Ladies and gentlemen, good day, and welcome to the REC Limited Q2 FY twenty-five earnings conference call, hosted by Elara Securities Private Limited. As a reminder, all participant lines will be 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 an operator by pressing the star then zero on your touchtone phone. Please note that this conference is being recorded. I now hand the conference over to Ms. Shweta Daptardar from Elara Securities Private Limited. Thank you, and over to you, ma'am. Thank you, Steve. Good morning, everyone. On behalf of Elara Securities, we welcome you all to Q2 FY twenty-five earnings conference call of REC Limited. From the esteemed management today, we have with us Mr. Vivek Kumar Dewangan, IAS, Chairman and Managing Director, Mr. Vijay Kumar Singh, Director of Projects, Mr. Harsh Baweja, Director of Finance, Mr. Mohan Lal Kumawat, Executive Director of Finance, and other senior officials. We express our gratitude towards the management of REC Limited to provide us the opportunity to host this conference call. Without further ado, I now hand over the call to Mr. Vijay Kumar Singh, Director of Projects, for his opening remarks, post which we can open the floor for Q&A. Thank you, and over to you, sir. Good morning, everyone. I'm Vijay Kumar Singh, Director of Projects. We have a very brief presentation for our Q2 results, half-yearly results. We would like to make that quick presentation, and thereafter, our CMD will be giving overall overview of the sector. Please allow us to make this quick presentation to you. Over to my colleague for making the presentation, please. Good morning, everyone. We'll take you ahead for the investor presentation. We believe investors got an access of the investor presentation on our website. We'll take you ahead with this presentation. We have divided this presentation into five areas, which is REC overview, operational performance, asset quality, borrowing profile, and the financial highlights. Let's take REC overview first. We see that REC has a journey of more than five decades, wherein we started our journey from nineteen sixty-nine to develop power infrastructure sectors in rural areas, and therein we have grown ahead in leaps and bounds. In the latest year, 2024, we have been appointed as National Program Implementing Agency for PM Surya Ghar: Muft Bijli Yojana. We also did our maiden yen bond issuance of JPY 61.1 billion, and recently in September 2024, we did a USD bond issuance of $500 million, which were raised at the most competitive rates. REC has multiple key strengths, the first being Maharatna company and a strategic player in the Indian power infrastructure and logistics sector. We have a diversified asset base with robust access to diversified funding sources. We occupy a strategic position in the growth and development of the power sector and a major player in renewable energy segment and creation of India's Green Energy Corridor. We have a healthy asset quality with adequate Provision Coverage Ratio. We have very strong fundamentals and profitable business, with stable margins leading to strong profitability. We have highest domestic credit ratings of triple A, which is awarded by all the four major rating agencies in India. We have the international ratings of Baa3 and triple B minus from Moody's and Fitch, respectively, which are at par with the sovereign rating of India. We are the nodal agencies for all the major flagship schemes of India, the major being RDSS, Saubhagya, DDU-GJY, the latest being rooftop solar, et cetera. We have a highly qualified and experienced management team with sector expertise. We are a government trusted arm, wherein we are assisting in GOI in multiple schemes, being RDSS, Saubhagya, Late Payment Surcharge Scheme, Consumer Service Ratings of DISCOMs on operational matters, Integrated Ratings of DISCOMs on financial matters, DDU-GJY, NEF, Rooftop Solar Program. We have been accorded the coveted Maharatna status in FY 2023, which is the best among all the ratings assigned to the central public sector undertakings in India. We are amongst the top 14 PSUs which have been accorded this Maharatna status in India, out of the total 100 rated entities in India. Apart from Maharatna, the ratings are Navratna, Miniratna one and Miniratna two. REC holds the highest rating of Maharatna. This Maharatna status gives us various business advantages, wherein we get greater operational and financial autonomy. It allows us strategic investments by incorporating JVs, subsidiaries, and M&A activities in India and abroad. We have access to accelerated growth and support government's vision for the power sector. If you come to slide number 8, you see that we have forayed into infrastructure sector for nation's accelerated development, wherein we can... We have diversified our loan portfolio with a mandate of up to 33% loans in the infrastructure sector and logistics sector. In these sectors, we have sanctioned various projects in metro, ports, waterways, airports, oil refineries, road and highways, IT infra, fiber optics, steel infra, and health sector. If you come on the slide number 9 of the PPT, we have given the shareholder outlook. If you see the shareholding pattern of REC as at thirtieth September 2024, we are majorly owned by Power Finance Corporation, who hold 52.63% in REC, while the foreign portfolio investors and FIIs hold 21.23% in REC. The insurance companies hold 3.93%. Individual HUF and H NIs hold 10.78% in REC. The mutual funds and AIFs hold 9.48%. The corporate banks and financial institutions hold 1.71%, and others hold 0.24%. The top ten shareholders as at September thirtieth, 2024, are also given in the slide, wherein PFC holds 52.63%, Government of Singapore at 1.56%, HDFC Trustees, 1.47%, LIC, 1.35%, Nippon Life, 1.28%, Tata AIG, 0.77%, NPS Trust of Aditya Birla Sun Life Pension Fund, 0.77%, SBI PSU Fund, 0.71%, SBI Life Insurance Company Limited, 0.67%, Vanguard Total International Stock Index Fund at 0.66%. So these are the top 10 shareholders of REC as at 30th September 2024, and FIs and FPIs have always been reposed faith in REC, and they consistently hold more than 20% in REC stock since IPO in 2008. We have a strong history of high dividend paying in REC, and in the same