PTC India : Concall Invite (6th July 2022) PTC India Ltd-Q4

"PTC India Limited's Q4 FY'22 Earnings Conference Call"

July 06, 2022

MANAGEMENT: DR. RAJIB KUMAR MISHRA - CHAIRMAN &

MANAGING DIRECTOR & DIRECTOR, MARKETING &

BUSINESS DEVELOPMENT

SHRI HARISH SARAN - EXECUTIVE DIRECTOR

(COMMERCIAL & OPERATIONS)

MR. PANKAJ GOEL - CHIEF FINANCIAL OFFICER

MR. RAJESH CHERAYIL - CHIEF STRATEGY OFFICER

MR. ANAND KUMAR - INVESTOR RELATIONS TEAM

MR. MUKESH AHUJA - VICE PRESIDENT (FINANCE)

MR. SUSHANT CHATURVEDI - HEAD (INVESTOR

RELATIONS, PUBLIC OUTREACH & CORPORATE

COMMUNICATIONS)

,

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PTC India Limited

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Moderator:Ladies and gentlemen, good day and welcome to the PTC India Limited Q4 FY'22 Earnings Meet. At this moment, all participants are in listen-only mode. Later, we will conduct a question- and-answer session. At that time, you may click on the raise hand icon to ask a live question or you may submit your text question. Please note that this conference is being recorded. I now hand the conference over to Sushant Chaturvedi from PTC India. Thank you. And over to you, sir.

Sushant Chaturvedi: Thank you, Aman. Good afternoon, ladies and gentlemen. My name is Sushant Chaturvedi and I head Investor Relations, Public Outreach and Corporate Communications for PTC India Limited. We thank you for the participation on this call. We trust you and your loved ones are safe and in good health. Our good wishes to all of you.

Last couple of years have been unusually challenging for everyone. Our company has been making every effort to keep operations up and running and following the required safety guidelines. We compliment and thank all our associates and stakeholders for their efforts, support and optimism. Going forward, I would like to welcome you all for the earnings conference call for the fourth quarter and the annual FY'22 of PTC India Limited.

To discuss "Business Performance and future Outlook," we have from the management side, our Chairman and Managing Director Dr. Rajib Kumar Mishra who's also handling the charge of Director, Marketing, and BD; Shri Harish Saran Ji, ED, Commercial and Operations; Pankaj Goel, our CFO joining us from London; Rajesh Cherayil, our Chief Strategy Officer; Anand Kumar, part of the IR team, and Mukesh, the VP, Finance. I hand over the proceedings now to the chairman, Dr. Rajib Mishra.

Dr. Rajib K. Mishra: Thank you, Sushant and welcome to our investors meet. This we are doing it on a virtual meet, and we would love to do it physically as soon as possible, but this time, we have continued what we were doing for the last almost two and a half years.

Financial year 2021-22 became a bellwether year for PTC in terms of traded volume as we traded record 87.5 billion units of electricity and we have surpassed this our previous 80 billion units traded in the previous financial year. And we have maintained a market share of around 52% this year. And despite the non-availability of income of around Rs.74 crores from one-off transactions from Bangladesh, our total operating margin at around Rs.704 crores is more than what we have done in the previous year. Our consultancy income has increased by almost 35% and we have reached a number of around Rs.39.75 crores and we have already completed the acquisition process of the IL&FS Energy Advisory business and that will be added from this financial year onwards.

