Torrent Power Ltd Management Discussions

POWER SECTOR

The power sector is constantly evolving with both the needs of customers as well as the sources of power generation constantly evolving. Power demand was also way ahead of estimates due to higher industrial activity and higher usage due to improved Transmission & Distribution infrastructure and improved last mile electrification. The availability of power in rural areas has drastically increased from 12.5 hours in 2015 to about 21-22 hours presently. The power availability in urban areas is at 23.8 hours.

Peak power demand in FY24 reached a new all-time high of 243.27 GW while the base demand grew by ~7.6%. This trend is expected to sustain considering that India is expected to be one of the fastest growing major economies of the world with a projected GDP growth rate of 7%.

Generation

The supply side constraints remain complex primarily due to the rapidly changing energy mix. While renewable energy capacities have expanded significantly, they are still insufficient to meet the growing demand. Amid rising concerns around global warming, India along with other major economies of the world is planning a rapid shift away from fossil fuels. However, in the short run, there is a trade-off between economic growth and energy transition. India has the challenge of balancing both.

Until energy storage becomes economically viable for perpetual supply of round-the-clock renewable energy, thermal capacity expansion is imperative to fulfil the rising power demand. To ensure uninterrupted power supply for national growth, the Government of India has announced plans to add 93 GW of thermal capacity by FY32. In FY24, new thermal capacity of 5.9 GW was added which was 5 times the capacity added in FY23. Further, the Plant Load Factor (PLF) of thermal power plants has also started going up from 64% in FY23 to around 69% in FY24.

Nonetheless, Renewable Energy (RE) continues to grow rapidly and remains a key component of Indias energy transition journey. FY24 saw addition of 18.5 GW in renewables, a notable 71% of the total capacity addition in FY24. Solar continues to lead RE capacity addition, contributing 81% [15 GW] of the total RE capacity addition. The growth in solar power capacity was driven by reduction in solar photovoltaic cell and module prices to an all-time low of 12-13 cents/watt against 27-28 cents/watt in the previous years. Factors such as increasing clean energy procurement by industries, relaxation in requirement for approved list of model manufacturers and time-extension provided by the

Ministry of Power (MoP) for solar and hybrid projects also aided to the RE capacity addition during the year. While policy changes led to a five-year high wind capacity addition at 3.3 GW, it remained below the peak achieved in FY17. Capacity addition is also fraught with various hurdles such as delay in land acquisition, lack of power evacuation capacity, policy uncertainty, stringent regulations on grid connectivity including directive from the Honble Supreme Court to relocate overhead power cables to safeguard the habitats of the Great Indian Bustard in Gujarat & Rajasthan. The recent announcement of re-introduction of reverse bidding for wind power projects could again be a setback for the wind sector.

Going forward, pace of RE capacity addition should significantly accelerate to meet the clean energy goal of 500 GW by 2030. The Government of India announced several incentive schemes to promote the use of renewable energy such as PM-Surya Ghar: Muft Bijli Yojana entailing an investment of over I 75,000 Crore to promote solar power, production linked incentive schemes for promoting domestic manufacturing of solar photovoltaic (PV) modules, ease of doing business for Commercial & Industrial (C&I) consumers to meet their voluntary sustainability targets, among others. Additionally, the Government is also emphasising on alternate clean energy solutions such as green hydrogen, pump hydro storage and battery storage. With the purpose of import substitution and the aim of becoming a leading exporter of Green Hydrogen, the Government has allocated I 17,490 Crore under Strategic

Interventions for Green Hydrogen Transition (SIGHT) scheme.

This includes achieving a 26 GW pumped hydro storage capacity by FY32 and supporting Battery Energy Storage Systems (BESS) projects through Viability Gap Funding (VGF) to develop 4,000 MWh of BESS projects by FY31. The future strategy of the government is to prioritise Hybrid/Round-The-

Clock (RTC)/Firm Dispatchable Renewable Energy (FDRE) over traditional vanilla solar and wind projects. Given the massive opportunity and various policy interventions, India has positioned itself as an attractive destination for energy transition-related investments.

Transmission & Distribution

The power sectors growth hinges on the development of a robust power transmission network, especially when India is aiming to integrate 500 GW of RE capacity by 2030. Given the shorter gestation period of RE projects compared to the development of transmission system, transmission projects need to be planned in advance. An extensive network of transmission lines has been developed over the years for evacuating RE power, but still there is a shortfall in transmission capacity, to match the generation capacities and load requirements. In FY24, transmission network was expanded by 14,203 ckm, falling short of the targeted addition of 16,682 ckm. Power transmission projects face execution risks mainly owing to delays in acquiring right of way and forest clearances.

