PTC India Limited analyst Q&A

We will now begin the question -and-answer session. Mr. Patel has the question regarding Sikkim-Urja, what is the capital loss? What would be covered in insurance? And third, what is the loss of volumes and profits?

Yes, in Teesta Urja Limited, which is a Sikkim government company and where P TC has 5.62 percentage of the stake , the total investment at the carrying value is Rs.221 crores as on date , and this project has met with some kind of a natural calamity and there w ere some losses as far as the project is concerned in terms of the dam of the hydro project. The detail of the losses and the way forward for bringing this project back into the stream is already on. And at this stage, I may not be in a position to share the exact loss because of this natural calamity . But I can tell you that the company is trying to bring this project back as early as possible, and the necessary steps have been taken by them to start cleaning exercise and other exercise necessary for bringing this project back. Exact loss , we will be in a position to share once the survey is complete and the claim to the insurance company is also at a stage where we can give the final figure to you. But, at this point of time I can only share that the company is doing both the things. They have submitted their claim to the insurance company . They are trying to come out with a road map for restoration of the hydro project and it will be done as early as possible.

Yes, you are right in saying that the growth is there in some segments, and we are seeing that because of the higher prices in the energy exchanges, the offtake by the discom in bilateral short- term contract has declined. And we are expecting the prices have come down in the month of November and we hope that it will come back, and the states have started coming out with the tenders. And whatever is the anticipated numbe r or the estimated number we have shared with you in the past, we would be able to achieve in the third and fourth quarter, at this point of time I can say. But because of the higher prices in the month of September and October, we have seen some decline in the short-term bilateral trade.

We have a question from Narendra K huthia from RoboCapital. What was the revenue and volume of HPX in Q2 FY24? How are we planning to utilize the cash in books going ahead? Now that PEL disinvestment is done, are we planning on stake sale in PTC Financial Services?

So, the first part I'll request CFO to please reply on the HPX volume, the revenue and the profitability in the quarter. The second part, I'd like to answer.

As regards the HPX total revenue from operation and profitability is concerned, so for the quarter ended September '23, their total revenue from operation is around Rs. 13 crores and the profit before tax was around Rs.7.35 crores, out of which PTC share being 22.62% holder, so PTC share was Rs.1.66 crores for the quarter.

You must recall that this is a new exchange and started only in July 2022. So, in the first year of its operation, this has become profitable, and in some of the segmen ts in the market they have almost 1/3 of the volume and 35 % to 40% of the market share . And a lot of changes are happening in the regulation. So, we expect this exchange will gain because of the changes in the regulation in this space. As far as the second part of your question is concerned, that is the stake sale of our PTC Financial Services, let me tell you that we have shared with you that we will go one-by-one and we are consistent saying that this is on pause for some time. But the important thing is during the last so many months, the performance of this company has improved, the profitability has improved, even the share prices have improved during last so many months. So, at the appropriate time, we will start this process when we feel that the time is right, and we will let you know once we will start the process. As far as the PTC Energy Limited, we expect that the entire process of transferring the asset can be complete in the next two to three months.

We have a question from Karthik Babu from Capstocks and Securities. What is volume growth expected in FY24? Is Q2 margin sustainable in the coming quarters?

As far as the volume growth is concerned, we have given our estimate earlier and energy trade or power trade is a seasonal business, and it depends upon so many socioeconomic factors and the demand which comes from the disco ms. So, we will still go by whatever we have shared with you and the kind of growth what we expect here. The second part what you are askin g is on the profitability what we have achieved in Q2. So, margins are based on the portfolio mix. So, we have always maintained that ideal portfolio mix is 50 %-50% that is medium term and long term should be 50% and 50% from short term bilateral and the exchanges. So, keeping that in mind the profitability or the margin what we have achieved this quarter is something which is desirable, but it all will depend upon the circumstances and the situation what we will be seeing in third and fourth quarter.

We have a next question from the line of Danesh Mistry from Investor First Advisors. What is the approximate timeline to successfully closure of the PTC Energy sale to ONGC -- three months, six months or more than that?

