Rating Rationale
July 31, 2023 | Mumbai
Jamnagar Utilities and Power Private Limited
'CRISIL AAA / Stable' assigned to Non Convertible Debentures
 
Rating Action
Total Bank Loan Facilities RatedRs.4317 Crore
Long Term RatingCRISIL AAA/Stable (Reaffirmed)
Short Term RatingCRISIL A1+ (Reaffirmed)
 
Rs.1000 Crore Non Convertible DebenturesCRISIL AAA/Stable (Assigned)
Rs.7000 Crore Non Convertible DebenturesCRISIL AAA/Stable (Reaffirmed)
Rs.2000 Crore Non Convertible DebenturesCRISIL AAA/Stable (Reaffirmed)
Corporate Credit RatingCRISIL AAA/Stable (Reaffirmed)
Rs.4000 Crore Commercial PaperCRISIL A1+ (Reaffirmed)
Note: None of the Directors on CRISIL Ratings Limited’s Board are members of rating committee and thus do not participate in discussion or assignment of any ratings. The Board of Directors also does not discuss any ratings at its meetings.
1 crore = 10 million
Refer to Annexure for Details of Instruments & Bank Facilities

Detailed Rationale

CRISIL Ratings has assigned its ‘CRISIL AAA/Stable’ rating on proposed non-convertible debentures (NCDs) of Rs 1,000 crore of Jamnagar Utilities & Power Pvt Ltd (JUPPL; part of the Reliance Industries Holdings Pvt Ltd [RIHPL] group) while reaffirming its ‘CRISIL AAA/Stable/CRISIL A1+’ ratings on the existing bank facilities and debt instruments. The issuer rating is also reaffirmed at ‘CRISIL AAA/Stable’.

 

The ratings continue to take comfort from the strong operational linkages of the entities of the RIHPL group with Reliance Industries Ltd (RIL; rated CRISIL AAA/Stable/CRISIL A1+’), their robust financial flexibility driven by holding of 104.36 crore fully paid equity shares of RIL that are cumulatively worth about Rs 266,118 crore as on June 30, 2023, and support from the promoter group of RIL. The ratings also factor in the stable cash accruals and long tenure debt availed by JUPPL. These strengths are partially offset by the group’s high consolidated debt.

 

As on June 30, 2023, the group deployed Rs 37,956 crores by way of interest-bearing loans/ units in Digital Fibre Infrastructure Trust (DFIT), the InvIT (Infrastructure Investment Trust) holding telecom infrastructure through its special purpose vehicle namely Jio Digital Fibre Private Limited (JDFPL; rated ‘CRISIL AAA/Stable/CRISIL A1+’). This has resulted in higher income for the RIHPL group in fiscal 2023 which shall continue over the medium term as well.

 

In fiscals 2021 and 2022, the RIHPL group also deployed about Rs 23,000 crore from its liquidity and internal accruals, in promoter entities for participating in the rights issue of RIL.

Analytical Approach

For arriving at the ratings, CRISIL Ratings has combined the business and financial risk profiles of JUPPL, Sikka Ports & Terminals Ltd (SPTL; 'CRISIL AAA/Stable/CRISIL A1+'), RIHPL, and other entities under its control. All these entities, collectively referred to as the RIHPL group, have common ownership, significant business linkages with RIL, and fungible cash flows.

 

Please refer Annexure - List of Entities Consolidated, which captures the list of entities considered and their analytical treatment of consolidation.

Key Rating Drivers & Detailed Description

Strengths:

Strong operational linkages with RIL

The entities of the RIHPL group belong to the promoters and promoter group of RIL. The operations of these entities are critical for RIL, as they are closely integrated with the facilities of its refining and petrochemical complex in Jamnagar, Dahej and Hazira, all in Gujarat.

 

JUPPL has a generation capacity of about 2,300 megawatt (MW) of electricity and about 10,000 tonne per hour (tph) of steam. Its power plants in Jamnagar, Hazira, and Dahej are captive to the existing petrochemicals and refining business of RIL and caters to most of its power requirement.

 

SPTL provides port and marine infrastructure services at village Sikka, district Jamnagar for handling crude and evacuation of petroleum and petrochemical products of RIL, through five single-point mooring equipment and six jetty berths, crude and petroleum products storage tanks, and related undersea and on-shore pipelines. It handles a major part of RIL’s refining/petrochemicals volumes. The company is also engaged in operating and hiring construction equipment and machinery and is a co-developer of Jamnagar special economic zone (SEZ).

 

Robust financial flexibility and stable cash flows, driven by operational efficiency

The contractual nature of the cash flows of JUPPL and SPTL, along with strong operations, and income earned on financial investments lends stability to the overall cash flows of the group. JUPPL recovers fixed cost based on plant availability, and fuel is supplied by RIL; while SPTL’s revenues are based on volumes handled. Moreover, the group also earns a stable interest income on its investments of Rs 37,956 crore in DFIT.

 

The group has strong operating efficiency, reflected in JUPPL consistently achieving an average plant availability factor (PAF) of more than 90%, and port facilities of SPTL handling volumes of more than 110 million tonne per annum.

