Ladies and gentlemen, good day and welcome to the Indian Energy Exchange Q3 FY 2023 results conference call hosted by Axis Capital Limited. As a reminder, all participant lines will be in the listen-only mode. There will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during the conference, please signal an operator by pressing star and then zero on your touch-tone phone. Please note that this conference is being recorded. I now hand the conference over to Mr. Sumit Kishore from Axis Capital Limited. Thank you. Over to you, sir. Thank you, Dorian. Good afternoon, ladies and gentlemen. On behalf of Axis Capital, I'm pleased to welcome you all for the IEX Q3 FY 2023 earnings conference call. We have with us the management team of IEX, which is represented by Mr. Satyanarayan Goel, chairman and managing director, Mr. Vineet Harlalka, CFO, Mr. Rohit Bajaj, head business development, Mr. Aparna Garg, head investor relations and corporate communications. We will begin with the opening remarks from Mr. Goel, followed by an interactive Q&A session. Over to you, sir. Good afternoon, friends, and welcome to the earnings call for quarter three of financial year 2023. Let me begin by wishing all of you a Happy New Year. With me today on this call are Mr. Rohit Bajaj, Head Business Development. Mr. Vineet Harlalka, our CFO and Company Secretary. Mr. Amit Kumar, Head of Market Operations and Product Development. Mr. S.N. Goel, CPO. Mr. Samir Prakash, CHRO. Ms. Aparna Garg, Head of Investor Relations and Communications, and Mr. Aditya Valli. At the outset, India's commencement of the G20 presidency on December 1 marks a significant milestone towards undertaking a leadership role on the global stage. It also brings an opportunity for India to showcase its sustainability roadmap. On the economic front, India's post-COVID economic recovery continued with a strong H1 2022-2023. The country registered a broad-based economic expansion of 9.7% during this period and was placed among the fastest growing economies of the world. Recently, India's manufacturing purchasing managers index, PMI, rose to 57.8 in December 2022 from 55.7 in the previous month, the highest it has been since October 2020. Similarly, the services sector in India did better than it has in the last six months, with the services PMI rising to 58.5 in December from 56.4 in November. With increased economic activity within the country, electricity consumption in India for quarter three of FY 2023 stood at 3.3 billion units, which is a year-on-year growth of 6.8%. Key contributors to this demand were increasing consumption by the states Rajasthan 16.4% year-on-year, Karnataka 12.5%, Gujarat 8.1%, Telangana 7.6%, and Andhra Pradesh 6.5%. Installed capacity in India achieved 410 GW as on 31st December 2022. In line with the country's commitment towards arresting climate change and evolving into a net zero emitter by 2070, the installed capacity of our renewable grew to 168 GW. The growth of green energy is expected to help India attain its vision of achieving 50% of its entire energy consumption from non-fossil fuel sources by 2030. In the quarter ended December 2022, the price of e-auction fuel and coal continued to be high, while the quarterly average price premium declined from 293% in Q2 to 242% in Q3 of this year. It was considerably higher as compared to 35% for the special power e-auction fuel and coal in FY 2022. As a result of this, input cost for GenCos continued to be high. Continuing high spot e-auction fuel and coal price led to average clearing price in the Day Ahead Market at INR 4.56 paisa in Q3, while lower from INR 9.4 in the previous quarter, but still high to provide optimization potential for DISCOMs and open access consumers. During the quarter, coal production increased by 8.7% year-on-year basis to 225 million tons, while coal dispatched to the power sector remained almost similar at 184 million tons compared with the same period of FY2022. Inventories at power plants now stand at 13- days. Improving coal inventory and further reduction in EOS and coal prices is expected to result in a decline in power price on the exchange platform and provide further cost optimization opportunities for DISCOMs and open access consumers. This will result in higher volume on the exchange platform. On the regulatory and policy front, several developments took place. A few highlights are, in early December, the new ERC regulation, the new REC regulations for RE generators was implemented. The new REC mechanism of no floor price and flexibility between REC is likely to increase liquidity in the market. The trading of ESCerts is expected to start in this month. Recently, CERC made amendment to define a floor price for trading Energy Saving Certificates, which is fixed at 10%, at 10% of the price of one metric ton oil equivalent of energy consumed that's notified by the advisors notified by central government. The GNA regulations were notified in October 2022 and were partially implemented at the grid as the grid code is in the draft stage. The regulations are expected to be implemented before the end of FY2023. Implementation of GNA will remove regulatory arbitrage, which led to temporary shift of volume from DAM market to DSM market, and will be more conducive towards further market development within the country. Further, CERC issued revision settlement mechanism and regulation method of regulation 2022, linking the DSM charges to the time of price discovered on the exchange. It will discourage DISCOMs to overdraw under DSM and will lead to increase in market volume in the RTM market. All these initiatives will help further deepen power market in the country. Coming to IEX updates. During quarter three FY 2023, electricity volume at 23 BU grew by 9% on quarter-on-quarter basis. However, electricity volumes declined 2% on year-on-year basis as compared to Q3 of FY 2022. Volumes were impacted largely due to supply side constraints led by high prices of e-auction coal. REC volumes at 1.2 BU during quarter three FY 2023, witnessed a de-growth of 68% on year-on-year basis as compared to quarter three of FY 2022. As in Q3 FY 2022 had exceptionally high REC volume of INR 38.3 lakhs to fulfill the pent-up demand caused by a stay on REC trading by APTEL for almost a period of 16- months. Overall volumes at 