Acme Solar Holdings Limited (ACMESOLAR) Q2 2027 Earnings Call Transcript

Ladies and gentlemen, good day and welcome to the Q2 and H1FY27 earnings conference call of ACMES Allard Holdings 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 star then zero on your touchstone phone. I now hand the conference over to management. Thank you and over to you.

Thank you. Good afternoon, everyone, and thank you for joining us today. I am Ankit Verma, Director of Corporate Finance. I am joined by our Chairman, Mr. Manoj Kumar Bhatiai, Mr. Nikhil Dhingra, Joint MD and CEO, and Mr. Arun Chopra, CFO. It is my pleasure to present the highlights of our performance for the second quarter and the first half of FI 27. Let me begin with our financial performance. Total revenue for the quarter stood at INR 1,007 crore, which is up 67.5% year-on-year, while EBITDA increased 63.6% to INR 8.74 crore, driven primarily by short-term peak power-based operations and renewable capacity additions. A blended EBITDA margin was 86.7%, which comprises 90.8% from renewable generation and 78.3% from BESS operations, where the cost of power purchased to charge the batteries sits within the operating expenses. Profit after tax rose 133.5% Y-O-Y basis to INR 269 crore, which represents a bad margin of 26.7%. Our asset base grew by INR 11,466 crore over the year to INR 28,462 crore following the commissioning of BESS and RE projects. Coming to our business and execution updates, we made strong progress across commissioning, PPA signing, and short-term peak power best contracting. We have commissioned approximately 5.2 gigawatt hour of best capacity till date, which is the second largest best capacity in India as of date. And we achieved our initial half-yearly target of 5 gigawatt hours, which we mentioned in the last call. With this base and solar commissioning, 1.9 GW of our contracted projects are now partially commissioned. In addition, 1.7 GW of modules have been delivered to site, out of which 1.1 GW are already installed across multiple projects. Out of this installed 1.1 GW module capacity, 200 MW peak of modules is already charged, and the balance is expected to be charged by November to December of this year. We signed 430 MW of FDRE PPAs during the quarter. Additionally, we yesterday signed another 400 MW FDRE PPA, with NPPC taking the overall PPA science portfolio to 92% out of the total contracted portfolio of 8370 MW. Through short-term best contracts, we have locked in more than 1,600 crore of revenue for partial sale of FY27 capacity and more than 1,500 crore for partial sale of capacity for FY28, with a balance to be tied up through future. Our CUF for the quarter improved from 24.1% to 27.8% year on year and power generation grew 19.6% to 1840 million units. Additionally, we sold 324 million units through short-term peak power best contracts. The weighted average cost of debt for our fully operational projects is around 8.4%. 65% of these borrowings are from PFC, REC, IRIDA, and NAPFIT, whose rates follow their own long-term cost of funds and which limits interest rate volatility. TRIZL has upgraded ACME solar holding rating outlook to AA-positive from AA-stable. The key sector and regulatory updates. Below are the favourable steps taken by the government, benefiting all the stakeholders. First, BEST connectivity. CTYL has initiated the grant of BEST connectivity under non-roffer route, speeding up deployment. For us, it helps build a large BEST pipeline at preferred high GHI sites. Second, Green Energy Corridor, Phase 3. The Union Cabinet has approved INR 1.36 lakh crore for interstate transmission and INR 50,000 crore for 50 gigawatt hour of bus, targeting the evacuation of 135 gigawatt of renewable energy. This is expected to open up new opportunities for us in the state-connected renewable projects. Third, the Padan Mantri Surya Sarovar Yojana. The scheme targets 5000 MW of floating solar with at least 2 hours of co-located storage and provides central financial assistance of up to INR 1 crore per MW after commissioning. This opens up new business opportunities for us in the floating solar market. And lastly, use of curtailed energy for best charging. Wherever the GNA is delayed, curtailed solar under the PPA can now charge best for merchant sale. This gives us the opportunity to commission our solar capacity ahead of scheduled GNA and utilize that energy in best. Overall, these developments reduce risk, widen the opportunity set, and support our focus on best deployment. Looking ahead, let me share our Upgraded Capacity Roadmap. Given our execution momentum and the scale of the opportunity, we are raising our targets across all three time frames. FY27, best commissioning guidance raised from 10 GWh to more than 12 GWh, driven by our early deployment strategy. And by 2030, our renewable target rises from 10 gigawatt with 25 gigawatt hour of BES to 15 gigawatt and 50 gigawatt hour of battery, doubling the storage component. And below are the several factors that support delivery of this roadmap. A strong tender pipeline, 20 plus gigawatt of upcoming tenders across solar plus BES, FBRE, CFD, and PHSP. 50 gigawatt-hour peak power builds already rolled out till September 27, and another 200 to 250 gigawatt-hour of short-term peak power contracts expected in the near-term, near-to-medium terms, and 20 gigawatt-hour of medium-term peak-only tenders expected shortly, and as we speak today, SECI has launched a large 4 gigawatt-16 gigawatt-hour option for 4 hours of a short peak power, which requires commissioning within the required 12 months. The tender also carries VGF funding of INR 15 lakhs per megawatt hour. Secondly, about 10 gigawatt of RE connectivity inventory that we have, which is secured and applied, for upcoming bids over and over existing portfolio, and 5 gigawatt plus of BEST connectivity already granted. Third, about 19 gigawatt hour of BEST already contracted with reputed suppliers including CATL, ITM, Gangfang, Trina, and CLOU. Thank you. I would now hand over to Manoj, sir, to discuss strategic priorities of the company going forward. Thank you, Rohit.

