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| Product | Quantum (Rs. Cr) | Long Term Rating | Short Term Rating |
| Bank Loan Ratings | 1500.00 | ACUITE A | Stable | Reaffirmed | - |
| Total Outstanding | 1500.00 | - | - |
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Rating Rationale |
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Acuité has reaffirmed the long-term rating of ‘ACUITE A’ (read as ACUITE A) to the bank facility of Rs.1,500.00 crore of Uttar Haryana Bijli Vitran Nigam Limited. The outlook is ‘Stable’. Rationale for Rating: Acuite has considered the fact that Uttar Haryana Bijli Vitran Nigam Limited is a wholly owned entity of Government of Haryana (GOH). UHBVNL caters to the power requirements of entire North Haryana, thereby covering 10 districts and consumer base of 3.3 million consumer base. Government of Haryana has acquired stake of 96.52%, which provides adequate financial flexibility. The support extended by Government of Haryana in the form of regular infusion of equity and guarantees extended and payment of agricultural subsidies. The company has received aggregate subsidy to the tune of Rs. 2900 crore in FY24 as against Rs. 2722 crore in FY23. The company reported Revenue from Operations of Rs. 18380.86 Crores in FY23 as against Rs. 14153.10 crore during FY22 i.e., with increase in revenue to the tune of 29.87%. The borrowings by UHBVNL is covered by guarantee extended by Government of Haryana.
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| About the Company |
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Uttar Haryana Bijli Vitaran Nigam Limited (UHBVNL), incorporated in 1999, is a wholly owned entity of Government of Haryana (As on 31st March, 2019, GoH held 96% stake in UHBVNL and the balance was held by Uttar Haryana Vidyut Prasaran Nigam Limited) and is engaged in distribution of power. It is responsible for the distribution and retail supply of electricity in the North zone of Haryana comprising of Panchkula, Ambala, Yamunanagar, Kurukshetra, Kaithal, Karnal, Panipat, Sonepat, Rohtak and Jhajjar. The company managed by Mr. Saket Kumar, Mr. Karnesh Sharma, Mrs. Jyoti Saini, Mr. Mohammed Shayin, Mr. Phool Chand Meena, Mrs. Ashwani Kumar Raheja, Mr. Rakesh Agarwal, Mr. Amit Gupta, Mr. Amit Kumar Agrawal, Mr. Parvesh Sharma, Mr. Sunil Chawla and Mr. Pankaj.
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| Unsupported Rating |
| Not Applicable |
| Analytical Approach |
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Acuité has adopted the standalone approach while assessing the business and financial risk profile of UHBVNL and has notched up the rating on the back of benefits emanating from the ownership by Government of Haryana (GoH). GoH holds ~96.52 per cent equity ownership in UHBVNL besides regular managerial and financial support to UHBVNL; the government has supported its bank borrowings by way of Guarantee.
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| Key Rating Drivers |
| Strengths |
| Strategically important role of UHBVNL for the state and support extended by the Government of Haryana
UHBVNL caters to the power requirements of entire North Haryana, thereby covering 10 districts and consumer base of 3.3 million consumer base. Government of Haryana has acquired stake of 96.52%, which provides adequate financial flexibility. The support extended by Government of Haryana in the form of regular infusion of equity and guarantees extended and payment of agricultural subsidies. The company has received aggregate subsidy to the tune of Rs. 2900 crore in FY24 as against Rs. 2722 crore in FY23. Hence, support from GOH is crucial for rating and hence any credit profile of state of Haryana is of key importance. Securitisation of cash flows through an escrow mechanism The facilities availed by UHBVNL is supported by a securitisation of its operating cash flows through an escrow account. Escrowing of cash flows through designated accounts maintained with SBI, with the stipulation that the company to route collections/ receipts/ cash flows through the designated account at least to the extent of 1.5 Times of the monthly debt service obligations (Principal and Interest). Acuité takes comfort from the aforesaid escrow mechanism apart from the unconditional and irrevocable guarantee provided by GoH and believes that adherence to the stipulated structure will remain a key rating sensitivity factor. Improved AT & C Losses There has been improvement in the AT&C Losses i.e., 10.32% in FY 23 as against 12.70% in FY 22 which has resulted in collection efficiency of 100% in FY23. However, the AT&C Losses are high in the first half year (Summer Season) and lower in the second half (Winter Season) of the year. |
| Weaknesses |
| Moderate Financial Risk Profile
The financial risk profile of the company is leveraged with debt-equity ratio above unity. The D-E ratio remained at 2.53 times as on March 31, 2023, vis-à-vis 2.57 times as on March 31, 2022. The borrowings by UHBVNL is covered by guarantee extended by Government of Haryana. The interest coverage ratio declined to 2.72 times during FY23 as against 4.28 times during FY22 and 2.85 times during FY21, backed by dip in operating profit and higher interest cost. The Net Cash Accruals to Total debt amounts to 0.15 times in FY23 as against 0.23 times in FY 22. The total outside liability to tangible net worth also saw minuscule dip to 5.87 times as on March 31 2023 as against 5.37 times as on March 31, 2022. The same is due to increase in tangible net worth to Rs. 2083.71 crore in FY23 over Rs.1881.61 crore in FY22 and higher increase in debt from Rs. 4828.20 Cr. as on March 31, 2022 to 5262.09 Cr. as on March 31 2023. The total debt of the company comprises of long term debt of Rs. 3398.72 Cr., short term debt of Rs. 1490.71 Cr. and Rs. 372.67 Cr. of CPLTD. Moderately intensive working capital management The company has moderately intensive working capital management with Gross Current Asset (GCA) of 102 days in FY23 as against 75 days in FY22. The increase in GCA days is on account of increase in current liabilities i.e. receivables for FSA charges. |
| Rating Sensitivities |
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| Liquidity Position |
| Adequate |
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The liquidity profile of the company continues to remain at adequate level with company reporting net cash accruals of Rs. 724.79 crores against debt obligation of Rs. 575.77 crores in FY23. The company has unencumbered cash and bank balance of Rs.63.43 crore as on March 31, 2023. The borrowings are supported by guarantee extended by Government of Haryana. The facilities are further supported by securitisation of its operating cash flows through an escrow account. Hence, all the collection receipts are routed through escrow account. The current ratio of the company, however, continues to remain below unity i.e., 0.73 times in FY23.
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| Outlook: Stable |
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Acuité believes that UHBVNL will benefit from its natural monopoly in the power distribution business in Haryana and strong support from Government of Haryana. The outlook may be revised to ‘Positive’ in case of healthy growth in scale and profitability of the UHBVNL along with improvement in credit profile of GoH. The outlook may be revised to ‘Negative’ in case of significant buildup in receivables beyond existing levels or sharp deterioration in GoH’s credit profile.
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| Other Factors affecting Rating |
| None |
| Particulars | Unit | FY 23 (Actual) | FY 22 (Actual) |
| Operating Income | Rs. Cr. | 18380.86 | 14153.60 |
| PAT | Rs. Cr. | 263.75 | 670.04 |
| PAT Margin | (%) | 1.43 | 4.73 |
| Total Debt/Tangible Net Worth | Times | 2.53 | 2.57 |
| PBDIT/Interest | Times | 2.72 | 4.28 |
| Status of non-cooperation with previous CRA (if applicable) |
| Not Applicable |
| Any other information |
| None |
| 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 • Group And Parent Support: https://www.acuite.in/view-rating-criteria-47.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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| *Annexure 2 - List of Entities (applicable for Consolidation or Parent / Group / Govt. Support) |
| 1. Government of Haryana |
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Contacts |
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