21 July 2016 : Mumbai, India: JSW Energy Limited (“JSW Energy” or the “Company”) today reported its results for the first Quarter (“Q1 FY2017” or the “Quarter”) ended 30th June, 2016.
Key highlights of Q1 FY 2017 (consolidated):
Highest Net generation of 6,648 Mus, as against 4,480 Mus in the previous year EBITDA of ` 1,159 crore, up 31% as against ` 887 crore in the corresponding quarter of
the previous year PAT of ` 367 crore, up by 19% as against ` 309 crore in the corresponding quarter of the previous year Total Comprehensive Income of ` 497 crore, up by 76% as against ` 283 crore in the corresponding quarter of the previous year Vijayanagar plant conferred with “Golden Peacock Environment Management Award”
Consolidated Operational Performance:
During the quarter, net generation was up by 48% compared to the corresponding quarter of
the previous year primarily due to generation from hydro power plants acquired during FY 2016
and improved performance of Ratnagiri plant; which were partly offset by shut downs at
Vijayanagar and Barmer plants due to maintenance and low scheduling of power since the
month of June. During the quarter, the 300 MW Baspa-II power project achieved its highest
ever generation in April – June quarter since the commissioning of the plant with a Gross
Generation of 454 Mus.
The merchant sales during the quarter were 2,397 million units (37% of volume); while the
sales under Long Term PPA were 4,019 million units (63% of volume).
Consolidated Financial Performance Review and Analysis
Results for the Quarter ended June 30, 2016 are in compliance with IND AS notified by the
Ministry of Corporate Affairs. Consequently, results for the quarter ended March 31, 2016,
June 30, 2015 and the previous year ended March 31, 2016 have been restated to comply
with IND AS to make them comparable.
Turnover :
For the Quarter ended June 30, 2016, the Company achieved a consolidated turnover of ` 2,492 crore, an increase of 15% as compared to ` 2,167 crore in the corresponding period of
the previous year. The increase in turnover is primarily on account of the addition of hydro
units acquired during the second quarter of the previous year; partly offset by lower realisation
during the quarter.
Fuel Cost:
The fuel cost for the quarter was at ` 1,041 crore, up by 6% from ` 983 crore in the
corresponding quarter of previous year, primarily due to increase in thermal power generation,
increase in the transfer price of lignite at Barmer and currency depreciation (INR/USD); partly
offset by the decrease in the landed cost of imported coal principally due to a softening of the
international prices.
During the current quarter, the Total Income from operations was ` 2,450 crore as against ` 2,095 crore in the corresponding quarter of the previous year. EBITDA for the quarter was ` 1,159 crore as against ` 887 crore in the corresponding quarter of the previous year. EBITDA was higher due to overall higher generation and decline in the fuel price; partly offset by lower realisations. The Company earned Profit after tax of ` 367 crore for the current quarter as against ` 309 crore in the corresponding quarter of the previous year. Total comprehensive income of the company for the quarter stands at ` 496 crore as against ` 283 crore in the corresponding period of the previous year, an increase of 76% primarily due to profit on fair valuation of investments routed through Other Comprehensive Income.
The Consolidated Net Worth and Consolidated Net Debt as at June 30, 2016 were ` 10,232 crore and ` 13,836 crore respectively, resulting in a Net debt to equity ratio of
1.35 times.
Status Updates:
Monnet Power Company Ltd. (MPCL) -
The Company had submitted a proposal to Monnet Ispat & Energy Ltd. (MIEL) for
acquisition of majority shareholding in MPCL, which was not accepted by the lenders to
MPCL. Presently, the Company has withdrawn itself from the acquisition process of
MPCL.
240 MW – at Kutehr, Himachal Pradesh (HP) -
The enabling works for the project are continuing and progress has been achieved in
some of the adits and approach roads. Work on financial closure and subsequent award
of the EPC contract is likely to be taken up during the current fiscal. The project cost is estimated at ` 2,900 Crore and cost incurred on the project up to June 30, 2016 was ` 272 Crore.
Outlook
Industrial Production growth in India improved in May 2016, with almost all the sectors
showing an improvement. Although inflation has been inching up in the last few months, good
progress of monsoons and a likely uptick in economic activity levels in second-half of the
current fiscal bodes well for the growth outlook, creating a possible room for softening of
interest rates. Government spending on infrastructure and other development projects should
drive an uptick in the investment cycle and, consequently, energy demand.
Electricity demand in India grew by 8.9% yoy in the current quarter; however, supply outpaced
this with an improvement of 9.7% yoy. This has resulted in a narrowing of the demand-supply
gap across various regions even in terms of peak power requirement. Muted industrial activities
over the past few years and existing poor financial health of the Discoms have resulted in
sluggish demand for power in recent years. This has affected both off-take by the Discoms and
market price of power.
More states have joined the UDAY scheme and this should help in gradually improving their
operations and capacity to buy more power in the near future. The government’s resolve to
provide uninterrupted power to all on a 24 x 7 basis shall also drive a robust energy growth in
the coming years.
Weak merchant power prices and recent hardening of international coal prices are expected to
put pressure on margins. We expect the merchant demand and prices to remain benign unless
pick-up in economic activity drives significant demand improvement.
About JSW Energy Limited
JSW Energy Limited, part of the JSW Group, is a growing energy company. The Group has
diversified interests in carbon steel, power, mining, infrastructure and cement. JSW Energy is
working on power solutions in the states of Karnataka, Maharashtra, Rajasthan, Himachal
Pradesh and Chhattisgarh. The Company has an operational capacity of 4,531 MW, and has
entered into definitive agreements to acquire an additional 1,500 MW of operating coal based
thermal power plants. The Company is an early entrant in the Power Trading and Power
Transmission business and plans to enter into power distribution business and generation
through non-conventional energy sources. It is working towards building a full service
integrated energy business.
