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00:00We have Rohit Bajaj, Joint Managing Director at Indian Energy Exchange joining us.
00:13Now, of course, Mr. Bajaj, let me first off start by asking you, of course, the growth
00:20for the month that you've disclosed has been extremely strong.
00:25Talk us through which products are driving this growth first.
00:29And second, market share, talk us how we are planning to consolidate that at IEX.
00:35Yeah, good morning.
00:38The month was, as you rightly said, was very good for us.
00:41We clocked 36% growth on YOY basis.
00:46And this was mainly driven across electricity and renewable certificates.
00:50Electricity side, we are doing exceptionally well in real-time market.
00:53We have done highest ever volume this month in real-time market, and then green markets
00:58have picked up very well starting July.
01:00Day ahead market, which is our main, the biggest market that has also started doing very well.
01:07So it is a connected thing all across.
01:09We are seeing very good growth.
01:11But if you ask me what two products are contributing majorly to this, then it is real-time market,
01:17green markets and the certificates.
01:18There are certain good things which have happened.
01:21Last year, if you see, our growth was 14% and that was subdued because there was limited
01:28implementation of the supply side.
01:30This year, particularly with many initiatives by the government, we have seen coal production
01:35going up in double digits.
01:36We are seeing other initiatives by the government where imported coal-based plants are operational
01:40in between, during the crunch period, even gas-based plants are operational.
01:44So on YTT basis, we are at 31% up level as compared to last year.
01:50And this has been very good.
01:51The last two months, particularly July, we grew by 55%, August we grew by 36%.
01:57And one very good thing which has happened is the prices have come down.
02:01So consecutively for the last two months, we have seen below 5 rupees prices.
02:06And this is one sweet spot where we see participants, buyers coming to meet their requirement also
02:14and then they are also coming to replace their costlier power.
02:18So we feel that this is sustainable, may not be at the rate of 30% plus, but we are expecting
02:25very high demand going forward also because the overall demand in the country is increasing.
02:30We have seen 8-9% growth in the last couple of years, this year again we are 7% plus.
02:35And going forward, we expect that this momentum will continue.
02:38All right, Mr. Bajaj, just give us a thought on what gives you the confidence that this
02:45pricing will sustain this below rupees 5 per unit that you are speaking about?
02:51Yeah, so I won't say this will be all the months it is going to be 5 rupees below 5 rupees,
02:58but we expect that since the supply situation has eased out and there are certain measures
03:03which are going to stay with us because coal production which has increased, which is continuously
03:08increasing now, today coal production is increasing more than our demand increase.
03:12So this is something which we are expecting is going to be there in times to come.
03:16Then there is a lot more capacity which is in the pipelines.
03:19We are seeing solar capacity addition in a very big way this particular year.
03:24We are also banking on, we are also looking at conventional capacity commissioning which
03:28is going to happen this year, about 10-12 gigawatt of additional capacity will come.
03:33So there are two parts to it.
03:34First is we should have sufficient capacity where we are seeing many things in the pipeline.
03:38We are expecting 30-40 gigawatt of capacity overall conventional plus RE to come in this
03:44particular year.
03:45And second is utilization of existing capacity.
03:47Now utilization of existing capacity will happen when you have fuel available.
03:52So that has got two parts.
03:53One is domestic production, which has increased hugely and second is imported coal prices
04:01have also come down.
04:02Now with the imported coal prices come down and staying at this level, this also provides
04:07a lot of room for additional supply because this, the utilization of imported coal based
04:11plant also increases.
04:12So these are some of the factors which we believe will going to be there in the times
04:17to come and prices are going to be around this level or certain months when the winter
04:22months when we see there is decline in demand, we can expect prices to go down even further.
04:29And what do you believe will contribute most to your top line?
04:33Regulatory environment is a bit volatile in that sense.
04:39So do you believe that product mix will hold the key for you?
04:43Yes, product mix.
04:44In fact, if I look back, there was a time when almost 90% of our revenue used to come
04:51from just one product, which was the head market.
04:53Today that number has gone down below 50%.
04:56We have numerous product available.
04:59As I mentioned, real time green market, we have a term head market also doing well because
05:04the longer duration contract today we are providing contracts up to three months and
05:09we have also filed approval from the regulator to enhance it from three months currently
05:14to 11 months.
05:15We are also in the process of introducing green real time market subject to approval
05:20from the Honorable CRC, the commission which is regulating the sector.
05:24So these are some of the things which we feel that is going to provide even more headroom
05:29to us to grow and consolidate the overall electricity market.
05:35Market as such is expected to grow going forward and historically we have seen within the short
05:39term segment, exchange is one segment which has been growing at the fastest pace.
05:44Now all the distribution utility, they see a lot of value in it because these prices
05:49which are discovered here and these are most competitive prices, there is a transparent
05:53way of discovering these prices.
05:55So on the price front, we are very comfortable with this.
05:59And second is flexibility that your demand is not constant throughout the day, you need
06:04more power during the peak hours, sometimes peak is in the evening, winter time you have
06:08morning peaks also there.
06:09So if you want power for 2, 3, 4 hours, this is the only platform which provides you that.
06:14So I think these are some of the things which we feel that is going to add a lot of value
06:18to our participant and as well as to us.
06:21Understood.
06:22All right, Mr. Bajaj, short on time.
06:25So we're going to have to close the conversation here.
06:28Thank you so much for coming in speaking with us.
06:31Of course, extremely interesting, IEX has given very solid returns to investors.