JSW Energy Limited Investor Presentation May 2015

JSW Energy Limited Investor Presentation May 2015

Agenda Overview Value Proposition Business Environment Appendix 2

JSW Group presence across the core sectors JSW Steel*: India s leading integrated steel producer (Steel Capacity: 14.3MTPA ) JSW Energy*: Engaged across the value chain of power business (Operational Capacity: 3,140MW) JSW Cement: Slag cement plant of 5.3MTPA capacity JSW Infrastructure: Engaged in development and operations of ports (Goa, Jaigarh, and Dharamtar Port) JSoft Solutions: An IT & ITES arm of JSW group * Listed company 3

JSW Energy Presence across the value chain Currently operational capacity: 3,140MW* Power generation Power transmission Operational transmission line JV with MSETCL: two 400KV transmission lines JV with Toshiba, Japan for manufacturing of supercritical steam turbines and generators Equipment manufacturing Mining Rajasthan (lignite): Kapurdi (operational with capacity of 7MTPA) and Jalipa (under development) mines; mineable reserves of 441mn tonnes Power trading Engaged in power trading since June 2006 Handled trading volume of ~9 bn units in FY15 * Capacity would increase to 4,531MW upon completion of Baspa II & Karcham Wangtoo Hydro Assets acquisition under the scheme of arrangement pending before the Himachal Pradesh High Court and receipt of other approvals 4

Established energy company with 3,140 MW operational capacity. proposed increase to 4,531 MW 1 Baspa II (300MW) & Karcham Wangtoo (1,091MW) 1 Barmer: 1,080MW Configuration: 8 X 135MW Units operating: since 2010 5 Technology: Sub-critical pithead lignite based TPP Fuel Source: Captive lignite mines of BLMCL 2 Power Offtake: Long Term PPA Project Cost 4 : INR 71,660mn/ $1,194mn Units operating: Baspa II since 2003 and Karcham Wangtoo since 2012 Technology & Fuel Source: Hydro Power Offtake: Long Term PPA and Merchant Enterprise Value to JSW Energy 4 : INR 97,000mn/ $1,617mn 3 Ratnagiri: 1,200MW Configuration: 4 X 300MW Units operating: since 2011 5 Technology: Sub-critical TPP Fuel Source: Imported thermal coal Power Offtake: Long Term PPA & Merchant Project Cost 4 : INR 54,942mn/ $916mn Operational Subject to acquisition of the assets 1 Vijayanagar: 860MW Configuration: 2 X 130MW and 2 X 300MW Units operating: since 2000 5 Technology: Sub-critical TPP Fuel Source: Gas & imported thermal coal Power Offtake: Merchant & Long Term PPA Project Cost 4 : INR 30,960mn/ $516mn Proximity to load centre/fuel source/infrastructural facilities 1) Capacity would increase to 4,531MW upon completion of Baspa II & Karcham Wangtoo Hydro Assets acquisition under the scheme of arrangement pending before the Himachal Pradesh High Court and receipt of other approvals, 2) Long term FSA with BLMCL for supply of lignite from its captive mines; BLMCL is a 49:51 JV between Raj WestPower Ltd (subsidiary of JSW Energy) and Rajasthan government undertaking, 3) Subject to mutually agreed adjustments, 4) USD/ INR = 60, 5) denotes start of first unit in respective fiscal year; TPP Thermal Power Plant 5

Proven track record FY12 FY15 Capacity (MW) 2,600 3,140 CAGR FY12 15: 6% Net Generation (MUs) 13,594 20,307 CAGR FY12 15: 14% Total Revenue INR 62,654mn / $1,044mn INR 96,103mn / $1,602mn CAGR FY12 15: 15% EBITDA INR 15,944mn/ $266mn INR 38,535mn/ $642mn PAT INR 1,701mn/ $28mn INR 13,495mn/ $225mn Fuel Type Thermal Coal Thermal Coal & Lignite CAGR FY12 15: 34% CAGR FY12 15: 99% Profitable and dividend paying since listing Diversifying fuel sources Business Segment Power generation, O&M, transmission, trading, coal mining and equipment manufacturing Power generation, O&M, transmission, trading, coal mining and equipment manufacturing Presence across the value chain Despite turbulent sector dynamics, delivering sustainable growth driven by focused execution and balanced strategy USD/ INR = 60 6