I would like to extend my sincere gratitude to our shareholders, our board of directors, and my team, who have continued continuously supported and guided the company in the right direction. Our strategy going forward will rest on five pillars. Together, they are building a return-led self-financing renewable platform with contracted, visible cash flows. First, return on capital and profitability. We allocate capital to the highest return opportunities. Megawatts matter, but the measure we would ourself to our BSS, subject to tariff realization, is cash.

We will now begin the question and answer session. Anyone who wishes to ask a question may please press star and one on the touchstone telephone. 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.

First question is from the line of Puneet from HSBC.

Please go ahead.

Yeah, thank you so much, and congrats on great performance. I'm looking forward to your targets. My first question is, you know, given the context of delays in transmission, what is the revised number of capacity additions that you intend to do for FI27 for power generation? And also, what should one think of as annual capex and capitalization plan?

Right, Manit. the revenue, which is seen in these quarters. So if you look at the complete commissioning of an FDRE plant or a hybrid plant, that is dependent on the GNA commissioning coming online, right? And as per the current timeline, we are hopeful that we will be able to do 1.5 gigawatts, right? But it could be more, it could be less by a quarter, depending on the GNA commissionings. But of course, as far as the partial commissioning go, it will be substantially higher, maybe it will be substantially higher, maybe two and a half, three gigawatts. Because as far as AC commissioning goes, we've already charged 2.5 gigawatts of capacity in terms of that. And if you look at revenue generation elements, as we have clearly mentioned, we have charged 1.9 gigawatt of capacity commission. Because given these FBRE constructs and you can say the peak power constructs, right, these are now distributed across multiple CTO substations. So tracking the full commissioning, right, does not mirror the revenue generation, right? Right? Because the best comes online early. Like in one of our, two of our actually plants, we have charged solar also. Right? And we are using, because the GNA is not live, we are using it to charge the best. Right? And as far as, and the GNA is partially available, let's say at Vicarnate 3. So we are supplying to NDPC during the day, whenever the GNA is available, rest of the time it is going to the best. Of course, since the GNA is not available, we are using it very productively by reducing our cost of production. So, that's how we will continue to share the details also in terms of the commissioning and also in terms of the elements commissioning.

No, I get that.

Sorry, just to complete the reply on the CAPEX, right? So, CAPEX also is something you asked. So, we have done around 10,000 crores of CAPEX this year till date. Sorry, 6,000 crores of spend out of which 3.5 is capitalized and 3 is CWIP. So, 6,500 crore is what we have done already, and I think we will do a similar amount or a higher amount in the second half of this year.

And capitalization also, similar number?

Yes, yes, because we are targeting to capitalize whole of 12 gigawatt hour of BES in this financial year only. So, I think the number will substantially go up from what we have done in the previous half year because the BES is ordered, the LCs are getting opened, and we have money lying. And as you would have noted, there is a lot of cash because of the disbursements we received in September. So all of this will be utilized into VPEX.

Right. And on the generation side, the 3 gigawatt, where should it end of FI27, including what you would use to power your own BES?

Generation side, to power our own BES, in terms of, you can say, see, there is, I think what you mean to ask is, There is BES and there is generation to charge that BES or to supply to the grid, right? So you want to know that number. So it will be upwards of 1.5 to 2 gigawatts in terms of that generation, in terms of the megawatt peak VB will install. And of course, bulk of it will be driven by Fatega 2, which has around, already installed of around 700 megawatt peak is already installed at that. We are just awaiting the GNA going live. Our transmission line is more or less ready. And then Neemach and then Bikane 3, these three only will take this above 1.5. And of course, we have Anantapur also coming, which will take it to around 2 gigawatt plus. So on the generation side, right? And this could go upward. I'm just saying the basic three, four projects, which we see as coming online before March, depending on the timeline of the GNA. And not at all places we are using this to charge battery because the substation is coming live earlier, we may charge the solar first and the battery may come later or battery may come concurrently also.

And on the debt side, how should one think about, you know, your cost of debt going into the future? You also have a credit rating upgrade, but at the same time, you know, there's also interest rate rising.

Yes, yes. So, you're right. It's, of course, the global and the Indian situation is moving towards a stabilization or some increase in the interest rates, of course. So, as Ankit mentioned, we have analyzed this issue, and we have reviewed that 65% of our debt is from institutions which borrow very long term, right? If you noticed, PFC, REC, IRDA, and, of course, NAPFID, these institutions borrow very long term. Only 20% of their book is on a five-year duration borrowing, which they refinance every five years. The rest of their book is fairly stable, and these guys don't really, if you notice their behavior in the last five, ten years, they have not increased their base rates as frequently as an MCLR-linked institution would do. So, we don't foresee interest rates hikes from, let's say, 10,000 crore out of our 15,000 crore operational debt book, which is there. And on the under-construction debt, of course, as you know, once the project gets operational, there is a substantial reduction in the interest rate, which purely happens because of credit risk reduction and nothing to do with the interest rate cycle prevailing. So, let's say 9% plus interest rate which we are paying in a lot of these projects, which are under construction, We'll move down to, let's say, 9%, substantially sub-9% rate. So that's something which is independent of the macro. It is a micro related to our company, which will also play out. As we are seeing, even during the under-destruction phase, we are getting two projects refinanced, which is in progress, where the battery is commissioned, the solar is very close to commissioning, but we are getting it refinanced. So, that is also going on because the risk is currently out of the picture in terms of the commissioning of both the elements that batteries commissioned and solar is very near commissioning, and the GNA is also going to get commissioned. So, we are getting good demand for such where even during the construction phase, we are able to refinance.

