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Azure Power Global Limited  (NYSE:AZRE)
Q3 2019 Earnings Conference Call
Feb. 13, 2019, 8:30 a.m. ET

Contents:

  • Prepared Remarks
  • Questions and Answers
  • Call Participants

Prepared Remarks:

Operator

Good morning. And welcome to the Azure Power Fiscal Third Quarter 2019 Earnings Conference Call. All participants will be in listen-only mode. (Operator Instructions) After today's presentation, there will be an opportunity to ask questions. (Operator Instructions) Please note, today's event is being recorded.

I would now like to turn the conference over to Nathan Judge, Investor Relations. Please go ahead, sir.

Nathan Judge -- Investor Relations

Thank you, and good morning, everyone, and thank you for joining us. After last night's close the company issued a press release announcing its financial results for the third fiscal quarter of 2019 ended December 31, 2018. A copy of the press release and the presentation are available on the Investors section of Azure Power's website at azurepower.com.

With me today are Inderpreet Singh Wadhwa, Founder, Chairman and Chief Executive Officer; and Sushil Bhagat, Chief Financial Officer. Inderpreet will provide a business update, and Sushil will discuss our fiscal third quarter financial performance. Inderpreet will finish our prepared remarks by reiterating our fiscal 2019 guidance and providing fiscal 2020 outlook. After this, we will open up the call for questions.

Please note, our Safe Harbour statements are contained within our press release, presentation materials and available on our website. These statements are important and integral to all our remarks. There are risks and uncertainties that could cause our results to differ materially from those expressed or implied by such forward-looking statements, so we encourage you to review the press release we referred -- we furnished in our Form 6-K and presentation on our website for a more complete description.

Also contained in our press release and presentation materials are certain non-GAAP measures that we reconcile to the most comparable GAAP measures, and these reconciliations are also available on our website and in the press release and presentation materials.

It's now my pleasure to hand it over to Inderpreet Singh Wadhwa, Founder, Chairman and Chief Executive Officer.

Inderpreet Singh Wadhwa -- Founder, Chairman and Chief Executive Officer

Thank you, Nathan, and a very good morning, everyone. I'm pleased to report that our fiscal third quarter is yet our best quarter ever. We have delivered results well ahead of expectations. Our revenues in local currency terms were significantly above our expectations, as we are constructing facilities in record time well ahead of contract deadlines.

Our 1.9-gigawatt pipeline has a tariff, which is 18% above the lowest bid in the Indian solar market. At a time when solar panel prices have plummeted over 40%, thus giving us returns much higher than our hurdle rates. We are setting new benchmarks for lowering costs and our interest expense continues to be less than originally planned. We were profitable this quarter and now expect that we will be profitable on the full-year basis this year, excluding any foreign currency exchange fluctuations.

We have eliminated the contract risk, as every project in our pipeline has a contract in hand and most have already secured critical interconnection approvals that should allow us to build projects ahead of schedule. We have approximately over $330 million of cash on the balance sheet that when coupled with long-term projects finance options will provide us adequate liquidity to complete every project in our pipeline. This is during the time when the macroeconomic environment has seen some turbulence, although the outlook is improving. On every operational metrics, we are doing extremely well.

However, we are disappointed that the share price is not reflective of our strong operations and high rate of return on operational and under construction projects. We will continue to evaluate and pursue options that will create long-term shareholder value, strong operational cash flows and drive the share price closer toward our fair value. We will remain highly disciplined and we'll always pursue the highest returns to our shareholders.

Slide four summarizes our mission and core values, which are critical to our long-term success. Our mission continues to be the lowest cost power producer in the world. This is again, not the same as having the lower selling price of power in the world. Core to our culture as a company are four core values, excellence, honesty, social responsibility and entrepreneurship, and we strive to uphold every one of these values in everything we do. The business continues to perform well, the portfolio of 3,059 megawatts is a leading solar portfolio in India with fixed price contracts for 25 years, but one of the most diverse and strongest counterparty profiles in the Indian solar market.

We are pleased with the performance in the third fiscal quarter, that has exceeded our internal plans. The portfolio is nearly doubled from this time last year. Our balance sheet is the strongest it has ever been and to complete the pipeline of contracted assets, we do not anticipate a need to access public equity markets.

For the first time ever in India, we were able to create the first financing warehouse of $135 billion for our rooftop projects. This structure should bring numerous benefits; including accelerating completion timelines for future rooftop projects and create a strong differentiator for Azure in the market.

