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SJVN Ltd
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Ladies and gentlemen, good day, and welcome to the SJVN Limited Q2 FY '23 Earnings Conference Call hosted by Elara Securities Private Limited. [Operator Instructions]
Please note that this conference is being recorded.
I now hand the conference over to Mr. Rupesh Sankhe from Elara Securities. Thank you, and over to you, sir.
Yes. Good afternoon, everyone. On behalf of Elara Securities, we welcome you all for the Q2 FY '23 conference call of SJVN. I take this opportunity to welcome the management of SJVN represented by Mr. Nand Sharma, Chairman and Managing Director; Mr. A.K. Singh, Director of Finance. So 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. Nand Sharma for his opening remarks. Over to you, sir.
Yes. Good evening to all investors and analysts present over there. The brief of quarter 2 results -- and around with the half yearly results of SJVN, we have here. Before I come to the actual numbers of Q2 and H1, there are a few major achievements, which I would like to share with all of you.
First is on the capacity addition front. SJVN has started commissioning of Parasan 75-megawatt solar project in Uttar Pradesh. The commissioning started in the last week of October. And so far, we have synchronized, what, 31 megawatts of solar capacity out of 75 megawatts. And in a couple of weeks, we will complete the commissioning of total 75 megawatts of Parasan solar project. Second achievement only yesterday, we bagged another floating solar project in on Omkareshwar reservoir. That is 83 megawatts solar project -- floating solar project. And we have already also bagged 90-megawatt capacity under us, and -- which we are awarding in a couple of weeks right from now. So we will be adding 173 megawatts floating solar projects in Omkareshwar reservoir.
On the generation front, last -- this quarter 2 is termed as monsoon quarter. So on the generation side, the figures are quite encouraging. Most of the generation, what -- 40% of most generation happens during the month of monsoon being the -- majorly a hydro company. But at the same time, the construction activities during the monsoon months is slightly hampered. So we then make up this loss in the coming months. So generation, we have already achieved more than 7,000 million units of generation out of 8,700 design capacity for the entire year in quarter 2.
On generation side, there are 2 significant achievements. Highest ever generation by all the projects of SJVN, hydro, solar and wind. In the month of September, SJVN has achieved highest ever, that is 1,339 million units from this project in the month of September. In the month of September in the previous year's -- in any year, this generation was not recorded. But this year, this is the highest ever generation recorded so far. Both the projects, Nathpa Jhakri and Rampur recorded the highest generation, too.
Then on the other front, we are going to add 1 more hydro project shortly. The forest clearance Phase 2 for the Sunni hydroelectric project, 382 megawatts, INR 2,614 crores investment. The forest clearance Phase 2 has already been granted now. Now we are waiting for approval of the cabinet committee on Economic Affairs for the investment of a the [ relevant ] bidder contractor has already been identified through competitive bidding. And as and when the investment approval is achieved, we will award the project shortly, and this project will also start the first phase of construction.
Then there is another significant achievement in the sector of hydro. The projects we are doing abroad. In Nepal, there is 669-megawatt Lower Arun project. And its DPR has been technically -- techno-economically approved and vetted, [ conquered ] by the Central Electricity Authority. So we record in the record 11 months, any hydro project BPI has been cleared by CEA, and we are now moving toward the investment approval. And as and when the investment approval is achieved, I think it will take another 3 to 4 months. We will start construction of another hydro project in Nepal. [ Prash ] and I have already shared with you.
Then Raghanesda solar project, 100 megawatts in solar park in Gujarat. We have already awarded the project construction to the contractor. Tata Power Solar System is the contractor and the construction has started now. And similarly, on Gurah and Gujarat solar power projects. Total -- this is about 125-megawatt projects group. So construction has already been started, both have been awarded. Then the power purchase agreement for the Omkareshwar project, which we are going to start construction, but signed between SJVN and the MP Power Management Company Limited. The tariff is INR 3.26. So [ MPP ] has been signed with them.
