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Torrent Power Ltd
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Ladies and gentlemen, good day, and welcome to the Torrent Power Q3 FY '20 Earnings Conference Call hosted by Motilal Oswal Financial Services. [Operator Instructions] Please note that this conference is being recorded. I now hand the conference over to Mr. Aniket Mittal from Motilal Oswal Financial Services. Thank you, and over to you.
Thank you, Steven. Good evening, everyone. On behalf of Motilal Oswal Financial Services, I welcome you to the 3Q FY '20 earnings call for Torrent Power. From the management, we have with us Mr. Sanjay Dalal, the CFO of the company; Mr. Rishi Shah, AGM, Finance; and Mr. Jayprakash Khanwani, Manager, Finance at Torrent Power. We will begin with brief comments from the management and follow that up with a Q&A session. Over to you, sir.
Yes. So this is Sanjay Dalal from Torrent Power. Thank you all of you for attending the earnings call for the Q3 of financial year '19/'20. I will give a short overview of the performance for the quarter, and then we will start taking questions from the participants. So the consolidated profit after tax for this quarter was INR 416 crores versus INR 238 crores in the comparative quarter. That is, it was higher by INR 178 crores, which is approximately 75% growth. Apparently, the PAT number has increased considerably, however, a good part of this is attributable also to the recognition of the deferred tax asset which is owing to the reduction in MAT rate from 21.55% to 17.47%, vide the Taxation Laws (Amendment) Act of 2019. The MAT rate reduction along with unchanged normal tax rate of 34.94% has led to an increased utilization of accumulated and unrecognized MAT credit in the future years. This has resulted in recognition of a onetime net deferred tax asset in the quarter by INR 105 crores. So if we adjust this onetime tax gain of INR 105 crores, then the PAT increase is about 31%. Coming to the PBT number, the consolidated PBT for the quarter is INR 309 crores versus INR 254 crores in the comparative quarter, it is higher by about INR 55 crores, which is a 22% growth. Adjusted here also -- the comparative quarter has certain one-offs. So if we adjust for one-off in the comparative quarter, the core profit growth is about 30% actually.We'll now come to the consolidated EBITDA number, where I'll also give you a brief overview on what is the contribution from various business segments to this growth in EBITDA. So the consolidated EBITDA came in at INR 877 crores versus INR 790 crores in the comparative quarter. It is higher by INR 87 crores, which is approximately 11% growth.So if we look at it from segment perspective, then all segments except renewables have contributed to this growth. So the gas-based generation segment, the license distribution segment and the franchise distribution segment have all turned in strong operating performance contributing to the growth of EBITDA in this quarter. The renewables segment was flat. It came in with a flat EBITDA. It may be noted that the EBITDA number for the quarter is after absorbing the impact of reduction in tariffs for our SUGEN long-term PPA due to change in CERC regulation. This happened from April '19 onwards. And the impact of this for this quarter, we estimate about INR 41 crores. So after absorbing this blow of INR 41 crores, we have been able to increase the EBIDTA. So coming to segment-wise performance. The gas-based generation plants turned in a better performance and contributed to this EBITDA -- increase in EBITDA. Essentially, 2 factors operated positively. One was the operationalization of the UNOSUGEN plant PPA, which happened from 1st July 2019 onwards. So that contributed towards additional EBITDA. And also the merchant power sales contributed towards the additional EBIDTA. If we look at the licensed distribution business, that also contributed to the growth in EBITDA. Essentially, the licensed distribution business, there are 3 sources from which we are able to increase our profit. One is the increased ROE on the back of new CapEx investments which we have made in the last 12 -- 4 quarters. And secondly is the incentive gains on account of T&D norm and O&M norm, where our actual T&D losses and O&M expenses are lower than what is permitted -- what is allowed to us in the tariff. So all of this also contributed towards increased profitability for the quarter. Coming to franchised distribution businesses. Both Bhiwandi and Agra did well in terms of further reducing the T&D losses and bringing in a higher contribution for the quarter actually. As I said, renewables turned in a flat performance. So there was flat EBITDA for renewables segment, primarily because more -- actually, we commissioned 2 projects during the quarter amounting to 176 megawatts of capacity. However, this happened at the very fag end of the quarter. So its impact on EBITDA is really not coming now, and you will see probably that impact in the coming quarters. So renewables was more or less flat as compared to the previous quarter also. So now I'll go to some other developments which happened in the quarter, which may give some insight into how the businesses will be moving forward. The first is that we have considered an interim dividend of INR 11.60 per equity share. So this is made up of 2 components. INR 6.60 per share is the normal dividend as per the dividend policy of the company and INR 5 is a special dividend which has been declared with a view to distribute a part of the onetime tax gain, which we have made as a result of reduction in tax rates.The second development in the quarter has been that we have prepaid almost INR 1,000 crores of debt during this quarter ahead of its due date. So that has resulted in a net reduction. In the coming quarters, we will see a significant interest drop as a result of these prepayments. The third development I would like to bring to your notice is the record low LNG prices which are prevailing right now. So we have been able to tie up a good number of cargoes at costs of $4 and below. So this sort of creates strong favorable conditions for merchant power sales because we will now be able to compete with coal-based power also in the merchant power market with these record low LNG prices.So -- yes, so that completes my overview, and I would now request the participants to raise their questions.