The financing backdrop continues to improve as well. The yield on our Green Bond has tightened approximately 80-basis-point since fiscal second quarter 2019 and currently stands at about 5.8%. We have begun to see a more accommodative monetary policy in India as well. The Reserve Bank of India reduced the repo rate by 25 basis points, the first cut in almost 17 months. In addition, they adopted a mutual policy stands from calibrating tightening. This will bode well with regards to us raising additional debt for projects in the pipeline.

On construction front, we continue to set new standards of excellence with completion of 95 megawatts of our projects in Gujarat, almost five months ahead of schedule, which we believe is the fastest time to finish a large utility-scale project anywhere in the world. Several other projects under construction are generally ahead of schedule, which could lead to a strong first quarter fiscal for FY '20.

Since the IPO, we brought down our cost of operations, G&A and interest expense significantly. The issuance of the fixed rate Green Bond is paying dividends during a rising rate environment and this has led to EBITDA margin expansion, and an EPS of $0.05 per share this quarter, and we expect to be profitable for this year as well, barring any fluctuations in the foreign exchange rates. This to us is the milestone and a record of our efforts to increase revenues, while at the same time containing our costs to deliver profitable results.

As we look back at 2018, we wanted to share with you some accomplishments that provide shareholders superior returns on projects. Where we are able to develop land much cheaper than government solar parks thus leading to higher returns. 84% of our pipeline is located outside solar parks. We have secured an industry leading interconnection of 1.3 gigawatts with Central Grid Transmission Authority ahead of schedule. With land and interconnection placed before project financing, we expect to negotiate better financing rates and tighter spreads with our lenders.

Our project costs are down year-on-year, as we are able to deliver continued productivity enhancements, since inception of balance of system costs, which are cost we have direct control over have declined by 86%. Our excellence continues through to operations as we pioneer new ways of reducing operating costs.

Our DC plant load factor continued to be among the highest in the Indian solar industry. We have doubled our committed pipeline year-over-year to 1.9 gigawatts, 85% of those projects are the very strong credit offtakers rated A to AAA domestically and almost 64% of our contracts in the pipeline are with the Government of India sovereign entities, which give us the highest possible credit in India for infrastructure projects. These projects have a blended tariff, which is 18% above the lowest bid in the market, which illustrates our ability to consistently add additional value for shareholders through disciplined and value-accretive bidding strategy.

Every project in our portfolio now has a letter of award in place, which we believe eliminates the contracting risk of our portfolio and improves visibility for our shareholders.

We continue to make good progress with our rooftop business, which focuses on large scale government commercial and industrial customers. Azure Roof Power now has 86 megawatts under operations, up 160% from last year. Our rooftop portfolio stands at about 211 megawatts, which we believe is one of the largest in India and our rooftop pipeline has a weighted average tariff of almost 100% higher than the lowest solar power bids in the market.

The scale and breadth of operations in this business is impressive with construction occurring on over 2,000 roofs across the country simultaneously and our newly created financing warehouse of $135 million, the first of its kind in India provides us with even greater differentiation to our competitors, and should speed the construction timeframe for new projects.

All government projects under construction remain on time and on budget with several projects running ahead of schedule. Our decade long experience in the Indian solar market is paying off. As an example of that is our project in Gujarat, there we have a wealth of experience and brought 95 megawatts online, what we believe to be a record time for a large utility-scale project for any company.

Our 100-megawatt project in Karnataka, 200-megawatt project in Rajasthan are in advance stages of construction and ahead of schedule, and this will lead to a stronger fiscal first quarter in 2020. This would not be possible without our integrated business model and our culture of excellence. As outlined in our mission statement, environmental, social and governance principles are core to our business, as one of the largest solar companies in India, we are helping to offset a worsening air quality throughout the country, already through our operating projects we have avoided almost 3 million tons of carbon avoidance, which is equivalent to planting almost 40 million trees.

We have reduced our water consumption by over 40% this year through innovative patent pending operating techniques. We strive to enrich and enhance the quality of life in villages where we operate. We have built water purification facility that give access to clean drinking water to over 60,000 people. We have constructed and donated infrastructure for schools and have created almost 4,000 jobs in 2018. Our governance is strong inline with some of the most strenuous requirements globally and our HR policy is in line with the World Bank Equator Principle.

