Torrent Power Limited (NSE: TORNTPOWER) Q3 2026 Earnings Call dated Feb. 10, 2026
Corporate Participants:
Saurabh Mashruwala — Executive Director, Chief Financial Officer
Analysts:
Sucrit Patil — Analyst
Sumit Kishore — Analyst
Satyadeep Jain — Analyst
Dhruv Muchhal — Analyst
Atul Tiwari — Analyst
Ketan Jain — Analyst
Bharani V — Analyst
Aniket Mittal — Analyst
Anuj Upadhyay — Analyst
Arul Selvan — Analyst
Presentation:
operator
Ladies and gentlemen, good day and welcome to Torrent Power Limited Q3 NFI 26 earning conference call. As a reminder, all participant line will be in the listen only mode and there will be an opportunity for you to ask questions after the presentation. Conclude should you need assistance during the conference call, please signal an operator by pressing Star then zero on your touchtone phone. Please note that this conference is being recorded. I now hand the conference over to Mr. Sourabh Mashwalla, Executive Director and CFO from Torrent Power Limited. Thank you. And over to you sir.
Saurabh Mashruwala — Executive Director, Chief Financial Officer
Thank you. Good evening to all of you and thank you for joining Torrent Everything called the Torrent power for Q3 FY26. First I will take you to the performance of the quarter after which phone lines will be open for the Q and A session. We’ll explain the performance of the company at CBT level first. Then we’ll take you to the tax expenses. Separately reported PBD for the quarter stood at 805 crores as compared to 630 crores the corresponding quarter of last year. An increase of 175 crores that is about 28% on reported basis. PBD for the corresponding part of the last include Non recurring income of 77 crores on account of sale of cable business.
As I said for this one off, PBT for the quarter stood at 805 crores as compared to 553 crores in the comparable quarter of last year. An increase of 252 crores that is 46% on an adjusted basis, tax expenses were lower during the quarter as favorable directory orders received during the quarter are eligible for the tax exemption. Business size factor contributing to the performance of the quarter are as follows. First, contribution for thermal generation business reported an increase of 163 crores mainly on account of three factors. First, receipt of favorable orders from the regulators. Second, lower contribution from sale of merchant power and LNG by 75 crores and foreign currency fluctuation.
Other expenses resulting into the higher expenses to the extent of 35 crores. Second, contribution from the distribution business increased by 106 crores mainly on account of three factors. First, improvement in TNDL office at distribution franchisee units partially offset by the higher TND losses in the license distribution business. Second, additionally contribution from licensed distribution business was supported by increase in ROE and ROCE on account of capitalization of assets and higher rate of returns on equity as per new tariff regulations and other incentives. The third receipt of favorable orders from the regulator by 41 crores. Third reason is contribution from renewable generation increased by 24 crores mainly on accounts of higher PLF from the existing wind power projects due to better wind resources coupled with the contribution made by the newly commissioned solar capacity of 285 megawatts.
Both other factors contributed to lower profitability was on account of two factors. First, increase in Michelin expenses and depreciation partially offset by reduction in finance costs on the back of prepayment made in Q4 of FY25. This complete the explanation of the financial performance during the quarter. Moving on to the project subject first during the quarter re pipeline increased by 500 megawatt for 1.6 gigawatt thermal project power purchase agreement Power supply agreement has been executed with MP Power Management Co. Ltd. Contract for balanced plant of machinery has been awarded for the projects. With the Progressive commissioning of 360 megawatt MSC DC project aggregate installed generation capacity of the company stood at 5 gigawatt as on 12-31-25 comprising up 2.7 gigawatt ASPs project close to 2 gigawatt of renewable capacity and 62 megawatt of coal based capacity.
Pipeline projects are at the end of the quarters. Includes 4 GHz renewable capacities, 3.3 GHz of storage capacities, 1.6g coal based capacities and 2 transmission project at Ka and the solar port. Further details in the pipeline project have been summarized in our latest investor presentation available on the website. That’s all for the this quarter. Now I request coordinator to open the Q and A Q and A session. We wish everybody to stay safe and healthy. Thank you. Handing over to the operators.
operator
Can we proceed with the Q and A?
Saurabh Mashruwala — Executive Director, Chief Financial Officer
Yeah.
