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| Product | Quantum (Rs. Cr) | Long Term Rating | Short Term Rating |
| Bank Loan Ratings | 5600.00 | ACUITE BBB+ | Stable | Upgraded | - |
| Total Outstanding | 5600.00 | - | - |
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Rating Rationale |
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Acuité has upgraded the long-term ratings to 'ACUITE BBB+' (read as ACUITE triple B plus) from 'ACUITE BBB' (read as ACUITE triple B) on the Rs. 5,600.00 Cr. bank facilities of Jaiprakash Power Ventures Limited (JPVL). The outlook is 'Stable'.
Rationale for rating The upgrade in ratings takes into account the improving credit risk profile of the company, as reflected by the improvement in total saleable energy, revenue from operations, healthy financial risk profile and strong liquidity profile of the company. The increase in revenues is primarily on account of higher power generation with increase in Plant Load Factor (PLF) and an increase in merchant sales rates. The rating continues to derive strength from the presence of an off-take agreement for the entire capacity of the Vishnuprayag hydro-electric project (VHEP), the availability of coal covering the fuel requirements through captive mines, as well as fuel supply agreements (FSA) and linkages. Furthermore, the company was selected as the preferred bidder for Bandha North Coal Mine, and the geological extraction reserve is estimated to be 200 Million Metric Tonnes (MMT). The coal mine is expected to take another 3-4 years to develop for commercial use. However, timely commissioning of the Bandha North Coal Mine will continue to remain a key monitorable factor, The rating is further constrained by disputed receivables and limited long-term PPA tie-ups for both Jaypee Nigrie Supercritical Thermal Power Plant (JNSTPP) and Bina Thermal Power Plant (BTPP). |
| About the Company |
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JPVL was incorporated in 1994 as a part of the "Jaypee Group" and is promoted by Jaiprakash Associates Limited (JAL). It has been listed on the NSE and BSE since 2005. The company is engaged in the generation of power through a 400 MW hydropower project, Vishnuprayag in Uttarakhand, and two thermal power projects located in Madhya Pradesh, viz., the 1,320 MW Nigrie thermal power plant and the 500 MW Bina thermal power plant. Further, JPVL has a coal mine at Amelia, Madhya Pradesh, and a cement grinding unit adjacent to its Nigrie power plant. Jaypee Group is a diversified business conglomerate with varied business interests in sectors such as infrastructure, real estate, cement, power, and healthcare.
The directors are Mr. Dinesh Kumar Likhi, Mr. Pritesh Vinay, Mr. Manoj Gaur, Mr. Suren Jain, Mr. Praveen Kumar Singh, Mr. Sunil Kumar Sharma, Mr. Binata Sengupta, Mr. Anupam Lal Das, Mr. Vandana Rakesh Singh, Mr. Sudhir Mital, Mr. Rama Raman and Ms. Sonam Bodh (IDBI Nominee). |
| Unsupported Rating |
| Not Applicable. |
| Analytical Approach |
| Acuite has considered standalone financial and business risk profile of Jaiprakash Power Ventures Limited. |
| Key Rating Drivers |
| Strengths |
| Established track record of operations
The company was incorporated in 1994, reflecting an established track record of operations for more than two decades, and forms part of Jaypee Group. JPVL operates a 400 MW hydropower project, Vishnuprayag, in Uttarakhand and two thermal power projects located in Madhya Pradesh, viz., the 1,320 MW Nigrie thermal power plant and the 500 MW Bina thermal power plant. All the plants are fully operational, and the required approvals and agreements are in place, leading to zero project execution risk. The operational performance of the company, however, remained moderate, marked by an average PLF of 63 percent and a PAF of 90 percent combining all three power plants. Vishnuprayag HEP has an off-take agreement for its entire capacity. However, Nigrie STPP & BTPP has PPAs for 37.50 & & 70 % of its capacity, and it sells a significant amount of its generated power by way of medium-term PPAs. Acuite believs that the company would continue to benefit from the established track record of operations and experience of the management over the medium term. Improvement in revenue from operations & profitability The company has reported total operating income of Rs.6,777.95 Cr. during FY2024 as against Rs.5,794.22 Cr. in FY2023 thereby improving the topline by 16.98%. The revenue segment of the company majorly comprises of sale of power, followed by sale of coal and sand mining activities. The sale of power constitutes a major portion of the revenues, which is more than 90%, and the rest is contributed by other segments. The increase in revenues is primarily on account of increase of PLF for both plants (Bina & Nigrie) which resulted in increase of total saleable energy and tariff has been increased for merchant sales of saleable energy in both plants. The company has recorded the turnover Rs. 1,754.70 Cr. in Q1 FY 24-25 against Rs. 1,707.82 Cr. in Q1 PY 23- 24.
