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Edited Transcript of TATAPOWER.NSE earnings conference call or presentation 8-Nov-19 1:00pm GMT

Half Year 2020 Tata Power Company Ltd Earnings Call

Mumbai Nov 9, 2019 (Thomson StreetEvents) -- Edited Transcript of Tata Power Company Ltd earnings conference call or presentation Friday, November 8, 2019 at 1:00:00pm GMT

TEXT version of Transcript

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Corporate Participants

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* Praveer Sinha

The Tata Power Company Limited - CEO, MD & Director

* Ramesh Narayanswamy Subramanyam

The Tata Power Company Limited - CFO & Compliance Officer

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Conference Call Participants

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* Abhishek Puri

Axis Capital Limited, Research Division - Executive Director of Capital Goods, Infrastructure and Power

* Apoorva Bahadur

Jefferies LLC, Research Division - Equity Associate

* Atul Tiwari

Citigroup Inc, Research Division - VP and Analyst

* Dhruv Muchhal

Motilal Oswal Securities Limited, Research Division - Research Analyst

* Mohit Kumar

IDFC Securities Limited, Research Division - Analyst

* Pulkit Patni

Goldman Sachs Group Inc., Research Division - Equity Analyst

* Puneet J. Gulati

HSBC, Research Division - Analyst

* Rahul Modi

ICICI Securities Limited, Research Division - Analyst

* Sumit Kishore

JP Morgan Chase & Co, Research Division - Research Analyst

* Swarnim Maheshwari

Edelweiss Securities Ltd., Research Division - Research Analyst

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Presentation

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Operator [1]

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Ladies and gentlemen, good day, and welcome to the Tata Power Q2 FY '20 Earnings Conference Call. (Operator Instructions) Please note that this conference is being recorded.

I now hand the conference over to Mr. Praveer Sinha from the company. Thank you, and over to you, Mr. Sinha. Mr. Praveer Sinha, you may go ahead.

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Praveer Sinha, The Tata Power Company Limited - CEO, MD & Director [2]

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So thank you, Hemant, and good evening, and welcome to the earnings call to discuss the Q2 results. The company has performed well across all businesses and operations in Q2 and has achieved consistent performance. This quarter has been driven by lower losses of Mundra due to better cost management of coal, better operational performance of all the regulated business, including Maithon and Delhi Distribution and higher EPC orders in Tata Power Solar, but for the nearly INR 158 crores of one-time tax adjustments for past periods in the coal companies, the results would have been much better.

The consolidated revenue grew by 1% from INR 7,279 crores to INR 7,329 crores this quarter. The consolidated EBITDA in this quarter grew by 20% to INR 2,113 crores compared to INR 1,777 crores last year. Renewable continued to report a very strong EBITDA of INR 641 crores despite Generation getting affected due to the extended monsoon. All other subsidiaries and joint ventures continued to perform with and the underlying business EBITDA grew by 5% from INR 2,220 crores this quarter. And this is without considering Cennergi & ITPC, which has been held-for-sale to INR 2,327 crores this quarter. The company has achieved a PAT before exceptional items of INR 351 crores this quarter as compared to INR 393 crores in Q2 last year. This is a growth of approximately 29% if we include -- if we exclude the PAT from Cennergi & ITPC and the Q2 reported PAT. The consolidated PAT before onetime adjustment in coal companies has actually grown by 30% to INR 509 crores.

The founding of the international coal prices by nearly $14 in this quarter has reduced CGPL's fuel under-recovery from INR 0.90 to INR 0.51. Apart from this, the coal portfolio has reported a profit of INR 9 crores this quarter.

The Renewable business portfolio continues to grow, and we have commissioned 400 megawatts of solar capacity since last year Q2 with another 500 megawatts of solar projects under implementation.

Our Solar EPC business has also done very well, and it continues to grow with an order pipeline of INR 3,200 crores and with the rapid expansion of rooftop solar wind, solar farms apart from the utility-scale solar orders. Tata Power Solar also won 105 megawatts to develop the largest floating solar plants in the world, which was approximately INR 343 crores, including 3 years O&M, which is to be installed in NTPC Kayamkulam plant in Kerala.

Let me share with you some more updates on the divestment process and how we are trying to address the issue of the debt. We have been able to tie up for the purchase of -- for the sale of the Cennergi in South Africa and -- for an amount of $106 million. And all the documentations are being completed to complete the transaction, and we hope that within the next 3 to 4 months, we'll be to get the proceeds of the divestment.

Similarly, steps have been taken for divesting our stake in ITPC Zambia, and we expect to complete this transaction also within this financial year. We are also looking at divesting a few of our other assets, which will get finalized in the next few months. And once we get the feedback from the market of the type of valuations that we expect, we expect that we will go ahead with the divestment of these assets too.

In all, we are expecting that we will get nearly $1 billion worth of asset due to some monetization in the next 12 to 18 months. We are also expecting that the NCLT hearing which has been completed for the defense business, the order of that will come and we will be able to get the necessary Defense Ministry approvals within next 6 months. As you would have seen that we have taken a lot of steps to reduce our debt in spite of the fact that for our existing businesses, the regulated business as well as the new renewable capacity additions, and going forward, our steps to reduce the debt will continue and we'll see a better net equity ratio in the times to come.

Some of our other initiatives have been regarding the Prayagraj project, which we have gone through the platform. We have got a positive order from APTEL and we expect that whole transfer of shares will get completed in the next few weeks' time. And we expect that not only this, but in future, we'll be able to complete a few more transactions through the Resurgent platform.

The company has also taken over 160 megawatts of captive power plants from Tata Steel through its joint venture, which is Industrial Energy Ltd, and this includes the 40 megawatt diesel generating set switches, and we won 20 megawatts gas-based power plant, which is coming up in Kalinganagar. And we also have the tolling agreement with Tata Steel to operate these plants and run for that. And this will be done through the joint venture, IEL. We expect that with some more opportunities with Tata Steel, we'll be able to service nearly 1,000 megawatt of capacity to them in next 1 year time. We continue to roll out the EV charging network with Tata Motors, and we expect that this partnership will help us to install nearly 300 charging stations by end of this financial year across 5 cities, mainly Mumbai, Delhi, Pune, Bangalore and Hyderabad. And we expect that over a period of time, we'll be able to grow pan India. We have also started work on the rollout of the 10,000 micro grids, which we plan to do by 2026. And this is being done in collaboration and with support of Rockefeller Foundation Smart Power India and many, many other technology partners. And we do hope that in this financial year, we'll able to complete 200 villages as we roll out not only the micro grid solutions but also the micro enterprise solutions.

On the Mundra issue, post the elections, we have taken it out very strongly with all the governments and Punjab, it has gone to the cabinet, and we expect that after the Guru Parv next week, then the government of Punjab should be taking up this proposal. Similarly, we have taken up with Rajasthan and Haryana, and we expect that once the Punjab thing is clear, they will also take it up, and we should get some better clarity in next 2, 3 months. Similarly, the Maharashtra approval where we have shared with you that we have already got the approval at the bureaucrats level, and it has to be approved at the political level by the cabinet. We expect once the government is in place, we'll be in a position to take that approval too.

So all in all, you would see that there has been lot of growth that has been planned by the company, whether it is in the renewable projects or it is a large-scale renewable generation, number of transmission and distribution initiatives and also the EV charging and home automation, these all is expected to support the company in its growth plan in the years to come by. We also are in the advanced stage of discussion, and we expect that a decision on the CESU bid, where we have bid for the distribution of the Central Distribution Company in Orissa. The outcome is expected in the next few months, and hopefully, we will be able to start operating that in the next financial year.

So we have a lot of plans within Tata Power, and I'm sure by the time we met -- meet for the next quarter results, we'll be able to share with you more details of the initiatives taken by us and some of the -- and the results of some of the initiatives we have already initially started.