Questions and Answers:
operator
Thank you. Thank you so much, sir. Ladies and gentlemen, we’ll begin with a question and answer session. Anyone who wishes to ask a question may press Star and one on their touchstone telephone. If you wish to remove yourself from the question queue, you may press Star and two. Ladies and gentlemen, we request you to use handsets while asking a question. I’ll wait for a moment while the question queue assembles. Our first question comes from the line of Sukriti D. Patil from Eyesight Fin Trade Private Limited. Thank you. Please proceed.
Sucrit Patil
Good evening to the team. I have two questions. My first question to Mr. Sourab is torrent Power has expanded across generation, distribution and renewables. Growth often brings some pressure on cost and cash flow. Going forward, how will you balance investing in new renewable projects with keeping debt and margins under control? What clear signals will Tell you it’s time to slow expansion and focus more on the financial discipline. Want to understand your point of view on this. Thank you.
Saurabh Mashruwala
Yeah. In terms of financial discipline, if you look at our leverage ratio quite comfortable. For example our net day to equity ratio is 0.40 as on March 25 and net day two it has a 1.41. So companies under leverage company right now and with this investment we are leveraged will remain comfortable I would say in terms of our current investment plan. So we are maintaining financial discipline and improving our return on liquidity and ROCE going forward once we implement all this project in the pipeline. Right.
Sucrit Patil
Thank you. My second question to Mr. Shah is again along the similar line. Just want to understand your the plan of action basically in this fuel cost and regulatory changes can have some impact on the profits. I believe. What financial disciplines do you use to protect the returns? Like for example do you have a minimum margin requirement, a debt ratio, you know that you won’t cross or cash cycle targets in mind? How do you, how do these rules shape your investment and decision making process? You want to understand that. Thank you.
Saurabh Mashruwala
Generally the new projects being financed at 70, 30 or maybe 75, 25, 82 ratio. So that is what typically we do the financing in terms of. If you look at the see if you look at the sector per se there are lots of investment opportunity going up because of going up by the sectors. And yes we do have an investment plan but we are mindful of our financial metrics. I would say in terms of debt equity ratio and net debt to beta ratio and which is very comfortable and we will if you look at the peers also is very going aggressively.
So definitely our ratios will be. We will be the lower end of peers and we will be comfortable with those kind of ratios, leverage ratios.
Sucrit Patil
Thank you and best wishes.
Saurabh Mashruwala
Thank you so much.
operator
Thank you. Our next question comes from the line of Sumit Kishore from Access Capital. Please go ahead.
Sumit Kishore
Good evening. Thanks for the opportunity. First, I think it’s been a very strong P and L performance in the quarter. Just want to understand a few numbers here. You mentioned that there is increased contribution from gas based power plants because of some regulatory benefit as well as a higher merchant and LNG sales contribution during the quarter. What is the size of the regulatory benefit? And we hadn’t seen much merchant generation in Q3 based on the PLF numbers. So is that 75 crore number that you mentioned mainly coming from LNG gains? That’s the first question.
Saurabh Mashruwala
So the contribution for the merchant LNG is Lower in this quarter? It’s not higher. I would say that is what we would like to clarify. So it’s lower basically by 75 crores as compared with the comparable quarter of last year. We got some favorable orders from the regulator which has, which is I would say added the bottom line of the company by about close to about 270 crores.
Sumit Kishore
Okay, so that basically explains the extent of the positive surprise. 70, correct?
Saurabh Mashruwala
Yeah.
Sumit Kishore
Why? What was the regulatory item about?
Saurabh Mashruwala
It is one of the generation projects.
Sumit Kishore
Which one? Sujan. You know Sujan is not, I mean.
Saurabh Mashruwala
It’S a gas based generation project. We, we got.
Sumit Kishore
Which gas based generation project Sujan or you know. And why did this regulatory benefit crop up? What is the background? This is explaining the entire profit beat in the quarter.
Saurabh Mashruwala
Explain it.
Sumit Kishore
Okay, the second question is, the second question is related to capex. So basically in renewable so far this financial year in nine months period, what is the CAPEX that you have incurred and what is your CWIP in renewable as of December end? And has there been any pickup in pace of CAPEX in renewable in third quarter?
