JSW Energy Limited (533148) Earnings Call Transcript & Summary

Ladies and gentlemen, good day. And welcome to JSW Energy Limited Q4 FY '20 Earnings Conference Call hosted by Motilal Oswal Financial Services Limited. [Operator Instructions] Please note that this conference is being recorded. I now hand the conference over to Mr. Aniket Mittal from Motilal Oswal. Thank you, and over to you, Mr. Mittal.

Thanks, Nirav. On behalf of Motilal Oswal Financial Services, I welcome you all to the 4Q and 12-month FY '20 earnings call for JSW Energy. I will now hand over the call to Mr. Pritesh Vinay, Head of Investor Relations for JSW Group to take this call forward. Over to you, sir.

Thank you very much, Aniket. A very good evening to all the participants. On behalf of JSW Energy, I welcome all of you to the fourth quarter and full year fiscal 2020 results discussions. I'm sure you have had a chance to go through the results, the press release and the presentation, which is already uploaded on the website. We have with us today the management team of JSW Energy, represented by Mr. Prashant Jain, the Joint Managing Director and CEO; Mr. Sharad Mahendra, the Whole Time Director and COO; and Mr. Jyoti Kumar Agarwal, Director Finance of the company. We will start with a few minutes of opening remarks by Prashant, and we can then open the floor for Q&A. With that, over to Prashant.

