| JBM Green Energy Systems Private Limited | ||||||||
| Ratings reaffirmed at 'Provisional CRISIL A (CE) / Stable , CRISIL A (CE) / Stable / CRISIL A1 (CE) ' | ||||||||
| Rating Action | ||||||||
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| & A prefix of 'Provisional' indicates that the rating centrally factors in the strength of specific structures, and is contingent upon occurrence of certain steps or execution of certain documents by the issuer, as applicable, without which the rating would either have been different or not assigned ab initio. This is in compliance with a May 6, 2015 directive ‘Standardizing the term, rating symbol, and manner of disclosure with regards to conditional/ provisional/ in-principle ratings assigned by credit rating agencies' by Securities and Exchange Board of India (SEBI) and April 27, 2021 circular ‘Standardizing and Strengthening Policies on Provisional Rating by Credit Rating Agencies (CRAs) for Debt Instruments’ respectively by SEBI. | ||||||||
| 1 crore = 10 million | ||||||||
| Refer to Annexure for Details of Instruments & Bank Facilities |
Detailed Rationale CRISIL Ratings has reaffirmed its’ CRISIL A(CE)/Stable/CRISIL A1(CE)’ ratings on the bank facilities of JBM Green Energy Systems Pvt Ltd (JBM Green). Simultaneously, CRISIL Ratings has also reaffirmed its 'Provisional CRISIL A (CE)/Stable’ rating on the Rs 57 crore proposed bank loan facilities. The ratings are based on the strength of the unconditional and irrevocable corporate guarantee by the company’s parent, JBM Auto Ltd (JAL; rated ‘CRISIL A/Stable/CRISIL A1’). |
Analytical Approach The ratings are based on CRISIL Ratings’ criteria for rating instruments backed by guarantees. The (CE) suffix in the rating reflects the payment structure that is designed to ensure full and time-bound payment to the lenders owing to corporate guarantee by JAL. To arrive at its unsupported rating, CRISIL Ratings has applied its parent notch-up framework to factor in the support from the ultimate parent, JAL |
Key Rating Drivers & Detailed Description Strengths: * Unconditional and irrevocable corporate guarantee by JAL The ratings are based on an unconditional, continuing and irrevocable guarantee from JAL, and an unconditional undertaking by the latter for securing principal and interest obligations on the entire debt of JBM Green. The capital structure of JAL is comfortable, with estimated gearing of 1.42 times as on March 31, 2022, which is expected to improve to below 1 time over the medium term owing to healthy accrual.
The payment structure is designed to ensure full and timely payment to the lender. The guarantor, JAL, will pay any amount due and payable by JBM Green in relation to these instruments no later than 3 calendar days from the stipulated due date, irrespective of the lender bank invoking the guarantee. Also, the central treasury team of JAL will closely monitor the repayments and provide timely support. The guarantee and the undertaking together cover the principal, interest, and other monies payable under the guaranteed bank loan.
* Strong experience of the JBM group The ultimate parent, JAL, which along with being a Tier-I component supplier to auto original equipment manufacturers (OEMs), is also an OEM bus supplier itself (manufacturing buses since fiscal 2017 with current capacity of 1,500 per year). The group plans to increase the same to 6,500 buses per year over the next three years. Additionally, JAL supplied 30 e-buses in August 2019, which are running successfully in Mumbai from the Turbhe Depot under NMMT. It has also supplied 90 e-buses through VT Emobility Pvt Ltd and 150 buses through MH Ecolife under the GCC model. It has dedicated manpower for depot management under its sales team operating at various locations in the country. The parent has the required expertise and capability to manufacture, supply and operate e-buses. JBM Green is a captive unit for assembling battery pack for the electric buses of JBM group.
* Healthy growth prospects for e-buses in India The Government of India is focusing extensively on promoting electric vehicles (EVs) as a cleaner and sustainable form of transportation, with special emphasis on the commercial segment. To support faster adoption of EVs in India, the government has introduced various schemes such as FAME, offering upfront subsidies (to reduce capital costs), exemptions or reductions on road tax, registration tax, subsidised electricity tariffs, among others.
Weakness: * Project implementation risks Commercial operations began in June 2022, however, it remains in the manual mode. The project is currently under automation process. Technicians who were unable to come from China due to Covid-19 induced restrictions have now arrived in India and started the installation process to move operations from manual mode to automation mode. Stabilisation of capacity will remain a key monitorable. |
Liquidity: Strong Liquidity derives comfort from credit enhancement available in the form of an unconditional and irrevocable corporate guarantee by the ultimate parent. JAL is likely to provide financial support in the event of an exigency. JBM Green has also received support in the form of unsecured loans from the ultimate parent, JBM Auto Limited. The ultimate parent also has access to fund-based limit of Rs 886 crore, utilised 64% on average (on fund based sanctioned limits) over the 10 months through May 2022. The outstanding debt of JBM Green in fiscal 2023 is expected to be around Rs 120 crore with outstanding debt of Rs 30 crore (includes loan from parent company) in fiscal 2022. |
Outlook Stable The outlook is based on the 'Stable' outlook on the guarantor's debt instruments. The ratings will remain sensitive to any change in CRISIL Ratings’ rating on JAL |
Rating Sensitivity factors Upward factors:
Downward factors:
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Adequacy of credit enhancement structure The ratings are based upon the strength of an unconditional, continuing and irrevocable guarantee extended by JAL, along with an unconditional undertaking to ensure full and timely payment of all amounts due to the lender.
