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Drop Of 92% In Q4 Profits: JSW Energy’s Power Generation Woes

The company’s net generation came down from 5,894 MUs (million units) in the year-ago quarter to 4,063 MUs in the fourth quarter FY17, down by 31% due to low generation and weak merchant offtake

Photo Credit : Reuters

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Owing to low power generation, JSW Energy, one of the largest power generation companies in India, reported a sharp fall of around 92 per cent in its consolidated net profit for the March quarter standing at Rs 24 crore as compared to Rs 296 crore of net profit, a year ago.

On the annual basis, the company’s consolidated profit came down to Rs 629 crore for the fourth quarter as against Rs 1447 crore for the same period previous fiscal.

It’s the time when most of the power generation companies are looming under low Plant Load factor (PLF), with JSW being no exception. The company’s consolidated deemed PLF was 52 per cent as against 69 per cent a year ago.

The company’s net generation came down from 5,894 MUs (million units) in the year-ago quarter to 4,063 MUs in the fourth quarter FY17.

The Q4 power generation, down by 31 per cent with the corresponding quarter of the previous year was largely due to low generation and weak merchant offtake at all the three major plants –Vijayanagar, Ratnagiri and Barmer, with all of them witnessing low PLFs.

Also, The EBIDITA was down from to Rs 660 crore from Rs 1,111 crore, comparing the quarter of both the years, a decline of 41 per cent. This fall comes from the declining revenues of the company and increase in the international coal prices.

Total income came down to Rs 1,935.29 crore, from Rs 2,664.87 crore in the corresponding period of the previous fiscal. Total income from operations at the consolidated level saw a fall of 29 per cent, coming down to Rs 1,862 crore as against Rs 2,631 crore in the corresponding quarter last year.

Lacklustre industrial demand, increasing power generation capacity, lack of long-term PPA and poor financial health of Discoms are straining the power sector.

“Electricity demand continued to slow down for the second year in a row with only 2.5 per cent growth for FY17, whereas the in the supply is consistently outpacing the demand growth”, said the company statement.

The company is positive on getting some support in the coming months on the industrial activity, as the manufacturing PMI has been rising in at a steady pace, fuelling the power demand.
On the rising international prices of coal, Sanjay Sagar mentioned that the company has taken permission to blend up to 50 per cent of the domestic coal with the imported one. This would act as act as a hedge against rising coal prices.

The company also mentioned how the impact of government schemes like UDAY is getting visible. As financial health of the state DISCOMs improves, their off-take is also expected to increase. As noted by Motilal Oswal Securities, there is an expectation of more medium term PPAs being signed as the demand improves, led by UDAY.

On its outlook for the industry, the company said, "The New government in Uttar Pradesh (UP) has already embarked on a programme to accelerate the availability of 24x7 power for all citizens and it is expected that other states will follow the UP example. This should lead to a robust growth in demand, which has otherwise been subdued for the last 2 years”.


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