“This is attributed to a financially weaker counterparty that is Punjab State Power Corporation, which accounts for 94 to 96 per cent of PSTCL’s revenue,” Ind-Ra said.
New Delhi: Credit rating agency India Ratings and Research (Ind-Ra) has downgraded the rating for Punjab State Transmission Corporation Ltd (PSTCL) and termed its outlook negative on account of constrained liquidity position.
“The rating actions reflect the likely constrained liquidity position of PSTCL in the near-to-medium term due to the largely debt-funded capex in financial year 2019-20 and the weak financial performance over financial year 2014-15 to 2018-19,” Ind-Ra said.
It added that PSTCL’s available funds which amounted to Rs 63.53 million in financial year 2018-19, covered only 0.15 per cent of the long-term debt and 1.18 per cent of the operating expenditure at the end of the year.
“This is attributed to a financially weaker counterparty that is Punjab State Power Corporation, which accounts for 94 to 96 per cent of PSTCL’s revenue,” Ind-Ra said.
According to the rating agency, PSTCL’s average utilisation of the fund-based working capital limits was 35.12 per cent for the 12 months ended March 2020 and the company has availed the Reserve Bank of India moratorium on the repayment obligations of Rs 1.28 billion for March-May 2020.
The corporation incurred a loss of Rs 69.55 million in financial year 2018-19, mainly due to an increase in employee costs as well as finance costs. The liquidity profile of PSTCL would remain a concern and the entity would require proactive support from the government of Punjab to timely recover dues from the counterparty, Ind-Ra said.
Source: energy.economictimes.indiatimes
