NLC Tamil Nadu Power Limited

Transcription

1 Ratings NLC Tamil Nadu Power Limited Facilities Amount (Rs. crore) Ratings 1 Remarks Long term Bank Facilities* 3, CARE AAA (SO)(In-Principle) [Triple A (Structured Obligation)] (In-Principle) Long term Bank Facilities* 1,184.92@ CARE AAA (SO) [Triple A (Structured Obligation)] Total Facilities (Rupees Four Thousand Six Hundred Twenty One crore and Ninety Two Lakh only) Assigned Final Rating * backed by Letter of Comfort given by Neyveli Lignite Corporation Limited rating of Provisional CARE AAA (SO) was assigned to these bank facilities. Subsequent to the submission of the duly executed letter of comfort, the final rating is assigned to these bank facilities. CARE has adopted its Rating methodology for Private Power Producers for assessing NLC Tamil Nadu Power Limited. Rating Rationale The rating is based on the credit enhancement in the form of Letter of Comfort extended by Neyveli Lignite Corporation Limited (NLC) to the term loans of NLC Tamil Nadu Power Limited (NTPL). The credit profile of NLC derives strength from the company being a Navratna Public Sector Enteprise with 90% stake held by Government of India (GOI), its long operational track record of more than four decades, assured offtake of power (by virtue of being one of the lowest cost producers largely due to high operational efficiency and depreciated nature of its plants) presence of own lignite mines with adequate resources resulting in guaranteed fuel supply, its strong financial position characterized by highly favourable capital structure along with high profit margin and consistently healthy internal accruals. These credit strengths are offset to an extent by delay in realization of receivables from one of its major customers (TANGEDCO) leading to elongation in working-capital cycle notwithstanding the improvement in collections in the recent past. Background NTPL is a joint venture company between Neyveli Lignite Corporation Limited (NLC) and Tamil Nadu Generation and Distribution Corporation (TANGEDCO) to implement the 1,000 MW Thermal Power project in Tuticorin, Tamil Nadu. NTPL was set up consequent to a MoU entered into by NLC with Government of Tamil Nadu in 2003 and a joint venture agreement between NLC and TANGEDCO in June The shareholding of NLC in NTPL is 89% and the rest of the shares are held TANGEDCO as on March 31, 2015 Project Status The project is a conventional thermal power plant comprising two units of Pulverised Coal Fired Steam boilers with two units of steam turbine generators of 500 MW each. The project implementation is carried out by NLC itself and is assisted by project consultants M/s Mecon Ltd. Unit-I of the project was originally scheduled to be completed by 46 months from the date of sanction i.e., March 2012 and Unit II by August However, there has been a delay in achievement of certain milestones and COD was revised twice and latest COD being October 2015 and December 2015 for Unit-1 and Unt-2 respectively. Actual COD was declared on June 18, 2015 and August 29, 2015 for Unit I and Unit II. The power generation of NTPL has been allocated to Southern states and NTPL has already signed Power Purchase Agreement for 25 years with respective states to whom power has been allocated. NTPL has signed fuel supply agreement with Mahanadi Coalfields Limited (MCL) in September 2013 for the supply of 3 Million Tons Per Annum coal for NTPL project. The coal procured from MCL fields will be first transported to Paradip port by rail and then transported to Tuticorin port by sea. There it will be stored in a dedicated coal berth from which the required coal will be transported to the power plant. Also a contract has been awarded to M/s. MSTC for supply of Million Tons of imported coal. 1 Complete definitions of the ratings assigned are available at and other CARE publications 1

2 Project funding The revised cost estimate for the project stands at Rs.6,602 crore being funded by term debt of Rs.4,622 crore and rest through equity. Company has received a term loan of Rs.2,500 crore from consortium of bankers headed by Bank of Baroda and received a term loan of Rs.937 crore from consortium of bankers headed by Bank of India. The incremental debt on account of increased project cost was funded out by bridge loan extended by NLC for Rs crore in FY14 and FY15. Subsequently, the above loan was re-financed by Power Finance Corporation Limited (PFC) based on the letter of comfort given by NLC. NTPL had availed Rs.888 crore from PFC as on September 26, The amount outstanding to NLC from NTPL is Rs crore as on September 26, 2015 Credit Risk Assessment About the Guarantor Neyveli Lignite Corporation Limited (NLC), established in 1956 is a public sector enterprise under the administrative control of Ministry of Coal, Government of India (GoI) and is engaged in lignite mine production and thermal power generation. GoI holds 90.00% stake in the company as on March 31, In April 2011, NLC was accredited with Navratna status by the Department of Public Enterprises, GoI which would significantly benefit the company in terms of decisions pertaining to capital expenditure. Power Generation NLC is one of the major power generating sources catering to all the states of South India and has been a low cost power producer. NLC is presently operating five thermal power stations with an aggregate power generation capacity of 3,253.5 MW (including Wind mill power generation of 13.5 MW). During FY15, NLC generated 19,729 Million Units (MU) of power as against 19,988 MU during FY14. Out of total power generated, power exported was 16,671 MU as against 16,956 MU during FY14. The drop in the power generation and export was due to the technical problems faced by Barsingar TPS. The average PLF for FY15 was 81.36% as against 83.19% during FY14. Presence of own lignite mines with adequate reserves NLC is presently operating 4 mines (3 in Tamil Nadu and 1 in Rajasthan) with aggregate capacity of 30.6 Million Metric Tonnes Per Annum (MTPA). During FY15, the lignite production from these mines was Lakh Ton (LT) as against LT during FY14. The restructuring of Mine I and Mine IA is under process. Restructuring will help NLC to expand the overall capacity by 1.5 MTPA. 2