The operating profit margin of the company improved to 33.23% in FY24 compared against 20.25% in FY23. This is due to major downfall in the rate of market coal. Substantially, the profit after tax improved from Rs.59.02 Cr. in FY23 to Rs.686.10 Cr. in FY24 resulting the increase in net margin from 1.02% in FY23 to 10.12% in FY24. Acuite believes that the operations of the Company would continue to improve on account of better PLF and off-takes over the medium term. However, sustainability of such improved margins needs to be monitored. Financial risk profile
The capital structure as represented by debt equity remained improved over the years marked by 0.38 times as on March 31, 2024, compared against 0.45 times as on March 31, 2023. The improvement is majorly backed by decline in total debt of the company and accretion of profits in reserves. The tangible net worth of the company remained at Rs. 11,286.89 Cr. as on 31 March 2024 against Rs. 10,591.63 Cr. for the last year. Further, the company has also reported interest coverage ratio of 4.07 times during FY24 and Debt Service Coverage Ratio of 2.01 times for FY24. The debt to EBITDA of the company remained at moderate levels of 2.32 times for FY24. The total outstanding liability to tangible net worth stood at 0.52 times during FY24. The ROCE of the company 8.78% in FY 24 against 5.10% in FY 23. Acuite believes that financial risk profile of the company remain to the comfortable in the medium term with the steady accruals. Low fuel supply risk JPVL has a captive coal mine in Amelia (North), Madhya Pradesh, which the company has won by way of reverse bidding. Out of the total fuel requirement of 5.90 MTPA for Nigrie TPP, the mine caters to the fuel requirement to the extent of its annual drawing capacity, i.e., 3.92 MTPA, and the balance of the fuel requirement is met through e-auctions from the open market. Furthermore, the company was selected as the preferred bidder for Bandha North Coal Mine, and the geological extraction reserve is estimated to be 200 MMT. The coal mine is expected to take another 3–4 years to develop for commercial use. Acuité believes that with the use of coal from Bandha North Coal and Amelia mines and with existing fuel supply agreements, all the plants of the company will run at an optimum load factor. |
| Weaknesses |
| Limited PPA tie-ups
JPVL has long-term PPA tie-ups for only 56.08 percent of its capacity, leading to constrained operational performance. The long-term PPA ensures a stable cash accrual position in the company; however, Nigrie STPP and Bina TPP have long-term PPAs for only 37.50 and 70 percent of their total capacity, respectively. This risk is to an extent mitigated by the lower fuel costs of the company due to the presence of captive coal mines, and hence the company has been able to generate higher revenues through merchant sales in the open market on higher margins. Acuite believes in case of any changes in PPA arrangements, or off-take patterns the revenues and profitability of the Company might be affected over the medium term. Counterparty risk with disputed receivables The company is dealing with state companies, UPPCL and MPPMCL, which exposes it to high counterparty risk. The invoice raised on MPPMCL in pandemic for capacity charges has been disputed as a notice of invoking the force majeure clause by MPPMCL. Another Rs. 324 Cr. is held up against the recovery of tax. however, management is confident that it will their favour. Such counterparty risk exposes the company to erosion of capital in case any unforeseen write-offs. However, the debtor days improved from 74 days as of March 31, 2023 to 64 days in FY24. The total outstanding debtors as of March 31, 2024, remained at Rs. 1186.39 crore as on March 31, 2024. Extended Support given to Promoter Entity The corporate guarantees extended by the company to its group/sponsor company, i.e., Jaiprakash Associates Limited (JAL), for USD 1500 Lakhs was to be released as the framework agreement signed between JPVL and its lenders in April 2019, the same has not yet been released. Any crystallization of the said corporate guarantee might impact the liquidity profile of JPVL and hence remains the key rating sensitivity. |
| Rating Sensitivities |
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| Liquidity Position |
| Strong |
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The liquidity profile of the company is strong as net cash accruals of Rs. 1,151.21 Cr. in FY 24 against current debt obligations of Rs. 347.21 Cr. during the same period. The company has also maintained cash and bank balance of Rs. 30.74 Cr. and unencumbered fixed deposits worth Rs. 900 Cr. as on March 31, 2024. The current ratio of the company is 1.81 times as on 31st March 2024. The strong liquidity position of the company is also supported by the presence of a debt service reserve account, which ensures timely payments of debt obligations in case of any shortfall in operational cash flows as permitted by the lenders. Acuite believes that the liquidity of JPVL will maintain over medium term indicating buffer for any future endeavours.
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| Outlook: Stable |
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Acuité believes that JPVL will maintain a 'Stable' outlook and will continue to derive benefits over the medium term due to extensive management experience, an improved liquidity position, and low fuel supply risk. The outlook may be revised to 'Positive' in case the company registers a higher-than-expected improvement in its business profile, financial risk profile and recoveries are collected from disputed receivables. Conversely, the outlook may be revised to 'Negative' in the event of a deterioration in the company's financial risk profile, a delay in the realisation of receivables, or any significant lending to group companies.
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| Other Factors affecting Rating |
| None. |
| Particulars | Unit | FY 24 (Actual) | FY 23 (Actual) |
| Operating Income | Rs. Cr. | 6777.95 | 5794.22 |
| PAT | Rs. Cr. | 686.10 | 59.02 |
| PAT Margin | (%) | 10.12 | 1.02 |
| Total Debt/Tangible Net Worth | Times | 0.38 | 0.45 |
| PBDIT/Interest | Times | 4.07 | 2.23 |
| Status of non-cooperation with previous CRA (if applicable) |
| Not Applicable. |
| Any other information |
| None. |
| Applicable Criteria |
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• Default Recognition :- https://www.acuite.in/view-rating-criteria-52.htm • Infrastructure Sector: https://www.acuite.in/view-rating-criteria-51.htm • Application Of Financial Ratios And Adjustments: https://www.acuite.in/view-rating-criteria-53.htm |
| Note on complexity levels of the rated instrument |
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In order to inform the investors about complexity of instruments, Acuité has categorized such instruments in three levels: Simple, Complex and Highly Complex. Acuite’ s categorisation of the instruments across the three categories is based on factors like variability of the returns to the investors, uncertainty in cash flow patterns, number of counterparties and general understanding of the instrument by the market. It has to be understood that complexity is different from credit risk and even an instrument categorized as 'Simple' can carry high levels of risk. For more details, please refer Rating Criteria “Complexity Level Of Financial Instruments” on www.acuite.in
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