EBENE, Mauritius, Feb. 10, 2021 /PRNewswire/ -- Azure Power Global Limited (NYSE: AZRE), a leading independent solar power producer in India, today announced its consolidated results under United States Generally Accepted Accounting Principles ("GAAP") for the fiscal third quarter 2021, period ended December 31, 2020.

Fiscal Third Quarter 2021 Period Ended December 31, 2020 Operating Highlights:

• Operating Megawatts ("MW") were 1,987 MWs, as of December 31, 2020, an increase of 10.0% over December 31, 2019. Operating and committed megawatts were 7,115 MWs, as of December 31, 2020, an increase of 34.2% over December 31, 2019. Committed megawatts include 4,000 MWs for which we have received Letters of Award ("LOA") but the Power Purchase Agreements ("PPAs") have not yet been signed.
• Operating revenues for the quarter ended December 31, 2020 were INR 3,521 million (US$ 48.2 million), an increase of 15.6% over the quarter ended December 31, 2019. We estimate that our revenues were negatively impacted by approximately INR 126 million (US$ 1.7 million) on account of adverse weather conditions resulting in low insolation, as compared to our initial estimates, during the quarter.
• Net loss for the quarter ended December 31, 2020 was INR 1,088 million (US$ 14.9 million). During the quarter, our results were negatively impacted by stock appreciation rights (SARs) expense of INR 1,318 million (US$ 18.1 million). Refer to the detailed explanation in the 'Stock Appreciation Rights expense' section of the commentary below.
• Adjusted EBITDA for the quarter ended December 31, 2020 was INR 1,563 million (US$ 21.3 million), a decrease of 26.0% over the quarter ended December 31, 2019. During the quarter, our results were negatively impacted by an increase in stock appreciation rights (SARs) expense of INR 1,318 million (US$ 18.1 million). Refer the detailed explanation in the 'Stock Appreciation Rights expense' section of the commentary below.
• Non-GAAP Cash Flow to Equity ("CFe") from Operating Assets for the quarter ended December 31, 2020 was INR 1,231 million (US$ 16.8 million), an increase of 142.0% over the quarter ended December 31, 2019.

Key Operating Metrics

Electricity generation during the quarter and nine-months ended December 31, 2020 was 783.7 million kWh and 2,436.8 million kWh, respectively, an increase of 98.6 million kWh or 14.4%, over the quarter ended December 31, 2019, and an increase of 441.8 million kWh, or 22.1%, over the nine months ended December 31, 2019. The increase in electricity generation was principally a result of an additional 183 MWs of AC (277 MWs DC) operating capacity commissioned since December 31, 2019. Our Plant Load Factor ("PLF") for the quarter and the nine months ended December 31, 2020, was 19.3% and 20.1% respectively, compared to 17.7% and 18.6%, respectively, for the same comparable periods in 2019, which increased principally due to the addition of DC capacity and improved performance by our plants.

We commissioned 153 MWs AC (236 MWs DC) during the three months ended December 31, 2020 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 new solar power plant capacity during the reporting period. The project cost per megawatt (DC) operating for the nine months ended December 31, 2020 decreased by INR 3.2 million (US$ 0.04 million), or 9%, to INR 31.2 million (US$ 0.43 million) primarily due to lower costs on account of the reduction in solar module prices for the projects commissioned during the period. The project cost per megawatt (AC) operating for the nine months ended December 31, 2020 was INR 45.0 million (US$ 0.62 million), compared to INR 47.9 million, for the nine months ended December 31, 2019, on account of a reduction in solar module prices. Excluding the impact of safeguard duties, the DC and the AC costs per megawatt for the nine months ended December 31, 2020 would have been lower by approximately INR 2.6 million (US$ 0.04 million) and INR 2.7 million (US$ 0.04 million), respectively, and for the nine months in the prior year ended December 31, 2019, the DC and the AC costs per megawatt would have been lower by approximately INR 2.5 million and INR 4.1 million, respectively.

