“India Grid Trust Q2FY24 Earnings Conference Call”
November 06, 2023
MANAGEMENT: MR. HARSH SHAH – CHIEF EXECUTIVE OFFICER &
WHOLE-TIME DIRECTOR, INDIA GRID TRUST
MR. NAVIN SHARMA – CHIEF FINANCIAL OFFICER,
INDIA GRID TRUST
MS. MEGHANA PANDIT – CHIEF INVESTMENT
OFFICER, INDIA GRID TRUST
MR. SATISH TALMALE – CHIEF OPERATING OFFICER,
INDIA GRID TRUST
MODERATOR: MR. JITEN RUSHI – AXIS CAPITAL LIMITED
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India Grid Trust
November 06, 2023
Moderator: Ladies and gentlemen, good day and welcome to the India Grid Trust Q2 FY24 Earnings
Conference Call Hosted by Axis Capital Limited.
As a reminder, all participant lines will be in the listen-only mode and there will be an
opportunity for you to ask questions after the presentation concludes. Should you need assistance
during the conference call, please signal an operator by pressing ‘*’ and ‘0’ on your touchtone
phone. Please note that this conference is being recorded.
I now hand the conference over to Mr. Jiten Rushi from Axis Capital Limited. Thank you and
over to you, sir.
Jiten Rushi: Thank you, Seema. Good evening, everyone. On behalf of Axis Capital, I'm pleased to welcome
you all for the Q2 & H1 FY24 Earnings Conference Call of India Grid Trust.
We have with us the management team represented by Mr. Harsh Shah – Chief Executive Officer
and Whole-time Director, Mr. Navin Sharma – Chief Financial Officer, Ms. Meghana Pandit -
Chief Investment Officer, and Mr. Satish Talmale – Chief Operating Officer.
We will begin with the “Opening Remarks” from the management, followed by an interactive
Q&A session. Thank you and over to you, sir.
Harsh Shah: Thank you, Jiten, and thank you everyone for joining on this quarterly call with us today. I'll be
referring to the investor presentation that we have circulated to ensure that we are on the same
page in terms of references.
So, I'm on the Slide #3 of the investor presentation. So, I'll reiterate our vision. Our vision is to
become the most admired yield vehicle in Asia, and we believe that if we are able to continue to
focus on, focused business model with long-term contracts and low operating risk, focus on
value-accretive growth, deliver predictable distribution, and maintain a capital structure which
is optimum, we will be able to achieve what we have set out to achieve.
On the next slide is our current portfolio. And as you can see, the portfolio has substantially
grown versus last quarter on account of the recent acquisition. As we stand today, we are
approximately Rs. 27,000 crores assets under management. We are present in 20 states and one
UT with over 80 revenue generating elements, separate revenue generating elements, which
encompasses 8,400 circuit kilometers of lines, 17,550 MVA substations, and 555 megawatt of
AC solar generation and DC level will be over 670. Our transmission average tenure left on the
contract is 27 years, where most of our assets are contracted through built own, operate and
maintain, so there is no transfer. In solar, where almost all contracts are used to be 25-year-old,
but most of them have an operating history of 7 years now, so with a residual turnover of
approximately 18 years.
On the quarter 2 update, which is on Slide #6, this quarter has been a very interesting quarter on
multiple fronts. At one end, we have acquired one of the largest acquisitions on renewable space,
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which is Virescent, which we acquired for approximately Rs. 4,000 crores, which almost
multiplied our megawatt capacity 5x and added India Grid’s AUM in solar, took to around 17%
of AUM. Along with that, we also raised approximately Rs. 400 crores of preferential allotment
where marquee reputed investors and family offices end up investing sometime in August. So,
on the growth and capital front, we are doing pretty well. While funding for Virescent on the
debt side also, we have charted a path of one of the longest infrastructure bonds of almost 15-
year tenure with one of the marquee investors like IFC on board, with which IFC has become
the largest lender to us now. And on growth side, we have made a beginning in the new area of
battery energy storage, which we have been speaking about over the last one year. And we have
received the first letter of award for 20 megawatt / 40 megawatt hour project in Delhi. So, overall,
a pretty exciting quarter that we've seen over the last 3 months.