context, we have declared the second interim dividend of INR 4 per share in Q2 FY 2025. This is in addition to the first interim dividend of INR 3.5 per share, which was declared in first quarter, making a total dividend payout of INR 7.5, which is 75% per share on the face value of INR 10. The earning per share of REC for the half year is INR 28.28. That is on analyzed basis of 56.56%, and the book value per share is at 276.82 as at 30th September 2024. We have received various awards and accolades in our long history. The latest being that we have been awarded the plaque under financial services sector, other than banking and insurance category at the REC Awards, that Institute of Chartered Accountants of India Awards, for excellence in financial reporting for FY 2022-23. Apart from that, we have received various awards in various areas for renewable financing, risk management, green bond, sustainable finance, and corporate governance, et cetera. We come to the operational performance of REC for this quarter and half year, FY 2025. In the first half of FY twenty-five, we have sanctioned total projects worth INR 1,88,991 crore, wherein we have sanctioned the highest category of loans in renewable, including large hydro, of INR 63,391 crore, making total sanctions 32% out of the total kitty, so we have captured, we have, we are still in the same trajectory of outpacing the last year's sanction. In quarter two of this year, we have sanctioned projects of INR 76,200 crore, wherein renewable sanctions stand at INR 27,737 crore. The disbursements during the half year stand at INR 99,955 crore, wherein the renewable disbursements stand at INR 12,297 crore, making total disbursements 12% out of the total portfolio. The disbursements under second quarter was INR 47,303 crores, and out of that, the renewables were INR 5,946 crores. This signifies an increase of 20% in the disbursements from the last half year of FY 2024 in the current year, FY 2025. There's an increase in the renewable, including large hydro, of 93% in the disbursement in the current half year of FY 2025. Our loan book during the half year has increased by a robust rate of nearly 15% Y-o-Y, and our loan book as of thirtieth September 2024 stands at five lakh forty-six thousand one hundred and seventeen crore, out of which state sector stands at 88% of the total book, at four lakh eighty thousand eight hundred and eighteen crores, and the private sector stands at 12% of sixty-five thousand two hundred and ninety-nine crores. The renewable stands at 9%. It has grown continuously from September 2023, at twenty-nine thousand eight hundred and thirty-three crores, to forty-seven thousand eight hundred and twenty crores, as at thirtieth September 2024. Now, renewable book stands at 9% of our total loan book. The generation book is at one lakh fifty thousand nine hundred and thirty-seven crores. The transmission book is at INR forty-eight thousand five ninety-two crores. The distribution book is at INR two lakh nineteen thousand nine hundred and ninety crores. The infrastructure and logistics sectors in the core area is at INR sixteen thousand five zero four crores, and I&L, infrastructure logistics sector, electromagnetic components at INR forty-nine thousand three hundred and eight crores. The STL and MTL stands at INR twelve thousand nine hundred and sixty-six crores. So that is the total book of INR five lakh forty-six thousand one hundred and seventeen crores. We have pan-India presence across all the states in India, wherein we have lending across twenty-eight states of INR four lakh eighty thousand eight hundred and eighteen crores and private book of INR sixty-five thousand two hundred and ninety-nine crores, making the total loan book of INR five lakh forty-six thousand one hundred and seventeen crores. On slide 17 of the presentation, we have given the top 10 major borrowers of REC, which are all in the state sectors. The top being Tamil Nadu Generation and Distribution Company, then Maharashtra State Electricity Distribution, Tamil Nadu Power Generation, Kaleshwaram Irrigation Projects, Uttar Pradesh Power Corporation Limited, Telangana State Power Generation Corporation, Andhra Pradesh Southern Power Distribution Company, Telangana State Power Distribution Company, Jodhpur Vidyut Vitran Nigam Limited, and the Jaipur Vidyut Vitran Nigam Limited. We have a well-diversified asset portfolio, with top 10 borrowers accounting for nearly 36% of the outstanding loans, and none of the top 10 borrowers account for more than 7% of the total loan book, and there are no NPAs in the top 10 accounts ever. If you come on the asset quality of REC, the asset quality has shown continuous improvement of wherein our gross NPA have reduced considerably from 3.42% in March 2023 to 2.53% in September 2024. Our net NPA have also reduced continuously from 1.01% in March 2023 to 0.88% in September 2024. The provision coverage ratio stands healthy at 65.12% as at close of September 2024. On page twenty of the presentation, we have given the sector-wise breakup of our ECL provisioning, that Expected Credit Loss provisioning of our loan portfolio. If you see out of the total loan outstanding of INR 546,117 crore, the total NPAs are at INR 13,824 crore, wherein we have made a provisioning of INR 9,003 crore, signifying a provision coverage ratio of 65.12%. Additionally, we have- 65.12%. 