Adani Energy Solutions (NSE:ADANIENSOL) Q2 2027 Earnings Call

0:00 Ladies and gentlemen, good day, and welcome to Q2 and H1 FY 'twenty seven Earnings Conference Call hosted by Adani Energy Solutions Limited. From AESL side, we have the following on the call as main speakers: Mr. Kandar Patel, CEO, AESL Mr. Ashok Jagetia, CFO, AESL Mr. Raj Kumar Jain, Business Head, Energy Solutions Platform Mr. Prashant Soni, Head Finance, AESL. As a reminder, all participant lines will be in a listen only mode, and there will be an opportunity for you to ask questions after the presentation concludes. Please note that this conference is being recorded.

0:49 I now hand the conference over to Mr. Prashant Soni from AESL. Thank you, and over to you, Mr. Soni. Thank you. Thank you, and a very good day to everyone. I welcome you all to the Q2 and H1 FY 'twenty seven earnings call of AESL. We hope you had an opportunity to review the earnings presentation and financial results that we shared on our website. To outline the flow of today's call, we will begin with the opening remarks from our CEO, Mr. Kandar Patel, following which we will open the floor for Q and A. The call will conclude with closing remarks from our CFO, Mr. Prashop Jagethia. For those who wish to ask the questions, we request you to start joining the question queue a little in advance to help us manage the Q and A efficiently.

1:38 Thank you. And with that, I would like to hand over to Mr. Gandhar Patel for his opening remarks. Sir, over to you. Hello. Good morning, everyone. Thank you for joining Q2 FY 'twenty seven call today. This quarter marks another important milestone for AESL evolution. Our performance in this quarter demonstrate that AESL is now becoming mature, India's leading integrated infrastructure platform and utility. And it is supported by all our four business, which is in a growth mode, that's a transmission, distribution, smart metering and energy solution.

2:36 Our focus obviously remains on building long duration utility assets. Currently, we have asset base of about 83,000 crore, and we have already locked in CapEx of more than INR 1 lakh crore, which is and that we will be delivering in another four to five years. So asset will grow almost 1.3x, 1.4x from what we have today in next five years. In fact, since we have been focusing continuously on CapEx delivery on the ground, and we see now results coming up.

3:24 The CapEx in this first half of the year is the all time high. We have deployed about 7,850 crore of CapEx among all our businesses. As far as transmission is concerned, during this quarter, we added another two projects. One is at Vajek Penduti and second one is Satara. And with these two projects, our order book remains at about 87,000 crore. And as we said earlier, we have been focusing on those critical transmission assets where large renewable and consumption that we are integrating.

4:20 So these two projects, obviously, is very, very important for development of Sattara is important for development of PSP projects and Pendurthi is for data centers that is coming up in Vajak region. And we will continue to focus on those large and critical projects like HVDC and this kind of a project where we are enabling renewable integration into the grid and also enabling rapid consumption in our economy. As far as distribution is concerned, both at AEML and MUL, we have been continue to deliver exceptional operational performance.

5:10 Our distribution losses in Mumbai has reduced further to 4.29% in the first half. And this despite the fact that consumption has also increased by more than 10%. And we also continue to focus on reliability, customer service and operational excellence as far as distribution is concerned. Smart metering, we have now delivered about 14,800,000 meters so far. And around 60% of our order book that we have delivered and balanced portion, we wish to complete in another twelve to fourteen month time.

6:02 As far as C and I and Energy Solutions platform is concerned, we are steadily transitioning from incubation to scale now. During this quarter, the platform delivered revenue of over INR 2,000 crore and EBITDA of over INR 800 crore. And we already have a tie up of four gigawatt of renewable and 3.5 gigawatt of base capacity. So while we are tying up on a supply side, we have also now started tying on a tie up on a consumer side. So we executed that 2,500 megawatt RERTC contract with MSDCL. And we also expect to further scale up on both sides on our supply as well as consumer side significantly in going forward.

6:59 Financially as well, we delivered another strong quarter with the total income growing over 50%. Also increasing close to 67% and PAT growing 145%. As we made a commitment and we continue to focus on the governance and ESG part. We are happy to say that now in SLP global electric utility category, we are one globally, getting 90 out of R100, whereas industry average is about 40.

7:52 And we will continue to focus on those aspects going forward as well. On our funding and balance sheet side, significant portion of our debt is also the fixed rate or is appropriately. So we don't expect much of the volatility due to foreign exchange or interest rate variation in our P and L or balance sheet. Overall, in all segments, be it a transmission distribution, smart metering or C and I, we see a great opportunities going forward. Those opportunity pipeline remains robust, and we are well positioned to take advantage of the opportunity available to us in all the segments.

