Note:- For activities or ratings of instruments falling under the purview of Financial Sector Regulators other than SEBI, the grievance / dispute redressal mechanisms and investor protection mechanisms provided by SEBI shall not be available.
Rating Rationale
Acuité has reaffirmed the long-term rating of 'ACUITE B' (read as ACUITE B) on the Rs. 1712.00 Cr. bank facilities of Raichur Power Corporation Limited (RPCL). The outlook remains 'Stable'
Rationale for reaffirmation
The rating reaffirmation considers the continued improvement in the receivable position along with the operational and financial assistance RPCL receives from its parent i.e Karnataka Power Corporation Limited (KPCL). However, the rating remains constrained on account of low PLFs, weak financial risk profile and poor liquidity of the company.
About the Company
Raichur Power Corporation Limited (RPCL) is a joint venture between Karnataka Power Corporation Limited (77.86 percent) and Bharat Heavy Electricals Limited (22.14 percent). The company is operating two thermal power plants, each having an installed capacity of 800 MWs in Yermarus, Raichur. Mr. Sambasivarao Chandramouleswara Sharada, Mr. Ramu Nagaraja, Ms. Ketoki Basu, Mr. Tajinder Gupta, Mr. Mangalore Rajeeva Gangadhara, Mr. Ravinder Hotchand Teckchandani, IAS Mr. Gauravgupta and Ms. Shyamala Venkataraman are directors of the company.
Unsupported Rating
Not Applicable
Analytical Approach
Acuité has considered the standalone business and financial risk profile of RPCL to arrive at the rating.
Key Rating Drivers
Strengths
Strong parentage of KPCL with continuous financial and operational support
KPCL owns 78 percent stake in RPCL. RPCL receives operational support in the form of usage of parent's facilities along with financial support in the form of unsecured loans. RPCL receives funds from KPCL to service its debt obligation and for its working capital requirements. Given the poor liquidity position of RPCL, the continued inflow of unsecured loans from KPCL is crucial to ensure timely debt servicing.
Improving receivable position
Prior to 2022, there were continuous delays in the payment of dues by the ESCOMs, which had severely affected the liquidity of RPCL. Post implementation of late payment surcharge rule by the GoI (Governement of India), the ESCOMs have been paying their past dues in monthly equal installments and in a timely manner which led to an improvement in the receivable position, which stood at 302 days in FY2025 from 372 days in FY2024 and 415 days in FY2023.
Weaknesses
Decline in the operating performance
The operating revenue of RPCL declined to Rs. 3,801.94 Cr. in FY2026 (Est) from Rs. 4,372.56 Cr. in FY2025. The decline in revenue was on account of decline in the power production. In FY2026, the power plants were undergoing overhauling and servicing for around 4 - 5 months which had affected the operations of the plant. Further low gross calorifc value of the coal had also affected the overall production. However, from FY2027 onwards, the plants have resumed regular operations.
Going forward, improvement in the PLF and operating revenue will be a key rating sensitivity.
ESG Factors Relevant for Rating
RPCL is a coal based thermal power producer therefore, directly contributes to carbon emissions. The other material factors from the environmental perspective are green supply chain and waste management. The governance factors that play an important role are ethical business practices, board oversight and management compensation. Further, risk management practices to minimise corruption associated with electricity and gas distribution plays a crucial role. Additionally, regulatory compliance, shareholder’s rights and audit control are other material issues in the power generation industry. On the social front, occupational and workforce health & safety management are of primary importance to this industry given the nature of operations. The policies on responsible procurement and product safety as well as quality are of utmost significance.
On the governance front, RPCL's board comprises mix of experienced and knowledgeable members which include one executive director, five nominee directors, two independent directors. Further, the company has a continued focus on creating a green and clean future for upcoming generations which is exhibited through its ongoing capex project for implementation of the Flue Gas Desulphurization (FGD) system. This project is expected to be completed in FY2026.
Further, to regulate the risk management practices in power distribution business, the GOI had issued late payment surcharge rules in 2022, whereby the ESCOMs were directed to repay the past dues (including interest at 15% p.a) to RPCL on a monthly basis. Previously, the ESCOMs in Karnataka were irregular in paying their dues for a long period of time, however, pursuant to the government directive, the dues are being streamlined to some extent.
Rating Sensitivities
Potential triggers (individual or collective) for an upward rating action:
Improvement in PLF, thereby leading to improvement in the operating performance.
Significant improvement in receivable position
Potential triggers (individual or collective) for a downward rating action:
Decline in the operating performance
Any change in assistance by KPCL
Liquidity Position
Poor
The poor liquidity position of the company is evident from its negative cash accruals against maturing repayment obligations. The company has been servicing its debt obligations through unsecured loans infused by KPCL. Going forward also, the company is expected to continue generating negative cashflows and shortfall is expected to be funded through unsecured loans from the parent.
Outlook: Stable
Other Factors affecting Rating
None
Particulars
Unit
FY 25 (Actual)
FY 24 (Actual)
Operating Income
Rs. Cr.
4372.56
3923.34
PAT
Rs. Cr.
(1405.03)
(1735.48)
PAT Margin
(%)
(32.13)
(44.23)
Total Debt/Tangible Net Worth
Times
(2.27)
(2.62)
PBDIT/Interest
Times
0.69
0.51
Status of non-cooperation with previous CRA (if applicable)
Note:- For activities or ratings of instruments falling under the purview of Financial Sector Regulators other than SEBI, the grievance / dispute redressal mechanisms and investor protection mechanisms provided by SEBI shall not be available.
Contacts
List of instruments and names of regulators of the instruments
