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| Product | Quantum (Rs. Cr) | Long Term Rating | Short Term Rating |
| Bank Loan Ratings | 1170.21 | ACUITE A- | Stable | Reaffirmed | - |
| Bank Loan Ratings | 329.79 | - | ACUITE A1 | Reaffirmed |
| Total Outstanding | 1500.00 | - | - |
| Total Withdrawn | 0.00 | - | - |
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Rating Rationale |
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Acuite has reaffirmed its long-term rating to ‘ACUITE A-‘ (read as ACUITE A minus) and short term rating to 'ACUITE A1' (read as ACUITE A one) on the Rs. 1500.00 crore bank facilities of Odisha Coal and Power Limited (OCPL). The outlook remains ‘Stable’. Rating Rationale for reaffirmation The scale of operations has declined to Rs. 4102.63 Cr. in FY2024 from Rs.5291.31 Cr. in FY2023 primarily due to reduced coal realizations as well as revised tariff rates and lower realizations. Further, the group has achieved Rs.2448 Cr. till September 2024. PAF and PLF improved for OPGCL’s unit 3&4 in FY2024 to 80.51% and 80.15% respectively against 78% and 77% in the previous year respectively. Further, financial risk profile continues to remain moderate marked by significant improvements in networth, improving gearing and low debt coverage indicators. There are various debt funded capex plans and so the financial risk profile needs to be monitored.
The liquidity position is marked adequate as reflected by healthy cash accrual generation against the maturing debt repayment obligations. Prepayments of loans have been made by OCPL in both FY23 and FY24. The ratings continue to reflect the group’s strategic importance and strong linkage with State government of Odisha. The group has low offtake risk because of Power Purchase Agreement with GRIDCO and Fuel Supply Agreements. However, the rating strengths are partially offset by the high working capital management and regulatory risk. |
| About the Company |
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Odisha Coal and Power Limited
Bhubaneswar, Orissa based, Odisha Coal and Power Limited was incorporated in 2015. It is a joint venture of Odisha Power Generation Corporation Limited having 51% shareholding and Government of Orissa having 49% shareholding. The company is engaged in mining and extracting coals for supplying to Thermal Power Plants of Odisha Power Generation Corporation Limited. Mrs. Sariputta Mishra, Mrs. Manasa Ranjan Rout, Mr. Sambit Parija, Mr. Vishal Kumar Dev, Mr. Satya Priya Rath, Mr. Sailendra Dwivedi, Mrs. Lipsa Das are directors of the company. |
| About the Group |
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Odisha Power Generation Corporation Limited
Bhubaneswar, Orissa based, Odisha Power Generation Corporation Limited was incorporated by the Government of Orissa in 1984. The company generates and makes bulk supply of power by establishing, operating & maintaining power generating stations. Mrs. Manasa Ranjan Rout, Mrs. Hrudaya Kamal Jena, Mr. Sariputta Mishra, Mr. Yudhisthir Nayak, Mrs. Suchitra Pal, Mr. Vishal Kumar Dev, Mr. Narendra Nath Misra, Mr. Krushna Chandra Samal are directors of the company. The company had set up two units of 210 MW thermal power station at Banaharpalli (IB Thermal Power Station) in the district of Jharsuguda in December 1994 (unit 1) and June 1996 (unit 2). Since its inception the company has been making profits from unit 1 & 2. Power Plant is located at IB-Thermal Power Station, Banaharpali, Jharsuguda, Odisha with Installed capacity of 660MW each for units 3& 4(July 2019 and August 2019). |
| Unsupported Rating |
| Not Applicable |
| Analytical Approach |
| Extent of Consolidation |
| •Full Consolidation |
| Rationale for Consolidation or Parent / Group / Govt. Support |
| Acuite has consolidated the financial and business risk profile of Odisha Power Generation Corporation Limited and Odisha Coal & Power Limited. The consolidation is on account of Odisha Coal & Power Limited being a 51% subsidiary of Odisha Power Generation Corporation and Odisha Coal & Power Limited being incorporated to cater to the coal needs of Odisha Power Generation Corporation Limited for Unit 1, 2, 3 & 4 and for its upcoming Unit 5 & 6 through the coal mines of Manoharpur and Dip-side of Manoharpur block. OPGCL has given corporate guarantee to OCPL in terms of financial assistance.
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| Key Rating Drivers |
| Strengths |
| Strategically important entity to Government of Odisha
The group is strategically important for the power sector infrastructure in the state of Odisha. OPGCL is also one of the key entities for undertaking power generation activity in the state of Odisha other than OHPCL. The status of being a government-owned entity provides adequate financial flexibility. OPGCL's credit profile is also supported by its access to funds at low cost and its ability to mobilize financial resources from several financial institutions and multilateral development institutions. The rating also factors regular equity infusion by GoO in OPGCL. Odisha has been one of the fastest growing states in India with a low debt to gross state domestic product. The GoO has significantly increased its focus on increasing industrial development in the state. It is also focusing on asset creation towards infrastructure and social sectors. Acuité believes that OPGCL shall continue to benefit from the financial, operational, and managerial asisstance received from GoO from time.