Saurabh Mashruwala
Yeah, there has been pickup in the CAPEX also in the third quarter because we have to implement many projects together. So there has been pickup in the CAPEX in last one or one or two quarters and it has that the pace will continue going forward also because we have pipeline of pipeline renewable projects and there’s a renewable project, pump storage and coal project is going to be implemented. Implemented. So there is a pickup in CAPEX also. So sumit, just to add Q3 renewable projects we had incurred a capex of 1750 crores. If I look at the YTD number it was around 3100 crores. So you can understand the increase in the renewal projects. Capex so 3100 crores YTD which means six months we would be around 1500 crores of capex. In this quarter itself we have done 1700 crores of capex.
Sumit Kishore
Excellent. That is, that is what I was looking for.
Saurabh Mashruwala
Yeah, perfect.
Sumit Kishore
So there is a pickup in capex and given the transmission constraints and everything else put together of the 4.3 gigawatt or RE pipeline under construction, what should be the phase out in terms of commissioning, say fourth quarter and next financial year and the year after that. I mean if you can give us a broad sense that you used it.
Saurabh Mashruwala
So we can give the sense of about for the next year we expect to commission about 1.2 to 1.5 gigawatt next year I think in a similar phase will we can expect in next year also the year thereafter also.
Sumit Kishore
Okay, so this financial year FY26 will be a fairly weak year in terms of renewable capacity relative years.
Saurabh Mashruwala
Yeah.
Sumit Kishore
Okay. Okay. And just one more question. You know our demand growth in the last 15 days has been quite bad. I mean after 22nd of January it’s once again become flattish kind of more demand growth for almost 15 plus days that we last checked. I mean, is that something you all have been noticing? Is there any specific reason and is there any probability of Section 11 getting implemented as we enter into higher demand period this year as well? I mean, what is your sense?
Saurabh Mashruwala
So one can say that it’s an exception kind of a thing, Aberration kind of a thing I would say because if GDP has to grow at 6.5 to 7%, power demand has to grow in a similar line. Otherwise GDP won’t be growing at that particular rate. The two things basically, one is the last of the demand was very, very strong, the base was very strong last year. And the second is the extended monsoon in the current year has impacted the power demand. But this cannot be a scenario every year I can say so it has to grow in line the GDP growth.
I would say that is what we can say. So one should ignore the current year. One should keep as a hybridization kind of a thing and one should not look at the current demand scenario.
Sumit Kishore
I would say completely reach again. It started happening last 15 days. Our demand growth is not there. I hope this does not continue. Thank you so much and wish you all the best.
Saurabh Mashruwala
Thank you.
operator
Thank you. Our next question comes from the line of Satyadeep Jain from Ambit Capital. Please go ahead.
Satyadeep Jain
Hi, thank you. Just first wanted to understand DISCOM performance first on the sale of units within discom. So overall we understand power demand was relatively flattish via in the quarter. When I look at Ahmedabad, Surat and all most regions, you’re witnessing decline. Is that what is in your view driving that decline? Is it behind the meter? Is it something else that’s driving this decline? Yoy and then maybe can you talk a little bit more about the ROE increase that you’ve seen historically? If I’m not mistaken, it was 14% saying that this year that the increase in Roe for Discom that in addition to some 1 off of 41cr has driven this almost 20% YoY increase in EBITDA in discount despite decrease in the purchase of units.
Can you explain this power with discount.
Saurabh Mashruwala
Performance in terms of demand? Yes, definitely demand is lower this quarter. But as I explained earlier in the call that the aberration kind of a thing because of the extended monsoon last year base was very high. So both the combined effect one can see in the demand but this is treated as aberration Because GDP and the power demand has to go in line in hand in hand with the means, line with the gdp. So it has to be there. Demand will definitely come and at least 5,6% demand when one can see next year in terms of was trying to.
Satyadeep Jain
Understand the torrent Ahmedabad, Surat. We understand the power demand has been looted. But Gujarat has still reported positive yoy demand growth in third quarter. So what is driving this decline in specific pockets? Is it more residential, rooftop or something? Just trying to understand yoy decline of your sector.
Saurabh Mashruwala
Satyav. If you really look at it, dissect it. Ahmedabad is more of residential, less of commercial. Because of extended monsoons and winters also pretty good. Typically this quarter demand goes down. And this year particularly because of good winters demand in Ahmedabad has gone down. If you look at Surat, Surat is more of an industrial area. But again that has been impacted because of the diamond industry not being in shape. The textiles also not being going good because of which Surat also has been impacted. If you look at DNH it has shown some growth. But again because of the industrial activity it has not shown the growth which it used to report around 3 to 4%.
