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Techno Electric & Engineering Company Ltd
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Ladies and gentlemen, good day, and welcome to the Q3 FY '21 Earnings Conference Call of Techno Electric & Engineering Company Limited, hosted by Asian Market Securities Limited. [Operator Instructions] Please note that this conference is being recorded. I now hand the conference over to Mr. Amber Singhania from Asian Market Securities. Thank you, and over to you, sir.
Thank you, Margarette. Good afternoon, everyone. On behalf of Asian Market Securities, I would like to welcome everyone to 3Q FY '21 Earnings Conference Call of Techno Electric & Engineering Company Limited. We have with us today Mr. Padam Gupta, Chairman and Managing Director; Mr. Ankit Saraiya, Director, along with their management team representing their company. We shall start with the opening remarks from the management, and then we will move to the Q&A session. Over to you, sir.
Yes. Thank you very much, and very good afternoon to all of you. I welcome everyone to our -- to discuss our financial results for the quarter ended 31st December, 2020. Anything said on this call, which reflects our outlook for the future or that could be constituted as a forward-looking statement must be reviewed in conjunction with the risk that the -- our industry faces and in turn, company is exposed to. Nine months results are not comparable on year-on-year basis due to the impact of COVID-19 in the quarter, April, June 2020, where we lost almost about 2 months in this quarter -- in the first quarter of this year. And we continue to be impacted with the local lockdown loss and quarantine rules by different states and particularly, Northeast, where these rules are the ones we rest. Let me quickly highlight our performance. For our Q3 financial year '21, the total revenue in this quarter stands at around INR 259 crores against INR 270 crores over the last year. The revenue of the EPC stands at around INR 210 crores. Revenue for the wind segment is at INR 45 crores, approximately. The company has recognized the differential of the tariff payable for this year and last year, pursuant to APTEL order dated 28/1/2021, where they have surprisingly reduced our tariff over '18, '19 by INR 0.975 per unit, which stands set aside.EBITDA for the company stood at INR 77.51 crores in the quarter. The operating profit for the EPC segment for this quarter stands at INR 36.5 crores approximately. Operating profit margin in EPC segment is at around 18% plus/minus compared to 17% last year. Operating profit for the wind segment is at INR 41 crores. Other income is at INR 11 crores, nearly at par with last year's. The profit before tax for the quarter is at INR 75.71 crores compared to INR 42.5 crores last year. That, thereby, it is up by around 77% year-on-year. The profit after tax is at INR 56.6 crores compared to INR 32 crores last year, signifying a high by 75% year-on-year. The EPS is at INR 5.15 crores. Coming to 9 months results, the revenue in 9 months stands at almost around at INR 748 crores compared to around INR 795 crores last year. And similarly, the revenue from EPC stands at around INR 580 crores, approximately. We have been able to cover most of the ground despite lower revenue in first quarter due to the challenges faced because of the COVID. The revenue from wind segment is at INR 97 crores, at par with the previous year. EBITDA for the company stands at INR 197 crores. Operating profit for the EPC is at INR 111.5 crores compared to INR 125 crores last year. The operating profit margin is at 19.3% compared to 18.8% last year. The operating profit for wind segment is at par with last year's, more or less at INR 85 crores. The other income is at INR 74 crores and around INR 75 crore compared to INR 36 crores last year. It includes -- it's basically high because of profit from the sale of investment of this INR 28 crores from KT Jhajjar to IndiGrid and the dividend we received from the JV for about INR 15.8 crores. The profit before tax sit at INR 219 crores. After -- profit after tax sit at INR 171 crores, approximately. The EPS at around INR 15.67 crores or INR 15.7 crores. The current investment values, including cash and cash equivalents, is at INR 800 crores. The order intake has seen a major growth or improvement in this quarter compared to our previous 2 quarters. We have almost booked the business of about INR 300 crores in this quarter from Power Grid and from Kerala state government, and we are further L1 in another about INR 665 crores business with -- which majorly includes 1 FGD order from DVC for INR 500 crores and another 1 TBCB package with Power Grid. If Power Grid wins, we will be awarded back to back.And this would take our total intake for the financial year to be around INR 1,000 crores, plus the unexecuted book as on date is around INR 2,000 crores. The outlook for largest business shifts more towards as conveyed earlier also, towards generating plants for pollution control systems and also it was the distribution segment. So the major is 1 FGD segment, where -- as for the notification of Government of India, all coal-fired type of plants need to limit their sulfur emission where SCBs and private sector have yet to implement the plan, but the CPSUs are really advanced in this case. And we expect business of around in the -- of around INR 150 billion in the next 2, 3 years at the industry level. Out of which, we may be eyeing about INR 1,000 crores over the next 2 to 3 years. [ Good ] business also for another INR 500 crores, INR 600 crores so that this segment continues to give us a space of execution at INR 500 crores a year. The Transmission segment continues to be stagnant, and it is limited only to the evacuation of renewable power at the moment. There is ongoing TBCB bidding for 66 gigawatt of renewable power, which is expected to be tendered out by June '21 against the -- which submission dates have been again extended or revised from time to time. So we don't see that in execution, these orders will happen during this year. We plan to bid for -- we