Tata Power plans a capex of over Rs75000 crore in next 5 years in renewables

Tata Power plans a capex of over Rs 75000 crore in next 5 years in renewables

· Tata Power plans a capex of over Rs. 75000 crores in the next 5 years in renewables

· Rs 14000 crores consolidated capex in FY 23 with Rs. 10000 crores in renewables

· Tata Power holds strong solar EPC order book Rs 13,000 crore

· Tata Power added 707 MW capacity in FY22 in renewables

· Looking ahead, Tata Power confident to deliver on financials and ESG commitments

· Company plans to increase green energy share to 60 percent over next 5 years

· Company has three key goals—carbon net zero by 2045, 100% water neutral by 2030, zero waste to landfills before 2030.

· Company declared dividend of Rs 1.75 per share in FY22

· Tata Power's generation revenue up 28 percent in FY22, yoy

· The ROCE during FY22 increased to 7.8 percent from 7.2 percent a year ago

· Tata Power looking to be consumer centric company via several initiatives such as smart metering, EV charging, solar roof top.

· Strong performance was delivered in T&D during FY22 through acquisition of discoms in Odisha

· Increase in revenue was due to Odisha discoms, renewable additions.

AGM Speech:

Mr Natarajan Chandrasekaran, Chairman Tata Power

7th July,2022 :I thank all the Members for joining this meeting. I hope the Members are safe and in good health. Due to the coronavirus concerns, lockdown and social distancing norms, we are holding this Annual General Meeting through video conference. This is in compliance with the directions of the Ministry of Corporate Affairs. A live streaming of this meeting is also being webcast on NSDL’s website. The Company has taken the requisite steps to enable Members to participate and vote on the items being considered at this AGM.

Industry Update:

The year 2021-22 can be defined as a year of - RESILIENCE and RESPONSIBILITY.

First, the collective resilience of society, corporations, and government ensured that the headwinds emanating from elevated commodity prices, residual effects and variants of COVID-19, geopolitical conflicts and erratic weather patterns don’t leave the economy badly bruised. Secondly, the global community continued to show commitment and relentless focus on sustainable development. Globally, there was an increase of 27% in energy transition investment during 2021, aggregating to a total of USD 755 bn. India’s green energy push gained momentum during the year, intensifying further with the strong commitments made at COP26 conference in Glasgow. India made a historic announcement of becoming net zero emitter by 2070 with 500 GW of non‑fossil capacity by 2030 and meeting 50% of energy requirements from renewable energy by 2030. Increased vaccination coverage helped resume activities in H2 2021 and in general, the industrial activity bounced back. The higher commercial and industrial activities boosted the power demand by about 8% in FY22. Peak power demand breached the 200 GW mark for the first time, during July 2021. The unanticipated rise in electricity demand caused additional strain on domestic coal supplies causing demand-supply gap and thus increasing the demand on power exchange, which witnessed surge in electricity prices to the extent of ₹ 20/unit. India’s installed generation capacity stood at 400 GW as on March 31, 2022. Though the generation mix is dominated by thermal generation (52%), a movement towards clean energy is evident with a slowdown in new thermal capacity additions to the tune of 1.3 GW during FY22, contributing to just 10% of the total capacity addition during the period. The focus on renewable energy sector has led to steady growth of India’s renewable energy capacity over the years, crossing the 100 GW mark in FY22, with share of renewable based capacities moving up from 12% in FY12 to 28% in FY22, mainly driven by solar. The government-backed policy initiatives along with the consistent fall in cost of solar technology provided boost to the solar energy sector, making it attractive for both domestic and global players. The changing dynamics driven by maturing technologies have shifted the trend from plain standalone solar and wind projects, to rising interest in more complex projects including hybrid, Round the Clock (RTC), peak power, floating solar and storage. With a push towards Atmanirbhar Bharat, the government introduced the Production Linked Incentive (PLI) scheme across 13 sectors including ₹ 24,000 crore for solar manufacturing to lower the import dependency.

