The Sajjan Jindal-led JSW EnergyNSE 0.20 % is on track to becoming a 10,000 MW company in the next three to five years and aims to double it to 20,000 MW by the end of the next decade, chief executive officer Prashant Jain.
JSW, with current capacity of 4,559 MW, is scouting for acquisitions in both thermal and renewable energy to achieve this goal. many stressed assets in the beleaguered power sector are up for sale at low valuation, Mr Jain said.
â€œWe are looking at a capacity of 10 gigawatt (gw) over the next 3-5 years. We have a one time opportunity in the thermal power sector where stressed assets are on the block, which include some good assets. We are looking at some low cost assets, coal pit-head plants where the power cost is in the bottom quartile for a particular power distribution company,â€ Jain said.
JSW is in the process of buying the 700 MW-Ind-Barath Energy (Utkal) unit and has entered into exclusive discussions to buy GMR Kamalanga Energy, which owns a 1,050 mw operating thermal power plant in Odisha. Jain said that the company is keen to sign the share purchase agreement and close the deal by March.
The next phase of expansion that will take the company to 20 GW will be driven by renewable energy. â€œAround 30-40 per cent of the of the 10 gw capacity that we are aiming would be from renewable energy. We are already looking at 20 GW capacity in five years after that. As we scale up our capacity from 10 gigawatts to 20 mw, the incremental 10 GW capacity would be almost 90-100 per cent from renewable,â€ Jain explained.
In May, JSW Energy decided to focus only on power and dropped all plans to diversify into electric vehicle manufacturing business. The company has been successful in acquiring hydropower projects from Jaiprakash Power Ventures (JPVL) in Himachal Pradesh, but it had to scrap two similar buyout plans one from JPVL and another from Jindal Steel and Power.
â€œThe main criteria for acquisition for us is the right value and right asset that fits into our strategy. Typically, all assets are to be funded by 25 per cent equity and 75 per cent debt, we look at assets where the equity should be getting a normative return of around 15 per cent,â€ he said.
JSW is among the few Indian power companies who are looking for acquisitions, most other power utilities are struggling with stretched balance sheet and muted cash flow.
â€œOur focus is on growth now because we have deleveraged our balance sheet substantially and we have optimised our operation and maintenance cost in the last three years. But like in the past, we will continue to be prudent in our approach,â€ Jain said.
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