KSK Mahanadi Is A Very High-Quality Operating Asset Generating Good EBITDA & Revenue: JSW Energy

Summary

JSW Energy discusses its strategic acquisition of KSK Mahanadi Power under insolvency proceedings, which adds 3,600 MW to their capacity, with 1,800 MW operational. The company targets reaching 20 GW by 2030, focusing on thermal and renewable energy. Key advantages of the acquisition include reduced construction costs and faster project timelines, thanks to existing infrastructure and proximity to coal mines. The company also addresses challenges regarding tariff adoption for SECI projects and outlines plans to secure funding through a mix of internal accruals and debt.

Takeaways

• 😀 JSW Energy has acquired KSK Mahanadi Power under the insolvency process for ₹55,985 crores.
• 😀 The acquisition adds 3.6 GW to JSW Energy’s generation capacity, with 1.8 GW already operational.
• 😀 JSW Energy aims to reach a total generation capacity of 20 GW by FY2030.
• 😀 The acquisition includes a high-quality 1,800 MW operational portfolio tied up with states like Uttar Pradesh, Tamil Nadu, and Chhattisgarh.
• 😀 The 3,600 MW plant’s expansion will be cost-effective due to advanced completion stages, including ready infrastructure like the balance of the plant and transmission lines.
• 😀 JSW Energy believes that expanding the existing plant will cost significantly less than building a new one from scratch.
• 😀 The project’s timelines will be faster compared to standard thermal plants due to the already-prepared infrastructure and approvals.
• 😀 The funding for the project will involve a mix of internal accruals and debt, dependent on the NCLT process timeline.
• 😀 JSW Energy sees growing demand for thermal power, especially for peak evening supply, which will make the plant’s power cost-effective for buyers.
• 😀 Regarding renewable projects, JSW Energy is addressing tariff adoption challenges, backed by precedent cases where similar situations led to positive outcomes.

Q & A

What is the total bid amount for JSW Energy’s acquisition of KSK Mahanadi Power?

The total bid amount for JSW Energy’s acquisition of KSK Mahanadi Power is ₹55,985 crore.

What is the target generation capacity for JSW Energy by 2030?

JSW Energy aims to reach a total generation capacity of 20 GW by 2030.

How does the acquisition of KSK Mahanadi Power contribute to JSW Energy’s generation capacity?

The acquisition of KSK Mahanadi Power contributes 3.6 GW to JSW Energy’s generation capacity, bringing their total capacity to 28.2 GW.

What is the current operational status of KSK Mahanadi’s capacity?

Out of the 3.6 GW capacity of KSK Mahanadi, 50% is already operational, amounting to 1.8 GW.

How does JSW Energy view the acquisition in terms of cost and timeline efficiency compared to building a new plant?

JSW Energy considers the acquisition more cost-effective and efficient compared to building a new plant. The operational portfolio reduces capex and speeds up the expansion timeline, as the approvals and infrastructure are already in place.

Why does JSW Energy consider the KSK Mahanadi acquisition a good strategic move?

JSW Energy sees the acquisition as a good strategic move because the 1800 MW operational capacity is tied up with long-term PPAs with states like Uttar Pradesh, Tamil Nadu, and Chhattisgarh, ensuring stable revenue and reducing construction risks.

How does the location of KSK Mahanadi benefit JSW Energy?

KSK Mahanadi’s location is close to coal mines, which reduces transportation costs and ensures a reliable fuel supply for future capacity expansion.

What is the proposed funding strategy for the KSK Mahanadi acquisition project?

The funding for the project will be a mix of internal accruals and debt, with specific plans dependent on the timeline for completing the acquisition process.

What is the issue with the proposed tariff for BS projects won by JSW Energy from SECI?

The issue revolves around the SECI not adopting the proposed tariff for the BS projects. JSW Energy plans to make a representation, arguing that the bidding process was fair and competitive, and the tariff issue is due to evolving technology and market dynamics.

How does JSW Energy plan to resolve the tariff dispute with SECI?

JSW Energy plans to make a representation supported by past cases where similar issues arose, asserting that cost reductions over time in evolving technology justify a review of the original tariff assumptions.