Then we also bagged -- SJVN also bagged 200-megawatt solar power project on built, own and operate basis through e-reverse auction in Maharashtra. This the tariff is INR 2.90. Then -- MOU has already been signed with the GUVN, Gujarat Urja Vitran Nigam Limited, for a 260-megawatt project in Gujarat. Then MOU has been signed with an entity of Assam for dumping 1,000-megawatt coke -- floating solar coke power projects in Gujarat. MOA has been signed in the presence of the honorable Chief Minister on 17th of October. SJVN have also bagged 105-megawatt solar power project in Maharastra also at a tariff of INR 3.93. So SJVN is aggressively marching ahead in the capacity addition front as well as in the operations front.
Another news which I would like to share with you that hydro project in Naitwar Mori, a 60-megawatt hydro project will be commissioned during the financial year in the month of February, March '23. So the net capacity addition of -- for 60 megawatts. Similarly, we are also going ahead with the construction of Bagodara Solar Power project in Gujarat.
Then coming to the numbers of quarter 2 and H1 of FY '23. Quarter 1 this -- as I already shared, the generation. Generation of all the projects is quite high. Out of 8,700 million units designed energy, the achievement in this quarter is 4,327 million units against 4,404 million units last year. So there is slight little decrease, a decline in the generation. But you know that we have already achieved that maximum. So there is a slight decrease basically because of this reduction in the water discharge in the rivers as well as less wind load flowing in the wind projects. So there is slight 1.7% decrease in the generation, but overall generation during the half year, if you take into account the quarter 1 and quarter 2, there is an increase of 223 million units against 6,840 million units during the last half year. This year generation is 7,062 million units. That is around 3.2% higher than the last year.
So in this quarter, except the profit after tax, there is increase. But in other parameters, there is a slight of marginal decrease -- or decline. The generation -- you know that generation, there is 76 million units reduction in generation, that is about 1.7%. So consequently, there is a reduction in the annual revenue from operations. Revenue from operations registered an achievement of INR [ 880.74 ] crore against INR 883 crores. So there is a decrease of around INR 3 crore in the revenue from operations.
And the total income. Total income also decreased by about INR 5.73 crore. This year, in the quarter 2, the total income is INR [ 921.26 ] crores against INR 926.99 crores last year. So there is a marginal decrease. Similarly, the expenses registered from increase, but this increase in expenses there is INR 79 crore [ increase ], INR 386.43 crores expenses during the quarter against INR 307.23 crores last year. The increase is because of the [ later ] portion of the interest and financial charges -- financial costs.
So PBT, there is a decline of INR 84 crore. PBT is INR 534.83 crores against INR 619.76 crores. But in profit after tax, net profit, there is an increase of about 11% in the quarter. Last year, the PAT was INR 406 crores. And this year -- this quarter, INR 451 crore. So there is a net increase of INR 45 crores. That is 11% over the last year.
Earnings per share is INR 1.15 against INR 1.03. Net worth has also increased by about INR 621 crores. So far as the half year figures are concerned. Half year figures, revenue from operations increased by 22%, INR 1,886 crores against INR 1,547 crores. There is increase of 22%. Similarly, total income also increased by 22%. Total income in the half year is INR 1,991 crores against INR 1,629 crores, so increase of INR 360 crores. Profit before tax, PBT, is 13% increase. Up to this half year, September, the profit before tax was INR 1,185 crores against INR 1,045 crores. Profit after tax registered 42% increase. Against last year's half year profit or half yearly profit of INR 746 crores, this year, half yearly profit -- net profit after tax is INR 1,058 crores, increase of INR 300-plus crores. And I would also like to share that this half yearly profit is again, greater than -- more than the last year's total profit of INR 977 crores. So there is an increase in the half year, against even full year profit also.