 

The expected annual net cash accrual of more than Rs 7,000 crore over the medium term should comfortably cover debt obligation. Financial flexibility is also bolstered by its commitment of holding at least 75.4 crore unpledged equity shares in RIL, either directly or indirectly, and the support it derives by being a part of the promoter group of RIL.

 

Weakness:

High consolidated debt

RIHPL, at a consolidated level, has high, although declining, external net debt of Rs 27,835 crore as on March 31, 2023. Nevertheless, most of the debt has a long maturity period, with repayments up to fiscal 2028. However, given the stability of cash flows due to the captive nature of operations, the business is expected to comfortably service its debt obligations.

Liquidity: Superior

The robust financial flexibility of the group is driven by its holding of 104.36 crore fully paid equity shares of RIL that are cumulatively worth about Rs 266,118 crore as on June 30, 2023. Cash and equivalents are likely to continue to be healthy at Rs 4,000-6,000 crore over the medium term. Net cash accrual is expected in excess of Rs 7,000 crore per fiscal over the medium term should comfortably meet debt obligation

Outlook: Stable

The credit risk profile of the group is expected to remain healthy, supported by stable profitability, strong operational linkages with RIL, and adequate financial flexibility derived from holding RIL shares

Rating Sensitivity factors

Downward factors

  • Reduction in RIHPL group’s holding of RIL equity shares below 75.4 crore
  • Significant diminution in the value of RIHPL's investments

About RIL

RIL is one of India's largest private sector companies, with diverse interests, including petrochemicals, oil refining, and upstream oil and gas exploration and production. RIL has strong competitiveness in the global oil refining and petrochemicals business, arising from its integrated business model with superior Complexity Index of 21.1 for its Jamnagar site, which makes it amongst the most complex sites in the world. RIL has also established its presence in the consumer facing business space by providing retail and digital services, which currently is RIL's principal growth drivers. Reliance Retail Limited is India's largest retail entity by revenue, while Reliance Jio Infocomm Limited has also become India's largest telecom service provider by revenue market share. The group is now in the process of establishing itself in the green energy space.

About the Group

JUPPL operates coal- and gas-based power plants at Jamnagar (both in the domestic tariff area and SEZ), Hazira, and Dahej, having combined capacity of about 2,300 MW of electricity and 10,000 tph of steam for catering to the manufacturing facilities of RIL.

 

SPTL provides port storage, handling, and evacuation facilities to RIL in Jamnagar.

 

RIHPL is a holding company belonging to the promoters and promoter group of RIL. Its 100% economic ownership (including direct and indirect) of SPTL, and JUPPL is in addition to the economic interest it holds in RIL’s shares, either directly or indirectly.   

Key Financial Indicators - RIHPL (consolidated)

Particulars   2023 2022
Revenue Rs. Crore 9,320 8,665
Profit After Tax (PAT) Rs. Crore 2,658* 4,477*
PAT Margin % 28.50% 51.70%
Adjusted Debt/EBITDA Times 3 3.1
Adjusted Interest coverage Times 3.5 3.7

*Includes interest income earned from investments undertaken

Any other information: Not applicable

Note on complexity levels of the rated instrument:
CRISIL Ratings` complexity levels are assigned to various types of financial instruments and are included (where applicable) in the 'Annexure - Details of Instrument' in this Rating Rationale.

CRISIL Ratings will disclose complexity level for all securities - including those that are yet to be placed - based on available information. The complexity level for instruments may be updated, where required, in the rating rationale published subsequent to the issuance of the instrument when details on such features are available.

For more details on the CRISIL Ratings` complexity levels please visit www.crisilratings.com. Users may also call the Customer Service Helpdesk with queries on specific instruments.

Annexure - Details of Instrument(s)

ISIN Name of instrument Date of
allotment		 Coupon
rate (%)		 Maturity
date		 Issue size
(Rs crore)		 Complexity 
levels		 Rating assigned
with outlook
INE936D07075 Non Convertible Debentures 4-Aug-14 9.75% 2-Aug-24 2,000 Simple CRISIL AAA/Stable
INE936D07174 Non Convertible Debentures 29-Sep-21 6.40% 29-Sep-26 4,000 Simple CRISIL AAA/Stable
NA Non Convertible Debentures# NA NA NA 4,000 Simple CRISIL AAA/Stable
NA Commercial Paper NA NA 7-365 days 4,000 Simple CRISIL A1+
NA Cash Credit / Overdraft facility NA NA NA 85 NA CRISIL AAA/Stable
NA Non-Fund Based Limit NA NA NA 100 NA CRISIL A1+
NA Proposed Fund-Based Bank Limits NA NA NA 1,980 NA CRISIL AAA/Stable
NA Proposed Non Fund based limits* NA NA NA 317 NA CRISIL A1+
NA Term Loan 31-Mar-23 T-Bill linked 31-Mar-28 1,800 NA CRISIL AAA/Stable
NA Working Capital Facility NA NA NA 35 NA CRISIL AAA/Stable

