Key Regulatory Decision

DEE Development Engineers' subsidiary, Malwa Power Pvt. Ltd. (MPPL), has been granted a new tariff rate of ₹5.224 per kWh by the Punjab State Electricity Regulatory Commission (PSERC) for its 6 MW biomass power plant. This represents a substantial increase of approximately 49.3% from the previous interim rate of ₹3.500 per kWh. The new tariff is set for an extended 10-year period following the expiry of the initial PPA on April 26, 2025. The company expects to recover ₹5.80 Crores retrospectively for the period between May 2025 and February 2026. In addition to the improved tariff, DEE Development's new Biomass Pellet Plant, located at the same site, is expected to commence operations shortly. This diversification is projected to add ₹23.40 Crores in revenue in FY 2026-27, complementing the ₹24.31 Crores expected from power generation, leading to a total projected revenue of ₹47.71 Crores for that fiscal year.

Business Impact and Strategy

The approved tariff hike is expected to significantly boost the revenue and profitability of MPPL's biomass power generation. The addition of the Biomass Pellet Plant represents a strategic diversification into a related revenue stream, enhancing the company's overall business resilience and growth prospects.

Background on Tariffs and Operations

DEE Development Engineers has been operating biomass power plants in Punjab through its subsidiary, Malwa Power Pvt. Ltd. (MPPL). The initial 20-year Power Purchase Agreement (PPA) for the 6 MW plant in Muktsar expired on April 26, 2025, leading to an interim tariff of ₹3.50 per kWh. The company has navigated past regulatory challenges concerning tariff determinations. Notably, in August 2025, PSERC had revised tariffs downwards for its 8 MW Abohar plant, a decision DEE Development found unsatisfactory. The company has also diversified into manufacturing piping systems for various infrastructure sectors.

Company's View and Potential Appeal

DEE Development Engineers views the determined tariff of ₹5.224 per kWh as on the lower side, which could impact profitability over the extended term. The company is evaluating an appeal to the Appellate Tribunal for Electricity (APTEL) to seek a tariff revision. This potential appeal may incur legal costs and carries an uncertain outcome, echoing past regulatory disputes with PSERC that led to legal challenges and financial impact.

Outlook and Next Steps

Shareholders can anticipate improved financial performance from the biomass power segment due to the higher tariff rate. The commencement of the Biomass Pellet Plant introduces a new, substantial revenue stream, potentially increasing overall company turnover and profitability. The retrospective recovery of ₹5.80 Crores will provide a near-term financial boost.

Key areas to monitor include:

• The company's decision on whether to file an appeal before the Appellate Tribunal for Electricity (APTEL) to challenge the determined tariff.
• The outcome of any such appeal, which could lead to a revised tariff and impact future revenue streams.
• The timely commencement and performance of the new Biomass Pellet Plant and its contribution to overall revenue and profitability.
• Management commentary on the current regulatory environment for biomass power tariffs and future outlook.