Reliance Infrastructure

Q3FY10 Post Result Conference Call Transcript

Representative: Mr. Lalit Jalan - CEO and Wholetime Director Mr. S.C. Gupta - Director Mr. Madhukar Moolwaney - Senior Vice President-Finance and Accounts Mr. K.P.Maheshwari - Head of Metro Mr. Sudhir Hosing - Head of Road

PL Rep.: Rupa Shah – 91-22-6632 2244

Date: 30th January, 2010

Ms. Rupa Shah - Prabhudas Lilladher

Good afternoon everyone. Welcome to the Reliance Infra Q3 FY10 earnings conference call. We have with us, Mr. Lalit Jalan, CEO - , CEO and Wholetime Director of Reliance Infra, along with the senior team management, represented by Mr. S.C. Gupta, Director, Mr. Madhukar Moolwaney, Senior Vice President-Finance and Accounts, Mr. K.P.Maheshwari, Head of Metro, and Mr. Sudhir Hosing, Head of Road. What we can do is start with opening remarks by Mr Lalit Jalan, and then we can move to the Q&A. Over to you sir.

Mr. Lalit Jalan, CEO - Reliance Infrastructure

Yes. Good morning, this is Lalit Jalan here. And welcome to this third quarter conference call for Reliance infrastructure.

I will start by quickly running through the key numbers for this quarter. Our total operating income for the quarter was, on a standalone basis, 2287 crores. Vs. 2718 crores, in the corresponding period of last year. And this reduction in topline is due to the lower FAC, that is the fuel adjustment charge, of our circle which has been there due to the power purchase cost, that we buy from external sources. Our purchase cost from external sources has gone down, very substantially and that is reflecting in the lower billing value. The total revenues for the 9 months are still higher, and there is still significant customer addition, for the first 9 months. Then we look at the net profit. The net profit, again on a standalone basis, is 277 crores, vs. 251 crores, in the corresponding quarter of last year. And this is an increase of 10%. However, this profit will have been higher by 58 crores, to 335 crores, had we recognised the revenue, which we did not, due to the stay on the tariff. We are being very conservative. The stay will be removed, and the entire tariff will be granted to us, however we have not recognised this 58 crores of profit in the 3rd quarter stay in the tariff. We are waiting, MERC, is expected to come out with a decision in March, after the study of the books, and we are very hopeful that the stay will be removed and we are allowed for all our charges. The cash profit for the year, for the quarter is 346 crores vs. 325 crores. The annualised EPS is 55 Rs. vs. 46 Rs., which has increased 20%. The EPC order book, as of end of Dec. 31, is Rs 18970 crores. And we continue to be in a good liquidity position, with cash and cash equivalent of more than Rs 7800 crores. We have a portfolio of businessess. And in the portfolio of buisnessess, we have the regulated returns businesses like generation, distribution, with incentives thrown in, these are, these are regular steady businesses growing at a 4 to 5%. Then we have the EPC business, which is a growth business, does not use capital, and gives us substantial profits. And then we have, the entire range of very high growth, infrastructure businessess. These are unregulated, but these are on much higher returns basis. We got into the infrastructure space, we were essentially a utility company upto 2006. in 2006, we decided to make a foray into the very promising infrastructure sector, and I am very happy to say that in 3 years time, we have become the largest infrastructure company of . Today the company is developing 15 projects, totalling to more than 28000 crores, and these projects comprise of 9 road projects, of 730kms, totalling to 7300 crores, 3 metro projects totalling to 16200 crores, and 3 transmission projects totalling to 4300 crores. We have not included the three projects, where we are

