Ladies and gentlemen, good day, and welcome to the JSW Energy Limited 4Q FY '25 Post Results Earnings Conference Call hosted by B&K Securities.
[Operator Instructions]
Please note that this conference is being recorded. I now hand the conference over to Mr. Rajesh Majumdar from B&K Securities. Thank you, and over to you, sir.
Yes. Hi. Good evening, everyone, and once again, welcome to all of you. We are proud to hold the conference call of JSW Energy Limited Q4 FY '25 and full year FY '25 earnings today. We have today the management team represented by Mr. Sharad Mahendra, Joint Managing Director and CEO; Mr. Pritesh Vinay, Director of Finance and CFO; and Mr. Bikash Chowdhury, Head, Investor Relations and Strategic Finance. So without much ado, I shall now request Sharad sir to start with his opening comments. Thank you, sir.
Thank you, Rajesh, and good evening, ladies and gentlemen, and thanks to you all for joining us today. It is my pleasure to share the highlights of our performance for the quarter and the year gone by. FY '25 has been a landmark year for JSW Energy, one marked by strong execution, strategic growth and sector-leading achievements. I'm proud to share that we recorded the highest annual wind capacity addition by any renewable energy company in India this year. During the year, we crossed a significant milestone of 10 gigawatts set under Strategy 2.0. And as I speak today, JSW Energy is a 12.2 gigawatt company, reflecting the momentum we have built across both organic and inorganic expansion. In FY '25 alone, we have added 3.6 gigawatt of capacity, strengthening the diversity and scale of our portfolio. This has resulted in company reporting the highest ever annual EBITDA of INR 6,115 crores and reported a PAT of highest PAT of INR 1,951 crores. Before we delve into our performance, I would like to share some sector highlights. The dynamics are shifting towards enhancing energy security, addressing the increasing baseload and peak load management.
FY '25 has marked an emerging trend in India's power sector dynamics with several state distribution companies increasingly turning to competitive bidding for thermal power procurement. This trend reflects the growing urgency among states to secure firm power and complement the intermittent renewable generation. Thermal power, particularly from domestic coal-based sources is regaining strategic importance. Having said this, we are happy to tell that JSW Energy has also secured a 1,600-megawatt ultra-supercritical plant in West Bengal, which is fully tied up with WBSEDCL. Coming to capacity additions, India's total capacity -- installed capacity has reached 475 gigawatt and the country has added 33 gigawatts in fiscal '25. Notably, renewable energy led the growth, accounting for a record 29 gigawatt of total additions. This surge was primarily driven by solar power, which contributed 24 gigawatt, followed by 4.2 gigawatt of wind capacity. The power demand for the country grew 4.2% in FY '25. In the fourth quarter, we saw a demand growth of 3.2% year-on-year on a high base of 7.4% growth seen last year in the same quarter.
Structurally, we continue to expect a strong power demand in the medium term. The peak demand witnessed in quarter 4 is 238 gigawatts, which was in February '25 and 250 gigawatt in FY '25. The merchant market remained resilient during the year, averaging around INR 4.5 per unit on exchange on the back of soft coal prices. We have seen merchant tariffs firming up in quarter 4 as compared to quarter 3 FY '25. In Q1 FY '26, we are seeing merchant tariffs further increased to INR 4.76 per unit.
For the quarter gone by, the API 4 coal prices were stable year-on-year at $95 per tonne. And as we talk currently, API 4 coal prices are around $89 per tonne, while within the domestic coal market, sufficient steps are taken to keep a robust coal supply.
Coming to company performance, we have added total 3.6 gigawatts of operational capacity during the fiscal '25. This comprises 1.7 gigawatt of organic capacity that affirms our capabilities to execute large-scale projects efficiently. Our organic wind capacity addition stands at 1.3 gigawatt during the year gone by, representing 1/3 of the nation's total wind capacity addition during the year. These greenfield wind capacity additions include the completion of SECI 10 wind project of 454 megawatts. Our remaining first batch of under construction wind projects are nearing completion. The quarter gone by also saw commissioning of the second unit of Ind-Bharat JSW Utkal, which was 350 megawatts and which has now stabilized and running smoothly.
Complementing our organic growth, we have strategically expanded our footprint through consummation of 2 important transactions: one, KSK Mahanadi Power, a 3.6 gigawatt unit on 6th March '25 asset and O2 Power, a 4.7 gigawatt platform on 9th of April 2025. KSK Mahanadi is 3,600 megawatt plant and is the largest thermal asset acquired via NCLT proceedings for a total resolution amount of INR 16,084 crores. Currently, 1,800 megawatt is operational, which is 95% tied up under PPAs and has fuel supply agreements. In FY '25, the plant reported full year EBITDA of INR 2,895 crores on a PLF of 67.4%, while the underlying EBITDA stands at INR 2,382 crores. We have improved PLF from 67.4%, which was witnessed during the year to 79% post completion of the transaction in just 25 days of operations, which we did in the month of March.
The deemed PLF stands at 99% during this period. We are currently integrating operations with JSW Energy and implementing the comprehensive plan to bring in cost efficiencies. In another large transaction, we acquired O2 Power, which is a 4.7 gigawatt RE platform for a total value of INR 12,468 crores. The current installed capacity of O2 Power is 1.3 gigawatt and we expect it to scale to 4.7 gigawatt by June '27 by undertaking capital expenditure of between INR 13,000 crores to INR 14,000 crores.