So I think there are mixed factors involved in each area. You have to look at from how the mix is there between industrial, commercial and residential.
Satyadeep Jain
Okay. In terms of increase regulated return one off scheme. Can you maybe.
Saurabh Mashruwala
Just going back to your earlier question. You said that demand has gone down but your roes have increased. So first of all I just want to clarify that our profitability is not actually dependent on the unit growth for license distribution businesses. It is more dependent on the capitalization which we do as we get roes. So there is no correlation between the demand and the return profitability I would say. And second thing, regulated carrying cost order. If you look at our regulatory asset. Yes it on regulatory asset we do earn some carrying cost. But we account for the carrying cost when it is approved by the regulators. So this kind of order will keep on coming. I would say. That is what we can say right now. Hello. Hello.
operator
Hello. Sir, participant has left the queue. Okay, our next question comes from the line of Dhruv Muchil from HDFC amc. Please go ahead.
Dhruv Muchhal
Yes sir. Thank you so much. So most of my questions were asked by Sumit and Satya. But just probably some follow ups. So you. The opening remarks you mentioned distribution. Profitability is also improved because of higher capitalization and higher roe. So is there some change in ROE rates in any of these circles?
Saurabh Mashruwala
Yeah, it’s 14 to 15.55%.
Dhruv Muchhal
Okay. In Gujarat it has moved from 14 to 15.5.
Saurabh Mashruwala
Yeah. ROC basically 14 to 15.5.
Dhruv Muchhal
Okay. And this will be applicable for the next tariff period or three to five years or is it only for a single. Okay, perfect. Got it. And said, does it also apply to your thermal asset engine or only for distribution? No, it’s only for distribution. Okay. And the second is on the renewable through just to.
Saurabh Mashruwala
Just to correct. It would also apply for M Gen. Because it’s part of distribution.
Dhruv Muchhal
Yeah, it’s part of distribution.
Dhruv Muchhal
Okay, perfect. And the next question is on the. On the renewable execution. Now you have a decent pipeline of wind assets and hybrid assets to be executed based on your PPT to be executed the in FY27. So you have I think SECI 15 then TPDL project and IMCL project. So we are hearing a lot of challenges in the sector because both mix of transmission issues and mix of wind execution issues and your near term visibility is primarily driven by wind and hybrids. So if you can help us a bit more in terms of probably I don’t know the proportion of land that you have acquired.
The. The quantum of transmission which is available with you already, which gives you visibility that this 1.2 1.5 gigahertz can actually happen.
Saurabh Mashruwala
In terms of land, we are reasonably. Okay. Land is not the issue. Only thing the maybe the row issue everybody is facing we may face but we have to handle those issues and we have to implement our exhibition plan.
Dhruv Muchhal
Okay. So because it’s a mix of wind and transmission where it seems the challenge is even higher than solar and transmission. So just wanted to understand the comfort on the commissioning targets we are comfortable.
Saurabh Mashruwala
I would say in terms of implementing 1.2 to 1.45 GHz project next year at this moment.
Dhruv Muchhal
Okay. So it probably recupants would get available even the equipment. But on transmission, do you have the transmission access already or it’s in the applied stage and it it is pending commissioning.
Saurabh Mashruwala
Connectivity is all available for most of the project I would say.
Dhruv Muchhal
Okay. The physical substation probably is already commissioned.
Saurabh Mashruwala
That seems to be. So I think those. There are two parts to it. One is that you have the connectivity which is yet to be commissioned. So some of our projects will have connectivity to those substations which are already commissioned. Some of our projects are having connectivity where augmentation or a new substation is getting commissioned. So it will be a mix of both.
Dhruv Muchhal
Okay, but based on your assessment, individual substation wise and project wise, you are reasonably certain of 1 point to 1.5 gigawatt?
Saurabh Mashruwala
Yeah. Yes.
Dhruv Muchhal
Generally we have seen, I mean generally in the industry, the bidding activity is low. If you commission 1.2 this year, 1.2 next year, you’re already, you know, done through your contracted pipeline, including the CNI projects, of course you already done and even the merchant capacity. So how do we see. How are you looking at the visibility beyond that given it’s a. I mean we consider this a platform business. So how would visibility beyond say next two years?
