Azure Power Global Limited Equity Shares

Good day and welcome to Azure Power Q3 2021 ONI conference call. As a reminder, all participant lines will be in listen-only mode, and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during the conference call, please signal an operator by pressing star then zero on your touch-tone phone. Please note that this conference is being recorded. I now hand the conference over to Mr. Nathan Judge from Azure Power. 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 third fiscal quarter of 2021, ended December 31, 2020. A copy of the press release and a presentation are available on the Investor section of Azure's Power website. at azurepower.com. With me today are Renji Gupta, Murali Subramanian, COO, Pawan Karmar, Agrawal, CFO. Renji will start the call by going through several key highlights, and then Murali will follow up with an update on our projects under construction, technological innovation, and an industry update. Pawan will then provide an update on the quarter, with additional discussion on the performance of the quarter, and then we will wrap up the call with Ranjit discussing fiscal year 2021 guidance, providing initial fiscal year 2022 guidance, and a discussion 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 release we furnished in our Form 6-K and the 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 as the most comparable GAAP measures, and these reconciliations are also available on our website in our press release. presentation annual report. And with that, it's now my pleasure to hand it over to Ranjit.

Thank you, Nathan. And very good morning, everyone. It was around this year, this time last year, that COVID began spreading rapidly across the world. It has been truly unfortunate how this pandemic created so much pain and uncertainty. Fortunately, the light at the end of the tunnel is getting brighter with the vaccine being globally distributed as we speak. Here's to hoping that we can all claim victory over the virus on our next call. Sustainability and ESG are key to the success of our business. At Azure, we start every meeting with a discussion of health and safety, which is of paramount importance. We would like to start this call by highlighting our ESG accomplishments this quarter. We are very proud to announce that we obtained the ISO 45001 certification, which demonstrates Azure's focus on occupational health and safety. Given the remote locations of our projects, the extreme heat and difficult conditions for construction and operations, as well as the inherent safety risks that come with any large-scale construction project, we believe this validates the additional efforts we make to make our workplace safe for our team members and contractors. In addition, in December, MSCI, a leading ESG rating agency, rated Azure Power as AA for ESG, which places us in the top quartile of all global utilities they cover. We believe that we will improve on this rating going forward as we work through some legacy issues that have improved this past year. Despite the challenges faced during the pandemic, the company's operations have persevered. Today, we have 19% more megawatts operating than we did at the same time last year. Our operating assets have performed extremely well, and not only we have been able to continue collecting revenues, we even improved our collections with our DSO at 113 days at the end of the quarter compared to 119 days at the beginning of the pandemic. We had slashed costs, and our cash GNA, excluding stock compensation expenses, fell by 15% from the same quarter last year. last year. We had promised to reduce our cash GNA expenses by 10% in FY21 versus FY20, and I'm happy to report that we are on track to deliver on our promise. At the end of Q3 FY21, we are operating with 25% fewer team members than a year ago. Growth and our actions to improve returns have resulted in a 26% year-on-year increase in EBITDA from operating assets and a 142% increase in cash flow to equity from operating assets. Over the last three quarters since we started reporting CFE, we have seen a steady improvement in this metric due to our focus on settling our assets, capex infusion in operating assets, reducing our costs, and collection of long outstanding dues. Also, our CFE generation of $67 million over the past 12 months would have been around $75 million if insulation in third quarter and year-to-date had not been about 5% lower than the 20-year average NASA insulation data. On the flip side, despite significant progress towards signing PPAs on our four gigawatts for which we have a letter of award but no PPAs, we have not much to report. We still remain optimistic that we will have positive news to deliver shortly as there is a definite movement towards the finish line. The fact that India beat its peak power demand record twice in the last month indicates a strong recovery is underway, which will enable discoms to invest in buying power for their future needs. As we announced before Christmas, we do expect a reduction in tariffs from what was discovered when we won the auction about 14 months ago. Frankly, costs have come down and productivity has risen significantly during this period. The government continues its tremendous support to the renewable energy sector. The Honorable Prime Minister has reiterated the Government of India's vision of having 450 gigawatts of renewable energy operational by 2030. Many structural changes are being proposed to the regulatory and policy framework to enable this growth. In the recent budget, approximately 40 billion US dollars have been set aside for upgrading infrastructure and technology of distribution companies to make them more efficient and improve their fiscal positions. In a path-breaking change, the government has spoken of putting a framework in place whereby the consumer could be in position to choose their electricity supplier, which means there would be an opportunity for consumers to choose clean and lowest-cost renewable energy. With further infusion of equity in SECI, Solar Energy Corporation of India, the budget signaled the government's intent to strengthen its support for the RE business. In my remarks exactly a year ago, I had spoken about four broad themes that we had started work on. strategy, transparency, efficiency, and prudence. In the last four quarters, we have worked hard on all four things. Our transparency has manifested itself in our disclosures, streamlining of reporting structures, elimination of EPC margins, and our constant outreach to the investor and stakeholder community. Efficiency and prudence have been demonstrated through reduction in our costs, pruning of our workforce, simplification of internal processes, focus on training and human resource. We have executed our strategy, which primarily focused on discipline and capital allocation. As tariffs have plummeted to below three US cents, in an environment that module prices are holding firm, we have stayed away from bidding aggressively, patiently waiting for the right opportunities that will earn our shareholders a return higher than our cost of capital. We have time and again demonstrated our commitment to capital discipline by chasing returns over scale. With interest in green hydrogen growing exponentially, storage costs continuing to decline, and increasing efficiency of solar modules, the stage is set for the next quantum leap in acceptability of renewable energy across the world. These are exciting times. We continue to look for suggestions from our investors and stakeholders on how we can further improve our disclosures and make it easier for you to understand our business. With that, I would like to turn it over to Murali.