Gujarat Industries Power Company Ltd

Good afternoon everyone. Anshuman can you open the Conference. Then I will give the specific remarks. That will be fine.

Okay so shall we simi with the Q&A session directly Yes, we can sImi directly.

Rituja we can start with the Q&A session.

How are you and can you give the broad highlight or what is the status or the solar power project, the large solar power project that we arc undertaking?

Basically, we have commenced I OO-megawatt Solar Project in the month of August last year and that project is now generating very well, above 30%, and we arc coming up with 2375 megawatt Khavda project. That is in the Project stage as of now.

Sir,l was talking about the Khavda projects for further details, what has huppcncd in the last six months since the update that you gave us last time in the Con Call,if there are any meaningful updates there?

It is basically not a one year down the line Project. It is down the lille fi ve-year Project with timeline of 50% completion by December 2024, and all the activities arc going on as per the schedule., i.e. geotechnical investiglltions, contour and topography survey, hydrology survey. etc. and Detail Project Report has already been submitted to Ministry of New & Renewable Energy (MNRE). PMC has already been I1nalized and we are working on Desalination plant for water requirement.

Long Term Agreement (LTA) is signed for 600 megawatt with CTUIL. MNRE approval is received lor 2250 megawatt. These arc the progress as far as the schedu led timeline so everything is going as per the timeline process.

Sure, thank you Sir. I wi ll join back the queue.

Sir, my question is little bit lengthy but I will ask to the point. Sir, we are the asset-based company and at the current market price, the enterprise value is not more thall Rs. 1500 Crorcs white if we calcu late the replacement value o r the current operat ing capacity say Lignite 500- MW, Wind 122 MW, Solar 262 MW tbe total is 884 MW and if I assign the value o f Rs.4 Crores per MW then the replacement va lue comes to Rs.3500 Crores? Current enterprise value is 58% discount to the replacement value? Sir we have installed 175 MW additional power plant during the period of 20 19 to 202 1 i.e. 75 M W earlier and then 100 MW in August 202 1, but at the same lime the stock price, the shareholder or investors are basically conccmed with the reward by the company and tbc wealth creation by company, we are generating enough cash and reinvesting for the pUllJose of expansion, but somehow the market is not giving the discount or we are not Page 2 of 12

I(. 1(. Bhatt: I(. 1(. Bhatt: 1(. I<. Bhatt:

Thanks for your question. First of all, I would Like to say that basically we are putting our internal accruals in the expansion to build the asset, which in the future will help the company to grow further because as you may be aware that the whole technology and gas-based stations are no more in operation. ns, so we have to expand into the new area, new ventures, and new expansion then only the company can grow fUl1hel' that is the first thing. Second thing I would like to tell the share priee was around Rs.65 to Rs.67. it is now hovering Rs.80 to Rs.85. It is still better than the previous year what it was and that is basically not in our hand also, but what you arc telling is correct. We will try to do our best how we can help the shareholders ftll1her in the coming days with the new expansion and other things taking place. We will look into it surely.

Sir in that connection I would like to ask how long the lignite power plant will be operational?

Lignite power plullt lor 500 MW, additionally 20 years plus 10 years lignite reserves are available for the the lignite station, we do not have any issue as far as fuel is concern.

Okay and can wc assulllC that it will be operational for the next 20 to 25 years at leas!?

Yes definitely, It will be also into the process of extension of about 5 or 10 years depending upon thc availability of lignitc further ..

But the current captive mines will support both the lignite plants to operate at full capacity?

Yes, we have already available lign ite for plant upto PPA life.

Sir, we have floated one tender for 75 MW additional Solar Power Phillts and for which I think the February was the last day, some February date? What is the status of that Project Sir?

Your question is very val id, that was the lender for GUVNL 500-MW bidding. t hat wa.:; won by the other bidders al a very low price, however, we do not want compr9f1lis9 with! quality and Page 3 of 12

1(. 1(. Bhatt:

Sir, though the lignite plant is available ror 20 to 25 years, but our all-new expansion will be in the renewable field? Is it okay, is my understanding correct?

