Tata Power Company Ltd
NSE:TATAPOWER
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Tata Power Company Ltd
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Ladies and gentlemen, good day, and welcome to the Tata Power Q1 FY '24 Earnings Conference Call. [Operator Instructions] Please note that this conference is being recorded.
I now hand the conference over to Dr. Praveer Sinha, CEO and Managing Director, The Tata Power. Thank you, and over to you, sir.
Thank you. Thank you very much. And good afternoon to you all the analysts who have joined for the call.
I have with me my colleagues, Sanjeev Churiwala, CFO; JV Patil, Financial Controller, Kasturi and Rajesh Lacchani from the Investor Relations and other members on the finance team.
Just to give you a little background on the power sector globally and in the country. Our -- during the first quarter, that is during the period April, May, June this year, there were extreme weather conditions. We had heavy rains right through these months. And we saw that we also had the cyclone in the western part of India, impacting Gujarat.
We also had the extreme weather conditions in Odisha where a large number of times, the Kal Baisakhi, which is a lower level of cyclone came over there due to extreme heat conditions. And due to all these reasons, the consumption of power during the last quarter only increased by 1.5%, which was expected based on the earlier trends, in fact, the month of February has seen very high temperature.
We were expecting a much higher growth in the consumption. We also saw that how globally the coal prices have come down. And to that extent, today, the imported coal is available in large quantity and at a much, much lower price compared to last year. We also saw that the prices of solar materials that is solar cells and modules and wafers have come down drastically.
And we expect that with more capacity addition that will take place in China and some of the other countries in Southeast Asia. They will be an oversupply, and they will be much restrained prices of cells and modules going forward.
As far as Tata Power is concerned, we have done -- this is the 15th consecutive quarter in which we have shown a growth in our PAT. This year, for this quarter, our reported PAT is INR 1,141 crores compared to INR 884 crores. And if we see the PAT before exceptional items, which is in the core business, it is INR 906 crores compared to INR 884 crores. Revenue has virtually remained flat INR 15,000 crores -- INR 15,003 crores compared to INR 14,776 crores. But there has been a huge improvement in the EBITDA, which has grown to INR 3,005 crores compared to INR 2,107 crores, that's 43% growth, showing the robustness of the core business of Tata Power.
We have also seen that during this quarter, all our businesses have done exceedingly well whether it is our existing generation business. All of them have performed much better than the previous year. And the benefit of efficiency and improved cost control, the results are there for us to see.
Similarly, our Mundra plant has operated during this quarter under Section 11. And it continues to do that till 30th September and if the heat conditions continue, it may get extended. And to that extent, our operations at Mundra are cost reflective and our losses are very restricted over there.
Our coal business, of course, though it is doing very steady because of the prices coming down has reduced profit compared to last year. But the reduction in profit in coal business has been more than made up by our existing operations in our generation business, Mundra, as also in our renewal and in our T&D business where all our businesses are virtually getting stabilized. And the improvements that have happened over there because of fundamental business, which has become much more robust. We will see this continuing in future quarters. And is the precursor of the improvement that we would see subsequently.
In our transformation and distribution business, our Odisha business has stabilized to a large extent, notwithstanding the fact that we had very tough 3 months, wherein we had to do huge amount of restoration activity in [ greenfield ] activity to take care of the weather conditions.
But I think, again, the Odisha business has stabilized and future quarter performance will be much, much better for us to see. Our EV business also has been doing consistently very well. Our operations are right across the country. We are nearly 4,400 of public chargers, 50,000 home chargers and large number of bus chargers that we are putting. We are one of the largest number of bus chargers nearly 1,200 in various cities in the country under ESL tenders that was won by our OEM partner Tata Motors.
If we look at our other areas, our balance sheet has improved. Our net debt to EBITDA -- our debt equity ratio continues to be at 1.1. And our working capital has improved over the period of time, which has helped us to ensure that we are within all the financial metrics that we have planned for ourselves.
Though the debt during the period increased because of the huge CapEx that we have planned this year, INR 12,000 crores, we would still be within the ceiling of 3.5 for the net debt to underlying EBITDA. We have -- during the quarter, we have also seen that our ratings have improved both ICRA and CARE have upgraded their credit rating from AA/Stable to AA/Positive. And this is a reflection of the performance of the company in better management of them financially.
