Torrent Power Limited (TORNTPOWER) Q2 FY23 Earnings Concall Transcript

Torrent Power Limited (NSE:TORNTPOWER) Q2 FY23 Earnings Concall dated Nov. 10, 2022

Corporate Participants:

Lalit Malik — Chief Financial Officer

Saurabh Mashruwala — Vice President, Finance

Analysts:

Nikhil Abhyankar — DAM Capital Advisors Ltd. — Analyst

Mohit Kumar — DAM Capital Advisors Ltd. — Analyst

Rahul Modi — ICICI Securities Ltd. — Analyst

Amit Bhinde — Morgan Stanley India Company Pvt Ltd — Analyst

Sumit Kishore — Axis Capital Ltd. — Analyst

Sheen George — Geojit Financial Services Limited — Analyst

Jiten Rushi — Axis Capital Ltd. — Analyst

Dhruv Muchhal — HDFC Mutual Fund — Analyst

Swati Jhunjhunwala — VT Capital Market Private Limited — Analyst

Presentation:

Operator

Good morning, ladies and gentlemen. Welcome to the Torrent Power Limited Q2 FY ’23 Earnings Conference Call. [Operator Instructions]

I now hand the conference over to Mr. Lalit Malik, CFO, Torrent Power Limited. Thank you, and over to you, sir.

Lalit Malik — Chief Financial Officer

Thank you, very much. Good morning to all of you and thank you for joining earnings call of Torrent Power for quarter two FY ’23. First, I’ll take you through the performance of the quarter, after which phone lines will be opened for question-and-answer session. We’ll explain the performance of the company at PBT level first, and we’ll take tax expense separately thereafter. Reported PBT for the quarter stood at INR725 crores as compared to INR485 crores in the corresponding quarter last year, with an increase of INR240 crores, that’s 49% on the reported basis. There are no nonrecurring items in both the current quarter and corresponding quarter of the last year.

I will now take you through key highlights on improvements in the PBT by INR240 crores for the current quarter. The improvement in the operating profit is mainly coming from: one, improvement in profitability of gas-based power plants, mainly on account of two factors: a, first is net gain of INR155 crores coming from sale of LNG. This, as discussed in the earlier call, with elevated LNG prices, it makes commercial sense to sell LNG instead of converting it into electricity. Second is gain of INR40 crores on account of lower depreciation charge in DGEN on account of onetime impairment charges taken in quarter four for FY ’22 and reduction in depreciation rate in SUGEN. Therefore, in total, including above major factors, profitability of the gas-based power plants improved by INR194 crores.

Moving on to performance of distribution business, pursuant to restoration of industrial demand, which was impacted last year due to COVID-19 pandemic, there was a marked improvement in overall contribution from the distribution business by INR90 crores, major factors of which are as under: one, gain on account of reduction in T&D losses of INR51 crores; volume and rate gain from franchisee business of INR14 crores; and higher ROE and incentives in licensed distribution of INR25 crores. On the other hand, renewable business of the company witnessed a decrease in PBT, mainly on account of lower PLF in its wind project amounting to INR32 crores. This was partly offset by profit booked on account of acquisitions consummated during last two quarters amounting to INR9 crores. Therefore, in total, profitability of renewable power plants reduced by INR23 crores.

Next is with regard to finance costs. Increase in finance cost of INR34 crores, which is mainly due to increase in the average borrowing by approximately INR2,000 crores; other miscellaneous gains of INR14 crores, mainly coming from increased contribution from coal-based plants and other miscellaneous gains. Moving on, after-tax numbers, consolidated profit after tax reported for the quarter is INR485 crores as compared to PAT of INR367 crores reported in corresponding quarter last year, which is higher by INR118 crores, which is contributing to 32%.

This was all about the financial performance of the company during the quarter. Now moving on to operational performance of the company. Distribution business witnessed a marked improvement in the overall demand and surpassed the pre-COVID level last quarter two FY ’20. Demand during quarter two FY ’23 has increased by 5% as compared to corresponding quarter of the last year. And also as compared to Q2 FY ’20, that’s the pre-COVID level. The growth was driven by elimination of COVID impact and consequence normalization of industrial and commercial activities.

