Ptc India Earnings Call

PTCIndia Q32014EarningsCall 21Jan14

Operator Ladiesandgentlemen,gooddayandwelcometothePTC IndiaLimitedQ3FY '14EarningsConferenceCall.Asareminder,allparticipant lineswillbe in the listenonlymode.Therewillbeanopportunity foryou toaskquestionsafter thepresentationconcludes.Pleasenotethatthisconference isbeingrecorded.InowhandtheconferenceovertoKomalIyerfromFortunaPR.Thankyouandovertoyou,Ms,Iyer.

KomalIyer,InvestorRelations Thanksfortakingtimeforparticipatinginthiscall.RepresentingthecompanyareMr.DeepakAmitabh,theChairmanandManagingDirector;Mr.ArunKumar,ExecutiveDirectorandCFOandMr.RajivMalhotra,ExecutiveDirectorandChiefRiskOfficer.SomeoftheinformationsharedorstatementsmadeinthisconferencecallcouldbeforwardlookinginnatureandadetaileddisclaimerhasbeenincludedinthequarterlyInvestorPresentation.FollowingtheopeningremarksbyMr.DeepakAmitabhandtheCFO,thefloorwillbeopenedforquestion.IwouldnowinviteMr.Amitabhtoopentheconference.

DeepakAmitabh,ChairmanandManagingDirector Goodafternoon,everybody.OnbehalfofPTC,Iwelcomealltheanalysttothisconference.AlongwithmeareMr.ArunKumar,theCFO;andMr.RajivMalhotra,whoistheCRO.OnethingistherethatIwillbeavailableintheconferencefornotmorethanhalfanhour,becauseIhavetoleaveforameeting,soI'dliketokeepourdialoginitiallyasshortaspossible,sothatthereissufficienttimeforthequestionanswersandwhateverbalancequestionanswer,myteamisgoingtohandlethat.

I'm happy to present a very robust quarterly performance for our company. As you allmust have seen, the volumes haveincreasedto8.2billionunitsinthequarter,showinganincreaseof40%.Thecompanyhasalsobeenabletorealizeasurchargeamountof INR138croresmainly fromUPPCLforthedelayedpayments,ofwhichabout INR73crores isthenetrealization forPTC.

Onemoreimportantthingthatduringthisquarter,wealsocommencedsupplyof250megawattpowertoBangladesh,whichaddstoourinternationalportfolio.So,wehadbeendoingbusinessfromBhutanandNepalearlier,nowBangladeshhasalsojoinedthis.Also,thecompanyhastiedupthroughLOIsandPPAs,saleofpoweronlongtermbasisforabout1,100megawatttotheutilitiesofRajasthan,UttarPradeshandTamilNadu.

Thesearethestepswhicharegoingtoensurethatourvolumeskeepgrowingupfornextthreetofouryearsonacontinuousbasis.Despitethewaggeriesrelatedtothepowersector,weremainoptimisticaboutthegrowthinourbusinessvolumeandexpectahealthypacetocontinuegoingforward.

Strongbalancesheet,robustcashflowsandobviously,thecaseofexperienceinthesectorputsPTCinapositiontobenefitfromanyopportunitythatcomesitswayandsuccessfulperformanceofoursubsidiariesisatestamenttothesame.OnemorethingwhichIwantedtosaythatcompanywillremainfocusedorincreasingitspresenceinmultiplebusinesssegmentslikelongterm,mediumterm,shorttermsalestoutilitiesaswellastotheretailthatisdirecttobusinesssegment.

Wehavementionedearlieralso,thisactivityofours,westartedoneandahalfyearsago,andnowtheresults,wecanseetheresults,whicharecomingup,becausethecompanycontinuedto increase itspresence inretailsegmentwithmorethan1,750millionand itbeingcontributedbyretail inninemonths.Similarly,wehaveseenthat,sotheexchangealso,ourvolumeshavebeengrowingup.Onemore thingwhich Iwanted toemphasizewas,during just coupleofdaysback,whileourDirectorofMarketing,Mr.SNGoel,hegotajobintothisplace,IndiaEnergyExchangeasaManagingDirector.

Asyouallknow,PTChasbeenthe initial throughoursubsidiarycompanyPTCFinancialServiceshad initiatedthisconceptoftradingthroughexchangesandwewerethe our financecompanywasacopromoter,soobviously,withhimgoingthereourrelationshiparegoingtobemorestrengthenedandhehasjoinedthereasMDandCEOforafiveyearcontract.Now,otherthanthis, I thinkwehad been showing wehave seen a solid growth in the EBITDA, PBT, PAT, even if you take out these thesurchargeincome,stillourEBITDAfortheninemonthsandthreemonthshavebeengoingveryrobustly.Withthis,IjustwantedtohandoverthemictoourCFO,Mr.ArunKumarforfurtherdialog.Thankyou.

ArunKumar,ExecutiveDirectorandChiefFinancialOfficer Thankyou,sir.I'mArunKumar.Goodafternoon,everybody.ThegrowthinvolumeshavebeenalreadysharedbyourChairman.Wehaveonquartertoquartercomparisonbasisfrompreviousyear,weareupby40%andoncumulativebasis26%.Iliketomentionhere thatweachieved27,645millionunits in the lastyear, (inaudible) inninemonthsduring thisyear.Andourgrossoperatingmarginshavebeen31%moreascomparedtothequarterofthecorrespondingyearoftheprevious. Total gross operatingmargin is 46 crores and surcharge has also been explained by our Chairman thatwe have been able tosuccessfullycollectthesurchargefromUPPCL.Andtotaloperatingmarginforthequarterhavebeen89croresandcumulativelyforthreequarters,itis108crores.TherehavebeenincreasesintreasuryincomebecauseoftheUPPCLduescollectedduringtheyear.Theinterestincomeanddividendincomehavebeenmoreascomparedtothecorrespondingquarterofthepreviousyearandprofitbeforetaxhavebeen133.94croreduringthequarterandforninemonthsitstoodat260.35crores.Profitaftertaxis90.78forthequarterandfortheninemonths,itis182.29crores.

Soinsummary,thesearethefinancialresults.YouarefreetoaskonceourCFOornowfreetoaskthequestionsorthequeries,wewillbehappytoanswerthat.

QuestionsAndAnswers

Operator Thankyouverymuch.Ladiesandgentlemen,wewillnowbegin thequestionandanswersession.The firstquestion isfromthelineofHardikShahfromICICISecurities.Pleasegoahead.

PrakashGoel,Analyst Hi,sir.ThisisPrakashGoelhere.Congratulationsonagoodsetofnumber.Hello?

DeepakAmitabh,ChairmanandManagingDirector Thankyou.

ArunKumar,ExecutiveDirectorandChiefFinancialOfficer Yeah,thankyou.

PrakashGoel,Analyst Okay.Ihavetwoquestions.Firstwithregardtocashdeployment.Whatisthecurrentcashbalance,cashinbankbalanceandwhatistheplantousethecashbalancegoingforward?

ArunKumar,ExecutiveDirectorandChiefFinancialOfficer See,thecashbalanceason31stDecemberwasroughly781croreswithus.The(TechnicalDifficulty)onaparticulardatemayvarybecauseofthedebtorsandcreditorspositionasondate.

PrakashGoel,Analyst Okay.So,basicallywhatIwaswantingtoknowisthathowwouldwhatistheplan,longtermplanofdeploymentofcash,becauseweunderstandtheyearendcashbalancewillbecloseto1,000crorelikewhatwillbethedividendpolicyandhowyouwouldutilizethecash?

DeepakAmitabh,ChairmanandManagingDirector With regard todividendpolicy, itwillbe slightlyearly tocomeoutwith thedetails,but certainly,we'llkeep the interestof the

investorsinmind.

PrakashGoel,Analyst Okay.Soanyspecificplanwithregardtoutilization,anyacquisitionandotherthingsthatisbeingplannedthat?

DeepakAmitabh,ChairmanandManagingDirector Canyoupleaserepeatthatquery?

PrakashGoel,Analyst Yeah.Thequestionisthatanyspecificplanwithregardtoutilizationofthecurrentcashorlikethecash,whichislikelytobe?

DeepakAmitabh,ChairmanandManagingDirector Thecompanyisworkingoutonadetailedbusinessplan,butletmesharewithyouthatweforwardourlongtermvolumesarecomingonstream,thatisin'14'15,'15'16and'16'17,whichwillbesubstantiallyincreasingourworkingcapitalrequirements.

PrakashGoel,Analyst Okay.

DeepakAmitabh,ChairmanandManagingDirector Wewillbetouchingaroundfromlongtermitselfaround11gigawattofthecapacity.

