We will spend about Rs 8k-10k cr for capex every year over the next decade: Prashant Jain, Joint MD & CEO, JSW Energy

By Rajesh Kurup

Driven by steady cash flows and reduction of interest costs, Sajjan Jindal-led JSW Energy’s net profit rose two-fold in the December quarter. With plans to become 20 GW by 2030, the power producer’s net debt will further rise, its joint managing director and chief executive officer Prashant Jain tells Rajesh Kurup in an interview. JSW Energy is also close to commissioning its first large-scale solar project, he says. Excerpts:

JSW Energy posted a two-fold jump in net profit, while Ebitda rose 35% in Q3. Where is the growth coming from?
This was our highest Q3 Ebitda in the last five years, driven by steady cash flows of 84% of our portfolio tied under long-term power purchase agreements with gains from the short-term market. Healthy Ebitda and a lower finance cost led to a more than two-fold jump in Q3 net profit.

We have been able to proactively refinance and reduce our interest cost. Our weighted average interest cost has come down to 7.82% during the quarter, compared to 8.04% in Q2 and 8.29% in corresponding quarter last year. Our net profit for the nine-month-period exceeded those registered in the full fiscal year 2021.

Your debt also came down during the quarter?
With a net debt to Ebitda of 1.74 times and net debt to equity of 0.37 times, we have a robust balance sheet. During the quarter we reduced our net debt by about Rs 500 crore to 6,000 crore, despite growth capex incurred for renewable projects. Strong cash flow generation and an efficient management of trade receivables enabled us to deleverage and create headroom for pursuing growth. At the end of the quarter, our receivables stood lower by 20% on a year-on-year (y-o-y) basis, amid an increasing receivable scenario in the power sector that saw a 2% YoY increase.

Are you planning to reduce net debt further?
Our current capex plans to become 20GW by 2030 are underway, and we will spend about Rs 8,000-10,000 crore for capital expenditure every year over the next decade to add about 15 GW renewable energy capacity. Currently, we have about 2.5 GW of renewable projects under-construction. We will now see an increase in net debt going forward as we keep on adding capacities every quarter.

We are close to commissioning our first large-scale solar project of 225 MW in Q4. The debt will be loaded on the balance sheet at the same time we start generating cash flows from this project. Beginning FY23, we will start commissioning wind energy capacities in a phased manner every quarter.

On your plans to transition from a thermal and coal-based company to a renewable energy firm?
Our current portfolio of 7 GW has 55% renewable energy projects, with 1.4GW operational projects and 2.5 GW under construction. We would become 85% renewable at 20 GW capacity by 2030, along with venturing in emerging energy areas such as green hydrogen, battery and pumped hydro storage and energy services.
To unlock value for shareholders, we are currently amidst re-organising our company into grey (thermal) and green (renewable) businesses. We have already received board approval and are seeking necessary approvals from the National Company Law Tribunal.

JSW is also raising funds through debt?
Raising debt will be a key source of capital for our growth plans. If we intend to spend `8,000-10,000 crore in capex every year, about 70-75% of it would be funded by debt and balance through internal accruals. JSW Energy is the second-largest entity in the $13-billion JSW Group, which adds to our financial flexibility.

What is the progress on the hydrogen and green ammonia space?
Our efforts on green hydrogen and ammonia space are progressing well. We are conducting studies and scoping exercises and soon will present our business and investment plan to the board.