‘We have Power, not just a PowerPoint’. These were the opening words of  the soft spoken Sajjan Jindal, Chairman & Managing Director of JSW Energy whose IPO opens next week. Notably, the issue is the first IPO from the JSW Group in 15 years.

Some of the key takeaways from the plant visit followed by the one-to-one meeting at Jindal Mansion in Peddar Road, Mumbai that theIPOguru.com team had with Sajjan Jindal are detailed hereunder : 

The IPOguru team visited the operational facilities of JSW Energy at Vijaynagar, Karnataka and also got a chance to view the state of the art steel plant the country's second-largest private steel-maker by installed capacity, JSW Steel. The visit was hosted by V.K.Dhanuka, Sr. Vice President – Energy Projects and the group CFO, Krishna Deshika.

The present operational capacity at 995 MW (at Vijaynagar and 1 unit of 135 MW in Barmer, Rajasthan) has been proposed to be raised to 3140 MW by the end of the next calendar year (Oct 2010) and 11390MW by 2015.

The company has already achieved financial closure for its entire capacity addition program and the same has been proposed to be funded with a Debt to Equity ratio of 3:1 (75:25).

The plant load factor for the operational plants at Vijaynagar has been the best amongst the private players at 97.88 per cent for the latest fiscal gone by.

Of the total plants under operations, the power sale / distribution of the 260 MW  capacity has been through the Merchant basis that helped the company to earn Rs.7 per unit of power. This has helped the company to not only boost its revenues but also the bottom-line in FY 2009.

A notable highlight was that the 260 MW (2*130 MW) power plant at Vijaynagar (SBU I) can run entirely on corex gas.  Though the plant currently uses both, corex gas and coal for production of power and the company pays according to the calorific value (heating value) that is equivalent to that of coal, it enables the company to earn carbon credits which therefore reduces the cost of production.

Presently, JSW Energy sources its entire requirement of coal (dependence on imported coal) from outside India (Indonesia ) for its power plant in Vijaynagar. As per the company estimates the landed cost of coal aggregates to close to USD 65 per tonne. The cost of producing per unit of power is thus Rs 1.40 per unit.

Overall, the total fuel (coal) requirement for the entire proposed capacity of close to 11400 MW is estimated to be less than 50 million tones. While, at present almost 45 per cent of the production capacity is proposed to be sold under merchant basis, the same is expected to come down to 20 per cent as and when the entire production capacity is reached i.e. by 2015.

To conclude, all the recent IPOs from the power space have flattered only to deceive and sunk like stones, post listing.

Will the IPO of  JSW Energy reverse this trend ?

 

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