Thank you, Pritesh. Good evening, ladies and gentlemen. I hope that each one of you are doing well, and having a -- you're staying safe at your home. This quarter, we have seen that the power demand has gone up by 1.9%. This happened primarily on the very strong backdrop of power demand growth in the month of January and February, where we saw in January, 3.8% power demand growth and in February, it was 11.8%. But in March, it came down to 8.4%. Precisely in the last week of March, between 23rd to 31st of March, the 27% power demand drop was seen, which has been consistently improving during the month of April and May. In the month of April, we saw the power demand de-growth was 23% and in the first 15 days, it was negative 19%. If you look at the recoveries side also, in terms of the peak demand, which was close to 122 gigawatts in the month of April has been gradually improving. And as we are speaking now, the peak demand has come up to 142 gigawatts as compared to the previous year, same time, 172 gigawatts. Also, if you look at the profile per se, in the northeastern region, the power demand is positive as compared to last year. And in case of Eastern region, the power demand is between 6% to 9% negative growth. And South is close to 10%, West and North is negative 20%. So the major impact of the degrowth of the power demand is being seen in the West and North. What we saw in terms of generation for the FY '20, the thermal generation was down negative 2.8%, whereas the hydro generation was positive 15.7% and renewable was positive 9%. Why did we see the thermal generation going down and lower PLF because of this COVID-19 because all of you must be knowing that hydro and renewable are enjoying much strong status. Because of that, whatever the knockdown on the power demand change was to be borne by the thermal power plants, and that was the reason that the thermal power generation went down by negative 2.8%. All India thermal PLF went down to 56.4%. It is 3 digits lower number as compared to 61% last year. And interestingly, this negative PLF or the lower PLF was seen only in the central and state sector. So central sector, the PLF came down to 64% as compared to 72% and state was 50.7% as compared to 57% last year but IPP was flat at 55%. Now as we are seeing the pickup in the power demand, the PLF of the thermal power plants will -- is going to pick up. During the year, we saw total 16 gigawatt of the gross capacity addition, 16.5 gigawatt, of that close to 7 gigawatt is in the thermal capacity and 2.5 gigawatt was retired so net capacity addition in thermal was 4.3 and renewable was 9.4 gigawatts. For the last quarter, the merchant tariff was low at 2.74%. And in the current quarter, the merchant tariffs are further subdued because there are a lot of thermal power plants, which are not able to maintain a technical minimum and because of which they are selling power in merchant market. And in the month of April and May, we saw the merchant volume also picking up. And we saw a lot of DISCOMs were buying power from the merchant market and reducing the load of their own power plants, where the fuel prices are higher than the merchant tariffs. But this trend is going to reverse as we are seeing the power demand is going up. So people will not be selling power in order to maintain the technical minimum and then power tariffs will again going to pick up as soon as the demand for power revives. But for the entire year, merchant tariff was INR 3.01 as compared to the last year tariff of INR 3.85. And merchant volumes were flat at INR 50 billion at -- same as last year. The coal prices have been coming down consistently in line with the other commodity trend as well as the oil prices and natural gas prices. Last quarter, it was -- API 4 index was down 6% year-on-year. And subsequently, it has fallen very rapidly. And now the coal prices are stable, and we believe that the coal prices will be remaining subdued in the current year and time to come. Coming back to the company. In the quarter 4, our generation was lower by 3%, primarily due to the lower uptake under PPA, which was down by 15%, whereas the short-term sales was higher by 30%. For the entire year, the generation was lower by 4% due to the lower offtake under PPA, which was down by 6%, whereas the short-term sales was down by 12%. The short-term sales, which was down 12%, was primarily due to the reason what we saw in October 2018, there was a quite an interesting period of 45 to 60 days. At that point of time, there was a lot of shortages. And at that point of time, we were running our Vijayanagar facility full because of which the PLF were higher. And -- but if you look at for the entire year per se for the Ratnagiri plant, the short-term sales was higher than the last year because we could enter into the various contracts from the Ratnagiri plant. For the quarter, our EBITDA was higher by 10% at INR 629 crores. This was primarily because of lower fuel cost as well as lower O&M costs. We have been reducing our O&M cost consistently. This year also -- this is a consecutive third year where we have reduced our O&M cost year-on-year. And last year, we have -- we obtained the status of the lowest O&M cost power producer in the country in each and every segment and on a consolidated basis. This year, we further strengthened our position. And going forward also, we are going to follow the similar trajectory. Our interest cost was lower by 12% during the year at INR 1,051 crore and PBT was at INR 1,025 crore before exceptional items, which was higher by 18%. Now we have been deleveraging our balance sheet consistently because of which we have been taking the -- getting the advantage of lower interest costs. And our net debt into the company has come down to INR 8,945 crore, and our debt-to-EBITDA has come down to 0.77x, which offers a huge potential for us to grow our balance sheet. Our interest cost, which is -- for the year was 9.12%. But if you look at based on the resets, we are expecting that this interest cost will be 1% lower if there are no further interest cuts announced by RBI. So that will be further improving our gearing as well as lower interest costs. Now coming to the couple of interesting things which industry has been facing, and I want to talk about that. One is the receivable position. JSW Energy, as we have been mentioning that we are in the bottom quartile of purchase basket for the respective discounts. That offers us very high merit order dispatch, and because of which our payment is also coming -- have been coming on priority. Our receivable position has been improving since September last year. In the December quarter, our receivable came down by 4%, and in March quarter, it further came down by 3%. And as we are speaking, we -- our receivables have further come down by double digits as compared to the March position. However, the industry is facing the challenging times, but JSW Energy has been able to gather all these storms. And because of our positioning, we are in a sweet spot. JSW Energy has been given force majeure, primarily for -- through 2 