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Operator
Thank you for standing by and welcome to the Renewed Third Quarter Fiscal Year 2023 Earnings Conference Call. All participants are in listen-only mode. There will be a presentation followed by a question and answer session. If you wish to ask a question, you will need to press the star key followed by the number one on your telephone keypad. I would now like to hand the conference over to Nathan Judge of Investor Relations. Please go ahead.
spk09
Thank you, Jason, and good morning, everyone, and thank you for joining us. This morning, the company issued a press release announcing results for its fiscal third quarter, 2023, ended December 31st, 2022. A copy of the press release and the presentation are available on the investor relations section of Renew's website at www.renew.com. With me today are Sumanth Sinha, founder, chairman, and CEO, and Kedar Kapadge, CFO. After the prepared remarks, we will open the call for questions. Please note, our safe harbor statements are contained within our press release, presentation materials, and available on our website. These statements are important and integral to all our remarks. There are risks and uncertainties that could cause our results to differ materially from those expressed or implied by such forward-looking statements. So we encourage you to review the press release we furnished in our form 6K and presentation on our website for a more complete description. Also contained in our press release, presentation materials, and annual report are certain non-IFRS measures that we reconciled to the most comparable IFRS measures. And these reconciliations are also available on our website in the press release, presentation materials, and annual report. It is now my pleasure to hand it over to Samant.
Jason
Yes, thank you, Nathan, and a good morning, good afternoon, or good evening to everybody listening in on the call. Welcome to the call. Let me start off by saying that the Indian renewable energy market remains incredibly robust, and we see plenty of high-return investment opportunities on the horizon where we do believe we have a competitive advantage. specifically in the complex projects and corporate PPA segments. We have developed a platform that is differentiated not only in India, but even when compared to peers globally. We have operational expertise across renewable energy technologies with leading proprietary digital capabilities that creates an optimal and customized product for our customers. We believe that the world is shifting. Customers are increasingly recognizing the climate change imperative as an existential risk and are moving rapidly to decarbonize. We are one of the few companies globally that can deliver that decarbonization solutions for our customers that most other companies are not really focusing on as much. As these solutions require technological leadership, complexity and customization, we believe that we will be the decarbonization leader and will be even better positioned to capitalize on these opportunities more than ever before. From our perspective as we look at it today, we believe that our EBITDA will grow at least 50% over the current base as we execute on our entire portfolio in the coming two years. We expect to layer further growth on top of this with a particularly interesting round of upcoming auctions over the next year given their complexity. In addition to this is the evolution of opportunities in digitalization and green hydrogen that provide our investors incredible upside options that many companies are not focusing on as much at this point. We believe that the value of our shares do not reflect one of the best growth rates in the renewable energy industry, combined with equity returns that are among the highest in the world. So much so that we have already bought about $160 million of our own stock, which represents over 15% of the free float in only the last 10 months or so. We have another $90 million of authorization or another 20% of free float, approximately, and we have every intention to use that authorization aggressively given where the current share price is. We believe the value of the company has been highlighted with over 500 million of asset sales over the past 18 months at valuation multiples that are consistently higher than new bill multiples. Starting on page four to discuss highlights this quarter, we continue to report strong growth and for the first nine months of this fiscal year, 2023, Revenues from contracts with customers grew 24% year-on-year, adjusted EBITDA was 18% higher, and cash flow to equity increased 11% from the same period in the prior year. We have commissioned capacities of 7.7 gigawatts operating, and the total capacity under construction currently is 5.4 gigawatts, and another 337 megawatts is in the process of being acquired, which brings our total portfolio size to 13.4 gigawatts. So far this fiscal year, our core operations, what we can control, are tracking within a smidge of our internal budget provided at the beginning of the fiscal year. With only about six weeks left in this fiscal year, we expect that we will end the year around INR 61 to 63 billion. The revision and guidance is essentially for reasons beyond our control. This includes delayed completion of the acquisition that we had announced earlier this fiscal year, and which is still under process. Based on where we are in the process, we now expect the acquisition to close early next year. We had expected that this acquisition would add about INR 3 billion or so this year in our original guidance, which looks to be realized in FY24 and beyond. Even though the acquisition is not contributing to EBITDA this year, it is contributing to our balance sheet. The lockbox date was set at the beginning of this fiscal year, and we retain the economic value and cash generation which accrues to our balance sheet. Also, carbon credit sales of around INR 1 billion that we expected to be realized this fiscal year are not likely to slip into early next fiscal year, given the backlog of projects that are in the process for registration at various carbon exchanges. Also, weather continues to be a bit of a headwind, and whilst we captured the majority of the negative hit this year in our guidance at the beginning of the year, the weather along with a variety of other items look to end up another one billion rupees or so worse than our beginning of the year assumptions. We are focused on the long run and still believe that Renew will be delivering adjusted EBITDA of 89 to 94 billion rupees over the next several years or about 50% higher than this year. Virtually all of this growth is contracted and highly visible. As we have reiterated many times, we are focused on creating value And one of the key determinants of creating value is maximizing returns, not only through disciplined bidding and product offerings, but also through execution. In this way, SECI began granting extended construction timelines, which may present us an opportunity to enhance the returns on these projects under development. Module prices are also down 20% or so in the last couple of months, which allows us to streamline