65.12%. Additionally, we have provisioning of three thousand seven hundred and five crores on stage one and stage two assets. That's the standard assets, implying a total provisioning of 0.70% also on the standard assets. The credit impaired assets of REC are at various stages of resolution, wherein almost 13 projects are under NCLT, worth of twelve thousand two hundred and ninety-six crores, wherein we have made a provision of 67%, and we are also pursuing four projects outside NCLT, worth one thousand five hundred and twenty-eight crores with a provisioning of 50%. We now come to the borrowing profile of REC, wherein we have the highest long-term ratings from CRISIL, ICRA, CARE and India Ratings of triple A, and the domestic credit ratings of Baa3 from Moody's, triple B minus from Fitch Ratings, and triple B plus from Japan Credit Rating Agency, which are at par with the sovereign rating of India. Of the total outstanding borrowings of REC on slide number twenty-four, we have total outstanding borrowings of four lakh seventy-five thousand eight hundred and thirty-two crores as at thirtieth September twenty twenty-four, wherein our external commercial borrowings are at one lakh forty-eight thousand seven hundred and ninety-two crores. Apart from that, we have access to various other areas as well of borrowing, which are institutional bonds, including contingent bonds of two lakh two thousand seven hundred and seventy-six crores. We have loans; we have taken loans from banks and institutions of INR 71,508 crores. We have access to 54EC capital gains tax exemption bonds of INR 43,753 crores. REC is only amongst the four agencies in India who can issue such kind of bonds. We have Tax Free bonds of INR 8,999 crores, and we have borrowed small amount of INR 4 crores from infrastructure bonds as well. So that is the total portfolio of INR 4,75,832 crores of our borrowings. During the current period of half year 2025, we have raised total quantum of INR 77,759 crores to fund our disbursements. And during the current quarter ended September 2025, we have raised INR 30,928 crores. Out of this, INR 23,121 crores in half year have been raised from FCNRB loans, and INR 18,105 crores have been raised from foreign currency borrowings. We have also raised INR 29,378 crores from special bonds, INR 4,254 crores from capital gain bonds, and we have also taken loans from banks and financial institutions of INR 2,900 crores. Now we come to the financial highlights of REC for the half year ended 2024. We have recorded the highest ever half-yearly profit of INR 7,448 crores during the half year ended 30th September 2024. Our total income stands at INR 26,633 crores versus INR 22,571 crores, which signifies an increase of 18% Y on Y. The net interest income stands at INR 9,723 crores versus INR 7,763 crores. That also signifies an increase of 25% Y on Y. The net profit, the net profit for the half year stands at INR 7,448 crores, which is an increase of 11% year on year from INR 6,734 crores in the corresponding half year last year. The loan book has reached 5.46 lakh crores as at end of September 2024, which is an increase of 15% Y on Y. The asset quality has improved, with net credit impaired assets at 0.88% against 0.96% year-on-year. The net worth has also increased to INR 72,893 crore versus INR 63,117 crore, which is an increase of 15% year-on-year. We have a capital adequacy ratio of 25.31%, including Tier I capital of 22.87% and Tier II ratio of 2.44%, which is well above the RBI requirement of 15%. During the half year ended 2024, the yield on loan assets stands at 10.08%, the cost of funds at 7.12%, implying an interest spread of 2.96% and a net interest margin of 3.64%. The return on net worth is at 21.013%, the interest coverage ratio of 1.57 times, and the net equity ratio of 6.47 times. The standalone statement of profit and loss is also given on slide number 29, wherein we have given the quarterly and the half year presentation of the profit and loss. We have attained a profit after tax of INR 4,500 crores in the half, in the quarter ended 30th September 2024, against INR 3,773 crores, and also the profit for the half year is at INR 7,448 crores. The balance sheet position is also given on slide number 30, wherein we have given the item-wise distribution of the balance sheet position of assets and liabilities as of 30th September 2024. With this, we have concluded the presentation, and CMD sir has also joined, and now we can go ahead with the question and answer session. I welcome- Thank you. All the participants today in this con call who are present today. As you have noted that our revenue from operation and income is increasing to at the rate of 70%-80%, and our asset under management has grown by 15.2% and on half yearly basis. We'd like to give guidance that our asset under management is likely to increase in next three to four years at the rate of, it will vary from 15%-20%. Depending on particular quarter, it can go to 15%, some quarters it may go to 17%, some quarters may go to around 20%. But on an average, we hope to maintain this 17% growth in our asset under management. But even if we take a conservative estimate, even if we grow at the rate of 15%, our asset under management would be doubled to about ten lakh crore by the year two thousand thirty. But if we are able to sustain this 17% growth, perhaps we may be doubling the asset under management by the year two thousand twenty-nine, twenty-eight, twenty-nine, sir. One more significant thing you might have observed that our sanction to the renewable energy sector has increased by about 21% in the first half of the year. We have sanctioned projects worth INR 60,391 crore in the first half, and disbursements have also gone up by 93% with respect to renewable energy sector. Going forward, our Ministry of Power has outlined the requirement of 80 gigawatt capacity of coal-based capacity in the next six to seven years, by the year 2032. We are targeting a 20% market share in this coal-based power plants business also. And distribution sector will remain our key focus area because Revamped Distribution Sector Scheme is being implemented. And thereafter also, since country's distribution network is quite old, 35- to 50-year-old, the continuous upgradation of distribution infrastructure will still be required. And with the increase in share of renewable energy in the total overall generation profile, the requirement of the storage solution, the evacuation through Green Energy Corridors will be still there, and we are targeting near 20% market share in the renewable energy business, which may definitely be more than three lakh crore by the year 2030. With this, now we are open for questions. Thank you very much, sir. 