JSW Energy Ltd

NSE:JSWENERGY

Earnings Call Analysis

JSW Energy Hits Record EBITDA; Growth on Track

JSW Energy reported robust growth with power demand increasing by 13% in the quarter, resulting in a high power deficit reminiscent of 2004-2006. The company achieved record EBITDA of INR 2,008 crores, a 29% growth in power generation, and successfully performed bilateral contracts leading to a 35% higher tariff. With 86 megawatts commissioned this quarter, the total year-to-date capacity added amounts to 216 megawatts. Their projects, including the 2.4 gigawatts in progress and the Ind-Barath units, are on schedule. The company's strong performance in integration and EBITDA improvement programs is expected to significantly affect the bottom line earlier than planned. Receivables improved by 10%, net debt remained at INR 24,260 crores, and they announced the visibility of future growth with 10 gigawatts projected by December 2024.

Surge in Power Demand and Robust Performance

The narrative begins with a significant uptick in power demand, escalating by 13% during the quarter and more than 7% year to date. This surge mirrors levels not seen since 2004-2006, despite the grid capacity having more than doubled to 200 gigawatts. The company capitalized on this trend, registering a 29% increase in power generation, driven by both renewable sources and merchant sales, leading to the highest-ever EBITDA (INR 2,008 crores), cash profit (INR 1,180 crores), and profit after tax (INR 850 crores) for the quarter.

Strategic Project Commissions and Integration

On the development front, the company successfully commissioned 86 megawatts of SECI X capacity during the quarter and anticipates the commissioning of Ind-Barath Unit 1 in the coming month, with Unit 2 set to follow in quarter 4. Highlighting a particularly strong performance, the Mytrah acquisition saw a 27% increase in generation year-on-year, which substantially boosted the EBITDA. The company is advancing ahead of schedule concerning the integration and EBITDA improvement plans, signaling positive prospects for the next financial period.

Financial Outcomes and Market Assessment

While the broader market contends with coal price fluctuations, seen in a 65% year-over-year decrease in the API 4 coal price index, the company's adeptness in fuel cost management is evident. Short-term market dynamics remain favorable with a 35% higher tariff achieved in bilateral contracts compared to exchange tariffs. This, along with efficient coal sourcing strategies that have secured supplies into January from auctions and subsidiaries of Coal India, supports a comprehensive production plan for the ongoing financial year. The prevailing power market is described as 'tight,' a scenario expected to persist for the foreseeable future.

Evolving Clean Energy Landscape

Pivoting towards renewable energy and sustainability, the company has set ambitious goals, including the commissioning of 10 gigawatts by December 2024. A memorandum of understanding (MOU) with JSW Steel to establish 6.2 gigawatts of renewable capacity, 2.7-gigawatt-hour storage capacity, and a considerable green hydrogen production capacity by 2030 outlines a significant leap towards a carbon-neutral footprint. The first green hydrogen plant, employing alkaline technology sourced from a Chinese manufacturer, is projected to commence operations by March 2025.

Acquisition Synergies and Advanced Timelines

The acquisition of Mytrah has proven fruitful with the company outperforming anticipated timelines, where the majority of the benefits expected to materialize in FY '25 are likely to be realized by the end of FY '24. Optimizations in operational efficiency have led to a 27% increase in Mytrah's generation quarter-on-quarter, translating into heightened EBITDA contributions. This accelerated integration demonstrates the company's proficiency in leveraging acquisitions for growth.

Earnings Call Transcript 2024-Q2

[Operator]

Ladies and gentlemen, good day, and welcome to the JSW Energy Limited Q2 FY '24 Earnings Conference Call hosted by Batlivala & Karani Securities India Private Limited. [Operator Instructions] Please note that this conference is being recorded. I now hand the conference over to Mr. Rajesh Majumdar from Batlivala & Karani Securities. Thank you, and over to you, sir.

