The ratings continue to reflect the established business profile of the company in the oil rigs and drilling business on account of the longstanding relationships it has with upstream companies in India’s oil and gas space and healthy financial risk profile, driven by low gearing, strong liquidity and adequate debt protection metrics.
The ratings also factor in support that JDIL receives as part of the DP Jindal group. These strengths are partially offset by high exposure to group companies, as well as the susceptibility of charter rates (at the time of signing of contracts) to crude oil prices, which are inherently volatile.
For arriving at its ratings, CRISIL Ratings has considered the standalone financials of JDIL. In the case of Virtue Drilling Pte ltd (VDPL) and Discovery Drilling Pte Ltd (DDPL), CRISIL Ratings has followed the moderate consolidation approach to account for the support extended to these entities.
Also, CRISIL Ratings has centrally factored in strong business and financial linkages with the DP Jindal group as JDIL is strategically important to the group.