Rating Rationale
October 28, 2022 | Mumbai

Jamnagar Utilities and Power Private Limited

 

Rating Action

Total Bank Loan Facilities Rated

Rs.2317 Crore

Long Term Rating

CRISIL AAA/Stable

Short Term Rating

CRISIL A1+

 

Rs.7000 Crore Non Convertible Debentures

CRISIL AAA/Stable

Rs.475 Crore Non Convertible Debentures

CRISIL AAA/Stable

Rs.2000 Crore Non Convertible Debentures

CRISIL AAA/Stable

Rs.2250 Crore Non Convertible Debentures

CRISIL AAA/Stable

Corporate Credit Rating

CCR AAA/Stable

Rs.4000 Crore Commercial Paper

CRISIL A1+

1 crore = 10 million   

Refer to annexure for Details of Instruments & Bank Facilities

Detailed Rationale

CRISIL Ratings on the bank facilities, commercial papers and non-convertible debentures (NCDs) of Jamnagar Utilities and Power Private Limited (JUPPL; part of the Reliance Industries Holdings Private Limited [RIHPL] group) continue to take comfort from the strong operational linkages of the entities of the RIHPL group with Reliance Industries Limited (RIL; rated CRISIL AAA/Stable/CRISIL A1+’), their robust financial flexibility driven by their holding of 104.36 crore fully paid equity shares of RIL that cumulatively are worth about Rs 268,090 crore as on September 12, 2022, and support from the promoter group of RIL. The ratings also factor in the stable cash accrual and long maturity profile of the debt of JUPPL. These strengths are partially offset by the group’s high consolidated debt.

 

As on March 31, 2022, the group has deployed Rs 38,959 crores by way of interest-bearing loans and units of Digital Fibre Infrastructure Trust, the InvIT (Investment Infrastructure 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 2022 which shall continue over the medium term as well.

 

In fiscals 2021 and 2022, RIHPL group has also deployed about Rs 23000 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 Limited (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. Their operations 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 theexisting 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 revenues of SPTL are based on volumes handled. Moreover, the group also earns a stable interest income on its investments of Rs 38,959 crore.

 

The strong operating efficiency of the group is 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 significant holding of unpledged equity shares in RIL, either directly or indirectly, and the support it derives from being a part of the promoter group of RIL.

 

Weakness:

  • High consolidated debt

RIHPL, at a consolidated level, has high external debt of Rs 36,575 crore as on March 31, 2022. Nevertheless, most of the debt has a long maturity period, with repayments up to fiscal 2027. 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 2,68,090 crore as on September 12, 2022. Cash and equivalents are likely to continue to be healthy at Rs 3,000-6,000 crore over the medium term. Net cash accrual is expected in excess of Rs 7,000 crore per fiscal over the medium term, which should comfortably meet debt obligation.

Outlook: Stable

The credit risk profile of the group should remain healthy, supported by stable profitability, strong operational linkages with RIL, and adequate financial flexibility 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 the Company

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.   

About the Group

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.

Key Financial Indicators– RIHPL (Consolidated)

Particulars

 

2022

2021

Revenue

Rs. Crore

8,665

8,064

Profit After Tax (PAT)

