JSW Energy Limited (533148) Earnings Call Transcript & Summary

Ladies and gentlemen, good day, and welcome to the Q2 FY '27 Earnings Call of JSW Energy hosted by Antique Stockbroking Limited. [Operator Instructions] I now hand the conference over to Mr. Ishan Verma from Antique Stockbroking Limited. Thank you, and over to you.

Thank you, Nisha. Good afternoon, everyone. On behalf of Antique Stockbroking, I welcome you all to the 2Q FY '27 Results Conference Call of JSW Energy Limited. We have with us today from the management, Mr. Sharad Mahendra, Joint MD and CEO; Mr. Chandrasekaran Prabhakaran, CFO; and Mr. Vikas Choudhary, Head of Investor Relations and ERM. We will begin with the brief opening remarks from the management, followed by the Q&A session. Thank you, and over to you, Sharad, sir.

Yes. Thank you, Ishan. Good evening, everyone, and thank you for joining us for JSW Energy's Q2 FY '27 Earnings Call. I hope you and your families are keeping well. At the outset, let me start with the fact that the fundamentals of our sector have never looked this stronger. If I were to sum up this quarter in one line, it would be this. The market is moving towards exactly what we have been building. Three themes define the sector over the last 3 months. Demand kept beating expectations on the back of a strong economy, energy security moved to the center of the national agenda and the procurement shifted decisively towards firm reliable power. Let me take each of these in turn and then show you how JSW Energy is positioned on each. The first is demand and the press on resilient economy. India continues to be among the fastest-growing major economies in the world. Real GDP grew 7.8% year-on-year in quarter 1 of FY '27, and the RBI expects growth to remain robust at 7.1% for FY '27. High-frequency indicators point to sustained momentum. The index of industrial production grew 8% year-on-year in August. PMIs rebounded in September to 55.1% for manufacturing and 55.2% for services, well within expansion territory. And GST collections rose above 7.7% year-on-year to INR 6.15 trillion in quarter 2 of FY '27. This economic momentum is translating directly into electricity consumption. Power demand in quarter 2 FY '27 grew 11.1% year-on-year, building on 8.3% growth witnessed in quarter 1. September alone grew about 11.3% with peak demand touching 270 gigawatt in quarter 2 of FY '27. The momentum strengthened further in October with month-to-date demand growth of 21.2% and year-to-date demand growth of almost 11.4% Part of this is weather as monsoon was about 13% below normal in quarter 2 and cooling demand stayed high well into the evening. But the large drivers are structural and in our view, durable, industrialization, urbanization, rising per capita consumption and new sources of load such as data centers, electric mobility. These support our view of 5% to 6% long-term CAGR in power demand and the last two quarters suggest that view may prove conservative. The second theme is energy security. The ongoing conflict in the Middle East has disrupted LNG and crude flows through the Strait of Hormuz, tightened global energy markets and pushed utilities across Asia back towards coal. For India, the priority is clear: secure domestically sourced dispatchable power backed by a domestic manufacturing base is no longer an option. It is a strategic necessity. The sharp rise in imported coal prices has significantly impacted fuel costs across the sector. API 4 benchmark coal prices averaged close to $115 per tonne in quarter 2 of FY '27, up around 28% year-on-year from $90 per tonne. Despite this increase, our transition to domestic coal and implementation of job work arrangements at imported coal plants shielded us from fuel price volatility and has enabled us to effectively mitigate the impact and maintain cost competitiveness. Domestic supply has also tightened. Coal stocks at power plants fell to multiyear low and in October, around 96 plants were classified as critical, holding an average of 6 to 7 days of stock against the normative 19 to 20 days. Tight fuel supply, coupled with robust demand flowed directly through to the power exchanges. Day ahead market prices averaged INR 5.70 per unit in quarter 2 of FY '27. As compared to this, our merchant realization, however, stood at INR 6.90 per unit, which was around 20% higher than the DAM average. This is driven by the strategic bilateral contracts we have entered into. The third theme is the shift