I now hand over the call to the moderator for question-and-answer. I have with me over here my senior colleague, the CFO, Ramesh Subramanyam, is here and other senior colleagues are here from Finance and Treasury, and they will be in a position to respond to most of the questions today. And if there's anything left, we'll respond to you subsequently. Thank you.

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Questions and Answers

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Operator [1]

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(Operator Instructions) The first question is from the line of Mohit Kumar from IDFC Securities.

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Mohit Kumar, IDFC Securities Limited, Research Division - Analyst [2]

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Congratulations on the good set of numbers. Sir, my first question is on the INR 158 crores, which is related to KPC related to prior period tax assessment, which (inaudible). Can you give us some color? And does it mean that the contribution of profit for associates and JV would have been, if not for this provision, it would have been around INR 340-odd crore?

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Ramesh Narayanswamy Subramanyam, The Tata Power Company Limited - CFO & Compliance Officer [3]

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Yes, it should have been because these are items which are -- essentially these are taxes relating to dividends. Okay, there are 2 portions in it. One is relating to the dividends, which come from these companies and there is a tax on it, where the timing is different, where earlier, the system is that first we transfer -- take it as a shareholder loan because of the cash distribution arrangement, then it gets converted into dividends as and when they are declared. So while the incomes would have been part of the consolidated results in the past periods, since the dividends were declared in this quarter, the provisions have to be made. And even for the pending dividend, which is yet to be declared, but already on, we have made a provision. So this is one portion on the dividend side. So this is more to meet the matching requirements. And therefore, you can say that, yes, they did not belong to this quarter. The other is really during the tax assessments of that coal companies, certain tax liabilities have been published (inaudible) happened and as a result, there is a tax entry. Together, this is INR 160 odd crores.

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Mohit Kumar, IDFC Securities Limited, Research Division - Analyst [4]

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Okay. My second question, sir, you laid out that as a spend of assets of nearly USD 1 billion is expected to happen next 12 to 18 months, which are the assets were including? And is there any plan to do InvIT of renewables portfolio in near term?

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Ramesh Narayanswamy Subramanyam, The Tata Power Company Limited - CFO & Compliance Officer [5]

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So the USD 1 billion, which we're talking about includes some of the assets, which we have kind of already, I think, you are all aware, which is really the international assets. And some of the group holdings that we have. But yes, there are a couple of more assets, which we believe are on the periphery of being noncore, but these are something, which we are in very initial stages [PAT], but they are likely to be crystallized over the next quarter-or-so into some concrete action, but they are very early days, but we have an ambitious plan to really have these assets sold. But let me put it this way, yet to be kind of seen because the market we are observing, we are actually evaluating the market for these assets, some of the other assets. At this point, it will be too early to talk about specific, but I think they all add up to the number, which you mentioned.

About the InvIT. I think it's interesting to -- we've been looking at InvIT for some time now. And we do believe that it is a very apt structure for infrastructure investments of the types we have. I think that we continue to explore. And the moment we feel that they're comfortable with the terms, et cetera, I think we will look at it. They're not averse to it. And at an appropriate time, we will announce and -- if we have a clear understanding on how we're going to go about it.

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Mohit Kumar, IDFC Securities Limited, Research Division - Analyst [6]

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Is it possible to lay out the time line for acquisition of Prayagraj and the funding?

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Ramesh Narayanswamy Subramanyam, The Tata Power Company Limited - CFO & Compliance Officer [7]

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So the funding for Prayagraj is already arranged. Okay. Remember that this is going to be through our Resurgent platform, which is where Tata Power is 26%, that is funded by Tata Power. The investor funding is all ready. The bank funding is also ready to take out the existing bankers. And the time line is that, it is actually very little. We are just evaluating the recent issue, which certain -- as Mr. Sinha mentioned, that someone has filed a petition in the Supreme Court against the APTEL decision, and we are still yet to get a copy of that petition. As soon as we're done, we will evaluate that and then take that in. Otherwise, they are all set.

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Operator [8]

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The next question is from the line of Abhishek Puri from Axis Capital.

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Abhishek Puri, Axis Capital Limited, Research Division - Executive Director of Capital Goods, Infrastructure and Power [9]

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Heartening to see some debt reduction finally starting to happen. On -- sir, a couple of things. One, on the EBITDA numbers that have been given in the presentation, it shows a clear growth. But when I'm looking at the consolidated segment-wise results, I mean, Generation, T&D, Renewable, all three have seen flattish-to-down results here. So what is the difference between this and the reported number in the PPT?

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Praveer Sinha, The Tata Power Company Limited - CEO, MD & Director [10]

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All I can broadly say is if you are looking at it, the -- you have given business-wise thing -- in the segmental, okay. So -- can I suggest? You asked a question, which requires a little bit of accounting answer, so I would ask Rahul to explain to you because there are some adjustments there vis-a-vis the main result because of the intercompany adjustments, which are there. So there are some eliminations, and maybe he will explain it.

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Abhishek Puri, Axis Capital Limited, Research Division - Executive Director of Capital Goods, Infrastructure and Power [11]

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Okay. I'll take that off-line, sir. Sir, 2 things on the business side. One, what is the final decision at the Punjab level. Are they accepting what has been approved by Gujarat? Or is there any further cutdowns there?

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Ramesh Narayanswamy Subramanyam, The Tata Power Company Limited - CFO & Compliance Officer [12]

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What has happened in Punjab since the Gujarat approval was given, there has been a lot of discussion with them because they had certain requirements in terms of changing the period for which the extension will be given, and also on some of the other issues relating to the HPC report. We have entered into an agreement with them, and this is under approval by their government. And then, of course, it will go to the regulator and regulator will take a common call for all these other PPAs also. So this is something which is little different than the HPC on 2 of the conditions, not very -- nothing very dramatic changes. But yes, it is little different, and we expect that this is something, which Punjab is ready to go and sign with us.

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Abhishek Puri, Axis Capital Limited, Research Division - Executive Director of Capital Goods, Infrastructure and Power [13]

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Sir, in terms of that INR 0.35 that we have to offset, is that amount going up in this case? Or does it remain the same?

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Praveer Sinha, The Tata Power Company Limited - CEO, MD & Director [14]

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No. Not -- so it remains the same. So INR 0.15 is for the purpose of the coal profits and INR 0.20 is the lender's haircut. So the INR 0.35 continues to be.

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Ramesh Narayanswamy Subramanyam, The Tata Power Company Limited - CFO & Compliance Officer [15]

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The change in the Punjab thing, just to add to what Mr. Sinha -- is more on performance with major parameters -- like stringent parameters.

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Abhishek Puri, Axis Capital Limited, Research Division - Executive Director of Capital Goods, Infrastructure and Power [16]

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So in terms of the (inaudible), did you create another parameters?

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Praveer Sinha, The Tata Power Company Limited - CEO, MD & Director [17]

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There are a couple of parameters. And I think that it is better that we -- finally what is acceptable, we have given them some alternatives. So we'll wait to hear from them finally, which one is acceptable.

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Abhishek Puri, Axis Capital Limited, Research Division - Executive Director of Capital Goods, Infrastructure and Power [18]

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Okay. Okay, sir. And lastly, on this acquisition at IEL level, I mean, I just want to understand the rationale to acquire a DG set when you have written off the Rithala one earlier and -- to a large extent, and what are the reasonable assured returns in this business?

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Ramesh Narayanswamy Subramanyam, The Tata Power Company Limited - CFO & Compliance Officer [19]

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So Abhishek, the strategy here is that we provide end-to-end power solutions to Tata Steel. So therefore, it's a bouquet of ways in which we secure. Tata Steel has operations, which cannot be curtailed. They need a continuous support. And in fact, one of the DG sets that we're putting up in the mines where there is not really good supply. So it's a bouquet supply, our bouquet, it's not that DG set is by design. So therefore -- okay, as regards to your return profile, first of all, it's not a very small investment, and it's a one-off -- onetime investment. Thereafter, we don't think that there's going to be more DG sets. And also, these are all with assured returns. And remember that credit -- Tata Steel Credit is far better credit for us than the discount credit at this point of time in terms of payment flows. So it's a very secure business for us.