Turning to our under construction portfolio. JSW Energy is currently constructing 11.3 gigawatts of generation projects, all of which are fully tied up under long-term power purchase agreements. The under construction portfolio includes 9.7 gigawatts of renewable energy projects and 1.6 gigawatt of Salboni ultra-supercritical thermal power project, which marks our investment in greenfield thermal after more than a decade. Beyond this, we have a robust project pipeline of approximately 4.9 gigawatts of projects where letter of intent or letter of awards have been secured and PPAs are yet to be signed.
In this quarter, we have reduced our untied capacity as now our Vijayanagar thermal plant is fully tied up. This development not only ensures stable and predictable cash flows, but it also marks a fundamental shift in the composition of our open capacity. With Vijayanagar fully tied up, our open capacity now stands at approximately 976 megawatts out of the total portfolio. And out of this 976 megawatt, only about 9% to 10% of the capacity is dependent on the imported coal and rest all is on domestic coal. This transformation signifies a decisive move towards a more resilient domestic coal-based open capacity, reducing exposure to global coal price volatility. Therefore, the breakeven price for our open thermal capacity also reduces with the higher use of domestic coal.
Coming to energy storage, we recognize the critical role it plays in integrating renewable energy. We have expanded our logged-in energy storage capacity to 28.3 gigawatt hour. Notably, the Bavali in Maharashtra, the 12 gigawatt hour hydro pump storage project, which is tied up with MSEDCL is currently under implementation. In addition, recently in quarter 1 of FY '26, we have signed PPA with UPPCL for another 12 gigawatt hour of PSP project to be delivered in next 6 years.
Regarding our SECI 500-megawatt 1 gigawatt hour battery energy storage system, we have appealed in AL and awaiting the outcome. Coming to the operational performance for the quarter, our net generation for the quarter rose by 24% year-on-year to 7.9 billion units. driven by a 32% increase year-on-year in renewable generation on the back of new capacity additions, total net generation from the tied up portfolio was up by 28% year-on-year during this quarter, while short-term generation increased modestly. Our thermal portfolio witnessed a healthy PLF of 77% in the quarter and 71% for the year. A significant portion of JSW Energy's wind capacity was commissioned during the second half of the last fiscal. As is widely recognized, wind generation in India typically peaks during the first half, particularly from May to September, while the second half tends to experience lower wind speeds and lower generations. Therefore, we are well placed ahead of the coming wind season and anticipate a normalization of generation output.
Lastly, coming to the outlook, we are proud to announce that we have surpassed our 10 gigawatt capacity target set under Strategy 2.0, a major milestone in our growth journey. Building on this momentum, I'm happy to announce and launch our Strategy 3.0, our new road map to achieve 30 gigawatt of generation capacity and 40 gigawatt hour of energy storage by 2030. This strategic vision of [ 30 by 30 ] underscores our commitment to powering India's energy security with scale, speed and sustainability. By FY '30, we expect our EBITDA on a run rate basis to grow between 2.7 to 3x over FY '25 pro forma EBITDA levels. To support this expansion, we plan to invest INR 1,30,000 crores in capital expenditure between FY '26 to FY '30. With 11.3 gigawatt under construction projects and a robust pipeline, our locked-in capacity now stands at 30.2 gigawatts, placing us firmly on track to deliver target set under Strategy 3.0.
That's all from my side. With this now, I pass on to Pritesh Vinay to talk on the financial performance for the quarter. Thank you.
Thank you, Sharad. A very good evening to all the participants. As Sharad mentioned, for the quarter, net generation was up by 24% Y-o-Y. And this translated to a total top line increase of 21% Y-o-Y to just shy of INR 3,500 crores. We reported an EBITDA of INR 1,513 crores, which was up by 17% Y-o-Y. And profit after tax for the quarter stood at INR 408 crores, which was up by 16% Y-o-Y. For the year as a whole, we saw the EBITDA increase by 5% Y-o-Y to INR 6,115 crores and profit after tax for the year was up by 13% Y-o-Y at about INR 1,950 crores. Moving to the balance sheet and leverage. If you look at the net debt for the quarter, at the end of the quarter, post completion of the KSK acquisition, the total net debt stood at about INR 44,000 crores, out of which about INR 9,500 crores was for projects which are under capital work in progress and almost INR 34,500 crores was the leverage sitting on the operating companies.
Against the reported EBITDA of INR 6,115 crores, if you look at the pro forma EBITDA, which basically is if all these assets that we have acquired in the middle of the year were available with us for the entire part of the year, the pro forma EBITDA is about INR 8,860 crores. And hence, the net debt to pro forma EBITDA stands at just about 5x. The other key metric that I would like to highlight is that the net debt to equity stands at 1.6x at the end of the financial year. The weighted average cost of debt went up by almost 18 bps sequentially and stood at about 9.05%. And from a receivables point of view, the receivables continue to be healthy. We reported a total outstanding receivables of INR 2,900 crores. From a headline point of view, in terms of DSO, it may appear to be at 76 days, a bit higher compared to March last year.