We have also been awarded in a number of places, whether it is in terms of employee brand or also in areas such as corporate governance. And I think it all demonstrates and shows the good performance of the company in all use. I'm sure at Tata Power, the way it has been steadily improving its performance, we'll continue to do that in future quarters also.
And we'll maintain a very healthy balance sheet going forward. All our existing operations and the growth areas will continue to perform well in the future also. And I'm sure we will continue to get your support in meeting all the objectives of the company.
With this, I will ask Yash Shree to open the floor for questions.
[Operator Instructions] We have our first question from the line of Sumit Kishore from Axis Capital.
My first question is on the solar EPC business. The solar rooftop revenue is down year-on-year. Solar pump is also down, and the quarterly run rate for the including scale solar EPC revenue booking is significantly low as compared to the INR 170 billion order backlog that you have there. So how would you size this performance up relative to the FY '25 and FY '27 target that you had given us on scale up for solar EPC business?
So this is a timing issue. One is on solar pumps, we are by design we are going slow because the orders under the KUSUM program have not come. Also, the margins in the KUSUM program in the earlier months were very low. And hence, we have decided that we'll wait for the device KUSUM program to come before we go full out.
As far as our rooftop is concerned, our business has done very well in this quarter. The margins have improved tremendously. And we expect that the order backlog that we have, we will be executing in the subsequent quarters with much better and higher margins because the emphasis is now that we should improve our margins in all these business, having established ourselves in more than 460 cities with our channel partner. And that's what you will see in our PAT and EBITDA for the rooftop business.
Similarly, on our EPC projects, you will see that our margins have improved, though we have not executed too many orders because the full benefit of lower prices of cells and modules, which we are now going to get, will get reflected in Q2, but more in Q3 and Q4 because now we have ordered all of them, and they will start coming from the month of September, August.
So you would see that on an overall basis, we will be doing very well in all these businesses and the real improvement and the benefits you would start seeing in the subsequent quarters.
Sure. My second question is on Mundra. We see that this plant availability despite Section 11 being in vogue was just about 54%, in fact, down on a year-on-year basis. So why is that? And is there any update on the Mundra PPA resolution?
So one of the units is down, and there was a transformer failure in one of the units. So only 4 units are operating out of the 5. And then we started operating under Section 11 from 15th of April because we were wanting to first resolve the FCPA issue. But since Section 11 was already imposed there was a delay from the procurer side to finalize it. And then we probably operate it under Section 11.
So I think this quarter, you will see our ability will improve drastically. Incidentally, the plant is operating, all the 4 units are operating. And being a low cost or one of the most efficient plants on merit order it is being scheduled compared to all the other plants -- nearby plants in Gujarat. So I think you will see much better performance in terms of both availability and P&L. But yes, in the first quarter, we've missed the first 15 days, and that's why you see a lower availability and...
Got it. What is the implied equity value of Tata projects from your fund raise which has happened there?
Sanjeev?
Sorry, could you just repeat your question?
What is the implied equity value of Tata projects for the fund raise which has happened in Tata projects, what is the implied equity value for 100% equity stake?
Okay. So basically, you're talking about the number of shares that is held by CGPL. That has come down from 47.78% to 30.81% and the book value per share is about INR 110 per share.
I'm not talking about the book value, I'm talking about the total implied equity value for Tata projects.
I think we have a stake holding of about what 31% which is a book value of INR 110. So you can simply multiply this by almost like 3.5x. That will be the total book value of the shares.
Okay. I will take that separately. finally my question is on the INR 100-odd crores of income that you have booked from Maithon that is a nonrecurring income, right? So we should be adjusting it in the profits?
So it's not a nature of a nonrecurring. I would say this is the nature of the business it is because across our various projects, we keep on having the discussion on the tariff adjustments and the relief that we saw. For example, in this particular case, during the COVID, of course, the plant utilization was slow. And we had to seek the relief. And they've given us the relief. It just takes time.
And normally, every year, you will have something or the other coming up, right? So we don't classify this as a nonrecurring. But yes, one particular plant, it may be nonrecurring, but it will have in some other plants. Across our entire [ thermal generation ] capacity across procurers every year you'll have something or the other coming up. And that's the nature of the business.
Fair enough. Over next 5 years, how do you foresee demand for group captive renewable capacities from Tata Group companies, especially Tata's? That's my last question.