construction schedules for our 5.4 gigawatts under development and potentially bring in plants earlier to capture market sales, which could materially improve the returns on our pipeline. We are planning to update the market in the next couple of months, but broadly, we do expect that the adjustments will be moderate and all the projects on our pipeline will be executed as they are all expected to earn returns above our threshold minimums. We are making good progress on our accounts receivables and are seeing regular payments from the state distribution companies that have the highest amount of overuse. Also during the quarter, we added another 300 megawatts of corporate PPAs, bringing that portfolio to 1.8 gigawatts, or about 13% of our total portfolio. Separately, we also received some strong ESG ratings from Refinitiv. Sustainalytics and Carbon Disclosure Project. Refinitiv recently updated their ESG rating on Renew, and we are now ranked as the second highest of any electric utility or IPP globally. Sustainalytics ranked us as a top ESG-rated company. We also received the highest rating by the Carbon Disclosure Project among all Indian renewable companies. Onto signing of new PPAs on page five. As I said, we have signed another 300 megawatts of PPAs this quarter, and we have also reduced our growth as only 1% of our 13.4 gigawatt portfolio has pending PPAs. The corporate PPA portfolio has nearly tripled from the same time last year, and as I said, is now 1.8 gigawatts, with a growing backlog. We estimate that we have the largest market share by a significant measure in this market, which show that differentiated advantage in this business segment. Corporate PPAs offer higher returns than plain Manila renewable energy projects, given higher barriers to entry. Our ability to partner with corporate customers and provide them energy solutions sooner than our competitors. We continue to believe that Renew will have a four to five gigawatt corporate PPA portfolio by 2025. The volume of auctions for complex projects, such as round-the-clock and peak power, continues to be robust. At the moment, there is about 12 gigawatts of auctions for these complex projects under process, and given our differentiated platform that provides us cost and revenue advantages, we remain bullish that we will be able to capitalize on these at returns that are above our minimum return thresholds. With regard to CapEx, the prices of materials Modules which go into our capex have moved in our favor since our last earnings call last November, and this is discussed on page six. On this front, we have seen around a 20% reduction in prices for modules compared to levels in November. Falling prices for wafer and cell prices are likely to also make the delivered prices from our captive manufacturing even more competitive. From where we stand today, we are even more confident about delivering returns within our targeted 60 to 20% equity IRR range at the project level. We believe there is further opportunity to improve returns to capital recycling, further implementation of proprietary digitalization, and continued pursuit of operational excellence. As a reminder, we have locked in wind turbine prices, so there is essentially no material exposure on this front. If in the event that any additional new project has an expected IRA below our minimum thresholds, as you know, we will not proceed. We will remain disciplined with your capital. With that, I would like to turn it over to Kedar to go over the latest quarter's financials.
Renew
Thank you, Suman. I'll now move to slide eight, which provides the highlights of the fiscal third quarter of 2023. We added 66 megawatts this quarter to bringing the total 7.8 gigawatts operating. We signed another 282 megawatts of PPAs, which brings the total amount under construction to 5.4 gigawatts. Our revenues from customers rose 24% year-on-year in the first nine months of fiscal 2023. EBITDA increased 18% in the nine months of fiscal 2023 when compared to the same period in the prior year. And our cash flow to equity increased 11%. While solar generation was better than last year, the wind PLF was about 200 basis points lower than the prior year, which was in keeping with the lower production from wind sites recorded across all of India. Turning to page 9, which provides reconciliation of adjusted EBITDA in Q3, which stands at INR 11.628 million, the wind resource continues to be below normal, elevated above the lowest witness several years ago, And carbon credit sales were below last year, although we expect this will come in the next fiscal. EBITDA through the nine months ended about 98% of our entire budget and for our four operations, excluding the impact of weather, M&A, and the timing impact of carbon credit sales, the full year looks like it will end up being around the same. With regard to our cash flow generation on a nine-month basis, our cash flow to equity was 11% higher than the prior year, although CAP this quarter was impacted by the timing of interest payments. after refinancing a green bond. That paid the interest bi-annually with domestic debt, which pays the interest monthly. Also worth noting is the strong cash generation from our cash flow statement. Cash flow from operations for the third quarter of FY23 nearly doubled to $261 million from the same period in the prior year, as one of the largest positive contributors was a $122 million reduction in our receivables from the second fiscal of 23. Turning on to page 10, as we have highlighted many times over the past year, we have been focused on improving collections on the past due receivables from the state distribution companies, and we are pleased to announce that we have made a sizable progress. The Q3 DSO improved by over two and a half months compared to the end of Q3 in the prior fiscal, and that contributed about $1.2 million to our cash position, as the discounts that have been laid on payments have now been making up payments. As a reminder, the AP DISCOM, which represented about 42% of our current past due receivables in March 31, agreed in June to pay past dues over the next 12 months in equated monthly installments and has made about six to seven payments out of 12 so far. The other states that were late have also been making payments on past dues. At this point, we are expecting to end the fiscal with further improvement of the DSOs, which would represent a release of cash from working capital of approximately 6 billion rupees or more from the prior year. We continue to expect further improvement in our DSOs over time as an increasing percentage of our sales will be to the central government-owned SEKI, which pays its bills promptly and on time. Today with 7.8 gigawatts operating, about 50% of our assets are with the five DISCOMs that have high DSOs, as almost all of our committed projects are with SEKI or with corporate customers who pay on time, The exposure to these five discoms will fall to about 32% by the time we complete the execution of the portfolio. This customer makeshift would represent an improvement of 55 days in our overall DSO just by itself. With that, I will turn it back to Suman for comments on our ESG initiatives and guidance.
