PTC India Ltd — Call Transcript 2023

Jun 6, 2023

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Date: - June 6, 2023

Listing Department/ Department of Corporate Relations, The Bombay Stock Exchange Limited, Phiroze Jeejeebhoy Towers, Dalal Street, Mumbai, Fax- 022-22722037/39/41/61/3121/22723719 Scrip Code: 532524

Listing Department The National Stock Exchange of India Limited, Exchange Plaza, C-1, Block G, Bandra- Kurla Complex, Bandra (East), Mumbai- 51, Fax- 022-26598237/38- 022-26598347/48 Company Code: PTC

Sir/ Madam,

Sub: Submission of transcripts of Audio recording of the Investors & Analyst Meet held on May,22 2023 on the financial results for Q4FY2023 and FY2023

In continuation of our letter dated May 27, 2023 in terms of regulation 30 and 46(2)(oa) of Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015, enclosed please find the transcripts of the Investors & Analyst Meet held through VC on May 30, 2023 on the financial results for Q4FY2023 and FY2023.

This is also available on the Website of the Company at www.ptcindia.com.

This is for information and record please.

Yours faithfully,

For PTC India Limited

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Company Secretary FCS- 4998

Encl: as above

PTC India Limited

(Formerly known as Power Trading Corporation of India Limited) CIN : L40105DL1999PLC099328

2nd Floor, NBCC Tower, 15 Bhikaji Cama Place New Delhi - 110 066 Tel: 011-41659138, Fax: 011-41659142 E- mail: info@ptcindia.com Website: www.ptcindia.com,

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“Investor Call of PTC India Limited Q4 FY23 & FY23 Earnings Call”

May 30, 2023

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– MANAGEMENT: DR. RAJIB KUMAR MISHRA CMD, PTC INDIA LIMITED – MR. HARISH SARAN EXECUTIVE DIRECTOR, PTC INDIA LIMITED – MR. PANKAJ GOEL ED & CFO, PTC INDIA LIMITED

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Moderator:

Ladies and gentlemen, good day and welcome to the Investor Call of PTC India Limited Q4 FY23 & FY23 Earnings Call.

The Management Team at PTC India is led by Dr. Rajib Kumar Mishra – CMD, PTC. Dr. Mishra is accompanied by Mr. Harish Saran - Executive Director, PTC and Mr. Pankaj Goel - CFO at PTC India Limited.

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 Q&A tab on the lefthand side of your panel to ask a live question. Please note that this conference is being recorded.

I now hand the conference over to Dr. Rajib Kumar Mishra, CMD, PTC India, to make an opening statement. Thank you and over to you Sir.

Dr. Rajib Kumar Mishra: Good afternoon, dear investors and analyst friends.

FY23 for PTC India Limited was a year of consolidation and cleaning up of our accounts. If you have gone through our results, it is clearly visible from our results that our trading volume, we have increased our margin from a substantial number that is from 2.82 to 3.2 paisa per unit. Our short-term volume which mainly is from the exchange volumes has come down from 61% to 53%. We have always maintained that the right kind of balance for our portfolio is almost 50% from long term and medium term and 50% from shorter term market. And for in this year, we have achieved this to a great extent. Our advisory business has shown a very healthy growth of around 45% and we could earn a revenue of 57.54 crore.

Now let me just share with you that this year, which has ended in the 31st of March was a year where we have seen international geopolitical tensions and the real shock of fuel supply throughout the world. Now during this uncertainty, some of the PPAs which we have signed was operating in the first quarter and to some extent in the second quarter was below par and that has led to the reduction of volume in some of the PPAs. Most important thing, as a prudent move, we have ceded all the volumes in the exchanges where we were getting a negative margin that is the cost to serve was more than what we used to earn from the trading margin and this was a conscious call. So, you can see very clearly that our exchange volume has come down drastically from 44.6 billion unit, which we did last year. And this year we have done 29.49 billion unit. So, this was a conscious call, but that has helped us to consolidate our position in this market.

Now one major change which we have seen during the year was a government directive or the surcharge payment that is late payment surcharge scheme, which came into operation from August 22 and if you have gone through our results, you must have seen that the surcharge earned, which was net of what we paid and what we got, there is a difference of around INR 170 crore, for the year, which is substantial. But what I would like to mention here, there will always be some of the

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things which are not under the control of the company, and that is because of the changes in the

government rules or the regulations which we get. And this was one thing which has little bit affected the profitability of the company.