Well, there is a lot of opportunity now, especially there has been amendment in the policy, both on group captive as well as on open access where meeting more than 100-kilowatt you can supply under open access and group captive, the definition has been widened. So you would find that all the new plants of Tata Group, which are coming, whether it is the electronics plant or the battery plant or any of the other new semiconductor initiatives, the growth of Tata Motors in their new plant EV plant which coming up in [ Sanand ]. So everywhere you will find that we will have huge opportunity. And we will virtually be having 100% renewable supply to all these customers.
But apart from that, we are also getting huge opportunities outside and we can share there's a very large list of group captive customers, which we have tied up last quarter, and we continue to get it on a regular basis. And you will see that our group captive business this year will be quite substantial.
We have our next question from the line of Mohit Kumar from ICIC Securities.
The first question is on the solar pumps. I understand that there is the new sticky bid, which is -- which is up for bidding. Can you just explain the -- even change in tender terms compared to last -- compared to the last tender which was put by EESL? And what are the time lines for the bids?
So the solar pumps are the last big bid happened over in 2020. And thereafter, the bids have still not happened now. EESL is not doing the bid and it's been -- that mandate has been given to [SECI]. So we still have to see now what sort of new bids are coming.
But what has also happened is that there are a number of states which are coming up with different combinations of these not for just solar pumps, but the rural electrification of grids or [indiscernible] like Maharashtra is coming up with a huge plan to set up nearly 7,000 megawatts of solar generation in rural areas, which is very close to existing grids.
So that the evacuation of power takes place and the purpose is that it will supply to the lower -- to the local areas in the rural areas to -- for pumping purpose as well as for local supply to the other types of consumer. So I think a different combinations of the KUSUM program will come, which I think will help a much better penetration of solar in rural areas.
Is it that you are less optimistic about the solar pump in the near term? Is that right fair assessment?
Not that it will go certain modifications because the earlier programs were not so successful. And hence, the -- each one of them -- the KUSUM has 3 components, KUSUM A, B, C. We are seeing that the KUSUM C initiative will possibly get more traction compared to the KUSUM A and B.
Understood. Sir, my second question is how much is the capacity you expect on the renewable side to install in FY '24 and FY '25?
See, there are 2 parts: one is capacity [ bid off ] and capacity installation. Now the installation of FY '24 and '25 will be all those, which will bid out in the previous years, and you have seen MNRE has also given extension up to 31st March for the projects, which were ordered in '21, '22. And also for DCR projects up to 30th September, 2024.
So I think many of the projects which could not come earlier because of a marginal increase in project costs, increase in cost of cells and modules. Those will get executed in this year. The ones where the beginning is being taken place, they will take about 24 months to come up. So they will only come in -- more in FY '26 and '27.
And sir our capacity, so how much you expect to install in FY '24 and FY '25? Is it possible to give the numbers?
I don't have that numbers. We can check from MNRE website or some of the people who carry out these reports, which...
He's asking our numbers...
Our number. Our number is I think this year, we are targeting to set up nearly 2.5 gigawatts, which partly is for us and partially is third party.
So that's the type of number that we are looking -- that we will set up in this year. And we -- as I mentioned to you, we have nearly 4 gigawatt output order which is under execution, which includes for us also and outside. That -- some of that will get into FY '25.
We have our next question from the line of Puneet Gulati from HSBC.
My first question is on the Odisha DISCOM. Can you help us understand how to read this -- your performance versus AT&C losses. Till last quarter, I think it was -- you were trending below the trajectory and now the quarter it seems you're above the trajectory? How should one read that? You can give some more color there.
So as I mentioned to you last quarter, because of the extreme weather condition, the billing efficiency and collection efficiencies were impacted. And that's why when you have to see the distribution business, AT&C losses, you have to see on a 12-month rolling basis and not on 3-month basis because some of the supply that takes place in the month -- in summer months, the collection happens in the subsequent month.
And some of the earlier collections, which we have -- that we have said this. So I think you have to see more from a 12-month cycle rather than just seeing on quarter-to-quarter because many of these things gets -- if there is lesser collection in one month. In the next month, you end up with doing 105% or 110% collection. And that will get reflected in the subsequent quarter.
Understood. And second question is on the Tata Power EPC business, what -- this quarter also margin seemed to be a bit lower. What would that be attributable to? And where do you think will this charges [ ultimately expensed to ].