I have already answered. Within three months, we expect it to be completed.

The next question is from Vipul kumar Shah from Sumangal Investment. What will be a use of funds raised from sale of PTC Energy Limited?

Shah ji, what we do is that we have a capital allocation plan which we will be submitting to the board shortly based on the long -term strategy and the medium -term strategy. And we have identified some areas where we would like to utilize this one as well as the p lans what we will be submitting to the board . Once it is cleared from the board, I'll be in a position to share with you what exactly we have decided to utilize this money.

The next question is from Sunil Shah from SRE PMS. Sir, as per disclosure from both PTC and ONGC, there are some terms and condition s that needs to be fulfilled for transaction to go through. Sir, can you please let us know those terms and how critical are they for the smooth passage of the transaction?

There are some of the things which I would like to share with my analyst s friends and the investors, and I can tell you that there is nothing so critical that we cannot fulfill at this point of time and we are pretty sure that we will be completing this t ransaction in the timeline what I have already mentioned.

We have a question from Mohit Kumar from IC ICI Securities. Can you please update us on market coupling and market-based economic dispatch? By what time do you expect the decision on market coupling?

Mohit ji, you are well aware of the fact that the staff paper was circulated by CERC, and they have received more than 125 comments from different stakeholders . The only thing is market coupling is a must. As you know, I had just mentioned that four days in the month of September there were continuously no market, or the price was at Rs.10. So, we can understand the depth of the market is very much required and tha t is the genesis of coupling the market, increasing the depth, increasing the transparency for price discovery. But there are contra views also, which CERC has received. After hearing everything, CERC may decide. They have already this in the PMR 21 that the market coupling is required. Only thing is the date and time when this has to be implemented, that need to be notified. So , keeping that in mind, I understand they will give more hearing and then they will decide when this will be implemented and throug h which agency.

We have a next question from Vaibhav Gupta from B owhead India Fund. Given Teesta Urja is a run of the river project, will we still be able to do 50 % to 60% volumes even after damage to the Teesta dam?

You are rightly asking a question because the damage in the plant house is bare minimal, although there is some silt in in the plant house and the equipment need to be cleaned thoroughly before we can start the machines. But , yes, it's a run of the river scheme and if the flow of the water is there in the river with a small barrage, I think the generation can be started . But, once there is a damage, it may take a couple of months before this can be done and the management of the company, they are seriously doing this, and they are trying to give a revi val plan so that the generation can be started as early as possible.

We have a question from Raju Hirani. Any guidance on the core trading margins?

Hirani, we have just mentioned that what was the trading margin we have achieved in this quarter and the portfolio mix what we expect to be there in the third and fourth quarter. So, without any guidance I can tell you that this is the desirable thing which we would like to do.

We have a question from Vipulkumar Shah. What are rebates and surcharge charges?

So net rebate for this quarter was Rs.33.36 crores and net surcharge income for this quarter was Rs.34.54 crores.

There's a question from Mr. Pradeep Aggarwal. What will be the net income from sale of PTC Energy?

We have already intimated through our press release and intimation to the BSE and NSE that the bid we have received is of Rs.925 crores against the equity investment and the enterprise value as on 31st March was Rs.2,021 crores which included the debt taken by that company.

There's a question from Mr. Vaibhav Gupta from Bowhead India Fund. Receivables outstanding beyond six months at the end Q2 FY24?

After netting of the back -to-back creditors, the exposure for more than six months was around Rs.205 crores, that is on account of Bihar, around Rs.166 crores in the cross-border trade.

We have a question from Sunil Shah from SRE PMS. Sir, as the proceeds are received of Rs.925 crores, would we attempt to retire debt or go in further new projects?

As I have just mentioned that the debt on PTC Energy Limited is passthrough, that means it covers under the enterprise value, so retiring debt in PEL doesn't arise. The question of Rs.925 crores would be for as per the capital allocation plan given by PTC India Limited and that exactly what we will do once we will receive this, we will come with a n allocation plan and the deployment in the new projects or new ventures what we will have. We will come out with that very openly when we will be meeting next.