discounts, one is Rajasthan. Second is UP. However, I would like to clarify a couple of things here. Our hydro power plant, which is a very low-cost power plant, we have been scheduling 100% power, which have been generated during this lockdown period. In fact, all the companies who have given us the so-called notice, they have been taking 100% of power. And that is a very low-cost power, and we have been receiving money also. Our Maharashtra plant is running at more than 100% PLF. And in case of Rajasthan, where our deemed PLF is higher than the actual PLF, but there, we are seeing an interesting trend also. Last year, our actual PLF was close to 62.5%, whereas during the shutdown time frame, our PLF has been in excess of 70%. So we are very, very confident that in spite of clarification, which has been issued by the Ministry of Power in the month of April as well as in the month of May that for unscheduled power, the fixed cost has to be paid. And whatever relaxation which has been provided by the Ministry of Power for Central sector, for without any carrying costs, it needs to be paid for the -- within -- in 3 installments. Based on our profile and also based on the scheduling of power, we are not exposed to any kind of a risk where there will be any dispute, which will be arising for nonpayment of power for unscheduled power beyond the guaranteed amount. The exposure is only with respect to Rajasthan plant. We are also -- I have explained, that the scheduling has increased. Government of India has recently announced a couple of packages, which are step in the right direction. The way we see is that power sector has been facing its own integral challenges for quite a long time. And this COVID-19 situation has created an emergency for Government of India to do certain reforms in the sector. That's why we see this -- this is a step in the right direction, and we believe that the reforms in the power sector will be accelerated given the crisis situation. Apart from the liquidity measure, the privatization of DISCOMs and reforms and DISCOMs are very, very important factor because what we really believe is that reforms or the privatization of DISCOMs, use of technology and direct payment of subsidy to the consumer are actually integral part and that will be reducing the tariff to the actual consumer. Historically, people have been talking about the DISCOM health will be improved if the tariff is increased by the regulator, and then only the health of the DISCOM will improve. But actually, the reason is other way around. We believe that the tariffs will go down because of the privatization and then transmission and distribution losses will come down as well as if the subsidy is paid directly to the consumer, the actual tariff will come down. Second, stressful situation for the power sector is the unavailability of the coal and with the opening of the coal mine for the commercial coal mining in the -- in India is going to be a very well progressive step. So I personally believe that these 2 reforms are going to go in a long way and will strengthen the power sector and which will bolster the investment in time to come. However, execution is the key. We need to really see how quickly these reforms are fructifying on the ground. As regards to our 2 acquisitions, which we have been really talking about. One is the GMR Kamalanga, where we have put the transaction on hold. Given the uncertainty in the recovery of power demand, I would like to clarify to all the participants that given the trajectory, the visibility of the transaction going through is low. As regards to Ind-Barath, there has been no progress for last 3 months because of the lockdown. And we are looking for courts to resume to start hearing the matter, and we will be keeping you posted in due course of time. Lastly, I want to clarify one more important part. We have seen a very stable EBITDA, and then our PBT has been consistently going up because of our lower O&M costs as well as the lower interest cost. Our 81% capacity is long-term tied up. However, our EBITDA coming from the long-term portfolio is close to 94%, 95%. And our entire long-term portfolio and the EBITDA -- 95% EBITDA is not contingent upon imported coal prices as well as the dollar fluctuation. It's only the 5% EBITDA margin, which is contingent upon the dollar fluctuation as well as merchant tariffs and then international coal prices. That's why we have been seeing the very stable cash flows, and our balance sheet has been quite interestingly strengthening year-by-year and which has been giving us quite a good opportunities where we believe that we will be able to capitalize in time to come. Our Kutehr project, at this point of time is there is no activity going on because of the lockdown activity. As and when the lockdown is lifted, we will be evaluating it and then starting -- we will start working on that project. The PPA for with Haryana for Kutehr project, it is before the regulator for approval. Because of the lockdown, it has got delayed the approval, but we believe that it should be coming anytime soon. With regards to our operating of our Karcham project from 1,000 megawatt to 1,091 megawatts, there are the positive development. And then we have -- we are getting a very good visibility that operating will be happening very soon, probably in shorter than anybody is expecting. So we -- the moment our operating is done, then we will be in a position to capitalize on a higher cash flows as well as the higher order flows. Conserving cash is the key for us, and we have been deleveraging. And we have been delaying all kind of a CapEx. Our normal CapEx, which has been less than INR 100 crores every year for maintaining our plants, but we will be putting all our -- all best foot forward to reduce the CapEx as much as possible and reducing our O&M cost further as much as possible until there is a clarity in the sector because the clarity in the power sector is contingent upon 2, 3 things. One is how the economy is revising? Because the power demand, what we are really seeing here is the power demand, which is primarily coming from the commercial establishments and also the MSME sector. The large industries are having their own capital power plants. That demand is not captured here. So the economic recovery is very -- is a key. How the MSME is going to come back very quickly on its feet that we need to see and also the migrant labor position, whether how quickly they go back to their home and how quickly they'll come back for work. And these all things are going to decide the trajectory for the recovery of power demand, but that recovery will be important for us to see how we plan our future growth opportunities. As far as our existing operations are concerned, we are quite comfortable. And we will be insulated from such disruptions other than whatever is the 5% EBITDA, as I explained to you, is close towards the merchant market, which we believe that we will be taking various measures to overcome in due course of time. With that, I would like to hand over the forum for question and answer. Thank you.