24.2 BU recorded 5% quarter-on-quarter growth across all market segments. However, on a year-on-year basis, overall volumes declined by 12% because of power supply constraints, high price discovered during Q3 2023 and high REC traded volume in Q3 FY 2022. In November 2022, IEX filed a petition for introducing the High Price Day Ahead Market segment to enable generators which have high variable costs more than INR 12 to participate in this market. We are expecting to start this market by February 2023. We continue to sustainability transition India's energy markets to efficient and asset light business. In quarter three this year, we incorporated a fully owned subsidiary, International Carbon Exchange. ICX is aimed to leverage opportunities that exist in the voluntary carbon market. Exchange mechanism will facilitate market participants to trade in voluntary carbon credit, allowing for transparency and optimal Price Discovery. We are confident that ICX will go a long way in helping achieve India's target to target of reducing the emission intensity of its GDP by 45% by 2030 to limit global warming to 1.5 degree Celsius. The quarter also saw IEX become India's first carbon neutral power exchange, using market-based tradable instruments to offset its carbon emissions. This will help IEX members and participants to reduce their scope three emissions by building a cleaner value chain. I shall now talk about developments at IGX. In quarter three FY 2023, there has been several noteworthy developments at Indian Gas Exchange. IGX traded a total volume of 24.42 million MMBtu during quarter three FY 2023, which was a 568% year-on-year increase. The growth was largely on the back of participation by major domestic gas producers and an increase in the number of participants. During this quarter, seven members, including RIL, BP Exploration Alpha, and Vedanta Limited, joined IGX. Recently, IGX launched GIXI, the first ever nationwide price index to reflect benchmark natural gas prices for India. The IGX price index is developed with the purpose to derive a single price for the country in line with the international benchmarks such as JKM, and we have the CBA markers, PDF, et cetera, which are currently representative of the price of their respective coverage regions. Now I will enumerate some of the IGX financials during the quarter three FY 2023. During the quarter, profit after tax at INR 12.76 crore witnessed a growth of 427% on quarter-on-quarter basis and 1,437% on year-on-year basis. Efforts undertaken by IGX in the country's gas sector were also recognized at the Energy Award 2022, where IGX won the Best and Pioneering Gas Exchange Initiative for the Gas Economy Award. It is now time for me to summarize the financial performance of the company in this quarter. On a consolidated basis, revenue for Q3 FY 2023 increased 3.1% on a quarter-on-quarter basis from INR 113.8 crore in Q2 to INR 113.4 crore in this quarter. However, due to decline in traded volume, revenue for Q3 witnessed de-growth of 10.3% on a year-on-year basis. Consolidated PAT at INR 77.2 crore grew 8.4% on a quarter-on-quarter basis as compared to INR 71.2 crore in Q2 of financial year. With gradual improvement in domestic production of coal and improvement in coal inventory, we expect a rationalization of power prices on the exchange and the volume is expected to improve. Since its inception, IEX has grown with focus on customer centricity, innovation and technology. We continue to work towards building a sustainable and efficient energy future for India. In addition to developing new products such as HPDAM and ancillary market, we are exploring business opportunities in voluntary carbon credit space with the launch of ICX and also doing policy advocacy to create a framework for setting up coal exchanges. We believe in the government vision for a sustainable future for India's energy sector and are committed to help the country achieve it. With this, we shall now commence the question and answer session. Thank you. Thank you. 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 phone. If you wish to remove yourself from the question queue, you may press star and two. Participants are requested to use handsets while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. The first question is from the line of Mohit Kumar from DAM Capital. Please go ahead, sir. Good afternoon, sir. Thanks for the opportunity. My first question is, how has been the traction in long-term duration market? I think we have quoted two kind of contracts monthly and any single site give us auction. Can you please comment on that? Yeah, in the long tail, we introduced these long duration contracts in the month of July. There is very good response from the market. I think by now we have conducted more than 50, 60 auctions. Since the price discovered in this auction is on the higher side because of the supply side constraints, as you are aware, many of these auctions have not resulted into a contract. Still we have done more than 1 billion unit transaction during these six months in this segment. Are we seeing any green shoots in this particular segment? Like, given that, you know, we are entering into a summer season. See, invariably the long duration contract transactions happen when the prices are competitive. Then distribution companies will get into a contract for 3 months, 6 months to have the power, seasonal power requirement, to meet the seasonal power requirement. The price discovery at the moment because of the uncertainty in the availability of coal and very high EOS and price, since the prices are higher, it is difficult to say about the volume growth in this. I can give you broad picture about this market. Almost about 50 billion units of transactions are happening in the less than one year contract through the trading company. With the kind of flexibility which we have provided for this long duration contract, I'm sure we should be able to get a good large share out of that. Going forward, we will see how the growth happens in this market. Next year, particularly, Government of India has fixed a very high target for coal production, which is 1 billion ton for the country as a whole. If that happen, I'm sure coal prices also will cool down and our clearing price will also come down. Then you will see good traction