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 withdraw yourself from the question queue, you may press star and two. Participants are requested to use handset 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 Shreya Shivani from CLSA. Please go ahead. Thank you for the opportunity, and congratulations on a good set of numbers. Two questions. First is on the liability funding side. So your cost of funds has inched up. Can you give some outlook for what's, how it's going to be in the future? And which bonds, I'm assuming one of those, which bonds are the one which has caused the spike, and how much price hike have we done for borrowers? And which segment, traditional, renewable et cetera, which segment did we hike the prices? Second question is on some of these media articles had these news items about lending to some of these groups, like, say, Vadhavan Port was mentioned couple of weeks back in the media article. So can you help us understand, given Vadhavan Port is owned by JNPA, will our loan have a government guarantee over there from an explicit government guarantee as a collateral over there? And also there was a news article about lending to a company called Azure in the renewable sector. Wanted to understand the thought process behind lending to that company, given that there have been whistleblower issues with them, the CEO changed within two years and two months or so, stuff like that has happened in the past. And yeah, those are my two questions. Thank you. Let me respond to those questions. The cost of funds is likely to come down by the year, by Q4, as you might have observed that Reserve Bank of India, although they are holding this rate, but there's likelihood that the rates may come down in Q4, and we have kept a diversified portfolio of our borrowing. You might have observed that our FCNR loan and this external commercial borrowing has increased about 31% of our total borrowing. That is, there the, our cost of fund is much less, less than 7%, actually, and our 54EC bond is the cheapest source of fund available that gives us 5.5%. Going forward, we are not planning to increase the burden on the borrowers because our cost of funds will be able to contain. With regard to your queries about lending to non-power infrastructure and logistics sector, let me clarify that our hands are full with our core sector generation, transmission, distribution, and with a renewed focus on energy transition from the renewable energy segment and entire green project. We have a huge pipeline of projects from this core competency area. So we are not focusing on non-core infrastructure and logistics at this stage. And as I had already indicated that, we are... With regard to renewable energy projects, we have recently signed MOUs worth one lakh twelve thousand crore when we had participated in RE Invest Summit in Gandhinagar last year, we have signed MOUs worth one lakh two lakh eighty-five thousand crore. So we have a huge pipeline of projects from renewable energy sector and conversion generation, transmission, distribution also, we have huge pipeline projects. We'll be selective in financing non-core infrastructure logistics only where the asset quality is good, revenue cash flows are ensured, only those sectors we'll be able to focus. With regard to Vadhavan port, you might have observed that that has already been approved by the Cabinet Committee on Economic Affairs. Government of India has already approved. This is being taken by JNPA, and we'll. But the execution will take time actually, for Vadhavan Port. This execution will commence from the year two thousand twenty-seven only. By that time, its likely cash flows will become clearer. At that point of time, we'll take a call, but we do feel that there is absolutely no concern with regard to funding Vadhavan Port. I'll request our director to respond or add on this specific feature for Vadhavan Port. Correct. Vadhavan, just to add what CMD sir just now informed, is that we are in close discussions with them. They have confirmed that the entire equity will come up front. Now, you might be aware there are two promoters: JNPA is one, and Maharashtra Maritime Board is another promoter with 26% stake. Both of them will put 100% equity up front. Now, up front equity inclusion and that too 100%, definitely gives us a lot of comfort in terms of project development and subsequently as well. But then we are in discussion and negotiating this loan with them. With regard to your query on Azure, yes, we are very, very careful and we are watching the developments in Azure. What we have done in Azure is, that we have picked up only the commission projects. The commission projects which have definitive revenues, which the projects have secured a very good rating. If I'm correct, it is A minus rated projects. So it is all towards refinancing of commission projects only. And we are definitely not considering, at this point of time, any greenfield project. Because we are still not very sure that, for greenfield, the equity would come quite smoothly. But commission assets, the equity is improved, the projects are completed, they are up and running, and they have very good rating, and therefore we did that particular transaction. That is very useful. Can you help us understand in the commissioned projects of Azure, what is the EBITDA cover? I don't have that particular number- Yeah. But in terms of our Debt Service Coverage Ratio, it was close to one point three. ... so it's a lot of compliance. Okay, okay. Thank you very much. Thank you, sir. Thank you. The next question is from the line of Manish Agarwal from PhillipCapital. Please go ahead. Yeah, thanks for the opportunity. So taking the similar discussions forward, what's your take on telecom sector? Is company open to provide loan assistance to likes of MTNL or Voda? Your views will be very useful, and I have few more. Yeah. At this point of time, we feel that, we are not going to finance telecom sector, because our hands are, as already mentioned, our hands are full with generation, transmission, distribution, and with, regard to renewable energy sector. Telecom sector, as of now, we are not considering to finance. Okay, sir. That's useful. Second question was on repayment rates. So this quarter, the repayment rates were slightly high. Is there any prepayments you are witnessing, or are these some short-term loan which we discussed earlier, which are coming back? If you can comment on that. Actually, REC is into a financing business, and you can then expect that some of the prepayments will always come in. In the quarter itself, we have a prepayment of around INR 7,000 crore, which