JSW Energy puts GMR Kamalanga buy on hold

Our Bureau Mumbai | Updated on May 20, 2020

Prashant Jain, Joint MD and CEO, JSW Energy   -  BUSINESS LINE

Will revisit deal once Covid-led uncertainties normalise, says company

Sajjan Jindal-backed JSW Energy has put its GMR Kamalanga acquisition on hold as a result of Covid-19 related uncertainties.

“The transaction has been put on hold given the ongoing uncertainty and will be revisited once the situation normalises,” the company said in a statement to the exchanges.

JSW Energy, in October, had announced the acquisition of GMR Kamalanga Energy Ltd for ₹5,321 crore. It had said the deal would increase its power generation capacity at a time when energy requirements were on the rise. GMR Kamalanga is a subsidiary of GMR Energy Ltd and operates a 1,050-MW thermal power plant in Odisha.

The acquisition was meant to be an all-cash deal and included three plants with 350 MW capacity each, located in Odisha’s Dhenkanal district, with revenues of ₹2,195 crore.

Another acquisition which JSW Energy had planned — Ind-Barath Energy (Utkal)'s 700 MW of stressed assets — is awaiting approval from the NCLT.

Posts ₹108-cr profit in Q4

For the March quarter, JSW Energy's net profit came in at ₹108.44 crore, a whopping increase from the ₹4 crore posted in the same period last year, due to gains from a tax write-back and improvement in EBITDA margins of almost 6 percentage points.

A deferred tax liabilities write-back of ₹276.81 crore and a corresponding tax adjustment in future tariff of ₹111.63 crore (net) was recognised in the quarter. Exceptional items also included a write-back of ₹177.48 crore, which is no longer payable, the company said.

JSW Energy’s net profit for FY20 was ₹1,100 crore, a 58.27 per cent rise when compared to ₹695 crore in FY19.

However, during the quarter, total revenue declined 8 per cent on a yearly basis to ₹1,848 crore (₹2,018 crore) as a result of lower long-term sales and decline in fuel cost. The fuel cost for the quarter decreased by 16 per cent YoY to ₹996 crore due to moderation in the imported coal prices and lower generation.

Prashant Jain, Joint MD and CEO, JSW Energy, said that power demand over the short term is expected to be muted, attributable to subdued economic activity due to the Covid-19 situation. “There have been major disruptions in supply chain and logistics, including disruptions in billing and collections for discoms. In the short term, volumes and tariffs at merchant markets are expected to be adversely impacted due to a lacklustre demand scenario,” he added.

However, over the medium term, power sector outlook is intact, as rapid urbanisation and stabilisation of various schemes undertaken by the government such as “Power for All” and “24 x 7 Power” are expected to spur power demand. Further, the recent government announcement of ₹90,000-crore liquidity infusion for discoms via PFC/REC is a key positive for the sector, said Jain.

Dividend payout

The board has declared a dividend of ₹1 per equity share of ₹10 (10 per cent), on the paid-up equity capital of JSW Energy for FY20.

EBITDA for the quarter increased 10 per cent to ₹629 crore from ₹570 crore in the year-ago period.

Finance costs declined to ₹248 crore from ₹276 crore in the same quarter last year, which was attributed to proactive debt repayment measures taken by the company. Also, the consolidated net worth and consolidated net debt as on March 31, 2020 were ₹11,646 crore and ₹8,945 crore, respectively resulting in a net debt to equity ratio of 0.77x.

Installed capacity as on March for JSW Energy was 370.1 GW.

Published on May 20, 2020

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