8:45 And we will continue to focus on besides ESG, as I said, on CapEx delivery. So this is in nutshell, and I hope you must have received all the details and material on our financials. So I thank all of you, and now we'll be happy to take questions from all friends. Thank you. Thank you. We will now begin the question and answer session. Participants are requested to use handsets for asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles.

9:44 The first question comes from the line of Manish Sumayya with Cantor. Congratulations on a strong quarter in the first half. I did have a couple of questions. Maybe to kick it off, on IntelliSmart, when should we expect that transaction to close? Thank you, Manishwai for your question. Intel is smart, the approval from CCI is pending and we expect this approval very soon. In fact, we had a couple of meetings with them, and they wanted a various information on transactions as well as on the market. We have provided all those information.

10:41 We also had approval from all the utilities where Intelismart has a concession. So we also are required to take their approval. We have secured all those approvals. And we expect the CCI approval very soon. And once we have that CCI approval, we will complete the transaction immediately. So we expect that to happen in next one month time. Okay. That's super helpful. And then on the legacy smart meter business, you had installations of about $1,300,000 in the second quarter. It did show that the quarter was a little bit of a slower deployment.

11:30 Maybe if you can just help us understand how we should think about the second half deployment and perhaps what's really happening on the ground that might potentially speed up the deployment in the second half? Yes. So the yes, obviously, the deployment on the first half was lower than even our expectation, and those reasons were mainly extended. But we are working on those, and those reasons are obviously in resistance from people for a smart meter, where we have now ramped up our campaign to educate those customers.

12:19 The second one was that few of the distribution companies wanted to focus on a specific type of smart meter installation. So point in case was that Maharashtra was expecting us to install mainly in ST consumer meters. And once you target a very specific consumer, obviously, your speed will reduce because you won't be able to capture that entire geography. And they were wanting to do it for a right reason because they wanted to complete that energy accounting at least for real time energy accounting for ST consumer. So we also supported them. But now that they have asked us to deploy all and every meter, which is pending. So we expect that speed will increase significantly.

13:14 And similarly, in Bihar, they wanted us to do the tagging of all the customers before we install that meter. And we also have completed those activities now in Bihar and Maharashtra, where the pace was low, we expect that to increase significantly. Okay. And then just lastly on transmission, if I can just add one more question. I think you said that the second half capitalization should be much better than the first half? And perhaps if you can just help us understand the two or three projects might really bump up the second half versus the first half.

14:05 So if you see the tech record or the past few years performance, the CapEx performance, obviously, is a little lesser in first two quarter as compared to second two quarter and mainly because of the weather conditions and a lot of transmission CapEx get hindered in monsoon and summer. So we expect to do total CapEx of transmission in the range of about INR 14,000 crore. So we will be doing about 8,000 to INR 9,000 crore of CapEx in another the second half.

14:54 And we are fully lined up for that. All the contracts has been awarded, teams have been mobilized, contractor has been mobilized, and you will see a lot of execution activity on the ground scaling up in the second half. The next question comes from the line of Rohan Mehta with Strategy. Couple of questions regarding the Energy Solutions platform. First, so I gather that we have been selling in the merchant market in the previous quarter and now will tie up with MSCBC.

15:46 So will the margins go down? And second, how do we see the progress of this segment, say, in the H2 and FY 'twenty eight? So Rohan, our long term strategy is to make sure that we have substantial capacity tied up on a long term basis on both sides. We would obviously not want to want large exposure of market as far as ESL platform is concerned. So when we started and scale up this activity, obviously, we started with tying up a generating capacity, and we have now started tying up on, say, our consumer side as well. And you must have seen that we have done this long term PPA with MSCBCL, which will start operating from last quarter of this year.

16:51 And we were fortunate enough that between this period where we start our long term supply, the market was good, and we have been able to earn a good margin. But in the long run, we wanted to have a stabilized revenue profile rather than creating a volatility based on a market in our P and L. Okay. And what about the long term strategy, sir? That is only in terms of volumes. Terms of volumes. Sir, in terms of volume, we will certainly continue to scale up this. And currently, we have about this 2,500 megawatt of MSC DCL PPA.

17:44 We will be doing another PPA with an AML where regulatory approval has already been achieved. So we will be doing that PPA. So we will continue to scale up this volume. And we will reach to about total aggregate capacity on both side, about 7,000 to 8,000 megawatt of tie up over a three to four year. Okay. Thank you so much. Thank you. Next question comes from the line of Mahesh Patel with ICICI Securities. Please go ahead.