[Operator Instructions] The first question is from the line of Mohit Kumar from IDFC Securities Limited.

Yes. Sir my first question is on the addition pipeline, as you said, the GMR Kamalanga deal is on hold right now. Is this, do you think, because of change in demand environment? Or is there something else related to this decision?

So thank you for your question. It's a combination of factors. The way we are -- the way the situation is positioned at this point of time, given the uncertainty in demand and also the way the things are changing for thermal power plant, we have been evaluating and doing the introspection in last 2, 3 weeks. And based on that, we realized that this is an extraordinary situation. And at this point of time, it will be probably a prudent thing for us to question our strategy to grow within the thermal sector, as well as the kind of valuations we have been looking in the transaction, whether they are really warranted in this transaction. So it's a combination of all the uncertainty, the valuation as well as the thermal power generation.

Second question [indiscernible] given that our debt-to-equity ratio is low, so which are the -- what kind of growth you're seeing in the next couple, 3 years before the coal situation gets lifted?

Your voice was not clear, if I have heard you then...

My question is that what kind of growth opportunity will perceive in the next couple of years?

Sir, sorry to interrupt, your voice is not clear.

But I got the question. So as we have been talking about that, we are looking at 10 gigawatt generation company in next 3 to 5 years' time frame. I think we are going to stick to our guidance. Earlier, we were thinking that our -- that out of 5,500 megawatt of additional capacity addition, close to 2,000 megawatt, we were looking from thermal and balance 3,000 megawatt or 3,500 megawatt from the renewable sector. Now probably the majority will be coming from the renewable sector. So our growth opportunity and then targets remain same, but majority will be coming from renewable side.

Last on the balance sheet side, the other comprehensive income [indiscernible] around INR 900 crore, this is prior to -- from the JSW Steel investment, am I right?

Jyoti, can you take this question?

So it's primarily because of JSW Steel investment, yes.

Next question is from the line of Atul Tiwari from Citigroup.

Sir, again, on the Kamalanga acquisition, so now that is on hold, do you guys have to pay some kind of breakup fee to the other parties? And likewise, does the other party now have flexibility of going ahead and selling the plant to somebody else?

As I mentioned, the transaction is on hold. And in due course of time, you will come to know about the controls. However, I want to clarify. There is no break fee construct in the [indiscernible].

[Operator Instructions] Next question is from the line of Abhishek Puri from Axis Capital Limited.

Congrats for a good set of results. Just wanted to check for GMR Kamalanga one. So you said that it's a combination of thought process on thermal power plants as well and your incremental growth will come in from the oil sector. So could you -- could we get your thoughts on how you guys are planning it? And is there any near-term CapEx plan? Would there be acquisition opportunities that will be taken up seriously? Would this INR 5 crore per megawatt, that is an established number for many of the recent acquisitions? Would that fit into your returns benchmark structure that we look at?

Thanks for your question, Abhishek. I think the need of the hour today is to wait for the right time once we get the clarity. Because at this point of time, the important thing for us is to conserve cash and see that how the economic recovery is panning out. We don't know how -- whether there is a flattening of curve in India or not? Whether the peak is yet to come? Or whether it has -- we have seen it? Whether there will be a second wave or not? However, as I clarified that as and when there is a economic recovery, which is coming on the ground, then immediately, we will be moving very quickly on to the -- on whether to look at organically or inorganically. We have been mentioning that we have built capacity and also capability. In terms of various sites close to 1 gigawatt of sites are in our position, both for solar as well as wind, which we can start the construction anytime we want. But we are waiting for the clarity to emerge how this COVID-19 situation is panning out. Had this situation not come in front of us, we would have been already on ground. So the -- it's not a question of how, it's a question of the clarity, what we -- what will emerge from the various indicators. Today, you know that if I want to start construction anywhere, I cannot start even if I want to do that. Because I may have to stop. There are various uncertainties from the -- from the government side, there is a fear in the people. There is a -- there are various other factors. So the important thing is as soon as we see the recovery, we should have a visibility about the COVID-19 situation, we will be in a really good position to start on the renewable journey. And other than 1 gigawatt, there is another big pipeline which we are building because we are working on a very, very different construct, than this industry has been working. This industry had been working typically on a EPC construct to build solar capacities. And that's where our strategy is slightly different. What we have been doing in our power plant or steel plants or in cement plant, we have been building our -- on our own by reducing it into multiple packages. And thereby, you can reduce your costs and you can improve your returns. So that's what the strategy we are having. That's why we are acquiring a lot of sites, where we can build this renewable capacities. And we will be certainly looking at any acquisition opportunity in case it comes in front of us. Sharad, do you want to add anything?

