JSW Energy Limited

Integrated Annual Report 2020


A resilient business with a growth agenda

We aim to become a 10 GW company over the foreseeable future, with Renewable Energy as the central theme of our growth plans.

Dear Shareholders,

FY2020 was a challenging year for the Indian power sector marked by subdued economic growth and weak industrial production. The fag end of the year evidenced the outbreak of Coronavirus, leading to hugely dislocated economic conditions and significantly disrupted way of life at a global level.

At JSW Energy, we have been largely resilient to the overall economic weakness during the year, as well as to the disruptions caused by Covid-19. This has come about through significant de-risking of our business over the past few years with more than 80% of our capacity tied-up under long-term contracts and a very efficient cost structure encompassing both O&M and finance costs. We have also put in place an agile and proactive response mechanism encompassing human, operational, financial and strategic aspects for tackling the unprecedented situation caused by Covid-19.

FY2020 in Perspective

FY2020 witnessed subdued power demand growth of 1.3% led by twin headwinds of overall weakness in economic activity and Covid-19 related impact towards the end of the year. Thermal PLF in India declined to 56.0% during the year, its lowest level in almost three decades. Growth in domestic coal production was flat at 729 million tonnes during FY2020, whereas coal imports grew by 3.3% to 243 million tonnes.

In FY2020, we commissioned our 18 MW Thermal power plant at Nandyal with long-term PPA tied-up under Group Captive scheme. During the year, while our total net generation was marginally lower by 3.8%, generation at our Hydro plants was higher by 14.4% due to better water availability in the Sutlej basin. However, generation from our Thermal plants declined by 9.5% primarily due to lower offtake by long-term customers across plant locations.

Nevertheless, our profitability was largely insulated as majority of our capacity is tied under long-term PPA with two-part tariff, wherein we receive fixed capacity charges based on our plant availability, which was above normative across all the plants, with fuel costs fully pass through at actuals. We also continued to improve our operational efficiencies by following global best practices, and further reduced O&M expenses during the year, thereby cementing our position as one of the lowest O&M cost power generators in the industry.

JSW Energy has been constantly evaluating multiple opportunities for organic and inorganic growth and to this effect announced two acquisitions during the year – 1050 MW GMR Kamalanga Energy Ltd and 700 MW Ind-Barath Energy (Utkal) Ltd. While the GMR Kamalanga transaction has been put on hold given the ongoing Covid-19 related uncertainties, the Ind-Barath acquisition is awaiting necessary approvals from the National Company Law Tribunal. On the organic growth front, we commenced preparatory construction work for our 240 MW Kutehr Hydropower plant in Himachal Pradesh, pursuant to the strong impetus provided by the Government to boost Hydropower generation in the country through measures such as Renewable status for large Hydropower projects and introduction of Hydropower Purchase Obligation.

We have one of the strongest balance sheets in the Power sector in India and continued to strengthen the same during the year with consolidated Net Debt to Equity ratio further declining from 0.85x to 0.77x thereby creating sufficient headroom for pursuing attractive growth opportunities.

Given the healthy business performance in FY2020 amidst a challenging economic environment, the Board has recommended a dividend of ₹ 1 per equity share for the year.

Decisive measures to tide through Covid-19 crisis

Despite the Covid-19 situation, the Company’s plant operations continue to run smoothly, while ensuring adherence to necessary safety measures. To deal with the pandemic, we have adopted best-in-class safety and hygiene practices, realigned mobility, and enhanced digital working capabilities for our employees. Further, we continue to efficiently monitor our operations, ensure supply chain continuity, implement stringent cost control and revamp risk mitigation to suit the new normal. With power identified as an essential service, we have endeavored to support the nation under such critical circumstances by ensuring the required plant availability across all our locations. Overall, we aim to turn the pandemic led crisis into an opportunity, thus creating value for all our shareholders.

Responsible Growth Strategy

JSW Group and JSW Energy have always embarked on new business opportunities keeping a balance between growth aspirations and prudent financial management. We believe that our business decisions should be aligned with the well-being of all our stakeholders and society at large. In line with this vision, we aim to become a 10 GW company over the foreseeable future, with Renewable Energy being the locus of our growth plans. Given the strong Government impetus, large inflow of investments from a wide array of global investors and improving project economics, we believe that Renewable Energy will be the centerpiece of India’s long-term power story.


As per the Reserve Bank of India, global economic activity has come to a near standstill attributable to the Covid-19 pandemic. The overall economic recovery is now contingent upon the intensity, spread and duration of the pandemic. Nevertheless, I firmly believe that there is light at the end of the tunnel, and together we will emerge stronger from this crisis.

Over the short-term, power demand should see a moderation due to Covid-19 induced conditions. However, over the medium-term, Power sector outlook is sanguine, as rapid urbanisation and stabilisation of various schemes undertaken by the Central Government such as “Power for All” and “24 x 7 Power” is expected to spur power demand.

The Government has announced a set of holistic reforms including mandatory enforcement of payment security mechanism under PPAs, privatisation of Discoms in Union Territories, establishment of proposed Electricity Contract

Enforcement Authority, implementation of smart-metering/prepaid meter, direct benefit transfers of subsidies, separation of carriage and content, etc. These measures, together with the ₹ 90,000 crore liquidity infusion package announced under the Atmanirbhar Bharat Abhiyaan to enable Discoms clear their outstanding dues should help in power demand revival and improvement in the overall health of the sector going forward.

On the supply side, incremental capacity additions have been driven largely by the Renewable Energy segment over the last few years. Technological advances and reducing capital costs have progressively made Renewable Energy commercially attractive and more affordable than Thermal power. Henceforth, power capacity addition in India is expected to be primarily driven by the Renewable Energy segment.

Going forward, our strategic intent is to continue de-risking the business model by steadily increasing our long-term PPA proportion and further lowering our overhead and finance costs. As a growth oriented company, we are enthusiastic and remain focused on achieving our medium-term vision of becoming a 10 GW player through a mix of organic and inorganic opportunities primarily in the Renewable Energy space.

At JSW Energy, we have adopted robust Environmental, Social and Governance practices and remain fully committed to the environment and society. We continue to foster the creation of an ecologically sensitive, value based and empowered society through our purposeful CSR engagements and initiatives.

Finally, I would like to convey my sincere gratitude to all our stakeholders including the Central and State Governments, investors, regulators, bankers, rating agencies, customers, suppliers, advisors, and employees for their consistent support and trust. I also take this opportunity to wholeheartedly thank all our frontline warriors such as doctors, healthcare workers, municipal officials, army, police and all other people in the essential services for their undaunted spirit in tackling the Covid-19 crisis.

Best wishes,

Sajjan Jindal
Chairman and Managing Director