towards firm power. On the supply side, capacity addition continues at a record pace. India added about 23.9 gigawatts of renewables in the first half of FY '27, including 20.8 gigawatts of solar, taking nonfossil capacity past 300 gigawatt. On the thermal side, about 3.3 gigawatt was net commissioned in H1, which was about 39 gigawatts under construction with about 39 gigawatts under construction. But the more telling signal is in the bidding. Renewables still dominate new capacity additions, yet procurement is shifting decisively towards firm and dispatchable capacity. FDRE, solar plus storage, stand-alone batteries and notably long-term thermal. The states awarded around 17 gigawatt of long-term thermal capacity at tariffs of about INR 5.40 to INR 6.30 per unit in FY '26 and a further 18 gigawatt of thermal tenders are currently under bidding. To us, the conclusion is simple. Renewables and thermal are not competing, they are complementary. Renewables deliver the cheapest energy, while thermal and storage keeps the light on through the evening peaks. Let me connect each of these three themes: demand, energy security and firm power to what we executed during this quarter -- quarter gone by. Since April, we have commissioned 1.4 gigawatts of organic renewable capacity as compared to last full year's approximately 1.2 gigawatt. This is also nearly half of our FY '27 guidance of 3 gigawatt. In Q2, we added 513 megawatts comprising 301 megawatts of solar and 212 megawatts of hybrid capacity. Including the 300-megawatt Maruti Thermal acquisition, total capacity addition since April stands at 1.7 gigawatt, taking our installed capacity above 15.1 gigawatt with renewables accounting for approximately 61% of the portfolio. Of the remaining 1.6 gigawatts to be commissioned during the year, we are fully on track. Land and transmission connectivities are secured. Equipment is either on site or in transit and offtake is backed by long-term power purchase agreements. The pipeline is substantially derisked, and we are confident of achieving our 3 gigawatt commissioning target of FY '27, supported by planned CapEx of around INR 20,000 crores. Further, on our energy storage pursuits, we expect to commission about 1 gigawatt hour of battery energy storage projects in FY '27. We are also enthused by the sizable C&I opportunity in the market and particularly by the opportunity within our own group as its companies pursue ambitious growth plans. Our installed C&I portfolio, including group captive stands at 3.7 gigawatt, about 25% of our total operating capacity. We expect it to grow to over 8.5 gigawatt by 2030 with group companies contributing a large share. JSW Energy has long been the energy partner of choice for the JSW Group, meeting around 3 gigawatts of round-the-clock thermal and renewable power demand across group companies. That partnership has the potential to have a significant step-up with JSW Steel planning to expand capacity to up to 80 million tonnes per annum and other group businesses is scaling rapidly, the group's RTC power requirement is expected to more than double to around 7 gigawatt by 2032. A substantial share of this will be met through green energy in line with the group's decarbonization ambitions. We have already laid the groundwork to capture this demand. Of the 6.2 gigawatt of MOUs signed with the group companies in quarter 2 of FY '24, 4.5 gigawatt is yet to be tied up and 2 gigawatts of this is under advanced discussion. This represents a large visible and high-quality growth pipeline with certainty. JSW Energy is well positioned to serve as an integrated energy partner to the group and to the wider industrial market, delivering reliable round-the-clock and increasingly green power at scale. This will add a strong layer of long-term assured demand to our growth trajectory. Looking further ahead, our long-term pipeline gives us clear line of sight to our 30 gigawatt target for 2030, and our growth runway extends well beyond it. Multiple drivers support our growth beyond 2030, the Salboni thermal project, the 920-megawatt Punatsangchhu-Bhutan hydro project, our first cross-border generation venture being developed in partnership with the Druk Green Power Corporation, Bhutan, Bhutan's state-owned utility and further thermal and C&I opportunities. Meanwhile, our sizable pump storage pipeline of 26.4 gigawatt hour remains on track. Moving ahead, as the market pays more for firm power, we have strengthened our thermal platform