Ladies and gentlemen, good day and welcome to the JSW Energy Limited Q2 FY23 Earnings Conference Call hosted by DAM Capital Advisors 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 conference call, please signal an operator by pressing star then zero on your touchtone phone. Please note that this conference is being recorded. I now hand the conference over to Mr. Mohit Kumar from DAM Capital Advisors Limited. Thank you, and over to you, sir.
Thank you, Faizan. On behalf of DAM Capital, I welcome you all to the Q2 FY23 earnings call of JSW Energy. From the management, we have Mr. Prashant Jain, Joint Managing Director and CEO. Mr. Pritesh Vinay, Director (Finance). Mr. Ashwin Bajaj, Group Head, Investor Relations. Mr. Vikas Chaudhary, Investor Relations and Treasury head. We'll start with a brief opening remarks followed by Q&A. I will now hand over the call to Ashwin Bajaj. Over to you, sir.
Thank you, Mohit, for hosting the call, and a very good evening, ladies and gentlemen. So, welcome to JSW Energy's Q2 results call, where we will detail our results as well as our annual-led growth strategy. We have our management team, as Mohit introduced. Let me hand it over to Mr. Jain for opening remarks, and then we'll take questions. Mr. Jain?
Thank you, Ashwin. Good evening, ladies and gentlemen. The quarter gone by, we have seen a power demand growth at 5.7%, which has moderated from 18% power demand growth, which we saw in Q1 in the current financial year. For the H1, the power demand growth stood at 11.8%. The current quarter also, the power demand is growing at a good pace, but we are expecting that this year should be ending something at around 8%-8.5% power demand growth. The total installed capacity for the sector is now at 408 GW, with a net capacity addition of 4 GW in quarter two and total 8.3 GW capacity addition in H1.
All this capacity which was added up during the quarter was renewable capacity, 3.1 GW coming from solar and 0.9 GW coming from wind. This total installed renewable capacity stood at 165 GW, which is in excess of 40% of the installed capacity. The merchant volume went down by 18% during the quarter at 20 billion units, with the average tariff at INR 5.4 per kWh, which is lower than the previous quarter. Now the weighted average for the H1 stood at INR 6.59. The current quarter prices are also running quite low, close to on an average of INR 4.5-INR 5 because of better availability of the thermal power at this point of time and moderate power demand growth.
In terms of the company, the net generation was 6.7 billion units. It was 2% lower than the last year, which was primarily due to the weak merchant market during the quarter, as well as the Ratnagiri 300 MW unit was under maintenance. The EBITDA was at INR 1,098 crore, which was up by 2%. Profit after tax was up by 37% at INR 466 crore. Cash profit was INR 681 crore, higher by 12%. We've maintained our trajectory of receivables. It was down 19% at 66 days during the end of the quarter. And, the current quarter too, we are doing pretty good in terms of the receivable metrics. So, we are maintaining a healthy receivable metrics.
In terms of the projects, now, our committed pipeline is 10 GW and which is going to be completed ahead of our earlier guidance of FY 2025. And, this is without the new domain which we have started, which is the battery storage and pumped storage vertical. 1 GWh of battery storage project, which we have recently we were the winning bidder in the SECI tender, is over and above this 10 GW of the pipeline. Now, the projects are also moving as planned ahead of the schedule. Starting from the current quarter, the commissioning of the SECI X projects will start, and then month-on-month we will be seeing the incremental capacities which are coming up. We are also doing pretty good in terms of the hydro pumped storage pipeline and which is moving.
In addition to that, we have also secured some new projects in hydro projects which are run of the river in Himachal Pradesh. One project we have already got awarded the LOI. There are some more projects which are in pipeline across the country which we are looking because we see that, given the new hydropower purchase obligation, there will be a demand which will be coming up going forward. After we complete the Kutehr project next financial year, we will be deploying that execution team to undertake new hydro projects going forward. With this, I end my opening remarks. We are happy to take the question- and- answer. Thank you.
Thank you very much. We will now begin the question- and- answer session. Anyone who wants to ask a question may press star and one on the touchtone telephone. If you wish to remove yourself from the question queue, you may press star and two. Participants are requested to use handsets when asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. Reminder to the participants. Anyone who wishes to ask a question may press star and one at this time. Reminder to the participants. Anyone who wishes to ask a question may press star and one. The first question is from the line of Anuj Upadhyay from HDFC Securities. Please go ahead.