This completes the overview of the quarterly financial and operating performance of the company. Now we’ll move on to give you a brief update on current projects which are as under. 115 megawatts SECI-V project with SCOD of September 2022 is likely to get commissioned by end of December 2022. Request is submitted to SECI for SCOD extension till December 2022. Next, SCOD of TPLD 300-megawatt solar project has been recently extended up to August and October 2023. Next is 300 megawatts SECI XII wind project was won by the company during quarter one. LOA of the same has been received, and PPA will be signed in due course. Decisions have been initiated with few EPC contractors for implementation of the project.

That’s all for this quarter. Now I would request coordinator to open lines for Q&A session. We wish everybody to stay safe and healthy. Thank you. Now we hand over to the operator.

Questions and Answers:

Operator

[Operator Instructions] The first question is from the line of Swati Jhunjhunwala from VT Capital. Please go ahead.

Swati Jhunjhunwala — VT Capital Market Private Limited — Analyst

Yes. Thank you for taking my questions. So, sir, my first question is the prices are — power prices have been high in Q1 and Q2. So what is the outlook like going into Q3 and Q4?

Saurabh Mashruwala — Vice President, Finance

I’m Saurabh Mashruwala. The price of gas is higher as compared to the last year. If you notice that in the Q2 we have not operated the plant significantly. [Indecipherable] hardly. It’s 7% for SUGEN/UNOSUGEN. So we are awaiting the price to stabilize. Once the prices stabilize, we will procure the gas and then open SUGEN/UNOSUGEN plant. At the same time, recovery of fixed cost is continuing in SUGEN/UNOSUGEN projects. So the profitability is not going to be impacted as far as SUGEN/UNOSUGEN project is concerned. So pricing will continue to remain on the higher side in the short duration, although in the coming next year, perhaps the prices may look for downward trends unless there is some other unpleasant actions take place. But otherwise, currently, the prices are expected to remain at the similar level in the short term.

Swati Jhunjhunwala — VT Capital Market Private Limited — Analyst

Okay. And second question is, so the Section 11 agreement that the government has come — that the government has imposed right now, it is valid till December 31st, if I’m not wrong. So after that, do we see any impact on our operations on account of PPAs not being signed or the power agreement is not happening?

Saurabh Mashruwala — Vice President, Finance

No, it won’t have an impact on us.

Swati Jhunjhunwala — VT Capital Market Private Limited — Analyst

Okay. Next question is, what is the regulated equity as of September?

Saurabh Mashruwala — Vice President, Finance

September — we don’t look at September. Regulated equity, typically happens every year. So we generally look at on a year-on-year basis.

Swati Jhunjhunwala — VT Capital Market Private Limited — Analyst

Okay. All right. So for the second half, what is the planned capex for the Licensed Distribution business?

Lalit Malik — Chief Financial Officer

Sorry, can you please repeat it again?

Swati Jhunjhunwala — VT Capital Market Private Limited — Analyst

The capex — the capital expenditure, and what are we planning for the second half for the Licensed Distribution?

Lalit Malik — Chief Financial Officer

Sure. So for the Licensed Distribution, we are expecting somewhere to the tune of INR400-plus crores of capex in the second half since we have already completed almost INR350 crores in the first half.

Swati Jhunjhunwala — VT Capital Market Private Limited — Analyst

Okay. And could you give me the EBITDA breakup for the gas and the renewables and the Licensed and Franchised businesses?

Lalit Malik — Chief Financial Officer

We can note down EBITDA breakup.

Saurabh Mashruwala — Vice President, Finance

So Q2 — in the Q2 numbers of gas-based [Indecipherable] INR351 crores.

Swati Jhunjhunwala — VT Capital Market Private Limited — Analyst

51, is it?

Lalit Malik — Chief Financial Officer

INR351 crores. Renewable is INR253 crores, Licensed Distribution is INR397 crores, Franchised is INR290 crores, and overall EBITDA is INR1,261 crores.

