1/10/14 : CRISIL Ratings :

January 09, 2014

Mumbai

Power Grid Corporation of India Limited

Rated Amount Enhanced

Total Bank Loan Facilities Rated Rs.25000 Million (Enhanced from Rs.15000 Million)
Long-Term Rating CRISIL AAA/Stable (Reaffirmed)
Short-Term Rating CRISIL A1+ (Reaffirmed)
(Refer to Annexure 1 for details on facilities)

Rs.27 Billion Short-Term Debt Programme (Enhanced from

CRISIL A1+ (Reaffirmed)
Rs.25 Billion)**
Rs.130.00 Billion Long-Term Borrowing Programme CRISIL AAA/Stable (Reaffirmed)
Rs.135 Billion Long-Term Borrowing Programme CRISIL AAA/Stable (Reaffirmed)
Rs.107.00 Billion Bond Programme CRISIL AAA/Stable (Reaffirmed)
Rs.63.68 Billion Term Loan CRISIL AAA/Stable (Reaffirmed)
Rs.54.15 Billion Bond Programme* CRISIL AAA/Stable (Reaffirmed)
Rs.36.975 Billion Bond Programme (Series XXVIII and
CRISIL AAA/Stable (Reaffirmed)
XXIX)*
Rs.35.019 Billion Bond Programme (Series XXIV, XXV, XXVI,
CRISIL AAA/Stable (Reaffirmed)
and XXVII)*
Rs.2.819 Billion Bond Programme (Series XXIII)* CRISIL AAA/Stable (Reaffirmed)
Rs.6.325 Billion Bond Programme (Series XXII)* CRISIL AAA/Stable (Reaffirmed)
Rs.22.963 Billion Bond Programme (Series XIX, XX, and
CRISIL AAA/Stable (Reaffirmed)
XXI)*
Rs.16.325 Billion Bond Programme (Series XVII and XVIII)* CRISIL AAA/Stable (Reaffirmed)
Rs.5.25 Billion Bond Programme (Series XVI)* CRISIL AAA/Stable (Reaffirmed)
Rs.8.913 Billion Bond Programme (Series XIV and XV)* CRISIL AAA/Stable (Reaffirmed)
Rs.8.363 Billion Bond Programme (Series XI, XII, and XIII)* CRISIL AAA/Stable (Reaffirmed)
Rs.4.326 Billion Bond Programme (Series IX and X)* CRISIL AAA/Stable (Reaffirmed)
*Outstanding amount as on March 31, 2011
** PGCIL intends to raise short term working capital loans against this programme

CRISILs ratings on the debt programmes and bank facilities of Power Grid Corporation of India Ltd
(PGCIL) continue to reflect the strategic importance of PGCIL to the Government of India (GoI), as it is
the only company authorised to transmit power across statesit carries about 50 per cent of the total
power generated in India. In the past, GoI not only extended equity support for PGCILs capital
expenditure (capex), but also guaranteed the companys loans from multilateral lending agencies. The
ratings also factor in PGCILs healthy operating efficiency and sizeable cash accruals.

CRISIL believes that PGCIL will continue to generate stable revenues and cash flows over the medium
term, backed by its efficient operations and regulated tariff structure. The companys financial risk profile
is characterised by assured and stable cash flows; this is supplemented by the companys ability to
access the capital markets. PGCIL has already launched its follow-on public offer (FPO) to raise fresh
equity to fund its capex requirements. Moreover, the tariff structure ensures recovery of all expenses,
including debt-servicing charges, and provides for fixed return on equity, based on achievement of
performance benchmarks mandated by the regulator. PGCIL has maintained an availability factor of over
99 per cent in 2012-13 (refers to financial year, April 1 to March 31), above the stipulated benchmark of
98 per cent.

These rating strengths are partially offset by the weak financial risk profiles of PGCILs main customers,
the state power utilities (SPUs). However, as on March 31, 2013, PGCILs receivables collection cycle
improved substantially with collection efficiency of 101 per cent for 2012-13 as compared to 95 per cent
for 2011-12. The improvement was driven by recovery of dues that were outstanding because of
finalisation of tariff orders in the previous years. While the SPUs have been making timely payments,
their financial risk profiles remain a rating sensitivity factor for PGCIL.