But what I would like to point out are 2 things: a, given that the amount of power being sold on merchant is lower where you get immediate realization, there's a higher proportion of power, which is being sold on a credit period. And secondly, the quality of receivables are very, very healthy. In terms of the overdues out of these total amount, the overdue trend as a percentage of total is significantly lower on a Y-o-Y basis. Maybe I'll just take a stop there, and we can open up the floor for Q&A.
[Operator Instructions] our first question comes from the line of Mohit Kumar from ICICI Securities.
Congratulations on building a very strong pipeline and especially completing 2 inorganic organic acquisition. My first question is, of course, you have built up a very large baseload portfolio now, especially with the acquisition of Mahanadi and now we're building a new power plant in West Bengal. My question is, do you still see accretion to this baseload portfolio? And my related question is, what is the status of equipment placement and land acquisition for the West Bengal coal-based power plant?
Can you repeat the first question, please?
How do you think about accretion, further accretion to this baseload portfolio? Do you still think that you would like to do more of the coal-based power plant?
See, Mohit, yes, we are seeing the increase in the peak demand, which is -- we witnessed 250 gigawatt, the baseload demand, especially with the significant increase in the intermittent renewable energy, which is solar, the peak load demand, the baseload demand will definitely grad keep on increasing gradually. One is the demand growth and the pattern in which the new capacities which are coming in. If we see last year, a significant portion has come from renewable and also primarily driven by solar. So the baseload demand will gradually is forecasted to be increasing. So wherein the thermal is going to play a key role.
And regarding your second question in terms of the readiness, I'm happy to tell that the entire land on which the plant is to be set up is in our position. So that is not at all a challenge. Everything -- the groundwork, in fact, the initial preparatory work has already started. Regarding the equipment placements, we are at an advanced stage of finalizing that. And that we don't see as a constraint at all in completing the project within the PPA time lines.
[indiscernible] '25 for KSK Manati. And what is the improvement possible over the next 2 to 3 years?
See, as we told you that in my opening remarks, I told about the EBITDA, which was -- operational EBITDA, which was in the range of INR 2,350 crores operational EBITDA, which was there full year on -- for KSK. And the way we have demonstrated in terms of increased PLF bringing in the efficiencies, we are quite confident that we are still working. We are integrating. It is only about a month which has happened. We are working on areas have been identified, but we see a significant scope of improvement in terms of the efficiencies, which will ultimately improve in terms of the revenue as well as the bottom line.
And any -- would you like to quantify that number, sir?
Mohit, it may not be appropriate to quantify it at this point. But I think what will be better and more credible is to deliver some kind of a quarterly progress, and that will be a better way of tracking this, yes.
Our next question comes from the line of Atul Tiwari from JPMorgan.
Congratulations on hitting your targets for capacity expansion. I have 2 questions. The first one is again on the Salboni project. Would it be possible to share some color on the PPA? Is it a regulated PPA? Or is it a completely PPA? And if it is the letter then what are the kind of prices that we are looking at?
See, this is -- again, the Salboni is a Section 63 PPA, which was under the competitive bidding, which we have been able to secure.
Okay. And so I'm assuming it will be under a 2-part tariff, fixed charges and energy charges separately.
Yes, yes. Yes.
Okay. So Atul, the levelized 25-year tariff under 2-part mechanism will be roughly INR 5.45 per kWH.
Okay. Assuming domestic coal supply, of course.
Yes, yes. It is fully tied up, yes.
Okay. Okay. And your plan of doing INR 1.3 trillion of CapEx by FY '30, would you be able to share some color on the thought process around need for equity to meet that? And how much of that you can generate internally and how much you will need to raise from outside?
So Atul, as we have been talking about this consistently in the past that any growth aspiration has to be calibrated within a certain framework of protecting leverage profile and calibrating growth commensurately. So it may not be appropriate to quantify that because needless to say, and I'm sure you would be aware of this, that there will be a back ending of this. So as your capacity base goes up, your cash accretion goes up, your ability to spend goes up progressively. So it's not 130 divided by 5 equally spent in every year, right? So therefore, everything has been planned in such a way that the capital availability is matched with the expected capacity increase going forward. And if need be, as we had demonstrated about a year ago, if you look at that point of time, if you looked at our committed growth pipeline and our then prevailing leverage profile, we actually didn't need to raise any equity capital.
So therefore, these are things out there, and it's very difficult to crystal ball and pinpoint exactly. But anyways, all the growth aspirations will be significantly calibrated to meet the guardrails, yes.
Our next question comes from the line of Sumit Kishore from Axis Capital.
I have a couple of questions. The first one is if you could give us a sense of what was the total CapEx in the previous financial year? And what is that you expect to spend over FY '26 and FY '27 separately, if possible in case you -- just FY '26 would also be fine. That's my first question.
So Sumit, what we actually ended up incurring as a total CapEx for fiscal '25 was ballpark about INR 8,000 crores. And if you remember, we had guided for INR 15,000 crores CapEx for the year because of certain delays in some of the ongoing projects and because we were accelerating the inorganic growth pipeline, we calibrated it down. For fiscal 2026, we are expecting to end up spending anything between INR 15,000 crores to INR 18,000 crores in that range to complete the ongoing projects plus the pipeline of new growth projects that have started.
Sorry to interrupt. Sumit, you're not audible. May I request you to use your handset, please?
Am I audible?
Yes, sir.
Am I audible now?
Yes, sir, please go ahead.