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the preferred bidder, and where we are expecting the awards shortly. These are two ultra mega transmission projects, and the western sea link. The above number also does not include the 5 airports that we have won, as is two real estate projects and the capital expenditure that we require for our distribution businesses. Out of these 15 projects, 2 are operational, 2 became operational this year, and 7 projects totalling to around 10000 crores, will become operational in fiscal year, 11. And these projects are with two metro projects that is line I, and Delhi metro airport link, which my colleague, Mr. Maheshwari will cover in much greater detail in his talks. 4 road projects, details of which will be given by Mr. Hoshing in his presentation, and the western region strengthening scheme, which is rapidly under construction. Briefly, we are among the largest road concessionare, in the country, we are the top 3, with 730 kms., we are the only private sector player, in the metro space as of today, we are developing all the 3 metro projects, which have been awarded, to date in the country, in the private sector, we are the largest transmission private sector player, developing the first 100% private transmission company, we have also been the preferred bidder for the two ultra mega transmission projects. Among our steady businessess, we are the largest private distribution company, distributing power in Mumbai, Delhi and Orissa, with more than 6 million customers. And we are taking part in all the opportunities that are coming up in that space. In the area of generation, we will do the 940 megawatt, that we are doing in Reliance Infra and our future growth in generation will be through which is through a 45% owned…company by us, Reliance Power, and the investment that we made in Reliance power, is today worth about 650 to 700 Rs. per share for every share of Reliance infrastructure. We have also announced our intention to enter into the cement space and we plan to build a capacity of 20 million tonnes over 5 years. We have identified two sites, Satna in Madhya Pradesh and Yavatmal in Maharashtra for 5 million tonnes each. And we have signed MOU’s with the respective governments also. We feel that with the integration of fly ash, limestone, and power, we will be a very cost competitive cement player. We have also made our foray into the airport sector, by taking charge of 5 regional airports, in Maharashtra, these are developed airports, and happy to announce that in the 3 months, that the airports have been under our management, we have been able to start commercial flight, from Kingfisher on two of the airports, and a training institute for training pilots, has been cleared at another of the airports. There are several other proposals, that we are going through and we think, that this is a good opportunity where we have a 95 year concession period. We are also empanelled by ADPRD, for IT consultancy and implementation and that is across all the phases of IT in the distribution sector. Just last week, we were awarded the most admired infrastructure company, in the KPMG infrastrucutre award. Also our project, Mumbai Metro line 1, was regarded as the best infrastructure project, for the year. We are comfortable on a cash position, cash equivalent of 7800 crores, our debt is to the tune of 4400 crores. Briefly touching on distribution, we run the flagship distribution businessess, in mumbai, Delhi and 3 circles of Orissa. In Mumbai, I just wanted to make it clear to all the anlaysts, now that the competition has started in suburban Mumbai, and is expected to start in the island of Mumbai, so the migration of customers has started, from Reliance to TATA’s, and in some cases from TATAs to Reliance. The current tariffs of TATAs are significantly lower, than that of Reliance at the high end. However, all customers continue to be on the Reliance network, which means they are still serviced by the Reliance wires business, so we continue, even the customer who gets transferred to TATA’s, continues to pay the wire charges to Reliance, so, the entire profits of Reliance Mumbai distribution, is fully assured. Which means whether the customer remains with us, or he is with TATA’s, he uses my network, and has 15% return on equity of the network, comes to the shareholders of Reliance infra. Secondly, even for the future growth of the network, the regulator has said, that the utility which is better placed, will do the growth of the network, and since our network is nearly 50 times bigger than the size of TATA’s, we will always be the most efficient, option for growing the network, so the future growth of the network will also come to Reliance Mumbai distribution. Mumbai continues to be the most efficient distribution utility, with losses, T&D losses in the range of 10%, next year, the size of 500 MW of coal power, we have tied up 300MW of power from external sources, at substantially better prices than the prices that existed this year. Our bids for medium term power, mainly for 5 years, are with us and we are evaluating the results. And our bids for long term power, that is for 25 years, starting 2014, are also in the market and we are expecting the bids in early February. We expect to close medium term power and long term power, in this financial

