Dear Shareholders,
I hope that all of you are doing well and that this message finds you in good health.
The year gone by was an extraordinary one for your company as in many ways the future
direction of JSW Energy took shape in FY24.
Not only did the company perform extremely well across parameters but also years of
hard work and planning has started to bear fruit in FY24.
I am truly excited about the future of JSW Energy and share the yearRs.s developments
and progress with you all in confidence.
FY24 was an inflection point for your Company. Our total installed capacity stands at
7.2 GW across thermal, hydro, solar and wind. We have also locked-in 3.4 GWh capacity of
energy storage projects in our development pipeline. Our installed capacity grew by 2.7 GW
over the past two years, reflecting a 26% CAGR. I am pleased to share that by securing
additional bids of 3.4 GW through the auction processes, our total locked in capacity has
increased to 13.2 GW. This was achieved on the back of strong underlying growth in power
demand at 7.5%, a robust bidding environment, our competitive edge in executing projects
on time and within budget and the strength of our balance sheet. Currently 2.6 GW of
projects are under construction, and will be commissioned in FY25, helping us meet our 10
GW capacity target by FY25.
Accelerating growth. Broad-basing possibilities
As we move into the future, JSW Energy is no longer going to remain just an energy
generation company as a huge part of our growth and value is going to come from providing
our customers complete energy solutions.
Spanning across generation, storage and products S services our horizons and our total
addressable market have truly expanded. Your company is an early mover in the energy
storage business - having a presence in both the battery energy storage system and the
hydro-pumped storage projects. Additionally, towards supply chain de-risking, we are also
venturing into equipment manufacturing by making solar PV panels and wind turbines.
Significant strides have been made towards our target of becoming a 20 GW generation
company by 2030. With tailwinds such as healthy underlying power demand, a strong pipeline
of under-development capacity and a robust capital structure on the balance sheet, I am
confident of accelerating our 2030 targets by a few years. We stand by our goal for a 50%
reduction in carbon footprint by 2030 and achieving carbon neutrality (Net Zero) by 2050.
Economic overview
IndiaRs.s GDP has grown by 8.2% in FY24, according to NSO estimates, compared to 7.0%
growth a year ago. Led by strong manufacturing and construction activity, the Indian
economy is poised to showcase robust growth in FY25 reflecting a resilient economy in the
midst of a slowing global economic landscape. In FY24, major conflicts in Europe and the
Middle East created geopolitical risks. These conflicts established the need for energy
security and your company is diligently advancing towards its goal of delivering
sustainable and cost- effective energy solutions for India.
Energy security - a strategic imperative
India is the third largest power consumer in the world and the worldRs.s fastest
growing major economy. Sustained economic growth needs energy security and sustainability.
India has been navigating the volatile energy market in the past few years, ensuring
energy security while working on energy transition with an ambitious target of 500 GW of
renewable energy by 2030 and Net Zero by 2070.
Power demand in India increased by 7.5% YoY in FY24. All-India peak power demand
touched a high of 243 GW in September 2023, and in line with demand, overall power
generation increased 7.1% YoY. Renewable power generation increased 11% YoY, driven by
higher generation of solar and wind power. IndiaRs.s total installed capacity stood at 442
GW at the end of FY24.
As the Indian economy grows and per capita income continues to increase, power demand
is bound to accelerate. Increase in the usage of electronic appliances, rapid urbanisation
and the governmentRs.s infrastructure push have all led to a sustained and systemic
increase in the demand for power which will continue in the years to come. The next decade
is set to be transformational for IndiaRs.s power sector as it faces the twin challenges
of meeting the growing demand while decarbonising the economy.