Understood. That's very clear. Just lastly on my side, on the 400 megawatt NTPC tender that you signed, who is the offtaker and has the tariff been reduced to 4.37 from earlier 4.7? What's driven that?

Yeah, so NTPC is the off-taker for that FDRE PPA, right? And Tushar may not reduce the tariff in that one, right? In the NTPC? So there is a GST 5% and 12% impact, right? Which is a tentative estimate of that tariff. So that is not a tariff reduction. That is basically the GST reduced to 5% from 12% post the RFS, right? So, there is no tariff reduction in this particular PPA. There is, I think we have increased the hour of battery, one hour of battery. We have increased the battery from 4 hours to 4.5 hours, but we have not reduced tariff in this one.

Understood. That's very clear. Thank you so much and all the best.

Thank you. Next question is from the line of Amit Bhinder from Axis Capital. Please go ahead.

Hello, sir. Am I audible?

Yes, yes.

Congratulations on a great set of numbers and the revised guidance. Just a few questions. One, in the previous question, you mentioned that you have done a capex of around 6,000 cross and you would do similar probably in the H2. So that's revised guidance of 12,000 cross. I think earlier we were talking about 15,000 to 17,000 cross. So any previous thoughts on this because of the transmission connectivity or any other reasons? Right.

So, we have done a capex of 6,500 crores already, right? And we are yet to receive batteries of around, you can say, we have around 7 gigawatt hour of battery with us today at sites. And we are yet to receive 5 gigawatt hour of batteries for which we have opened LCs and they have not been capitalized or they are still part of, they are not part of the capex. So, it will be a substantially higher number than 6,500 crore, which we are hoping to do. And we are also getting modules for sites where we are able to charge these batteries. So, we are quite confident that it will be a higher number than 6,500 crore. I don't have a ready number with me right now in terms of the H2 Capex exactly, but we will be able to share with you. It should be higher going by these two things. So, in terms of the GNA dependency, right, for battery, we have no GNA dependency because we are only doing battery installation at places where GNA is available, right? And for modules also, we are only doing where we are able to either charge our battery or supply to the grid. So, which is a big runway for us because we have a large amount of megawatts which we can install at places where we have batteries or where we have GNA. So, that will not be a limiting constraint for KPEX for us.

Got it. The second question that I want you to understand is that you have mentioned that you have done 1.9 gigawatt of partial commissioning of the projects. So, if I just take a 25% PNF on that for this quarter, it would mean about 1,000 million units, and your best of supply is only 324. So, in a way, are we implying that we had around 650 to 700 million of curtailment? Sorry, I missed you.

Could you come again?

You have 1.9 gigawatt of capacity which is pre-commissioned, right? Now, if I take a 20% ELF on that, it means about 1050 million units generation in the quarter. Best is only 324 and we have also taken external purchases. So, in a way, are we, is it right to conclude that curtailment was close to around 700 million units?

No, no. So, how you should look at this commissioning is, you look at the elements which you got commissioned, right? So, there is a solar which got commissioned at some places, and there are quite a few places where the solar is not even commissioned, right? It's only battery. So, wherever the battery is commissioned, it's purely charging of that battery and discharging of that battery, right? Because the solar is not there, so this 25% CUF is not applicable, right? Wherever the solar is charged, there also the capacity is partially commissioned as of now, as mentioned. So, there also, let's say at BKAN Air, currently 133 MW is charged out of 300 MW. So, for 133, you can benchmark 25%, right, in that specific project. And so, we can give you, I think in the next, we can incorporate the exact numbers where you can match this 25%.

Yeah, I was doing the request for that. If we can have that in the PPD, as to what is your planned configuration and how much has been commissioned in the operational table below?

We will do that. We will do that in the next presentation. Yeah.

And the last question that I have is basically, if I look at your Q1 to Q2 gross log difference, that's almost about 1782 gross, whereas the operational debt that I'm seeing, that is increasing by around 31 billion. So, 31 million gross. So, ideally, it should be 75, 25 or 80, 20 when you do it in the, when you recognize as operational debt. So, there's a mismatch. If you can help me understand the accounting behind that.

So, Amit, you are comparing Q1, FY27 with Q2, FY27 or corresponding to Q1?

No, Q1, FY27, QOQ. So, QOQ, your gross block has gone up from 196 billion to 214 billion. So, that's a 1782 cross of gross block increase. Whereas, if I look at the operational debt increase, that's around 3100 cross. So, ID, I mean, I would have expected a 75, 25 or 80, 20 kind of a recognition into operational debt when the project gets capitalized. But here the difference is higher.

So, if we can put up the numbers for your reference, right, so that we are clear. So, in Q1 F27, our gross debt was roughly 20,000 crore. In this quarter, it was 26,500 crore. That's number one. Gross block for Q1 was around 24,900 crore, and for this quarter it stands at roughly 28,500 crore, right, which is roughly a capex of roughly 3,500 crore, which we are talking about during the quarter, and the gross rate increased partially because some of the refinancing must have also happened, and the rest of it went into CWI.

Question, I'll try to take this offline because the operational debt is appearing more versus the CWEP debt.