Looking at the industry and regulatory news, solar continues to be the lowest cost source of electricity in India, and the preferred new source of supply. Last year 54% of all new capacity additions were solar and if you look over the past two years, solar capacity additions have risen almost 318%, compared to 37% for wind and a decline of 87% for coal. In fact, a recent report from S&P Global highlighted that approximately 50,000 megawatts of coal power projects may be canceled in the coming months. Currently there are 25 gigawatts roughly operational for solar projects, another 17 gigawatts under development. We are actively tracking about 38 gigawatts of auctions in process this financial year, and we expect additional wins given our strong development expertise and access to capital. We do want to stress that we will remain disciplined and only invest if the returns are above our cost of capital.

On the regulatory front, there have been some positive developments recently. In Assam, where we are building the largest solar plant in the Northeast portion of India has adopted new land development policies conducive for solar project development. Also regulations regarding rooftop access continue to evolve and recently the size of projects that qualify for net metering was increased to 2 megawatts, up from 1-megawatt, which should enhance the potential market opportunity for this fast-growing business for us. (Technical Difficulty) Hello?

Unidentified Speaker --

Do you want to switch for line open.

Operator

Thank you for holding. We've now reconnected to the speaker location, please proceed.

Inderpreet Singh Wadhwa -- Founder, Chairman and Chief Executive Officer

Are we connected to the call?

Operator

Yes, sir. You are connected to the conference you are live now, please proceed.

Inderpreet Singh Wadhwa -- Founder, Chairman and Chief Executive Officer

On the regulatory front there have been some positive developments recently. In the State of Assam, where we are building the largest solar power in Northeast portion of India has adopted new land regulatory policies conducive for solar projects. Also regulations regarding rooftop access continue to evolve, wherein net metering was increased to 2 megawatts, up from 1-megawatt, which could enhance the potential market opportunity for this fast-growing business.

On the GST front, the regulatory has approved the pass-through of GST taxes for various projects through the industry, including some of ours and we continue to expect that our projects have strong change in law protection that will help us manage any change in such provisions, and we do not expect any material impact to the business on this front.

With that, I would like to pass the call over to our CFO, Mr. Sushil Bhagat, who will review our third fiscal quarter performance. Over to Mr. Sushil.

Sushil Bhagat -- Chief Financial Officer

Thank you, Inderpreet. Turning to our fiscal third quarter of 2019 performance, we continue to record a strong growth with the number of operating and committed megawatts increasing to 3,059 or 95% -- 94% from the prior year fiscal third quarter. We also had 1,169 megawatts under operation as of fiscal third quarter 2019 or about 45% more than what we had at fiscal third quarter of 2018.

Our fiscal third quarter 2019 revenue was $34.9 million, which was a 40% increase from the prior period. The G&A expenses increased only 6%, compared to 40% increase in revenues, as we captured economies of scale of our platform. While EBITDA rose 50% year-on-year. During the quarter we changed our estimate of useful life for many of our utility scale projects based on various technical evaluations and tests, we now estimate that our solar modules will continue to generate power for at least 35 years at high efficiency levels and have concluded that most of our utility scale projects will continue to have a useful life of at least 35 years, up from 25% previously.

Our interest expense during the quarter was about $16 million, which compared to the last year was about flat, despite significantly more megawatts added reflecting lower realized interest rates. On our balance sheet, cash and equivalents ended the quarter at $251 million, which includes the cash raised during our follow-on in October. The property, plant and equipment increased to about $1 billion, a 24% increase from the prior comparative period and as we brought new facilities online. Net debt was $721 million as of December 31, 2018. Our balance sheet remains very strong. At the end of the quarter we had $612 million of liquidity, which included $330 million of cash, $178 million of undrawn project debt facilities and $104 million of working capital that we didn't draw on.

I will now pass it over to Inderpreet to discuss the guidance.

Inderpreet Singh Wadhwa -- Founder, Chairman and Chief Executive Officer

Thanks, Sushil. With regards to our guidance, we continue to reiterate our guidance for FY '19 and continue to expect to have between 1,300 megawatts to 1,400 megawatts operational by March 31, 2019. We expect that revenues in Indian rupee terms will meet or exceed our original expectations. However, as our results have converted into US dollars for the convenience of the reader, we expect US dollar revenue guidance for the year ending March 31, 2019 to be at the lower end of the guidance range. The Indian rupee has depreciated 9% from INR63.83 to INR69.58 for every US dollar since our original guidance.