Swati Jhunjhunwala — VT Capital Market Private Limited — Analyst

INR1,261 crores. Is that correct, the total number?

Lalit Malik — Chief Financial Officer

Yes, that’s correct.

Swati Jhunjhunwala — VT Capital Market Private Limited — Analyst

Thank you so much for my questions.

Lalit Malik — Chief Financial Officer

Thank you.

Operator

Thank you. The next question is from the line of Nikhil Abhyankar from DAM Capital. Please go ahead.

Nikhil Abhyankar — DAM Capital Advisors Ltd. — Analyst

Thanks for the opportunity, sir, and congrats on a good set of numbers. Sir, in the recent past, two or three big ticket projects were [Technical Issues].

Operator

Sorry to interrupt, sir. Your voice is breaking up.

Lalit Malik — Chief Financial Officer

Yes, your voice is breaking up.

Nikhil Abhyankar — DAM Capital Advisors Ltd. — Analyst

Am I audible now?

Lalit Malik — Chief Financial Officer

Yes.

Nikhil Abhyankar — DAM Capital Advisors Ltd. — Analyst

Yes. So in the recent past, two or three big ticket projects were announced and to land up in Dholera SIR and these projects are mostly power guzzling [Phonetic]. So what power demand growth do you expect in the medium term?

Lalit Malik — Chief Financial Officer

You’re talking about Dholera SIR?

Nikhil Abhyankar — DAM Capital Advisors Ltd. — Analyst

Yes.

Lalit Malik — Chief Financial Officer

No, Dholera SIR right now, some industries are coming up. So as of now, there is not much of demand. It is mainly for the construction demand, which is there and that too not very high. So ramp up will take some time in that area.

Nikhil Abhyankar — DAM Capital Advisors Ltd. — Analyst

I was specifically talking about the Foxconn-Vedanta semiconductor deal and also lithium ion battery plant for Tata Chemicals.

Lalit Malik — Chief Financial Officer

Yeah. So I think Tata Chemicals plant, I think that is — it is under construction or work has just started. So as of now, power demand — giving an outlook for power demand will be very difficult.

Nikhil Abhyankar — DAM Capital Advisors Ltd. — Analyst

Okay. And sir, receivables have increased significantly to INR29 billion since March. So any specific reason for it, sir?

Lalit Malik — Chief Financial Officer

Sorry, sorry, can you please repeat again?

Nikhil Abhyankar — DAM Capital Advisors Ltd. — Analyst

Our receivables have increased to INR29 billion.

Saurabh Mashruwala — Vice President, Finance

Yes. So I can give an update about the receivables. The receivables has gone up because of the incoming new business coming in, like Daman and Diu, which was not there as of March ’23 — March ’22, which has receivables coming — about INR500 crores receivable is — new receivable is added in our business. Then we are — as you noticed, we have significantly sold RLNG through the course of the quarter, about INR300 crores [Phonetic] on account of RLNG, which was not there as on March ’22. Plus if you look at our distribution business normally have a higher receivable as on September as compared to March number. So about [Indecipherable] INR50 crores of receivables has gone up in distribution business as on September, which will come down over the — during the H2. And some new projects — renewable project is also added which was not there as of March ’22. So all put together has increased the receivables levels as on September ’22 as compared with March ’22.

Nikhil Abhyankar — DAM Capital Advisors Ltd. — Analyst

Understood. So those are my primary two questions. I’ll get back in the queue. Thanks.

Saurabh Mashruwala — Vice President, Finance

Thank you.

Lalit Malik — Chief Financial Officer

Thank you.

Operator

Thank you. The next question is from the line of Mohit Kumar from DAM Capital. Please go ahead.

Mohit Kumar — DAM Capital Advisors Ltd. — Analyst

To the government, I believe that there were a couple of meetings held in the quarter for solving, resolving the gas issues. So have you heard anything from the government, do you think something is possible in the medium term? And does the ancillary market starting — start will help our power plants to get the schedule?