Corporate strategy Selective Growth Efficient capital allocation for organic growth Pursue selective inorganic growth opportunities which will enhance cash flows and be RoE accretive Diversification of Fuel Mix and Offtake Arrangements Increasing proportion of Long Term PPAs goal to reach over 85% of total Diversify both fuel mix and source thermal coal, lignite and hydro Focus on Resource Optimization Committed to robust mix of sustainable eco-friendly technologies Focus on prudent O&M practices and higher plant efficiencies Strengthening Presence Across the Value Chain Continue to evaluate opportunities across the value chain from mining, equipment manufacturing, generation, transmission and distribution for creating long term value Prudent Balance Sheet Management Retain prudent financial profile Manage growth and debt profile to capture market opportunities without excessive risk 7

Business challenges and mitigation strategies Barmer: Fuel availability, PLF Final tariff order Ratnagiri: Lower demand impacting scheduling and PLF Under-recovery on PPA with state Discom Vijayanagar: Reliance on merchant sales Exposure to imported coal prices and currency volatility Received environmental clearance from Ministry of Environment, Forests & Climate Change (MoEFCC) for Kapurdi mine to increase the mining capacity from 3.75 MTPA to 7 MTPA until FY18 Expect to operationalize Jalipa mine in FY16 Barmer plant consistently operating above normative PLF Expect final tariff order by FY16, current provisional tariff order covers ~96% 1 of fixed cost petitoned FY15 PLF 73% (versus 71% in FY14) LT PPA proportion improved to 773 MW on CERC norms Filed petition for compensatory tariff with MERC under forcemejure clause of the PPA While demand for merchant power remains strong, opportunity to tie up long term PPA looks promising over the next two years Thermal coal price corrected in sync with global energy prices Prudent Hedging policy for coal imports 1) Calculated as INR 2.38/unit as per the interim tariff order against our tariff petition of INR 2.48/ unit 8

Sound Corporate Governance Audit Committee Nomination and Remuneration Committee Stakeholders Relationship Committee Risk Management Committee Corporate Social Responsibility (CSR) Committee Ensures regular review of audit plans, significant audit findings, adequacy of internal audit system, compliance with regulations by the Company and its subsidiaries Comprises of four Non-Executive Directors Identifies qualified persons and recommends to the Board the appointment, removal and evaluation of Directors Responsible for drafting policy on specific remuneration packages for Executive Directors and approving the payment of remuneration to managerial personnel Formulate criteria for independence of Director, evaluation of Independent Directors, policy on Board diversity Comprises of three Non-Executive Directors Responsible for the functioning of the investor grievances redressal system Comprises of two Non-Executive Directors Periodically reviews risk assessment and minimization procedures Formulates and recommends to the Board a CSR Policy including list of projects and programs Strong commitment towards CSR Comprises of four Non-Executive Directors All key committees in place, having adequate independent director representation 9

Agenda Overview Value Proposition Business Environment Appendix 10

Value proposition 1 Efficient Capital Allocation and Execution Capabilities 2 Portfolio of Efficient Operating Assets 3 Diversified Fuel Tie-up 4 Balanced Mix of Off-take Arrangements 5 Robust Financial Profile 11

1 Efficient Capital Allocation and Execution Capabilities Vijayanagar (2000-2001): 260 MW @ INR 43.42mn/MW (~$0.72mn/MW) Vijayanagar (2010): 600 MW @ INR 32.78mn/MW (~$0.55mn/MW) Ratnagiri (2011-2012): 1,200 MW @ INR 45.78mn/MW (~$0.76mn/MW) Barmer (2010-2013): 1,080 MW @ INR 66.36mn 1 /MW (~$1.11mn/MW) Leveraging upon strong project execution and project management expertise, and infrastructure 1) High capital cost due to CFBC boilers for lignite based power plant USD/ INR = 60 12