Rs. Crore

4,477*

3,396*

PAT Margin

%

51.7%

42.1%

Adjusted Debt/EBITDA

Times

3.2

2.6

Interest coverage

Times

3.6

3.6

*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 Level

Rating Assigned

with Outlook

INE936D07075

Debentures

04-Aug-14

9.75%

02-Aug-24

2000

Simple

CRISIL AAA/Stable

INE936D07067

Debentures

26-Apr-13

8.95%

26-Apr-23

2000

Simple

CRISIL AAA/Stable

INE936D07141

Debentures

29-Aug-17

7.65%

29-Dec-22

275

Simple

CRISIL AAA/Stable

INE936D07158

Debentures

29-Aug-17

7.67%

28-Feb-23

175

Simple

CRISIL AAA/Stable

INE936D07166

Debentures

29-Aug-17

7.7%

29-Jun-23

275

Simple

CRISIL AAA/Stable

INE936D07174

Debentures

29-Sep-21

6.4%

29-Sep-26

4000

Simple

CRISIL AAA/Stable

NA

Debentures#

NA

NA

NA

3000

Simple

CRISIL AAA/Stable

NA

Commercial Paper Programme

NA

NA

7-365 days

4000

Simple

CRISIL A1+

NA

Working Capital facility

NA

NA

NA

35

NA

CRISIL AAA/Stable

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 Non Fund based limits*

NA

NA

NA

317

NA

CRISIL A1+

NA

Proposed Fund-Based Bank Limits

NA

NA

NA

1780

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 Private Limited

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 2022 (History) 2021  2020  2019  Start of 2019
Instrument Type Outstanding Amount Rating Date Rating Date Rating Date Rating Date Rating Rating
Fund Based Facilities LT 1900.0 CRISIL AAA/Stable 22-09-22 CRISIL AAA/Stable 22-09-21 CRISIL AAA/Stable 28-07-20 CRISIL AAA/Stable 28-06-19 CRISIL AAA/Stable CRISIL AAA/Stable
      --   -- 26-07-21 CRISIL AAA/Stable 16-03-20 CRISIL AAA/Stable   -- --
      --   -- 25-06-21 CRISIL AAA/Stable   --   -- --
Non-Fund Based Facilities ST 417.0 CRISIL A1+ 22-09-22 CRISIL A1+ 22-09-21 CRISIL A1+ 28-07-20 CRISIL A1+ 28-06-19 CRISIL A1+ CRISIL A1+
      --   -- 26-07-21 CRISIL A1+ 16-03-20 CRISIL A1+   -- --
      --   -- 25-06-21 CRISIL A1+   --   -- --
Corporate Credit Rating LT 0.0 CCR AAA/Stable 22-09-22 CCR AAA/Stable 22-09-21 CCR AAA/Stable 28-07-20 CCR AAA/Stable 28-06-19 CCR AAA/Stable CCR AAA/Stable
      --   -- 26-07-21 CCR AAA/Stable 16-03-20 CCR AAA/Stable   -- --
      --   -- 25-06-21 CCR AAA/Stable   --   -- --
Commercial Paper ST 4000.0 CRISIL A1+ 22-09-22 CRISIL A1+ 22-09-21 CRISIL A1+ 28-07-20 CRISIL A1+   -- --
      --   -- 26-07-21 CRISIL A1+   --   -- --
      --   -- 25-06-21 CRISIL A1+   --   -- --
Non Convertible Debentures LT 11725.0 CRISIL AAA/Stable 22-09-22 CRISIL AAA/Stable 22-09-21 CRISIL AAA/Stable 28-07-20 CRISIL AAA/Stable 28-06-19 CRISIL AAA/Stable CRISIL AAA/Stable
      --   -- 26-07-21 CRISIL AAA/Stable 16-03-20 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 35 HDFC Bank Limited CRISIL AAA/Stable
Cash Credit / Overdraft facility 50 ICICI Bank Limited CRISIL AAA/Stable
Non-Fund Based Limit 50 HDFC Bank Limited CRISIL A1+
Non-Fund Based Limit 50 ICICI Bank Limited CRISIL A1+
Proposed Fund-Based Bank Limits 1780 Not Applicable CRISIL AAA/Stable
Proposed Non Fund based limits* 317 Not Applicable CRISIL A1+
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

Media Relations
Analytical Contacts
Customer Service Helpdesk

Aveek Datta
Media Relations
CRISIL Limited
M: +91 99204 93912
B: +91 22 3342 3000
AVEEK.DATTA@crisil.com

Prakruti Jani
Media Relations
CRISIL Limited
M: +91 98678 68976
B: +91 22 3342 3000
PRAKRUTI.JANI@crisil.com

Rutuja Gaikwad 
Media Relations
CRISIL Limited
B: +91 22 3342 3000
Rutuja.Gaikwad@ext-crisil.com


Manish Kumar Gupta
Senior Director
CRISIL Ratings Limited
B:+91 124 672 2000
manish.gupta@crisil.com


