JAYPEE VENTURES PVT.

LIMITED

Long-term Bank Facilities CARE A-

Rating Operate & Transfer (BOOT)], security and medical

services support at all Jaypee group companies’ site
CARE has retained the ‘CARE A-’ [Single A Minus] rating
offices and dividend.
to the outstanding Long-term Bank Facilities of Jaypee
Ventures Pvt. Ltd (JVL) aggregating Rs.121.88 cr. Operations
Facilities with this rating are considered to offer
adequate safety for timely servicing of debt obligations. JVL has grown over the years backed by Jaiprakash
Such facilities carry low credit risk. CARE assigns ‘+’ or Associate Ltd. (JAL)’s increasing order book for projects
‘-’ signs to be shown after the assigned rating (wherever to which it provides consultancy services. Over the
necessary) to indicate the relative position within the years, JVL has undertaken design and engineering
band covered by the rating symbol. consultancy assignments for various hydro electric
projects viz Sardar Sarovar, Baspa-II Chamera II, Indira
The rating continues to draw comfort from JVL’s long
Sagar hydro-Nathpa Jhakri, Tehri, Dul-Hasti, Vishnuprayag,
track record, proven project designing and consultancy
Omkareshwar, Baglihar and Tala. The company has also
capability, healthy profitability & overall financial position
completed technical design & engineering consultancy
and moderate outlook for the power & construction
assignment of cement plant at Himachal Pradesh with
segment in the country.
installed capacity of 3 mn tonne p.a.
The rating is however constrained by concentration of
clientele within group companies, high inter-group Besides, the company’s various ongoing projects
transactions and foray into unrelated areas like real including Srisailam, Ganga Expressway, Taj
estate. Expressway, Karcham Wangtoo (Hydro electric project)
etc provide clear revenue visibility over 3-5 years.
Background
JVL had entered into sublease agreement with Jaypee
JVL, promoted in 1992 by the Jaypee Group, is engaged
Infratech Ltd. (JIL) a group company which is a Special
mainly in engineering consultancy. It is a closely-held
Purpose Vehicle (SPV) implementing Taj Expressway
company. The company’s senior management team
project, for 180 acres land at Sec 28, Noida, U.P. In FY08,
comprises well-qualified and experienced members. The
JVL entered into a development agreement with JAL for
top management of JVL has long association with the
construction, development, selling & marketing of the said
Jaypee group, with considerable experience in handling
180 acres of land. As per the terms of the development
hydropower and irrigation projects.
agreement JVL is entitled to 30% of the total built-up area/
JVL is mainly engaged in providing consultancy services plots of land after completion of the project.
including project studies, preparation of detailed project
reports, market surveys, project planning, design and Financial performance:
detailed engineering in various sectors like hydropower,
Total income of JVL has increased by 11.4% in FY08 as
irrigation, water supply and waste water treatment. JVL’s
compared to FY07 on account of increase of consultancy
design facilities are at Sahibabad, Ghaziabad, U.P. It is
receipt from various hydel projects of group companies
equipped with software tools for civil, electromechanical
viz Vishnuprayag, Karcham Wangtoo, Srisailam, etc and
and hydro mechanical planning, designing etc.
increase in dividend income. The company’s operating
The company has a division which provides security and expenses are primarily in the form of employee cost and
medical services support at all Jaypee group companies’ other maintenance and administrative expenses. On
site offices. Besides, JVL acts as the holding company account of increase in salary & administrative expenses,
for some of the Jaypee group companies. JVL’s income PBILDT margin declined by 11.71% in FY08 as
profile comprises income from consultancy assignments compared to FY07. In line with decrease in PBILDT
[for Jaypee group’s projects under Engineering, margin, PAT margin declined by 10.9% in FY08 as
Procurement & Construction (EPC) or Build, Own, compared to FY07.

