Brickwork Ratings revises the ratings for the Bank Loan Facilities of Rs. 1500.00 Crs. of Andhra Pradesh Power Development Company Limited.
ParticularsFacilities** | Amount (Rs.Crs.) | Tenure | Rating# | ||
---|---|---|---|---|---|
Previous | Present | Previous (01 Dec 2020) |
Present | ||
Fund Based | 1500.00 | 1500.00 | Long Term |
BWR BB-/Negative
Downgrade and Change in Outlook |
BWR C
Downgrade |
Grand Total | 1500.00 | 1500.00 | (Rupees One Thousand Five Hundred Zero Crores Only) |
Brickwork Ratings (BWR) downgrades the ratings of Andhra Pradesh Power Development Company Limited (APPDCL or the company) considering delays in servicing the debt obligations which are not being rated by BWR. Hence, on cross-default basis, the rated facilities have been downgraded to BWR C. The ratings are also constrained by weak debt service coverage indicators, high debt-equity levels, and delay in the realization of receivables. The ratings are partially offset by the parentage and the improvement in tangible net worth and operating profitability margins.
KEY RATING DRIVERSCredit Strengths:
APPDCL is a subsidiary of Andhra Pradesh Power Generation Corporation Limited (APGENCO) (50.45% shareholding). The other shareholders include the AP and Telangana discoms, and the Government of Andhra Pradesh.
During FY21, the company's scale of operations improved to Rs. 3645.18 Crs from Rs. 3439.26 Crs in FY20. The operating profit margin improved to 38.76% in FY21 from 30.98% in FY20. The company's tangible net worth improved to Rs. 475.30 Crs from Rs. 98.25 Crs on account of infusion of capital in the form of share application pending allotment of Rs.483.97 Crs indicating support from the parent companies.
Apart from the rated facilities, the company has availed term loans from the financial institutions, which are not being rated by BWR. Towards these loans from financial institutions, there are delays in meeting the debt obligations.
Although the company has shown improvement in the operating profit and reduction in the net losses during FY21 when compared with FY20, the company is not able to generate adequate cash accruals to meet its interest and debt service obligations. The company is continuously reporting weak debt service and interest coverage indicators. The company's total debt stood at Rs. 19047.21 Crs as of 31 March 2021. The company has reported a high debt-equity level of 40.07X as of FY21.
As of 31 March 2021, the company's receivables position stood at Rs. 1872.58 Crs. Timely realization of the dues from the debtors, which in turn improves the cash flows is a key rating monitorable.
To arrive at its ratings, BWR has relied on the standalone financials of the company. BWR has applied its rating methodology as detailed in the Rating Criteria (hyperlinks provided at the end of this rationale).
RATING SENSITIVITIES
Going forward, the ability of the company to generate adequate cash flows for meeting its debt obligations, the timely realization of its debtors, and meeting the debt obligations on time will be the key rating sensitivities.
The liquidity position is poor. The Company is not generating adequate cash accruals to meet its debt obligations. During FY21, the company has generated net cash accruals of Rs.62.54 Cr as against the debt obligations of Rs. 1132.44 Crs. However, the company is relying on short-term to medium-term loans to meet its debt obligations. As of 31 March 2021, the cash and cash equivalents were reported at Rs. 405.17 Crs
ABOUT THE ENTITYAndhra Pradesh Power Development Company Limited (APPDCL) was incorporated on 1-March-2006. APPDCL is a subsidiary of Andhra Pradesh Power Generation Corporation Limited (APGENCO). APPDCL is a Special Purpose Vehicle formed by Andhra Pradesh Power Generation Corporation Limited (APGENCO) to undertake the development of Sri Damodaram Sanjeevaiah Thermal Power Station (SDSTPS) (2x800 MW). APPDCL has commissioned and commenced operations of its 1st stage of 2*800MW units on Feb 5, 2015, for unit-I (1*800MW) and for Unit-II on 24 Aug 2015 (1*800MW).
