CARE downgrades Jaiprakash Power Ventures term loans

CARE Ratings has downgraded ratings for Jaiprakash Power Ventures Ltd (JPVL)’s  loans used for Nigrie thermal power project (NTPP) from “BB” to “D” due to ongoing delays in debt servicing of credit. The amount of loans involved in this downgrade is Rs 11,885 crore.

The cash flows of the project have weakened as a result of subdued operating performance and the proposal for re-financing and additional financial assistance is under consideration with the lenders, CARE said on Tuesday.

Also, CARE revised the ratings for corporate term loans and cement unit loans of JPVL to ‘D’ due to weak liquidity and large repayment obligations in the near term for which funds are yet to be tied up.

Also, CARE has revised the rating for bank facilities of JPVL in respect of Bina power project to ‘B’ and placed under credit watch on account of binding pact entered with JSW Energy Ltd for sale of the project.  The ratings for bank facilities of Vishnuprayag power project has been revised to ‘B’ due to deterioration in the overall financial risk profile of the company.

The cash flows of the company have weakened due to continued high debt levels, relatively longer time taken and lower than expected realization from the sale of two power assets to the JSW group. The operating performance of the thermal power assets has been subdued, CARE said.

JPVL, a 60.69 per cent subsidiary of Jaiprakash Associates Ltd (rated ‘CARE D’) is engaged in power generation business. Currently has one operational hydro power project of 400 MW (Vishnuprayag in Uttarakhand), and two thermal power projects of having 1,820 MW capacity (500 MW Bina and 1,320 MW Nigrie, Madhya Pradesh).

The rating continues to factor in experienced promoter group having long track record in the power segment.

Going forward, key rating sensitivities will include performance of the various operational projects, timely monetization of assets as envisaged, raising of requisite funds to meet investment and other obligations. The agency would also track aspects like secure adequate fuel supply for the Nigrie TPP and timely implementation of the project under JPVL’s subsidiary Prayagraj Power Generation Ltd (PPGCL).