Saurabh Mashruwala — Vice President, Finance

See, government, last one year, government has held a couple of meetings. So they are working with the solution to provide affordable gas to power project. But it’s a work in progress I would say at this moment.

Mohit Kumar — DAM Capital Advisors Ltd. — Analyst

Anything on the ancillary markets, sir, you are hearing?

Saurabh Mashruwala — Vice President, Finance

Sorry?

Mohit Kumar — DAM Capital Advisors Ltd. — Analyst

Anything on the ancillary markets you are hearing, which should help our power plants to have higher PLF?

Lalit Malik — Chief Financial Officer

Sorry, Mohit, we lost you. You are saying ancillary markets?

Mohit Kumar — DAM Capital Advisors Ltd. — Analyst

Yes, yes.

Lalit Malik — Chief Financial Officer

So can you just refer what do you mean by ancillary markets?

Mohit Kumar — DAM Capital Advisors Ltd. — Analyst

You were supposed to start somewhere, I think CERC was supposed to come with a regulation. So are we expecting — have you heard anything on that? And can we expect a higher scheduling for our power plants once that is up — once that market is up?

Lalit Malik — Chief Financial Officer

No, nothing as of now.

Mohit Kumar — DAM Capital Advisors Ltd. — Analyst

Okay. And sir, second, and the [Indecipherable] block I’ve also seen slightly has increased materially from March 31. So can you please explain how much has been from the Daman and Diu and the other capacity?

Lalit Malik — Chief Financial Officer

Mohit, we’re losing you. Sorry, can you repeat? Your voice…

Mohit Kumar — DAM Capital Advisors Ltd. — Analyst

Am I audible now? What I’m saying is the fixed assets, fixed asset plus CWIP has seen a material increase from March ’22.

Lalit Malik — Chief Financial Officer

Yes.

Mohit Kumar — DAM Capital Advisors Ltd. — Analyst

But can you please help us how much has been added from Daman and Diu and how much is from our capex?

Saurabh Mashruwala — Vice President, Finance

So Licensed Distribution in H1, as Lalit said, INR183 crores. And Franchised was at INR105 crores, renewables has about INR550 crores kind of a thing. These are the breakup because of which fixed asset block and CWIP has gone up.

Mohit Kumar — DAM Capital Advisors Ltd. — Analyst

So there is not much in Diu and Daman.

Saurabh Mashruwala — Vice President, Finance

Not much in Diu and Daman.

Mohit Kumar — DAM Capital Advisors Ltd. — Analyst

Understood. Thank you, sir. Thank you. Best of luck.

Operator

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

Rahul Modi — ICICI Securities Ltd. — Analyst

Thank you for the opportunity, sir. Sir, can you just elaborate a little on how the demand that you mentioned has been improving and is better versus the pre-COVID levels, especially in Agra and Bhiwandi. How has the demand trajectory been and what is the sustainable growth from the current base that you expect over the next three to five years?

Saurabh Mashruwala — Vice President, Finance

Yeah. As we explained in the call, demand has reached — crossed the pre-COVID level, and it has reached at an average level of 5%, 6% growth. That is what we can predict. And it all depends on the industry, how the industry with GDP growth will be going forward. But in normal circumstances 5%, 6% growth we can see in the demand in all our distribution area.

Rahul Modi — ICICI Securities Ltd. — Analyst

Okay. Sir, also, can you elaborate on the bid on renewables that we had at solar for the 199 tariff? Any progress there? And there were some recent changes in the solar import duty structures, some concessions we were getting, how is that impacting us?

Saurabh Mashruwala — Vice President, Finance

Yes. As we explained earlier, we are awaiting the price to come down on solar panels, which is around – currently they’re $0.26, $0.27. We are hoping to — once the prices are on a reasonable level, we can implement the project. As far as the duties are concerned, as we see the changing in law conditions so it is passed through. So it won’t impact any of the solar projects.

Rahul Modi — ICICI Securities Ltd. — Analyst

Thank you, sir. Thank you.

Saurabh Mashruwala — Vice President, Finance

Okay.

Operator

Thank you. The next question is from the line of Amit Bhinde from Morgan Stanley. Please go ahead.