Your understanding as of now is correct because currently renewuble is the only focus of the GUVNL as well as the Gujaral Government .. Looking at all we are rightl10w expanding only in renewable but as YOll may be aware the situation may change down the line two to three years, green hydrogen, ,battery storage and nil these things may corne into the picture so we will think at that time with the new expansion requirement looking at those aspects at that time ..

And Sir gas-based plant are not working currently, will it be commenced or permanently we have closed down or what is the status of that plant? I know that the gas price is very high so it is not feasible to operate the gas plant, but suppose the gas price once again comes down then we will recommence or shutdown because otherwise also it is generating a very minimum protit fo r the company?

The gas-based stations are totally debt free, depreciated. We are now preserving it 101' the future requirement because what we think one year or two years down the line, again it will be possible to nm the Station. That is why we are maintaining this Station in preservation mode.

Right now the current year what is the capex expectation Sir?

See the current year capex at Khavda would be around Rs.300 Crores for Solar Park Development per se because after the park project it will initially kick off so for the next financial year it would be first phase Park Development - Rs.300 Crores approximately plus 75 MW is what we are thinking of, it would be around RsAOO Crores to Rs.450 Crores roughly. Sir thank you.

Thanks tor providing the opportunity. So far out ofthis nearly RsAOO Crores of EBITDA that we have done during the year, would it be possible lor you to give the numbers in terms of how mueh was the loss on the Gas based Plant? How much was the profit rrom lignite, solar and wind separately?

Basically gas-bused station was contributing around Rs.20 Crores to Rs.25 Crores. Right now i.e. for the current financial year it is not giving anything as such .. Page 4 of 12

((. K. Bhatt:

Sir basically I just want the bifurcation of RsA06 Crores that we havc EBJTDA, how much is from lignite, how much is fro m solar, how much is from wind and obviously we wi ll have some losses of the gas-based station so if YOli can help liS with the specific nllmbcrs that wou ld be helpful for liS to understand?

EBlTDA from the thermal would be around Rs.200 Crofes to Rs.2 15 Crores somewhere and from the wind and solar you can take it around Rs.200 Crores to Rs.220 Crorcs.

Okay and I am sure that lignite and wind plants would be profitable for us, but in terms of PBT?

In solar plant which plant is sti ll PBT negative for liS? How much of the capacity is sti ll negative on a rBT basis for solar which will eventually turn profitable as we pay orf debt and depreciation got reduced so I am sure it will turn prolitable, but as of now how much of the solar capacity is loss making in terms of PST?

All the Solar Stations arc in positive state only because the tariff and what we are gett ing as tari ff vis a vis our cost all arc in positive state only.

So currently also for FY2022 all the solar plants have contributed to PST or they have not?

Yes all have contributed even the new 75 MW Solar Power Plant commissioned in August 202 1 also contributed.

So all the PBT is positive? Okay that is it from Illy side. Thank YO li.

Oood afternoon gentleman just one question on your lignite power plant? I think the answer to the first question you are saying that you are more or less basically dependant on your own lignite mines, but in the past you had an occasion to buy lignite from outside? In fact in FY202 1 you also got somc imported coal so how was it in FY2022 Sir? Were you completely dependent on your mines or you had to buy some from outside?

Let me break your answer into pmis. For 202 1-2022 Lignite was supplied by our own mines. For the financial year we did not buy Lignite from outside, but the requirement year-an-year depends on the availability orthe location, land slide, and monsoon. AJI these are the geographical factors which arc affecting the production levels at the mines,. The year before last year there was an extended monsoon and heavy rainfal l. That was the reason we could noL source lignite fi'om the mines and to run our station we had to import a very minimal quantity, not very large. 11 is below 10% or lhe total rcquirement. OIr CL is not much dependent on the imported coal.

