Ladies and gentlemen, good day and welcome to the Adani Energy Solutions Limited Q3 FY 2025 Investor Update call. As a reminder, all participant lines will remain 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 the operator by pressing star, then zero on your touch-tone telephone. Please note that this conference is being recorded. I now hand the conference over to Mr. Kandarp Patel, Chief Executive Officer of Adani Energy Solutions Limited. Thank you, and over to you, sir. Hi, good morning, all investor friends and analysts, and also wish you a very happy New Year. So we have released this Q3 result material through stock exchange and also updated our website, so I'm sure all of you must have a chance to look at it. You must have noticed that AESL's continued that growth momentum even in Q3 in all parameters, be it financial, operating, or deployment or implementation parameters. So we have reported a strong number in terms of revenue, EBITDA, PAT, and also CAPEX deployment at our various projects. During this quarter, AESL's won one of the largest projects in our operating history, that is HVDC Bhadla-Fatehpur transmission project of about INR 2,500 crore CAPEX. Besides that, INR 25,000 crore CAPEX. Besides that, we have also secured Khavda Phase 4 Part D, which is Pune-Boisar project. Now, with all these projects that we have secured in the current year, our CAPEX pipeline for transmission alone has reached almost 55,000 crore from 17,000 crore level. So that's a significant thing that AESL has been able to achieve. Now, while we continue to secure projects of large amounts, we have also performed very well in terms of deployment of CAPEX on the ground. So in quarter three, the CAPEX of transmission was about 3,000 crore, which is almost three times of CAPEX that we deployed last year in the same period. And for the nine-month period in the current year, the CAPEX deployed so far is 7,500 crore, which is almost double than what we did in the last year during the same period. And our focus now, obviously, will be on CAPEX deployment, efficient CAPEX deployment. All the projects that we are undertaking right now, we aim to complete that on time and also within the cost. In the current year itself, we will commission another 3 projects, which are Sangod, Khavda Phase 4 Part A, and KPS Augmentation. At AESL level and at AEML level, we will commission another transmission project of BKC 220 kV Project. These 3 projects, in fact, 4 projects will combine to about CAPEX of INR 3,100 crore that will get capitalized, and that will start contributing revenue of about INR 375 crore on an annual basis. Similarly, on a smart meter, our deployment has gained significant momentum. We have now reached to deployment of about 18 lakh meters so far. By the year end, we aim to reach to 40 lakh meters, and for the next year, we have targeted 70 lakh meters. So all the thing is in place, teams are in place, most of the issues on the ground are sorted out, and we are confident that we'll be able to achieve this. In fact, we aim to surpass this, but this is the minimum that we'll be able to do on the ground. On the operational front as well, we have done an excellent job. The ability that we have achieved is 99.7%, which has contributed to about INR 33 crore of incentive income during the quarter, and the incentive income for the period nine months is about INR 100 crore. We have added about 225 circuit kilometers during the quarter. Now we have reached to 25,778 circuit kilometers. In the distribution segment as well, we continue to perform very well. Our sales have increased by about 3%, but significant achievement is in terms of T&D losses. Now we have reached to the level of 4.66%, and we aim to continue to maintain that trajectory. Even in a distribution network, we have achieved reliability of over 99.9%. On a financial front as well, you must have seen those data. The revenue has increased by 15%. The total income now stands at about 6,000 crore, which is with a growth of 24%. Operational EBITDA of 1,579 crore, which is 9% higher as compared to the last period. Similarly, EBITDA increased by 6%. Now it has reached to 1,831 crore. The PAT has also seen a significant growth, which has reached to 625 crore in quarter three, which is 80% higher on a year-on-year basis. Now you must have seen that the most important thing that we have achieved so far is that we have locked in our growth, three times growth already, and now the focus of the organization will be on implementation. We will continue, but despite that, we will continue to participate in the bidding opportunity. There is about INR 60,000 crore bidding that we expect to happen in the next one-year period, and while we participate in the bidding, we will be mindful that we will secure projects only to the extent that our ratios are not and our ratings are not diluted and our returns are not compromised. We will be very selective in taking the projects, and with these event thresholds, we expect that we'll be