May 19, 2025

Dhariwal Infrastructure Limited: Ratings reaffirmed

Summary of rating action

Previous rated amount Current rated amount

Instrument* Rating action
(Rs. crore) (Rs. crore)
Long-term fund-based – Term
2,314.35 2,258.00 [ICRA]A-(Stable); reaffirmed
loan
Long-term – Working capital
250.00 306.35 [ICRA]A-(Stable); reaffirmed
limits
Long term/Short term - Non-fund [ICRA]A-(Stable)/[ICRA]A2+;
135.00 135.0
based limits reaffirmed
Total 2,699.35 2,699.35
*Instrument details are provided in Annexure I

Rationale

The ratings continue to factor in the strong parentage of Dhariwal Infrastructure Limited (DIL) as a part of the RP-Sanjiv Goenka
(RP-SG) Group, the satisfactory operating performance of its 600-MW thermal power project, and the availability of long-term
power purchase agreements (PPAs) for Unit 2 (300 MW) and a medium-term PPA for a major share of Unit 1 (300 MW). ICRA
notes that there is no offtake risks for Unit 2 of the plant, wherein 187 MW is tied up with Noida Power Corporation Limited
(NPCL) under cost-plus tariff, and another 109 MW with Tamil Nadu Generation and Distribution Corporation Limited
(TANGEDCO) under competitive bid-based tariff. The ratings also consider the low fuel-supply risk because of the long-term
fuel supply agreement (FSA) for 525 MW of the 600-MW capacity. The operating performance of the project under DIL remains
satisfactory, with plant availability remaining well above the normative requirement and the plant load factor (PLF) remaining
at healthy levels. The company also benefited from the sharp increase in tariffs for the power sold in the short-term market
since FY2023, led by the healthy electricity demand growth in the country. Given the company’s exposure to the medium-
term/ short-term power market, the sustainability of healthy power demand conditions remains a key monitorable for DIL.

The company has earlier received funding support from its fellow subsidiary, Haldia Energy Limited (HEL; rated [ICRA]A1+),
and its parent, CESC Ltd. (CESC; rated [ICRA]A1+). However, it has remained self-sufficient over the last few years and did not
require any support from the Group. While ICRA does not envisage the requirement of any incremental funding support from
the parent/Group companies over the medium term, any such support, if required, is expected to be available from the
parent/Group companies, as demonstrated in the past. That said, with DIL’s free cash flows improving in recent years, the
company has steadily reduced its Group advances by Rs.620 crore since FY2021. Additionally, given the improvement in
earnings predictability, ICRA understands that DIL aims to support the Group’s future investment needs, especially in the
strategically important renewable power business. In this regard, ICRA notes that DIL availed fresh long-term borrowing of
Rs.600 crore towards the end of last fiscal. As this fund is yet to be mobilised, it led to a large build-up of cash & liquid
investments of around Rs.690 crore as on March 31, 2025. ICRA opines that even with the aforementioned borrowing
programme, DIL’s credit metrics is expected to remain in line with its rating category. However, any further large leveraging
plans, which weighs down on DIL’s coverage and leverage metrics, remains a rating monitorable.

The ratings remain constrained by the unavailability of long-term PPA for Unit 1 of DIL’s power plant, though the tie-up of new
medium term PPA’s (25 MW with NPCL, 125 MW with Adani Electricity Mumbai Limited and 75 MW with The Tata Power
Company Limited) offers enhanced revenue visibility over the near term and mitigates the offtake risk to a large extent.
Nevertheless, DIL’s ability to tie up PPA for the balance capacity at attractive tariffs in the future will remain a key credit
monitorable. The capacity without long-term or medium-term PPAs accumulating to 75 MW would remain exposed to volume
and tariff risks in the short-term market, as well as fuel pricing risk.