[Rajesh Majumdar, analyst]

Yes. Good evening, everyone, and thanks for the opportunity. We have the conference call of JSW Energy Limited today being taken by the management team comprising of Mr. Prashant Jain, JMD and CEO; Mr. Pritesh Vinay, Director, Finance and CFO; and Mr. Bikash Chowdhury, Head, IR and Treasury. First of all, sir, congratulations on an excellent set of numbers. Without much ado, let us now hand over the call to Mr. Prashant Jain for making his opening remarks. Thank you, sir.

[Prashant Jain, executive]

Thank you, Rajesh. Good evening, ladies and gentlemen, and it's late in the Friday night. But the power sector has been in the news for the good reasons now. And to start with, the power demand during the quarter went up by 13%. And for the year till date, it was up by more than 7%. In the month of quarter till -- in the month of October till date, the power demand is up in excess of 19%. So all in all, we have been seeing a very robust trend of very high power demand. And because of which we are seeing a very high power deficit, the kind of a deficit, which we saw in 2004 to 2006 period.

And remember that time the grid capacity was miniscule at that point of time, close to 85 gigawatt and today, it is 200 gigawatt. So the kind of a power deficit at this kind of a great size translates to a large shortage of the power capacity. During the quarter, we saw a total capacity addition of 3.5 gigawatts and year till date 9.3 gigawatt, and now we have a total installed capacity of 425 gigawatt. The merchant volume during the quarter was up by 26% and year till date 20% and power tariff for the quarter was INR 5.9 on an average. For the company, the power generation was up about 29% at 8.6 billion unit due to higher renewable power generation as well as higher merchant sales.

The company clocked highest-ever EBITDA of INR 2,008 crores and highest ever cash profit of INR 1,180 crores and profit after tax of INR 850 crores. The merchant tariff during the quarter for our short-term sales was INR 8.17 as against just I mentioned, INR 5.90 of the exchange price for the quarter. This demonstrates the capability of the company to do the bilateral contracts at a 35% higher tariff than the merchant tariffs available in the exchange and which also contributed a lot for this higher EBITDA.

During the quarter, we commissioned 86 megawatts of SECI X capacity, which completed total year-to-date commission capacity of 216 megawatts. All our existing 2.4 gigawatt projects are running as per schedule. We have guided in the previous quarters, and you will be seeing all those capacities getting commissioned in the current quarter, current financial year and next financial year and as per the scheduled time lines.

For the Ind-Barath, the boiler light-up has been done, turbine is ready to be synchronized in the next 7 days' time frame. However, the transmission line, the 1 or 2 bottlenecks are being sorted out. We expect next month, the Unit 1 will get commissioned. Unit 2 will be commissioned as scheduled in quarter 4. Mytrah did a very good exceptional performance in terms of availability as well as generation, generation increased by 27% year-on-year, which contributed significantly to the EBITDA. And as I had guided for the company that we are running ahead of schedule in terms of the integration as well as the EBITDA improvement program, which we guided to the Street.

And you will be seeing in the current financial year a lot of the hard work has been done, and then that will be flowing into the bottom line of the company ahead of schedule. Receivables improved 10% year-on-year, both for the consolidated as well as including the Mytrah and that performance is going to further improve in next 3 to 6 months' time frame. The net debt of the company stayed at INR 24,260 crores and with the debt-to-EBITDA of 3.3 without CWIP and 4.6 with CWIP, weighted average interest cost reduced from 8.68% to 8.51%. And there is an interesting development, which we have now to share with all of you is we have been guiding for next batch of our growth. We have disclosed that there is a visibility of 10 gigawatts, which is getting commissioned by December 2024. Now JSW Energy has signed an MOU with JSW Steel for building 6.2 gigawatts of the renewable capacity, 2.7 gigawatt hour of the storage capacity and 85,000 to 90,000 tonnes of the green hydrogen for manufacturing green steel.