So I think the worst is behind us as far as the EPC business is there, where we were under tremendous stress because there were some legacy orders which we had to execute. Now that the prices of cells and modules have come down, you will see getting reflected in Q3 and Q4. Q2 also some of them will start -- we will start seeing early phases of improvement. So you will actually see all the improvements coming in the subsequent quarters, and we'll be able to do a much better margin than going forward.
But I thought that hampers crossed last quarter itself where we reported almost 10% EBITDA margin. So what's...
I think there are some rollovers which were there, which could not get completed in the month of March, they rolled over to April, May. And that's what is it. And that's why you don't see too much of top line also compared to what we would have otherwise done. So going forward, you will find that our top line will also improve and the bottom line will also improve.
Understood. And lastly, you are one of the best capitalized firms in -- available equity for renewable power. How are you positioning yourselves in the SECI biddings as well? Do you think the current tariffs have become attractive enough for you to participate or you think the expected IRR is still low from this?
We have our band within which we operate, and we ensure that we bid within those band. We have seen -- last year we won a large number of order, nearly 2.6 gigawatt of orders that we have won. And most of that were hybrid orders. They were not pure solar or pure wind.
In any case we don't bid pure wind we only bid either pure solar or hybrid solution. So you will find that the returns in complex solutions of hybrid are much better compared to the returns in pure vanilla solar or pure vanilla wind.
Understand. And how is company prepared in terms of the more complex bids which are coming in from dispatchable power, et cetera, how should we think about...
Other than solar and wind, we are not gone for storage. We will now go -- now that you would have heard that yesterday, we went and signed the MOU for setting up pumped hydro. Now we will be in a position to offer a combined solution with storage also. So I think in those projects, we will be able to get much better returns.
And then what is the timeline one should think about some pumped hydro projects, still MOU, I presume?
Yes. But then the benefit for us is that these will come up on our existing hydro plants. We've already done a lot of work, and we actually have been working on that for more than last 6 to 9 months. And I can tell you that we will possibly be one of the first ones who would come online.
And then how much capacity can you build on your existing hydro plants?
Right now, we have planned 2,800, but we have -- and this is only at few of the reservoirs. We have 6 reservoirs. So we've not actually gone for the full potential.
Okay. So 2.8 gigawatt on the 2 reservoirs?
Yes.
We have our next question from the line of Apoorva Bahadur from Goldman Sachs.
On this pump storage project, just wanted to understand what would be the capital cost?
So see, typical, if you do a greenfield pump hydro, it would be about INR 7 crores to INR 8 crores. Since we already have the reservoirs, we already have one of the -- we have the dam over there so for -- storage. So we -- our thoughts will be less than INR 5 crores or more.
These are all closed loop or open looped?
These is all closed loop.
Understood. Sir, secondly, on Mundra, just wanted to understand at what coal price will we operate Mundra, even without Section 11?
Well, let's see. Right now, we are under discussions. So our objective is that something similar to Section 11, we should be in a position to negotiate. And we will work out and let you know once it's decided.
Okay. So sir, I just wanted to clarify, in case Section 11 is not extended and the global coal prices declined, right? Will we operate a plant? Or will we put it I mean, we won't loose...
I'm optimistic that the Section 11 will get extended or and during the extended period, we will be able to find out mutually acceptable solution.
Understood, sir. Sir, I think last question. Can you share the margin profile for group captive and rooftop projects that you're doing?
We have very good margins, I can tell you that. And that's why you see there is a lot of focus now on group captive projects. And once this results start coming, we'll be able to show you more. Right now, these are very early stages of group captive projects, but I expect by end of this financial year, we'll have some of them operating. And you will be able to see that details.
And sir, for the projects that we are doing for Tata Group. I mean, if you can quantify the margin for them? Will it be like...
We don't give the margin, but I can tell you, those are good margin projects.
We have our next question from the line of Subhadip Mitra from Nuvama Institutional Equities.
My first question is with regard to the coal profitability. If I look at the numbers based on the JV and the associated numbers, which I understand has the majority of the coal profits, clearly, there is a decline on a Y-o-Y basis. However, on a Q-on-Q basis, the number seems to have improved. So is it possible to get some color as to did we see better volumes on a Q-o-Q basis on the realizations or on the margins?
