be done because of the objections from the locals. So we had a meeting with the Chief Secretary, Chief Secretary called all the concerned secretaries, secretary home and other secretaries. They also called the concerned CDOs who are actually doing the work at street level. So there has been headway compensation of the land is to be determined by the CDOs. So now CDOs have been directed to expedite it. We are keeping a close liaison and touch with the concerned secretary as CDO. We are hopeful that we will get the projection early.
And sir, last 2 small questions is, was there any FX loss this quarter like you probably had in the last quarter 4Q? Or was there an FX loss this quarter, which you could not pass on to the customers into discounts?
Yes, the interest on -- HERB on the ECB about...
Some portion.
Some portion or about INR 35 crore, INR 35 crores to INR 40 crores.
INR 30 crores.
About INR 30 crores HERB on ECB. That will not be passed to be consumer.
So when should we expect this to -- I mean, over this loss because ideally, this should eventually get capitalized on some -- how I'm wondering, will this continue to be an impact if the currency continues to depreciate?
Then these borrowings are deployed in the project and when this amount is capitalized. At that time, it will be...
That will be done. But until when, this will continue to remain -- depending upon how the currency moves. Is that fair?
Yes. Definitely.
And sir this is linked to the [indiscernible] project, [indiscernible] project, 1,000 megawatts?
Other projects, we are employing this capital.
Sure. So this seems to be a big impact because last quarter also, this was an impact. If you can -- I'm not sure how we can offset this, probably some hedging or some of other tools because this is impacting our numbers in some way. Although this quarter it is small, but it's still impacting our numbers. Sure, sir.
And sir, last question is on Arun-3, you mentioned that you are signing -- you signed MOU with PTC and [ REC ] renew. So what would be the tariff be if your -- if you can give some sense?
Tariff will be on between INR 4.55 to INR 4.60 per unit.
Okay. So this is agreed -- largely agreed with these -- under the MOU, this is largely agreed with them?
We are trying...
Is there -- yes.
It will be around this figure.
I was wondering if -- I mean, will it change depending upon the project cost or tomorrow if the project cost comes out to be lower or higher? Can this amount change? Or this is largely fixed now?
Maximum tariff.
Maximum tariff. And we are hopeful. We have got now different permutations and combinations of the project cost and expect the decrease in the project cost also because of various reasons. So we will be comfortable if we -- rate in terms of the project cost, we will be comfortable at this level of tariff.
[Operator Instructions] The next question is from the line of Rohit Natarajan from Antique Stockbroking.
Sir, coming back on this on Arun Phase 3 project. Is there any slippages like internally probably you were targeting the commissioning schedule within June '23. But now this transmission front, we are not seeing that kind of a progress. So really what exactly is the situation over there? Is there any shift of the internal commissioning scheduling delay or are we still adhering to the same time line?
Yes. Last it was planned by June '23, but because in the generation front also -- because of the heavy rain, this year rain started very early, right from the mid-February or early March, very -- flash floods in that area. So that impacted our dam concreting also. And similarly, the powerhouse and HRT also. And in HRT phases also, there has been some geological issues.
So we are not able to go ahead with the desired pace of work in HRT also. So that is resulting you into some delays in the generation front also. So we are planning to achieve it by December '23, by all the means. And by that time, we are also trying -- we are making efforts to do the transmission line work before that.
Great. Great, sir. And on the Bihar Thermal project, we had some issues on rail and water pipeline part. The land acquisition R&R was underway, but I mean what is the situation over there, sir?
Yes. No, land for both these components, railway siding or water corridor has been -- the award has been made by the district authority. And for the water corridor, the land has already been handed over to us. And regarding the railway siding, major portion has been handed over and rest of the portion will be handed over soon by the listed authorities to SJVN. So we are already -- we are keeping the schedule as such, June '23, first unit and January '24 second unit.
Sure, sir, sure. And the CapEx guidance for this year, can we assume it's still like INR 8,000 crores that's the target you're looking at?
CapEx...
INR 8,000 crores.
Yes. Total is INR 8,000 crores. And the first quarter...
[indiscernible]
CapEx for the year is -- target is INR 8,000 crores, okay? And for this [indiscernible] project, it is INR 2,500 crores, okay? And right now in the quarter 1, the target was INR 1,800 crores. Against that target, we have already done INR 1,990 crore in the quarter 1. And till date INR 2,330 crores CapEx has been done. And we are sure that we will achieve this target of INR 8,000 crores in the year.
Sure, sir. For FY '24, the number of INR 9,000 crores...
If you can speak with low speed, I think your...
Sir, FY '24 CapEx target?
Can you repeat?
FY '24 CapEx target.
FY '24? FY '24 was INR 10,000 crores.
[Operator Instructions] The next question is from the line of Apoorva Bahadur from Investec.
Sorry, sir, you gave some breakdown of the incentives and other income. Can you please repeat that? I'm just noting it down.
