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Azure Power Announces Results for Fiscal First Quarter 2020

Published on 14 Aug 2019
Azure Power 
Azure Power Global Limited today announced its consolidated results under United States Generally Accepted Accounting Principles for the fiscal first quarter 2020 ended June 30, 2019.

Fiscal First Quarter 2020 Period Ended June 30, 2019 Operating Highlights:

- Net income of INR 90.2 million (US$ 1.3 million) for the quarter ended June 30, 2019 as compared to INR 29.8 million for quarter ended June 30, 2018.
- Operating Megawatts were 1,609MW, as of June 30, 2019, an increase of 59% over quarter ended June 30, 2018.
- Operating and Committed Megawatts were 3,351MW, as of quarter ended June 30, 2019, an increase of 57% over quarter ended June 30, 2018.
- Revenue for the quarter ended June 30, 2019 was INR 3,389.3 million (US$ 49.2 million), an increase of 40 % over the quarter ended June 30, 2018.
- Adjusted EBITDA for the quarter ended June 30, 2019 was INR 2,447.7 million (US$ 35.5 million), an increase of 25% over the quarter ended June 30, 2018.

Key Operating Metrics

Electricity generation during the quarter ended June 30, 2019 increased by 299.3 million kWh, or 75%, to 700.1 million kWh, compared to the quarter ended June 30, 2018. The increase in electricity generation was principally a result of additional operating capacity during the period.

Total revenue during the quarter ended June 30, 2019 was INR 3,389.3 million (US$ 49.2 million), up 40% from INR 2,422.5 million during the same period in 2018. The increase in revenue was primarily driven by the commissioning of new projects.

Project cost per megawatt operating (megawatt capacity per the power purchase agreement) consists of costs incurred for one megawatt of new solar power plant capacity during the reporting period. The project cost per megawatt operating for the quarter months ended June 30, 2019 decreased by INR 4.1 million (US$ 0.06 million) to INR 40.2 million (US$ 0.58 million) primarily due to lower costs on account of the reduction in solar module prices for the projects commissioned during the period partly offset by approximately US$ 0.05 million per megawatt payment of safe guard duties that the company expects to recover.

As of June 30, 2019, the Company's operating and committed megawatts increased by 1,210MW to 3,351MW compared to June 30, 2018 as a result of obtaining new projects.

Nominal Contracted Payments

The Company's PPAs create long-term recurring customer payments. Nominal contracted payments equal the sum of the estimated payments that the customer is likely to make, subject to discounts or rebates, over the remaining term of the PPAs. When calculating nominal contracted payments, the Company includes those PPAs for projects that are operating or committed.

The following table sets forth, with respect to the Company's PPAs, the aggregate nominal contracted payments and total estimated energy output as of the reporting dates. These nominal contracted payments have not been discounted to arrive at the present value.



Nominal contracted payments as of June 30, 2019 increased compared to as of June 30, 2018 as a result of the Company entering into additional PPAs.

Portfolio Revenue Run-Rate

Portfolio revenue run-rate equals annualized payments from customers extrapolated based on the operating and committed capacity as of the reporting dates. In estimating the portfolio revenue run-rate, the Company multiplies the PPA contract price per kilowatt hour by the estimated annual energy output for all operating and committed solar projects as of the reporting date. The estimated annual energy output of the Company's solar projects is calculated using power generation simulation software and validated by independent engineering firms. The main assumption used in the calculation is the project location, which enables the software to derive the estimated annual energy output from certain meteorological data, including the temperature and solar insolation based on the project location.

The following table sets forth, with respect to the Company's PPAs, the aggregate portfolio revenue run-rate and estimated annual energy output as of the reporting dates. The portfolio revenue run-rate has not been discounted to arrive at the present value.



Portfolio revenue run-rate increased by INR 8,401.4 million (US$ 121.9 million) to INR 25,939.9 million (US$ 376.4 million) as of June 30, 2019, as compared to June 30, 2018, due to an increase in operational and committed capacity.

Fiscal First Quarter 2020 Period ended June 30, 2019 Consolidated Financial Results:

Operating Revenues

Operating revenue for the quarter ended June 30, 2019 was INR 3,389.3 million (US$ 49.2 million), an increase of 40% from INR 2,422.5 million over the same period in 2018. The increase in revenue was driven by the commissioning of new projects during the period after June 30, 2018 until June 30, 2019.

Cost of Operations (Exclusive of Depreciation and Amortization)

Cost of operations for the quarter ended June 30, 2019 increased by 36% to INR 296.9 million (US$ 4.3 million) from INR 218.2 million in the same period in 2018. The increase was primarily due to higher plant maintenance cost arising from newly commissioned projects during the period after June 30, 2018 until June 30, 2019.

General and Administrative Expenses

General and administrative expenses for the quarter ended June 30, 2019 increased by INR 396.0 million (US$ 5.7 million), to INR 644.7 million (US$ 9.4 million) compared to the same period in 2018. General and administrative expenses increased primarily on account of higher payroll costs and one-time charges of INR 264.4 million (US$ 3.8 million) primarily related to management transition.

