Crisil places TPAEC's debt programmes on rating watch

Mumbai, Mar 29 (UNI) India's premier ratings agency, Crisil, has placed the debt programmes of Torrent Power AEC Limited (TPAEC) on rating watch with developing implications.

Crisil has assigned an AA- rating to the Company's Rs 1.50 billion non-convertible debenture programme, a FAA rating to its fixed deposit programme and a P1+ rating to its Rs 0.70 billion commercial paper (CP) programme.

This rating action follows TPAEC's decision to amalgamate its entire business and undertaking, along with two other Torrent group companies, Torrent Power SEC Limited and Torrent Power Generation Limited, on a going concern basis, into a new entity christened Torrent Power Limited, stated a Crisil release issued here today.

Crisil stated that it would take a final view on the ratings only after a detailed study of the amalgamation which would bring all the power businesses of the Torrent group under one umbrella.

TPAEC enjoys sole licensee status in Ahmedabad and Gandhinagar as far as power distribution is concerned and the rating reflects the Company's dominant position in its license areas.

Stating that the Company's financial profile is marked by stable cash flows and high debt-protection measures, the release highlighted the healthy operational efficiencies of the Company besides its low level of transmission and distribution losses, which, it pointed out ''are among India's lowest''.

The Company also enjoys a high plant load factor of coal-based plants at 86 per cent while its gearing as at end-FY 05 was below 0.4 times and net cash accruals, over 0.8 times its total debt.

However, the release sounded a cautionary note, pointing to the regulatory uncertainty regarding future tariffs to be determined by the Gujarat Electricity Regulatory Commission, averring that ''the extent of the Company's equity exposure to the 1,095 MW Torrent power generation project, are key risk factors''.

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