18:33 Yes. Hi, sir. So my first question is on our transmission order book. So we have reported around $870,000,000,000 of work in hand. So I guess this doesn't include the recently won Aptar project, right, which is around 120,000,000,000? This includes Wijig and Satara, which is recently won. Okay. And sir, the transmission commissioning, right? So H1, I think we haven't captured any meaningful capacity. So I see in CA data that it's largely due to the ROW issues, some clearance, etcetera, right, including some capacity in Kaura.

19:19 So are we expecting this project, this three, four projects that are delayed in H1 to get commissioned in H2? Or what are we doing to kind of accelerate these projects? So Mahesh, we recently commissioned one element of Phase four, which is the. Hello? Hello. Yes, sir. You are ready. Yes, yes. So we have recently commissioned one of the one element of Phase four Kaurav Ghuj recently. The work on Kaurav and Khawda, Alwadi is also going on. Alwadi is tagged up because of the ROW problem.

20:16 And we expect resolution very soon. In fact, it is being discussed at Government of Gujarat as well as Government of India level very frequently. The other project that we expect to commission would be WRSR in this year also this year. And probably, we will complete we are trying to push that project. We might complete the Navinhal project in the current year or maybe it may spill over in the next year, first half. We will be commissioning WRSR Kaura Phase four, Halubad. So these three projects are short and Navinhal probably we might be able to commit.

21:06 And in Mahan as well, Phase I will get commissioned. The Phase II will be in the second next year, first quarter. So as you must have seen, despite these ROW challenges, we have been able to scale up our CapEx deployment as far as transmission is concerned. And with the resolution of this ROW in Gujarat, we are hopeful that we will be able to scale up even further. Got it, sir. Thank you. So my second question is on the Energy Solutions segment. So we sold around 12,200,000,000 units this quarter. So can we have the breakup of how much of this is sold through our long term contracts and how much on short term basis?

21:58 So in quarter two, we sold about 14,500 million units. Out of this 14,500, about 3,500 is the unit that we take a position and sell in the market, whether to third party or exchange. So there, we have a long term tie up in terms of supply and sell it in the market, that is INR 3,500. The second volume, which is about INR 9,500 million, where we do power trading. So we sell on behalf of someone, which is 9,500.

22:50 And there are about 1,500,000,000 units where we manage or provide the power management services. So totaling that 3,500, $9,515,100. So that's a total volume of INR 14,500 million that we handled this quarter. But this quarter, I was just checking the numbers out of 25 view we had reported in H1, right? And in Q1, we had reported 13 around 13 view. So I thought this quarter, we have sold around 12 view, but I think the number is not No.

23:38 H1 number is 28,540, and Q2 number is 14,583. Okay, sir. Got it. And sir, lastly, in the P and L, we have booked some assets, right, some deferred assets of around INR 17,000,000,000. Could you throw some light on what is this exactly? See, there are two companies, MBG PTCL and ATIL, where company has started to go with a new tax regime and recognize the past paid MAT assets in the books of account close to around INR 1,500 crore.

24:25 Since these are Section 62 assets and therefore, corresponding adjustable recoverable assets has also been liability has also been created. And to that extent, there is no impact on P and L. Got it. Got it. Thank you so much. Thank you. Next question comes from the line of Nikhil Nagani with Bernstein. Please go ahead. Hi. Thank you for taking my question. My questions are on the Energy Solutions Earlier, you had said you plan to scale it up to 7,000, 8,000 megawatts in a few years. Just wanted to clarify, you meant that on the sourcing side or on the power sales side, you wanted to scale it up to that level?

25:15 Nikhil, this is Raj. So it's largely on the supply or say, the consumer stack side. Obviously, there would be capacities which will be required to match that demand. So that would be higher. But yes, this is the consumer stack side. That is what we are targeting. Understood, Raj. And in terms of the entities you're targeting, you mentioned this Maharashtra contract. Beyond that, are we targeting small C and I customers as well? Or are we thinking to the large data center kind of opportunities primarily? So we have a diverse set of consumer stack even today. So one, obviously, you have 2,500 megawatt of the MS EDCL thing, seven fifty megawatt, AEML, so that's 3.25.

26:05 We are targeting multiple data center customers. We are in advanced discussions with them. Then further, we also have close to 400 megawatts of C and I clients, which are smaller ones, as well as we are also managing some of the other demand and provide our services for a competitive power to various internal consumers. So we are making it diverse to ensure that the margins reflect the complete solutions. Got it, Raj. And on the sourcing side, then do we also plan to source coal based generation and farm storage? Or would we largely stick to renewable solar plus base kind of setups, solar wind test? So the sourcing would reflect the consumption per se as we want to match on a long term basis on both the sides.

