JSW Energy Limited (JSWENERGY) Q1 2027 Earnings Call Transcript

Ladies and gentlemen, good day and welcome to the JSW Energy Limited Q1 FY27 Earnings Conference Call, hosted by JM Financial Institution Securities Limited. As a reminder, all participant lines will be in the listen-only mode, and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during the call, please signal an operator by pressing star, then zero on your touch-tone phone. I now hand the conference over to Mr. Sudhanshu Mansal from JM Financial Institution Securities. Thank you, and over to you, sir.

Thank you, Rayo. Hello, everyone. On behalf of JM Financial, I welcome you all to the 1QFI 27 earning call of JSW Energy. For today's call, we have with us the leadership team of the company, led by Shri Sharad Mahindra sir, Joint MTN CEO, Mr. Chandr Shekharan Prabhakaran sir, CFO, and Mr. Vikash Todiri sir, Head of Invest Relations and ERM, along with the other team members. Now, I will hand over call to Sharad sir for his opening remarks, after which we will open the floor for Q&A session. Thank you so much sir for your kind presence and giving us the opportunity to host the call. Over to you sir.

Thank you, Sudhanshu. Good afternoon, everyone, and thank you for joining us today for JSW Energy's Q1 FY27 earnings call. I hope you and your families are keeping well. Thank you. capacity additions to almost 1.1 gigawatt till date, if we add the capacity added during the month of July till date. Of this, 150 megawatt was driven by early commissioning of Tidong Hydro, originally scheduled for October 26, which contributed also an incremental EBITDA of 20 to 22 crores in Cropwater 1 itself, and will allow us to capture the ongoing hydrology Thank you. Since April 26, till date to approximately 1.1 gigawatt, as I said earlier. For further details, please, you must refer to slide number 7 of our results presentation. We remain firmly on track to deliver our FY27 annual target of 3 gigawatt capacity addition and 20,000 crores of capix, having already achieved close to 36% of the FY27 capacity guidance And surpassed about 87% of the total capacity added in all of FY26. You may refer to slide 21 for this. Another significant milestone in our journey was the deleveraging achieved through the successful execution of 10,150 crores capital raise in the recent past. The largest growth capital raise in the Indian power sector. This was accomplished by a combination of strategies reflecting strong market confidence in JSW Energy's growth story. This comprised of three components. And third, a QIP of 4,000 crores anchored by marquee global and domestic institutional investors. Together, this gives us an ample liquidity cushion of about 12,880 crores in cash balances, comfortably funding the equity portion of our estimated 20,000 crore FY27 capex and 2030 growth plans with headroom for future growth. Discipline continues to strengthen with net operating leverage on a trailing 12-month basis improving to 4.95 from approximately 5.2 in FY26. Even as we scale up our growth investments, by year 2030, we are committed to have our net leverage below 5 times. Further, I am also pleased to share that as a reflection of our strong green focus and long-term commitment to carbon neutrality, our expanding renewable portfolio enabled us to avoid approximately 16 to 7 million tons of CO2 emission in fiscal 26 and about 4.5 million tons in quarter 1 of FY27. This is based on the prevailing Indian grid emission factor. Now, before I get into our detailed quarter one performance, let me share a few sector observations. India's power sector delivered a strong start to FY27 with quarter one demand growing 8.5% year on year, a sharp turnaround from the muted 0.9% growth in FY26. This strength was broad Driven primarily by prolonged heatwave conditions, delayed monsoon progression, and higher cooling appliance uses, pushing up the residential and commercial consumption. This momentum has been carried into July as well, with the month-till-date demand growth in July being at robust at almost 12%. Peak power demand touched 271 gigawatt in May, already surpassing FY26 full year peak of 245 gigawatt. Again on July 16th, we saw another peak of 270 gigawatt and demand is expected to touch 300 gigawatt in the near term. We view this as early validation of the medium-term structural story. We have consistently articulated India's industrialization, urbanization, and rising per capita consumption underpin a clear 5 to 6 percent long-term CAGR in power demand. Additionally, the ongoing crisis in West Asia underscores the strategic importance of India's energy self-sufficiency agenda under Atman Mirbar Bharat. Further strengthening the case for accelerated electrification and sustained long-term demand growth. India's growing global economic structure, contributing approximately 8% of the world GDP on a PPP-adjusted basis, coupled with its continued high GDP growth outlook, should support sustained power demand growth. On the merchant market, this improving demand backdrop is now clearly visible. Day ahead market prices, which averaged around Rs.86 per unit through FY26 on mutual demand, have formed meaningfully in quarter 1 of FY27, rising to Rs.10 per unit from about Rs.4.40 per unit in quarter 1 of FY26, a nearly 16% year-on-year increase. Against this improving landscape, let me take you through our performance for the quarter. With the sizable capacity that we added, our total installed capacity now stands at about 14.6 gigawatt, with renewables constituting around 61%, complemented by 5.7 gigawatt of thermal capacity, providing reliable dispatchable baseload. This balanced mix remains central to our strategy, participating meaningfully in India's clean energy transition while ensuring grid reliability through firm contracted thermal capacity. On the organic front, we continue to evaluate selective value-accretive acquisition opportunities that complement our strategic priorities and strengthen our growth platform. Accordingly, we signed a definitive agreement to acquire Maruti Clean Toll and Power Limited, which operates a 300 MW thermal plant in Chhattisgarh. The plant has a long-term power purchase agreement of 195 MW net with Rajasthan DISCOMs with a residual PPA life of 14 years. In addition, the plant provides 5% power at variable cost to Chhattisgarh DISCOM. While the balance 64 megawatt is sold in the merchant market, the coal is secured through a long-term fuel supply agreement with SECL and linkage under the Shakti scheme. Further, on our organic thermal growth, please refer to slide 22, our first Salmoni plant has received all key clearances, 100% of