Firm power - mainstay for base load demand
Thermal Power will continue to be a key constituent in the energy mix, insulating India
from geopolitical disruptions and ensuring energy security, especially at a time when the
economy is expanding rapidly. Although our dependence on fossil fuel is decreasing, but
fossil-fuel based energy is essential for the country to meet the transition phase over
the medium term. IndiaRs.s base load demand has increased to about 200 GW and is growing
at a healthy pace. Assuming sustainable demand growth of 6-7% per annum, India will need
12-14 GW of incremental firm power every year. Over and above this, the decarbonisation
aspirations of commercial S industrial consumers and energy transition-related investments
will need further capacity growth in renewable energy. All of this will translate into a
need to install 40-50 GW of new renewable energy capacity annually. This is a huge
challenge that the entire renewable
energy industry is grappling with. In FY24, India could add only 18.5 GW of renewable
energy capacity. Further, renewable energy has the problem of intermittency, as both solar
and wind are not available 24 hours. Hence, balancing the grid and providing it stability
is something thermal power will do till storage solutions such as battery and hydro pump
storage evolve and become cost-efficient. Hence, while we will continue to focus on adding
renewable capacity, we will also continue to pioneer energy storage solutions as well as
keep an eye on any new thermal opportunities.
JSW Energy - Strategy 2.0
At JSW Energy, Strategy 2.0 heralds an ambitious roadmap to intensify growth and
broad-base our capabilities within the energy sector. The strategy encapsulates our
commitment to scale power generation capacity to 20 GW along with 40 GWh of energy storage
before 2030. The strategic framework summarises how we are diversifying, broad-basing and
expanding our portfolio across the value chain - from Electrons to Molecules, from a Power
Generation to Energy Products and Services company. It lays out how we are embracing new
energy solutions, including Battery Energy Storage Systems (BESS), Pumped
Storage Projects (PSP), equipment manufacturing, green hydrogen and its derivatives. It
underlines our proactive approach to leading the energy transition journey for our country
while at the same time continuing to focus on enhancing operational efficiency and driving
sustainable growth.
This strategy, which was unveiled last year, embodies a proactive and forward-looking
approach towards transforming the energy landscape. The plan articulates how we are
accelerating by aspiring to grow at a 22% CAGR between FY23-FY30.
While pursuing this rapid growth, the leverage profile of the Company will continue to
be best-in-class. At all times, it will remain our endeavour to maintain our sustained
normalised Net Debt to EBITDA multiple below 4.0x.
Delivering sustainable growth - building a war chest to accelerate growth
FY24 was a milestone year in terms of our operational and financial performance. Our
net generation increased 27% YoY to 27.9 billion units (BUs), driven by higher renewable
energy and thermal power generation. Total renewable generation increased 54% YoY to 9.3
BUs, while thermal generation increased 17% YoY.
Total Revenue increased 10% YoY to Rs. 11,941 crore. We recorded the highest-ever
EBITDA and the second- highest ever Profit After Tax (PAT) in our history. EBITDA at Rs.
5,837 crore grew by 53% year-on-year, driven by the additions to our renewable energy
asset base and a strong performance by the thermal business. This resulted in a 17% YoY
growth in PAT at Rs. 1,723 crore.
The Board has recommended a dividend of Rs. 2.0 per share for FY24.
Liquidity continued to be strong with cash and cash equivalents of Rs. 4,691 crore at
March 2024. Today, JSW Energy has one of the strongest balance sheets in the sector, which
gives it the headroom to pursue value accretive growth opportunities. Our consolidated Net
Worth and Net Debt stand at Rs. 20,832 crore and Rs. 26,636crore, respectively, resulting
in a Net Debt-to-Equity ratio of 1.3x, while Net Debt-to-EBlTDA ratio stands at 4.5x.
In a major strategic development, in April 2024, we successfully raised Rs. 5,000 crore
of equity through a Qualified Institutional Placement (QIP) issue to build a war chest for
accelerating our growth ambitions.
I am pleased to share with all of you that this was the largest QIP in the power sector
and our first equity raise since the IPO. The issue was subscribed over 3.2x and met with
an overwhelming response by high quality blue-chip global and domestic institutional
investors. The success of this capital raise reinforced the faith and trust reposed by
large institutional investors on your Company to be one of the best positioned to
capitalise on the growth potential of the Indian power sector.