in two ways. First, by buying value, we completed the acquisition of Maruti Clean Coal & Power in August at an enterprise value of INR 1,410 crores. It is EBITDA and PAT accretive from day 1 and lowers our net leverage. About 195 megawatts of this capacity is tied up under a long-term power purchase agreement with Rajasthan DISCOMs, of which around 14 years of residual life is there. While about 64 megawatt gives us merchant exposure at a time of strong prices. In Q2, this plant generated about INR 45 crores of EBITDA in just 55 days from our acquisition on August 6 and till the end of the quarter. Second, by bidding at low cost, at Salboni, turbine generator orders for all 4 800-megawatt units totaling 3.2 gigawatts are now in place with the Phase 2 turbines ordered from Toshiba JSW in September. Site work on Phase 1 is progressing well, and the first unit is expected to be commissioned in 2030. At KSK, the 600-megawatt fourth unit remains on track for FY '28 commissioning and balance 1,200-megawatt commissioning scheduled in FY '29. On fuel, our continued shift to domestic coal has insulated us from the rise in imported prices, as I said earlier. Recently acquired Maruti Thermal plant is also fully domestically fueled through a long-term fuel supply agreement with SECL and linkage under SHAKTI scheme. Coming on to our thermal growth ambition, as you know, we raised our stake in Toshiba JSW Power Systems to 10.7% in July. The scheme to acquire GE Power India's boiler business, including its Durgapur manufacturing unit facility received NCLT sanction on 1st of October, and the transaction is expected to be closed very soon. We have placed the boiler order for the entire Salboni project with the Durgapur facility, which sits in the same state as the project. With the turbines from Toshiba JSW and boilers from our own facility, we now control the critical part of our thermal build-out at one of the lowest capital costs in the industry and on one of the shortest time lines. The same logic applies to renewables. Our Halol wind blade facility has been producing blades for our wind projects since its commissioning in June, and the Chitradurga facility remains on track for completion and commissioning in quarter 3 current quarter of FY '27. Further, I'm also pleased to share that ICRA and India Ratings have affirmed JSW Energy's long-term credit rating at AA with a stable outlook. This recognizes our larger and more diversified operating base, our high share of contracted capacity and the deleveraging we delivered through the INR 10,150 crores of capital unlocking in the current -- in this calendar year. A stronger rating directly helps contain our cost of capital as we fund our ongoing leg of growth. I would also like to address curtailment, an issue the sector as a whole is grappling with. Curtailment across our portfolio stood at 4.8% of the total generation in H1, which is lower than what the national level curtailment of about 5.4% has been witnessed. And this has been possible primarily because of the diversified asset base rather than having majority of the assets in the areas where the curtailment is being witnessed more. In Q2, our curtailed units stood at 225 million units with a revenue impact of INR 59 crores. Further, about 60% of our curtailed capacity currently on temporary grid network access will move to permanent G&A by end of current quarter, which is quarter 3 of FY '27, and which will significantly reduce our exposure meaningfully towards this curtailment. Our growing renewable portfolio also helped us avoid about 13 million tonnes of CO2 emission in H1 of FY '27 and about 8.4 million tonnes in quarter 2 of FY '27 based on the prevailing Indian grid emission factor. Now coming to our quarter 2 operational performance. Net generation of quarter 2 FY '27 increased by 17% year-on-year to 17.5 billion units, driven by robust capacity addition and healthy plant performance. On hydro, the monsoon was weaker this year and all India hydro generation declined about 15% year-on-year in quarter 2. Our plants held up well against this backdrop, helped by their location in Sutlej and Ravi basins, which outperformed the national trend. In the Sutlej basin, Karcham Wangtoo and Baspa did broadly comparable to the basin operating at consolidated PLF of 90%. In the Ravi basin where our Kutehr plant is, the generation rose about 14%. Kutehr more than doubled its generation to about 408 million units in its first full monsoon season at a