has impacted our loan book also. But that is a continuous feature, and it will keep on coming in the year and in the next two quarters also. So there's nothing called refinancing by other entities, correct? No, it is nothing like that. It is just they have cash surplus with the borrowing agency and they have prepaid the amount to us. Okay. Sir, finally, on Lanco, I understand the status quo is maintained. There is no money received, so if you can update on that. Also, similarly on the related point, we have been, you know, our coverage on Stage Three is coming down, so your take on that. Why are we bringing down the coverage on Stage Three? That's it from my end. Thank you, sir. Lanco Amarkantak case, the NCLT has passed the order, but, there were some operational creditors, they have about the distribution of this profit. That matter is pending, so that's why some amount has been kept. Once this matter is disposed of, the remaining amount will also get disbursed to all the lenders. On coverage, sir. The Stage Three coverage issue. Yeah, stage coverage. I'd like to clarify that of late, the Andhra Pradesh utility- No, no, that is fine. I'll just reply to what you are saying that, as you know, most of the projects which are coming in the renewable sector are coming from the private sector. So, in our previous investor conferences, we have already mentioned that by the year two thousand and thirty, our private sector share will increase to 30%. So it is going in line with that of what we have already said to our investors, that, with the new infrastructure projects as well as renewable projects, the private sector share will keep on increasing. This time now it has, from 10%, it has reached to 12%. No, no, sir, my question was, if I may come again, your provision coverage on Stage Three is declining your... And you are reversing the provisions. So my question was, why are we doing that? Actually, there was some amount was received, and against which we have reversed some ECL provisions. So that is why our NPA has changed. And as soon as we get the full amount and the full settlement is there, the gross NPA will also come down. Got it, sir. That's useful. Thank you. Thank you. The next question is from the line of Alok Srivastava from UBS. Please go ahead. Yeah, hi, morning, sir. Sir, on the previous participant's question, could you mention which asset is this, where this provision reversal has happened? It is regarding the KSK Mahanadi project, which is under advanced stage of resolutions. Bids have already been received. Some amount out of the TRA we have received. That amount which we have received out of the TRA amount, we have reversed ECL provision for that. That our management considers that the value as of now, which has been bid by the prospective investors, is much more than what we have already made a provision under ECL. So, whatever was the paper loss, we have reversed to that extent, and for that the money has already been received. In fact, NCLT allowed a distribution of the money lying in TRA to the lenders. That's how we got some receipt. The resolution of KSK Mahanadi is at advanced stage. We have got very good bids, and our recovery is going to be more than 100% with regard to KSK Mahanadi. Sure, sir. And sir, we had been reading that on Hiranmaye project, DVC has emerged as the highest bidder. So sir, what is our exposure there, and do we expect any writeback on that one? Yes, yes, we are expecting recovery of more than 80% from the Hiranmaye asset, and we had made provisioning about 50%, so we'll get some write back. Our total write back that we are expecting from three assets, KSK Mahanadi, Hiranmaye, and Sinnar project in Nashik. Our total write back are expected to be about 1,500 crore. Okay, sir. Okay. And sir, one more question I had, about TANGEDCO, which is also your biggest borrower. There, this trifurcation is going on between the generation, distribution, and the renewable entity. So sir, is there enough clarity now that where the guarantees will fit and your exposures, are they all, you know, guaranteed over there? Is there any risk post the trifurcation that happens? Thank you so much, Anup, for asking this very pertinent question. The trifurcation of TANGEDCO has already happened, and the three companies have become functional. I'll request Satyajit to say that our exposure is now well within the limit, and we have got sufficient space for all the three utilities. So what was happening, especially in the case of Tamil Nadu, the generation company and the distribution company were together called TANGEDCO. You might notice that in a state like UP, we have five discoms. In Tamil Nadu, we had only one discom, and then that discom was also clubbed with Genco, generation company, and therefore, we were experiencing a great difficulty in terms of our exposure limits. Now, since this trifurcation has happened, the entire loan, in fact, earlier also it was for a specific purpose, a specific scheme for generation, transmission, and distribution. Likewise, the loan separation has happened with respect to the scheme that we had sanctioned. Now we have separate loan amount, which is in generation, transmission, and distribution. Whatever loans were guaranteed by the government continues to remain guaranteed by the government, even after the trifurcation. Now, the biggest relief that we have got is that, we are nowhere close to the exposure limit for any of the utilities, with respect to generation, transmission, and distribution. Okay, got it, sir. So sir, here, there is a possibility that there could be a rating upgrade of some of these entities, and you can have write backs also at a later point, because if I'm not wrong, TANGEDCO had a C minus rating? Overall rating, there will obviously be impact, and they'll be re-rated again. All these three utilities will be re-rated again. You may note that distribution utility rating is dependent on the ranking being done by the Ministry of Power. I am sure their rating will go up, and similarly for Genco also. Some of the assets that they have, they very recently paid to their lender. We were not the lender for those projects will also improve the overall financials of the generation company. So our understanding is that all