able to continue to maintain our market share of around 20%. So with this detail, I think we'll dwell more during the question-answer session. Over to you for further proceeding. Thank you. Ladies and gentlemen, we will now begin the question-and-answer session. Anyone who wishes to ask a question may press star and one on their touch-tone telephone. If you wish to remove yourself from the question queue, you may press star and two. Participants are requested to use their handsets while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. The first question comes from the line of Mohit Kumar from ICICI Securities. Please go ahead. Hi, good morning, sir. And thanks for taking my questions. So first question is on the financial numbers. Can you please help us with the large negative movement in the regulatory in this quarter in P&L and the nature of it? Sorry, Mohit. Large negative moment in the default regulatory line item in the P&L where there is a negative of INR 468 crore, if I'm not wrong. So. Correct, correct. So, Mohit, that is only on account of the regulatory surplus that the distribution business has reported. What has happened is that the MERC has now allowed FAC recovery to be done along with the tariff recovery, and because of which there is a regulatory surplus. Till now, we would have a regulatory gap in our account, but because of this FAC recovery which the regulator has allowed, we are now having a surplus in our balance sheet or in our income statement, which is just a timing difference, which has to be returned back over the next quarter or over the next tariff period. So, it's just a timing part on the regulatory surplus part. So Mohit, just to add what Kunjal said, this negative number is not a negative. It is the surplus revenue over and above the cost of supply that we have recovered from customers. Now, when the next tariff setting happens, this surplus will get adjusted from ARR, meaning thereby that our tariff will be lower than our cost in the next tariff period, and obviously, that will help us in improving our competitiveness among the competitors in Mumbai distribution. Understood, sir. My second question is, what is the status of Mumbai HVDC project? Are we expecting it to commission in the Q4, or will it be a most likely spread-out phenomenon in FY 2026? And my second question, again on the second HVDC line, which is one, what is the progress? When do you expect the awarding to be done to the equipment providers, and what is the timeline you're looking at? Mohit, our Mumbai HVDC is right on track. There is only one issue which is yet to be. In fact, we have yet to get the approval, which is from mangrove cutting, which matter is pending before High Court, but that involves only one and a half kilometers of cabling. Everything else is on time, and we expect to commission this project in quarter three next year. That will be the completion on time, which will be a very, very significant event in the context of Mumbai because you must have seen the history of Mumbai transmission projects, which are delayed for quite a long period, but this will be the one mega project which will get completed in time. As far as Fatehpur-Bhadla HVDC project is concerned, you must have seen from the various announcements and press releases that we have taken over this subsidiary on the 28th of this month. We are into the final stage of discussion with the OEMs, and we hope to conclude those contracts in the next one to one and a half months. The period that is given for completion or commissioning of the first bipole is 48 months, and the second bipole is 54 months, and we'll be commissioning well within the time. The start starts from the signing of the transmission service agreement, or is it from the transfer of the SPV? So we have completed both the parts. We have signed the TSA, and we have also taken over the SPV. Understood, sir. My last question, sir, how is the pipeline of smart meter bidding, and has the Tamil Nadu smart meter tender is up for rebidding now? What I gathered is that they wanted to do rebidding because they have already got that approval from RDSS for getting a grant of that Government of India contribution of INR 900 per meter, and we expect that they will be coming out with another bidding, rebidding very soon. Understood, sir. Thank you and all the best, sir. Thank you. Thank you. The next question comes from the line of Bharani Dhar from Avendus Spark. Please go ahead. Yeah, good morning. Am I audible? Yeah, yeah. Loud and clear. Okay. Yes, sir. So my question is on the power demand growth. So in our operating circuits, also we have seen about a 3% year-on-year growth in power distribution. So I wanted to understand your view on where is this heading in the sense first, if there is a slowdown from last year in which segment or categories there is a slowdown, and what is your outlook on this power demand growth for the next one- to two-year period? So the growth that we have seen this year is obviously much lesser as