Amit Bhinde — Morgan Stanley India Company Pvt Ltd — Analyst

I have two. On your renewable EBITDA…

Operator

Sorry to interrupt, Amit. Can you speak a bit louder? We’re not able to hear you.

Amit Bhinde — Morgan Stanley India Company Pvt Ltd — Analyst

Can you hear me now?

Operator

Much better. Thank you.

Amit Bhinde — Morgan Stanley India Company Pvt Ltd — Analyst

Yeah. Okay. Great. So, sir, I wanted to ask you on your renewable EBITDA. Renewable EBITDA per unit has gone up from nearly INR3.8 per unit to near about INR4.6 now. So what is driving this improvement in renewable EBITDA per unit? And what should be the sustainable number? That’s one. And second, on this solar project that was for INR1.99. I think we were looking at impairing this project, right? That project we’re not continuing. Am I correct on that?

Lalit Malik — Chief Financial Officer

No, we have already provided the amount. If you look at last quarter, we had provided INR10 crores in the books of account. So no further provision is required for this thing.

Amit Bhinde — Morgan Stanley India Company Pvt Ltd — Analyst

So that is surrendered. That project is surrendered, right? We’ll not be continuing with it at all.

Lalit Malik — Chief Financial Officer

Not yet surrendered, on a conservative view we have provided we have made the provision of INR10 crores.

Amit Bhinde — Morgan Stanley India Company Pvt Ltd — Analyst

Right, okay. Got that.

Lalit Malik — Chief Financial Officer

As far as your questions on the renewable margin, so we don’t actually figure out how we have tentative number. You added a new project during the H1. So that is what the impact you may have seen.

Amit Bhinde — Morgan Stanley India Company Pvt Ltd — Analyst

Great. It has gone up steeply, like it is up 20%, almost INR4. 6 over INR3. 8%. So what is changing? New additions, I can understand, but…

Lalit Malik — Chief Financial Officer

Amit, there are new additions also in the capacity through acquisitions. So I hope you would have factored that. If you have done that, we can take it offline, and we can look at the numbers out it’s being calculated and then we can take it offline.

Amit Bhinde — Morgan Stanley India Company Pvt Ltd — Analyst

All right. Sure.

Saurabh Mashruwala — Vice President, Finance

Last Q2, it was 787-megawatt project. This year, it is about 1,060-megawatt project. So capacity has gone up. [Indecipherable] correct capacity, I think you will get the answer.

Amit Bhinde — Morgan Stanley India Company Pvt Ltd — Analyst

Right, right. Great. Sure. I’ll just get this — better clarity on this later after the call. Thank you.

Operator

Thank you. The next question is from the line of Sumit Kishore from Axis Capital. Please go ahead.

Sumit Kishore — Axis Capital Ltd. — Analyst

Good morning. Thanks for the opportunity. Could you give a three-, four-year strategic roadmap for the company across the regulated distribution, franchise and renewable business? If you could outline the capex plans over a three-, four-year period for these businesses and how is the landscape evolving? We are hearing about the Electricity Amendment Bill, which is going to come up in the winter session. And in renewables, we are looking at high module prices currently, which is impacting the outlook there. So just like to hear your thoughts on the strategy for the company across business segments for the next three to four years. Thank you.

Lalit Malik — Chief Financial Officer

As we explained during the last couple of calls, as far as distribution is concerned, we have a capex plan of about INR1,500 crores for the next three years’ time where we plan to invest about INR1,200 crores in our Licensed Distribution business, which will improve our ROE going forward. And about INR250 crores goes in our Franchised Distribution and we’ll try to reduce the loss further.

Sumit Kishore — Axis Capital Ltd. — Analyst

In case of renewables, are there any opportunities that you’re looking at? Similarly in Licensed Distribution and franchisee. Are there any other incremental growth opportunities in new areas that you’re looking at or which are on the horizon? [Technical Issues]

Operator

Hello, members of the management team. Hello? Ladies and gentlemen, we seem to have lost the audio from the line for the management team. Please stay connected while we try to regain the connection. Ladies and gentlemen, thank you for patiently holding. We now have the line for the management reconnected. Over to you, sir. Members of the management team please proceed.