[Operator Instructions] First question is from the line of Mohit Kumar from IDFC Securities.
Congratulation on a decent set of operational performance. My first question is on the CapEx number for Ahmedabad and Surat area for 9 months FY '20? And how much are you expecting the balance, in the Q4? And how much is CapEx plan for Ahmedabad and Surat area in FY '21?
So okay. So 9 months number I'll give you and alongside the 9 months number, I'll also give you what we expect for this year. And maybe for the benefit of all, we will probably give you some guidance on what is the CapEx we expect in the next 3 years broadly. So if we look at the license distribution business, for the 9-month we have incurred a CapEx of about INR 600 crores, and we hope to end the year with about INR 1,050 crores of CapEx. In the franchised distribution business, for the YTD 9 months, we have incurred a CapEx of INR 162 crores, and we expect to end the whole year with INR 250 crores of CapEx. And then there are some miscellaneous CapEx which we have incurred. And that -- which is around INR 41 crores. So 9 months is around INR 735 crores roughly, and the whole year will end with INR 1,320 crores to INR 1,350 crores of CapEx. Right? Now for the next 3 years, that is financial year '21, '22 and '23, our ongoing CapEx in the distribution businesses, that is license distribution and franchise distribution, is about INR 1,900 crores to INR 2,000 crores per year.
The bifurcation between, sir, distribution and franchise, if we can provide for FY '21?
So roughly about INR 1,500 crores to INR 1,600 crores in licensed distribution business and about INR 300-odd crores per year in the franchised distribution business.
And secondly, sir, is it possible for you to quantify the incentive gain for the Ahmedabad and Surat franchisee area for 9 months?
So it really is not -- I don't have that number anyway right away, but I can just conceptually explain that the incentive gains have to be seen on a year-to-date basis -- year all basis. What I can tell you is that as our actual expenditure on O&M is less than the norm. So we are earning on account of savings. What I can also confirm you that the trajectory of the T&D loss, actual T&D loss, is lower than the norm which has been permitted to us in the tariff. So we are gaining there also. The allocation of these savings between quarters is slightly tricky because of the billing cycles, I had explained last time. So to exemplify, if I -- I can give you a 9-month trajectory for T&D losses. If I take YTD of 9 months, say, for Ahmedabad, then I have a T&D loss of about 5.04% in Ahmedabad, which in the comparative quarter last year -- I mean, the YTD -- comparative YTD of year, it was 5.15%. So actual further reduction of T&D losses. The norm I have for the whole year for Ahmedabad in '19, 26.7%. Right? Okay. So this sort of will start to give you an idea of where we are on actuals.
Right. Sir, one last question. Are you finished? Should I ask the next question or?
Yes, yes. Please go ahead.
Sir, one last question. What is this consol debt at the end of Q3 FY '20?
Consolidated debt at the end of?
Q3 FY '20.
Q3? Okay, so at the end -- 31st December '19, consolidated is how much?
INR 8,800 crores.
So it is INR 8,800 crores of gross debt. And against that, we have almost, I think, INR 400 crores of the prior amount.
The next question is from the line of Abhishek Puri from Axis Capital.
Congratulations on good set of results, sir. Sanjay bhai, this USD 4 and below what you mentioned, is it a delivered price? Or is it ex ship? And secondly, in terms of the arrangement of gas, this is largely for UNOSUGEN or DGEN? I mean to understand, this is largely for regulated business or the PPA business or for selling in the merchant?
