Strategically important role of JVVNL for the state of Rajasthan & support extended by the GoR
JVVNL came into existence in 2000 and is engaged in the business of distribution and supply of electricity in 10 districts of Rajasthan, namely Jodhpur, Sirohi, Pali, Barmer, Jaisalmer, Jalore, Bikaner, Sriganganagar, Hanumangarh, Churu. The area of operation of Jodhpur Discom is 182509 sq. km. The power supply in the Jodhpur Discom is managed by 12 distribution circles i.e. Jodhpur City, Jodhpur District, Sirohi, Pali, Barmer, Jaisalmer, Jalore, Bikaner District, Sriganganagar, Hanumangarh, Churu Bikaner City Circle(under private franchises).  The status of the company as a 100 per cent government of Rajasthan (GoR) owned entity provides it adequate financial flexibility. JVVNL's credit profile is also supported by its access to funds at low cost and its ability to mobilise financial resources from several financial institutions and multilateral development institutions. The rating also factors in the ongoing support extended by GoR to JVVNL in the form of regular infusion of funds in the form of equity and unsecured loans and guarantees extended by the state government.  In FY2025 (prov.) the GoR made an equity infusion of Rs. 59.30 Cr. Further, well established regulatory processes in Rajasthan such as presence of multi-year tariff regulations and grants sanctioned by the GoR has strengthened the operations of JVVNL. Acuité believes that JVVNL, being a fully owned undertaking of GoR, shall continue to benefit from the financial, operational and management support of GoR from time to time. Any event that impinges GoR's overall credit profile shall remain a key rating sensitivity.

Sustainable improvement in the AT&C losses and T&D losses
JVVNL has experienced sustained improvement in the Transmission and Distribution Losses [T&D] and Aggregate Technical and Commercial Losses [AT&C] over a period of last 10 years accrued to the implementation of multiple initiatives, capex to improve transmission lines, installing substations, among others. The collection efficiency of the discom has stood in range of 90 per cent to 100 per cent in last 3 years ending FY2025. Further the company has entered into Distribution & Franchisee Agreement in 2017 with Bikaner Electricity Supply Limited, fully owned subsidiary of the Calcutta Electric Supply Corporation (CESC) for a period of 20 years. The AT&C losses have improved from 26 per cent in FY2014-15 (base year) to 20 per cent in FY2025.

Moderation in EBDITA; though losses recovered by State Government in a phased manner
The revenues from sale of power stood at Rs. 24,415.82 Cr. in FY2025 (prov.) as compared to Rs. 25,420.72 Cr. in FY2024. The decline is on account of lower consumption from the domestic & industrial segment. Further, due to no inflations built in the tariff, the EBDITA margin of the company declined to 8.13 per cent in FY2025 (prov.) against 14.54 per cent in FY2024. The company has reported net losses of Rs. 2,756.62 Cr. in FY25 (prov.) as against Rs.292.88 Cr. in FY24. As per guidelines, GoR has taken over and in lieu of that released a sum of Rs. 865.84 Cr. during FY 2021-22 (50 per cent of losses of F.Y 2020-21) and Rs. 1,765.05 Cr. during FY 2022-23 (60 per cent of losses of FY 2021-22) & Rs.2468.38 Cr. during FY 2023-24 (75 per cent of the losses of FY 2022- 23). On recommendation of 15th Finance Commission, the Ministry of Finance, Gol has approved a performance based additional borrowing space of 0.50 per cent of Gross State Domestic Product (GSDP) to States in power sector upon fulfilment of certain conditions and criteria. The objectives of the additional borrowing space are to improve the operational and economic efficiency of the power sector and promote a sustained increase in paid electricity consumption. This special dispensation of borrowing space has been recommended for each year for a four-year period from FY 2021-22 to 2024-25. Under the scheme, State Government (GoR) has agreed to take over the future losses of the Discoms in a phased manner i.e.100% of loss during FY2024-25 and onwards.

Modest financial risk profile
The financial risk profile is modest marked by negative Net worth. The net worth stood at Rs. (19,978.81) Cr. as on March 31,2025 (prov.) against Rs. (17,676.48) Cr. as on March 31, 2024. The deterioration in net worth is primarily due to losses incurred in FY2024.  Besides there is an equity infusion of Rs.59.30 Cr was made during FY2025 (prov.) Also, the company on operating level has been profitable owing to reduced AT&C and T&D losses. It is a highly capital-intensive nature of business where in order to maintain operational efficiencies, the company has to incur regular capital expenditure. This results in rise in borrowings which in turn affects the profitability levels and in turn the debt protection metrics. The total debt stood at Rs.  36,793.25 Cr. in FY2025 (Prov.) as against Rs.  33,541.44 Cr in FY2024. The debt protection metrics have been modest with interest coverage ratio (ICR) and debt service coverage ratio (DSCR) at 1.21 times and 0.59 times, respectively, in FY2024 as compared to 0.81 times and 0.44 times, respectively, in FY2023. In FY2025 (prov.), GoR has infused equity to the tune of Rs. 59.30 Cr. Furthermore, there has been support in the form of guarantee extended by Government of Rajasthan (GoR). Hence, support from GoR is crucial for rating and hence any credit profile of the state of Rajasthan will remain as a key rating monitorable.