Generation data I have already shared. I would also like to share that the plant availability factors, which we take pride there, this is the one of the highest in the industry. This is, again, more than 109%. Plants can be operated at a overload of 10% only. So we have achieved this plant availability factor of 109.62% in case of Nathpa Jhakri and 109.5% in case of Rampur projects.
So this is about the numbers that figures of quarter and half yearly [indiscernible] from management side. Now we are open to the questions of investors and analysts. You are welcome.
[Operator Instructions] First question comes from the line of [indiscernible], an individual investor.
Sir, my first question is regarding debt. Can you tell me what is the incremental cost of borrowing for our company in FY '23? And second small part of [ that ]. Since the exchange rate has increased for India rupee and dollar, so what proportion of our borrowings are in foreign currency? And how does that impact as a company?
Regarding the portion of external borrowings from the total borrowing, I would like to share that in case of our Rampur project, this is World Bank funded project. The total borrowing now which stands at the total borrowing is INR 1,602 crores. Out of INR 1,602 crores, INR 1,535 crores are in terms of dollars, and only INR 66 crores are in terms of the local -- domestic borrowings. Then we have also taken this external commercial borrowings to the extent of -- about INR 2,200 crores in terms of dollar. So total borrowing as on this date INR 5,295 crores. So INR 1,500 crores of Rampur -- INR 1,535 crores for Rampur and [indiscernible] INR 3,700 crores to INR 3,800 crore is borrowings from -- in terms in dollar, whereas INR 1,400 crores domestic borrowings.
Okay. But does that significantly increase our the amount of finance cost during this financial year or half of this financial year?
Yes, yes. Because this dollar rate has increased from about INR 78 to INR 82 during this period. So there has been increase in the financial [ cost ].
Okay. Just what was the answer for our earlier question, over the incremental cost of borrowing for this half year? Do you have the figure?
Finance costs during this half year -- finance costs have increased by INR 101 crores, out of this INR 80 crores is FCRV.
Okay. Sir, just one another question. Then FY '24, can you tell me like approximately figure, how much capacity addition is there going to be there? And how many projects will be commissioned until FY '24?
During my initial brief, I have shared this 75-megawatt Parasan Solar Project will be added. Then 16-megawatt Naitwar Mori Solar Project will be added, hydro project. Then 70-terawatt Bagodara Solar Power project. So total comes to, what, 205-megawatt projects during this -- this is for FY '22, FY '23. Yes. FY '22, '23 years.
And what about Buxar thermal power? Is it going to be commissioned before '24?
This will be commissioned next year, FY '24.
We'll take our next question from the line of Dhruv Muchhal from HDFC Mutual Fund.
Sir, is there an FX impact this quarter? And if -- what is the amount?
What is the impact -- what is your question?
Foreign exchange impact this quarter.
Foreign exchange impact. It's INR 80 crores.
Sir, INR 80 crores is the impact or INR 80 crores is the FCRV amount?
It's the FCRV amount.
INR [ 50 ] crores is recoverable from the beneficiaries against the Rampur project.
Out of these 82 -- INR 80 crores, INR 50 crores is recoverable from the [ beneficiaries ] will be [ pass-through ]. That is in case of our operational projects, Rampur project.
Okay. Okay. So INR 30 crores is net impact. Because INR 50 crores, you would have recognized in the regulatory deferral account?
Yes. Yes, yes.
Got it. And sir, so this was almost similar to the last quarter. 1Q was also about INR 30 crores impact.
Yes. Yes, that is...
Sir, the second thing is, can you give a total sum of what is the under construction renewable capacity that you've already won? And -- in terms of megawatts, and what is the total CapEx that is likely to be incurred on this capacity? And what would be the potential revenue on this capacity?
Your question is regarding the capacity which we are developing of renewal projects, you want to know?
Yes, sir, which we have already won in terms of bidding or in terms of final number.
