RENEWED FOCUS RENEWED ENERGY Annual Report 2017-18 Key Highlights of FY2017-18 Net Power Generation EBITDA 21.82 BN UNITS `3,228 CR Turnover EBITDA Margin `8,514 CR 38% Contents Corporate Overview Statutory Reports 2 Renewed Focus. Renewed Energy. 40 Management Discussion and 202 Consolidated Statement of 4 About JSW Energy Limited Analysis Cash Flows 6 Key Performance Highlights 66 Directors’ Report 204 Notes to Consolidated Financial Statements 8 Chairman and Managing Director’s 106 Corporate Governance Report Review 272 Financial Highlights (Standalone) 12 Our Value Creation Model Financial Statements 273 Financial Highlights (Consolidated) 14 Megatrends Standalone 18 Strategic Priorities 124 Independent Auditor’s Report 274 Notice 20 Strong Balance Sheet 130 Balance Sheet E-Communication Registration Form for Future Growth 131 Statement of Profit and Loss Proxy Form 22 Constant Focus on Operational 132 Statement of Changes in Equity Attendance Slip Excellence 134 Statement of Cash Flows Route Map to Venue of the 24 Diversifying into Cleaner Energy 136 Notes to Financial Statements Annual General Meeting 26 Building Smarter Mobility for the Future Consolidated 28 Board of Directors 193 Consolidated Independent 32 Risk Management Auditor’s Report 34 Enabling Our People 198 Consolidated Balance Sheet 36 Empowering Communities 199 Consolidated Statement of 38 Corporate Information Profit and Loss 200 Consolidated Statement of Changes in Equity Forward-looking statement In this Annual Report, we have disclosed forward-looking information to enable investors to comprehend our prospects and take investment decisions. This report and other statements – written and oral – that we periodically make contain forward-looking statements that set out anticipated results based on the management’s plans and assumptions. We have tried, wherever possible, to identify such statements by using words such as ‘anticipates’, ‘estimates’, ‘expects’, ‘projects’, ‘intends’, ‘plans’, ‘believes’, and words of similar substance in connection with any discussion of future performance. We cannot guarantee that these forward-looking statements will be realised, although we believe we have been prudent in our assumptions. The achievements of results are subject to risks, uncertainties and even inaccurate assumptions. Should known or unknown risks or uncertainties materialise, or should underlying assumptions prove inaccurate, actual results could vary materially from those anticipated, estimated or projected. Readers should keep this in mind. We undertake no obligation to publicly update any forward-looking statement, whether as a result of new information, future event or otherwise. JSW Energy Limited | Annual Report 2017-18 Renewed Focus. Renewed Energy. JSW Energy is one of the few energy generation companies in India to have overcome headwinds and maintain long-term stability. With total capacity of 4,531 MW, we have a diversified presence across thermal as well as hydel power sectors. In the last fiscal, we grew our hydro plant’s load factor (PLF) and locked long- term PPAs that ensured stable demand and growth. Our robust governance and operational efficiency is continually improving business performance. We have also made strategic changes in our business plans in sync with the evolving dynamics of the Indian power industry. As the Indian Government provides impetus to the renewable energy sector, we at JSW Energy see this is as a significant growth opportunity. JSW Energy has also resolved to lead the next phase of mobility through electric vehicles. As we embark on this new path that leads to a new India, we are confident our renewed focus will fortify our promise to light up the developing parts of the country and enable us to power ahead with our committed values and sustainable business practices. 2 Renewed Focus Renewed Energy Corporate Overview Statutory Reports Financial Statements 3 JSW Energy Limited | Annual Report 2017-18 About JSW Energy Limited JSW Energy Limited, the power utility With a strategic approach to expand With a renewed focus arm of the JSW Group, commenced its across geographies, diversify the fuel and robust operations, journey in the early years of economic mix and sign long-term power offtake liberalisation in India. With a culture of arrangements, the Company has JSW Energy is setting high performance and teamwork, the adequately de-risked the business. new benchmarks in the Company has leveraged opportunities and grown sustainably. In the last fiscal, the Company power sector. announced foray into the renewables Over the years, the Company sector with plans to install solar has set benchmarks of operational power systems and solar PV module excellence in the power sector and manufacturing capacity. JSW Energy implemented cutting-edge innovation has also announced its entry into to minimise environmental footprint. Electric Vehicles (EV) manufacturing Of the 4,531 MW power generation and has signed MOUs with Gujarat and capacity JSW Energy operates, thermal Maharashtra Governments for setting power accounts for 3,140 MW and up the units. The Company’s presence hydel 1,391 MW. extends across India and includes interest in a coal mining Company in South Africa. 