| PTC Energy Limited | ||||||
| Ratings upgraded to 'Crisil AA/Stable/Crisil A1+'; Removed from 'Watch Positive' | ||||||
| Rating Action | ||||||
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| Note: None of the Directors on Crisil Ratings Limited’s Board are members of rating committee and thus do not participate in discussion or assignment of any ratings. The Board of Directors also does not discuss any ratings at its meetings. | ||||||
| 1 crore = 10 million | ||||||
| Refer to Annexure for Details of Instruments & Bank Facilities |
Detailed Rationale Crisil Ratings has removed its ratings on the bank facilities of PTC Energy Limited (PEL) from ‘Rating Watch with Positive Implications’ and has upgraded the ratings to ‘Crisil AA/Crisil A1+’ from ‘Crisil A/Crisil A1‘ while assigning a ‘Stable’ outlook to the long-term rating. |
Analytical Approach Crisil Ratings has factored in support from the ultimate parent, ONGC Limited, as PEL is its wholly owned step-down subsidiary. The company receives need-based operational, managerial and financial support from the ultimate parent. |
Key Rating Drivers & Detailed Description Strengths: Strong financial, operational and managerial support from the ultimate parent PEL benefits from the leadership position of ONGC Limited, its strong market linkages and sectoral expertise. ONGC Limited has a target to touch 10GW of renewable energy capacity by 2030 through its renewable arm, ONGC Green. The acquisition of PEL is in line with ONGC Limited’s this vision. Crisil Ratings expects PEL to receive operational and managerial support from the new ultimate parent, ONGC Limited, as and when required. Any change in stance of support from the ultimate parent will be a key monitorable.
Low offtake risk The entire operational capacity of 288.8 MW is tied up through long-term power purchase agreements (PPAs) with distribution companies (discoms) of Madhya Pradesh (MP), Andhra Pradesh (AP) and Karnataka (spread over 25, 25 and 20 years, respectively).
Weaknesses: Exposure to inherent risk of variability in wind speed and pattern Variation in wind speed and pattern may lead to low operating plant load factor (PLF) and thus, impair cash flow. PLF was constrained because of stabilisation and technical issues during the initial years, and low wind speed led to lower than P90 PLF in fiscals 2022 and 2023. While the performance has improved during fiscal 2024, it again declined to the long term average in YTD fiscal 2025, that is below P90 levels. Nevertheless, liquidity cushion in the form of debt service reserve account (DSRA) and need-based support from ONGC Limited will mitigate this risk. That said, operational performance of projects and their impact on cash flow will remain a key monitorable.
Exposure to counterparty risk Cash flow remains susceptible to delays in payments by counterparties, given their weak credit risk profiles. In the past, payments from discoms of MP and Karnataka, though delayed, were received at regular intervals. In case of AP, there was uncertainty over the stance of the State Electricity Regulatory Commission on review of the PPA tariff. After the High Court of AP issued an order related to PPA tariff renegotiation for wind and solar power projects in October 2019, the discom has been paying Rs 2.43 per unit towards past dues. This, along with delays from other state discoms, led to an increase in receivables.
However, in March 2022, the High Court vide its order, directed AP discom to honor terms of the signed PPAs and clear pending dues as per the tariff agreed under the PPA within six weeks. The State discom has started paying instalments under the new Electricity (Late Payment Surcharge and Related Matters) Rules, 2022. This helped receivables improve to Rs 187 crore as of Feb 2025, from Rs 275 crore as of March 2023 (Rs 445 crore as of March 2022). Further, receipt of pending instalments in the coming months will help reduce receivables. However, timely collection of dues will remain a key monitorable, given the weak financial position of the counterparties. |
Liquidity: Strong The company has a DSRA covering six months of debt obligation for 209.3 MW and DSRA of three months for the remaining 79.5 MW. As on Feb 28, 2025, PEL had maintained DSRA of Rs 101 crore (Rs 67 crore in form of fixed deposits and Rs 34 crore as bank guarantee). In addition, cash and equivalent, including bank balance and deposits, stood at Rs 89 crores. Hence, the internal accrual, unutilised bank limits and cash and equivalent will adequately cover debt obligation. Timely collection and reduction in receivables from all counterparties, leading to recouping of liquidity, is a key monitorable. Further, PEL enjoys strong financial flexibility as it is a part of the ONGC group. |
Outlook: Stable Crisil Ratings believes PTC Energy Limited will continue to benefit from stable cash flow backed by long term PPA and timely payments from the offtakers over the medium term. Further, PEL will remain strategically important to ONGC Limited and receive need-based support from the latter. |
Rating Sensitivity Factors Upward Factors
Downward Factors
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About the Company PEL is a wholly owned subsidiary of ONGC Green Limited, which, in turn, is a wholly owned subsidiary of ONGC Limited. The company has aggregate capacity of 288.8 MW of operational wind power assets, of which 50 MW each is in Madhya Pradesh and Karnataka and 188.8 MW in Andhra Pradesh. |
About the Group ONGC Limited is India's largest exploration and production company. It explores, develops and produces crude oil and natural gas in India and abroad. The company functions under the administrative control of the Ministry of Petroleum and Natural Gas; the government held 58.89% of the company’s equity capital as on June 30, 2024.
For fiscal 2024, ONGC, on a consolidated basis, had a profit after tax of Rs 57,101 crore and total income of Rs 6,55,259 crore, against Rs 49,294 crore and Rs 5,39,199 crore, respectively, for the previous fiscal. |
Key Financial Indicators*
*As per analytical adjustments made by Crisil Ratings |
Any other information: Not Applicable |
Note on complexity levels of the rated instrument: |
Annexure - Details of Instrument(s)
@One-way interchangeable with bank guarantee |
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