| 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 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.
Loans backed by state government guarantee under a designated escrow mechanism
GoR extended guarantees of Rs. 27076.11 Cr. towards the bank loans and loans from Rural Electrification Corporation/ Power Finance Corporation against the total borrowing of Rs. 36,831.33 Cr. as on March 31, 2025. During the current FY2025 JVVNL has availed working capital and other loans from Banks & Financial Institutions etc. of Rs. 28,155.82 Cr. to meet the working capital requirements. SBI has a designated escrow mechanism along with a debt service reserve account (DSRA) equivalent to 1 month interest & principal repayment. Further, in case of any shortfall at any time during the currency of the facility, the bank would replenish the same from central collection account without any consent from the company.
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| Moderation in EBDITA; though losses funded by State Government in a phased manner
The revenues from sale of power stood at Rs. 24,411.19 Cr. in FY2025 as compared to Rs. 25,418.44 Cr. in FY2024. The marginal 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 6.64 per cent in FY2025 against 14.54 per cent in FY2024. The company has reported net profits of Rs. 92.29 Cr. in FY25 as against loss of Rs.292.88 Cr. in FY24. The profits are mainly on account of increase in exceptional items like revenue from grants, other income, non-operating income, reversal of finance cost etc.
As per the recommendation of 15th Finance Commission, the Ministry of Finance, Gol has approved 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. 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.
High aggregate technical and commercial loss (AT&C)
The Aggregate and Technical Commercial Loss (AT&C losses) remained high at ~20-23 %, the high losses are due to outed meters which will be replaced by smart meters in the medium term, large and scattered agricultural consumer base in Jodhpur region, long feeder lines in rural/agricultural areas leading to high technical losses and practical difficulties in meter reading and billing in scattered agricultural regions. JVVNL has transitioned from bi-monthly billing to monthly billing which completed in Jan’25. Further they have initiated focus on identifying high-loss areas through smart metering and feeder segregation. Overall, AT&C losses, post adjustment for subsidy receivables, are expected to remain relatively higher side till the time optimum efficiency is achieved.
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.
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