We'll share that with you. Because the coal company as its own working in terms of how much of mix of coal that we are supplying. So it so happens that in some quarters, it is more of high CV coal and less of less CV coal that bids well. In some quarters, we supply more of the CV coal and less of high CV. So it depends on what sort of mining mix that they have and the profit costs based on that.
Okay. Understood. Secondly, in terms of the upcoming renewable bids, right? So there is a plan to auction out maybe 50 gigawatts of renewables every year by the government. Along with that, you also have your own plans on the captive power side on the C&I side or on rooftop. So as a strategy, how would you look at your annual renewable capacity addition? Would you have an internal target, in fact the numbers of that one?
Yes. There is a number, but we play between the utility scale and in terms of group captive. And wherever we find we have a better margin, we do that. We are typically looking at something like 2 to 2.5 gigawatt of capacity addition.
2 to 2.5 gigawatt of capacity addition every year.
Yes. But it's a mix of group captive and utilities.
Of course, of course. And the pumped hydro-related opportunity, now that we have a ready 2.5 gigawatt of opportunity there, that would be over and above this run rate of 2.5?
Yes, that is to support the renewable power. So typically, it's in the 3:1 ratio. So if I put a 2 gigawatt of pumped hydro, it can support 6 gigawatts of -- 3 to 3.5x, so 6 to 7 gigawatts of renewable capacity for giving firm 24/7 power.
Understood. Understood. Understood. Would you be also looking at -- is it going to be a combination of hydro plus solar plus wind or more of solar plus hydro? How does the contribution be?
So depending upon what sort of requirement is there from customers. In some cases, it may be just solar and wind, but in some cases, we will give a good combination whereby we can give them 24x7, 100% power.
Understood. Last 2 questions from my side. Firstly, on the EPC side of things, again, with such a large quantum of tendering activity expected over the next few years. And so you would be sensing a large opportunity again opening up on the EPC side. So any thoughts on how large this opportunity can be or what kind of market share you would like to take here? And also, what do you feel are the sustainable margins?
So again, for us, the first priority is to meet our own internal department. So whether it is the group captive or it is the utility scale, we will meet that requirement. And I mentioned to you that we are looking at 2, 2.5 gigawatt. Thereafter, you will look at the opportunities, with the third-party opportunity. And again, it will be all dependent on what sort of margins we are getting and what sort of returns we will have in that.
Also now earlier we used to EPC projects with land. Now we don't do with land. So we do more of projects where the owner provides us the land and we develop the project for them. So it's again, a place where we are very, very careful. And there is a very calibrated growth that we have.
Understood. Lastly, on the Tata projects stake sale. I think this question came up earlier as well. So while you did mention that the -- I think book value was around INR 110 per share. What was the price at which the transaction was done? Is it possible to know?
No. So I think the rate was lucrative. We have not sold any stake right, because we did not participate in the rights issue, our overall shareholding dropped from 48% to 31%. And because INR 1,500 crore of additional equity burden was infused by the Tata Group, to that extent, the book value per share increased.
As a result, we have to book the profit that we see as an exceptional item, which normally should be in the OCI balance sheet, but because this is not in subsidiary but more of an associate, we had to book it in the P&L. But this is noncash item, as such has no implication of the cash of the company.
Understood. So this infusion of capital by Tata Group was again done at book value or at a higher number?
No, at a certain value itself.
Okay. Okay. Would it possible to know that number or that's not available?
Yes. I think it's already there as part of the release by Tata Project itself, we can forward that list to you separately.
We have a next question from the line of Bharanidhar Vijayakumar from Spark Capital. Sir, you're not audible. Can you use your handset?
Better now? I'm using the handset. Is it better?
Yes.
Was just trying to understand if the investment into pump storage opportunity would attract any regulated return of 16.5%. Is it the case?
No, no. This we will combine with our renewable business. So it has nothing to do with this. It's not on a regulated basis that we are going to supply.
Okay. So then it will not be also for just peaking process. It will be around the clock kind of...
It can be anything. It can be for peaking. It can be around the clock, depends on what sort of combination we will use.
Okay. And what is the update on the supplementary PPA for Mundra?
Right now, we are under Section 11. So let's see till what time it goes. Once it gets over then we will look at this aspect and the supplementary.
Okay. And on the Mundra site, you mentioned that given variable cost has fallen and it's attractive for the DISCOMS of schedule on merits order based facts, this is for the powers of plant, what would be like the variable cost per unit right now that is in 1Q '24 from Mundra?
