|
|
| Product | Quantum (Rs. Cr) | Long Term Rating | Short Term Rating |
| Bank Loan Ratings | 300.00 | ACUITE A- | Stable | Assigned | - |
| Bank Loan Ratings | 1150.00 | ACUITE A- | Stable | Reaffirmed | - |
| Total Outstanding | 1450.00 | - | - |
| Total Withdrawn | 0.00 | - | - |
|
Rating Rationale |
|
Acuité has assigned its long-term rating of ‘ACUITE A-’ (read as ACUITE A minus ) on the Rs. 300.00 Cr. bank facilities of Rajasthan State Power Finance and Financial Services Corporation Limited (RSPF&FSCL). The outlook is 'Stable'. Acuité has reaffirmed the long-term rating of ‘ACUITE A-’ (read as ACUITE A minus ) on the Rs. 1150.00 Cr. bank facilities of Rajasthan State Power Finance and Financial Services Corporation Limited (RSPF&FSCL). The outlook remains 'Stable'. Rationale for the rating assigned and reaffirmed The rating continues to factors in RSPF & FSCL’s strong parentage (Government of Rajasthan- GoR holds~100 percent) and expectations of future support. The rating further considers the experienced managerial Board at RSPF & FSCL, comfortable capitalization levels marked by Capital Adequacy Ratio (CAR) of 44.45 percent as on March 31, 2024. The Government of Rajasthan has infused Rs. 560 Cr. in FY24; which is followed by another equity infusion of Rs.350 Cr. in FY23. By virtue of state government ownership and support, the corporation enjoys strong resource raising ability at lower cost of funds thereby maintaining comfortable liquidity/ capital buffers to meet its funding requirements. These strengths are partially offset by large ticket size exposures and limited flexibility to go beyond its existing area and scope of operations which may hinder its portfolio growth. While Acuite takes cognisance of presence of large ticket exposure. the credit risk is mitigated by availability to Letter of Comfort from Government of Rajasthan. Going forward, continued ownership/support from GoR, RSPF & FSCL’s ability to profitably grow its loan portfolio while containing any slippages will be a key monitorable. |
| About the company |
| RSPF & FSCL was incorporated on 21st December, 2012 in the name of Rajasthan State Power Finance Corporation Limited as a Public Limited company under the Companies Act, 1956. Rajasthan State Power Finance and Financial Services Corporation Limited (RS PF&FS CL) is a Government Company wholly owned by the Government of Rajasthan. RSPF&FSCL was set up to provide financial assistance to the State-owned Power companies. RSPF&FSCL now also provides its service to other PSUs of the Rajasthan. Finance Department of Government of Rajasthan has been designated as the Administrative Department. The main objective of the company is to support / augment the resources for financing the State-owned public- sector undertakings in the State of Rajasthan. |
| Unsupported Rating |
| ACUITE BBB-/ Stable |
| Analytical Approach |
| To arrive at the rating, Acuité has considered the standalone business and financial risk profiles of RSPF & FSCL and notched up the rating by factoring in the form of Guarantee extended by Rajasthan State Government for the rated borrowing; with a parent notch up of its State Government. |
| Key Rating Drivers |
| Strength |
| Ownership and support from the Government of Rajasthan RSPF & FSCL is a Government Company wholly owned by the Government of Rajasthan. The corporation was established with the objective of providing financial services to the state government PSUs. The Board of directors comprise eleven directors of which two are independent directors and the remaining nine are from the government of Rajasthan. RSPF & FSCL funding mix comprises equity contribution from GoR and bank borrowings. RSPF & FSCL has got capital infusion from the Government amounting to Rs. 350 Cr. in FY23; follwed by equity infusion of Rs.560 Cr. in FY25. This has taken the total networth to Rs. 1041.24 Cr. as on March 2024 as against Rs.467.79 Cr. as on March 2023. The outstanding borrowings as on March 2024 stood at Rs.2480 Cr. The ownership and the guarantee by the GoR enable RSPF & FSCL to borrow at fine pricing from various banks and institutions. GoR has also extended guarantee for the bank loan facilities of the corporation. RSPF & FSCL capitalisation levels remained adequate at 44.45 percent as on March. 