the three companies will have improved rating going forward. Once the improved rating is there, and you have rightly mentioned that, that will impact our ECL provisioning also. That will also be, to some extent, reversed. Sure, sir. Okay. Thanks a lot, sir. All the best. Thank you. The next question is from the line of Suraj Das from Sundaram Asset Managers. Please go ahead. Am I audible? Yes, yes, Suraj, go ahead. Yeah. Hi, sir. Good morning, and congratulations on a good set of results. Sir, on your slide twenty, where you give your loan portfolio and ECL provisioning, if I see the longer term, you know, trend on that thing, just wanted to understand two things. One, sir, on the private sector side, in the generation and renewable, your PCR coverage on stage one and two is continuously coming down. So for example, in March 2023, it was something like, you know, more than 100 basis points, which is now 60 basis points. Similarly, on renewable, it is something like 230 to 40 basis points, now it has come down to 60 basis points. So just wanted to understand what is the rationale behind this. Is this... I mean, and at the same time, you are growing the renewable book also. Is it because your ECL PD assumptions are lower because you don't have any significant, you know, delinquency over the past few years, or is it a conscious choice? Sir, can you please repeat the question? I'm not able to hear you perfectly, sir. Yeah. Sir, I'll repeat it. So if I see the stage one and stage two provision- Yes. for the private sector in generation and renewable segment Yes. It is now 60 and 62 basis points, respectively. Yes. This quarter. This number, let us say in March 2023, four, five- Yes ... quarters back, it was something like 102.30 basis points. Yes. This number is continuously coming down. Yes. So just wanted to understand what is the rationale behind this, because we are also growing the renewable book, and you are also, you know, reducing the stage one and two provision on both the segments. So what is the rationale, sir? I think you might have seen that our renewable book is growing quarter on quarter, year on year basis. Now, there are some projects which are under construction, have not achieved COD. There are projects which have achieved COD, and there are some refinancing projects also, which we mentioned during the earlier answers. So during the construction stage, the provisioning remains high, which is close to 1%, as per the ECL methodology. And once the project achieve the COD, the ECL provision comes down by 40 basis points. ... So as the projects continue to achieve COD, this provisioning will also come down. But then if there's addition of, you know, under construction project, there'll be change in this particular provisioning. So all will depend on the mix of the under construction and commission project, which will get reflected in the overall provisioning in the renewable energy sector. Number two, the PD, PD of these all some of the projects of renewable sector have also been improved, so which has resulted in lesser ECL provisioning, sir. Understood, sir. Very clear. And the second question, similarly on the infrastructure sector, both core and E&M, your provision on the stage one and two is only eight basis points. So should not be higher, sir, because I mean at least 40, 50 basis points should be the, you know, initial provision to begin with. Or, or why am- Actually, what happens that, in case of infrastructure project, most of our funding is to the government sector. No, sir, I was talking about the private sector only. And out of this, the maximum are against the state government guarantee. So as per our ECL approved policy, the weightage of the PD and NGD is lesser than in case of the project is secured by the government guarantee. So that may be the reason what you are mentioning here, why it is in case of IRF it is less. Okay, sure. No, so for private sector also, you have government guaranteed. Is that what you are implying? No, no, no. That is not the case, sir. Private sector is on the basis of the outstanding here and there, sir. And, Private sector is only close to INR 1,250 crore out of our total Infrastructure and Logistics lending. There, of course, the provision will be higher. What you see is the average against all of our lending in Infrastructure and Logistics. Majority or I would say 90% of the loans that we have advanced in the state sector are guaranteed by the government, state government, and therefore, their provisioning is much lower. What you see, 0.08, is towards private and state put together by government guarantee. Only for the private, only private. So as regards the private sector, it is absolutely on the ECL model for which we have the PD, which is done by our third party agency, ICRA. Sure, sir. Got it. And last question is, sir, if I see the first half, your disbursement has been something like, you know, INR 90,000 crore. What is the disbursement that you are expecting in the second half? Yeah, this year - last year, you might have noticed that our total disbursement was one lakh sixty-one thousand crore. This year, our disbursement may go up to one lakh ninety thousand crore. Another one lakh crore disbursement will happen in H2. Sure, sir. Thank you. All the best. Thank you. The next question is from the line of Sripal Doshi from Equirus. Please go ahead. Hi, sir. Thank you, and congrats on a decent quarter. So my first question was on sanction pipeline. So, what is the cumulative sanction pipeline in the renewable energy and in the infrastructure project segment? Let me first cover this, renewable sector. Last year, our total sanction was one lakh thirty-six thousand crore, and this year we have sanctioned more than sixty thousand crore. Another projects of more than eighty thousand crore is there, which we'll be considering for sanction in the H2. With regard to infrastructure logistics, as I have clarified, that we are going slow on infrastructure logistics sector because our hands are full with conventional generation, transmission, and distribution, as well as the renewable energy sector. We'll finance only those infrastructure logistics sector where remedy cash flows are assured, asset quality is good, entity is good. So last year