Naveen Vaidyanathan
Director
CRISIL Ratings Limited
B:+91 22 3342 3000
naveen.vaidyanathan@crisil.com


Vinit Patil
Senior Rating Analyst
CRISIL Ratings Limited
B:+91 22 3342 3000
vinit.patil@crisil.com
Timings: 10.00 am to 7.00 pm
Toll free Number:1800 267 1301

For a copy of Rationales / Rating Reports:
CRISILratingdesk@crisil.com
 
For Analytical queries:
ratingsinvestordesk@crisil.com


 

Note for Media:
This rating rationale is transmitted to you for the sole purpose of dissemination through your newspaper/magazine/agency. The rating rationale may be used by you in full or in part without changing the meaning or context thereof but with due credit to CRISIL Ratings. However, CRISIL Ratings alone has the sole right of distribution (whether directly or indirectly) of its rationales for consideration or otherwise through any media including websites and portals.


About CRISIL Ratings Limited (A subsidiary of CRISIL Limited, an S&P Global Company)

CRISIL Ratings pioneered the concept of credit rating in India in 1987. With a tradition of independence, analytical rigour and innovation, we set the standards in the credit rating business. We rate the entire range of debt instruments, such as bank loans, certificates of deposit, commercial paper, non-convertible/convertible/partially convertible bonds and debentures, perpetual bonds, bank hybrid capital instruments, asset-backed and mortgage-backed securities, partial guarantees and other structured debt instruments. We have rated over 33,000 large and mid-scale corporates and financial institutions. We have also instituted several innovations in India in the rating business, including ratings for municipal bonds, partially guaranteed instruments and infrastructure investment trusts (InvITs).
 
CRISIL Ratings Limited ('CRISIL Ratings') is a wholly-owned subsidiary of CRISIL Limited ('CRISIL'). CRISIL Ratings Limited is registered in India as a credit rating agency with the Securities and Exchange Board of India ("SEBI").
 
For more information, visit www.crisilratings.com 

 



About CRISIL Limited

CRISIL is a leading, agile and innovative global analytics company driven by its mission of making markets function better. 

It is India’s foremost provider of ratings, data, research, analytics and solutions with a strong track record of growth, culture of innovation, and global footprint.

It has delivered independent opinions, actionable insights, and efficient solutions to over 100,000 customers through businesses that operate from India, the US, the UK, Argentina, Poland, China, Hong Kong and Singapore.

It is majority owned by S&P Global Inc, a leading provider of transparent and independent ratings, benchmarks, analytics and data to the capital and commodity markets worldwide.

For more information, visit www.crisil.com

Connect with us: TWITTER | LINKEDIN | YOUTUBE | FACEBOOK


CRISIL PRIVACY NOTICE
 
CRISIL respects your privacy. We may use your contact information, such as your name, address and email id to fulfil your request and service your account and to provide you with additional information from CRISIL. For further information on CRISIL's privacy policy please visit www.crisil.com.



DISCLAIMER

This disclaimer is part of and applies to each credit rating report and/or credit rating rationale ('report') that is provided by CRISIL Ratings Limited ('CRISIL Ratings'). To avoid doubt, the term 'report' includes the information, ratings and other content forming part of the report. The report is intended for the jurisdiction of India only. This report does not constitute an offer of services. Without limiting the generality of the foregoing, nothing in the report is to be construed as CRISIL Ratings providing or intending to provide any services in jurisdictions where CRISIL Ratings does not have the necessary licenses and/or registration to carry out its business activities referred to above. Access or use of this report does not create a client relationship between CRISIL Ratings and the user.

We are not aware that any user intends to rely on the report or of the manner in which a user intends to use the report. In preparing our report we have not taken into consideration the objectives or particular needs of any particular user. It is made abundantly clear that the report is not intended to and does not constitute an investment advice. The report is not an offer to sell or an offer to purchase or subscribe for any investment in any securities, instruments, facilities or solicitation of any kind to enter into any deal or transaction with the entity to which the report pertains. The report should not be the sole or primary basis for any investment decision within the meaning of any law or regulation (including the laws and regulations applicable in the US).

