MUMBAI, MAY 06: Text of Crisil press release ondebentures, bank facilities and short-term debt of Tata Power Company Ltd. CRISIL reaffirms ratings on The Tata Power Company Limited Non-Convertible Debentures AA/ Positive (Reaffirmed)Aggregating Rs.22 bln* Rs 18.25 bln Cash Credit AA/Positive (Reaffirmed)/Working Capital Demand LoanRs 0.7 bln Over Draft AA/ Positive (Reaffirmed)/ Working Capital Demand Loan Rs 1.5 bln Term Loan AA/ Positive (Reaffirmed)Rs 30.7 bln Letter of Credit P1+ (Reaffirmed) /Bank Guarantee Rs 5 bln Short-Term Debt Programme P1+ (Reaffirmed) *Outstanding amount as on March 31, 2011. CRISIL has reaffirmed its 'AA/Positive/P1+' rating on The Tata Power Company Ltd's (Tata Power's) debentures, bank facilities and short-term debt. For arriving at its ratings, CRISIL has combined the business and financial risk profiles of Tata Power; its group distribution company, North Delhi Power Limited (NDPL); Tata Power Trading Company Limited; transmission subsidiary, Powerlinks Transmission Limited (PTL; rated 'CCR AA+' by CRISIL); Industrial Energy Limited; the special-purpose vehicle (SPV) formed for the execution of Mundra Ultra Mega Power Project (UMPP), namely, Coastal Gujarat Power Limited (CGPL; 'A+/Positive') and Maithon Power Limited; as well as the SPVs formed for the acquisition of coal companies in Indonesia. CRISIL has also combined the business and financial risk profiles of Tata Power's coal operating companies in Indonesia on a proportionate basis; Tata Power has an effective stake of 30 per cent in these companies. The ratings continue to reflect Tata Power's strong position in the electricity generation, transmission and distribution business, its stable licensee business that has regulated returns, and the significant progress made by the company in its two key ongoing projects, the 4000-megawatt (MW) CGPL project, and the 1050-MW Maithon project. The ratings are underpinned by the company's strong management, stable and healthy accruals, robust liquidity, and continued strong financial flexibility. These rating strengths are partially offset by the change in business profile of the company, with increasing contribution of revenues from the non-regulated businesses and its high debt levels (on a consolidated basis). The first unit of Maithon, with capacity of 525 MW, is expected to commence commercial operations by early 2011-12 (refers to financial year, April 1 to March 31) and the second unit is expected to commence commercial operations four months after the first unit. There has been an estimated cost overrun of Rs.3.8 bln in the Maithon project because of a modification in the railway siding for the project. The first unit of CGPL, with capacity of 800 MW, is expected to commence commercial operations in the second quarter of 2011-12. The other four units, with capacity of 800 MW each, are expected to commence commercial operations in a phased manner; the entire capacity is expected to be operational by the end of 2012-13. CGPL may face cost overruns in the project, largely due to its unhedged exposure to foreign currency debt; however, the overrun is not expected to be significant for the scale of the project. Tata Power has demonstrated strong financial flexibility through timely financial closure for its two ongoing projects, with long-term loans, and raising funds through global depositary receipts, foreign currency convertible bonds, and sale of investments. CRISIL believes that Tata Power enjoys financial flexibility by virtue of the need-based support that it will receive from the other Tata group companies, and its substantial investments in these companies, which can be liquidated to meet its fund requirements. The major projects, currently in Tata Power's pipeline, include the Coastal Maharashtra, the Naraj Marthapur, and the Tiruldih projects. The structuring and progress of execution of these projects will be rating sensitivity factors for Tata Power. OUTLOOK: POSITIVE CRISIL believes that Tata Power will make steady progress in its CGPL and Maithon projects. The rating may be upgraded if Tata Power stabilises operations at the first units of CGPL and Maithon, and does not undertake any incremental large, debt-funded capital expenditure programme, over and above projects currently in its pipeline. Conversely, the outlook may be revised to 'Stable' if the Company faces time and cost overruns in the projects, or if it undertakes any additional large, debt-funded projects over and above the projects currently in its pipeline. ABOUT THE COMPANY Tata Power is India's largest integrated private power utility, with an installed generation capacity of 3127 MW as on March 31, 2011. The company is present across the entire power business spectrum, from generation (thermal, hydro, solar, and wind) to transmission and distribution. The company's licensee businesses in Mumbai and Delhi contribute about 45 per cent to its consolidated revenues. Tata Power also supplies power to Tata Steel Ltd in Jharkhand, and to Karnataka distribution companies as an independent power producer. PTL, a joint venture of Tata Power and Power Grid Corporation of India Ltd ('AAA/Stable/P1+'), runs a 400-kilovolt transmission line from Bhutan to Delhi. For 2009-10, Tata Power reported, on consolidated basis, a net profit of Rs.19.75 bln on net revenues of Rs.189.85 bln, against a net profit of Rs.12.64 bln on net revenues of Rs.180.61 bln for 2008-09. For the nine months ended December 31, 2010, the Company reported, on consolidated basis, a net profit of Rs.14.26 bln on net revenues of Rs.143.62 bln, against Rs.10.32 bln and Rs.140.65 bln respectively for the corresponding period of the previous year. Compiled by Abhijeet SawantPhone: +91 (22) 66497000. feedback@tickerplantindia.com Copyright (c) TickerPlant Ltd.
Copyright (c) TickerPlant Ltd.
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