| Tata Power Delhi Distribution Limited | ||
| Rating reaffirmed at 'Crisil A1+' | ||
| 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 reaffirmed its 'Crisil A1+' rating on the commercial paper programme of Tata Power Delhi Distribution Ltd (TPDDL).
The rating continues to reflect the robust business risk profile of TPDDL, supported by the regulated cost-plus-return on equity (ROE) business model in its licensed power distribution zone in north and north-west Delhi, its favourable consumer mix, healthy operational metrics underpinned by adequate ARR-ACS (average revenue realised-average cost of supply) gap, and low AT&C (aggregate technical and collection) losses. Furthermore, the financial risk profile is strong, supported by low gearing of 0.4 times as on March 31, 2024.
These strengths are partially offset by sizeable regulatory assets (RAs) of Rs 4,516 crore as on December 31, 2024, mainly due to insufficient tariff hikes in the past. |
Analytical Approach Crisil Ratings has applied its parent notch-up framework to factor in the extent of financial and managerial support from The Tata Power Company Ltd (TPCL; ‘Crisil AA+/Stable/Crisil A1+’). |
Key Rating Drivers & Detailed Description Strengths:
The regulated business model with a cost-plus-tariff regime ensures recovery of cost incurred along with an ROE of 16%. Automatic/suo moto adjustment of tariff through the power purchase adjustment cost (PPAC) mechanism has helped recover a part of the rising power purchase costs in a timely manner (up to 8.75% suo moto without taking any prior approval from the Delhi Electricity Regulatory Commission [DERC] as per currently applicable business plan regulation). Crisil Ratings understands that DERC has allowed TPDDL ~22 % recovery under the PPAC mechanism from January 2025 to April 2025. Also, the true-up mechanism helps in recovery of any substantial increase in power purchase costs. In fact, RAs reduced from Rs 5,321 crore as of March 2024 to Rs 4,516 crore as of December 2024.
The discom also generates additional income in the form of AT&C incentives and a part of the cost saving benefits on operations and maintenance (O&M) and financing costs. This has helped the company generate strong cash accrual, with additional income over and above the regulated returns.
The customer mix (as per units billed) remains favourable with a large presence of domestic consumers (52%), commercial (24%) and industrial (16%) as of December 2024. Others comprise only 8% and agricultural consumption forms a very small proportion. The higher industrial and commercial consumption and strong collection efficiency has also contributed to maintaining low AT&C losses.
Weakness:
The decline in RAs to Rs 4,516 crore as of December 2024 was mainly supported by recovery under the automatic PPAC route. Without considering the impact of carrying cost, RAs continue to be liquidated faster. As of the fiscal 2021 order, close to 95% of RAs (Rs 5,787.70 crore) have been approved by DERC.
Crisil Ratings understands that the RAs will likely reduce over the medium term through expected increase in percentage passthrough under the PPAC mechanism. Timely recognition of RAs by DERC and their continued liquidation will be a key monitorable. |
Liquidity: Strong Net cash accrual is estimated at Rs 600-630 crore in the coming fiscal against debt obligation ranging around ~of Rs 300-400 crore each during fiscal 2025 and fiscal 2026. The gearing of 0.4 time indicates sufficient headroom to refinance or raise additional debt (70% of capex) to meet average capex requirement (~Rs 660-670 crore each in fiscals 2025 and 2026). Utilisation of the fund-based limit of ~Rs 753 crore was modest at ~2% on average during the eleven months of fiscal 2025. The bank lines are expected to meet incremental working capital requirement. Moreover, TPDDL enjoys need-based support from TPCL, the parent. |
Rating sensitivity factors Downward factors:
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About the Company TPDDL is a 51:49 joint venture of TPCL and the Government of Delhi. The company distributes electricity in north and north-west parts of Delhi and serves a populace of 70 lakh. It started operations on July 1, 2002, post the unbundling of the erstwhile Delhi Vidyut Board. With a registered consumer base of 2.1 million as on December 31, 2024, operations span 510 square km. |
Key Financial Indicators: (Standalone)* (Crisil Ratings-adjusted)
*Note: During the first nine months of the fiscal 2025, the company reported revenue of Rs. 8,872 crore and Profit after tax of Rs. 704.15 crores. |
Any other information: Not applicable |
Note on complexity levels of the rated instrument: |
Annexure - Details of Instrument(s)
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| Annexure - Rating History for last 3 Years | |||||||||||||||||||||||||||||||||||||||
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| All amounts are in Rs.Cr. | |||||||||||||||||||||||||||||||||||||||
Criteria Details
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