This 85,000 to 90,000 tonnes of green hydrogen will be associated with additional 1.8 gigawatt of the renewable capacity and 1 gigawatt hour of the storage capacity. All these things will be done by 2030. So this entails a total within the group around 9 gigawatt of -- or 8 gigawatt of the renewable capacity, 3.7 gigawatt hour of the storage capacity plus the green hydrogen and green oxygen. And we will be deciding in due course about the pricing mechanism, but what I can explain is that historically, whether it is third-party or the group captive, we have been doing all our projects at, at least mid-teen equity IRRs.

With this, I would like to open the forum for question and answer. Thank you.

[Operator]

[Operator Instructions] The first question is from the line of Atul Tiwari from Citigroup.

[Atul Tiwari, analyst]

Yes. Congrats on a very good set of numbers. Just one clarification on the merchant sale. So fair to assume that this was done from Vijayanagar and Ratnagiri projects, right?

[Prashant Jain, executive]

That's right.

[Atul Tiwari, analyst]

And what was the quantum behind this INR 8 merchant sale, I mean, how many units, et cetera. Sorry, your results came just now. So I did not have a chance to look through the PPT yet.

[Pritesh Vinay, executive]

You're talking about -- I'll give the quarter, during the quarter the total MUs that are sold in merchant market?

[Atul Tiwari, analyst]

Yes. And what was the, say, the import -- landed price of imported coal for you, if you could help on that, so those were the data points I need.

[Pritesh Vinay, executive]

So on the imported coal, let me take that first. If you see the API 4 index which is the benchmark for the 6,000 kcal high GCV coal. That was actually down 65% Y-o-Y during this quarter to an average about $113 per tonne compared to the same time last year, right? And you will be able to kind of derive that because we do, of course, just to reiterate what we have shared in the past for Ratnagiri, we do a blend of low GCV and high GCV. And for Vijayanagar because it is inland and there's an additional inland transportation cost involved, we typically try to go with maximum high GCV coal.

So therefore, you'll be able to -- if you look at the stand-alone financials, you will be able to compute the implied fuel cost. So we will not be able to disclose that separately. But coming to your first question, we sold roughly 660 million units of total in the short-term markets during the quarter.

[Atul Tiwari, analyst]

Okay. And now that the power market appears to be tight. So I mean, do you have bilateral contracts for third and fourth quarter as well already? Or do you plan to kind of sign...

[Pritesh Vinay, executive]

It was on a rolling basis, Atul, because it works both ways, like typically, states are also in the past have been reluctant to go for longer-term bids. We have seen 7 day, 15 day, 30 day, but we have not really seen anything going beyond 30 days, so yet. But I think it's a matter of time. And historically, also if you see, typically, third quarter tends to be weaker. So Atul...

[Prashant Jain, executive]

Prashant here, so the reason why I explained this point is not from the point of view about the differential we have garnered. The point what I told is that power shortage is for real. That's why most of the DISCOMS are trying to lock in the power instead of waiting to secure it into the their end markets because there is no reasonable assurance to get the availability of power. So the reason is to explain this point is to look at from that point of view, not from the point of view of the any other way.

[Atul Tiwari, analyst]

I totally agree. And so just one more on that. So now that Ind-Barath Unit 1 is going to be commissioned next month, so you have already, I mean, tied up on the bilateral side or like you want to keep it completely merchant? Or what is the status of PPA? I mean I know in past you have spoken about keeping it open and trying to take advantage, but any thought process on that?

[Prashant Jain, executive]

So we would like to not to say anything about that part because on a day-to-day basis, we take decision. And what is in the interest, we will be doing it depending upon the market scenario. But the point is that it's a really tight market. And it will remain a tight market for many months, quarter and year.

[Atul Tiwari, analyst]

That I agree sir. And sir, any comment on the coal arrangement for Ind-Barath, I mean, have you managed to tie up anything in from CIL or any other source?

[Prashant Jain, executive]

We source the coal from the nearby mines and we already have the coal available with us in various auctions, and we have already secured the supply until January and beyond that is already under tied up. So for the year, whatever we are going to produce, we will be having the coal, which has been already secured from the Coal India or its subsidiaries.

