­RPL was incorporated in the year 2007 as Sophia Power Company Limited, originally as a part of Indiabulls group. The company changed its name to Indiabulls Power Limited after its listing on NSE as well as BSE in the year 2009. In 2014, subsequent to the group split along with Indiabulls Infrastructure and Power Limited, the company was carved out and renamed as RattanIndia Power Limited. RPL is promoted by Mr. Rajiv Rattan who is one of the co-founders of Indiabulls Group and currently holds the Chairmanship of RattanIndia Group. The company operates Amravati Thermal Power Project, located at Amravati district, Maharashtra with a total power generation capacity of 2,700 MW comprising of two phases of 1,350 MW each. Phase-I of the power plant (270 MW x 5 units) was commissioned in March 2015. Phase-II is at present stalled due to pertaining uncertainties associated with Power Purchase Agreement (PPA). However, it would be treated as separate account owing to the presence of ring-fenced mechanism prescribed by the lenders for the said project.

­RPL is a power producer based on thermal electricity. The advancing environmental risk emanating from new regulations may adversely impact the cost of generation. Environmental risk is a major issue for thermal power generators as coal based power generation causes significant environmental damage. While there have been some measures adopted to reduce the carbon emission, the reduction however is not uniform. The risks of regulatory constraints therefore continue to remain high for this industry and additional measures could lead to cost escalation.

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 handling of waste is important. Any increase in pollution levels is likely to create social unrest and political pressures. As thermal power plants also generate large amount of employment in local communities and are susceptible to unionization of labor force, managing social welfare of the local community is critical. RPL engages the local community for various services required namely car rentals, regular maintenance of various equipments, manpower supply etc. The Company also ensures 100% utilisation of fly ash generated due to burning of coal and utilisation of raw water used in the generation process towards other processes within plant facility.

On Governance front, the company has adopted requirement of Corporate Governance from Provision of Companies Act 2013 and SEBI (LODR) Regulations 2015. The board of directors comprises of professionals having expertise and experience in various filed such as construction, finance, banking, regulatory affairs, administration and management and technical operations of power plants. Hence, diverse board of directors ensures pooling of knowledge and balanced Board. An audit committee, comprising of 3 members has also been constituted by board. The two of them are independent directors and the third is promoter director. The Stakeholder’s relationship committee has been constituted to assist the board in safeguarding the interests of and redressing the grievances of the security holders of the company.

> Recovery of claims within expected tenure
> Elongation of trade receivables
> Timely refinancing of debt

The liquidity position of the company is stretched marked by tightly matching  net cash accruals against the repayment obligations. RPL generated net cash accruals of Rs. 574 crore in FY2022 as against repayment obligations of Rs. 501.86 crore. Further the company was able to prepay its loan of Rs.254.73 crore during FY2023. Going ahead, the estimated net cash accruals are expected to be in the range of Rs.822.48 -905.15 crore per annum during the period FY2023-2025 and the repayment obligation post the refinancing including redemption of preference shares are expected to be in the range of Rs. 472-722.01 crore during same period. The company has also received claims worth Rs. 114 crore in Q4FY2023. However,  timely refinancing of debt still remains critical to avert further pressure on  company’s liquidity position.

­Acuite believes that RPL will maintain a ‘stable’ outlook on account of stable operating performance and will continue to derive benefits over the medium term due to extensive experience, presence of long-term PPA for entire capacity and low fuel supply risk. The outlook may be revised to ‘Positive’ in case the company registers higher-than-expected improvement in its business risk profile and financial risk profile. Conversely, the outlook may be revised to ‘Negative’ in case of deterioration in the company’s financial risk profile or delay in realisation of receivables or refinancing of debt. 

­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.