2 Portfolio of Efficient Operating Assets JSW Energy Stand alone 4 1QFY14 2QFY14 3QFY14 4QFY14 1QFY15 2QFY15 3QFY15 4QFY15 81% JSW Energy Standalone PLF All India private sector thermal power plants' PLF* 70% 93% 81% 83% 64% 62% 61% FY12 FY13 FY14 FY15 4 Among the best run thermal power plants in India on a consistent basis Vijayanagar plant has been consistently recognised as a top performing operating power plant by the Ministry of Power for 7 consecutive years 2 Raj West Power PLF 1 73% 78% 87% 34% 3 92% 88% 77% 87% Benchmark O&M practice resulting in consistently higher PLFs Industry leading PLFs driven by O&M and execution expertise *Source-CEA 1) Deemed PLF, 2) Vijaynagar s SBU I (260MW) or SBU II (600MW) received either the Bronze Shield or the Silver Shield in the category of Performance of Thermal Power Stations for FY07/FY08/ FY09/ FY10/ FY11 and the Gold Shield for FY12 and FY13, 3) 4QFY14 PLF was lower due to fuel availability related back-down during Feb-Mar 2014, 4) Includes Vijaynagar (860MW) and Ratnagiri (1,200MW) plants 13

3 4 Diversified Fuel Tie-up and balanced Mix of Offtake Arrangements Fuel sources o o o Thermal coal Lignite, and Hydro 34% 66% 3,140MW* 31% 24% 45% 4,531MW^ Imported coal Lignite Hydro Power off-take arrangements optimal mix of long term contracts & merchant power sales (return optimization). 41% 59% 34% 66% 3,140 MW 4,531 MW^ Long Term Short Term 1 Lower fuel risk, resilience to sector dynamics Short term: Ability to capitalise on better realisations Ability to respond to demand fluctuations and shortages Long term: Stable cashflows, pre-defined returns Insulated from inflation and fuel price movement, declining tariff. with aim to tie-up over 85% of capacity under long term PPAs ^ Capacity would increase to 4,531MW upon completion of Baspa II & Karcham Wangtoo Hydro Assets acquisition under the scheme of arrangement pending before the Himachal Pradesh High Court and receipt of other approvals 1) short-term arrangements also includes other arrangements 14

5 Robust Financial Profile FY14 EBITDA Margin (% 1 ) 70.79% FY14 Return on Capital Employed (% 2 ) 15.60% 38.77% 37.02% 30.45% 26.01% 24.94% 19.91% 11.46% 10.85% 9.96% 8.99% 5.70% 5.65% JSW Energy JPVL R Power Adani Power CESC Standalone NTPC Tata Power JSW Energy CESC Standalone NTPC Tata Power R Power Adani Power JPVL FY14 Return on Net Worth (%) 13.11% 11.49% 9.26% Dividend paying track-record since listing in 2010 5.27% 0.96% JSW Energy NTPC CESC Standalone -2.43% -4.44% R Power JPVL Tata Power Adani Power Sector leading margins and return ratios Source: Other company data from CARE research 1) EBITDA Margin = EBITDA/ Net Revenue, 2) RoCE = EBIT/ Average Capital Employed 15

5 Robust Financial Profile FY14 Net Debt/Equity (x) FY14 Net Debt/EBITDA (x) 5.95 7.00 11.72 13.09 8.01 1.36 0.37 0.68 1.29 3.14 2.58 1.81 2.99 4.71 JSW Energy CESC Standalone NTPC R Power Tata Power Adani Power JPVL JSW Energy CESC Standalone NTPC Tata Power Adani Power JPVL R Power Free cash positive for last three years, despite sector specific challenges Well capitalised balance sheet, best positioned to tap growth opportunities Source: Other company data from CARE research 16

Well poised to capitalise on improving sector fundamentals JSW Energy s Advantage / Approach Regulated sector Capital allocation Coal block auctions Policy environment /Inorganic growth opportunity Stability of cash flows takes precedence over growth Prudence as key to sustainable value creation Opportunity to secure fuel Sector looking ripe for consolidation and growth projects with low risk to cash flow Increase share of long term PPAs to over 85% Leverage low fixed cost advantage for upcoming Case 1 Bids Put on-hold growth projects when sector fundamentals were uncertain All existing long term PPAs with pass-through of energy/fuel cost as per applicable regulations Coal auctions may provide potential to enhance our organic growth Well positioned to: capitalise on strong balance sheet capitalize on expected consolidation of the power sector 17