Depreciation and Amortization Expenses

Depreciation and amortization expenses during the quarter ended June 30, 2019 increased by INR 69.8 million (US$ 1.0 million), or 13%, to INR 623.4 million (US$ 9.0 million) compared to the same period in 2018. The increase in depreciation and amortization expense reflected the additional depreciation on new projects commissioned since June 30, 2018, was offset by a decrease in depreciation expense on account of change in useful life, which was effective October 1, 2018. For a detailed discussion, please refer to Note 2(i), to our consolidated financial statements in our Form 20-F for the year ended March 31, 2019.

Interest Expense, Net

Interest expense, net during the quarter ended June 30, 2019 increased by INR 486.7 million (US$ 7.1 million), or 45%, to INR 1,560.1 million (US$ 22.6 million) compared to the same period in 2018. Interest expense increased due to additional loans related to new projects but was partially offset by higher interest income on investments during the quarter ended June 30, 2019.

Loss on Foreign Currency Exchange

During the quarter ended June 30, 2019, the Company incurred losses of INR 50.3 million (US$ 0.7 million) compared to a loss of INR 204.2 million, during the quarter ended June 30, 2018, primarily due the expense of hedging foreign exchange rates.

Income Tax Expense

The income tax expense increased during the quarter ended June 30, 2019 by INR 29.2 million (US$ 0.4 million) to INR 123.7 million (US$ 1.8 million), compared to INR 94.6 million in the same period in 2018, primarily as a result of higher income from operations.

Net Income

The net income for the quarter ended June 30, 2019 increased by INR 60.4 million (US$ 0.9 million) to INR 90.2 million (US$ 1.3 million), compared to a net income of INR 29.8 million for the same period in 2018. The increase was primarily due to higher revenues achieved during the period.

Cash Flow and Working Capital

Cash used in operating activities for the quarter ended June 30, 2019 was INR 466.7 million (US$ 6.8 million), INR 283.0 million (US$ 4.1 million) improvement from the comparable period in 2018, primarily due to an increase in revenue during the quarter ended June 30, 2019. During the quarter ended June 30, 2019, additional cash interest paid on loans compared to the same period in the prior year was INR 358.2 million (US$ 5.2 million). In addition, cash flow in operating activities is impacted more in the first and third quarters of the fiscal year primarily related to the semi-annual payment of interest on green bonds.

Cash used in investing activities for the quarter ended June 30, 2019 was INR 5,666.6 million (US$ 82.2 million), compared to INR 4,196.0 million for the comparable period in 2018, primarily on account of purchases of property plant and equipment for new solar projects amounting to INR 5,657.8 million (US$ 82.1 million).

Cash generated from financing activities was INR 10,742.0 (US$ 155.9 million) for the quarter ended June 30, 2019, compared to INR 4,251.7 million for the comparable period in 2018, primarily due to additional debt incurred related to new solar projects.

Liquidity Position

As of June 30, 2019, the Company had INR 11,470.7 million (US$ 166.4 million) of cash, cash equivalents and current investments. The Company had undrawn project debt commitments of INR 10,876.2 million (US$ 157.8 million) as of June 30, 2019.

Adjusted EBITDA

Adjusted EBITDA was INR 2,447.7 million (US$ 35.5 million) for the quarter ended Jun 30, 2019, compared to INR 1,955.7 million for the quarter ended June 30, 2018. The increase was primarily due to the increase in revenue during the quarter ended June 30, 2019.

Recent accounting pronouncement 

The Company adopted ASU 2016-02 – Leases (Topic 842) in the quarter ended June 30, 2019 using the modified retrospective approach and elected certain practical expedients permitted under the transition guidance. The transition guidance allowed the Company not to reassess prior conclusions related to contracts containing leases or lease classification. The adoption did not have a material impact to our income statement or cash flow. However, the adoption resulted in increasing the Right of Use asset on our consolidated balance sheet by INR 3,504.5 million (US$ 50.8 million) as well as Lease Liabilities by INR 3,078.4 million (US$ 44.7 million).

Guidance for Fiscal Year 2020

The following statements are based on the Company's current expectations. These statements are forward-looking and actual results may differ materially. With a robust pipeline and strong execution capabilities, the Company expects to continue to deliver high growth for fiscal year ending March 31, 2020. For fiscal year ending March 31, 2020, the Company continues to expect to have between 1,800 – 1,900MWs operational. In addition, the Company is reiterating its guidance of revenues of between INR 12,770 – 13,350 million (or US$ 185– 194 million at the June 30, 2019 exchange rate of INR 68.92 to US$ 1.00) for fiscal year ending March 31, 2020.


ENF Profiles For Companies Mentioned in This Article

Azure Power (Solar System Installers): https://www.enfsolar.com/directory/installer/5841
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