Renew Energy Global Plc — FY2023 Form 20-F
Reporting period: Fiscal year ended March 31, 2023, with comparisons to fiscal years ended March 31, 2022 and 2021. This is an annual report, not a report for calendar-year 2022 Q4. Financial statements are prepared under IFRS as issued by the IASB; amounts below are in Indian rupees (Rs.) unless stated otherwise.
Business context
ReNew develops and operates wind, solar and hydro power projects in India, with expanding transmission, digital, storage and related businesses. At March 31, 2023, it reported 7.98 GW of commissioned capacity and 5.72 GW of committed capacity, for a combined portfolio of approximately 13.7 GW. Power sales under long-term contracts remain the core business.
Financial and operating performance
| Metric | FY2023 | FY2022 | Change / context |
|---|---|---|---|
| Revenue | Rs. 78,223 million | Rs. 59,349 million | Up 32% |
| Total income | Rs. 89,309 million | Rs. 69,195 million | Up 29% |
| Loss before tax | Rs. 2,470 million | Rs. 12,233 million | Loss narrowed |
| Net loss | Rs. 5,029 million | Rs. 16,128 million | FY2022 included Rs. 10,512 million of listing and related expenses |
| Adjusted EBITDA (non-IFRS) | Rs. 62,004 million | Rs. 55,144 million | Up 12%; company-defined measure |
| Cash flow to Equity (non-IFRS) | Rs. 15,237 million | Rs. 12,888 million | Up 18%; company-defined measure |
| Net cash from operations | Rs. 65,572 million | Rs. 42,390 million | Up 55% |
| Net cash used in investing | Rs. 74,978 million | Rs. 124,747 million | FY2023 included Rs. 86,364 million for property, equipment and related assets |
| Net cash from financing | Rs. 19,113 million | Rs. 90,038 million | FY2022 included substantial Business Combination proceeds |
| Cash and cash equivalents at year-end | Rs. 38,182 million | Rs. 28,379 million | Increase of Rs. 9,803 million |
| Total borrowings | Rs. 530,407 million | Rs. 444,260 million | Includes Rs. 16,999 million of compulsorily convertible debentures |
Wind and solar revenue was Rs. 36,009 million and Rs. 32,105 million, respectively. Solar generation rose 43% to 8,112 million kWh, with plant load factor increasing to 24.9% from 23.3%. Wind generation increased 6% to 9,002 million kWh, while plant load factor was broadly stable at 26.5%. O&M expense increased to Rs. 5,528 million from Rs. 4,929 million; finance costs and fair-value changes in derivatives rose to Rs. 50,966 million from Rs. 41,712 million.
At March 31, 2023, current assets were Rs. 109,867 million and current liabilities were Rs. 115,926 million, a current-liability excess of about Rs. 6,059 million. Cash and cash equivalents plus bank balances other than cash equivalents totaled Rs. 76,019 million; some deposits are pledged or otherwise restricted. Gross trade receivables were Rs. 32,042 million, including Rs. 31,139 million from government-owned or controlled entities. Capital commitments, net of advances, for wind and solar projects were Rs. 119,739 million.
Material changes and unusual items
- Revenue growth reflected expanded capacity, improved solar utilization, transmission-project construction revenue and late-payment surcharges. Lower carbon-credit sales partly offset the increase.
- FY2023 other expenses included Rs. 800 million of liquidated damages and Rs. 630 million of carbon-credit impairment, totaling Rs. 1,430 million. Raw materials and consumables rose to Rs. 6,956 million, mainly from transmission construction.
- Finance costs and fair-value changes included Rs. 6,816 million of non-cash mark-to-market adjustments, according to management.
- The Company repurchased 28.0 million Class A shares into treasury for approximately US$179 million cumulatively by year-end under its US$250 million program; about US$71 million of authority remained.
- After year-end, on April 28, 2023, a subsidiary issued US$400 million of 7.95% secured notes due 2026. This issuance is subsequent to the March 31, 2023 reporting date.
Outlook, risks and contingencies
The filing gives no clear consolidated financial guidance for FY2024. Management says it expects operating cash generation, credit facilities and project-finance lines to meet working-capital requirements for the next 12 months, while noting that funding availability and terms are not assured. The company expects growth from its committed pipeline; several projects are targeted for commissioning during FY2024 and FY2025. It also plans solar-cell and module manufacturing capacity, though the filing presents differing capacity descriptions in different sections; investors should verify the current project scope and schedule.
- Debt and funding: Borrowings are substantial, secured by project assets and subject to restrictive covenants. Certain subsidiaries had ratio or security-creation covenant breaches; the Company had sought waivers or extensions for current breaches. Management said no lender had issued a default notice or accelerated repayment as of the report date, but relief was not assured.
- Offtaker and collection concentration: 67% of FY2023 total income came from PPAs with central and state government utilities; one state distribution company contributed more than 10% of total income. Collection delays, disputes and counterparty credit risk could pressure cash flows.
- Project and regulatory risks: Construction delays, grid constraints, weather variability, land and permitting issues, equipment costs and changing Indian policies may affect generation, project returns and commissioning. The Supreme Court bird-protection proceedings may affect projects in Rajasthan and Gujarat, including 1,813.8 MW commissioned and approximately 2,585 MW under development; cost and implementation effects remain uncertain.
- Legal and tax matters: Significant disputes include Andhra Pradesh tariff, curtailment and payment matters; Karnataka captive-power charges; tax assessments; and force-majeure PPA termination appeals. The filing states that the potential loss for certain proceedings cannot be reasonably estimated. Management believes current provisions and contingencies are not material overall, but outcomes remain uncertain.
- Internal controls: Management and the auditor identified material weaknesses in internal control over financial reporting as of March 31, 2023, involving delayed or inadequately evidenced review controls and inadequate segregation of duties for manual journal entries. Disclosure controls were deemed ineffective. Management has begun remediation, but cannot estimate when it will be complete or assure success. The financial-statement audit opinion was unqualified; the auditor issued an adverse opinion on internal control.
Important facts for investors to verify
- Whether the internal-control remediation is operating effectively and whether future filings report any restatement or additional control issues.
- Receivable aging, subsequent collections and exposure to state distribution companies, particularly the largest customer and Andhra Pradesh counterparties.
- Debt maturity schedule, covenant compliance and the status of waivers, extensions and security filings at subsidiaries.
- Commissioning progress, required PPAs and financing for the 5.72 GW committed portfolio, including transmission and manufacturing projects.
- Updates on bird-diverter and underground-transmission requirements, as well as related project costs and regulatory recovery.
- The assumptions behind Adjusted EBITDA and Cash flow to Equity, and reconciliation to IFRS cash flows and earnings; these are non-IFRS measures and exclude important costs and cash requirements.