Detailed Rationale

Crisil Ratings has placed its rating on the long-term bank facilities of Jaiprakash Power Ventures Ltd (JPVL) on ‘Rating Watch with Negative Implications’.

 

The rating action follows the announcement by JPVL on February 27, 2026, that an application has been filed before the National Company Law Tribunal (NCLT) under the provisions of Section 7 of the Insolvency and Bankruptcy Code (IBC), 2016, against JPVL by the National Asset Restructuring Company Ltd (NARCL), alleging a default of ~Rs 512 crore plus interest and other charges, in relation to the corporate guarantee extended to Jaiprakash Associates Ltd (JAL), which is presently under IBC.

 

As per discussions with JPVL, the insolvency application has been filed before the NCLT and the same is yet to be admitted. Hearing before the NCLT will happen after replies are filed by both JPVL and NARCL. The disputed amount pertains to the corporate guarantee extended by JPVL to JAL’s external commercial borrowings (ECBs) from the State Bank of India (SBI), which was required to be released by the SBI as per the framework agreement signed in April 2019 as one of the conditions of the restructuring plan of JPVL, which was implemented. SBI had sent a Demand cum Recall Notice pertaining to the same in December 2023 and took the matter to the Debt Recovery Tribunal (DRT), New Delhi. The company has represented its stand in the DRT and the matter is still sub-judice. 

 

Crisil Ratings has taken note of this development and will continue to monitor the progress in the matter. The rating will be removed from watch and a final rating action will be taken once Crisil Ratings has more clarity on the admission of the application by NCLT or any adverse impact on JPVL.

 

The rating continues to factor in the sustained healthy performance of the company on the back of strong plant load factors (PLFs) recorded across its thermal plants in fiscal 2025 and the first half of fiscal 2026, leading to robust liquidity. The rating continues to consider the business risk profile, driven by healthy sales and fuel availability for majority of the capacity and established track record of operations. These strengths are partially offset by tie-up of only 56% of the capacity with long-term power purchase agreements (PPAs), average financial risk profile as indicated by sizeable capital expenditure (capex) to be incurred over the medium term, and exposure of cash flow to weak financial risk profiles of counterparties.

 

Crisil Ratings has taken note of the initiation of Corporate Insolvency Resolution Process (CIRP) of JAL on June 3, 2024, which is the promoter entity of JPVL and holds 24% stake in the company. Furthermore, majority of the lenders are common across JAL and JPVL. While the CIRP of JAL is not expected to have any material impact on the cash flow of JPVL, Crisil Ratings will continue to monitor the situation closely.

 

Crisil Ratings also notes the various show cause and demand notices amounting to Rs 7,167 crore issued by the Department of Mines and Geology (DMG) alleging illegal extraction, storing, transportation and selling of sand. The High Court of Andhra Pradesh has given an interim stay on Rs 2,147 crore and for the balance amount, the company has filed its reply with DMG. The issue is currently evolving and will be a key rating sensitivity factor.

 

Additionally, Crisil Ratings has taken note of the arrest of Manoj Gaur, non-executive chairman of the company, by the Enforcement Directorate (ED) under certain provisions of the Prevention of Money Laundering Act 2002, pertaining to Jaypee Infratech Ltd and JAL. Since the arrest, there has not been any material impact on the operational performance of JPVL. Nevertheless, Crisil Ratings will continue to monitor the situation for any possible business/ financial impact on JPVL.

 

Furthermore, when JPVL’s debt was restructured back in 2019, a ‘Right to Recompense’ clause was included in the facility agreement which mentions that if the profitability and cash flow of the company improves, the lenders shall have the right to receive recompense for the haircut taken on debt. While the lenders have proposed a significant amount for the recompense, discussions are ongoing between the lenders and the company regarding the issue and any cash outflow pertaining to this remains a key monitorable.

Analytical Approach

Crisil Ratings has taken a consolidated approach to arrive at the rating.

Please refer Annexure - List of Entities Consolidated, which captures the list of entities considered and their analytical treatment of consolidation.

