­Strategically important entity for Government of Tamil Nadu
Tamilnadu Transmission Corporation limited (TANTRANSCO) incorporated in 2010 is an electric power transmission system operator in Tamil Nadu state. TANTRANSCO serves transmission infrastructure network for power companies in Tamil Nadu. As per requirement of the Electricity Act 2003, Tamil Nadu electricity board (TNEB) was restructured into two companies namely TANGEDCO (Tamil Nadu generation and Distribution Company) and TANTRANSCO. Final transfer scheme of restructuring was completed in the year 2015 by bifurcation of assets and liabilities between both the entities. TNEB continued to be holding company of TANGEDCO and TANTRANSCO, which is ultimately held by Government of Tamil Nadu. TANTRANSCO maintains the entire substations above 66Kv capacity. TANTRANSCO is the sole power transmission company in Tamil Nadu and is a 100 percent government owned entity. The GoTN provides capital investment, grants and guarantees for loans. Acuité believes that TANTRANSCO, being a 100 per cent undertaking of GoTN, shall continue to benefit from the financial, operational and management support from time to time.

Strong growth in revenue due to revision in tariff rates:
TANTRANSCO registered revenue of Rs.6911.77 Cr. in FY2025 (Prov.) posting a growth of ~14 percent on FY2025 revenue of Rs.5983.24 Cr. This growth in revenue is attributable to the hike in tariff rates during the year. The tariff rate was increased by 4 percent in FY2025 to Rs.5580 per MW per month. During the 6MFY2026, TANTRANSCO registered revenue of Rs. 3,281.07 Cr. and expected to end the year with revenue of Rs.7200-7300 Cr. The expected revenue growth is on account of increase in tariff rate during the year. Tamil Nadu Electricity Regulatory Commission (TNERC) in its new order in July, 2025 has increased the tariff by 4 percent to Rs. 5,803 which is expected to increase the revenue for the current year, while operating margins are expected to remain stable. The operating profit margins remained range bound at 61.54 percent in FY2025 (Prov.) against 64.75 percent in FY2024. However, PAT margin declined sharply in FY2025 (Prov.) to 2.17 percent from 9.15 percent in FY2024, due to higher interest and depreciation. Acuite believes, TANTRANSCO will continue to report stable revenue growth on account of yearly revisions in tariff rates which is also expected to cover all the operating expenses.

Efficient working capital operations:
The operations of the company are working capital efficient as reflected by is Gross current account (GCA) days of 85 days in FY2025 (Prov.) as against 92 days in FY2024. TANTRANSCO receives bills from Tamil Nadu Generation and Distribution Company (TANGEDCO), sole customer of the company within 30-45 days, resulting debtor days of 33 days in FY2025 (Prov.) against 52 days in FY2024. The creditor days remained at 17 days in FY2025 (Prov.) as against 82 days in FY2024. The dependency on the fund based working capital limits also remained low, with an average of 25 percent utilization over the past 12 months ending July 2025. Acuite believes that company's ability in efficiently managing its working capital operations will remain key rating sensitivity going forward.

Below-average financial risk profile:
The financial risk profile of the company is below average marked by negative net worth, gearing ratio and moderate debt protection metrics. TANTRANSCO’s net worth remained negative at Rs.(3,723.80) Cr. as on March 31, 2025(Prov.) as against Rs.(3595.66) Cr. as on March 31, 2024, due to accumulated losses. However, there is an addition of Rs.350 Cr. equity during the year. The debt position as on March 31, 2025 (prov.) (comprising secured long-term loans of Rs.23,55.41 Cr, unsecured loans from GoTN and foreign financial institutions of Rs. 4,398.97 Cr, short-term debt of Rs.90 Cr. and current maturities of debt around Rs.4220.31 Cr.) stood at Rs. 32,260.70 Cr. as against Rs. 31,344.84 Cr. as on March 31, 2024. The gearing level of the company stood negative at -8.66 times as on March 31, 2025 (Prov.), due to negative net worth, and high debt funded capital outlay as against -8.72 times as on March 31, 2024. In current year company is undergoing capex with estimated capital outlay of Rs.2991.44 Cr, majorly funded through debt. Further, the total outside liabilities to tangible net worth(TOL/TNW) stood at -16.01 times as on March 31, 2025(Prov.) as against -16.25 times as on March 31 2024. The debt protection debt protection metrics remained moderate with interest coverage ratio and debt service coverage ratio at 1.86 times and 0.68 times respectively, as on March 31, 2025(Prov.) against 2.08 times and 0.69 times respectively as on March 31, 2024. Debt/EBITDA remained high at 7.58 times as on March 31, 2025 (Prov.) as against 8.09 times as on March 31, 2024.
Acuite believes that financial risk profile of the company will continue to be below average and timely support from GOTN through equity infusion would be critical for sustaining the leverage indicators.­

Susceptibility of operating performance to transmission charges set by Tamil Nadu Electricity Regulatory Commission (TNERC)
TANTRANSCO’s revenue is influenced by regulatory framework governing the power sector. Revenues of companies such as TANTRANSCO are determined by Tamil Nadu State Electricity Regulatory Commission (TNERC). The TNERC considers key parameters like the cost structure and expected return on capital employed to arrive at transmission tariffs, wheeling and SLDC (State Load Dispatch Centre) charges. Any significant delays in tariff approvals or a reduction in return on equity or a tightening of the TNERC norms could result in lower operating cash flows. Acuité believes that any significant change in the regulatory environment will impinge on the credit profile of the company.