OREANDA-NEWS. May 10, 2011. Tata Power, India’s largest integrated private power utility, today, announced that Crisil has reaffirmed ‘AA/Positive/P1plus’ rating assigned to its NCD programme, short-term debt and bank facilities.

Crisil has arrived at these ratings after combining the business and financial risk profiles of Tata Power; its group distribution company, North Delhi Power; Tata Power Trading Company; transmission subsidiary, Powerlinks Transmission (rated ‘CCR AAplus’ by Crisil); Industrial Energy; the special-purpose vehicle (SPV) formed for the execution of Mundra Ultra Mega Power Project (UMPP), namely, Coastal Gujarat Power (CGPL) and Maithon Power; as well as the SPVs formed for the acquisition of coal companies in Indonesia.

Crisil has also combined the business and financial risk profiles of Tata Power’s coal operating companies in Indonesia on a proportionate basis; Tata Power has an effective stake of 30 per cent in these companies.

Speaking on the positive ratings, S Ramakrishnan, executive director, finance, Tata Power, said, "The continued positive ratings on our loans and debentures issues is a reiteration of the company’s stable licencee business that has regulated returns and the significant progress achieved in two of our key ongoing projects ie, the 4000-MW CGPL project, and the 1050-MW Maithon project further reflects the strong fundamentals of the company and its business model. We are happy with Crisil's overall assessment of our current and future business.”

The ratings are underpinned by the company’s strong management, stable and healthy accruals, robust liquidity, and continued strong financial flexibility. These rating strengths are partially offset by the change in business profile of the company, with increasing contribution of revenues from the non-regulated businesses and its increased debt levels (on a consolidated basis).

The 525-MW first unit of Maithon is expected to commence commercial operations by early 2011-12 (ie, financial year, April 1, 2011 to March 31, 2012) and the second unit with a capacity of 525MW is expected to commence commercial operations four months after the first unit. There has been an estimated cost overrun of Rs3.8 billion in the Maithon project because of a modification in the railway siding for the project.

The first unit of CGPL, with capacity of 800MW, Mundra UMPP is expected to commence commercial operations in the second quarter of FY2011-12. Whereas the other four units of 800MW each; are expected to commence commercial operations in a phased manner; the entire capacity is expected to be operational by the end of 2012-13.

Tata Power has demonstrated strong financial flexibility through timely financial closure for its two ongoing projects, with long-term loans, and raising funds through global depositary receipts, foreign currency convertible bonds, and sale of investments. Tata Power’s major projects in the pipeline, include the Coastal Maharashtra, Naraj Marthapur, and Tiruldih projects. The structuring and progress of these projects will be sensitivity factors for Tata Power’s ratings.