Agenda Overview Value Proposition Business Environment Appendix 18

India installed power capacity Sector-wise Installed Capacity 267.6 GW (as on Mar 31, 2015) Mode-wise Installed Capacity (as on Mar 31, 2015) Central 72,521 27% Private 98,153 37% State 96,963 36% Nuclear 5,780 2% Diesel 1,200 0% Gas 23,062 9% Hydro 41,267 15% RES 31,692 12% Coal 1,64,636 62% Private sector contributes 37% of the total installed capacity Coal based capacities contributes 62% of the total installed capacity Source: CEA 19

Demand-supply scenario Southern states to remain in deficit...albeit deficit expected to come down in AP marginally Western states remain surplus...with Maharashtra remaining in marginal deficit 0% -4% -8% -12% -16% -20% FY08 FY16E FY15E FY14 FY13 FY12 FY11 FY10 FY09 AP KTK TN FY17E 80% 60% 40% 20% 0% -20% -40% FY08 GUJ MAHA FY10 FY09 MP CHG FY12 FY11 FY13 FY14 FY15E FY16E FY17E Source: CARE Research 20

FY08 FY09 FY10 FY11 FY12 FY13 FY14 FY15E FY16E FY17E Mar'09 Sep'09 Mar'10 Sep'10 Mar'11 Sep'11 Mar'12 Sep'12 Mar'13 Sep'13 Mar'14 Sep'14 Power Demand (BUs) 691 739 777 831 937 995 1,049 1,122 1,195 1,273 Coal price (US$/tonne) Indian demand growth and thermal coal prices Demand growth at multi-year low demand to grow at 5.7% CAGR during FY14-17 with gradual pick-up in economy.. International thermal coal prices expected to remain subdued in the next 1-2 years 1,400 % growth 14% 130 Richard Bay 1,200 1,000 12% 10% 110 HBA Newcastle 800 600 8% 6% 90 400 4% 70 200 2% 0 0% 50 Source: CARE Research 21

Agenda Overview Value Proposition Business Environment Appendix 22

Kutehr hydro project under implementation Gross capacity 240 MW (3 x 80) Technology Water allocation Power Off take Project Details Run-of-the-river Hydropower Ravi river Free power to HP state government: 12% to 30% of delivered energy for 40 years, balance through long term arrangements Status Update Techno-economic clearance from CEA received MOEF accorded Forest stage-i & II clearance & environment clearance Implementation agreement signed with HP government Consent to Establish obtained from HP State pollution control board Commenced enabling works related to the project Project Cost Total: INR17,980mn Amount spent till Mar 31, 2015: INR2,380mn Initiated process for award of EPC contracts Majority land is acquired 23

Opportunity for organic growth Chhattisgarh: 1,320 MW Kutehr: 240 MW* Land Available Water Available EC Available Land Water EC Available Available Available Ratnagiri: 3200 MW Land Available Water Available EC Pending Vijayanagar: 660 MW* Land Available Water Available EC Available Ratnagiri and Chattisgarh projects on hold, which can be revived with low gestation offering geographical diversification * Under implementation 24

Recent acquisition of Hydro Assets - Rationale Enhanced Scale of operation - Capacity increase from 3140 MW to 4531 MW* Portfolio diversification with operational hydro assets - Thermal 3140 MW & Hydro 1391 MW* Balanced Mix of PPA Basket - LT PPA 2,988 MW (66%) and Merchant 1,543 MW (34%) All projects commissioned, have PPAs on regulated two-part tariff - Cash flow and earnings accretive immediately Well built hydro power plant with low execution risk - Stable hydrology, proven operational track record, high plant availability, low O&M costs Value enhancing strategic fit with high quality assets * Capacity would increase to 4,531MW upon completion of Baspa II & Karcham Wangtoo Hydro Assets acquisition under the scheme of arrangement pending before the Himachal Pradesh High Court and receipt of other approvals 25

Strong financial track record 1,00,000 80,000 60,000 40,000 20,000 Total Revenue (INR mn) EBITDA (INR mn, RHS) 96,103 91,477 89,076 40,000 38,535 32,000 62,654 30,066 34,536 24,000 16,000 15,944 8,000 1,00,000 90,000 80,000 Net Debt (INR mn) 94,049 91,191 1.60 1.52 Net Debt to Equity 89,205 1.36 75,739 1.90 1.70 1.50 1.30 1.10 - FY12 FY13 FY14 FY15 0 70,000 1.01 FY12 FY13 FY14 FY15 0.90 Key financial parameters FY13 FY14 FY15 EBITDA Margin (%) 32.9 38.8 40.1 Return on Net Worth (%) 14.6 11.5 18.6 EPS (INR Per Share) 5.51 4.60 8.23 DPS (INR Per Share) 2.00 2.00 2.00^ Profit making entity since inception Dividend paying track-record since listing Free cash positive Well capitalised balance sheet/ low gearing ratios Robust financial profile in a challenging environment ^ Subject to approval of shareholders 26