3 Strong financial position characterized by highly favorable capital structure coupled with high profit margins NLC generated total income of Rs.6,777 crore during FY15 as against total income of Rs.6,913 crore during FY14. Revenue from sale of power and lignite was Rs.5,590 crore and Rs.494 crore during FY15 as against revenue from sale of power and lignite was Rs.5,361 crore and Rs.599 crore in FY14. The PBILDT margin of NLC has remained high and relatively stable in the past. The sale price of power is fixed as per CERC Tariff guidelines. The tariff is based on two part tariff formula which ensures recovery of its costs along with fixed Return on Equity (RoE) subject to achievement of certain operational parameters. As on March 31, 2015 NLC s Net worth was Rs.14,371 crore and Overall gearing ratio remained relatively low at 0.46 times The liquidity position of the company also has been strong with cash balance of Rs.3,537 crore as on March 31, From FY11 onwards, there has been increase in debtor days on account of delay in realisation of TANGEDCO receivables. However, with the improvement in payments by TANGEDCO, the average collection period has improved from 181 days in FY14 to 132 days in FY15. Prospects of domestic power sector As per executive summary of the power sector for till June 2015 from Central Electricity Authority (CEA), per capita consumption in India has been growing from 818 (KWh) in FY11 to 957 (KWh) in FY14. The deficit for the entire country for the month of June 2015 declined to 2% from 3.7% (Y-o-Y) due to significant capacity addition. As on June 30, 2015, 64,294 MW of capacity has been added for the target of 88,537 MW as per 12th plan target. Despite capacity addition, deficit still continues in the southern region. As per Central Electricity Authority (CEA), Load Generation Balance Report, during FY15, out of peak demand of 39,094 MW in the southern region (Andhra Pradesh, Karnataka, Kerala, Tamil Nadu, Telangana, Puducherry and Lakshwadeep), the peak power met was 37,047 MW. The peak deficit for Karnataka, Kerala, Tamil Nadu and Puducherry was 452MW, 166MW, 209MW and 41MW during FY15. The anticipated demand and supply of power for the southern region during FY16 is given below. Source: Load Generation Balance Report , CEA 3

4 The peak deficit for the individual states in the southern region is given below. Source: Load Generation Balance Report , CEA Given the significant power supply deficit in the country, low per capita consumption of power in India compared with the world average, growing industrialization and urbanization and GoI recognizing the power sector as a key infrastructure sector to be developed to sustain the Indian economic growth, the overall growth potential for the companies in the power sector is favourable. Financial Performance of NLC (Consolidated) (Rs. Cr) For the period ended / as at March 31, (12m, A) (12m, A) (12m, A) Working Results Net Sales 5,593 5,968 6,104 Total Operating income 6,098 6,913 6,777 PBILDT 2,538 2,865 2,626 Interest Depreciation PBT 1,914 2,213 2,066 PAT (after deferred tax) 1,458 1,502 1,579 Gross Cash Accruals 2,223 2,154 2,083 Financial Position Equity Capital 1,678 1,678 1,678 Networth 13,080 14,198 14,371 Total capital employed 20,351 21,608 22,850 Key Ratios Growth Growth in Total income (%) (1.97) Growth in PAT (after D.Tax) (%) Profitability PBILDT/Total Op. income (%) PAT (after deferred tax)/ Total income (%) ROCE (%) Solvency Long Term Debt Equity ratio (times) Overall gearing ratio(times) PBILDT/Interest(times) PBIT/Interest (times) Term debt/gross cash accruals (years) Total debt/gross cash accruals (years) Liquidity Current ratio(times) Quick ratio(times) Turnover 4

