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Ratnagiri Gas and Power Private Ltd October 19, 2020 Ratings Facilities Amount (Rs. crore) Rating1 Rating Action Bank facilities – Fund-based – Long 1,461.05 Revised from CARE BB-; Stable CARE D term -Term Loan (reduced from 1562.70) (Double B minus) 1,461.05 Total (Rs. One thousand four hundred sixty one crore and five lakh only) Details of instruments/facilities in Annexure-1

Detailed Rationale & Key Rating Drivers CARE has revised the ratings of Private Ltd (RGPPL) to CARE D. Facilities with this rating are in default or are expected to be in default soon. The revision in the long term rating of RGPPL factors in the delay in servicing of its principal obligations by the company which were due at the end of September 2020. Key Rating Sensitivities: Positive:  Timely servicing of debt obligations for more than three months.

Detailed description of the key rating drivers Key Rating Weaknesses Delays in servicing of debt obligations RGPPL had not serviced the principal obligations due at the end of September 2020. The company is in discussion with its lenders for one time settlement (OTS) of its outstanding debt of Rs 1461.05 crore. As per minutes of the consortium meeting held on September 17, 2020, the company had proposed its lenders for OTS for which lead lender has given in-principle approval with cut- off date considered as September 01, 2020. Other lenders are still under process of taking requisite approvals. The company has only paid interest obligations due for the month of Sept 2020 while it has not made the principal payment due on Sept 30, 2020 as the process for OTS is underway.

Lower fuel availability For running the plant at 85% PLF, RGPPL’s daily gas (having GCV of 9,700 KCal/SCM) requirement at SHR of 1,822 KCal/unit is 7.54 million metric standard cubic meters per day (MMSCMD). The company has entered into long term fuel agreement with GAIL () Limited for next 5 years w.e.f. April 01, 2017 for securing the LNG at competitive rates. However, the availability of gas in last twelve months has been much lower than the normative requirement (i.e less than 30%).

Sub-optimal operating performance Due to lower gas availability and ongoing dispute in the MSEDCL, PAF has remained low in FY19 and FY20. In fact, only one out of the three power blocks of RGPPL is operational, with the second one acting as a back-up. The PLF of the plant continues to be low at 25% in FY20 and ~12% in H1FY21.

Key Rating Strengths Implementation of demerger scheme and subsequent conversion of unsustainable portion of debt to CRPS Pursuant to the scheme of arrangement the LNG undertaking of RGPPL was demerged and transferred to Konkal LNG Private Limited (KLPL) on a going concern basis with effect from January 01, 2016. The aforesaid scheme became effective from March 26, 2018. As part of the demerger scheme, out of the total borrowing (as on December 31, 2015) of Rs. 8,906.75 crore, debt of Rs. 3,310.07 crore has been transferred to KLPL. As per the approved demerger scheme and the business plan effective January 01, 2016, the remaining debt lying with RGPPL was restructured into two parts - Rs. 1,900 crore was retained as sustainable loan and Rs 3,696.68 crore was deemed as the unsustainable portion. The company has issued CRPS of Rs.3,695.12 crore against the unsustainable portion of loan liability on 08.08.2019 in 5 equal series redeemable at Re.1 per series per lender, with the remaining balance of Rs 1.56 crore written off. The company has redeemed Rs.2,956.10 crore of CRPS till 31.03.2020 and balance of Rs.739.02 crore is due for redemption on 31.03.2021.

Experienced promoters and strong execution capabilities in power projects NTPC Limited (NTPC, rated CARE AAA; Stable/ CARE A1+) and GAIL (GAIL, rated CARE AAA; Stable/ CARE A1+) collectively are the majority shareholders with holding of 25.51% each in Ratnagiri Gas and Power Private Limited. Both NTPC and GAIL are ‘Maharatna’ companies and majority of their shares are held by the GoI. NTPC is the largest power generation company in India.

1Complete definition of the ratings assigned are available at www.careratings.com and other CARE publications 1 CARE Ratings Limited

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NTPC has a long track record of conceptualizing, developing and running power plants efficiently in India. NTPC provides technical expertise for plant operation in RGPPL. GAIL is the market leader in the transmission of in the country with dominant market share, extensive pipeline network and natural gas handling capacity of 206.03 MMSCMD. GAIL has been instrumental in arranging fuel for running the plant.

Existing power supply arrangement RGPPL had signed PPA with for supply of average 500 MW of power for next 5 years with effect from April 01, 2017 at a fixed tariff of Rs. 5.50/ unit. RGPPL also has PPA signed with the states of Daman and Diu for 43MW, Dadar & Nagar Haveli for 43 MW, and with Goa for 21.5 MW. The company has started supplying power to the state of Daman and Diu from January 2019, while the other two states are not scheduling power from RGPPL.

