JSW Energy Limited Investor Presentation August 2019 Agenda
Overview Value Proposition Operational Appendix Highlights
2 JSW Group – Overview
USD 14 Billion group with presence across the core sectors JSW Steel*: India’s leading integrated steel JSW Energy*: Engaged across the value chain producer (Steel making capacity: 18MTPA) of power business (Operational plants’ capacity: 4,559MW)
JSW Infrastructure: Engaged in development JSW Cement: Manufacturer of PSC, OPC and operations of ports (Operational capacity: and GGBS cement (Operational plants’ 75MTPA) capacity: 12.8MTPA)
Group Market Cap (USD 9,048 Million**)
JSW Energy 1,579
JSW Steel 7,470
As on August 6, 2019 *Listed company. ** USD/ INR = 70.4 3 JSW Energy – Presence across the Value Chain
. Currently Operational . Operational Transmission Line – JV with Capacity: 4,559 MW Power Power MSETCL: two 400KV transmission lines Generation Transmission
. JV with Toshiba, Japan for Equipment . Rajasthan (Lignite): Kapurdi and manufacturing of super-critical Mining Jalipa mines (operational with steam turbines and generators Manufacturing capacity of 4.5MTPA and 6MTPA respectively)
Power Trading
. Engaged in power trading since June 2006 . Handled trading volume of 2 Bn units in FY19
4 Established Energy Company with 4,559 MW Operational Capacity
Barmer: 1,080MW Baspa II (300MW) & Karcham Wangtoo (1,091MW)
• Configuration: 8 X 135MW • Units operating: Baspa II since 2003 and Karcham Wangtoo since 2012 • Units operating: since 20103 • Technology & Fuel Source: Hydro • Technology: Sub-critical pithead Lignite based TPP • Power Offtake: Long Term PPA 2 • Fuel Source: Captive Lignite mines of BLMCL1 • Asset Value to JSW Energy: INR 92,750mn/ $1,317mn • Power Offtake: Long Term PPA 2 • Project Cost: INR 71,650mn/ $1,018mn Nandyal: 18 MW Commissioned 18 MW thermal capacity in Q1FY20 at Renewable Energy: 10 MW (Solar) Nandyal with LT PPA under Group captive scheme
Commissioned ~10 MW solar power projects across various Under-construction capacity locations within JSW Group, and exploring other opportunities in RES segment 18 MW thermal capacity under construction at Salboni (W.B.); to be tied under Group Captive LT PPA
Ratnagiri: 1,200MW Vijayanagar: 860 MW • Configuration: 4 X 300MW • Units operating: since 20113 • Configuration: 2 X 130MW and 2 X 300MW • Technology: Sub-critical TPP • Units operating: since 20003 • Fuel Source: Imported Thermal Coal • Technology: Sub-critical TPP • Power Offtake: Long Term PPA & Merchant • Fuel Source: Gas & Imported Thermal Coal • Project Cost: INR 55,161mn/ $784mn2 • Power Offtake: Long Term PPA & Merchant • Project Cost: INR 30,957mn/ $440mn2
Proximity to load centre/fuel source/infrastructural facilities
1) Long term FSA with BLMCL for supply of lignite from its captive mines; BLMCL is a 49:51 JV between JSW Energy (Barmer) Ltd (subsidiary of JSW Energy) and Rajasthan Government undertaking, 2) USD/ INR = 70.4 3) denotes start of first unit in respective fiscal year; TPP – Thermal Power Plant 5 Proven Track Record
FY12 FY19
Capacity (MW) 2,600 4,541 . CAGR FY12–19: 8%
Net Generation (MUs) 13,594 22,088 . CAGR FY12–19: 7%
Total Revenue INR 62,654mn / $890mn INR 95,056mn / $1,350mn . CAGR FY12–19: 6%
EBITDA INR 15,944mn/ $226mn INR 32,211mn/ $458mn . CAGR FY12–19: 11%
PAT INR 1,701mn/ $24mn INR 6,845mn/ $97mn . CAGR FY12–19: 22%
Thermal Coal, Lignite, Hydro, Fuel Type Thermal Coal . Diversifying fuel sources Solar
Power Generation, O&M, Power Generation, O&M, Business Segment . Presence across the value chain Transmission, Trading, Coal Mining Transmission, Trading, Coal Mining
Despite turbulent sector dynamics, delivering sustainable growth driven by focused execution and balanced strategy