According to the payment mechanism, the guarantor, JAL, will pay not later than 3 calendar days from the due date any amount due and payable by JBM Green in relation to these instruments in case of any default on, or shortfall in, payment. The guarantee and the undertaking together cover the entire principal, interest, and other monies payable under the guaranteed loan. |
Unsupported ratings CRISIL BBB+ CRISIL Ratings has introduced 'CE' suffix for instruments having an explicit Credit Enhancement feature in compliance with the Securities and Exchange Board of India's circular dated June 13, 2019. |
Key drivers for unsupported ratings For arriving at the unsupported rating, CRISIL Ratings has considered the standalone business and financial risk profiles of JBM Green and has applied its parent notch-up framework to factor in the extent of support available to the company from JAL. The rating factors in low supply risk with long-term arrangement with Chinese manufacturer- Microvast for supply of fuel cells and machinery, established track record of JAL of delivering EV buses and the strategic importance of JBM Green to its parent and ultimate parent, given the synergies to its operations and criticality of the project for the strategy of JAL to focus on its bus manufacturing and operating segment. These are partially offset by susceptibility of the project to demand risk as initially most of the orders would be tender-based and would require the company to bid aggressively. |
Additional disclosures for the provisional rating The 'provisional' rating on the proposed instruments will be converted into a 'final' rating on:
Additional documents, if any, executed for the transaction will also have to be provided. A rating rationale/report indicating conversion of the 'provisional' rating into a 'final' rating will be published on the CRISIL website on receipt of these documents. |
Rating that would have been assigned in the absence of the pending documentation In the absence of pending documentation considered while assigning provisional rating as mentioned above, CRISIL Ratings would have assigned a rating of ‘CRISIL BBB+‘ |
Risks associated with the provisional rating: The 'Provisional' prefix indicates that the rating is contingent on occurrence of certain steps or execution of certain documents by the issuer, as applicable. If the documents received and/or completion of steps deviate significantly from the expectations, CRISIL Ratings may take an appropriate action, including placing the rating on watch or changing the rating/outlook, depending on the status of progress on a case to case basis. In the absence of the pending steps / documentation, the rating on the instrument would not have been assigned ab initio. |
About the Company Incorporated on December 30, 2019, JBM Green is involved in manufacturing, integration, testing and sale of lithium ion-based battery systems. It has implemented Module to pack assembly of lithium batteries from July 2020 and has partially commenced phase II of its operation by moving up the value chain with cell to pack assembly.
The company has set up a greenfield 0.8 Gwh production base for cell to pack assembly at Bawal, Haryana. The estimated project cost is Rs 126.47 crore, which was financed by lease loan and promotor’s contribution. |
About the guarantor Incorporated in 1996, JAL manufactures sheet metal components, assemblies and sub-assemblies, tools, dyes and moulds. JAL is primarily a Tier-1 supplier of key systems and assemblies to the automotive OEM industry and caters to esteemed clients such as Ashok Leyland, Bajaj, Daimler, Fiat Chrysler, Ford, Honda, Hero, JCB, Mahindra, Maruti Suzuki, Renault, Nissan, TATA, Toyota, TVS, Volvo Eicher, and Volkswagen. The group has alliances with more than 15 renowned companies globally, including Arcelor Mittal, Cornaglia, Dassault Systemes, JFE Steel, Ogihara and Solaris Bus & Coach. The structure of JAL enables each business unit to chart its own future and simultaneously leverage synergies across its competencies. The company has 16 manufacturing facilities: 14 for sheet metal components and tooling and 2 for buses and 1 skill development centre. |
Key Financial Indicators
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List of covenants
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Any other information: Not applicable |
Note on complexity levels of the rated instrument: CRISIL Ratings will disclose complexity level for all securities – including those that are yet to be placed - based on available information. The complexity level for instruments may be updated, where required, in the rating rationale published subsequent to the issuance of the instrument when details on such features are available. For more details on the CRISIL Ratings’ complexity levels please visit www.crisil.com/complexity-levels. Users may also call the Customer Service Helpdesk with queries on specific instruments. |
Annexure - Details of Instrument(s)
* - Interchangeable with Non fund based limit |
| Annexure - Rating History for last 3 Years | ||||||||||||||||||||||||||||||||||||||||||||||||||||
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| All amounts are in Rs.Cr. | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| Annexure - Details of Bank Lenders & Facilities | ||||||||||||||||||||||||||||
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This Annexure has been updated on 31-Oct-2022 in line with the lender-wise facility details as on 29-Jul-2022 received from the rated entity
Criteria Details
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