KEY FINANCIAL INDICATORS (Standalone)Key Parameters | Units |
FY 20-21 (Audited) |
FY 19-20 (Audited) |
---|---|---|---|
Operating Revenue | Rs.Crs. | 3645.18 | 3439.26 |
EBITDA | Rs.Crs. | 1412.94 | 1065.25 |
PAT | Rs.Crs. | -106.92 | -431.26 |
Tangible Net Worth | Rs.Crs. | 475.30 | 98.25 |
Total Debt/Tangible Net Worth | Times | 40.07 | 192.96 |
Current Ratio | Times | 0.89 | 0.82 |
The terms of sanction include standard covenants normally stipulated for bank loan facilities for availing the working capital loans.
On account of inadequate information and lack of management cooperation, CRISIL has migrated the rating on bank facility of APPDCL to 'CRISIL B-/Stable Issuer Not Cooperating' as on 30-Jul- 2018, and further it was reaffirmed at ‘CRISIL B-/Stable Issuer Not Cooperating’ as on 30-Oct-2019 and on 29-Jan-2021.
ANY OTHER INFORMATIONNA
RATING HISTORY FOR THE PREVIOUS THREE YEARS (including withdrawal and suspended)Facilities | Current Rating (2021) | 2020 | 2019 | 2018 | |||||
---|---|---|---|---|---|---|---|---|---|
Type | Tenure | Amount (Rs.Crs.) |
Rating | Date | Rating | Date | Rating | Date | Rating |
Fund Based | LT | 1500.00 |
BWR C
(Downgrade) |
01Dec2020 |
BWR BB-Negative
(Downgrade and Change in Outlook) |
08Nov2019 |
BWR BBStable
(Reaffirmation) |
05Sep2018 |
BWR BBStable
(Assignment) |
Grand Total | 1500.00 | (Rupees One Thousand Five Hundred Zero Crores Only) |
BWR complexity levels are meant for educating investors. The BWR complexity levels are available at www.brickworkratings.com / download / ComplexityLevels.pdf. Investors queries can be sent to info@brickworkratings.com.
Hyperlink/Reference to applicable CriteriaAnalytical Contacts | |
---|---|
Sowmya Yatham Manager - Ratings Board : +91 80 4040 9940 sowmya.y@brickworkratings.com |
Vipula Sharma Director - Ratings Board : +91 80 4040 9940 vipula.s@brickworkratings.com |
1-860-425-2742 | media@brickworkratings.com |
SL.No. | Name of the Bank/Lender | Type Of Facilities | Long Term(Rs.Crs.) | Short Term(Rs.Crs.) | Total(Rs.Crs.) |
---|---|---|---|---|---|
1 | State Bank Of India (SBI) | Cash CreditSanctioned | 500.00 | _ | 500.00 |
2 | Un tied portion | Working Capital (CC)Proposed | 600.00 | _ | 600.00 |
3 | Union Bank of India | Cash CreditSanctioned | 400.00 | _ | 400.00 |
Total | 1500.00 | 0.00 | 1500.00 | ||
TOTAL (Rupees One Thousand Five Hundred Zero Crores Only) |
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About Brickwork RatingsBrickwork Ratings (BWR), a Securities and Exchange Board of India [SEBI] registered Credit Rating Agency and accredited by Reserve Bank of India [RBI], offers credit ratings of Bank Loan, Non- convertible / convertible / partially convertible debentures and other capital market instruments and bonds, Commercial Paper, perpetual bonds, asset-backed and mortgage-backed securities, partial guarantees and other structured / credit enhanced debt instruments, Security Receipts, Securitization Products, Municipal Bonds, etc. BWR has rated over 11,400 medium and large corporates and financial institutions’ instruments. BWR has also rated NGOs, Educational Institutions, Hospitals, Real Estate Developers, Urban Local Bodies and Municipal Corporations. BWR has Canara Bank, a leading public sector bank, as one of the promoters and strategic partner. BWR has its corporate office in Bengaluru and a country-wide presence with its offices in Ahmedabad, Chandigarh, Chennai, Hyderabad, Kolkata, Mumbai and New Delhi along with representatives in 150+ locations.
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