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, the company along with Indiabulls Infrastructure and Power Limited was carved out of the group 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.

­Acuité has considered the standalone view of business and financial risk profiles of RPL to arrive at this rating.

­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
> Timely servicing of debt obligations
> Elongation of trade receivables

­The liquidity position of the company is poor marked by inadequate net cash accruals against the repayment obligations. RPL generated net cash accruals of Rs. 574 crores in FY2022 as against repayment obligations of Rs. 501.86 crore. The net cash accruals are expected to be in the range of Rs.512.67 -622.90 crore during the period FY2023-2024 and the repayment obligation post the refinancing are expected to be in the range of Rs. 455.6-722.48 crore during same period. Acuite believes timely refinancing of debt is critical to avert further pressure on  Company’s liquidity position. Moreover, the interim coal shortages and elongating receivables position also adversely impacts the working capital requirements of RPL, thereby impacting its liquidity position.

­Acuité believes that RPL will maintain a 'Negative' outlook over the medium term due to its poor liquidity position and elongating trade receivables position. The rating may be downgraded incase of delays in refinancing of debt obligations. The outlook would be revised to 'Stable' incase of improvement in its operating performance leading to significant improvements in its cash accruals and collections of claims and receivables thereby leading to improvement in its liquidity position.

­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 categorisa"on of the instruments across the three categories is based on factors like variability of the returns to the investors, uncertainty in cash flow pa&erns, number of counterpar"es 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 Ra"ng Criteria “Complexity Level Of Financial Instruments” on www.acuite.in