Low Offtake Risk OPGCL has signed power purchase agreements with GRIDCO Ltd. In Odisha, GRIDCO (state owned power transmission company) is engaged in the business of bulk purchase and bulk sale of power to the four DISCOMs and trading of surplus power. It is based on a two-part tariff structure for sale of the entire power generated. Regular maintenance of the power stations has enabled OPGCL to consistently maintain plant availability factor higher than the normative level of 68.49 per cent (as defined in the PPA), thus leading to full recovery of fixed costs. In addition, OCPL has signed fuel supply agreement with OPGCL regarding sale of extracted coal from Manoharpur coal mines. OPGCL also has a fuel supply agreement (FSA) with Mahanadi Coalfields Limited (MCL) which ensures a steady supply of raw material to units 1&2. Acuite believes the offtake agreements provide comfortable revenue visibility over the medium term. Moderate Financial Risk Profile The financial risk profile of the group remained moderate marked by growth in networth, comfortable gearing and low debt protection metrics. The networth of the group stood at Rs.5314.19 Cr. in FY24 as against Rs.4844.99 Cr. in FY23 due to accretion of reserves. Additionally, there was an equity infusion by OPGCL of Rs.412.08 Cr. in FY24 for projects. The gearing improved to 1.36 times in FY24 from 1.70 times in FY23. OCPL made significant prepayments of Rs. 271 Cr. in FY2022-23 and Rs. 100 Cr. in FY2023-24. The debt protection metrices of the group is low marked by Interest coverage ratio (ICR) of 2.89 times and debt service coverage ratio (DSCR) of 1.40 times for FY2024. Acuite believes that the financial risk profile will remain moderate over the medium term, supported by steady accruals and moderate capital structure. |
| Weaknesses |
| Decline in scale of operations
The operating income of the group stood at Rs.4102.63 Cr. in FY24 as against Rs.5291.31 Cr. in FY23. The operating margin stood at 46.51 percent in FY24 as against 61.28 percent in FY23 The decline was due to reduced coal realizations and change in tariff rates from Rs.3.86/unit to Rs.3.80/unit. Further, the group has achieved Rs.2447.83 Cr. till September 2024. The PAT margin stood at 16.27 percent in FY24 as against 31.07 percent in FY23. Acuite believes the scale of operation is likely to improve in the medium term driven by rise in mining activity in OCPL and rise in overall plant load factor in power plants. Intensive working capital cycle The group has intensive working capital cycle as reflected from Gross Current Asset (GCA) days of 175 days in FY24 as against 145 days in FY23. The inventory days stood at 49 days in FY24 as against 41 days in FY24. OPGCL stores coal and oil for 45 days and 2 months respectively. The debtor days stood at 105 days in FY24 as against 85 days in FY23. The credit terms for OPGCL from OCPL is a credit period of 1 month and another 15 days available. The creditor days stood at 71 days in FY24 as against 79 days in FY23. The credit terms for OPGCL are on advance basis and varies based on the contract but generally of 15-30 days. Acuite believes working capital requirement is likely to remain similar over the medium term. Exposure to Regulatory Risks GRIDCO is the sole counterparty for OPGC's power output and is directly exposed to the health of the Odisha discoms. Thus, OPGC's collection efficiency largely depends on state of the power sector in Odisha. However, these risks are mitigated by presence of a robust two-tier payment security mechanism comprising a letter of credit and an escrow mechanism, which has led to timely realization from discoms. Coal prices Coal prices are expected to remain volatile in the near term, influenced by a complex interplay of geopolitical factors, supply chain issues, and regional energy policies. In the longer term, the demand for coal is expected to decline due to the global push for decarbonization. However, strong demand from emerging markets and technological developments may sustain coal prices in certain regions. The future of coal will largely depend on the pace of global energy transitions and the development of alternative energy sources. |
| Rating Sensitivities |
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| Liquidity Position |
| Adequate |
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Odisha group has adequate liquidity marked by net cash accruals of Rs. 1031.78 Cr. in FY24 as against debt obligation of Rs.592.99 Cr. over the same period. OCPL made significant prepayments of Rs. 271 Cr. in FY2023 and Rs. 100 Cr. in FY2023-24. The cash and bank balance stood at Rs. 88.30 Cr. for FY 2024. Further, the current ratio of the company stood moderate at 1.18 times in FY2024 as against 0.92 times in FY23. The group has intensive working capital cycle as reflected from Gross Current Asset (GCA) days of 175 days in FY24 as against 145 days in FY23. The bank limit of OPGCL has been 81 percent for non-fund based utilized for the last seven months ended in October 2024. Acuite believes that the liquidity of the group is likely to improve over the medium term.
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| Outlook: Stable |
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| Other Factors affecting Rating |
| None |
| Particulars | Unit | FY 24 (Actual) | FY 23 (Actual) |
| Operating Income | Rs. Cr. | 4102.63 | 5291.31 |
| PAT | Rs. Cr. | 667.29 | 1644.23 |
| PAT Margin | (%) | 16.27 | 31.07 |
| Total Debt/Tangible Net Worth | Times | 1.36 | 1.70 |
| PBDIT/Interest | Times | 2.89 | 4.48 |
| Status of non-cooperation with previous CRA (if applicable) |
| Not Applicable |
| Any Other Information |
| None |
| Applicable Criteria |
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• Application Of Financial Ratios And Adjustments: https://www.acuite.in/view-rating-criteria-53.htm • Consolidation Of Companies: https://www.acuite.in/view-rating-criteria-60.htm • Default Recognition: https://www.acuite.in/view-rating-criteria-52.htm • Manufacturing Entities: https://www.acuite.in/view-rating-criteria-59.htm |
| Note on complexity levels of the rated instrument |
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| *Annexure 2 - List of Entities (applicable for Consolidation or Parent / Group / Govt. Support) | ||||||
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