31, 2024. The corporation has maintained a gearing of 2.38 times as of March 2024. Since the support from GoR is critical to the rating, the credit profile of Rajasthan state is of key importance. Rajasthan’s fiscal deficit stood at 4.31 per cent of the GSDP for 2023-24 (RE) (3.76% per cent during the previous year). The outstanding debt of Rajasthan state as a percentage of GSDP remained over 37.57 percent for 2023-24 (RE) against 37.27 per cent for 2022-23 (RE). The state’s revenue reciepts to GSDP ratio for 2023-24 (RE) stood at 13.36 per cent against 14.37 per cent of for 2022-23 (Actual). While these levels are already elevated, further deterioration in the state metrics could impact the headroom of GoR to support such entities like RSPF & FSCL, Movement in the state’s key fiscal metrics i.e. fiscal deficit to GSDP and Debt to GSDP will remain key monitorable. Acuité believes that the corporation will continue to benefit from continued financial and business support from the State Government on an ongoing basis. |
| Weakness |
| RSPF & FSCL commenced its lending business in 2020-2021 with a focus on extending financial assistance to the State PSUs of Rajasthan. Given that company has recently commenced lending operations, its exposure is wholesale in nature with top exposure, namely Rajasthan Rajya Vidyut Utpan Nigam Limited, Ajmer Vidhyut Vitran Nigam Limited, Jodhpur Vidhyut Vitran Nigam Limited, Jaipur Vidhyut Vitran Nigam Limited. While the debt repaying ability of aforementioned exposure has been impacted on account of stretched receivables, the credit risk is mitigated by availability to Letter of Comfort from Government of Rajasthan. In the event of deterioration of the credit profile of its borrowers RSPF & FSCL could face elevated asset quality pressures and consequently higher credit costs. |
| Assessment of Adequacy of Credit Enhancement under various scenarios including stress scenarios (applicable for ratings factoring specified support considerations with or without the “CE” suffix) |
| RSPF&FSCL has established a track record and acts as a nodal agency on behalf of the state government. RSPF & FSCL has adequate liquidity marked by the comfort it derives support from the Government of Rajasthan (GoR). Acuité believes that the support from the Government of Rajasthan (GoR) will stand adequate in all scenarios including any stress situation and in the event of any requirement, Government of Rajasthan (GoR) will provide the necessary support. |
| ESG Factors Relevant for Rating |
| Not Applicable |
| Rating Sensitivity |
|
| Liquidity Position |
| Adequate |
| RSPF & FSCL had adequately matched asset liability profile as on March 31, 2024 with cumulative surplus in all maturity buckets. The corporation’s total debt stood at Rs.2480 Cr. as on March, 2024. The corporation has maintained cash and bank balances of Rs. 1221.91 Cr. as on March 31, 2024. |
| Outlook: |
| Stable |
| Other Factors affecting Rating |
| None |
| Key Financials - Standalone / Originator | ||||||||||||||||||||||||||||||||||||||||
|
||||||||||||||||||||||||||||||||||||||||
| Status of non-cooperation with previous CRA (if applicable): |
| Not Applicable |
| Interaction with Audit Committee anytime in the last 12 months (applicable for rated-listed / proposed to be listed debt securities being reviewed by Acuite) |
| Not applicable |
| Any other information |
| None |
| Applicable Criteria |
|
• Application Of Financial Ratios And Adjustments: https://www.acuite.in/view-rating-criteria-53.htm • Default Recognition: https://www.acuite.in/view-rating-criteria-52.htm • Explicit Credit Enhancements: https://www.acuite.in/view-rating-criteria-49.htm • Group And Parent Support: https://www.acuite.in/view-rating-criteria-47.htm • Non-Banking Financing Entities: https://www.acuite.in/view-rating-criteria-44.htm • Public Finance - State Government Ratings: https://www.acuite.in/view-rating-criteria-26.htm |
| Note on complexity levels of the rated instrument |
|
| |
|
|
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|
| |
| *Annexure 2 - List of Entities (applicable for Consolidation or Parent / Group / Govt. Support) | ||||||
|
||||||
|
Contacts |
About Acuité Ratings & Research |