Yeah, hi. Thanks for the opportunity, sir. My question relates to the status on the Mytrah acquisition, sir. If you can provide some update on that. Secondly, anything on the Utkal Ind-Barath project? I mean, last call we had mentioned probably we are relooking in, to acquire that project. And, also if you can provide some kind of a timeline in tying up the untied capacity of the Vijayanagar for our captive group plants. That's it, sir.
Thank you. With regards to Mytrah, the necessary conditions precedent are being implemented, and we are expecting that we will be completing the transaction within the current quarter. And, with regards to the Ind-Barath Utkal, I mean, NCLT had already given its judgment thereby approving the plan. And, we are working with the lenders to implement the plan. As a part of our, you know, decarbonization strategy, we are working on this plant to do the vertical integration to enter into the polysilicon market. And, that is our strategy. Based on this 700 MW power plant capacity, we will be working to do the vertical integration to manufacture polysilicon. The third part is with respect to the untied capacity.
JSW Steel has already undertaken 5 million ton capacity expansion at Vijayanagar. And, their scheduled commissioning is sometime in calendar year 2025. And so, accordingly our untied capacity will be looked into the group captive model going forward.
Sir, can you mention what quantum of untied capacity can be parked for this 5 million ton of expanded capacity at Vijayanagar? And, just a clarification on the Utkal Ind-Barath, you mentioned about the vertical integration. So, are you saying that project will probably serve the need the purpose of captive arrangement? Is my understanding correct, sir?
Absolutely. Absolutely.
Thank you. Another thing-
Although we are still working out, but a majority of untied capacity will be looked into that capacity expansion.
Okay. Fine, sir. Thank you.
Thank you. The next question is from the line of Mohit Kumar from DAM Capital Advisors. Please go ahead.
Good evening, sir. My first question is on the maiden battery storage bid. So, what is the status of the LOI? And can you please throw light on your strategy on how do you want to schedule your merchant capacity? I believe there is 40% which you open to the market. And how do you see this open capacity to you know, tied up or how you want to participate in the ancillary market?
We are yet to receive the LOI from SECI, and we are given to understand sometime in the current quarter we will be receiving that LOI. And, at this point of time, we are absolutely open to both ancillary market as well as to tie up those capacity with some of the DISCOMs. We have already received some interest both on DISCOM as well as the some corporates wanting to take available with us. And, we have factored both the opportunities with this. And, I can give you one color that ancillary market is also equally exciting opportunity. And, In some cases, what we are seeing is more remunerative as compared to what we do the tie up of capacity.
Understood, sir. Storage plant side, of course, you've built a large pipeline. When do you think, you know, we will be ready to execute something? Is it contingent on getting some PPA? Is it getting some on getting some hydrogen or hydrogen the order?
No, it's not contingent on that. It's primarily at this point of time, it's a regulatory approval which are being undertaken. To give you some color, the first project will be a captive project, which will be used for our Vijayanagar plant, and which we are taking the necessary regulatory approval. We are expecting to start the construction from next calendar year once we secure the necessary regulatory approval, which is predominantly the environment clearance.
How is the debt-to-EBITDA or debt-to-equity look after the Mytrah acquisition? Do you think we'll need to raise some capital for the further growth?
We have explained in our last call, with this existing pipeline, both the 2.2 GW and of the under construction as well as Mytrah acquisition, plus the new acquired pipeline. All put together, we will be below the, you know, 4.5-4.6x debt-to-EBITDA level. We are quite comfortable, and we will be still throwing a lot of cash because right now we are generating in excess of around INR 2,400-2,500 crore of a cash profit, which is very, very healthy, which will be also going to increase with this commissioning of this project as well as the acquisition, which will be sufficient to grow our pipeline.
However, if we get any kind of a great opportunity where we feel there is a good transaction which can be value accretive for all the shareholders, as well as there is a opportunity to deploy that particular capital by making substantial growth strides, we will not be averse to raising the capital. And, as a current capital deployment requirement and the pipeline, we don't need any capital.
Lastly on this, bidding appetite on the solar and wind. I think you have been participating in solar as of now. Is it a no-go area for us ?
My question is the other way around t he people who are bidding, why they are not building? So, we are not doing anything, which we cannot build .
Understood. Okay, sir. Thank you. That's it from my side. Thank you.
Thank you. Participants if you have questions you may press star. Our next question comes from the line of Nikhil Abhyankar from DAM Capital. Please go ahead.
Hello?
Yes, sir. Go ahead.