What you have -- you have covered, Prashant, almost everything. So that is what we are looking for in expansion, both in renewal space. So there is nothing much to add on this.

Just on the use of cash in that case. So you guys are sitting on a decent amount of cash and which was probably kept up for these acquisitions. And if they are not going through, the dividend actually looks pretty small on that number then. And I understand this is a period when you should conserve cash, but could we expect FY '21, '22, if things normalize in say next 2 quarters or 3 quarters, the dividend rate should go up?

Yes. Certainly, there are the past precedents, Abhishek, then in case we don't see any good growth at that point of time, our dividend distribution has been higher than the stated policy. This time our dividend is close to 15% of the profits. But in past, we have given higher dividends also. But I believe, generally that this is a brief interruption, which has happened and this has created a uncertainty in front of all of us because at this point of time, anybody is making a guess, which will be hazardous at this point of time. But I believe that we are going to have a very good and rapid growth as soon as the -- there is a slightest visibility we are seeing, we will be very, very aggressive.

Okay. And so just one more question on the JS -- Dolvi expansion has been pushed back as per one of the newspaper article. So what are the backup measures for that PPA that we were expecting that Ratnagiri will fully comply into 100% PPA in that case? So -- or on that, again, gets pushed back along with the start of the plant?

Sharad, you would like to take this call?

See, Dolvi, what we are seeing as you have rightly said. But yes, we don't expect any significant delay. But yes, as you have seen last year, what we have done is that whatever balance power was there was tied up for full year under the short-term sales and the results we have seen of that -- the impact of that. So we are definitely -- we had -- last year also, we have not been dependent on the exchange sale, wherein it has been quite low, the tariffs also. So we are definitely in touch with the buyers for short-term market sales. And we have done also -- been successful in the month of April also to some extent. But just going forward, also the same -- in case there is any delay, we are quite sure that within the state, we will be in a position to sell this available capacity at the short-term till the time Dolvi comes.

And one more thing which I want to clarify to, Abhishek, that now the new tender, which is coming up is for 5,000 megawatt hybrid tender for RTC, coupled with the thermal capacity that offers us a very good opportunity to look at various things, which will be giving us a growth in the renewable sector as well as tying up of our existing capacity. So we are keenly looking at that opportunity.

Great. Okay. Just one small clarification. Vijayanagar is seeing big volume jump in month of April, whereas all other plants have seen decline. So what is driving that? Any new contracts that you have signed? That will be my last question.

Sharad?

See, Vijayanagar, if you see that our volumes have been in this -- to the captive steel plant only significantly. And also, in this the ramp-up has happened faster than what has happened in other places. So the requirement has gone up and the ramp-up under captive, we are selling close to what we have been selling in normal days, the same amount of power we have reached. If we talk of as on date scenario, we are at the same levels or slightly better than what we have been selling in the month of April.

Actually, their plant was under shutdown, that's why they were operating -- we were operating our plant.

Next question is from the line of Bhavin Vithlani from SBI Mutual Fund.

So just one thing, receivables has seen a jump from INR 1,400 crores to INR 2,100 crores. If you can give color on where exactly is distressed? You mentioned about Rajasthan and UP in your opening remarks. And has there been any improvement in the month of April? That's one. Second is on the Kamalanga, are there any payments or the advances made or any bank guarantees given that, if you can help us? And third is, any view on the FGD that needs to be done? Would we be able to adhere by the time line? You have 3 questions.

So Kamalanga question would -- Jyoti, would like to take. Then balance 2, I will take.

