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| Product | Quantum (Rs. Cr) | Long Term Rating | Short Term Rating |
| Bank Loan Ratings | 83.31 | ACUITE BBB+ | Stable | Assigned | - |
| Bank Loan Ratings | 1477.25 | ACUITE BBB+ | Stable | Reaffirmed | - |
| Bank Loan Ratings | 276.83 | - | ACUITE A2 | Assigned |
| Bank Loan Ratings | 649.17 | - | ACUITE A2 | Reaffirmed |
| Total Outstanding | 2486.56 | - | - |
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Rating Rationale |
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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 2126.42 Cr. bank facilities of Jodhpur Vidhyut Vitran Nigam Limited (JVVNL). The outlook is 'Stable'.
Also, Acuité has assigned 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 360.14 Cr. bank facilities of Jodhpur Vidhyut Vitran Nigam Limited (JVVNL). The outlook is 'Stable'. Rationale for the rating The reaffirmation of the ratings factors the stable revenue growth, sustained improvement in the AT&C and T&D losses along with the healthy collection efficiency in the last three years ended 2023. The AT&C losses and T&D losses stood at around 22% and 21% in FY2023 against 21% and 21% in FY2022. Further, the rating also factors in the support received from the State Government of Rajasthan (GoR) in the form of subsidies, grants and government guarantee backed borrowings. Also, the rating draws comfort from JVVNL's diverse consumer mix with high consumption from domestic and industrial consumers given their high tariff band. However, the rating is constrained on account of net losses in FY2023 and expected losses in FY2024 along with weak financial risk profile marked by negative net worth, and deterioration in the debt protection metrics given the high debt levels of the company. Acuite also takes note of the current regulated nature of business. |
| About the Company |
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Incorporated in the year 2000, Jodhpur 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), Jaipur Vidyut Vitran Nigam Limited. (JVVNL) and Jodhpur Vidhyut Vitran Nigam Limited (JVVNL). JDVVNL’s area of operations covers 10 districts of Rajasthan, namely Jodhpur, Jaisalmer, Jalore, Sirohi, Pali, Barmer, Bikaner, Churu, Ganganagar and Hanumangarh. The company has its registered office located in Jodhpur. 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 |
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Acuité has considered the standalone business and financial risk profile of Jodpur Vidhyut 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 2000 and caters the power requirements of around 10 districts of the state including Jodhpur, Jaisalmer, Jalore, Sirohi, Pali, Barmer, Bikaner etc to name a few. It is a strategically important entity and forms the backbone of the power sector infrastructure for Rajasthan with area of operation of around 1.82 lacs sq. km. 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. During FY2023, there was an equity infusion of Rs. 136.38 Cr. made against share application money pending allotment. In FY2024, the GoR made an equity infusion of Rs. 59 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 79% to 82% in last 3 quarters ending Q3FY2024. 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% in FY2014-15 (base year) to 21% in FY2023. |
| Weaknesses |
| Moderation in EBDITA; though losses recovered by State Government in a phased manner.
The company’s operating income stood at Rs.21089.57 Cr. in FY2023 as compared to Rs.19333.50 Cr. in FY2022 on account of the increased consumption from commercial & industrial segment. However, due to increase in the power purchase cost and no inflations built in the tariff, the EBDITA margin of the company declined to 5.59% in FY2023 against 11.02% in FY2022. Further, the discom has reported net losses of Rs.1526.13 Cr. in FY23 as against the net loss of Rs. 1465.34 Cr. in FY22 mainly with decline in EBDITA coupled with the write off the tariff subsidy receivables from the state Government on account of stopped and defective meter. Nonetheless, the losses would be taken over by the State government in a phased manner under a scheme approved on the recommendation of 15th Finance Commission, the Ministry of Finance, Gol wherein a performance based additional borrowing space of 0.50% 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. 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 FY2023 that resulted in further decline in the networth to Rs. (17,957.96) Cr. as on March 31,2023 against Rs. (16,771.04) Cr. as on March 31,2022. The debt levels stood at Rs. 27817.16 Cr.as on March 31, 2023 as against Rs. 23071.68 Cr. as on March 31, 2022. Further, as on March 31, 2024, the outstanding debt is estimated at Rs. 33,000 Cr. It is a highly capital-intensive nature of business where in order to maintain operational efficiencies, the company has to incur regular capital expenditure. Decline in EBDITA coupled with 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 0.81 times in FY2023 (0.86 times in FY2022) and 0.44 times in FY2023 (0.56 times in FY2022), respectively. Though the company’s DSCR has been weak in the past 2 years ended FY2023, 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 |
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JVVNL generated a negative net cash accruals of Rs. (478.78) Cr. in FY23 against the repayments of Rs. 2468.26 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 FY2023’s losses in FY2024. Furthermore, the liquidity position is also supported by equity infusion of Rs. 136.38 Cr. by GoR during FY23. The company’s repayment obligation in the FY24 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 unencumbered cash and bank balances stood at Rs. 470.55 Cr as on March 31, 2023 (includes earmarked amount is 32.29 Cr).
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. |
| Outlook: Stable |
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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 23 (Actual) | FY 22 (Actual) |
| Operating Income | Rs. Cr. | 21089.57 | 19333.50 |
| PAT | Rs. Cr. | (1526.13) | (1465.34) |
| PAT Margin | (%) | (7.24) | (7.58) |
| Total Debt/Tangible Net Worth | Times | (1.55) | (1.38) |
| PBDIT/Interest | Times | 0.81 | 0.86 |
| 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 • Group And Parent Support: https://www.acuite.in/view-rating-criteria-47.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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| *Annexure 2 - List of Entities (applicable for Consolidation or Parent / Group / Govt. Support) |
| 1. Government of Rajasthan |
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