compared to last three years, and the stagnation is because that the additional capacity or additional consumption that was expected to get commissioned has delayed. One of the majors would be commissioning of those metros in Mumbai, which we expect that it will now have reached to a very good shape and will get commissioned in a very short time. And a few of the data center projects that are supposed to come up have delayed. So it is delayed for some time, but we expect that growth to remain healthy about 5% per annum. Are you seeing any drop in demand from specific consumer categories like residential or industrial, anything like that? No, no. I don't see any category. In absolute term, it will reduce. In fact, it will continue to grow at a steady rate, and the additional growth will come from this kind of intervention or commissioning of such a project, public mobility basically, and consumption-like data centers. Understood. My second question is on the privatization opportunity in distribution that recently came up, especially in the state of UP. So where is that bid in progress? Are we bidding for it? We will certainly bid for it. They have invited me for appointment of consultants, and UP has been thinking of privatization since the last couple of years, and we believe that they have done a good amount of preparation. So we see movement in that direction. And we believe that once a state like UP does privatization, it will also give the signal to many other states where they would also want to explore this option. And we see a good amount of opportunity coming up in distribution privatization. But the number that we are talking currently, we have not factored in those kinds of additional opportunities. Understood. Just to be clear, you just said they have invited for appointment of consultants. Any timeline as to when there will be a final round of bidding and when we can expect the opening of the bids? And if at all, if there could be any challenges because it is a large state, and usually privatization faces a lot of challenges from incumbent employees, etc. So your views on that? Yeah. So this bid, I believe, has already mentioned the timeline. It is about 210 days. I'm not quite sure about it. But it looks like that UP wanted to conclude it early, and with the kind of administration at a state level, we think that they will be able to pull it off this time. Sure. Okay. Thank you so much, [inaudible]. Thank you. The next question comes from the line of Dhananjai from Ask Investment Managers. Please go ahead. Thanks for the congratulations and good quarter results. I wanted to ask you, sir, in smart meters, what are we learning from on ground in terms of implementation, and how are we seeing that in terms of order pipeline going ahead? So currently, Dhananjai, we have an order pipeline of 2.43 crore meters. We have already deployed about 18 lakh meters. Our average rate is about now we have reached to 15,000 meters per day. And I feel proud in saying that we have been doing far, far better as compared to all other players in the market. In fact, today, my sense is that the meters being implemented by all other companies on the ground, aggregate of that, we are implementing equivalent to that. So we have already reached to 15,000, and we'll be doing at least 20,000 average meters per day in the last quarter of this year. And as far as the bidding pipeline is concerned, there are a few large states who have not gone ahead with the smart metering bidding. Those are Karnataka, Tamil Nadu, Telangana, and Madhya Pradesh, and a few of the states have done partial, like Andhra Pradesh, Gujarat, and a few of the states are also facing very, very poor deployment. They might even think of canceling and rebidding that opportunity in states like Rajasthan and UP. So what would you have assessed what went wrong in Rajasthan and UP, and how are we seeing for ourselves in terms of pushback from any local bodies or final consumer? When you take this kind of project for implementation, you have to assume that this kind of challenges will come on the ground, and you have to handle it and implement it. Now our team has done a fabulous job. They have been able to handle this kind of resistance on the ground. One of the key elements in managing those is that communication with the customer, and we have been able to handle that part very well and have been able to reach to this level. The other key element is to understand the requirement of the distribution company because every distribution company has different processes for billing and metering. You need to understand that well and integrate your solution very well with their system seamlessly so that they don't find any problem in getting your data and availing your services. That's a key aspect there, and we being a distribution company understand that very well. Our team has also done an excellent job on that count as well. Sure, and so what will be the CapEx for this year and next year? Total CapEx for 2025 and 