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| Product | Quantum (Rs. Cr) | Long Term Rating | Short Term Rating |
| Bank Loan Ratings | 117.50 | ACUITE AA- | Stable | Assigned | - |
| Bank Loan Ratings | 880.00 | ACUITE AA- | Stable | Upgraded | - |
| Bank Loan Ratings | 50.00 | - | ACUITE A1+ | Upgraded |
| Total Outstanding | 1047.50 | - | - |
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Rating Rationale |
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Acuité has upgraded its long-term rating from ‘ACUITE A+’ (read as ACUITE A plus) to 'ACUITE AA-' (read as ACUITE double A minus) and short-term rating from ‘ACUITE A1’ (read as ACUITE A one) to ‘ACUITE A1+’ (read as ACUITE A one plus) to Rs.930.00 crore bank facilities of Haryana Vidyut Prasaran Nigam Limited (HVPNL). The outlook is ‘Stable’.
Further Acuité has assigned its long-term rating of ‘ACUITE AA-’ (read as ACUITE double A minus) to Rs. 117.50 crore bank facilities of Haryana Vidyut Prasaran Nigam Limited (HVPNL). The outlook is ‘Stable’. Rationale for Upgrade Rating has been upgraded on account of constant improvement in operating performance in line with revision of charges by HERC, improved financial risk profile with healthy tangible net worth and strong liquidity position of the entity. The company has maintained healthy unencumbered cash and bank balances and has enough leverage headroom to raise funds for debt funded capex going forward. |
| About the Company |
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Haryana Vidyut Prasaran Nigam Limited (HVPNL) is a State Government of Haryana undertaking and was incorporated in1997. The company is engaged in transmission company power and is licensed by Haryana Electricity Regulatory Commission (HERC) for transmission and bulk supply of power in Haryana. HVPNL receives power from generation companies, predominantly from Haryana Power Generation Corporation Limited (HPGCL), which is further transmitted through its transmission network consisting of high-tension lines and sub-stations to the distribution companies (discoms) namely: UHBVNL and DHBVNL. The major portion of transmission is done to UHBVNL and DHBVNL; ~99% as on date. In addition to this, the company also supplies power to NTPC, CRPCL, Indian Railways etc.
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| Unsupported Rating |
| Not Applicable |
| Analytical Approach |
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Acuité has adopted the standalone approach while assessing the business and financial risk profile of HVPNL and has notched up the rating on the back of benefits emanating from the ownership by Government of Haryana (GoH). GoH holds ~99% equity ownership in HVPNL besides regular managerial and financial support to HVPNL; the government has supported its bank borrowings by way of Guarantee.
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| Key Rating Drivers |
| Strengths |
| Support from State Government of Haryana
Haryana Vidyut Prasaran Nigam Limited (HVPNL) is a state Government undertaking with Government of Haryana having 99% stake in the company. The company is a strategically important entity and forms the backbone of the power sector infrastructure of state. The company is a sole bulk power transmission company in Haryana. The company is a licensed entity for transmission and bulk supply of power in Haryana and primarily provides transmission services to the state utilities such as Uttar Haryana Bijli Vitran Nigam Limited (UHBVNL) and Dakshin Haryana Bijli Vitran Nigam Limited (DHBVNL). Apart from this, the company also transmits power to other entities such as NTPC, Indian Railways and Tata Power Trading Company Limited (TPTCL). Further, state Government of Haryana has also extended guarantee for the bank facilities of the company. Comfortable financial risk profile The tangible net worth of the company remained healthy at Rs. 5035.37 crore as on March 31, 2023 as against Rs. 4,637.31 crore as on March 31, 2022 and Rs. 4672.36 crore in FY21. The marginal decline in FY22 is mainly due to reduction in debenture redemption reserve to Rs. 49.84 Cr. in FY 2022 from 137.34 Cr. in FY 2021 and deficit in other comprehensive income. However the increase in networth in FY23 is on account of accretion of profit to reserve. The debt equity ratio of the company improved to 0.79 times as on March 31, 2023 as against 0.82 times as on March 31, 2022. Further, the debt components of the company are covered by irrevocable and unconditional guarantee extended by Government of Haryana. The improvement in D-E ratio is on account of higher improvement in net worth while minuscule increase in debt. The interest coverage of the company improved to 4.84 times in FY 2023 as against 3.74 times in FY 2022. DSCR has improved to 2.55 times in FY 2023 from 1.97 times in FY 2022. Debt-EBITDA has improved from 5.41 times in FY 2021 to 2.79 times in FY 2023. Acuite believes that the financial risk profile of the company is continuing to be moderate in the medium term. |
