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Product | Quantum (Rs. Cr) | Long Term Rating | Short Term Rating |
Bank Loan Ratings | 2658.67 | ACUITE BBB+ | Stable | Reaffirmed | - |
Bank Loan Ratings | 802.67 | - | ACUITE A2 | Reaffirmed |
Total Outstanding | 3461.34 | - | - |
Rating Rationale |
Acuité has reaffirmed its long-term rating of 'ACUITE BBB+' (read as ACUITE triple B plus) and its short-term rating of 'ACUITE A2' (read as ACUITE A two) to the Rs 3461.34 Cr. bank facilities of Jaipur Vidyut Vitran Nigam Limited (JVVNL). The outlook is 'Stable'.
Rationale for the rating The rating reaffirmed factors the stable revenue growth with improvement in operating margins, sustained improvement in the AT&C and T&D losses along with improvement in the collection efficiency in the last six years ended 2024. The rating factors in the support received from the State Government of Rajasthan (GoR) in the form of subsidies, grants and government guarantee backed borrowings. Further, the AT&C losses and T&D losses stood at around 20.02% in FY2024 against 25.65% (Base year FY2019) and 21.60% in FY2024 against 25.05% (Base year FY2019). The rating also draws comfort from JVVNL's diverse consumer mix. However, the rating is constrained on account of weak financial risk profile marked by negative net worth, and modest debt protection metrics given the high debt levels of the company along with regulated nature of business, |
About the Company |
Incorporated in 2000, Jaipur Vidyut Vitran Nigam Limited. (JVVNL) is a state power distribution company of Rajasthan State Electricity Board (RSEB). As per the Rajasthan Power Sector Reforms Act, 1999 of GoR, the erstwhile Rajasthan State Electricity Board (RSEB) was unbundled into a generation Company, a transmission Company and three distribution companies (Discoms) w.e.f. July 19, 2000. Rajasthan Rajya Vidyut Utpadan Nigam Limited (RVUNL) was incorporated as the sole generation company, Rajasthan Rajya Vidyut Prasaran Nigam Limited (RVPNL) was incorporated as the sole transmission company & three Discoms were incorporated in the form of Ajmer Vidyut Vitran Nigam Limited. (AVVNL), Jodhpur Vidyut Vitran Nigam Limited (JDVVNL) and Jaipur Vidyut Vitran Nigam Limited. (JVVNL). JVVNL’s area of operations covers 12 districts of Rajasthan, namely Jaipur, Dausa, Alwar, Bharatpur, Dholpur, Kota, Bundi, Baran, Jhalawar, Sawaimadhopur, Tonk and Karauli. The company has its registered office located in Jaipur. The current directors of the company are Ms Aparna Arora, Mr. Ashutosh Pednekar, Mr. Anil Kumar Gupta, Mr. Pranab Kumar Sinha , Mr. Bhaskar Sawant , Mr. Naresh Kumar Thakral , Ms. Kirti Kachhawaha , Mr. Pramod Tak and Mr. Harsh Baweja.
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Unsupported Rating |
Not Applicable |
Analytical Approach |
Acuité has considered the standalone business and financial risk profile of Jaipur Vidyut Vitran Nigam Limited (JVVNL). Further, Acuité has also factored in the inherent support extended from the state government of Rajasthan.