I would like to share that there are different stages. We want the project to throw competitive [ the date ] and the tariff is determined. But actually, the project is allotted, and we start construction only then this tariff is ratified by the concerned regulatory mission, state electricity liability commission. So...
Sir, if you can probably -- for simplicity's sake, you split it between 2, that is already -- I mean, that is in your hands that you've already won? And within that, how much the tariff is approved and for the remaining, which is not approved? So probably we can...
The tariff is different for different projects. Total is about 1,400 megawatts. It is between 1,400 to 1,500, and we had just last -- only last -- yesterday, we won 83-megawatt then -- it will be more than 1,500 -- about 1,500 to 1,600 megawatts.
1,500 to 1,600. And sir, what would be the expected revenue on these projects? And what would be the total CapEx that you will have to incur on these projects, including what you have already spent in terms of [ stability ]?
Revenue, if you think of -- in terms of revenue, say, 1,500 megawatt project, the expected generation -- power generation is around -- about 3,500 million units. About 3,500 million units. So tentatively revenue, we can take as [ 2.5 ], which -- so in it is around INR 875 crores revenue. The revenue will be around INR 875 crores. Say, about INR 900 crores revenue from these projects.
And sir, CapEx will be?
And the CapEx will be -- for 1,500 megawatts, this CapEx will be around INR 7,500 crores or say, INR 8,000 crores.
Sir, just a small request, you are winning a lot of projects in solar and wind and hybrid, if you can probably on your calls or in your commentary, you can provide the total quantum of solar -- or renewable projects that is under execution, the revenue potential and the CapEx, that would be very helpful to [ help us ].
Yes, definitely. [Foreign Language] if you share your...
Yes, sure. I'll do that, sir. I'll do that.
There's differences, so can also -- we can share it.
Sure, sir. And sir, one last question. The usual question is on Arun-3, if you can share the -- what is the [ HR 3 ] stage right now? What -- I mean how much kilometer is done? And what is the monthly run rate for the last 3 months?
Yes. The charted total length is 11.8 kilometers. And out of 8.8 kilometer, we have already done -- heading 9.54 kilometers, we have already completed.
9.54 heading is done.
Yes. Similarly...
What is the monthly run rate for here? I mean what are you achieving in the last few months, last, say, 2, 3 months?
Last, 3 months, I'll say, around 300 meters average that we've done. We are working on 6 fronts. We are working on 6 fronts. In some fronts, the achievement is 60 meters, in some front it's for 30 meters or 40 meters. It depends on the rock we encountered during the course of excavation. So the average monthly achievement is 300 meters.
300 meters. Got it.
Our next question is from the line of Mohit Kumar from DAM Capital.
So my first question is on the Arun-3. What is the status of PPA? Is there any development in that regard?
Yes. PPA, we are trying from different corners, from the different beneficiaries. We are -- we have already approached the states. Now we have signed MOU with the PTC as well as the review [ energy ]. So we are exploring the possibility of having [ CPSC ]. They will have the back-to-back [ CPSC ] for this call. So we are in the process of signing a [ CPSC ] with these 2 entities.
So clarification, sir. Does that -- does Nepal power plant is covered under HP obligation?
No. Government of India so far as of now has not allowed HPO benefit to these projects located [ without ].
What is the cost structure of the PPA? How are you approaching this under the under the state? Is it fixed tariff? Or is it again a CRC-based on...
The basic guiding model it is the CRP model. But we have to see because with the CRC model, tariff declines with repayment of the debt also and the decrease in the depreciation quantum also. What we are trying -- if a PPA signed at lump sum rate. There is no reduction on [ net ] debt. So we are exploring these possibilities, so that over a period of 25 years that -- because the concession period is 25 years. So we will very economic also on that.
When are we expecting Arun-3 to commission, sir?
Arun-3, next financial year '23, '24. By March '24, we will complete that.
So both these -- both these power plants from Arun-3 will be mostly up and running.