In terms of financial performance, our revenue and EBITDA grew approximately 20% and 4%
year-on-year respectively. EBITDA growth at 4% was considering there were several one-time
costs which we expensed out in the first quarter of acquisition for Virescent, like the one-time
integration and other expenses which is mentioned here. On the collection front, quarter 2 again
surpassed our expectations. We collected approximately 114% in transmission and 127% for
solar, which has aided the NDCF substantially. And that is one of the reasons that we have
increased the guidance for the financial year 2024 to Rs. 14.10 a unit, as well as increased the
guidance on run rate by another 3% to Rs. 3.55 a unit versus Rs. 3.45 in quarter one. It's important
to note that we had increased 3.3 to 3.45 just 6 months ago. So, on a year-on-year basis, it was
almost like a 7.5% increase on DPU that's being delivered. Net debt to AUM as it stands today
is 63.5%, which is well below the 70% cap and we will look to raise capital to continue to
maintain the headroom for further growth.
On the operational front, our average availability remains above par at 99.76%. Solar CUF is as
per plan that we had budgeted for and the issue that we had seen in NER asset between three
asset lines has been rectified and the lines are operational now.
On the industry update, I'm sure you guys have seen the latest couple of days of newspaper, the
demand generation, generation growth is increasing and we are pretty bullish about the peak
demand as well as number of units consumed is going to continue to rise on a year-on-year basis
and which will result into substantial amount of investment in the sector. One of the key
developments on the transmission and solar sector that we target, the national framework on ESS
to encourage adoption and create ecosystem for development of ESS has been pushed. The
National Electricity Plan envisages 74 gigawatt of storage with a capacity of 400 gigawatt hour
and this is completely in line with India's vision to achieve 500 gigawatt of solar or renewable
energy capacity. We are confident that storage is in its journey of evolution where solar was 15
years ago. And with incremental investment and support from the government, we are confident
that the cost of battery energy storage will continue to come down. Over Rs. 1,25,000 crores of
projects for transmission have been announced and they are coming for auction over the next 12
to 18 months and we are preparing ourselves well to see what are the relevant projects and
suitable projects for us to acquire and bid.
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Coming to the next slide on Slide #8, I would invite Satish Talmale, who is Chief Operating
Officer, to take you through the operating performance of the company.
Satish Talmale: Hi, everyone, and happy to share quarter 2 operational performance for the portfolio. Starting
with safety, so we continue to perform on our mission of ZERO HARM. So, we had no fatality,
zero medical treatment cases. We had one LTI and three first aid minor injury cases reported.
On performance, quarterly average availability is at 99.76%. Solar generation, we generated 231
million units at 18.9% CUF, which is higher compared to last year quarterly performance by
4%, which is sheer due to reliability initiatives and some performance improvement initiatives.
Insulator flashover issue, we are out of way. Both the lines are charged now and that risk is
largely mitigated. On overall reliability for the transmission system, we have trips per line ratio
at 0.16 and substation trip per element is at 0.03. This is slightly higher than the last year
performance because of the insulator issues, but now we don't anticipate those issues in near
future. Of course, the focus on prudent defect management with reliability centered approach
will continue with the adoption of new technologies. A few initiatives like Asset Health Index,
which will help us to determine the condition of the critical equipment and the remaining life,
residual life, is something we have kick-started. Drone deployment is already getting
commenced in our central region at a larger portfolio level. We will be covering almost 2000
kilometers under drone surveillance. Solarization project which is one of the initiatives for
saving our auxiliary power consumption across the portfolio. This is also kick-started for other
substations.
That’s it from my side and I would hand over to Navin for financial performance.