also plan to bid for 4 projects, small value each, less than INR 500 crores in the state of Maharashtra, MP, Karnataka and Rajasthan. And the union budget for '21, '22 has allocated at 3 crores -- 3 lakh crores to be spent over the next 5 years for the pad solution to be -- and the funds will be linked to the financial performance and liability of the -- by the distribution companies.We are seeing that government is keen to implement reforms in past sectors, which are overdue. And they are even gone to the extent of talking about the licensing of the distribution segment, which will be a milestone in itself.We are seeing the good interest from large investors remit funds to participate in this TBCB bids along in partnership with us. This will enhance our assets to capital, and we'll be able to participate a bit more aggressively, although market here is really aggressive and intensive.On the distribution side, we see some more -- a lot of activity happening going forward in, particularly, in the case of smart metering and also the power distribution. Networks will also be, accordingly, made more smart and intelligent as a backup to the metering. The main aim of the government is to improve efficiency and contain losses. So that the health of DISCOMs could be improved, and its raise could be -- given to the consumers in terms of the power supply, which will be, again, I will say, already a big breakthrough. We will mention that the project that, in the near future, we'll be interested to us is a 9 lakh meter project in the state of J&K where we are already implementing, a project without issue of 2 lakh meters.Apart from this, they are reading in media that government will be utilizing the opportunity as reforming the sector, which are over pending in the name of Atmanirbhar Bharat, which will be -- which is actually a long-standing demand of the stakeholders. This is holding up the amendment to the Electricity Act, to the tariff policy and estimation of gross subsidy, payment of subsidy directly to power consumers, and a lot of planning is made through CA to give the visibility over the next 5 years on improving efficiency and stability in power of supply.As usual, I will restate that we are -- the power sector at the moment is at a very critical venture and something which should happen very shortly going forward. And it will be a game changer.Wind segment. We are, again, facing headwinds because of the poor financial health of the DISCOMs and the delays in payments, and there is a pressure on the tariffs also, which we have to constantly fight at regulatory regimes. We hope to realize our pending payment of last 2 years shortly out of the INR 1.2 crores package announced by the Finance Ministry through RDC, PFC to DISCOMs to pay -- to clear the generator dues up to June 2020. We have already received INR 38 crores, and INR 28 crores is expected in this week, making it INR 66 crores out of the total dues of around INR 122 crores, which is a 50% as first tranche. Additionally, we have been speaking about the RDC price issue since the last few quarters. And there is no trading happening in this due to this -- after the APTEL stead, the trading of RDC, pursuant to CRC revising the floor and forbiddance prices and in the -- we are hopeful that the reorder dissolved in the month of October will be delivered shortly and see as the order will set -- will be satisfied. So -- and normal trading resumes. That is our expectation. In the coming years, I will again -- sales retreat that we are strongly seeing the cost sector reforms happening with the focus on efficiency, stability and reliable power supply, cost of our any improvement of financial health of the DISCOMs and this sector. The focus, however, we will continue to be on renewable power with the electric transmission, infrastructure has green corridors where your company has been the first movers. The transmission in construction is required for 500 gigawatt over next 10 years. Our thrust on overseas market is also bearing close. We are hopeful of bagging further businesses in the markets of Africa and Afghanistan. I want to discuss another interesting opportunity going forward. Techno has always been good in -- or excelling in this power-based solutions, particularly in power-guzzling industries like aluminum earlier. Now we see this opportunity emerging in data centers.We are -- the pandemic has created a lot of stress on digitization as well as online systems. And by virtue of huge population in our country and the rising penetration of more Internet and mobile telephones has led to a significant data proliferation. Among the consumers, we are the -- the total, however -- to handle this data, to present this data and also the privacy of the data as for the requirement of IND Ministry, India will be needed to add lot more data center capacity, which currently is at no more than 550-megawatt plus/minus. And we anticipate that this will grow to at least 2 megawatts in next 3 years and to 5 gigawatts in next 10 years. With such growth and related investment, we plan to develop an ultra-scale, hyper-density data center of 25 megawatt -- 25 to 30.0 megawatt, I'd say, in the city of Chennai. We'll be captively consuming the wind capacity we have in that state, and our data center will be carbon neutral. And that, along with the requirement of -- and we'll meet the requirement of hyperscale customers like Microsoft, Amazon, Google, Facebook, et cetera, because of their ESG commitments. The total CapEx on this facility will be INR 750 crores, which we intend completing in no more than 1.5 years. And 60% to 65% CapEx, although this happens in the electromechanical works, which are the core competency of your company. So we will not only benefit by utilizing the renewable energy produced by us in Tamil Nadu to be used as captively, but we'll also be able to leverage in-house expertise of doing these works. And also, in the future, we'll be able to take up these ones as EPC after demonstrating our capability in this area. With this now, I invite questions and any further elaboration you need on any of the points of my presentation.