Jason
Yeah, thank you, Kirab. I'm taking up ESG on behalf of our sustainability head, Vaishali. Turning to page 12, Continuing our momentum from last year, we are committed to setting new benchmarks on all fronts of ESG performance and transparency. Our latest ESG ratings and scores are testimonials to our endeavor on this front. As a validation of our ESG commitment and performance, we recently received a score of 81 out of 100 from Refinitiv, a global provider of financial market data. This score positions Renew as number one in India in the electric utilities and IPP category, And as I said earlier, number two globally in the same category. Furthermore, Renew has been recently included in the top rated ESG companies list released by Morningstar Sustainalytics for the year 2022-23. We believe this is a validation of Renew's ability to identify and manage ESG risk that can impact our operations. TDP has rated Renew as B for climate change, which is the best rating among the renewable energy companies in India and higher than the Asia average, which is a C. A B rating from CDP for Renew reflects that the company is taking coordinated actions for climate change mitigations. To drive collaborative impact towards a fossil-free future, we continue to work with our employees, communities, and partners. Towards this end, Renew has undertaken the following initiatives. We have pledged to plant one million trees by 2030 under World Economic Forum's One Trillion Tree Initiative. Our corporate office in Gurugram in India has been recognized as one of the best existing green buildings by GRIHA. It stands for Green Rating for Integrated Habitat Assessment, India's green building rating agency equivalent to the USGBC, United States Green Building Council. Our annual program called Gift Warmed has benefited 275,000 people across 11 states in India this year. One of our other initiatives, Project Surya, focusing on job training and entrepreneurship development of women salt pan workers, was showcased in COP27 in the India Pavilion and the G20 Empower Inception event. Turning to slide 13, we continue our efforts to achieve our ESG targets with specific initiatives. Earlier last year, we submitted our science-based GHG reduction targets which have now reached the validation stage by SBTI. Working towards our target to achieve water neutrality by 2030, a feasibility study is currently underway near our site to identify community-based initiatives to offset our water footprint from our operations. We also, I should say, have achieved a 12% women representation in our workforce by the end of Q3, and we are working on increasing it substantially to 30% in the next few years. We would be disclosing progress across our targets in our forthcoming sustainability reports. I invite you all to engage with our sustainability report 21-22, which is released in October 2022. Moving on, with regard to our guidance, this is not beyond the sustainability section, with regard to our guidance outlined on slide 16, we are shifting our FI23 adjusted EBITDA guidance as I said earlier, to a range of 61 to 63 billion rupees, which reflects the absence of the expected EBITDA contribution from our acquisition under process, the deferment of carbon credit sales, and some impact of weather, which is deferring some of our EBITDA. Again, we are not revising our portfolio run rate EBITDA, which is about 50% above expected levels this fiscal year, and which is essentially fully contracted and should be reached over the next couple of years. On the buyback front, as I said, we have repurchased about 25 million shares since we implemented the program, which still leaves us about $90 million of authorization remaining. $90 million represents approximately 20% of the current free float at today's share price. We continue to see considerable value in our shares. As we have evidenced by numerous asset sales over the past year, RNW trades at a meaningful discount to what we can sell assets for. As our shares are one of the highest return investments of scale that we can make, we have been actively buying back stock when we believe that it could provide the highest return opportunity for our shareholders. With that, we will be happy to take any questions. Nathan, back to you.
Operator
Thank you. If you wish to ask a question, please press star 1 on your telephone and wait for your name to be announced. If you wish to cancel your request, please press star 2. If you're on a speakerphone, please pick up the handset to ask your question. The first question comes from Julian Dumoulin-Smith from Bank of America. Please go ahead.
