India Ratings and Research has resolved the Rating Watch with Developing Implications on Tamil Nadu Power Distribution Corporation Limited, following the successful restructuring and distribution of assets and liabilities of the erstwhile Tangedco, as a part of the bifurcation process.
The Union Ministry of Corporate Affairs had approved the State government decision to restructure Tangedco into two separate entities — Tamil Nadu Power Generation Corporation Limited (TNPGCL) for generation, and Tamil Nadu Power Distribution Corporation Limited (TNPDCL) for distribution.
It also approved the proposal of carving out a new entity, Tamil Nadu Green Energy Corporation Limited for renewable energy, by hiving off the Renewable Energy wing of Tangedco and merging it with Tamil Nadu Energy Development Agency (TEDA), with effect from June 27, 2024.
“The division of the liabilities and assets of the erstwhile Tangedco is completed and all three entities have prepared their standalone financials for fiscal 2025,” India Ratings, a credit ratings firm, said.
Earlier, it had placed Rating Watch with Developing Implications, indicating that the ratings could be upgraded, affirmed or downgraded based on the details that will emerge on the bifurcation. India Ratings affirmed ‘IND A(CE)’/Stable rating on TNPDCL’s bonds. The CE rating is based on the credit profile of the government of Tamil Nadu. The Tamil Nadu government has extended an unconditional and irrevocable pre-default guarantee to TNPDCL’s bonds, it said.
India Ratings also affirmed ‘IND BBB’/Stable rating on TNPDCL’s bank facilities. TNPDCL is a monopolistic power distributor in Tamil Nadu, playing a pivotal role in the State’s power sector. Even after the bifurcation, the State government continues to hold 100% shareholding in the State’s discom, it said.
India Ratings said it continues to classify TNPDCL as a dependent entity, under its rating of Public Sector Entities criteria.
The rating firm said it affirmed the bank loans rating in view of TNPDCL’s sustained scale of operations and improved profitability during the fiscal 2025, based on provisional financials.
TNPDCL’s liquidity is likely to remain supported by the subsidy/grant inflow from the Tamil Nadu government. Amid the heavy losses incurred by TNPDCL until fiscal 2023, the State government had budgeted to take over 100% of the losses from fiscal 2022. TNPDCL continues to rely on short-term working capital facilities to fund its long-term debt service obligations, India Ratings said.
TNPDCL received ₹31,849 crore in tariff subsidies and other revenue grants (mainly loss-funding by the Tamil Nadu government) in fiscal 2025, the ratings firm said. It expects that the reliance on subsidies will continue in the near to medium term. TNPDCL’s debt increased 22.28% on a year-on-year basis to ₹1,06,113 crore in fiscal 2025, it said.
Published – September 02, 2025 12:32 am IST