Most likely. Though Arun-3's commissioning date is February '25, but we are trying to complete it in the next financial year. We are doing our best.
Sir, is it possible to share the incentive number for H1 FY '23 and H1 FY '22?
Yes, sure. In last year, total incentives -- '21, '22, total incentives were INR 252.57 crores. And this year -- this quarter, total incentives are INR 73 crores. And so far -- total percentage -- let me check if we have the data. This half year, INR 147 crores incentive so far -- [ INR 160 ] crores. Sorry. This was last year. It's -- INR 151 crores this year, in the half year against INR 147.97 last year. So the comparison between the 2 quarters, last year quarter and this year's quarter.
Yes. Sir, [ in the annual ] portfolio.
Third quarter over the half year.
And on the renewals portfolio, so how is the game plan? Are we trying to -- is there any chance that you might [ hide ] the asset? Is there some thinking this subsidiary for should try to at least start with the [ end bit ]. Is there something which you thought of right now? And also the -- what kind of capacity you are expecting to get commissioned in FY '24 and FY '25, for renewables?
Renewables. Renewals, this FY '23, the capacity addition will be around 205 megawatts. Yes. Hydro is also renewable. But if we exclude hydro, then, what, 145 megawatts, solar. And 50 megawatts [ wind ], this is hydro. So far as the next year is concerned, our 1,000 megawatt project under CPC scheme that will be commissioned. And 100-megawatt [ of Omkareshwar ] will be completed. 200 megawatts in Bihar. 100 megawatts in Punjab. 100 Gurah, and 125 megawatts in UP. [In Karesh ] and this [Foreign Language] -- in total, let's say, So total about 1,700 megawatt solar projects will be commissioned next year, FY '23.
1,700 megawatts?
Yes, 1,700.
I thought the entire portfolio is 1,500 megawatts. Isn't it?
Entire portfolio is not 1,500.
That is about 3,600.
The entire is 3,600, but these projects 1,500-megawatt projects are under construction. So some projects will be put under construction for the next couple of months. So total, next year, this is about 145 megawatts [ by year end ], and rest of the about 1,700 megawatts project next year, financially will be completed.
Understood. Understood. And balance in FY '25, right?
Yes, balance in FY '25.
And is anything on the listing or monetization of the asset, sir? Renewable assets? Because versus with the commission in the next 12 to 18 months? Are you thinking of some kind of monetization platform.
End of the '24 or '25.
Then FY '25, we will consider listing because we have separately incorporated a subsidiary for these renewables only, SJVN Green. So when we have some portfolio of operations projects that we will try to list the company.
The next question is from the line of Aniket Mittal from SBI Mutual Fund.
A few questions from my side. Firstly on Arun-3, if you could help me understand what is the percentage of tower erection works that have been completed?
Percentage of tower erection, in which case?
For Arun-3, on the transmission front.
Yes. Arun-3 power erection, exact data we will -- we can share with you later on. We -- it has been divided into 2 packages. Hilly area packages -- there are 7 districts involved in Nepal, hilly area and plain area, and most of the towers in plain area. The foundations have been done. About 70% foundations have been done. But in case of hilly area, the land is yet to be handed over. We are in the process of taking over the land. So we're laying all the foundations -- foundation stone and the foundation laying of the towers is yet to take off in most of the areas. Data, we can share, if we can share the number or put in or send a name.
So with respect to this hilly area, we would yet to be awarded packages as well? Or have you awarded the tower packages over there?
Well, as I said that we have divided into 2 packages, one in the hilly areas, most of the areas in 3 districts. It's Sankhuwasabha, Bhojpur and 1 other district. We last 4 districts are in plain areas. So plain areas, the land has been already taken into possession for -- in many of the locations, possession has been late, and our reduction has also been done under process. But in hilly areas, the possession of the land is a little problem, but our teams are there and they are solving the issue.
