Care puts JSW Energy's bank facilities, NCDs on credit watch with negative implications

Sajjan Jindal-led JSW Energy Ltd (JEL) said on Friday that Care Ratings has put its short- and long-term bank facilities totalling Rs 7,579 crore besides non-convertible debentures worth Rs 1,900 crore on credit watch with negative implications.

This follows the recent announcement of proposed acquisition of thermal power assets of GMR Kamalanga Energy Ltd which owns and operates a 1,050-megawatt thermal power plant in Odisha and approval of JEL's resolution plan submitted for Ind-Barath Energy (Utkal) Ltd by the committee of creditors.

Care said these acquisitions might be largely debt funded. As a result of this, overall gearing ratio of the company at consolidated level might increase significantly from 0.78 times as on March 31.

"Care continues to take a consolidated approach while arriving credit profile of JEL. Further, the credit risk profile of group and associate companies of JEL might be impacted in case of upstreaming of free cashflows or availing of additional debt at group and associate companies level."

However, JEL continues to derive strength from well-established and highly-experienced promoter group having rich experience power industry, long-term firm offtake arrangement of major operational capacity providing favourable medium to long-term revenue visibility, favourable debt coverage indicators and financial risk profile.

But the rating strengths continue to be partially offset by volatility associated with fuel cost, foreign exchange rate and counter-party risk.

"The ability of JEL to maintain envisaged operational parameters amid tepid domestic power sector and any major capital expenditure or large debt-funded acquisition impacting the overall financial risk profile of the company remains key rating sensitivities," said Care.