JSW Energy Q2 profit up 12 pc at Rs 353 cr

Despite a decline in revenues, Sajjan Jindal-led JSW Energy on Friday reported a 12 percent increase in net profit for the September quarter at Rs 353 crore mainly on the back of a decline in fuel costs and lower finance cost. The company had reported a profit of Rs 316 crore in the year-ago period.

Its total revenue during the quarter under review fell 13 percent to Rs 2,231.85 crore from Rs 2,567.74 crore in Q2 FY19 mainly due to a decline in fuel cost. The fuel cost for the quarter fell 26 percent year-on-year to Rs 983 crore primarily due to moderation in the imported coal prices.

Finance cost declined to Rs 272 crore from Rs 308 crore in the corresponding quarter of the previous year, attributable to proactive debt repayment. "The nearly 40 percent reduction in fuel cost has resulted in an overall decline in our expenses for the quarter. This decline in fuel cost also resulted in a decline in revenues as the benefit of the reduction had to be passed on to the consumers," the company's CEO Prashant Jain told reporters.

He noted that in contrast with the last quarter, the power demand growth declined to 1.6 percent mainly due to prolonged monsoons and floods in the west and south India and an overall slowdown in the industrial activity. During the quarter, the company's net generation stood at 6700 million units as against 6670 million units in Q2 FY2019.

Its short term sales during the quarter were higher at 759 million units as compared to 315 million units in Q2FY19 primarily due to higher sales at both Ratnagiri and Vijayanagar plants. During the quarter, the average merchant power prices at IEX stood at Rs 3.16 per unit, which was 18 percent lower as compared to Q2 FY2020.

Jain also informed that the committee of creditors has approved its resolution plan for Ind-Barath Energy (Utkal) which owns a 700 MW under-construction thermal power plant in Odisha, which has secured coal linkages. The closure of the transaction shall be subject to approval from NCLT. "There are two units of 350 MW each of which one is commissioned but had stopped operations for the past two years, while the other is yet to be set up. Once we take over the plant, we will commission both of them in 12-24 months," its chief operating officer Sharad Mahendra said.

When asked how much is the total debt of Ind-Barath, he said, "towards financial creditors, it is around Rs 4000 crore and towards the operational creditors it is around Rs 800 crore. We will be spending around Rs 3-3.5 crore per MW for this acquisition which includes an upfront payment to the creditors and also refurbishment and setting up of the plants." Jain also said that the company has entered into exclusive discussions for the potential acquisition of GMR Kamalanga Energy, which owns a 1050 MW operating a thermal power plant in Odisha. JSW Energy (Kutehr), a 100 percent subsidiary of the Company, commenced construction of 240 MW hydropower plant in Himachal Pradesh, under Haryana Power Purchase Centre accepting its offer for the supply of hydropower and filing the necessary petition for approval with Haryana Electricity Regulatory Commission.

"Our focus, going forward, will be to increase the share of renewable energy portfolio through setting up green field projects in both solar and wind space. Our target is to reach 10 GW in the next 3-5 years and a significant contribution will come from these sources," Jain said. He added that the company is looking for brownfield expansion in the thermal space as there is several good assets, which are stressed and that it wants to cash in that opportunity.

Mahendra said the company is also looking at hydropower assets for acquisitions. The company's consolidated net worth and net debt as on September 30, 2019, were Rs 11,756 crore and Rs 9,702 crore, respectively, resulting in a net debt to equity ratio of 0.83x.