Recent 4 GW Project Win Is Value Accretive
Use of Non-GAAP Financial Measures: Cash Flow to Equity (CFe)
Cash Flow to Equity is a Non-GAAP financial measure. We present CFe as a supplemental measure of our performance. This measurement is not
recognized in accordance with U.S. GAAP and should not be viewed as an alternative to U.S. GAAP measures of performance. The presentation of
CFe should not be construed as an inference that our future results will be unaffected by unusual or non-recurring items. We believe GAAP metrics
such as net income (loss) and cash from operating activities do not provide with the same level of visibility into the performance and prospects of our
operating business as a result of the long term capital-intensive nature of our businesses, non-cash depreciation and amortization, cash used for debt
servicing as well as investments and costs related to the growth of our business. Our business owns high-value, long-lived assets capable of
generating substantial Cash Flow to Equity over time. We define CFe as profit before tax (the most comparable GAAP metric), adjusted for net cash
provided for used/in operating activities, other than changes in operating assets and liabilities, income and deferred taxes and amortization of hedging
costs; less: cash paid for income taxes, debt amortization and maintenance capital expenditure. We believe that changes in operating assets and
liabilities is cyclical for cash flow generation of our assets, due to our high growth environment. Furthermore, to reflect the actual cash outflows for
income tax, we deduct income and deferred taxes computed under US GAAP and presented in our consolidated financial statements and instead
include the actual cash tax outflow during the period, are considered as part of interest expense. We believe that external consumers of our financial
statements, including investors and research analysts, use Cash Flow to Equity both to assess Azure Power's performance and as an indicator of its
success in generating an attractive risk-adjusted total return, assess the value of the business and the platform. In addition, we use CFe internally to
forecast long term financing needs and to determine equity returns on our projects.
We have disclosed CFe for our operational assets on a consolidated basis, which is not the Cash from Operations of the Company on a consolidated
basis. We believe CFe supplements GAAP results to provide a more complete understanding of the financial and operating performance of our
businesses than would not otherwise be achieved using GAAP results alone. Cash Flow to Equity should be used as a supplemental measure and not
in lieu of our financial results reported under GAAP. We have also bifurcated the CFe into Operational Assets and Others, as defined below, so that
users of this financial statement are able to understand the Cash generation from our operational assets. We define our Operational Assets, as the
Projects which had commenced operations on or before the year ended March 31, 2020, (as provided in the ITEM 5. OPERATING AND FINANCIAL
REVIEW AND PROSPECTS, of our form 20F for the year ended March 31, 2020), the operational assets represent the MW operating as of that date.
We define Others as the project SPV's which are under construction, or under development - as provided on page 55 of Form 20F, Corporate which
includes our three Mauritius entities, the other than projects covered under operational assets, as well as, a company incorporated in USA and other
remaining entities under the group.
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