Our cash balance has increased considerably and the treasury income has increased almost to 6.6 times. Now this is something which I would like to mention that as because the sundry debtors have come down from INR 6700 Crore to INR 5400 Crore approximately, our liquidity position has improved drastically to around INR 979 crores at the end of 31st March. These are all positive signs. Why I will mention it whenever I met the investors in the past, they always were a little worried that you have a significant outstanding in two of these states that is J&K and Bihar. I'm very happy to share with you that an outstanding which was around 1600 crore in J&K last year, we have a very manageable outstanding of less than 600 crore on 31st March. Similarly in the case of Bihar also, the outstanding is in very manageable level. And we are happy that the company is at a level where the borrowing for our working capital has come down drastically during this period.

Now let me tell you something about our subsidiary company:

For the first time, all the three companies, that is the holding company and the two subsidiary companies, PTC Financial Services and PTC Energy Limited has shown profit this year and the PTC Energy Limited, the concern which was of the tariff, which was not paid by Andhra Pradesh because of the legislative disputes between the Andhra Pradesh and the wind suppliers, has been resolved and High Court has given that in favor of the IPP’s. So, with that and the payment we have received from LPS scheme, we are in a very good position for the subsidiary company and let me share you one thing before you ask question on this. The monetization of PEL is very much on cards, expression of interest has already been issued and we have received a very good response from the bidders and it is expected to be closed by June end. So, with this, I feel that I have given my opening remarks. I'll hand it over to my CFO to tell you about the results more and then I'm open to answer your questions if at all you have.

Pankaj Goel : Thank you, CMD sir, and good afternoon to all of you. Now, as CMD has already explained regarding the holistic business scenario which is prevailing in for the PTC or power sector as a whole, so I'll go through the numbers and we'll try to explain it further.

First I'll go through the quarter wise result for the March 23 vis-à-vis the March ‘22 Quarter:

The volumes stood at 16.4 billion units compared to 17.3 billion units. As CMD has already explained, the volume was under pressure due to short term transactions, mainly at the exchange platform. There, margin is very low. However it has a positive impact on realization on weighted average margin per unit, which has actually increased to 2.91 paisa per unit from 2.46 paisa per unit during the last quarter. So,

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what we mean to say that instead of a quantity, in this year we have we have actually eye on the quality trading. That is because our weighted average margin has increased from 2.46 paisa to 2.91 paisa per unit for the quarter. So, likewise, the profit before tax stood at INR 192 crore in comparison to INR 211 crore during the last quarter, again the PBT was under pressure mainly due to the surcharge income. So, as you are already aware and in the last call we have already discussed that during the year, MoP has come out with an LPS scheme whereby all our long outstanding dues have been cleared on an interest free equated monthly installment basis. Some of the customers have opted this scheme having a total outstanding of around 2,644 crore. The company is regularly receiving the installment under the LPS scheme, resulting in better liquidity, which has already been explained by CMD sir that our net cash position as on 31st March was 979 crore. However, as these installment are without interest, he said, it has an impact on our surcharge income. So, likewise because of the liquidity position, our total debtors on a yearly basis has gone down from 6,771 crore to 5,437 crore. Likewise, the PAT is almost at the same level of 155 crore during the quarter. The total other comprehensive income stood at 175 crore in comparison to 166 crore. During the last quarter, the increase in comprehensive income is mainly on account of increase in the fair valuation of our equity investment in Teesta Urja Limited. Earnings per share stood at during the Quarter 5.25 in comparison to 5.27.

Now I'll go through the year ended results:

The volumes stood at 70.6 billion unit as compared to 87.5 billion unit. The reason I have already explained while I was explaining the quarterly results, again profit before tax stood at 481 crore compared to 571 crore. Again, it was under pressure due to surcharge income, which I have already explained due to the LPS scheme notified by Ministry of Power. The profit after tax stood at 370 crore in comparison to 425 crore. The total other comprehensive income stood at 389 crore compared to 435 crore. Earnings per share stood at Rs. 12.49 in comparison to Rs. 14.35.

Now I'll go to the consolidated results:

For the quarter, the volume stood at 16.5 BU compared to 17.4 BU. Profit before tax stood at 171 crore compared to 216 crore. Profit after tax stood at 129 crore compared to 157 crore. Total other comprehensive income stood at 149 crore compared to 167 crore. Earnings per share stood at Rs. 3.94 in comparison to Rs. 5.01 during the last quarter.