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year. Briefly touching on Delhi distribution, our total income, for the quarter is 1364 crores, against 1288 crores. The T&D loss reductions, for this year are in the range of, 4% plus, which means, both the companies will be deeply in the incentive zone, as they were last year, so besides the 16% regulated returns, we will get the additional incentives as per the multi year tariffs announced by the regulator. The success in the Delhi privatisation, is now opening up the franchise opportunity, in the rest of the country, and we are actively pursuing with the state and central authorities, to take part in these opportunities as we are the largest in this space and also we have the highest amount of experience, in turning around the difficult utilities. Currently Maharashtra with 5 cities, Bihar, with 4 cities, MP with 2 districts and UP with 9 cities, have come out with bids for distribution franchises, and we will address these opportunities. In the transmission business, as mentioned earlier, the work on the western region strengthening scheme, is on full swing, and it will be covered briefly by Mr. Gupta, during his talks, on the EPC side as the project is being done, by our Reliance EPC. This project will start getting commissioned from the first quarter of fiscal 11, and there are 9 such projects in WRSS, and at least 6 of them will become operational in the next financial year, and they will start earning revenue and bottom line for Reliance infra, from next year onwards. We have got the funds tied up for Parbati Koldam and NHPC has finally given us the indemnity for the start up, of the Parbati hydro power plant, and this project will also be completed by December 12. As mentioned, in the transmission sector, also, the entire space is opening up, there were 3 ultra mega transmission projects, which were put out to bid, our company has been the preferred bidder, for 2 of them, and we are waiting for the letter of award. So, takeover on our generation projects, and also on our very very good EPC business, I will handover the mike to Mr. Gupta, who is the wholetime director, and my colleague on the board, Mr. Gupta.

Mr. Gupta, Director - Reliance Infrasturcture

Good morning to all of you, and I will just take you through the two subjects that Mr. Jalan has mentioned. One is the operating plants. Right now we are operating 4 plants, one is coal based plant at Dahanu, very close to Mumbai, and 3 are gas turbine based plants. As most of you know, Dahanu has been operating more than 100% PLF for the last 6 years, and has been continously being adjudged the best operating plant, in the country, not only in the country, but in the world, in terms of all designated parameters, whether it is PLF, whether it is heat rate efficiency, whether it is coal consumption, secondary fuel oil and the auxiliary consumptions. And this has been recognised very well, by the regulatory commissions as well, and in addition to the 14% return, we are getting incentive, which is more than 15 to 16%, only on our performance. And in the last 8 or 9 months, we have received more than 20 awards, on this operation, coal based power plant, and the best being the golden Peacock award, as well as the best service sector award in the country from RB&Q. Not only in power plant space but in all the services sectors, including banks and other utility services, Dahanu has been adjudged as the top performer. We have started getting gas and the plant has started running. The PLF has improved considerably and the gas is now available to run on full load. Goa is operating on…though the power generation cost is slightly higher, still because of the high reliability of the power plant, the industrial consumers continue to prefer power supply from our Goa power plant. And the PLF has gone up from 84%, in the previous year to 89%. And all these three plants are operating very well, following all the environmental norms, reliability, availability and the fuel efficiency standards, better than the best in the world. And as Mr. Jalan has mentioned, the future generation business, will continue to be in our own group company, called Reliance Power in which we own about 45% share. Coming to the EPC group, in the last 2 or 3 years, we have sprung up vertically in the EPC group, in terms of demonstrating our capability to execute the projects, the order book is close to 19000 crores, as of now, but is expected to grow vertically, because a lot of projects are in the offing. In the last 3 years, we have recruited more than 1600 profesionals in the company, created a centre of engineering excellence, and in most of the areas we are on our own. As you know, implementation of the infrastructure projects, including power, you require tremendous amount of knowledge and strength to deliver. And I am glad that so far, whatever projects we are doing, has been adjudged as the best implemented project, yesterday the award was given to 2x300MW power project we