PrakashGoel,Analyst Okay.Sothatbringsmetothequestionthatlike,whatwillbethevolumethisyear?Like,beginningoftheyear,thecompanyguidedfora32billionunitvolumeandwehavealreadydone29billionunitinthefirstthreequarter.Sowhatwillbethetotalvolumethisyearandnextyear?

DeepakAmitabh,ChairmanandManagingDirector See,asacompanystrategy,wehavebeensharingwiththemarket thatminimumtargetwillbedoubledigit,that'salmost10%growthyearonyearbasis.Andcertainly,we'llbeachievingmuchmorethanthat.

PrakashGoel,Analyst Sir,10%isnothing,sir,becausethebase

DeepakAmitabh,ChairmanandManagingDirector That'swhat I'm saying. Earlier, that'swhat I repeated to you that if you see the comparisonwith the last year. Last year,wecompleted27,645millionunits.Inninemonths,wealreadycompleted27,475millionunits.

PrakashGoel,Analyst Okay.Sowhatisthenumberthatyouarelikelytodothisyear?

DeepakAmitabh,ChairmanandManagingDirector

Itwillbeaverydefiniteforwardlookingstatement,ifIsharethefigureswithyou.

PrakashGoel,Analyst Soatthebeginningoftheyear,ifyousay32billionunitandyouwewantthatnumberandyou'vealreadyachieved28billionunitinthefirstthreequarters,soshouldweforecastthatyoushouldbeachievingsomethinglike36billion,37billionunitinthefirstFY'14?

DeepakAmitabh,ChairmanandManagingDirector Thanksforyourbestwishes.We'lltrytoachieveyourtarget.

RajivMalhotra,ExecutiveDirectorandChiefRiskOfficer WewillI'lljustaddthesethings.See,whenwesaidwewillbedoing32billionunits,weshouldbedoingbetterthanthat.

PrakashGoel,Analyst Thatisunderstandable,sir.

RajivMalhotra,ExecutiveDirectorandChiefRiskOfficer Andsecondly,what Iwanttosay,seetill andasyouhavebeenseeing, Imean,Arunwillgiveyouthedetails,what istheratiobetweenshorttermtodayalsoandlongterm,thatratiolongtermhastokeepincreasingatleasttillthetimejustwhatever11,000whatArun issayinggetsexhausted.Andby the time,wehavebeen talkingaboutandwehavebeen reading in thenewspapersabouttheproposedamendmentsby ortotheElectricityAct,wheretheyaregoingtoseparatethesupplysideandthecontentpart,contentand thewirepartetcetera.SoPTC isworking towardsthat,because theseamendmentsand theiractivitytakesatleastcoupleofyears,sowearealsogearingupourselvesoveraperiodoftimetomovetowardsbeingpurertradingcompanytomoreofanaggregatorofsupplyanddemandside.

So,thatisalargerbusinessplan,obviouslyitisgoingtotakecoupleofyearsbeforewegotowardsthat,becauseitrequireslotofchangesintheElectricityActandtheinternationalunderstandingofthethingshowtheyaredone.

PrakashGoel,Analyst Okay.Sir,justonethingwithagain,likeanothercashdeploymentrelated.Basically,earlierweweregiventounderstandpostourexperienceinUPandTamilNadu,thatwe'llnotbeblockingourcapitalformakingpaymenttothePowerGenCos?Hasthatstrategychangedor likenow, is itmandatedbybecauseyouaretalkingaboutrisingvolumeandrisingworkingcapitalrequirement,soIjustwanttounderstandthatpoint?

DeepakAmitabh,ChairmanandManagingDirector Yeah,yeah,yeah.See,what Imean,Ithink,CROwill liketoaddhis insight intothewholething,butthedifferencewhichwasthereearlier,thatweweredoingasperthecontractsandIhaverepeatedsomanytimes,what(inaudible)thosecontracts,whichwehavecorrectedoveraperiodoftime.

Secondly,noweverypaymentis,thereisanappraisalsystem,thereisariskprofit,whichseesthesethingsonadaytodaybasisandafterthatonlyitisfilteredandevenifwearegoingtoavailtherebateincome,thecallsaretakenoneachtransactionsnow.Soit'snotthat likegenerally,but longtermbusiness, inshorttermthepaymentsaremade in10times 10daystime,15daystimetotaketherebateetcetera,whereas,inlongterm,thestorymaybeslightlydifferent,butI'llaskRajivMalhotratoelaborateuponthispoint.Thankyou.

RajivMalhotra,ExecutiveDirectorandChiefRiskOfficer Thankyou,sir.JusttoaddtowhatMr.Amitabhissaying,see,wearetalkingoflikeonadailybasisastodayanoutstandingofnearly1,000crores.Ithinkwhatisimportanttounderstandiswherethis1,000croresliesintermsofhowmanydaysofoutstanding.So,whenyoulookatit,somepartofitispurelybusinessasusual,apartfromsomething,whichisanolddisputedamount,whichcomes

inthegreaterthan90daybucket,whichweareasacompanytryingtoresolvewithTANGEDCO.Ithinkthatissomethingwhichiscommunicatedtoyouearlier.Wepointthatoneneedstounderstand,isthat,solongasthereceivablesarewithinourradarandwearekeepingtrackofanythingsoonas itfixthe30dayoutstandingmark.Andtothatextent,redflagwhere ithastobeanddoaquickfollowup,Ithinkyourmoneyissafe.

PrakashGoel,Analyst Sir,youwouldhavedonethesimilarthinginthepastalsowhenUPandTamilNaduthingwentoutofhand.So,I'mjusttryingtounderstandlikewhentheUPmoneystartedcomingback,youwouldgiveyes,sir?

DeepakAmitabh,ChairmanandManagingDirector Prakash,canIinterrupthere?See,aboutUPandTamilNadu,inthesameconferencecallforlastthreeyears,wehavebeensharingwhatwerethethings,solet'snottakesomuchtimeofthewholeconferencecall,whereothersmaybewaitingforaquestionandyoucancomebacktousonthisspecificissue.Yeah,yeah,thankyou,thankyou.

Operator Thankyou.ThenextquestionisfromthelineofVishalBfromB&KSecurities.Pleasegoahead.

VishalBiraia,Analyst Sir,of late,wehavehearda lotofnoise from thepoliticalstratathattariffneeds tobecutornomajor tariff increasearetobetaken,somethingofthatsort.Andwe,yesterday,Maharashtrahadcuttariff,lastweekHaryana.So,anycommentsfromyouonthisthing?Thisisthefirstthingandsothesecondthingisthat,onthelongtermcontractthatwehavePSAs,sowehavereducedthequantumthatwillcomeupinFY'15to3,500megawattsfrom6,000megawattsearlierinthelastpresentation.So,ifyoucanaddressthat?

DeepakAmitabh,ChairmanandManagingDirector Arun,canyouanswerthesecondquestionaboutcuttingdownthething.

ArunKumar,ExecutiveDirectorandChiefFinancialOfficer Yes,sir.Asfarasourlongtermvolumesareconcerned,wehaveanalyzedeachandeveryprojects,it'saprogressandwheredowestand insometermsoftieuporsaleofpoweretcetera.The11gigawatt,which Isharedwithyou isaconservativefigureafterbiddingortakingoutthoseprojectswheretherehavebeenaslowprogressorwheretheapprovalshavebeenheldup.

VishalBiraia,Analyst Okay.Sir,willitpossiblefor?

DeepakAmitabh,ChairmanandManagingDirector Andregardingthefirstquery,seeit'stooearlytocommentaboutthesethings, it'stooearlytocomment,because it'sanelectionyearandwedon'tknowtheexactdetailsof,inMaharashtra,theyhaveaskedforcuttingdownthetariffetcetera,wehavenoideathatitisitmaybebecauseofthecostof,Imean,theprocurementpowercostetcetera,howmuchithasbeenandthecharges,whichmayhavebeenverystiff.Sowithoutanalyzingthesethings,itbecomesverydifficulttotakeacallandtogeneralizethatitwillitisapplyingacrossthecountry.Soit'stooearlytocommentaboutthat.MaybeafterMarch,wewillbeinamuchbetterpositiontocomment,analyzingeachandeverythingwhichisgoingon,withoutseeingthedetails.

VishalBiraia,Analyst Indeed,sir.Sir,justoneasacorollarytothis,sir,haveyoufeelincreasedinqueriesfromthestatespertainingtoshortterm

demand,shorttermpowerforthenextthreemonths,sixmonthsorfortheelectionperspective?

DeepakAmitabh,ChairmanandManagingDirector Itisbusinessasusual.Imean,ithasbeenbusinessasusual.So,therehasbeendemandforthepower,startingfromNovember,Decemberitself,whichhasthatnormallyhappens,becausesummerseasonarequitestrongthisthing,keepingthecountrytheoverallcountryintoapicture.Summerdemandsandsummercropsdemandsareayeartoyearphenomena.Soobviously,itpicksup,thedemandpicksup.