Despite the headwinds and the lack of exceptional income and COVID-induced behavior, which was effected twice in the same year, one in the wave two and the other in the COVID wave three, where the demand has gone down by almost 18% to 20% in the country, we have shown increased volume of more than 9% in this year, and we have shown the resilience of business

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	PTC India Limited
	July 06, 2022
	model this year as well and we have come out with the new schemes and some of the innovative
	products, which we will discuss during the conversation.
	Before I take it further, I would request now CFO of the company, Mr. Pankaj Goel to give you
	a brief presentation on the performance of the company and some of the numbers which he
	would like to share with you for the performance during the year. Mr. Pankaj Goel.
Pankaj Goel:	Yes. Thank you CMD sir, and good evening to everybody. As you are aware that the presentation
	has already been uploaded on the website, but, again briefly I will go through the financial
	number. First, I will go through the quarter-ended March '22. The volume has increased by 6%
	to 17.3 billion units from 16.3 billion units. The total operational income has increased by 38%
	to Rs.279 crores from Rs.202 crores. Profit before tax has also increased by 99% to Rs.211
	crores from Rs.106 crores. The profit after tax has also increased by 146% to Rs.156 crores from
	Rs.63 crores. In line with the same, the total other comprehensive income has also increased by
	160% to Rs.166 crores from Rs.64 crores. The earning per share for this quarter stood at 5.27 in
	comparison to 2.14 during the last quarter.
	Now, I will go to the performance for the year as a whole for March '22 The volume has increased
	by 9% to 87.5 billion units from 80.3 billion units. The total operational income has increased
	by 2% to Rs.744 crores from Rs.728 crores. The profit before tax has increased by 1% to Rs.571
	crores from Rs.566 crores. Profit after tax has increased by 4% to Rs.425 crores from Rs.410
	crores. The total other comprehensive income has increased by 6% to Rs.435 crores from Rs.411
	crores. The earning per share for the year stood at Rs.14.35 comparison to Rs.13.86.
	Thank you. Now, I will request our ED (Commercial and Operations) - Mr. Harish Saran to give
	his remarks also.
Harish Saran:	Good afternoon to everybody. I will tell something about the working capital cycle and segment
	wise operating margin which we have heard during the year. As far as working capital cycle
	goes, average sales per day increased by 28% to INR92.80 crores. Average collection period has
	gone down to 72.62 days corresponding to 80.8 days in the year '21. Average payment days have
	reduced to 46.24 days in comparison to 50.05 days in the financial year '21. Net rebate income
	has increased by 12%. Working capital cycle has reduced to 26.38 days as compared to 35.55
	days in the year '21.
	As far as segment wise operating margin goes, so, the transaction margin without the exceptional
	transaction on a volume weighted basis has dropped by 14% to 2.82 paise per unit as compared
	to 3.28 paise per unit in the last financial year. Transaction margin including the exceptional
	transactions has dropped by 33% compared to 4.19 paise per unit for the year '21.
	Short term volumes have increased almost by 59% of the overall annual traded volume. Despite
	the increase in transaction margin in short term segment from 0.68 paise per unit to 0.80 paise
	per unit this year, they are undue influenced in the overall portfolio mix brings the total portfolio

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margins down. Medium term trade volumes, they have brought by 6% and the transaction margin in this segment, that has been dipped by 11%, decreasing the overall operating margin in this

