Company Overview

JSW Energy (NSE: JSWENERGY) is a one of India’s leading power companies,  The company currently generate 4,559 MW, out of which 3158 MW is thermal power,1391 MW is hydropower and 10 MW solar power. We’re present across several Indian states and have stakes in natural resource companies in South Africa. This diversity in geographic locations, fuel sources and power off-take arrangements, helps it de-risk its business. 1

The Company began its commercial operations in 2000, with the commissioning of its first 2x130 MW thermal power plant at Vijayanagar, Karnataka. Since then, JSW Energy has steadily enhanced its power generation capacity from 260 MW to 4,559 MW, having a portfolio of 3,158 MW in thermal power, 1,391 MW in hydropower, and 10 MW in solar power. Moreover, JSW Energy is now spread across several Indian states and have stakes in natural resource companies both in India and South Africa. With this, JSW Energy has ensured diversity in geographic presence, fuel sources and power take-off arrangements, thereby de-risking its business.

As part of its vision to become a full-spectrum power company, JSW Energy launched JSW Power Trading Company Ltd. (JSWPTC) in 2006.

JSWPTC has obtained a category "I" license to trade in power, which is the highest Power Trading license issued by Central Electricity Regulatory Commission to trade in power across India. Today, it is one of the leading power trading companies in India.

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Plants

We, at JSW Energy, believe that energy and sustainability should co-exist. And that’s why, from its plants to its processes, the company take into account the social, ecological and community impact of all its endeavours. The company's every effort is hence designed to maintain the delicate natural balance of the country’s geology, and minimise chemical emissions into the atmosphere. Because it is only when JSW Energy is sustainable in its efforts, that its future generations of its nation can reap the fruits of it. 2

Baspa

Commissioned on 8th June 2013, its Baspa Plant is located in the higher reaches of the Himalayas, and has a generating capacity of 300 MW. Its diversion barrage is located in village Kuppa, near Sangla, and the powerhouse is located near village Karcham, upstream of the Karcham Dam.

Karcham Wangtoo

Commissioned on 13th September 2011, the Karcham Wangtoo plant is located on river Satluj in District Kinnaur of Himachal Pradesh, and has a generating capacity of 1091MW. Its diversion dam is located at village Karcham and the powerhouse is located near village Wangtoo on NH-5.

Barmer

Located close to its fuel source, the lignite mines in Kapurdi and Jalipa, the Barmer Plant is operated by Raj WestPower Limited, the company that also owns the mines in partnership with Rajasthan State Mines & Minerals Ltd. The plant comprises of eight 135MW units that produce 1,080MW of power and use lignite as fuel

Vijaynagar

Located in Vijayanagar, Karnataka, this plant consists of two separate business units, with a combined capacity of 860MW. The plant stands out as extremely efficient and has received several accolades from the Govt. of India.

The Vijayanagar plant comprises of two separate business units:

SBU I: This unit was commissioned in the year 2000. It is the first of its kind in India, which is operating on multi-fuel technology of any combinations. The 2X130MW units have set standards for the rest of the country in the area of operation.

SBU II: This unit became operational in the year 2009. Running on imported coal and a blend of coal from other different sources that help boost cost effectiveness

Ratnagiri

Located at Jaigarh village in Ratnagiri, this plant was launched in July 2007. It comprises four units of 300MW each and runs on imported coal. The plant was commissioned within record time when the first unit went on-stream in 2010, and the entire plant was fully commissioned in 2011.

Equipment Manufacturing

JSW Energy and JSW Steel entered into a Joint Venture Agreement with the renowned Toshiba Corporation of Japan to form Toshiba JSW Power System Private Limited, as early as 2008. 3

Its state-of-the-art manufacturing facility at Ennore in Chennai was inaugurated in the presence of (Late) Selvi J. Jayalalithaa, Hon’ble Chief Minister of Tamil Nadu, and manufacturing commenced in 2011.

The company is incorporated with 75% shareholding by Toshiba Corporation Limited, Japan and 25% by JSW Group.

It aims to manufacture highly efficient supercritical Steam Turbines and Generators for thermal power plants, in capacities ranging from 500 MW to 1000 MW in India.

Its manufacturing facility has annual production capacity of 3000 MW, acting as a hub to serve global markets and Toshiba’s manufacturing base in Keihin, Yokohama.