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 The company also remains exposed to counterparty credit risk on account of its exposure to the state utility of Tamil Nadu.
There have been significant delays in receiving payments from TANGEDCO in the past, while the payment pattern from NPCL
and the other parties has been satisfactory. Nonetheless, the payment track-record from TANGEDCO has improved post June
2022, following the implementation of the late payment surcharge (LPS) rules as notified by the Ministry of Power. The ratings
also reflect the company’s exposure to regulatory risks, given the ongoing legal proceedings before the Supreme Court
challenging the jurisdiction of Uttar Pradesh Electricity Regulatory Commission (UPERC) in approving the 187-MW PPA with
NPCL. Any adverse regulatory outcome in the matter remains a key rating driver.

The Stable outlook on the long-term rating factors in the improved revenue visibility for the company following the tie-up of
new medium term PPA’s at healthy tariffs, the healthy operating performance and attractive tariffs in the short-term market,
which is expected to keep its credit metrics at comfortable levels.

Key rating drivers and their description

Credit strengths

Strong parentage with DIL as part of RP-SG Group – DIL is a 100% subsidiary of CESC, which is the flagship company of the RP-
SG Group. By virtue of its parentage and Group linkages, DIL has benefited in the past as the RP-SG Group extended financial
support during FY2015-FY2021. While the company did not require any incremental support over the past few years, such
need-based support from the parent/the RP-SG Group is expected to continue, in case of any cash flow mismatches.

Availability of long-term and medium-term PPAs limits the offtake risks – The availability of long-term PPAs for the capacity
under Unit 2 limits the offtake risk. However, DIL faced significant offtake risk for the 300-MW capacity under its Unit 1 which
did not have a long-term PPA and was relying on short-term arrangements for the sale of power till March 2022. The company
had tied up a three-year PPA for 210 MW out of the 300 MW capacity of Unit 1 with the Indian Railways for supply of power
from April 1, 2022 to March 31, 2025. Subsequently, the company has tied up new medium term PPA’s (25 MW with NPCL,
125 MW with Adani Electricity Mumbai Limited and 75 MW with The Tata Power Company Limited) effective from April/May
2025, which offers enhanced revenue visibility over the near term and mitigates the offtake risk to a large extent.With this,
the exposure to the short-term market has declined compared to the earlier years. There was no funding support required
from CESC/Group companies since FY2022 due to the presence of adequate internal accruals and no incremental support is
expected in the near to medium term for DIL.

Fuel-supply agreement with SECL mitigates fuel availability risks – DIL has an operational FSA with SECL since March 2016,
which mitigates fuel availability risk and ensures competitive energy cost for the station. The FSA is for the supply of 2.73
million tonne per annum (MTPA) of coal; however, as DIL was not able to secure a long-term PPA for Unit 1, the active FSA was
only to the extent of 1.43 MTPA (revised to 1.58 MTPA since October 2020), mapped to the 300-MW installed in Unit 2. Coal
shortage, if any, was being met through e-auctions or imports. For the supply of power under the new medium term PPA’s
from Unit 1, DIL is eligible to draw coal from SECL under its FSA arrangement, which further mitigates the fuel supply risk.

Favourable regulatory orders from CERC and UPERC – DIL has received favourable regulatory orders from the CERC and UPERC
under its long-term PPAs for compensation for change-in-law events along with reimbursement for the additional coal
consumed due to lower materialisation of FSA coal. The company has billed the compensation approved by the regulators and
most of it has already been received.

Sustained improvement in leverage and debt coverage metrics – With the gradual improvement in profitability, accruals and
scheduled debt repayments, the overall external debt of the company has reduced. This reduction in debt coupled with
improved profitability has resulted in improved debt coverage metrics, reflected in the total external debt/OPBITDA of 3.2
times in FY2024 against a total external debt /OPBITDA of 5.34 times in FY2022. ICRA notes that DIL availed fresh long-term
borrowing of Rs.600 crore towards the end of FY2025, which has led to an increase in the total external debt and consequently

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 the total external debt/OPBITDA. As this fund is yet to be mobilised, it led to a large build-up of cash & liquid investments of
around Rs.690 crore as on March 31, 2025. ICRA opines that even with the aforementioned borrowing programme, DIL’s credit
metrics is expected to remain in line with its rating category. However, any further large leveraging plans, which weighs down
on DIL’s coverage and leverage metrics, remains a rating monitorable. The DSCR is expected to remain at around 1.3-1.4 times
over FY2026-FY2028.