Lalit Malik — Chief Financial Officer

Yes, sorry for the technical glitch. We can continue now.

Operator

Mr. Kishore?

Sumit Kishore — Axis Capital Ltd. — Analyst

Yeah. You were elaborating on your strategy on renewables and any growth opportunities across distribution?

Saurabh Mashruwala — Vice President, Finance

Sumit, as we discussed earlier also and we have explained earlier in the calls also, as far as Licensed Distribution are concerned, we have a capex of about INR1,500 crores each year for next two, three years’ time. In our Licensed Distribution, we estimate about INR1,200 crores capex we are going to encourage here for next two, three years and franchisee about INR250 crores to INR300 crores capex. So this is — the Licensed Distribution will give additional ROE and it will — it will give the additional ROE. And Franchised, we’ll try to reduce the loss further that we have to plan for our distribution business.

As far as renewable is concerned, we have an ambition to go up to about 5 gigawatt of renewable capacity in the next three, four years by way of inorganic as well as organic way. And we are also looking for the new distribution areas to be added to our business, like we have at Daman and Diu. Government is coming up with a new and another area like Pondicherry and other areas. So we plan to participate in that area also.

Sumit Kishore — Axis Capital Ltd. — Analyst

Sure. The plans are stable. Thank you so much.

Operator

[Operator Instructions] The next question is from the line of Sheen George from Geojit Financial Services Limited. Please go ahead.

Sheen George — Geojit Financial Services Limited — Analyst

Hello.

Saurabh Mashruwala — Vice President, Finance

Yes, please. Go ahead.

Sheen George — Geojit Financial Services Limited — Analyst

Sir, my question is like how much exact quantity of gas was sold in this quarter? We know the margin number, but exact quantity [Indecipherable].

Lalit Malik — Chief Financial Officer

We’re not able to hear you.

Sheen George — Geojit Financial Services Limited — Analyst

I was asking how much exact quantity of gas was sold in this quarter?

Operator

Mr. George, we are unable to hear you. Your audio is very soft.

Sheen George — Geojit Financial Services Limited — Analyst

Hello?

Operator

Yes, sir, please proceed.

Sheen George — Geojit Financial Services Limited — Analyst

Am I audible now?

Operator

Yes, sir. Much better. Thank you.

Sheen George — Geojit Financial Services Limited — Analyst

So my question is like how much exact quantity of gas was sold in this quarter? We know the number in financial terms amount, but can you help us with the quantity?

Saurabh Mashruwala — Vice President, Finance

Yeah, we’re not comfortable to share those details about the quantity of gas sold by our company.

Sheen George — Geojit Financial Services Limited — Analyst

Okay, fine. Thank you.

Operator

Thank you. [Operator Instructions] The next question is from the line of Jiten Rushi from Axis Capital. Please go ahead.

Jiten Rushi — Axis Capital Ltd. — Analyst

Good morning, sir. Sir, my question is on the gas cargo which you had tied up for merchant trade purpose. So this is for this year’s at USD21 per MMBtu. So in the upcoming third quarter also we can expect some desk trading margin or we have already utilized the cargo?

Lalit Malik — Chief Financial Officer

So I think we have not fully utilized the cargo. There could be some spillover to the next quarter also from that cargo.

Jiten Rushi — Axis Capital Ltd. — Analyst

The spillover in Q3 you’re saying.

Lalit Malik — Chief Financial Officer

Yeah.

Jiten Rushi — Axis Capital Ltd. — Analyst

And sir, on the volume number, if you can give us the actual growth in the quarter for the distribution licensee, franchisee business and licensing growth given the Agra, SMK and various other [Indecipherable] if possible.

Lalit Malik — Chief Financial Officer

On an average, it’s around 5%.

Jiten Rushi — Axis Capital Ltd. — Analyst

Fine, sir. Okay, sir. That’s it from my side. Thank you and all the best.