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implemented at Yamuna nagar, and was adjudged the best implemented project in the country, by the ministry of power. Currently we are working on 7 projects, working out to be more than 7200 MW, and ultra mega, with a capacity of approximately 4000 MW. So, whether CEA or ministry of power or any other agency, they look at our strengths, our implementation, and they are quite happy with the systems, the procedures and the capability and the knowledge the group is possessing to deliver the projects on time, and with the high quality safety, standards, environment, and maintaining the cost at the most optimum levels. On the Road sector, we got first internal poject called GF Toll Road, the division has several achievements in this quarter, the first 600MW unit, power plant was synchronised by the chief minister of Haryana, in December 2009 and this is being the largest sized unit in the country so far being only 500 MW.

And I am glad to say that this 600 MW unit, supplied by Shanghai electric corporation of China, was finally commissioned and synchronised by our in house team, indicating the strength and the knowledge the group possess. And the last thing, the second unit of 600MW at Hissar, which we are doing as a turnkey if you see, to government of Haryana, the burner lighting was done by the chief minister in a record time. At Butibori power plant, which is 1x300MW, and also getting expanded by another 1x300MW, is making progress as per the schedule or better than the schedule, and will be up and running in the next 15 to 18 months time. At the ultra mega power project at Sasan, all the facilities providing work are over, all the design work is more or less completed, all the studies have been incorporated in optimising the designs, and the boiler foundation work is almost completed, the chimney work is going on and all the related activities, in relation to finalisation of contracts is already in progress, and as you are aware, for the main plant order has been already placed on Shanghai electric corporation. So, we are on a fast track mode to implement, all these projects. We also have another 4000 crores project, by Damodar Valley corporation, in West Bengal at Raghunathpura, and yesterday night, we lifted the steam drum, which is the heaviest consignment of 450 tonne, very very successfully. So, the progress is going on well, with almost 200 tonnes of structural erections, fabrication and erection work completed. At GF Toll Road, which is our most prestigious job, in the northern sector, all these contracts have been awarded, and the complete mobilisation of resources has been done, and the work has started progressing. At western region, transmission line, the foundation wok is in full swing, and the erection of towers has been initiated and the work is going on as per schedule. Just to sum up on this part of the job is that, all the operating plants are operating better than the best in terms of environment, availability, efficiency and all those things, EPC is vertically springing up, demonstrating the professional approach, following all the systems and procedures to achieve all the project exhibitions of mega mega nature, in a record time at the most optimal cost. So, now I will hand over to my colleague, Mr. Sudhir Hoshing, Head of Road - Reliance Infrastructure, he will take you through the road projects, thank very much.

Mr. Sudhir Hoshing, Head of Road - Reliance Infrastructure

Thankyou Mr. Gupta. Good morning everybody. As Mr. Jalan has already talked about road projects, we are working on 9 projects covering 730kms., and costing almost 7300 crores, out of which two projects are already on operational mode.

3 projects are operational and 7 projects are under construction. Out of these 3 projects in Tamil Nadu we are expecting to to complete this year and at the end of the year we have in addition to this we simply got one project in Reengus and Jaipur to which goes to Sikar road and one very big project in Pune to Satara 140 kms. Where in the revenue will start by end of April as you can start the toll collection. In addition to this I have one more project in Gujarat – Gandhidham Kandla Port connecting around 71 kms. Which in a way we received LOI very recently. As far as the opportunity, these sectors the opportunities are many, we have almost 3 lac cr which is available not only from NHAI but from State Government and other private PSUs like PIDB for Punjab and MP. So opportunities are many

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and we are looking around Rs. 20,000 crores. By having so much of opportunities and we are also into road projects and we already become the one of the biggest concessionaire of NHAI in road sector. That’s about the road sector and I would like to handover the mike to