VishalBiraia,Analyst Sure,sir.Sir,couldyouspecifywhichprojectshavewecutdownfromthe6.6gigawattthatweexpectedinFY'15tothenow3.5gigawatts?

DeepakAmitabh,ChairmanandManagingDirector IwillrequestAruntosharethecompletedetailsaftertheconcalloroncethequestionhourisover.

VishalBiraia,Analyst Sure,sir.Thankyouverymuch.

DeepakAmitabh,ChairmanandManagingDirector Yeah.Thankyou.

Operator ThenextquestionisfromthelineofMohitKumarfromIDFCSecurities.Pleasegoahead.

MohitKumar,Analyst Sir,congratulationongoodsetofnumbers.


ArunKumar,ExecutiveDirectorandChiefFinancialOfficer Thanks,Mohit.

MohitKumar,Analyst Sir,Ihavecoupleofquestions.First,regardingthewehavecontractedaround700megawattofadditionalPPAinthequarter,amIright,sir?

ArunKumar,ExecutiveDirectorandChiefFinancialOfficer Howmanymegawatt?

DeepakAmitabh,ChairmanandManagingDirector Exactfigures,Arun.

MohitKumar,Analyst Additional700megawattPPAinthequarter?

ArunKumar,ExecutiveDirectorandChiefFinancialOfficer No,Chairmansaidthatwehavesignedfor1,000megawatt.

MohitKumar,Analyst Right.400wassigned inthefirsthalf,additional700megawatthasbeensignedinthe lastquarter.Canyoujustdetailoutthosepowerplants,whichhave?

ArunKumar,ExecutiveDirectorandChiefFinancialOfficer I can give you on that details of the for Rajasthan. Rajasthanwas there,UPwas there, TRN Energy,Maruti Clean. I don'tremember,DainikBhaskarPower.Somanyofthemwerethere,wecontinuetobe

RajivMalhotra,ExecutiveDirectorandChiefRiskOfficer 400megawattsinTamilNaduandAdhunik,one.MaruthiClean250MWinRajasthan,DBPower410megawattinRajasthan.

MohitKumar,Analyst Sir,whathappenedtothisTamilNadubidwhere(inaudible)wherewehaveinvestedconsiderableamount.HavetheysignedPPAthroughus,PSAthroughus?

DeepakAmitabh,ChairmanandManagingDirector TamilNadu?

ArunKumar,ExecutiveDirectorandChiefFinancialOfficer No.They TamilNadu theyhave signeddirectly.Theyhave signeddirectly,because thereyou see,wheneveranyPPAsaredone, it'snotthatfullcapacityisgiventous, let'sgobacktoKarchhamWangtoo,JP.Itwasa1,000megawattplant,theyonlyoffered700megawatttousonalongtermbasis.Soitalldependsupon,it'snotnecessarythatthefullplanbethereandthefullloadtheyaregoingtogiveittoPTC.So,asandwhenwhat

MohitKumar,Analyst Sorrytointerruptyou,ifIremembercorrectly,wehadaPPAwiththeIndBarath,Utkal.SoideallytheyshouldhaveenteredaPSAwithusright?

ArunKumar,ExecutiveDirectorandChiefFinancialOfficer See, thewhole issue is,wehave invested themoney through finance companyand therewere two setsofmoneywhichwereinvested.Firstsetwasinvestedandtwoyearsback,weboughtanEBITof24%interestalso.Andanotherthisthingistherewheretheexitwillbecominginnextoneyearorso.So,financecompanyisaseparatecompanyandtheyaredoingtheirjobwhichtakingcareoftheirinterest. Now,PTChasPPAs,therearePPAswhereinitialsarethere,therearelotofconditionprecedentwhicharethere.Allthosethingshavetobeanalyzed,soyourqueryabout IndBharath, I'msurethemarketing marketingpeoplearenotthere justnow intheconcall,theywillanalyzethethingsandsenditbacktoyou.

MohitKumar,Analyst

Andsomyotherqueries,IthinkAndhraPradeshhasfinalizedtheirPPAforthenextyear,ifIamnotwrong.So,haveyouenteredintoanyPPA,finalPPAforSimhapuriandMeenakshiTPSforourportion?

ArunKumar,ExecutiveDirectorandChiefFinancialOfficer LookSimhapuri,Simhapuri,thePSAisthere,theSimhapuriandthisthingtheywereinatollingarrangementsearlier.

MohitKumar,Analyst Correctsir.

ArunKumar,ExecutiveDirectorandChiefFinancialOfficer AndfromtollingwehavemovedtoPPAandPSA.So,tillMay,thepowersaleagreementsarealreadythereandasandwhenitwillbeforfurtherperiod,PTCwillbesigningthem.

MohitKumar,Analyst Sir,that'swhyI'mtryingtobelievethatAndhraPradeshhavealreadyfloatedthebidsforthenextyearfromJune2014?

DeepakAmitabh,ChairmanandManagingDirector So,I'msuremymarketingpeoplemustbeonthejob,I'msureaboutthat.

MohitKumar,Analyst Okay,okayjustwantedtofigureoutwhetherwehaveconcludedPPA,sir.Andsir,isthereany?

Operator SorrytointerruptMr.Kumar.

MohitKumar,Analyst LastquestionIknow.

Operator Sure.MayIrequestyouto,andthen,togobacktothequestionqueue.

MohitKumar,Analyst Thisisthelastquestion.

Operator Yeah,sure.

MohitKumar,Analyst Sir,whicharetheexitwhicharelikelytohappenthisyear,wheredoyouseeitwasamomentum?

DeepakAmitabh,ChairmanandManagingDirector Exitfromwhere?

MohitKumar,Analyst Exitfromourpowerprojectinvestment?

DeepakAmitabh,ChairmanandManagingDirector No,PTChasthenonlytwolargeinvestments.OnewastheTeestaUrja,andanotherisAthenaEnergyVenturesLimited.ButTeestaUrjashouldgetcommissionedbytheendofitwillstartgettingcommissionedbytheendofthiscalendaryear.Meaningthereby,thatobviouslyin'15,'16onlywhentheplantisfullyoperationalandsettleddown,thatisthetimewe'llstartseeingwhetheranexitwillrequirenoworwhatisthebestvaluewecandetermine,yeah.

MohitKumar,Analyst Okay,sir.Thankyou.Thanksforyouranswers,sir.

Operator Thankyou.ThenextquestionisfromthelineofJaiprakashToshniwalfromIndiaFirstLifeInsuranceCompany.Pleasegoahead.

JaiprakashToshniwal,Analyst Goodafternoon,sir.Mostofmyquestiongotanswered.Justwantedtoknow,wehadacommitteewhichsortoftoworkoutonthecash

DeepakAmitabh,ChairmanandManagingDirector Yourvoiceisnotaudible.Hello?Hello?

Operator Mr.Toshniwal?

JaiprakashToshniwal,Analyst Hello?

Operator Yes.Pleasegoahead.

JaiprakashToshniwal,Analyst Yeah,sorrysir.Goodafternoon.

DeepakAmitabh,ChairmanandManagingDirector Goodafternoon.

JaiprakashToshniwal,Analyst Mostofmyquestiongotanswered.Justwantedtounderstandthereisacommitteewhichisworkingonrequirementforthecashrequirementforworkingcapital.Anyresultfromthatoranyreportfromthatcommittee?

ArunKumar,ExecutiveDirectorandChiefFinancialOfficer Ifyouseethecorrespondingincreaseinthegrowth,theworkingcapitalrequirement intheupcomingyearsisgoingtoincrease.We'llgiveyouaroughestimatethatitwillalmostgothreetimesinFY'15.

JaiprakashToshniwal,Analyst Okay.Fairenough,sir.Okay,thanks.

Operator Thankyou.ThenextquestionisfromthelineofSanjeevPfromSharekhan.Pleasegoahead.

SanjeevPanda,Analyst Congratulation,sir,foraverygoodsetofnumber.


SanjeevPanda,Analyst Sir,Iwantedtounderstandabitsorryforapingonthesamething.Lookingatthenumbersorvolumethatwehavegeneratedwehavealreadytradedtilltheninemonth.Whatarethekindofnumberswecouldseeinaveryforthewholeyearandgoingforward,ifatallthenumberswillgrow,whatarethesourcesofyouknowthekindof,likeintermsoflongtermandshorttermorcrossbroder,whereweseethegrowthcomingfrom?