Credit challenges

Absence of long-term PPA for Unit 1 –While the offtake is secured for the 300-MW capacity in Unit 2 through long-term PPAs,
and a medium-term PPA for 225 MW under Unit 1, the ability of the company to tie up PPA for the balance capacity and renew
the medium term PPAs at attractive tariffs in the future will remain key credit monitorables. Further, DIL remains exposed to
coal availability and pricing risk for the capacities not contracted under a long-term and medium-term PPA. Also, there are fuel
cost pass-through risks for the capacities not contracted on a cost-plus basis. ICRA, however, notes that the escalation in fuel
cost for long-term PPA with TANGEDCO is largely passed on to the consumers on the basis of the escalation factor notified by
the CERC. Fuel cost escalation for the PPA with NPCL is entirely passed on by DIL in a timely manner given that the tariff is
determined on a cost-plus basis. For the medium term PPA’s signed recently, the escalation in tariff is linked to WPI.

Counterparty risk on account of exposure to state power distribution utility of Tamil Nadu – DIL remains exposed to
counterparty credit risk on account of its exposure to the state power distribution utility of Tamil Nadu, which has a weak
financial profile. However, following the implementation of LPS rules, the receivables have come down with regular payment
of the ongoing bills post July 2022 and recovery of past dues through instalments. The sustainability of the improvement will
remain a key monitorable. ICRA draws comfort from the timely payments from NPCL and the other parties.

Exposure to regulatory risk pertaining to ongoing case in Supreme Court – DIL is exposed to regulatory risk pertaining to the
approval of the PPA with NPCL. This approval by UPERC has been challenged before APTEL, wherein the decision is in favour
of the company. This has been challenged before the Supreme Court. Any adverse regulatory outcome in the matter remains
a key rating driver.

Liquidity position: Adequate

The liquidity profile of the company is adequate with the cash flow from operations expected to be sufficient to meet the debt
servicing obligations, driven by the availability of long-term and medium-term PPAs. Also, the company has free cash balance
of around Rs. 690 crore as on March 31, 2025. Moreover, ICRA expects the promoter group to infuse additional funds, if
required, as demonstrated in the past.

Rating sensitivities

Positive factors – ICRA could upgrade DIL’s ratings if there is an improvement in the company’s earnings and debt protection
metrics on a sustained basis, supported by healthy operating performance and remunerative tariffs in relation to its cost of
power generation.

Negative factors – The ratings could be downgraded if there is any adverse regulatory ruling, leading to uncertainty over the
187-MW PPA with NPCL, resulting in a material drop in DIL’s earnings. Also, the inability to ensure adequate plant availability
adversely impacting DIL’s earnings, or material delays in payments from customers affecting the liquidity profile could trigger
a downgrade. Moreover, any change in linkages with the CESC Group or weakening of the credit profile of CESC may trigger a
rating revision.

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 Analytical approach

Analytical approach Comments

Corporate Credit Rating Methodology
Applicable rating methodologies
Power - Thermal
Parent/Group: Parent: CESC Limited; Group: RP-SG Group
The ratings assigned to DIL factor in the high likelihood of its parent, CESC Limited [rated
Parent/Group support [ICRA]A1+], extending financial support to DIL out of the need to protect its reputation from
the consequences of a Group entity’s distress; there also exists a consistent track record of
the RP-SG Group extending timely financial support to DIL in the past, whenever a need arose
Consolidation/Standalone The ratings are based on the company’s standalone financial profile

About the company

Dhariwal Infrastructure Limited (DIL) is a part of the Kolkata-based RP-SG Group. It is a wholly-owned subsidiary of CESC Limited
(rated [ICRA]A1+), the flagship company of the RP-SG Group. The company has 2X300 MW thermal-based power generation
units at Chandrapur, Maharashtra. The two units with a capacity of 300 MW each were commissioned on February 11, 2014
(Unit 1) and August 2, 2014 (Unit 2).