land has been acquired, equipment orders are placed, and the site work is now in full swing. On the KSK brownfield expansion, land, water, rail, transmission infrastructure and environmental clearances are already in place. Coming to vertical integration, a priority we have spoken about consistently on the thermal side, we increased our stake in Toshiba JSW Power Systems joint venture to 10.7% from 2.4% earlier. This is aimed at de-risking our equipment supply chain and building thermal capacity at one of the lowest capital costs in the industry. Combined with our ongoing acquisition of GE's boiler business, which we look to complete in this quarter, we have now fully de-risked our thermal growth ambitions, giving us full control over our build-out for both our current projects and future opportunities. We commissioned our wind blade manufacturing facility at Halal, Gujarat on 8th of June with an annual capacity of 450 blades sufficient to support approximately 600 megawatt per annum of wind installations, strengthening backward integration in the segment and supporting a lower LCOE. The second blade manufacturing facility at Chitradurga in Karnataka is expected to be commissioned in the current year with work currently at an advanced stage. On the 5 gigawatt hour battery plant which we have commissioned in quarter 4 of FY26, we have received our first large external order of 440 crores. This engagement represents a step forward in the country's strategic expansion in the energy storage segment. Reinforcing our commitment to building capabilities across the energy value chain. In summary, Quarter 1 FY27 has reaffirmed the momentum we built through FY26. We are executing at pace, strengthening our balance sheet, deepening our vertical integration, and remaining firmly on track to deliver strategy 3.0 within defined timelines. Now, coming to the operational performance for the quarter, next generation for quarter 1 FY27 declined marginally by 5% year-on-year to 12.9 billion units, primarily driven by lower generation at Mahanadi and our hydro plants. Our hydro portfolio grew in capacity with the addition of Tidong and Kutehar year on year. However, overall portfolio generation declined by almost 26% year on year, owing to weak hydrology across the entire basin. National hydro generation was down 7% year on year. Sutluck basin was down 39% year on year and Ravi basin was down by 24% year on year. This comparison should be viewed in context. Last year saw an early onset of monsoon while this year the winter was longer in various Himachal basin areas and the snow melt began much later. However, with the onset of monsoons, water flow has normalized. The generation in July till date has been excellent, with our Karcham, Baspa, and Kutehar plants operating at over 100% PLF. We expect the plants to catch up and achieve the design energy for the full year. Further, we also continue to receive the capacity charges for our plant availability, Even when the generations are lower than the design energy. On the thermal portfolio, Mahanadi generation was impacted by a one-off evacuation availability for about 17 days in the quarter, which is now fully normalized. And this happened due to the extreme wind conditions. This resulted in the impact on the transmission line. The loss in MUs year-on-year was about 184 million units or 7% decline year-on-year. However, this will be categorized under the forced major provisions. As a reminder, we had a healthy quarter of merchant sales in Utkal last year. Quarter 1 was exceptional. This time generation was broadly similar but was sold under long-term contracts instead. Going forward, the Utkal plant is expected to generate higher EBITDA due to its stable operation and supplying under the PPA with Karnataka and Assam. Overall, our thermal generation declined by 6% year-on-year to 8 billion units. Regarding the coal prices, coal prices witnessed an increase year-on-year. Taking a specific index like API 4 as a reference, it stood at $90 in Q1 of FY26, compared to $113 in Q1 of FY27, an increase of almost 25%. Our continued shift towards domestic coal has kept us resilient to this adverse will price movement. Further, our open capacity has reduced to under 4% currently, which renders stability to our earnings. And also to mention that the change in any import coal prices is passed through with no impact on JSW Energy's power supply through PPAs. On the RE portfolio, our solar and wind generation was up by 29% and 3% respectively, supported by increased capacity year-on-year of 1168 megawatt. Turning now to our financials for the quarters, figures many of you will already be familiar from the pre-call materials. Revenue for the quarter remained flattish on a year-on-year basis, coming in at 5,437 crores. EBITDA mirrored this trend, growing marginally by 2% year-on-year to reach 3,103 crores. Our year-on-year capacity addition was 1,558 megawatt with fresh assets continuing to be capitalized onto the balance sheet. Both depreciation and interest expenses had moved up in step. On year-on-year basis, depreciation increased 20% in quarter 1 to 890 crores, while interest costs climbed roughly 16% to 1519 crores, movements that align with the pace of capacity we are adding. Coming to the bottom line, profit after tax stood at 533 crores, declining year-on-year on account of higher capitalization impact as new assets are commissioned. Correspondingly, The PAT attributable to shareholders was also down at 471 crores. As many of you are aware, we have already issued notice to exercise our call option on the remaining 26% stake in Mahanadi. Once this transaction closes, the minority outflow should shrink substantially. Turning to leverage, stripping out the debt tied to capital work in progress, our net debt-to-TTM EBITDA ratio stands at roughly 4.95, comfortably within our financial guardrails, and as noted earlier, a substantial improvement from the 5.2 times we reported in FY26. On the liquidity front, we remain well-placed, holding cash and cash equivalents of approximately 12,880 crores. Additionally, our cash return on net worth, after adjusting for our JSW Steel shareholding, continues to be healthy. About 14%, it has reduced year-on-year primarily because of net worth increase due to recent fundraisers. Overall, as I said in my opening statement, this has been a strong quarter, fully in line with our plans, with sharp focus on organic capacity addition and balance sheet deleveraging, both of which we have delivered decisively. And that momentum is carrying firmly into quarter two. That concludes my opening remarks and happy to take any questions from you. Thank you.