Right. Okay. So firstly, the prices are net price what is known as delivered ex ship. After that you further incur the regasification cost, the transportation cost and -- to get the [ burner ] cost. This is one. The second is that -- so if you recall, we have -- we had tied up gas up to December '20 in a 3-year tender, which we had done some time in 2017. So some part of it was for 2020 calendar year. But we have not tied up all of it. So there was additional purchase, which we have been doing this year, looking at the record gas prices. And those have come at $4 and less actually. Now cargoes as and when they are purchased are actually earmarked clearly for the regulated business because we have to also file it with the regulator, so that he knows exactly what we are contracting. And therefore, the remaining cargoes are therefore earmarked for merchant business. So we have -- the entire requirement for the regulatory business has been tied up for the whole year between the medium-term contract we had done and the additional contract we did now. And in addition to that, we have also tied up roughly about 3 cargoes for merchant power. So with this low cost and gas being available, we hope to do more merchant power sales in the coming quarters.
Right. On the gas scheme that you've mentioned in the presentation, I mean, we also read it in the papers that it has gone to the cabinet stage. Any further approval or understanding where the scheme is now? And what is -- in what shape it is coming in now?
No, we have no idea on -- in what form the scheme is coming. We are also aware as much as you are that it has moved for the final approval. So once the cabinet approves, they will sort of release the scheme. But our understanding is that it will be more or less -- there will probably be 2 components. One component will be more or less similar to the one which we had in '14/'15, '15/'16, except that there may be no requirement of subsidy now. And the other component could be in form of bundled power or some such thing.
Okay. And lastly, if you can give us the breakup of the EBITDA business-wise, just to reconcile the consolidated numbers and -- in our model?
Okay. So the EBITDA from thermal generation was, say, INR 279 crores, renewable generation was INR 110 crores, licensed distribution was INR 287 crores, franchised was INR 198 crores and INR 3 crores is remaining part, all put together, INR 877 crores.
The next question is from the line of [ Nimit Vasa ], an individual investor.
Many congratulations. My question is in 2 parts. Am I audible now?
Yes, yes.
Yes, sir, you are audible.
Yes, yes. So one is about the Pipavav plant, where we had committed certain amount to the land. So what would be that amount?
Yes. And second?
Yes, second is how much are we underutilized because of the nonavailability of the gas?
So on first plant, the Pipavav project has been shelved. So the government has also decided that the power project is not going to be implemented. It was in joint venture with the Gujarat Power Corporation Limited. So we had committed certain amounts for acquisition of land. That is roughly around, I don't know the exact number, but about INR 80 crores to INR 100 crores -- INR 80 crores to INR 90 crores of money. So -- and the land has been acquired in that SPV. Because it was acquired through that acquisition process, the government will now find another buyer and transfer it to another buyer, at which point we will get back our money. The value of the land has increased multiple fold after that. But obviously, being acquired land, we are not expecting any benefit out of it. But our money is safe to that extent. It's only a question of government finding another alternative investor for -- in that land.
Do we get any interest on that?
We -- I don't know about that. That will depend on the government. So we will obviously make claim, but it was entirely up to the revenue department to work on -- to decide on all those issues. But we will get back our money. That's for sure, because when they find another buyer, they will -- obviously, are going to give a much higher price for the land because the prices have gone up substantially after our acquisition.
Right. And regarding the underutilization?
Yes. So there is no -- there is underutilization because we have our DGEN power plant which is more or less stranded, but it is not because of nonavailability of gas. It is more because of nonavailability of power demand.
Okay. So gas is available as and when you require?
Yes, gas is no longer a constraint.
Okay. And so I need to further understand, like what is the price at which we break even? Like, above which price goes and you are not competitive with thermal or any other source?
That's a complex question to answer because on a marginal cost basis, even today, for example, at today's gas price, we are able to compete with coal-based power also. But it will all depend on what is the gas price and what is the coal price. Both keep moving.
Okay. So out of our total cost -- capacity, can I get the utilization factor or...
It is there in the investor PPT, which we have uploaded on the website. So you will get all the information on operations there.
When I saw the result, it was not there. Okay, I will check it out.
No, no. It is in the PPT format on the website.
Okay, on the website, Torrent Power's website.
Yes.
The next question is from the line of Rahul Modi from ICICI.
Congratulations on good numbers. Just a couple of questions. Sir, can you help us with the merchant sales for 3 months and 9 months? And how much would have been the incremental over and above the fuel cost that we recovered out of this or the marginal contribution?
