Aravali Power Company Private Limited: Instrument Amount (In Rs Crore) Rating Action

Aravali Power Company Private Limited
Instrument Amount (In Rs Crore) Rating Action

Fund Based Limits 1200.00 [ICRA]A (Stable) assigned
Non-Fund Based Limits 125.00 [ICRA]A1 assigned

ICRA has assigned long term rating of [ICRA]A (pronounced as ICRA A) to the Rs 1200 crore
*
fund
based facilities of Aravali Power Company Pvt Ltd (APCPL)
. The long term rating carries a stable

outlook. ICRA has also assigned short term rating of [ICRA]A1 (pronounced as ICRA A one) to the Rs
125 crore non fund based facilities of APCPL.

ICRAs rating factors in the limited project implementation risks, given that its 1500 MW coal based
thermal power plant in Jhajjar, Haryana is already operational, tying up of power sales through long
term Power Purchase Agreement for the entire capacity and also limited fuel risks given tying up of
Fuel Supply Agreements with Coal India Limiteds subsidiaries. Given the cost plus nature of PPA, the
companys profitability is likely to be stable and not exposed to fuel price risk subject to its ability to
operate within the normative parameters. Although weak demand has resulted in low plant load factor
(PLF) in the last two fiscal years for the company, linkage of capacity charges to Plant availability
factor (PAF) secures the revenues streams of the company. ICRA also substantially derives comfort
from the companys promoter profile with NTPC Ltd. (rated ICRA AAA and A1+) holding a 50% stake
in the company and providing comfort in terms of in-house technical and managerial expertise
available for the company which reduces operations and maintenance risks for the project.

Rating concerns emanate from the presence of counterparty credit risks, as the company is exposed
to financially weak discoms which can also impact the working capital cycle of the company. In this
context however ICRA notes steps being taken by the Central and state govt to improve the financial
strength of the power sector, including debt restructuring under the Financial Restructuring Plan of
Govt of India. Secondly, the companys cost of power is relatively high given the high landed cost of
coal, arising out of its inland location which results in high freight cost, which adversely impacts its
merit order position. Further, ICRA notes that the companys gearing is relatively high at 2.37 times as
on March 2013 given the relatively nascent stage of operations and the coverage indicators are going
to be modest in the near term given the relatively high debt load which is typical to power projects at
an early stage of its life cycle. Going forward, the ability to operate at normative parameters and
improvement in financial profile of state discoms and thereby reduction in counterparty credit risk will
remain key drivers for the companys ratings.

Company Profile
Aravali Power Company Pvt Ltd. (APCPL) is a Joint venture company between NTPC Ltd (50%),
Haryana Power Generation Company Ltd (HPGCL, 25%), and Indraprastha Power Generation
Company Ltd (IPGCL, 25%). APCPL has constructed a 1500 MW coal based power plant near Village
Jharli, District- Jhajjar (Haryana) named Indira Gandhi Super Thermal Power Project (IGSTPP). All
three units of the project have been commissioned now with the last unit achieving COD on April 26,
2013. The current estimated cost of the project is Rs 8587 crore which has been funded in debt to
equity ratio of 70:30. PFC (Power Finance Corporation) has funded the term loans for this project. Fuel
Supply Agreements for the project have been signed with Mahanadi Coalfields Ltd (3.907 MTPA),
Eastern Coalfields Ltd (1.000 MTPA) and Northern Coalfields Ltd (1.000 MTPA). Long term PPA has
been signed for the entire generation capacity with 11 states.

During FY 2013, the company has reported an operating income of Rs 2739.7 crore as against Rs
1397.2 crore in FY 2012; the increase is primary driven by commencement of operations of Unit 2 in
April 2012. The company reported a profit after tax of Rs 177.7 crore in FY 2013 as against Rs 34.2
crore in FY 2012.
September 2013

*
100 lakh = 1 crore = 10 million
For complete rating scale and definitions, please refer to ICRAs website www.icra.in or other ICRA Rating
Publications.

For further details please contact:
Analyst Contacts:
Mr. Sabyasachi Majumdar (Tel. No. +91 124 4545304)
sabyasachi@icraindia.com

Relationship Contacts:
Mr. Vivek Mathur (Tel. No. +91-124-4545310)
vivek@icraindia.com

Copyright, 2013, ICRA Limited. All Rights Reserved.
Contents may be used freely with due acknowledgement to ICRA
ICRA ratings should not be treated as recommendation to buy, sell or hold the rated debt instruments. The ICRA
ratings are subject to a process of surveillance which may lead to a revision in ratings. Please visit our website
(www.icra.in) or contact any ICRA office for the latest information on ICRA ratings outstanding. All information
contained herein has been obtained by ICRA from sources believed by it to be accurate and reliable. Although
reasonable care has been taken to ensure that the information herein is true, such information is provided as is
without any warranty of any kind, and ICRA in particular, makes no representation or warranty, express or
implied, as to the accuracy, timeliness or completeness of any such information. All information contained herein
must be construed solely as statements of opinion and ICRA shall not be liable for any losses incurred by users from
any use of this publication or its contents

Registered Office
ICRA Limited
1105, Kailash Building, 11th Floor, 26, Kasturba Gandhi Marg, New Delhi 110001
Tel: +91-11-23357940-50, Fax: +91-11-23357014

Corporate Office
Mr. Vivek Mathur
Mobile: 9871221122
Email: vivek@icraindia.com

Building No. 8, 2nd Floor, Tower A, DLF Cyber City, Phase II, Gurgaon 122002
Ph: +91-124-4545310 (D), 4545300 / 4545800 (B) Fax; +91- 124-4050424

Mumbai
Mr. L. Shivakumar
Mobile: 9821086490
Email: shivakumar@icraindia.com

3rd Floor, Electric Mansion, Appasaheb Marathe Marg,
Prabhadevi, Mumbai - 400 025
Ph : +91-22-30470000, 24331046/1053
/1062/1074/1086/1087, Fax : +91-22-24331390
Kolkata
Mr. Jayanta Chatterjee
Mobile: 9845099459
Email: jayantac@icraindia.com

A-10 & 11, 3rd Floor, FMC Fortuna, 234/3A, A.J.C. Bose
Road Kolkata700020
Tel: +91-33-22876617/8839 22800008/22831411
Chennai
Mobile: 9845099459

5th Floor, Karumuttu Centre, 498 Anna Salai, Nandanam,
Chennai-600035.
Tel + (91 44) 45964300, Fax + (91 44) 9434 3663

Bangalore
Mobile: 9845099459

'The Millenia',
Tower B, Unit No. 904, 9th Floor, Level 9, 19-14, 1 & 9,
Murphy Road, Bangalore - 560 008
Tel:91-80- 43396400 Fax:91-80-43396409

Ahmedabad
Mr. L. Shivakumar
Mobile: 989986490

907 & 908 Sakar -II, Ellisbridge,
Ahmedabad- 380006
Tel: +91-79-26585049, 26585494, 26584924,
Tele Fax: +91-79-25569231
Pune
Mr. L. Shivakumar
Mobile: 989986490

5A, 5th Floor, Symphony, S.No. 99, CTS 3909, Range Hills
Road, Shivajinagar,Pune-411 090
Tel: + 91-20-25561194-25560196; Fax: +91-20-25561231
Hyderabad
Mobile: 9845099459

4th Floor, SHOBHAN, 6-3-927/A&B. Somajiguda, Raj
Bhavan Road, Hyderabad500083
Tel:- +91-40-40676500

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. The long term rating carries a stable

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