Yes. So there have been no advance or any sort of guarantees or letters of credit that have been given for the Kamalanga transaction. And I think Prashant did explain in one of the earlier questions, there is no break fee as well. So there is nothing of any of those sorts of things that is a part of the transaction construct.

Yes. So in terms of your receivables, we need to look at a couple of things. Number one is that earlier, a lot of DISCOMs were taking the rebate, while the amount was not due. Typically, when you raise the invoice within 7 days, they get a -- they make a rebate. And then after that up to 30 days, until that time, there is another rebate. And after that time, it is due. So the increase in the not due amount has gone up primarily between the last year and this year. But if you look at the overdue amount between the last year and this year, the difference is only INR 300 crores. Balance all difference what you are talking about between INR 1,428 crores [to 20 -- INR 2,100 crores] is a not due amount, which has gone up. The overdue amount has gone up by less than INR 300 crores. So -- and which is now at -- which has further gone -- come down in the month of May. And majority of this is only one DISCOM, and that is the GETCO DISCOM. And we believe that situation will also lease out the moment this PFC/REC reimbursement is taking place. So the receivable increase is primarily coming from DISCOMs not availing rebate. And this situation is further easing from March till now. This receivable is further coming down. It has come down by close to 15%.

In fact, if I can just add into that, the overdue amount between March and April has come down by 25% for us. So we have not seen any deteriorization in the payment trajectory of any of the discounts. In fact, given the COVID situation, we have been more proactive in terms of collection monitoring. And that has actually helped us to reduce our overdue amount.

And you -- and one question, I missed you asked about one more thing.

FGD?

FGD? Sharad, you would like to take that call?

Prashant, you can continue, yes.

Okay. With regards to FGD, for us, we need not to install any FGD in our Barmer and Ratnagiri. Only for the Vijayanagar, we need to install the FGD. There also, we are evaluating the various options going forward, whether we should do that or we should not do that given the change in the fuel mix because there are the possibilities that we will be able to use more of the cash, and then we can eliminate the FGD investment. And also we can integrate it along with the renewable power, given a new construct, what we might have seen right now that a new RTC renewable power tender, which was done at INR 2.90 for first year tariff. I think last nail in the coffin has been put for thermal power plants. With that a lot of people, including the captive consumers will be switching over to that part. And then we are building that kind of a construct going forward as soon as we are finalizing that construct we will be sharing with you.

Yes. Just one more question, if I may. So there were certain organic expansion that you had planned. You spoke about Kutehr, but in the earlier calls, you spoke about expansion in Rajasthan, given that there is excess mining available. Any views on that, please?

So we -- as I mentioned, as far as the CapEx is concerned, we are watching on daily basis. As soon as we get a clarity on COVID-19 and we see the economic environment is becoming normal as well as the health, insecurity or the fear or the risk factor is diminishing, we will be certainly going back to the drawing board and look at it. However, any thermal expansion, we will be giving a thought couple of times before we look at it. Until unless it is a must to do or a very, very so attractive so that too difficult to refuse, then only we will be looking at thermal acquisition. And for the reasons which I have explained to you just now, if renewable power RTC is available at INR 2.90 first year, with a 3% escalation, I don't think you can beat it.

Our next question is from the line of Dhruv from HDFC Asset Management.

Yes. Sir, the GMR Kamalanga plant had a good part under PPA. So you were assured a fixed return. So in that sense, the revenue or the EBITDA was largely freezed. So should we understand if the acquisition price, if for a hypothetical situation is revised to a lower value, so that your threshold return gets managed. You will go ahead with the GMR acquisition? Or it's a completely no now for the company?

As I said that at this point of time, the transaction is on hold. And also, I mentioned that the visibility is poor for the reasons which I have explained to you. So because of that, beyond that, I don't have any more comments to offer. We will be talking to you in due course of time.

And sir, lastly, a small thing. You mentioned in your opening remarks that 95% of the EBITDA is through long-term PPAs. So this 95%, you mean on the overall FY '20 EBITDA, right?