we had sanctioned. In first year, when the year two thousand twenty-two, twenty-three, when government had allowed us to diversify into non-core infrastructure logistics, that year we had to sanction projects worth eighty-five thousand crore. But last year it came down to INR 40,000 crore, and this year will be to the same, at the rate of INR 40,000-50,000 crore only in this current financial year. Got it. Got it, sir. That's helpful. Sir, the other question was, last quarter we had highlighted about this account in Andhra Pradesh, which was seeing some issue. So, so is the cash flow now back to normalcy or have we seen any improvement there? Yeah, a lot of improvement has happened with regard to the payment coming from the and the overdues from Andhra Pradesh utilities. In fact, their distribution companies, their overdues have come to, they have become- They have made a good amount of payments in the month of October itself, so things are coming on track. By November and, or by December, all this will become, all the dues will start getting paid. Okay. Okay, so we'll see complete normalcy for that account, even on provisioning side by December. Hello? Hello? Hello. Ladies and gentlemen, sorry to interrupt. The management line has been disconnected. Please wait while we reconnect them back. Thank you.... Ladies and gentlemen, thank you for patiently holding. The management line has been connected. Mr. Sripal, please go ahead with your question. Yeah. Hi, sir. So I was just asking that since that account has started repaying, and by December, you expect, you know, complete repayment for the dues. So will we see the reversals on the provision side as well for this account by December? Naturally, there'll be reversal of more than INR 100 crore. Yeah. Oh, got it. Got it, sir. Then just one last question, which was, like, on the growth side. So, while repayment rates are a little higher, so despite that, our growth guidance on loan book side will remain in the range of 15%-17%, or there could be some, you know, downside as well because of the higher repayment? No, it is now Q3, Q4, it is going to be about 17%. Seventeen, it will, it may go up to 20% also. Okay. Okay. Got it, sir. Got it. Thank you so much, sir, for answering my questions, and good luck for the next quarter. Thank you. Thank you. Thank you. The next question is from the line of Preeti from UTI Mutual Funds. Please go ahead. Hi, good morning, team. So my question is on the market share comment that you made. So could you help us understand the current market size and how is it split right now between NBFCs, banks and bonds? And follow up to that is, do you expect the competitive intensity for the sector go up, given the healthy asset qualities, and also the structural trends that you're seeing in the power sector value chain? Yeah, that's my question. Thanks. Yeah. The question pertaining to market share with respect to that, in power sector, transmission, generation, transmission, distribution, as you might have noticed that out of our only most operators in this transmission, generation, transmission, distribution, only 9% is there in the renewable sector, and infrastructure like it's about 11%. About 80% is in transmission, transmission, and distribution and generation sector. The market share of REC and PFC is about 20%, remaining 60% is by the other financial institution. The same market share will be able to hold on to the renewable energy space also. That's why the total debt requirement for achieving 500 gigawatt of installed capacity from non-fossil fuel sources. Right now, we already achieved 200 gigawatt, another 300 gigawatt capacity will come. Renewable energy installation of 300 gigawatt additional capacity which will be installed, roughly 15 lakh crore will be required. Then, associated transmission line in the name of, in the form of Green Energy Corridor and storage solutions is also required. The total requirement will be about 15-20 lakh crore actually. So we are targeting a humble pie of 20% of that 15 lakh crore. In lower side, we are making conservative estimate. At least 3 lakh crore will come from our renewable energy portfolio, but it can go up if the transition gets faster, and it might go up to more than 20% also. But we and 20% will be able to capture renewable energy sector business. With regard to power sector overall, you have might assume that power demand has been increasing at the rate of 8-9% in the last two years, and this trend is going to continue as India is trying to become a developed country by the year 2057, that's 23-24 years. The power demand will keep increasing. As you might have noticed that per capita consumption of electricity, India is only one-third of the world average. When we are assigned to become a developed country, per capita consumption of electricity is bound to grow and will be more than the world average, like developed countries in USA, other countries, the per capita consumption of electricity is about 11-12 times of the world average. But we have followed a sustainable path, right? Our per capita emission of carbon dioxide is also one third of the world average. But when in our path to become developed country, our per capita consumption electricity is bound to grow, and it will be reaching about 45 times of the world average. But per capita emission of carbon dioxide will not grow to that extent, and we'll be able to instead of one third of the world average, that perhaps we'll be able to come at the level of world average only with regard to the emission of carbon dioxide. Any other questions, Kitty? Yes. My question was on the competitive intensity from banks or in the debt market. Yeah, competition from banks will be there, particularly renewable energy sector, because a lot of financial institutions are there. But even then, we'll be able to hold on, because the advantage with respect to REC is that we can give longer ten-year loan. Our tenure of the loan can go up to 85% of the project life. So normally, the project life is about 20, 25 years, and tenure of loan can go up to 18 to 20 years, while banks typically give loans for a tenure of 10 to 12 years only. And that we can take larger exposure in a single project. 