in this market, long duration contract market. Understood. On this IGX, how much was the revenue and PAT for nine months? For Q3 you mentioned INR 12 crore. Is that number right? Yeah. Yeah. During the quarter three, the total operating revenue was INR eighteen and a half crore for the IGX. In comparison to INR 5 crore revenue during the quarter two. After nine months number, sir? Yeah. For nine months, the operating revenue was INR 27 crore, versus INR 5 crore for the previous year. As a profit number, sir, for the nine months? Number for the nine months is INR 16 crore. Okay. Understood. Most of the profit has come in this quarter. Yeah. Understood, sir. Thank you, sir. Thank you. Thank you. Thank you. The next question is from the line of Mr. Sumit Kishore from Axis Capital Limited. Please go ahead, sir. Thanks for the opportunity. My first question is, there has been a slight easing of supply sides and sales, but we have not seen a meaningful improvement in liquidity on the exchanges so far. October was better in that respect, but then November and December sequentially saw a worsening of liquidity and high exchange prices. January also the exchange prices so far are north of 60 INR. What is the sequence of events you expect over the next few months on the liquidity aspect, and how do you expect exchange prices to pan out over the next six months? There has been significant improvement in the coal production in the country. Yes. You know, when the crisis happens, always rationing is done. This time, government of India, what they have done is they have increased supply of coal under the PPA so that states are able to get coal for running their power plants with IPPs which have the contracts. Because of that, good part of the demand of the state is met by the position under the PPA. Clear up of the coal-based power plants increased almost by 6%-7% as a result of that. Availability of coal in the market, which is the e-auction market, is still low, and e-auction price is very high. I think it is still about 240%-250% of the administered price. At these prices, the variable cost is INR 5 plus, so generators are not willing to... they cannot sell power at a rate lower than INR 5.25, INR 5.50. That is why our clearing price is still high. I'm sure going forward, when coal production improves availability, the e-auction market is more. The e-auction price, which was only 35% premium in FY 2022, it should come down to that level. When that happens, then you will see our clearing price coming down to INR 3.54, and the volume should also increase with that. Would that be a reasonable expectation to have over the next three, four months or, you know, based on how things are going right now, you expect that liquidity will be tight for some more time? Maybe after August, September, this should come down because March, April, May are high demand periods and during this time even hydro and wind support is also not available, there is going to be a lot of pressure on the coal-based power plant. After that, I think the situation should improve. Okay. Would it be reasonable to say that, when exchange prices are high, it, you know, given that states DISCOMs, you know, requirement, to optimize their power procurements or finalized customers wanting to buy system power, all this demand will get impacted and that could weigh on volume growth on exchanges as we have seen in the fiscal so far. Yeah, yeah. When the clearing price is high, definitely it is impacting our business because our clear volume normally consists of three components. One is purchase by DISCOMs to meet the demand. Second is the states which are located far away from the coal mines, their variable costs used to be higher. They used to back down those processes and then purchase power from the market. Third is purchase of power by the open access consumer, industrial consumers, so it optimize their cost. Now, with high clearing price, it is only the demand of the distribution company which is coming to the market, and optimization opportunity is reduced to significant extent. That is why we slight dip in the cleared volume. I'm telling you, in spite of that, even for meeting the demand, the volume is still very, very high. On quarter-on-quarter basis, we have seen growth with respect to quarter two, quarter three. Volume growth is almost about 8.6% in electricity. Because I'm thinking, I'm sure quarter four should be better than quarter three. Got it. It is expected that, you know, the volume would shift back to DAM from DAC and, you know, with the bringing out the GNA regulations in October. This issue around double charging of transmission charges, why has it still not been addressed? Can you please explain that? No, no. Issue has been appreciated by the regulators. They have already issued the GNA regulation where they have addressed this issue, and there will be no double charging. The only thing is that GNA regulations will be implemented after finalization of the grid code and transmission charge carrying regulation. These two regulations are under the hearing have been held for all these regulations, so they are under finalization of these documents. Once these regulations are issued, then this will be implemented together. All these three regulations are interlinked. We are expecting maybe from first of April this will get implemented. Okay. My last question is on, ICX. You know, in your presentation you had mentioned that by 2050, India will sell almost 200 million carbon credits. Over the next two to three years, you know, how do you see the opportunity shaping? What are the investments that you will do in ICX? Could you know, give us a more you know, between you and the next couple of years, what will be the developments? Carbon market is a different kind of a market and we have just started this exchange. We understand that the opportunity size is quite big, but first one or two years could be difficult period for us. As of now, we have just incorporated the company. We are in the process of developing the technology platform for this and understanding the market, approaching the buyers and sellers, getting them registered. Maybe by middle of this year, we intend to launch this exchange. Thereafter, I mean, let's see, because many corporates, many industrial houses, they have made