[Pritesh Vinay, executive]

Through the auction mechanism, including SHAKTI tranches.

[Operator]

[Operator Instructions] The next question is from the line of Lavina Quadros from Jefferies.

[Lavina Quadros, analyst]

Congratulations on a good set of results. Just wanted to -- some clarity on Mytrah. How is that acquisition ramping up? And is it in line with what you were projecting of INR 14 crores, INR 15 crores?

[Prashant Jain, executive]

So I think we guided higher number than that in our acquisition presentation where we talked about INR 1,650-odd crores of normalized EBITDA, which will be achieved by FY '25. And whatever ramp-up plan for the increased energy as well as reduced O&M cost we have guided for, we are running ahead of schedule. And that is what I explained that by the end of the financial year, you will realize that majority of what we guided for in FY '25, you will see in FY '24 itself. So it's doing pretty well.

[Pritesh Vinay, executive]

And to add to that, Lavina, of course, I mean there's a lot of as Prashant already said in his opening remarks, he used the performance improvement, asset optimization plan. So just to give you a flavor, in this particular quarter, Mytrah generation on a like-to-like basis, Y-o-Y basis, was actually up by 27%. And that was primarily led by higher machine availability, which improved by close to 700 basis points on a Y-o-Y basis and machine availability for the wind capacity stood at about 97% for the quarter.

Similarly, on the solar side, the actually -- the actual generation was better than the P90 generation stood at close to 165 million units. So if you look at the delta increase in Mytrah generation improvement, almost half of that was on account of focused interventions in terms of getting higher throughputs, ensuring higher availability and adequate spares management and O&M management, et cetera.

So all of that is leading to better generation, hence, better revenue. optimization of O&M cost. And therefore, even at the EBITDA level, what Prashant was saying that if you go back and listen to the transcript or the recording of the call that we had done for the fourth quarter of fiscal '23 when we had consummated Mytrah acquisition, we had guided to hit that normalized EBITDA run rate in about 18 months post acquisition. But on a run rate basis point of view, we are actually ahead of those timelines.

And all of that is reflected in improved EBITDA. Mytrah reported an EBITDA of about INR 557 crores during this quarter. And over and above this, we, of course, have talked extensively about the benefits of lower financing costs due to a benchmark debt refinancing and debt resizing. And therefore, Prashant mentioned in his opening remarks about how the weighted average interest rate during this quarter on a sequential quarter-on-quarter basis has actually gone down despite the rate cycle not turning and MCLRs actually continuing to pressure upwards.

And that was because the full impact of the debt refinancing at Mytrah was flowing through. And just to add to that and close the loop as Prashant also touched upon that is in terms of the receivables, what is happening at Mytrah portfolio. On a year-on-year basis, Mytrah receivables are actually down by 30% compared to the same time last year. So I think that all in all, operationally, financially, it's been a very robust integration and optimization layout of the Mytrah acquisition.

[Lavina Quadros, analyst]

Okay. And lastly, on green hydrogen, would you like to elaborate a little bit on -- I mean you're expanding the plant, you have to import the electrolyzers. Anything else you'd like to add on that front on the ecosystem?

[Prashant Jain, executive]

So Lavina, I will suggest that give us some more time. And so I think with this MOU, the whole objective is to first bring the visibility from 10 gigawatt to 20 gigawatt and also Electron to Molecules business. And now that is put it into the place. So maybe in a couple of months, you will see that we are talking about each and every item in detail. However, already our first green hydrogen plant is under construction, equipments have been already ordered.

We are going ahead with the alkaline technology. We are importing it from the Chinese manufacturer, and the construction has already been started, and we are expecting that by March '25, this will be up and running.

[Operator]

We have the next question from the line of Anuj Upadhyay from Investec.

[Anuj Upadhyay, analyst]

Can you elaborate on the status of across the PSP...