PLF of about 78%. Our Tidong plant, which was commissioned in quarter 1 FY '27, much before the scheduled time line of October '26 gave us a healthy advantage of ongoing hydro season. The plant generated 199 MUs in quarter 2 at a PLF of 61%. Overall, driven by incremental generation work from Kutehr and Tidong, our hydro generation was 3,421 million units, up 13% year-on-year. On thermal, generation was 8.9 million units, up 13% year-on-year, including 321 million units from the newly acquired Maruti plant. Our consolidated thermal PLF was 75% in quarter 2 against all India thermal PLF of 67.8%. Mahanadi plant operated at 90% PLF. Utkal continued stable supply under its PPAs with Karnataka and Assam at a PLF of 82%. Utkal had an exceptional quarter now that it operates under long-term PPAs. Plant EBITDA more than tripled year-on-year to INR 368 crores in quarter 2 FY '27 and grew over 60% year-on-year in H1. This was driven by significantly better plant performance and by PPA realizations well above the dam prices at which the plant's power was sold a year ago. On renewables, all India generation grew about 11% year-on-year for wind and about 39% for solar in Q2, driven largely by capacity additions with all India PLF of 37% of wind and 18% for solar. Our wind and solar portfolio operated at PLFs of 46% and 19%, respectively, and generation was up 25% for wind and 36% for solar, supported by a year-on-year capacity increase of 1.5 gigawatt. Now turning to our financials, many of which you will already be familiar with from the pre-call materials, backed by robust capacity addition and healthy plant performance, revenue for the quarter was INR 6,658 crores, which is up 24% year-on-year and EBITDA was INR 3,907 crores, up 23% year-on-year. With year-on-year capacity addition of 1.9 gigawatt and new assets being capitalized, depreciation rose 17% to INR 943 crores and finance cost rose 14% to INR 1,615 crores, in line with the pace of capacity we are adding. Further, I'm sure many of you have questions about the potential increase in the interest rate due to the recent actions by RBI and the inflationary expectations and what they could mean for our bottom line. Our debt book is well insulated close to 1/4 of our term debt is at fixed rates, which is around 8% only. And nearly 90% of the floating portion is linked to lenders' internal benchmark like MCLR rather than repo or other market-linked instruments like treasury bills, et cetera. Historically, we have seen that MCLRs tend to lag and not increase in the same quantum as that of repo. We also actively and progressively keep pursuing refinancing as our projects reach commissioning and build operating track records. With that lever of refinancing is still available and lag in MCLR reset, we do not see any immediate rise in our debt cost and maybe only a modest impact in the medium term if the interest rates hikes continue. Additionally, as you can see in our presentation, our debt cost has come down significantly by about 51 basis points to 8.28% from about 8.79% a year back. Profit after tax was INR 1,141 crores, up 38% year-on-year. And PAT attributable to shareholders was INR 1,056 crores, up 50% year-on-year. Excluding debt tied to capital work in progress, our net debt to TTM EBITDA stands at about 4.94x, down from about 5.2x in FY '26. We hold cash and cash equivalents of about INR 15,700 crores, and our cash return on net worth adjusted for our JSW Steel shareholding stands at about 15%. Now let me return to where I started. The economy is growing strongly and power demand is growing even faster. Energy security is now national policy and the market is rewarding firm reliable power. On this front, JSW Energy is well positioned on each of these fronts. We have a portfolio diversified across modes such as thermal, hydro, wind and solar, backed by an increasingly integrated supply chain. We have a clear record of delivery with 1.4 gigawatts commissioned this year and full visibility of the next 1.6 gigawatt in balance part of this current financial year. Our locked-in pipeline underwrites the next phase of growth and a healthy balance sheet gives us the headroom to fund it. Overall, we entered the second half of the year with confidence and momentum. Thanks, friends. Now as we approach Diwali, I would also like to extend warm wishes to all of you and your families for a joyous festival and a prosperous year ahead. Thank you, and we look forward to your questions now. Thank you.