Mr. K. P. Maheshwari, Head of Roads – Reliance Infrastructure

Thank you Sudhir. Our Metro projects, we are right now implementing

3 metro projects out of which two are under constructions and one we have recently signed a concession agreement. The two under constructions are Mumbai Metro 1 project and Delhi Airport Express Link Project. The Mumbai Metro 2 project, this is a 32 kilometer project with 27 stations. We have recently signed a concession agreement. We have recently been shortlisted for another High Speed Airport Express Link project in Bangalore where the project cost is likely to be in excess for $2 million and we have also put in our prequalification bids for almost $5 billion Hyderabad Metro project. Talking about two projects which are under construction for the Mumbai Metro 1 project all of you must be aware of the immense challenges which we are facing in respect to implementation of the project in the highly crowded centre of the road and also passing through very narrow stretches, number of you would have visited the site and Amit Jain would have given you all the details. Very briefly the project, Mumbai Metro project construction is going on in full swing and despite all the constraints of Narrow ROW, traffic constraints, underground utilities, interfaces with number of civic agencies.

Despite all of these constraints we are very very confident that we would be able to implement the project, start the commissioning by the end of this calendar year. This would be 15-18 months ahead of schedule, even construction which is the most difficult element in Bombay is going on in full swing. We have almost completed 65-70% of the civil construction work. The rail system implementation is also going on in full swing. Our trains are getting ready in China and the first train is expected to arrive in Mumbai by April in anticipation of a likely commissioning by the end of this calendar year. Operations and maintenance preparations are also going on in full swing with our O&M partners which is Veolia Transport from France, one of the largest and the most reputed O&M companies in the world. Recruitment for the O&M companies started, we have been getting the viability gap funding from MMRDA. Till date we have already received about Rs. 200 crores and we do not foresee any bigger challenges at this stage. One of the major obstacles which was crossing the Andheri railway tracks, we have been able to finally get all the approvals from railway authorities and the work on the metro bridge or the Andheri railway track also started.

As regards Delhi again a number of analysts been to the Delhi project site number of times and had first hand feel of project implementation work which is going on. This project is awarded to us in January 2008 and we have to complete it in a record time of 30 months. Once we complete this project, such a complex project of 23 kms having underground and elevated stretches, the implementation time of 30 months will be a world record. This is a complex project having many interfaces, the airport operator on one side, DMRC on the other side. Despite all of these interfaces and despite a very compressed implementation schedule we are glad to inform everyone that we are on schedule. Most of the civil work which we are supposed to complete is on track. Most of the work is DMRC was supposed to handover has been given, has been already handed over to us. Our rail system implementation is going on in full swing, our trains for the Delhi project are also schedule to arrive in April. Our power supply, tunnel ventilation, all the rail systems including the track work installation is going on and we are on schedule to complete this project before the onset of the Commonwealth Games.

With respect to future opportunities the metro business is a very promising business in the sense that urban transport is the need of the hour in all the cities in the country. Almost all the cities big or small are planning metro networks and

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we are looking at all of those opportunities and would participate in them in future. Thank you. I will handover the mike back to Mr. Lalit Jalan, CEO - Reliance Infrastructure.

Mr. Lalit Jalan, CEO - Reliance Infrastructure

Friends just to sum up shortly, we have a sound Balance Sheet, very good financial position and you have heard from all my colleagues a strong execution capabilities initiate the verticals. We are very focused and dedicated teams which run those vertical businesses. We have had some of the execution which has been achieved over the last 9 months and we are very well geared up for the future, as I mentioned very good portfolio of businesses which include cash cow businesses like Mumbai and Delhi distribution which gives us regulated and incentives and generation and as much required capital but gives us good profits. And then the very high growth I return infrastructure businesses in a short period of 3 years we have made leadership positions. And with this I will handover the mike back to Prabhudas Lilladher.

The first question is from the line of Mr. Parag Gupta of Morgan Stanley. Please go ahead.