I think it's around INR 5 but I don't have exact numbers, but it's around that number.
We have our next question from the line of Gaurav Kumar from TRG Corporate Ventures.
Yes. Sir. Am I audible, sir?
Yes. Please go ahead.
Sir, my question is Tata Power is expanding in the EV space. So can I know that how much does the EV station contribute really your revenue?
So there are 3 businesses: one is the home charger, which we provide against the return; the second is the bus charger where again, it is on a return basis that we do; and the third is the public charger where it is on a revenue basis in the sense, if the utilization is more, we get higher revenue. If it is less, we get -- so there are 2 which has a guaranteed return, including the fleet chargers, while one is a public charger, which is based on the demand...
And you also installed EV charging setup in restaurants and resorts as well. So what is the revenue sharing picture? I just wanted to know that you have installed more than 4,000 EV-charging points. So I just wanted to know that -- what the revenue share is expected? And how much revenue do you intend to generate in coming future?
So the typical arrangement with most of the people, whether they are in restaurants or shopping malls or any public parking place or it is in petrol stations, it depends on the owner of that place. In some places, it is a revenue sharing, in some places, it's a fee that you have to give on a monthly basis or a yearly basis. So different places have different models, and we work on those lines. And of course, there is a presentation that have been put. You can see the details of each of these chargers.
We have our next question from the line of Sumit Kishore from Axis Capital.
The question is what is the price of RE RTC wind, solar, hybrid with storage along with it? So at what tariff do you think is it viable right now?
See, it all depends where you are putting up. If you are putting up in Maharashtra, it has difference, if you are putting up in Rajasthan...
Take Rajasthan, which is very sunny and or take a site, which is windy and sunny.
Every place in the country is sunny, you tell me where it is not sunny.
So the idea is what generically to see how low that tariff has come.
So I would say that INR 3 range is a good range. People who have gone and done a crazy numbers, they are struggling to execute those projects and the margins are impacted. So in a better sunny place, better wind speed, it can be 280 or 270. So INR 3 plus/minus 10% is a good reference if you want to. But it's a very thumb rule sort of it.
Yes. But if we want to include storage along with it, say, battery energy storage systems or pump storage hydro for round the clock power. So then where would you see the RE RTC tariffs?
So Sumit, this is more an academic question. So let me give you a very generic answer or maybe a INR 5 tariff will be something that we care. But -- it all depends what sort of -- see you want 4 hours of battery backup or you want 2 hours of battery backup. It all depends on that. So very, very difficult to say what number and say that this is the correct number, and we cannot deviate. 2 hours should have a separate arrangement...
And just one question on the EPC business. We find that most of your utility scale, EPC order book, which is third party is PSU focused. So how is the risk sharing on price of procurement of modules between Tata Power and your PSU customer?
No one shares the risk accepting that if there is any change in law that happens. A good thing with PSU is that you get paid on time. Many of the other developers don't pay on time, and that's why we have been very, very averse to bidding for non-PSUs.
So you basically take the risk of procuring modules and the volatility of prices in modules?
Absolutely. Accepting for change in law. If there's any change in law that takes place so that we get protected.
We have our next question from the line of Gopal Nawandhar from SBI Life Insurance.
Sir, receivables actually has gone up quarter-on-quarter. So can you just describe which business this relates to?
So receivables is a function of the business growth. Also, many of them are a little cyclical in terms of, like I mentioned to you that in summer months, the consumption in distribution area increases, but the receivable comes in July month. So May or June will be very high consumption. And payments will start coming in July and August. So that's the cycle that you have.
Also some of the cycles of -- some of the supply that comes to us, we need to make payment depending upon what is the market condition. Sometimes we buy some of the material and stock it with us. So there what happens is the receivables that we get change. But I think over a period of time, our receivable number of days has reduced us.
Okay. And the second question is that we have seen correction in the cell and module prices. Obviously, it should help our existing order book in terms of execution. My question is on our plant, which we are putting for cell and module, how should one look at that project IRR? And whether the final product, which comes out of this plant will be competitive enough to -- comparable with the import or you will need some more support from the government to replace the import?
So we sell in volumes, you know that there is a basic customs duty. On module, it is 40%. And on cell it is 25%. So that's -- give the protection to the domestic manufacturer to the extent of the difference at which you would procure and save the duty, we service what you manufactured over there.