The historically challenging power distribution domain is witnessing notable transformation. Multiple government-led reforms have rejuvenated the distribution segment, substantially reducing average AT&C (Aggregate Technical & Commercial) loss from 26% in FY15 to 15% in FY24. Further, timely tariff hikes and payment of subsidies, helped reduce Average Revenue Realised (ARR) - Average Cost of Supply (ACS) gap from H 0.78/kWh in FY14 to H 0.45/kWh in FY23. Outstanding dues of distribution companies (discoms) dropped by over two-third since May22, to under H 45,000 Crore and is expected to decline further under the Late Payment Surcharge waiver scheme. Improved financial discipline is helping discoms and gencos to increase capex and power procurement, reducing load shedding and boosting overall power demand. Going ahead, the Government aims to enhance energy measurement and accounting across all levels by modernising distribution

BUSINESS MODEL

The Company is an integrated power utility engaged in the businesses of electricity generation, transmission and distribution with operations spread across the states of Gujarat, Karnataka, Madhya Pradesh, Maharashtra, Rajasthan,

Uttar Pradesh, Haryana, Telangana, Andhra Pradesh, Tamil Nadu and Union Territory (UT) of Dadra & Nagar Haveli and Daman & Diu.

1. Generation

The Company has total generation capacity of 7,368 MWp comprising of Thermal and Renewable generating assets (including 3,040 MWp of renewable capacity under development).

A. 3,092 MW Thermal Generation

i. 362 MW Coal-fired Thermal Generation

The 362 MW AMGEN Power Plant at

Ahmedabad in Gujarat is an embedded generation unit for the licensed distribution area of Ahmedabad. It is regulated by Gujarat Electricity Regulatory Commission (GERC) which allows cost plus post-tax Return on Equity (RoE) of 14% as part of the regulated tariff.

infrastructure to accommodate growing demand. State Governments have also been contemplating to increase the scope of private sector participation in the distribution sector.

Outlook

Going forward, while share of RE power (including hydro) would increase, coal will remain critical to serve overall demand. To achieve the climate change commitments, RE will remain the mainstay and is expected to meet significant incremental demand in the years to come. The integration of large amounts of variable and intermittent renewable energy poses challenges for grid stability and uninterrupted power supply. Energy Storage

Systems, especially Pumped Storage Hydropower (PSH) as well as Battery Energy Storage Systems (BESS), will play a critical role as they become more affordable with evolving technologies. Similarly, as decarbonisation appears necessary for India to reach its Net Zero goal by 2070, green hydrogen could be a key enabler of clean energy transition. The distribution sector is expected to improve efficiencies with modern distribution infrastructure and various initiatives planned under Revamped Distribution Sector Scheme (RDSS).

ii. 2,730 MW Gas-fired Thermal Generation

The Company has three gas-based plants namely 1,147.5 MW SUGEN Mega Power Plant, 382.5 MW UNOSUGEN Power Plant and 1,200 MW DGEN Mega Power Plant which are built with highly efficient power generation technologies. SUGEN and UNOSUGEN are regulated by Central Electricity Regulatory Commission (CERC) which allows cost plus post-tax RoE of 15.5% as part of the regulated tariff structure. 76% of SUGEN and UNOSUGEN capacities are tied up under long-term Power Purchase Agreements (PPAs). The untied capacity of all three plants is utilised to supply power in merchant markets, depending on demand and opportunities.

B. 4,276 MWp Renewable Generation

1. 1,236 MWp Operational Projects

With commissioning of 115 MW wind power project, 35 MWp solar capacity under C&I segment, the total operational renewable generation capacity of the Company reached 1,236 MWp (315 MWp Solar and 921 MWp

Wind) which is tied up under long-term PPAs. 491 MWp or 40% of operational capacities have feed-in-tariff based PPAs with the Company operated distribution utilities.

2. 3,040 MWp under development Projects

I. 420 MWp Solar Power Project (300 MW Contracted Capacity)

The Company had won 150 MW solar project through competitive bidding conducted by its distribution arm to service Renewable Purchase Obligations (RPO) and further 150 MW of capacity was awarded under green-shoe option. The PPA is signed for a period of 25 years. The project is being implemented in Gujarat by Torrent Saurya Urja 2 Private Limited, a wholly owned subsidiary of the Company. The Company has progressed well on the project and plans to commission the same in July24.

II. 300 MW SECI XII Wind Power Project

The Company has signed PPA with Solar Energy Corporation of India (SECI) under Wind Tranche XII for 300 MW Wind project for a period of 25 years. The project is being implemented in Karnataka by Torrent Saurya Urja

2 Private Limited, a wholly owned subsidiary of the Company. The project is likely to be commissioned in the third quarter of FY26.