So I'll give you a 9-month YTD -- understand, which I have -- rarely have with me. So YTD, in the current year, we have sold almost 1,300 MUs at a net contribution of about 1.10. When I say net contribution, it is after all the incremental cost, so fuel, water, some long-term O&M costs, all considered, right? Yes, go ahead.
Okay. And this would be a combination of DGEN and SUGEN?
Yes, yes. For merchant power sale, you have to look at all the 3 as one opportunity. We have unutilized -- uncontracted capacity in the SUGEN, UNOSUGEN and across all of DGEN. So it will all depend on the kind of contract we have. And -- but -- so if we have around the clock, RTC contract, we generally prefer to operate DGEN because it has the lowest cost. But if it has only part-of-the-day contracts on the power exchange, then we would prefer to use UNOSUGEN or SUGEN. So all 3 put together -- these numbers are all 3 put together. It will depend on the kind of want. So in Q1 and Q2, we got 2 monthly round-the-clock supply contracts. So we operated DGEN then.
Okay. And sir, in terms of the under construction, on the renewable side, sir, any update on the progress?
Okay. So 2 projects were commissioned during the quarter, as I said. The 126-megawatt Maharashtra project was commissioned. It was commissioned 1 month ahead of time. And 50-megawatt SECI–I project was also commissioned. So now we have 2 projects left. One is the SECI–III project for which we have made a provision in the last quarter. So there is no further progress. SECI has not reverted on our application for extension of time. And so in this whole process, a lot of additional time has also been lost. So we really don't know whether this project will ever happen, but it doesn't matter to us because we have taken the full charge in the P&L. The other project is the SECI–V project. Now as you would be aware that after the bidding for SECI–V, when we started scouting for land, the government of Gujarat came around and changed the policy of land and stopped allotting land to wind power projects generally till they formulated a new policy. Then they came up with a new policy and then the elections came, the central elections came and another 3, 4 months was lost. So after the central elections, the Government of Gujarat announced a new land allocation policy for all projects which have been awarded under SECI–IV and thereafter and said that these projects can be given land only in wind parks, which will be developed. So this wind park could be developed either by the nodal agency of the government or another private developer. However, outside the wind park, there is no private land or revenue land which will be given to the developers. So -- and now this policy has come about 3, 4, 5 months back. But as of yet, there is no wind park which has been made operational or available. So here also we have lost substantial time, and we have approached SECI for extension of time based on a change of law. So till we hear from SECI a positive -- till we get a positive response from SECI, this project also may face the same fate as SECI–III. We will probably then abandon this if they don't give extension of time. So should that happen, the possible downside would be about INR 23 crores of penalty under the SECI contract. This is the maximum, we are not saying -- because there are legitimate reasons why it should not be penalized.
SECI–V contract?
SECI–V contract. Because there's a standard penalty for termination of contracts. So about INR 23 crores, 115 megawatts. And I think INR 20,000 per megawatt, I think, is the penalty. So that is about INR 23 crores plus whatever preoperative costs which we may have incurred. That could be the drop-dead scenario. But as of now, SECI is still examining our application for time. We have said that, look, there is a change of law because of which the land has not been available. No revenue land is being allotted for wind projects and no approval for private land also for wind projects is being given. It has to come only in wind parks. None of these wind parks have still been developed. And therefore, there has to be an extension of time. If we get it, then we'll possibly do it. If we don't get it, then again, this project also may go the same way.
Right. And sir, that was very helpful. Sir, can you just help with the strategy in terms of your procurement for gas from merchant. Now if we see with summers coming on, prices going up, so you are looking to tap more if you get sub $4 on a sustained basis for some more capacity?
So we have already tied up, as I said, some cargoes. And we'll see -- so this -- the cargoes we have tied up will allow us to do a fairly substantial quantity of merchant parcels. And we'll see. As the market sends out, if required, we'll try and get more gas.
Sure. And sir, just lastly, on -- can you update on the status of Dholera? I believe we've done some initial CapEx as well. So when do you expect the full force to begin?
Yes. So Dholera, of course, there are some updates in the investor PPT we have uploaded. But -- so if you look at December '19 -- the period up to December '19, we have spent about INR 52 crores of CapEx. INR 26 crores was in the previous year, INR 26 crores is in the current year.
YTD.