Yes. So in continuation, when you mentioned that the net debt to pro forma 5x. So in terms of the -- your comment regarding the pacing of growth, in all circumstances, you would keep below the 5.5x net debt to pro forma EBITDA is the understanding we have.
That is the endeavor, Sumit.
Okay. So there could be temporary overshoots that could happen without you needing to raise equity? Should we read it that way?
So it's like this, Sumit, as has been our track record and as seasoned trackers of the sector like yourselves know, that project progress, particularly in the infrastructure space, including the power sector, there are too many noncontrollable factors. And there could be times where there could be some bunching together of projects. But more importantly is this that wherever you are allocating capital, are they inherently at returns more than your cost of capital? And from a leverage profile point of view, rating agencies tend to have a slightly through-the-cycle view because they also factor in that the capital work in progress, is that returns accretive or is that returns dilutive. So a lot of factors go into that. So may not be able to give a precise answer, but just wanted to give you a sense of how to think about it, yes.
Fair enough. Just the second question is on projects like Salboni, which are -- so the renewable pipeline that you have, you could pretty much start executing or you would already have started executing the projects where PPAs are done. But for new project starts like Salboni or ASK expansion, I mean, how are you thinking in terms of the pace of deploying capital?
See, Sumit, if we talk of Salboni here also, the PPA has already been signed. There is a time line in the PPA. So we are going to -- which normally is about 48 months to 60 months time period as per the PPA. So we will be spreading. And of course, as Pritesh earlier said, that initial 1 or 2 years, which is more of a groundwork, preparatory work is there, it is more back-ended. So it is being planned. It cannot be just equally distributed in years. It is more -- it will be back-ended. So that is what Salboni has been planned. Again, the PPA has been signed.
Regarding KSK, as we have informed earlier also that the 3 units which are already operating and the balance of plant, which is fully ready for full 3,600 megawatt, so -- and one unit, which is the fourth unit to commission, 40% of that work also is complete. So that is at a very low cost. that can be commissioned. And as the things progress beyond fourth unit, fifth and sixth unit also will be accordingly planned. In my opening remarks also, as I said, that many states are now coming forward for -- to meet their base demand for thermal requirements are coming in. So that gives a very unique opportunity for us to execute the project in a very short time as compared to the standard time which a greenfield thermal power plant takes for KSK.
So basically, the low cost should be interpreted as INR 256 crores per megawatt for bringing up.
Yes. See, difficult to quantify exactly. But yes, as I told you that whatever the benchmark numbers maybe you are aware of setting up a greenfield project and assuming that fourth unit is 40% ready, balance of plant for entire INR 3,600 is ready. So it can be estimated that it will be significantly lower than the normal benchmark cost for a greenfield thermal plant.
That is very clear. Just the last point on other income for the quarter, it's up 149% to some INR 3.1 billion. So was that basically treasury income for the acquisitions that you were about to make?
Yes. There were 2 primary components to that, Sumit. There was a deferred consideration payable that was for one of the prior acquisitions. Of Mytrah, which was subject to certain conditions subsequent. And there was a write-back of that provision because that didn't have to be paid out. And the second is a treasury income gain, as you rightly said, because of the high cash and liquidity that we carried on the books.
How much was the write-back for Mytrah roughly?
I think that was roughly about close to ballpark about INR 100 crores.
The next question comes from the line of [indiscernible] from Avendus Spark.
Regarding this Salboni project, could you...
Sir, may I request you to use your handset, please? Sir, your audio is not loud enough, sir.
Is it better now?
Yes, sir.
Yes. So I just wanted to get a sense on the Salboni project as to its readiness with respect to environment clearance, forest clearance.
These all are under process. There is already at the similar location, this cement plant is running. So I think those all clearances are under process, so we don't see that as a challenge.
Okay. Second question is on the construction portfolio of around 12 gigawatts. Of this, especially when it comes to renewables, what percentage has land what percentage has CPU approved or awarded transmission capacity? Because you mentioned it has PPAs, but the other 2 things like land and transmission, you can mention.
So we have also talked about this in the past, but just to refresh the memory that typically, what happens is the way we approach any project execution is you cannot wait for 100% of the land before doing the groundbreaking because you also have to meet the PPA time line commitments. So typically, you either already have a control about a significant percentage of the land and you have a line of sight or a visibility of being able to get to the finish line on as-you-go basis, right? So that is one. Second is on the connectivity side, for the projects that we need to deliver in the immediate term, we already have -- either already have connectivity or we are in very advanced stages of securing connectivity.
The other thing I would like to add is that when we were acquiring O2, we had also talked about the fact that O2 does not only have 100% of the connectivity that it needs for its own platform, but it also has some excess connectivity. So we are planning projects in such a way that from a synergy point of view, some of that excess connectivity that O2 has, we will be utilizing for our own projects because now it's -- everything is JSW, right? So it's a combination of these 2 things, which gives us a high degree of confidence. in being able to commit to certain capacity targets in a certain time line, yes.
And also to add, which we have -- to reiterate again, which we have said earlier also, for maybe next 2 years, whatever projects under construction to be executed, we all know that there is a challenge in terms of getting the CTU connectivity, which the -- in general, the industry is facing. So we -- as a strategy, the PPAs which were signed and within the same states, we have found the areas which are suitable, whether it is a wind or solar. So we have reduced our dependence for next 2 years on CTU connectivity. And within these states, the STU connectivity availability is something which, as Pritesh said, that majority of the projects we have the connectivity in place or at a very, very advanced stage. So that strategy has really helped us in ensuring that we will be in a position to execute the projects within the PPA time lines.