Operator

Thank you. The next question is from the line of Dhruv Muchhal from HDFC Mutual Fund. Please go ahead.

Dhruv Muchhal — HDFC Mutual Fund — Analyst

Yeah, sir. Thank you so much. Sir, in the standalone balance sheet, if I look at the other financial assets, there seems to be a decent increase that’s even visible in the cash flow statement, the change for the first half. Sir, just wondering, is it because of the regulatory asset, the unbilled revenue and if you can highlight something on that.

Saurabh Mashruwala — Vice President, Finance

Yes. Part of it is because of regulatory assets. Part of it also due to the adding of the Daman and Diu also, which was not there in March.

Dhruv Muchhal — HDFC Mutual Fund — Analyst

Sir, I was looking at the standalone because I believe Daman and Diu will be…

Saurabh Mashruwala — Vice President, Finance

Yeah, standalone number, yes, because it’s in the regulatory assets.

Dhruv Muchhal — HDFC Mutual Fund — Analyst

So is it because of some delays in the — what we call — FPPCA refuel surcharge, or is that getting reflected very well?

Saurabh Mashruwala — Vice President, Finance

Yeah, it is because the delay in the recovery.

Dhruv Muchhal — HDFC Mutual Fund — Analyst

Sir, what would be — by end of September, what would be the regulatory asset as of now, which you typically report in Annual Report, which is recoverable?

Saurabh Mashruwala — Vice President, Finance

As I told you, regulatory asset is built up in H1 and gradually reducing in H2. Better we will talk about the numbers on March ’23. That will give a clear picture on the regulatory asset.

Dhruv Muchhal — HDFC Mutual Fund — Analyst

Sure, sir. That’s all and thank you so much.

Operator

Thank you. [Operator Instructions] As there are no further questions, I now hand the conference over to the management for the closing comments.

Lalit Malik — Chief Financial Officer

Thanks a lot for participation, and we wish everybody to stay safe and healthy. Thank you and over to you.

Saurabh Mashruwala — Vice President, Finance

Thank you so much.