YTD. So by the end of the year, that INR 26 crores, I think, should reach a number of about INR 60 crores, in the number which I gave to another investor earlier in the discussion. So right now, all of this expenditure is in form of network development. The demand is still to come. The -- overall, what we are seeing is that there is a slower development in Dholera as compared to what was originally envisaged, primarily because of the industrial -- general industrial slowdown. So accordingly, our network development plans also are sort of getting modified continuously. But this year and next year, both will be mainly network development CapExes, not any substantial revenue there from. But all of this will sort of get trued up in 3 to 5 years' time, by which time the demand will start coming in. So when the first tariff determination happens, at that point in time, all the CapExes of the past will be trued up and ROEs for those CapExes will be allowed in the first tariff fixation.We're not accounting for all -- we are not doing any regulatory GAAP accounting for Dholera till the time first tariff order comes.
The next question is from the line of Jayesh Gandhi from Harshad Gandhi Securities.
Sir, few clarifications. You said that long-term debt as on December 31 is INR 8,400 crores?
Yes.
INR 8,400 crores?
INR 8,800 crores.
INR 8,800 crores.
Sir, by 30th September, it was, what, INR 8,200 crores something? So have we increased?
No, no, no. So let me give you an overall perspective for the whole year. So at the beginning of the year, April '19, it was about INR 9,400 crores. So we have sort of, including the prepayment, we have paid down about INR 1,640 crores of debt in the 9-month period. However, we have also raised about INR 978 crores of debt from -- for financing our CapExes in the distribution businesses, on the 70:30 ratio, which is permitted under the regulations. So that takes us to a net debt of INR 8,800 crores at the end of December, right? So net reduction over 9 months is about INR 660 crores.
Okay, sir. And if I remember correct, you said that next 3 years CapEx will be INR 1,900 crores to INR 2,000 crores each year, right?
Yes.
And that will be also financed 70-30?
Yes, all distribution CapExes are generally financed 70-30.
Okay. And one last question, sir. If we are not getting any demand for DGEN, is it not worth to write it off?
No. So there are accounting rules based on which we make our provisions. So -- and it hardly matters whether we write it off or -- it's a noncash charge even if we write it off. So that is -- there is an impairment. If you see the financial statement, there is a note on the impairment of DGEN. So that will give you a perspective of why it is impaired or not impaired.
Okay. And with this lower gas price, can we think of having a merchant sales from DGEN?
We have actually in Q1 and Q2 actually sold merchant -- done merchant supplies from DGEN. So it all depends on what opportunities come up. If we get RTC opportunities, we usually supply from DGEN because, one, the transportation -- it has a dedicated pipeline, to get -- transportation pipeline from PLL. So there are no gas transportation costs. And it has a superior heat -- station heat rate also. So the overall cost of producing power in DGEN is much lower as compared to the other 2 plants. So -- but we can only supply from DGEN if we get round-the-clock contracts. We can't supply contracts which are broken up, part-of-the-day contracts.
Okay. So is it ever possible in next 2, 3 years that we can go to 25%, 30% of capacity in DGEN? Or it's a remote possibility?
No, no. We are definitely seeing that as a possibility, strong possibility because the government is working on a policy framework to operationalize the stranded gas-based power plants because DGEN is only one of them. Overall, almost 14,000 megawatts of gas-based power plants are stranded in the country. So the government is working on a scheme to revive and operationalize these plants. If that happens, we expect DGEN to operate at 35% PLF. And it will also increase the opportunities of merchant sales once it is operational at 35% because then it can do even part-of-the-day contracts.
And one last question, sir. Have we now seen improvement in electricity consumption because we have been observing last month-on-month data saying that electricity consumption has reduced by 7%, 8%, 11%. Have we now seen it improving last January or February?
Data up to December shows a reduction. January, I think there is an uptick.
And how about us?
So we are -- for next year, we are seeing a growth in Ahmedabad distribution area, but we are not seeing much growth in the Surat distribution area. Dahej distribution area also shows strong growth, but that's, I think, very small operations.
The next question is from the line of Dhruv Muchhal from HDFC Asset Management.
Sir, can you help us, how much is 1 cargo of gas in terms of quantity? And how much can -- how much units can that generate, just to get a rough math?
So 1 cargo is roughly 3.2 TBTU.
TBTU is trillion Btu.
British thermal units, yes. And that's equal to around 50 megawatts for 12 months on a 100% PLF basis.