Yeah. Thanks for the opportunity, sir. I just wanted to ask you whether you're looking at in some capacities?
Yes, there will be an additional pipeline after we complete this project. There are further opportunities which have been already outlined. And, we are looking into that. And, at some point of time next calendar year, we will be doing that. And, In addition to that, we are also working to do further CNI business with the third parties. So, Of course, beyond this 10 GW, there will be additional pipeline which will be announced next calendar year.
Understood. So also after Q1, in the annual report last year you had booked certain revenue through sale of carbon credits. I just wanted to know, at that time you mentioned that the inventory is somewhere around 20 million. So, have you booked any revenue through it in H1? What is the inventory right now that we are having ?
So, you know, after the Ukraine war, the carbon credit prices dropped dramatically. Carbon credits, which were trading $7.5-$8, have come down to $2.5 at this point of time, which we also believe is transitional in nature and which will once again go up. So, at this point of time, we are holding the inventory. We have not sold any more incremental or w hatever we have sold is also very insignificant. And so Pritesh, what is the inventory right now is t he same what we were having as well as the
Yeah, yeah.
Rather it will be increased with the fresh accruals also.
And sir, how are receivables looking like? Have they increased? Has the Rajasthan government participated in government liquidity scheme?
Repeat your question once again.
Sir, has the Rajasthan government participated in the government liquidity scheme?
So, Nikhil let me come in here, we may not be privy to statewide participation in the liquidity scheme of the government. But, what we can comment on is that if you look at our receivables trend, as Prashant mentioned at the opening, you know, on a year-over-year basis, the overall receivables have come down by 19% from a DSO equivalent point of view. But more interesting is this, that within that the amount of overdues has actually come down by 23%. As we are speaking right now, subsequent to the end of the quarter, there are no overdues that we have from the Rajasthan DISCOMs.
Or any other DISCOMs.
Or any other DISCOMs. Whether it is on account of their participation in liquidity scheme of government or not, we would actually conform to that. But, as far as our overdues are concerned, we don't have any overdue at this point.
Understood sir. And previously you also mentioned about the plans to get into polysilicon. So, when will we be able to announce anything specific regarding that or is it contingent on any PLI scheme coming from the government?
We are working on this, the contours of the project because t his is absolutely new area for the country. So, there are various barriers, t here are the technology barriers, there is a talent barrier, and there are various other challenges in terms of engineering and other things which are building all these blocks. And, soon we will be announcing as and when we are ready with that. And, Of course, we will be certainly participating in the PLI scheme as and when the final scheme is bidding is started.
Understood, sir. That's all from my side. I'll get back into queue. Thanks.
Thank you. Next, to ask a question y ou may press star. Thank you. Next is from the line of Anuj Upadhyay from HDFC Securities. Please go ahead.
For the opportunity again, sir. Just a follow-up on the first question, which was related to the polysilicon. I need one clarity, sir. I mean, are we planning to come out with a complete integrated module manufacturing team, right from polysilicon, the module manufacturing? And if yes, then what is the quantum which we are eyeing basically out here? And are we waiting for the PLI schemes to get launched so that we can tap on the quantum? Or, I mean, like, we are planning now to go ahead with irrespective of the PLI benefits.
There are a number of factors which will be deciding all these, that's why we said we'll be talking in due course. You need to understand that India is having a large ambitious plan for renewable energy growth, which will be not only used for the power generation, but also electron to molecule. For that, there will be a large requirement of polysilicon and also the ingots and wafers. There are huge export opportunities going forward because after the new Inflation Reduction Act, which they have announced in United States, as well as the decarbonization strategy of Europe, there will be a huge requirement of polysilicon and components both in Europe as well as the United States.
We are working out the contours in terms of our own requirements, so to meet the demand as well as the export opportunity. Also there are various PLI contours which all will be the determining factor when we figure out how much is the polysilicon capacity. Of course, there will be a certain capacity which will be end-to-end, and there will be some capacity, only polysilicon or only solar. Even we are finalizing that with various variables, then we will be announcing once we have participated in the PLI scheme.
Got it, sir. Thank you, sir.
Thank you. The next question is from the line of Rahul Modi from ICICI Securities. Please go ahead.
Thank you for the opportunity, sir. Sir, pardon me if, can you throw some light on the plans that we are having in terms of the pumped hydro storage for the next three-five years, and the CapEx that we earmarked? When are we expecting this CapEx to start? Thank you.