Julian Dumoulin - Smith
Hi, thanks for taking the questions. This is actually Morgan Reed. I'm for Julian. Can you first talk about the execution on the corporate PPAs this quarter? It seems like this is clearly an increasingly relevant portion of the pipeline. I would be interested to understand what proportion of the portfolio you think this can kind of become in the Next year, kind of trying to understand where you are focusing your growth. Clearly, you've talked about this opportunity quite a lot.
Jason
Yes. You know, in terms of the, you know, we've signed a lot of our corporate PPS in the last six to nine months and less than that. So a lot of these projects have been under execution. But I think the important thing to note is that we've signed most of this 1.8 gigawatts in the last 12 months. And that gives you a sense that the momentum in that part of the market is pretty good and is picking up. We've also stated earlier that we expect almost about 25% of our future PPS to come from the corporate market. We have a pretty healthy backlog at this point in time. And so I suspect that that is something that we should be able to achieve in the near term.
Julian Dumoulin - Smith
Got it. Thank you. And then, can you also kind of elaborate on the value that you're associating with the decline in module prices? It seems like maybe there's some accelerated development opportunities and certainly some decrease in CapEx. Can you just talk about how we should think about that as we're looking at the current development opportunities?
Jason
Yeah, Kirab, you want to take that?
Renew
Yeah. So I think we spoke about the 20% decline in the module prices from November till now. And the new POs that we are placing are at a level which makes us pretty comfortable. If we wait for some more time, there might be a little bit of further decline as well, although some of these things are not fully predictable. And yes, I think this allows us to manage the capex well. This allows us to get the IRRs back in shape. because the prices, especially during June to November period, were quite elevated, as we know. So we continue to track, and we continue to stagger the orders and deliveries in a manner in which we stay very close to our target range of the IRRs.
Julian Dumoulin - Smith
Great. Thank you. I'll take the rest offline.
Operator
Our next question comes from Nikhil Nijania from Bernstein. Please go ahead.
Jason
Hi, thank you for taking my question. On the acquisition front, the quantum of 528 megawatts last time, DC is lower this time. Any reason for that? And also on timelines on completion of an acquisition, if you could give some guidance.
Renew
Yeah. So Nikhil, this acquisition was under the slump sale route, which means you have to change the titles to the underlying assets, you know, you have to transfer the PPA, you have to transfer the lease, you have to transfer the title of all other assets. And that's little, you know, relatively little more time involving process compared to a pure share purchase agreement. And this has given us a lot of learnings. But as we said, the lockbox date is already agreed from beginning of this year. So the cash flow for those PPAs will get to a balance sheet as a reduction from the capex. What this has also done is this has allowed us to reflect in terms of the quality of the assets that we are pursuing. And in the next few months, we will make judgment as to what's the right proportion of these assets that we should be finally acquiring. And maybe we'll end up with slightly higher than the half of what we were targeting earlier. But as I said, please take all this as a tentative approach guidance at this point of time will be announcing probably by the full year when we have a clearer picture of the total PPS that will take over. And maybe by that month, maybe from the time we will approach you for the full year results, we'll have a much better idea on both the number, I mean the size of the assets that will take over and the timeline for full integration.
Jason
If I may just add to that, sorry. Sure. I was just saying that, look, as you know, most M&A transactions are, as Kedar was saying, shared transfers. This one was a slump sale because of the specific situation involved here. And that process has just taken way longer than anticipated and expected because of the transfer of so many different things. But I think it's something that we're now fairly close to completing, and it is something that should be finished by early next year. And that will then, you know, also allow us to get back to you on exactly what percentage we're going to acquire. But there were one or two assets within that that we felt might be something that we don't really want to go ahead with or were harder to close because of all these regulatory issues. And that's why we've decided to sort of decrease the amount that we were acquiring a little bit. Appreciate that answer. Well, the second question was regarding the asset sale news, which is going around of 1.1 gigawatts to potential entities like Torrent, et cetera, which said it's news.
Kedar
Any views, if possible, to share on that? The rationale and if it's, yeah, any take on that one?