2026? So we have completed INR 7,500 crores of CapEx for the nine-month period currently. And by the end of this financial year, considering the smart meter deployment, the CapEx in transmission and distribution, we're likely to close around INR 12,000 crores of CapEx by the end of this financial year. And so for next year, roughly? Roughly, basically, it would be in the range of around INR 18,000 odd crores for FY 2026. Okay. Considering that we have to deploy all the transmission projects, which would roughly amount to around 12,000 odd crores in the transmission CapEx itself. And then the remaining 12,000 would be for? Would be largely contributed by smart meters, where we would go aggressively, as KP sir mentioned, that it would be around 20,000 meters per day. So there we would have to deploy more CapEx in smart meters. Sure. Thank you, sir. Thank you. The next question comes from the line of Pradyumna Choudhary from JM Financial Family Office. Please go ahead. Yeah. Yeah. Hi, sir. Thank you for the opportunity. So my first question is, why? So pardon me for being a bit new to the company, so some of your questions would be basic. First question is, on the distribution side, we've seen a flat EBITDA, operating EBITDA YOY, and the EBITDA number has even declined by 17%. So what is the reason for the same? So that's because of the reduction in the asset base or regulated asset base in the distribution business, largely on account of the carve-out of Dahanu Power Plant, which was completed last quarter. Now, once the Dahanu Power Plant is out of our way, we will see stable EBITDA in the AEML business. In fact, we have huge plans of capitalization coming up in the next one or two quarters in AEML distribution business, where we would see that around INR 2,000 crore of EBITDA being done during the next year or so. So basically, we will see a stable EBITDA from EBITDA. The drop is largely on account of Dahanu Power Plant. Just to add what Kunjal said, the drop is on account of Dahanu and also on account of delay of one project, which is BKC 220 kV Project. Now, our regulatory asset base right now is about INR 7,500 crores, and by the year end, with all capitalization of the CapEx that we are doing in distribution and that particular project, the EBITDA, sorry, the RAB will reach to about INR 9,000 crores by this year end. 9,000 crores will reach by year end from what number currently? 7,627. Thank you. And secondly, on the smart meter side, what sort of EBITDA are we targeting over the next two years? Do we give a number? The balanced smart meter opportunity is about 10 crore meters, and we will target about 20%-25%, at least, of those bidding opportunities. All right. All right. Thank you. Thank you. Thank you. The next question comes from the line of Love Sharma from JPMorgan. Please go ahead. Hi. Thanks, Manish, for the call. Just two questions from me. If you could just highlight what would be the debt outstanding as of December across the transmission and the distribution business AEML and also the cash balances which you're currently holding. And the other question was, I think, coming more of a follow-up from the previous question about you do expect some tariff revision lower for AEML. Could you just quantify how much are we expecting for FY 2026 onwards? Sure. So now, basically, the debt levels continue to remain the same as was reported in September of close to around INR 39,500 odd crores. We also have surplus cash of around close to INR 9,000 odd crores, which is that we have a net debt of around INR 30,000 odd crores, and the leverage continues to be in the range of 1 to 3.3 times of our EBITDA. So that position still continues to remain the same, especially due to the proceeds of QIP. We have a healthy liquidity position in the company to take care of our funding requirements. On the tariff levels, on the tariff side, this INR 400 odd crore of revenue surplus will translate to a tariff reduction of about INR 0.70 per unit. INR 0.70 per unit. Okay. And so that remains only pretty much for the FY 2026, or do you expect it to be in the future years also to be lower? So it can get spread out in a couple of years, but that depends on, so our application is already before MERC, and they will announce tariff for next year, latest by 31st March. Understood. And how about because you are completing some of these transmission assets in AEML as well, like you just mentioned, I think, about one of the projects which will be completed this year, that build-up in the RAB, and how will that be monetized in the future? Should we expect more like a mid-term tariff revision there? So that tariff of transmission project that we commission in AEML doesn't directly get included in my distribution tariff. It gets pulled into a state pool, and from state pool, I have to pay, and the tariff of that is already factored in the ISTS as a tariff estimate that we have made for our distribution tariff. Okay. Understood. So that revenue will be separate from the distribution