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Abhishek Puri, Axis Capital Limited, Research Division - Executive Director of Capital Goods, Infrastructure and Power [20]

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Also the CERC waste return?

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Ramesh Narayanswamy Subramanyam, The Tata Power Company Limited - CFO & Compliance Officer [21]

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Similar.

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Praveer Sinha, The Tata Power Company Limited - CEO, MD & Director [22]

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Yes, similar to that. And one thing more is that this is a standby power. This is not that. So right now, we are already having 120 megawatt inside Kalinganagar for the Phase 1 and another one of 120 is coming. This is a standby unit to take care of emergency growth in case of a shutdown or the grid collapsing. So this is not something, which will be running continuously 24/7, but if there is any emergency requirement, we need those findings.

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Abhishek Puri, Axis Capital Limited, Research Division - Executive Director of Capital Goods, Infrastructure and Power [23]

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Right. So just to complete this, this INR 200 crores that we are spending for 40-megawatt DG set. We -- since it's a standby unit, we will be having a certain return on equity assured based on availability?

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Ramesh Narayanswamy Subramanyam, The Tata Power Company Limited - CFO & Compliance Officer [24]

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Correct. Yes.

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Abhishek Puri, Axis Capital Limited, Research Division - Executive Director of Capital Goods, Infrastructure and Power [25]

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And within 15 years, we will be able to recover this entire investment?

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Ramesh Narayanswamy Subramanyam, The Tata Power Company Limited - CFO & Compliance Officer [26]

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Yes.

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Praveer Sinha, The Tata Power Company Limited - CEO, MD & Director [27]

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Yes. And it will be hosted through the JV IEL, where we hold 74%.

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Abhishek Puri, Axis Capital Limited, Research Division - Executive Director of Capital Goods, Infrastructure and Power [28]

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74%. Right.

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Operator [29]

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The next question is from the line of Apoorva Bahadur from Jeffries.

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Apoorva Bahadur, Jefferies LLC, Research Division - Equity Associate [30]

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And congratulations on a very good set of results. Sir, during the presentation, you spoke that there is a 1 gigawatt opportunity with Tata Steel over the next 12 to 18 months, so could you please elaborate on that?

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Praveer Sinha, The Tata Power Company Limited - CEO, MD & Director [31]

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It's not 1 gigawatt, we will become 1 gigawatt. Right now we are already 800 megawatt of power that we are supplying to Tata Steel, both at the (inaudible) Kalinganagar put together and with the another 120 megawatt of gas-based and 40 megawatts of DG set will actually become 960 megawatts. So in totality, and there are some more that is expected. So we expect that over next 1 year, we will become more than 1 gigawatt as far as Tata Steel is concerned, and we'll be supplying that power.

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Apoorva Bahadur, Jefferies LLC, Research Division - Equity Associate [32]

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Okay. Sir, also on the micro grid agreement that you have done with Rockefeller, so is it more like a CSR thing for us?

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Praveer Sinha, The Tata Power Company Limited - CEO, MD & Director [33]

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No, it is not a CSR thing. It is a commercial business proposal. And the purpose of this project was that if we had to shield up and we have to provide power to remote areas, micro grids can play a very, very critical role. And that's why this has been done along with Rockefeller, so that they can support some of the other micro enterprises, which will be having huge demand of electricity in these areas. So it is still a commercial business for us.

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Apoorva Bahadur, Jefferies LLC, Research Division - Equity Associate [34]

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Okay. Sir, do you see good scope for this even after Saubhagya?

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Ramesh Narayanswamy Subramanyam, The Tata Power Company Limited - CFO & Compliance Officer [35]

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Yes, absolutely. Because there are a large number of consumers in these places, who do not get to a continued supply or do not get at all, especially all the commercial and small-scale industrial users in these locations. So until and unless we are able to cater to their requirement and give them when they want the power, we will not be able to remove the universal assets of energy. So the energy poverty can only go if we are able to them provide continuous power and I think micro grids will play a very, very critical role as part of the distributed generation.

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Operator [36]

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The next question is from the line of Atul Tiwari from Citigroup.

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Atul Tiwari, Citigroup Inc, Research Division - VP and Analyst [37]

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Sir, for the consolidated entity, what will be the total CapEx guidance across all the initiatives that you are taking? And how much of that will be in your regulated businesses?

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Ramesh Narayanswamy Subramanyam, The Tata Power Company Limited - CFO & Compliance Officer [38]

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So regulated businesses across the Tata Power Group generates about INR 1,000 crores and another INR 200 crores in the rest of the nonregulated businesses, and this excludes renewable growth because that depends on the bids. And we continue to hit that bid.

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Atul Tiwari, Citigroup Inc, Research Division - VP and Analyst [39]

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Okay. So $10 billion in regulated and about $2 billion-odd or in others.

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Operator [40]

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The next question is from the line of Pulkit Patni from Goldman Sachs.

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Pulkit Patni, Goldman Sachs Group Inc., Research Division - Equity Analyst [41]

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Sir, couple of questions from my side. Sir, the first one is on our coal business. Our production costs have gone up quite meaningfully this particular quarter. Obviously, the coal realization we know have declined. Any particular reason why production costs have gone up in this quarter?

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Ramesh Narayanswamy Subramanyam, The Tata Power Company Limited - CFO & Compliance Officer [42]

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There is pressure on fuel costs, for sure. And in some of the pits, from quarter-to-quarter, the strip ratios could cause issues. The team is working very hard on these issues. Hopefully, in the next few quarters, we'll see some improvements because the management there has taken lot of measures to control costs in this severe environment with pricing under pressure.

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Pulkit Patni, Goldman Sachs Group Inc., Research Division - Equity Analyst [43]

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Okay. Fair. Sir, secondly, on Tata Power Renewable stand-alone, we had a pretty significant increase in interest cost. And we also mentioned that some free O&M periods have come down. So my question on that is, a, what would be the sustainable margins in that business? And secondly, if this loss of generation would not have happened, what is the kind of operating revenue that we could have possibly generated in this quarter?

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Ramesh Narayanswamy Subramanyam, The Tata Power Company Limited - CFO & Compliance Officer [44]

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Okay. So I'll give you a quick overview because I think a lot of questions around that. So by nature, the Renewable business, whether it is solar or wind, the first 4 to 7 years of life, you will see a very low path, okay? It is in the range of 2% to 5%. This is essentially because the initial years, the interest cost is higher, then the deferred tax is the other impact. So as a result, you see that as one feature. But however, these businesses throw off excellent free cash on a regular basis. So for example, today, our fleet, as it stands, would generate something like INR 2,200 crores of EBITDA and about INR 1,000 crores of free cash in this year. So that's the kind of strong portfolio we have. And remember that many -- we are bidding very selectively. We are also looking at all the cost before we bid or after we secure them and as a result, we are hopeful it's very healthy. So I won't be -- we won't be concerned too much about quarterly variations, these keep happening, but we are in the run rate, we should see here, which is very close to what we are going to see for future for the current portfolio. And as we add another 400 or 500 megawatts, we will keep growing the EBITDA. And I want to add one more nothing. Apart from the fact that we are leveraging good cash out of it, remember that the questions you raised about interest, so what happens is whenever we commission assets, the asset starts to attract immediately the full depreciation and interest in that quarter, whereas the ramp-up to full PLF generally for teething troubles takes time. So in a growing portfolio, you will find some aberrations in the EBITDA and therefore PAT generation when there are commissioning of assets, but the underlying health is very, very strong on this portfolio.