Yes. If you look at our FY '20, FY '19 EBITDA, they are more or less same, but our PPA portfolio has been increasing from 63% to 81% in last 24 months' time we have achieved. And then this long-term PPA portfolio is going to further increase in due course of time. We are not finding some solution for our Vijayanagar and Ratnagiri additional capacity, which I -- as I explained also, there are certain opportunities in front of us, for example, a 5,000 megawatt thermal plus renewable hybrid tender wherein we need not to look at for any fresh capacity in thermal only existing capacity without any CapEx is utilized, and then you can build additional renewable portfolio. Then this PPA portfolio will increase, but our PPA -- our EBITDA is quite stable. And then because of further deleveraging of our balance sheet and reduction in O&M cost, you will see PPA will be up -- PPA has been going up.

Next question is from the line of Murtuza Arsiwalla from Kotak Securities.

Just as an extension on the 95% PPA EBITDA. So let's say, on FY '20, you had 5% EBITDA consolidated, which is roughly about INR 160 crores. What would that number look like for '19? The content of EBITDA, which came from the short-term PPAs of -- the one which is more vulnerable to imported coal and short-term tariffs, et cetera? And what is the capacity that we're talking about, if you can identify the capacity, which is clearly still open both in '19 and '20 and the quantum of EBITDA in both the cases?

I don't have a ready number, but if my memory is right, I think we were anything between 63% to 68% average long-term tied up as compared to 81% long-term tied up in last year. So I will not be able to quantify at this point of time. But yes, short-term EBITDA contribution was more in FY '19. And the reason why I highlighted this point because typically, I have been talking to a couple of investors -- people have been seeing us that we are a company, which is more exposed to the merchant tariffs and merchant market situation and international coal prices as well as the currency fluctuation, but I wanted to clarify this point. And that this is what we have demonstrated in terms of our EBITDA stability as well as in our growth in the PPT.

Sure. And just fast forwarding to the current scenario where April, May, obviously, has been weak. You highlighted previously that Vijayanagar has been able to sell to JSW Steel. So again, it would be fair to say that the April to June quarter would be fairly resilient. Most of the sales is happening under the long-term PPA. And so you're not as vulnerable as people have generally perceived you to be in terms of the earnings?

So I don't want to comment on the -- and on current quarter and give you any forward-looking statement. But I want to tell you is that when we are -- as far as JSW Energy is concerned, the COVID-19 impact will be minimal or may not be any.

Next question is from the line of Sumit Kishore from JPMorgan.

In light of the comments that you have made on your thermal plants going forward, how would you place your commitment to the Ind-Barath deal now? I know it's still in the NCLT process, but you have to incur certain CapEx out there. So how is that project?

We have submitted a proposal before NCLT, which is a binding proposal in front of us. So until and unless, which is approved by the NCLT, I cannot make any kind of a comment on that. So it's a binding proposal and we have given it to -- before the NCLT. And -- but one thing which we need to see that the kind of a risk reward, which is the differential is there in case of Ind-Barath is very, very different. And then variable cost is close to INR 1.20. So if our proposal is going through, and we need to do that project and complete that project, that project is falling in the category, which I mentioned that if -- it's a kind of a situation where we cannot say no and we can -- and we are having a -- such a good economic proposition where it is very hard to resist in that bucket Ind-Barath falls.

Because based on your earlier comments, it was -- it appeared to be just a matter of time. And even now probably for the NCLT approvals to come through. So you will still have to incur the CapEx of maybe about for INR 20 billion, INR 27-odd billion for the 700-megawatt capacity.

No. CapEx -- the overall project cost, including the acquisition price will be much, much lower than what you are talking about. But nevertheless, as I mentioned is that, that project will be very, very economically viable, if we are taking over that project.

And in light of the comments that you made, I mean, more at a sector level, do you think that the projects, which are stranded even now or half constructed. I mean what would you believe as a sector player would be the future for that thermal capacity now?

I think the situation has changed completely after recent tenders because the way the government is coming up. Now I wanted to give you a heads-up that now Ministry of Power is talking about that they will be setting up a new framework because there is a new energy -- renewable energy corridor, which is being created in which new framework will be done in which anybody can set up a renewable power and sell it into the merchant market without any transmission, interstate transmission cost for a lifetime -- for a period of 20 years. So imagine that if that is the kind of a situation -- if that happens, then what is going to happen that the power is available at -- in the merchant market at INR 2.50 to INR 2.90. What do you do with the highly taxed coal sector and highly taxed transportation sector in India?

