Brickwork Ratings revises the ratings for the Bank Loan Facilities of Rs. 4204.22 Crs. of Andhra Pradesh Power Generation Corporation Ltd.
ParticularsFacilities** | Amount (Rs.Crs.) | Tenure | Rating# | ||
---|---|---|---|---|---|
Previous | Present | Previous (01 Mar 2021) |
Present | ||
Fund Based | 3904.22 | 3904.22 | Long Term |
BWR BBB+/Stable
Reaffirmation |
BWR C
Downgrade |
Non Fund Based | 300.00 | 300.00 | Short Term |
BWR A2
Reaffirmation |
BWR A4
Downgrade |
Grand Total | 4204.22 | 4204.22 | (Rupees Four Thousand Two Hundred Four Crores and Twenty Two lakhs Only) |
Brickwork Ratings (BWR) downgrades the ratings of Andhra Pradesh Power Generation Corporation Limited (APGENCO or the company) considering delays in servicing the debt obligations which are not being rated by BWR. Hence, on cross-default recognition, the rating for the bank loan facilities has been downgraded to BWR C/A4. The ratings are constrained by high debt-equity levels, the company availing short- to medium-term loans to meet mismatch in cash flows, and the delay in the realization of the outstanding receivable position and the company’s exposure to regulatory risks. However, the ratings are partially offset by the strong parentage considering the company is wholly owned by the Government of Andhra Pradesh (GoAP) and experienced management.
KEY RATING DRIVERSCredit Strengths:
APGENCO is wholly owned by the GoAP with adequate state government support due to the strategic importance of the power sector and implicit support from the GoAP.
Sri Dr. Srikant Nagulapalli, IAS is the chairman, and Mr. B Sreedhar, IAS, is the managing director of the APGENCO. There are five other directors in the company. All the board members are well-qualified and have vast experience in the industry.
During the last three years, APGENCO has reported an increase in the debt-equity levels. The debt-equity level deteriorated from 3.81X as of 31 March 2018 to 5.53X as of 31 March 2020. The increase in debt-equity levels was mainly on account of the debt availed for the ongoing CAPEX and the delay in the equity contribution for the ongoing CAPEX. However, the state government has agreed to support APGENCO by providing a guarantee for the fresh borrowings availed by it
APGENCO had continued to report high outstanding receivables levels in the last three years. The outstanding receivables were reported at Rs. 9951.59 Crs and Rs. 10147.84 Crs as of FY19 and FY20, respectively. Of the said receivables, Rs. 3441.78 Crs were receivables outstanding for more than six months from TSDISCOMs, and Rs. 6706.06 Crs were receivables outstanding less than six months from APDISCOMs.
The company has continuously been reporting weak debt service coverage indicators since the last three years. However, the company has informed that for meeting the shortfall in the debt obligations, APGENCO is availing short-term loans from banks and financial institutions.
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 as confirmed by the company and the lender.
To arriving at its ratings, BWR has considered the standalone financials of the company with support from the State Government . 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.
APGENCO has not generated adequate cash flows from operations for repaying its debt obligations. The company has been increasing borrowings for meeting these shortfalls. The company has reported a cash balance of Rs. 8.32 Crs as of 31 March 2020. Although the liquidity indicators were reported at poor levels, the company has been supported by the state government of Andhra Pradesh which owns the entire shareholding in the company.
ABOUT THE ENTITYAndhra Pradesh Power Generation Corporation Limited (APGENCO ) was formed after unbundling the erstwhile AP State Electricity Board (APSEB) into APTRANSCO and APGENCO under the AP Electricity Reforms Act, 1998, on 01 Feb 1999. As per AP Re-organisation Act, 2014, a separate state-generating corporation was created with effect from 2 June 2014 for the state of Telangana. APGENCO was bifurcated into APGENCO (Residuary) and Telangana Generation Corporation Limited (TSGENCO). The power projects located in Telangana have been transferred to TSGENCO with effect from 2 June 2014. The projects located in the residual AP remained with APGENCO. APGENCO has an installed capacity of 5613.026MW, consisting of thermal-3410MW, hydel-1797.60MW, and solar-405.426 MW.
