JSW Energy Limited Investor Presentation August 2019 Agenda - - PowerPoint PPT Presentation

JSW Energy Limited

Investor Presentation

August 2019

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Agenda Overview Value Proposition Operational Highlights Appendix

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*Listed company. ** USD/ INR = 70.4

JSW Group – Overview

USD 14 Billion group with presence across the core sectors

JSW Steel*: India’s leading integrated steel producer (Steel making capacity: 18MTPA) JSW Energy*: Engaged across the value chain

• f

power business (Operational plants’ capacity: 4,559MW) JSW Infrastructure: Engaged in development and operations of ports (Operational capacity: 75MTPA) JSW Cement: Manufacturer of PSC, OPC and GGBS cement (Operational plants’ capacity: 12.8MTPA)

JSW Steel 7,470 JSW Energy 1,579

Group Market Cap (USD 9,048 Million**)

As on August 6, 2019

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JSW Energy – Presence across the Value Chain

Power Generation Power Transmission Power Trading Equipment Manufacturing Mining

• Engaged in power trading since June 2006
• Handled trading volume of 2 Bn units in FY19
• Operational Transmission Line – JV with

MSETCL: two 400KV transmission lines

• Currently

Operational Capacity: 4,559 MW

• JV

with Toshiba, Japan for manufacturing of super-critical steam turbines and generators

• Rajasthan (Lignite): Kapurdi and

Jalipa mines (operational with capacity of 4.5MTPA and 6MTPA respectively)

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1) Long term FSA with BLMCL for supply of lignite from its captive mines; BLMCL is a 49:51 JV between JSW Energy (Barmer) Ltd (subsidiary of JSW Energy) and Rajasthan Government undertaking, 2) USD/ INR = 70.4 3) denotes start of first unit in respective fiscal year; TPP – Thermal Power Plant

Established Energy Company with 4,559 MW Operational Capacity

Proximity to load centre/fuel source/infrastructural facilities

Renewable Energy: 10 MW (Solar)

Commissioned ~10 MW solar power projects across various locations within JSW Group, and exploring other opportunities in RES segment

Barmer: 1,080MW

• Configuration: 8 X 135MW
• Units operating: since 20103
• Technology: Sub-critical pithead Lignite based TPP
• Fuel Source: Captive Lignite mines of BLMCL1
• Power Offtake: Long Term PPA
• Project Cost: INR 71,650mn/ $1,018mn2

Ratnagiri: 1,200MW

• Configuration: 4 X 300MW
• Units operating: since 20113
• Technology: Sub-critical TPP
• Fuel Source: Imported Thermal Coal
• Power Offtake: Long Term PPA & Merchant
• Project Cost: INR 55,161mn/ $784mn2

Baspa II (300MW) & Karcham Wangtoo (1,091MW)

• Units operating: Baspa II since 2003 and Karcham Wangtoo since 2012
• Technology & Fuel Source: Hydro
• Power Offtake: Long Term PPA
• Asset Value to JSW Energy: INR 92,750mn/ $1,317mn2

18 MW thermal capacity under construction at Salboni (W.B.); to be tied under Group Captive LT PPA

Under-construction capacity Nandyal: 18 MW

Commissioned 18 MW thermal capacity in Q1FY20 at Nandyal with LT PPA under Group captive scheme

• Configuration: 2 X 130MW and 2 X 300MW
• Units operating: since 20003
• Technology: Sub-critical TPP
• Fuel Source: Gas & Imported Thermal Coal
• Power Offtake: Long Term PPA & Merchant
• Project Cost: INR 30,957mn/ $440mn2

Vijayanagar: 860 MW

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USD/ INR = 70.4

Proven Track Record

Despite turbulent sector dynamics, delivering sustainable growth driven by focused execution and balanced strategy

FY12 FY19

• CAGR FY12–19: 6%

Total Revenue INR 62,654mn / $890mn INR 95,056mn / $1,350mn

• CAGR FY12–19: 11%

EBITDA INR 15,944mn/ $226mn INR 32,211mn/ $458mn

• CAGR FY12–19: 8%

Capacity (MW) 2,600 4,541

• Diversifying fuel sources

Fuel Type Thermal Coal Thermal Coal, Lignite, Hydro, Solar

• CAGR FY12–19: 7%

Net Generation (MUs) 13,594 22,088

• Presence across the value chain

Business Segment Power Generation, O&M, Transmission, Trading, Coal Mining Power Generation, O&M, Transmission, Trading, Coal Mining