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

Congratulations on a very, very good set of results. My first question is on the JSW Mahanadi PPA. If I see your slides, I think you are talking about a PPA which is exploring. My question is, are you looking at the utility kind of PPA? My question -- I'm asking the question because most of the DISCOM PPAs are coming with the condition that you have to set up the capacity within the state. And we haven't heard anything on Chhattisgarh floating those kind of PPAs, yes.

Yes, Mohit, thank you. See, I think when you are talking of Mahanadi, you are talking of the PPAs for the upcoming capacities is what we believe?

Yes. Yes.

Okay. See, yes, definitely, the project work has started, as we have said that the first unit is expected to be commissioned maybe in FY '28 and balance 2 in FY '29. And the way the demand scenario and the requirements which are coming in for the firm and reliable power, we are definitely -- there are many DISCOMs who are looking for a firm power supply for a PPA. So we don't see that as a challenge going forward. Of course, when you talk of Chhattisgarh, it is only that the 5%, which is the free power, that is the commitment which is there for them available. But yes, we continue to explore the possibility of what should be -- which states we have to go for. But yes, going forward, we will definitely be going for the power purchase agreements. But if this scenario -- because, fortunately, we have time now to take a decision, if this scenario of evening peaks, the way we are seeing the increase and the drivers which are responsible for this growth, especially during evening peaks is there, we may slow because to even keep a part capacity open also for the merchant. But principally, our policy, as we said that we will be focusing on the long-term power purchase agreement remains as it is. The only advantage is that this is being close to the coal mine with low fuel cost, the opportunity to take advantage maybe a part of this capacity in the merchant market also with short-term contract. So we will take a call at the right time, but we are confident that selling this capacity will not be a problem because of the low fuel cost being close to the mine.

Understood. My second question is what explains the strong EBITDA for Utkal on a Q-o-Q basis? I think Q-o-Q, there is a sharp jump. Was there any one-off during the quarter?

No, there is -- one is that there is nothing. Maybe I'll request Mr. Prabhakaran, he will.

So actually, if you see the last quarter, I think we are selling most of the capacities in the short term. We all were in the merchant. Now from April onwards, as you are aware, that we have kind of secured this long-term PPA with Karnataka and also the Assam. So I think we are getting a better pricing in those this one, which anyway, that kind of -- that is sums up the kind of entire -- the Utkal portfolio, the profit being there.

But the jump is very high on a Q-on-Q basis, last Q1 FY '27. Last quarter, I think...

As you are aware, I think we had -- the performance in terms of if you look at it, I think if you look at it, we are at about close to 82% of PLF this year -- this quarter. Wherein we had certain kind of operational issues, outages in the last quarter. So the performance of the plant have completely kind of improved as compared to the last quarter. And that's why you will see that similar kind of the performance company.

And also to add, Mohit, what C.P. just said is as compared to Q1, quarter-on-quarter when we compare because the plant availability was slightly lower than what it was in quarter 2, though it was not impacting our fixed cost recovery under the power purchase agreement with Karnataka, the opportunity to sell in the merchant market was limited. That income was secured, but the opportunity which we were able to get with the better plant performance in quarter 2 as compared to quarter 1 gave us the opportunity for a better financials through the merchant, which was additional for us.

The next question is from the line of Sumit Kishore from Axis Capital.

My compliments on a strong quarterly performance and project execution. My first question is in relation to your portfolio target of 30 gigawatt by 2030, close to 3.7 gigawatt of C&I renewable and our utility capacity of 7-odd gigawatt is there. What is the stage of sort of readiness in terms of transmission evacuation and land for these projects to be commissioned over the next 3, 4 years. And after you commissioned 3 gigawatt of RE this fiscal, given the challenges in the sector, how should we think about the phaseout of capacity addition through 2030 on renew?