Saurabh Mashruwala
So we are bidding for the most of the project, I would say, but we restrict ourselves to the threshold IRR. If you look at the last Q3, we added about 100 megawatt additional incremental capacities. So we keep on bidding and we keep on aiming for the higher capacities. Also going forward.
Dhruv Muchhal
I was wondering can you, you know, probably get more aggressive in the CNI project side until the utilization bidding happens or that’s a limited market and probably so we are already aggressive.
Saurabh Mashruwala
So effectively we are there in all the bids or majority of the C and I consumers. It’s all about the commercials aspect of it. If commercials are feasible, we will definitely want to lock in capacity as we have stated earlier. Also I think our aspiration is to reach a 10 GHz of renewable capacities which we look at it, if commercials are favorable, we will definitely want to lock in those. Also we have seen that one 1.5 years, the capacities were not growing suddenly. In six months we would have, we had built up 3 gigawatts of capacity.
So those opportunities are available in the market as and when available, we’ll be able to catch that.
Dhruv Muchhal
Sure. And just one clarification. The 1.2, 1.4 is at the AC level or is it the BC level? Is it megawatt peak or megawatt? This at DC level. Okay, thank you so much. Thanks and all the best. Thanks.
operator
Thank you. Our next question comes from the line of Satya Deep Jain from Ambit Capital. Please go ahead.
Satyadeep Jain
Hi, sorry, I got disconnected. One question on the PSP in the presentation you mentioned October 28th is the SEOd just wanted to understand that looks aggressive given its two and a half years from now. How do you look at this timeline versus typically what we are hearing in the. We’re seeing and hearing in the industry from others. And where are you in terms of preparedness to get this executed in two and a half years.
Saurabh Mashruwala
We are preparing ourselves for the execution contract. Major contract I would say has been given for the PSP project. So maybe some delay may happen. But as of now we call contract key contract has been given.
Satyadeep Jain
So October 28 is the deadline as per the agreement with MSC DCL. Right. The this and there can be extension to this based. So the extent there can be. For how long? What is the agreement typically say about extension? Does it have to be because of some particular reasons?
Saurabh Mashruwala
Transmission capacity is not available, Their subscription may not be ready. So those kind of things will get the extension.
Satyadeep Jain
Okay. And on discom again. So Roe, you mentioned this also want to understand is there a. There’s a one off that you talked about in discom. So is that 41 cr at the PAC level and the 270 crore you mentioned in generation is also at the pack level. Can you explain?
Saurabh Mashruwala
These are all TBD level. TBD levels.
Satyadeep Jain
So 270cr in generation. So Unisugen is PBT and this 41cr in discom is also PBT.
Saurabh Mashruwala
Yes.
Satyadeep Jain
And just on this one or two re projects where you you seeking sod SEO, the extension is that mainly because of lack of transmission. For these projects everything is installed on ground. You’re just waiting for transmission something.
Saurabh Mashruwala
So if. If you are seeing that transmission project is getting delayed. If you put up everything on ground effectively your incoming incurring indirect cost, which is which nobody will reimburse you to. So you will always calibrate your implementation based on the your expectation of transmission being commissioned. All the project is in line with the transmission is coming. Basically same thing with the transmission line.
Satyadeep Jain
So these two projects where you seeking extension, the SECI 12 and the MSC DCL one maybe. How much delay are you looking at here? This is all transmission in which. Which location is this?
Saurabh Mashruwala
No, no. So. So I think project by project there are different issues. If you look at MSC dcl we have already commissioned part of is only some part of it which is pending, which is not because of transmission. It is because of some other factors.
Saurabh Mashruwala
Okay. As far as Sec 12 is concerned is because of transmission not being ready, the evacuation part of it not being ready. So every project will have its own. Nuances because of which there are certain pluses and minuses.
Satyadeep Jain
Okay, so. But as of now you don’t. You must have some visibility on SECI 12 or this you expect in FY27, correct?
Saurabh Mashruwala
Yeah, yeah, yeah, absolutely.
Satyadeep Jain
Okay. Okay. Thank you so much.
operator
Thank you. Our next Question comes from the line of Atul Tiwari from JP Morgan. Please go ahead.
Atul Tiwari
Yes, thanks a lot. So first I wanted to check whether in this quarter you booked any income from the NBVN contract. Because I suppose there was some take and pay and the contract was supposed.
