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Jan 24, 2013 07:15 PM IST | Source: CNBC-TV18

Imported coal price, Barmer plant boost Q3: JSW Energy

NK Jain, vice chairman, JSW ENERGY, says that better realisations and soft imported coal prices helped in the third quarter. Merchant tariffs have been higher than estimates for the Q3. Barmer plant contributed positively to Q3 profits.

NK Jain, vice chairman, JSW Energy , says that better realisations and soft imported coal prices helped in the third quarter. Merchant tariffs have been higher than estimates for the Q3. Barmer plant contributed positively to Q3 profits.

Also read: Bullish on market; DIIs must also join rally: Samir Arora

Below is the edited transcript of his interview to CNBC-TV18.

Q: What is your average merchant realisations were in this quarter?

A: It is about 4.5/KW.

Q: Your plant load factor (PLFs) has been very good across plants and they have reached almost 90 percent. Do you see a possibility of further improvements in coming quarters?

A: We have plants in Ratnagiri, Barmer and Vijayanagar, Karnataka. In Barmer plant PLF cannot improve substantially because it has different technology. However, in this quarter Barmer’s PLF has been very good at 81 percent. PLF at Vijayanagar continues to operate at 100 percent and 90 percent in Ratnagiri. Overall, ninty-one percent is a good PLF that we achieved in this quarter. Still there is a possibility of improvement by 1 or 2 percent.

Q: Merchant tariffs tend to be a bit volatile in nature. How do you see merchant tariff rates for the rest of the year because Rs 4.5/kW is higher than estimate?

A: Basically, merchant tariff in this quarter has been bit better. Our guidance is Rs 4.25-4.5/kW range and it will remain in the same range. It is about Rs 4.25/kW.

Q: You did clarify in the past that you are not looking to acquire Lanco’s Udupi plant, but is that possibly on the cards for JSW Energy given that most of your plants are working at almost 100-percent capacity. Are you looking to expand your plant portfolio itself?

A: No, we would certainly be interested in acquiring any good asset, which is available in the country. We are open for discussion on any of these opportunities.

Q: In this quarter you got good news from the raw material front because imported coal was not very expensive and therefore your margins improved, but do you have a plan B that you are working on to reduce your vulnerability to imported coal?

A: In this quarter three factors have contributed to our operational performance and it has been excellent. This has been the best quarter where operating performance of the plant has been good, better realisation and lower fuel cost.

Going forward, we will continue to import coal as our plant are dependent on imported coal. The global economy is down so commodity prices are under pressure and our view is that coal prices may not move further and remain at USD 85-88 level on free-on-board FOB. So, we stand a good chance to keep the fuel cost stable for some more coming quarters.

Q: While PLFs may not go up significantly from here, I believe that some more units of the Barmer plant are coming into or being commissioned in the coming quarter. Would you have significant volume growth from the new units that you can sell form there?

A: Yes, infact significant volume growth may not see in the last quarter of the financial year because the units will put on Capacity on Demand (COD) in February or first week of March, which may not be substantial addition in units generation. However, going forward Barmer will add substantial generation in units for the company.

Right now, only 540 megawatts (MW) is full operational and another 540 will come in full operation by end of this year. Next year we will have full capacity of 3,140 MW, 1200 MW at Ratnagiri and 1,080 MW at Barmer and 860 MW at Vijayanagar. So next year we expect volume growth in the company.

Q: The plant tariff for the Barmer plant has not come in yet. How soon do you expect that tariff order and any losses that you are facing till such time as you get clarity on that?

A: Barmer unit has already started minutely contributing towards the equity returns in this quarter. In this quarter, the Barmer plant made a small profit. We are able to recover our entire fixed cost, interest, depreciation and yet we are able to provide for equity return. Recently, the regulator increased the interim tariff has been increased by the regulator.

However, final tariff determination may take more time. The regulator promised that final hearing will be held in February so we expect a judgment soon. When the final tariff is laid out the entire return on the equity, which is there would be available to the company.

However, from this quarter we are not making any losses in Barmer plant and by next year it will generate return to the equity.



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