Yes, Sumit, thank you. I think this is a very, very valid question related to the sector, not only JSW Energy. Yes, 3 gigawatt current year and next year, we -- as we have given the guidance that maybe 2.5 to 3 gigawatt every year, that is on track. And our capacity addition beyond current year, current fiscal, say, for FY '28 or beyond is basically we have divided our this thing into three categories. One is that the off-grid, which is the group captive requirement under the C&I, wherein my dependence on the grid or the grid curtailment, I'm insulated from that. That is a significant capacity, which is going to be there in getting added every year. Second is intrastate connectivity, which is the STU connectivity within the state and through the STU network. And third, which we have to remember is that when we talk of curtailment, curtailment, we all know that we have a significant advantage of diversified locations across the country. And the curtailment, which we talk of, majorly the curtailment is in a particular Gujarat, Rajasthan sector on the northern grid. There, we have limited capacities and whatever curtailment we have faced is in this corridor only, our three projects, out of which 2 are -- as I said in my opening remarks, are going to get the grid network access when the new capacity is coming up for the grid power evacuation by this quarter end. So I think what we have planned knowing that what is the challenges which are coming in, our planning is insulated from any curtailment challenges. Wherever the challenges are, it is the battery energy storage, which is going to play a role. It will be a solar coupled with battery energy storage, assuming that there can be some curtailment, then we get the opportunity to sell the power in the evening peaks. So keeping that thing in mind, we are absolutely certain that there will be no obstacle or hurdle in achieving our annual plan of whatever, 2.5 to 3 gigawatt capacity addition every year, wherein wherever required, battery energy storage is going to be -- to play a major role. So that capacity addition is sacrosanct. It is going to be there.

Sure. You spoke on reliable power being the future and on battery energy storage system, a couple of your peers in the sector have moved a bit faster, and they are even dabbling with the time shift arbitrage by selling that power in the evening. So your best plans as per portfolio is 3.2 gigawatt hour. I mean how should we think about your BESS investments over this 4-year period? I mean, definitely, are you going to limit yourself to just this -- or it seems to be a much bigger opportunity. How do you think the arbitrage opportunity is going to fare over the next 3, 4 years? Is it going to go away? Or how will it sort of play out?

Right. Sumit, if you compare that maybe other -- maybe someone else has moved faster, we have to see the difference in the model. I am getting the curtailment for which I have the plants which are commissioned and have a firm power purchase agreement, which may get started the moment the connectivity comes, maybe it can be 6 months or 1 year. Maybe the others who are doing this are having a large capacity commissioned with no power purchase agreement, which is there in sight. And it is basically -- I see that as a cost which has been already the money which has been invested and not giving the desired returns. To protect that, I will not say a sunk cost, but to protect that losses, it is better keeping in mind the evening peak, what the prices which are being discovered in the demand. This is a very good step which has been taken. For us, it is a very, very temporary phenomenon. But yes, we also, as I told you, like what we are doing is we applied 6 months about 8 months back for evening connectivity for our solar plants, which are already commissioned. We are also going to set up in the coming year. Now we are starting -- going to start the project work, wherein we will be setting a solar capacity for charging the batteries and only using our existing connectivity for solar, which we have for which we have got the sanction allocation for the evening discharge through the battery. So we are also working on, and we will be definitely commissioning at this battery, as you said, 3.2 gigawatt hour, all this is over and above that 3.2. This is a dynamic situation, but we are working on this, and we definitely will be participating by setting up such model of projects and taking advantage of the evening peaks.

[Operator Instructions] The next question is from the line of Atul Tiwari from JPM.

Congratulations on a strong set of numbers. Sir, my question is on the merchant sale in the quarter. You did mention INR 6.9 realization. Would it be possible to share how many units were sold in the merchant in the quarter?

We have shared that in the slide. It is 1.1 billion units, which we have sold during the quarter, 1.1 billion. If you see in the -- your presentation, Slide #8 -- #6.

Okay. And sir, is this phase continuing in the third quarter? Do your bilateral contracts extend well into third quarter and the fourth quarter? What is the duration of those contracts, et cetera? Any color?