You can convert that into energy terms.
Yes, yes. And sir, is there sufficient gas -- regas capacity available to if, say, for instance, we want to import further?
I would guess so because Mundra terminal has also now been commercialized. So...
We can be connected even to Mundra?
We are connected. We can -- we are connected because Mundra -- GSPL is the send out line from Mundra, and we are on the GSPL network.
Okay. Okay. And sir, the merchant sales number you mentioned, 1,300 units, is it fair to assume mostly it was in first half and nothing significant would be in third quarter?
First and second quarter and some in third quarter also.
Okay, there was some.
Normally, would not have been, but there is some sales in the third quarter also.
Okay. Okay. And sir, lastly, you gave the EBITDA numbers for Q3 by segment. If you can give it for the last year Q3 also, please?
Yes. I don't have it right away. Can we give you offline?
Yes, sure, sir.
The next question is from the line of Vinay Kumar from Spark Capital.
So with the commissioning of about 170 megawatts in this quarter, I presume there would not be any under-construction project now, right?
You are talking...
I mean, SECI–III and SECI–V are almost not being executed. So there would be no projects under execution?
Correct, yes.
Understood. So with reduction in interest cost going forward and the improvement in operating cash flow and about this equity that was required for SECI–III and V not being committed, so what is the plan for all this capital that you will be generating over the next 1 to 2, 3 years? So what I'm trying to understand is what would be the aspiration of Torrent Power from here on? So what are your areas where you would look to put in capital or focus your efforts in growth, et cetera, et cetera?
So as we indicated a little while earlier, we have strong CapEx plans in our distribution businesses. We also expect to acquire 1 or more franchise operations in next few years as that opportunity opens up because the government is very keen to privatize the distribution segment. So that will require additional capital. So far as generation business is concerned -- the thermal generation business is concerned, we are not expecting any CapEx deployment in the next couple of years. And so far as renewable business is concerned, we are taking a pause as we had indicated in the last quarter, from participating in third-party contracts, bidding for third party contracts. However, [ of our own ] DISCOM also has requirements -- RPO requirements to be fulfilled. So they are planning to come out with tender for their requirements, and we will participate in those tenders. So to that extent, we'll do renewables. And transmission is a segment which we are interested in deploying capital, provided we are able to get it at the right returns. So overall, the approach has been that not to allocate capital at anything which is lower than 15% ROE.
Understood. So if I heard you right, primarily, it would be into...
Primarily, the visibility of CapEx is in distribution businesses. Other businesses, the visibility of CapEx is low. And -- but approach will be that we will only pursue quality growth and not misallocate capital. And so if there is extra capital like what we did recently, we have distributed almost INR 1,000 crores by prepayment of debt and another INR 670 crores by way of dividends to -- so we will prefer to do that rather than commit at low returns.
Understood. So to focus on this distribution business where you are probably looking at opportunities, could you give us more details as to where all these efforts are? Is there anything that you are already looking at? Or any areas or state where you think you would really be interested in?
Yes. So again, from a visibility perspective, Shil, Mumbra, Kalwa, we are expecting that will be handed over to us from -- by the end of this month. So we are focusing on that area once we get that area. Orissa, regulator has issued or floated a request for proposal for privatization of 3 DISCOMs of Orissa. So we are actively examining -- participating in that prospect also. So this is from a visibility perspective. Other than that, the government is extremely keen in pushing states to bring out more distribution circles for privatization, either by way of franchise agreements or by way of, right, full privatization, like what Orissa is trying to do. So those opportunities, as and when they come, would be of interest to us.
Understood, sir. Got it. Got it. Anything in the transmission side that you're already working on since you mentioned...
No, we have participated, but not won any project as of now. I think there is a new round of projects which are -- which have just been announced. So we'll examine that. We'll participate, but we'll be rational.
This would be the interstate TBCB projects?
Yes. The tariff-based competitive bidding projects. They are interstate as well as some of them could be intra states also.
Next question is from the line of Mohit Kumar from IDFC Securities.
Sir, one clarification, sir. The taxes for the quarter, if I adjust for deferred tax, the effective tax rate, meaning by adding your current tax and deferred taxes is negative. Am I missing something? And how should we see firstly for the tax rate, effective tax rate for the FY '20 and FY '21? Is there something...
So that number which you are seeing, I think that is INR 108 crores?
Right, right.
What is the...
INR 105 crores.