4 Renewed Focus Renewed Energy Corporate Overview Statutory Reports Financial Statements Our Existing Businesses Power Generation Power Transmission Mining Current operational capacity Two 400 KV operational Jalipa and Kapurdi lignite mines 4,531 MW transmission lines (JV with with combined capacity of MSETCL) 9 MTPA are operational, capable of meeting entire lignite requirement of 1,080 MW power plant of RWPL Power Trading Equipment Manufacturing Engaged in power trading since JV with Toshiba Corp for June 2006, handled trading manufacturing of supercritical volume of 3.5 billion units this steam turbine generators year Power Plants and Operational Capacity Vijayanagar Baspa II & Karcham Wangtoo 860 MW 300 MW & 1,091 MW Fuel Source: Gas and thermal coal Fuel Source: Hydro Power Offtake: Long-term PPA and Merchant Power Offtake: Long-term PPA Barmer Ratnagiri 1,080 MW 1,200 MW Fuel Source: Captive lignite mines of BLMCL Fuel Source: Thermal coal Power Offtake: Long-term PPA Power Offtake: Long-term PPA and Merchant 5 JSW Energy Limited | Annual Report 2017-18 Key Performance Highlights Turnover (` in crore) Net Generation (Mu) 2013-14 8,908 2013-14 17,061 2014-15 9,610 2014-15 20,307 2015-16 10,060 2015-16 22,064 2016-17 8,480 2016-17 21,631 2017-18 8,514 2017-18 21,816 `8,514 CR 21,816 MU EBIDTA (` in crore) EBIDTA Margin (%) 2013-14 3,454 2013-14 38.8 2014-15 3,854 2014-15 40.1 2015-16 4,261 2015-16 42.4 2016-17 3,541 2016-17 41.8 2017-18 3,228 2017-18 37.9 `3,228 CR 37.9% PAT* (` in crore) PAT Margin* (%) 2013-14 1,132 2013-14 12.7 2014-15 1,384 2014-15 14.4 2015-16 1,297 2015-16 12.9 2016-17 629 2016-17 7.4 2017-18 496 2017-18 5.8 `496 CR 5.8% * Before exceptional items * Before exceptional items 6 Renewed Focus Renewed Energy Corporate Overview Statutory Reports Financial Statements 7 JSW Energy Limited | Annual Report 2017-18 Chairman and Managing Director’s Message 8 Renewed Focus Renewed Energy Corporate Overview Statutory Reports Financial Statements Dear Shareholders, JSW Energy has been committed to the objective of developing our nation and creating value for all stakeholders. By pursuing operational excellence and efficient capital allocation we have been able to successfully turn every challenge into opportunity, thereby building and growing a strong and sustainable energy business. The year FY2017-18 was marked by a during the year. This is a commendable JSW Energy has one of the strongest significant pick up in power demand, achievement considering that very balance sheets in the power sector in led by an improvement in the overall few long-term PPAs have been signed India. The Company’s consolidated net economic environment. Going forward, in the power sector over the last few debt to equity ratio declined from 1.29x we expect the growth momentum years. As a result, our hydropower to 1.02x led by proactive prepayments, to continue, led by government’s business, housed in Himachal Baspa scheduled repayments and intensive infrastructure push and various Power Company Limited, is now 100% working capital management. The structural policy reforms which should tied-up in its offtake, joining its fellow Company also implemented an augur well for power demand growth. subsidiary, Raj WestPower Limited is aggressive plan of receivables The downside risks to India’s growth to enjoying this enviable position. The collection during the year. Proactive watch out for would be spike in crude oil Company also secured group captive refinancing, upgrade in credit ratings prices and rising interest rates. contracts of 86 MW for its Ratnagiri of subsidiaries and a general decline plant, enabling the long-term PPA in interest rates, led to the weighted With limited thermal capacity addition, proportion for this plant to reach close average cost of debt lowering by incremental power demand is likely to to 72%. 114 bps during the year. be fulfilled by rising PLFs in thermal stations and the rapidly growing The Karcham-Wangtoo hydropower Exciting growth plans launched renewable energy segment, where the plant clocked its highest ever In its endeavour to become a futuristic size of the opportunity is substantial. generation since its commissioning. organisation with focus on sustainable Operations at the other plants were development, the Company has decided FY2017-18 in perspective broadly satisfactory with the exception to enter the business of Electric Vehicle Over the past year, we have of Vijayanagar, where the plant (EV) manufacturing including associated substantially deleveraged our generation was affected by erratic businesses of electric battery/storage balance sheet, improved operational schedule. The Company also faced systems and charging infrastructure. efficiencies and created a platform for cost pressure due to rising imported future growth.