their commitment under the ESG to be carbon neutral. These targets are quite challenging, all of them to achieve these targets will have to buy carbon credits. I think India is a large producer of carbon credits also. Since it's an international exchange, we intend to interact with the international participants also. Opportunity is good, but let us see how much share we are able to get out of that. Okay. Thank you for answering my question. Thank you. Thank you. We have the next question from the line of Sandeep Aggarwal from Naredi Investment Private Limited. Please go ahead, sir. Hello? Hello. Mr. Aggarwal, please go ahead. Yes. Yes. Yes, sir. Thank you. My question is currently 85.9% is on long-term PPA. Can you please speak, sir, bit loudly? Hello? Yeah. Yeah, please. Yeah. Currently 85.9% is long-term PPA, as per your comment. After 25- years of completion, it will be no renewable. What is the other option for the company to sell the power other than exchange? My question is. I mean, at present, companies who have long-term PPAs after 25- years, they are free to sell their power in the market. Then they have the option to sell this power under the bilateral contracts, maybe for on medium-term basis or short-term basis. Exchange is the most flexible option where they can. You know, after 25- years the plants also get aged and their performance also deteriorates likely. Depending on the availability of the plant, they can best utilize their capacity through the exchange platform. We have both Day Ahead Market and RTM market, and we also have long-duration contracts. I'm sure this participation of these platforms will be more through the exchange. Sir, you have any data that after three to five years, what will be the percentage reduce 85.9% to what percentage? As of now, from the last 5-6 years, long-term contracts are not happening. Demand is increasing every year at a rate of 5%-6%. Definitely the share of the long-term contracts in due course of time will increase and purchase through the market will increase. Okay. My next question is regarding the gas exchange. About 30% of gas imported via short-term. What is the exact market size in this and what is the main trigger you think other than price to increase the volume in a, you know, close right now? See, in any market platform, on any market platform, the volume increases when the prices are competitive, and same thing holds good for the gas section also. This year, volumes of the gas exchange increased because for the first time Government of India allowed domestic gas with the ceiling price also, allowed trading of that through the exchange. That brought us good volume. LNG trading was hardly any quantity, because LNG rate is very, very high in the international market, so import was less and our trading through the exchange was very less. It was mostly domestic gas with the ceiling price and domestic gas from the other sources. Going forward, as and when the LNG prices moderate, they come down to the level of, $5-$6, which used to be the price earlier also. I'm sure when that price comes, the LNG import will increase, and we will see larger volumes through the IGX platform. Okay. Thank you. Thank you, sir. Thank you. The next question is from the line of Yash Jurulkar from HDFC Asset Management. Please go ahead, sir. Yeah, hi, thanks for the opportunity. I had two questions. One is basically from a business perspective. You have introduced, you know, many new products in the past, say, few quarters. Going forward, what would be the revenue composition, you know, looking like? Say, if I have to order from a year or two from now, what would you want from the revenue side? How the product should be looking like? I couldn't get your question. Can you repeat, please? Yeah. My question is, since you have introduced many new products, so the revenue contribution of DAM and RTM is supposed to be the highest right now. Say two years down the line, how would you want the revenue composition to be like? I mean, there was a time when DAM was constituting almost about 90% of our volume and 90% of our revenue. Today, DAM is only about 50% of our volume, RTM has become 26%. Taken together is about 78% DAM plus RTM. In fact, DAM plus RTM is the most competitive market as far as exchange is concerned. Volume in these two segments will continue to lead other market segments. We also expect long-duration contract volume to pick up in future. As I told you, whenever the prices, the coal price come down in the international market and in our domestic e-auction market, in the RST market also we expect significant volume growth. It will be very difficult to say how will be the distribution of volume under the different segments. That depends on the clearing price. When the clearing price come down, then you will see large volume in the RST market also. Okay. Okay. In green market is another area with large renewable capacity addition. We should see good volume growth in this market also. Would renewals also be like a major component going forward in the DAM segment, the green DAM segment? Yes. Green market, it was only 2%-3% two years back. Last year it was 5%, and this year it is already 6%. I'm sure next year you will see green market going to be almost about 10% of the total volume. Okay. Secondly, just wanted to know about the transaction charges which are under review. You had submitted your proposal about the transaction charges and it was under regulatory approval. Does that risk still remain that the transaction charges would, you know, drop or, you know, would be halved? Hearing are held in the month of December. Order is reserved by the commission. Order has not been issued. Till order is issued, well, it is very difficult to say what is going to be the final order. Looking at what happened during the hearing, I think, we made our case and we practically convinced the commission that a 2% of projection case is the right, which we have to be at the right number, which we have also fixed in the regulations. Probably that should happen. Okay. Basically from your point of view, you think that, I mean, it would work in your favor? Yes. Yes. Okay. Okay. Just one last question. I just wanted to understand about the gross bidding mechanism, like at what implementation stage it is or it is under regulatory