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Operator [45]

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The next question is from the line of Puneet Gulati from HSBC.

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Puneet J. Gulati, HSBC, Research Division - Analyst [46]

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On the micro grid, is it just an MoU at this point in time? Or have you already decided to commit some capital on it?

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Ramesh Narayanswamy Subramanyam, The Tata Power Company Limited - CFO & Compliance Officer [47]

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At this point, we -- the size -- the first round of micro grids would be small in number in the next 6 months or so. Once we are clear about the entire supply chain, then they will ramp it up. But overall, let me tell you that this is not a sparingly high CapEx gain at this time, at least in the next 1 year or so. Once we have a better handle on the commercial, then we will ramp up. So we are talking about probably a couple of hundred crores at best in the next 1 or 2 years.

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Puneet J. Gulati, HSBC, Research Division - Analyst [48]

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Okay. And so what about the business model, like, could you not own this grid?

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Ramesh Narayanswamy Subramanyam, The Tata Power Company Limited - CFO & Compliance Officer [49]

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We will own this grid, and we will own the assets. It's a different matter that we may not invest fully. It could be depending on how the -- how we finally form the partnerships. We may or may not invest 100%. But the business model is quite simple that just like any other products we serve and have some margins.

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Puneet J. Gulati, HSBC, Research Division - Analyst [50]

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Okay. So, sir, product sales business rather than -- okay.

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Ramesh Narayanswamy Subramanyam, The Tata Power Company Limited - CFO & Compliance Officer [51]

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I mean, product is here, energy, by the way, I'm not talking about it apparently, but, of course, there is a huge opportunity to have other economic activity around this as a team. So it is evolving area, I don't think it would be proper for us to disclose the entire business potential at this stage because some of it is clearly on an advanced stage of kind of developing the model.

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Puneet J. Gulati, HSBC, Research Division - Analyst [52]

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Okay. Okay. Fair enough. On this renewable, is there any progress with what's happening in Andhra Pradesh from your end? Have you received any money?

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Ramesh Narayanswamy Subramanyam, The Tata Power Company Limited - CFO & Compliance Officer [53]

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So we have not received any money, but we have got in appeal against that order, that's based on which they were supposed to give us certain interim money and also that they need to ensure that we protect our PPAs, which have been entered with the DISCOM. So we are expecting that some decisions will come in the next few weeks' time as the appeal is listed for hearing this month.

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Puneet J. Gulati, HSBC, Research Division - Analyst [54]

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But didn't APTEL decide a 2.44% to be paid?

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Ramesh Narayanswamy Subramanyam, The Tata Power Company Limited - CFO & Compliance Officer [55]

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What the High Court had decided was that they cannot modify the PPA. For the interim, they said that they will pay at 2.44% plus interest rates, but that also has not commenced yet. And that's why we have gone and appealed against that.

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Puneet J. Gulati, HSBC, Research Division - Analyst [56]

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Okay. And what would be your receivable outstanding in this?

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Ramesh Narayanswamy Subramanyam, The Tata Power Company Limited - CFO & Compliance Officer [57]

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In the Andhra, it is INR 350 crores.

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Praveer Sinha, The Tata Power Company Limited - CEO, MD & Director [58]

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INR 250 crores, I think, one minute, let's check.

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Ramesh Narayanswamy Subramanyam, The Tata Power Company Limited - CFO & Compliance Officer [59]

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So Andhra is about -- over realized about INR 250 crores.

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Operator [60]

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The next question is from the line of Sumit Kishore from JPMorgan.

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Sumit Kishore, JP Morgan Chase & Co, Research Division - Research Analyst [61]

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My first question is, we saw a swing of almost INR 2.3 billion that was positive in Mundra EBITDA on a year-on-year basis. Maithon EBITDA was quite stable. Even then, on a segment result basis, the contribution of generation segment results dipped slightly. So I am assuming that this was on account of a dip in stand-alone generation EBITDA contribution. Could you please explain that in a bit of detail?

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Ramesh Narayanswamy Subramanyam, The Tata Power Company Limited - CFO & Compliance Officer [62]

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You are looking at the segmental results, right? EBIT?

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Sumit Kishore, JP Morgan Chase & Co, Research Division - Research Analyst [63]

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EBIT and the INR 585 crores in 2Q FY '20, reducing some INR 633 crores in 2Q FY '19, I guess, the EBITDA numbers, that's for -- because I don't think EBIT level performances of Mundra would also be positive. And for Maithon should be largely stable.

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Ramesh Narayanswamy Subramanyam, The Tata Power Company Limited - CFO & Compliance Officer [64]

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You are looking at the segmental results, right, EBIT?

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Sumit Kishore, JP Morgan Chase & Co, Research Division - Research Analyst [65]

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EBIT and the INR 585 crore in 2Q FY '20, reducing from INR 633 crores in 2Q FY '19. I get the EBITDA numbers just for -- because I don't think the EBIT-level performances of Mundra would also be positive and for Maithon should be largely stable.

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Ramesh Narayanswamy Subramanyam, The Tata Power Company Limited - CFO & Compliance Officer [66]

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The numbers that I'm looking at it -- year-on-year, last year's EBITDA for generation was INR 336 crores against this year INR 441 crores. So where do you see that drop.

Can I just request that -- Rahul, can you get in touch with me and get these numbers. I don't see a decrease. I think there's a question of some reconciliation, some...

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Sumit Kishore, JP Morgan Chase & Co, Research Division - Research Analyst [67]

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Sir, the reduction is from INR 336 crores to INR 441 crores.

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Ramesh Narayanswamy Subramanyam, The Tata Power Company Limited - CFO & Compliance Officer [68]

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I'm sorry, reduction is from?

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Sumit Kishore, JP Morgan Chase & Co, Research Division - Research Analyst [69]

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INR 441 crores to INR 336 crores. Is that correct?

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Ramesh Narayanswamy Subramanyam, The Tata Power Company Limited - CFO & Compliance Officer [70]

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No, no, no. Previous year, it's INR 336 crores. Current year is INR 441 crores.

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Sumit Kishore, JP Morgan Chase & Co, Research Division - Research Analyst [71]

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It increased, then...

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Ramesh Narayanswamy Subramanyam, The Tata Power Company Limited - CFO & Compliance Officer [72]

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Yes. Last year, we had actually a negative order -- regulatory order in Maithon, which is why it was depressed.

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Sumit Kishore, JP Morgan Chase & Co, Research Division - Research Analyst [73]

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Okay. Okay. So I think we'll have to understand this separately.

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Ramesh Narayanswamy Subramanyam, The Tata Power Company Limited - CFO & Compliance Officer [74]

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Yes.

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Sumit Kishore, JP Morgan Chase & Co, Research Division - Research Analyst [75]

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The second question, again, is a follow-up on your comments regarding the USD 1 billion asset monetization. My understanding is that what we have on the plate right now is ITPC, Exaaro, the Tata project stake that you have. The balance money that has to be received for SEB and the balance portion of Arutmin sale proceeds. Would these go toward 1 crore -- the USD 1 billion that we are talking about?

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Ramesh Narayanswamy Subramanyam, The Tata Power Company Limited - CFO & Compliance Officer [76]

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Yes.

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Sumit Kishore, JP Morgan Chase & Co, Research Division - Research Analyst [77]

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So SED and the balance portion of Arutmin sale proceeds are also included in the USD 1 billion.

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Ramesh Narayanswamy Subramanyam, The Tata Power Company Limited - CFO & Compliance Officer [78]

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Yes.

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Sumit Kishore, JP Morgan Chase & Co, Research Division - Research Analyst [79]

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And please remind us how much have we received for SED so far and how much is outstanding for Arutmin.