Yeah, and some of the debt happened at the quarter end, which anyway is coming as a reflecting as a cash value in the book, which is 10,000, which is 10,000 crore.

Okay. Just to understand, could there be a possibility that you are taking more debt on the operational asset and funding in some of the equity through that for the CWIP? Is that a possibility?

No, no, that has not happened at least in this quarter or the previous quarter. So, that is not the case because, you know, when we typically refinance is when the project just becomes a COD, right? That is when you deserve a top-up because the debt equity can move from 75-25 to a higher number. This has not happened in the… What we have really done is we have taken disbursements early on these FDRG and peak power projects to push our battery equipments, right? And that has resulted because, as you know, the battery KPEX for us is quite front-ending, right? We are ordering 12 gigawatt hour of batteries. So, all those projects, battery debt has come in early, right? And the battery LCs are only open when required. This is a factory acceptance test. At that time, you open a LC, even though you take debt at the end of the quarter or whenever, because it's an aggregate disbursement, they do not only each and every LC period. So, there is a time delay between the disbursement and the utilization of the debt. So that is why you see a lumpy amount coming in in terms of gross debt. Whereas the capex is happening as we open these LCs and we install those batteries or deliver these batteries. That is how it will turn out. So you will see this full of debt converting into gross block and converting into revenues also because the time scale revenue is very short in a battery. Batteries where the GNA is live and where we are ready.

If you can give that. And second, the average purchase price of the best that you have recently ordered in Q2. I think Q1 ordering was around 15 gigawatt hours. Now you have 19, so you have ordered 4 gigawatt hours during the quarter. So how has been the rates because lithium carbonate prices are going up and best capex can grow that you have been going to.

So, in terms of the solar being used to charge best, out of the 133 MW, how much is around 80-90 MW of AC. So, around 90-100 MW of AC is being used to, out of 133 is used to charge best, and 33-40 MW is going to the client. We have done lower than 1 crore per megawatt hour because, as you know, the key difference in the CAPEX for us is we are installing VES at operational substations, right? So the CAPEX for the transformers and the AC infrastructure exists at these plants. So we are not doing the greenfield installation. So that saves us around 20 lakh per megawatt hour of CAPEX. So, and that's why we have been able to do between 90 lakh to 1 crore kind of a number for the CAPEX, which we have capitalized on our books. In terms of going forward, what we are seeing is the lithium carbonate prices have come down, the copper prices have gone up, and of course, the Chinese tax is coming into picture in January. 6% tax is there from export tax. So, it's a combination of factors. But overall, the battery doesn't look to be going up at all. It will go down. How much it goes down is dependent on the three, four factors we spoke about and, of course, on the supply and demand and various other geopolitical factors.

Thank you. Next question is from the line of Mohit Kumar from ICSA Securities. Please go ahead.

Yeah, good afternoon, sir. Thanks for the opportunity. My first question is, sir, are you seeing that Seki is floating bits of a completely, thereby conversion to PPA are happening faster? Is your understanding correctly?

Yes, yes. As you can see in the cycle of our recent PPA, we won a bid and it got signed to PPA around two months. And of course, the selectiveness with which the bids are coming is also very praiseworthy, I may say, because they are actually collecting the exact bids from the states and coming up with only those bids, whether it is My second question is on the batteries.

Can I please help us understand the battery PPA tires, which you have done for 15 billion and 60 billion rupees? How much of the current capacity are tied up for H2 and FY28? And are we exposed to the input price volatility?

For FY27, we are around 90-95% tied up. In terms of what we can produce, we have contracted. We keep around 5-10% for RTM and RTM kind of a sale. In terms of FY28, we are around 65% tied up, or maybe 50% to 60%. We will confirm that number, but around that number is what we are tied up. And it is not, in terms of the input prices of, in terms of CAPEX, you are asking, Mohit, or you are asking about the cost of buying power. We are talking about cost of buying power as of now. It's dependent on these IEX prices for buying power, but wherever we are producing our own solar, right, which is a large number, we are more and more reducing that risk because I think by end of March or maybe by June, at quite a few places, our solar will be fully ready to charge these batteries, which we have at that station because they have that kind of configuration. So, our procurement from IEX would reduce substantially. In the next presentation, we will incorporate that also, that how much we will buy from outside versus how much we will have. But we will give you that number.

Sorry to interrupt. Mr. Mohit Kumar, when management is answering your question, may we request you to please mute yourself because there is a disturbance, sir. You may go ahead with your questions.

I'm done. Thank you. So, thanks for your opportunity. Thank you. All the best, yeah. All the best.

Next question is from the line of Shorab Arya from Oakland Capital Management. Please go ahead.

Yeah, hi. Am I audible? Yeah, please. Yeah, hi. Yeah, congratulations on great set of numbers. So, I have two questions. One is on your strategy 2.0. So, of course, for 2030, we are saying now we can do 16 gigawatts. But, what we are seeing in market is ultimately, you know, grid connectivity is the challenge. The existing project already, of course, we are not able to fully commission them. So, in that context, how realistic the 15 gigawatt target is, if you could throw something in it.

Yeah, sure. I think, see, as you must have noted from our strategic plan, which we have also mentioned in the presentation, We are focusing more on the revenue generation possibility than the absolute megawatt number. I think you have pointed out really well that we are not fussed up about the details.