Jason
So, you know, capital recycling as a strategy is something that we've talked about quite a bit in the past. And I think most global renewable energy companies follow the same strategy and we are doing the same. I think the idea really is that we can build more than we can necessarily hold or want to hold. And so therefore, you know, building more than allows us to capitalize on value creation or create value in those assets that we're building. and then sell them at higher multiples. So I think that's an eminently sensible strategy for us to pursue. And so, Nikhil, you'll see in the future certainly us looking at selling more assets, which is not to say that our portfolio will not grow. It will grow as well. And, you know, look, there's a lot of news in the Indian press, as you're aware. And so you just have to wait for something specific to be announced by us. Before, you know, until that point, we really can't comment, as you well know. Got it, correct. Thanks for the answer. Sorry, two more questions quickly then. One is, there is news going around that ALM restrictions might get relaxed in the near term. If that happens, does it help people in timeline for any project? And related to that, on the RTC project, which is a big one, Last time the guidance was for Q2FI24. Does that change as it stands today or if that list is changed? Yeah, so look, as far as the LMM is concerned, you know, as you know, we sit on both sides of that equation. We are both a developer and we're also looking at getting into manufacturing. So we are fairly neutral to whichever way it pans out. But will it allow us to commission projects earlier? Not necessarily. First of all, it hasn't actually come out as a specific policy yet. So we have to wait and see exactly what happens. So I can't say that it's going to allow us to commission earlier because we'll obviously have to see where we can buy the modules from, what are the delivery timelines and so on. But to the extent that we can commission some of our projects earlier, certainly we would like to do that because as I was saying in my remarks as well, if we're able to commission projects earlier, you are able to sell some of that power into the merchant market. And I think one of the things that is emerging quite clearly, it appears, is that prices in that market are going to be relatively robust. So that opportunity potentially can open up, but we haven't studied it specifically, so I can't give you any sort of clear-cut answer on that. Your second question on RTCs, Q2 commissioning, look, the RTC project, as you know, is comprised of four different projects, three wind and one solar, and then, of course, there's a battery component as well. These projects should be commissioned progressively over the course of literally starting pretty much now, onwards till the end of, I would say, Q2, Q3. So I think that's what's going to happen. the whole project, and so whenever the project gets commissioned, you know, revenues can start, whichever part of the project gets commissioned, the whole project for us to then, you know, sort of go to SECI and say the whole project is commissioned might take till Q2 or Q3 of this coming financial year, FY24. So we are largely on track from an execution standpoint. Got it. Perfect. Makes sense.
Kedar
This is just on the balance sheet. On other non-currency assets, there's a jump of, I think, about a thousand crores or $120 million. What is the reason for that?
Renew
Yeah, Nikhil, so a couple of items which has gone up. As you know, we have made an acquisition in a digital entity. And we are only a 40% stake in that entity. So part of that gets recorded in the other assets. We also made some advances to capital creditors as part of the RTC and various projects. So I think some of these things get sort of reflected in the other assets category.
Nikhil
Perfect. Thank you so much, Ketan. Thank you so much. That's it for now.
Operator
The next question comes from Justin Clare from Roth MKM. Please go ahead.
Nikhil
Yeah, thanks for taking our questions. So I guess first off, you had indicated that you expect further improvement in DSOs by the end of this year and then into fiscal 24. Was wondering if you just give us a sense for how much more improvement might be possible. And then just more generally, could you talk about whether you expect this improvement in DSOs to be maintained? So at this point, you know, has there been a lasting structural change in the market where there's going to be potentially lower risk of DSOs getting extended in the future?
Renew
Yeah, we believe so. I think you must have heard about several pronouncements from the regulators which is helping us. See, two things are happening. One is the old dues are getting cleared and the current dues are getting promptly paid on time. And both these are helping us to you know, get a reduction quarter by quarter in the DSOs. And second factor which we mentioned is the mix of off-takers is changing in favor of those who are paying much earlier. So the proportion of corporate off-takers, the proportion of central authorities like SECI, that is going up. And the proportion of discoms is going down from 55 to 32. So both the LPS team specifically and the change in mix of the off-takers is helping us. And we believe this is structural. and this will continue for some time. Compared to the December DSO, we do expect about 15 to 20 days further reduction as of March, and similarly going forward as well.
Nikhil
Okay, thank you. And then it looks like the ALMM was recently relaxed for a period of two years, and then we've also seen the decline in module cell and wafer pricing. So just given the changes that have happened here, can you talk through your module sourcing strategy? Has there been any change? I think as of now, you're planning to self-supply with about 60% of your projects from your own manufacturing. Has that changed at all, or are you thinking there just any update would be helpful?
Jason
Yeah, so look, at this point in time, we... First of all, the ALMM has been an announcement by the minister, but it's not really come out as official government policy yet. So we have to wait for that to happen and to see if it happens. So I think that's number one. Number two is that we haven't yet been able to make an assessment of how this change might impact us. Keep in mind that the customs duty of 40% on modules and 25% on cells is still there. That is not changing. which essentially means that imports from China, for example, are still not going to be possible. From one or two other geographies like Southeast Asia, it might be. But it's a question of finding out how much availability there is in those markets, given that a lot of the modules from there are being shipped to the U.S. and to Europe. So we'll have to make that assessment, which we have not been able to do yet because this is obviously still not official policy on the part of the government. As far as our own supply is concerned, look, our module plant will be up and running in the next few months. And, you know, once it's stabilized, then, of course, we expect that to supply to us and for most of our suppliers to come from there. But, again, you know, some of our projects are, in fact, grandfathered because we had run them before this duty and the element was announced. And so, therefore, for those projects, we are able to import products modules from China or anywhere else for that matter. And so I think it will depend on really, you know, at what point does our plant get stabilized, what are the specific rules at that point in time, and then based on that, we'll take the most optimal decision. I think behind all of this, you have to keep in mind that the good news is that module prices and sell prices also have come down dramatically. And therefore, you know, whichever way we look at it, I think our module costs are going to be lower than we had – potentially sort of anticipated, and that's going to be good for us. Now, I can't give an exact sense of how much will come from our own supply versus how much will be imported and from which geographies, because that's still a little bit uncertain at this point in time, given the uncertainty a little bit around government policy and on supply sources.
