Support from the government of West Bengal
WBPDCL is a wholly-owned undertaking of the GoWB and a strategically important entity of the power sector infrastructure for the state of West Bengal. The ownership structure provides adequate financial flexibility. It is also the nodal agency of the government for undertaking power generation activity in the state. Being a power generation company, WBPDCL is mandated to ensure the generation of power from its installed capacity and supply the same to WBSEDCL. WBPDCL's credit profile is also supported by its access to funds at low cost and its ability to mobilise financial resources from several financial institutions and multilateral development institutions.
Acuité believes that WBPDCL, being a 100 per cent undertaking of GoWB, shall continue to benefit from the financial, operational and management support as and when required. The GoWB has demonstrated financial support by way of loans to WBPDCL on a regular basis. Any changes in the ownership pattern of WBPDCL or any event that impinges GoWB's overall credit profile shall remain a key rating sensitivity.

Strong business risk profile
WBPDCL has achieved revenues of Rs. 11,471.19 Cr. in FY2024 as compared to Rs. 11473.25 Cr. in FY2023. The marginal decline in the operating income is primarily due to overhauling at Sagardighi power plant which has the highest capacity amongst the 5 plants of WBPDCL (1600 out 4265 MW), because of which the Plant Load Factor was reduced. Further, the company has achieved revenues of Rs.5435.38 Cr. till September 2024 (Provisional). Acuité believes that the business risk profile is strengthened by the increase in usage of captive coal, going forward, which is expected to be increase further. The cost-plus tariff model has translated into steady EBITDA margin for the company of about 18.11 per cent in FY2024 and profitability margin of  3.02 percent in FY2024.

Inbuilt ‘cost plus tariff’ structure
The billing of generation charges of WBPDCL are regulated based on the Annual Revenue Requirement (ARR) under ‘cost-plus’ based tariff mechanism. The regulator, WBERC allows a post-tax return on equity of 14 per cent and other uncontrollable expenses are allowed to be passed through in tariff through Annual Performance Review (APR) process.
Acuité derives comfort from the cost plus based tariff mechanism.

Assured Offtake account on PPA
There is a power purchase agreement between WBSEDCL and WBPDCL for 15 years up to 2035. As per the agreement, the entire generating capacity of WBPDCL is allotted to WBSEDCL. WBSEDCL shall purchase such power as per terms conditions set forth in the agreement.
Acuité believes that going forward the long term agreement will continue to ensure assured offtake of the company.

Working capital intensive nature of operations
­The working capital intensive operation of the company is marked by high Gross Current Assets (GCA) of 676 days in March 31, 2024 as compared to 559  days in March 31, 2023. The GCA days are high on account of high debtor days and other current assets. The debtor days stood at 270  days in March 31, 2024 as compared to 220  days as on March 31, 2023. The payments are stretched from the only customer WBSEDCL. The other current assets are high primarily due to the high regulatory assets in the form of fuel cost and fixed cost recoverable. However, the inventory holding is comfortable at 99  days in March 31, 2024 as compared to 73 days in March 31, 2023. Acuité believes that the working capital operations of the firm will remain almost at the same levels as evident from stretched collection mechanism and high regulatory assets over the medium term.