[Operator Instructions] The first question is from the line of Renjith Sivaram from ICICI Securities.
Congrats on good set of numbers, and I hope that the growth prospects will be increasing after the budget.
Absolutely. Let this quarantine rules a bit more settled down as a nation. Today, we have become 28-country nation, normal 28-state nation. That's a huge challenge to handle.
Yes. So just on the other outlook for this year and the next, can you give some more clarity on this? Do you see still getting delayed? So when do you expect this Green Energy Corridor orders to happen and subsequently our order to improve? That will be my second. And third is partly this distribution reforms. So do we also plan to come out with some products because that will be a huge opportunity, 3 lakh crore of this distribution reform. So is there any thoughts from our side to participate in that?
You see, as far as the order book is concerned, I shared with you that we have booked order of INR 300 crores already, which includes 1 package of Sikar from Power Grid, which we have won recently in this TBCB bidding. We are further L1 with Power Grid in another, almost about 300-crore packages, which have to go through the TBCB bidding, and they should be mostly over by 15th of March. To my mind, they are happening one by one. So we should -- Power Grid is fairly aggressive. As we see in the past, their success rate is almost 80%. So we are very hopeful of securing this business. Additionally, there is a business happening selectively in different states also where we'll pick up like Kerala, we got INR 85 crore order recently to build a 220 kV 2 GIS stations. So similarly, we expect more business from MP as well as from the state of Ghana and Karnataka going forward. But overall, if you ask me, I would like to say growth will happen out of FGD business more where we expect to book almost about INR 500 crores. We're certain to -- we'll get tomorrow's towards Board meeting in DVC, it should be approved. So that will be another INR 500 crore where we are L1. And we are also talking to a private entity, very closely order to mature about INR 400 crores. So FGD should give us a good strength. Starch mission will continue to be stagnant at INR 500 crores a year. But this data center addition will be another business to us that, out of our CapEx, we'll have EPC of around INR 500 crores in our books that is to be executed over the next 12 to 18 months. So -- and also, we are seeing traction of businesses from other entities also in data center as much as we are finding interest from the investors from U.S. and Singapore in this business. So overall, I will say that business prospects are good.Now coming to distribution sector reforms, you see making product is never a forte of Techno. We have always been a technology, high-end, complex solution-based company. By virtue of DISCOM or distribution power getting delicensed, I'm very sure it will -- this sector will see through...[Technical Difficulty]
[Operator Instructions] We have Mr. Gupta reconnected.
Yes. My apologies, I got logged out. So what I was trying to say that as for Techno is concerned, we are fairly in a good position and constantly moving up the scale in solutions. But coming to distribution reforms and part of this INR 3 lakh crore, we will definitely be looking more on reforms not by financial injection into the DISCOMs but by definite steps which brings efficiency and improves performance, contains T&D losses. All that should be the major agenda of the government so that these are sustainable reforms and money is wisely utilized, not throwing good money after bad money.Some part of distribution has to be privatized, if not all, all of it so that new technologies can be deployed, new modern-day solutions can be a way of life. Consumer can have a choice like telecom, and there is a competition in place in every market, in every -- as far as the limit in every market. So definitely, it will sound good for everybody, a product manufacturer, solution provider or even a power distributor, power aggregator or power distributor, all will be good. So delicensing is a very sensible thought of the government, but we need to see the political will to go through it. As we have seen in the past, many good things have been talked about, but implementation has been very time-consuming or tardy.
Sir, just a follow-up, energy meters is one area where we are already giving some solutions. So wouldn't this distribution reform also drive a lot more of energy meters kind of product in that aspect?
Sir, not only energy metering, but I am sure even the networks will undergo a reconceptualization. There is so much of scope. The entire networks will be reconfigured, technologically and otherwise. And you will see that like telecom today, voice is no more a product, it is value-added services. So same future, I see down 10, 20 years in power also that if you can produce power at INR 2 a unit in renewables and it can be so distributed, the power at every rooftop and every countryside, it will be a revolutionary change. Once we have energy storage solution in place, we have renewable power, next corridor being produced at competitive prices, this will be altogether a different world. That's what I see in the next 10, 20 years. For young people, it will be a totally new lifestyle.
