MUMBAI: In a move to diversify business operation, JSW Energy is venturing into new verticals, including electric vehicles, energy storage business and charging infrastructure.
In its meeting on Friday, the company’s board has approved incurring ₹3,500-4,000 crore capex over the next three years into the new business verticals. This comes at a time when thermal power industry faces unprecedented disruption from the renewable energy sources.
“We have been seeing very limited space for growth in the power sector,” said Prashant Jain, Joint MD and CEO of JSW energy, the power arm of JSW Group, which has a total 4,531 MW of operational capacity.
According to Jain, JSW has set an ambitious target of launching its own electric vehicle by 2020. While the company realises that it is venturing in a very competitive space, he added, JSW bets on the growth of automobile industry, as well as level-playing field created due to disruption by electric vehicle technology.
“We will start with around 60 per cent localisation in India. We are considering and evaluating opportunities for setting up a manufacturing facility in several States, including Maharashtra, Gujarat and Rajasthan, and also Tamil Nadu and Andhra Pradesh,” Jain said.
For the electric car project, which will be launched under JSW brand, the company is planning to collaborate with technology partners. Jain, however, could not disclose any names so far.
Another vertical JSW Energy is exploring, as reported by BusinessLine earlier, is energy storage systems and charging infrastructure. The company is eyeing to become a player in energy storage, not only for electric vehicles but also for other static applications, including telecom, micro grids, solar storage systems for households and power banks.
No shift in core business
According to Jain, venturing into new verticals does not mean JSW Energy will shift focus from its core business. The company is planning to optimise its thermal and hydro capacity, and targets signing up both long- and short-term Powe Purchase Agreements (PPA) with State discoms.
At the moment, only around 65 per cent of company’s thermal capacity is tied up with PPAs.
“Our long-term PPA portfolio, which is currently two thirds of the capacity, will increase to three fourth in the next six months,” Jain said. JSW Energy is also looking to tie up 376 MW out of 1,200 MW of its hydro capacity which currently remains open.
JSW Energy will continue consolidating the power business and remains interested in acquiring assets that are capable of producing power priced at a “new normal” of around ₹3 per unit.
Plan to refinance
The company will also focus on deleveraging its debt and is looking for various refinancing options, CFO Jyoti Kumar Agarwal said. JSW Energy’s consolidated net debt stood at ₹13,686 crore, resulting in a Net Debt to Equity ratio of 1.28 times, he added.
In the first quarter of the current financial year, JSW Energy had registered a 9 per cent decline in the revenue from operations, which stood at ₹2,232 crore as against ₹2,450 crore in the corresponding quarter of the previous year.
The revenue decreased due to lower generation from the coal-fired plants and subdued merchant realisations, the company said. Its consolidated net profit, too, declined to ₹217 crore from ₹367 crore in the corresponding quarter of the previous year.