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Ramesh Narayanswamy Subramanyam, The Tata Power Company Limited - CFO & Compliance Officer [80]

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No, SED, we're yet to close. So therefore, it is yet to be received. Arutmin, we are expecting about INR 1,000 crores to INR 1,500 crores over the next 24 months.

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Praveer Sinha, The Tata Power Company Limited - CEO, MD & Director [81]

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We have already received about $200 million.

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Ramesh Narayanswamy Subramanyam, The Tata Power Company Limited - CFO & Compliance Officer [82]

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$200 million we already received. We have been actually having good progress over the last 6 months. And over the next 18 to 24 months, we expect another INR 1,000 crores to INR 1.500 crores to come.

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Operator [83]

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The next question is from the line of Swarnim Maheshwari from Edelweiss.

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Swarnim Maheshwari, Edelweiss Securities Ltd., Research Division - Research Analyst [84]

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So firstly, if you can just help us understand, if you can quantify this INR 1.58 billion of tax-rated adjustments with the disallowances part and the dividend part.

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Ramesh Narayanswamy Subramanyam, The Tata Power Company Limited - CFO & Compliance Officer [85]

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The disallowance is around INR 60 crores, and the rest is dividend related, whereas the INR 100 crores is about dividends.

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Swarnim Maheshwari, Edelweiss Securities Ltd., Research Division - Research Analyst [86]

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Okay. Sir, if we're understanding better, I think there is -- in the last quarter also, there was almost about INR 1.1 billion impact of this withholding tax impact on the accumulated dividends. Is this of the similar nature?

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Ramesh Narayanswamy Subramanyam, The Tata Power Company Limited - CFO & Compliance Officer [87]

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Yes. It is a similar nature. So whenever we receive it, we book it, same issue.

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Swarnim Maheshwari, Edelweiss Securities Ltd., Research Division - Research Analyst [88]

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Okay. Okay. And secondly, sir, if you can just throw some light on this Indonesian draft mining norms, what is the progress over there? And where do you see finally the renewal happening?

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Praveer Sinha, The Tata Power Company Limited - CEO, MD & Director [89]

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Okay. So as you know, the draft mining law was just -- is ready, but then it was waiting for cabinet sort of approval in the Indonesian government. They had elections. The elections have got over. The new cabinet has just been formed. And what we are told is that in the next couple of months, this bill may come up for approval. And then like all the countries, it will go through some parliamentary discussions. We expect that in the next 6 months or 6 to 9 months, the bill could be passed, and then we have to file an application for renewal. That is the process.

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Swarnim Maheshwari, Edelweiss Securities Ltd., Research Division - Research Analyst [90]

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Sure. And your assessment of no material impact or deterioration, which is like less than 5%, it remains?

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Ramesh Narayanswamy Subramanyam, The Tata Power Company Limited - CFO & Compliance Officer [91]

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Right now, yes, based on what we hear as what is contained in the draft, that is what the assessment is.

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Operator [92]

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The next question is from the line of Rahul Modi from ICICI Securities.

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Rahul Modi, ICICI Securities Limited, Research Division - Analyst [93]

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Congratulations. Sir, a couple of questions. Sir, we see that Maithon, although the EBITDA has been higher, there is a -- the plant availability has decreased. So there would be some under-recovery there, so some one-off that is there in the quarter?

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Ramesh Narayanswamy Subramanyam, The Tata Power Company Limited - CFO & Compliance Officer [94]

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Yes. IN Maithon, the plant availability was a little lower, because we had to carry out this, some emergency maintenance activities. And so that is why it had availability of...

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Rahul Modi, ICICI Securities Limited, Research Division - Analyst [95]

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How much was the...

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Ramesh Narayanswamy Subramanyam, The Tata Power Company Limited - CFO & Compliance Officer [96]

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About INR 12 crores due to the maintenance costs.

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Praveer Sinha, The Tata Power Company Limited - CEO, MD & Director [97]

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So we expect that in this quarter, it will make it up and it will again have a full availability of 80%.

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Ramesh Narayanswamy Subramanyam, The Tata Power Company Limited - CFO & Compliance Officer [98]

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Okay. And we had both expenses relating to the maintenance as well as availability-related entitlement (inaudible) INR 25 crores.

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Praveer Sinha, The Tata Power Company Limited - CEO, MD & Director [99]

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But on a cumulative basis, in Q3, we will be.

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Rahul Modi, ICICI Securities Limited, Research Division - Analyst [100]

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Okay. Sir, the outstanding from Arutmin, the $200 million, so we've received anything in the first half?

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Ramesh Narayanswamy Subramanyam, The Tata Power Company Limited - CFO & Compliance Officer [101]

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Yes. We received about $5 million.

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Praveer Sinha, The Tata Power Company Limited - CEO, MD & Director [102]

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I think we ended March with $170-odd million, if I recollect. Yes, now it's $200 million.

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Rahul Modi, ICICI Securities Limited, Research Division - Analyst [103]

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Okay. And so in terms of assumption for Prayagraj starting, just wanted to get some clarification. Now the Supreme Court appeal that has gone. So either it will be dismissed, or if it's not admitted, then you will go ahead with it and you will study accordingly if you get the order?

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Praveer Sinha, The Tata Power Company Limited - CEO, MD & Director [104]

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We are looking at various options, Rahul, because we do believe that we have a strong case. But we have to look at this petition before we decide.

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Ramesh Narayanswamy Subramanyam, The Tata Power Company Limited - CFO & Compliance Officer [105]

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In fact, the petition has not even been submitted. The petition that was given was returned, saying that it was defects. So we have also not seen the petition. And so whether there is any merit in that petition itself is a (inaudible) question.

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Rahul Modi, ICICI Securities Limited, Research Division - Analyst [106]

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Right. Sir, anything on the extension of DMO, if you're hearing? Although the price is lower, but still on a policy level?

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Praveer Sinha, The Tata Power Company Limited - CEO, MD & Director [107]

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No, Rahul. I think let's see whether the new government when they form the policy also. This is also the time when they release the entitlement or rather the coal targets to be given to the coal companies in terms of the quota. So I think -- along with that, I think this will get decided. So haven't discovered anything yet.

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Rahul Modi, ICICI Securities Limited, Research Division - Analyst [108]

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Okay. Sir, just lastly on the working capital front, sir, what is the situation? Like we've not heard much of a positive commentary across the sector. So for us, how is it -- whether it's same, different, if you can throw some light? And any bulking up of cash that is expected to be received due to this in the next 2 quarters?

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Ramesh Narayanswamy Subramanyam, The Tata Power Company Limited - CFO & Compliance Officer [109]

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So our portfolio, one good thing is that it is well spread out, and that is helping us in the sense that a couple of states, where we don't have an issue, which we all know. But since overall, I think we're still about 3 months on an overall basis. So we are, I think, okay. And we do -- even in the bidding, et cetera, we are continuing to be very cautious on that front. So our receivables right now is from a -- is right now -- stands at about INR 5,129 crores. This was before, in Q1. And now we are at Q2, it's INR 4,900 crores. In fact, as the overall portfolio, our debt has actually improved. But yes, if you were to analyze them, there are some which are overdue for some longer time and which is a couple of days. Overall, actually we've had an improvement.

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Operator [110]

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The next question is from the line of Mohit Kumar from IDFC Securities.

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Mohit Kumar, IDFC Securities Limited, Research Division - Analyst [111]

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So one question, sir. Why the other income is higher in this quarter compared to last year?

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Ramesh Narayanswamy Subramanyam, The Tata Power Company Limited - CFO & Compliance Officer [112]

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Just a minute. Okay. So we had INR 70-odd crore of dividend from our South African subsidiary. That is one reason. And -- but others are smaller items. The biggest, I would say, is INR 78 crores of dividend from the South African JV. There are some other things, some sale of securities, et cetera, that rest of the amount really accounts from that. And we sold some properties, INR 32 crores from there. And there were just take-or-pay order, which was INR 32 crores. Okay. So (inaudible) about INR 14 crores. I think there are 3, 4 items, not very material, but all that put together add up to the balance. But the biggest is about INR 77 crores of dividend.