• CAGR FY12–19: 22%

PAT INR 1,701mn/ $24mn INR 6,845mn/ $97mn

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Audit Committee

 Ensures regular review of audit plans, significant audit findings, adequacy of internal audit system, compliance with applicable regulations by the Company and its subsidiaries  Comprises of four Independent Directors and one Non-Executive Director

Compensation and Nomination & Remuneration Committee

 Identifies qualified persons and recommends to the Board the appointment, removal and evaluation of Directors  Responsible for drafting policy on specific remuneration packages for Executive Directors and approving the payment

• f remuneration to managerial personnel

 Formulate criteria for independence of Director, evaluation of Independent Directors, policy on Board diversity  Comprises of three Independent Directors and one Non-Executive Director

Stakeholders Relationship Committee

 Responsible for the functioning of the investor grievances redressal system  Comprises of one Independent Director, one Non-Executive Director and one Executive Director

Risk Management Committee

 Periodically reviews risk assessment and minimisation procedures  Comprises of two Independent Directors, one Non-Executive Director and two Executive Directors

Corporate Social Responsibility (CSR) Committee

 Formulates and recommends to the Board a CSR Policy including list of projects and programs  Periodically reviews the progress of CSR activities and programs  Comprises of two Independent Directors, one Non-Executive Director and one Executive Director

Sound Corporate Governance

All key committees in place, having adequate Independent Director representation

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Agenda Overview Value Proposition Operational Highlights Appendix

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Value Proposition

Efficient Capital Allocation and Execution Capabilities Portfolio of Efficient Operating Assets Diversified Fuel Tie-up Balanced Mix of Off-take Arrangements Sound Financial Profile

1 2 3 4 5

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Project cost of select power plants set up by other players in the industry

1) High capital cost due to CFBC boilers for lignite based power plant USD/ INR = 70.4

Efficient Capital Allocation and Execution Capabilities

Vijayanagar (2000-2001): 260 MW @ INR 43.42mn/MW (~$0.62mn/MW) Vijayanagar (2010): 600 MW @ INR 32.78mn/MW (~$0.47mn/MW) Ratnagiri (2011-2012): 1,200 MW @ INR 45.97mn/MW (~$0.65mn/MW) Barmer (2010-2013): 1,080 MW @ INR 66.34mn1 /MW (~$0.94mn/MW)

Leveraging upon strong project execution and project management expertise, and infrastructure

Power project Capacity Project cost 1st COD MW

INR NR mn/MW $mn/MW Year

Lanco (Amarkantak) 600

52.3 0.74 2009

Lanco (Udupi) 1,200

46.7 0.66 2010

Aryan Coal (Kasaipalli) 270

50.0 0.71 2011

Tata Power/DVC (Maithon) 1,050

52.4 0.74 2011

Adhunik (Padampur) 540

61.8 0.88 2013

GMR EMCO (Warora) 600

62.5 0.89 2013

GMR (Kamalanga ) 1,050

62.1 0.88 2013

Dhariwal (Chandrapur) 600

62.2 0.88 2014

DB Power (Janjgir-Champa) 1,200

70.2 1.00 2014

JPVL (Nigrie) 1,320

79.2 1.13 2014

Neyveli (Barsingsar)

1

250

70.0 0.99 2010

Giral (Rajasthan)

1

250

76.9 1.09 2011

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JSW Energy Standalone1

93% 81% 83% 84% 61% 59% 65% 64% 64% 62% 61% 61% 56% 55% 55% 60% FY13 FY14 FY15 FY16 FY17 FY18 FY19 Q1FY20

JSW Energy Standalone PLF All India Private Sector Thermal PLF*

*Source-CEA 1) Includes Vijaynagar (860MW) and Ratnagiri (1,200MW) plants 2) Deemed PLF 3) Lower PLF in FY19 due to lower water availability in Sutlej Basin

Portfolio of Efficient Operating Assets

 Among the best-run private sector power plants in India  Sound operating efficiency characterised by one among the lowest O&M expenses in the sector