III. 102 MW SECI XVI Wind Power Project (100 MW Contracted Capacity)

The Company, during the reporting year, has won 100 MW Wind Power Project through competitive bidding process under SECI Wind Tranche XVI. The PPA tenure shall be 25 years from scheduled commissioning date. The project is planned to be executed in Karnataka. The Letter of Award has been issued by SECI and PPA signing is awaited.

IV. 368 MWp REMCL RE-RTC Power Project (100 MW Contracted Capacity)

The Company, during the reporting year, has won 100 MW RE-RTC Power Project through competitive bidding process from Railway Energy Management Company Limited (REMCL). The PPA tenure shall be 25 years from scheduled commissioning date. The project is planned to be executed in Maharashtra with total ~368 MWp installed capacity of Wind and Solar for meeting the Capacity Utilisation Factor (CUF) requirement as per the tender. The Letter of Award has been issued by REMCL and PPA signing is awaited.

V. 425 MWp MSKVY Solar PV Project (306 MW Contracted Capacity)

The Company, during the reporting year, has won 306 MW Solar PV Power Project from Maharashtra State Electricity Distribution Company Limited (MSEDCL) under the Mukhyamantri Saur Krishi Vahini Yojana (MSKVY 2.0). It is a decentralised model with multiple small solar projects and is to be implemented at various locations in Nashik district of Maharashtra. The objective of MSKVY scheme is to solarise agriculture feeders and provide daytime solar power to farmers. The project is also eligible to get the Central Financial Assistance under PM-KUSUM scheme. PPA has been executed for a period of 25 years with scheduled commissioning by September25.

VI. 825 MWp Hybrid Power Project (450 MW Contracted Capacity)

The Company has won 300 MW Hybrid

Project through competitive bidding conducted by its distribution arm and further 150 MW of capacity has been awarded under green-shoe option. The project is planned to be executed in Gujarat with total ~825 MWp installed capacity of Wind and Solar for meeting the CUF requirement as per the tender. The PPA tenure is 25 years from scheduled commissioning date.

VII. 200 MWp Hybrid Project

The Company is developing 200 MWp

Hybrid project in Gujarat comprising of

125 MW Wind and 75 MWp Solar by utilising its existing evacuation network installed for the 115 MW SECI-V wind project. Currently, the project is being developed for selling the power in exchange or on merchant basis and depending on the availability of suitable opportunity, the project may be tied up under PPA with a Discom/C&I consumer. The project is likely to be commissioned progressively by third quarter of FY26.

VIII. 400 MWp renewable projects for Commercial & Industrial consumers

The Company is developing renewable projects for supply of power to Commercial and Industrial consumers. Currently, 35 MWp capacity is operational in the state of Rajasthan, Haryana, Andhra Pradesh, Karnataka, Maharashtra, Tamil Nadu and Uttar Pradesh. Further, 400 MWp capacity is under development and will be progressively commissioned over next 2-3 years.

C. Pumped Hydro Storage Project (PSP)

The Company is actively pursuing development of Pumped Hydro Storage Project. The Company during the reporting year has obtained in-principle allotment of PSP sites in the state of Maharashtra and Uttar Pradesh. The Company is in the process of obtaining necessary approvals for the development of 4 PSP sites of 8,350 MW in these states.

D. Green Hydrogen and Green Ammonia Project

The Company is actively exploring investment opportunities in the sunrise sector of Green

Hydrogen. Company is one of the successful bidders for getting Production Linked Incentive (PLI) under the tender invited by SECI for production of 18,000 tons per annum of Green Hydrogen under MNRE SIGHT Mode-I Tranche-I scheme. Letter of Award has been issued by SECI. The Company is working on development of a Green Ammonia export project.

The Company is also implementing a pilot project for blending ~2.5% Green Hydrogen with natural gas in the city gas distribution network of Torrent Gas Limited in Gorakhpur, Uttar Pradesh. This is an important milestone in the Companys foray into business in India.

the GH2

2. Distribution

The Company is the licensed operator for electricity distribution in major cities of Gujarat i.e. Ahmedabad, Gandhinagar, Surat, Dahej SEZ, Dholera Special Investment Region (DSIR) and Mandal Bechraji Special Investment Region (MBSIR) and in the UT of Dadra &

Nagar Haveli and Daman & Diu (DNH & DD), aggregating to ~ 2,050 sq kms of area.

DSIR, part of the prestigious Delhi-Mumbai Industrial Corridor (DMIC) Project, represents a long-term growth opportunity for the Company. The state-of-art network with robust processes will ensure minimal T&D losses, highest reliability and low cost of supply. Planning

& development of an efficient distribution network is under progress; Investment of about Rs. 1,200 Crore is envisaged over next 10 years to cater to demand of about 404 MW.