ArunKumar,ExecutiveDirectorandChiefFinancialOfficer See,asfarasthefiguresfortheyearareconcerned,theChairmanhasalreadyreplied,givingadefinitefiguresforthisyearornextyear isaforwardlookingstatement.Youcanseethegrowthhappeningeveryyear.Asfaras longtermsareconcerned,therearedefinite projects from where we drive these figures. And rather we reduce our projection from 14 gigawatt to 11 gigawattconsideringthedetailedanalysisoftheprojects,theprogressbeingmadeandthesalesbeingtiedup.

SanjeevPanda,Analyst Okay.Sir,onthebalancesheetside,itisareceivablenumbers,ifyoucansharewithus?

DeepakAmitabh,ChairmanandManagingDirector Youwantreceivablesason31December?

SanjeevPanda,Analyst Yeah.

DeepakAmitabh,ChairmanandManagingDirector

Yeah,certainlywecansharethat.Thedebtorsare2,368crores,creditorsare1,556ason31stDecember.

UnidentifiedParticipant Okay.Thankyousir.Thanksverymuch.That'sitfrommyside.

Operator Thankyou.ThenextquestionisfromthelineofDeepakAgarwalfromElaracapital.Pleasegoahead.

DeepakAgarwal,Analyst Yeah.Goodafternoon,sir.Firstofall,congratsforgoodsetofnumbers.

DeepakAmitabh,ChairmanandManagingDirector Canyourepeatlouderplease?

DeepakAgarwal,Analyst Yeah,okay.AmIaudiblenow?

DeepakAmitabh,ChairmanandManagingDirector Yeah.Itsbetter.

DeepakAgarwal,Analyst Congratsforgoodsetofnumbers.Ihavecoupleofquestions.Firstlyon,whenyousayyouhavescaleddownfrom14gigawattto11gigawatt in terms of longterm arrangements, so do you think there is some specific set of projects or some specific sort ofpromotersarereallyfacinglotoffinancialstress,despitesomuchofworkdonebyCCIandlotsofreformstakingplace?AndsecondquestionishowdoyouseethevolumeifyoucansharetheguidanceforFY'15?Thanks.

ArunKumar,ExecutiveDirectorandChiefFinancialOfficer Asfarasvolumesareconcerned,Ithink,it'sbeingrepeatedlyaskedfor,andcompanyviewshavebeengivenbytheChairman.Andwith regardto reducing thevolumeby3gigawatt, Iagain repeatthatweareseeing theprogressoftheproject,theirapprovalstatus,theircommissioningschedulesandtheirssincerityaswell.Takingaholisticview,wecometoafigureof11gigawatt.

DeepakAgarwal,Analyst Okay.AndthelastthingisonwhendoyouseethiscontractsforRajasthan,GujaratsorryRajasthan,UPandTamilNadutostartintermsofactualvolumedelivery?

ArunKumar,ExecutiveDirectorandChiefFinancialOfficer Thatwecangiveyouthetimelineswhentheindividual

RajivMalhotra,ExecutiveDirectorandChiefRiskOfficer TheyarespecifictotheirImean,theirsigningthisthing.Ithink,itmustbefrom'16onwards,butwe'llhavetocheckupwiththemarketingpeople.

DeepakAgarwal,Analyst Forallthethreestates?

RajivMalhotra,ExecutiveDirectorandChiefRiskOfficer Yes,from'16.

DeepakAmitabh,ChairmanandManagingDirector Yeah,becausenormallyitiseffective,RajivMalhotracanexplain,butIthinkthebiddingdocumentcontainsthatsupplyhastobeginaftersomanymonths,Imean,thatisthepartofthat.

DeepakAgarwal,Analyst Okay.

RajivMalhotra,ExecutiveDirectorandChiefRiskOfficer Whilewe'llbehappy to share theexactdetailsof the supply foreveryoneof those tieups, roughly, it is somewherearoundSeptember,Octoberof2016andthereon.That'swherethepowerstartstoflow.

DeepakAgarwal,Analyst WhichistheFY'17then?

RajivMalhotra,ExecutiveDirectorandChiefRiskOfficer You'retalkingabout'16and'17,yeah.

DeepakAgarwal,Analyst Okay.Thankyou.

DeepakAmitabh,ChairmanandManagingDirector However, theremaybe some volumeswhichare flowing in the shorttermbefore that.Therefore, Iwouldnotwant tomakeaqualifiedstatementonlyfortheFY'16,FY'17.

UnidentifiedParticipant Okay.Okay.Thankyou,sir.

ArunKumar,ExecutiveDirectorandChiefFinancialOfficer Yeah,whatRajivistryingtosaythatifthepowerplantsgetcommissionedearlier,let'ssay,in'15only,soobviously,tillthatpointoftime,wemayhavetosellitinamerchantbasis.

UnidentifiedParticipant Yeah,sure.Thatyouhavethatoneyearlevyyoucandothat.

ArunKumar,ExecutiveDirectorandChiefFinancialOfficer

Yeah,yeah.Yeah.

UnidentifiedParticipant Okay.Thankyou.

DeepakAmitabh,ChairmanandManagingDirector Iwillhave toexcusemyself,becausehalfanhour is theupper limit,which Ihadkept formyself,but I'm sureArun jiandRajivMalhotra,theywillbeabletotakeanyfurtherquestionsfromyouall.Thankyou.Okay,I'mjustsigningoff.

Operator Thankyouforyourtime.ThenextquestionisfromthelineofSachinShahfromEmkayInvestments.Pleasegoahead.

SachinShah,Analyst Hello?

ArunKumar,ExecutiveDirectorandChiefFinancialOfficer Hello?

SachinShah,Analyst Yes,sir.Thankyouforthisopportunityandcongratulationsongreatsetofnumbers.Sir,justwantedtounderstandcoupleofthingsonyourbusinessside.Sir,inthelast,ifyouseethelastfiveyeardataofthePPA,ofwhichinthelasttwoyears,therehasbeennotmanymajorcontractsthatyouhavesignedinspiteofabout40,000megawattto50,000megawattprobablyavailableinthePPA.Soanyparticularreasonforthis?

ArunKumar,ExecutiveDirectorandChiefFinancialOfficer See, thepowerpurchasehas to correspondwith the sale tieupaswell.Wemean to say, the caseonbidding,outof the totalbidding,whatever have taken place in spite of some of themwhich has been cancelled last two, three years.We have beensuccessfulin70and50megawatts.

SachinShah,Analyst Okay,okay.Andsir,whenyoudothis,whenyousignaPPA,isthereaminimumguaranteetariffthatyougivetotheproducer?

RajivMalhotra,ExecutiveDirectorandChiefRiskOfficer Not.

SachinShah,Analyst Okay.Right, sir.And sir,onemore fundamentalunderstanding about it is thatwhen thePSAs are available, theproducers canactuallyalsodirectlygoandsign,likeforexample,IndBarathUtkaldida500megawatt,theysigneddirectlyaPSAwithTamilNadu.Ithinkinspiteoftheyhavingsomearrangementwithyou.So,howdoyouwhereisthePTC'svalueadditioncomingtoavoidthiskindofthing?

ArunKumar,ExecutiveDirectorandChiefFinancialOfficer See,bygivingoneexample,youmayhaveaperceptionthatwearenotbringingvalueaddition.Butatthesametime,thereare

peoplewhoarestillwillingandwhohavebeendoingthroughPTC.AndPTChasbeenabletodemonstrateitsvalueadditioninthebiddings.

SachinShah,Analyst Right.Sir,canyouelaboratea littlebit,theproducerswhoaresigningupwithyou.Whatexactlyadvantagethey'reseeing inbeingwithyou?Canyoujustgivealittlebitmoresothatthismisperceptionactuallygetsclearedout?

ArunKumar,ExecutiveDirectorandChiefFinancialOfficer Rajiv,I'mjustsupplementingandtakingthisquestionfromMr.ArunKumar.

SachinShah,Analyst Yes,sir.

ArunKumar,ExecutiveDirectorandChiefFinancialOfficer See,IthinktheproducerwhosignsupwithPTChasaveryclearchoice.Eitherherunshisplantstotherestofhiscoreconfidenceorhetakescareofmarketingtheoutput.Ifheisinabetterpositionthanustomanagethetraderiskandmanagethemarketriskoftheirproject,verygood.Buttherestillmaybeopportunitiesforthemtoworkwithusintheshortterm.So,Ithinkit'smoretodowithwhattheywanttodowiththeirownorganizationsetupandskillset.

Now, ifyougobacktomarketregulations,wheretheregulator itself, ittalksofatraderbuying inthe longterm,tying itupandbeingabletodoOTCproductsintheshort,mediumandlongterm.NowthatistheifImaysayinfewlines,wevalueaddwithinwhichPTC'sbusinessaregoingtowork.And,thereareotherlicensetraderswhomaynotbeworkinginallthesesegments.