Okay, sir. The other question was I just wanted to understand a broad-level thinking in terms of -- you've got upcoming projects in the form of Naitwar Mori and then Arun-3 but we've not signed PPAs for them. How is it that you want to really make use of your hydro assets coming forward? Is there a thought process of running a particular percentage of merchant? If you could just throw some light on that?
Yes. First, we will try to have PPAs, long-term or medium-term PPA. If that is not possible, we are also into the solar projects. We have already started some -- taking some projects at our own in Rajasthan and in other states, in Gujarat also, where we will generate the solar power and we will bundle and provide the RTC, around-the-clock power to the beneficiaries to -- either through exchanges or as a merchant plant. So that is under our consideration.
Okay. So Naitwar Mori. So for example, you mentioned should come up in FY '23. And has there been a PPA signed for it?
For which project?
Naitwar Mori.
Naitwar Mori, not yet. Not yet. We are trying that as power is bundled with some solar power. We are trying to establish some projection in [ mature ] solar projects or some other projects, also. And on the other hand, we are approaching the bulk consumers also, who require bulk power industry. We are also approaching these bulk consumers, also.
The other question was in terms of the Kholongchhu project in Bhutan, is there any update on that?
Kholongchhu project, this is ready to take off, but at the 2 government levels, Government of India and Government of Bhutan. Government of Bhutan is not comfortable in the JV mode, joint venture mode. So they have time again requested government of India to change it from JV mode to IG mode. So there are discussions going on at the government of India level. So we are just waiting for the outcome, whether -- if it is to be put under IG mode, then in what way SJVN participation will be there. If they want to construct it as their own, then naturally, we will exit from that. But in that, we have put the condition that then they have to pay back our equity contribution, which we have [ actively had ] made along with the reasonable rate of interest. That was our condition.
Got it. I just have a couple more. So one is, you won, I think, a recent project with MSEDCL for 200 megawatts, which I think is at a tariff of INR 2.9. If you could help me with what would be the capital cost for this project and the PLF that you're expecting here?
Yes, 200 megawatts, the capital costs will be around INR 1,000 crores to INR 1,100 crores. [ INR 1,110 crores. ] And PLF is at -- PLF will be around 26%.
Is the -- just to dwell a bit more on this because since we've given so much initiatives on the solar front to 2030, we've got a large capacity that we want to build. Are you also looking to develop any in-house expertise in executing on these products? Or would you continue to outsource them from an EPC perspective?
So for as construction is concerned, no [ constructs set customers at its own ]. They award it to even the private contract, private also. They awarded to some other body or some other their own subsidy -- I mean other arm, private construction. So construction business will be just contracted off, you can say it as also -- so we are not -- we are thinking of module manufacturing. So it is just the idea that we're thinking -- thought process. So we're not constructing at our -- by [ our own start ].
Sir, even now -- right now are you like separately procuring the models for your upcoming project and handing over the balance of system to others? Or is this like an entire package that you hand out to the EPC contractor?
The projects have added so far, they were in the EPC mode, supply as well as erection modules and system all by the EPC contractor. But in the coming time, we are also thinking of separating and segregating it. Procuring modules in a different mode and awarding the balance of supply parts to some other contractors. So if it is economical, we will -- we are thinking of going in that direction.
The next question is from the line of Dhruv Muchhal from HDFC Mutual Fund.
Sir, you mentioned that the Naitwar Mori project is starting next -- this year itself. But you mentioned that you have yet to sign the PPA. You're looking at probably bundling with solar or approaching bulk customers. Sir, just trying to understand because the project is likely to commission very, very soon. So I mean just trying to understand the commercial arrangements are yet to be firm. So what would -- in the interim, you would be, what, selling it in the merchant market? Or how do we think of this?
We are in the process of having tie-ups with [ the relevant ] consumers or some other entities. If it is not there, but until that time, we can sell it in the open market in the exchange also.