#Yet to be placed

*Fully interchangeable with proposed fund-based limit

Annexure – List of entities consolidated

Names of Entities Consolidated Extent of Consolidation  Rationale for Consolidation 
Reliance Industries Holding Pvt Ltd Fully consolidated Common ownership, significant business linkages with RIL, and fungible cash flows
Sikka Ports & Terminals Ltd Fully consolidated Common ownership, significant business linkages with RIL, and fungible cash flows
Annexure - Rating History for last 3 Years
  Current 2023 (History) 2022  2021  2020  Start of 2020
Instrument Type Outstanding Amount Rating Date Rating Date Rating Date Rating Date Rating Rating
Fund Based Facilities LT 3900.0 CRISIL AAA/Stable 21-07-23 CRISIL AAA/Stable 12-12-22 CRISIL AAA/Stable 22-09-21 CRISIL AAA/Stable,CCR AAA/Stable 28-07-20 CRISIL AAA/Stable,CCR AAA/Stable CRISIL AAA/Stable,CCR AAA/Stable
      -- 13-04-23 CRISIL AAA/Stable 28-10-22 CRISIL AAA/Stable,CCR AAA/Stable 26-07-21 CRISIL AAA/Stable,CCR AAA/Stable 16-03-20 CRISIL AAA/Stable,CCR AAA/Stable --
      -- 10-03-23 CRISIL AAA/Stable 22-09-22 CRISIL AAA/Stable,CCR AAA/Stable 25-06-21 CRISIL AAA/Stable,CCR AAA/Stable   -- --
Non-Fund Based Facilities ST 417.0 CRISIL A1+ 21-07-23 CRISIL A1+ 12-12-22 CRISIL A1+ 22-09-21 CRISIL A1+ 28-07-20 CRISIL A1+ CRISIL A1+
      -- 13-04-23 CRISIL A1+ 28-10-22 CRISIL A1+ 26-07-21 CRISIL A1+ 16-03-20 CRISIL A1+ --
      -- 10-03-23 CRISIL A1+ 22-09-22 CRISIL A1+ 25-06-21 CRISIL A1+   -- --
Fund Based Facilities LT 0.0 CRISIL AAA/Stable 21-07-23 CRISIL AAA/Stable 12-12-22 CRISIL AAA/Stable 22-09-21 CCR AAA/Stable 28-07-20 CCR AAA/Stable CCR AAA/Stable
      -- 13-04-23 CRISIL AAA/Stable 28-10-22 CCR AAA/Stable 26-07-21 CCR AAA/Stable 16-03-20 CCR AAA/Stable --
      -- 10-03-23 CRISIL AAA/Stable 22-09-22 CCR AAA/Stable 25-06-21 CCR AAA/Stable   -- --
Commercial Paper ST 4000.0 CRISIL A1+ 21-07-23 CRISIL A1+ 12-12-22 CRISIL A1+ 22-09-21 CRISIL A1+ 28-07-20 CRISIL A1+ --
      -- 13-04-23 CRISIL A1+ 28-10-22 CRISIL A1+ 26-07-21 CRISIL A1+   -- --
      -- 10-03-23 CRISIL A1+ 22-09-22 CRISIL A1+ 25-06-21 CRISIL A1+   -- --
Non Convertible Debentures LT 10000.0 CRISIL AAA/Stable 21-07-23 CRISIL AAA/Stable 12-12-22 CRISIL AAA/Stable 22-09-21 CRISIL AAA/Stable 28-07-20 CRISIL AAA/Stable CRISIL AAA/Stable
      -- 13-04-23 CRISIL AAA/Stable 28-10-22 CRISIL AAA/Stable 26-07-21 CRISIL AAA/Stable 16-03-20 CRISIL AAA/Stable --
      -- 10-03-23 CRISIL AAA/Stable 22-09-22 CRISIL AAA/Stable 25-06-21 CRISIL AAA/Stable   -- --
All amounts are in Rs.Cr.
Annexure - Details of Bank Lenders & Facilities
Facility Amount (Rs.Crore) Name of Lender Rating
Cash Credit / Overdraft facility 50 ICICI Bank Limited CRISIL AAA/Stable
Cash Credit / Overdraft facility 35 HDFC Bank Limited CRISIL AAA/Stable
Non-Fund Based Limit 50 ICICI Bank Limited CRISIL A1+
Non-Fund Based Limit 50 HDFC Bank Limited CRISIL A1+
Proposed Fund-Based Bank Limits 1980 Not Applicable CRISIL AAA/Stable
Proposed Non Fund based limits& 317 Not Applicable CRISIL A1+
Term Loan 1800 HDFC Bank Limited CRISIL AAA/Stable
Working Capital Facility 35 State Bank of India CRISIL AAA/Stable
& - Fully interchangeable with proposed fund-based limit
Criteria Details
Links to related criteria
CRISILs Approach to Financial Ratios
CRISILs Bank Loan Ratings - process, scale and default recognition
Rating Criteria for Power Generation Utilities
The Infrastructure Sector Its Unique Rating Drivers
Criteria for rating entities belonging to homogenous groups
CRISILs Criteria for rating short term debt

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