Navin Sharma: Thank you, Satish and good evening everyone. We are on Slide #9. Another good quarter with
robust performance as compared to the same quarter previous year. We have recorded a revenue
and EBITDA of Rs. 695 crores and Rs. 558 crores respectively, which translates into 20% and
4% YOY growth. Q2 FY24 EBITDA includes one-time integration expenses pertaining to recent
Virescent acquisition. NDCF generated for the quarter was Rs. 309 crores and board has
approved distribution of Rs. 3.55 per unit which is higher by around 3% compared to our
guidance and this translates into DPU growth of 7.5% on a YOY basis. With this, FY24 DPU
guidance increased to Rs. 14.1.
Coming onto collections for the quarter, it stood at 114% and 127% respectively for transmission
and solar business. For H1, collection performance is more than 100% for both the businesses.
The DSO as of 30th September 2023 stands at 67 and 73 days respectively for transmission and
solar business, which reflects significant improvement in solar business, where DSO was 125
days a year ago and 87 days in last quarter.
Coming onto next Slide #10. DPU for the quarter is Rs. 3.55 per unit. It will be distributed in
form of interest, capital repayment and other income which is Rs. 2.9, Rs. 0.63 and Rs. 0.02
respectively. The outstanding units at the end of the quarter is around 73 crores and the gross
distribution to all the unit holders at Rs. 3.55 comes to Rs. 259.5 crores. Record Date for the
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distribution is November 9, 2023 and tentative date by which the unit holder will receive the
distribution is November 18, 2023. NAV as of September 30, 2023 stood at Rs. 133 per unit.
Post this quarter’s distribution, IndiGrid would have distributed Rs. 78.86 per unit, with a total
distribution of around Rs. 4,389 crores. On the right hand side, we have showcased the trend of
distribution year-on-year basis, which is stable and scalable growth of 4% over the years. We
are on track to meet this year's revised guidance on distribution of Rs. 14.1 per unit.
Coming on to next Slide #11, which showcases the waterfall from our EBITDA to the NDCF
distribution and generation. At an SPV level, we have a consolidated EBITDA of Rs. 586 crores.
Net of the finance cost, working capital movement, CAPEX and taxes at SPV level, NDCF
generated at SPV comes to around Rs. 673 crores. Net of the trust level expenses, interest costs,
and tax, we have generated NDCF of Rs. 309 crores. In this quarter, we have replenished our
reserves by Rs. 49 crore, and closing reserves stands at Rs. 303 crores, which is in excess of one
quarter's DPU basis current guidance. So, that's all from my side. I hand over to Meghana to take
the subsequent slides. Over to you, Meghana.
Meghana Pandit: Thanks, Navin. Good evening, everyone. I'm on slide 12, which showcases our balance sheet
overview for this quarter. We continue to remain AAA rated by all the three rating agencies.
And at the end of this quarter, 30th September, our average cost of debt was about 7.56%. Almost
84% of all the gross borrowings, which stood at about INR 188 billion are of a fixed rate nature,
which has been our strategy of ensuring that bulk of the borrowings continue to be on a fixed
rate basis. Post the Virescent acquisition and the preferential allotment, our net debt to AUM
stands at about 63.5%. The cash balance stood at about Rs. 1,870 odd crores, which comprises
about Rs. 260 odd crores for the Q2 distribution, almost about Rs. 500 crores for DSRA, Rs. 400
crores that we raised from the preferential issue is also included in this cash balance, and the
NDCF reserve that got created in the quarter is also part of this cash.
During the quarter for the Virescent acquisition, we raised about Rs. 4,000 odd crores and that
we raised at an incremental cost of about 7.53%, which was lent by marquee lenders such as IFC
which subscribed to 15-year NCDs. In addition to that, other marquee debt lenders were IIFCL,
Federal Bank, HSBC, SBIMF, Yes Bank, etc. So, totally at the end of the quarter, our gross
borrowings of INR 188 billion can be split into almost 55% of bonds and about 45% of bank
loans. Bonds also are subscribed by various categories of investors including mutual funds,
insurance companies, HNIs, similar diversified portfolio on the loan side. The graph that you
see at the bottom of the slide showcases the repayment or refinancing schedule.