And in the Indian context, many of the plants, including our plant, we've got the PLI benefit and some of the other state incentives. So I think we are going to be very competitive, and we are going to be very efficient. And we will be much, much better place compared to the imported modules that others...
Okay. I'll just try to rephrase and understand. The point is maybe, say, 6 months 9 months back, when we started these projects, the prices were different and now prices have come off. So what will help you in terms of reducing the cost or what's the -- makes you...
The prices of the raw material also have reduced. See 6 months back the wafer prices were INR 90 a kg. Now it is INR 40 a kg. So everything has gone down. Your production costs will come down to that extent. And you will be much more competitive.
Sure. And the last bit on the wind side, we have seen a significant reduction in the PLF year-on-year. Generally, this is a high season month. So 3% reduction year-on-year, we have seen on the wind PLF. How should one look at it -- this in terms because...
Again, you should look at it all on a 12-month cycle. This year, the wind speeds in the month of June were very bad, but in July, it has -- quarter. Last year, the June month was very good, but May was bad. So these are things which are because of extreme weather conditions in such changes. And -- but on an overall basis, it is not happening.
You have seen that Mumbai has got rain what it was expected to get in the month of July itself. But August, there is no rain. June there was very little of rain. So I think on an overall basis, whatever rain it has to get the specification is more or less the same. But yes, it changes what used to take 3 months to fill up, today it takes maybe 2 months or 1.5 months to fill up. So that's what it is.
So there is no change in the -- overall change assumption or say, pattern -- structural -- there's no structure change in the pattern itself?
No. If you see on a 12-month rolling basis. If you see it on a 1-month or 3-month basis, you will find a change.
We have our next question from the line of Apoorva Bahadur from Goldman Sachs.
Sir, regarding the adverse weather events in Odisha. So is it sort of allowed as a force majeure in terms of the impact on performance also the incremental CapEx that you would have to incur? Or is it something that the company has to take a hit?
So it is not a force majeure condition, unlike full-fledged cyclone that takes place. So what happens is the regulatory system allows any of these type of CapEx that you need to incur. And you incur those CapEx as a part of your annual plan.
Okay. And sir, the impact on performance that it has, is that allowed under the handover agreement or...
No. The impact on performance, you need to catch up on that.
Okay. And how will the commission look at this performance? Will it look at it on a rolling basis? On a cumulative basis?
Only thing is on a yearly basis, nothing is on a quarterly basis.
So in case there is a bad weather event at the end of the year and because of that the performance is hampered, we'll be penalized?
Yes. So you have to -- it includes the 12-month period. Until and unless, I told you that it is a declared cyclone or a declared extreme weather condition, so if it is declared, then they would consider this suitably. But if it is not a declared weather condition, than they don't consider.
We'll take our last question from the line of Rajesh Majumdar from B&K Securities.
I have only one question. How should we read the profit of the share of associates and JVs for this quarter? It has gone up on a sequential basis. So what is the coal price approximately for the quarter? And should we take this as a sustainable run rate going forward? Is there any change in royalty tax which is incorporated in this also, yes. That's it...
So mainly, actually, there is a change in our quantity. Actually, there is a slight increase in quantity of sales this quarter and in addition to this because the prices have come down, so the cost of production also has been minimized. That effort has been put in by our co-JV partners. Those are the major things which has resulted in an increase in profit from our coal companies as compared to the Q4.
And in addition to that, definitely, the last year previously, there was a Tata projects losses that is not there this year. The losses have reduced substantially. If you remember last year, it was actually INR 240-odd crores. So this is hardly anything. So those are the 2 major things.
I think I'll request you to have a look at Page #32 of the uploaded investor deck. It has a complete breakdown.
I now hand over the conference to Dr. Praveer Sinha for closing comments. Over to you, sir.
Thank you. Thank you very much to all of you for joining on this call. If you have any more questions, please get in touch with my colleagues, me and Rajesh. And we'll be more than happy to share the details.
And I do look forward to having interaction with you during the next few months. And we will also have interaction with all the analysts like last year. We'll -- once we fix up the date, we will inform you about this. Thank you. Thank you for joining.
Thank you, sir. On behalf of the Tata Power, that concludes this conference. Thank you for joining us, and you may now disconnect your lines.