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Mohit Kumar, IDFC Securities Limited, Research Division - Analyst [113]

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Understood. Sir, the second question was regarding this renewables portfolio, trying to demerge the -- or take out the renewables or stand-alone, trying to budget Tata Power Renewables, where is that process right now?

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Praveer Sinha, The Tata Power Company Limited - CEO, MD & Director [114]

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It is still in the course, yes, as of now, still in the course. The progress is slow, but it's happening. A lot of cases are (inaudible) also going through some (inaudible).

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Mohit Kumar, IDFC Securities Limited, Research Division - Analyst [115]

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Any idea about what time line?

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Ramesh Narayanswamy Subramanyam, The Tata Power Company Limited - CFO & Compliance Officer [116]

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I think in 6 to 12 months, it will be clear, because these are going through -- quite slow in terms of the coal progress.

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Operator [117]

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The next question is from the line of Dhruv Muchhal from ACS Mutual Fund.

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Dhruv Muchhal, Motilal Oswal Securities Limited, Research Division - Research Analyst [118]

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Sir, the question was on the dividend distribution tax, which we see, it's one-off. Sir, but for any dividend, which you distribute from your coal JV, there will always be a dividend distribution tax. So should we consider this as one-off or, I mean, this would always be a recurring thing?

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Ramesh Narayanswamy Subramanyam, The Tata Power Company Limited - CFO & Compliance Officer [119]

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No. So I think we have to clarify this. The dividend distribution tax, you are absolutely right, whenever there's a dividend, there will be tax. This is -- what is happening is, due to the -- we have redomiciled our holding company, et cetera, because of which, for a long time, the dividends were not virtually -- or rather the cash outgo of the surpluses from the coal companies are not converted to dividends, pending formalities. And as a result, there is a mismatch of timing. The income was realized in a period and consolidated in the earlier periods. And since those got converted into dividends in these periods, it becomes one-off for this period. But this doesn't mean that it will not happen next time. Of course, you should simply assess the coal profits for the year and apply the 10% dividend tax on that. That is going to be there always. But for future, we've now already provided for whatever is pending to be converted. So from here onwards, the income -- whenever there is an income, we will start booking to avoid this mismatch. But this a lumpy thing, which has happened. It doesn't happen normally.

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Dhruv Muchhal, Motilal Oswal Securities Limited, Research Division - Research Analyst [120]

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Okay. So this INR 100 crore pertains to all for future? Or is it also for the quarter, the income which we have earned for the quarter and for the first half, I mean, for 1Q?

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Ramesh Narayanswamy Subramanyam, The Tata Power Company Limited - CFO & Compliance Officer [121]

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So INR 75 crore is for future and INR 25 crore is for the past.

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Dhruv Muchhal, Motilal Oswal Securities Limited, Research Division - Research Analyst [122]

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Okay. Okay. So going forward, we should build this as a recurring thing? I mean, as you continue to distribute dividend, we will be booking the dividend distribution tax?

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Ramesh Narayanswamy Subramanyam, The Tata Power Company Limited - CFO & Compliance Officer [123]

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Correct. I think you should just look at the PAT at the coal companies and assume that there will be a dividend tax on that.

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Dhruv Muchhal, Motilal Oswal Securities Limited, Research Division - Research Analyst [124]

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Okay. And the dividend tax is about 15% if I'm not wrong?

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Ramesh Narayanswamy Subramanyam, The Tata Power Company Limited - CFO & Compliance Officer [125]

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10%.

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Dhruv Muchhal, Motilal Oswal Securities Limited, Research Division - Research Analyst [126]

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10%, okay. Sir, secondly on the Mundra, our tariffs has increased on a Q-o-Q basis from 2.85 to 2.96, but the under-recovery -- I believe your coal cost would have declined and it's also in the FOB cost, it seems like. But there is not a similar decline in the under-recovery number? Or there's no increase in the EBITDA number. So just wondering what has happened here? The under-recovery -- the per unit under-recovery?

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Ramesh Narayanswamy Subramanyam, The Tata Power Company Limited - CFO & Compliance Officer [127]

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Of course, the EBITDA is increasing, right. In the Q2, EBITDA was INR 175 crores on Y-o-Y basis as against minus INR 63 crores last year.

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Dhruv Muchhal, Motilal Oswal Securities Limited, Research Division - Research Analyst [128]

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If I'm looking on Q-on-Q, I mean, more...

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Ramesh Narayanswamy Subramanyam, The Tata Power Company Limited - CFO & Compliance Officer [129]

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Q-o-Q, so Q-o-Q is -- Q-o-Q has....

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Dhruv Muchhal, Motilal Oswal Securities Limited, Research Division - Research Analyst [130]

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EBITDA in 1Q was INR 160 crore. This time, it's INR 160 crores. But the tariff has increased from 2.85 to 2.96. And your coal cost on an FOB basis, it's flat, but the GCV has improved, so marginal benefit even there.

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Praveer Sinha, The Tata Power Company Limited - CEO, MD & Director [131]

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Actually it decreased from 1 paise to 0.51 paise.

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Dhruv Muchhal, Motilal Oswal Securities Limited, Research Division - Research Analyst [132]

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(inaudible) has come down to 0.51 paise. That's only 4, but considering that the revenue has increased, the per unit revenue has increased decently, I thought

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Ramesh Narayanswamy Subramanyam, The Tata Power Company Limited - CFO & Compliance Officer [133]

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Revenue has increased, proportionately, it would be mostly because of the coal price increase, because the fixed charges don't increase, right? So these are the variable portion and normally to match the coal pricing. So it won't directly flow into the bottom line.

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Dhruv Muchhal, Motilal Oswal Securities Limited, Research Division - Research Analyst [134]

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Sir, that's the reason. I mean, on a Q-o-Q basis, your coal prices are broadly flat or -- also (inaudible) benchmark, the benchmark coal prices are flat or down. Sir, your coal cost should not have increased.

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Ramesh Narayanswamy Subramanyam, The Tata Power Company Limited - CFO & Compliance Officer [135]

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There will be -- this will probably be attributable to stock adjustment, because we purchased -- these are on purchase prices. So there could be some timing issue. And also, I think we (inaudible) I think there's some impact of IND AS 115, we will share with you some numbers. There's some impact of that also.

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Dhruv Muchhal, Motilal Oswal Securities Limited, Research Division - Research Analyst [136]

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Okay. And sir, lastly, was on the receivables. So we have -- particularly in the renewable side, we have long dues. Are we entitled for the late payment surcharge there? And are we booking for it? And are we claiming it?

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Ramesh Narayanswamy Subramanyam, The Tata Power Company Limited - CFO & Compliance Officer [137]

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So here, we are entitled, but we book it only when we receive it.

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Dhruv Muchhal, Motilal Oswal Securities Limited, Research Division - Research Analyst [138]

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Okay. So there could be a decent portion of late payment surcharge, which can come along with the receivables when they are released?

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Ramesh Narayanswamy Subramanyam, The Tata Power Company Limited - CFO & Compliance Officer [139]

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Theoretically, yes. But our practice is that it's a big stress, because (inaudible) some of our customers give. Some customers ask for rebates on that delayed payment. And some marginal delays, we also waive. So it's a mixed bag. I don't think that you should count on it big time at this time as a [centennial] number.

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Dhruv Muchhal, Motilal Oswal Securities Limited, Research Division - Research Analyst [140]

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So because of this working capital, there's a hit to our interest cost, but there's no offsetting income. So on that basis, I was...