26:56 Obviously, the demand from our consumers is also diverse, as you can understand, based on the mix which we are talking. So it will be having all kinds of sources, including thermal, PSP, renewables, BES and whatnot. So it will be full diverse, including third party clients and the market sourcing. Perfect. And one last question, when this Maharashtra PPA starts, how much of our BEST already contracted or to be contracted would transition to this PPA? So I would say this way that within the Maharashtra one, 2,500 megawatt, we have broadly covered 50% right now based on our sourcing. And obviously, we are further in the market, so discussing with various parties for further sourcing of various types of capacities.

27:50 That's how we are currently positioned. Okay. Thank you so much. This is across resources, not only the battery. Okay. Solar plus base is what you got. Thank you. Thank you. Thank you. Next question comes from the line of Shiram Kapoor with Jefferies. Please go ahead. Hi, sir. Thanks for the opportunity. My first question carrying on from the on the Energy Trading business, you first gave the volume breakups. Would it also be possible to share the revenue and EBITDA breakups as you had given on the last quarter for the three segments within this long term trading, C and I trading and Power Management? See, the average realization as far as trading is concerned is about 5.75.

28:45 And what we sell on exchange on behalf of others, we get about to three per unit. Got it, sir. So just to add further, the total sale is about for the H1 is about INR 3,800 crores. And that's purchase sale revenue. For rest of the category, we do accounting on a net basis, means it's only a margin part. So long term sale that we have done sale from a long term contract we have done is about INR 3,688 crore.

29:37 And the balance in other category, power trading on those C and I customer and power management, those revenue, which are margins are about INR 52 crore, 57 crore and INR 32 crore, respectively. Got it, sir. And just secondly on the so the EBITDA that you would have earned on the long term trading would just be so you're saying 2 to 3 paisa is a fair estimate to take on the power management and C and I trading and the balance is all coming from the long term trading? Is that Yes, of the aircraft correct. Got got it, And just secondly on the transmission business, you mentioned that you're expecting to commission three projects this year, WRSR, Halvad And Kagara Phase 4. So earlier, you had given a guidance of around 15,000 crores of capitalization.

30:32 So are you revising that downward, given that maybe some projects have been pushed to a bit next year? Not immediately because we are still hopeful that we will be able to complete what we plan in the current year because now we expect the next six months will be a fair season for transmission project working. And we expect those constrained, which were there relating to ROW in Gujarat, We'll be able to we will be able to sort it out. In fact, we have started handling that and started working on the ground. As I mentioned, we have already completed one element of Kauda Phase four element.

31:17 Second, La Cardia is also progressing very fast. In Halvad, only 50 location is pending, and we expect that also to get completed very soon. WRSR project is also on a second of commissioning. Those both the sub taken on both the side is completed. The line portion is limited issue or balance work is pending. And now we are doing stringing also the last phase of stringing there in WRSR. We have started realizing drone to avoid ROW problem for us singing. So we expect that to complete in this year only.

32:03 So we don't see a requirement currently as of now to revise the CapEx guideline, and we hope that we'll be able to do it in next six months of this year. Right, sir. And lastly, on your smart meters business, so you earlier guided for about 10,000,000 installations this year itself. You've done 3,400,000 the first half. So just wondering whether you're still on track for meeting that 10,000,000 this year? So we plan for about 80 to 90 like meter this year. And the balance about 40, five, we hope that we will be able to complete in the next first next half year.

33:05 Got it, sir. Thanks. I'll come back in the queue for further questions. Okay. Thank you. Next question comes from the line of Vishal Pariwal with PL Capital. Please go ahead. Yes, sir. Thanks for the opportunity. Sir, on this Energy Solutions platform, I think the contract where we take a position, last quarter, have done almost like 3,300,000,000 units where the spread is higher, margins are higher. And this time, we have done 3,500,000,000 units. So can you give some perspective, like, I mean, at the end of the year, maybe on a quarterly basis, how this ramp up can happen on this particular portfolio for us?

33:51 So I think two points, which are very relevant here. One is, as we answered earlier, we are ramping up this particular portfolio starting end of or the last quarter, we would be having capacities going to Maharashtra. So that's where a lot of this capacity, which is currently available with us, cost of expected to only increase as we ramp up capital, capital, more capacities on the sourcing side.

34:36 So this is broadly the business model that you would find us retying up the capacities prior to our deployment. So that's what you would reflect you would see in our results. Okay. So basically, the $3,500,000,000 quarterly run rate, a jump is expected in quarter four. And in terms of I mean, like because if you do that working of one, two in other portfolios that we make, then I mean, we are making more than, like, INR $2.20 per se in this particular side of the business. Then in RERTC, the numbers are in similar trajectory that is there for us for the Maharashtra one? Or probably it is a little different? So see, I think one first question on the volume. As I mentioned that there will be a steady increase in our volumes as we increase our tie ups on both the sides. So what you see today, obviously, there is seasonal weather variations. But at the same time, on a trajectory basis, we are expected to increase the volumes.