Thank you very much. We will now begin the question and answer session. Anyone who wishes to ask questions may press star and 1 on their touchtone telephone. If you wish to remove yourself from the question queue, you may press star and 2. Participants are requested to use handsets while asking questions. Ladies and gentlemen, we will wait for a moment while the question queue assembles.

To ask questions, please press star and 1. First question is from Suvit Kishor from Axis Capital. Please go ahead.

Good evening. Thanks for the opportunity. First question on the macro situation in relation to thermal. We have seen that between 12 to 1 p.m., you know, several thermal power plants in the country are likely operating below technical minimum. What has been your experience for your thermal fleet, and how do you see this situation progressing in coming times?

Great. Yeah, Subhi, thank you. Very correct, because this is a peak time when the solar generation is at its peak. But just to tell you that for us, barring, of course, the load factor reduces, But what we have gone, what our experience during the entire quarter has been that because of the attractive tariffs now at Mahaladi, our backdowns or reductions have been the minimum because of the merit order. And the minimum what we have gone, and in case of Utkal, there the load minimum which goes to, for us, the backdowns have been maybe not below 60% in majority of the cases, but overall on a round-the-clock basis, maybe we are, maybe if you talk of the month of July when the power demand has grown almost 12% till date, We have been operating at almost more than 85% PLF and more than 90% availability. So we have not experienced anything in terms of the technical minimum. In other plants, we don't need, but we are building the capability to even operate at maybe below 50% also, which we have already done in our Rathagiri and Vijayanagara plants. Yes.

Just to add that we continue to require our fixed costs in those kind of handles. We are not kind of impacted. And we also have the flexibility to kind of sell that in the merchant in case that happens.

Sure. My second question on the thermal space is you have introduced 600 megawatt Mahanadi under construction projects now, and combined with Salponi Phase 1, how is the ramp-up on BTG sourcing for these projects progressing, particularly your arrangement with GE for the acquisition that you had made? How is that shaping up? So, what is your main plate capacity in terms of internal manufacturing for boilers, turbines, and generators today? And given you are looking to commission 600 megawatt Mahanadi by F528, you know, how is that going to pan out in terms of equipment sourcing?

