The Sajjan Jindal-led JSW Energy is likely to continue with an acquisition spree abroad, as it scouts for coal and thermal power assets, a company official said.
The company, which in the past two years has agreed to buy four power assets in India, is also on the lookout for coal mines abroad to replace some of its current imported requirements.
“Looking at assets outside India certainly interests us; we are not averse to acquisitions outside. We have not come across many exciting opportunities. Africa is an upcoming market, but we have to be very careful of the country risks and political risks,” said Sanjay Sagar, joint managing director and chief executive officer.
JSW Energy, which operates 4,531 Mw in India, does not have any exposure to power assets abroad.
In the past decade, it has stayed away from making big investments in coal assets abroad. The bull-run for commodity prices in 2011 saw peers like Tata Power and Adani Group invest heavily in coal mine assets abroad.
The company is keen to integrate backwards with overseas coal mines. In July, it agreed to acquire 100 per cent stake in Minerals & Energy Swaziland for $1.5 million in Africa.
Sagar further said, coal mine acquisitions would depend on the exploration of this one. “We are hoping to find coal there. If it has sufficient quantity, then we might not need to look at any other asset.” On the quantity of coal, Sagar did not give an estimate, but said the mine would be viable at 150 million tonnes and above.
JSW Energy currently holds a 67.27 per cent stake in South African Coal Mining Holdings. The mines, as of March, were under care and maintenance pending receipt of requisite licenses in the new mining area.
The company has entered into definitive agreements to acquire an additional 1,500 Mw of operating coal-based thermal power plants in India. Of its total capacity, Sagar added, about 2,000 Mw is fuelled using imported coal.
Through these acquisitions, the company looks to meet some of its requirement through backward integration. “It is a pure backward integration play. We are not looking to enter the coal trading business,” said Sagar.
“The company’s debt-equity ratio is comfortable for acquisitions. Whether a bet is good or not depends on the geography they choose these assets. For coal mines, it is a good decision to acquire in the long run. These acquisitions did not work for Tata Power and the others earlier due to change in policies in Indonesia and unavailability of fuel-pass in India. However, India is now moving towards fixed-cost bidding for power purchase agreements, so it may be a good decision for JSW to look to acquire coal mines now,” said Anuj Upadhyay, analyst with Emkay Global Financial Services.