I am so sorry to interrupt you here, sir. Mr. Saurabharyam, may we request you to please self-meat your line when management is answering? There is a disturbance coming from your line. Thank you very much. Sir, you may please go ahead.

So, in terms of the strategy, we were just explaining that the strategy is more about, of course, in terms of the numbers, right? In terms of the revenues we can generate, the profit we can generate, and, of course, the pace at which we can grow, right? So, in terms of our strategic alignment, we are fully geared up to grow at a very fast clip in terms of both of these. So how we achieve these gigawatts and how we achieve these crores is, of course, linked to the connectivity we have, right, which is more than required for this 15 gigawatts and the timelines of these substations, which is also very well in planning and very well in delivery. So, 15 gigawatts is not at risk in terms of the GNA connectivity because the substations we are targeting for these 15 gigawatts have a timeline of 2028 at last and maybe early 2029, right? So, the delays we see in these substations, and now the substations are coming up with a timeline of 36 months, 30 months. That is the extension already being done by CTU or the MOP in terms of the planning, which is again a very good step they have taken. So, even if you factor in a 6-month delay or a 12-month delay, we are within our goal of achieving this capacity. And in terms of the best capacity, again, we have enough connectivity for doing those best projects we have spoken about. The main thing, I think, Sharia, which we are working on and keep working on is the customer, right? So to have the demand for such projects and to be able to do these projects. So what may happen is we may do, let's say, a 17 gigawatt and a higher amount of best, right, which is entirely likely going by the amount of peak power deficits which is coming. If you notice the tender which Amkit spoke about, right, so it is a higher amount of peak power which is needed. And in terms of when you realize per megawatt, it is much higher, right, the profit realized is also potentially higher. So, in terms of connectivity, in terms of the demand, of course, they are there. And we see good demand coming up because, as you see, the power prices in India. So, people have realized that you have to go full steam on all the sources and not choose a particular source. So, thermal may come up, right? Renewable is also coming up with firm demand backed up. And peak power is also coming up. So, we see that a lot of bids are coming which are very rightly designed and which capture through the real demand. So, we don't see from all these three perspectives of connectivity tie-up, the demand availability, and of course, in terms of our execution abilities, we don't see a challenge. And that's why we have upgraded. Because what we noticed is we have already 8.5 gigawatts of PPA, right? And we are going to participate in more than 3 to 4 gigawatts of PPA very soon. So, we noticed that if we get those PPA done by end of 27 or so, we will definitely be around 12 gigawatts of capacity by 2129. And if we assume something in, let's say, a lot of best we are doing, for which there is a ready customer available, there are a lot of states which want to buy those peak power projects. So, it is very, I think, very, very safe to assume that in terms of contracted capacity, we can reach there by 2027 in terms of tie-ups. Of course, the execution will go on till 2029 and 30. But in terms of PPA tie-ups, we can go there by end of next year, calendar-wise.

This 10 to 15, of course. So, incremental, this 6 gigawatt. So, how much of this you are thinking on data center, hydrogen molecule, maybe from your own Acme CleanTact, their plans are also going pretty ahead. So, if you could divide it, will the nature of the business change from current, you know, PPAs with state, with these, you know, central utilities, or if you could divide it?

Yeah, yeah, that's a good question. So, in terms of the overall growth we are seeing, in terms of demand centers, we don't see a change in the nature of the customers for us. Of course, there will be incremental demand coming from various other sources, including what you mentioned, data center, green, ammonia, and multiple other demand areas. But our primary source for capturing this would be these AAA PPAs with these counterparties like SECI and TPC, SECI primarily now, and of course, state governments. The addition to this would be state governments, which is entirely there. And, of course, we will participate in the SECI bids, like SECI is procuring power for green ammonia projects also. So, their feeder to SECI is increasing. Whatever sources you mentioned in terms of data center, green ammonia, SECI is also catering to demand for these sources also. So, in terms of the conduit for us to get these PPAs, so that will remain a AAA counterparty, and that is what we want to achieve. And we don't see a shortage of these bids like we mentioned. We have sufficient bids to take it from 10 to 15 gigawatts. We are already at 8.5. So, if you see, if we kept it at 10, right, we are at 8.5 already in 26. So, that doesn't show any growth in terms of our contracted capacity for the next two years in terms of bids 1 and PPSI. So, because we have been winning projects to the rate of around 1.5 gigawatts every year for the last three, four years. So, I think even if you project it like that, we are bound to reach that number. And we see a great increase in these bids coming up because of the shortage of peak power in India. And that is playing out in terms of prices already. So, we see that 10 to 15 gigawatts and incremental 5 gigawatts capacity being won by us in the next 18 months, 12 to 18 months for sure.

So, we are not factoring anything from Acme Cleantech in this, or that is also part of it?

Yeah, yeah, we are not factoring in anything from the Acme Cleantech. Of course, we are, it could increase this 15 gigawatts further. If Acme Cleantech were to, let's say, buy power for the green ammonia or for data or for any other sources through SECI or through any We are not factoring in that in this 15-year-old.

Second is, so, of course, what we all expect is, you know, the spread of BES will go down over two years, three years. And what matters is at what pace the new BES comes into the system. And here we see you, yourself, are, you know, putting so big BES numbers. So, what do we expect about then the best spread? Should they narrow very quickly? Because, let's say, I don't know what is the reason, but Q1 to Q2 itself, it is down. That might be from a different reason. But two, three year hence, then how to think about this particular market from a spread perspective?