Robust project pipeline
In addition to other significant milestones, we successfully secured additional
renewable energy project pipeline with a cumulative capacity of 3.4 GW during the year
through the competitive bidding process. This reflects a remarkable 35% surge in our
locked-in capacity, which now stands at 13.2 GW. The bids include aggregate solar projects
of 2.4 GW; i.e., 700 MW each from SJVN, NTPC and SECI, and another 300 MW project from
GUVNL. A wind project of 1.0 GW was received from SECI under Tranche XVI.
We achieved a significant milestone with the rapid synchronisation of Ind-Barath Unit
1, having a capacity of 350 MW. Notably, this project represents one of the fastest
turnarounds of a previously stalled thermal power plant in India. It highlights our
commendable project execution skills, resilience, and outstanding teamwork.
Foray into Energy Products & Services
In the past year, we made strategic advancements in energy products and services.
Notably, we signed an offtake agreement with SECI for IndiaRs.s
largest Battery Energy Storage System (BESS) project, boasting an impressive capacity
of 250 MW/500 MWh. Additionally, we signed a technology licensing agreement with a leading
global OEM to manufacture wind turbine generators for our captive in-house requirements.
At JSW Energy, we are constructing our first Green Hydrogen plant, where we have signed
a 7-year hydrogen supply agreement for offtake of 3.8 KTPA with JSW Steel. This marks
IndiaRs.s largest commercial-scale green hydrogen project and the first in the country for
making green steel. India is poised to become a global green hydrogen player with
favourable government policies and industry collaboration as catalysts for a substantial
opportunity. We have also been allotted 6.5 KTPA green hydrogen production capacity from
SECI under the Strategic Interventions for Green Hydrogen Transition (SIGHT) programme. We
are focused on playing a significant role in the evolution of the Green Hydrogen economy
of the country.
Future capex
We intend to spend around Rs. 115,000 crore to reach our stated goal of 20 GW
generation and 40 GWh storage under Strategy 2.0. As we accelerate our ambition, this is
likely to increase going forward. Our plan is to spend approximately Rs. 15,000 crore in
FY25. Additionally, we are also actively scouting for acquisition opportunities in the
power sector.
Moving ahead, we are on track to commission our ongoing projects for power generation,
battery storage and green hydrogen production. The growth capital secured through the
recently completed QIP strategically positions us to accelerate the execution of our
returns accretive growth plans. This infusion of capital empowers us to drive progress and
achieve our goals with agility.
ESG priorities
Our ESG strategy reflects how we are putting our purpose into action. Every day, we
seek new and better answers to transform the world,
while making us stronger and more resilient. We are acting with urgency to protect our
planetRs.s limited resources and be a leader in the fight against climate change. During
the year, we achieved the Rs.Leadership Band (A-)Rs. in CDP Climate Change for the third
consecutive year, gaining the highest rating in the power sector in India.
We are measuring our progress and providing increased transparency on our performance.
Across our environmental work, we are also committed to being a force for equity, and are
working with communities on the frontlines of climate change to create shared
opportunities and build a more just world.
In Conclusion
Our proactive approach is on capitalising growth opportunities within the energy
sector, ensuring energy security, and supporting IndiaRs.s decarbonisation goals. This is
aimed at presenting us as a return focused, forward-thinking, resilient, and innovative
company ready for future opportunities, while accelerating current growth momentum.
Together, we are building an organisation to capitalise on our unique capability of
providing solutions across the value chain.
I would like to thank all our dedicated employees, partners and families of JSW Energy
who are converting this strategic vision into reality. I would also like to thank all our
stakeholders for their trust, support, guidance and good wishes. The journey ahead is long
and full of opportunities.
I am positive that the best is yet to come.
Sincerely,
Sajjan Jindal
Chairman a Managing Director