approvals and, you know, it's under review. Gross bidding is basically voluntary participation of the states to the market. States can sell their capacity, which is at the margin. I mean, if the exchange clearing price is INR 3, they can sell power from the power plants which are less than INR 3, maybe from INR 2.75 and above. They sell in the market and buy power whatever is required from the market. You are selling in the market and buying from the market. In that turn, in turn you are optimizing because your demand during the day is not uniform. You optimize your power procurement cost to the market. This kind of thing happens normally when the clearing price is competitive. Since this year the clearing price has been very high, there was no opportunity for distribution companies to apply this gross bidding concept. Okay. Okay. That's very helpful. Thank you so much. I mean, these are all the questions I had. If I have any further questions, I'll get back in with you. Thank you. The next question is from the line of Nikhil from AllianceBernstein. Please go ahead. Hi. Hi. Thank you for the opportunity. I had two questions. First question was regarding power derivatives. My understanding is it's gonna come on another exchange, but it has implications for IEX as well. Wanted to understand if there are any updates on that front. Power derivatives are not released as yet because this will be introduced in the semi-regulated exchanges. I think, NRC and states are working on this. There is a joint working group. That joint working group has to approve the contracts for the derivatives because, you know, in electricity we have the spot market also, and regulator wants to be sure that there is no adverse impact of those derivatives on the spot market. I think, it is in advanced phase and, maybe in the next one or two months we will have derivative contracts in the market. Understood. Good to hear that. The second question I had was regarding RECs. You mentioned the new regulations coming into play in December. Wanted to understand that, you know, the regulation allows power traders also to participate in RECs. Did that have an impact on November volumes, and could it have an impact on future volumes on RECs? I don't think because all Distribution Companies particularly, they would like to do trading of RECs only through a competitive platform so that there are no questions asked. Exchanges have been well accepted over the last 12 years that this is the competitive platform for Price Discovery, and REC trading has been happening through this platform. I'm sure execution companies will continue to buy RECs through this exchange platform only. Other open access consumer is industrial consumers. Their requirement is in very, very small quantities and they buy it as and when required basis. They will also like to prefer exchange platform because there's no connection platform that fixed government when that transaction is going to happen. I don't see allowing trading companies will have any adverse impact as far as REC volume is concerned. Let's see. So far, I don't think any transaction has happened in the through the trading companies because it is almost about one and a half month over, nothing has happened. Got it. Thank you so much for answering my questions. Thank you. The next question is from the line of Devam Modi from Kotak. Please go ahead, sir. Yeah. Good afternoon, sir. What will be the IGX share in the total gas volumes of the country? As of now, IGX share is only about 1.5% only. It is just, you know, this quarter two years back. This would be based on the third quarter, 22 million MMBtu would be 1.5%? Yes. What would be the Q3 profit from IGX would be around INR 12 crores, would that be correct? Yes. You're right. What would there be any one-offs in this current numbers because with kind of volumes also would we be posting this kind of numbers? If the volumes expand further, what kind of profitability can be expected over here? Are there any one-offs in this current numbers and the subsequent years? No, no. This quarter volume is mostly driven by the domestic gas, domestic ceiling price gas sold by Reliance and ONGC. They have regular supply of gas, so I'm sure their requirement will be to do sell of this gas on a monthly basis. They have seen that exchange platform again is more flexible and efficient platform. Again, here, the transactions have been very smooth, so the transactions from these companies should continue. In addition, as and when the LNG prices come down, the volume would further increase. Okay. What kind of... Would you... You are saying current base would remain around this levels and then volume increase will depend on further narrowing down of LNG prices. Would that be the right impression? In fact, in the gas markets, there are many fields which have been given to the private sectors. There are many fields, in fact, presently which were auctioned in the recent past. In those fields there is no auction and there is no ceiling in their price. As and when gas production from those fields start, I'm sure they also, there is participation also will increase on the exchange platform. There are many marginal fields which are coming up now. I expect good participation. This year already Gas Exchange has done more than three times of what we did last year. Which in nine months. By the end of the year, it should be almost about four times of what we did last year. For next year it will be difficult to give a number, but certainly it should be in the range of 50 million MMBtu. What would be the quarterly overheads at IGX level? Quarterly overhead is around INR 5.5 crore. This would mean all admin expenses and salaries? Yes. Okay. Okay. What would be the volume share in the core business of IEX, that is the energy exchange, what would be the volume share of FPIs on the buy side and the sell side in this quarter? Buy side it is about 80%-90%, between about 88%. On the sell side it is 65%. Distribution companies today are the major buyers and sellers. Buy mostly it is distribution company because due to the reasons explained by Mr. Goyal. Sell side also we are seeing very good participation from DISCOMs because they are the ones who are getting more coal under long-term supplies and they are operating their plants at higher TLF. Wherever they