35:41 Now margins is a question of what the underlying tie ups are on both on supply as well as the deployment side. The margins in the PPAs are reflecting the long term return profile of those PPAs, and you will see that happening. But we believe that we will continue to maintain healthy margins in our businesses across the diversified consumer base, and that's what you would see. Okay. Okay. Okay. And then just maybe one last question is on the smart meeting. I think do we all do I mean, like I said, I've already given a clarification target for this year and next year.

36:32 But in terms of further buildup of order book, I mean, are you seeing activities on the ground, any tendering opportunity that has kind of... I mean, like, you know, probably scaling up or maybe are bidding? Any any color that can be provided will be helpful, sir. So on the smart meter side, yes, the market right now is still untapped for large capacities to be coming for the auctions. There are already current auctions which are there in the market. We are participating, and we believe that the demand will ramp up because the market is seeing the benefits of it coming in, and we are fully positioned to actually tap that opportunity.

37:24 And there could also be an opportunity of acquisition in the market on top of what we get here through bidding. Okay. Got it. Sure, sir. I think that's all from my side, Dan. Thank you. Thank you. Next question comes from the line of Vivek Rajamani with Morgan Stanley. Please go ahead. Mr. Rajamani, please go ahead. Yes. Thanks so much for the opportunity and congratulations. Mr. Rajmani, sorry for interrupting. Your voice is breaking. Can you please come in the range at all?

38:11 Is this better? Hello? Hello? Mr. Ajmani, we cannot hear you. Mr. Ajmani, can you speak, please? Hello? Is this better? Yes, this is better. Please go ahead. Yes, sorry, apologies for that. Thanks for the opportunity and congratulations on good set of numbers. Just to kind of clarify on the question on the previous participant. Obviously, the new contracts that you have will scale up from 4Q of twenty twenty seven and the portfolio mix will obviously change going into fiscal 'twenty eight.

39:00 Could you just give us a sense that from the very strong quarter that we witnessed, would it be fair to say that there could be some softening as we get into the more cooler periods from a merchant perspective, given that you have more longer term volumes will only commence meaningfully from fiscal 'twenty eight onwards. Is that a fair statement? So I think, yes, we are as we have said in the earlier answer as well, we are transitioning more and more merchant volumes, which are currently available with us to long term PPAs. We will, again, in future, are likely to have timing mismatches, and we will have the volumes available to us for those timing mismatches as we have capacities advanced in advancement of our deployment.

39:50 Now what we realize on that, that machine capacity is based on the market conditions, and we obviously try to maneuver our strategy in a manner that we are able to realize healthy returns on those things. Now within that framework, obviously, there are PPAs, which we want to tie up, and we already have roughly 3.25 gigawatt of PPAs, which also have very healthy returns. So with volumes picking up and all of the PPAs coming in, we expect to maintain a very good EBITDA margin in this business. So Vivek, as I said earlier, in the long run, we would not want major volatility in our C and I profitability.

40:37 And therefore, we would not take long term or a large volume exposure to market. So we will continue to tie up capacity on both sides on a long term basis so that we have a stability in revenue as well as profitability. And obviously, to leverage the advantage of having this diverse portfolio of supply as well as consumer side, we will keep certain capacity open, but it will not be a significant one. So what you will see in the long run is a steady and growing cash flow as well as volume and profitability.

41:30 Thank you, sir. That's great. Just the second question was from our bookkeeping one. Mr. Your voice is breaking. I'm sorry, Mr. Spada? No, no. It's still breaking. I'm sorry. Mr. Rajmani, I request you to jump back in the queue for more questions. Thank you. Next question comes from the line of Apoorva Pahatul with IFL Capital. Please go ahead. Just one question. Adani Green has added more battery capacity in 2Q. So just wanted to know if they are going to take that over as well and operate for the rest of the year? See, I think we are in active discussions with multiple parties, including Adani Green for whatever capacity they deploy.

42:23 If they find it attractive to tie up with us independently based on the market benchmarks, they would do with us. So obviously, we connect with them as well for these capacities, and you would see some of those happening in the near future. But purely on the market benchmarks where the value is available for both entities, if at all those transactions happen. So if we do take over, it won't it need not necessarily be at the 4.85 tariff, I believe. Yeah. I wouldn't stick to a particular number. Number is a result of where the market benchmarks are. It could be lower. It could be higher depending upon how the market costs are moving ahead. What you should be looking at is whether I am tying up at the numbers which are market benchmarks or not. So whether it is SECI, NTPC or other bids, which are available to me or similar players are available to me when I'm going in the market and tying up with them versus what opportunities they may have in their own portfolio.

