JSW Energy’s Prashant Jain Sees Power Demand Growing By October

JSW Energy Ltd. expects demand for power to start growing from October as it is already seeing a recovery after the Covid-19 lockdown froze industrial consumption.

Power demand witnessed gradual improvement with easing of lockdown restrictions, Prashant Jain, joint managing director and chief executive officer at JSW Energy, said in a video interview with BloombergQuint. Demand rose since July, indicating the economy is coming back to normal, he said, adding that only commercial malls, theatres, gyms and restaurants are to reopen.

JSW Energy saw its revenue contract and profit decline as demand fell in a quarter marred by India's lockdown to contain the pandemic. The company, part of the billionaire Sajjan Jindal's JSW Group, also terminated the agreement to acquire GMR Kamalanga Energy citing current market conditions. It awaits the National Company Law Tribunal's approval for its acquisition of Ind-Barath unit under the insolvency law.

Q1 Highlights (YoY)

• Revenue fell 23% to Rs 1,887 crore as merchant volumes declined.
• Net profit down 13% to Rs 213 crore.
• Operating profit fell 4% to Rs 827 crore.
• Margin improved by 787 basis points to 43.8% due to lower fuel costs as generation fell and prices of imported coal declined.
• Net generation down 15.9% at 493 crore units.
• Average realisation at Rs 3.81 a unit versus Rs 4.28 a year earlier.

Debt Repayment

The company has repaid Rs 900 crore since April 1, bringing net debt below Rs 8,000 crore. Receivables also fell in the current quarter as there were no disputed billing.

Jain expects receivables to improve as disbursement of Rs 90,000 crore by REC Ltd. and Power Finance Corp as part of the package to help ailing distribution companies.

The company's weighted average interest rate has come down from 9.12% in March to 8.44% in June as the marginal cost-based lending rate fell. Interest costs are expected to further fall because of reduced net debt and lower rates.

Cash Deployment

JSW Energy will use cash for repaying debt and rewarding shareholders, according to Jain. There's no major equity requirement this year—implying no major capital expenditure will be undertaken, besides maintenance for ongoing project.

Focus On Renewables

Jain said the company will focus on renewable space and targets to retire thermal assets by 2050. JSW Energy plans to double its capacity, led by renewables. It will consider using cash to acquiring renewable energy assets.

Watch the full interview here: