New 1000 MW plant ups profit; to add 500 MW in Q4: JP Power

The current operational capacity of the company is 1700 MW and going ahead, the company plans to add another 500 MW in Q4. "Funding for three more projects are already in place and they will be operational in another two years," Jain says. With the additional capacity, he expect both the topline and the bottomline to grow on a continuous sustainable basis at least 30% each year.

Below is the edited transcript of the interview. Also watch the accompanying video.

Q: Take us through what the jump in the numbers can be attributed to, have merchant realisations gone up in the current quarter?

A: Till March of last year, we were operating 700 mw of hydropower through our plant in Baspa II and Vishnuprayag. This year, we have commissioned a 1,000 mw plant the Karcham-Wangtoo plant. In fact, it is the largest hydroelectric power plant to go into operation in the 11th five year plan. The first unit of the project was commissioned in May and all four units were commissioned by September. So we have added this generation capacity and definitely in the last quarter, we have seen merchant prices going up by almost Rs 1.5 which added to the bottomline.

Q: Where is it that merchant rate are trading at right now and what is it that you are factoring in even through the course of the calendar year for an average band for merchant trades?

A: The merchant prices in the last quarter have been close to Rs 5, and we continue to see the same levels more so because we have hydro-capacity where we are able to generate power in the peak hours or hours where you have the highest demand. That helps us command better pricing in terms of our merchant power. The revenue has grown by over 100% compared to the same period last year for the nine-month period, and the PAT is up by about 176% to close to Rs 410 crore as resultant of the Karcham-Wangtoo capacity coming online.  

Q: While the numbers are very strong especially on the power side the interest cost as well have gone up quite a bit for the company. Can you walk us through what the plan is in terms of either reducing interest cost or whether or not you have any fresh fund raising requirements in plans?

A: The interest cost has gone up because, as I mentioned the 1,000 MW Karcham-Wangtoo project has come online, so interest is attributed to that project, and all these projects are funded on 70:30 debt equity ratio. So it’s nothing alarming as far as the interest cost is concerned, it is pass-through in the tariff. As far as fund raising is concerned, we are currently implementing in addition to 1,700 MW of operational power capacity, the 500 MW Bina which we expect to go into production next quarter.

Thereafter next year, we expect our 1,320 MW Nigri thermal power plant to go into production, and the year after that, we are expecting our 1,980 MW Bara thermal power project to go into production.

So we have lined up all funding for all these three projects, and given the commissioning of these three projects, every year new capacity addition is going to come up. So we expect both the topline and the bottomline to grow on a continuous sustainable basis at least 30% each year.