Azure Power Global Limited Equity Shares

welcome to the Azure Power Q2 FY21 earnings conference call. As a reminder, all participant lines will be in the listen-only mode, and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during the call, please signal an operator by pressing star, then zero on your touch-tone phone. Please note that this conference is being recorded. I now hand the conference over to Mr. Nathan Judge, Thank you, and over to you, sir.

Thank you, and good morning, everyone, and thank you for joining us. Last night, the company issued a press release announcing results for the second fiscal quarter of 2021, ended September 30, 2020. A copy of the press release and the presentation are available on the Investors section of Azure Power's website at azurepower.com. With me today are Ranjit Gupta, CEO, Murali Subramanian, COO, and Pawan Kumar Agrawal, CFO. Ranjit will start the call by going through recent key highlights and to review the overall long-term positive outlook for solar in India. Murali will then follow with an update on our projects under construction and an industry update. Palandam will provide an update on the quarter. with additional discussion on the performance of operating assets, a deeper dive into our following cash G&A expenses, recent improvement in DSO, and then we will wrap up the call with Ranjit updating FY21 guidance and reiteration of our longer-term guidance. After this, we will open up 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 releases 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-GAAP measures that we reconcile to the most comparable GAAP 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 Ranjit.

Thank you, Nathan, and a very good morning, everyone. Last time we spoke, I had hoped that we would get some relief from the pandemic and a vaccine would be found. Looks like there has been some positive news on the vaccine front, and we are all seeing light at the end of the tunnel. Here's wishing that the next call is held in an even more positive environment with our fight against COVID-19. Given the breadth of our operations, Azure had embarked on an aggressive awareness campaign internally to ensure we remain safe from COVID-19. Through continuous monitoring and management support, we ensured reduced incidents and report no severe health impact on any of our team members. We formulated and implemented strong quarantine and isolation protocols across our operations and provided a dedicated doctor on call to support all our team members and their families who were impacted by the pandemic. Our COVID-101 awareness flyer series continued to disseminate meaningful information and knowledge which enhanced capacity and preparedness of our staff during the pandemic. We have also continued to work with our communities to help them through our CSR outreach. Job training is an important focus for us across our operations. We are also moving forward to getting ourselves ISO 45001 certified. Azure continued to operate despite the challenges faced with COVID-19. During the quarter, we reported that cash flow to equity, or CAP, rose 50% year on year to $14.7 million. Starting this quarter, we will also begin highlighting EBITDA and leverage statistics for our operating assets. This will enable investors to better see how our operational assets are performing and have a greater ability to value the company. EBITDA from operating assets for the quarter rose 20% year to year to $40.7 million and the net debt to last 12-month EBITDA was 5.9x. We also made great progress this quarter in getting make-up payments from our past due customers and our day sales outstanding fell to 114 days from 139 days in the previous quarter, which is the lowest level we have reported since 2018. With regard to the PPAs for the four gigawatts pipeline for which we have LOAs, given the size of capacity combined with other factors, we now expect that the PPAs will be signed in tranches of 500 to 1000 megawatts at a time, rather than four gigawatts at once. We are making progress and do expect that we will receive PPAs for the first tranche pair on January, February 2021. As many are aware, construction costs have fallen, foreign exchange rate move has been favorable in recent months, and we continue to expect that we will realize our original expectation of 20% equity IRRs or more on this four gigawatts. As we have discussed before, there is an added advantage for the three gigawatts coming online after the interstate transmission system or ISTS cost waiver expires in mid 2023 for renewable energy. With expiry of this waiver, distribution companies will begin to incur about one to two cents per kilowatt hours for transmission costs that were previously avoided. However, for our entire four gigawatts pipeline, we will retain this waiver and distribution companies that buy power from this four gigawatts will not incur this expense, providing a significant pricing advantage. After mid-2023, the power generated from these megawatts will likely be some of the lowest delivered new power in the Indian market. In addition, we would note that many discomps are well short of meeting their renewable purchase obligations for the next several years. It is pertinent to note that the draft amendments to the Electricity Act increases penalties and discounts that do not meet their RPO obligations. Hence, discounts will need to buy renewable power and our tariffs with an IFTS waiver will be one of their lowest cost options. We also released our second sustainability report in less than nine months. The most recent one is for fiscal year end 2020. We have continued to expand our disclosure, including scope 3 emissions and participation in the carbon disclosure project. We have implemented several new policies, including diversity and inclusion, equal pay, and enhanced health and safety policy, ESG, a commitment to continue to not emit non-GHG air emissions, and to reduce loss time incidents by 5% annually, among others. We are also increasingly engaging with our suppliers to encourage better carbon reporting and efforts to reduce their environmental impact. We continue to remain a net carbon neutral company and are making good progress in reducing our water consumption with an aim to be water neutral by 2023. Whilst many are aware of the tremendous organic growth opportunities for solar in India, on page 5, we would like to provide a brief recap for the many new investors that have recently invested in AZRE. Electricity per capita usage in India is some of the lowest in the world as many only recently received access to the grid and what they do get is unreliable and not readily available. As solar capacity is the lowest cost source for new electricity, solar makes the most sense to satisfy substantial future demand growth. These are coupled by supportive government targets that aim to have 450 gigawatts of renewable energy capacity in place by 2030 or nearly 30 gigawatts of new capacity additions every year going forward. In fact, we see about 25 gigawatts of new capacity being auctioned by the end of next year. Today in India, there is only construction capacity to build about a third of what the government intends to auction. This provides a tremendously attractive runway for significant additional growth with returns that will be well above our current cost of capital. As we complete two quarters of work from home, I take this opportunity to thank all Azure stakeholders for their patience and support. At any organization, Its team is its biggest source of strength. And I can proudly say that the team at Azure has done an incredible job over these last two quarters. We currently have over 3,000 staff and labor at our various sites working through the dangers of this pandemic. Apart from the various initiatives, our human resource team has undertaken to ensure cohesiveness and engagement in these change times. has embarked on an ambitious online training program, which is specifically developed for our team members as we seek to upskill ourselves to take Azure to greater heights. With that, I will pass it over to Murali.