CARE has placed the ratings on Long-Term Bank facilities, Short-Term Bank facilities and Non-Convertible Debentures of JSW Energy (JEL), JSW Energy (Barmer) , JSW Hydro Energy, Jaigad Power Transco, Barmer Lignite Mining Company and JSW Power Trading Company on 'Credit watch with negative implications'.
The ratings revision is on account of recent announcement of proposed acquisition of thermal power assets of GMR Kamalanga Energy (GKEL, rated CARE D) which owns and operates a 1,050 MW thermal power plant in Odisha and approval of JEL's resolution plan submitted for Ind-Barath Energy (Utkal) (IEUL, rated CARE D; Issuer Not Cooperating) by the Committee of Creditors.
CARE in light of the above events is engaging with management to understand its implications on overall financial risk profile of the company and its group/associate companies. As per the initial discussion with the management, CARE understands that 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 31 March 2019.
CARE continues to take consolidated approach while arriving credit profile of JEL. Further, the credit risk profile of group/associate companies of JEL might be impacted in case of upstreaming of free cashflows or availing of additional debt at group/associate companies level.
CARE would be monitoring closely and evaluate the impact of the above developments on the credit quality of JEL and its group/associate companies and would take a view on the rating when the exact implications of the above are clear.
The ratings on Commercial Papers of JSW Energy, JSW Energy (Barmer) and JSW Hydro Energy have been reaffirmed at 'CARE A1+'.
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