Mumbai: Ratings agency Care Ratings on Tuesday downgraded the long-term bank facilities of Jaiprakash Power Ventures Ltd of ₹ 656 crore and ₹ 2,272.46 crore to ‘D’ or a default rating from ‘B’. The agency also reaffirmed its ‘D’ rating on long-term bank facilities of ₹ 12,241.53 crore.
Care Ratings also said it has withdrawn Jaiprakash’s ₹ 2,272.46 crore bank facilities pertaining to its Bina thermal power plant from its credit watch.
Instruments with a ‘D’ rating are in default or are expected to be in default soon.
“The revision in the ratings of the bank facilities of Jaiprakash Power Ventures Ltd (JPVL) factors in delays in debt servicing by the company due to its weak liquidity," Care Ratings said.
Debt-laden Jaypee Group has been selling assets to reduce stress in its power business. The company on 18 July approved the sale of its Bina thermal power plant to JSW Energy Ltd for ₹ 2,700 crore, subject to mutually agreed adjustments. Last year, it sold two hydropower projects, Karcham Wangtoo and Baspa, to JSW Energy for about ₹ 9,200 crore.
Care said it has withdrawn the rating assigned to the bank facilities pertaining to Karcham Wangtoo and Baspa hydropower projects consequent to their transfer to a special purpose vehicle, which was sold to JSW Energy.
Jaiprakash Power is a 60.69% subsidiary of Jaiprakash Associates Ltd, which is also rated as ‘CARE D’ by the ratings agency. The power company currently operates the 400 megawatt (MW) Vishnuprayag hydro power project, and two thermal power projects—the 500 MW Bina and the 1,320 MW Nigrie plants.
Jaiprakash Power is also in the power transmission business through its 74% subsidiary Jaypee Powergrid Ltd, which has set up a 214-km transmission line. Another subsidiary Prayagraj Power Generation Ltd has the 1,980 MW thermal power project in Bara, Uttar Pradesh, of which 660 MW capacity is operational and the rest is under implementation. Jaiprakash Power also commissioned a 2 MTPA cement grinding unit at Nigrie in June 2015.
Jaiprakash Power reported a standalone net loss of ₹ 196.16 crore in the first quarter ended 30 June, against a ₹ 66.96 crore net profit a year ago. Standalone net sales in the first quarter fell 37.8% to ₹ 750.41 crore from ₹ 1,207.40 crore a year earlier.
Restricted operations of the Nigrie super thermal plant, higher costs at the Amelia coal mine and cheaper merchant power hurt the company. Lower demand depressed power generation at the Bina thermal plant, Jaiprakash Power said in a statement last week.
As on 31 March, Jaiprakash Power had a debt of about ₹ 22,414.94 crore.