So, if you look at Q1 to Q2, right, and if you look at the prices we have signed up for this year and next year, they are substantially gone up, right? In terms of the delivery, those contracts were already signed, right? In Q1, we can't, we actually don't wait, right? We want to reduce risk. So, what we do is we sign for, let's say, next two quarters, and these projects, these bids are also for next six months. They are not for, let's say, 15 months onwards. It is 6 to 12 months maximum they are. So, the Q2 contracts were already signed. So, the tariffs have not moved from Q1 to Q2. They were already contracted, right? We can tell you our tariff for Q3 also, right? So, they are already contracted. In terms of the new bids we have won for, let's say, Q4 or Q1 of next year, they are substantially higher. The tariffs are substantially higher than, you can say, what we have realized so far. So it is dependent on how the states are feeling about their power demand in near term, because these are near term bits. And structurally, let me tell you, there is a big shift happening from RTC procurement, which is a thermal procurement or a gas procurement, to BESS procurement. Because, like we said in our previous conference call also, this is a new form of power. BES is a new form of power, which has developed trust with now maybe 10 to 12 governments, which maybe our peers and us have supplied to. So people are more and more confident about shifting their near-term power mix from RTC to batteries. So you will see that a lot of new demand is being created. In terms of the tariffs, of course, the RTC at 7 rupees or 6 rupees is much more expensive than best at 10 rupees, because you are buying unnecessary volume of power, which you don't need to during the day when you contract out this RTC, and that volume is huge. Basically, the 85% of the near-term power is RTC, which is waiting to be disrupted.

Thank you for the opportunity. So, I wanted to understand what's the capacity addition target for FY28 in megawatt terms, 27 and 28?

So, in FY28, in terms of the GNA availability, we are looking at upwards of 3 gigawatts, around 2.5 to 3 gigawatts is what we are looking at in FY28. Because, Seanan, in terms of the, we are seeing all of our substations coming alive during that particular year, and it is aggregating around that. You will see from June to December, bulk of our substations If you look at most of the substations day-to-day, that is where they are. And of course, they are there with some delays, so we are very confident that there will not be further delayed because the elements are ready and the work is happening at a very good pace. So, that's where we are.

Okay, and what about 27? Because I guess initially it was 0.5, but when I was looking at the EPT last quarter, so around, I suppose, 700 MW over 1G the capacity, which was basically the substations were ready for the timelines, GNA timelines as per the PPT. So, it was around 700 megawatts. So, what is the status of that? Because if you see in this quarter, we haven't commissioned any project and H1 capacity addition is around, there is no capacity addition this H1, right? If I compare with the two quarters. So, yeah.

So, Shauna, when we look at the capacity addition, we look at the elements we have charged for each of these projects, right? So, and we have laid out in our presentation and we have partially commissioned around 1.9 gigawatts of capacity so far out of the total under construction portfolio we have. In that 1.9, we have partially commissioned solar at two places and battery at around two, four places. So, and all of these projects are under those, and excluding one project, which is ACME Suryodha, all of these are under PPAs, and they are generating revenues. So, in terms of, if you are, I think, mentioning about the generating source, which is the solar, right, if you are tracking only that, or in terms of the contracted capacity, we have operationalized 133 megawatts of grid-facing solar, right? Of course, that is what we have done in this quarter. And, of course, in terms of the commissioning targeted for FY27, it is, depending on the Patega 2 operationalization, we could do 1.5 gigawatts still. But, of course, it could move to a quarter by June or something. But 1.5 gigawatts is what we are targeting for FY27.

So, on the financial side of query, if you see your interest costs have been flat for the past two to three quarters, so basically, what's the reason for that? Because we have commissioned batteries, so ideally, depreciation is increasing, so basically, you know, cost also should increase, right?

Right. So, there are a couple of reasons for that. One is that we've done a QIP raise, right, of around 2,800 crores. So, that has, of course, resulted in us paying down some of the debt, which has resulted in saving that interest cost, right? That is one of the key reasons. And the second thing is some of these cash flows we are generating from BES, right? That is also saving on the debt drawdown from our side that we are able to use it as equity and we are not able to, we don't increase, that is increasing the internal accruals available to either pay down debt because we are paying down debt from these internal accruals also and not incurring the interest costs. And we are drawing down less debt because these accruals are to be used for CAPEX or for And in some cases, lenders have allowed it for using it as equity also. So that is resulting in us keeping flat. The third thing is we have refinanced higher interest rate bond. Right now, we don't have any dollar exposure in the overall book. It is 100% rupee. And that has resulted in substantial interest saving in this quarter for us, which will continue to be there. So these are the 3-4 reasons we have.

Even when I was looking at the other expenses, so for the past 2-3 quarters it was a bit higher. This quarter it is, as compared to the last quarter, it is around 45 crores. So is there any specific trend how to look at it or how to look at it?

Arun, what did these other expenses include?

So other expenses basically include the 1M expenses and in the last quarter the other expenses were higher So, this ROC bit, I'll just explain.

It is basically, when you put equity in a company, you have to pay fixed ROC fees for issuing share capital. So, that is very lumpy, and it only comes when you start doing a project. So, that keeps it kind of lumpy. I think maybe we can have a line item showing this or in schedules, we can show this as a one-time expense. So, that will help you to predict it on a quarter-on-quarter basis if you want.

Can we just repeat what was that one-time expense?