Sure. And in the past, you've also mentioned your plans to do group captive renewables for some 300, 400 megawatts. I mean that possibly have got pushed back because of the demand disruption.

No. That's not because of the demand disruption, that's primarily because of the COVID-19 situation that you cannot work on ground. And then you want to see before you start work there has to be a clarity because of the health risk. As I mentioned, our plan to achieve 10-gigawatt in 3 to 5 years stands same. And we are committed for that. As soon as we are having the clarity on the situation, then we will start building our capacity on the renewable front.

Next question is from the line of Rahul Modi from ICICI Securities.

Hope everyone is safe. Most of my questions have been answered. Just a quick question I had. Sir, the contracts with JSW Steel are all taken -- take-or-pay, I believe. So even if we are not supplying, there will be a fixed cost, which should be paid?

Jyoti, will take this call.

Yes. So all the group captive contracts are at arm's length and the construct is similar to the PPA construct that we have with noncaptive clients. Some of them, in fact, most of the group captive within JSW Group are under the Section 62 construct. But there is about a 60-, 70-megawatt in Ratnagiri, which is outside of JSW Group, which is on a fixed price construct. But bulk of it is on a Section 62 construct, take-or-pay basis.

We will take the last question from the line of Bhavin Chheda from Enam Holdings Pvt. Ltd.

Two questions. Any upcoming PPA or bilateral contracts, which you may have participated and expecting in near-term? And second, will JSW Energy will be looking at the commercial coal mining, which is expected to open up in a bigger way?

I'll take up the question for commercial mining and PPA question, Sharad will answer. As far as commercial mining is concerned, that's an attractive opportunity, but we need to -- you need to see that we have 2 power plants. One is in Karnataka and other is in Maharashtra. They are based in the -- based on the imported coal. We have to look at in detail that whether it is economically viable to switch to the domestic coal, given the logistic constraint what we are having, because both the plants are strategically located, there imported coal is the most viable option. However, we are evaluating the logistics cost as well as the CV of that particular coal, and what will be the terms at which the bidding will happen. At the end of the day, if it is making an economic sense, we will be certainly doing it. Or else, we may be tying up with some company, who will be entering into this kind of a bidding, and then we will be sourcing coal from them. If it is making a economic sense, we will certainly look at it. If not, then we will not look at it. Sharad, you can answer the second question.

Yes. I'll just request, once again, to be more clear about what exactly was there in terms of the PPA, you would like to know?

Yes. So any open capacity, which -- have you already participated in the bilateral or tax award or PPA? I think the PFC recently issued a tender. So have we won there and that supply would start?

No. See, the thing is that we -- that what we have participated in earlier PFC thing, we are ready. It is -- only the thing is that because of the uncertainties, PFC has not been able to get from the buyer side that -- which are the states who are going to take the power from. So we are not very confident that under that, it can -- it will be fructifying in near future. But yes, in terms of our sales, in terms of the bilateral short-term trades, as I had earlier said also to one of the questions that we are quite confident that we will be able to assign a significant part of our open capacities in under bilateral trade -- bilateral deal with the buyers. So -- and that is what we are still looking for, and we are quite confident that we'll be very, very soon, we'll be able to do that.

One correction, what Sharad mentioned that for PFC tenders, he was meaning from GMR Kamalanga for the PFC capacity, not for other existing capacity.

I will now hand the conference over to Mr. Pritesh Vinay for closing comments.

Yes. Thank you very much for participating. In case there are any follow-ups, please feel free to reach out to Nitin or myself. And with that, over to Prashant for some last comments.

So I would like to just conclude with the situation that we are keenly watching the situation. And based on the daily developments, we will be calibrating our efforts for the future growth. And with that, I would like to thank each one of you and also stay safe. Thank you.

Thank you very much. On behalf of Motilal Oswal Financial Services, that concludes this conference. Thank you for joining us, you may now disconnect your lines. Thank you.