utility as such. Okay. Correct. So in AEML, now there are two streams. Earlier, there were three streams of revenue. One was from a generation of Dahanu, which we have carved out. So in AEML, we have now two revenue streams, regulated revenue streams, one from distribution assets and one from transmission assets. So all transmission assets is a part of ISTS, and the tariff gets pulled with all other transmission assets of the states and then gets charged to individual distribution company based on the usage of those transmission assets. Got it. Thanks. This is useful. And just a last, I mean, to confirm, the cash balance which you mentioned was about INR 9,000 odd crores. Is that right? Correct. Correct. Correct. Nice. Okay. Great. Thank you. That's it from me. Thank you. The next question comes from the line of Darshan Parmar from Jefferies. Please go ahead. Hi, team. I just wanted to get a sense on how much of smart metering bidding is still left, if you could quantify. Darshan, the smart meter bidding left out is about INR 10 crores, and those are mainly from the state of Andhra Pradesh, sorry, Telangana, Karnataka, Tamil Nadu, Madhya Pradesh, part of Andhra Pradesh, and a few other states. Okay. Yeah. Thanks. Thank you. The next question comes from the line of Abhiram Iyer from Deutsche Bank. Please go ahead. Hi. Congrats to the company on a good set of results, and thanks for taking my question. I just wanted to ask, with the Dahanu Power sale in the previous call, you'd mentioned that some of that proceeds are going to go towards reduction of debt. So may I just quantify how much is the debt now at AEML, how much it's been reduced by? That was question one. And question two was, has the company been in progress on a plan for refinancing its upcoming bond? There is an AESL bond coming due in 2026. Any imminent plan for that? So at the AEML debt level, yes, the proceeds would be applied as per the AEML bond documents, where we can use the proceeds of Dahanu towards business as well as reduction of the debt. Part of the proceeds have been used to repay the debt of the company of about 400 odd crores during last quarter. And so currently, at AEML, there is no increase in the—I mean, there is actually a reduction of the debt. We currently have around $880 million of bond outstanding and $300 million of SLB bond outstanding, so $1,120 million of bond, which is outstanding at AEML level. So that is at the debt level. Sorry, what was the second question? The second question was, you also have a USD public bond which is coming due with the Adani transmission company at all in 2026. So are there any plans towards refinancing this or coming back to the market for this? Yeah. So I'll answer that. This is Kunjal Mehta on this side. So I think for that one, we will stay true to our capital management plan. That is issued at 10-year. It will be similar to the 2036 paper that we have outstanding, which is an amortizing paper, and it was issued in 2019. So this one, when it comes due, three to six months prior to that, you should be seeing us tapping the market for a term takeout of that, which will be an amortizing structure. We have the option of both private placement and public market for that instrument. Thank you for the clarification. That's it from my side. Thank you. Ladies and gentlemen, if you wish to ask a question, please press star and one. The next question comes from the line of Chirag Parekh from Nuvama Wealth Management. Please go ahead. Sir, two questions. First is, on the transmission side, you mentioned we have about 54,000 crores worth of transmission CAPEX to be done, right? So 55,000 - was it 55, right? Yeah. 55,000 crores CapEx would translate to how much of incremental EBITDA? INR 55,000 crores of project currently, based on the tariffs which we have quoted, will give us INR 7,600-7,700 crores of tariff which is there. We continue to maintain 92% or 93% margins in transmission business. Understood. And you said INR 370 crores would be the Q4 incremental tariff revenue from the four projects that you will be commissioning? Correct. But that's a part of 54,000, right? That's it. INR 7,600 crores would be the tariff. Second question is, on the debt side, we have 60% of our debt, I think, on the U.S. dollar denominated. Correct me if I'm wrong, but 60% is what is the foreign debt. So with the current rupee depreciation, what are your thoughts on this, and how do we account this? Because I think most of the debt is more than five years or something. So just wanted some clarity on this as well, please. So, what we generally do is that as soon as we take and work this debt for a rupee, I mean, dollar-denominated debt, we hedge the entire debt so that currently our entire portfolio is hedged both at AEML as well as ESL level. So we are not significantly impacted because of the rupee depreciation. So it is fully hedged. Fully hedged. So the hedging cost would come in the finance cost, is it? Correct. Correct. Yes. So even today, whatever finance