ICRA assigns 'IrA' rating to Bangalore Electric Supply Co Ltd

Mumbai, June 21 (UNI) ICRA has assigned an 'IrA' (issuer rating A) to the Bangalore Electric Supply Company Limited (BESCOM).

The rating indicates adequate-credit-quality and is only an opinion on the general credit worthiness of the rated entity and not specific to any particular debit instrument, a release issued here today said.

The rating reflects the company's track record of profitable operations, limited debt repayment obligation in the medium term hitherto limited dependence on subsidy support from the government of Karnataka (GoK), its superior demographic profile and reasonable success in its ability to meet the regulatory targets set by the Karnataka Electricity Regulatory Commission (KERC).

The rating is constrained primarily by the expected increase in company's dependence on subsidy from GoK consequent upon reallocation of high cost PPA's to BESCOM and the less-than-satisfactory track record with reference to receipt of payments from GoK, including subsidy due, dues on account of write-offs and dues from government departments for power purchase.

In ICRA's opinion BESCOM will also be adversely affected by the allocation of Power Purchase Agreement with an Independent Power Producer (IPP) against which close to Rs 1.4 billion per year of power purchase costs has historically been disallowed by the KERC, the release said.

UNI LS KU AW1609