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Key Rating Drivers |
Strengths |
Strategically important role of JVVNL for the state of Rajasthan & support extended by the GoR
JVVNL came into existence in the year 2000 and caters the power requirements of 12 districts in the state of Rajasthan including Jaipur, Bharatpur, Dholpur, Kota, and Karauli to name a few. It is a strategically important entity and forms the backbone of the power sector infrastructure for Rajasthan. The status of the company, as a 100 per cent owned by government of Rajasthan (GoR) provides an 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. During FY2024 and FY2023, there was an equity infusion of Rs.182.01 Cr. and Rs.176.14 Cr. infused as equity capital by GoR. 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. Further, it has also recorded significant improvement in its billing efficiency which stood around 85.41% in FY2023 against 83.19% in FY2022. Further the company has entered into Distribution & Franchisee Agreement in 2016 with Kota Electricity Supply Limited, and Bharatpur Electricity Services Limited; both fully owned subsidiary of the Calcutta Electric Supply Corporation (CESC) for a period of 20 years. |
Weaknesses |
Modest financial risk profile
The financial risk profile remains modest marked by negative net worth and deterioration in the coverage indicators. The discom reported net losses in FY2024 and FY2023 that resulted in further decline in the networth to Rs. (20,108.00) Cr. as on March 31,2024 against Rs. (12,437.87) Cr. as on March 31,2023. The debt levels stood at Rs. 33,926 Cr.as on March 31, 2024 as against Rs. 29,446.55 Cr. as on March 31, 2022.It is a highly capital-intensive nature of business where in order to maintain operational efficiencies, the company has to incur regular capital expenditure. Higher debt has resulted in the deterioration of the debt protection metrics as reflected by by interest coverage ratio (ICR) and debt service coverage ratio (DSCR) stood at 0.13 times in FY2024 (1.31 times in FY2023 and 1.44 times in FY2022) and 0.06 times in FY2024 (0.71 times in FY2023 and 0.90 times in FY2022), respectively. Though the company’s DSCR has been weak in the past 2 years ended FY2024, Acuité notes that JVVNL has received regular support from GoR in the form of grants and equity infusion which is expected to continue going forward. Regulated nature of operations The revenues are influenced by the regulatory framework governing the power sector. Revenues of players such as JVVNL are determined by Rajasthan Electricity Regulatory Commission (RERC) through revision in tariff. Any significant delays in tariff approvals or a reduction in return on equity or a tightening of the RERC norms could result in lower operating cash flows. Acuité believes that any significant change in the regulatory environment will impinge on the credit profile of the company. |
ESG Factors Relevant for Rating |
Not Applicable |
Rating Sensitivities |
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Liquidity Position |
Adequate |
JVVNL net cash accruals stood at (Rs. 3,132) Cr. against the repayments of Rs. 4695 Cr. However, the repayment obligations have been funded from support in the form of grants from GoR. Further, under the Additional Borrowing Limit of 0.50% of Gross State Domestic Product (GSDP) scheme, State Government (GoR) has agreed to take over the future five year losses of the Discom in a phased manner, and as per guidelines, GoR has taken over and in lieu of that released a sum equivalent to 75% of the losses reported in FY2023. Furthermore, the liquidity position is also supported by equity infusion of Rs.182.01 Cr. and Rs.176.14 Cr. by GoR during FY2024 and FY2023. Further, there have been liquidity infusion for Discoms by Power Finance Corporation (PFC) & Rural Electrification Corporation Limited (REC) for a period of 10 years. The company’s repayment obligation in the FY 2023-24 and going forward obligations will be repaid by way of newly availed term loans from REC & PFC and working capital loans which are backed by government guarantee and remaining by way of grants from GoR. JVVNL due to its strategic importance to GoR has been able to access various funding sources in the past to tide over the short-term liquidity mismatch. The cash and bank balances stood at Rs. 235.43 Cr. as on March 31, 2024, and Rs.104.19 Cr. as on March 31, 2023. Further, Acuité receives comfort from the fact that JVVNL being a GoR entity warrants adequate financial support from GoR, time to time, to support the mismatches.
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Outlook: Stable |
Acuité believes that the JVVNL will maintain 'Stable' outlook over the medium term from its strategic importance to the GoR, experienced management and strong parentage. The outlook may be revised to 'Positive' if the company successfully ramps up its operation and registers growth in revenues while improving its profitability and AT&C and T&D losses. Conversely, the outlook may be revised to 'Negative' in case of less than expected growth in the revenues or increased AT&C and T&D losses deteriorating the operating profile.
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Other Factors affecting Rating |
None |
Particulars | Unit | FY 24 (Actual) | FY 23 (Actual) |
Operating Income | Rs. Cr. | 26652.00 | 24087.26 |
PAT | Rs. Cr. | (4333.00) | (221.43) |
PAT Margin | (%) | (16.26) | (0.92) |
Total Debt/Tangible Net Worth | Times | (1.69) | (2.37) |
PBDIT/Interest | Times | 0.13 | 1.31 |
Status of non-cooperation with previous CRA (if applicable) |
Not Applicable |
Any other information |
None |
Applicable Criteria |
• 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 • Group And Parent Support: https://www.acuite.in/view-rating-criteria-47.htm |
Note on complexity levels of the rated instrument |
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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*Annexure 2 - List of Entities (applicable for Consolidation or Parent / Group / Govt. Support) | ||||||
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Contacts |
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