USD/ INR = 70.4 6 Sound Corporate Governance
Ensures regular review of audit plans, significant audit findings, adequacy of internal audit system, compliance with Audit Committee applicable regulations by the Company and its subsidiaries Comprises of four Independent Directors and one Non-Executive Director
Identifies qualified persons and recommends to the Board the appointment, removal and evaluation of Directors Compensation and Responsible for drafting policy on specific remuneration packages for Executive Directors and approving the payment Nomination & of remuneration to managerial personnel Remuneration Formulate criteria for independence of Director, evaluation of Independent Directors, policy on Board diversity Committee Comprises of three Independent Directors and one Non-Executive Director
Stakeholders Responsible for the functioning of the investor grievances redressal system Relationship Comprises of one Independent Director, one Non-Executive Director and one Executive Director Committee
Risk Management Periodically reviews risk assessment and minimisation procedures Committee Comprises of two Independent Directors, one Non-Executive Director and two Executive Directors
Corporate Social Formulates and recommends to the Board a CSR Policy including list of projects and programs Responsibility (CSR) Periodically reviews the progress of CSR activities and programs Committee Comprises of two Independent Directors, one Non-Executive Director and one Executive Director
All key committees in place, having adequate Independent Director representation
7 Agenda
Overview Value Proposition Operational Appendix Highlights
8 Value Proposition
1 Efficient Capital Allocation and Execution Capabilities
2 Portfolio of Efficient Operating Assets
3 Diversified Fuel Tie-up
4 Balanced Mix of Off-take Arrangements
5 Sound Financial Profile
9 Efficient Capital Allocation and Execution Capabilities
Project cost of select power plants set up by other players in the industry Power project Capacity Project cost 1st COD MW INR mn/MW $mn/MW Year
Lanco (Amarkantak) 600 52.3 0.74 2009 Lanco (Udupi) 1,200 46.7 0.66 2010 Aryan Coal (Kasaipalli) 270 50.0 0.71 2011 Barmer Tata Power/DVC (Maithon) 1,050 52.4 0.74 2011 (2010-2013): Adhunik (Padampur) Ratnagiri 1,080 MW @ 540 61.8 0.88 2013 (2011-2012): 1 INR 66.34mn /MW GMR EMCO (Warora) 600 62.5 0.89 2013 Vijayanagar 1,200 MW @ (~$0.94mn/MW) GMR (Kamalanga ) 1,050 2013 (2010): INR 45.97mn/MW 62.1 0.88 600 MW @ (~$0.65mn/MW) Dhariwal (Chandrapur) 600 62.2 0.88 2014 Vijayanagar INR 32.78mn/MW DB Power (Janjgir-Champa) 1,200 70.2 1.00 2014 (2000-2001): (~$0.47mn/MW) JPVL (Nigrie) 1,320 79.2 1.13 2014 260 MW @ 1 INR 43.42mn/MW Neyveli (Barsingsar) 250 70.0 0.99 2010 1 (~$0.62mn/MW) Giral (Rajasthan) 250 76.9 1.09 2011
Leveraging upon strong project execution and project management expertise, and infrastructure
1) High capital cost due to CFBC boilers for lignite based power plant USD/ INR = 70.4 10 Portfolio of Efficient Operating Assets
JSW Energy Standalone PLF 1 All India Private Sector Thermal PLF*
93% Among the best-run private sector power plants in India 81% 83% 84% 64% 65% 62% 61% 61% 61% 59% 64%60% 56% 55% 55% Sound operating efficiency characterised by one among
the lowest O&M expenses in the sector JSW Energy Standalone Energy JSW FY13 FY14 FY15 FY16 FY17 FY18 FY19 Q1FY20
JSW Energy (Barmer) - Deemed PLF JSW Hydro Energy Ltd
66% 2
86% 3 85% 84% 84% 84% 81% 50% 52%
46%
Hydro Barmer
FY15 FY16 FY17 FY18 FY19 Q1FY20 FY17 FY18 FY19 Q1FY20
Healthy PLFs driven by O&M and execution expertise *Source-CEA 1) Includes Vijaynagar (860MW) and Ratnagiri (1,200MW) plants 2) Deemed PLF 11 3) Lower PLF in FY19 due to lower water availability in Sutlej Basin Diversified Fuel Tie-up and Balanced Mix of Off-take Arrangements