With the robust pipeline and strong execution capabilities, we expect to continue to deliver high growth in the next fiscal year ended March 31, 2020. For the fiscal year ending March 31, 2020, the company expects to have 1,800 megawatts to 1,900 megawatts operational. In addition, the company expects revenues to be between INR12.8 billion and INR13.4 billion, which at the December 31, 2018 exchange rate of INR69.58 for every US dollar translates to $184 million to $192 million.

With this, we will now take questions.

Questions and Answers:

Operator

Thank you. We will now begin the question-and-answer session. (Operator Instructions) Today's first question comes from Philip Shen of Roth Capital Partners. Please go ahead.

Philip Shen -- Roth Capital Partners -- Analyst

Hi, everyone, and thanks for the questions. First question is on your guidance for fiscal 2020, I think, it implies about 400 megawatts to 600 megawatts of installations in FY '20. This compares we believe with your 890 megawatts of CODs that you had previously expecting for that timeframe. Can you talk about why the guidance might be a bit lower than the COD dates and how much conservatism might be built in there? Thanks.

Inderpreet Singh Wadhwa -- Founder, Chairman and Chief Executive Officer

I think what we've seen is the contracting time for some of the projects from winning the auction to getting a letter of award, to getting into the PPA is going a little bit longer than what it used to be, and which is all right, because the capacity of the projects or the size of the projects have also substantially increased in the market, earlier we used to have 100 megawatt project or a 50 megawatt project and now we're talking about 300 megawatt and 600 megawatts, so that is accounted for, and if you recall what we do in our annextures, the schedule for completion of these projects, is based on the estimates of when we believe all these contracts would be in place, and we continue to update every quarter as we make progress from winning the auction, to getting a LOA, to getting a PPA in place, so largely it's a reflection of that.

We also believe that we'll have an opportunity to pull in some of these projects earlier, because as we have seen this year on some of the projects in Gujarat we have done earlier, but that would be a decision and a trade-off we will have to make from a cost benefit standpoint, if you expect the cost of technology or the efficiency of technology that is better in the following fiscal year. We may continue with the plan as per the contracted commissioning of these projects and if we don't feel there is a significant benefit of of doing so, we may pull some of those projects in, but we are quite confident of achieving the numbers that we put forward.

Philip Shen -- Roth Capital Partners -- Analyst

Great. Thanks, Inderpreet. Shifting over to the PLF for FQ3, we estimate that you guys came in with an 18.2% PLF, I think your year-ago period was 15.8%. Are we in the right ballpark with our calculations, if not, maybe help us understand what the number is in the quarter. And then can you talk -- if we are in the right ballpark, can you talk about what drove the year-over-year improvement and how it might be and what it might be due to and was it weather conditions increasing overloading higher efficiency modules, et cetera? Thanks.

Inderpreet Singh Wadhwa -- Founder, Chairman and Chief Executive Officer

Yeah. So I think quarter-over-quarter definitely the numbers are clear, and as we know, we don't break out the PLFs for the quarter, there's a certain amount of estimation there. But what is more meaningful number is the annual number that we published and that number is largely going to be higher on account of two factors; one, is our solar projects are coming online in high installation areas of Gujarat and Rajasthan and Karnataka. And we are now doing additional overloading on these projects, because of the technology improvements. So those are the two reasons for the increase in the plant load factors.

Philip Shen -- Roth Capital Partners -- Analyst

Okay. And then looking ahead for the rest of this calendar year, should we continue to expect the PLF to be a little bit better than expected?

Inderpreet Singh Wadhwa -- Founder, Chairman and Chief Executive Officer

You should expect the PLF better than the last fiscal year, for full fiscal year, in this full fiscal, because when we talk about the next quarter you will actually get the annual numbers as well. And again, we expect them higher for precisely the two reasons we mentioned to you.

Philip Shen -- Roth Capital Partners -- Analyst

Okay. Thanks, Inderpreet. On the call, I think, you guys talked about 38 gigawatts of auctions that you guys have line of sight to. I think in the prior quarter that number was 24 gigawatts of next year to two years. Can you just give us more detail on the upcoming auctions, how many or what percentage of that you might be expecting to bid into and we have your history of win rates, but any update on what you expect in terms of win rates on the 38 gigawatts would be great? Thanks.