have surplus, they come to the exchange market and sell that power. Correct. Correct. I was just trying to understand what you were saying with regards to the fact that when the prices are higher, typically you would expect the volumes to be slightly hit because of the lower FPI participation. Would you feel that the non-FPI components of the dependent supply will be much more inelastic to price movements? Would that be the right understanding? No. What we were trying to explain was from the DISCOM or FPI side, we get two types of buy. One buy is there to meet the deficit, which is price insensitive. Whatever is the price they want to buy, then buyers is lower and supply to the end consumer. Second part of buy is actually optimization buy. In first nine months, the growth in the overall electricity demand grew by 10%. Growth was so robust that there was so much deficit buy, which led to prices being on the higher side, coupled with the higher input cost and hence optimization buy was not happening. The number that we have registered till now, it is purely on deficit buy. The point we were trying to explain was, as the supply will improve, as the cost, input cost will go down, we expect more buy to come from same SEBs. This additional buy would be on account of optimization or replacement. Sure, sir. What I was trying to ask was the non-SEB volume, that is the volume from industries and other private entities, would that be growing in a normal trend? I mean, irrespective of the fluctuations in power cost? No, no. That has gone down drastically. In fact, non-SEB volume today is only 10% because our prices are very high. As the prices will start to come down, you will see this number going up to as high as 30%-35%. There is so much demand which is there, which is waiting on the sidelines, waiting for price to come down. Every day, these industries are placing their buy bids. Their bids remain unclear because the prices are high. This is additional over and above SEB buy. This quota will also come as the prices will come down. It's a highly price-sensitive buy which we get from industries. Okay. Okay. Sure, sir. That's it from my side. Thanks. Yeah. Thank you. We have the next question from Anshuman Ashit from ICICI Securities. Please go ahead. Thank you, sir, for the opportunity. Sir, over the past few days, we have seen the INR 12 price cap being hit during the morning and evening hours during many time blocks. Sir, what is generally the view on this price cap? Will it continue? Will it be changed because it is hurting the DISCOMs a lot and hurting our volumes as well? Do you see with the national coal price moderating a bit, do you see supplies from imported coal-based plants increasing and there being some near-term relief on prices? The price cap of INR 12 is expected to continue for some more time. CERC has already issued that this will continue till further orders. Which means that, they don't see, they don't expect revision of this upward in the near future. Let me tell you one thing. With INR 12 price cap, we don't see any impact on the volume. Because whatever sale is available in the country, the marginal cost of that is much lower than INR 12. Even domestic coal-based power plants, there also the cost is, in spite of high C, ox rate is INR 5.5. Imported coal-based plants, the cost is about INR 6.5-INR 7. INR 12 is much higher than that. All of them have incentive to participate in this market, so I don't see any impact on the volume because of this, price cap. Okay. Understood. sir, for the nine months, what has been the total exchange volumes and, how has been our market share? Could you give some details on that? Exchange volumes has been almost about 70.7 billion units the first 9 months. Mm-hmm. Our market share is in this quarter it is almost 92%. If you take the full year, it is 89% electricity. In electricity. Sir, is it fair to assume because the other two exchanges mostly have term ahead contracts, and because volumes there have increased and for DAM and DAM, it has reduced. Once DAM volumes pick up, our market share may revert to the earlier levels. You must understand one thing, why did DAM volume pick up? If you analyze the volume trend on the exchange platform for the last 13, 14- years, the DAM volume used to be hardly 1% or 2% of the total volume cleared on the exchange platform. Distributors, when there is enough liquidity on the Day Ahead Market and RTM market, they prefer to buy in the DAM and RTM because that provides them lot of flexibility. In this year, whenever supply side constraints, demand was more, many distribution companies preferred to get into the DAM market to ensure availability of power. That is why the DAM volume increased. In future, with the increase in coal supplies, price moderation on exchange platform, I am 100% sure that DAM volume will rather go down. We have seen in these nine months also, the months in which the clearing price was lower, the DAM volume was lower in that, sir, in that month. I don't see any reason for DAM volumes to go up. Okay. Understood, sir. Sir, for FY 2024, what is the growth that you are looking forward to in terms of exchange volumes overall? Yeah. Our growth is dependent on the market conditions. If GDP grows, electricity demand is going to grow. If electricity demand increases by 5%-6%, that means that almost about 80 billion -90 billion unit of extra demand in the country. I'm sure good part of that will come to the market. But for meeting that demand, there should be enough supply also. Supply can happen only if there is adequate coal supply. I mean, it is all dependent on these things, so it will be difficult to make any guess on that. I can tell you one thing, if you take our average for the last five years, six years, our growth rate has been almost about 20% on CAGR basis. It should be possible to achieve that kind of a number if market conditions are conducive. Okay. Understood. Sir, one final question. Sir, you had mentioned in your initial remarks that ESCerts trading will start in this month. Is it? Sir, at what kind of volumes are you expecting in that? ESCerts, I think, the total volume of the ESCerts for sale is hardly about INR 40-50 lakhs. INR 60 lakhs. INR 70 lakhs. The purchase obligation is for only INR 35 lakhs. The size is very less in this. Okay. Okay. Similar