| Weaknesses |
| Susceptibility of operating performance to transmission charges set by Haryana Electricity Regulatory Commission (HERC)
HVPNL’s revenue is influenced by regulatory framework governing the power sector. The HERC 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. The company reported total operating income of Rs. 2426.08 Cr. in FY 2023 as against Rs. 2042.94 Cr. in FY 2022 witnessing growth of 18.75% over FY 2022. The major portion of the revenue is derived from transmission segment (87.62% in FY2023, 86% in FY 2022 & 78% in FY 2021). |
| ESG Factors Relevant for Rating |
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The 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.
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| Rating Sensitivities |
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| Liquidity Position |
| Strong |
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The net cash accruals of the company remained at Rs. 1159.17 Cr. against maturing debt obligation of Rs. 275.57 Cr. in FY 2023 giving sufficient liquidity buffer. Going forward company is expected to generate net cash accruals of ~ Rs. 1000 Cr during FY24 & FY25 respectively against maturing debt obligation of Rs. 341.27 Cr. in each year. Further company maintained unencumbered cash and bank position of Rs. 256.19 Cr. in FY 2023. Acuité believes that going forward the company will maintain strong liquidity position due to steady accruals.
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| Outlook: Stable |
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Acuité believes that HVPNL will benefit from its natural monopoly in the power transmission business in Haryana and strong support from Government of Haryana. The outlook may be revised to ‘Positive’ in case of healthy growth in scale and profitability of the HVPNL along with improvement in credit profile of GoH. The outlook may be revised to ‘Negative’ in case of significant build up in receivables beyond existing levels or sharp deterioration in GoH’s credit profile.
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| Other Factors affecting Rating |
| None |
| Particulars | Unit | FY 23 (Actual) | FY 22 (Actual) |
| Operating Income | Rs. Cr. | 2426.08 | 2042.94 |
| PAT | Rs. Cr. | 650.68 | 343.34 |
| PAT Margin | (%) | 26.82 | 16.81 |
| Total Debt/Tangible Net Worth | Times | 0.79 | 0.82 |
| PBDIT/Interest | Times | 4.84 | 3.74 |
| Status of non-cooperation with previous CRA (if applicable) |
| Not Applicable |
| Any other information |
| None |
| Applicable Criteria |
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• Default Recognition :- https://www.acuite.in/view-rating-criteria-52.htm • Infrastructure Sector: https://www.acuite.in/view-rating-criteria-51.htm • Application Of Financial Ratios And Adjustments: https://www.acuite.in/view-rating-criteria-53.htm • Public Finance - State Government Ratings: https://www.acuite.in/view-rating-criteria-26.htm |
| Note on complexity levels of the rated instrument |
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In order to inform the investors about complexity of instruments, Acuité has categorized such instruments in three levels: Simple, Complex and Highly Complex. Acuite’ s categorisation of the instruments across the three categories is based on factors like variability of the returns to the investors, uncertainty in cash flow patterns, number of counterparties and general understanding of the instrument by the market. It has to be understood that complexity is different from credit risk and even an instrument categorized as 'Simple' can carry high levels of risk. For more details, please refer Rating Criteria “Complexity Level Of Financial Instruments” on www.acuite.in.
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| *Annexure 2 - List of Entities (applicable for Consolidation or Parent / Group / Govt. Support) |
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