As has been mentioned, we try and ensure a smoothened curve in terms of the refinancing that
comes up every year and our target is not to increase that by more than 10% to 12% of the gross
borrowings. FY25, the refinancing amount of about INR 21.5 billion comprises the INR 12
billion of short-term loan that we took in order to fund the Virescent acquisition. Out of that,
almost Rs. 400 crores is already repaid which we had raised through preferential allotment and
balance we will do through the impending equity raise that is planned.
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Moving to Slide #13, we continue to deliver superior risk adjusted total returns. Total returns
comprises of the distribution, which is almost 75% in the end of the quarter without including
Q2 distribution and about 38% of price change. On a total return basis that translates into 113%
since the time we got listed and on an annualized basis, it converts into 13%, which as you can
see compared to pure play debt bonds as well as compared to pure play equity indices, we have
been providing superior returns especially if you compare it with the Beta which is the measure
of the risk which is at the lowest end.
Continuing on Slide #14, which talks of our business outlook. So, on the portfolio strategy, we
are focusing on maintaining stable operations and ensuring that we continue to provide with
sustainable distribution while looking at value-accretive acquisitions. On the growth side, we
are looking to consummate the pipeline deals, which is one of the transmission assets that we
plan to acquire from GR Infra Rajgarh Transmission Limited upon its COD, which is expected
in Q3. In addition to that, the COD of our first greenfield transmission project, Kallam and the
newly won BESS project in Delhi, we continue to focus on that. In addition to that, the significant
greenfield opportunities which are available on the transmission side, we will look at proactively
participating. Delivering on the increased DPU guidance of 14.1 for FY24, we are also looking
at undertaking internal restructuring in order to smoothen the operations and reducing the legal
entities from 38 to a reasonably lower number. Basically, that is a simplification of the corporate
structure.
Improving balance sheet strength continues to be the focus area, which is considering the market
environment, ensuring that we look at optimizing the interest costs and elongate the tenures as
much as is possible when we look at future acquisitions. Similarly, maintain adequate liquidity
to address any uncertainties that come about. We are also looking at raising equity capital for
which we had taken the unit holder's approval to the extent of about Rs. 1,500 odd crores.
On the asset management side, our focus continues to be on maintaining 99.5% availability
across all the portfolios and ensuring that we maximize on the incentives, ensure that we improve
on the O&M practices across the portfolio, utilize various digital tools in order to assist in
analytics and decision making both on the solar as well as on the transmission side and ensuring
world-class EHS and ESG practices. Our industry stewardship again continues where we
proactively participate in the electricity sector where we can look at capitalizing on the
opportunities that come about, both on the greenfield side as well as on the monetization pipeline
side. And focusing on increasing awareness and education about IndiGrid per se and InVITs at
large also remains an active area for us.
Moving to slide 15, this is a slide that we provide, which showcases how on the back of accretive
acquisitions has our DPU been increased and the longevity of the same. If you look at from
FY18 onwards, since the time we got listed from Rs. 11 to Rs. 14.1 DPU guidance that we have
provided in FY24 on the back of various acquisitions and the acquisitions we have categorized
in various colors. The last one being yellow, which is supposed to be recent as well as the
augmentation pipeline that we have and how the longevity and the increase of that can be seen
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given the business plan. I'll take a pause here and we can get into a question-answer session for
any specific queries.
Moderator: Thank you very much. We will now begin with the question and answer session. We take the
first question from the line of Mohit Kumar from ICICI Securities, please go ahead, sir.
Mohit Kumar: Congratulations on a very good quarter, especially raising the DPU. So, my first question is,
what is the EBITDA of Virescent in the quarter and in the half year, and at what enterprise value
you bought this portfolio?
Harsh Shah: Hi, this is Harsh here, Mohit and thank you. I think the Virescent, we have not provided a specific
Virescent related disclosure, so it wouldn't be fair to disclose, but I can tell you Virescent
performance in this quarter has been for one month and five days. The consolidation of Virescent
has happened from 25th of August 2023, the date of acquisition and dissolution of the trust.