Nikhil
Okay. I appreciate it. Thank you.
Operator
Again, if you have a question, please press star, then 1. Our next question comes from Amit Bindi from Morgan Stanley. Please go ahead.
spk05
Hello, . I had two questions. One, with the wind PLF situation right now and be thinking of reassessment, how are we looking at the near-term forecast and any update on the reassessment that you are planning?
Jason
Yeah, these are both good questions. So look, as you know, in the guidance that we've given for the current financial year, we had already assumed a lower sort of wind speed, a lower wind forecast for this year. And that is something that is almost being met as far as the wind speed of this year is concerned. Although, of course, it is significantly below what you might consider to be the long-term means. Chances are that we'll carry on with the same kind of, the same level of forecast into next year as well. We are unlikely to, you know, sort of change that substantially from the current level because I think it still is, you know, it's sensible to be prudent. We've had, as you know, now three not good years of wind in a row. And that's a fairly rare event, but it is not that it is unknown to happen. It has happened in the past in other geographies as well. Typically, when that kind of thing happens, then there is at some point a bounce back, but it's hard to say when that might happen and how much that might be. So I think we will, therefore, from a prudency standpoint, just carry on with the very conservative guidance that we gave this year into next year as well. As far as the long-term proper assessment is concerned, that is something that we are working on right now. We are discussing with a number of the wind forecasting agencies And I think the good news in some of the early conversations we've had with them is that the technologies, the methodologies, and the science that they use to forecast long-term wind in India is no different from what they use anywhere else in the world. And so therefore, I would feel that as we go deeper into this work, that we should be able to get a good sort of view on a lot of these issues. And we should be able to come back to all of you I think, very soon on this matter. But I think the other thing I should also say is that because of the experience of wind in the last two, three years, we've already become very conservative in our forecast for wind in the future as well, not just for our existing assets, but also the assets that we're going to build in the future. So a lot of that conservatism we're already building in to our future forecast. So I think that you won't really see any big delta from the current year into next year and so on. simply because, as I said, we've already reduced our forecast quite substantially. And for future projects, we are also being already quite careful about the forecast that we're now doing. So I would not anticipate any further reductions from this level in terms of our guidance. But, as I said, we will just cross-check and re-corroborate all of this with the wind agencies and get back to all of you with more specific and firm predictions sort of views from them, from these forecasting agencies by the next time that we interact with you all, hopefully in the next few months' time.
spk05
Just anecdotally on this one, now the government is planning an 8 gigawatt oxen on wind. So first thing that they also have this criteria that it should not be concentrated in some states. So it would be diversified across states where the wind variability could be more. So how do you see approximate tariff impact when you look at two aspects? One, wind PLFs already, speeds already impacted and other you would have to diversify into a different state where the wind speeds may not be very optimal for the auction. So how do you see that?
Jason
I don't think that will have any impact, frankly, simply because we are, for example, as a company already operating in most of these eight states. And so we have already good experience in terms of wind forecasting in all of those states. And look, eventually, even if the wind quality is lesser in one state compared to another, That gets reflected in the tariff that people bid because the tariff just ends up being higher in the states that have lower bid speed. What the government intends to do is to bundle all the wind projects together from across various states and offer a single pooled tariff to the end buyers of the power. So it actually doesn't matter which state you put up the capacity in.
spk05
Great. Got it. And another question that I had was on this domestic manufacturing for modules. Now that the model prices are declining, if we look at the financial aspect of it, how much would be the differential? Like how much would be the output, price of the output from our own manufacturing versus say imports plus custom duty? For example, like say around 20, 25 cents for imported module with the custom duty and maybe, I mean, whatever is the price for the domestic one. How much would be the differential between the two?
Jason
Yeah, so I can't give an exact answer at this point, nor do I want to be very specific on this issue right now. I think the only thing is, as you know, that import duties are 40% and on modules and 25% on sales. And, you know, any modules that we make in India or cells that we make in India are going to be significantly, significantly less than, you know, the protection that the duty provides. So I think that ultimately the comparison really in some ways is not to imports because those will always be more expensive with the duties. But in some ways the comparison should really be with what is being manufactured in India otherwise by other companies. And I think in that respect, we will be very, very competitive simply because of our scale and also because of the fact that we have a much more modern plant with the latest technology.
spk05
I saw that. Ballpark, it would be around 25 cents or something for domestic manufacturing output. I know, I mean, as you said. No, you know, you can't.