Mining

In a concerted strategy to become a leading, fully integrated power company, JSW Energy has integrated backward into mining. 4

Barmer Lignite Plant

Located 20 km from Barmer, Rajasthan, JSW’s Barmer plant sources lignite from the Barmer Lignite Mining Company Limited (BLMCL). The mining company has rights to develop lignite mines in two adjacent blocks – Kapurdi and Jalipa. The Jalipa block is still under development, but the Kapurdi mine is currently supplying lignite to the Barmer plant. This coordinated strategy has been initiated by JSW Energy to become a leading, fully integrated power company.

South African Coal Mining Holdings

JSW Energy has a majority holding in South African Coal Mining Holdings Limited (SACMH), a Company listed on the Johannesburg Stock Exchange and with coal mines in South Africa.

Apart from coal mines, the Company has other infrastructural assets, viz. allocation in Richard’s Bay Coal (RBCT), Wash Plant, Railway Sidings etc.

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Industry Overview

Coal Consumption in India

The total coal consumption in India stood at ~972 million tonnes (MnT) in FY2019-20, with a growth rate of 0.3% on a Y-o-Y basis. Of the total coal consumption, ~729 MnT came through indigenous production, with the balance being imported. India’s domestic coal consumption is largely met through Coal India Limited (CIL) and Singareni Collieries Company Limited (SCCL), India’s largest coal miners, and off-take from these two stood at ~644 MnT in FY2019-20, 5% lower than the previous year, with ~80% being consumed by the power sector. By FY2022-23, coal consumption is expected to reach 1,076 MnT with domestic production touching 931 MnT, driven largely by an increase in production by CIL, commissioning of captive coal blocks and rising power needs of India. 5

Indian Power Sector

With a population of almost 1.4 billion, India is one of the world’s fastest-growing major economies and is vital for the future growth of global energy and power markets. The Indian Power sector has witnessed an eventful decade with a significant rampup in the power generation capacity leading to near-universal household electrification in India. However, it has also faced multiple headwinds such as fuel availability, lack of PPAs, delays in policy implementation and poor financial health of DISCOMs.

Power Capacity & Generation

The installed power generation capacity in India as on FY2019- 20 stood at 370.1 GW, marking an increase of 14 GW YoY basis. Continuing the previous year’s trend, the capacity addition was led by Renewable Energy Segment (RES), which added ~9.4 GW capacity. The net capacity addition in the Thermal segment witnessed a marginal pickup for FY2019-20 at 4.3 GW compared to 3.4 GW in FY2018-19.

Within the RES segment, solar energy contributed ~6.5 GW of the capacity addition, wind contributed ~2.1 GW with others filling the rest. RES installed capacity has seen a big leap in the past few years

All-India Thermal plant load factor (PLF) for FY2019-20 stood at 56.0%, down from 61.1% in FY2018-19, primarily due to a decline in State and Central PLFs. Thermal PLF for the Central sector stood at 64.2% compared to 72.6% in FY2018-19. Thermal PLF for the State sector stood at 50.2% compared to 57.8% in FY2018- 19. Thermal PLF for the Private sector declined marginally YoY to 54.3% from 55.0% a year ago.

All-India power generation for FY2019-20 stood at ~1,389 billion units (BUs), up 1.0% from ~1,376 BUs in FY2018-19. Thermal power generation stood lower by 2.8% YoY at ~1,043 BUs compared to ~1,072 BUs in FY2018-19. The share of power generation of the Thermal segment came down from ~78% in FY2018-19 to ~75% due to aggressive capacity addition in the RES segment. Hydropower generation increased significantly by 15.7% YoY to ~156 BUs from ~135 BUs in previous fiscal due to better water availability, especially in the Northern region. RES power generation increased 9.1% YoY to ~138 BUs from ~127 BUs in FY2018-19, led by robust capacity additions.

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Power Demand

In FY2019-20, the demand for power in India grew by 1.3% to 1,291 BUs compared to 1,275 BUs in FY2018-19. The subdued power demand growth was due to the twin headwinds of overall weakness in economic activity and Covid-19 related impact towards the end of the year. Peak power demand touched an all-time high of 184 GW in FY2019-20, an increase of 3.8% YoY. Chhattisgarh, Himachal Pradesh, Kerala, Bihar, and Uttar Pradesh were the main drivers for power demand while Gujarat, Maharashtra and Tamil Nadu witnessed fall in demand on a YoY basis. The Northern region saw the highest increase in demand by 3.2% YoY to ~395 BUs, followed by the Southern region where demand rose by 1.5% on a YoY to ~346 BUs. The Eastern region witnessed a modest growth of 0.3% on a YoY basis to ~146 BUs, while the North Eastern and Western regions saw a fall in demand by 0.4% to ~389 BUs and 0.6% to ~17 BUs, respectively.