Subsequent to that, it has taken into consolidation, but so it's just month, I can say that's been
added. How much exactly? We have not provided this split in the financials, so we may not be
able to give that. On the enterprise value of Virescent, depending on, you look at the net of cash,
with cash and all that, simply put, we have acquired for approximately Rs. 3,850 crores, which
is net of cash, plus cash will add, so approximately Rs. 3,850 crore is the enterprise value one
can look at.
Mohit Kumar: My second question is what are the equity requirements and capital requirements for battery
storage project and expected COD and EBITDA if possible?
Harsh Shah: It's a very small project. I think the topline of that project on annuity base is around Rs. 11 crores
and this is going to be for 12 years. And capex, I would say, in the range of Rs. 100 crores plus.
We are still working on the final capex, as you know, the battery prices etc. as we are closing.
But it's going to be more than Rs. 100 crores. And the equity required for that project will be
only 30% because 70% of the debt is going to be funded by GEAPP, is one of the leading
development organizations who has supported this project from the beginning and it is kind of
required that we borrow from them. So, it's the same for all bidders. Approximately Rs. 30 crores
is the equity required.
Mohit Kumar: So, last question, there is some, I think in the board meeting you are looking for big internal
restructuring with a group of various SPVs, Holdcos, held for reducing the number of legal
entities. So, the purpose of this, does it give us any financial benefits?
Harsh Shah: I would say a little bit of financial benefit, see, we are running about more than 35, 40 legal
entities. And the whole idea is when you run the 40 legal entities, you have to run it like a normal
company, right irrespective of that being an SPV that adds compliance cost and transaction cost.
So, we are trying to minimize that. Our goal is to reduce from where we are to approximately
25, 26 legal entities. The main benefit is going to be the simplification of the structure,
compliance cost, etc. But considering it is even intercompany, inter-IndiGrid group transfer etc.
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because it is for the first time, we are going to look for even approval of unit holders at the right
time when the overall scheme is finalized.
Moderator: Thank you sir. The next question is from the line of Yatindra Agrawal from SUD Life. Please
go ahead.
Yatindra Agrawal: My question is regarding the contraction in EBITDA. So, the operating revenue is increased by
20%, but EBITDA is just increased by 4%. And we can see that there is disproportionate increase
in employee benefit expenses and investment management fees. So, can you explain this?
Harsh Shah: Yeah, so there are two costs, which are one-time costs which are booked on the acquisition in
the expense line item, they are not paid, but they are booked in that. So, there are one-time costs,
for example, for Virescent acquisition closure, there were certain incentives to the management
team who did not continue as well. So, those incentives were paid by the acquirer and therefore
reduced from the equity value. So, those reflect in the first month. Second is the 0.5% is the
incentive fee for the IM, which is not paid right now, which is only booked. It will be paid only
when entire year's guidance is met. These are the two large expenditures, which are one-time
expenditure of acquisition, and therefore the EBITDA looks smaller for the comparable quarter.
The third one is contribution of Virescent was only for one month, but that's also for the revenue.
But that's the reason why the EBITDA is less.
Moderator: Thank you, sir. The next question is from the line of Sarvesh Gupta from Maximal Capital.
Please go ahead, sir.
Sarvesh Gupta: So, first question is that earlier we were guiding for a 3% to 5% sort of a DPU growth range in
the long term and I think post 2021 we have delivered more than 5% now and we are finding
more traction outside of our usual transmission assets. So, is there a case of increasing the
guidance for the DPU growth rate as well?