So, ROC, registrar of companies, you know, when you put share capital into a company, right? When you raise your authorized capital, basically, you have to pay an ROC fee. So, that ROC fees, when you start a project, how much is it? It goes limited at two and a half crores. Yeah, yeah, around two and a half crores per SPV, you need to pay that. So, that increases whenever you start putting equity in a company, right, you need to pay this two and a half crores per SPV. So, that keeps it slightly unpredictable to that extent.

Next question is from the line of Apoorva Bahadur from IFL Capital. Please go ahead.

Hi, sir. Thank you for the opportunity. A couple of questions. One is on the partial commissioning of projects that we have done. So, would it be helpful if you can explain how do we sort of, so do we like capitalize these assets and start charging all the expenses to P&L or they are still capitalized on balance sheet?

So, Apoorva, wherever we are selling power, we have expensing out because we have capitalized and the rest is, wherever we are not selling power, it is not yet capitalized.

So, the solar which is used to charge your battery, would that be capitalized or is it going to be the battery?

That is capitalized completely. Yeah, wherever, so even the, see, we are selling power means we can sell to the grid or we can sell to our own best, right? In both cases, the sale is being made from that SPV. So, wherever the sale is being made, we are, we are capitalized, right? And I think wherever we have said partially commission, they are capitalized.

Understood. So, our gross block already includes him. It's no longer in the same app.

Yes, yes, yes, exactly.

Understood. And secondly, on these new PPAs which we are signing, I believe that they will be under the ambit of ALMM2 now. So how are you seeing the pricing for DCR ALMM2 compliant modules? What's your view? When would you tie up for these? Would it be this year, next year?

Right, right, Apoorva. So, we have plans of buying modules for these projects from, you can say, June onwards of next year. So, because these are commissioned targets from December onwards, December to March of 28, those are the timelines for commissioning these projects. So, we have done some initial negotiations and discussions because we don't intend to buy immediately, but of course, we have whatever briefings we have done, we are getting prices of lower than 17 as of now, but it is very dependent on the various factors. So, we are substantially within the prices we had assumed in terms of bids for that. So, that's not a risk we see. Of course, given the Chinese regulations which have come into force in terms of the recent Chinese regulations, so if it impacts the cell capacity in India, then we will have to see, but it doesn't look like there is already substantial cell capacity which has come up or which is ALMM registered and which is already there. So, we don't see these prices increasing because of shortage of suppliers. So, we think that because of that, the prices will not increase.

Okay. And connectivity for all these projects, we had to declare them before bidding, or is it like we will still have to wait for CTU to commission those substations and only then? So, there could be a deferral in further setting up these capacities?

No, actually, see, in these, most of these projects are peak power projects, these ALMM, if you are only talking about ALMM2, or you are talking about all projects?

No, the recent ones, so the ones which we have, say, signed PBA, this big order, or...

So, most of these projects are peak power projects we are already installing, where DNA is almost operational. So, there is no DNA risk, because these peak power projects are actually very immune to DNA delay, Because we typically install them at projects where GNA is live. So, in a lot of our book, there is no GNA dependency delay because they are operational. So, most of the peak power projects we are doing, the GNA is operational. So, there is no risk to these timelines. Other than maybe you can say a RTC project or a REMCL, wherever you need to install a grid-facing solar project, there you are more dependent on the GNA being getting delayed. But in peak power projects like the ones where the battery is supplying power to the grid, there is, from our side, there is, we allot such that there is no delay possible in those projects because of GNA.

Okay. Just last question on this peak power projects. I think one of the recent projects we have signed it up, tariff about 6 rupees, where we have to supply during peak hours, and we also have to arrange for the charging power. How does the match work at 6 rupee? Because I think the battery cost at $100 itself would be closer to 4.5 rupee, right? 12% IRR. On top of that, the cost of charging. So, what type of equity IRR are we seeing over there at 6 rupee tariff?

Right, right, Aburban. So, in terms of that project and the resultant economics of it, so there are a couple of things in terms of the early commissioning, right, because as I mentioned, we have allotted these projects to an operational DNA. So, for us, the solar takes time to come up, right, because of ROW issues, because of the land acquisition issues. But battery comes up for us fairly early, and as you see, we have pre-poned a lot of these battery commissioning. So, in terms of the battery commissioning, the battery will come up earlier for these projects. And, of course, since the PPA signed, the debt is available as well. So, there is early commissioning revenue which you realize out of these projects, out of this project, Because specifically, it is available to sell power today. So that's the key difference between our earlier project and this project. Of course, it is dependent on the competition, right? Nobody likes to reduce their returns. But in terms of the, we make a high team return on this. Even if we factor in, you can say, 6 to 12 months of operations of short-term power. But we will, of course, have around 24 months. So maybe we will do higher than that.

Fair enough. Thanks a lot, Nikhil. All the way.

Thank you. The next question is from the line of Dhruv Muchal from HDFCSF Management. Please go ahead.

Yes, sir. Thank you so much. Sir, you made a comment that 85% of near-term is RTC and is waiting to be disrupted. I didn't get that point. If you can please expand on that.

Yeah, Dhruv. So, basically, in terms of the deep portal, there is a deep portal, as you must be aware, where LISCOMs procure short-term to medium-term power, right? So the volumes in that deep portal, 85% of them are through thermal RTC kind of tenders, and only 15% are through, you can say, gas or other sources, right? So that is where we were saying that this 85%, right, because there was no availability of other sources, that was the trend, yeah, Because people are buying, like we see a lot of states buying this RTC power, when they only need peak power, because there is no other source available. Like you saw Gujarat, right? Gujarat used to buy a large amount of RTC power. But this year, you see, Gujarat bought a large amount of peak power. So that has reduced their RTC purchase volume of these short-term and medium-term power. So that is what I was talking about.