Key Rating Drivers - Strengths

Adequate sale tie-up and fuel availability for majority of capacity

The 400 megawatt (MW) hydro plant at Vishnuprayag in Uttarakhand has a long-term PPA for its entire capacity with Uttar Pradesh and the plant has historically demonstrated consistent recovery of capacity charges.

 

Furthermore, the Bina thermal power plant (installed capacity 500 MW) has long-term PPAs, valid for 25 years, covering 70% of the capacity with MP Power Management Company Ltd (MPPMCL). The fuel supply agreement of 1.5 million tonne per annum (MTPA) for the plant is in place. This caters to around 68% of the plant requirement, while the balance is met through e-auctions. Despite a relatively higher PPA, the plant falls a bit towards the end in merit order due to its distance from the mines, leading to high fuel costs.

 

The Nigrie thermal plant (installed capacity 1,320 MW) has long-term PPAs, valid for 20 years, covering 37.5% of the capacity (495 MW) with MPPMCL. For fuel security, the company has captive Amelia coal mine in Madhya Pradesh on reverse bidding of Rs 712 per tonne. The mine caters to 3.92 MTPA of the 5.7 MTPA fuel requirement; the balance is met through e-auctions. Furthermore, the Nigrie plant is in the coal belt and sources most of its coal requirement from the captive mine, therefore, procurement cost is much lower than Bina, and hence, it is more competitive for supply in merchant markets.

 

That said, JPVL has a diverse portfolio of thermal and hydro power plants along with cost plus PPAs for around 56% of the capacity. This is also supported by proximity of its thermal power plants to coal mines. Nevertheless, the ability to enter new PPAs at remunerative tariffs would remain monitorable.

 

Established track record of operations

The Vishnuprayag plant has consistently demonstrated plant availability factor (PAF) of over 99%, well over normative levels, for the past five fiscals ensuring full recovery of costs. The Nigrie thermal plant also reported a PAF of 90% for fiscal 2025 (93% in fiscal 2024) while PLFs were healthy at 81% (85% in the previous fiscal) despite lower quantum of PPAs for the plant. Also, the Bina plant has reported a PAF of 83% for fiscal 2025 (90% in the previous fiscal). The PAF for all three plants is expected to remain above normative levels going forward.

Key Rating Drivers - Weaknesses

Average financial risk profile, as indicated by sizeable capital expenditure (capex) to be incurred over the medium term with significant contingent liabilities

After restructuring of debt in April 2019, total debt reduced to Rs 4,870 crore (includes long-term debt of Rs 4,361 crore) as on December 31, 2022, from Rs 11,149 crore (including working capital) as on March 31, 2019. As on March 31, 2025, total debt was Rs 3,755 crore (term loan and fund-based working capital limit). This has contributed to JPVL’s outstanding debt reducing to Rs 1.7 crore per MW, which is one of the lowest in its peer group. However, JPVL plans to undertake capex of around Rs 750 crore over the medium term, for which the company might not go for any debt tie-up and utilise its free cash reserve. The ability of the company to arrange funding from internal sources will be monitorable. Furthermore, there are certain contingent liabilities, given various show cause and demand notices (amounting to Rs 7,167 crore) issued by the DMG alleging illegal extraction, storing, transportation and selling of sand. The High Court of Andhra Pradesh has given an interim stay on Rs 2,147 crore and for the balance amount, the company has filed its reply with DMG. Furthermore, a ‘Right to Recompense’ clause is present in the framework agreement signed in 2019, discussions pertaining to which are still ongoing. Both the issues are currently evolving and will be key rating sensitivity factors. The rating draws strength from a debt service reserve account (DSRA) equivalent to three months of debt servicing in the form of cash worth Rs 210 crore and cash of Rs 1,927 crore as on September 30, 2025.

 

Exposure of cash flow to weak financial risk profiles of counterparties

Exposure to receivables collection risk persists given the weak credit risk profiles of key consumers, who are primarily state distribution companies (discoms). The Nigrie and Bina plants have PPAs with MPPMCL and Vishnuprayag with Uttar Pradesh. While overall receivables have reduced to 56 days as on March 31, 2025 from 64 days as on March 31, 2024, exposure continues to be around Rs 1,000 levels with a sizeable chunk of disputed receivables. Any further build-up of receivables or delayed collections from counterparties, resulting in weakening of the credit risk profile will be key a rating sensitivity factor.

