Azure Power Global Limited, a leading independent renewable power producer in India, announced its consolidated results under United States Generally Accepted Accounting Principles (“GAAP”) for the third quarter of fiscal 2022, ended December 31, 2021.
Operating Highlights:
• Megawatts (“MWs”) Operating* were 2,523 MWs, as of December 31, 2021, an increase of 37% over December 31, 2020. Operating, Contracted & Awarded MWs* were 7,425 MWs, as of December 31, 2021. Contracted & Awarded megawatts included 1,537 MWs for which we had received Letters of Award (“LOA”), but the Power Purchase Agreements (“PPAs”) had not been signed as of December 31, 2021.
• Operating revenues for the quarter ended December 31, 2021, were INR 4,480 million (US$ 60.2 million), an increase of 27% over the quarter ended December 31, 2020.
• Net loss for the quarter ended December 31, 2021, was INR 610 million (US$ 8.2 million) against the net loss of INR 1,088 million for the quarter ended December 31, 2020. The decrease in loss in current quarter was primarily due to additional revenue from customers, reversal of stock appreciation rights (SARs) expense, offset by an increase in interest and tax expense. (Refer the detailed explanation in the Net loss/(profit) section below)
• Adjusted EBITDA for the quarter ended December 31, 2021, was INR 3,935 million (US$ 52.9 million), an increase of 152% over the quarter ended December 31, 2020. The increase was primarily due to additional revenue from new projects, revenue from customers and reversal of stock appreciation rights (SARs) expense during the quarter ended December 31, 2021.
• Non-GAAP Cash Flow to Equity (“CFe”) from operating assets for the quarter ended December 31, 2021, was INR 1,941 million (US$ 26.1 million), an increase of 58% over the quarter ended December 31, 2020. The increase was primarily due to projects which were commissioned after the quarter ended December 31, 2020, and incremental revenue from customers.
*Megawatts Operating and Megawatts Operating, Contracted & Awarded exclude the Rooftop portfolio, for which we entered into an agreement to sell in April 2021. We excluded 153 MWs from our Operating, Contracted & Awarded portfolio as of December 31, 2021, and the prior comparative period. We excluded 153 MWs from our Operating portfolio as of December 31, 2021, and 147 MWs from prior comparable period. The exclusion from prior period is for the purpose of comparison with current period, however we continue to consolidate these assets as of December 31, 2021.
Key Operating Metrics
Electricity generation during the quarter and nine-months ended December 31, 2021, was 1,068 million kWh and 3,181 million kWh, respectively, an increase of 284 million kWh or 36%, over the quarter ended December 31, 2020, and an increase of 744 million kWh or 31%, over the nine months ended December 31, 2020. The increase in electricity generation was principally a result of an additional 689 MWs of AC (805 MWs DC) operating capacity, including our Rooftop portfolio commissioned since December 31, 2020.
Our Plant Load Factor (“PLF”) for the quarter and nine months ended December 31, 2021, was 19.6% and 21.1%, compared to 19.3% and 20.1%, respectively, for the same comparable periods in 2020, which increased principally due to the addition of AC and DC capacity and improved performance by our plants, including Rooftop portfolio.
Our Plant Load Factor (“PLF”), excluding rooftop portfolio, for the quarter and nine months ended December 31, 2021, was 20.5% and 22.0% respectively. We commissioned 313 MWs AC during the three months ended December 31, 2021, and 533 MWs AC during the nine months ended December 31, 2021, against 153 MWs AC (236 MWs DC) during the comparative three months and 179 MWs AC (264 MWs DC) during the nine months ended December 31, 2020.
Project cost per megawatt operating (megawatt capacity per the PPA or AC) consists of costs incurred for one megawatt of newly commissioned solar power plant capacity during the reporting period. The project cost per megawatt (DC) operating for the nine months ended December 31, 2021, was INR 33.9 million (US$ 0.46 million), compared to INR 31.2 million for the nine months ended December 31, 2020. The project cost per megawatt (AC) operating for the nine months ended December 31, 2021, was INR 35.9 million (US$ 0.48 million), compared to INR 45.0 million, for the nine months ended December 31, 2020. Excluding the impact of safeguard duties, the DC and the AC costs per megawatt for the nine months ended December 31, 2021, would have been lower by approximately INR 2.0 million (US$ 0.03 million) and INR 2.1 million (US$ 0.03 million), respectively, and for the nine months ended December 31, 2020, the DC and the AC costs per megawatt would have been lower by approximately INR 2.6 million and INR 2.7 million, respectively.