Yes. Definitely, third quarter is fully booked. And maybe I'll not comment on the pricing, but the pricing discovered may be either same or better than this, not lower than these for quarter 3. And we -- now the discussions are on for quarter 4. Normally, it is 2 months to 3 months normally 2, 2.5 months back before the people start. There are discussions going on even for quarter 4, but quarter 3 is fully booked.

Okay, sir. And sir, on the fixed rate debt, you said 25% of the debt is at a fixed rate. So what will be the tenure of these fixed rates? Is it for the duration of the life of the debt or only for some time?

Prabhakaran, please.

Yes. I think if you look at it, of this 25%, we are saying that about close to 15%, which is ForEx linked one, where it is fully kind of hedged both on the interest rates and also on the FX. So I think that is in the range of about close to 5, 6 years is the kind of the tenure that we have. And the balance is about the fixed when we say is about close to -- because these are NCDs where that is also kind of about close to 4 to 5 years. So we are talking about on the 25% of fixed, the tenor approximately between 5 to 6 years.

[Operator Instructions] The next question is from the line of Vishal from PL Capital.

Sir, regarding the BESS, I think one of your slides talks about we'll be commissioning 1 gigawatt hour of BESS in FY '27. So is this BESS, I mean, linked with the PPA capacity that we have? Or are we preponing some of the BESS and we sell it to silicon merchant? How one should look at this?

Yes. see, this is all is the PPA capacity, which we are going to -- this is under the PPA, we are commissioning. And these are majorly for two states, which is Rajasthan and the state of Kerala. These are all standalone BESS. Any investment in solar is not there.

Okay. Got it, sir. And just a clarification, by FY '30, we are planning to have 30 gigawatt of capacity. That's our base case. But in one of your slides, which is slide -- I think at the back, the numbers are not there. Slide 39, where we have given a breakup of our capacity renewable under construction and MOU base. So that totals to almost like 27 gigawatts. And similarly, we have done the same for thermal-based capacity, which is 11 gigawatt of capacity, which is coming to, say, under construction and operational. So that this totals almost like 37, 38 gigawatt of capacity. So I mean, is this a pipeline that we have.

Yes, this is a pipeline, yes. This is a pipeline, yes. Because if you see when we say 30 gigawatt, we all know that the full work is going on, and we have signed 3.2 gigawatt of power purchase agreement with the state of West Bengal and setting up a greenfield plant in Salboni. Out of that, 30 gigawatt -- contains only 800 megawatt. Balance, all 2.4 gigawatt is beyond 30. And then as I told in my remarks -- opening statements also that the group captive requirements are going to go beyond 2030 also when the capacity plans of JSW Steel, which they have announced now, the growth plan. So all those things are the pipelines, which are beyond 30 gigawatt and beyond 2030.

Okay. Okay. And maybe one last question. Regarding the renewable capacity under construction capacity of almost like 10.4 gigawatts, what sort of PPA that we have right now out of this number?

See, we are doing this all which is there under construction or at various stages of construction project execution is all under PPA, which is basically with utilities, with C&I customers and group captive. So all mixed, it is only the PPA. We are not investing anything or setting up any capacity till now for a merchant, of course, as I said some time back to answering one of the questions that going forward, seeing the evening peak opportunity putting up some solar capacity with battery and only for evening peak sale through battery discharge is something which may get added. But right now, it is all under a PPA, which is out of it 2 gigawatts is under group captive which we are under discussion and that is going to get closed now.

Sure, sure. And in group captive, when we are doing any PPA, so I mean, any threshold IRR that we work or I mean, like ROE framework that we have when we put this arrangement?

See, as we have been saying that we will not -- we will execute only sign the PPAs or any projects. Our benchmark returns are mid- to mid-teen IRRs. It has to meet that criteria and move above that, then only we sign. So that statement remains. All our projects definitely have to be minimum mid-teen IRRs. And that has got in the group captive also we have.