for the REC for FY 2023? For REC. For REC, yeah. What's the kind of volumes? As by 2023... Yes. What's your expectation for the FY 2024? We have already done 43 lakh REC ready, and we should close this year with at least almost about 60 lakh REC. Yes. We are expecting another, INR 20 lakhs in next three months. These are the closing months. Majority of the buy is in these trending months only. Okay. Understood. Thank you so much for answering my questions. Best of luck. Thank you. The next question is from the line of Lavanya Yerramaneni from UBS. Please go ahead. Hello. Hi, sir. Thanks for this opportunity. I just wanted to understand if, once we get approval or order from CERC on the transaction charge, do we have any idea on the frequency of the approval which is needed or is it only whenever a new product is launched? No. I mean, invariably these kind of approvals are once approval. Thereafter, if conditions change, if regulator feels that there should be re-examination of that, they can do that. In fact, in case of trading margin, as the next best example is the trading margin. CERC had notified trading margin in 2010, in 2020 they reviewed that and issued a order that is the impact trading. Why is the trading margin upward after 10- years? It is not done on yearly basis. Once this approval is there, I'm sure this approval is going to be there for a long time. Okay. Maybe for a decade. I was just checking because, for trading margin it was a cap and, explicit approval for issue of trading licensee was not required. Here with exchanges, along with the cap, approval is required for each of the exchanges separately. Here also they are going to approve the transaction fees as a cap. Exchanges which cannot charge more than so many, so much of paisa as transaction fees in the DAM market, so much paisa in the RKE market. If you fix the number, then between the different exchanges they will not be able to promote competition. Mm-hmm. Got it. Here also they are going to put the cap, and they have already put the cap in the regulation. A cap on INR 0.02. Mm-hmm. I'm sure that number is going to come. Got it. Got it. Just, I mean, I just wanted to understand your view on the overall market. Usually during winters, I mean, overall electricity demand comes down and supply is relatively better during this period. Despite that, the exchange prices are quite high. Coal prices is the only reason or any other change in the market or that you are seeing price so high, market prices even in January? One is the demand of power in the country has increased. It has increased by almost 10% this year, which is again unprecedented. In the last 20 years, this is the 1st year where the electricity demand in the country has increased by 10%. Otherwise, it used to be at a rate of 4%, 5%, 6%. That is one factor. Second factor is, coupled with this, it is unfortunate to see that coal prices have increased in the international market because we have almost 20 gigawatt of that imported coal based capacity. That open capacity is operating hardly at 30%-40% PLF. The pressure is on the domestic coal based power plant, and that is why all these problems are happening. Okay. Got it. Got it. With some moderation in international coal prices, do you see this improving in coming months or how do you see this moving? I'm sure, because the prices have already started coming down. Every month we are seeing 4-5% reduction in the imported coal prices. Domestic coal price, key e-auction price also is reducing every month. In the near future, it should come down to the normal range. Got it. Last question from my side. We have seen sell side from state boards, state electricity, they're saying 65% now. What this used to be earlier? Like, what is their share in the sell side? In the normal year, like 2020? Distribution companies then used to be 30%-40%. Okay. Generating company used to be 60%-70%. This year, since the distribution company states got more coal under the PPA, they had more power at their disposal. You know, there are many states where the demand is in the morning and evening hours, but then they don't have very less demand during the night hours and daytime. To keep the plant running, they sell power during the nighttime and some daytime. I mean, when there are states who have constructed capacities keeping their demand growth for the next 10 years, and they have to raise surplus capacity at their disposal, so they sell power from those plants. Since the price, clearing price on the exchange trade platform is lucrative, these states in the product in turn are also able to make some reasonable profit out of that. Got it. Thank you. Thank you so much, sir. Thanks for explaining. Thank you. We have the next question from Ankush Agrawal from Surge Capital. Please go ahead. Yes. Hi, sir. Thank you for taking my question. Firstly, on the IGX, what will be the total traded natural gas in India, in a year, including the domestic? Yes. The natural gas traded is almost about 36 million MMBtu. A very large part of it is domestic gas only. Domestic gas, sir. No, domestic gas has two types of I'm asking the total Indian consumption, not what IGX is saying. Indian gas, total gas consumption in India is almost about 160 MMSCMD. It is million cubic meter per day, 160 million cubic meter per day. Out of that, 50% is produced domestically and 50% is imported. What would this be in MMBtu terms? Uh-. Size. I don't have the number right now. Rough number. Rough number would do. Right now I would not like to make a wild guess on this. Okay. sir, out of this, you know, what would be the addressable opportunity for IGX, like the short-term traded gas, like which is traded from traders or, you know, bilateral deals, something like that? IGX this year is doing almost about 1.5% the total power gas consumed in the country. Okay. What would be the short-term market size? Looking at the plan of the Government of India, government plan is to increase consumption of gas from 6.3% to 15% of the energy basket in the next seven, eight years. They have created large infrastructure in the gas sector like LNG terminals, gas pipeline transmission sector. If gas growth happens like that, I'm sure opportunity for the gas exchange is very, very high. I always say that the opportunity for the gas exchange is as