Okay. Because this project would probably classify although this is small -- I mean relatively small for the overall scheme of things. But this project would also classify under HPO obligation, if I'm not wrong.
Yes. [indiscernible]
Can't you look to sell it to some discoms who are looking for meeting the HPO obligation? Because that will give you -- or do you think you will get a better price when you're selling it to a bulk consumer?
Bulk consumer, yes. If we clinch a good deal with them, so some consumers are there in the steel industry or some in oil industry. So we are eyeing that opportunity also. So -- but in the long run, some PPAs here in the open market, uncertainties are there.
Have you got some initial interest when you're seeing bulk consumer? Have you got some initial interest from any consumer that gives us some comfort that there is some market available for them to sign?
We are in the process of discussions with them. It will not be, I think, proper disclose at this time.
But that means you have got some interest, at least there is some discussion which is happening here.
Yes, we have got some.
Some discoms also, Dhruv. We have got some interest from the discoms also, they are asking for the commissioning situation, et cetera.
Okay. Okay. So because just trying to understand, if you sell it to a commercial customer, I mean, a non discom, then you'll have to also look into open access, the customer will have to get open access and all those other -- these regulatory issues along with the state government. So is that easy process? Or do you -- I mean that can be easily handled? Or that could be a hurdle when you're looking at this approach?
Open access is easy. I think from the regulatory front run, not so much problems. It is only the question of transmission of power, evacuation of power, taking power. So that capacity -- because there is 1 grid in the country. So the consumer is in a far best -- say that consumer wants to widely power. If we inject here in the northern grid, power can be made available to the western side or the southern side also.
Okay. So sir, final thing, sir. It is fair to assume before the project start, you will be under some kind of commercial arrangement either with the state discom or with a commercial customer to sell this power?
No [indiscernible] does not happen to. So no state [ commitment ] -- enters into the long-term PPAs. Because in hydro, if we go CRP model, the initial tariff is very high. The present-day government discoms have to bear the high tariff cost, whereas the subsequent of successor governments or authorities they enjoy the benefit of the lower tariff. So with the coming of solar and wind at the lower rates, most of the consumers, the discoms of the states are going for one solution for their power problems that is supplied from hydro, from wind or thermal or bundling, they want around-the-clock power. So we are also trying to dump that mechanism also, how to bundle it because we are in hydro, we are in thermal, we are solar, we are in wind also. So we are working on that business model, too.
[ Dhruv's renewable ] question.
Dhruv, you had a question about renewable portfolio?
Naitwar Mori. Is it including under construction, including projects that you have won which are yet to be constructed. I was looking for everything, including everything.
[Foreign Language] Under construction, Naitwar Mori. [ We'll take it off air. ]
[Foreign Language]
The next question is from the line of Aniket Mittal from SBI Mutual Fund.
Sir, just one clarification. So when you talk about these PPAs no longer being long term in nature or the state government is not willing to sign a long-term PPA. So when you're in discussions with some of these consumers, typically, what is the duration of PPE that are being talked about that you're looking to sign now? And secondly, would all of this be now a fixed tariff structure?
The long-term PPA, initially, it was about for 25 years or in some cases, 35 years or so. But now no discount even long term, they take it like 15 years. So we will try to enter into PPA with all consumers at least for 15 years. So rest of the things depend upon how board decides they negotiate with each other and come to the conclusion of some final outcome.
Okay. Maybe if you could just elaborate, I mean, in your view, what is the reason why like some of these states wouldn't want to enter into a 25-year PPNR, probably looking at a lower term of PPA? Just trying to understand based on the discussions that you would have had with them.
For example, say, my project on [indiscernible] comes at this stage. And by tariff, the first year tariff is, say, around INR 6. And say, after 10 years, this tariff from 6 years will come down to, say, INR 5 because debt portion is also quite part of that, the depreciation is also excluded under the CRC model. And after, say, 15 years or 20 -- 18 years, that is total debt is paid. The term debt rises -- debt in some cases [ just 20 ] years and in some new cases 18 years or 15 years. See, after 15 years, total debt is paid. And the depreciation, majority of the depreciation is also -- has also happened. So the tariff goes to INR [ 4.5 ]. But the government of this day, the government now with the state governments are just promising that we will give free power or power at a lower rate.