Okay. Sure. My final question is on -- if you have any estimate of peak debt that would be in your balance sheet in between 26 to 30, what could be that number?
We unfortunately don't think that is the right way to think about it because what is more significant for us is that whatever projects you are implementing at a certain tariff and at a certain capital cost or a project cost, are they returns accretive or not? If they are all meeting your hurdle rate of, say, a mid-teen equity IRR, then the debt is serviceable, right? So therefore, what is more important and appropriate in our view to track is the leverage ratio. And more importantly, to get into the mechanics of this is your debt service coverage ratio, right? So as long as one is comfortable on that side, one can take calls on an ongoing basis.
Our next question comes from the line of Abhishek from Motilal Oswal.
So just on the renewables capacity side, my understanding is some of the capacities were facing some, I think, land acquisition and right-o-way issues, especially for some of the wind projects. So are those getting resolved now? And is there a time line on some of those capacities?
Yes, Abhishek, as we told that we have commissioned and we have demonstrated commissioning of fresh 1.3 gigawatt of wind capacity, which faces the maximum challenge in terms of the ROW issues and implementation issues, which is almost 1/3 of the country's capacity addition, which has taken place. So we have been successfully able to overcome those challenges and the proper mechanisms are in place. And going forward, also the projects which are under construction, we are at a very advanced stage of the ROW issues and the project execution planning is done in such a way that these are within the time lines with the solving these issues take place. So this is a continuous process. We know the way the things happen in the country.
But yes, this is something which is being monitored very, very closely. And we don't see that as a bottleneck in not meeting the time lines within the PPA in which we have to execute the project.
Okay. Okay. Fair enough. So second question is, while there is a good 5-year out target of 30 gigawatts, is it possible to give us some sort of a capacity bridge like, say, by -- I'm saying, let's ignore KSK and power for now. So is it possible to give us a number for, say, end FY '26 and FY '27, just on the organic basis could capacity.
See, as we say that from -- we are talking it is 12.2 gigawatt operating portfolio and the projects which are in pipeline and to be executed within the PPA time lines, you can assume that beyond 12.2 gigawatts, maybe 3 to 3.5 gigawatt of capacity addition, around 3.5 gigawatts of capacity addition in a year ensures us to meet the -- and deliver the projects on time. So you can just maybe estimate that what is further going to happen going forward.
Okay. Fair enough. Just one last question. from me. So I mean, your hands are really full right now in terms of lots of projects. And so does it mean going forward, you are going to be more selective with respect to SEI tenders? And is there a specific category like we'll do more of FDRE or hybrid or any thoughts on those?
See, as we have -- you rightly said that maybe meeting the 30 gigawatt by 2030, the pipeline which we have takes care of that. But -- and this also gives us to be selective in going forward in participating in the upcoming bids. And as we have been maintaining that any opportunity which comes, which is return accretive to our shareholders to us is what we are going to look, and we will ensure that our benchmark returns are protected, keeping those things in mind, only we will be -- going forward, we'll be participating in the bids.
Abhishek, I may want to add. I'm too tempted, sorry. I believe we have always been selective. It is not that something has changed now and hence, selective, right? Let's not forget that India has seen in the last 4 years tendering in excess of 130, 140 gigawatt, right? But we have gone ahead and secured a pipeline of barely 7 to 8 gigawatts, right? So we have been very selective, and we will continue to be so.
Our next question comes from the line of Aniket Mittal from SBI Mutual Fund.
My first question actually is pertaining to wind. Aside of the execution-related issues, generally wind PLF over the past few years have also been a bit depressed. So just wanted to understand your thoughts on that, like in terms of building sort of wind PLF in your assumptions, are you sort of recalibrating that? What sort of PLFs are you assuming going forward?
Yes, Aniket, a very important question, which is a part of our DNA within our organization. See, whenever we are planning to participate in a bid and the modeling is being done for the right tariff, we have always been very conservative in terms of the assumptions. Like the industry, in general, we have seen in case of wind has operated at P75. But for us, the benchmark is P90, which gives us enough room for such kind of deviation when we have seen the last year also that the wind speeds comparatively were lesser than what was anticipated. So we take care a lot of assumptions in such a way that even if these things go wrong, our benchmark returns are protected and we don't go wrong when we are executing and when the project is operational.
And what would that P90 number be, sir? -- what the P90 number that you...
P90 number depends on a lot of other factors. assumption is the probability of going wrong.
If I may come in here. See -- so there are 2, 3 factors that go in, right? One is the location, particular location. Second is the type of equipment that you plan to utilize there, right? And what is the rating of that equipment and what are the efficiency factors, et cetera, right? So it's not a one size fits all that P90 will work at all locations regardless of which equipment you. And hence, ultimately, what works for us effectively is the LCOE number, right, instead of P90 that what is the levelized cost of energy that one is likely to achieve at a particular location for a given configuration of machine, yes.
Okay. The other question was just to understand on the interest cost. In the press release, I think you've mentioned that the weighted average cost of debt has gone up to about 9.1%. So just to understand that what's the average cost of borrowing that you look at now in terms of your financing these projects, both at the project level and...