No, no, no. [indiscernible] please help me. Okay. So if you see the tax expense line, it is INR 108 crores credit, right?
Correct, yes.
So there are 3 elements to it. So it is made up of a current tax charge which is INR 67 crores. That's there in the P&L. Right? So that is the MAT tax which we have to pay. Then there is a net deferred tax credit of INR 175 crores, right? And INR 175 crores has 2 elements. One is INR 105 crores, which, as I explained earlier, that because of reduction in MAT rate from 21.55% to 17.47% by Taxation Laws (Amendment) Act of 2019, the past accumulated MAT credit, which we were not able to utilize, will now be utilized. And we took a credit for that, which was estimated at INR 464 crores for the whole year. So out of that INR 464 crores, INR 105 crores is attributable to this quarter. Right?So the remaining INR 70 crores deferred tax effect is a net deferred tax adjustment relating to operations of the current year. So it's a deferred tax asset for the simple reason that the MAT credit -- MAT tax which we are paying, INR 67 crores, is sort of getting carried forward by way of a deferred tax asset because we will be utilizing that to reduce our tax liability in future. So that brings us to INR 108 crores. So out of these INR 108 crores, INR 105 crores is onetime. It will not recur. There -- in fourth quarter also, there will be a similar number, not exactly INR 105 crores, but a lower number of deferred tax credit pertaining to this reduction in tax rate. But next year onwards, it won't be there.
Okay, sir. Understood. Sir, what is the average tariff in Shil, Kalwa? And the average tariff where you would have put the bids, what was the average tariff? And how much were the MUs sold in a year in the area?
I don't know...
Average tariff, I wouldn't have it right away.
Okay. Sir, I'll take it later?
Yes, because last...
Maybe you can take it from Rishi...
Sure, I'll take it. Sir, last question. Is there any VAT payable, state VAT implications in our gas sourcing? Or is it 0 for us?
So we are directly importing. So there is no VAT -- question of VAT. We are not buying locally. We have [ international ] suppliers and directly importing and consuming. So there is no sale to take place after imports. So there are no VAT implications for us.
The next question is from the line of Rahul Modi from ICICI.
Sir, just a couple of quick questions. Firstly, on the regular debt repayments on an annual basis, what would be the number like?
Regular -- next 12 months number?
Yes.
One sec.
So around INR 700 crores, but this doesn't include some [ cash or fee ] related payments. So if you add that, it could be around INR 1,000 crores -- INR 900 crores to INR 1,000 crores.
Sure. And sir, just one question, wanted to check. So we've seen the overall performance of renewables. This year, due to seasonality, has not been the best. Have you also faced certain issues with regard to that in terms of PLF?
No, in our distribution areas, we have been more or less okay. There has not been..
In the renewables -- sorry, in the renewables?
For renewables, see, there are 2 aspects for it -- particularly for Gujarat projects. So if you see the PPT which we have uploaded, we have given the renewable PLF, which shows that, overall, there has been an increase in the PLF in this quarter as compared to the previous year quarter. So this is because the wind speeds have been better, particularly in December. This is a low-wind quarter, but December in Gujarat is a decent quarter. So these are generation PLF, which we have given. So overall PLF has been higher. However, in Gujarat, the accounting for wind energy is with a delay of 1 month. So in our P&L, the December is not appearing. It will appear in the next quarter. So that's why our EBITDAs are therefore flat in spite of PLF being better than last quarter.
Okay. Okay. So it will be, okay, 1 -- the quarter minus 1 month?
Yes, yes. So this quarter we accounted October -- September, October and November, right? So this is a very low-wind period. December is a decent wind period in Gujarat. So most of our capacities are in Gujarat. So this December has been better than last December. So the overall, October, November, December generation PLF is better. It's at 21.73% versus 18.65% in the previous quarter. However, that's not reflected currently in the P&L because of a delay of 1 month in energy accounting by SLDC for wind projects.
The next question is from the line of [ Ritwik Sheth ] from [ One-Up Financial Services ].
Sir, just one question. Is it possible to give the breakup between Ahmedabad and Surat cumulative equity invested till date?
Cumulative equity invested?
Yes.
Regulated equity, we could give you, what is the regulated equity. That you can get it actually from the tariff order itself, but this is, what, March '19, no? So at March '19, it was, what, 17 --
1,800 crores.
Roughly INR 1,800 crores.
For Ahmedabad?