 

Vulnerability to merchant markets to the extent of untied capacity

The company has demonstrated its ability to sell the untied capacity at healthy margins in short-term markets in the past due to low cost of generation at its Nigrie plant due to the proximity of the plant to coal mines, and the ability to capture healthy peak rates. Given that 44% of overall capacity is untied as of date, JPVL remains exposed to volatility in volume and margin in short-term markets, which depends on various factors such as peak power deficit, coal prices and its availability. The ability to tap into short-term markets at healthy volume and margin remains monitorable.

 

Filing of application in NCLT against JPVL; CIRP ongoing for JAL

Pursuant to the petition filed by ICICI Bank Ltd under the Insolvency and Bankruptcy Code, 2016, NCLT has admitted JAL into CIRP, through its order dated June 3, 2024. JAL is the promoter entity of JPVL and holds 24% stake in the latter. Furthermore, Crisil Ratings also notes that JPVL had extended a corporate guarantee (CG) to JAL’s ECBs from SBI (which is now converted to rupee term loan).

 

This debt was transferred to NARCL, which has filed an application before the NCLT against JPVL, alleging a default of ~Rs 512 crore plus interest and other charges, in relation to the CG. As per discussions with JPVL, the application is yet to be admitted. SBI had sent a Demand cum Recall Notice pertaining to the same in December 2023 and took the matter to DRT. The company has represented its stand in the DRT and the matter is still sub-judice. The admission of application by NCLT or any potential cash outflow arising from the crystallisation of the CG could have a bearing on the liquidity of JPVL and would be a key rating sensitivity factor.

Liquidity Adequate

JPVL maintains a DSRA equivalent to three months of debt servicing (~Rs 210 crore) and had a cash reserve of Rs 1,927 crore as on September 30, 2025. Annual net cash accrual is expected to be healthy on the back of strong merchant market rates, sufficient to fund the debt obligation and capex over the next few fiscals. Liquidity is also aided by the presence of trust and retention accounts, which ensure that surplus cash gets trapped in the system and is used for debt servicing or for meeting operational requirements as permitted by lenders. The company has pre-paid its entire debt obligation till September 30, 2026.

Rating sensitivity factors

Upward factors

• Dismissal of application filed by NARCL in NCLT pertaining to the CG extended for debt of JAL
• Sustainable improvement in the business risk profile, most likely with a further tie up of capacity under medium- to long-term PPAs (currently 56% of capacity is tied-up) leading to improvement in the financial risk profile
• Faster-than-scheduled debt reduction leading to significant improvement in the financial risk profile
• Resolution of demand notices pertaining to sand mining or right to recompense clause with the lenders, without any material cash outflow

 

Downward factors

• Admission of application filed by NARCL in NCLT or any adverse impact on JPVL due to any possible cash-outflow
• Weakening operating performance with PAF remaining below normative levels (PAF<85%) or lower realisations from merchant market impacting operating cash flow
• Delays in receipt of payments from counterparties resulting in cash flow mismatch
• Any material obligation arising because of restructuring at the parent/group company
• Any obligation arising because of demand notices pertaining to sand mining or right to recompense clause with the lenders

About the Company

JPVL, incorporated in 1994, is promoted by JAL and operates 2,220 MW of power capacity divided amongst three plants -- 500 MW at Bina thermal power plant, 1,320 MW at Nigrie thermal power plant and 400 MW at Vishnuprayag hydro power plant.

Key Financial Indicators (consolidated)*

As on / for the period ended March 31		2025	2024
Operating income	Rs crore	5,467	6,777
PAT	Rs crore	814	1,022
PAT margin	%	14.9	15.1
Adjusted debt/adjusted networth	Times	0.31	0.38
Adjusted Interest coverage	Times	5.15	5.10

* As per analytical adjustment by Crisil Ratings

Any other information: Not applicable