But in a normal state scenario what you are saying thai your own mines will be sufficient for your 500-megawatt power plant? Yes. Page 5 of 12

K. K. B1lntt:

The Phase I Dfthe Lign ite Plant (SLPP I) stao1cd way back in the year 2000 and Phase II (SLI'P· 2) started in 2010. Still we have the available lignite to feed our power statioll for the next 30 years.

For next 30 years but the useflil life is only 17 to 18 years now?

The useful life of first station is 30 years, that is around 2030, and another one that commissioned in 20 10 PPA for which shall expire in 2040, but we have the available lignite in the region will be increase the availability for another IO-ycar with life extension of SLPP I and we are also thinking for SLPP 2 life extension at Sir you said capex for Khuvda is uround Rs.300 Crores and another for 75 MW is also Rs.350 Crores so how are we going to fund this Rs.650 Crores of capex for the next year?

Can you quantify that subsidiary in rupees of course? 30% of the cost. 30% of the cost, Rs.90 Crorcs YO li will get as subsidiary? Yes.

So your contribution will be Rs.2 10 Crores only?

Yes you can say our contribution is Rs.2 10 Crores and al the fagend we arc going to get the UDC up front developments charge from the project developer and the balancc we are going to fund it through our own as well as dcbt.

So still sir l have not understood our role Khavda project so cntire infrastructure we have 10 develop including roads, everything, and all ul'ilities everything we have to develop and we are going to get a fixed rate of return on that investment means how this arrangement works? Page 6 of 12

1<. 1<. Bhatt: 1<. 1<. Bhott: 1<. I<. Bhatt:

Basically, Khavda Project is in t\vo Phases. One is lhe project and one is the park development per se, Park development we have to do and there also we are go ing to get certain relulll all our investment.

Thanks for giving follow-up opportunity. Sir 1 understand last year we had faced replacement issues and that is why last year has not been normal in terms of profitability? Not for FY2023, I am talking about FY2024. which hopefully would be completely normal year for us? Based on the current capacities what kind of PST can we do if all the plants are kind of operating normally with normal capacity utilization? I just wanted to understand what kind ofPBT can wc do on this whole capacity that we have currently?

Vaibhav thank you for your question, but in the current normaJ scenario since the Station lis not in operation, it would be in the range of Rs. 250 to 300 crores ror 2023-2024. Post 2024 capacity at K.havda and at reclaimed mining land will be added At that time, PBT will go up but right now for 2023-2024 it would be hovering bchvccn 250 to 300 crorcs.

Okay Rs.250 to 300 crores, so Sir I do not understand it still? If 1 look at your historical results as I said in fY2024 everything will be normal? 1 am not talking about FY2023? FY2024 everything will be normal and if I compare with say the last time in FY2020 when we generated Rs.300 Crores of profit while we did not have some of the solar plant operating so you are saying that by FY2024 as well those additional capacity will not be contribuling anything 10 profits because in March 2020 financial year in FY2020 also we generated Rs.300 Crores of PBT?

If you look at the last year profitability there are two factors which has affected the prolitability ror the year per se that is Station I at Vadodara which is totally shutdown and technical issue at SLPP-I which has resulted into lower generation which lead to under recovery or Ii xed cost as per PPA. During 2020 the profitability fro m SLPP-I was better around Rs.40 crores and Station- J contribution was around Rs20 to 25 crores.

No. I am actually talking about Sir FY2020? I am talking about FY2020? FY2020 profit is Rs.300 Crores PBT right? I am talking about last-to-Iast year so h'lo years earlier March 2020 our PBT was Rs.300 Crores and now in fY2024 also you are saying we will do Rs.250 Crores to Rs.300 Crores. Now in between FY2020 to FY2024 we added capacities on the solar front so basica lly what il means is that whatever addi tional capacities Ihat we have created YOll arc saying thaI will not be contributing anything?