So it's a mix of things, Aniket. So what has happened is that for O2 -- sorry, for KSK acquisition, we drew down on a long-term debt, which was priced at a certain level, assuming a BBB credit rating profile. We have achieved higher than that. And hence, when we report in June quarter, you will see this number coming down because that number has already inched down because the credit rating is better than the base case at which it was priced. So that is one. Second is what is going to happen is that there is a substantial amount of our borrowings, particularly all the project financing debt, which is typically linked to a bank reference rate, a bank MCLR plus a spread. So therefore, depending on how the interest rate environment moves out and all signs seem to be a more benign rate curve trajectory going forward, there will be an impact of that.
The third factor that comes in also is the timing when your resets happen because typically, while these are long-term facilities, no bank wants an ALM mismatch. And effectively, these are floaters, right, which have annual resets. So periodically, based on when you draw down the first facility, there's going to be an annual reset that will happen quarter-to-quarter. So it's a combination of all these things, which ultimately reflects on this chart here. Then second is this depending on the type of capital pool you are targeting, these costs can be number. So for example, if you want to do a 3-year issuances and assume the rollover refinancing risk, the number can be much finer. What we choose to do is to ensure that for all the projects which are backed by PPA, you are doing a long tenure nonrecourse project financing, right? So it's a combination of all that from institution to institution, bank to bank, that number will vary. But largely 8.5% to 8% to 9%, that is the range typically at which you can get a long tenure project financing facility today.
The next question comes from [indiscernible] from Axis Securities.
My first question is. So post the acquisition of KSK Mahanadi and O2 Power is completed. So going forward, these 2 companies will get consolidated in our company, right, for modeling purpose?
Yes. Yes, Hopefully.
No, no, not hopefully.
Surely. 2, you will see when we report the June quarter results because that transaction got consummated only in the month of April.
Understood. Sir, actually, my second question is regarding O2 only. So O2 in the press release, I understand that we expect that by June '25 around 2.2 gigawatt of capacity is expected to be operational. So can we have like a split of this 2 to 59 megawatts in solar wind and hybrid...
See, presently, when we acquired this asset operating capacity of 1,343 megawatts, out of which 20 -- 71 megawatt of wind and balance is all solar, this what we have acquired. And during the quarter, what we are seeing maybe another addition of about 500 megawatts, which will happen, which takes it to about close to 1.9 gigawatt and balance because of the connectivity and various issues, we will see in the coming quarter.
Understood. And that would be mainly solar only, right, the commissioning?
Yes. Fresh capacity addition to reach 1.9 is 100%.
Understood. And balance, if you can check still 2.2 gigawatt would also be solar or will be? Yes, up to 2.2, everything is solar.
Our next question comes from the line of Nikhil Abhyankar from UTI Mutual Fund.
Sir, recently, we were also thinking of having solar manufacturing plants. So it is not included in the strategy 3.2. Can we expect that it will drop from now?
No. If you see, we have kept this in abeyance. The reason is if we see that we all are aware the way the capacities -- module capacities have got added in India, which is close to 100 gigawatt. So we did the evaluation, and we found basically the objective for us to go for manufacturing was when we had announced to supply chain derisking. That scenario has changed, and we don't see right now of the module availability at the right price as a challenge. So we will be watchful on that. We'll not say that we have dropped, but we have kept in advance. As and when we feel the need, we will be going ahead. But immediately for the current fiscal, we are not going ahead with this.
Okay. And sir, this SEI capacity, can you just tell us how much was the CapEx done? And if a significant portion of it is done, should -- are we also looking at using it for, say, merchant market tapping the night and day arbitrage available...
It is -- see that this happened, the timing was such that we have not done any significant CapEx. It remains in single digits only. So right now, we have not done anything significant in this. And maybe single digit when I'm saying it means maybe around INR 10 crores or below.
But -- I mean, the project was supposed to get commissioned in March '25. So -- and it was canceled. I mean, it has stayed in just 4 months prior to it. Still the CapEx is only INR 10 crores?
Yes, yes. We were -- we had planned in such a way to commission that in 4 months' time. That was not a challenge at all because the preparatory groundwork, the way this amount which has been already invested was done judiciously that as and when the clarity comes because in that time also, the regulatory approvals were pending though the PPAs were signed. So -- and the batteries, what we had ordered, we have enough other projects also, which we have -- which is captive requirements of energy storage as well as other bid which we have won. So the same batteries are being used for other locations. So we don't see any challenge except ordering, yes, you are right, we had ordered, but this is being used in alternate projects.
Okay. And so can you just give us a time line as to what will be the commissioning trend for the rest of the 1.9 gigawatt hours of...
See, again, as I said, that the implementation, which we have made for energy storage, we have been talking about energy storage, as we said in our Strategy 3.0, we are maintaining 40 gigawatt hour, which is part of energy storage also. So balance 1.9 gigawatt, the PPAs which are signed, we will be executing, and this is a short lead time. So we will be doing total -- we have another 5 projects which are there other than this 1 gigawatt, we will be executing as per the PPA time lines, which normally is 18 months.
Our next question comes from the line of Dhruv Muchhal from HDFC AMC.
Sir, is it possible to share the run rate EBITDA for the renewable capacities as of March end for the renewable, I mean, ex hydro and also, if possible, the gross block that you invested? Run rate EBITDA run rate is also fine. However, what is comfortable?