[Operator]

[Operator Instructions]

[Anuj Upadhyay, analyst]

Is it better now?

[Operator]

This is much better, sir.

[Anuj Upadhyay, analyst]

Please go ahead. Okay, So could you elaborate on the current status on the PSP side. We have signed LOI -- we've got the LOI for 2.4 gigawatts. Exactly at which stage of development we're in. And is this only across in Maharashtra or these 2.4 factors in other states as well?

[Prashant Jain, executive]

Yes. Thank you, Anuj. So all places, we have already started the work. And right now, the kind of a work which we are doing is in terms of the regulatory approvals as well as ordering of the equipment. So ordering of the equipments are in advanced stage and regulatory approvals are with respect to the forest and environmental clearance. So one project already the EC has been -- is in final stage. The meeting has been concluded, and we will be receiving EC within the current quarter. And also the forest clearance will be also available by next quarter. And we are expecting once EC and FC are in place in early next financial year, we will be starting the construction.

And by the time the project equipment will also be ordered. Other than that, there are total 6 projects which are in advanced stage of similar regulatory approvals and also the plant ordering because later on, when we see that there will be not many bits which will be coming up quickly, we want to create the complete preparation. So there are total 6 projects where we are moving very aggressively. They are amounting towards in totality of 7.8 gigawatt of capacity, but with around 6.5 hours of average storage time.

Those are being done in parallel with respect to environment clearance, forest clearance, land acquisition and also the ordering of equipment. And we will keep them ready. And as soon as we are able to lock in the bids to supply those storage capacity, we will immediately start the construction and issue the notice to proceed for -- to the equipment manufacturer. This is how the status of PSP is.

[Anuj Upadhyay, analyst]

And would it be possible to specify the quantum for which we are awaiting the EC next year, sir, on which we believe -- we expect to begin the construction part, what would be the quantum for that...

[Prashant Jain, executive]

We will not start the construction until unless we win the bid and do the financial closure. So please understand what are the various enablers to start the project of PSP. First project is that first is that you get the allocation; second is, you get the regulatory approval. Third is you win the bid; and fourth is you do the financial closure. So these are the things. So what we are doing is the allocation part is done, we are completing the regulatory approvals and then keeping the ordering ready.

Now there will be the 2 milestones, which we need to achieve before we put that into the construction is winning the bid and doing the financial closure. So once we win the bid, then at that point of time, the turnaround time will be very, very less to put them into the construction. So we will be able to tell you as soon as we win more bids.

[Anuj Upadhyay, analyst]

And lastly, all these 7 projects are in Maharashtra or we have across other states as well?

[Prashant Jain, executive]

Across other states. So it's in Karnataka, it's in Maharashtra, it's in UP and it's in Rajasthan. So these are 7 projects, which are at advance stage.

[Anuj Upadhyay, analyst]

And if I may, please ask another question, which is related to modern manufacturing thing. So it's like what we heard in the last call is like we are probably shipping the base to another state, could be Rajasthan. So any development over there sir.

[Prashant Jain, executive]

So it is in Rajasthan. We have already acquired land, boundary has been done, equipments have been ordered. We have also secured an incentive package from the Government of Rajasthan and it is now under construction. And as per schedule of March 2025, it would be up and commissioned.

[Anuj Upadhyay, analyst]

Fine sir. This will be for 1 gigawatt.

[Prashant Jain, executive]

Yes, right.

[Operator]

[Operator Instructions] The next question is from the line of Sumit Kishore from Axis Capital.

[Sumit Kishore, analyst]

My first question is on the MOU that you have signed with JSW Steel. The generation capacity of 6.2 gigawatt is basically going to explain 60% of the increase that you do from 10 gigawatt to 20 gigawatt by 2030. So this is just formalizing the contribution that steel would have to your capacity expansion beyond 2024.