43:31 So that's where I think there is a good meeting of mind happening, and we have been able to tie up large capacities and based on that understanding in past, where they get their market returns and we get capacities at that thing. And they're able to do this without having risk of SECI PSA tie ups or any of those things which you see in the center. At the same time, we are able to tap larger sources. So it's a mutual win win. At the same time, both parties would decide based on how the market benchmarks are moving. For a similar trade profile, for a similar long term tie ups and similar terms and conditions. Next question comes from the line of Vinci with PhillipCapital.

44:24 I had an industry related question. So now China is putting a ban on solar tech exports and possibly it could lead to a slowdown in solar in India. So can you see a reduction in the need for transmission lines going ahead if that happens? Sorry, Philippe, you said they are putting a ban on solar They putting a ban on export of technology in solar. So India is still not fully integrated in the solar wealth chain. So if that leads to a possible slowdown in solar capacity addition, do you see there will be a lesser need for adding new transmission lines? I think, Philip, per se, we do not see the equipment banks in China because it's largely on a high-tech side that there have been some reservation in exporting technology outside China, largely focused on, I would rather say, more towards the ingot and wafer or the earlier part of the value chain in the solar manufacturing.

45:33 But at the same time, if you look at India, first, India is today on the solar side manufacturing side is an overcapacity market, which is available in the ALM modules and all of that, those are available. So we do not necessarily see any impact on solar, but I don't think that is the way we could be looking at transmission. The transmission opportunities is coming from multi phases, not only based on solar deployment. You have a huge amount of pipeline right now, which is coming from the states upgrading their networks because they need to absorb capacities for their increased demands. A lot of cities now looking for solutions to bring more power to their own consumption centers.

46:20 You can see a lot of demand coming from China from the Mumbai area as well or Maharashtra area as well. Similar things are getting replicated in other metros. Obviously, the third phase is also now coming up with more than 100 gigawatt of capacities coming on thermal. So that entire thing is also pushing the capacities on the transmission side, a requirement of that. Similarly, you have PSPs coming in, in a very big way. So solar is one component. At the same time, we do not see any meaningful slowdown in solar for the reasons which you just alluded to. So it's basically a market where we can decide how much opportunity we want to tap in rather than there is any dearth of opportunity. Sure. Just to extend that thought on thermal, this 100 gigawatt of thermal, I think bulk of it is brownfield expansion, where I think transmission lines are already present.

47:15 So if you move to a more towards thermal to offset any reduction in solar, do you see the overall transmission pipeline shrinking a bit than what it would have had it been internally in the business? No, no, no. It's not correct because even though it is brownfield expansion, the original transmission line plan for that original capacity. And obviously, when you add that capacity, you will also require additional transmission capacity for that. So for whatever capacity is getting added in new or brownfield, the capacity requirement as far as transmission will be the similar one. Sure. But would it trend more towards the 400 kV line rather than a seven sixty five kV or HVDC line because it will be incremental transmission capacity that can come? No, no, no, no. I don't think it will also be pushing towards the 400 kV line because those brownfield expansions are also a large scale.

48:20 So if two units are getting added, then it's a 1,600 megawatt. And obviously, there are multiple thermal projects getting developed in the vicinity. So probably, it will also require a similar kind of a solution like HVDC. Recently, you must have seen recently one mega project that has been approved by Government of India, which itself is more than 80,000 crores, right? That is from East to North Transmission Corridor. So as Raj said, transmission demand is coming from various sectors. And now you will see a lot of transmission opportunities coming from the project, which is aimed at a system upgradation and also on a consumption side and mainly around city areas.

49:29 Thank you. Next question comes from the line of Shiram Kapoor with Jefferies. Please go ahead. Hi, sir. Thanks for the opportunity. Just a clarification, you mentioned that you have about 3.25 gigawatt of PPA signed up already on the energy trading. So that would be a 2.5 gigawatt MS EDCL and seven fifty megawatt AML. Is that correct? And are those both? Is the AML one operational already? Or is that also yet to be In terms of time lines and the capacity, please, two five gigawatt MSD cell signed. The capacity starts being deployed from end of February this year, 1,000 megawatts and 1,000 megawatts from end of April and another 500 megawatts end of July in the next year.