The next question is from the line of Sandeep Tulsiyan from JM Financial.
Sir, I have a...
Can you raise a bit of the volume?
Yes. Sir, is this better?
Yes, it's better. If you can a little more, it will be good.
Sure. Sir, firstly, just want to understand these order book and order inflow numbers I was not able to tally. So this INR 300 crore inflow that we mentioned is the 9-month number, right, not the third quarter number?
Yes. It's the third quarter number, sir, not 9 months.
Sir, but our order book was INR 2,100 crores, what we shared at the end of 2Q. You have done about INR 200 crores of revenue in EPC. So ideally, if you book INR 300 crore worth of orders, it should have increased by INR 100 crores, right? But it's gone down by INR 100 crores sequentially.
You see, what is happening is that some business becomes unexecutable also over the time by some of the orders with us. So we do make some minor adjustment here and there. So you can say executable value is around INR 2,000 crores plus/minus approximately.
So sir, can you share details of this INR 200 crores orders, which we have excluded from order book? Like which were these orders just to get some understanding around that?
You want me to name the order specific?
Maybe orders or the customers, in which area or transmission, PGCIL, state, what would be the order?
One order is obviously FGD for Bokaro of INR 300 crores. And then we are executing one order for Adani at Lakadia. We are executing one order for Sterlite at Karnataka now.
Sorry, my query was to understand which are these orders that you have removed, which you mentioned, because that gap is almost INR 200 crores. I want to understand which are these orders that you are now...
You send me a mail, I will tell you because I'm in Delhi now. Okay. I'm not in my office. So it will be difficult to give you. It may be distributed over 15, 20 orders.
Understood. I'll get in touch separately for that. And secondly, sir, just want to understand, so order inflow-wise, you used to guide that maybe annually what you are mentioning, INR 500-crore-odd. We should look at it on transmission side annually. Another maybe, say, INR 400 crores to INR 500 crores on FGD side and maybe INR 200 crores to INR 250 crores on the smart meters. So that should be the -- largely the opportunity of about INR 1,200 crores to INR 1,250 crores odd annually is the way we should assume?
Another INR 400 crores, INR 500 crores from the data center now, which we are starting with.
Correct. Correct. Yes, sorry. So that will add it up to INR 1,700 crores.
Yes.
Where first order we will do on our own, and then we will pitch it to the external customers.
Right. Absolutely.
And sir, for these 2 areas which you mentioned, one is data centers, this INR 750 crore, entire thing will be funded by Techno from its cash or is it a project under JV?
You see, to begin with, we have taken up this project. A lot of interest is shown by the foreign investors from U.S. and Singapore. But we are under NDA, so we cannot share more details with you at the moment. But ultimately, there will be a JV partner at the SPV level.
Okay. And sir, the second thing which you mentioned was this INR 500 crore bids in each of Maharashtra, MP, Karnataka and Rajasthan. So those are what essentially, these are BOOT projects that we would be bidding for?
Yes, BOOT, these are TBCB BOOT projects. We will be taking part in 4 of them, which are each around INR 500 crores plus/minus and collectively at INR 2,000 crores. So we'd like to win one of them, if possible.
Win 1 out of 4 is what we are targeting. Got it. And sir, last question if I may, please. On that mutual fund side, if you just give us what is the exposure of those bonds reduced to since you have been sharing consistently the progress on that part.
Now the exposure has come down to INR 150 crores, which we are hopeful to bring down below INR 100 crores by March. That is what it is. And next year, it will be a full exit. And that is not a mutual fund, I will say, that is a bond exposure.
Bond, bond. Sorry.
The lessons learned are that whatever money you get, you keep in mutual fund now, which is safe and healthy. So the balance in mutual funds is also around INR 500 crores in cash other than this.
Okay. Got it.
And another INR 150 crore is investment continuing in our JV -- SPVs with Patran in transmission.
The next question is from the line of Deepesh Agarwal from UTI AMC.
Sir, my question is on the data center side. So do you have in-house expertise on setting up data center or you are relying on some other party for this?
You see, I cannot claim to have a capability to give time for data center in-house. So definite -- but we have a lot of capabilities in element building of a data center, let me put it. Because data center, by and large, is a multilayer power solution, which has to be ensured to be available in any circumstances so that availability and reliability is no less than 99.9.And additionally, you have to supply quality power to the racks. So definitely, we will be working for only first project with a global consultant who do these jobs day in, day out. So they will be hand-holding us so that first project and customization happens together in partnership with them. Partnership, I mean, under their consultancy and detail. And once we have gained experience, definitely, we can be on our own legs.