Inderpreet Singh Wadhwa -- Founder, Chairman and Chief Executive Officer

Yeah. We generally don't forecast that information for competitive reasons, which one will participate and conversion rates and stuff. But what we've said in the past and I'd reiterate that -- is that, we will generally grow inline with the market and our more important aspect of our growth is discipline and returns are above the cost of our capital, so not just for the sake of market share we'll win projects and -- so we will be very cautious and in fact we believe that we are in a very strong position both in execution and capital in the market, compared to many peers in the industry that should give us an opportunity to win projects at much better hurdle rates and we will be very selective in which contracts we take.

Philip Shen -- Roth Capital Partners -- Analyst

Okay. Great. I think I'll pass it on. Thanks, Inderpreet.

Inderpreet Singh Wadhwa -- Founder, Chairman and Chief Executive Officer

Thanks, Philip.

Operator

And our next question comes from Joseph Osha of JMP. Please go ahead.

Joseph Osha -- JMP Securities -- Analyst

Okay. Good morning, everyone. Good afternoon, if the case may be. I wanted to return to your comment about the Green Bond and the spread that had tightened there. What does that imply for your future thoughts about funding, because you said you're also getting better spreads from your domestic lenders, which route might we see you take going forward?

Inderpreet Singh Wadhwa -- Founder, Chairman and Chief Executive Officer

Yeah. I think we will continue to be a mix of project finance and bonds, and the process we follow there is once the assets are built, they are fairly mature and markets are receptive. We will issue Green Bonds and when the projects are in development under construction, we will tap local project finance or construction finance options, and all of these will be somewhat driven by the external market conditions and the rates which we can negotiate and the spreads we can negotiate with various counter parties.

But the good news is that we are probably the most diversified in terms of both domestic project finance lenders, overseas project finance lenders, as well as public institutional capital from the Green Bond market. So we will evaluate all of these options project-by-project and continue to do which is the most cost effective strategy for the business. And as you're seeing the results of that in this quarter and next quarter that our finance cost or our interest cost continue to show a downward trend even when there is turbulence at the macro level.

Joseph Osha -- JMP Securities -- Analyst

So that -- I guess that, that kind of -- to be clear then we might actually see you back in the Green Bond market again and your sense is that even with the turbulence, you referred to in the fact that I'm going to assume that hedging that out back to rupee is going to be more expensive than it was, that still a viable option for you guys?

Inderpreet Singh Wadhwa -- Founder, Chairman and Chief Executive Officer

So, we will of course pursue the most effective option and I presume your question relates to refinancing of the Green Bond?

Joseph Osha -- JMP Securities -- Analyst

Yeah.

Inderpreet Singh Wadhwa -- Founder, Chairman and Chief Executive Officer

And when that comes out, I mean, we will still have ways out 2022 I believe. And we will continue to do well with both rupee and dollar options, and even when we do our financing in dollar. We don't keep it open, we hedge it out. So whichever way we grow, we'll pick the most cost effective option for the company. And my thesis on that has always been, when you have an asset which has been running for six, seven, eight years, the risk on that asset is fairly negligible from an operation standpoint and you should be able to negotiate a very effective when tight spends on those financings down the road.

Joseph Osha -- JMP Securities -- Analyst

Okay. But to be clear on -- your are not contemplating at this point a situation where some of the projects that you've got the Green Bond on, you would end-up with amortizing debt you believe you can refinance?

Inderpreet Singh Wadhwa -- Founder, Chairman and Chief Executive Officer

We are not contemplating moving our Green Bond into amortizing debt at this point.

Joseph Osha -- JMP Securities -- Analyst

Okay. All alright. Thank you. Shifting gears, it's an election year, don't know when yet, but typically you get into these election cycles and there's a lot of talk about rural electrification and policy proposals and stuff like this. I'm wondering how you all see this year and how the political environment might reflect on your business?

Inderpreet Singh Wadhwa -- Founder, Chairman and Chief Executive Officer

Yeah. So the good news for solar is that it is not relying on any subsidy from the government any more and it is the cheapest source of energy. And in the next two years, it's extremely important for the government to demonstrate the development on the infrastructure side and they have to ensure availability of power, they have to ensure the cost effective availability of power, and that's where we'd continue to see a lot more development of solar in the market. And we believe that post-election, if the government changes, the opposition is also a strong believer of solar, in fact, the National Solar Mission was set up in the year 2010 under the different government's regime and the new government accelerated from 20,000 megawatt to 100,000 megawatt goal for solar energy, so whichever way we will carry it, we'll see a net positive for solar in this election year.