Mr. Parag Gupta - Morgan Stanley

Good afternoon Mr. Jalan. I have just 2 questions from my side. Firstly on the Mumbai distribution business, can you give us an idea on when do you expect the finalise all the medium term arrangements given that you have

500 mega watts of your own capacity and 300 mega watts that you recently tied up. But I would assume that there would still be a shortfall of 300-400 mega watts. So what is the timeline and do you think it will be ready by 1st of April?

Mr. Lalit Jalan, CEO - Reliance Infrastructure

We are very hopeful, the bids are with us. We are just evaluating and negotiating with the bidders and although internally we have set ourselves with the timeline of end of February but what I mentioned in the call was by this end of financial year we will have both the medium term and the long term bids closed.

Mr. Parag Gupta - Morgan Stanley

And as far as the EPC business is concerned in 9 months until now you have done a revenue of about 21 million, I would assume that you had earlier mentioned a guidance of about 35 billion for the entire year. Do you think we are going to be following short of that guidance and if yes do you think that the revenues from next year will be higher because of some of those revenues slipping into fiscal `11?

Mr. Lalit Jalan, CEO - Reliance Infrastructure

There could be a marginal shortfall but we should be fairly close to our

35 billion guidelines.

Mr. Parag Gupta - Morgan Stanley

Would you still be maintaining the EPC margins of about say 7-8%?

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Mr. Lalit Jalan, CEO - Reliance Infrastructure

Yeah if you look on a 2-3 years basis we are confident of getting of 7-8%. As I mentioned earlier also that sometimes you are depending on which phase the project is. We are rather conservative in whether accounting for margins so most of the projects, in early stages of this project and to that extent the margins could be for those projects in the 6- 7% range. And yes on 3 years lending basis 7-8% guidelines, we are fairly confident.

Mr. Parag Gupta - Morgan Stanley

Ok. Thanks a lot.

Thank you Mr. Gupta. The next question is from the line of Mr. Subhabrata Mitra of Jet Age Securities Limited. Please go ahead.

Mr. Subhabrata Mitra - Jet Age Securities Limited

Good afternoon sir. My first question is with regards to are we looking at any FOREX losses in this particular quarter?

Mr. Lalit Jalan, CEO - Reliance Infrastructure

For Q4?

Mr. Subhabrata Mitra - Jet Age Securities Limited

For Q3.

Mr. Lalit Jalan, CEO - Reliance Infrastructure

There are some gains.

Mr. Subhabrata Mitra - Jet Age Securities Limited

Can you put a number to that sir?

Mr. Lalit Jalan, CEO - Reliance Infrastructure

We can revert back to you on that.

Mr. Subhabrata Mitra - Jet Age Securities Limited

Sir secondly my question pertains to the road projects, the one that are currently operational. Can we have any kind of details with regards to the current volumes and all these kinds of earnings or profitability that we are looking at on these two projects?

Mr. Lalit Jalan, CEO - Reliance Infrastructure

These projects started during the year itself and we will start reporting, segmentwise reporting from next year onwards and even in the consolidated numbers for the year you will get the turnover and terms of the road businesses.

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Mr. Subhabrata Mitra - Jet Age Securities Limited

So as of now the numbers are not really available?

Mr. Lalit Jalan, CEO - Reliance Infrastructure

I mean we are not reporting the numbers but still it is early days and we are still reporting standalone numbers and starting next year since all these infrastructure projects will be kicking in we will be announcing the consolidated numbers on a quarterly basis.

Mr. Subhabrata Mitra - Jet Age Securities Limited

And sir the last question was with regards to one of the new road projects. With Pune – Satara project I think I heard something that we will be starting to earn revenues from this particular project from April onwards. Can you please clarify?

Mr. Lalit Jalan, CEO - Reliance Infrastructure

We will do rapid financial closures and we will take over the project, we expect to take over the project in April. And existing core earning project in a 4to 6 laning project when you take over the project the revenue starts accruing to you.

Mr. Subhabrata Mitra - Jet Age Securities Limited

So `11 onwards this will start accrue earnings?