In addition to the continued focus of the Government on clean energy transition, one of the other critical areas is increased participation of the private players in the transmission & distribution space to improve the operational efficiencies and financial performance of the Discoms. The government has been announcing multiple schemes towards addressing the issues in the distribution sector which are yet to gain momentum. Growth in new business areas like solar rooftop, solar pumps and microgrids along with EV charging is also gaining accelerated momentum.

Company Performance

The performance of your Company in the last financial year and its preparedness for the future through a distinct set of priorities and goals clearly embodies commitment towards sustainability and resilience. Your Company continues with a more focused and pragmatic approach to achieve the set renewable energy targets and has added 707 MW of renewable capacity during the year. This has increased our clean and green portfolio to 34% of total capacity and the Company aims to raise it to 60% in the next five years. The Company holds a strong EPC order book of ₹ 13,000 crore and is also setting up a 4 GW solar cell and module manufacturing capacity in Tamil Nadu with an investment of ~₹ 3,000 crore. In addition to this, the Company is equally focused on growing consumer centric and new-age energy solutions -Solar Rooftop, EV Chargers, Solar Pumps, Smart metering and energy management solutions, enabling power in the hands of the consumers. To scale up these green businesses and solutions, your Company also entered a strategic partnership and created a renewables platform which has got an investment of ₹ 4,000 crore from Blackrock Real assets and Mubadala Investment company. Your Company is equally committed to deliver strong performance in the transmission and distribution business, serving 12 mn. customers including 9 mn. customers in Odisha.

The Company is progressing well on deleveraging and has earned credit rating upgrades by both Moody’s and S&P Global.

Consolidated financials

a) Consolidated Revenues in the year increased by ~28% to ₹ 42,576 crore as compared to ₹ 33,239 crore in the previous year. The increase in revenue growth was mainly due to full year operation of Odisha Discoms, renewable capacity addition and execution of major solar EPC projects.

b) Consolidated PAT increased by ~50% to ₹ 2,156 crore as compared to ₹ 1,439 crore in the previous year. The increase was mainly due to improved performance across all businesses, full year operations of Odisha Discoms and lower finance cost.

c) Consolidated Net Debt / Underlying EBIDTA ratio has improved from 4.1 to 3.9 from FY21 to FY22 reinforcing the Company’s commitment to maintain comfortable debt position for sustainable growth. Consolidated Net Debt / Equity has remained largely in line with the previous year even after repayment of Unsecured Perpetual Securities of ₹ 1,500 crore and capex of ₹ 7,268 crore in FY22.

d) The Company contributed significantly towards creating value for the stakeholders as demonstrated through improved Consolidated Return on Capital employed which increased to 7.8% as compared to 7.2% in the previous year and Consolidated Return on Equity which increased to 9.5% as compared to 6% in the previous year.

Looking ahead, I am confident that Tata Power will continue delivering on all its stated commitments across financial, operational and ESG metrics.

Tata Power is looking to scale its Generation capacity to over 30 GW by FY27 from current 13.5 GW with an increased clean energy portfolio from current levels of 34% to 60% by 2027 and 80% by 2030. In our T&D business, the Company will further optimize the Odisha Discom operations, stabilise the new acquisition in the transmission business and deliver phenomenal customer service, enabled by digitalization. Your Company is on path to becoming an ESG benchmark in the power sector. In this pursuit, we have set ourselves on path for 3 key goals of becoming Carbon Net Zero by 2045, 100% Water neutral by 2030 and Zero waste to landfill before 2030. Lastly and but importantly, your Company has already seen 107 years of existence and it has proven itself to be an organization and a brand which has been ‘built-to-last’. It is with this ethos and commitment we will be continuing to tread on our journey to become ‘Utility of the Future’ with focus on creating innovative, smart and clean energy solutions for our customers. Based on the performance, the Directors have recommended a dividend of 175%, which is ₹ 1.75 per Equity share of ₹ 1/-. I would like to compliment the Management team and all Tata Power employees for their steady performance this year.