Okay. And sir, you mentioned that CapEx of INR 750 crores. So at INR 750 crores CapEx, what would be the power requirement on this data center? And would we be able to tie up our vendors entirely for this data center?
Absolutely. That is our objective, sir, that we have a capacity of 112 megawatts in the State of Tamil Nadu, which at a given PLF of 25% if we translate like-to-like to a stable powerhouse, it will be equivalent to 25- to 30-megawatt depending on the power produced. To be more precise, we produce about 200 million to 220 million units per year. That will be our availability of power with us. And a data center of this size will be needing that kind of power within plus/minus 10%.
Okay. Okay. So basically, this will solve our issue with respect to working capital and this will also give us an opportunity to have a higher rate than what we currently touch on the vendor side?
Absolutely. You see, the power which data centers buy from the state is at INR 8. So your power gets better valued. Your power asset gets better valued and you are in a sunrise sector called data center. And once we do one of it, we'll also be recognized as EPC, which are needed in the country to set up these capacities.So it will be -- and our aim is like transmission. We started as EPC, then came in TBCB. We don't want to see life cycle of the TBCB projects. So we park with IndiGrid and InvIT.Similarly, these data centers also find ultimately REIT or InvIT happens in this segment of business also worldwide. So the business model will continue to be same that you develop it, you operate it with a global partner, rent out to one of the digital data companies like Facebook, Google or Microsoft. And they are partly in REIT or InvIT like Singapore, there is a company called CapitaLand and funded by Government of Singapore itself. So they take care of itself. It's a simple business model, ultimately.
Okay. Okay. And sir, of this INR 750 crores CapEx, what portion of the CapEx will be executed by Techno's, say, EPC arm? And would you be earning an EPC margin on this?
You see, basically, we will be doing the power receiving than power conversion from EHV to HV and medium voltage to LV. Then captive power is another layer of power, then another layer of energy storage solutions or kind of a UPS solution around it with a battery backup as practiced. So multilayer power solutions are within our forte apart from cooling systems, firefighting system, safety security systems, which are integrally part of these stations.So we have already taken land in the State of Tamil Nadu at Chennai. Land has been given by their industrial estate in SIPCOT. And we are in a very advanced stage to now launch the project.
Okay. So would it be fair, we will be at least doing 50% of the value in-house and making a company level margin?
About 2/3 of it, sir, almost 2/3.
And making company level margins also on the EPC side?
The margin level, maybe 1 or 2 notch lower or upper, but it will be a long-term margin, sir. We will ultimately leverage margin, but it will become more valuable to you.
[Operator Instructions] The next question is from the line of Rohit Balakrishnan from VRDDHI Capital.
Sir, am I audible?
Yes, yes, very much audible.
Sir, in terms of your FY '21 business, so going by your earlier guidance of this quarter, Q4 we should do an execution of INR 500-odd crores because you mentioned INR 1,100-odd crores like probably revenue. So is that a correct assessment or there is a change in that?
Yes, you are right. We like to target that. But presently, what we are finding is that DISCOMs are short of money, sir. So we don't want to put more working capital in the business unless cash is visible with the customer. That is how Q3 we could have done another INR 50 crores, which we did not mainly because we are not getting payments from DISCOMs the last 2 months. They are starved of money, funds, whatever you say, due to pandemic.So if their funds position improves and government funds comes in, we are definitely hopeful of INR 500 crores. Otherwise, INR 400 crores should be the fair achievement. So you can say that if INR 1,100 crores of EPC we don't achieve, we'll definitely achieve it with a wind top line, wind power, other than other income. So that is purely a realignment of progress with the availability of funds. We don't want to create more debt, book debts by raising our top line.
Right. Right. And so next year then, I mean, are we looking at like probably what you said. Excluding this data center, are we looking at like 10%, 12% kind of growth only on the overall EPC side or I'm talking again excluding data centers?
Are you talking of this year or next year? '21, '22?
'21, '22 I'm talking about, sir.
'21, '22 will be definitely better year as far as I can see. Vaccination has started and government is serious for economy growth. Budget is very supportive. So I'm sure liquidity should not be an issue after April onwards. This is a issue only temporarily limited to this year.But then FGD will be another growth center rather than data center, which, for this year, we wanted to do INR 100 crores but could not do even INR 40 crores, INR 50 crores. So next year, FGD will contribute no less than INR 500 crores. So another INR 750 crore we can easily expect from transmission and distribution. And obviously, data center will also be adding to the top line. So we are very confident that '21, '22 will achieve a top line of INR 1,500 crores.