PGCIL undertook a large capex programme of more than Rs.550 billion for the 11th Five-Year Plan (2007-
08 to 2011-12). Against this the company incurred a capex of more than Rs.552 billion during the 11th
Five-Year Plan. In 2012-13, PGCIL invested more than Rs.200 billion and capitalised assets worth Rs.153
billion during the year. CRISIL expects a significant increase in PGCILs cash flows over the medium term
due to commissioning of new assets.

Moreover, PGCIL has laid out a capex plan of Rs.1.1 trillion for the 12th Five-Year Plan (2012-13 to 2016-
17) to be funded in a debt-to-equity-mix of 70:30. The capex plan involves the setting up of an
associated transmission network for upcoming generation projects of central power generators, setting
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associated transmission network for upcoming generation projects of central power generators, setting
up ultra-mega power projects, grid strengthening, and construction of nine high-capacity power
transmission corridors for independent power producers. As a result of the capex, PGCILs gearing is
expected to deteriorate over the medium term and could even be higher than the stipulated 70:30 mix
temporarily. To bring its capital structure within stipulated norms, PGCIL has approached the capital
markets with an FPO of 787.05 million equity shares. The offer comprises a fresh issue of 601.86 million
equity shares and offer for sale of 185.19 million equity shares by the GoI. The fund raised through fresh
issue of equity shares will be used to meet the equity contribution for its capex programmes. While the
company has a track record of completing projects within the stipulated timelines and costs, any time or
cost overrun in implementation of these projects remains a rating sensitivity factor.

Outlook: Stable
CRISIL believes that PGCIL will maintain its robust financial risk profile over the medium term, despite its
planned debt-funded capex, backed by strong demand for power and the regulated tariff regime. PGCIL
is of strategic importance to Indias power sector, given its role in developing and operating the national
power transmission network. The outlook may be revised to Negative in case of significant delays or
default in payments by SPUs to PGCIL.

About the Com pany

PGCIL was incorporated in 1989 to set up extra-high voltage alternating current and high-voltage direct
current (HVDC) transmission lines. The company moves large blocks of power from the central generating
agencies and areas that have surplus power to load centres within and across regions. It is under the
administrative control of the Ministry of Power, GoI. PGCIL owns and operates an extensive nationwide
network of transmission lines; this network comprises mainly 400-kilovolt transmission lines and HVDC
transmission systems, carrying about 50 per cent of the total power generated in India. As on July 31,
2013, PGCIL owned and operated a transmission line network of about 101,886 circuit kilometres and
170 substations, with a transformer capacity of more than 169,563 megavolt amperes.

For 2012-13, PGCIL reported a net profit of Rs.42.1 billion on net sales of Rs.127.1 billion, as against a
net profit of Rs.32.4 billion on net sales of Rs.97.5 billion for 2011-12. For the six months ended
September 30, 2013, the company reported a net profit of Rs.22.8 billion on total revenue of Rs.77.4
billion, as against a net profit of Rs.19.9 billion on total revenue of Rs.62.2 billion for the corresponding
period of the previous year.
Annexure 1 - Details of v arious bank facilities
Current facilities Previous facilities
Amount Amount
Facility Rating Facility Rating
(Rs. Million) (Rs. Million)
Bank Guarantee 6000 CRISIL A1+ Bank Guarantee 3000 CRISIL A1+
CRISIL CRISIL
Cash Credit 3000 Cash Credit 3000
AAA/Stable AAA/Stable
Letter of Credit 16000 CRISIL A1+ Letter of Credit 9000 CRISIL A1+
Total 25,000 -- Total 15,000 --

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Management Email:manoj.damle@crisil.com
CRISIL Limited
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About CRISIL LIMITED

C RISIL is a global analytical company providing ratings, research, and risk and policy advisory services. We are
India's leading ratings agency. We are also the foremost provider of high-end research to the world's largest
banks and leading corporations.

About CRISIL Ratings

C RISIL Ratings is India's leading rating agency. We pioneered the concept of credit rating in India in 1987. With a
tradition of independence, analytical rigour and innovation, we have a leadership position. We have rated over
60,000 entities, by far the largest number in India. We are a full-service rating agency. We rate the entire range
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C RI SI L has revis ed its rating s ymbols and definitions with effec t from J uly 1 1 , 2 0 1 1 , to c omply with the SE BI c irc ular, Standardis ation of Rating Symbols
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