Operator

[Operator Closing Remarks] Thought you asking why the big. Am I audible now. Yes. Yeah, so in the recent past, well I big-ticket projects were announced and it’s actually to land up into lira. I up and these. Project, mostly power so, what kind of power demand growth we expect in the medium-term. You’re talking about Dolev I. No got. All other EPAM right now some industries are coming up so as of now there is, not much of demand it is mainly for the construction demand which is there and that will not very-high so. Ramp-up will take some time in that area. I was specifically talking about the Foxconn Vedanta. Semiconductor deals also Lithium-ion batteries plan for Tata Chemicals. Yes. I think Tata Chemicals plant. I think that it is under-construction or work is just started so as of now power demand giving out giving an outlook for power demand would be very difficult. Okay and, sir. Receivables has increased. Significant 20 billion March. So, any specific reason for, sir. Sorry sorry can you please repeat again our receivables have increased to 29 billion nine. So I can’t give you update about the receivables the receivable has gone up. Because of the incoming new business coming in like dominant these which was not there aren’t as of March 23, management went into what we said is stable as coming in, about 500 crores simple is. was added because our business. Then the we are as you notice we have significantly sold is the growth in the quarter about physically bodies on account our RLNG because there as of March 23. But if you look at our distribution business normally have higher receivables as on September as some of the March number so DNI specific figures up bit what has gone up in distribution this definitely hasn’t September this will come down over the. During the 4th H2. And some new projects even for this quarter which was not there as of March we do all put together as easy that equivalent as of March, September. 20 years, compare with March 20.. Those are primarily. Two questions, I’ll get back to looking at thank you thank you. Thank you the next question is from the line of Mohit Kumar from DAM Capital please go-ahead. I good. Morning, sir. The government. Sir, I believe that there was a couple of meetings held in the quarter. First of all being these resolving the gas issues have you had anything from the government we think something is possible in the medium-term and does the ancillary market starting start will help our power plants to get the schedule. Government. Last one year government is we had at is the couple of meetings so, they are working with. Solution to provide affordable gas and power per day but what’s the problem that you will see at this moment. Now anything on the ancillary markers sir you are. Sorry. Anything on the ancillary markets you are hearing this should help our power plant to highlight. So sorry we lost you you are seeing ancillary markets yes yes yes yes. So can you just people. I mean what do you mean by ancillary market. supposed to start from TCRC couple of to cover the regulations so are we expecting out have you heard anything on down that and can we expect a higher scheduling for our power plants once that is up and was that the market is up. No-no, nothing as of now. Okay and sir okay I’ll and the net block. I also seen slightly has increased materially. From March 31 can you please explain how much has been probably ND Wendy. They have their capacity. We are moving a bit anybody we began to increase am I audible now, what I’m saying is the fixed asset fixed asset plus CWIP has seen a material increase. From March 22. Again but could you please help us how much has been added from Tamarack and do and how much is from our CapEx. License the return in H1 as well as the one you did three crores. And frankly we that I 100 vehicles. The level has added a ballpark kind thing we have the breakup because of. Getting in fixed assets block as PWP has gone up so there is, not much in. We’ve done one now not margin-dilutive uncommon. Understood, Understood. Thank you sir tank that will. Thank you. The next question is from the line of Rahul Modi from ICICI Securities please go-ahead. Thank you for the opportunity sir Sir can you just elaborate a little on how the demand. That you mentioned has been improving and is better. Versus the. Pre COVID levels especially in Andhra and how is the demand trajectory and what is the sustainable growth from the current base that you expect over the next three to five years. As we explained in the call demand has cross the peak COVID mirror and. It is average level of private broadband growth that is what we can predict and it all depend on the industry how investing is growth will be going-forward but in a normal segment. Secondary sales by 6% growth we can see. The demand in all our distribution area. Okay so also can you elaborate some. On the on the bid on renewables that we had at Solar for the 100 9,100 and 99 tariff. Any progress there and there were some recent changes in the. Solar import duty structures which some concessions we were getting how is the how is that impacting us. Yeah as we explained earlier we are awaiting the price to come down, Polar it around 10 currently there 26 27 banks we are hoping to come if bunch are price higher on a reasonable level we can we’ve been we can but as, these are concerned it is changing lock on vision so it is possible. So it won’t affect in fact. And we have plenty of the product it. Hello. Thank you sir thank you. Okay thanks. Thank you. The next question is from the line of Amit Sinha from Morgan Stanley please go-ahead. I two questions on your EBITDA sorry after. I think I missed that can you speak a bit louder we are not able to hear can you hear me can you hear me now better thank you okay great so sir. I wanted to ask you on your renewable EBITA Renewable EBITDA per unit has gone up from nearly 3.8 for Unit 2-year about 0.6 now so what is driving this improvement in renewable EBITDA per unit and what should be the sustainable number that’s one and second on the solar project that was for 1.9 and rupees. I think we were looking at comparing this project right that’s that project we are not continuing am I correct on that. We have already provided. The amount you see glass last but we had 10 crores rupees in the books of account so they go for developer community quite something. So that is. I think that project is surrender rate will not be continuing with or not. Correct. Not yet current but we have a conservative way it provides the we have made a provision of 10 crores. Right. Okay. Got it and as your questions on the level margin so we don’t actually even figure it out how we considered number but we have added a new projects during the H1 so that is what the impact you may has been. It has gone up steeply like it is up 20%, 20%, almost 3.84.6 over 3.8 so. I mean what is changing. New additions. I can understand but. I mean there are new additions also in the capacity to do acquisitions so. I hope you would have factored that. If you have done that. We can take it offline and we can look at the numbers of being calculated and then we can take it offline short-term that would last Q2 it was 707 MW project this year is about one 0 six odd projects took FSP has gone up with respect to the product category. I think you will get the please. Right right picture. I’ll just get this. I mean, better clarity on this later. Upon thank you. Thank you. The next question is from the line of Sumit Kishore from Axis Capital please go-ahead. Good morning thanks for the opportunity could you give three-four years strategic roadmap for the across. The regulated. The distribution franchisee and renewable business if you could outline the