Care places JEL's commercial papers on credit watch with negative implications

Care has placed the ratings of commercial paper issue of JSW Energy Ltd (JEL), JSW Energy (Barmer) Ltd and JSW Hydro Energy Ltd on credit watch with negative implications following recent announcement of proposed acquisition of thermal power assets of GMR Kamalanga Energy Ltd (GKEL).

GKEL owns and operates a 1,050 megawatt thermal power plant in Odisha. Care said the downgrade factors in pending approval of JEL's resolution plan submitted for Ind-Barath Energy (Utkal) Ltd by the committee of creditors.

The closure of transaction is subject to the receipt of necessary regulatory approvals and clearances from respective competent authorities.

In light of these events, Care said it is engaging with management to understand its implications on overall financial risk profile of the company and its group and associate companies.

"As per the initial discussion with management, Care understands that these acquisitions may 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," it said.

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

Care added that it will monitor closely and evaluate the impact of these developments on the credit quality of JEL and its group and associate companies. It will take a view on the rating when exact implications are clear.

Incorporated in 1994, JEL is a part of the JSW Group headed by Sajjan Jindal. The JSW group has presence in various sectors like steel, power, cement and infrastructure.

JEL is the holding company for JSW Group's power business having consolidated operational capacity of 4.5 gigawatt as of March 31. The company also provides operation and maintenance services for power plants of the group companies and project management services for the power plants being set up by the group.

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