Right. And for this data center business that you just talked about, so INR 750 crores is what we will, is the overall investment. So I mean how someone look at it from a company perspective because we'll be doing some -- there will be some EPC revenue also and then there will be some wind business also coming through this as we'll be using it captively. So on a total investment basis, how do you -- I mean from an ROI basis, what kind of ROI are you looking at from this business?
You see, if you study this segment of business, today, it is a very healthy and rewarding sector as of today. The EBITDA is not less than 50% in this market at a full power cost because power is the biggest raw material post commissioning of the data centers other than the manpower cost. So power is our in-house availability with us, which will contribute at least INR 150 crore operationally apart from another INR 100 crore happening as a rental value.So Techno's delta will be largely out of the power side, and the EPC capability to do in-house is almost 2/3 of the project cost. You can compare this with another TBCB project that you create a project and you do EPC in-house, and ultimately, you happen to park it with REIT or InvIT at a market-driven price. But we'll continue to be the power supplier to this facility, which will continue to give us at least about INR 150 crores top line as a power supplier in the process.
Sure. And eventually, you will sort of, like you do in TBCB, you would sell it to...
We will exit through REIT or InvIT accordingly down 2 years.
Right.
And secondly, we will also be developing these facilities in a JV, sir. We created a separate holdco for this business, which will be jointly held by a foreign investor along with Techno Electric. We won't like to take whole risk on our books. That is our wish at the moment.
Sure. Sir, one more question on -- so just as a segue to this. Sir, we have already around INR 800 crores on the book and another INR 100-odd crores are expected from TANGEDCO and similar numbers from Kohima, perhaps even more than that. And then obviously, we're generating cash flow. So you had mentioned last time that like we would be distributing a healthy amount, but that -- I mean in terms of -- we have done an interim dividend, but it is certainly not very high from the kind of cash that we have.So just want to understand your thought process. What is your thinking? Because in the past also, we have been generous with cash outlay in the form of buyback and everything. So just want to understand what is your thought process at this point of time on this.
You see, we have already paid INR 3 last quarter, INR 3 this quarter now. And then the final dividend when it's due will be a part of the March quarter. So in all go, we will be definitely distributing around 40% of the bottom line as per our policy. Had government taken out tax on the buyback, we would have preferred buyback option. But now dividend is tax-free and taxable in the hand of recipient. And our major investments are mutual funds and who are largely tax-free, you see. And if they are part of growth scheme, even investors are tax-free in those funds.So that way, the market response was more in favor of dividend. So we are very, trust me, you will be handsomely rewarded going forward. It will be no less than buyback, and it will continue like that.
[Operator Instructions] The next question is from the line of Nishith Shah from Aequitas Investment.
Sir, I wanted to understand the smart meter opportunities of 9 lakh meters in Jammu and Kashmir. So in revenue terms, how big can this be?
Sir, generally, you can take one smart meter project is around $100 per meter as installed.
Sorry, sir. I did not get.
$100. I said one smart meter as installed is $100 to $120 per meter.
Okay.
So it means per meter, the price level is about INR 8,000 without taxes.
Correct. Understood.
As installed. So you can multiply 9 lakh by INR 8,000.
Yes, sir. Sir, and is the bidding now -- I mean, where is this project right now?
Which one?
This 9 lakh meters?
It will happen in the whole state, sir. Presently, we are doing 2 lakh meters, 1 lakh in Jammu City and 1 lakh in Srinagar City. So 9 lakh meters will be in the other parts of the state.
But is there any time line that it would be done within 2 years, 3 years and the bidding and everything is out?
You see, at the moment in power sector and the way DISCOMs and government works, you can easily take it about 3 years, if not 4.
Okay. And sir, I wanted to get clarification. So in your opening remarks, you said that there was some reduced tariff of INR 0.975 as per some order to 2021. So what is that...
Not '21, sir.
What is that, sir?
It is enhanced. What happened was in '18, '19, the regulator gave the order reducing tariff to INR 0.97 to the earlier paid tariff of INR 2.18 from '15 to '18. So we challenged that move of the regulator, state regulator, I'm saying, in APTEL, which is high court kind of a regulatory body. So they have set aside that order. So the tariff reduced by them 2 years back stand now billable and payable to us as per the present mandate. So that is what we are talking that we were presently accounting our billing at INR 2.14 as against INR 3.12 2 years back.
[Operator Instructions] The next question is from the line of V. P. Rajesh from Banyan Capital.
I joined a little late. Just wanted to make sure I...
Mr. Rajesh, I'm sorry. Your voice is not clear.
Your voice is a little low. Can you enhance your voice, please?
