Jamnagar Utilities and Power Private Limited
Rating Action
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:
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).
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:
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
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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)
*Includes interest income earned from investments undertaken |
Any other information: Not applicable |
Note on complexity levels of the rated instrument: |
Annexure - Details of Instrument(s)
#Yet to be placed *Fully interchangeable with proposed fund-based limit |
Annexure – List of entities consolidated
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| Annexure - Rating History for last 3 Years | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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| 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 |
Criteria Details
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