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JSW Energy calls off deal to acquire GMR’s Odisha plant

Our Bureau Mumbai | Updated on July 31, 2020 Published on July 31, 2020

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Profit of Sajjan Jindal-backed firm dips 12.7% in first quarter

The Sajjan Jindal-backed JSW Energy Ltd has backed out of the deal to acquire GMR Kamalanga Energy, as a result of Covid-19-related uncertainties.

“With the elapsing of long stop date, both parties have mutually agreed to terminate the transaction given the continued uncertainty due to the Covid-19 pandemic,” JSW Energy said in a statement.

JSW Energy had announced the proposed acquisition in October. GMR Kamalanga Energy Ltd is a subsidiary of GMR Energy Ltd and operates a 1,050-MW thermal plant in Odisha.

JSW Energy has also announced its Q1 FY21 results. Profits for the quarter were at ₹213 crore, down 12.7 per cent from ₹244 crore posted in the year-ago period. Revenues came in at ₹1,805 crore, a dip of 25.1 per cent ( ₹2,412 crore). Weak economic activity amidst Covid-19-related lockdowns and lower long-term and short-term sales led to the dip.

India’s power demand declined 16.2 per cent y-o-y in Q1FY21, compared with 7.4 per cent growth in Q1FY20. Demand declined across all regions on a y-o-y basis. However, the demand decline moderated in May’20 and June’20 to 14.9 per cent and 10.9 per cent on a yearly basis, indicating a gradual recovery, according to Prashant Jain, Joint MD and CEO, JSW Energy.

Forecast for power demand

Industry watchers expect the power demand in the medium term to improve in the backdrop of rapid urbanisation and government schemes such as 24/7 electricity. “Further, the recent government measure involving a ₹90,000-crore liquidity infusion package for Discoms via PFC/REC, disbursements under which have already commenced, is a key positive for the sector,” stated Jain.

For JSW Energy, overall power generation declined 16.2 per cent on a y-o-y basis. Thermal generation declined 22.8 per cent, while hydro and renewable segments grew 4.3 and 3.8 per cent. The plant load factor (PLF) for thermal segment came in lower at 46.6 per cent against 62.8 per cent in the year-ago period with declines across private, central and state sectors.

Consolidated net worth and consolidated net debt as of quarter ended June were ₹12,202 crore and ₹8,493 crore, respectively, resulting in a net debt to equity ratio of 0.70x, flat compared with the previous quarter.

While EBITDA for the quarter decreased 4 per cent to ₹827 crore (₹861 crore), finance costs declined to ₹240 crore (₹270 crore), attributable primarily to proactive debt repayments. The fuel cost for the quarter decreased 33 per cent on a yearly basis to ₹915 crore due to moderation in imported coal prices and lower generation. Shares of JSW Energy closed flat at ₹46 at the end of trading day on the BSE.

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Published on July 31, 2020
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