JSW Energy may dilute stake

Sajjan Jindal’s JSW Energy may go in for dilution of promoter holding to fund its second phase of expansion, expected to commence in 2012.The promoter group owns 76.72 per cent stake in the company. JSW Energy vice-chairman N K Jain told Business Standard it was exploring the option of diluting this stake in the next phase. The company plans to raise its power generation capacity to 10,450 Mw from the present 1,430 Mw by 2015, as part of its second phase of expansion.It requires an investment of Rs 45,000-55,000 crore to set up this capacity and needs to put in at least Rs 12,000-14,000 crore as equity investment.

Lofty plans

Besides, JSW Energy is scouting for more coal assets abroad and to enter into power transmission and distribution. The company, that had raised Rs 2,700 crore from its initial public offer (IPO) in December last year, is aiming to become one among the top three independent power producers in the country.Recently, JSW Steel, part of the group and India’s third largest steel maker, had divested close to 15 per cent stake to JFE of Japan to raise Rs 5,700 crore for expansion. “Once the ongoing projects start power generation, our internal cash generation will be higher and this is sufficient to meet the equity needs for the next one to two years. So far, we have invested close to Rs 2,500 crore to Rs 3,000 crore equity for the ongoing projects. For the next phase of growth, we may look at diluting equity and other possible options,” said Jain.

The next phase of expansions include a 1,320-Mw project at Chhattisgarh, 1,620 Mw in West Bengal in a joint venture with JSW Bengal Steel and another 3,200 Mw capacity expansion at Ratnagiri in Maharashtra.

Currently, JSW Energy has operational capacity of 1,430 Mw and another 1,710 Mw of generating capacity is under construction. The company is setting up a 4x300 Mw thermal power plant at Ratnagiri in Maharashtra and its first unit was commissioned recently. The second unit will take off this month and the next two units in February and April next year. Of the total project cost of Rs 5,650 crore, the company has spent over Rs 4,000 crore.

At Barmer in Rajasthan, the company is setting up a 1,080 Mw (8x135 units) lignite-based power project and two units are operational. The rest are expected to take off by July next year. Of the project cost of Rs 6,085 crore, JSW Energy has spent Rs 4,000 crore. It is also setting up a 240-Mw hydroelectric project at Kutehr in Himachal Pradesh, with an investment of close to Rs 1,800 crore and has announced it will add 660 Mw near its Vijayanagar (Bellary) plant in Karnataka, with an investment of Rs 3,300 crore.

High capex for two years

The company has utilised Rs 1,503 crore of the IPO proceeds and another Rs 1,200 crore is remaining. For the next two years, JSW Energy will require a total capital expenditure of Rs 3,000-3,500 crore every year, said Pramod Menon, chief financial officer.

The company had refinanced part of its debts, aggregating to Rs 1,000 crore, in the September quarter. This will provide a five-year moratorium, after which the repayment will be done in five instalments. This restructuring helped the company to reduce its cost of debt to 9.75 per cent from the current 11.5 per cent. JSWEL had consolidated net debt of Rs 8,634 crore as of September 30.