Sure, sir. I think this explains a lot of query, sir.

The next question is from the line of Dhruv Muchhal from HDFC AMC.

Sir, you have shifted the KSK Mahanadi 1,200 megawatt from pipeline to under construction. Does it mean that you have placed the equipment order? And also you're guiding the unit to commission by FY '29. Although it's brownfield, it's a 3-year commissioning that you're targeting. Is that -- I mean, I'm just trying to understand, is this optimistic because generally, what we see is 4 to 5 years, even for brownfield?

Yes. No, yes. One is that the orders have -- equipment orders have been placed already, and we don't see any uncertainty because I have not spoken, but it's a local procurement only, and it is absolutely in -- within the time lines. And second is the 3-year time line when you see, we have to compare with a greenfield plant, which takes normally 4.5 to 5 years. Here, there is a lot of common infrastructure in the plant when we -- I have been making this statement since acquisition in maybe March '25 that a lot of balance of plant areas are fully ready to handle 3.6 gigawatt, whether it related to coal handling plant, whether it is related to ash handling plant, the railway infrastructure for coal transportation or whether it is the transmission network. That all is already ready when we acquired for 3.6 gigawatt. So this gives us a confidence of doing in 3 years, we don't see that as a challenge.

Got it, sure. And sir, you have also now included group captive under advanced discussion of 2 gigawatts, specifically you are mentioning this. I mean how should we consider this? This happens within the next 3 months, 6 months and commissioning in 2 years? Or I mean, I'm asking because this is not specifically included, so probably there is a better time line now.

Yes. The thing is, as I said, that we have a clear visibility of 30 gigawatt till FY '30. Now our group company, as we said that they have also announced a huge expansion capacity additions, greenfield and brownfield both, the requirements are going to be significantly high in terms of -- from the current levels of power requirement. So it will -- this will go beyond 2030. So when we say 30 gigawatt, beyond that, the momentum will continue maybe at least next 3 to 5 years, then that time, our major focus is going to be the thermal capacity and the RE capacity under the C&I and the group captive is going to be our focus beyond the current 30 gigawatt plan, which we have.

Got it. Sure. And sir, even in the solar and wind and hybrid space, the under construction pipeline space, we see a Q-o-Q increase in the pipeline. And if I just check, most of the increase is coming from the C&I line item in hybrid or wind or solar. And I believe these are third-party C&I because otherwise, you classify them as group captive. So are you looking for more and more C&I kind of contracts and this is the nature of customers that you're tapping?

Yes, yes. That is our focus area now for maybe two, three reasons. One is that, of course, there is a complete energy transition even at the industry level also, everyone has the RPO obligations to meet by 2030. Everyone is looking for a certain percentage of green power. So we see this as a big opportunity. And in terms of pricing and returns also, we find this more attractive because for the buyer also, this is a replacement cost benefit. So it's a win-win for both. And we are executing and like maybe in this quarter, the quarter gone by, we have commissioned the capacity for the cement company. We are doing more and maybe within this H2 of current year, the likes of Amazon and others, we are going to commission the capacities and the data center opportunities which are going forward coming, we are in discussions with various organizations. So of course, yes, C&I, group captive, as I said, hydro pump storage and thermal. These are the four pillars which are going to be there beyond 2030 visibility, which is there today in terms of bifurcation.

Got it. Sure, sir. And so the next thing is on KSK, if I look at the EBITDA, does this number INR 650 crores reflect the run rate now? I mean, I believe there was a tariff adjustment which was pending. So does this reflect it and this can be considered as a reasonable run rate or there should be some adjustment to this because there is a dip Y-o-Y, Q-o-Q.

No, I think this kind of run rate EBITDA should be the base basically. This should be the run rate EBITDA for the full year. I think that should be -- that's how we should look at it. Even though we have a small kind of -- yes, sorry?

I mean this considers the adjustment to the tariff which has happened now. This is after the tariff adjustment.