We are already having right now a portfolio of 50 gigawatt-hour of pumped storage. As I mentioned, sometime in the next calendar year, first project will start. Where we do not have any issues with respect to land, it's only the PPA. It is the regulatory approval which we will need during that time. Then we will attend them. The first project will take three years to commission. Similarly, projects where our final DPR is under preparation, it needs to be approved by CEA before we start the project. Second part is that you have to acquire the land, whatever is the private land.
If there is a forest clearance and the majority of our projects that you have to acquire the land, you have to take environmental clearance. All projects are going to take anything between 12-24 months before we do hit the ground. First project we see to hit the ground in the calendar year 2023, and thereafter calendar year 2024 onwards, there will be various projects which will be hitting the ground. It's going to be a cycle. We are building a portfolio of pumped hydro projects. As we explained last time that the grid will be requiring large portfolio of the pumped hydro projects. Going forward, this will be very big, you know, scientific solution for the grid, which we will be deploying over a period of time.
Yeah. This is very helpful. The first project that is resting, that will be starting in CY 2023. That is capacity. If you could just what will be the total cost? You mentioned that the PPA is not needed. Is it already signed with how does the mechanism work?
Basically, you know, it's going to be for the group captive requirement, and it will be close to 1 GWh.
Okay. What will be the cost to it?
Once we are signing the PPAs and everything, we will be announcing that. Typically, I can give you a color. The pumped hydro projects are in the range of INR 4 crore per MW to INR 6.5 crore per MW. Pumped storage projects are typically between 5 hours storage to 8 hours storage, depending upon the type of project and everything, it is there. You can do the math on your own accordingly.
Sure. Sir, you will be using your own renewable for the power injection, or this will be primarily from the grid to all your captive coal plants to begin with?
The first project will be integrated for our own requirements.
Okay, thank you.
We are working in our own microgrid in the future, where we will be coming out with a solution where there will be a solar park, there will be a wind park, there will be our own transmission corridor integrated well with the pumped storage along with a large RTC solution.
Okay. Perfect, sir. Thank you.
Thank you. The next question is from the line of Anshuman Ashit from ICICI Securities. Please go ahead.
Thank you, sir, for the opportunity. Sorry if I may have missed this. Sir, you have recently also received a letter of intent for Chatru Hydroelectric Project. Could you please give us some details on that, on the timelines for DPR preparation and the cost which we can expect?
This is one project where already it was earlier allocated to some private party, where the DPR is already in place. The project is in place now. We have to revalidate the DPR. We have to reinstate the environment clearance. We'll be participating in various bids or signing of the PPA with the DISCOMs who are interested to source hydropower. As I said, being the largest private sector hydropower producer in the country, we are building these kind of a portfolios into PPA and then has a very good capability to execute the project in a more efficient way. Operating the plants in a most efficient way.
Our Kutehr project, which we started the groundbreaking in October 2019, in spite of three COVID waves, we are running ahead of the schedule. We completed 85% of the tunneling. We are expecting this will be the fastest ever project in the country in recent times by any hydropower developer. With those kind of a capability, hydropower which is running, we are quite upbeat about various opportunities, and that's why we are very involved with.
Is there any portion of the generation which you'll have to share it with, also free to the Himachal Pradesh DISCOM?
Government of India has come out with a regulation that now it is fixed at 12% throughout the life of the project. Project life is also now decided by the Government of India under the policy at 30 years. It's a single norm for all old and the future power projects.
Okay. Sir, just wanted to know your view on the coal prices going forward for FY 2023. What do you believe that the merchant prices will be changed to sell on the exchanges if put through some rise in demand?
Sorry, I will not be able to give you any kind of a guidance on the coal prices because these are the unprecedented times with a lot of variables and factors. Given the current situation, it is very tough to make a call. The way it is now, if that trend continues, then thermal coal prices will immediately drop. If natural gas prices remain elevated, then thermal coal prices will be elevated. Everything is contingent upon geopolitical situation, also the natural gas prices. Overall demand in perspective on a normalized business environment case, the thermal coal price should not be more than $100.
Sir, are the current merchant prices favorable for us to sell on the exchanges?
No.
Okay. Understood, sir. Thank you so much.
Thank you. Ladies and gentlemen, that was the last question. I would now like to hand the conference call to the management for closing comments.
Thanks, Arpita, and thanks everyone for joining us today. We'll reach out. Good evening.
Thank you. Ladies and gentlemen, on behalf of DAM Capital Advisors Limited, that concludes this conference call. Thank you for joining us, and you may now disconnect your lines.