Private power generation company Tata Power Company (TPCL) is planning to raise up to Rs 2,000 crore via bonds for financing its business operations.

It has, meanwhile, tied up Rs 450 crore ($50 million) of sustainable trade finance from Japanese banking institution MUFG (Mitsubishi UFJ Financial Group) for renewable energy projects.

TPCL’s gross debt marginally rose to Rs 49,535 crore as of September this year, from Rs 47,590 crore as of March. This is on account of increased borrowing in renewable businesses, Odisha power distribution companies, and coal special purpose vehicles.

CRISIL Ratings has assigned ‘AA/stable’ rating to the proposed non-convertible debentures (bonds), reaffirmed its ‘AA/stable’ rating for long-term bank facilities, and ‘A1+’ for short-term bank facilities.

The cash accrual is projected at Rs 4,000-5,000 crore for 2022-23 (FY23) and 2023-24 (FY24), respectively, which will largely meet the annual capital expenditure requirement of about Rs 5,000-6,000 crore.

The debt maturity of Rs 5,500 crore in FY23 and Rs 6,500 crore in FY24 is expected to be largely refinanced, given the strengths of the company’s cash flows.

The ratings continue to reflect TPCL’s stable cash accrual from the regulated businesses, the diversified business risk profile, and strong financial flexibility being a part of Tata Group. These strengths are partially offset by losses in Coastal Gujarat Power on account of unviable project economics and moderate debt protection metrics.

On financing of renewable projects, Sanjeev Churiwala, group chief financial officer, TPCL, said after the association with MUFG Bank, it is looking at raising more green finance to expand its clean energy portfolio and contribute towards meeting India’s net-zero target.

The financing facility from MUFG is extended for solar projects under TP Kirnali (TPKL). Incorporated in 2020, TPKL is a 100 per cent-owned subsidiary of Tata Power Renewable Energy (TPREL), a clean energy platform.

TPCL is the holding company of TPREL.

Operating profitability remains strong for the renewable energy business, driven by the commissioning of new renewable capacities.

Healthy operational performance above normative levels continues across regulated generation and distribution businesses, observed CRISIL.