We were talking or 20 19-2020, I have look at it, there may be certain things which we have to sec into year wise what was the reason ,,,hy it is 305. Page 7 of l2 P.l!. n 1[.101 D

S u ~, Sir no problem. We wi ll probably engage on this separately. That would be helpful. That is it from my side. Thank YOLI.

Sir I have two questions. First is if we look at the last 5 to 10 years then for some reason or other thermal power plants were shutdown for two or three times, beam problem or technical issue, can we say Ihat over the next 5 to 10 years per plant shutdown will come for two to thrcc times?

Your question is valid but it is all mechanical. We cannot predict. We are doing our best to maintain the availability of the station wilh annual overhauling and capital overhauling as may be required. but since the machines are old 20 years it may be possible to have technical issllcs and we are trying our best so that availability is not affected.

I was not blaming, not from that point of view just from understanding point of view asking because the machines have become old, Ihat is a given fact? With Ihat understanding and also with the machines becoming old so whal has bcen the typical trend in a power plant so generally in 5 to 10 years Iwo to three shutdowns is common?

Right and Sir there was one question which I would like to reiterate again and hope if you can clarify that? 2017, 2018, 20 19 and 2020 broadly our profit before tax was approximately Rs.300 Crores? After Ihat in the last two years we have added capacity on the solar side and a little bit on other capacities arc gcuing added on the solar apart from the ullra mega power solar park that we are building and slill we are saying thai our profit before tax will only be RsJOO Crores so Ihal is one place which YOll can give some broad !.hought, over the last four years what we have done on average and even with capacity added we are still in the same level that you are guiding liS, so I am 110 1 able to understand this?

What you are saying is absolutely correct. In the phase mmmer since the last fOllr to five years gas-based stalions profitability is getting depleted year by year. Earlier it was contributing a lot Page 8 of 12

Thank YO li for the opportunity. Sir how is the current energy demrllld and at what Plant Load Factor (PLF) lignite plants currently we are operating?

I am putting it to our commercial head. She will be able to tell you at what level.

At present, our availability from SLPP power plant is more than 75% for 250 megawatt and another 250 megawatt we have some constraints so it is operating at 60% availability level approximately 65%. What is the P LF?

PLF is also around same like in our SLPP we are at the top oflhe merit order so OLir tlvailability as wcl1 as PLF both arc same. Bolh are above 75% you can say.

For station one it is 65% approximately. For station two it is around 75%. So SLPP- I initially 75% plus?

No SLPP-l is 65% because of beam isslle at unit I ofSLPI>· 1 We propose to replace it in the F.Y 2022-23 in the month of July somewhere. That is the reason we are running that Station at a lower load. That is the reason, in SLPP I it is slightly lower at 65%, to 67% and SLPP 2 it is above 75%.

And what is YOLi r current energy demand? Page 9 of 12 / I 1 ( ~A,Jr 'I I

Sir my line was disconnected so my question was how arc we going to fund the Khavda project and another 75-MW project which you arc talking about so around Rs.600 Crores of capex? We aheady have certain borrowings so can you throw some light 011 this?

This solar park project cost wou ld be around Rs.300 Crorcs for phase- I, out of this Rs.300 Crores, 30% will be subsidiary from MNRE. Then 45% wilt be fimded through UDCU, however, we are going to sel l the park location. 15% will be equity contribution by OlPCL and 10% we are going to fund it by the debt. That is the total mechanism as of now and for 75 MW, RsAOO Crores to RsA50 Crores we are going to fund it by 70:30 mode i.e. 70% debt and 30% equity.

So that 75 MW when it will· become operational?

It will be operational down the line in 18 months YOLi can consider. 18 months okay Sir? Thank you, Sir.