Having said that, during the time of the elections, of course, there won't be a lot of bidding activity, so we may expect some of these bids either to happen prior or post the election, so there might be a bit of a lumpiness in the allocation of new projects, which is typical of an achievement.

Joseph Osha -- JMP Securities -- Analyst

Yeah. That makes sense. And final question for me, just on current projects and your rate of overbuild, I believe, Phil, talked a little bit about this is as well. How you're thinking about the economics of overbuild a bit and how far you might go with that in terms of how that affects your capacity factor on new projects?

Inderpreet Singh Wadhwa -- Founder, Chairman and Chief Executive Officer

Yeah. I think that the new projects that would make out and it's (Technical Difficulty) we have seen (Technical Difficulty) high 20 on the new design, in terms of plant load factor, but we have to realize that the portfolio is operating at 18%, 19%. So if you look at (ph) all of the new build is up and running for full financial year, you will not see that significant uptick on the plant load factors for the entire portfolio, it would be an incremental movement as these projects come online.

Joseph Osha -- JMP Securities -- Analyst

Okay. So to be clear, new projects like you're breaking up a bit there, I heard high 20s and the high 20s would include an overbuild, correct?

Inderpreet Singh Wadhwa -- Founder, Chairman and Chief Executive Officer

That's correct.

Joseph Osha -- JMP Securities -- Analyst

Okay. All right. Thanks a lot. I'll turn it back to someone else.

Inderpreet Singh Wadhwa -- Founder, Chairman and Chief Executive Officer

Thank you.

Operator

And our next question today comes from Maheep Mandloi of Credit Suisse. Please go ahead.

Maheep Mandloi -- Credit Suisse -- Analyst

Hey. Thanks for taking the question. With regards to the import tariffs on modules in India, which expires by mid-2020. Are you seeing any impact on either project completions or new auction activity in the market right now?

Inderpreet Singh Wadhwa -- Founder, Chairman and Chief Executive Officer

Not at all, Maheep, in fact, the new projects have roughly two years build, so like if you bid for a project today, it takes somewhere between 60 days to 90 days to get a contract and then clock starts from there. So that means, most of the module procurement will actually happen after the duty period. So we don't see any insignificant impact on new auctions on that front.

Maheep Mandloi -- Credit Suisse -- Analyst

Got that. And just on the module availability or module pricing, could you just talk about, whether you're seeing any tightening in the market or, probably, stabilizing prices or rising prices in the market, and specifically, if for the 1.9 gigawatts under construction. How many megawatts have you already procured and how many you still need to? Thanks.

Inderpreet Singh Wadhwa -- Founder, Chairman and Chief Executive Officer

I'd say, as I've talked about the total 3-gigawatt portfolio, we probably have like contracted 1.6-gigawatt, 1.7-gigawatt of the 3-gigawatt. So (Technical Difficulty) so that in terms of the breakup. And then in terms of the pricing, I mean, we continue to do every new contract at a lower value than the previous contract. There are -- when (Technical Difficulty) stabilization and stuff, we still feel there is a big gap between supply and demand, there maybe an instance where one supplier may not be able to fill the entire capacity at the (Technical Difficulty) at least spread it across a couple of suppliers. We are not seeing any increase in pricing of the contracts we've done in the last quarter.

Maheep Mandloi -- Credit Suisse -- Analyst

Sir, you were breaking up earlier, you said around 1.6 gigawatts procured, right of the 3 gigawatts that's what you said?

Inderpreet Singh Wadhwa -- Founder, Chairman and Chief Executive Officer

Yeah. About 1.6 to 1.7 is closed --

Maheep Mandloi -- Credit Suisse -- Analyst

Okay.

Inderpreet Singh Wadhwa -- Founder, Chairman and Chief Executive Officer

-- and 1.3 (Technical Difficulty) and we don't expect any or any (Technical Difficulty) increase in pricing and we are able to negotiate contracts at a lower prices than what we've done in the past.

Maheep Mandloi -- Credit Suisse -- Analyst

Awesome. And just one last question from me, on the G&A side, could you just talk about directionally, either as a percentage of revenues or dollar terms, how should we think about it for next year?

Inderpreet Singh Wadhwa -- Founder, Chairman and Chief Executive Officer

Yeah. I think the percentage of revenue that you see for the last 12 months is a good benchmark and you just adjust it for inflation it is what I have guide to.

Maheep Mandloi -- Credit Suisse -- Analyst

Okay. Thanks a lot.