So,therefore,thereisthiswholeissueaboutatradingcompanyrunbyoneofthemajorIBPwiththefocusspecificallyonmanagingtheirownproductionorownedassetsandparticipating intheshorttermutilitymarket fromnowand thenor invariouskindofthreemonthskindofsaleopportunities.So,PTCifImaythenrecap,one,itistheissueofmanagingcreditrates,whichwe'vebeendoingandthereisatrackrecordtosayhowwellwehavebeendoing.Ineednotgointodescribingitmyself. Second,how, like ifsomebodycommissionsourproject,wherejustaquestionago,weweretalkingabouta longtermtieupwiththe stateutilityhappeningon inOctober16.Theproject iscommissionedaheadof that.Whocreates?Aworld,whomakes themarketforthatshorttermorinterimperiod,basicallycomestoatraderorwe'reagenerator.See,inanyguessthetraderisnotamandatoryrequirement,heisapartofthe,shallIsay,themarketsector,leadingthemarketandwhichiswherewearetoday.

ArunKumar,ExecutiveDirectorandChiefFinancialOfficer See,asasupplementtowhatRajivhassaid,youhavetoseethePTC'sroleinthewholepowersectorasawhole.Today,marketmightbesamethatonegeneratorhasgonedirectlyandbiditforit.But,seethepositionofthegeneratorswhentheycametothemarketforestablishingthesepowerplants.Howmanyofthefinancialinstitutionswereabletocarryoutduediligenceandtakenindependentcalloffinancingthem.ItwasPTCwhereamajorityofthisdeveloperhadcome,PTCcarriedoutaduediligence,seethatwasworkedoutwhatsortof figurestheycanarriveat.Sothe isolationthatsomebodyhasmovedaway,okay,there istheroundcallasRajivexplained.ThePTCroleyouhavetoseeinamuchbroaderperspective.

UnidentifiedParticipant Sir,butwhatIunderstandisthatearlierthePPAsignedwithPTCwasacceptedbythefinancialinstitutionsforfinancialclosure,soprobablythatwasonereason.ButIthinkthatisalsonownotprobablyacceptedbythefinancialinstitution.Isthatacorrectthingandsothatisone

ArunKumar,ExecutiveDirectorandChiefFinancialOfficer WearenotyethavegotafeedbackthatwherePTCisagreeabletosignaPPAandfinancialinstitutionisnotagreeabletothem.Sofarwehavenotreceivedafeedback.

UnidentifiedParticipant Okay.Okay.

ArunKumar,ExecutiveDirectorandChiefFinancialOfficer Butthewayforward,youhavetoseethemarket,howitisdeveloping.Allthedeveloperhavetoeithergoformerchantofforacasefrombillingroute.SotheFinancialInstitutionhastolook,hisviewpointfromallthesedevelopingmarketscenario.

UnidentifiedParticipant Okay.Andsir,inCase1bidding,PTCwillstillbeparticipating?

ArunKumar,ExecutiveDirectorandChiefFinancialOfficer Icanjustanswerthat.SeetheCase1bid,asitexistedtillrecently,youareawarethatanewsetofbiddocumentshavebeenfloatedby theGovernment of India it has been notified. So, as on date, the provision for a trader or participation through an SPD,althoughtheclosuresthereareprettyidenticaltotheearlierCase1bid,it'sprettyhazy.NowthereareviewsintheindustryabouthoweffectedparticipationthisdocumentwillgiveandIdon'twanttopredictthat,becauseIthinkitisforustosee.

Icanonlysaytwoorthreethingshere.Onewherewehavetieupsandtowardsexistingprojectsone,thereareopportunitiesforwhichareavailableintermsoftheexistingguidelines.Theissuesthereistheact,thentherearetheguidelines,whichcomeunderthe tariffpolicyof2006.And then there isa standardbiddingdocument, that is thehierarchy inwhich the lawor thepolicytowards.Now,oneSPDwhichhascomeasrecentlyasacoupleofmonthsago,Ithinkstillthemarketisyettoobserveit.

UnidentifiedParticipant Okay,right.Thankyousomuchandwishingyouallthebestsir.

RajivMalhotra,ExecutiveDirectorandChiefRiskOfficer Thanksverymuch.

Operator Thankyou.Participantsarerequestedtoplease limitthequestiontotwoatatime.Thenextquestion isfromthe lineofSantoshDesaifromEdelweiss.Pleasegoahead.

SantoshDesai,Analyst Hi,hello.Thankyousir,fortakingthequestion.Onethingis,canyoujustelaborateonthepreviouspoint,Ididn'tgetit.SoaspertherevisedDBFOOnorms.

DeepakAmitabh,ChairmanandManagingDirector Couldyouspeakupalittlebit.

UnidentifiedParticipant Canyouhearmenow?

ArunKumar,ExecutiveDirectorandChiefFinancialOfficer Alittlebetter.Ifyoucanspeakintothemic,itwillbeveryeasiertocatch.

UnidentifiedParticipant Isitbetternow?

ArunKumar,ExecutiveDirectorandChiefFinancialOfficer Yeah.

UnidentifiedParticipant Okay. Justwanted to ifyoucouldclarifyon theearlierpointevenabitmoreunder the revisedDBFOOnormsa trader isnotallowed to signaCase1 in somekindofaPPS.Nowhowareyou trying tomitigate thatbecauseyouhavequiteabitofopencapacity in termsofPSA?YouhavePPS,butyouhaveaPSA.So ifyouhave to tieupunder the revisednorms sohowwillyoumanagetodothat?

ArunKumar,ExecutiveDirectorandChiefFinancialOfficer Seetherevisednormstoanexistingproject,Iforthelikeofme,somebodycanexplainhowitwillapplyI'dlovetobeeducated.Tworeasons,onethereviseddocumenttalksofapartthroughofcoalandbasicallythecoalbelongingtotheutilityattheendoftheday.Thecutsofthishasbeenthecoalshortageandwe'retryingtoworkthatout.

UnidentifiedParticipant Right.

ArunKumar,ExecutiveDirectorandChiefFinancialOfficer Inanexistingproject,where thecoal linkageoracoalblock,whateverbedomesticcoalbasedFacilitiesAct isallocated to theprojectandwhichispartlytiedup.TwoactuallyparticipateinaDBFOObidsandwe'venotbeenabletounderstandhowitcandothat.

UnidentifiedParticipant Okay.Sobasicallyyoustronglybelievethatthesethingstogetmodifiedinbothform,bothfromathosekindofoperatingissuesaswellasallowingtraderstoparticipateinthatbecauseononehandthegovernmentwantsa15%,20%ofthepowercapacitytobeareopenedupfortrading,ontheotherhand,ifyouaredisallowingatrader,itdoesn'tobviouslymakesense?

ArunKumar,ExecutiveDirectorandChiefFinancialOfficer Okay.Therearetwothings,I'dliketorespond.One,Idroppedthewordstrongandwhenitcomestostrongbelief,let'ssaythisfromsuperlatives.

UnidentifiedParticipant Okay.

ArunKumar,ExecutiveDirectorandChiefFinancialOfficer Restofitwhatyousaidmaybeareasonablebelief.



Second,whenwe'retalkingofcreatingthat15%or20%oftradedmarket,thetraderisnotmandatory.Wehavetobecompetitiveandinthemarkettryingtogetourshareofthebuy.Sogeneratorwantstotradedirectlywiththedistributorandwiththecomingamendmentoftheactisfreetodoit.


ArunKumar,ExecutiveDirectorandChiefFinancialOfficer Sogenerallythedriftthatyou'vegotis,Iguessfine.Wehaveafeelfromtheindustryalso.Havingsaidthat,Iwouldnotlooklikedomakeanystrongcommentsonthepolicy,whichisthelargerlanetoday.

UnidentifiedParticipant Okay.The second things is, justwanted tounderstand in thepast, therewere these three contracts,onewaswithTorrent,secondwaswithKarchamandthirdwaswithLanco,wherethePPA,thecounterpartieswalkedoutortherewassomedisputeandthatPPAgotcanceledandall

RajivMalhotra,ExecutiveDirectorandChiefRiskOfficer Ididn'tgetthefirstname,please.Sorry,LancoandKarchamIgot.

UnidentifiedParticipant Torrent,Torrent.

ArunKumar,ExecutiveDirectorandChiefFinancialOfficer Okay.

UnidentifiedParticipant Yeah.Andnow,wearehearingthisIndBharath.SowhatwaskeydifferentbetweenIndBharathandtheearlierthreeandhowarewemitigatingthisriskgoingforwardthatsuchthingsdonothappen?

