ICRA has reaffirmed Tata Power Delhi Distribution Limited's (TPDDL) Rs. 4,500 crore term loans and Rs. 145 crore fund-based limits at "ICRA double A minus". Moreover, ICRA has also reaffirmed a rating of "ICRA A one plus" assigned to the Rs. 725 crore non-fund based limits and Rs. 500 crore short-term debt programme of TPDDL.
According to the rating agency's report, the rating action has factored in the satisfactory working of the cost plus tariff mechanism in Delhi as reflected by significant hike in tariffs allowed over the past three years which has made current tariffs nearly cost reflective.
While the ratings continue to derive comfort from the company’s favourable operating position arising from the cost-plus nature of its core business, ICRA was happy to note TPDDL's ability to meet the stringent operating parameters including AT&C loss reduction measures laid down by DERC.
However, the above ratings are constrained by significant build of receivables on account of revenue under recoveries as power purchase costs increased significantly over the years. Further, lower sale rate for surplus power as against the rates approved by DERC has continued to result in power-cost under-recoveries.
As for the key rating sensitivities, the company has listed out certain factors which include TPDDL's timing of additional tariff hikes and its adequacy to not only cover increasing cost of power but also permit eventual liquidation of past under-recoveries.
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