IPO-bound MSEDCL looks to refinance half of its Rs 98,000-crore debt

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India’s largest power distribution company, Maharashtra State Electricity Distribution Co Ltd (MSEDCL), is charting out plans to refinance at least 50 percent of its Rs 98,000-crore total debt as part of a comprehensive strategy to prepare for a public listing,  managing director Lokesh Chandra told Moneycontrol in an interview recently.

To "clean the balance sheet" ahead of an IPO planned within the next 12 months, the utility has already secured Rs 12,800 crore from the State Bank of India (SBI) to replace high-cost loans with debt at more competitive rates.

This restructuring is critical to managing the company's current annual debt-servicing burden of approximately Rs 12,000 crore, which has been exacerbated by agricultural arrears totalling Rs 75,000 crore, Chandra said in the interview.

MSEDCL has a balanced consumption mix, with high-tension (HT) industrial users and households contributing the largest share of its revenue. In FY25 (provisional), HT industrial consumers accounted for 33.4 percent of revenue, followed by domestic users at 20.9 percent, agriculture at 16.7 percent, commercial at 11.1 percent, and low-tension industrial at 8.3 percent, with the rest coming from public services and other categories. The utility supplies electricity to over 3 crore consumers, including railways and other public services.

However, unpaid dues from farmers led to a debt pile of Rs 75,000 crore, weighing on the rest of the business which is profitable, according to Chandra. The utitlity has decided to de-merge the agriculture business by March 2026.

The new agricultural company will be 100 percent reliant on solar power to lower costs and will run the 45 lakh existing pumps through solar power.

"We are undertaking a financial restructuring to ensure the new entity is not overburdened with debt from day one. The idea is to create a structure where the agriculture business and other segments are financially viable on a standalone basis. At least 50 percent of the Rs 98,000 crore debt will be refinanced, while the rest will be moved to longer-tenure borrowings to ease near-term repayment pressure. A portion could also be supported through government assistance,” he explained.

MSEDCL has already raised Rs 12,800 crorefrom SBI to repay high-cost loans. This move also freed up a revenue stream of nearly Rs 50,000 crore that was previously "hypothetically dedicated" as collateral in older loan agreements

MSEDCL expects cost savings to the tune of Rs 66,000 crore from a reduction in power procurement costs over the next five years, as it looks to increase the share of renewables from its current 13 percent to 52 percent in terms of total energy consumption by 2030.  With the reduction in power procurement costs due to increased renewable share, the company projects a 2 percent annual tariff deduction, a reversal from previous years, where tariffs typically increased by approximately 9 percent to 10 percent annually.

Maharashtra aims to be the first state to reach 52 percent energy consumption from renewables by 2030. While some older thermal plants are being kept operational to meet rising demand for now, the long-term goal is to phase out costlier and environmentally unsustainable power.

"As the renewable share grows to 52%, the energy share provided by thermal power is expected to drop from approximately 80 percent  to 45–46 percent," Chandra said.

The projected annual electricity demand growth rate for Maharashtra is 6 percent to 6.5 percent.

Beyond raising capital, the listing is intended to improve governance efficiency and transition the company into a more technology-driven system using AI tools for load forecasting and real-time grid visibility