ArunKumar,ExecutiveDirectorandChiefFinancialOfficer Okay.I'lljustdoIthinkhavingsinceyouhaveboughtupbothKarchhamandLancoasthecases,Ithink,itshouldbeawareofwheretheyaretoday.ThatdisputehassomewhereendedandwearelookingattariffdeterminationofKarchhamalongwithandKarchhamorLanco,ourJPsareworkingalongwithPTC,tohaveatariffdeterminationbytheCRCthat'sthepositiontoday.


ArunKumar,ExecutiveDirectorandChiefFinancialOfficer SameforadisputeregulationofLanco.

UnidentifiedParticipant

Right.

ArunKumar,ExecutiveDirectorandChiefFinancialOfficer Pleaseunderstandthatthedisputesaroseinacontextoftheindustrywheretheywasextremeoptimismorwherethemerchanttariffslie.


ArunKumar,ExecutiveDirectorandChiefFinancialOfficer Andyouknow,therehasbeena learning in the last three, fouryears, Ineednotget into that.Soyeah, thecounterpartieshavelearnttheirlessons,we'velearntourlesson.WhatitmeansisthatourcontractprovisioninadifficultPPAhavebeentightened.Andthe issueatstakesometimes like intheKarchhamcase is infactattheendoftheday, itsaprojectwhich is largelyfinancedbypublicmoney.Andifstateutilitiesareatthe,let'ssaythebenefitsspendofthis,youjustcannotwalkawayfromthatdeal.So,it'sanissueofsanctityofcontractswhichIthinkthisismuchlargerthanadisputethatPTCmayhavewonorlost.

UnidentifiedParticipant Right.So,howcomethishappenedagainafterallthistimeinthis

ArunKumar,ExecutiveDirectorandChiefFinancialOfficer Yeah,wewillnottobeabletosaythatithashappenedagain.Thisspecificsofthecase,theydid.

UnidentifiedParticipant InIndBarath,whydidithappen,that'swhat.Andhowarewetighteninginthefuturesothatsuchthingsdoesnothappen?

ArunKumar,ExecutiveDirectorandChiefFinancialOfficer IndBharath, Iwillnotbeabletosaythatthesamethinghashappened. I'llneedtogetbacktoyouandwhatthisspecificswere,whatwasthecapacitytiedwithus,whichpartofthecapacitytheybid.Second,howdoweavoidthisinfuture?Ithinkit'saquestionofwherewehavethreeorfourprocessgoverningtermination,whetherandvariousissueslikewhatisthepenaltyofwalkingoutofthesecontracts.ButwhatI'monlytryingtounderlinehereisthatwhiletradingispurchasedforresaleandwasthatprincipletoprinciplecontract.Thefact isthatthere'sanexcessbetweenthesaleswemaketoutilities inthecontextandthepowerthatwehavebought.SoitisnotthatPTCistheonlyparty,whichiskindoflearningfromthisoristryingtofightthisout.


ArunKumar,ExecutiveDirectorandChiefFinancialOfficer It'sanissuethatyou'veraisedthattheprinciplelevelitisandwhatthesanctityofcontractsinthesector.



Notthefirsttimethatit'shappened.Idon'tbelievethisisgoingtobethelast,ifnotnow,three,fouryearsfromnowandtheirphasesinwhichtheindustrygoesthrough,(inaudible).

UnidentifiedParticipant Okay.CanIaskonemorequestion?

ArunKumar,ExecutiveDirectorandChiefFinancialOfficer Thatyouneedtoaskthemoderatorbecause,wewouldmayhavealotofpeopleonthequeue.Idon'tmind,speakingthatup,evenoutlinediftherearequestions.

UnidentifiedParticipant Yeah,okay,thenoperatoriftherearemore,shouldIwaitonthequeue?

Operator Yesplease.

UnidentifiedParticipant Okay,I'llwaitonthequeuethen,thankyou.

Operator Thankyou.ThenextquestionisfromthelineofVivekSharmafromICICISecurities.Pleasegoahead.

VivekSharma,Analyst Goodafternoongentlemen.

ArunKumar,ExecutiveDirectorandChiefFinancialOfficer Goodafternoon.

VivekSharma,Analyst Sir,justwantedtoknowthestatusofourdisputewithKarchhamWangtoo,what isthestatus,how,when istheyearendscheduleandwhatdoyouexpectfromthesamegoingforward?

ArunKumar,ExecutiveDirectorandChiefFinancialOfficer ThatMr.MalhotrahasalreadyexplainedRajivMalhotra.AlreadyJPhasapproachesERPfordeterminationoftariff,whereevenbeneficiarystatesarealsomadeapartintoit.

VivekSharma,Analyst So,whendoyouexpectthePPAs,thesupplyfromPPAtostartandwouldwebegettingthepreviousforthelastyear'soperatinglossalso?

ArunKumar,ExecutiveDirectorandChiefFinancialOfficer Whatloss,sorry?

VivekSharma,Analyst LikeourPPAwassupposetostartfromtheCOD[ph]oftheplant,buttheplantoperatedforoneyearandthemerchant,sowe'velostvolumes?

ArunKumar,ExecutiveDirectorandChiefFinancialOfficer Wedidn'treallylosevolumes.

VivekSharma,Analyst Okaysir,PTCwassupplyingunderthePPAalready?

ArunKumar,ExecutiveDirectorandChiefFinancialOfficer No,youhavetounderstandthatonethecounterpartywentintoadispute,lookedforashortperiodatwhateverthethoughtwasthebenchcoursearethere[ph].CamebacktoPTCforbringthetradesunderthe,inaninterimperiodforthisshorttermcontracts.Secondatsomepointtheydecidedtoendthedisputes,sowewenttocollectivelytoCRC,thatlook,wewanttariffdeterminationinlinewiththeoriginalintentofthepurchaseandsalearrangements.

SotheutilitieshavealsobeenincludedandthatproceedingbeforetheCRC.

VivekSharma,Analyst Okay,okay.

ArunKumar,ExecutiveDirectorandChiefFinancialOfficer Right.Now,it'saproceduralthing,it(inaudible)inanoticesbeingissued,validationofthepartsbeingdone,etcetera.However,closetotheendofthisfinancialyear,weshouldthinkthatthematteroftariffdeterminationshouldgetsettled.

VivekSharma,Analyst Okay.

ArunKumar,ExecutiveDirectorandChiefFinancialOfficer Butthen,it'sjustaguesstimate,itdependsonhowfastthisCRCdealswiththiscase.

VivekSharma,Analyst Perfectsir.Thankyou.Thatwouldbeallfrommyside.

Operator Thankyou.ThenextquestionisfromthelineofA.JainfromEmkayGlobal.Pleasegoahead.

A.Jain,EmkayGlobalSecurities Sir,basicallymyfirstquestionwasafollowupquestiontothelastquestion.ArethereanyotherbidderswhicharegoingontheirownandsigningPPAswithorPSAswithSEBasofnow?ApartfromIndBarathUtkalarethereanyothercaseslikethis?


Noneoftheseriousonesatleastthat'swhatIcansay.

UnidentifiedParticipant Okay.And

ArunKumar,ExecutiveDirectorandChiefFinancialOfficer ItfellofftheshelfandithadahistoricalPPAwithus.

UnidentifiedParticipant Who?

ArunKumar,ExecutiveDirectorandChiefFinancialOfficer Thatwecannotsay.

UnidentifiedParticipant Okay.Okay.Andsomyfirstquestionisbasicallyonthevalueadditionpartanswered,youansweredearlierinthecall.Yousaidthatmarketriskandcreditriskiswhatyou'readdingvalueto.Andifadeveloperdon'twanttotaketheserisks,hewillcometoyou.So,justwant tounderstand themarket riskpart,what is it that,basicallyyou take intoyourbooks from thedeveloper in termsofmarketrisk?

ArunKumar,ExecutiveDirectorandChiefFinancialOfficer Inlastyearsofexistence,atleastPTChasbeenabletodemonstratetothemarketthattherecanbedelays,buttherecannotbeadefault.

UnidentifiedParticipant Yeah.That'swhat,it'sthecreditrisk,right?


UnidentifiedParticipant Intermsofmarketrisk,intermsofmarketpriceorofftakeofthepower.Isthattheriskyoutooalsotakentoyourbooks?Becauseoneofthequestionyouansweredthatthereisnoguarantee.Inoneofthequestionsyouansweredthatthere isnoguaranteeoftariff, which you provide in the PPAs, while at the same time, you are saying that you're takingmarket risk, so justwant tounderstandthathowthesetwothingscoexist?

ArunKumar,ExecutiveDirectorandChiefFinancialOfficer No,no.Withintheriskappetitethatwehave,wecannotobviouslypromisesomebodyatariffwhichislikewayout.

UnidentifiedParticipant Yeah.Okay.