And I'll go to the year ended consolidated results:

Volume stood at 71.1 BU in comparison to 88 BU during the last year. Profit before tax stood at 680 crore comparison to 745 crore. Profit after tax stood at 507 crore compared to 552 crore. Total other comprehensive income stored at 527 crore in compared to 571 Crore, it almost remained at the same level. Earnings per share stood at 15.05 in comparison to Rs. 17.10 during the last year consolidated as a whole.

Thank you very much.

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Moderator: Thank you very much. We will now begin the question-and-answer session. We will move to our next question that is from the line of Mohit Kumra from Kumra Investment Company. Please go ahead.

Mohit Kumra: So, sir, I just wanted more light on your investment in HPX. So, is that going as planned? Are you managing to take any market share from IEX? And what is your future plan regarding it? Because there is a catch 22 that if you are a 25% investor, you can't trade on it, and that is also a situation, right? You can't trade on it and you have to be a 5% investor to sell your stake and then. So, can you just give me some light on that investment please? Shed some light on it please.

Dr. Rajib Kumar Mishra: Thank you, Mohit. Very pertinent and relevant question which I wanted to touch upon, but you asked me this question. HPX is doing very well in recent times and on the product which they are in right now, that is Term Ahead Market. They are almost at par with IEX on several days and it is ahead of the other exchange that is PXL in that segment. To give you some more numbers, they have traded more than 4.5 billion units since the day it has started its operation, and in last 9 to 10 months. And every day it is improving its market share. So, that's really very encouraging. Let me tell you something about the prospects. Everything is in place. The exchange is doing very well and now they have more than 534 clients and on some of the days, it is having almost the equal volume compared to the leading exchange that is IEX. Important thing is now we are getting news that market coupling will be introduced soon and there will be a good opportunity for this exchange to get the benefit because of that. Your second part of the question was our investment in that. Right now, we are where we were and we are not decided what to do with our investment. It is a good investment. So, we have to keep it and that's what where we stand at this point of time.

Moderator: Thank you. In the meanwhile, while we wait for the question to assemble, we have a few text questions. Sir, should we go ahead with it? Dr. Rajib Kumar Mishra: Yes, please go ahead.

Moderator: Yes, the first text question is from Manoj Alim Chandani. What is the reason for increase in Q4 standalone PAT earnings and fall in consolidated PAT earnings? What is the outlook in FY24 in total income margins pretax and post-tax?

• Dr. Rajib Kumar Mishra: The CFO has explained the reasons. In the Q4, we are almost at par what we have done previous year and that we have already explained for the future we will try to see, but for the month of April and May as we complete, we are almost 21% up compared to last year's volume.

Moderator: Thank you. We will take the next question that is from Nilai Kumar Raj as an individual investor. Are PTC promoter willing to sell stake to private energy companies as news circulated in the past many times?

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• Dr. Rajib Kumar Mishra: We have clarified this in the earlier calls also and as you know that we have said always maintained the same position that PTC does not have any information of such development.

Moderator: Thank you. The next question is from Bharanidhar V from Avendus Spark. With the increase in power demand and supply crunch being felt in summer months in India, contracts which assure supply is likely to be more in demand. PTC India should be a natural beneficiary in this scenario. Is this the case? Is PTC India getting more inquiries to sign short term contracts?

• Dr. Rajib Kumar Mishra: I just mentioned the factual statement for the month of April and May. Our volume as compared to previous year is almost 21% more than what we did last year. Beyond that, I will not be in a position to give more clarifications, but of course the traded volume is always higher if the increase in demand is more.

Moderator: Thank you. We'll take the next audio question from the line of Mohit Kumra from Kumra Investment Company. Please go ahead.

• Mohit Kumra: So, this question is regarding PTC Financial Services. So, I have a couple of questions on that. The first is for a long time there was this stated intention from the company to sell your stake in this company. Is that still on the table since last year's purported governance issues? And my second question is that if that is not on the table, does your company have any intention to put even more money into PFS now or is that now left alone, as was stated earlier by you?

• Dr. Rajib Kumar Mishra: Second part I will answer first. We have no intention to invest more in PTC Financial Services and we maintain the same status we mentioned in the earlier call that the divestment of PTC Financial Services is on pause and that means we are yet to take further decision on this.

