IREDA's overall support score under the criteria increased to 45 from the 30 in last year's review. This is after Fitch raised its assessment of the support record factor to 'very strong', following a reassessment of the government's support to ensure IREDA's funding.
The assessment of rating takes into account expectations that the government will maintain a sufficiently high majority stake The company has postponed its IPO plans, which could have reduced the government's stake to 85%, due to market volatility following the Covid-19 pandemic. Fitch believes the potential dilution would not have been material to affect the government's control.
The government guaranteed 41% of IREDA's debt at end-March 2020 (44% at end-March 2019). The company's large borrowings from bilateral and multilateral institutions, which are backed by government guarantee, are important to support its growth.
In addition, IREDA
has applied for a capital injection of Rs 1,500 crore from the MNRE, following the postponed IPO. The injection is pending budgetary approval, but Fitch expects it to be approved. Once approved, it will help IREDA
maintain its leverage and allow the company to provide funding to the renewable energy sector. In addition, the government has waived the requirement that the company pay it dividends for FY20.
Business Standard has always strived hard to provide up-to-date information and commentary on developments that are of interest to you and have wider political and economic implications for the country and the world. Your encouragement and constant feedback on how to improve our offering have only made our resolve and commitment to these ideals stronger. Even during these difficult times arising out of Covid-19, we continue to remain committed to keeping you informed and updated with credible news, authoritative views and incisive commentary on topical issues of relevance.
We, however, have a request.
As we battle the economic impact of the pandemic, we need your support even more, so that we can continue to offer you more quality content. Our subscription model has seen an encouraging response from many of you, who have subscribed to our online content. More subscription to our online content can only help us achieve the goals of offering you even better and more relevant content. We believe in free, fair and credible journalism. Your support through more subscriptions can help us practise the journalism to which we are committed.
Support quality journalism and subscribe to Business Standard.