There's a question from Raju Hirani . Sir, there have been murmurs that the proceeds from the PEL sale would be used to clear the debt on the books of PTC. Can we get a confirmation on that and the outlook for shareholder returns?

Let me clarify on PTC holding company , there is no debt , CFO is also confirming the same thing. We as on date is also not taking a working capital because we have liquidity -

The working capital we are taking only for day -to-day mismatch. So, you can say that average borrowing for half year was around Rs.200 crores, but after the b orrowing we have a net cash balance of around Rs.1,000 crores at the end of this quarter actually. So , you can say we are a debt-free company. Only for a day-to-day mismatch, we are taking the borrowing, but otherwise we have a surplus cash.

There's a question from Lipika Kundu. This time both standalone and consolidated results were excellent. Then what was the compulsion for not declaring any interim dividend this time?

Lipika, thank you very much for giving us some comp liment on our results. But we go by the dividend declaration policy, and we are going to propose whatever as per the dividend declaration policy is made to the board again when we are meeting for the discussion in the third quarter and accordingly, we'll let you know where we stand.

Lipika Kundu ask, during last con call CMD said that if there will be a value unlocking the shareholders will adequately rewarded as per the company policy. Now that PEL is being divested, what are your plans now to reward the shareholders?

Shareholders are always at the top in our mind whenever we are doing any business activity. I'm repeating what I said earlier also, at the appropriate time, we'll let you know what the board has decided on this. We have a dividend declaration policy, and we will go by that. But the final decision will be by the board and once the sale procedure is complete.

There's a question from Mr. Vipul kumar Shah. What is margin for long -term and how it compares with margin for short-term and medium-term?

We have a question from Mr. Nikhil Abhyankar from ICICI Securities. After the implementation of new GNA regulations, volumes from DAC segment have shifted to DAAM and already its impact is seen in HPX Oct ober '23 volumes. Do you expect this trend to continue? Also, what were the long-term volumes on HPX in Q2 and October '23 if you can share?

Actually, the shift we are discussing right now, G NA regime, something which was expected, but we have not seen much of changes here . and HPX is also trying to venture out into new products, and they have also started some of the new products in the market. So , it is very difficult to predict whether with introduction of GNA , there will be impac t in one segment of the market. With each changing regulation, there will be some impact on the market, but these are all just at the beginning. From 1st of October , this has been implemented and we a re yet to see the major changes because of this. The information which I shared with you all was that in the term ahead market, they have a market share from 35% to 40%. In other areas also, they have a substantial market share in the day ahead market because of obvious legacy issues , they are yet to have a substantial market, but the company is confident that they will be having very good enrolled in due course of time.

There's a question from Mr. Vaibhav Gupta from Bowhead India fund. Sir, can you please share absolute number of receivables outstanding beyond more than six months and not on a back-to- back basis? And top two to three states from whom these receivables are to be received and by when can it be resolved?

More than six months debtors on a gross basis is 1 ,854 crores, out of which the top four, one is the Tamil Nadu Electricity Board, around Rs.550 crores, which is on a back-to-back basis. We have to pay to our generator also. And the next one is Bihar, that is around Rs.205 crores, out of which Rs.39 crores is back-to-back. And the other one is UP, that is around Rs.247 crores which is also on a back-to-back basis to be payable to our generator. And the next one is around Rs.225 crores from Punjab which is also on a back-to-back basis to our generator.

There are no more questions, sir.

Let me thank all the analysts’ friends who have attended today's conference and the investors who have participated. We respect your time and attention to the company, and we look forward for such insightful que stions to the management so that we can improve upon what we have done in the past. And we are continuously improving not only our business performance but also on other aspects such as governance and the issues related to it. So, we would be looking forward to the insightful questions what you asked during the conference. Thank you very much for being with us today.

Ladies and gentlemen, on behalf of PTC India, that concludes today's session. Thank you for your participation. You may now exit the meeting.