So they want power at a lower rate. They don't want power at INR 6, whereas if this power after 10 years. So they are not hinting after 10 years. They say that after 10 years, there will be some other person in power or other party in power. So why to think of the questions on the state of the people after 10 years or other policymakers. So they want -- if you are able to supply power, say, at INR 4 or INR 4.5 per unit by when you bundle it with solar or some other sources. So we need power at cheaper rates. That is the reason state governments are not interested in buying for -- having long-term PPAs.
Okay. And so the tariff structure will also be -- I mean, but that structure you are discussing, but fundamentally now we have fixed tariff structure. It wouldn't be a decrease in tariffs, such which you typically have, let's say in a regulated model?
Yes. Fixed tariff. That is also another solution, fixed tariff. But we have to say that fixed tariff, that is lower than what the CRC model provides. Because initially, if we enter into such tariff at such a rate, we have to return this loan also. So rather -- the accruals, the cash inflow is sufficient to meet the debt repayment or not. So that things are also to be kept under consideration.
Okay. Just one additional question. So going forward, you've got a few projects that are also, let's say, under clearance status or under survey, investigation status. Would you be willing to go ahead with these projects if there are no PPAs at a site? Or would you fundamentally want the PPAs to be signed and then go ahead with the construction?
In case of the solar, mostly of the solar, the PPAs are already -- there have been -- no PPA signing is there. But just the rate that state government or the [ year ] entity will achieve the power. But in case of, say, hydro projects, the EPS signing in the beginning has been a difficulty in the past also, and is also difficulty at present also. Because it is not certain that the hydro project will come, say, in 5 years or 7 years or 10 years. So there is an uncertainty. Uncertainty on the power on the part of -- but also on our part also. We cannot commit formally that we project -- I start construction today, we'll be able -- will be completed in '27 or '28. So the tenancy on the power of the per the financial part of the consumers or discoms is that in case of hydro projects, PPAs are signed just closer to the completion of the project.
Okay. I mean I'm not trying to compare, but typically, when I look at, say, one of your competitors, that doesn't seem to feel the case because they have mostly the PPA side. I'm just trying to understand, more from a willingness perspective, as in would you be willing to...
We can have a separate session on your questions, also. We are running short of time. I have another meeting also now.
The next question is from the line of [ Varun Bang from Ranson Investments ].
Sir, my first question is on capital financing. So some of our new projects that we are looking at are less lucrative from a profitability perspective because some of these projects are 80% debt finance versus the normal standard of 70%. So just want to understand your thought process, do we not push for 30% equity that reduces risk as well and improves [ per ] for PAT. So I just want to understand your thought process here.
Yes, 70% equity is beneficial to the developer because the return on equity comes on that, but to keep the tariffs reasonable -- because ROE fit for hydro projects or expected from the solar production in [ our right ] side, whereas the debt available is on the cheaper rate on the lower rate. So if we increased debt from 70% to 80%, the debt portion of interest on I'd say -- or the interest on the borrowings is lesser as compared to the return on equity. So to balance it, to keep the tariff reasonable. So that's why some 70% to 80% debt financing has been opted. But in the case -- in those cases, we are in hydro also, we are trying to keep equity at 30%. There, tariff is reasonable.
Ladies and gentlemen, due to time constraints, that was the last question for today. I would now like to hand the conference over to Mr. Rupesh Sankhe for closing comments.
So we thank Mr. Nand 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 so much.
Thank you very much. Okay.
Thank you. On behalf of Elara Securities Private Limited, that concludes the conference call. Thank you for joining us, and you may now disconnect your lines.