Forward looking and cautionary statement This presentation has been prepared by JSW Energy Limited (the Company ) based upon information available in the public domain solely for information purposes without regard to any specific objectives, financial situations or informational needs of any particular person. This presentation should not be construed as legal, tax, investment or other advice. This presentation is confidential, being given solely for your information and for your use, and may not be copied, distributed or disseminated, directly or indirectly, in any manner. Furthermore, no person is authorized to give any information or make any representation which is not contained in, or is inconsistent with, this presentation. Any such extraneous or inconsistent information or representation, if given or made, should not be relied upon as having been authorized by or on behalf of the Company. The distribution of this presentation in certain jurisdictions may be restricted by law. Accordingly, any persons in possession of this presentation should inform themselves about and observe any such restrictions. Furthermore, by reviewing this presentation, you agree to be bound by the trailing restrictions regarding the information disclosed in these materials. This presentation contains statements that constitute forward-looking statements. These statements include descriptions regarding the intent, belief or current expectations of the Company or its directors and officers with respect to the results of operations and financial condition of the Company. These statements can be recognized by the use of words such as expects, plans, will, estimates, projects, or other words of similar meaning. Such forward-looking statements are not guarantees of future performance and involve risks and uncertainties, and actual results may differ from those specified in such forward-looking statements as a result of various factors and assumptions. The risks and uncertainties relating to these statements include, but are not limited to, (i) fluctuations in earnings, (ii) the Company s ability to manage growth, (iii) competition, (iv) (v) government policies and regulations, and (vi) political, economic, legal and social conditions in India. The Company does not undertake any obligation to revise or update any forward-looking statement that may be made from time to time by or on behalf of the Company. Given these risks, uncertainties and other factors, viewers of this presentation are cautioned not to place undue reliance on these forward-looking statements. The information contained in this presentation is only current as of its date and has not been independently verified. The Company may alter, modify or otherwise change in any manner the contents of this presentation, without obligation to notify any person of such revision or changes. No representation, warranty, guarantee or undertaking, express or implied, is or will be made as to, and no reliance should be placed on, the accuracy, completeness, correctness or fairness of the information, estimates, projections and opinions contained in this presentation. None of the Company or any of its affiliates, advisers or representatives accept any liability whatsoever for any loss howsoever arising from any information presented or contained in this presentation. Please note that the past performance of the Company is not, and should not be considered as, indicative of future results. Potential investors must make their own assessment of the relevance, accuracy and adequacy of the information contained in this presentation and must make such independent investigation as they may consider necessary or appropriate for such purpose. Such information and opinions are in all events not current after the date of this presentation. None of the Company, any placement agent or any other persons that may participate in the offering of any securities of the Company shall have any responsibility or liability whatsoever for any loss howsoever arising from this presentation or its contents or otherwise arising in connection therewith. This presentation does not constitute or form part of and should not be construed as, directly or indirectly, any offer or invitation or inducement to sell or issue, or any solicitation of any offer to purchase or subscribe for, any securities of the Company by any person in any jurisdiction, including in India or the United States, nor shall it or any part of it or the fact of its distribution form the basis of, or be relied on in connection with, any investment decision or any contract or commitment therefore. Securities of the Company may not be offered, sold or transferred in to or within the United States absent registration under the United States Securities Act of 1933, as amended (the Securities Act ), except pursuant to an exemption from, or in a transaction not subject to, the registration requirements of the Securities Act and in compliance with any applicable securities laws of any state of other jurisdiction of the United States. The Company s securities have not been and will not be registered under the Securities Act. This presentation is not a prospectus, a statement in lieu of a prospectus, an offering circular, an advertisement or an offer document under the Companies Act, 2013, as amended, the Securities and Exchange Board of India (Issue of Capital and Disclosure Requirements) Regulations, 2009, as amended, or any other applicable law in India. 27

Thank you 28