Megawatts Operating and Megawatts Contracted & Awarded
We measure the rated capacity of our plants in megawatts. Rated capacity is the expected maximum output that a solar power plant can produce without exceeding its design limits. We believe that tracking the growth in aggregate megawatt rated capacity is a measure of the growth rate of our business.
“Megawatts Operating” represents the aggregate cumulative megawatts rated capacity of solar power plants that are commissioned and operational as of the reporting date.
“Megawatts Contracted & Awarded” represents the aggregate megawatt rated capacity of solar power plants pursuant to customer PPAs signed, allotted or won in an auction but not commissioned and operational as of the reporting date.
As of December 31, 2021, our Operating, Contracted & Awarded megawatts were 7,425 MWs. Contracted & Awarded megawatts included 1,537 MWs for which we had received LOAs but the PPAs had not been signed as of December 31, 2021. There was an increase of 470 MWs compared to prior comparable period.
The Company has received letter of awards (LOA), for its first 120 MWs wind project and 150 MWs solar – wind hybrid project from Solar Energy Corporation of India (SECI) and 200 MWs solar – wind hybrid project from Maharashtra State Electricity Distribution Company Limited (MSEDCL). During the quarter, we signed PPAs for 600 MWs and 2,333 MWs with SECI at a fixed tariff of INR 2.54 per kWh and INR 2.42 per kWh, respectively, for supply power for 25 years, as a part of 4,000 MWs manufacturing linked projects.
Consolidated Financial Results:
Operating revenues for the quarter ended December 31, 2021, were INR 4,480 million (US$ 60.2 million), an increase of 27% from INR 3,521 million in the quarter ended December 31, 2020. This increase was mainly driven by revenue generated from projects which were commissioned after the quarter ended December 31, 2020, and incremental revenue from sale of carbon credits in the quarter ended December 31, 2021.
Further the operating revenue for quarter ended December 31, 2021, includes INR 104 million (US$ 1.4 million) relating to Rooftop portfolio of 153 MWs (AC), for which Company has entered into an agreement to sell during April 2021.
Cost of Operations (Exclusive of Depreciation and Amortization)
Cost of operations for the quarter ended December 31, 2021, increased by 27% to INR 388 million (US$ 5.2 million) from INR 306 million in the quarter ended December 31, 2020. The increase in the cost of operations was primarily due to increase in operational expenses from project commissioned after the quarter ended
December 31, 2020.
The cost of operations per megawatt during the quarter ended December 31, 2021, was INR 0.16 million (~US$ 2,100), which is same as comparable period ended December 31, 2020.
General and Administrative Expenses
General and administrative expenses for the quarter ended December 31, 2021, were INR 157 million (US$ 2.1 million), a decline of INR 1,495 million (US$ 20.1 million) compared to the quarter ended December 31, 2020. The decrease in general and administrative expense in the current quarter was primarily due to reversal of stock appreciation rights (SARs) expense by INR 212 million (US$ 2.9 million) as compared to expense of INR 1,318 million in comparative quarter.
As of December 31, 2021, 1,875,000 SARs were outstanding of which 1,682,500 SARs are not exercisable until 2024 on which we will not incur any cash payments until that time. Also refer statement of beneficial ownership of our key managerial personnel, for details.
Depreciation and Amortization
Depreciation and amortization during the quarter ended December 31, 2021, increased by INR 139 million (US$ 1.9 million), or 17%, to INR 935 million compared to the quarter ended December 31, 2020. The increase primarily relates to the projects commissioned since period ended December 31, 2020.
Impairment loss
The Company recognized an impairment provision of INR 151 million (US$ 2.0 million) during the quarter ended December 31, 2021, primarily due to potential working capital adjustments and change in fair valuations amounting, in relation to the sale of 153 MWs of Rooftop portfolio, pursuant to the agreement to sell with Radiance Renewables Private Limited (“Radiance”). The impairment loss includes the charge for change in fair valuation, which is fully offset by the revenue and expenses recognized in the profit and loss account, related to rooftop portfolio.
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