Detailed Rationale

Crisil Ratings has reaffirmed the ratings on the bank loan facilities of Jakson Green Private Limited (JGPL) at 'Crisil A+/Stable/Crisil A1‘.

 

The ratings continue to reflect the strong operational and financial support of the parent (Jakson Limited; JL; Crisil AA-/Stable/Crisil A1+), established track record of promoters and its healthy order book, geographically diversified revenue profile and comfortable financial risk profile. These strengths are partially offset by presence in the competitive EPC segment and moderate working capital operations.

Analytical Approach

For arriving at the ratings, Crisil rating consolidates subsidiaries of JGPL (Jakson Green renewable Services Private Limited, Jakson green Infinity Private Limited, Jakson green International LLC – FZ - Dubai, JGPL Solar LLC -Uzbekistan, JGPL RVNL EPC Private Limited). Crisil Ratings has applied its parent notch-up framework to factor in the extent of support available to JGPL and its subsidiaries from its parent and part debt has been guaranteed by JL.

Key Rating Drivers & Detailed Description

Strengths:

• Strong operational and financial support of the parent: The business risk profile of JGPL is supported by strong operational and financial support from its parent, JL. Jakson Group has established market position in rural and urban electrification EPC business, substations and transmission projects, and metro rail electrification, among other segments and has provided managerial support to its subsidiary. JL has also provided funding support to JGPL by providing corporate guarantee for its part debt. JL has a strong financial profile with networth expected over Rs. 1,300 crores as on March 31, 2025, with gearing expected below 0.5 times over the medium term. The business profile of JL is also healthy driven by a large scale of operations with revenue of around expected over Rs. 6000-6200 crore in fiscal 2025. The business profile of JGPL will continue to be supported by its parent JL.

 

• Established track record of promoters and healthy order book: The parent has had a track record of almost a decade in the EPC industry and this experience of the management in the industry will help in increasing its footprint and focus on sustainable growth in the renewable energy sector. As evident, company able to add large numbers of new orders under renewable segments both domestic and export. This will also result in its scale of operations increasing healthily to Rs. 2000-2200 crores in fiscal 2025 and with stable growth of 15-20% in fiscal 2026. Furthermore, in the renewable segment have low gestation period leading and better profitability. The subsidiary gets eligibility for bidding for the orders as the parent has the eligibility to bid for the big orders and JGPL will continue to benefit from track record of operations reflected from healthy outstanding order book of more than Rs. 8000 crores (as on October 31, 2024 inclusive of Solar EPC, Solar Independent power producer etc.,). Crisil believes healthy order books provide revenue visibility over the medium term.
   
• Geographically diversified revenue profile: The company caters to wide number of clients in India and has presence in multiple states like Rajasthan, UP, Tamil Nadu, Maharashtra etc etc. The group also has taken international orders in Saudi Arabia, Dubai, Abu Dhabi, Uzbekistan, Mali, and Togo and the company only takes international orders after evaluating all political and counterparty risks. With healthy order execution of international order margins are also expected to improve. Crisil Believes, successful bidding for orders and their execution, thereafter, leading to an improved business risk profile, will be key monitorable.

 

• Comfortable financial risk profile: The capital structure is aided by lower reliance on external debt, as reflected in low gearing of 0.2-0.3 time and moderate networth estimated to be around 140-160 crores in fiscal 2025. The capital structure of the group remains leveraged with total outside liabilities to tangible networth (TOL/TNW) ratio of 4-4.5 times largely due to advance from customers which are non-interest bearing (excluding leverage will be 2.5-3 times) as of Mar 31, 2025. The debt protection metrics remain comfortable with Interest coverage and net cash accrual to total debt ratios stood estimated at 16-18 times and 2.1-2.2 times, respectively, in fiscal 2025. Going forward, sustenance of financial risk profile though steady accretion to reserves and absence of sizeable capex plan will remain a key monitorable.

 

Weaknesses:

• Presence in competitive EPC segment: The company remains exposed to intense competition in the solar EPC business, which has low entry barriers. However, the company profile remains secure as they ensure that the project site availability and impletion is within timeframe and factors in contingencies and cost overrun in their pricing.  The operating margin is expected at 5.5-6% over the medium term, and the ability to maintain profitability margin through operating efficiency will remain critical.

 

• Moderate working capital operations: Gross current assets (GCAs) were high at 121 days as on March 31, 2024, and going forward as well expected to remain within range of 110-120 days as of March 2025. The company needs to extend the long credit period to its customers, in line with industry standards. However, as its customers are reputable corporates, the counterparty credit risk remains low. The company also holds moderate work-in-process and inventory of solar modules. Further stretch in the GCAs, impacting the overall cycle and leverage ratio to fund working capital, will be monitorable.

Liquidity: Strong

Cash accruals are expected to be over Rs. 70-80 crore which is sufficient against nil term debt obligation over the medium term. In addition, company is having working capital limit of Rs. 35 crores, which remained low utilised, it will act as a cushion to the liquidity of the company. The current ratio is estimated to be around 1.02 times on March 31, 2024. The liquidity profile is also supported by its parent, JL, who has provided a corporate guarantee for part facilities, and unsecured loans and/or equity could be infused if required in the future.

Outlook: Stable

JGPL will continue to benefit from the extensive experience of its promoters and its healthy order book, which provides revenue visibility over the medium term.

Rating sensitivity factors

Upward factors:

• Improvement in the parent's overall credit risk profile.
• Sustained growth in revenue with operating margins of more than 5-6% leading to higher-than-expected cash accruals.

 

Downward factors:

• Weakening in the parent’s overall credit risk profile.
• Lower than expected operating performance with operating margins below 2-3% leading to lower than expected cash accruals.

About the Company

JGPL was incorporated in June 2022, is a 66% subsidiary of Jakson Limited (JL, rated at Crisil AA-/Stable/Crisil A1+). JGPL will be engaged in the EPC business in renewable segment. It is currently executing the projects undertaken by JL and also bidding for new projects under its name.

 

Incorporated in 1997, JL is a part of the Jakson group which has been operating since 1945. The group was promoted by Mr Satish Kumar Gupta. It is currently managed and run by his two sons, Mr Sameer Gupta and Mr Sandeep Gupta. JL manufactures diesel engines and is an authorised supplier of gensets for Cummins in India. In 2016, JL further diversified into the EPC business and entered government contracts for rural and urban electrification and gradually expanded into solar EPC, substations and transmission projects, and Metro rail electrification, among other businesses. The company has its corporate office in Noida, Uttar Pradesh and two manufacturing units in Pune, Maharashtra, and Kalsar, Gujarat. The subsidiary, JIPL, is in a similar line of business for the overseas market.

 

Jakson Green renewable Services Private Limited was incorporated in fiscal 2018-19 and is undertaking operation and maintained projects.

 

Jakson Green Infinity Private Limited was incorporated in fiscal 2024 and is undertaking operation and maintained projects.

 

Jakson green International LLC – FZ, Dubai Limited was incorporated in fiscal 2023 and is undertaking projects located in Dubai.

 

JGPL Solar LLC, Uzbekistan was incorporated in fiscal 2024 and is undertaking projects located in Uzbekistan.

 

JGPL RVNL EPC Private Limited was incorporated in fiscal 2024 and is engaged in the EPC business in renewable segment. It is currently executing the projects undertaken by JGPL.

Any other information: Not Applicable