Inderpreet Singh Wadhwa -- Founder, Chairman and Chief Executive Officer

Thanks, Maheep.

Operator

And our next question today comes from Moses Sutton with Barclays. Please go ahead.

Moses Sutton -- Barclays -- Analyst

Thanks for taking my question. Congrats on a strong quarter. Can you update on forward CapEx expectations on a dollar per watt basis, I think last year you said it was around $0.80, $0.82. And also, just note if that's including the DC, AC overloading of around 50%?

Inderpreet Singh Wadhwa -- Founder, Chairman and Chief Executive Officer

Yeah. So, Moses, I think, we don't give forward-looking numbers on CapEx. So what we would say in our financials for this quarter, they were at about, I believe 64 -- $0.64 on this quarter and we expect something -- sorry?

Moses Sutton -- Barclays -- Analyst

For the trailing nine months?

Inderpreet Singh Wadhwa -- Founder, Chairman and Chief Executive Officer

No. This is just for the quarter, the $0.64.

Moses Sutton -- Barclays -- Analyst

Okay. And --

Inderpreet Singh Wadhwa -- Founder, Chairman and Chief Executive Officer

And then, we actually are increasing our overbuild or overloading on these subjects. So there might be some effect of that in the following quarters. But at the same time, we are continuing to reduce our total build costs. So, I think, that's a good way to look at where we are right now.

Moses Sutton -- Barclays -- Analyst

Got it. And regarding the depreciation change to 35 years from 25 years, anything in particular you could add any additional color there? Did you do a study around those assets or in general and do you expect to have any higher taxes going forward given the lower depreciation?

Inderpreet Singh Wadhwa -- Founder, Chairman and Chief Executive Officer

I think, first of all, on the taxes perspective, so this is like there is an accounting depreciation and there is a tax depreciation. So we've not changed anything on the tax depreciation side. So we do not expect any change to the taxation going forward at least for the foreseeable future. And then, in terms of additional color, I think, we've just tried to explain that the projects that we have are using all Tier 1 equipment, I mean, we've got a lot of our solar in that portfolio, we have got a lot of unlocking cells (ph) in that portfolio and we've done a lot of test, lot of studies, both outside of India, in India and the warranties that back -- strong warranties and clearly most of these panels are at about 80% efficiency at the end of 25 years. So we've done a lot of work in that place to make sure that the asset life is rightfully extended to 35 years. We've also seen SunPower doing 40 years, we've seen Tesla doing 35 years. So we've taken, what I would call from an Indian standpoint a leading industry position, but not something that hasn't been done globally before.

Moses Sutton -- Barclays -- Analyst

Okay. Helpful. Thanks. And last one from me, you discussed some of this already with Philip question on the COD dates and projects. Can you confirm that it's Maharashtra 2 and Assam 1, that were pushed out a few quarters? And then just in terms, you also mentioned of you could pull some projects earlier, maybe can you point to any particular ones that might be the best candidates for actually completing earlier similar to Gujarat 2?

Inderpreet Singh Wadhwa -- Founder, Chairman and Chief Executive Officer

Yeah. I'd probably answer that first, I think, there is a project we are building in Karnataka. We may be able to pull that in a little bit earlier than the schedule date. That's doing really well. And then, in terms of the two projects you mentioned, Assam and Maharashtra 1s are out and I think the details are there in the appendix on where they are and if you look that appendix from the previous quarter's earnings you would be able to get the exact difference, but largely on account of contracting delays.

Moses Sutton -- Barclays -- Analyst

Great. That's very helpful. Thank you.

Inderpreet Singh Wadhwa -- Founder, Chairman and Chief Executive Officer

Thank you, Moses.

Operator

And ladies and gentlemen, this concludes today's question-and-answer session and today's conference call. We thank you all for attending today's presentation. You may now disconnect your lines and have a wonderful day.

Inderpreet Singh Wadhwa -- Founder, Chairman and Chief Executive Officer

Thank you.

Duration: 42 minutes

Call participants:

Nathan Judge -- Investor Relations

Inderpreet Singh Wadhwa -- Founder, Chairman and Chief Executive Officer

Unidentified Speaker --

Sushil Bhagat -- Chief Financial Officer

Philip Shen -- Roth Capital Partners -- Analyst

Joseph Osha -- JMP Securities -- Analyst

Maheep Mandloi -- Credit Suisse -- Analyst

Moses Sutton -- Barclays -- Analyst

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