50:15 As far as seven fifty megawatt is concerned, that's already approved by the regulator. All process already done. We are in the process of executing that, expect that to happen over the course of next three to four weeks. The capacity in that particular PPA would be two years from the date of signing that PPA. So that flexibility is there in terms of our deployment. Hope that answers your question. That's clear, sir. And just secondly, on coming back to the transmission side, if you could quantify, you recently won an intrastate project as well a few weeks ago. Could you quantify what the project value for that would be? And what is the pipeline ahead, this 1,400,000,000,000 tender pipeline that you're talking about? How much of that is interstate versus intrastate?

51:04 And how you see that progress on the intrastate side specifically? So both the projects that we have won last quarter, one is Satara as well as second is Pendruti, both are on interstate project. And right now, see, I think the offended pipeline itself at the country level is around INR 140,000 crores. It's spread across the States and the Central. Obviously, Central includes a lot of some of the HPDCs as well. So the tilt is in favor of the center in terms of the portion of the tenders which are out.

51:50 But as we mentioned earlier, there is significant amount of capacity build in the new GEC2 category as well, which has been recently approved, is more focused towards creating interstate networks. So this breakup is more revolving breakup and would have its own spread as we move forward. So we obviously decide where we where it is more suitable for us, which projects are more suitable for us and focus on them to ensure that we make value for our bids and add value to our shareholders. Directionally, directionally, you will see a lot of new project and opportunity coming from state side, as I said earlier.

52:39 So there will be a lot of projects that will have to be developed on a consumption side. And especially for those areas where huge amount of consumptions in terms of data center or manufacturing are coming up. And also around those cities, which is growing like this year, we see consumption increase in the city of Mumbai of the order of 11% to 12%. So those kind of consumption growth in the cities will also push for need of additional transmission capacity around those city areas. Right, sir. But just continuing on the intrastate pipeline, you're saying there's directionally we'll see more opportunities coming up. How is the competitive landscape in the intrastate side versus interstate? And do you see your typical project IRRs, ROEs being a little bit lower on the intrastate side versus the typical interstate ROEs?

53:42 So in the intrastate, typically, it is little better as compared to interest rate because obviously, those developers will see as a state regulatory versus central regulatory landscape. So typically in the state, the ROE would tell little better. Got it, sir. Thank you so much. Thank you. Next question comes from the line of Vishal Biraja with Pandan AMC. Please go ahead. Hi. So the capitalization market for this year and next year, if I'm... Sorry for interrupting.

54:31 Mr. Pariah, we cannot hear you. Can you speak a little louder? Yes, yes. Sir, could you restate the capitalization target for FY '27 and FY '28 please for the transmission business? See, as we said in the earlier question, we actually expect to incur 8,000 crore of additional CapEx in the second half of this year and another INR 18,000 crore to INR 19,000 crore in the FY 'twenty eight. That's the pipeline we are projecting as far as transmission is concerned. And sir, capitalization also addition to gross block? So the capitalization also would be of the order of INR 8,000 to 9,000 crore. So if we take WRSR, the Kaurav Phase 3, Halvat, that's Halvat project and then Kaurav Phase 4. If we take these three only, then it will be close to INR 9,000 crore.

55:36 And next year, we should be closer to INR 10,000 crore, sir? In terms of capitalization or Capitalization. Capitalization would be about give me a minute. That will be of the order of 10,000 crore. The capital light business will jump after the subsequent years after next year because of commissioning of those HVDC projects.

56:23 That will add a capitalization in lump. Yes. Agreed. One question on the borrowing side. Of the total net debt of INR 41,000 odd, how much is from ECB? On the borrowing side, ECB is around Around 10%. On the overall debt of INR 51,000 crore, 10% is around from the ECB. 10% is from ECB. Okay. And this year, the currency is hedged, as you had mentioned earlier. But is the interest rate also fixed for a few years?

57:12 Or that is completely variable? No, no, no. All our USD bonds and ECB, the interest rates are fixed. So 70% to 80% of our debt portfolio is on fixed coupon basis. That is very helpful. Thank you. Thank you. Next question comes from the line of Anuj Upadhyay with Investec. Please go ahead. Hi, sir. Thanks for the opportunity. Just one clarification, the 4.6 gigawatt tie up and 3.5 gigawatt hour battery storage is entirely from Adani Green, right? There's no tariff which includes Adani power as of now.

58:07 So there is no tariff with Adani power as of now. But out of the total capacity around 700 is from third party as well, six fifty. Okay. And you mentioned that of the total volume which we traded under the Energy Solutions, those were around INR 3,500,000,000 was for the merchant basis. And this was on a trading where we earned around two to three by size of margins. So you just mentioned what was the margin on the merchant basis, on yes. Of the order of 172 to INR 2. Okay.