Jason
No, I hate to generalize because it really depends on, for example, the input cost of either cells or wafers depending on what you're buying. And that price is moving around a little bit. So therefore, it's hard to give us, you know, a fixed number on that at this point.
spk05
All right.
Jason
Got that.
spk05
Those are my questions. Thank you.
Jason
Thank you.
Operator
Our next question comes from Bunit Galati from HSBC. Please go ahead.
Kedar
Yeah. Thank you so much. And best wishes. My first question is, you know, you haven't been, you know, very, very actively participating in the utility scale auctions. Is there a differentiated strategy that you know to adopt with focusing more on corporate than on utility scale?
Jason
Sir, as you know, there haven't been that many auctions. A lot of the auctions that have happened have either been state level bids or bids where which may have been for plain vanilla, either wind or solar. Those ones, as we've stated in the past, we don't intend to participate in because we don't really want to take a lot of direct state exposure or we don't want to participate in vanilla auctions, really frankly speaking, because we feel that our competitive edge lies in the more complex auctions. So I think we are focusing on the more complex bids. And as we've stated, we expect a lot of those to come down And so therefore, there'll be enough for us to bid for. Also, the corporate PPA market, as you've mentioned many times, is very active. And so between the RTC slash peak power bids, on the one hand, and the corporate PPA market, frankly, we have a hands full. And that is why we are choosing not to participate in the plain and the low auctions or the state-level auctions.
Kedar
Understood. And did I hear it right? You said that you will not be revising estimates on account of whether your EBITDA guidance is already prudently capturing that? That is right, Puneet. Yeah, that's what we've said. OK, understood. And then last one, when I look at your CAPEX guidance this quarter versus last, the manufacturing link had been slightly slower in FY23 and now more moved towards FY24. Why would that be the case and what are the timelines for completion now for your module and cell manufacturing capacities?
Jason
Yeah, so look, our module plant is running about a couple of months behind schedule. It was supposed to be commissioned by end of Q1. it will probably just spill over into early Q2, early Q1 of next financial year. So there's not a significant delay there, frankly. The cell and module plant are pretty much running as they were supposed to run in Dholera, where we're putting them up. So there should not be a significant difference in capex. Actually, there may just be some payment or phasing issue more than anything else.
Kedar
All right. Yeah. And on the carbon credits, can you explain what really happened there? You reduced the guidance on account of carbon credits as well. Is that a permanent hit or is it more short-term hit? And what part of your EBITDA at portfolio level guidance is attributable to carbon credits?
Jason
Yeah, Kedar, do you want to take that?
Renew
Yeah, yeah. So, Punit, these are basically RE credits now. Going forward, we hope to have more voluntary credits, nature-based solutions and things like that. But as of now, these are RE credits. What we understand is the global agencies which sort of register the projects as eligible for carbon credits, there is a lot of backlog. So actually, some of this is beyond our control. And it's just a timing deferral from quarter four of this year to probably first half of next year. And the amount is roughly a little less than one billion rupees. But as I said, primarily current composition of our credits is RE in nature. And going forward, the idea is to get a little more higher proportion of the voluntary credits.
Kedar
And at the portfolio level every time, what sort of contribution have you assumed? In your 89 to 94 billion every time?
Renew
Yeah, yeah. So it would be in mid to high single digits, not more than that.
Kedar
Mid to high single digits, okay.
Jason
No, in fact, Puneet, if I may say, in general, you know that carbon credits on our existing portfolio is in some ways really sort of winding down because of the way the Kyoto Protocol is being phased out. And so really there isn't a lot of carbon credits that we're assuming will be available in the future. There are some markets that are developing where those carbon credits may still have some value like in the Middle East and so on. But we don't know how those markets are going to develop over time. So at this point, we're being very conservative on making any assumption about any revenues coming in from carbon credits in the future from the renewable energy project. As Kedar said, there's a whole separate stream of work that we are doing right now on developing carbon credits based on nature-based solutions, but that's a whole different thing altogether. That's not really... In some ways, that's not part of this 89 to 94 billion that we gave, which is really revenues based on our EBITDA based on our 13.4 gigawatt portfolio.
Kedar
Okay. And when you say nature-based solution, basically the forest that you may be building, those will be ultimately contributing to the credits, that kind of stuff.
Jason
I mean, you know, there are two separate things, of course. I mean, the trees and all that we are planting are really from an ESG standpoint, not for profit in a sense. But there are other projects that are emerging that are at very early stages, things that we are just testing out right now. So it's not something that we can really talk about in detail, but should there be some of those, then that's going to be additive to any of these things.