big as what we are doing in the power sector. Yeah. That is taken, you know, any, like idea on what is the short-term market size? In the electricity we have about 12, 13% which is traded on the short-term side. On the gas side. Yes. In case of power sector, long-term contracts are almost for 87%, 80% of the demand. In the gas sector, long-term contracts are hardly for about 70%, 75% of the demand. Rest of the gas is under the short term, getting imported or bought in the short-term market. Okay. The opportunity is much higher. Understood. Okay. Got it. Secondly, sir, on this carbon exchange that you are looking to start, I believe this would be a global opportunity for IGX because, you know, carbon credits basically, these issuing agencies are global in nature. This would be fungible globally. Are we targeting the global opportunity or no, we would be restricting to, you know, carbon credit that would be issued and domiciled largely in Indian markets? This is going to be a global opportunity. That is why the name of this company is International Carbon Exchange. As of now, many European and American companies to comply with their ESG commitment, they are buying these carbon credits. Buyers are more active in the international market. We have on sell side, India is also producing many carbon credits. In fact, there's good opportunity for sell from the India, Southeast Asia countries and African countries. We intend to tap all these sources for the carbon credits and buyers in the European and American markets. The idea would be to firstly, you know, act as a supplier of Indian carbon credits to the global market. You're right. Right. That's got it. Got it. Okay. That's all. Thank you. Thank you. The next question is from the line of Arul Selvan from Independent Advisors Private Limited. Please go ahead. Hi. Can you hear me? I can hear you. Yes. I remember, I heard that, from a long duration perspective, you said that the current market size is about 50 billion units. Am I right in what I heard? You are right. Yes. My basic question here is that how exactly are the current market players trading in this segment? If it's not really through an exchange, you know, platform, is there some other platform or is it just a traditional, you know, P2P or bilateral contract way? Most of the trading in the interest market is happening through the platform. There is a platform which is for. Right. Owned by the government, right? Some of it, yeah. Where the reverse auction happen for, price discovery, and most of the trading through the trading companies are directly by generator to distribution companies. Okay. Now when long duration contracts are, I guess, introduced for, let's say, aggressively longer duration. Like, right now we have, if I'm not mistaken, six months, right? That's the longest duration that we have right now. Right, let's say-. We have right now contracts for delivery up to three months. Three months, sorry. We are talking to regulators for approving contracts up to one year delivery. Yes. Now my question here is that suppose, let's say in the future, we get, you know, the regulatory approval for launching contracts for let's say up to 6 months or 1 year or 2 years. Do you expect these players to automatically shift to our platform, or do you think that the existing big platform provides certain other advantages that are not available on our platform? Shifting of the participants on our platform will depend based on the value which we provide. If they are finding more value through exchange, they will definitely switch to exchange. We are trying to create value for customers to the exchange platform. Our one value is that these exchange platforms are flexible. You can give your requirement for doing the auction any day, and the auction can be done within three days time. We have very efficient system of power scheduling, so we in fact ensure that it matches the scheduling of the power also and also do the complete financial transaction. We pay to the generators on daily basis, so that is a big USP of the exchange. Generators are willing to sell power at a price lower on the exchange platform because they are assured of the payment. In case of these contracts, they are not assured of the payment on daily basis. They in fact get payment after the supply of power in monthly bills that bill and then after that many cases takes two, three months also. Looking at these kind of values, I am sure participants will be more active on the exchange platform. Right. Right. Just a couple of more questions. First one and to the next question is that are there any competitors, who are offering these long duration contracts for up to three months as of now? All the three agencies are offering this. Okay. You said that the fraction that you were seeing, that the lower amount of fraction, is that also across other exchange or is it only on our platform? I mean, volumes are happening in other exchanges also. I can definitely say that our share is more than their shares. Do you have a number for that in terms of what the market share would be on just the long duration contracts that are being? No, because, you know, as I told you that the volume in this segment at the moment is not significant because of the high clearing price. Right. This percentage and market share will be meaningful when the volume increases. Okay. Okay. That's it. That's it. I don't have any more question. Thank you. Thank you. Ladies and gentlemen, that was our last question for today. I would now like to hand the conference over to the management for closing comments. Over to you. I would like to thank all of you for being part of this call today. Friends, higher input costs continue to impact our volumes. Going forward with increased coal production, target for which has been fixed as 1 billion tonnes for the financial year 2023-2024. We expect a reduction in input price, lower clearing price on exchange, and increasing optimization potential for DISCOMs and open access consumers. I am sure this will support better volumes on IEX platform. IEX has always remained committed to positively contribute towards the sustainable Indian energy sectors. Thank you. Thank you. On behalf of Axis Capital Limited, that concludes this conference. Thank you for joining us. You may now disconnect your lines.