Financial Highlights

The Company’s net generation in FY2019-20 stood at 21,252 MUs vis-à-vis 22,088 MUs in the previous year. It generated a total income of Rs 8,560 Crore in the current financial year compared to Rs 9,506 Crore in the previous year. The deemed PLF was 66.01% for FY2019-20 as against 65.18% for FY2018-19.

The Company’s total Income from operations decreased by 9% and stood at Rs 8272.71 Crore as against Rs 9,137.59 Crore in the previous year. The Company earned an EBITDA (before exceptional items) of Rs 3,243.84 Crore, up by Rs 22.75 Crore over the previous year. The Company earned a Consolidated Profit of Rs 1099.92 Crore during the year as against Rs 695.13 Crore in the previous year. Its Total Comprehensive Income for the year stood at Rs 11.74 Crore as against Rs 707.15 Crore in the previous year. The Consolidated Net Worth and Consolidated Net Debt as on March 31, 2020, were Rs 11,645.62 Crore and Rs 8,944.55 Crore, respectively resulting in a Net Debt to Equity ratio of 0.77 times.

Future Growth Strategies

With the significant impetus of the Government on the development of renewable energy, the Company firmly believes that the Renewable Energy segment would be the prime technological driver for India’s future energy goals. To achieve its mission for becoming a sustainable and environmentally friendly enterprise, the Renewable Energy segment would be the locus of its growth plans.

The Company envisages the growth of its current capacity to 10,000 MW over the foreseeable future, with most of the new capacities targeted in the Renewable Energy space, comprising of solar, wind and hydro based power projects through a mix of organic and inorganic opportunities in the generation segment of the power industry. The Indian Power sector is going through a phase of consolidation with multiple opportunities available in the renewable energy space at attractive project economics. The Company, with its robust balance sheet and proven operating and project execution expertise, aims to leverage these opportunities for value-accretive growth.

Financial Results for the quarter ended September 30. 2020 6

November 3, 2020; From July 1, 2020 some of the existing Long Term customers of the Company have migrated into a Job work arrangement for purchase of power as against the earlier two-part tariff arrangement. Under this mechanism, thermal coal required for power generation is supplied by the respective customers and the Company in turn receives the job work charges from the customers for the supply of power. This arrangement has resulted in both lower operating revenues and fuel cost in Q2FY21 (to the extent Of fuel cost of the power generated under job work), leading to a neutral impact on EBITDA.

During the quarter, total revenue decreased by N on a YoY basis to Crore from Rs 2,232 Crore in the corresponding quarter of the previous year, primarily due to lower short term sales and the reduction attributable to the impact of job work at standalone entity. The fuel cost for the quarter decreased by 14% YoY to Rs 844 Crore, primarily attributable to lower generation and impact of job work at standalone entity.

EBITDA for the quarter decreased 6% YoY to Rs 985 Crore from Rs 1048 Crore in the corresponding quarter of previous year.

Finance costs declined to Rs 207 Crore from Rs 272 Crore in the corresponding quarter of previous year, attributable primarily to proactive debt repayments.

The Company’s Net profit stood flat YoY at Rs 352 Crore. Total Comprehensive Income of the Company for the quarter stood at Rs 998 Crore vis-a-vis Rs 23 Crore in the corresponding period of previous year.

The Consolidated Net Worth and Consolidated Net Debt as on September 30, 2020 were Rs 13,037 Crore and Rs 7,671 Crore respectively, resulting in a Net Debt to Equity ratio of 0.59x.

References

  1. ^ https://www.jsw.in/energy/about-jsw-energy
  2. ^ https://www.jsw.in/energy/jsw-energy-plants-0
  3. ^ https://www.jsw.in/energy/jsw-energy-equipment-manufacturing
  4. ^ https://www.jsw.in/energy/jsw-energy-mining
  5. ^ https://www.jsw.in/jsw_energy_annual_report_2019_20/pdf/JSW%20Energy%20-%20Annual%20Report.pdf
  6. ^ https://www.jsw.in/sites/default/files/assets/industry/energy/IR/Financial%20Performance/Financials/FY_20_21/Q2/Q2FY21%20-%20JSWEL%20Press%20Release.pdf
Tags: IN:JSWENERGY
Created by Asif Farooqui on 2021/04/20 10:03
     

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