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Ramesh Narayanswamy Subramanyam, The Tata Power Company Limited - CFO & Compliance Officer [141]

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Yes. But remember that this is happening in only a couple of states. So thereafter, other states, we have been having to -- if you take a year -- a full year picture, we are not way off.

Yes, it is putting pressure on working capital really, but I must tell you that we also factor some of these in the bids so that we are aware of some of the states. And therefore, for us, it's part of their plan. And also in the coming months, you will see that we are also working on some plans to kind of ensure that we get more liquidity through financing structure. So let's see how it goes.

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Dhruv Muchhal, Motilal Oswal Securities Limited, Research Division - Research Analyst [142]

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Sure. And sir, last question, if I may. In the coal JVs, the EBITDA number for BSSR and KPC together has declined by about -- from -- on a Q-o-Q basis from INR 350 crores in 1Q to about INR 100 crores in 2Q. But if I adjust -- if I look at the PAT number, in 1Q, it was INR 157 crores, and this quarter, it's about INR 81 crores. And if I add back the one-offs, which you mentioned, the tax items, you're hedging INR 240 crores. So despite a massive decline in the EBITDA, the PAT number on an adjusted basis would look significant increase. So...

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Praveer Sinha, The Tata Power Company Limited - CEO, MD & Director [143]

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You're talking about right BSSR, right?

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Dhruv Muchhal, Motilal Oswal Securities Limited, Research Division - Research Analyst [144]

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BSSR plus KPC.

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Ramesh Narayanswamy Subramanyam, The Tata Power Company Limited - CFO & Compliance Officer [145]

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Plus KPC. Well, I -- can I suggest we just take it off-line, because there are 2 companies put together, so there will be some calculations required, which is not fair to spend time online?

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Operator [146]

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The next question is from the line of Abishek Puri from Access Capital.

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Abhishek Puri, Axis Capital Limited, Research Division - Executive Director of Capital Goods, Infrastructure and Power [147]

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So just one clarification on the Tata projects, if you can give an update where it stands now. It's been quite some time that we were looking to monetize it? And secondly, in terms of the dividend amount that we would have received in the current quarter, because the [DDT] -- that 10% that you're talking about, which will be -- which has been booked for past quarters and future quarters, the total debt in the presentation is roughly about INR 1,900 crores. So this amount should have been INR 190 crores instead of INR 100 crores.

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Ramesh Narayanswamy Subramanyam, The Tata Power Company Limited - CFO & Compliance Officer [148]

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Abhishek, let me -- our team will come back to you with the reconciliation. You are saying that the debt, which was pertaining to the dividend is reducing by INR 100 crores, where the tax reduction is INR 160 million. Is that what you're saying?

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Abhishek Puri, Axis Capital Limited, Research Division - Executive Director of Capital Goods, Infrastructure and Power [149]

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Yes. Tax deduction, you said is INR 160 crores total for KPC?

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Praveer Sinha, The Tata Power Company Limited - CEO, MD & Director [150]

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Correct.

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Ramesh Narayanswamy Subramanyam, The Tata Power Company Limited - CFO & Compliance Officer [151]

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Correct.

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Abhishek Puri, Axis Capital Limited, Research Division - Executive Director of Capital Goods, Infrastructure and Power [152]

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Whereas from that INR 160 crores, INR 100 crores was related to the dividend adjustments.

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Praveer Sinha, The Tata Power Company Limited - CEO, MD & Director [153]

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Yes, [DDT].

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Abhishek Puri, Axis Capital Limited, Research Division - Executive Director of Capital Goods, Infrastructure and Power [154]

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But the total debt against the dividend in coal SPV as per your Slide #23 is INR 1,921 crores. If I take 10% of that, it should be INR 190-odd crores?

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Praveer Sinha, The Tata Power Company Limited - CEO, MD & Director [155]

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No, no, no. So INR 190 is what is left over. It belongs to what has been already received and what is yet to converted put together. Okay. So it was INR 2,900 crores-something -- INR 2,800 hundred roughly in March to recall? And therefore, what has been liquidated for that, the tax has already been accounted for.

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Abhishek Puri, Axis Capital Limited, Research Division - Executive Director of Capital Goods, Infrastructure and Power [156]

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Okay. So it is for the past quarters, this is not for the future quarters?

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Ramesh Narayanswamy Subramanyam, The Tata Power Company Limited - CFO & Compliance Officer [157]

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Past is -- month INR 2,900 crores was the balance in March. Now it is INR 1,900 crores. So INR 1,000 crores, INR 100 crores.

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Praveer Sinha, The Tata Power Company Limited - CEO, MD & Director [158]

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So that's the answer. Obviously INR 2,900 crores is now INR 1,900 crores. So there was INR 1,000 crore, 10% is INR 100 crores.

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Abhishek Puri, Axis Capital Limited, Research Division - Executive Director of Capital Goods, Infrastructure and Power [159]

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Okay. Got it. So the INR 1,000 crores has already been converted to cash here or accounted for dividend. Got it. And on Tata projects, if you can give me some clarity on where it is.

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Praveer Sinha, The Tata Power Company Limited - CEO, MD & Director [160]

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So Tata projects are -- intent is there. I think we are also looking for -- unfortunately, what has happened is our initial checks on the market, et cetera, show that we might have to time this properly so that we get the best value at the end of the day. Whether this asset is sold to the group companies or outside, we still have to get the best value. So we will continue to look for it. And I think we will not hurry up and give it at a low valuation, because of (inaudible), we have to protect our shareholder interest. So I think we're just waiting for the right opportunity. We'll continue to look at it.

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Abhishek Puri, Axis Capital Limited, Research Division - Executive Director of Capital Goods, Infrastructure and Power [161]

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So basically, the valuers have not given a proper value to it as per your expectations?

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Praveer Sinha, The Tata Power Company Limited - CEO, MD & Director [162]

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I think right now, that's our perception.

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Operator [163]

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The next question is from the line of Apoorva Bahadur from Jefferies.

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Apoorva Bahadur, Jefferies LLC, Research Division - Equity Associate [164]

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I had 2 questions. Firstly, if I see the (inaudible) at the end of August, your renewable due stood at INR 1,330 crores. How have they moved since, sir.

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Ramesh Narayanswamy Subramanyam, The Tata Power Company Limited - CFO & Compliance Officer [165]

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Renewable dues. Just a moment. So the current outstanding is INR 1,150 crores.

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Apoorva Bahadur, Jefferies LLC, Research Division - Equity Associate [166]

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That's great. Sir, secondly, in your annual report, you had mentioned about this circular from the Director General of Shipping regarding the change in basically (inaudible) content. So are we seeing an impact on increase in freight because of this? And if you could quantify -- because this will obviously have an impact on Mundra's fuel cost still the (inaudible) resolution implemented?

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Praveer Sinha, The Tata Power Company Limited - CEO, MD & Director [167]

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Okay. So there are 2 important items here. One is that on the ship side, some of the costs would be -- we are trying that it should be part of -- it should be borne by the ship owners, okay? Because -- where we have charters. So that is one mitigation. The other is that we are already -- there is a proposal to consider this as a change in law as far as the freight cost is concerned. And BRC is expected to link the inflation to the new benchmark, which would be reflecting the low sulfur oil. So that way, it will be covered in the tariff.

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Apoorva Bahadur, Jefferies LLC, Research Division - Equity Associate [168]

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Okay. Sir, what will be the impact if it could be quantified?

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Praveer Sinha, The Tata Power Company Limited - CEO, MD & Director [169]

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Impact should be (inaudible), because we are -- it is likely to be a pass-through.

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Apoorva Bahadur, Jefferies LLC, Research Division - Equity Associate [170]

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So I mean, in the interim till it is pass-through, (inaudible) by how much would it increase?