Thanks for the follow-up, Just have last question Sir? Sir for FY2021 , I am not talking about FY2022? J am talking about FY2021 we operated our gas station pretty much I think around 56% PLF which is pretty much normal given its history and you need to do 165 megawatt of that anyway was shut down and it has been shut down for the last few years so FY2021 what is the PBT only for the gas based station because anyway you are saying it was completely written off in tenns or depreciation so in terms ofPBT what it would have contributed in FY2021 '?

Basically ror gas-based stations, day by day, contribution by way of PBT is going down. It was contributing earlier in 2020-2021 up to around Rs.23 Crores but right now current year it is zero.

Another reason I think you were asking about 20 19-2020 profitability was high. Current year why it is low, one of the reasons is this contribution from Station I is down by Rs.20 Crores to RS.25 Crores and there was under recovery of fixed cost at SLPP-l by around Rs.23 Crores plus certain expenditure incurred on maintenance during overhauling which wou ld be around Rs.IO crores additional for better lire orthe machines. All these have contributed around RsAO Crarcs together. Ir you add RsAO Crores plus Rs.25 Crores, Rs.65 Crorcs proJitability was washed away in the current year as compared to the financial year FY20 I 9-2020.

Correct. That is what actually, I think that RS.25 Crores it was contributing to the profit that explains lot of things? I think that pretty mucb explains lot of entries in contribution wise not coming? That is it from my side. Thank YOLI. Page 10 of 12

Sir you can tell both the ligurcs the production and consumption? It is 29 Jakh metric tonnes. This was the production for FY2022? Yes FY2022. Sir what is OUl' target for FY2023'1 l3asically our rangc of prod ucti 0 11 requirement is 34 lakh mctric tonnes to run thc power station at a load r"clor of75 pilis al SLPP- I and 80%or SLPP-2.

Sir just for my understanding do the regulations allow us to sell the lign ite to third party?

No, we are not selling and we do not have the right to sale the lignite to third party because the captive mines has been given by the Government for the purpose of captive consumption in our plant only.

The next question Si r the projects that we have, if I heard correctly you said that in FY2023 and FY2024 we will not be commissioning any capacity is that understanding correct? Yes. As of now, we will be targeting 75 M MW Solar Project. Down the line 18 months it will be operational so next financial year it will not add to the capacity and for Khavda initially we have to go with the Solar Prk Development and then the Power Project so there is no as of' now possibility of any addition in the next financial year.

Sir if you can gu ide liS with the timelines for Khavda that will be helpful both for the solar park development and the capacity that you will be putting up by yourself as a developer?

Basically, first of all we have to do this solar park development project completion. Then we m"e targeting the capacity addition at 2375 MW Solar Park. We are targeting at least 1500 to 1800 capacity addition in the KJlavda location by our own in the next five to seven years down the line.

Sir thc solar park development how much time wi ll it take? Page II of 12 ~ ~~"r. _ "A r \ ) }

1(. K. Bhatt: 1(. K. Bhatt:

Generally, when everything is clem' andavai lable, then it generally lakes 15 to 18 months. You can say 18 months would be the ideal time.

Sir thi s 75-megawatt project that we are doing so have we placed the EPe order for lhe same?

No. As of now no, because what the EPe price which was discovered for the 75 megawatt which was for GUVNL tender and we are going to use that EPe cost for this 75 megawatt as per tender cond ition ..

Are we waiting fo r the module prices to coo l down a bit and then place the order is it?

That we will see. lflhe module prices what has been quoted at that time and clirrent time if there is a vasl difference then we will take it up with the contractor to coo l it down and reduce the project cost. That will be taken care off once the project is totally ready for the take off then we will take it up with the EPC contractor through price negotiation to the best of our interest.

Thai answers my question. Thank you so much.

Thank you everyone for joining the call. I thank the Management of GrPCL For giving this opportunity to host the call and thank all the participants for making this call a velY interactive session. Thank you, Mr. Bhatt for your detailed answers. Thank you everyone and we can now close.

Thank you everyone and thanking you also. \/-\1 "1 , jJ \ ). Page 12of l2