MBSIR is also a part of DMIC project and is being developed as an automobile hub. Uttar Gujarat Vij Company Limited (UGVCL) is the incumbent licensee and will continue to remain a licensee; the consumers, however, will have an option to choose one of the licensees for power supply. Investment of approx.

Rs. 550 Crore is envisaged over next 5 years to cater to a demand of about 90 MW in 5^th year of operations. Currently the matter is sub-judice as Gujarat Urja

Vikas Nigam Limited (GUVNL) & UGVCL have filed two appeals challenging GERCs order for grant of license to the Company for MBSIR area.

The licensed distribution business of the Company in Gujarat is regulated by GERC, which allows cost plus post-tax RoE of 14% as part of a regulated tariff structure. The licensed distribution business in the

Union Territory of DNH & DD is regulated by Joint

Electricity Regulatory Commission (JERC) which allows cost plus post-tax RoE of 15.5% for distribution wires business and 16% for retail supply business as part of the regulated tariff structure.

The Company also operates as a franchisee (of the license holder) for electricity distribution in the cities of Bhiwandi, Agra and Shil, Mumbra and Kalwa (SMK) aggregating to 1,007 sq kms of area. The term of the franchise agreement for Bhiwandi is up to 2027, for Agra is up to 2030 and for SMK is up to 2040, which may be renewed on expiry. The franchised distribution businesses of the Company are governed by the respective Distribution Franchise Agreements executed between the Company and State discoms as the license holders. The main thrust of the Company is to reduce AT&C losses, improve electricity supply and customer services in the franchised areas. The Company distributes nearly 30 billion units of power to over 4.13 million customers. Distribution loss of 2.7% in the licensed distribution business is one of the lowest across the country and comparable to global benchmarks. Consumers of distribution business enjoy enviable power availability of >99%, which is among the highest in the country. This has become possible due to end-to-end SCADA connectivity and distribution automation which controls power flows in real time besides identifying losses.

The Company has also made recent foray into EV Charging and currently operates 6 EV charging stations

4 in Ahmedabad and 2 in Surat.

. Transmission

The Company currently operates 354 km of 400 kV double circuit transmission lines and 128 km of 220 kV double circuit transmission lines for transmission of power generated at our gas-based power plants to various off-take centres. The existing operations are conducted through Torrent Power Grid Limited (TPGL), a subsidiary of the Company.

Upcoming Transmission Projects

1. Khavda Project at Gujarat:

In FY23, TPGL was awarded a transmission scheme, for evacuation of 4.5 GW RE power. The project scope covers laying of 60 km 400 kV D/C line together with bay upgradation. The project will have regulated tariff as per CERC (Terms and Conditions of Tariff) Regulations, 2024 which allows cost plus post-tax RoE of 15%. During the year, EPC contractor has been finalised and purchase orders have been placed. Scheduled Commercial Operation Date (SCOD) of the project is January 2026.

2. Solapur Project at Maharashtra

During the year, the Company emerged as successful bidder for establishment of inter-state transmission system on build, own, operate & transfer (BOOT) basis for a period of 35 years under Tariff Based Competitive Bidding (TBCB) process. Project scope covers laying of 44 km 400 kV D/C line together with 2 line bays and 1 substation. SCOD of the project is March 2026.

The Project is being implemented by Solapur Transmission Limited, wholly owned subsidiary of the Company.

In addition to above, the Company has non-material electrical cables manufacturing business.

OPERATIONAL AND FINANCIAL PERFORMANCE

1. Operating Performance

The following tables set forth the key operational parameters:

A. Thermal Generation

	AMGEN#		SUGEN^		UNOSUGEN^		DGEN^
Particulars
	FY24	FY23	FY24	FY23	FY24	FY23	FY24	FY23
PAF (%)	95.25	93.40	97.94	98.04	97.39	99.09	93.34	100
PLF (%)	90.95	88.23	36.62	15.01	39.74	1.74	9.28	NIL
Generation (Mus)	2,654	2,565	3,590	1,467	1,298	57	953	NIL

# Coal-based ^ Gas-based

During the year, AMGENs PLF improved to 91% from 88% last year due to increasing demand leading to higher off-take by long-term beneficiaries. Despite coal shortages, AMGEN managed to get allocated domestic coal, which aided in keeping variable cost under control.

Despite frequent starts/stops due to infrequent and inconsistent demand, gas-based generation plants were able to maintain a healthy Plant Availability Factor (PAF). Approximately 350 starts were performed by gas-based units during FY24 under current need of flexible operations.