Right. Sumit, I'll answer to both Mahanadi as well as the Salabhani what you asked. See, in case of Mahanadi, as we have said, we have been saying maybe since the first call after acquiring this asset last year, that the fourth unit of 600 megawatt, almost 40%, 30 to 40% of the work was already complete. And balance of plant already ready when we talk of coal handling plant or ash handling or railway or transmission network, everything is already in place. So what in this, this unit is getting completed through the same suppliers who have supplied the material earlier because part material also of turbine and other things is available with us for the course unit. So we have placed the orders and the material is under dispatch and all. So we will be, as we have said, in FY28, the commissioning of the next fourth unit, we are on track for that. And it will be through the Chinese suppliers only. For another two units, we are in discussions and we will be making the announcement at the right time very soon that what is our strategy for fifth and sixth unit to make it from 1.8 to 3.6 gigawatt. Now, coming to Salvani, as we have announced earlier also, maybe 2 into 800 phase 1, the turbine generator order has already been placed to TJPS, Toshiba JSW Power Systems, and already the work has started, and the suppliers and commissioning are absolutely in line with the PPA timelines. Regarding the boiler, this is the GE facility of Durgapur, which we are in the process of acquisition, maybe by the end of this quarter, it is expected that it will be there. That has a nameplate capacity as of now, as is various basis, is 1.1 gigawatt. Means if we say 800 megawatt boiler, it can make 1.3 boilers in a year, but with some de-bottlenecking and some minor investment, what we have already planned, it's a plan, this will go to 2 into 800, means 1.6 gigawatt capacity, because the TJPS, Toshiba JSW plant in Chennai is already having a capacity of 2 into 800. So, these two will be benchmarked together, and this will be there. So, this is the strategy, but we are totally de-risked in terms of the supply chain of boiler turbine generators for all our 800 megawatt expansion plans.

Okay. Just one last question on your external order for 200 megawatt, 400 megawatt hour, the battery assembly facility. So, what has the battery assembly facilities scaled up to? And, you know, what does this external contract need in terms of margins and what value add is changed about?

Yeah, I'll just to tell you the readiness of the plant. We have already completed the trials. We have already supplied maybe not big quantity, but at least some order we have supplied also to the third party. And plant is fully ready to start producing and meet the schedules, suppliers as per the schedule, which has been agreed by the buyer. And regarding the financial, I'll request Prabhakaran. He will just let you know on the margins.

Sir, I think here, in terms of the margin per dollar, if you look at it, it's in the range of about 2.75 to 3 dollars. So, like, if you kind of look at the overall capacity running, it will be about 15 million dollars in a year. So, that's how we're seeing looking at about close to 150 odd crores of EBITDA from this project.

Okay. Thank you, Sambathir.

Thank you. The next question is from Apoorwa Badur from IISL Capital. Please go ahead.

Hi, sir. Thank you for the opportunity. On this expansion for fourth unit, you mentioned that you have placed the order for remaining supply suppliers. Will there be any restriction on us in terms of signing us up with a state utility or do we plan to use in a merchant for capital markets?

No, there are, see, the thing is that those are only the guardrails. There is no such regulation in which, and lot of states are looking for, see, one thing which has to be important, many, there are more than one state who are interested. Keeping in mind now that with so much of solar, and so much, and this question was asked in the very beginning, that maybe the technical minimum coming down, so some of the buyers are preferring 600 lower capacity tire, because even if they have to do the back down, it is comfortably at 50%. So, we don't see, we are seeing a lot of interest, especially with the way international coal prices are moving and the way the currency direction is. A lot of imported coal-based power buying, they are looking for to replace it with domestic. So, we are confident that this will happen. And in this case, because we have got the permission also from the authorities for this partial import to complete the asset, this force unit, so we don't see that as a challenge and there is a lot of interest we are seeing in terms of signing a power purchase agreement. But to remember, even if it is merchant with next to the mine and the coal cost being so low and the cost at which we will be completing this project, another 600 megawatt, which will be significantly lower than the benchmark per megawatt cost of capacity addition, I think this will remain attractive in both the ways, whether it is merchant or whether it is in long-term BPA. So, we will take a call, but BPI opportunities, we are absolutely confident will be happening.

Sure, sir. Understood. So, secondly, on this best business return profile, I think, sir, I highlighted that we intend to make around $2.25 to $3 per kilowatt hour of storage capacity. Do you see a glide path towards improving the value addition and the margins over here, or this is something that you're looking like an exit margin from this business?

Yeah, I think this is more from the assembly, whatever we are doing, I think this is what we are looking at. And we kind of keep exploring in terms of, because the government has also come up with and PLI can have an incentive to set up sales and everything. We will continue to evaluate that, but in terms of whatever we have invested, I think this is the kind of return profile that we have.

Yeah, and also to add what Prabhakaran just said, in terms of the value addition, the opportunities which we have identified going forward is, One, as you said, that backward integration, and maybe instead of importing the cells, maybe making the cells in India, for which we are in discussion with various technology partners. And second is, in terms of scaling up, like today, it is a 5 megawatt hour of container size which is there. Going forward, we are building the capability, even if when the product is available, the components are available, instead from 5 to make it to 7, 6, 7, 8, which becomes more cost-efficient for us, as well as to the buyer also.

And sir, do we have a long-term partnership with the supplier from China for importing the cells? Right now, no. Right now, no. The warranties for this BESS are typically in this industry are given by the OEM, right? The self-manufacturer?