So Dhruv, we don't do that run rate EBITDA, but you will be able to -- you have the -- and the IR team will be able to help you. You have the details of all the RE projects and you have the tariff because all of them have been won through an auction mechanism, it's a public number. So you will be able to generate that. We don't give run rate EBITDA. So that we will be able to do -- from a gross block point of view, you will have to wait for some time because based on the size and significant developments that have happened, we should be in a position in some time to upload once the annual reports are completed, we will be able to upload the annual reports of all the entities. And this year, we are also going to be publishing JSW Neo's consolidated numbers on balance sheet cash flow. So that's based on popular demand. So therefore...
One more popular Yes. So the run rate EBITDA because that's a very good metric or revenue is a good metric for us to monitor because individual projects, you have many hybrid projects too. So monitoring or gauging it from individual projects becomes extremely difficult. So run rate EBITDA probably is an industry standard, as a suggestion, if you can please adopt it also.
We'll surely take that under advisement, Guru.
Our next question comes from the line of [indiscernible] with Morgan Stanley.
I just wanted to understand the impact that you had from the wind speeds on your acquired portfolio. Because as I recollect on Mytrah, you were guiding around INR 600 crores of EBITDA, and that's pretty lower now, including the new acquisitions as well. And any measures that you are taking on that EBITDA now?
Yes. See, one measure which we are taking, yes, it is a slightly lower wind speed impact is there on those assets when we said we have to assume that there are assets which ranges from maybe 650 or 850 kilowatt to maybe 2.7 gigawatt or 2 gigawatts. This is the range of the turbines which are there, which all was evaluated and considered while valuing the asset. But yes, wind speeds have had an impact there. But yes, what we are now our operations and maintenance team is working on apart from the availability, which we have been successful in increasing the availability, which used to be 96%, 97% to 99% availability, which we have ended with is the efficiencies of the machines which are running. So that also is important even when the wind is there, whether the machines are there, that evaluation is in progress.
And also, we have -- there were some contracts which were medium-term operations and maintenance contracts, which were signed with the suppliers. Some of them we have canceled and we have taken into -- during the previous year, at various stages, we have taken into our own control self-O&M. So that also will definitely result in significant savings in the operations and maintenance cost. And also the O&M contracts, which are prevailing, which was for medium terms, we have been successful in negotiating those contracts in our favor. So all those things, we will definitely see in the current fiscal.
But if I may add to that, Amit, I would like to add to what Sharad. So I just put it slightly differently, whatever Sharad has said is 100% correct. Look, in any initiative, there are controllable factors and there are noncontrollable factors. What one can definitely try and endeavor to do is that whatever are the controllable factors that Sharad talked about in terms of ensuring that your machine availability is up, ensuring that the focus on O&M cost reduction and getting more efficiencies out. So we are definitely at it, right? Now wind speed is something which unfortunately is not a controllable factor. But however, this is not a company-specific thing, right? So there are 2 things. One is that, obviously, when one does run these kind of processes, one looks at a longer-term horizon. right?
So we will be watching out closely. And as Sharad said, whatever can be done to salvage that aspect. And ultimately, the bottom line is this that there has to be a certain amount of risk appetite in running any enterprise, and these are inherent risks that one has to live with, yes.
Yes. And the second one that I wanted to understand is regarding your wind manufacturing plan that you had. So what's the progress on that? And what is the sourcing strategy at the moment?
Yes. See, in terms of wind manufacturing, I'd just like to tell, as we have said earlier, we had signed a technology license agreement with SAI. -- and they have their facilities in India only in Pune from where now all the supplies are going to come, which is going to start sometime in quarter 2. And apart from that, to further derisk and optimize in terms of both cost and deliveries, we are setting up our 2 blade manufacturing units our own for our captive requirements, which will be in the current year only, those -- both the units of blade manufacturing also will get commissioned. So these are the 2 steps on the manufacturing front and the wind we have taken.
Our next question is from the line of Mahesh Patil from ICICI Securities.
Sir my first question is on the Power the ofis2.3,2.4igawatt should be operational by June '25. So do we have any revised time line for that capacity?
Yes, Mahesh, as I said that when we acquired the portfolio, the operating capacity has been 1.4 gigawatt and the balance work, which is in progress, so by quarter end, we are expecting close to 1.9 gigawatt operational capacity and about 300 megawatts of solar, which is spilling over in quarter 2. That is the only minor change which is there. We had said 2.2 gigawatt operational by end Q1, which may spill over about small 300 megawatt maybe in quarter...
That you are setting up the...
Mahesh, I request you to repeat your question, sir, you are not audible.
Yes. Sir, my question is regarding the sourcing part. As you have mentioned that you are setting up the blade manufacturing unit, right? So given the revised guidelines on the domestic increased content of domestic manufacturing for wind as well, any challenges in terms of sourcing for both solar and wind equipment for the upcoming projects?
No. As we solar, as I said earlier also that enough capacity in India is there at a very, very competitive price. So we don't see any challenge, and we have already been procuring now modules locally for our ongoing projects. So we don't see as a challenge because close to 100 gigawatt of solar capacity or module manufacturing capacity is already in place in India. Regarding the blade manufacturing, as I said that, of course, there is a draft regulation of made in India, where in some portion, you can import after that, you have to be on domestic. So these actions of ours in the current year, when we will be commissioning our 2 blade manufacturing facilities will take care of our total capacity addition plan. So we don't see these things as a challenge for us.
