| Experienced management with strong promoter and group support:
The group benefits from a highly experienced management with extensive industry experience in power generation and infrastructure, having successfully developed and operated multiple hydroelectric projects and other diversified business. The promoter Mr. P Pratap Reddy has extended their personal guarantees aligning with the strong committment to the business. Additionally, the group's long-term debts were also secured by the corporate guarantees through related entities there by demonstrating strong group support. Acuite believes that the group's experienced management and strong promoter support will continue to benefit its operational and financial stability.
Presence of long-term Power purchasing agreement (PPA) ensuring revenue visibility
Pioneer group operates four hydro power plants with the capacity of 24.75MWs each with the combine capacity of 99 MWs. Unit1, Unit2 of PGL and unit 1 of PPCL with combine capacity of 74.25 MWs has long term PPA with Bangalore Electricity Supply Company (BESCOM) and Unit2 of PPCL with the capacity of 24.75 MWs has short term PPAs with other third parties. PPAs with BESCOM are at fixed price of Rs.2.91 per unit in PGL unit1, Rs.3.4 per unit for unit 2 and Rs.2.8 per unit for PPCL unit 1, while short term PPAs with third parties average around Rs.4.50 per unit. Acuite believes, these arrangements substantially mitigates demand and price risks, ensuring long-term cash flow visibility for the projects.
Recovery in operations with improved generation across the units:
Power generation improved significantly in FY2025 across all units, recovering from the sharp decline in FY2024 caused by inadequate rainfall. The average Plant Load Factor (PLF) for units on the Cauvery River (PGL Unit 1 and PPCL Unit 1) rose to 42.76 percent and 57.94 percent, respectively, in FY2025, compared to 33.61 percent and 42.56 percent in FY2024. Similarly, units on the Krishna River (PGL Unit 2 and PPCL Unit 2) recorded PLFs of 26.24 percent and 30.99 percent in FY2025, up from 5.45 percent and 9.66 percent in FY2024. The generation levels continued to improve during the first seven months of FY2026, with PLFs of 68.73 percent and 95.79 percent for PGL and PPCL Unit 1, and 56.94 percent and 58.09 percent for Unit 2 of PGL and PPCL, respectively. This strong recovery in generation has driven higher revenues, with the company reporting Rs.110.19 Cr during 7MFY2026, compared to Rs.78 Cr in 7MFY2025. Acuite believes that the recovery from the weak hydrology in FY2024 demonstrates the group’s ability to sustain operations under favourable conditions, which is expected to positively impact cash flows and liquidity.
Strong payment track record from BESCOM and third parties:
The group has strong payment track record from its counterparties, including BESCOM and other buyers, resulting in low counterparty risk. Payments from BESCOM are typically received within 30-45 days and the payments are routed through a Trust and retention account (TRA), which ensures that 50 percent of the inflows are allocated towards repayment and the balance towards operational expenses. PPCL unit 2, which supplies power under short-term PPAs to other third parties such as CISCO Systems Pvt. Ltd and other companies also has a strong payment track record, with collections occurring within 15 to 20 days. Going forward group’s ability to maintain its receivable cycle will remain a key rating sensitivity.
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| Hydrological risks associated with run-of-the-river power generation:
The group’s power generation remains exposed to hydrology risk inherent in run-of-the-river projects, wherein generation is directly dependent on seasonal water inflows. Variability in rainfall patterns and river flows can lead to fluctuations in plant load factor (PLF) and cash flow visibility, particularly during lean flow periods. To partially mitigate this, group has constructed a barrage, which ensures adequate water supply to generate power for minimum 3-4 hours even during lean season of the year. However, the project primarily depends on adequate flow of river water and is dependent on well spread monsoon to support higher unit generation. Acuite believes, sustained adequate rainfall will be critical for maintaining generation levels and cash flows stability.
Exposure to counter party risk
The group's revenue profile remains highly dependent on counterparty, BESCOM, exposing it to counterparty concentration risk. Although BESCOM has demonstrated a strong and consistent payment track record in the past, any deterioration in its financial position, changes in regulatory framework, or delays in tariff approvals could adversely impact the Pioneer group's cash flows and liquidity position.
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