58:54 You know, previous interactions, sir, you have mentioned that, you know, we will be eyeing close to around 10 gigawatt of PPA with the C and I and data center category, where the average spread could come in the range of 85 to 1 rupee. Now the supply side PPA, which we are the offtakers and PPA, which we are signing as on date, it's like with a AML, we have signed 700 megawatt with the MECDL, we have signed 2.5 megawatt. So even on this 3.5 gigawatt, we expect to have similar kind of a margin or margins out here are more of a like regulated basis where it would be much lower? No, no, it would not be much lower, but it would also not be this high because this is because of market condition prevalent in these two.

59:44 As we said earlier, we expect Hello. Hello. There is some background noise coming. Yes, sir. Yes. So we don't expect as I said earlier, we would not want to have this kind of market volatility that in certain quarter because of market condition, you have a bumper margin and maybe subsequently, you may not have that significant margin. So we will tie up on a long term basis, where those margins will be in the order of 80 to INR 150 on a consistent basis. Okay. Fair enough, sir. And is it fair to assume, sir, based on the tire, which we have as of now on the supply side that is from Adani Green and the $6,700 from the third party, the available volume, which we have to trade on a merchant basis would be in the range of 13 to 14,000,000,000 on an annual basis based on the current contract.

1:00:52 You know? Because just on a very simplistic calculation, which I did on a 4.6 gigawatt, that gives us close to around 10,000,000,000 of unit to be traded and 3.5 gigawatt hour of battery. Assuming that battery, again, it starts through the power. If we take it on the grid at a very lower rate during the solar hour, it gives somewhere close to 14,000,000,000 of unit. And just going by your quarterly run rate, this quarter we sold somewhere in the range of 3,300,000,000 on a merchant basis. So it is fair to assume based on our current tie ups, we have this quarterly run rate of 3.3 or 3,500,000,000 of units available to be traded on merchant till the time the PPA. You're right. Again, we have to be mindful of the fact that renewable, both wind and solar will be a seasonal profile.

1:01:45 But on overall basis, it would be of the order of INR 3,500 million per quarter. And this MSC DCM will be about 1,000 megawatt will start supply towards the end of February. So some part will go there. Thank you. Next question comes from the line of Ishan from Antik. Please go ahead. Just wanted to understand that our contracts with Adani Green are on take or pay basis.

1:02:36 So given the curtailment is a larger issue, so if the power is not scheduled or the grid backs are down, who bears the cost? It's basically whatever they are giving me the power, I am paying that the cost for that power. So on the generation side, obviously, the grid issue is with the generator. We are like any other buyer, like they would have PPAs with like SECI or anyone else, they pay for the power which is provided. Okay. So if the power is not reaching to you, then you are running team would be paying for the curtailment, is it? Yeah. They... That's the risk they have in their business.

1:03:22 So, essentially, how it how it is being done is that in any PPAs that you would have, whether it is with AESL or whether it is with any utility, generator is to schedule that power. And once it is scheduled, that becomes your responsibility to update and pay for that. Currently, they have not been able to schedule corresponding to the curtailment that is being enforced. So our responsibility starts the moment power is scheduled. Got it. Secondly, sir, you mentioned that there is no PPA with the running power, but this... I believe this energy and PPA also includes some thermal component to supply around the clock power.

1:04:13 So you could get... Sometimes since there... Will there be a time for the running power or, like, how much thermal capacity do we need to tie up under this particular contract? So in MSEDCL PPA, there is no compulsion that we need to have a thermal. There is a full flexibility. It is energy supply contract rather than a conventional PPA tied up with a particular source. So I can do any kind of combination there. But obviously, we will require a thermal capacity, and we are exploring various other options of taking capacity, thermal capacity on a long term basis. It could be Pazani Power, it could be other as well, and we have been talking to third party for thermal PPA as well.

1:05:01 Okay. So at this point, we cannot quantify how much of thermal will be required for this particular PPA? Correct. And we also don't want to lock those kind of a capacity in a way that we wanted to retain the full flexibility on a supply side. So I can leverage that entire supply stack in the most optimal manner, both in terms of technical and commercial side. Got it, sir. Thank you. Those are my questions. Thank you. Ladies and gentlemen, as there are no further questions, we have reached the end of question and answer session.

1:05:48 I now hand the conference over to Mr. Ashok Jagetian for closing comments. Thank you, everyone, for taking time out and joining this call. If any other questions left out, you please share one to one, and we will be happy to answer that. Thank you. Thank you. On behalf of Adani Energy Solutions, that concludes this conference. Thank you for joining us. You may now disconnect.