Ratings from CRISIL Ratings are statements of opinion as of the date they are expressed and not statements of fact or recommendations to purchase, hold or sell any securities/instruments or to make any investment decisions. Any opinions expressed here are in good faith, are subject to change without notice, and are only current as of the stated date of their issue. CRISIL Ratings assumes no obligation to update its opinions following publication in any form or format although CRISIL Ratings may disseminate its opinions and analysis. The rating contained in the report is not a substitute for the skill, judgment and experience of the user, its management, employees, advisors and/or clients when making investment or other business decisions. The recipients of the report should rely on their own judgment and take their own professional advice before acting on the report in any way. CRISIL Ratings or its associates may have other commercial transactions with the entity to which the report pertains.

Neither CRISIL Ratings nor its affiliates, third-party providers, as well as their directors, officers, shareholders, employees or agents (collectively, 'CRISIL Ratings Parties') guarantee the accuracy, completeness or adequacy of the report, and no CRISIL Ratings Party shall have any liability for any errors, omissions or interruptions therein, regardless of the cause, or for the results obtained from the use of any part of the report. EACH CRISIL RATINGS PARTY DISCLAIMS ANY AND ALL EXPRESS OR IMPLIED WARRANTIES, INCLUDING BUT NOT LIMITED TO ANY WARRANTIES OF MERCHANTABILITY, SUITABILITY OR FITNESS FOR A PARTICULAR PURPOSE OR USE. In no event shall any CRISIL Ratings Party be liable to any party for any direct, indirect, incidental, exemplary, compensatory, punitive, special or consequential damages, costs, expenses, legal fees or losses (including, without limitation, lost income or lost profits and opportunity costs) in connection with any use of any part of the report even if advised of the possibility of such damages.

CRISIL Ratings may receive compensation for its ratings and certain credit-related analyses, normally from issuers or underwriters of the instruments, facilities, securities or from obligors. Public ratings and analysis by CRISIL Ratings, as are required to be disclosed under the regulations of the Securities and Exchange Board of India (and other applicable regulations, if any), are made available on its website, www.crisilratings.com (free of charge). Reports with more detail and additional information may be available for subscription at a fee - more details about ratings by CRISIL Ratings are available here: www.crisilratings.com.

CRISIL Ratings and its affiliates do not act as a fiduciary. While CRISIL Ratings has obtained information from sources it believes to be reliable, CRISIL Ratings does not perform an audit and undertakes no duty of due diligence or independent verification of any information it receives and/or relies on in its reports. CRISIL Ratings has established policies and procedures to maintain the confidentiality of certain non-public information received in connection with each analytical process. CRISIL Ratings has in place a ratings code of conduct and policies for managing conflict of interest. For details please refer to:
https://www.crisil.com/en/home/our-businesses/ratings/regulatory-disclosures/highlighted-policies.html.

Rating criteria by CRISIL Ratings are generally available without charge to the public on the CRISIL Ratings public website, www.crisilratings.com. For latest rating information on any instrument of any company rated by CRISIL Ratings, you may contact the CRISIL Ratings desk at crisilratingdesk@crisil.com, or at (0091) 1800 267 1301.

This report should not be reproduced or redistributed to any other person or in any form without prior written consent from CRISIL Ratings.

All rights reserved @ CRISIL Ratings Limited. CRISIL Ratings is a wholly owned subsidiary of CRISIL Limited.

 

 

CRISIL Ratings uses the prefix 'PP-MLD' for the ratings of principal-protected market-linked debentures (PPMLD) with effect from November 1, 2011, to comply with the SEBI circular, "Guidelines for Issue and Listing of Structured Products/Market Linked Debentures". The revision in rating symbols for PPMLDs should not be construed as a change in the rating of the subject instrument. For details on CRISIL Ratings' use of 'PP-MLD' please refer to the notes to Rating scale for Debt Instruments and Structured Finance Instruments at the following link: https://www.crisil.com/en/home/our-businesses/ratings/credit-ratings-scale.html