The overall PLF improved on the back of increased power demand and government measures to utilise gas-based capacities. The Ministry of Power (MoP), through NTPC Vidyut Vyapar Nigam Ltd (NVVN), floated a tender for procurement of power from gas-based plants during high demand periods twice during the year April23 to June23 and March24 to June24. Letter of Award (LoA) was awarded by

NVVN with contracted capacity of 770 MW from DGEN plant and 150 MW from SUGEN plant during

April23 to June23 period; and 770 MW during March24 to June24 for supply of power from gas-based power projects during crunch periods.

B. Renewables Operational Projects	Solar		Wind
	FY24	FY23	FY24	FY23
Capacity (MWp)	315	281	921	805
PLF (%)*	18.42	18.69	26.71	24.33
Net Generation (MUs)	442	414	2,095	1,715

*Based on Contracted Capacity

Wind PLF in FY24 was higher as compared to FY23 due to increase in availability of plant, adding new capacity in high wind area and better wind speed. Solar PLF was slightly lower due to lower irradiation, year-over-year module degradation and stabilisation period of new C&I projects.

C. Licensed Distribution

					Dadra & Nagar
Particulars	Ahmedabad & Gandhinagar		Surat		Haveli and Daman		Dahej
					& Diu (DNH & DD)
	FY24	FY23	FY24	FY23	FY24	FY23	FY24	FY23
Area (sq kms)	~356		~52		~603		~17
Sales (MUs)	8,453	8,274	3,914	3,692	10,199	9,635	795	711
Growth (%) over PY	2.16		6.01		5.86		11.76
Distribution Loss (%) Actual	4.16	3.74	2.77	3.17	1.58	1.59	0.38	0.48
Distribution Loss (%) Normative	5.03	6.03	3.59	3.54	3.16	3.35	0.45	0.43
Consumer Base (Lakh, except Dahej)	20.99	20.71	6.36	6.32	1.65	1.57	129*	120*
Peak Demand (MW)	1,834	1,900	757	742	1,333	1,281	115	106

*Represents number of industrial consumers; Dahej licensed area comprises the Dahej SEZ area, which is made up of export-oriented manufacturing units.

The licensed distribution area of Ahmedabad witnessed growth in demand, primarily from industrial and commercial customers, propelled by market movement and fresh demand from new customers. Concurrently, the Surat licensed distribution area saw a notable rise in demand, bolstered by the growth in the Diamond Industry.

Further, licensed distribution area of Dadra & Nagar Haveli and Daman & Diu also marked significant rise in sales backed by high demand from industrial and commercial customers.

At Ahmedabad licensed area, distribution losses remained elevated as a result of seasonal fluctuations and higher Extra High Voltage (EHV) losses. Conversely, in Surat licensed distribution area, there has been a notable reduction in distribution losses, attributed to a rise in High Tension (HT) sales that contributes lower losses, coupled with increased focus on electrifying slums. Notably, the distribution losses at both

Ahmedabad and Surat licensed distribution areas have consistently remained well below the normative levels.

Tariff for FY25 (including true-up for FY23) for Companys licensed Distribution areas is yet to be determined.

The aggregate amount of regulatory gap of past periods approved and expected to be approved by Commission as on March 31, 2024 is Rs. 3,095 Crore and the same is appropriately accrued in the financial statements. In addition, aggregate amount of regulatory gap of Rs. 873 Crore is under dispute at various forums (primarily comprising of claims on account of carrying costs) and is not accrued in the financial statements; the same will be accrued in the financial statements of the period in which such disputes are determined by the appropriate statutory authorities.

D. Franchised Distribution

					Shil-Mumbra-Kalwa
Particulars	Bhiwandi		Agra		(SMK)
	FY24	FY23	FY24	FY23	FY24	FY23
Area (sq kms)	~721		~221		~65
Sales (MUs)	3,582	3,552	2,091	2,015	588	519
Growth (%) over PY	0.85		3.77		13.33
Distribution Loss (%)	9.64	10.00	9.16	9.49	29.97	33.48
Consumer Base (Lakh)	3.94	3.79	5.10	4.99	3.22	2.95
Peak Demand (MVA)	609	595	505	510	155	146

Our franchised distribution units witnessed higher sales in FY24 as compared to FY23, mainly due to increase in demand from residential and commercial consumers. The industrial consumer segment witnessed marginal growth mainly due to lower demand from power looms.

Bhiwandi and Agra have reached single digit distribution loss. losses was observed at SMK through loss reduction activities like surveillance & vigilance, theft deterrent systems, law enforcement against illegal connections, along with network improvement activities like distribution transformer cleaning, High reductionindistribution Tension (HT)/ Low Tension (LT) network revamping, meter replacement and service revamping. The collection efficiency in all units is nearly 100%.