Healthy PLFs driven by O&M and execution expertise

Barmer2 Hydro3

86% 85% 84% 84% 84% 81% FY15 FY16 FY17 FY18 FY19 Q1FY20

JSW Energy (Barmer) - Deemed PLF

50% 52% 46% 66% FY17 FY18 FY19 Q1FY20

JSW Hydro Energy Ltd

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Diversified Fuel Tie-up and Balanced Mix of Off-take Arrangements

Low fuel and forex risk; Approval to blend upto 50% of domestic coal at Vijaynagar and Ratnagiri plants Fuel sources –

• Imported coal
• Lignite
• Hydro
• Renewable (RE)

45.6% 23.7% 30.5% 0.2%

4,559 MW RE Hydro Lignite Imported coal

Power off-take arrangements – optimal mix of Long term PPAs and short term/ merchant sales....

Long term:  Stable cashflows, pre-defined returns  Insulated from inflation and forex/fuel price movement Short term:  Ability to capitalise on better realisations  Ability to respond to demand fluctuations and shortages

… with clear visibility to increase the LT PPA proportion to

• ver 88% from April, 2020

81.4% 18.6%

Long Term Short Term

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Source: Stock exchange filings – FY19 results; (1) Calculated as EBITDA/ Revenue, where EBITDA includes Other Income, (2) Calculated as EBIT/ Average Capital Employed (3) CPLTD for FY19 is basis FY18 for Reliance Power

Sound Financial Profile (1/2)

FY19 EBITDA Margin1 FY19 Return on Capital Employed2,3 (RoCE)

9.1% 9.7% 8.6% 7.2% 6.8% 6.5% JSW Energy CESC Adani Power NTPC Reliance Power Tata Power 34% 50% 28% 28% 27% 23% JSW Energy Reliance Power Adani Power CESC NTPC Tata Power

Healthy Margins and Return Ratios

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FY19 Net Debt1/Equity (x)

Source: Stock exchange filings – FY19 results (1) CPLTD for FY19 is basis FY18 for Reliance Power (2) EBITDA includes Other Income

Sound Financial Profile (2/2)

FY19 Net Debt/EBITDA2 (x)

Well capitalised Balance Sheet, adequately positioned to tap growth opportunities

0.9 1.5 1.5 1.8 2.3 6.1 JSW Energy CESC NTPC Reliance Power Tata Power Adani Power 3.1 4.5 6.2 6.3 7.0 7.1 JSW Energy CESC NTPC Adani Power Tata Power Reliance Power

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Agenda Overview Value Proposition Operational Highlights Appendix

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Key Highlights for Q1FY20

 Commenced power supply from Vijayanagar plant to Telangana under 300 MW short term PPA  Added 41 MW under long term PPA (LT PPA) at Ratnagiri plant under Group Captive scheme increasing the consolidated LT PPA proportion to 81.4%  Commissioned 18 MW thermal power plant at Nandyal with LT PPA tied under Group Captive scheme  Proposed acquisition of 1000 MW Tamnar thermal power plant from Jindal Steel and Power Ltd terminated due to elapsing of long stop date without completion of stipulated conditions precedent  The Company’s Vijayanagar plant won the ‘Shining Glory Award’ from Green Maple Foundation for contributions in Environmental Management  JSW Energy (Barmer) Ltd won the ‘Shining Glory Award’ from Green Maple Foundation for contributions in Business Excellence and Women Empowerment

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Q1 Plant-wise Net Generation (MUs)

* Deemed PLF Hydro net generation numbers includes free power to HPSEB

PLF/CUF Q1 FY20 Q1 FY19 Remarks (Q1 FY20)

Vijayanagar 38.2% 55.4% Lower short term sales Ratnagiri 81.7% (*83.6%) 84.4%(*85.5%) Lower short term sales Barmer* 80.8% 86.2% Hydro 66.3% 51.2% Higher generation due to better water availability in Sutlej basin Solar - Nandyal 22.4%

• Solar - Salboni

18.3%

• Short term sales (MUs)

722 1,147 Lower at both Vijayanagar and Ratnagiri

960 2,032 1,651 1,443 6,086 662 1,954 1,379 1,868 4 5,867 Vijayanagar Ratnagiri Barmer Hydro Solar Total Q1 FY19 Q1 FY20 30% 4%