Ifthere isatariff,which is,theyhaveagreedas it'sabase line,which isthereaspartofa longterm,thatreallyseeking isnotaguaranteed tariff. It'smore like saying thatwith in theworst case scenario, the debt service of the lenders to that projectrecoveredornot.

UnidentifiedParticipant Okay.Sothatroughlywouldbelet'ssay,intoday'senvironment,wouldbeaboutINR3,INR3.5perunittype?

ArunKumar,ExecutiveDirectorandChiefFinancialOfficer ItwouldbeofINR3,yeah.

UnidentifiedParticipant Okay.And

ArunKumar,ExecutiveDirectorandChiefFinancialOfficer Andthinkingitisapoolofknowledge,itisa(inaudible).

UnidentifiedParticipant Yeah.

ArunKumar,ExecutiveDirectorandChiefFinancialOfficer Theseindependentpowerproducersmightbehavingaprojectortwoprojects,wherethebiggestbidsprojectsisoneortwostateswherePTCbidsforthecasesacrossourcountryandfornumberofourdevelopers.

UnidentifiedParticipant Rightsir.So,theoreticallyspeaking,thoughpracticallyIalsoagreewithyou,theoreticallyspeaking,let'ssayiftariffsinthemarketarelowerthanINR3perunitlet'ssay,theoreticallyyouwouldmakealoss?

ArunKumar,ExecutiveDirectorandChiefFinancialOfficer See,again,Imean,wecanhaveaseparatesessiononhowthecontractsareadministered.


ArunKumar,ExecutiveDirectorandChiefFinancialOfficer Theutilityinashorttermsituationfindsthatitneedsdispatchaboveanythingelse.IfthemarketisdiscoveringafaceofsubINR3orsubfiguresthatweagreed.


ArunKumar,ExecutiveDirectorandChiefFinancialOfficer Itisbasicallythegeneratorwhosays,look,Iwantaguaranteeofscheduling,whatisyourfeel.


ArunKumar,ExecutiveDirectorandChiefFinancialOfficer That'sthewayitplayoutsisn'tit.Seeit'sallveryfinetosaythatyou'resittingonaliabilityorifyou'resittingonaterminationcostliability,youhavetocomedowntotherealworldtoseehowyouoperatedinthemarket.

UnidentifiedParticipant Rightsir.

ArunKumar,ExecutiveDirectorandChiefFinancialOfficer Soyoupleaseunderstandthatthesecontractsnottoomanyofthemhavebeenadministeredinthepast.

UnidentifiedParticipant Yeah,true.

ArunKumar,ExecutiveDirectorandChiefFinancialOfficer Andwehavetomakeadistinctionbetweenlongtermpricingandshorttermpricing.

UnidentifiedParticipant Yes,sir.Sothisthiswhatyouhavesaidbeenmarketriskandcreditriskislongtermcontractsright?Whatyouexplainedisforlongtermcontracts?

ArunKumar,ExecutiveDirectorandChiefFinancialOfficer Yes.You'realsoawareof the fact that thereareeven in theshorttermcontracts, therearecompensationprovisionsunable tosupply. Imean,youwanttocall itperformancerisk,that isalsotheretoa limitedextent,butwe'remeteringthatriskandwe'relivingwithit.

UnidentifiedParticipant Right,sir.Right,correct.Secondmysecondquestionisbasicallyonsir,yousaid,workingcapitalrequirementcouldbeoverthreetimesthecurrentrequirement,whichisthere,ifIhearditcorrectly?Isthatcorrectsir?


UnidentifiedParticipant Sirbasically, I justwant to understand, if you are assigning a backtoback contractwith SEB and samebacktoback contractawarded in similar languagewith the developers then howwould theworking capital requirement be there because youwillgettingapaymentandyouwillalsobemakingapayment?


Seetherearemismatchesandthepoweroftakeover,thefinaloftakeoverofPTC,hemaypayonaduedateandavailthathemayorhemaydecidetopayaftertheduedate.

UnidentifiedParticipant Right,sir.

ArunKumar,ExecutiveDirectorandChiefFinancialOfficer Socontextually,whatyouarereadingonthelineiscorrect,butitdoesnothappeninthecommercialworld.

UnidentifiedParticipant Okay. So, sirwhat is your assessment of let's say normalworking capital days,which youwill have, Imean debtorsminuscreditors.Whatshouldbethenormaldays?

ArunKumar,ExecutiveDirectorandChiefFinancialOfficer Letmefirstreplytoyourinitialqueries.

UnidentifiedParticipant Yeah,yeah.


Somebodyaskedaboutdebtorsandcreditorspositionason31st,Decemberthatsortofdemonstrateonaparticulardate,howmuchmoneyisinvolvedandroughlythedebtorsandcreditordates,ifyoutakeouttheabnormal[ph].

UnidentifiedParticipant SobasicallytheTamilNadupartlet[ph]?

ArunKumar,ExecutiveDirectorandChiefFinancialOfficer Yeah.It'satverystrong11to15days.

UnidentifiedParticipant Thedifferencebetweenthetwo?


UnidentifiedParticipant Thatiswhatisthenormalthat'swhatyouaresayingbasically?

ArunKumar,ExecutiveDirectorandChiefFinancialOfficer Andwiththehelp,improvingofthesediscountswayforwardsomethingelseemergeletusseerunrateforthat.

UnidentifiedParticipant Allrightandallrightsir.Thankyouverymuchsir.Yeah.

ArunKumar,ExecutiveDirectorandChiefFinancialOfficer You'rewelcome.

Operator Thankyou.Thenextquestionisfromthelineof(inaudible)fromEmkayInvestmentManagers.Pleasegoahead.

UnidentifiedParticipant Good afternoon sir and thanks for takingmy question. Sir, I just needed a couple of data points. Like as I can see from yourpresentation youroutstandingexposure toTamilNaduhas increased to260 crores thatwasa10 crore increase. I justwant tounderstandisthe10croresisanetfigureoragrossfigurelike,hasthereanyhastherebeenanycashreceivedfromTamilNaduthisquartersir?

ArunKumar,ExecutiveDirectorandChiefFinancialOfficer There'snowonlyfigure,thatisnonetorgross,thiswaswhattheopeningofthequarterandthisiswhattheendofthequarter.

UnidentifiedParticipant Yessir.So,justIwantedtoask,haveyoueverreceivedanycashfromTamilNaduthisquarter?

ArunKumar,ExecutiveDirectorandChiefFinancialOfficer That'swhatI'msaying,duringthequarter,nocashhasbeenreceivedfromTamilNadu.

UnidentifiedParticipant Okaysir.Thankyousir.Andsir,canyougivemeagrossmarginforunitforthisquarter,aswellasthecomparablefigureforthelastquartersir?

ArunKumar,ExecutiveDirectorandChiefFinancialOfficer Comparablefigureforthe?

UnidentifiedParticipant Lastquarter,previousquarterforQ2.

ArunKumar,ExecutiveDirectorandChiefFinancialOfficer Q2,inaQ3?

UnidentifiedParticipant Q3andQ2sir,basically.

ArunKumar,ExecutiveDirectorandChiefFinancialOfficer Q3wasthisyearwas8,236andlastwas5,871.

UnidentifiedParticipant Okay.AndQ2forthisyearsir?

ArunKumar,ExecutiveDirectorandChiefFinancialOfficer I'lljustgiveyou.Justforamoment.Totalunitwere10,820millionunitsasforthequarterQ2,thisyear.

UnidentifiedParticipant Sir,ifI'mactuallyaskingforthegrossmarginperunit,that'swhatI'maskingfor.

ArunKumar,ExecutiveDirectorandChiefFinancialOfficer Yousaidunits,gross?

UnidentifiedParticipant Grossmarginperunit.

ArunKumar,ExecutiveDirectorandChiefFinancialOfficer Grossmarginperunit?

UnidentifiedParticipant Yessir.

ArunKumar,ExecutiveDirectorandChiefFinancialOfficer Itwas0.039intheSeptemberand0.04duringthecurrentquarter.

UnidentifiedParticipant Okaysir.Thanksalotsir.

ArunKumar,ExecutiveDirectorandChiefFinancialOfficer Welcome.

Operator Thankyou.ThenextquestionisfromthelineofSantoshDesaifromEdelweiss.Pleasegoahead.

SantoshDesai,Analyst Thanksalotsir.Myquestionwasregarding,ifyoucouldjustprovidesomekindanoutlookabouthowdoseethemarketgoinghigh,bothintermsofvolumesandtheprices.Justanoutlook,notaboutyoursigning,aboutintermsoftheshorttermtrades.Howdoyouseeitsspanningout?Obviouslyifyouthinkthattherewillbesomekindofanaberrationbecauseoftheelectionsandyoucouldalsospellitout.Butapartfromthat,whatisthekindoflevelsandwhatisthelikelyintermsofvolumes?