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Ramesh Narayanswamy Subramanyam, The Tata Power Company Limited - CFO & Compliance Officer [171]

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I don't have a rough number, but I think it should less than maybe $0.15 or so. That's what -- as a number, but could not be immaterial number.

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Apoorva Bahadur, Jefferies LLC, Research Division - Equity Associate [172]

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$0.50 to the tonne?

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Ramesh Narayanswamy Subramanyam, The Tata Power Company Limited - CFO & Compliance Officer [173]

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Yes.

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Operator [174]

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The last question is from the line of [Rahul Mehta] from Capital and Finance.

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Unidentified Analyst, [175]

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Congratulations on good set of numbers. My question was regarding the March approval. If President's rule is imposed in Maharashtra, what are the chances of getting it okayed by the cabinet, I mean?

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Ramesh Narayanswamy Subramanyam, The Tata Power Company Limited - CFO & Compliance Officer [176]

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Yes, if there is a President rule, then the cabinet is run by the Governor and his advisor. I mean, they will approve it. So there has to be a government in place. Whichever be the government, they will approve it.

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Unidentified Analyst, [177]

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So we don't see any problem going to it, right?

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Praveer Sinha, The Tata Power Company Limited - CEO, MD & Director [178]

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No, no, not at all.

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Unidentified Analyst, [179]

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Got you. About the (inaudible) deal, how confident are you of bagging it? And if at all you bag it, will you see a bigger opportunity than Mumbai and Delhi put together?

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Ramesh Narayanswamy Subramanyam, The Tata Power Company Limited - CFO & Compliance Officer [180]

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There are only 2 parties over there, one is from [Capa Power] and the other is a bid from IPTL, which is India Power Company Limited, they are much smaller, they do not have these. And this bid has technical points as well as financial points. So we expect that the technical point itself, we will get certain advantage and we are quite confident also getting this bid. The -- in terms of the number of consumers, it's a very large area, and area also is very large. It is something like 38,000 square kilometers, which is -- which means that, just to give you an idea, Mumbai is 1,500 square kilometers, so that is 38,000 square kilometers. In terms of number of consumers, Mumbai has about 3.5 million consumers. [Setu] will have about 3 million consumers. So that's the signs that we are looking at.

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Unidentified Analyst, [181]

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Okay. So it could be as big an opportunity as Mumbai?

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Ramesh Narayanswamy Subramanyam, The Tata Power Company Limited - CFO & Compliance Officer [182]

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Yes.

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Unidentified Analyst, [183]

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In terms of consumers, yes.

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Praveer Sinha, The Tata Power Company Limited - CEO, MD & Director [184]

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Yes. Yes, in terms of consumer, in terms of area, it's much larger. And that's why, with the type of growth that will happen over there, we can expect a lot of opportunities to open up for us.

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Unidentified Analyst, [185]

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Okay. Sir, in the recent interview, which Mr. N. Chandra gave to Shereen Bhan of CNBC, he spoke about restructuring Tata Power. The Board has given in principle, I think, an approval for restructuring of Tata Power. So what exactly was that for? Is demerging the Coastal Gujarat Power CGPL business, is there anything on that line being worked out in Tata Power.

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Praveer Sinha, The Tata Power Company Limited - CEO, MD & Director [186]

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No. The restructuring is, I think, by and large, a whole bunch of things, which we have been talking about. I would give the reshaping it, so including finding out how to handle CGPL post (inaudible) resolution, what's the best structure to have it considering its (inaudible) and losses plus the debt reduction, finding a profit structure for the renewables. So I think a combined package of things that we are currently working on along with the Board. I think those are the things which are in his vision. And I think that's what you've been mentioning about. So that's exactly what we've been talking about.

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Unidentified Analyst, [187]

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There are no plans to demerge CGPL?

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Praveer Sinha, The Tata Power Company Limited - CEO, MD & Director [188]

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Well, I -- CGPL is worth exploring every option that's available. So I don't think that we should rule out any option at this point in time.

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Unidentified Analyst, [189]

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Okay. So if those options don't materialize as per your expectations, then probably we may think of demerging it? Is that the -- is that what I understand?

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Praveer Sinha, The Tata Power Company Limited - CEO, MD & Director [190]

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It's already 100% subsidiary, right? And what were -- demerging and listing is obviously out of question. So therefore, I don't know what exactly do you mean by demerging.

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Unidentified Analyst, [191]

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What I mean that is that -- I mean, huge unlocking of value can be created for shareholders, because shareholders have not got any return for the past 12 years, sir. Demerging of CGPL will lead to explosion of profits in Tata Power, which can [lead] the Tata Power stock.

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Ramesh Narayanswamy Subramanyam, The Tata Power Company Limited - CFO & Compliance Officer [192]

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Yes, providing I'm able to find a buyer, right, [Rahul], provided I'm able to buy find a buyer who also takes...

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Unidentified Analyst, [193]

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No, no, no. I'm not talking about selling CGPL. I'm just talking about demerging CGPL. See basically, if one share of CGPL is given to the shareholder of Tata Power, for every one share held, this will become a separate entity and the losses which are incurring in Tata Power because of CGPL, they go to CGPL, not to Tata Power.

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Praveer Sinha, The Tata Power Company Limited - CEO, MD & Director [194]

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They'll go to CGPL, but CGPL is owned by Tata Power, right?

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Unidentified Analyst, [195]

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Just like Adani did, today Adani Group enterprise value is INR 1 lakh crore, sir. The market cap of Adani Agri and Adani Power is INR 35,000 crores, a player which was not existing when Tata Power was created -- I mean, just 20 years back, Adani's market cap is doubled that of Tata Power, sir.

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Praveer Sinha, The Tata Power Company Limited - CEO, MD & Director [196]

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Okay. Rahul, I think you're confusing 2 things. One is, you are comparing us to Adani Group. Let's have a separate discussion on Adani Group comparison, if that is your topic. But the -- but I think please understand the current structure. And it's -- CGPL is 100% owned subsidiary. It's actually fully funded by the Tata Power currently. And there are only few options, either you merge it or you sell it or you live with it. There are only 3 possible options. So I'm sure you know which options would work, but that's a separate topic and discussion.

Maybe I've not understood your question. I'm sorry for that, but maybe we'll have an offline discussion (inaudible).

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Unidentified Analyst, [197]

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Basically, sir, as a shareholder, I have to live it with for the next another 15, 18 years till that company makes -- keeps on making losses. The point is -- I mean, 15 years and you've not got any shares, that's the point.

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Praveer Sinha, The Tata Power Company Limited - CEO, MD & Director [198]

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No, I do agree with the point that the asset is not delivering returns. That is well known. And this is why we are trying to solve the problem through the regulatory system. But I am very confused at your suggestion of demerger, because even after demerger, there -- the asset will continue to make losses. Those losses, some shareholder has to fund. And in this case, it is still Tata Power and its shareholders. So I don't think demerger will change that character. So that's the limited point. I would say that we'll take it offline and help understand if you have.

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Unidentified Analyst, [199]

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I'll send you a mail on that. I'll send you a mail on that.

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Praveer Sinha, The Tata Power Company Limited - CEO, MD & Director [200]

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Yes. Sure, sure.

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Operator [201]

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Thank you very much. And that was the last question in queue. I would now like to hand the conference back to Mr. Sinha for closing comments.

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Praveer Sinha, The Tata Power Company Limited - CEO, MD & Director [202]

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Thank you very much. And thank you for all the questions. And whenever we could not give you proper reply and we said that we would come back, our teams will get back to you with all the replies. And in case you have any other queries also, please do not hesitate to contact our team members, [Rahul] and [Kasturi], and I'm sure we'll be able to provide you all the answers. So once again, thank you for dialing in this call.

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Operator [203]

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Thank you very much. On behalf of Tata Power Company Limited, that concludes the conference. Thank you for joining us, ladies and gentlemen. You may now disconnect your lines.