So the second thing is, in your presentation, you mentioned 50 gigawatts of peak power bids roll out until September 27, and 20 plus gigawatts of upcoming tenders. This is a large quantum. So in your assessment, is it backed by state demand, or like previously, Sekhi and others used to just roll out tenders without any demand assessment? So, I mean, you might have done some work around this. Is it backed by state demand, or how is it?

Demand only, because SECI doesn't have demand of its own. And, of course, we are working, because now we are selling power to a lot of these states on a short-term basis. So, we have a big understanding of what they need and in what time frame. So, what we have done is mapped out their demand in short-term, medium-term, and long-term. So, what we realize is, in a short-to-medium term, there is very high demand for peak power. So there are a lot of five-year PPAs. People are trying to contract out some of these PPAs expecting their thermal to come up or expecting their ESP to come up or expecting these slowdown in the demand. And some of the states are rightfully looking at 20-year PPAs also depending on each state. It varies from state to state. But everybody is short on peak power, and nobody wants to be dependent on the weather patterns to assess their demand and also depend on other capacities to come up. And they are impacted because of G&A delay. As you must have noticed, a lot of these states are impacted because the plants are not coming up because of G&A delay in short term. So they are very skeptical of the commissioning timelines, and that is why they are contracting out surplus power. Then, maybe dependent on, maybe looking at their plan, they may be contracting out surplus than what they may need or may not need. So, that is where states like Chathisgarh, Urisha, like Bihar, Telangana, if you notice, large amount of bids have come up from Telangana and now with Chathisgarh, Agra Pradesh. So, a lot of these states are coming up with their own bids. Of course, and in our second, states like West Bengal is buying, and a lot of other states are buying, because everybody is short on peak power. They don't have a firm time for their peak power, right? In terms of solar, some states are surplus. You are right. That is the case. But nobody is now installing solar and sending it to the grid. Everybody is converting it into peak power, and that is the intent with which the states are also buying power. Notice there is a recent SECI tender which has come up today only, which Ankit also spoke about. That's a 16 gigawatt hour tender, 4 gigawatt into 4, 16 gigawatt hour tender, and it is coming up with a VGF, and it calls for a 12-month commissioning, right? And that is purely looking at the power situation prevailing today, and it caters to somebody who is ready to supply power, because they want to promote the battery installations sooner than later, the procurement power. And that is where the trend will go in terms of the procurement, and that is where we see the shortage. So the pure solar, the conventional method of seeing that solar bids and all that, that is no longer true. And that is why the megawatt hours are also there. In terms of RTC, RTC at 5.25 is again a very competitive bid which happened at SECI, which is currently being sold. So that will also, once it becomes a mainstream and people are able to commission that plant, the issue with some of these bids is the plants have not got commissioned. So once these plants come online with the GNA going live, I think the belief in these PPS will also go substantially up. And then you will see a lot of procurement happening from these kind of RTC also because it's very competitive, right, in terms of the price. It's much more competitive than a thermal or any other source, right? But in terms of the awareness, it is building up, and that is where you see Telangana kind of states which have come up with this RTC and Peak Power project bids. So more and more states are picking this up. And in terms of competitiveness, it stays. Competitiveness stays for all the three sources of renewable, solar, wind, and batteries. And of course, PSP also in certain context in terms of life of the project and the stability it provides. So, I think the fundamentals are strong. So, states are buying. It has shifted to, a lot of demand has shifted to states. And now we understand that a lot of aggregation will happen at the central level for this peak power. SECI has already come up. Maybe some other agencies will also come up with a similar bid of a large quantum of battery procurement.

Sir, one quick question. Your generation has grown by about 20% ROI. Your capacity is almost flattish, and I see your PLF has improved. So, is it, just trying to understand, is it repowering, which is driving such a massive increase in the generation, or is it the partial commissioned assets are also included in generation now?

So, there are two reasons for it. One is, like you rightly said, the capacity has increased, and also the repowering has increased. Then the third, the wind has come up online. As you see, it has done around 41% CUF in this quarter, right? So, introduction of, because wind was not there last year, 150 megawatts of wind is there, which is contributing significantly to the average CUF. And, of course, I think that's the main reason, and then the weather patterns.

Is the repowering a big element?

And last year, sorry, our seeker plant was not fully operational, which became operational on a bio-i basis. So, that actually, in the last year, it was contributing less. So, if you look at the next quarter, after that, it will be much less steeper growth curve.

Great, sir. Perfect. Thank you so much.

Thank you. Ladies and gentlemen, we will take that to our last question. With that, we come to the end of today's conversation.

Sorry, I would just like to correct one query. I think Bunit asked about the reduction we have shared in the newly signed PPA. So, there is around 33 Paisa reduction, out of which 11 Paisa is tentative change in law and 22 Paisa is voluntary. So, I think that's the broad reduction in the tariff for the NTPC PPA. So, just for every scene reference, I pointed out. I don't know whether police is there or not, but I'll just clarify. Thank you.

Thank you very much, team. Ladies and gentlemen, on behalf of ACME Solar Holdings Limited, that concludes this conference. Thank you for joining us, and you may now disconnect your lines. Thank you.