Harsh Shah: So, I think, I would say even 3% to 5% is the intent and strategy. It's not a guidance, so it's a
strategy. Yes, we have executed that strategy very well over the last 5-6 years and consistently
grown the DPU. I think increasing the guidance on growth has not been our focus. Our focus
has been to do 1) whenever we increase the guidance, we know that guidance is rock solid and
it's going to remain for next 8-10 years and not just enough for 1-2 years. And the second is that
focus on accretive acquisition has allowed us to repeat the guidance, right, repeat the growth of
3% to 5%. Now, I won't put all the extra growth on our skills. It is a matter of luck and
opportunities in the market. So, yes, we have prepared ourselves well to take over larger assets
and interesting assets as and when they come for acquisition. If we can continue to do so
repeatedly, why not? You will see this DPU growth being much higher than what we have done
before, but I would not guide for it that now IndiGrid is always going to grow DPU by 8%
because it gets compounded. As you can see in the last sheet that Meghana shared, when we
started you were 11, now you are 14 and we are seeing that the 3% to 5% will reach 15 soon. It
gets compounded and therefore I would say expecting that every year 8% NDCF growth would
put us on a little bit of a pedestal which we have stayed away from so that we can decide with a
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calmer mind. So, I would say that our guidance on growth remains 3% to 5%. As and when there
are solid opportunities, there is no incentive for us to hold back growth, right? So, we will
increase the DPU as we are doing it right now.
Sarvesh Gupta: And secondly, now for this incremental growth, we are venturing more and more towards solar.
So, first question related to that was that earlier we were planning to not increase beyond maybe
a quarter of the total assets. So, we are close to that sort of a number as far as these new assets
are concerned with this large acquisition. So, now incremental growth, how are you finding in
your core areas? I mean, there's a pipeline mentioned that you have done in your PPT, but are
you seeing interesting opportunities in your incremental growth, given that you might be close
to the limit that we had sort of talked about in terms of non-core areas?
Harsh Shah: Yeah. So, we are at 17%. There is still a sizable amount of headroom to grow in non-
transmission. But to answer your second question, there is tremendous amount of opportunity in
transmission and we are actively looking at it, actively bidding for it. When we win, what we
win, I think is not in our hands. But I would say we have a significant chance to win in this sector
and we are competitive. And it's a large enough pipeline available right now for a huge number
of players to bid for. So, I'm hopeful that we will end up reasonably achieving our share, a fair
share. What number? I don't know. But I would say transmission sector has never seen such a
large pipeline to be bid out in a year or two. It's a significant amount of pipeline that we've seen.
And we are hopeful that we'll win something reasonable for us.
Sarvesh Gupta: And just one data point, what is the average tenure on this fixed rate borrowing that we have?
Harsh Shah: So, our weighted average duration is about 6.2 years on the entire borrowing.
Moderator: Thank you. The next question is from the line of Mr. Milind from Dalal & Broacha. Please go
ahead, sir.
Milind Karmarkar: Just a small question. The drop in NAV between on a year-on-year basis, is it only because of
the capital repayment or there is something else to that?
Harsh Shah: No, it is not at all because of capital repayment. I'll correct you. It has nothing to do with capital
repayment. Capital repayment is just an accounting change based on tax rules. It has nothing to
do with capital requirement. The NAV reduction has multiple factors that contribute to it. One
of it is that when you have fixed life assets, then the value reduces. Some of our assets are fixed
life assets, whose value will reduce. Second is the risk-free rate has gone up between quarter two
of last year and quarter two of this year. So, risk-free rate will have a significant impact between
the two in terms of negative side. On the positive side, we have acquired Virescent, we have
acquired Khargone Transmission. So, that will have an accretive impact. So, it's a net impact
that you see over there. If there were no acquisition of Virescent and Khargone, then NAV
probably would have dropped more. So, it's an impact of few negatives, few positives. But it's
not capital repayment. Capital repayment is just accounting term only.
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Moderator: Thank you. The next question is from the line of Vipulkumar Shah from Sumangal Investment.
Please go ahead.
Vipulkumar Shah: Can you quantify the two factors which you mentioned, which resulted in less than proportionate
growth of EBITDA as compared to revenue growth of 20%?
Harsh Shah: Yes, Navin, you want to throw some light on that? Because I think it will be in financials also,
so we can describe.