2. Consolidated Financial Performance

The key financial data from the Statement of Profit

Particulars	FY24	FY23	Change in %
Revenue from Operations	27,183	25,694	6%
Fuel/Power Purchase/Material Cost	20,509	19,134	7%
Contribution	6,674	6,560	2%
Other Income	344	382	(10%)
Other Expenses	2,115	1,802	17%
PBDIT	4,904	5,141	(5%)
Finance Cost	943	818	15%
Depreciation and Amortisation Exp.	1,378	1,281	8%
Other Comprehensive Income / (Expense)	(21)	10	(310%)
Profit Before Tax	2,562	3,051	(16%)
Tax Expense	680	880	(23%)
Total Comprehensive Income	1,882	2,171	(13%)

The Profit Before Tax for the year was lower by 16% as compared to the previous year. Last year profit was higher mainly due to high merchant sales including sale of RLNG.

Adjusted for such one-time gains, the key operating parameters improved and contributed to increased profitability for the year Thermal PLF improved on the back of increase in demand, Renewable business saw higher profits due to better wind speed, the licensed distribution business performed better with higher RoE due to new capex as well as other parameters being better than normative parameters and the franchised distribution business witnessed reduction in distribution losses.

The finance cost of the Company increased on account of additional borrowings and increase in interest rate.

Liquidity, Capex and Debt Positions

The Companys liquidity, including mutual fund investments and deposits with banks/financial institutions, was Rs. 1,143 Crore at the beginning of the year. Liquidity as at the end of the year was Rs. 1,347 Crore, an increase of Rs. 204 Crore. For the year:

? net cash generated from operating activities was

Rs. 3,358 Crore

? borrowings including short term debt net of repayment was Rs. 1,081 Crore and ? net cash utilised for (a) capital expenditure Rs. 3,464 Crore; and (b) dividend distribution Rs. 771 Crore; leaving a closing liquidity balance of Rs. 1,347 Crore.

Capital expenditure was majorly towards improvement of existing network at our distribution areas and expansion of renewable businesses.

The long-term debt of the Company at the year-end was

Rs. 11,312 Crore, net increase of Rs. 791 Crore over the previous year (new debt raised Rs. 3,300 Crore less repayment of debt

Rs. 2,509 Crore). The weighted average rate of interest at the year-end was 8.22% with repayment profile as under:

	( Rs. in Crore)
Financial Year	Repayment Amount
2024-25	1,380
2025-26 to 2028-29	6,108
2029-30 to 2032-33	3,248
2033-34 to 2036-37	445
2037-38 to 2039-40	131
Total	11,312

The Company is rated by leading Credit rating agencies

CRISIL and India Ratings and the long-term & short-term ratings are as under:

? Long term rating: CRISIL AA+ / Stable and IND AA+/Stable ? Short term rating: CRISIL A1+ and IND A1+

The following table sets forth key financial ratios based on consolidated financials:

Particulars	FY24	FY23	Explanation in case of deviation of > 25%
	12.25	13.35
Debtors Turnover Ratio
	(~30 days)	(~27 days)
Interest Coverage Ratio	5.05	5.67
Current Ratio	1.54	1.52
Long Term Debt to Equity Ratio	0.88	0.92	Not applicable
Net Debt to EBITDA	2.25	1.97
EBITDA Margin	16.77%	18.52%
Net Profit Margin	6.97%	8.42%
Return on Net Worth	14.48%	19.07%

RISKS AND CONCERNS

Key risks and concerns in the businesses of the Company are briefly explained below:

? The Company has operational gas-based power generation capacity of 2,730 MW, out of which 1,163 MW is tied up as on March 31, 2024 under long-term PPAs and balance 1,567 MW untied capacity is dependent on short-term power contracts. During the year, certain portion of such capacity remained unutilised for want of short-term power contracts particularly in view of high LNG prices. Nonetheless, the utilisation was much better as compared to previous years in view of moderation of LNG rates. However, large available coal-based capacities and the Governments thrust to increase renewable generation capacity in the country coupled with falling tariffs of renewable power, pose a risk to the Companys uncontracted gas-based generation capacity in the long term.

The Company has built capabilities to import LNG from international markets at efficient prices to operate its power plants. However, such prices are subject to fluctuations and associated foreign exchange risks, geopolitical and demand-supply mismatch risks, consequent to which, there would be periods during which power from these plants would be uncompetitive. To manage the price fluctuation risk for the cargos whose price are linked to the reference indices (i.e. Date Brent, ICE Brent Future, etc.), the Company is exploring hedging through formalising Commodity Price Risk Management Policy (CPRMP).

The fuel contracts of the Company contain Take or Pay/ Use or Pay/ Ship or Pay obligations. Given the volatility in the LNG market, there could be a potential liability on the Company to pay the obligation charges as defined in the contracts. Various mitigation efforts like sale of RLNG, sale of power from merchant capacity, representation to supplier/ transporters/ regasification terminal for waiver of charges and roll over of unused capacity in future years, sub lease of regasification capacity, etc. are being made to reduce the impact of these adverse implications.

