Covid-19 impact: JSW Energy calls off acquisition of GMR Kamalanga Energy

Sajjan Jindal-promoted JSW Energy has called off its proposed deal to acquire GMR Kamalanga Energy, an operational coal-based power plant in Odisha, owing to the Covid-19-related uncertainty.

“With the elapsing of long-stop date, both the parties have mutually agreed to terminate the transaction, given continued uncertainty due to the Covid-19 pandemic,” JSW Energy said in a statement. The termination, it added, was with no cost to either of the parties.

In February, JSW Energy had said it would acquire the 1,050 Mw project for Rs 5,321 crore, only to put it on hold in May.

In order to become carbon neutral, the company is also looking to retire its existing coal-fired plants by 2050. “The idea is we will not like to invest more on the coal side, but will focus more on renewables. Whatever coal exposure we have, we want to retire or hive it off by 2050,” said Prashant Jain, joint managing director and chief executive officer, JSW Energy.

The company’s Vijaynagar and Ratnagiri power plants are coal-fired assets.

JSW Energy plans to enhance its renewable power capacity to two-thirds of the overall by 2030. The company currently generates 4,559 Mw, of which 3,158 Mw is thermal power, 1,391 Mw is hydropower, and 10 Mw is solar power.

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JSW Energy posts PBT of Rs 298 cr

The firm announced its financial performance for the June quarter on Friday. It reported a profit before tax (PBT) of Rs 298.28 crore, 8 per cent down from Rs 325.58 crore reported in the same quarter a year ago. Net profit stood at Rs 213 crore, 13 per cent down from Rs 244 crore reported a year ago.

The firm noted that India’s power demand declined by 16.2 per cent year-on-year (YoY) in the June quarter due to weak economic activity amid lockdowns and restrictions. In line with this, JSW Energy’s overall generation also dipped 16 per cent to 4,930 million units in the quarter.

"Around 95 per cent of the firm’s earning before interest, taxation, depreciation and ammortisation (Ebitda) is dependent on capacities which are tied up with power purchase agreements (PPAs)," Jain said. A higher exposure to PPAs has softened the hit on financials for JSW Energy. Ebitda for the quarter decreased 4 per cent to Rs 827 crore from Rs 861 crore in the corresponding quarter of the previous year.