Saurabh Mashruwala
To have finished by October. So. No, the contract was over by September. Q2. So we have not booked any income in Q3. Okay. Okay.
Atul Tiwari
And this 270 crore rupees. And to what period does it relate to? This relates to only this year or past few years. And what part of the will be recurring going ahead?
Saurabh Mashruwala
Basically it is not recurring. It is one time.
Atul Tiwari
Oh. Okay.
Saurabh Mashruwala
Okay.
Atul Tiwari
Thank you.
operator
Thank you. Our next question comes from the line of Ketan Jen from Evidence Park. Please go ahead.
Ketan Jain
Thank you. Thank you sir. So just on the clarification on the previous question is even though 41 crores favorable order and distribution is also one time or is it recurring?
Saurabh Mashruwala
See if you look at. As I explained on my call earlier we are carrying some regulatory assets and that regulatory set is carrying the carrying cost. So we keep on getting these kind of orders, favorable orders on carrying cost on a regular basis. That is what we can say right now. Pertaining to Ahmedabad and Surat.
Ketan Jain
Can you give us you gave the capex for re? If you could provide us the total capex in terms of licensee, franchisee and RE separately.
Saurabh Mashruwala
You want for this quarter or the cumulative ITD basis?
Ketan Jain
Cumulative nine months sir.
Saurabh Mashruwala
Cumulative nine months. About thousands. 1100 crores for license and franchise. Basically both put together.
Ketan Jain
Okay.
Saurabh Mashruwala
Then transmission about 240 crores. Code project is about 200 crores ESC we incur about 300 crores renewal as we explained about 3100 crores. That is what we’ve incurred basically capex. I mean nine months.
Ketan Jain
What did you say after transmission? Sir, I couldn’t get the number.
Saurabh Mashruwala
Transmission after transmit. Thermal project. Coal project. Basically 400 crores.
Ketan Jain
400 crores. Okay. Yeah. So this is 4200. So around 4000. So what’s the target for FY26?
Saurabh Mashruwala
Sorry?
Ketan Jain
What is the target capex for FY26?
Saurabh Mashruwala
We don’t give any target for the FY26.
Ketan Jain
But we will have a similar run rate as in third quarter.
Saurabh Mashruwala
Yeah. Run rate is if you look at the Q3 the run rate has increased. So similar pace will be there for going forward also.
Ketan Jain
Okay sir, that’s it.
Saurabh Mashruwala
Thank you.
operator
Thank you. Our next question comes from the line of Bharani V from Evidence Park. Please go ahead.
Bharani V
Good evening. Am I audible yes.
Saurabh Mashruwala
Yeah.
Bharani V
So I just want to clarify one thing. The 270 crores negative 77 crores on the generation side and the 41 crores on the distribution side, these are all PBT numbers, right? Can you give a corresponding EBITDA number for these three? Sir, for the third quarter?
Saurabh Mashruwala
It is, it is given in the. We give the segment analysis also where the EBITDA numbers are given. No.
Bharani V
So the incremental 270 crores is PPT. So what would be the incremental specifically on this regulatory one time impact on the EBITDA side?
Saurabh Mashruwala
This is the EBITDA number only. So EBITDA and pbt, there is no difference between this. Okay.
Bharani V
And the second question is on, of course someone also asked on the nature of this favorable regulatory order on un. Is it possible to explain that? Hello.
operator
Mr. Berani, please response.
Saurabh Mashruwala
We’ve explained 41 rule, the carrying cost order which keep on coming because we are carrying regulatory assets.
Bharani V
So my question is on the 270 crores of favorable regulatory income we booked due to euros. So just you can explain what was this related to?
Saurabh Mashruwala
We’ll explain. We’re not able to explain at this moment right now.
Bharani V
Okay, my final question is on this 41 crores on the distribution side, you mentioned some somewhere. I think you also mentioned that the ROE has increased from 14% to 15.5. Is that something that I heard right?
Saurabh Mashruwala
Oh, that is roe. Basically this carrying cost order is required.
Bharani V
Okay, so ROE having increased from 14 to 15.5.
Saurabh Mashruwala
ROCE is now ROCE basically not ROCE.
Bharani V
So that is neutral.
Saurabh Mashruwala
Right?
Bharani V
Because the ROE level it will be same because it’s just different way of compensating. But still the, the, the. The net profitability at the ROE level will still be the same.