Yes, yes, yes, yes.

Okay, okay. Sir, I would also like to touch upon the connectivity for our renewable capacity. I think very helpful you have brought it in the presentation about this 3 gigawatts, the remaining 1.9 gigawatt connectivity in FY27. Is all of it operational, first of all? And secondly, what's the update for FY28? Do we have some full capacity and activity capacity operational in FY28 as well?

Yeah, I'll come to that. Out of the, as I said, that till date, in the current year since April 1st, we have commissioned 1.1 gigawatt. We have added the fresh capacity. Just to tell you that out of this 1100 megawatt, 300 megawatt right now is under TGNA, which is facing curtailment. And we are, this is getting converted, the new capacity is getting commissioned, and we are almost certain that by, before 30 August, this will get converted into GNA. Once it gets converted into GNA, then there will be no curtailment. So, this 300 megawatt, which under curtailment, and one earlier project, which I have said last time also, in Rajasthan, of O2 power, which we acquired 400 megawatt, that is also under TGNA, which was to get commissioned, the connectivity was to get ready by July end, is expected to be sometime in September or October, so we will be waiting for that till then. These two projects remain under TGNA. Now balance 1.9 gigawatt which we have to commission in this year. I just want to tell you that out of this 28% of the capacity of 1.9, what we are doing may be more than 530 megawatt of balance 1900 which we have to execute is our group captive which is a mix of off-grid also, majority of the capacity is off-grid which is we have a dedicated transmission line of ours not connected to the grid. It is insulated. So this 530 is totally insulated. Another is that also the significant part what we are doing with utilities also. There also we have the connectivities fully in place and operational connectivities which is a mix of STU as well as the CTU. And also the CNI customers what we are with CNI projects what we are going to execute in the current year. So, these are the three mixes, but whatever 1900 megawatt we have to commission to reach the 3 gigawatt guidance we have given, we are absolutely 100% secured from connectivity, and it is all commissioned also.

Thank you, Farhan, for 28.

And for FY28, we will definitely come back to you. We have, but yes, as I have been saying earlier also, that the two areas we are in focus when we give the guidance for the year, maybe these two are the major driving factors based on which we will be giving, so that there is a surety of the numbers which are being achieved. But we will be definitely at the right time. Very soon, we will come back for FY28 also.

I appreciate it, sir. If I may squeeze in just one more question on wind generation. PLFs appear to be a little bit weaker, YOY. I think last year was exceptionally strong. Like hydro, are you also seeing them recover in July or they continue to trend lower?

Yes, we have seen a significant recovery. And normally, if you see, it is a very clearly established, there are patterns. When there are huge, heavy rains, the temperature drops, normally the wind speed is related and it improves, which we have also seen. Once the monsoon started, the wind speed season was disadvantaged. This time the temperatures have been higher and many of the assets for us, in wind, we have reached the PLF of 100% also, otherwise it is 90%, 100% PLF, what we have achieved. So, we don't see this as a chaunt. And in July, if you see, as compared to previous month, the PLF is already higher by about 5% to 6%.

Sure, sir. Thanks a lot. I'll get back in the queue.

Thank you.

The next question is from Satyadeep Jain from Ambit Capital. Please go ahead.

Hi, thank you. So, some storage projects, you've given some details. I think first time I'm seeing some, actually, the two projects specified. Just maybe if you can, you've shared some details on Threadiness, but maybe if you can elaborate on what is the CAPEX we're expecting and what is the level of confidence in achieving this commission that you mentioned.

Yeah, thank you.

See, as I told you that there are two power purchase agreements which we have signed. One is the Bawali project in Maharashtra with MSEDCL of 1500 megawatt, and another is in UP Kandora of 1680 megawatt, out of which 1500 megawatt PPA has been signed with the state of UP. Regarding the readiness, in Bawali, we are fully ready in terms of whether it is the environment clearance which we have received, the land acquisition majorly it has been done, some part is repped, but that is not in the core project area, So, that is not going to have any impact. That will carry on parallelly. And then the third is the forest stage 1 clearance has already been received. So, we are at a very advanced stage. The ordering has already been placed, like for entire civil work, the order has been placed to L&T. For electromechanical, the order has been placed to VOIT. So, we are fully ready in terms of, and already the mobilization, the construction power also has already been, we have been awarded and the connectivity has already been done, which you can see also in the slide. So, we are ready with that in terms of execution and meeting the timelines. We don't see as a challenge and especially with our experience and expertise of executing greenfield hydro projects in very, very tough terrains of Malayas in Himachal Pradesh. Here, the quality of rock, the ease of executing the project comparatively is much easier as compared to that. I will not say easy, but definitely the difficulty levels are much lesser. The tunneling part is very, very less as compared to what it is there in Himalayas, in the projects. So, we are absolutely confident of meeting the timelines in terms of the PPA timelines. Of course, if there is any delay in terms of the availability of power evacuation by the state, then only it can be, but we don't see that as a challenge also. So, Bawali, we are absolutely certain. Kandhara, as I told you, that we have already secured the EAC recommendation for EC from Ministry of Environment and Forest, and application for the forest clearance has already been submitted, and connectivity application also has been submitted to the UP authorities. So, civil work and construction award process is on, and we expect all the readiness by maybe in the last quarter of the current fiscal, the readiness to start the execution work at this side also, and to be within the timelines. Regarding the capex, we will come back, but as I said to you that rather than maybe we are not particularly for a project, maybe giving a capex is not a thing, but I can tell you that this is a very, very good high returns in terms of when we say benchmark returns of mid-teen IRRs. Here, I can say it will be significantly high in IRRs, we can say, is what we are absolutely confident with the tariff and the cost at which the most of the ordering has already happened.