Fuel sources – Power off-take arrangements – optimal mix of Long term PPAs o Imported coal and short term/ merchant sales.... o Lignite Long term: o Hydro 18.6% Stable cashflows, pre-defined o Renewable (RE) returns 81.4% Insulated from inflation and forex/fuel price movement 0.2% Short term: 30.5% RE Ability to capitalise on better realisations 23.7% Hydro Ability to respond to demand Lignite fluctuations and shortages
45.6% Imported coal Long Term Short Term … with clear visibility to increase the LT PPA proportion to 4,559 MW over 88% from April, 2020
Low fuel and forex risk; Approval to blend upto 50% of domestic coal at Vijaynagar and Ratnagiri plants
12 Sound Financial Profile (1/2)
FY19 EBITDA Margin1 FY19 Return on Capital Employed2,3 (RoCE)
50% 9.7% 9.1% 8.6%
7.2% 34% 6.8% 6.5% 28% 28% 27% 23%
JSW Energy Reliance Adani Power CESC NTPC Tata Power JSW Energy CESC Adani Power NTPC Reliance Tata Power Power Power
Healthy Margins and Return Ratios
Source: Stock exchange filings – FY19 results; (1) Calculated as EBITDA/ Revenue, where EBITDA includes Other Income, (2) Calculated as EBIT/ Average Capital Employed 13 (3) CPLTD for FY19 is basis FY18 for Reliance Power Sound Financial Profile (2/2)
FY19 Net Debt1/Equity (x) FY19 Net Debt/EBITDA2 (x) 7.0 7.1 6.1 6.2 6.3
4.5
3.1 2.3 1.8 1.5 1.5 0.9
JSW Energy CESC NTPC Reliance Tata Power Adani Power JSW Energy CESC NTPC Adani Power Tata Power Reliance Power Power
Well capitalised Balance Sheet, adequately positioned to tap growth opportunities
Source: Stock exchange filings – FY19 results (1) CPLTD for FY19 is basis FY18 for Reliance Power (2) EBITDA includes Other Income 14 Agenda
Overview Value Proposition Operational Appendix Highlights
15 Key Highlights for Q1FY20
Commenced power supply from Vijayanagar plant to Telangana under 300 MW short term PPA
Added 41 MW under long term PPA (LT PPA) at Ratnagiri plant under Group Captive scheme increasing the consolidated LT PPA proportion to 81.4%
Commissioned 18 MW thermal power plant at Nandyal with LT PPA tied under Group Captive scheme
Proposed acquisition of 1000 MW Tamnar thermal power plant from Jindal Steel and Power Ltd terminated due to elapsing of long stop date without completion of stipulated conditions precedent
The Company’s Vijayanagar plant won the ‘Shining Glory Award’ from Green Maple Foundation for contributions in Environmental Management
JSW Energy (Barmer) Ltd won the ‘Shining Glory Award’ from Green Maple Foundation for contributions in Business Excellence and Women Empowerment
16 Power Generation
Q1 Plant-wise Net Generation (MUs) 4%
6,086 6,086 5,867 5,867
31% 4% 16% 30%
1,868 1,868
4
1,379 1,379 2,032 2,032 1,954 1,651 1,443
960 960 662 0
Vijayanagar Ratnagiri Barmer Hydro Solar Total
Q1 FY19 Q1 FY20
PLF/CUF Q1 FY20 Q1 FY19 Remarks (Q1 FY20) Vijayanagar 38.2% 55.4% Lower short term sales Ratnagiri 81.7% (*83.6%) 84.4%(*85.5%) Lower short term sales Barmer* 80.8% 86.2% Hydro 66.3% 51.2% Higher generation due to better water availability in Sutlej basin Solar - Nandyal 22.4% - Solar - Salboni 18.3% - Short term sales (MUs) 722 1,147 Lower at both Vijayanagar and Ratnagiri
* Deemed PLF 17 Hydro net generation numbers includes free power to HPSEB Consolidated Financial Results ` Crore
Particulars Q1 FY20 Q1 FY19
Total Revenue 2,464 2,428
EBITDA 861 844
EBITDA Margin(%) 35% 35%
Interest 270 313
Depreciation 291 290
Profit Before Tax 300 241
Profit After Tax 244 229
Gross Cash Accruals* 551 500
Diluted EPS (`) # 1.49 1.40
# Not Annualized for Q1 * Computed as PAT+ Depreciation+ Deferred Taxes+ Exceptional items 18 Amongst the Strongest Balance Sheet in Power Sector
in ` Crore in (x) 13,000 1.20