Is it better now, sir?
Yes, a little better. If you can do a little more, we'll be good.
Okay. All right. I'll try. I'm sorry, I joined a little late.
Now it's good. Now it's good.
Okay. So on the data center side, what I understood was you're doing a JV where you will have a CapEx of INR 700 crores in the next year or so. So my question is that, what will be our contribution to that JV and what time will it take to come up, the plant or the data center, how long will it take to be put up?
You see, generally, it is a 2-year project as industry norm is. But definitely, since it is our in-house facility, we like to do in lesser periods, in no more than 18 months, preferably 15 months if you ask me.And secondly, obviously, even if you take a ratio of 1:2, then INR 250 crores of capital and INR 500 crores of loan will be there in the SPV level. So this INR 250 crore equity will be shared with the foreign investor depending on his appetite. Generally, they look for majority as we are told in this business. But we have to experience it, and we'll be more clear when we talk with you March results sometime in May. We will have all the clarity of this issue.
Sure. My second question is for next year, fiscal year '22, your growth share seems to primarily be driven by FGDs and the smart meters. Did I get that right or I'm missing another piece of growth?
Right. FGD, smart metering and additionally, data center will also crystallize into a way of life for next 4, 5 years to come once having done our own captive data center.
Right. And what is the market opportunity for data centers you see over the next 4, 5 years?
I said in my presentation, sir, that presently, we have only 550-megawatt capacity in the country, which should grow to 2-gigawatt in next 2, 3 years. It will be so rapid and 5-gigawatt in next 7 to 10 years.
I'm sorry.
This will grow phenomenally, at least 10x in next 7 years. That's what I know. In foreign countries, almost 10%, 12% of the power gets consumed by data center itself. If you look on experience of Singapore or U.S. or Hong Kong and similarly, this industry, India was deprived of earlier because of this industry being in the hands of large foreign entities and aggregators.Now by virtue of pandemic digitization and data growth, phenomenally online services, education and all that, e-commerce, so not many foreign and privatization of data policy of Government of India. So all these companies are looking on India hub as a hub now. So whichever cities are now globally connected by undersea cable, earlier, it was only Mumbai. So all data centers, 80% are in Mumbai. Now Chennai is connected in last 2, 1.5 years to Singapore by undersea cable, so Singapore, Chennai has become a bet.Now Calcutta cable connection is happening through Jio at Digha as the first and then 2 more stages will come. So this is how this industry will go on expanding with global connectivity. Wherever global connectivity fiber is available, this kind of hubs becomes viable and practical.
The next question is from the line of Keshav Garg from CCIPL.
Sir, I just wanted to understand that, so next year, FY '22, sir, what kind of -- so you think that we can hit around INR 1,500 crores top line?
Absolutely. No doubt.
Okay, sir. And sir, also, sir, like you mentioned, sir, so basically, regarding this data center. Sir, so by FY '23, you think, sir, we can expect revenues to start in the second half of FY '23?
Absolutely. You rightly said it.
Okay.
We should be ready with our facility by June or September.
The next question is from the line of Renjith Sivaram from ICICI Securities.
Sir, just on this data center, this INR 750 crores will be invested completely next year or will it be through -- what amount we are planning to invest next year?
Sir, at the moment, to be very precise is a little difficult. But you can take roughly around 75% in '21, '22 and the balance 25% in '22, '23.
Okay. And sir, what kind of ROE, return on equity that we are projecting at least from this investment from our internal workings?
If market continues to be what it is today, then at least 20% we can expect as a ROE.
Okay. And any particular site that we have bought or we have in our mind?
No, I shared with you in my presentation earlier that Chennai is the city, and there is SIPCOT industrial area in a place called Siruseri on OMR Road. We have already bought the land from the Government of Tamil Nadu, and it is just opposite to Airtel data center and next to Adani data center. It's an IT park, IT hub, and we'll be part of it. So land is already in place now.
The next question is from the line of Rohit Balakrishnan from VRDDHI Capital.
Sir, just 2 questions on, so TANGEDCO, we had about INR 160-odd crores to be received. Out of which we have received, how many crores you mentioned about INR 30 crores?
INR 66 crore out of INR 132 crores due up to June 2020 through RDC PFC scheme. First tranche of 50%, we have got sir.
So we've got, sir, INR 60 crores to INR 66 crores.
INR 66 crore out of INR 132 crores billed for the 2 RDC.
Sir, how much is pending so far now? So also the overall payment, I mean total.
INR 66 crore plus produced from July to December of another INR 20 crore. So we are to get another INR 86 crore.