Is it safe to assume maybe 5 crores or megawatts or something, any budget? Not very far from this number, you can say that. Not very far from this number. And the thermal case you mentioned for Manabi, yes, for the coming expansions, can you, is Is it possible to maybe indicate what kind of capability can be the first 600 in the remaining term?

See, I can tell you at what we execute the greenfield project we are doing at Salmoni also for which we have placed the order, boiler we are going to do ourselves, civil part order we have already placed, the work has started. We know, we have a fair idea of the completing a greenfield project there. As compared to that, Mahanadi, when we will be completing, I can say definitely that we will be at least 25 to 30 percent lower by doubling the capacity from 1,800 to 3,600.

Just lastly on PG&A, what was the curtailment that you can mention in this quarter for overall for these two projects?

See, we had total wind plus solar put together. We had a curtailment of 69 million units during the quarter. But as I told you, this has to be divided into two. There were curtailments under the GNA projects also for which the power was being supplied under the PPA. There, it is being treated as deemed as a plant availability, and we are getting the tariff against this supply, even if there is a backdown, because my buyer has scheduled in the exchange to draw the power, and my plant is available, even if I am being asked by the load center not to put the power, my buyer is getting the power, and I am getting my money for this power, under the GMA.

Yeah, I think in terms of the overall revenue, it's not material. It's about 15 crores this quarter for us.

The next question

is from Nikhil Negania from Bernstein. Please go ahead.

Hi, thank you for taking my question. It's in continuation on the earlier question on palm storage projects. I wanted to understand if there is any update on the Karnataka tender, Where the tariffs look even more attractive than the ones you have in the other two projects.

Yes, Karnataka also we have, for which we have got the letter, some local clearances and all which are at an advanced stage, which are under discussion, and we expect that also soon to be sorted and the PPA will be signed, for which we have already received the letter. But that is in the same, that is not a service thing. That Naryala project in Karnataka, yes.

Okay, understood. And any reason we did not participate in the recent SECI tender, where again Paris discovered was very attractive for farm storage projects, where only three bidders had come?

In this, actually, in this tender, the condition was that there has to be a FC1 forest clearance stage 1 in place. Those only can apply. That was the case. So, we were not having any other site ready for a stage 1 clearance. So, we have decided not to participate. But just to give you an update that we are now ready with another site of almost close to about 9 gigawatt hour and which as and when any opportunity comes, we will be participating in that. But we have not participated because we are not ready for a stage 1 clearance which was a precondition.

Oh, it makes sense. And one last question I had, any plans to set up merchant battery storage plants?

Can you repeat, please?

Does J. Sublu have any plans to set up merchant battery energy storage plants?

See, right now, no, but yes, we are exploring, keeping in mind the gas and the requirements which are coming up because the thermal capacity which is going to take care of the evening peak is still few years away. And the way demand growth is there, so there is an opportunity, because this also is somewhere where the solar plant exists, the solar radiations are good, and the connectivity is available. The same connectivity can be used post-solar hours, so connectivity is not a challenge. And solar capacity to charge the battery can be built at a very, very attractive cost because only DC side is to be done. So, that reduces the solar capacity charges to capex significantly. So, those are the things we are exploring. And at the right time, we will be definitely exploring when it makes sense that our benchmark returns are protected. We will definitely be looking into this to take care of evening peak advantage.

Perfect. Thank you. Those were my questions.

Thank you.

Thank you.

The next question is from Dhruv Muchal from HDFC Asset Management. Please go ahead.