Moderator: Thank you. Next question is from Manoj Alam Chandani. Please go ahead. Manoj Alam Chandani: At the outset, Mr. Mishra, let me congratulate you for the excellent performance and the good dividend you have declared, particularly in view of the huge challenges we have faced last year, particularly in terms of governance. Now it seems in the last couple of quarters with the clear disclosures, you have clarified on lots of governance issues and the improved results and dividend are really heartening. Now I would like to come on particularly two issues, this governance issues which was a big challenge from us, apparently due to vested interest from what we understand, are they behind us? Can we focus totally on business in PTC India, the flagship and also the subsidiaries, our PTC Financial because we keep on seeing there are apparently very negative articles in media coming regularly, which seems to be inspired or conspired and they raised negative issues and concerns about the company. We are a first-class company, very good professional management, very good board, particularly the current board in PTC India and PTC Financials is outstanding first class and far better than earlier boards. But still, even last week we saw some negative article about MCA investigation,

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SEBI investigations, apparently they are old issues or they are new issues. Can we focus on governance? One is this point; I would like you to clarify. Second thing, this PTC Financial was last two years because of the macro industry, it was in a down cycle. Now it has strengthened, cleaned up the balance sheet and on the takeoff stage as we can see in terms of the last 2 quarters performance and growth in business and NIMs which is happening and we also appreciate the reconstitution of the management team and new members coming at the board level, CFO level and Mr. Pawan Singh is doing an outstanding great job. With full transparency, he has been interacting with the investors, institutions and really taken it on the next stage. I would congratulate for that. So, we actually look forward to your clarifications, particularly in terms of governance, which is coming in the media. And another thing which is impacting our valuations. Last 10 years, we have seen PTC India, the valuation around the same level while the IEX and other companies are going far ahead and power sector is leaping in terms of multiples and we should be at least two times of book. If not higher, considering a clean balance sheet, also our working capital management is good, our customers are good and the business has got huge opportunities as you highlighted. This is one thing, and we also appreciate you coming on the channels, particularly the CNBC and other channels every quarter and actually sharing the truth in spite of negative stories in the press. Would like you to answer the question in detail if possible.

• Dr. Rajib Kumar Mishra: Thank you, Manojji, for appreciating the efforts the company has made for the benefit of our shareholders. And as we have always maintained, we work for our shareholders and the stakeholders of the company. And let me just give you a confidence from this room on behalf of all the top management that the company is on the right path and we are doing a very good business and we are all focused towards the benefit of the shareholders in real spirit. Well, we have given the full disclosure in the annual accounts and you have must have gone through that and nothing beyond it and whatever was mentioned, if you have gone through the results and the disclosures, it is related to the earlier issues which came out when the Independent Directors have resigned and nothing new has come up anything after that. In that, I have nothing more to add because we have already submitted our disclosures both to the NSE and BSE and to our investors also we have informed. So, once again I can only give you assurance and confidence that the company is on the right track for the betterment of the company and is doing very well.

• Manoj Alam Chandani: Thank you for your answers. It's really heartening that all the issues are old and now we can focus on business. On this, I would see that we need greater institutional participation, mutual funds, foreign investors also, and they can really come in if the issues are behind us and higher engagement with you like in this call also I was expecting lot of foreign funds and mutual funds, PMSs. Apparently they are watching, but they like the sector. I would suggest the management of both PTC India and PTC Financial have a higher engagement with institutional stakeholders. So, the company and all stakeholders will benefit in terms of appropriate valuation and with this I would suggest thanks and all the best to you.

Moderator: Thank you. The next question is from the line of Mangesh Kulkarni from Almondz Global Securities. Please go ahead.

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Mangesh Kulkarni: Sir, this time PFS has declared the dividend. So, can we expect some interim dividend from parents also in the Q1 or Q2 going ahead?

• Dr. Rajib Kumar Mishra: Mangeshji, let me tell you that at this point of time, we have just come out with our annual results and we have given you a dividend of 78%. That is Rs. 7.80 paisa per share, and that's something which we can mention right at this point of time. Anything what will be done in next quarter or so we will be sharing with you at that appropriate time.

• Mangesh Kulkarni: Thank you, sir, because after 2 years the PFS is back on the dividend list, that's why we were expecting. Thank you.

• Dr. Rajib Kumar Mishra: Right.

Moderator: Thank you. The next question is from the line of Vaibhav Gupta from Bowhead Investment Advisors. Vaibhav Gupta: Sir, can you please share the over dues which is dues beyond 45 days for Financial Year ‘21, 22 and 23?

• Dr. Rajib Kumar Mishra: I'll request Harishji, our Executive Director, Commercial to please reply.