? As per circular of Union Ministry of Environment, Forest and Climate Change (MoEFCC), the Companys 362 MW coal-based power plant (AMGEN) is required to comply with the revised emission norms. AMGEN is compliant with all (Sulphur Oxide). AMGEN

environmental norms except SOx

is permitted to operate till December 31, 2027 without SOx

compliance with an undertaking to retire the plant on or before December 31, 2027. If the plant continues to operate beyond December 31, 2027, environment compensation charge of

Rs. 0.40/kWh will be imposed with effect from January 1, 2025.

To meet with the cyclic variations in generation and demand gaps due to increase in renewable energy generation, Central Electricity Authority (CEA) has mandated flexible operation for all coal-based power plants, under which all coal-based power plants have to become capable of minimum load operation with defined ramp rate. CEA on 15^th December 2023, published a notification for phase-wise plan for implementation of flexible operation in thermal power plant for 40% of MCR (Maximum Continuous

Rating). As per the notification, AMGEN is under Phase

4, taking the deadline for compliance to January 2030.

AMGEN has initiated feasibility study in this regard. ? The Companys licensed distribution business faces the risk of delay in recovery of some part of cost of supply due to regulatory stipulations. The unrecovered and undisputed regulatory claim as at year end was Rs. 3,095

Crore, recognised in the financial statements for the year.

While such recoveries are permitted with carrying costs for delayed recovery, the same may affect the cash flows of the Company. In addition, regulatory disputes also cause delay in recovery of some part of the cost of supply. Such disputed regulatory claim as at the year-end was Rs. 873 Crore, which is not recognised in the financial statements for the year.

With the Governments emphasis on multiple distribution ??licensees in the same area, the competition in the distribution segment could increase going forward.

? In terms of upcoming projects, the Companys renewable business faces the risk of timely acquisition of suitable land for wind and solar projects & overcome Right of Use (RoU)/ Right of Way (RoW) issues for evacuation line within desired timeframe so that the PPA scheduled commissioning date can be honoured.

In terms of operational projects, stringent renewable scheduling and forecasting guidelines considering unpredictable weather forecast results into penalties for no fault of developers. The issue of long receivable cycles from various state discoms has been resolved to a greater extent through successful implementation of Electricity (Late Payment Surcharge and Related Matters) Rules 2022, leading to a moderate risk on this account.

BUSINESS OUTLOOK

1. Thermal Generation

SUGEN and UNOSUGEN plants are backed with long term PPAs for 76% capacity. DGEN plant is operated intermittently for supply of power through merchant power market during period of power supply deficit, provided affordable natural gas and/or RLNG is available. AMGEN, being an embedded generation unit supplies power to Companys own discom.

Considering the projected electricity demand vis-?-vis the current power supply position, both coal and gas based power plants are expected to operate at higher PLFs as compared to last year. The Government has also taken various measures in terms of utilising the gas-based capacities: (i) MoP (through NVVN) floated a tender for procurement of 4,000 MW power during the high-demand period from gas-based plants from 16^th March 2024 to 30^th June 2024; and (ii) MoPs direction under Section 11 to all gas based plants to keep untied capacity available during peak demand period of May & June. Further, Gas-based plants remain crucial to balance the intermittency of fast-growing renewable segment. The Governments vision of a ‘gas-based economy and increasing procurement from gas-based capacity hint at a strategic push towards enhancing the role of natural gas in Indias energy future. Considering these factors, the medium to long-term outlook on gas-based plants remains positive.

The current LNG prices, which are range bound, will also support in improved PLFs of gas-based plants. During the

Cybercrime, ransomware and third-party risk remain key concerns for businesses. To reduce such risks, Company has implemented Artificial Intelligence (AI) based advanced

Endpoint Detection and Response (EDR) system along with

Unified Endpoint Management (UEM) system to ensure infrastructure hygiene, avoid east-to-west malware spread and data leakage. The Company has also implemented Vendor Risk Management system to continuously monitor the risk of key vendors. Further, to reduce the impact of any vulnerability in applications, Company has implemented AI based Web Application Firewall (WAF). For any associated risks, the Company is following National Institute of Standards and Technology (NIST) framework published by the US National Institute of Standards and Technology and Zero Trust Architecture Network is being deployed, with an emphasis on three pillars: end points/devices, access/ authorisations and data. To protect the Company from any financial loss, cyber insurance has also been obtained.