cost that you see is with the hedging cost. Got it. Got it. There is not going to be any incremental one. So it is already there. But if the dollar, I mean, the rupee depreciates, then is there a mark-to-market loss that we have to book by any chance? Because I believe even hedging means that there would be at some point that you would reverse that entry. But in the near term, would that be any kind of mark-to-market losses? There is an end-to-end loss, but then there is a derivative gain because of the assets, I mean, the underlying usage, so from that perspective, it becomes neutral. Neutral. Okay. Okay. So no impact of the rupee depreciation on our balance sheet for now. Correct. Okay. That's it from my side. Thank you. Thank you. The next question comes from the line of Giriraj from Visaria Family Trust. Please go ahead. Yeah. Hello team. First, some clarification on the operating data what we report. So in the pre-quote subject also, we mentioned about the recent jump in the network length and the transmission capacity, somewhere about 14% quarter on quarter and 19% on the quarter on quarter for transmission capacity. But is it the total capacity or is it the which is what we are commissioned? So I just want to understand, there is no quarter on quarter increase in the revenue, not material. So is it the under construction capacity what we are mentioning here, or is it the commissioned capacity what we are mentioning here? So 25,000 circuit kilometers is the total. All put together or even under construction is included. Currently, close to 20,000 circuit kilometers have been fully commissioned, and the balance 5,000 circuit kilometers are under construction. Okay. So this number will not lead us to any conclusion on the revenue side of it because it includes the. Correct. So I think, Giriraj, what is the important number from revenue side to track is the CapEx that we have incurred or capitalization of that CapEx. Understood. Like you had mentioned recently in the PPT, I got a commissioning date also. Next question on the smart meter side. So when you mentioned that you will be commissioning about 20,000 meters per day, and roughly, let's say in 90 days, we'll talk about 18 lakh meters. So should we assume a CAPEX of about INR 1,000 crore because about INR 5,800 per meter CAPEX? Is that a right thought process? So our target is to do 70 lakh meters during the next financial year, which will roughly translate to around INR 3,500-INR 4,000 odd crores of CapEx for smart meters during the next financial year. Okay. Okay. And how do we book the revenue here? I understand it's INR 900, the subsidy what we will get, and then from the 31st month, the revenue will start kicking in. But will we be doing so analytics will Ind AS basis, we'll be doing on an accrual basis accounting, right, on SLM basis. So we'll straight. Yes, yes. And. No, no. So the revenue, under—because this is our accounting—would be under service concession accounting, so it would be spread between OpEx as well as the CapEx revenue. So therefore, and since the asset would be classified under SCA accounting, so a portion of it would be OpEx revenue, a portion would be CapEx revenue, and some portion would get attributed towards the interest income as well. Okay. So when will revenue start accruing from the meters or? Yes. Yeah. So the revenue in metering is accounted immediately on completion of, as soon as the billing starts. So we have already started billing in certain three or four projects that we have commissioned, and it is accounting on a per meter per month billing basis the tariff which we have quoted for each of the projects. Okay. Because since first quarter presentation, June 24, you heard people have the company had given the separate meter revenue and EBITDA, but this number is not there for the second and third quarter PPT, separate segment reporting on the meter side of it. So if. Yeah, because the amounts are not that significant for smart meters in the current quarter, so therefore it is not being separately shown under the segment reporting as per the Ind AS things. I think the segment reporting for smart meters would come up from the next financial year when the smart meter revenues would be a sizable number. Okay. Understood. Thank you. That's all from my side. Thank you. Ladies and gentlemen, if you wish to ask a question, please press star and one. As there are no further questions, I will now hand the conference over to Mr. Kunjal Mehta, Chief Financial Officer. Please go ahead. Thank you all for taking out the time and joining the call. We are continuing to engage with you, and in case if you have any clarifications or further information that you have, you can reach out to our IR team who will take on any of your additional information or clarification. Thank you all. Thank you once again for taking all the time. Thank you. On behalf of Adani Energy Solutions Limited, that concludes this conference. Thank you for joining us, and you may now disconnect your lines.