Saurabh Mashruwala
So, so Bharani basically RoC earning 14 or 15 and a half. There are certain milestones which regulator has defined. If you are meeting those milestones, you can earn up to 15 and a half percent. So there are different parameters which have been defined.
Bharani V
So this is my question is. Earlier we were getting compensated based on ROE, which was 14% regulated.
Saurabh Mashruwala
14 has moved to 15 and a half. But the methodology has changed from ROE to ROCE. But 15 and a half also is ROE, but there are certain slabs. So if you achieve this much you can get 25 basis points incremental. If you achieve this much, you can get 50 basis point incremental. So 14 or 15 and a half, both are effectively ROE numbers. But regulator has shifted from ROE to roce.
Bharani V
Okay, I will pick it up offline. No problem. Thank you so much. All the best.
operator
Thank you. Our next question comes from the line of Aniket Mittal from SBI Mutual fund. Please go ahead.
Aniket Mittal
Yes, just actually, you know that is one clarification that I wanted. So it’s in an all in basis. This given this new NYT order, what’s the increase in ROE that we are effectively seeing in Ahmedabad and Surat?
Saurabh Mashruwala
Yeah, one second. So Aniket, basically what we’re trying to say is that 14 is an ROE. 15 and a half also is an ROE. The methodology has been changed from ROE to ROCE first point. Second is another regulations regulator has defined a base ROE or ROCE on equity. Then there are certain milestones based on which your return on equity increases if you achieve those milestones and the highest one which you get is 15 and a half percent.
Aniket Mittal
So are we, are we trending as the is one? I’m just trying to understand. Let’s see the incremental delta in Roe, is it 150 itself for us or is it somewhere in the middle?
Saurabh Mashruwala
We would aim at incremental delta 150 basis points. Some years you may not be able to achieve base if you are not achieving those milestones. So it could be slightly lower.
Aniket Mittal
Okay. The other question I had was just on Bhiwandi, I think the franchise agreement for B1D is valid till January 27 which is, which is about a year away. Just wanted to understand what’s the discussions over there. How does one think about that franchise agreement going forward?
Saurabh Mashruwala
So we are under discussion right now with the MSC DPL about for the extension.
Aniket Mittal
Okay, okay, fair. And just one last question. What would be the overall regulatory assets currently on, on Ahmedabad and Surat? Right now.
Saurabh Mashruwala
Will be about. Issue. Just a second. So around 3000 crores.
Aniket Mittal
Okay, fair. Thank you.
operator
Thank you. Our next question comes from the line of Anuj Apad there from Investic. Please go ahead. Yeah.
Anuj Upadhyay
Hi. Thanks for the opportunity. Can you elaborate further on the LNG sale agreement which we have done with the JIRA and with this 0.27 mm TPA. How much of the fuels we have secured across our gas basin and for what period.
Saurabh Mashruwala
Is about 0.27 MTPA which is currently starting with the four cargoes starting from 2027 to 2037 for 10 years contract we have, we have exhibited.
Anuj Upadhyay
Okay, so this is 0.27 cumulative you’re saying per annum, which we are doing. Okay. And with this how much of the total requirement? Hello.
Saurabh Mashruwala
So requirement will be about 25%.
Anuj Upadhyay
Okay. Okay. And on the pricing front how exactly these contracts are placed, are they fixed, are they flexible.
Saurabh Mashruwala
With the brand?
Anuj Upadhyay
Got it, got it. And secondly on the SMK side, any timeline by when we can achieve, we are targeting to achieve a break even over there or anything on the profitability. So basically not exactly about how the profitability of lays over there. It’s been almost like four or five years we have taken over the circle. So how things are progressing over there. In terms of profitability.
Saurabh Mashruwala
So in terms of at losses if you look at we have reached already reach about 20% level. So yeah, we are near to the break even I would say.
Anuj Upadhyay
So by. Next year we can expect break even happening sir. FY27 yes. Okay. And how much capex you would have.
Saurabh Mashruwala
Spent till date on Smkullah numbers on a community basis.
Anuj Upadhyay
Okay. And any, any update on the parallel licensing?
Saurabh Mashruwala
There is no further update at this moment.
Anuj Upadhyay
Okay, that’s it. Thank you.
operator
Thank you. Our next question comes from the line of Dhruv Muchal from HDFC amc. Please go ahead.