Kedar
That's very true. Lastly, since you're there, what are your thoughts of going out of India and do renewable projects there? Or are you likely to focus on India only?
Jason
That's a very interesting question, Puneet. Look, it's something that we've debated at length. We believe that as a company, we have some pretty significant strength that can be leveraged in other countries as well. Obviously, access to equipment, access to low-cost execution mindset, engineering and execution capabilities. All of those are things that we do believe will have value in other geographies from an execution standpoint as well. And in addition, of course, we already have significant scale given that we are at least globally also ex-China among the 10, 12 largest companies in the world. Having said that, I don't think that we've taken a specific decision at this point. that we want to go overseas or not. It is something that I think we will evaluate. And if it makes sense, then of course we will come back and discuss it with everybody and I think, you know, think about it at some point in the future. But it is not something that is immediately on the cards. Having said that, as you all know, we're also looking at green hydrogen projects. Those are all at very, very early stages, I would hasten to add right now. And, you know, so in that sense, for some of those kinds of projects, yes, we are looking at development opportunities outside India. But again, I must add that those are the very early stages. And before we make any investments, obviously a lot of work needs to happen behind those.
Kedar
That's all from me. Thank you so much and all the best. Thank you.
Operator
Our next question comes from Angie Storozinski from Seaport. Please go ahead.
Angie Storozinski
Thank you. So I just wanted to ask, you know, a bigger picture question. So given all of the scrutiny surrounding Adani Green and their financing, I understand that there's very little comparison between your stock and theirs even before the sell-off as far as multiples are concerned. But I'm just wondering, is there any change to the competitive landscape to – questions that you're being asked by future lenders for your renewable power projects. You feel like this turmoil surrounding Adani Green is giving you an edge in bidding for some assets. And again, any lessons learned from how you can improve your disclosures going forward?
Jason
Yeah, so Angie, look, I think frankly speaking, as you said in your own question, we're a very different company from Adani in terms of a whole variety of different factors. I would say that, you know, in terms of our operating situation, nothing really has changed as such. I think that, you know, we were already considered, I think, a very high quality company in terms of ESG issues. and that continues to be the case. It's also reflected in all the ratings that we've got. There haven't really been any bids that have happened post this whole situation that one can point to and therefore say that this is how the situation might change. But I think what will happen is that there will be an appreciation for high-quality, well-governed companies that are truly following the whole ESG methodology in everything that they do. And so in that sense, you know, I would be hopeful that people will look at us with slightly, what should I say, a higher degree of attraction perhaps. But let me leave it at that because I don't know what impact it might have on the Adani group in terms of how their situation evolves. It's something that I don't know and I'm not aware of. And it's really too early to be able to comment on whether we've seen them change their behavior in the marketplace and so on. So, yeah, so let me just leave it at that. Kedar, I don't know if there's anything that you'd like to add.
Renew
No, I would just say that since we are listed on US, we do follow very extensive 6K and 20F disclosures, which are both for financial and operational data and management commentary, pretty extensive in nature. And we will continue to enhance those disclosures. Thanks.
Angie Storozinski
Okay, and an unrelated question, if I may. So you mentioned that SECI is granting extensions to CODs for some of the assets, and I don't think I fully understood what you were trying to say. You were suggesting that you actually might bring projects early on to capture merchant earnings and just use this fact that there could be an allowed delay in official CODs, or is it about just the... the fact that the component prices are falling and so the economics of the projects might get improved if you were to delay them?
Jason
Actually, Angie, it's both. And so each case might be different. Wherever it is allowed for us to postpone and we feel that in the postponement we can get lower prices, that will allow us to potentially postpone the project and lower the CAPEX and still meet SECI's commissioning requirements. So that is one potential strategy that we could follow. The second potential strategy is that we could potentially commission projects earlier and sell them in the merchant market and then sort of lay them off to Secchi based on the Secchi commissioning extension that we've got. So the point is that it gives us a lot more flexibility to optimize either project costs or revenues. And so we fully intend to use the flexibility that we've been given to maximize on the returns of our projects. So it will allow us to increase the return either by using either one of these two strategies.
Angie Storozinski
And then lastly, in your prepared remarks, you talked about projects that exceed the minimum return threshold, but you do have a range. So are we talking about projects that are at least 16% in the IRR?
Jason
Yeah, yeah, yeah, that's right. No, no, that's what I was saying, that all the projects, therefore, are within our threshold rate. And now that we have this extra little bit of flexibility, that just gives us a higher degree of confidence and comfort of being able to meet those threshold requirements. And, of course, for future projects, we continue to be disciplined, as you know, and we will not wait for projects where we feel that we are not likely to meet the standards.
Angie Storozinski
Awesome. Thank you. Thanks.
Operator
That does conclude our conference for today. Thank you for participating. You may now disconnect.
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