12,000 1.04 1.02 1.10 0.98 Net Worth (Rs Crore) 1.00 11,000 0.90 0.89 Net Debt* (Rs Crore) 0.85 0.86 0.90 Net Debt*/Equity (x) 10,000 0.80
9,000 0.70
8,000 0.60 Dec 31, Mar 31, Jun 30, Sept 30, Dec 31, Mar 31, Jun 30, 2017 2018 2018 2018 2018 2019 2019 Net Worth (Rs Crore) 11,469 11,110 11,581 12,231 11,904 11,822 11,928 Net Debt* (Rs Crore) 11,896 11,278 11,382 10,982 10,611 10,050 10,221^ Net Debt*/Equity (x) 1.04 1.02 0.98 0.90 0.89 0.85 0.86 Net Debt*/TTM EBITDA (x) 3.54 3.49 3.68 3.61 3.34 3.12 3.16 Weighted Average Cost of Debt 9.04% 9.03% 8.97% 9.00% 9.06% 9.07% 9.20% Net Debt calculation excludes the market value of listed equity investments worth ~`1,940 Crore (As on June 30, 2019)
Net Debt to Equity healthy at 0.86x
* Excludes short term working capital debt/acceptances ^ Gross Debt reduced by ~` 220 Crore in Q1FY20 19 Entity-wise Summary Financial Performance ` Crore Total Revenue# Q1 FY20 Q1 FY19 Standalone 1,191 1,388
JSW Barmer 863 654
JSW Hydro 390 370
JPTL 20 22
Consolidated * 2,464 2,428
EBITDA Q1 FY20 Q1 FY19 Standalone 295 259
JSW Barmer 251 265
JSW Hydro 334 337
JPTL 19 21
Consolidated * 861 844
# Including Other Income * After inter-company adjustments and eliminations 20 Agenda
Overview Value Proposition Operational Appendix Highlights
21 Strong Financial Track Record
Total Revenue (Rs. mn) EBITDA (Rs. mn, RHS) Net Debt (Rs. mn) Net Debt to Equity 42,612 120,000 38,535 160,000 2.40 35,414 34,536 100,596 40,000 100,000 32,276 32,211 144,762 2.00 30,066 120,000 1.60 96,103 32,000 1.52 133,844 80,000 89,076 95,056 1.36 1.60 91,477 84,804 85,139 112,782 15,944 24,000 1.01 1.49 100,503 60,000 80,000 91,191 94,049 89,205 1.20 62,654 1.29 16,000 40,000 75,739 1.02 0.80 40,000 0.85 20,000 8,000 0.40 - 0 - - FY12 FY13 FY14 FY15 FY16 FY17 FY18 FY19 FY12 FY13 FY14 FY15 FY16 FY17 FY18 FY19
Key Financial Parameters FY17 FY18 FY19 Profit making entity since inception EBITDA Margin (%) 41.8 37.9 33.9 Well capitalised balance sheet/ low gearing ratios Return on Avg. Net Worth (%) 6.3 4.6^ 6.1 Reducing debt levels leading to robust debt protection EPS (` Per Share) 3.87 3.02^ 4.24 metrics
Robust financial profile in a challenging environment
Note: Figures from FY16 onwards have been restated as per IndAS; ^ Before exceptional items 22 Demand Growth robust at 6.7% YoY in Q1FY20
Q1 FY20* Q1FY19 Remarks Region YoY % (MUs) (MUs) (Key States driving Demand) North 108,462 101,421 6.9% Uttar Pradesh (+10.8% YoY) West 105,213 99,617 5.6% Chhattisgarh (+26.0% YoY) South 90,037 82,858 8.7% Karnataka (+15.6% YoY) East 39,841 38,010 4.8% Bihar (+9.9% YoY) North-East 4,218 3,897 8.2% Meghalaya (+20.8% YoY) All-India 347,771 325,803 6.7%
Quarterly Growth Rates FY20 FY19 Region Q1* Q4 Q3 Q2 Q1 North 6.9% -0.5% 2.9% 2.7% 5.8% West 5.6% 2.8% 7.2% 8.9% 5.1% South 8.7% 2.4% 9.3% 8.5% 4.2% East 4.8% -0.1% 9.7% 11.0% 6.0% North-East 8.2% 10.7% 0.9% 4.6% -3.7% All-India 6.7% 1.6% 6.7% 6.8% 5.1%
Source: CEA, * Basis Provisional CEA Data Jun’19 23 Generation and PLF trends
Q1 FY20* Q1FY19 Gross Generation YoY % Remarks (MUs) (MUs) Thermal 287,690 276,562 4.0% • RE generation robust at 18.5% YoY Hydro 39,549 31,575 25.3% RES 36,186 30,527 18.5% • Growth in Hydro generation higher due to weak generation in Q1FY19 Others 11,904 10,847 9.7% because of lower water availability Total 375,417 349,512 7.4%
Thermal PLF (%) Q1 FY20* Q1 FY19 Remarks
All- India PLF 62.8% 62.2%
Central 69.0% 73.3% • All-India Thermal PLF marginally higher State 60.8% 61.3% YoY led by increase in Private Thermal PLF
Private 59.6% 54.5%
Source: CEA, * Basis Provisional CEA Data Jun’19 24 Installed Capacity
Sector-wise Installed Capacity – 358.3 GW Segment-wise Installed Capacity – 358.3 GW (As on June 30, 2019) (As on June 30, 2019)