• Harish Saran: So, as far as I mean 23 is concerned, we have the total outstanding of 5,398 and as on 31st March it was 6,739.

• Vaibhav Gupta: And sir, what are the over dues like dues beyond 45 days because I am assuming that those must have reduced significantly and will be better able to understand.

Pankaj Goel: As regards the ED, commercial has already told you the total debtors position as on the year end as regards the specific question of over dues debtor, so we always say that we always look at the debtors minus creditors, because that is the open position we take. So, as far as the open exposure is concerned more than 45 days is around only 363 crores as on 31st March, and out of that, we have already received 157 crore. So, the net exposure with regard to 31[st] March more than 45 days is around 206 crore and that is just only from, some amount from Bihar and some amount from J&K, that is all. Vaibhav Gupta : Sir, what was the similar number for September 22 and March 22, like 45 days over dues? Pankaj Goel: I'm sorry, this is the call for March 23, but if you need the other quarter details, Varun will note it down and will give you the information separately. Vaibhav Gupta : Sir, just one request like I have followed up earlier as well, but I was not shared the number so that's why I thought that this number, if it is shared over this call, it will be for the betterment of the whole investment community, everybody would be able to appreciate it.

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Pankaj Goel: You know that's you are right up to this point that because we are ready with the data for this quarter only. But we noted your request and I'll request Varun to share you with the relevant details. Moderator: Thank you. The next question from the line of Rajesh Shah as an individual investor. Sir with better mix of long- and medium-term contracts as compared to short term contracts, would the margin be improved in the current financial year? Dr. Rajib Kumar Mishra: Rajeshji, I mean what I have just mentioned that last year we made a serious effort and the margins have improved because we have improved the mix and low margin volumes we have seeded, so similar exercise we are doing for this year and prudent every day we are trying to see that the company is engaged in the services or the volumes where we have a better margin, so that's a continuous effort and what I can say at this point of time is these kind of continuous efforts may lead to some kind of a better results, but at this point of time it will not be appropriate that we should answer what is going to happen in the next quarter and beyond that. Moderator: Thank you. The next text question is from Narendra Kotia from RoboCapital. Can you give any outlook about the margins for the upcoming period? Dr. Rajib Kumar Mishra: Narendraji, I have just answered the same question so I will not repeat the same answer. Moderator: We have another text question from the line of Anshuman Ashit from Ambit. Sir while the appointment for the post of CMD has been closed, the appointment process for the post of Director is still open. Can you please share the update on the same and the timelines for the appointment? Dr. Rajib Kumar Mishra: The process is on and it will be done shortly. That's what I can say because we these are some of the things which are with the NRC and the board, so already they are in the process and it will be done at the appropriate time. Moderator: Thank you. So, we have another text question from the line of Vaibhav Gupta from Bowhead Investment Advisors. So, what are the receivable beyond 6 months on March 23? Pankaj Goel : So, as I have already explained that we always see as an open exposure, so more than 6 months, the open exposure is around only 261 crore as on March 23 and out of that, we have already received 150 crores, so around 100 crore is outstanding as far as the open exposure is concerned more than 6 months. Moderator: Thank you. Next text question is from Shubham Verma as an individual investor. Any updates on stake sale of PTC Energy? Dr. Rajib Kumar Mishra: Shubhamji, I have just mentioned in my opening remarks that the process is already on and by 30th of June we will get the final bid from the potential investors. Moderator: Thank you. Ladies and gentlemen, that would be our last question for today. I now hand the conference back to Dr. Rajib Kumar Mishra for closing comments. Thank you and over to you, sir.

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Dr. Rajib Kumar Mishra: Thank you very much. And let me just before we close and call it a day, I once again thank all the investors and analysts who attended today's investor call and let me reassure you that the company is trying to consolidate its business and we have started some of the innovative things like we have an analytical lab which is fully functional now with the company and we are having predictive analytical tools which we are using for conducting our business which is going to help this company to a tech savvy company in future, and there we see a lot of future in the transition of the energy trading business and we are hopeful that with the new innovative practices what we have started couple of years back, we are in a process that we are a company which is delivering our services better than others and we have a clear differentiator when we are reaching to our customers. With these words, I thank you all once again that you have joined us for today's meet and we will be coming with our updates as and when required for the developments what we have discussed. Thank you very much.

Moderator:

Thank you very much. Ladies and gentlemen, on behalf of PTC India Limited, that concludes this conference call. Thank you all for joining us and you may now disconnect your lines. Thank you.

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