Forward looking and Cautionary Statements:
Certain statements in this release concerning our future growth prospects are forward looking statements, which involve a number of risks, and uncertainties that could cause actual results to differ materially from those in such forward looking statements. The risks and uncertainties relating to these statements include, but are not limited to, risks and uncertainties regarding fluctuations in earnings, our ability to manage growth, intense competition within Power Industry including those factors which may affect our cost advantage, wage increases in India, our ability to attract and retain highly skilled professionals, time and cost overruns on fixed-price, fixed-time frame contracts, client concentration, restrictions on immigration, our ability to manage our internal operations, reduced demand for Power, our ability to successfully complete and integrate potential acquisitions, liability for damages on our service contracts, the success of the companies in which has made strategic investments, withdrawal of fiscal governmental incentives, political instability, legal restrictions on raising capital or acquiring companies outside India, unauthorized use of our intellectual property and general economic conditions affecting our industry. The company does not undertake to update any forward looking statements that may be made from time to time by or on behalf of the company.
Chairman’s Speech – JSW Energy AGM
Dear Shareholders,
It is my privilege and pleasure to welcome you all at this 22nd Annual General Meeting of JSW Energy Limited and to place before you the highlights of your Company’s performance during the financial year 2015-16.
A copy of the Annual Report for the fiscal 2015-16, containing the notice, the audited annual accounts as on March 31, 2016 together with the reports of the Board of Directors is already with you and with your permission, I take it as read.
Indian economy grew by 7.6% in FY 2015-16, making it one of the fastest growing large economies in the world. Sustained economic growth, growing urbanisation and thrust on manufacturing sector continue to drive electricity demand in India. To achieve the objective of power for all, the Government is going out in a holistic manner to resolve the issues around fuel, transmission and distribution besides building a balanced portfolio of renewable and green assets.
One of the key strategic measures taken to unleash the potential of the power sector last year has been the Ujwal DISCOM Assurance Yojana (UDAY) aimed at financial turnaround and revival of Power Distribution Companies, which have so far been the weakest link in the power sector value chain. Execution holds the key to this game changing reform for the sector in the long-term.
As the thermal generation space matures, and with many stressed assets, consolidation is anticipated in the space. We are well positioned to leverage our strong balance sheet to capitalise on this consolidation opportunity.
Business Performance of your Company
JSW Energy continued to harness opportunities and delivered a robust growth in FY 2015-16. Our strategic approach to efficient capital allocation helped us retain our position as one of the most efficient power producers in India.
Your company achieved the highest ever net power generation of 22.06 billion units as against 20.31 billion units last year. This was primarily driven by the acquisition of the Hydro power plants with effect from September 2015. Our thermal power plants maintained steady plant load factor and we benefited from a fall in international prices of coal.
On a consolidated basis, your company reported highest ever revenue of Rs 10,179 crore, record EBITDA of Rs 4,355 crore and highest ever Profit After Tax of Rs 1,396 crore. Our Return on Equity was strong at 17% and net debt-equity was 1.77 times despite the large acquisition made during the year.
I am happy to announce that the Board of Directors of your Company has recommended a dividend of Rs 2.0 (20%) per equity share on 164 crores equity shares of Rs 10 each for the year ended March 31, 2016.
Acquisitions
We concluded the acquisition of Himachal Baspa Power Company Limited (HBPCL) adding 1,391 MW of hydroelectric capacity in Himachal Pradesh. This helps in diversifying the power generation portfolio with high quality hydro power assets, besides increasing the share of long-term power purchase agreement in our basket.
JSW Energy has been evaluating interesting opportunities for inorganic growth. With significant assets in the sector being stressed, a meaningful engagement with lenders will be essential to evaluate and conclude deals in the space. Towards this end, we recently agreed to acquire the 1,000 MW Thermal Power Project located at Tamnar in Chhattisgarh. Additionally, just a few days ago we announced the acquisition of another 500 MW thermal power project located at Bina in Madhya Pradesh.
Successful completion of these two acquisitions will take our power generation capacity to over 6,000 MW, bringing us closer to our vision of a 10,000 MW capacity over the next few years.
Outlook and Growth Opportunities
The ever-growing power demand in the country, large capacity addition plans, rising availability of fuel resources and falling prices of the same, portray a positive outlook for the sector. Progressive policy level changes and effective implementation of directives promise enormous opportunities for various stakeholders and market players. Improvement in the financial health of State Electricity Boards and the gamut of Government’s initiative will also boost demand.
As base load deficits narrow down, our strategic intent is to transform the business model of JSW Energy as that of a utility company with stable cash flows, by tying up a substantial part (85%-90%) of our power capacity under medium/long-term PPAs.
Your Company remains committed towards inclusive growth by continuous and purposeful engagement with society around us and help them elevate their quality of life and ensure greater well-being. We ensure that our operations have a minimal impact on the environment and our host communities. We take adequate initiatives for energy efficiency and conservation every year.
I am delighted to share with you that The Ministry of Power has awarded our power plant in Vijayanagar as the Best Operating Power Plant in India for eighth consecutive year. Additionally, we continue to be recognised for our superior environmental standards by various independent agencies from time to time.
Acknowledgements
I am confident that on the strength of our core capabilities and a motivated Team, your Company is well positioned for an exciting journey ahead.
On behalf of the Board and the entire JSW Energy Team, I would like to thank all our valued shareholders, debenture holders, bankers, financial institutions, lenders, contractors, vendors, suppliers, regulatory authorities, various State Governments and the Central Government, for their support and co-operation.
I look forward to your valuable support and contribution in our endeavour towards nation building in the coming years.