KEY FINANCIAL INDICATORS (Standalone)Key Parameters | Units |
FY 19-20 (Audited) |
FY 18-19 (Audited) |
---|---|---|---|
Operating Revenue | Rs.Crs. | 10053.35 | 9735.39 |
EBITDA | Rs.Crs. | 3148.25 | 2432.98 |
PAT | Rs.Crs. | 10.05 | 24.89 |
Tangible Net Worth | Rs.Crs. | 4026.14 | 4016.25 |
Total Debt/Tangible Net Worth | Times | 5.53 | 5.13 |
Current Ratio | Times | 1.75 | 1.62 |
The terms of sanction include standard covenants normally stipulated for bank loan facilities
Nil
ANY OTHER INFORMATIONNil
RATING HISTORY FOR THE PREVIOUS THREE YEARS (including withdrawal and suspended)Facilities | Current Rating (2021) | 2021 (History) | 2020 | 2019 | 2018 | ||||||
---|---|---|---|---|---|---|---|---|---|---|---|
Type | Tenure | Amount (Rs.Crs.) |
Rating | Date | Rating | Date | Rating | Date | Rating | Date | Rating |
Fund Based | LT | 3904.22 |
BWR C
(Downgrade) |
01Mar2021 |
BWR BBB+Stable
(Reaffirmation) |
21Jan2020 |
BWR BBB+Stable
(Downgrade) |
29Mar2019 |
BWR AStable
(Reaffirmation) |
NA |
NA
|
Non Fund Based | ST | 300.00 |
BWR A4
(Downgrade) |
01Mar2021 |
BWR A2
(Reaffirmation) |
21Jan2020 |
BWR A2
(Downgrade) |
29Mar2019 |
BWR A2+
(Reaffirmation) |
NA |
NA
|
Grand Total | 4204.22 | (Rupees Four Thousand Two Hundred Four Crores and Twenty Two lakhs 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 | Andhra Bank | Cash CreditSanctioned | 500.00 | _ | 500.00 |
2 | Bank of Baroda | Cash CreditSanctioned | 200.00 | _ | 200.00 |
3 | Bank of Maharashtra | Working Capital Demand LoanSanctioned | 20.00 | _ | 20.00 |
4 | Bank of Maharashtra | Cash CreditSanctioned | 200.00 | _ | 200.00 |
5 | Bank of Maharashtra | Funded Interest Term LoanSanctioned | 0.16 | _ | 0.16 |
6 | Bank of Maharashtra | Funded Interest Term LoanSanctioned | 5.05 | _ | 5.05 |
7 | Canara Bank | Working Capital Demand LoanSanctioned | 14.30 | _ | 14.30 |
8 | Canara Bank | Cash CreditSanctioned | 200.00 | _ | 200.00 |
9 | Karur Vysya Bank | Term LoanSanctioned | 31.54 | _ | 31.54 |
10 | Karur Vysya Bank | Term LoanSanctioned | 100.00 | _ | 100.00 |
11 | Punjab National Bank | Cash CreditSanctioned | 200.00 | _ | 200.00 |
12 | Punjab National Bank | Working Capital Demand LoanSanctioned | 20.00 | _ | 20.00 |
13 | State Bank Of India (SBI) | Letter of CreditSanctioned | _ | 75.00 | 75.00 |
14 | State Bank Of India (SBI) | Term LoanSanctioned | 852.47 | _ | 852.47 |
15 | State Bank Of India (SBI) | Bank GuaranteeSanctioned | _ | 125.00 | 125.00 |
16 | State Bank Of India (SBI) | Cash CreditSanctioned | 500.00 | _ | 500.00 |
17 | State Bank Of India (SBI) | Working Capital Demand LoanSanctioned | 33.34 | _ | 33.34 |
18 | State Bank Of India (SBI) | Funded Interest Term LoanSanctioned | 11.84 | _ | 11.84 |
19 | Tamilnadu Mercantile Bank Limited | Cash CreditSanctioned | 100.00 | _ | 100.00 |
20 | Tamilnadu Mercantile Bank Limited | Working Capital Demand LoanProposed | 100.00 | _ | 100.00 |
21 | Union Bank of India | Working Capital Demand LoanSanctioned | 50.00 | _ | 50.00 |
22 | Union Bank of India | Bank GuaranteeSanctioned | _ | 100.00 | 100.00 |
23 | Union Bank of India | Cash CreditSanctioned | 750.00 | _ | 750.00 |
24 | United Bank of India | Funded Interest Term LoanSanctioned | 15.52 | _ | 15.52 |
Total | 3904.22 | 300.00 | 4204.22 | ||
TOTAL (Rupees Four Thousand Two Hundred Four Crores and Twenty Two lakhs Only) |
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