CONFERENCE CALL - from Capital Markets
Tax rate for FY16 will be 27-28%
JSW Energy held a conference call on Jan 20, 2015. In the conference call the company was represented by Sanjay Sagar, Joint Managing Director & CEO and Pramod Menon, Director Finance.
Key takeaway of the conference call
Power sold was up 11% to 5969 million units. But the share of long term power sales has come down to 51% compared to 54% in the corresponding previous quarter. The average realization was Rs 4.09/ unit in Q3FY16 compared to Rs 4.25/unit in corresponding previous quarter.
Lower off take by JSW Steel due to shutdown of its operations for expansion and maintenance work during the quarter has brought down the share of long term power to total sales in Q3FY16.
Expect the effective tax rate to be about 27-28% for FY16 as a whole even though the tax rate for the quarter ended Dec 2015 was higher at about 36%.
Benefit of refinancing and reduction in interest rate has brought down the weighted average cost of debt to 10.35% as of Dec 31, 2015 and target to bring below 10%.
Kutehr HEP project total cost is around Rs 2900 crore and the company expect to complete the Financial closure by end of current fiscal. The company has incurred a cost of Rs 254 crore as of Dec 31, 2015 in this project. Executing this project on EPC basis with the EPC contractor indentified through transparent ICB route with Jayprakash Associates emerging as the lowest bidder. Though the cost of Rs 2900 crore for 240 MW works out to Rs 12 crore per MW that should not be compared to the valuations for cost paid for acquisition of older plants. There won’t be any problem in selling the power in long term basis. Right now there is no PPA signed for this project and there is no worry for selling this power in long-term basis.
Karcham Wangtoo - Free power is 12% and will increase by another 6% over next 7 year. Currently PPA is for 70%. And balance is for merchant sales. The increases in free power ill bring down the merchant sales.
Hydro assets acquired becoming part of JSW Energy effective September 1, 2015 has resulted in higher interest and depreciation that hurt the bottom-line.
JSW Toshiba is evaluating the insurance related claims. About Rs 18-20 crore is the entity level loss is estimated for JSW Toshiba. The company’s share will be around Rs 5 crore.
Stabilisation of Kolhapur is taking more than long time for stabilization this additional transmission capacity of 2000 MW to South India from rest of the grid will come in by end of CY2016.
Cash on balance sheet is Rs 386 crore as on Dec 2015.
Acquisition Debt sitting at SPV level is Rs 5700 crore and at JSW Energy level is Rs 1500 crore. The acquisition debt sitting in JSW Energy level will move to SPV level in couple of quarters.
Sales in day ahead market in southern market by the company is very insignificant and largely in shorter of 6 months kind of contract.
Tariff on Himachal HEP – Invoicing and recognition is done on petitioned rate. The difference between invoicing and payment is about Rs 67 crore. The payment will be as per the tariff order of CERC.
Vijaynagar and Ratnagiri plants were on South African coal in Q3FY16.