We require ₹10,000 cr each in FY23, FY24 for RE expansion: Pratik Agarwal

Currently we have three long-term PPAs of around 1.5 GW of solar and wind power. Our vision is to acquire more contracts and triple that. Obviously, any incremental capex requires more investments. While we have equity capital tied up for the first set of projects with KKR, we are also in the market to raise debt. But we also have to start thinking about the early stages of growth for Serentica, for which we will of course require capital and we have a great partner in KKR and they may choose to fund some part of it or all of it.

I wouldn’t exactly say that. See KKR has a $8 billion infra fund, and many such other fund houses have large infra funds focused in Asia. In Asia, India is the top focus. So I think they will look at it, actively, but they have neither shown any interest nor have we approached them. I believe, between them and other large institutions, it ultimately depends on the quality of contracts and customers we have.

In the RE sector, for all players ₹50,000 crore is not such a large number, especially compared to the numbers from the top 2 to 5 players in the country. The sources for any such commitment is always debt equity and typically debt is close to one or sometimes even 3:1. We are anyway raising debt for the first round, we are also looking at foreign debt. The equity has to come from a combination of customers, internal approvals, investors and also the cash flow from projects. In terms of sanctions in hand in FY23, we plan to raise roughly ₹10,000 crore, including customer equity, third party equity and conversations we are having with lenders, we will raise that fund. Similar for FY24.

On Sterlite, we have not taken any decision so far, while IPO was one option, we still have multiple avenues of fundraising. If the market is right we might look into doing an IPO. On Serentica, there is nothing immediate. We believe we have enough capital as of now. We will never do the IPO when we need capital, we will only do it when there is good demand in the IPO market, there is really good acceptance of this idea. Only then we will look into it.

What are the things in favour? Good news is that key raw materials are now easy to acquire. However, it varies from place to place. I will say solar is very straightforward. It is a bit complex for purchasing equipment such as turbines and transformers. In India, I have not yet heard of a project getting delayed beyond three months due to lack of financing. Some banks are not lending, but there are other options like the bond market, ECBs, etc.

Acquiring land is the biggest challenge. We have a large population density. So, let’s say for a 500 MW plant in any other country, you would be dealing with maybe 20 families, but here you are dealing with up to say 800 families. So, if you have a company that is thinking five years ahead, then yes. It takes three years to acquire land, so I’m gonna start building landmarks in advance, then we can solve it.

So I think it will happen. Will it happen by 2030? I’m not sure. I think State governments must put in more effort. It is purely the State government in the key RE producing areas. For instance, wind energy is more challenging and unfortunately, it is only in six States, which are highly agricultural oriented.

Transmission is the key. We have not been planning in advance for laying transmission lines, which is a problem. This impacts asset utilisation as well. Clearances is another issue, which needs to be addressed. It takes over a year to get Forest Clearance, and then there is route survey, RoW, etc. However, the union government is acting swiftly on this. There is a strong enabling policy framework in place, including on improving the financial health of Discoms. So a lot is being done. The private sector is also pitching in. We are in the final stages of laying the 350 KM transmission lines (Vadodara) for evacuating RE for one of the richest solar and wind energy belts in India. I hope this line alone will carry 5,000 MW of clean energy in the time to come.