Yes, sir. Thank you. Sir, the PLF across your thermal plans this quarter are lower, say, for example, YOI. This is despite a very strong demand season. For example, Ratnagiri is lower, Vijayanagara is lower, Rajasthan is also lower, but anyway, it does not matter much. Utskal is almost equal, despite a long-term PPA. I thought, you have a long-term PPA, you have better schedule, and hence you can sell more in the short term, so the PLF could have been higher. KSK, I understand, there was issues. So, I mean, is this because of the solar thing, which is, you know, causing all this, and we are not looking at rightly? I'm just trying to understand what caused this. The demand was very strong.

Yeah, I'll come to plant-wise, not really because of the solar power and the backdowns I will start with Utkal. Utkal, there was a shutdown which was planned, which was important for us to take to ensure the annual availability of the plant, which is critical after the signing of the power purchase agreement. So, there was a large portion of in quarter one wherein the unit was not available, one unit. So, that was the reason of lower PLF in Utkal. So, this was one, and now if we see that in the month of June, the availability and the PLFs have significantly improved, and in the month of July, the availability is in excess of 91% in case of Utkal, and the suppliers are there. So, we are not facing, as I told in the beginning only, when someone asked about the PLF, our PLFs, even during the peak solar hour in case of Uchkal, it has not gone below 58 to 60 percent. It is almost 60 percent of the PLF we have been operating. So those are not the reasons. It was that we had taken the shutdown to improve the reliability and the performance because we were forcing that this demand now the way May, June, May was started. We decided to take that because July also when we are seeing the power demand growth at 12% in July. So we have deliberately did that and now the plant is back on track. Coming to Ratnagiri, Ratnagiri, the PLF has been down for the reasons that one is that with no impact on our financials, reason is that this is again a two-part tariff where we have to ensure the availability for our group captive, large capacities under group captive, which we are doing, and one unit is with MSEDCL. So, there also, it was again a planned shutdown to ensure the annual availability we have to ensure we achieve of 80%. So, that's my fixed cost. So, this is not without any impact and also in the month of June, there was a reduced demand, extreme weather conditions also when the rains started, when we saw that in Maharashtra. So, that is all by design. As I told, MSCDC, Mahanadi, you are aware yourself that what happened, and this we have recovered. Now, the availability has been 100% in July.

Even on the solar PLF, if you look at your slide, the number is about 21%. Last year was also 21%. Given the ACDC that you typically do, and also this time probably the weather was also relatively favorable. I am just wondering, I mean, is this because of curtailment that the number is low, or, I mean, how it should trend towards somewhere, I don't know, 24-25 percent?

Yeah.

See, the thing is, if you see the trend also in the country, normally the second half of the year for solar is always better, post-monsoon. Also, of course, as I told that 4 megawatt capacity, which is almost, you can say for me, is almost maybe 12 to 14 percent of my total capacity, where we have been facing curtailment also. All those things normalized, then it is coming 21, but otherwise PLFs have been much higher as compared to, this is after the impact of the curtailment also.

Because if I look at your YY generation capacity, renewable capacity growth, it's about 20%. 5.7G odd going to 6.8G odd. But your generation, RE generation growth is about 11%. And typically, the newer projects are coming even better PLFs, I'm assuming. So, of course, there could be some scheduling issue. Some projects might have happened at the end of the quarter. But the number seems very different. So I was wondering, is there some, you know, maintenance related loss or something else? So, even if I had 69 million units of curtailment, the number is only 13% worldwide. Right.

Yeah, I'll come to that. If you see the generation for us, in solar generation, in general, is the PLFs, what we are seeing, quarter 1, about 22%, quarter 2, but quarter 3, as I said, 26, and quarter 4, 28%. Oh, this is the annualized 25% breakup quarter-on-quarter, which you can see the past data also, you will see the similar trend. So, rather than going for a short-term one-quarter PLF, I think we have to wait for some longer time and wait for second half is significantly higher.

Also, just to add that some capacity we've added very recently, which is also stabilizing, which is bringing it slightly lower from the average perspective. I just wanted to add that.

Sure, sir. Great. That's all. Thank you so much. A lot of the best.

Thank you. The next question is from Rajesh Majumdar from 361 Capital. Please go ahead.

Yeah, good evening, everyone. So, sir, I was wondering on this Maruti TNN Tower, what is the logic of acquiring a subcritical capacity like this, except for the fact that the economy is cheap? What are the long-term plans on this, if any, and how does it fit into our overall scheme of things?

You see, yes, basically the objective is, again, as I told you, the opportunity to improve upon and to take advantage of the running asset. See, when the asset is ready, it is close to the coal mine, the opportunity of the upside of a small capacity, 60-odd megawatt capacity, which is open, also either to go for a PPA or to take advantage of the merchant taking care of the evening, this thing. So, it is overall, when we say the cost of acquisition, the opportunity is lying, the tariffs which we are recognizing, it's a mix of many things. In addition to that, our other team has done the technical due diligence and after that there is an option of utilizing part of the existing plant's resources and investing and maybe doubling the capacity or even more in the same plant which is very, very close to the coal mines is also an opportunity to take it. So, it's a mix of a few factors which make this asset extremely attractive for us.