Total: 79.8 GW # RES Total: 86.6 GW # Central State Total: 105.1 GW # +2,151 MW * 22.3% 24.2% 29.3%
Hydro Total: 226.3 GW # Total: 45.4 GW # 12.7% Private Thermal +45 MW * 46.5% 63.2% Nuclear 1.9% Total: 166.6 GW # Total: 6.8 GW # +2,196 MW *
In Q1FY20, Installed Capacity increased by 2.2 GW led by RES capacity addition (+2.15 GW)
Source: CEA * Net capacity change during Q1FY20 # Refers to total installed capacity of respective segments 25 Average Merchant Tariff
Merchant Tariff Trend (`/unit) 6.50 Particulars Q1 FY20 Q4 FY19 Q1 FY19 YoY% QoQ% Merchant Volume 5.50 11,993 9,431 13,938 -14.0% 27.2% (MUs) 4.50 Average merchant 3.29 3.18 4.13 -20.3% 3.6% tariff (`/unit) 3.50 Particular FY19 FY18 FY17 FY16 2.50 Average merchant 3.85 3.26 2.42 2.73 1.50 tariff (`/unit) Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar FY16 FY17 FY18 FY19 FY20
Average monthly merchant tariffs range bound at `3.2 - 3.4 per unit during Q1FY20
Source: IEX (DAM) 26 Indian Economy and Imported Thermal Coal Prices
. Industrial production (IIP) growth recovered after dipping to a 23- month low in Mar’19 (0.1%) and stood at 3.7% YoY in Apr-May’19 Imported coal (API4) price and USD/INR indexed to Jun-18 Levels
. Imported coal (API4) prices witnessed sharp decline of ~34% YoY Indexed API 4 Coal (monthly avg.) USD/INR (monthly avg.) and 20% QoQ in Q1FY20 110
. In Q1FY20, average value of rupee against USD appreciated by 100 ~1% QoQ, however, depreciated ~4% on YoY basis 90
80
Industrial Production Growth (YoY %) 70
12% Overall IIP Manufacturing 60 Jun-18 Sep-18 Dec-18 Mar-19 Jun-19 10% 8% 6% Indexed to Mar-2019 Levels 4% 2% Month API 4 Coal USD/INR 0% Mar-19 100 100 -2% Apr-19 91 100 May-18 Jul-18 Sep-18 Nov-18 Jan-19 Mar-19 May-19 May-19 88 100 Jun-19 84 100
Source: API4 Coal Index, MoSPI, Bloomberg, Reserve Bank of India (RBI) 27 Forward Looking and Cautionary Statement
This presentation has been prepared by JSW Energy Limited (the “Company”) based upon information available in the public domain solely for information purposes without regard to any specific objectives, financial situations or informational needs of any particular person. This presentation should not be construed as legal, tax, investment or other advice. This presentation is confidential, being given solely for your information and for your use, and may not be copied, distributed or disseminated, directly or indirectly, in any manner. Furthermore, no person is authorized to give any information or make any representation which is not contained in, or is inconsistent with, this presentation. Any such extraneous or inconsistent information or representation, if given or made, should not be relied upon as having been authorized by or on behalf of the Company. The distribution of this presentation in certain jurisdictions may be restricted by law. Accordingly, any persons in possession of this presentation should inform themselves about and observe any such restrictions. Furthermore, by reviewing this presentation, you agree to be bound by the trailing restrictions regarding the information disclosed in these materials. This presentation contains statements that constitute forward-looking statements. These statements include descriptions regarding the intent, belief or current expectations of the Company or its directors and officers with respect to the results of operations and financial condition of the Company. These statements can be recognized by the use of words such as “expects,” “plans,” “will,” “estimates,” “projects,” or other words of similar meaning. Such forward-looking statements are not guarantees of future performance and involve risks and uncertainties, and actual results