30% of our Tier I capital is about INR 20,000 crore. We can still, so lending also we can do up to the INR 20,000 crore. That is the inherent advantage which is there with ICAI as compared to other banks. Sure. Thank you for the response. Thank you. Thank you. Ladies and gentlemen, in order to ensure that the management is able to answer questions from all participants, please limit your questions to one per participant, as there are several participants waiting for their turn. The next question is from the line of Sanket Chheda from DAM Capital. Please go ahead. Yeah. Good quarter. Just check on the recovery front. Now, in KSK Mahanadi, we already know, and I think 50 did what the over and above. That's first. And second, on Hiranmaye and Sinnar, while we say more than 50%, but what and on recoveries, can it be more than 70-80% the way we are seeing it changing in case Mahanadi? So, yeah. 100%. Yeah. 100%. Yeah, for KSK Mahanadi, let me first clarify. The NPAs has already allowed the disbursement of the funds lying in the trust and retention account to all the lenders. Where INR 12,000 crore is already in the trust and retention account, where INR 650 crore has... They already allowed us to distribute among the lenders. And the bids for which KSK Mahanadi which has done, there the recovery is going to be more than 100% with regard to outstanding admitted claims. 100%. 100%. 100%. More than 100% we are getting actually. Yes, we are getting. And Sinnar also. Sinnar, our exposure is 3,131 crore, and we have made a provision of 80%. The admitted claim is 5,150 crore, sorry. Total admitted claim in Sinnar is 15,909 crore.Sinnar, we are expecting a recovery of around 55%, which is more than the ECL already provided. And as regards the Hiranmaye concern, we are expecting a recovery of around 82%, and we have made a provision of 50%. So more than the ECL provision will be reversal. As I mentioned, the overall reversal that we are expecting more than INR 1,500 crore from the three accounts. Okay. Thank you. Sure, sir. And there was a less accretion in AUM this quarter. We understand it was due to higher repayment from L/LHPPL than in the same quarter last year. But from here on, the accretion to AUM should be normalized, right? And while we guide for 15-20%, is 17-18% a right number to go with as far as expectation is concerned? Yes, and these I already replied. I mentioned that the range will be 15-20% some quarter in 2025, some quarter it will be 17%, some quarter it will be 20%. On average, we are expecting that growth in AUM would be around 17%-18%. ...Perfect, sir. Yeah. Thank you. The next question is from the line of Nikhil Jigania from Goldman Sachs. Please go ahead. Hi, thank you. I have just one question. This is regarding the rooftop solar scheme, which REC is to be part of. I wanted to understand what is the role REC will play, and what is the loan security mechanism for such loans? Nikhil, REC has been designated, has been given the task of National Program Implementation Agency. Our main job is to coordinate with the various stakeholders, like consumers, distribution companies, vendors, and the banks. We are not into retail financing. The retail financing for the rooftop solar is being done by the public sector banks at the rate of 7% interest rate; they are giving the loan, and we are not targeting to finance this, retail business of rooftop solar. However, if some aggregators, vendors, or PSUs are there who are going to implement this rooftop solar on large scale, there we are going to finance those aggregated vendors. Thank you. The next question is from the line of Jigar Jani from B&K Securities. Please go ahead. Yeah. Hi, thanks for taking my question. Just one, on the margins, given, assuming that, the interest rates do not happen, interest rate cuts do not happen, very soon, how confident are we of maintaining the current margins of about 3.6%? Is there a range that we should kind of, maintain over the rest of the year? Yeah, Jigar, let me assure you that we'll be able to hold on the net interest margin of more than 3.6%. Three point seven. Yeah. If the range is 3.5%-3.75%, but it is definitely going to be more than 3.6%. Because we are getting more of coal-based thermal capacity addition that is going to happen. There, our margins are quite good. And in fact, the renewable are also our margins is more than 9.5% interest. The average interest rate, which is going to renew, is 9.5%, while in the state of this conversion generation, it is more than 10.5%. We'll be able to hold on to our, this net interest margin of more than 3.6%. Right, sir. And just lastly on, there was one special loan disbursement of about INR 8,000 crores this quarter. Could you just clarify what is that special loan for? Of course, some of the utilities actually need this special loan for a long-term tenure, or not long-term, but a medium-term, for five to seven years. These loans are advanced to very few utilities for multiple purposes. Like Punjab, for example, is not availing CapEx loan for very small scheme. They are taking a special loan that will be deployed for the CapEx strategy only, and they are taking only for six, seven, eight years. So such loans constitute a special loan for us. These are not short-term, right? Like RBPA for SPN and PN. These are more longer-term. Yes, these are not short-term. These are relatively medium-term loans. Okay, understood. Thank you so much, and happy Diwali to you. Thank you. Thank you. Ladies and gentlemen, that was the last question for today's conference call. I would now like to hand the conference over to the management for their closing comments. I'd like to thank all the participants for asking very, pertinent questions, and hopefully, we have been able to address all the questions, and let me assure you, all of you, that we'll be able to sustain the growth, rate of minimum 17% in the next three to four years to come, and our assets under management is definitely going to be more than 10 lakh crore. It is likely to be earlier than 2030. That's what I can assure you. Thank you so much, and Happy Diwali to all of you. Thank you. On behalf of Elara Securities Private Limited, that concludes the conference call. Thank you for joining us, and you may now disconnect your lines. Thank you. Thank you.