InvestorQ : How are power companies like JSW Energy managing to tweak their business strategy in these times? I am a shareholder of JSW Energy and hence would like to know?
swati Bakhda made post

How are power companies like JSW Energy managing to tweak their business strategy in these times? I am a shareholder of JSW Energy and hence would like to know?

Answer
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Dia Deshpande answered.
3 months ago


In the aftermath of the steep fall in power demand during the lockdown, thermal power producers like JSW Energy have consciously chosen to rebalance risks across segments to manage cash flows in a more efficient manner. Let us look at how exactly such a conscious strategy worked in the case of JSW Energy, especially since April power demand fell 24%.

Despite the 24% fall in April and 19% fall in May, the power demand is only marginally down in June and that has helped the company. For example, JSW Energy focused on enhancing digital working capabilities, better monitoring, optimizing supply chains, rigorous cost control measures, improving liquidity and communicating proactively with stakeholders.

As a strategic choice, JSW Energy has put the GMR Kamalanga thermal power project in Odisha on hold and are also deliberately going slow on capital expenditure plans to prevent cash burn. JSW expects power demand to be subdued in the short term although it expects the demand to pick up sharply in the medium term once the lag effect is done and dusted.

JSW is also putting greater emphasis on the renewable segment. JSW Energy sees declining pace of thermal capacity addition as well as retirement of inefficient thermal plants. Apart from the shift to renewable power, JSW also expects that 100% FDI in coal would encourage large foreign players to have a meaningful stake in the domestic coal market.