[Prashant Jain, executive]

Yes. So this is 62% of that capacity plus in addition to that, another 1.8 gigawatts, which will be coming up for green hydrogen manufacturing also. So all in all, total around 8 gigawatt we have a visibility, plus we will be doing SECI projects or maybe acquisitions, maybe we will be having a C&I portfolio. So all -- everything is available in front of us. So whatever is remunerated, we will continue to lock in. But you can really see that 80% is having a clear visibility, which will be within our control.

[Sumit Kishore, analyst]

So now given that you have 80% visibility, is there -- any sense of whether the 20 gigawatt number itself is going to get upgraded?

[Prashant Jain, executive]

So Sumit, I think let's talk about it maybe 1 year from now or 1.5 years from now. And if we see that we need to revise our guidance and come out with a Strategy 3.2, we will be certainly doing that. And if you ask me personally, as my confidence, yes, there is a possibility that we will be doing better because of better balance sheet, better cash flows and better visibility. But at this point of time, we stick to our Strategy 2.0.

[Sumit Kishore, analyst]

Right. The energy storage projects that are mentioned in the MOU of 2.7 gigawatt hour, are these going to come from your pump storage hydro capacity or is it going to be new battery energy storage system projects?

[Prashant Jain, executive]

So it's a combination. So it will be, Sumit, combination and depending upon the needs. So we are seeing that 3.7 gigawatt hour will be for JSW steel perspective, 1 gigawatt hour for hydrogen and 2.7 gigawatt hour for -- coupled with RE generation. But it will be a combination for sure.

[Sumit Kishore, analyst]

So this 2.7 gigawatts are separate from the storage solution that you will have to combine with the RE power solution for green hydrogen?

[Prashant Jain, executive]

That's right.

[Sumit Kishore, analyst]

So I mean, in JSW 2.0 strategy, you had talked about a INR 20,000 crore kind of an EBITDA by FY '30, almost a 6 to 6.5x increase over the INR 30 billion plus run rate that you are doing. So that number, if I were to just think aloud here has an upside with this MOU that you have signed, so there are fresh projects which have added to the tally.

[Prashant Jain, executive]

Yes, that's true.

[Sumit Kishore, analyst]

If you could speak about the battery energy storage system project in terms of progress there? Have you tied up the battery, et cetera. How close are we to actual implementation of the project because you have earmarked this for completion before CY '24 end. And an associated question on the site program. Is there any progress in terms of bids being submitted and when progress expected there?

[Prashant Jain, executive]

So we are absolutely ready. I think there is a little bit of delay on signing the PPA because there are certain approvals, which SECI is taking. And since it's been the first of its kind project, they are -- central government is also giving certain subsidy to the DISCOMS who are availing this and there are certain procedural aspects of that. And because of that, there is a delay in signing the PPA, which can happen anytime. And once we sign the PPA, we will be immediately awarding the contract, and we are -- we will execute the project as per the schedule because the time taken will be not much and we are -- other things are already ready. And another -- so we do not see any kind of a challenge in terms of the execution of the project or on the time line we have guided for at this point of time, but there are the procedure delays.

[Sumit Kishore, analyst]

All right. And how is that site program progressing in terms of new opportunities coming up there?

[Pritesh Vinay, executive]

The site -- yes, it's work in progress. And as and when the tender under the National Green hydrogen Mission is done, we will definitely evaluate. I believe, originally, the bids were supposed to go sometime in September and then they deferred it. So let's wait for that. But yes, I mean, that is another potential optionality. But with this MOU that we have signed with JSW Steel, it puts us in a very -- relatively better spot to participate in the site tenders because you now have an end-use project, to be eligible for this almost like a PLI equivalent scheme that what site really is, right? So we will actively be looking at that as and when it comes up.

[Prashant Jain, executive]

Because most of the people who are talking about the green hydrogen, they do not have any buyer available to them. And what this MOU does is, there is a buyer, there is an application to manufacture green steel. And so it puts us in absolute competitive advantage.