5 Average collection period (days) Average creditors (days) Average inventory (days) Operating cycle (days) A Audited Details of Rated Facilities 1.Long-term facilities 1.A. (Term loans) Banker Type of facility Tenure Amount (Rs.cr) Bank of Baroda Term Loan LT 500 Bank of India Term Loan LT 450 Allahabad Bank Term Loan LT 250 Syndicate Bank Term Loan LT 250 Dena Bank Term Loan LT 250 Punjab & Sind Bank Term Loan LT 250 Indian Bank Term Loan LT 150 Corporation Bank Term Loan LT 150 Bank of Maharashtra Term Loan LT 150 Oriental Bank of Commerce Term Loan LT 100 Bank of India Term Loan LT 200 Central Bank Term Loan LT 200 Indian Bank Term Loan LT 537 Power Finance Corporation of India Term Loan LT Total LT 4, Grand Total 4, Total long term facilities at (1A) Rs. 4, crore Analyst Contact Name: Mr. P. Edwin Irudayaraj Tel: edwin.raj@careratings.com (This follows our brief rationale for entity published on 08 October, 2015) Disclaimer: CARE s ratings are opinions on credit quality and are not recommendations to sanction, renew, disburse or recall the concerned bank facilities or to buy, sell or hold any security. CARE has based its ratings on information obtained from sources believed by it to be accurate and reliable. CARE does not, however, guarantee the accuracy, adequacy or completeness of any information and is not responsible for any errors or omissions or for the results obtained from the use of such information. Most entities whose bank facilities/instruments are rated by CARE have paid a credit rating fee, based on the amount and type of bank facilities/instruments. In case of partnership/proprietary concerns, the rating assigned by CARE is based on the capital deployed by the partners/proprietor and the financial strength of the firm at present. The rating may undergo change in case of withdrawal of capital or the unsecured loans brought in by the partners/proprietor in addition to the financial performance and other relevant factors. 5

6 CONTACT Head Office Mumbai Mr. Sanjay Kumar Agarwal Mr. Amod Khanorkar Mobile: Mobile: sanjay.agarwal@careratings.com amod.khanorkar@careratings.com CREDIT ANALYSIS & RESEARCH LIMITED Corporate Office: 4th Floor, Godrej Coliseum, Somaiya Hospital Road, Off Eastern Express Highway, Sion (East), Mumbai Tel: Fax: care@careratings.com Website: REGIONAL OFFICE AHMEDABAD Mr. Mehul Pandya 32, Titanium, Prahaladnagar Corporate Road, Satellite, Ahmedabad Cell: Tel: mehul.pandya@careratings.com BENGALURU Mr. Dinesh Sharma Unit No , 11th Floor, Prestige Meridian II, No. 30, M.G. Road, Bangalore Cell: Tel: , dinesh.sharma@careratings.com CHANDIGARH Mr. Sajan Goyal 2nd Floor, S.C.O , Sector 34-A, Chandigarh Cell: Tel: / 09 sajan.goyal@careratings.com CHENNAI Mr. V Pradeep Kumar Unit No. O-509/C, Spencer Plaza, 5th Floor, No. 769, Anna Salai, Chennai Cell: Tel: / pradeep.kumar@careratings.com COIMBATORE Mr. V Pradeep Kumar T-3, 3rd Floor, Manchester Square Puliakulam Road, Coimbatore Cell: Tel: / pradeep.kumar@careratings.com HYDERABAD Mr. Saikat Roy 401, Ashoka Scintilla, , Himayat Nagar, Hyderabad Cell : Tel: saikat.roy@careratings.com JAIPUR Mr. Rakesh Jayaraman 304, Pashupati Akshat Heights, Plot No. D-91, Madho Singh Road, Near Collectorate Circle, Bani Park, Jaipur Cell: Tel: / 14 rakesh.jayaraman@careratings.com KOLKATA Ms. Priti Agarwal 3rd Floor, Prasad Chambers, (Shagun Mall Bldg.) 10A, Shakespeare Sarani, Kolkata Cell: ; Tel: priti.agarwal@careratings.com NEW DELHI Ms. Swati Agrawal 13th Floor, E-1 Block, Videocon Tower, Jhandewalan Extension, New Delhi Cell: ; Tel: swati.agrawal@careratings.com PUNE Mr. Rahul Patni 9th Floor, Pride Kumar Senate, Plot No. 970, Bhamburda, Senapati Bapat Road, Shivaji Nagar, Pune Cell: ; Tel: rahul.patni@careratings.com CIN - L67190MH1993PLC