Key financial indicators (audited)

DIL FY2023 FY2024
Operating income 1908.9 1921.7
PAT 243.5 283.5
OPBDIT/OI 28.3% 29.4%
PAT/OI 12.8% 14.8%
Total outside liabilities/Tangible net worth (times) 3.5 2.3
Total debt/OPBDIT (times) 5.6 4.5
Interest coverage (times) 2.6 3.0
Source: Company, ICRA Research; All ratios as per ICRA’s calculations; Amount in Rs. Crore; PAT: Profit after tax; OPBDIT: Operating profit before depreciation,
interest, taxes and amortisation

Status of non-cooperation with previous CRA: Not applicable

Any other information: None

Rating history for past three years

Chronology of rating history for the past 3 years

Current (FY2026)
Instrument FY2025 FY2024 FY2023
Amount
Type Rated (Rs May 19, 2025 Date Rating Date Rating Date Rating
Crore)
31-JUL- [ICRA]BBB+ 22-JUL- [ICRA]BBB+
Fund- - -
2023 (Positive) 2022 (Positive)
based – Long Term 2258.00 [ICRA]A- (Stable)
16-FEB- [ICRA]A-
Term loan - - - -
2024 (Stable)
31-JUL- [ICRA]BBB+ 22-JUL- [ICRA]BBB+
- -
Working 2023 (Positive) 2022 (Positive)
Long Term 306.35 [ICRA]A- (Stable)
capital limits 16-FEB- [ICRA]A-
- - - -
2024 (Stable)
Non-fund [ICRA]A- 31-JUL- [ICRA]BBB+ 22-JUL- [ICRA]BBB+
135.00 - -
based limits (Stable)/[ICRA]A2+ 2023 (Positive)/ 2022 (Positive)/

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 [ICRA]A2 [ICRA]A2
Long
Term/Short [ICRA]A-
16-FEB-
Term - - (Stable)/ - -
2024
[ICRA]A2+

Complexity level of the rated instruments

Instrument Complexity Indicator

Long term fund-based – Term loan Simple
Long term – Working capital limits Simple
Long term/Short term - Non-fund based limits Very Simple

The Complexity Indicator refers to the ease with which the returns associated with the rated instrument could be estimated.
It does not indicate the risk related to the timely payments on the instrument, which is rather indicated by the instrument's
credit rating. It also does not indicate the complexity associated with analysing an entity's financial, business, industry risks or
complexity related to the structural, transactional or legal aspects. Details on the complexity levels of the instruments are
available on ICRA’s website: Click here

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 Annexure I: Instrument details

Instrument Coupon Amount Rated

ISIN Date of Issuance Maturity Current Rating and Outlook
Name Rate (Rs. crore)
September
NA Term Loan NA NA 2258.00 [ICRA]A- (Stable)
2035
Working capital
NA NA NA NA 306.35 [ICRA]A- (Stable)
limits
Non-fund based
NA NA NA NA 135.0 [ICRA]A- (Stable)/[ICRA]A2+
limits
Source: Company

Annexure II: List of entities considered for consolidated analysis- Not Applicable

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 ANALYST CONTACTS
Girishkumar Kadam Vikram V
+91 22 6114 3441 +91 40 4547 4829
[email protected] [email protected]

Ritabrata Ghosh Deepayan Ghosh

+91 33 6521 6813 +91 33 6521 6804
[email protected] [email protected]

RELATIONSHIP CONTACT
L. Shivakumar
+91 22 6114 3406
[email protected]

MEDIA AND PUBLIC RELATIONS CONTACT

Ms. Naznin Prodhani
Tel: +91 124 4545 860
[email protected]

HELPLINE FOR BUSINESS QUERIES

+91-9354738909 (open Monday to Friday, from 9:30 am to 6 pm)

[email protected]

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