Power Generation

16% 4% 31%

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Consolidated Financial Results

# Not Annualized for Q1 * Computed as PAT+ Depreciation+ Deferred Taxes+ Exceptional items

` Crore

Particulars Q1 FY20 Q1 FY19

Total Revenue 2,464 2,428 EBITDA 861 844 EBITDA Margin(%) 35% 35% Interest 270 313 Depreciation 291 290 Profit Before Tax 300 241 Profit After Tax 244 229 Gross Cash Accruals* 551 500 Diluted EPS (`) # 1.49 1.40

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* Excludes short term working capital debt/acceptances ^ Gross Debt reduced by ~` 220 Crore in Q1FY20

Amongst the Strongest Balance Sheet in Power Sector

Net Debt to Equity healthy at 0.86x

Net Debt calculation excludes the market value of listed equity investments worth ~`1,940 Crore (As on June 30, 2019) Dec 31, 2017 Mar 31, 2018 Jun 30, 2018 Sept 30, 2018 Dec 31, 2018 Mar 31, 2019 Jun 30, 2019 Net Worth (Rs Crore) 11,469 11,110 11,581 12,231 11,904 11,822 11,928 Net Debt* (Rs Crore) 11,896 11,278 11,382 10,982 10,611 10,050 10,221 Net Debt*/Equity (x) 1.04 1.02 0.98 0.90 0.89 0.85 0.86 Net Debt*/TTM EBITDA (x) 3.54 3.49 3.68 3.61 3.34 3.12 3.16 Weighted Average Cost of Debt 9.04% 9.03% 8.97% 9.00% 9.06% 9.07% 9.20% 1.04 1.02 0.98 0.90 0.89 0.85 0.86

0.60 0.70 0.80 0.90 1.00 1.10 1.20 8,000 9,000 10,000 11,000 12,000 13,000

Net Worth (Rs Crore) Net Debt* (Rs Crore) Net Debt*/Equity (x)

in ` Crore in (x)

^

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Entity-wise Summary Financial Performance

` Crore

# Including Other Income * After inter-company adjustments and eliminations

Total Revenue# Q1 FY20 Q1 FY19

Standalone 1,191 1,388 JSW Barmer 863 654 JSW Hydro 390 370 JPTL 20 22 Consolidated * 2,464 2,428

EBITDA Q1 FY20 Q1 FY19

Standalone 295 259 JSW Barmer 251 265 JSW Hydro 334 337 JPTL 19 21 Consolidated * 861 844

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Agenda Overview Value Proposition Operational Highlights Appendix

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Strong Financial Track Record

Key Financial Parameters FY17 FY18 FY19

EBITDA Margin (%) 41.8 37.9 33.9 Return on Avg. Net Worth (%) 6.3 4.6^ 6.1 EPS (` Per Share) 3.87 3.02^ 4.24

 Profit making entity since inception  Well capitalised balance sheet/ low gearing ratios  Reducing debt levels leading to robust debt protection metrics

Robust financial profile in a challenging environment

62,654 91,477 89,076 96,103 100,596 84,804 85,139 95,056 15,944 30,066 34,536 38,535 42,612 35,414 32,276 32,211

8,000 16,000 24,000 32,000 40,000

• 20,000

40,000 60,000 80,000 100,000 120,000 FY12 FY13 FY14 FY15 FY16 FY17 FY18 FY19 Total Revenue (Rs. mn) EBITDA (Rs. mn, RHS)

91,191 94,049 89,205 75,739 144,762 133,844 112,782 100,503 1.60 1.52 1.36 1.01 1.49 1.29 1.02 0.85

• 0.40

0.80 1.20 1.60 2.00 2.40

• 40,000

80,000 120,000 160,000 FY12 FY13 FY14 FY15 FY16 FY17 FY18 FY19 Net Debt (Rs. mn) Net Debt to Equity Note: Figures from FY16 onwards have been restated as per IndAS; ^ Before exceptional items

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Demand Growth robust at 6.7% YoY in Q1FY20