	segment by almost 16%.
	As far as the long term margins are concerned, they remain stable. However, the volume has
	been dipped by 11%, decreasing the overall trading margin by 11%.
	The short term transactions for the fourth quarter that has been dipped by 42% and the per unit
	transaction margin has been dipped by 38%. Cross border traded volumes in the fourth quarter
	that have been dipped by 50% in this quarter.
Dr. Rajib K. Mishra:	So, altogether what we mean to say is this year when there was a crisis of coal and there was
	uncertainty in the supply, in spite of all these factors, the PTC has maintained a volume of 87.5
	billion units and we expect that the long term will start getting supply and the cross border also
	will increase from this year because the Bangladesh supply is restored now, and the full supply
	is being done.
	So, these are some of the highlights which we wanted to share. And at this point of time, this is
	what we have to share with all the investors and analysts. Now, we can open for any question-
	and-answer.
Moderator:	We will now begin the question-and-answer session. The first question from the line of Mohit
	Kumar from DAM Capital.
Mohit Kumar:	First question is around the profitability for the quarter. I think, of course the numbers are pretty
	high, but the numbers have been driven by the large amount of rebate and surcharge income in
	the quarter. So, in the given uncertain environment, this creates slightly let's say, perception,
	which is these numbers are not sustainable and this can create some issues in terms of receivables
	or going forward given that discoms are still not in the pink of the health, so, how do you see the
	FY'23 numbers, how do you think this will pan out? And secondly, if you can comment on the
	volume for Q1. Given that there is a lot of volatility in the entire system, how has the volume
	panned out for Q1?
Dr. Rajib K. Mishra:	Mohit, you have asked a pertinent question. As I just mentioned the year which has completed
	on 31st March, we have seen two corona waves during this time, and during that time, we have
	seen a lot of lockdowns and demand slowdown during this period. And with the uncertainty in
	demand, the short term volume has taken larger share in the portfolio. And that is being reflected
	in our portfolio as well. The second aspect which you wanted to cover is the rebate and surcharge
	income. That is an integral we have explained you earlier. That is an integral part of our
	agreement with all the utilities and we have always seen that as a part of our trading business
	income as well. So, keeping that in mind and knowing very well that we are dealing with the
	customers we are currently having, that the utility customers and the generators, we know that
	what kind of rebate and surcharge we are going to earn. So we find it as a certain kind of income

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rather than some where we are seeing any aberrations in any part of this. So I've answered both the questions. And the third part you're asking about the Q1. I think you need to wait when we are meeting again for the Q1 results, and I'll be in a position to answer your question at that point of time, but let me tell you that these last two months, there was a shortage of coal, there was some power crisis and all these stakeholders have got some kind of impact from these situations, but we will be in a position to give you a better picture once we are meeting after the Q1 results.

Mohit Kumar:My second question is on the power exchanges. We are about to launch the exchange. I understand that we are maybe 10, 15 days away from launching the exchange. What is the vision for the next five to 10 years, where to see the exchange and what kind of shareholding we would like to have because of launch, I think, what kind of shareholding would like to hold for the next few years, do we still maintain that we're going to hold 26% or really dropping down to 5% and will become a trading member of our exchange?

Dr. Rajib K. Mishra: Mohit, I can answer your first question very easily because we have already launched and we have kick started the functioning of the HPX today. So, that is the news, which I would like to share with all the investors and analysts that the HPX has started functioning from 6th of July, and the first trading was done at 3 o'clock today, and the inauguration of the exchange was done today at 11 a.m. in the morning. So, it has started working. And with three products they have started, and they will be launching slowly all the products available currently in the two exchanges. But other than that, they have in pipeline some of the new products also which they would like to introduce in due course of time. And exchanges in the country will have a substantial market share, because that brings a lot of short term volume, which is very close to the dispatch and we expect that the role of exchanges in the country will increase year-on-year. As far as the shareholding pattern of the exchange is concerned, I can tell you the current shareholding pattern, I cannot tell anything about what will happen in future and whether we will be a member or not. Right now we are the one of the largest promoter of the exchange and with our sincere effort, this exchange today has gone live. So, there the status is, and maybe futuristic questions as and when it comes, we will keep sharing with you and the investors.

Mohit Kumar:If I may ask, what kind of products you think the new exchange will introduce or let's say how will you differentiate with the other exchanges?

Dr. Rajib K. Mishra: As I said that currently all the products which are currently available in the exchanges they are trying to do, but you know that in the recent regulations, many of the other products have been allowed. And there is a lot of scope of innovation in those products which has recently been allowed for a longer duration contract, which each exchange has to come out with their own products and I am a very strong believer that the kind of team we have in the HPX, they will come out with very innovative and good products, which will have a niche market of its own.

Mohit Kumar:Last question on consulting. How do you see the consulting income growing in the next four to five years and which are the capabilities we are trying to build and which are the capabilities you believe that will give you better revenue numbers going forward?

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