As of December 31, 2020, our operating and committed megawatts were 7,115 MWs, an increase of 1,815 MWs compared to December 31, 2019. Committed megawatts include 4,000 MWs for which we have received LOAs but the PPAs have not yet been signed. The Solar Energy Corporation of India ("SECI") has informed us that so far there has not been adequate response from the state electricity distribution companies ("DISCOMs") for SECI to be able to sign the Power Sale Agreement ("PSA") at this stage even though we have a LOA. SECI has mentioned that they will be unable to sign PPAs until PSAs have been signed, and they have committed to inform Azure Power of developments in their efforts with the DISCOMS. Capital costs, interest rates and foreign exchange rates have improved since Azure Power won the 4 GW auction in December 2019 which have resulted in lower tariffs in other recent SECI auctions. We expect these savings likely will be passed on to state electricity distribution companies (DISCOMS). We expect a tariff markdown from the price discovered in the auction, which will facilitate signing of PSAs. We will continue our discussions with SECI towards signing PPAs in respect of the 4GW tender and expect the PPAs to be signed in tranches over a period of time.

Nominal Contracted Payments for Projects with PPAs

Our 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, we include those PPAs for projects that are operating or committed.

The following table sets forth, with respect to our PPAs as referred above, 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 for projects with PPAs do not include the payments for 4 GWs with LOAs since the PPAs have not yet been signed.

Our nominal contracted payments are not impacted for the delays in construction due to COVID-19, as revenues from our PPAs start on the date of commissioning of the project.

Portfolio Revenue Run-Rate for Projects with PPAs

Portfolio revenue run-rate for projects with PPAs 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, we multiply the PPA contract 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 our 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 our PPAs as referred above, 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 for projects with PPAs does not include the revenue for 4 GWs with LOAs as the PPAs have not been yet signed.

Fiscal Third Quarter 2021 Period ended December 31, 2020 Consolidated Financial Results:

Operating Revenues

Operating revenues for the quarter ended December 31, 2020 was INR 3,521 million (US$ 48.2 million), an increase of 15.6% from INR 3,047 million in the quarter ended December 31, 2019. This increase was driven by the revenue generated from projects which were commissioned during the quarter ended December 31, 2019 until December 31, 2020 and additional revenue of INR 63 million (US$ 0.9 million) for the recovery of Safe Guard Duties and Goods and Service Tax under the change in law provision of our PPAs for four of our projects.  We estimate that our revenues were negatively impacted by approximately INR 126 million (US$ 1.7 million) on account of adverse weather conditions resulting in low insolation, as compared to our initial estimates, during the quarter.

Cost of Operations (Exclusive of Depreciation and Amortization)

Cost of operations for the quarter ended December 31, 2020 increased by 14.6% to INR 306 million (US$ 4.2 million) from INR 267 million in the quarter ended December 31, 2019. This increase in the cost of operations was primarily due to an increase in operational expenses from projects commissioned during the quarter ended December 31, 2019 until December 31, 2020.

The cost of operations per megawatt during the quarter ended December 31, 2020 is INR 0.16 million (~US$ 0.002 million), in line with the same comparable period ended December 31, 2019.

General and Administrative Expenses

General and administrative expenses for the quarter ended December 31, 2020 were INR 1,652 million (US$ 22.7 million), an increase of INR 983 million (US$ 13.5 million) compared to the quarter ended December 31, 2019. Higher general and administrative expense in the current quarter was primarily due to an increase in stock appreciation rights (SARs) expense of INR 1,259 million (US$ 17.2 million) compared to the quarter ended December 31, 2019, partially offset by lower provisions against receivables of INR 69 million (US$ 1.0 million), absence of management transition expense of INR 126 million, absence of interest charges on the safeguard duty on the import of modules by INR 82 million incurred during the same comparable period in 2019 and lower other cost due to cost reductions initiatives in travel, professional and other administrative expenses.