Source: CEA, * Basis Provisional CEA Data Jun’19

Region Q1 FY20* Q1FY19 YoY % Remarks (Key States driving Demand) (MUs) (MUs) North 108,462 101,421 6.9% Uttar Pradesh (+10.8% YoY) West 105,213 99,617 5.6% Chhattisgarh (+26.0% YoY) South 90,037 82,858 8.7% Karnataka (+15.6% YoY) East 39,841 38,010 4.8% Bihar (+9.9% YoY) North-East 4,218 3,897 8.2% Meghalaya (+20.8% YoY) All-India 347,771 325,803 6.7% Quarterly Growth Rates Region FY20 FY19 Q1* Q4 Q3 Q2 Q1 North

6.9%

• 0.5%

2.9% 2.7% 5.8%

West

5.6% 2.8% 7.2% 8.9% 5.1%

South

8.7% 2.4% 9.3% 8.5% 4.2%

East

4.8%

• 0.1%

9.7% 11.0% 6.0%

North-East

8.2% 10.7% 0.9% 4.6%

• 3.7%

All-India

6.7% 1.6% 6.7% 6.8% 5.1%

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Generation and PLF trends

Thermal PLF (%) Q1 FY20* Q1 FY19 Remarks All- India PLF 62.8% 62.2%

• All-India Thermal PLF marginally higher

YoY led by increase in Private Thermal PLF Central 69.0% 73.3% State 60.8% 61.3% Private 59.6% 54.5% Gross Generation Q1 FY20* Q1FY19 YoY % Remarks (MUs) (MUs) Thermal 287,690 276,562 4.0%

• RE generation robust at 18.5% YoY
• Growth in Hydro generation higher

due to weak generation in Q1FY19 because of lower water availability Hydro 39,549 31,575 25.3% RES 36,186 30,527 18.5% Others 11,904 10,847 9.7% Total 375,417 349,512 7.4%

Source: CEA, * Basis Provisional CEA Data Jun’19

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State 29.3% Private 46.5% Central 24.2% Total: 45.4 GW # Total: 6.8 GW #

Installed Capacity

Source: CEA * Net capacity change during Q1FY20 # Refers to total installed capacity of respective segments

Sector-wise Installed Capacity – 358.3 GW (As on June 30, 2019) Segment-wise Installed Capacity – 358.3 GW (As on June 30, 2019)

Total: 79.8 GW # +2,151 MW * Total: 226.3 GW # +45 MW * Total: 105.1 GW # Total: 166.6 GW # +2,196 MW * Total: 86.6 GW #

In Q1FY20, Installed Capacity increased by 2.2 GW led by RES capacity addition (+2.15 GW)

Thermal 63.2% Nuclear 1.9% Hydro 12.7% RES 22.3%

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Average Merchant Tariff

Source: IEX (DAM)

Average monthly merchant tariffs range bound at `3.2 - 3.4 per unit during Q1FY20

Particulars Q1 FY20 Q4 FY19 Q1 FY19 YoY% QoQ% Merchant Volume (MUs) 11,993 9,431 13,938

• 14.0%

27.2% Average merchant tariff (`/unit) 3.29 3.18 4.13

• 20.3%

3.6% Particular FY19 FY18 FY17 FY16 Average merchant tariff (`/unit) 3.85 3.26 2.42 2.73

1.50 2.50 3.50 4.50 5.50 6.50 Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar

Merchant Tariff Trend (`/unit)

FY16 FY17 FY18 FY19 FY20

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• Industrial production (IIP) growth recovered after dipping to a 23-

month low in Mar’19 (0.1%) and stood at 3.7% YoY in Apr-May’19

• Imported coal (API4) prices witnessed sharp decline of ~34% YoY

and 20% QoQ in Q1FY20

• In Q1FY20, average value of rupee against USD appreciated by

~1% QoQ, however, depreciated ~4% on YoY basis

Indian Economy and Imported Thermal Coal Prices

Source: API4 Coal Index, MoSPI, Bloomberg, Reserve Bank of India (RBI)

Imported coal (API4) price and USD/INR indexed to Jun-18 Levels Industrial Production Growth (YoY %) Indexed to Mar-2019 Levels

• 2%

0% 2% 4% 6% 8% 10% 12% May-18 Jul-18 Sep-18 Nov-18 Jan-19 Mar-19 May-19 Overall IIP Manufacturing 60 70 80 90 100 110 Jun-18 Sep-18 Dec-18 Mar-19 Jun-19 Indexed API 4 Coal (monthly avg.) USD/INR (monthly avg.)