Dhruv Muchhal
Yes, sorry I missed the MIT regulation. Actually just to clarify, I was reading the regulation. The change to the return on capital employed method is only applicable for capitalizations post April 25th. Is that understanding right?
Saurabh Mashruwala
Yes.
Dhruv Muchhal
So it’s basically a prospective change for the like. For the older assets you continue to earn the ROE as you were earning earlier. Of course the rate has changed but for the incremental assets capitalized it moves to the ROCE model.
Saurabh Mashruwala
Absolutely, absolutely. You’re absolutely right.
Dhruv Muchhal
Perfect sir. That is the only clarification. Thank you sir.
operator
Thank you. Our next question comes from the line of Arul Selman from Bajaj Life Insurance limited. Please go ahead.
Arul Selvan
Hi. Hope I’m audible.
operator
Yes you are sir.
Arul Selvan
Yes. This is a follow up of the previous question that somebody asked. The question is with respect to the incremental milestones that have to be achieved to get that 150 points Delta on the ROE. Could you just give us a sense of what is the nature of those milestones that have to be achieved before we can get that 150 basis point delta?
Saurabh Mashruwala
Arun, milestones are linked to operational efficiencies like your ADNC laws, your sipi, your size, your other parameters link to your efficient operational parameters.
Arul Selvan
Okay. Okay. And is there any timeline by which you have to achieve that or is it like you get that.
Saurabh Mashruwala
Yearly performance?
Arul Selvan
Okay. Okay. Okay. Now I was wondering if there’s any normative level that we’ll have to achieve every particular year before we’re eligible for those Incentives.
Saurabh Mashruwala
Yeah those normative levels are there and if you achieve those normally you will get extra incentive.
Arul Selvan
Okay. Okay. Secondly one more question was with respect to again the Biwindi distribution franchise. Does the existing contract have any clauses for renewal or is it going to be like a fresh sort of bits that the government has to invite for renewal of the current reception franchise.
Saurabh Mashruwala
So if you look at our investor PPT we already said that can be extended of 5 years upon mutual agreement agreement. So it’s the virtual discussion is going on but it can be acceptable for further five years.
Arul Selvan
Okay. Okay. So hopefully we should be hearing some news about that before February 2020. So I’m just wondering if there’s any deemed extension clause if. If there’s no news on that at all.
Saurabh Mashruwala
There is no automatic extension clause. We need to discuss with MSC dc.
Arul Selvan
Okay.
Saurabh Mashruwala
Okay.
Arul Selvan
And lastly with respect to parallel licensing I’m just getting a sense of how much could be the amount of capital that you could be investing if the parallel licensing applications are allowed in any rough sense in terms of.
Saurabh Mashruwala
I think it’s too early to comment on that unless it is awarded. I think we should first get the first thing cleared and then we can discuss on that. And it depends on the area also how large is the area, how small is the area. So it depend all depend on the approval we are going to get on particular area.
Arul Selvan
Okay. Okay. Yes thank you.
operator
Thank you. Next question comes from the line of Varani V from evidence. Please go ahead.
Bharani V
Yeah, thanks for the follow up. Are there any short term gas tender in the market right now with heard something coming up from Tamil Nadu. Can you please elaborate if there is any short term.
Saurabh Mashruwala
Very recently 19 tenders was closed. No, no, I think so. I think Bani will not be able to comment on that. I mean for the future part.
Bharani V
Okay. No, I’m just asking is there any gas tenders like the NVBS kind of tender that.
Saurabh Mashruwala
No, not like NVV tender as of now. But see as the summer comes in typically Discoms keep on doing short term contracts for procuring power for their requirements. So that is a normal phenomena which happens.
Bharani V
Sure. And there. There is a possibility that some something like NVV and tender comes up for this year too.
Saurabh Mashruwala
Comment at this point of time.
Bharani V
Okay, sure. Thank you so much.
operator
Thank you ladies and gentlemen. As a no further question I would like to hand the conference over to Mr. Saurabh for the closing comments. Thank you. And over to you sir.
Saurabh Mashruwala
Yeah thank you for the joining torrent powering call. We keep. We wish everybody to stay safe and healthy. Thank you so much.
operator
Thank you, sir. Ladies and gentlemen, thank you so much. Ladies and gentlemen, on behalf of Torrent Power Ltd. That concludes this conference. Thank you for joining us. And you may now disconnect your lines.