Ratings has been revised to ICRA B+ for bank facilities of Rithwik Power Projects Limited

Rithwik Power Projects Limited

ICRA has revised the long term rating outstanding on Rs.15.70 crore1 bank lines of Rithwik Power Projects Limited (RPPL)† from [ICRA]BB- (pronounced ICRA double B minus) to [ICRA]B+ (pronounced ICRA B plus). The rating revision takes into account the deterioration in financial profile of the company as reflected in the net losses for two consecutive years, high gearing and weak coverage indicators.

ICRA notes that owing to the steep increase in the raw material prices in the first half of FY2013, plant’s own inefficiency in meeting operational norms and the inability to pass on the increase in raw material prices given that the selling price is determined by the Power Purchase Agreement (PPA), the company’s operating profit has reduced significantly in FY2012 and 1H, FY2013. Further, high auxiliary consumption, high Average Specific Fuel Consumption (ASFC) and low Calorific value of the raw material used had resulted in higher consumption of raw material which combined with lack of established fuel linkages resulted in steep increase in procurement costs during monsoon and post monsoon months. However, ICRA’s rating draws comfort from the presence of a long term PPA resulting in assured off take, favourable tribunal order resulting in arrears for the company, recent Government Order (G.O) sanctioning subsidy of Rs.1.50 per unit for a period of one year resulting in selling price of up to Rs. 5.50 per unit and the satisfactory Plant Load Factor (PLF) levels achieved by the company in the last two years.

Company Profile

Rithwik Power Projects Ltd has a licensed capacity of 6.0 MW (Installed capacity 7.5 MW) biomass based power plant and is owned by KHPL Clean Energy Private Limited (KCEPL). KCEPL in turn is a 100% subsidiary of Kohinoor Hatcheries Private Limited (KHPL). The plant is situated at Khammam District of AP and was commissioned in November 2002. The power generated from the plant is sold under a twenty-year PPA to APTRANSCO. RPPL was originally promoted by Mr U V Ramana and Mr C M Ramesh who later sold RPPL to Velcan Renewable Energy India Ltd (VREIL) during 2006. Thereafter the plant was operated by VREIL. During February 2010, RPPL was sold to KHPL. KHPL is promoted by Mr. Raghava Rao who has close to two decades of experience in business of broiler breeding since 1993-94.

Recent Results

In FY2012, RPPL reported an operating income of Rs.15.28 crore, operating profit of Rs. 1.46 crore and net loss of Rs. 0.08 crore as per the audited accounts. For the first half of FY2013, as per the provisional accounts the company has reported an operating income of Rs. 5.59 crore, operating profit of Rs. 0.46 crore and net loss of Rs. 1.20 crore. December 2012

For further details please contact:
Analyst Contacts: Mr. Rohit Inamdar (Tel No. +91-124-4545847) rohit.inamdar@icraindia.com
Relationship Contacts: Mr. Jayanta Chatterjee, (Tel. No. +91-080-43326401) jayantac@icraindia.com

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