Okay. Okay. And sir, on the Kohima project, so any update? I mean, we had earlier said in January, we will know. So I mean, CLP is still expected to be the buyer or somebody else? And when do you think that will close, sir?
Sir, as my update is with me, we have achieved the COD successfully. 3 months we have to give to CLP to put their approvals in place, which will be over by March end or mid-March. So I'm told they are trying hard. But if they succeed, it's good. If they don't, then also we have alternate buyers ready to buy this asset at a better value than CLP also.
Right. Do you expect this to get closed, sir, based on your time line somewhere in the first quarter of FY '22?
Absolutely. Absolutely, sir. By June, we will have this done with.
Okay. And we will have the money also realized with us or that will be...
Right. Absolutely. Otherwise, it has no meaning. If you don't get money, why get rid -- get out with asset.
Ladies and gentlemen, due to time constraints, that was the last question. I now hand the conference over to Mr. Amber Singhania for closing comments.
Thank you, Margaret. Sir, just before closing, 2 questions from my side is one, you mentioned about the Tamil Nadu pending receivables of around INR 86 crores. The recognition of this INR 36 crore in this quarter will be over and above this?
Yes. Obviously, it will be over and above this, sir. This is not a part of -- it is yet to be billed. We have got a regulatory offer and entitlement. Now pursuant to the notification by TANGEDCO, we'll be able to bill it in March. But it will be retrospective billing from those dates.
Okay. So basically, 50% will be from FY '20 and 50% is...
No, you see -- hello? Hello?
Yes, sir, I can hear you.
Yes. What I'm saying is, we are still uncertain. Whatever money they got from REC PFC, they have availed up to June 2020 loans. Now the rest of money has to come out of the DISCOM's own resources. So presently, their resources are all strained because of the pandemic. So no sooner they get better, we are being assured that we can expect a regular payment, and government may be helping them out of this INR 3 lakh crore payment which they have talked about in this budget spread over next 5 years.So we are very hopeful that in '21, '22, not only old dues will be over, but also we'll be getting paid regularly as usual. The backlogs issues will be over, done with as promises are being shared by the government. But let's see. Reality will lie in eating the pudding than talking about it.
Got it, sir. Sir, secondly, just on the pipeline side, when you mentioned the TBCB from 4 states, Maharashtra, MP, Rajasthan and Karnataka, and also the FGD tendering from the private player as well as a couple of more from NTPC and PGC. Any of these -- is there any expectation that any of these will get tendered out in this year itself or it will go to the next financial year potentially?
Pardon? Like your voice is very low, sir. Can you raise it?
Can you hear me, sir, now?
Yes, now better, better.
Yes. So sir, all of this pipeline of TBCB projects from 4 states and also the FGD tenders which are there in the pipeline, any project out of these are expected to be bidded out in this financial year or mostly it will go into the next financial year potentially?
I expect they should be over in this year, failing which I'm sure they should not spillover beyond June anyway. But we are more hopeful that this Power Grid where we are L1 still with them. We got one job of Sikar, 765 kV, as we did Bhadla for them, which is complete now, which are already secured. We should be able to get business of INR 250 crores, INR 300 crores from Power Grid itself by March end or maybe maximum April by between you and me.And additionally, we would like to win at least 1 out of 4 as our own TBCB package along with one of the InvITs in the country, where we are trying. So that is the scene behind it. Our [ one ] are getting postponed at the moment, which I believe may go to May, June, if not in March, April. At the moment, final dates are yet to be received from them.
On order book? Yes. Sir, just one clarification. Out of this INR 2,000 crore of order book, this INR 300 crores which we have bought from PGCIL in Kerala state is included in this or this is also over and above?
It is included in this INR 2,000 crores, sir. And whatever we have executed in this quarter goes out. This is unexecuted we are talking. The unexecuted book with the unexecutable portion taken off, the executable part left with us now is INR 2,000 crores as of today.
And we have -- and one-off is INR 65 crore over and above?
Over and above this. Absolutely correct.
Got it, sir. Got it, sir. So that's it for my side. I think we are already over for the time, sir. On behalf of Asian Market Securities, I would like to thank all the participants and special thanks to the management for giving us this opportunity to host the call. And I would like to request the management to put their closing remarks. Sir, over to you for the closing remarks.
Mr. Gupta, would you like to add any closing remarks?
Yes. I'd like to thank all the participants and their overenthusiastic participation in the call. And in case still if any of the participant or anybody else has an inquiry related to our performance, you please feel free to drop us a mail. And if you happen to be in this side of the country, you are welcome to drop in our office to see how we really do jobs and on. With this, I would like to close the conference, and I thank everybody for joining once again. Thanking you and wish you a pandemic-free year next year, pandemic-free next year, and get vaccinated soon.