may differ from those specified in such forward-looking statements as a result of various factors and assumptions. The risks and uncertainties relating to these statements include, but are not limited to, (i) fluctuations in earnings, (ii) the Company’s ability to manage growth, (iii) competition, (iv) (v) government policies and regulations, and (vi) political, economic, legal and social conditions in India. The Company does not undertake any obligation to revise or update any forward-looking statement that may be made from time to time by or on behalf of the Company. Given these risks, uncertainties and other factors, viewers of this presentation are cautioned not to place undue reliance on these forward-looking statements. The information contained in this presentation is only current as of its date and has not been independently verified. The Company may alter, modify or otherwise change in any manner the contents of this presentation, without obligation to notify any person of such revision or changes. No representation, warranty, guarantee or undertaking, express or implied, is or will be made as to, and no reliance should be placed on, the accuracy, completeness, correctness or fairness of the information, estimates, projections and opinions contained in this presentation. None of the Company or any of its affiliates, advisers or representatives accept any liability whatsoever for any loss howsoever arising from any information presented or contained in this presentation. Please note that the past performance of the Company is not, and should not be considered as, indicative of future results. Potential investors must make their own assessment of the relevance, accuracy and adequacy of the information contained in this presentation and must make such independent investigation as they may consider necessary or appropriate for such purpose. Such information and opinions are in all events not current after the date of this presentation. None of the Company, any placement agent or any other persons that may participate in the offering of any securities of the Company shall have any responsibility or liability whatsoever for any loss howsoever arising from this presentation or its contents or otherwise arising in connection therewith. This presentation does not constitute or form part of and should not be construed as, directly or indirectly, any offer or invitation or inducement to sell or issue, or any solicitation of any offer to purchase or subscribe for, any securities of the Company by any person in any jurisdiction, including in India or the United States, nor shall it or any part of it or the fact of its distribution form the basis of, or be relied on in connection with, any investment decision or any contract or commitment therefore. Securities of the Company may not be offered, sold or transferred in to or within the United States absent registration under the United States Securities Act of 1933, as amended (the “Securities Act”), except pursuant to an exemption from, or in a transaction not subject to, the registration requirements of the Securities Act and in compliance with any applicable securities laws of any state of other jurisdiction of the United States. The Company’s securities have not been and will not be registered under the Securities Act. This presentation is not a prospectus, a statement in lieu of a prospectus, an offering circular, an advertisement or an offer document under the Companies Act, 2013, as amended, the Securities and Exchange Board of India (Issue of Capital and Disclosure Requirements) Regulations, 2009, as amended, or any other applicable law in India. 28 Thank you
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