Okay, sir. And sir, my last question is on the pipeline. So we have a robust pipeline, right? So going forward, what would be the bidding strategy? Are you looking for something like more of solar or hybrid or FDRE? Any view on that?
See, as I said earlier also to one of the questions, we have enough of pipeline in place and the amount of the opportunity size is so big now that we will be selective. And everything is mentioned what we have in pipeline, what we have to install, if you go to the presentation, Slide #24, you will get all the details. But as a strategy, we will be definitely selective, ensuring that if the opportunity which is coming in is meeting within our Strategy 3.0 to reach 30 gigawatt, we have the entire pipeline in place, but we'll be selective. And going forward, wherever we are seeing that it is return accretive, meeting our benchmark returns, we will be participating. But yes, presently, we'll be focusing on our execution of the pipe.
Our next question is from the line of Anuj Upadhyay from Investec.
Sir, just want to get a sense on how our cash flows are placed to fund this INR 130,000 crores of CapEx over the next 5 years. Because what my sense is the extended KST capacity and the Salboni will only come by FY '29 or '30 because it has a execution time period of 4 to 5 years, and this would require a combined CapEx of to the tune of close to INR 0,00roNR the balance INR 90,000 crores, which is largely targeted towards the renewable capacity, generally has an executable time period of, say, 2, 2.5 years kind of a time period. So just to get a sense on what sort of CapEx because you guided that the next year CapEx would be the tune of INR 15,000 crores to INR 18,000 crores. But over FY '27 or '28, can we see a bulk of 25-plus kind of a run rate of a CapEx happening in the company level?
See, maybe I'll just say a few things on the numbers, what you just said and then maybe on the cash flow, Pritesh will let you know. See, one, as I said that these are all projects, which is maybe 4 to 5 years period and more back-ended investment, which is there. And the numbers for these 2 KSK and Salboni, West Bengal project, what you said, -- that is a significantly higher number. As I said earlier, the 1,800-megawatt capacity we have to execute in maybe by FY '30, this will be at a much, much lower cost than what the normal greenfield project is. So the cost will be significantly lower for this entire 1.6 gigawatt of West Bengal and 1.8 gigawatt of KSK, which is total 3.4 gigawatt will not be in the tune of the numbers what you have just said. It will be significantly lower, one. And in terms of cash flow with the new capacities coming in over a period, how it is going to help, maybe Pritesh will just tell you.
So Anuj, I'll just kind of try and repeat in a slightly different way what I said some time back. All growth aspirations, funding of those growth aspirations has to be calibrated with respect to your spending ability. And at the same time, on the other hand, managing that your leverage profile is in check. So we will be operating between these 2 guardrails, right? So from time to time, there was another question earlier, there could be some bunching temporarily, but largely, that is the endeavor. So I would not like to get into specifics because that would not be appropriate. But what is -- we can definitely kind of talk about is that for the current year, we are talking about INR 15,000 crores to INR 18,000 crores capital spending plan. And then it will be calibrated subsequent to that.
Okay, fine. And next on the Vijayanagar. Now the plant has been completely tied up, can we provide some kind of a sustainable ROE or what PLF the plant could run that would be helpful. I believe the plant have a regulated equity contribution of close to around INR 1,300 crores to INR 1,400-odd crores. So can we provide some sense on what kind of ROE it would be making on that captive arrangement?
So Anuj, on Vijayanagar, obviously, the tie-up is on CERC norms. But what I would also want to highlight, and this is important is this that this is a 5-year tie-up. So yes, the tie-up is for 5 years because JSW Steel also has decarbonization aspirations for which they also eventually want to switch over into more and more RE, right? So therefore, with that in mind, this has been done for 5 years. Rest of the things are arithmetic. You guys are very good in doing that. So I would not like to comment on that. But this is how you should look at it, yes.
Our next question comes from the line of Rajesh Majumdar from B&K Securities.
Yes. Sir, my question was actually on the lines of the last participant. So on the thermal PPAs, we are seeing a much shorter duration of 5 years now. Is that the trend going forward? And since you've locked in a lot of new coal-based capacity, is that going to be a challenge in the future in terms of the coal-based capacity?
So Rajesh, I would be to defer. I mean, PPAs are not for short duration. I mean, if you look at what UP did, what Maharashtra did, what West Bengal did, what Karnataka has called for, these are all 25-year bids. What I was explaining was this Vijayanagar 860 megawatt that has been tied up, that has been tied up for 5 years.
5 years, yes.
Yes. So the long-term PPAs still exists for the larger...
25 years and pump storage is all for 40 years, which are the PPAs which are coming.
Ladies and gentlemen, that was the last question for today. As there are no further questions from the participants, I now hand the conference over to the management for closing comments.
Yes. Thank you, everyone, for being with us today. And if anyone else has any query or any other questions, I request you to please approach our IR team. You will get a suitable reply if there are any other questions which remain unanswered today. Thank you very much.
Thank you. Thank you very much, and good night, everyone. Good night.
Thank you. On behalf of JSW Energy Limited, that concludes this conference. Thank you for joining us, and you may now disconnect your lines.