ArunKumar,ExecutiveDirectorandChiefFinancialOfficer Tradingvolumesintermsofinstallcapacityhavebeengrowingyearonyear.Andpresently,it'sroughly11%fortheinstallcapacity.Andwelookforward,ifweseethemarketoverseasandthepattern,whichisemerginginthecountry.Weexpandthatvolumesoftheratingwillgoup.

UnidentifiedParticipant Okay.Andintermsofrates,atwhatratesdoyouthinkthis?

ArunKumar,ExecutiveDirectorandChiefFinancialOfficer Rate,youhavetomakeadifferentiationbetweenlongtermandshortterm.


ArunKumar,ExecutiveDirectorandChiefFinancialOfficer ShorttermratesarealsobeinggovernedbytheabilitytopayandhowthesediscountsareabletocomeoutofFRPpackageswhichtheyhavepromised.

UnidentifiedParticipant Okay.So,whatisyourreadingabouthowthelongtermrateswillpanup?So,assumingtheshorttermrateswill?

ArunKumar,ExecutiveDirectorandChiefFinancialOfficer Wearealreadygettingthesuccessfulbidswhicharecomingoutofcaseonbidding.

UnidentifiedParticipant IfyouarereferringtotheUP,RajasthanandTamilNadu?

ArunKumar,ExecutiveDirectorandChiefFinancialOfficer TamilNadu,UP,Rajasthan,youcansay.

UnidentifiedParticipant So,ifyouexcludethese,theotherstatesarealsoyouaregettingthesimilarfeelingsinthesimilarrates,evenexcludingthesethreeandyouaregettingthesimilarfeelingabouttheotherstatesalso?

ArunKumar,ExecutiveDirectorandChiefFinancialOfficer Wecanonlygiveyouwhatithasemergedactuallyinlasttwo,threeyears.


ArunKumar,ExecutiveDirectorandChiefFinancialOfficer Whathasbeenthesuccessfulrates.


ArunKumar,ExecutiveDirectorandChiefFinancialOfficer Anddependsfromwherethegeneratorwaslocatedandfromwhereitoriginated.

UnidentifiedParticipant Okay.Understood,sir.Thanksalot.

Operator Thankyou.ThenextquestionisfromthelineofShreyasBfromSushilFinance.Pleasegoahead.

ShreyasBhukhanwala,Analyst Goodafternoon,sir.Sir,justonequestionlike

ArunKumar,ExecutiveDirectorandChiefFinancialOfficer Pleasespeakintothemike.

ShreyasBhukhanwala,Analyst Yeah.Areyouabletohearmenow?

ArunKumar,ExecutiveDirectorandChiefFinancialOfficer Yeah,that'sbetter.

ShreyasBhukhanwala,Analyst Yeah.Sir,Ijustwanttoknowhowmuchofthelongtermcapacityhaveyoucommissionedinlastninemonths?

ArunKumar,ExecutiveDirectorandChiefFinancialOfficer Thesedetailsaftertheconcallortheoncewehavefinished,Arunwillbesharingwithallofyou.

ShreyasBhukhanwala,Analyst Okay,okay.Andsir,onemorequestionwasonTamilNadu,whenareweexpectingtheremainingamounttobereceivedprobably,theoutstanding,whichis?

ArunKumar,ExecutiveDirectorandChiefFinancialOfficer Hopefully,bytheyearend.

ShreyasBhukhanwala,Analyst Okay.Andanypartofsurchargewhichweareexpectingfromthere?

ArunKumar,ExecutiveDirectorandChiefFinancialOfficer Wearealsotryingifwecanrecoverthesurchargeatleastfortheportiontheyhavepaid.

ShreyasBhukhanwala,Analyst Okay,okay.Yeah,that'sitfrommyside,sir.Thanks.

ArunKumar,ExecutiveDirectorandChiefFinancialOfficer Welcome.

Operator Thankyou.ThenextquestionisfromthelineofMohitKumarfromIDFCSecurities.Pleasegoahead.

MohitKumar,Analyst Goodafternoon,sir.

ArunKumar,ExecutiveDirectorandChiefFinancialOfficer Goodafternoon.

MohitKumar,Analyst Sir,whatistheissuewithTamilNadureceivable,Iheard,weheardtheChairmanonachannelsayingthatwearelookingtoappointanarbitrator?

ArunKumar,ExecutiveDirectorandChiefFinancialOfficer See, the issue in all present (inaudible) not per se anythingwith PTC, because PTC had been demanding for payment of thatoutstanding.ReplyhasnotcomefromTamilNadu,inspiteofrepeattoremindthis.ThereissomeinternalissuewiththeTNEB.Sosincewearegettingreply,weareoptingforarbitration,aswhatChairmanhassharedwith.

UnidentifiedParticipant Sowhatisthecomfortthattheamountwillyoupaidbythisfiscalyearend?

RajivMalhotra,ExecutiveDirectorandChiefRiskOfficer Ibegyourpardon?

UnidentifiedParticipant Whatisthecomfortthatthisamountwillyoupaidbythisfiscalyearend?

RajivMalhotra,ExecutiveDirectorandChiefRiskOfficer

Sinceweareoptingforarbitration,wearehopefulthatresultswillcomeup.

UnidentifiedParticipant Andsir,thatmysecondquestion,butturningtoCase2bidding,sir,underthenewdocuments,Ibelievethetraderweallowedtoparticipate,amIright?

RajivMalhotra,ExecutiveDirectorandChiefRiskOfficer Saythatagain,forCase2bidding?

UnidentifiedParticipant Case2biddingdocuments,thenewdocuments,thetraderyouallowedtoparticipate.

RajivMalhotra,ExecutiveDirectorandChiefRiskOfficer Yeah,Case2actually,technically,Case2isnotreallyrelevant.

UnidentifiedParticipant No.I'msorry.ImeantCase1bidding.

RajivMalhotra,ExecutiveDirectorandChiefRiskOfficer Okay.(inaudible)Case1bidding,couldyouagainarticulateyourquestion?

UnidentifiedParticipant MyquestionregardingthetraderyouallowedtoparticipateinthenewCase1biddingdocuments.AmIrightlysayingthat?

RajivMalhotra,ExecutiveDirectorandChiefRiskOfficer See,youhavetogooverviewdocuments,thestandardbiddingdocument,whichhaveincludedforthesofarsuccessorwantedtotheCase1bidding,right.TheDVFW[ph]model.


ArunKumar,ExecutiveDirectorandChiefFinancialOfficer So,one,ithasgotnoparticularprovisionforthesame(inaudible).SecondthereareprovisionslikeparticipationthroughandNHPC.


ArunKumar,ExecutiveDirectorandChiefFinancialOfficer However,howthat(inaudible)foreverybidwillbefound,evenbygeneratoralone.AsIsaid,it'sanopenquestion.


ArunKumar,ExecutiveDirectorandChiefFinancialOfficer That'swhenwetalkoutlongterm,nowthereisasimilarequitywhichhasunderfinalizationforthemediumterm.Youmaywanttogothroughit,youalso(inaudible)availableunderontheMinistryofourwebsite.Incase,ifyoudon'thaveaccess,wewillbehappytosendthemtoyou.Buttherearesimilarissueswhicharefuzzy,thereisnot,Imean,therehavebeendiscussionswithme,theyarealsoengaginginpolicyandsoon.But,atthispointweabletosharetosaythattheimplementabilityofthedocument,plusisnotthere.

UnidentifiedParticipant Anddoyouseesir,anyotherlongtermcaseonbid,bigfloatinginthenearfuture?

ArunKumar,ExecutiveDirectorandChiefFinancialOfficer Myownsenseis,we'vegotelectionsthatonthecornerandutilities,andthispointmaybewantingtoexistthechangesinpolicyandsoonanddoingitmuchbetter.Idon'tseethathappeninginthenexttwo,threemonths.Thanksforansweringmyquestions.

ArunKumar,ExecutiveDirectorandChiefFinancialOfficer I'msorry.

Operator Thankyou.

ArunKumar,ExecutiveDirectorandChiefFinancialOfficer Sorry.Onegentlemenwantingtosaysomething.

Operator Iwouldnowliketohandtheconferenceovertothemanagementfortheirclosingcomments.

RajivMalhotra,ExecutiveDirectorandChiefRiskOfficer Well,thankyouallforparticipatinginthisconference.Andwithregardtothelongtermvolumesprojectwise,ourcolleagueMr.Arunwillbesharingwithyou.Thankyouallofyou.

Operator Thankyouverymuchmembersofthemanagement.LadiesandgentlemenonbehalfofPTCIndiathatconcludesthisconferencecall.Thankyouforjoiningusandyoumaynowdisconnectyourlines.

Ptc India Earnings Call

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