For Ahmedabad.
And what about Surat?
Surat was about INR 650 crores.
INR 650 crores, okay. Sure.
So you can refer the recent tariff petition which we have filed for 2021. You'll get a lot of data -- more updated data in it. I just have the actual data for last year.
The next question is from the line of Vishal Biraia from Aviva Insurance.
Sir, any interest in acquisition of trust projects?
So there is no active opportunity, which we are currently pursuing. So we keep examining it, but we have not found anything interesting, worthwhile actually. So there is nothing on hand as of now.
Okay. And is there specific criteria that the existing projects that are on offer are not able to meet? If possible, can you discuss more on this?
Come again. Can you repeat the question, please?
What would be the main criteria that the existing projects that are on offer are not meeting? Which are those criteria, just if it's possible for you to share?
For us?
Yes.
So basically, these projects are stranded and they have gone into bankruptcy resolution for reasons. There are issues. Now these issues are very different from each project. So they are not all comparable. But when we look at them, we have to see whether we can handle those issues and how much time it will take for us to handle those issues. And if we are not able to handle it, whether we should really be getting into it. So when -- so most of the projects, therefore, get sort of rejected from our perspective is that we don't see any resolution for the issues which are afflicting those specific projects. So then the purchase sort of has to be speculative that something will happen and you will sort of be able to manage it and make it profitable. That's not the basis on which we will be able to allocate capital because those are very substantial risks.
The next question is from the line of Aniket Mittal from Motilal Oswal Financial Services.
Just actually one clarification on the SECI–I project. So the 50-megawatt one that we had won, when will that come on our books? I mean, could you just... give me...
So roughly, it is -- July '19 to July '20, so 1 month after July -- so I think post July '20, so between July '20 and December '20, I think it will come in our books.
Okay, okay. And sir, if I may, one more question on the transmission front. So I was just having a look. So while you said that you've actually bidded for this project, but you haven't been able to win any. And if I have a look at one of the projects that you've bidded, the S1 cost was actually around 15-odd percent lower than what we had bidded. So how do you see the intensity within the sector? Do you feel that the bidding itself has been aggressive? Or internally, you can do something to improve your sort of capabilities within transmission?
So initially, I think the bidding intensity was high, which we sort of sense that that's now had tapered down towards the end when the recent round was completed. So we'll have to see now what happens in the second round because PGCIL clearly has several advantages, which none of the private sector player has. So PGCIL was actually the highest winner in the recent round. They have a lower cost of debt. They tend to substantially fund their bidded projects through debt rather than equity, and they have almost a 0 O&M cost because they already are having an O&M activity for their tariff -- the regulated projects where the O&M which they get is far more than what they actually incur. So on an incremental basis, they hardly have any O&M cost. So because of these advantages, they tend to be -- they have been very aggressive in the last round. The new round, we'll have to see. We on our part have been continuously looking at various aspects relating to project cost, execution time lines and O&M costs, et cetera, to see how we can become more and more competitive. And progressively, we have been able to narrow down the differences. And there have been a few where we were L2. So we'll see now in the next round if the bidding intensity subsides. As I said, that one thing on which we do not compromise is the ROE. So we need to get our ROE. Otherwise, the project will never make sense for us.
Okay. And sir, while bidding, so what sort of ROEs do we generally look at, IRRs that we look at?
So our hurdle rate typically is 15%. It all depends. Now, of course, in last 1 year, there has been a reduction in interest rates by more than 1%. So we are also examining whether we need to reconsider our ROE hurdle rates. But this is for a relatively safe project. So each project will have its own characteristics. So some of them, if they are riskier, then we tend to add some risk premium while bidding for those projects.
[Operator Instructions] The next question is from the line of from Jayakanth Kasthuri from Way2Wealth Securities.
Sir, I'll have just one question. In terms of -- you said you have invested -- you are expecting the investment amount from the Pipavav project. So what was the amount invested?
So as I said, roughly about INR 70 crores to INR 80 crores we have invested.
[Operator Instructions] As there are no further questions, I now hand the conference over to the management for closing comments.
So thank you, everybody, for attending the conference call. And if anybody has any extra questions, they may contact our Investor Relations officers to get the clarification. We'll be happy to provide that. Thank you very much.
Thank you. Ladies and gentlemen, on behalf of Motilal Oswal Financial Services, that concludes this conference. Thank you for joining us. And you may now disconnect your lines.