JSW puts Ratnagiri expansion on backburner

JSW Energy on Thursday said the plan to expand its Ratnagiri power plant by 3,200 Mw would be postponed till issues regarding imported coal were sorted. However, the plan for 1,200 Mw of capacity would be commissioned on schedule. Two units of this project are physically operational, the third has begun commercial operation and the fourth unit will be operational soon.

Sajjan Jindal, chairman, said they were awaiting clarity on the government stand regarding imported coal-based projects before going for more of such capacity. These projects are facing trouble since Indonesia decided to index its coal exports to global prices and Australia is coming up with a tax on mining. The company is already importing all its coal requirements on a spot basis and is facing the heat.

JSW Energy also reported its quarterly results on Thursday. It saw a 41 per cent fall in net profit to Rs 190 crore from Rs 327 crore in the same quarter last year, as its fuel cost went up a whopping 77 per cent. This increase is due to a rise in global prices of coal. It has, however, a 27 per cent growth in revenue to Rs 1,119 crore, as compared to Rs 879 crore in the same quarter last year.

"Even long-term contracts of coal do not have fixed prices," said Jindal. "The problems in the power sector will continue for the next one year."

While imported coal-based projects are under review, the company is continuing the development of three domestic coal-based power projects -- a 1,320 Mw Chhattisgarh project, a 1,600 Mw project in West Bengal and 1,620 Mw in Jharkhand.

Merchant sales went up during the quarter to 72 per cent of consolidated net generation as against 69 per cent in the pervious quarter. "The margins on merchant sales are expected to be under pressure, as the deferment of power procurement is expected to keep the merchant tariff uncertain. However, imported coal prices are now showing some signs of decline," the company said in a press release.

The results did not go down well with the stock market. The stock plunged 6.6 per cent in trade on Thursday, to close at Rs 71 per share.