Liquidity: Adequate The company’s liquidity derives comfort from timely payments from Railways keeping debtors at manageable levels. The collection period stood at 14 days in FY20. The unencumbered cash and bank balance as of Mar 31, 2020 stood at Rs 9.48 crore along with short term fixed deposits of Rs 122.03 crore (PY: Rs 181.66 crore). The company had not requested the banker for availing the moratorium as per RBI circular dated March 27, 2020 and May 23, 2020, companies can opt for moratorium on their debt obligations for a period of 6 months from March 2020 to August 2020. The company is in discussion with its lenders for one time settlement (OTS) of its outstanding debt of Rs 1461.05 crore.

Analytical approach: Standalone

Applicable Criteria Criteria on assigning Outlook to Credit Ratings CARE’s Policy on Default Recognition Rating Methodology - Infrastructure Sector Ratings Financial ratios – Non-Financial Sector Liquidity Analysis of Non-financial sector entities Rating Methodology – Thermal Power Producers

About the Company RGPPL is promoted by NTPC (25.51%), GAIL (25.51%), MSEB Holding Company Ltd (MSEBHCL) (13.51%) and financial Institutions (IDBI Bank, SBI, ICICI Bank) (combined shareholding of 31.55%). It was formed to take over the partially completed assets of Dabhol Power Project owned by Limited (DPCL). The power plant has installed capacity of 1,967.08 MW (640 MW, 663.54 MW and 663.54 MW for respective power blocks) Hon’ble NCLAT vide its order dated February 28, 2018 had approved the demerger plan of the power block & R-LNG terminal of the Company and scheme was made effective from March 26, 2018.

Brief Financials (Rs. crore) FY19 (A) FY20 (Prov.) Income from Operations 2,093 2,077 PBILDT 384 328 PAT -574 -174 Overall Gearing NM NM Interest Coverage 2.53 2.32 A: Audited; NM – Not meaningful, A: Audited, Prov.-Provisional

Status of non-cooperation with previous CRA: Not Applicable

Any other information: Not Applicable

Rating History for last three years: Please refer Annexure-2

Annexure-1: Details of Instruments/Facilities

Name of the Date of Coupon Maturity Size of the Issue Rating assigned Instrument Issuance Rate Date (Rs. crore) along with Rating Outlook Fund-based - LT- - - March , 2034 1461.05 CARE D Term Loan

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Annexure-2: Rating History of last three years

Sr. Name of the Current Ratings Rating history No. Instrument/Bank Type Amount Rating Date(s) & Date(s) & Date(s) & Date(s) & Facilities Outstanding Rating(s) Rating(s) Rating(s) Rating(s) (Rs. crore) assigned in assigned in assigned in assigned in 2020-2021 2019-2020 2018-2019 2017-2018 1. Fund-based - LT-Term LT 1461.05 CARE D 1)CARE BB- - 1)CARE D 1)CARE D Loan ; Stable (19-Mar- (20-Mar- (03-Apr-20) 19) 18)

Annexure-3: Detailed explanation of covenants of the rated instrument / facilities: Not Applicable

Annexure 4: Complexity level of various instruments rated for this Company

Sr. Name of the Instrument Complexity Level No. 1. Fund-based - LT-Term Loan Simple

Note on complexity levels of the rated instrument: CARE has classified instruments rated by it on the basis of complexity. This classification is available at www.careratings.com. Investors/market intermediaries/regulators or others are welcome to write to [email protected] for any clarifications.

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Contact us Media Contact Name: Mradul Mishra Contact no. - +91-22-6837 4424 Email ID – [email protected]

Analyst Contact Name – Puneet Kansal Contact no. - +91-11-4533 3225 Email ID- [email protected]

Relationship Contact Name: Swati Agrawal Contact no. - +91-11-4533 3200 Email ID: [email protected]

About CARE Ratings: CARE Ratings commenced operations in April 1993 and over two decades, it has established itself as one of the leading credit rating agencies in India. CARE is registered with the Securities and Exchange Board of India (SEBI) and also recognized as an External Credit Assessment Institution (ECAI) by the Reserve (RBI). CARE Ratings is proud of its rightful place in the Indian capital market built around investor confidence. CARE Ratings provides the entire spectrum of credit rating that helps the corporates to raise capital for their various requirements and assists the investors to form an informed investment decision based on the credit risk and their own risk-return expectations. Our rating and grading service offerings leverage our domain and analytical expertise backed by the methodologies congruent with the international best practices.

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