CREDIT ANALYSIS & RESEARCH LIMITED 1

JVL does not require any working capital loans since the Financial Results:
consultancy assignments are financed through advances (Rs. crore)
from clients. Due to the nature of the business, capital Year ended / As on, Mar 31 2006 2007 2008
investment is also not too high. The sound solvency
position is reflected by low overall gearing and high interest Working results
Total Operating Income 76.98 100.74 112.22
coverage over the past years. However, gearing level
PBILDT 39.45 64.88 59.13
increased at end of FY08 due to increase in loan to fund
Interest 2.77 2.95 11.53
long-term investment in subsidiary/associate companies.
Depreciation 3.00 3.07 2.30
The current ratio of JVL has been low primarily due to PAT 27.99 47.69 40.74
negative working capital due to the nature of the business Net Cash Accruals 31.35 38.20 15.08
involving financing operations through client advances. Financial position
JVL is able to realise its debtors in 34 days and creditor Equity Share Capital 3.72 3.72 3.72
days are nearly 38 days. Current liabilities have increased Tangible Networth 254.78 297.97 313.56
sharply as on March 31, 2008 as compared to March 31, Total Capital Employed 285.31 338.82 489.64
2007 due to increase in security deposits aggregating
Key ratios
Rs.751.24 cr taken from JAL towards land development,
which will be adjusted against the value of 30% developed Growth
land at the end of the project period. Further the company Growth in Total Income (%) 65.15 30.86 11.40
has also received advances aggregating Rs.23.51 cr Growth in PAT [after D.Tax] (%) 107.76 70.40 (14.58)
towards work consultancy/technical work for ongoing Profitability (%)
projects. These factors led to an even lower current ratio PBILDT/Total Operating Income (%) 51.25 64.40 52.69
as on March 31, 2008. PAT / Total Income (%) 36.36 45.99 35.08
ROCE (%) (Total) 12.96 19.81 13.72
As per un-audited results for nine-month period ended Solvency ratio (times)
December 31, 2008, JVL reported PBILDT & PAT margin Long Term Debt Equity Ratio 0.12 0.17 0.56
of 45.58% & 31.58%, respectively, on total operating Overall Gearing Ratio 0.12 0.17 0.56
income of Rs.130.53 cr. Interest Coverage 13.18 15.00 4.93
Total term Debt / Gross Cash Accruals 0.72 1.40 32.64
Industry:
Liquidity ratios(times)
The Jaypee Group has strong project implementation track Current Ratio 0.40 0.81 0.39
record as a hydroelectric construction company. Till 1991, Turnover (days)
hydro power was a government-controlled sector, with Average Collection Period (Days) 24 23 34
government bodies like the Central Water Commission Average Creditors (days) 45 19 38
(CWC) and National Hydro Power Corporation (NHPC)
providing the design for hydropower projects. Since 1991,
private participation in hydro power projects including ‘Power for All by 2012’ and has undertaken multiple
Independent Power Producer (IPP) was permitted thereby reforms to make the power sector more attractive to
bringing the concept of development of hydro power private sector investment. The estimated hydro potential
projects on EPC, BOOT basis. in the country is 1,50,000 MW out of which only 47,247
MW has been harnessed (including the projects under
The Government of India has identified the power sector construction). With increasing emphasis being laid on
as a key sector of focus to promote sustained industrial setting up hydel capacity and thrust upon infrastructure
growth. It has embarked on an aggressive mission – development, the industry outlook remains positive.

August 2009

Disclaimer
CARE’s ratings are opinions on credit quality and are not recommendations to sanction, renew, disburse or recall the concerned bank
facilities or to buy, sell or hold any security. CARE has based its ratings on information obtained from sources believed by it to be
accurate and reliable. CARE does not, however, guarantee the accuracy, adequacy or completeness of any information and is not
responsible for any errors or omissions or for the results obtained from the use of such information. Most entities whose bank
facilities/instruments are rated by CARE have paid a credit rating fee, based on the amount and type of bank facilities/instruments.

2 CAREVIEW
CARE is headquartered in Mumbai, with Offices all over India. The office addresses and contact numbers are given below:

HEAD OFFICE: MUMBAI

Mr. D.R. Dogra Mr. Rajesh Mokashi
Managing Director Dy. Managing Director
Cell : +91-98204 16002 Cell : +91-98204 16001
E-mail : [email protected] E-mail: [email protected]

Mr. Ankur Sachdeva

Head - Business Development
Cell : +91-9819698985
E-mail: [email protected]

4th Floor, Godrej Coliseum, Somaiya Hospital Road, Off Eastern Express Highway,
Sion (East), Mumbai 400 022 Tel.: (022) 67543456 Fax: (022) 67543457
Website: www.careratings.com

OFFICES

Mr.Mehul Pandya Mr.Sundara Vathanan

Regional Manager Regional Manager
32 TITANIUM No.G1, Canopy Royal Manor,
Prahaladnagar Corporate Road, Near Manipal Hospital,
Satellite, Rustombagh, Off Airport Road,
Ahmedabad - 380 015. Bangalore - 560 017.
Tel - 079 4026 5656 Tel - 080 2520 5575
Mobile - 98242 56265 Mobile - 98803 60878
E-mail: [email protected] E-mail: [email protected]

Mr.Ashwini Jani Mr. Rahul Patni

Regional Manager Regional Manager
Unit No. O-509/C, Spencer Plaza, 401, Ashoka Scintilla
5th Floor, No. 769, 3-6-520, Himayat Nagar
Anna Salai, Hyderabad - 500 029
Chennai 600 002 Tel - 040 4010 2030
Tel: 044 2849 7812/2849 0811 Mobile - 91600 04563
Mobile - 91766 47599 E-mail: [email protected]
E-mail :[email protected]

Mr. Sukanta Nag Ms. Swati Agrawal

Regional Manager Regional Manager
3rd Floor, Prasad Chambers 710 Surya Kiran,
(Shagun Mall Building) 19 K.G. Road,
10A, Shakespeare Sarani New Delhi - 110 001.
Kolkata - 700 071. Tel - 011 2331 8701/2371 6199
Tel - 033 2283 1800/1803 Mobile - 98117 45677
Mobile - 98311 70075 E-mail :[email protected]
E- mail: [email protected]

CREDIT ANALYSIS & RESEARCH LIMITED 1