[Sumit Kishore, analyst]

Yes. And finally, on the 300-megawatt 2.4 gigawatt hour pumped storage hydro project where you have LOI in place, what exactly is the state of progress on the ground?

[Prashant Jain, executive]

I just explained to the previous speaker, I think Anuj was asking the similar question. So if you missed it, I will once again repeat it that we are in process of taking the regulatory approvals, EC and FC, which we are expecting that by end of this financial year, both will be in place. Equipment ordering is going on. And we are expecting that early next financial year, we will be putting that into the construction.

And as I also mentioned that in order to avoid such kind of situations later on, we are already working on total, including these 2 projects, there are 5 more projects, total 7 projects. We have already started certain these preparatory activities to take various regulatory approvals, land acquisition as well as the ordering of equipment. Once we secure the bids and then do the financial closure, those projects can be put into the construction stage ASAP.

[Sumit Kishore, analyst]

Very clear. And so if you start construction on this first 300-megawatt 2.4 gigawatt hour next year, it would take another 24 months to complete it or...

[Prashant Jain, executive]

No, it will be taking 36 months.

[Sumit Kishore, analyst]

36 months?

[Prashant Jain, executive]

36 months to 48 months. So depending upon the projects, one project we feel that 36 months and another could be 42, 45 months, but we will be guiding that in due course.

[Pritesh Vinay, executive]

Moderator, can we please take the last question, please?

[Operator]

Yes. The last question is from the line of Rajesh Majumdar from Batlivala & Karani Securities.

[Rajesh Majumdar, analyst]

Yes, sir. So I had a couple of questions. Is the company looking out for any more coal assets with no PPAs on the NCLT? Are there any other assets available? Are we looking at them? That was the first question.

[Prashant Jain, executive]

So Rajesh, we continue to look at various opportunities. And as and when we find any good opportunity, we will certainly try to lock in. So for record, you can consider that anything and everything which is available in the power sector, we are interested in it.

[Rajesh Majumdar, analyst]

And you do find any such opportunity still available? That was my question, actually.

[Prashant Jain, executive]

So that's a tricky question. But there are a lot of opportunities which are there, but which are not available at a reasonable price. And there are certain opportunities, which are available for reasonable price. So at unreasonable price, a lot of things are available.

[Rajesh Majumdar, analyst]

Okay. And sir, my second question was on the JSW Steel 6 gigawatts addition. And in fact, I was also on the JSW Steel call a while ago. The company has clearly mentioned that the CapEx funding for this will be a shared kind of funding. So would you highlight how this is going to work out in terms of the funding by JSW Energy and the way it's going to operate?

[Prashant Jain, executive]

So it is -- as per the ACT, therein, there is a captive power policy wherein these projects have to be housed under the SPV. And the power procurer has to take 26% equity into that SPV and balance will be by JSW Energy. And based on that PPA, the debt will be coming into the SPV for supply of the power. So this is how it is going to be. And this is how all of our existing power projects, whether it is thermal or renewable for group captive are structured.

[Pritesh Vinay, executive]

Yes, Rajesh, it's just exactly the same what we are doing for the 958-megawatt in the current pipeline of projects under execution. So it's a similar model under the captive scheme.

[Rajesh Majumdar, analyst]

Okay. And when you give the CapEx guidance, you're obviously including this inside that, right?

[Prashant Jain, executive]

Yes, yes. It will be similarly, like we have already guided for a long-term CapEx plan, which is under the Strategy 2.0. And so it will be guided on that.

[Rajesh Majumdar, analyst]

Right, sir. That's useful. And I don't think there are any more questions. So thank you very much, sir, for the opportunity. And if you would like to make some concluding remarks, we can conclude the call.

[Prashant Jain, executive]

No, thank you very much, ladies and gentlemen, and happy Navratri and happy Dussehra to all of you and your family. Thank you.

[Operator]

Thank you. On behalf of Batlivala & Karani Securities, that concludes this conference. Thank you all for joining us. You may now disconnect your lines.