Yes, total incentives, which we have earned in the first quarter is the INR 252 crore. No, no INR 87.59 crores in the quarter 1 against INR 71.55 crores last year. Regarding the capacity incentive, capacity incentives last year were INR 61.81 crore, and this year, INR 62.79 crores, an increase of INR 0.98 crore.
But on the other side, UI, there is deviation settlement mechanism. There is substantial increase. Last year, UI incentives were INR 9.7 crore. And this year, quarter 1, INR 24.3 crore. So there is an increase of INR 14.58 crores. Similarly, the total incentive during the quarter this year is INR 87.59 crores. There is an increase of INR 16.04 crores.
That's very helpful. Sir, secondly, I think on the last call, you highlighted that the government has handed us over certain pump hydro projects for exploration and [ DPR], wanted to take if there's any update on that and what we have found in our initial study.
Yes. Our committee of experts visited various sites. So we were just finding the viability or feasibility of these projects. We have also engaged the consultants for doing the due diligence. So out of 10-odd locations, we are going with the 4 locations to explore more for finding the viability of the project.
Sir, where would these be? And what would be your total capacity for these locations?
Total capacity was more than 13,000 megawatts. Majority of the projects were in Maharashtra. And a few projects in Andhra Pradesh, Karnataka and [ Arunachal ], Mizoram. So -- but majority of the projects were in Maharashtra. So in Maharashtra, we are focusing whether these are viable or not. That has to be [ SR ] trend. We are engaging a consultant and assigning the responsibility for making the investigations of doing due diligence.
Okay. So sir, what would be the capital cost that we are looking at?
Capital cost for the PSP?
Yes, sir.
It is yet to be determined. That will depend how the projects are -- whether reservoir on the main river or the outlet river locations, how much height of the dam or the reservoir. So that will be determined only after. But we can say that per megawatt it's more than INR 12 crore per megawatt.
INR 12 crores. Okay, sir.
The next question is from the line of Akhilesh Bhandari from ICICI Prudential AMC.
You had mentioned ForEx loss [indiscernible] around INR 30 crores. So what is the current level of ECB borrowing which we have? And how much is the unhedged portion out of that?
The loss is around INR 30 crores. The ECB is INR 2,300 crores.
USD 300 million.
USD 300 million, about INR 2,300 crores.
Sir, is this entirely unhedged or you have hedged a part of it?
It is not hedged. It is entirely unhedged, but we are keeping a close watch on the movement of the dollar price and the hedging cost. So we did not hedge it because of the higher hedging cost. So but we are keeping a close watch on the movement of the dollar price.
Sir, given that a part of this potentially renewable projects where the currency movement impact doesn't automatically become a pass-through, should it as a policy we automatically hedge it because that is the true cost, right? I mean in the end, regulated projects should become the pass-through in the tariff, but in renewable project, it won't become a pass-through.
Akhilesh, this is not automatically pass-through item because in the RE, renewal energy projects, except hydro. This is not a pass through item, this is -- the total cost. So the tariff is fixed. There is no variation. It's not cost frustrating. So it will be part of the cost of the project.
Yes. So that's what I'm saying. Since it's not a pass-through, shouldn't we be automatically hedging it when we are taking the loan? So that at least we have a visibility of the overall interest cost...
So you are right, but we are just weighing the different options where the cost of hedging is more or price -- dollar price movement is more. So we have to keep the balance intact.
[Operator Instructions] The next question is from the line of Dhruv Muchhal from HDFC Mutual Fund.
Just carrying forward from what the earlier participant was saying, it is very difficult to predict the move in USD, INR. I believe you will understand it well. So if it is not hedged and if it moves very volatilely it can have a significant impact on our numbers. So that -- hence, the suggestion or probably the request to consider some measures to protect our earnings from unexpected changes in the FX because even in last quarter, I believe we had some impact because of the FX loss and even in this quarter. So the volatility in FX, which is no control on us is impacting our performance. So that was the, I think, the point that we are trying to highlight.
Suggestion is noted. We are -- our team is working on it.
Sure, sir. Sir, just one thing on [indiscernible] project, I was looking at the CEA's broad status report where it's mentioned that the boiler hydro test is likely to get completed in the November '22. I mean, this November '22. And sir, from past experiences, looking at thermal projects, we understand that it takes at least about 1.5 to 2 years after the hydro test is complete, for the project to have the startup or the light up happen. So sir, based on your target of about June '23, it seems a bit aggressive in that sense then. So are we comfortable that it can be commissioned by June '23? Or should we build in some leeways there, probably a few 6 months or 9 months delay there?
So this is not the best position, 1 year or 2 years after hydro test. So even within 6 months, project can be commissioned, unit can be commissioned after hydro test. All the components, if they are ready then there is no such time requirement that only after 1 year after hydro test the project will be commissioned.
