Investor Presentaiton

6 fundamental ANALYSIS SJVN Ltd 20+ HDFC securities Click. Invest. Grow. YEARS Policy measures by the government to promote hydropower sector augurs well for the company The Government has approved a number of measures for promoting hydropower sector. These include: • Declaring large hydro power (LHPs) (>25 MW projects) as renewable energy source Mandating Hydro Purchase Obligation (HPO) as a separate entity within Non-solar Renewable Purchase Obligation (RPO) from new projects Providing flexibility to developers to back load tariff by increasing project life to 40 years Increasing debt repayment period to 18 years Tariff rationalization measures for bringing down hydropower tariff Budgetary support for Flood Moderation/Storage Hydro Electric Projects (HEPs) and towards cost of enabling infrastructure, i.e. roads/bridges. Because of these measures, the capital cost as well as the project tariff would be reduced especially in initial years, which would improve project viability & saleability, and thus, promote the hydroelectric projects. Cost-Plus Return on Equity model to ensure stable returns The operational hydropower plants have regulated tariff structure that allow recovery of the entire cost, including a fixed return on equity based on approved capital cost, subject to achievement of normative parameters notified by the Central Electricity Regulatory Commission (CERC) for each plant. The company has a decade-long record of operating at more than normative level. For FY22, the PAF for both the hydro plants was 106% (FY21 - 105%), well above the normative levels of 90% for Nathpa Jhakri HPS and 85% for Rampur HPS. The company expects ROE to continue at a rate of 16.5% for storage type hydro projects (norms tightened, receivable days 45 days from 60 days, escalation 4.77% instead of 6.64%). The tariff for Buxar thermal power plant is also based on CERC guidelines, which allow recovery of fixed charges and pass-through of energy charges, along with assured return on equity and incentives. This is a significant source of comfort, as it will offer steady revenues, assured return as well as comfortable debt servicing, subject to operating at normative parameters (minimum plant availability factor of 85%). Fuel cost pass-through will result in full recovery of variable costs, subject to operations within the normative parameters. FRETAILRES RETAILRESEARCH

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