Mr. Lalit Jalan, CEO - Reliance Infrastructure

That’s right.

Mr. Subhabrata Mitra - Jet Age Securities Limited

Thank you sir. That is all from my side.

Thank you Mr. Mitra. The next question is from the line of Mr. Sumit Kishore of JP Morgan. Please go ahead.

Mr. Sumit Kishore - JP Morgan

Hello. Thanks for the opportunity to ask a question. Sir given that elections in Maharashtra over and you are confident that the stay will be removed on pass through of tariff what timeline do you foresee for this to happen?

Mr. Lalit Jalan, CEO - Reliance Infrastructure

The tariffs normally become applicable from April 1 of next year and the ARRs of the discoms have been filed with the Regulatory Commission. So I think sometime in March you should find announcing new tariffs for the next year.

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Mr. Sumit Kishore - JP Morgan

But there is no commitment from MERC to removal of this thing?

Mr. Lalit Jalan, CEO - Reliance Infrastructure

No they are just waiting for the report of the litigation that they had done. And once it is done then they will take a decision obviously.

Mr. Sumit Kishore - JP Morgan

There are 6400 odd customers who have shifted to Tata Power. What is the connected load that they need to make?

Mr. Lalit Jalan, CEO - Reliance Infrastructure

I will give you the exact numbers, I don’t have the MUs and mega watts with me but I will sent it out to you.

Mr. Sumit Kishore - JP Morgan

And sir there are 300 mega watts that you have tied up on a short term basis. What are the details in terms of what were the purchase price etc.? Who are you buying it from?

Mr. Lalit Jalan, CEO - Reliance Infrastructure

This we don’t disclose, this 300 megawatts power we have sourced for `10-`11. Even for the medium term bidding, nobody had really bid for `10-`11 time periods. So for `10-`11 we have 800 mega watts base load available. On a based load basis we might be just be short by 500 mega watts. The power now that we are getting the rates that we are getting now are more than Rs. 3 lower than equivalent rates about a year back.

Mr. Sumit Kishore - JP Morgan

That’s fantastic. And the last question sir on a consolidated basis what is the consolidated debt and the cash and cash equivalents in Reliance sir?

Mr. Lalit Jalan, CEO - Reliance Infrastructure

I don’t have that number here but we will be reporting the consolidated numbers as on March 31 and will include all these details in the reports.

The March 31 numbers with you, March 31, 2009 and we can share numbers as on December 31 also with you.

Mr. Sumit Kishore - JP Morgan

Ok. Thank you so much.

Thank you Mr. Kishore. The next question is from the line of Mr. Sumit Agarwal of HSBC. Please go ahead.

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Mr. Sumit Agarwal – HSBC

Sir just wanted to clarify, one is the tariff this allowance, can you just explain me little bit what is all this about? And do you expect that you get the reimbursement sometime next year? Or when are you expecting those allowances?

Mr. Lalit Jalan, CEO - Reliance Infrastructure

Essentially if you see the tariff has been announced by MERC for the last 6 years now and upto now there has never been an issue whatsoever. This year, in last 2 years tariff increases in the range of 40-45% in 2 years were announced by MERC and those were passed to the consumers and increase it pass this cost, this number was getting power short. This year MERC had given only and this is what we had asked for a 2% tariff increase. So against 45% that the consumers had been given over the last two years this was just 2% for year `09-`10. However being an election year political parties made it into a big issue and owing to all these political issues MERC decided to put an end to this mayhem. So they have to go through their investigations and we expect that this stage should be cleared by March – April of this year.

Mr. Sumit Agarwal – HSBC

Sir also just wanted to know what is the final ROE that you make on the power plant over and above the regulated equity return, ROE that you had allowed? Final ROE including incentives.

Mr. Lalit Jalan, CEO - Reliance Infrastructure

It will be in the range of 25%.

Mr. Sumit Agarwal – HSBC

Also just wanted to check with you in Delhi there is some dispute in terms of some of the CAPEX getting disallowed by the DERC. What’s the status of that?

