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| Product | Quantum (Rs. Cr) | Long Term Rating | Short Term Rating |
| Bank Loan Ratings | 910.00 | ACUITE BB+ | Stable | Reaffirmed | - |
| Non Convertible Debentures (NCD) | 1025.00 | ACUITE BB+ | Stable | Reaffirmed | - |
| Non Convertible Debentures (NCD) | 325.00 | Provisional | ACUITE BB+ | Stable | Reaffirmed | - |
| Bank Loan Ratings | 250.00 | - | ACUITE A4+ | Reaffirmed |
| Total Outstanding | 2510.00 | - | - |
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Rating Rationale |
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Acuité has reaffirmed its long-term rating to 'ACUITE BB+’ (read as ACUITE double B plus) on the Rs.910.00 Cr. bank facilities and reaffirmed the short-term rating of 'ACUITE A4+' (read as ACUITE A four plus) on the Rs. 250.00 Cr. bank facilities of RattanIndia Power Limited (RPL). The outlook is ‘Stable'. |
| About the Company |
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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 Press Release RATTANINDIA POWER LIMITED Rating Reaffirmed 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 ringfenced mechanism prescribed by the lenders for the said project. |
| Unsupported Rating |
| Not Applicable |
| Analytical Approach |
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Acuité has considered the standalone view of business and financial risk profiles of RPL to arrive at this rating.
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| Key Rating Drivers |
| Strengths |
| Improvement in operating performance albeit decline in profitability margins
The company generated revenue of Rs. 3464.92 Cr. in FY2024 as against Rs.3231.16 Cr. in FY2023. The plant achieved Plant Load Factor (PLF) is 82% for FY2024 as against 77% for FY2023. The operating margin declined to 18.78% in FY2024 as against 23.49% in FY2023 on account of high input cost. Low reliance on e-auctioned/imported coal RIPL requires a minimum fuel supply of 5.90 MTPA to operate the plant at a normative level (availability factor of 85%). The company has signed Fuel Supply Agreement with Southeastern Coalfields Limited (a subsidiary of Coal India Limited) for 6.10 MTPA, which covers the majority portion of the requirement, resulting in lower reliance on e-auctioned/ imported coal. |
| Weaknesses |
| Delay in resolving long-pending change in law claims
On 13th November 2020, company received a favourable judgment from APTEL in respect of long pending change in law claims, based on the consent by the counterparty MSEDCL, due to which RPL was set to recover ~Rs. 772 crore. The recovery got delayed and the claim amount increased to Rs.1157 crore as on 25 November,2021. Under the order passed by Supreme court on February 14, 2022, MSEDCL was directed to pay 50 percent of the claim amount to power generation companies. Accordingly, RPL has received regulatory receivables of Rs 732 Cr. from April 2022 to June 2023 which was used for prepayments of debt facilities. Acuite believes recovery of claims within estimated timeline is critical to support the liquidity position of the company. However, apart from the disputed receivables, company has been regularly receiving its undisputed receivables. Counterparty risk The Company is dealing with State Discom- MSEDCL, which exposes it to high counterparty risk. The debtor days stood high at 224 days as on March 31, 2024 as against 281 days as on March 31, 2023. The receivables also include a notional interest component charged to long pending dues. Out of the total receivables, 81.34% of the receivables are disputed receivables and 18.66% are regular receivables. Acuite believes ability of RPL to prevent further elongation of receivables would be a key rating monitorable. |
| ESG Factors Relevant for Rating |
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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 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.
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. |
| Rating Sensitivities |
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| Liquidity Position |
| Adequate |
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The liquidity position of the company is adequate marked by adequate net cash accruals against the repayment obligations, post the refinancing. RPL generated net cash accruals of Rs. 454.58 crore in FY2023. During the year, RPL was under the refinancing process and the transaction was completed in June 2023. The unencumbered cash and bank balance of the company stood at Rs. 461.60 Cr. as on March 31, 2024.
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| Outlook: Stable |
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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
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| Other Factors affecting Rating |
| None |
| Particulars | Unit | FY 24 (Actual) | FY 23 (Actual) |
| Operating Income | Rs. Cr. | 3364.00 | 3231.16 |
| PAT | Rs. Cr. | (1027.90) | 332.65 |
| PAT Margin | (%) | (30.56) | 10.30 |
| Total Debt/Tangible Net Worth | Times | 0.78 | 0.69 |
| PBDIT/Interest | Times | 1.77 | 2.08 |
| Status of non-cooperation with previous CRA (if applicable) |
| Not applicable |
| Any other information |
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Supplementary disclosures for Provisional Ratings A. Risks associated with the provisional nature of the credit rating 1. Lack of third party monitoring of compliance in absence of executed trust deed and no finalized terms in absence of final term sheet 2. In case there are material changes in the terms of the transaction after the initial assignment of the provisional rating and post the completion of the issuance (corresponding to the part that has been issued) Acuite will withdraw the existing provisional rating and concurrently, assign a fresh final rating in the same press release, basis the revised terms of the transaction. B. Rating that would have been assigned in absence of the pending steps/ documentation The rating would be equated to the standalone rating of the entity: ACUITE BB+ / Stable. C. Timeline for conversion to Final Rating for a debt instrument proposed to be issued The provisional rating shall be converted into a final rating within 90 days from the date of issuance of the proposed debt instrument. Under no circumstance shall the provisional rating continue upon the expiry of 180 days from the date of issuance of the proposed debt instrument. |
| Applicable Criteria |
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• Default Recognition :- https://www.acuite.in/view-rating-criteria-52.htm • Infrastructure Sector: https://www.acuite.in/view-rating-criteria-51.htm • Application Of Financial Ratios And Adjustments: https://www.acuite.in/view-rating-criteria-53.htm |
| Note on complexity levels of the rated instrument |
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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.
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