So, we may see brownfield announcements on this in the future, is what you're trying to see?

Yeah, there is an opportunity, and also we also do the, it's a very, very value-accretive EV EBITDA, if you see, at what multiple I am acquiring this, and what is prevailing in the industry as a norm. So, all those factors also were considered. This is a very attractive acquisition, the price at which we have acquired. We are in the process.

And so, my other question was on the debt. So, if you look at the, first of all, what is the gross debt figure as of June? Given the net debt figure, it is about $55,000. What is the gross debt figure?

$56,000. Yeah, just let's see.

So, it's about 74,000. 74,000 is the gross debt, and we have about close to 12,900 of cash.

74,000 and 12,900 in investment. So, net debt is $1,000? And is there any balance of the cash raised during the quarter left to come in, in terms of the June 30th number? It's already been affected in the entire...

Both the PIP and the JSWC, the stair liquidation, which we did, I think those are already in. We have got close to 1900 of the preferential capital from the promoters that can come in, because that can come in within 18 months, what we did. So that can come in any day.

That is the last date, end date is June 27th. If the requirement is earlier, but this is there, that is yet to come, 1875 crores.

Right, and if we look at it, you talked about 20,000 crore capex for the year, so essentially that means we are looking at the gross debt increasing by another 6,000 to 7,000 crores, is that a wide assumption?

I think how we look at is that, say, for example, we have already done about this 7,000 crore of fundraise, and we'll have an operating cash flow also coming in, so which can give us close to, put together about 12, 12, 500 odd numbers. The balance is what we can kind of look at, the balance required between, whatever, 20 minus 12, 500 is what the incremental, this one could be.

And next year also, we plan to add about 3 gigawatts or similar.

Yeah, it will be in the same range. It will be in this range only, yes. Thank you very much.

Thank you. The next question is from Atul Tiwari from JAP Morgan. Please go ahead.

Yeah, thanks a lot. So my question is on the profitability at the PDT or FAT level, which has been quite suppressed over the past few quarters, Obviously, because of increasing depreciation and finance costs. And obviously, in your portfolio mix, there are a number of projects that are very mature now, right, operating for many years on thermal size. Okay, so my question is, will this situation persist over the next few quarters, or are we likely to see improvement in the profitability at the PBT or FAT level?

I think we have two things here. So one is like if you look at the capacity additions that we have been doing, these are mostly in the RE sector, right? Now, last year we did about close to 2.3, this year we said 3. Now, because the earlier ones which are there, which we did about 2 to 3 years back, those are the assets that which will come into, because initially the interest costs, the debit to the P&L will be slightly higher. Because there is a moratorium during the construction period. And post that, when the commissioning starts, the initial interest debits to the P&L will be higher. But over a period of about once the asset is in place, like kind of stabilized for about four to five years, that is why we see that, because that's been the kind of way it feels that the EBITDA should translate to a PBTL PAT. And that is how generally the industry is also right. Okay.

Thank you. The next question is from Dishan Jain from Corsair Capital. Please go ahead.

Yeah. Hello. Am I audible?

I just write it.

Yeah. Thanks for opportunity. So, just a very basic question. Since I'm correctly or wrong, what I heard, that we continue to receive the fixed charges, even if we have the lower PLF on the thermal side. So, when do we account and when do we actually receive the fixed charges from the customers?

So, in terms of, if you look at Mahanadi for this reason, so, because basically, if the availability is for a period of, like, 85%, you get that, because they kind of look at it at a period of the entire year. Now, in this case, like, to that extent that whenever we start billing and whenever we reach that capacity, so even though the income is recognized now, the collection will happen in the next two to three quarters, basically.

Oh, so collection you will receive in the next two to three quarters. And when do you account it, sir?

The accounting happens now in this quarter. For example, in this case, when we said to the extent of quarter, because we are kind of saying that 85% of the minimum availability will anyway reach, and to the extent of the fixed charges we are eligible to get, that is already accounted in this quarter.

Okay. Sure. Thank you.

Thank you very much. That was the last question. I would now like to hand the conference back to the management team for closing comments. Thank you. Thank you, sir.

Yes. Thank you, all of you. Thank you very much for being with us today and having the interaction. And also, in case there are any more questions which come to and which have not, you feel have not been answered or would like to know, please connect with our IR team and we'll be happy to take those and respond to that. Thank you very much. Good day. Thank you.

Thank you. Thank you very much. On behalf of JM Financial Institutional Securities, that concludes the conference.

Thank you for joining us, ladies and gentlemen.

You may now disconnect your lights.