Kamalanga deal is value-accretive, JSW Energy may expand capacity

JSW Energy believes that the acquisition of GMR Energy’s Kamalanga power project in Odisha will be value-accretive and aims to improve the performance of the plant. The company may consider expanding the capacity of the project, but for now it will be focusing on boosting performance and adding capacity through renewables, Prashant Jain, chief executive officer, told Rachita Prasad in an exclusive interview

How will this acquisition help JSW Energy and what are your future plans?

This is a pithead power plant with five years of operating history, 85 per cent output tied up in long-term power purchase agreements (PPAs) and diversified customers in three states. It fits into our strategy of having cost of power in the bottom quartile of the purchase basket, which will enable us to get merit-order dispatches and mitigate the risk of receivables. There is a potential to increase the capacity by another 350 MW, which we will consider but for now, we will focus on bringing efficiency into existing units. The base rate operating income is ₹900 crore with the enterprise value (EV) of ₹5,321. The EV-Ebitda ratio is 5.5. We believe we can improve it to 5.1 times by operational efficiency and tying up the balance power in longterm pacts. This deal is return-onequity accretive from day one.

You are also in the process of buying Ind-Barath (Utkal). When will it be completed? Are you looking at more buys?

The Ind-Bharat deal will be done by June-July. It is in the process of getting NCLT approval. We will not look at any more acquisitions in thermal power, unless it has very compelling valuations. Our focus would be on renewable energy.

You have said that renewable energy will be at the core of the second phase of growth from 10 GW to 20 GW. How will this be added?

It will be a mix of solar, wind and pump storage. We are investing in those capabilities and acquiring sites for large-scale projects. There is a team in place. This will be primarily organic growth but we are not averse to inorganic growth.

ET Energy World
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