Stock Appreciation Rights Expenses

Stock appreciation rights expenses for the quarter ended December 31, 2020 were INR 1,318 million (US$ 18.1 million), an increase of INR 1,259 million (US$ 17.2 million) compared to the quarter ended December 31, 2019. The increase in SAR expense was primarily due to a change in accounting for capitalisation of SAR expense for the prior two quarters as well as a 37% increase in the share price during the quarter ended December 31, 2020, compared to the quarter ended September 30, 2020. During the quarter ending December 31, 2020, 175,000 SARs were exercised. As of December 31, 2020, 1,795,000 SARs were outstanding of which 1,642,500 SARs are not exercisable until 2024 on which the Company will not incur any cash payments until that time. Also, we have provided an updated statement of beneficial ownership of our key managerial personnel below.

Depreciation and Amortization Expenses

Depreciation and amortization expenses during the quarter ended December 31, 2020 increased by INR 80 million (US$ 1.1 million), or 11.2%, to INR 796 million (US$ 10.9 million) compared to the quarter ended December 31, 2019. The increase primarily relates to the additional depreciation on capital expenditures from projects commissioned between December 31, 2019 until December 31, 2020.

Interest Expense, Net

Net interest expense during the quarter ended December 31, 2020 decreased by INR 485 million (US$ 6.6 million), or 19.5% compared to the quarter ended December 31, 2019, to INR 1,996 million (US$ 27.3 million). The decrease reflected the absence of charges in the same quarter a year ago including INR 385 million of prepayment charges to settle existing loans from the proceeds from the issuance of a solar green bond, INR 124 million related to the extinguishment of a debt facility, and INR 96 million relating to the refinancing of a loan partially offset by an increase in interest expense (net) of INR 141 million related to projects commissioned during the past 12 months.

Gain/ Loss on Foreign Currency Exchange

The Indian Rupee ("INR") appreciated against the U.S. dollar by INR 0.53 for every US$ 1.00 (or 0.7%) during the period from September 30, 2020 to December 31, 2020. During the quarter ended December 31, 2020, the Company did not report a foreign exchange gain or loss compared to an expense on foreign exchange loss of INR 60 million, during the quarter ended December 31, 2019. During the current fiscal year, the Company refinanced a foreign currency loan of INR 3,099 million (US$ 42.4 million) into an INR denominated loan, which should reduce the impact of Gain /Loss on Foreign Currency Exchange going forward.

Other Expenses/ (Income)

Other expenses/ (income), primarily consists of income from current investments and other incidental expense. During the quarter ended December 31, 2020, the Company has reported other expense (net) of INR 9 million (US$ 0.1 million) compared to other income (net) of INR 24 million, during the quarter ended December 31, 2019, primarily due to lower income earned in current quarter from current investments.

Income Tax Income/ Expense

Income tax income during the quarter ended December 31, 2020 was INR 150 million (US$ 2.1 million), compared to an income tax expense of INR 236 million in the quarter ended December 31, 2019. The company recognised an INR 427 million (US$ 5.8 million) deferred tax benefit during the quarter ended December 31, 2020 related to higher SAR expenses which was the primary reason for the year on year improvement in the Company's net tax expense.

Net Loss

Net loss for the quarter ended December 31, 2020 was INR 1,088 million (US$ 14.9 million), a reduction of INR 270 million (US$ 3.7 million) compared to a loss of INR 1,358 million for the quarter ended December 31, 2019. The loss in the quarter ended December 31, 2020 included higher expense of INR 1,259 million (US$ 17.2 million) related to stock appreciation right expenses.

The year-on-year improvement reflected higher revenues from projects commissioned over the past year as well as the absence of charges in the same quarter last year of INR 385 million of prepayment charges to settle existing loans from the proceeds from the issuance of a solar green bond, INR 124 million related to the extinguishment of a debt facility, INR 96 million relating to refinancing of a loan, INR 126 million related to management transition, and INR 82 million of interest charges on the safeguard duty on the import of modules.