Sure. So, we remain comfortable on this June '23 deadline?
Yes. Yes.
The next question is from the line of Mohit Kumar from DAM Capital.
Two clarifications, sir. One is that you [indiscernible] Nepal, will it be counted as RPO obligations for the Indian entity? Is it classified for [ HPO ]?
No, it's not qualified for [ HPO ] benefit. [ HPO ] benefit is granted only to the projects which are constructed in India, not in Nepal or other countries.
Understood, sir. And sir, how are you funding your renewable projects? Is it primarily 100% through debt? Or you are looking to issue equity also?
80/20. Mostly it is 80/20. 80% debt and 20% equity.
And how to think about debt for the renewable? Is it looking for how much debt, how much ForEx debt, how much rupee debt. Or do you intend to reduce the ForEx component going forward, especially for renewables?
We have funding from -- debt from different sources. We have tried that [ ECB ] -- got that ECB. We're borrowings also from external commercial borrowings. At the same time, other banks are also coming forward, and even we have gone for the bonds also, in future also, we can also go for green bonds or something -- some funding.
Different currency [indiscernible].
Different currencies also, yen also, U.S. also going -- in Pounds also. And at the same time, we also are generating funds through securitization of our assets, which are debt-free.
Sir, do you think monetization targeted for us given to the government?
For the monetization?
Yes, sir. Have we committed for any monetization commission?
Yes. This year, INR 2,000 crores through monetization process.
For securitization of the asset, okay. I understood.
Yes, securitization.
The case in the sense, how are you going to use the proceeds of this cash flow?
Yes. There is cash flow. We are supplying power to different beneficiaries, different state discounts.
Sir, my question is that if you raise the money through securitization, INR 2,500 crores, how will you use the proceeds of the resale?
Mainly to meet the requirement of equity investment.
Okay. But INR 2,500 crores are very large number, sir, we can put up a large capacity in this case.
Our [ PTO ] project is very large and more projects are coming into construction. So the equity requirement for these projects will be met from this part of securitized assets.
And sir which are the projects which you're looking to award this year EPC orders?
The hydro sector, there is INR 2,600 crores to [indiscernible] dam. So for that, we'll be requiring 30% equity. So about more than about INR 750 crores to INR 800 crores equity will be required in phased manner.
And in the renewal, the solar side also, we have just awarded [indiscernible] project in Gujarat, then would be awarding other projects. Bihar, 100-megawatt in Punjab.
[indiscernible]
90-megawatt floating project in Madhya Pradesh. So many more projects are...
300-megawatt in Gujarat.
Yes. So many more projects are in the pipeline.
Sir, all these solar projects once you award the EPC contract, the model price risk is on us or on the EPC contractor?
[indiscernible]
Once it is awarded, it's on the part of the EPC contractor.
Most of it, right, sir?
Yes.
[Operator Instructions] The next question is from the line of [ Varun ] from [ Branson ] Investments.
Sir, we've seen 3 consecutive rate hikes this year. So does this lower our effective IRR on renewable energy projects given that these projects are fixed tariff projects and most of these projects were won during low interest rate environment?
This lower IRR, this IRR threshold fixed by Government of India is -- has been fixed long back then the interest rates in the market were very high. Now the bank rates have gone very down 6% to 7%. In some cases, we are getting the loans at 5% to 6% also. So any IRR above the bank rates, the project will be viable, is viable. So 7% to 8% IRR or more than 7% will be the benchmark for the determination of the viability of the project also. And return-on-equity IRR is more than 10%. Or in our case, debt will be lower, right?
After the recent 3 hikes, interest rate hikes that you have seen?
We are seeing, in fact, this -- in case in interest rate is not impacting our IRR because the interest is not mainly capitalized. Interest is for only a short period, during construction period. Therefore, it is not majorly impacting our IRR.
All right. All right. Okay. And sir, second question, you said INR 8,000 crores of CapEx this year and INR 10,000 Crores next year. So could you just help me with the breakup between RE and non-RE, so CapEx breakup between RE and non-RE?
This year, out of INR 8,000 crores, about INR 3,000 crores is solar RE, you can say RE. Though Hydro is RE, but non-hydro RE, non-hydro. INR 3,000 crores for solar, this non-hydro RE, and INR 2,500 crores for thermal and about INR 2,500 crore for hydro.
And for next year?
Next year, the solar part will be INR 4,000 crores to INR 5,000 crores, maybe INR 5,000 crores.
[Operator Instructions] Due to time constraints, that was the last question for today. I now hand the conference over to Mr. Rupesh Sankhe for closing comments.
Yes. So we thank Mr. N.L. Sharma for giving us an opportunity to host this call. And we also thank all the investors and the analysts for joining this call. Thank you.
Thank you very much.
Thank you. On behalf of Elara Securities, that concludes this conference. Thank you for joining us and you may now disconnect your lines.