calendar year 2023, prices were around $13/mmbtu and in Q4 FY24, the prices witnessed a reducing trend and are currently around $9 to $10/mmbtu. LNG demand is anticipated to remain lower mainly due to a comparatively warmer peak winter in the US, Europe and China and sufficient inventory levels. There have also been spikes in gas prices due to geopolitical tensions across various countries. Based on opportunity and favourable prices, the Company booked and took delivery of ~9.5 cargoes in FY24 and has so far tied up 7 cargos for delivery in FY25. Going forward, prices for natural gas are likely to remain range-bound given the decline in demand and projected increase in LNG supply capacity in international market mainly in the US & Qatar. However, the uncertainty of gas flow from Russia to Europe, ongoing geopolitical tensions, economic recovery in China, timely commissioning of new

LNG plants and weather patterns may play a crucial role.

On the other hand, to meet the growth aspirations of the country and for 24X7 reliable power supply, new coal-based capacities have become inevitable and accordingly, the nation is set to witness an increase in coal-based generation capacity after a number of years of subdued capacity additions. Further, even for the existing coal-based stations, CEA in a letter to Ministry of Power suggested to allow all old thermal power plants to run up to the year 2030 by doing necessary renovation and modernisation, considering the anticipated demand scenario.

2. Renewables

The Company is poised for a promising future in the renewable power and green energy business, supported by several key factors like the global shift towards sustainable practices due to increased awareness of climate change and environmental concerns, conducive regulatory environment, technological advancements and the growing integration of renewable power sources into mainstream energy systems. The Government has announced ambitious targets for the clean energy segment together with a robust framework for growth to facilitate integration of higher share of renewables in the grid.

Capitalising on these trends, the Company aims to diversify its presence across the renewable energy spectrum by leveraging its expertise in executing and managing renewable projects. The Company intends to have presence across the renewable energy chain by participating in utility scale solar, wind, hybrid projects and also supplying RE power to C&I customers. Furthermore, with a commitment to a sustainable future, the Company is also exploring new avenues in the green energy segment, covering Pumped Hydro Storage, Green Hydrogen and

Green Ammonia. The Company already has ~1.2 GWp of operational and about 3 GWp under construction renewable capacity. The Company is actively exploring avenues, both organic and inorganic, within the renewable energy sector and is diligently working towards expanding its renewable portfolio to 5 GWp over the next few years.

3. Distribution

In its Licensed and Franchised Distribution business, the Companys focus remains on developing the exiting areas by adopting state-of-the-art technology and automation in operations to cater to the growth in demand and further reduce AT&C losses.

Ahmedabad and Gandhinagar cities are being developed as the hub for commercial and service sector. Accordingly, the load density is likely to increase in the coming years and there is potential for further horizontal and vertical development. The rapid urbanisation of the twin cities, new initiatives such as Smart City, infrastructure projects like Bus Rapid Transit System (BRTS)/Metro, etc. necessitate creation of state-of-the-art electrical network with ability of handling large quantum of power at the highest levels of reliability.

The Company continues to look for new opportunities in the distribution sector in the form of privatisation or franchise of existing areas. With the Companys long experience in supplying reliable & quality power and reducing distribution losses to amongst the lowest in the country, the Company expects to benefit from the

Government of India (GOI)s plans of delicensing the electricity distribution business and allowing discoms to have non-discriminatory access to the distribution system of any area. It is expected that new opportunities of privatisation of power distribution may be announced during the course of the next year.

Further, the track record of the Company in turning around existing franchised operations helps attract greater franchise opportunities for the Company in the near to medium term. Business opportunities are also being explored in other distribution areas in form of parallel licensee in the near future.

4. Transmission

Currently, the Company has limited investments in the transmission segment. As the segment offers robust regulatory mechanism and limited counter-party risks, the Company intends to selectively participate in tariff based competitive bidding for transmission projects (inter-state and intra-state). Considering the Companys strengths in financing and executing large projects, this is an area for future growth. Further, the Company is also evaluating brownfield opportunities.

INTERNAL CONTROL SYSTEMS

The Companys Internal Control Systems are commensurate with the size and nature of its operations, aimed at achieving efficiency in operations, optimum utilisation of resources, reliable financial reporting and compliances with all applicable laws and regulations. Ernst & Young (EY) LLP is the Internal Auditor of the Company. It carries out extensive internal audit throughout the year across all functional areas and submits reports to the Audit Committee. The recommendations from such internal audit and follow-up actions for improvements of the business processes and controls are also periodically reviewed and monitored by the Audit Committee.

CAUTIONARY STATEMENT

Certain statements in the Management Discussion and Analysis may be forward-looking. Actual outcomes may vary from those expressed or implied. The Company assumes no responsibility to publicly amend, modify, update or revise any such statements on the basis of subsequent developments, information or events.