JSW Energy on Friday announced its plans to launch a self-branded electric vehicle and associated business in storage and charging infrastructure in the country by 2020. The Sajjan Jindal-led company will invest close to Rs 4,000 crore on the business that would be funded by a mix of debt and equity. Out of total investment, debt will be Rs 2,000 crore while equity will be Rs 1,500 crore. The equity contribution will come through internal accruals, while debt would be raised in the market. An analyst with Kotak Securities said, the company may not have any issues in terms of equity contribution as it has a free cash flow generation of Rs 1,500-Rs 2,000 crore every year. Besides, the company has been paying a debt of close to Rs 1,500 crore every year. Hence, funding the EV business may not be an issue, but it needs to be seen how the market responds to their entrance into the car manufacturing business.
Prashant Jain, joint managing director and CEO, JSW Energy said, “The company is in talks with state governments of Maharashtra, Gujarat, Rajasthan and some of the states in south India to secure land for the manufacturing plant. The decision on manufacturing capacity is a work in progress and will be disclosed in due course.”
The company will also set up a manufacturing facility for two associated businesses such as battery manufacturing facilities — module assembly and battery packs assembly, as well as entire battery management system in phase one. In phase 2 it will set-up lithium ion battery manufacturing facilities.
“As far as battery charging stations are concerned we will facilitate with various partners to create the entire charging infrastructure. All these businesses will not just be vertical and forward integration for the existing businesses but also for electric car business. They will also act as standalone business for the third party businesses,” Jain said.
The energy storage business will not just be a business for mobility purpose but also for static applications, such as for replacement of diesel generation sets and solar rooftops and for the telecom towers too, Jain added.
The company is already working on certain platforms and top-heads along with their internal design team and external partners. However, Jain declined to comment on their partnerships for both platforms and technology for batteries. Meanwhile, JSW Energy reported a 40.54% year-on-year drop in consolidated net profit to Rs 217 crore in the April-June quarter of 2017 as fuel cost rose 8% to Rs 1,120 crore during the period.
Revenue from operations fell 9% on year to Rs 2,232 crore largely due to lower generation from the coal fired plants that fell to 6,400 million units from 6,648 million units a year ago. Merchant realisations during the quarter were also subdued with company selling 1,834 million units under merchant sales, as against 4,301 million under long term contracts.
Although the company declined to share merchant realisations, it is hopeful that merchant tariffs in the short to medium term will improve as recently the existing peak tariff between 6PM and midnight on exchanges touched a high of Rs 6 per unit. “We believe the short to medium term new normal would be around Rs 3.10 to Rs 3.30 per unit on the exchanges. The demand is also likely to grow in coming quarters led by pick in industrial demand and government focus on affordable housing,” Jain said.
Earnings before interest, tax, depreciation and amortisation before exceptional items was down by 16% to Rs 971 crore for the quarter.
The consolidated plant load factor during the June quarter was 76% against 78% a year ago.