Mr. Lalit Jalan, CEO - Reliance Infrastructure

The CAPEX that has been disallowed, it has been ruled that they have to compare the prices at which we have brought the prices and the other utility in Delhi has brought and we have asked for the details from the regulator. According to us the prices at which we have put the capital expenditure is lower then the prices that are competing utility in Delhi.

Mr. Sumit Agarwal – HSBC

Sorry, when are you expecting the clearances?

Mr. Lalit Jalan, CEO - Reliance Infrastructure

In the medium term because we still have to meet the DERC to go through all the paper work and finally get the clearance.

Mr. Sumit Agarwal – HSBC

And sir what is the total quantum as of now will you be getting some sort of carry charges also?

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Mr. Lalit Jalan, CEO - Reliance Infrastructure

Carry charges of quantum that has been disallowed in the tune of Rs. 500 crores and in case we were cleared then we will get the carrying cost from the year that they are cleared.

Mr. Sumit Agarwal – HSBC

Thanks a lot sir.

Thank you Mr. Agarwal. The next question is from the line of Mr. Pankaj Sharma of UBS Securities. Please go ahead.

Mr. Pankaj Sharma - UBS Securities

Hi. Good afternoon sir. Just one question on the other income, which are the key components of income which you have reported as other income in the Q3?

Mr. Lalit Jalan, CEO - Reliance Infrastructure

The other income is distribution other income.

Mr. Pankaj Sharma - UBS Securities

Sir not the other operating income, the other income which is reported?

Mr. Lalit Jalan, CEO - Reliance Infrastructure

There is a number of 215.58 crores.

These are the dividends interest of all the cash balances we have. A net of any Foreign Exchange is on the other income.

Mr. Pankaj Sharma - UBS Securities

And sir considering the fact that cash and cash equivalents have not really gone up significantly versus last year. This is almost a 50% increase in other income, FOREX loss?

Mr. Lalit Jalan, CEO - Reliance Infrastructure

Yeah last year there was a Foreign Exchange loss and there is a marginal gain this year.

Mr. Pankaj Sharma - UBS Securities

Thank you sir.

Thank you Mr. Sharma.

Ladies and gentlemen due to time constraints we will take one last question from the line of Mr. Shashi Kiran of Standard Chartered Capital Markets. Please go ahead.

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Mr. Shashi Kiran - Standard Chartered Capital Markets

Thank you for taking my question sir. Sir just one question can you give me some figures on how much revenue have you earned this quarter from NK and DS road projects?

Mr. Lalit Jalan, CEO - Reliance Infrastructure

Let me put it this way just wait for 3-4 months and I can tell you that the numbers are in line with the expectations and we will start reporting these numbers on a continuous basis from first quarter of next year.

Mr. Shashi Kiran - Standard Chartered Capital Markets

And when you introduced tolling on this project in each quarter?

Mr. Lalit Jalan, CEO - Reliance Infrastructure

NK & DS we have started tolling.

Mr. Shashi Kiran - Standard Chartered Capital Markets

In second quarter?

Mr. Lalit Jalan, CEO - Reliance Infrastructure

In Q2.

Mr. Shashi Kiran - Standard Chartered Capital Markets

So we are likely to see revenues for how many months?

Mr. Lalit Jalan, CEO - Reliance Infrastructure

Average I would say about 8 months.

Mr. Shashi Kiran - Standard Chartered Capital Markets

Ok. Thanks a lot sir.

Thank you Mr. Kiran. As we have no further questions I would like to hand the floor back to Ms. Rupa Shah - Prabhudas Lilladher for closing comments. Please go ahead.

Ms. Rupa Shah - Prabhudas Lilladher – Prabhudas Lilladher

I would like to thank Mr. Lalit Jalan, CEO - Reliance Infrastructure and senior management team and the participants for this call. Thanks a lot and have a nice weekend. Bye.

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