Navin Sharma: Yeah, Vipul, as we took the unit holders’ approval for payment of accrual of acquisition fee
which is 0.5% of enterprise value, the amount along with GST is around Rs. 23 crores and the
incentive which was paid to the Virescent employees who have not continued with us is around
Rs. 48 crores.
Vipulkumar Shah: So, net-net, it is Rs. 71 crores if I understood you correctly.
Navin Sharma: Yeah. 70 plus and there are some other expenses, but broadly these are two line items which
have a larger impact. Overall, this cost is in range of around 2% of total acquisition value.
Vipulkumar Shah: So, roughly 80 cores, right sir?
Navin Sharma: Yeah, plus minus couple of crores.
Moderator: Thank you, sir. The next question is from the line of Muhammed Sufyan from Lalkar Securities.
Please go ahead.
Muhammed Sufyan: I just needed to confirm whether this battery energy storage system, is it operational?
Harsh Shah: No, it is not operational. It is to be installed.
Muhammed Sufyan: It is to be installed. So, can you say, is there a change in the strategy to procure non-operational
assets?
Harsh Shah: We had our first under construction asset 2 years ago called Kallam Transmission. SEBI allows
us to do approximately 10% of our AUM is under construction. Including the Kallam
Transmission, we will be less than 1%. But yes, we have gone into the development part of the
business.
Moderator: Thank you sir. The next question is from the line of Mr. Ravish Chandra, an individual investor.
Please go ahead sir.
Ravish Chandra: Excellent one more quarter result. And mainly we are at Rs. 27,000 crore of asset. My question
is regarding this national monetization plan, we had some change from the government in the
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newspaper saying that, okay, acquisition, it has to go on a lease or something. Then some GST
issue has come in between. So, any update regarding this?
Harsh Shah: What you are referring to, none of them are formal disclosures from the government. I think they
are different statements provided by management teams over different calls. I think
fundamentally what government has said that any monetization that is happening of the core
assets should be in a manner that the assets come back to the government after whatever, 20, 25,
30 years. So, that's the in principle view, which we completely respect and support, that the
government wants to monetize assets in a way that they're not losing complete control and
eventually the asset comes back to the country. However, the implementation of this philosophy,
we have a different view. There is not necessarily a GST impact. One can very well house assets
in the SPV, sell it and buy back the shares at zero price after 30 years. That is what is happening
in the new TBCB projects as well, which are on BOT. So, why cannot it not happen the
monetization? So, however, I think it's not in our control to comment on that. So, we'll wait until
the government seeks consultation for that. But there is an AOMT guideline which talks about
how to monetize power transmission assets owned by government and state governments, which
we believe addresses many of these issues. But eventually, the decision to monetize comes back
to the respective ministry and respective PSU. I think there, people may take different views,
which may or may not be in line with what the overall objective is.
Ravish Chandra: Right now, all Rs. 27,000 crores is our own asset. We have not yet gone into any lease kind of
activity till now. So, if the government goes with that only, we have to go in the future. That's
it?
Harsh Shah: Yeah, if we monetize in future, we will go and acquire those leases, they can get into that later.
Ravish Chandra: Okay, maybe a cost of acquisition also might get reduced because it is not our property. It is a
lease for 35 years or whatsoever, isn't it?
Harsh Shah: Correct.
Moderator: Thank you. Ladies and gentlemen, that was the last question for the day. I would now like to
hand the conference over to the management for closing comments.
Harsh Shah: Thank you. Thank you everyone for joining the call today. And as we said, we are executing a
strategy of focusing on building the business with a good risk return, superior returns, the least
risk. And as you can see, the numbers speak for themselves. And we have been able to deliver
that consistently over the last 6.5 years. And we are pretty confident of the quality of assets that
we have and quality of management team that we will keep delivering and look forward for your
support along the way. Thank you.
Moderator: Thank you. On behalf of Axis Capital Limited, that concludes this conference. Thank you for
joining us. You may now disconnect your lines.
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