Month API 4 Coal USD/INR Mar-19 100 100 Apr-19 91 100 May-19 88 100 Jun-19 84 100

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This presentation has been prepared by JSW Energy Limited (the “Company”) based upon information available in the public domain solely for information purposes without regard to any specific objectives, financial situations or informational needs of any particular person. This presentation should not be construed as legal, tax, investment or other advice. This presentation is confidential, being given solely for your information and for your use, and may not be copied, distributed or disseminated, directly or indirectly, in any manner. Furthermore, no person is authorized to give any information or make any representation which is not contained in, or is inconsistent with, this presentation. Any such extraneous or inconsistent information or representation, if given or made, should not be relied upon as having been authorized by or on behalf of the Company. The distribution of this presentation in certain jurisdictions may be restricted by law. Accordingly, any persons in possession of this presentation should inform themselves about and observe any such restrictions. Furthermore, by reviewing this presentation, you agree to be bound by the trailing restrictions regarding the information disclosed in these materials. This presentation contains statements that constitute forward-looking statements. These statements include descriptions regarding the intent, belief or current expectations of the Company or its directors and officers with respect to the results of operations and financial condition of the Company. These statements can be recognized by the use of words such as “expects,” “plans,” “will,” “estimates,” “projects,” or other words of similar meaning. Such forward-looking statements are not guarantees of future performance and involve risks and uncertainties, and actual results may differ from those specified in such forward-looking statements as a result of various factors and assumptions. The risks and uncertainties relating to these statements include, but are not limited to, (i) fluctuations in earnings, (ii) the Company’s ability to manage growth, (iii) competition, (iv) (v) government policies and regulations, and (vi) political, economic, legal and social conditions in India. The Company does not undertake any obligation to revise or update any forward-looking statement that may be made from time to time by or on behalf of the Company. Given these risks, uncertainties and other factors, viewers of this presentation are cautioned not to place undue reliance on these forward-looking statements. The information contained in this presentation is only current as of its date and has not been independently verified. The Company may alter, modify or otherwise change in any manner the contents of this presentation, without obligation to notify any person of such revision or changes. No representation, warranty, guarantee or undertaking, express or implied, is or will be made as to, and no reliance should be placed on, the accuracy, completeness, correctness or fairness of the information, estimates, projections and opinions contained in this presentation. None of the Company or any of its affiliates, advisers or representatives accept any liability whatsoever for any loss howsoever arising from any information presented or contained in this presentation. Please note that the past performance of the Company is not, and should not be considered as, indicative of future results. Potential investors must make their own assessment of the relevance, accuracy and adequacy of the information contained in this presentation and must make such independent investigation as they may consider necessary or appropriate for such purpose. Such information and opinions are in all events not current after the date of this presentation. None of the Company, any placement agent or any other persons that may participate in the offering of any securities of the Company shall have any responsibility or liability whatsoever for any loss howsoever arising from this presentation or its contents or otherwise arising in connection therewith. This presentation does not constitute or form part of and should not be construed as, directly or indirectly, any offer or invitation or inducement to sell or issue, or any solicitation of any offer to purchase or subscribe for, any securities of the Company by any person in any jurisdiction, including in India or the United States, nor shall it or any part of it or the fact of its distribution form the basis of, or be relied on in connection with, any investment decision or any contract or commitment therefore. Securities of the Company may not be offered, sold or transferred in to or within the United States absent registration under the United States Securities Act of 1933, as amended (the “Securities Act”), except pursuant to an exemption from, or in a transaction not subject to, the registration requirements of the Securities Act and in compliance with any applicable securities laws of any state of other jurisdiction of the United States. The Company’s securities have not been and will not be registered under the Securities Act. This presentation is not a prospectus, a statement in lieu of a prospectus, an offering circular, an advertisement or an offer document under the Companies Act, 2013, as amended, the Securities and Exchange Board of India (Issue of Capital and Disclosure Requirements) Regulations, 2009, as amended, or any other applicable law in India.

Forward Looking and Cautionary Statement

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Thank you