New Delhi: India’s power distribution utilities have turned profitable on paper for the first time, but cash stress in the sector remains unresolved, with dues and delayed collections continuing to weigh on the system. The sector reported a positive profit after tax (PAT) of Rs 2,701 crore in FY25 on an accrual basis, compared with a loss of Rs 27,022 crore in FY24, according to the 14th Integrated Rating and Ranking Report of Power Distribution Utilities prepared by the Central Electricity Authority.
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The report was released by Power Minister Manohar Lal Khattar at a two-day Chintan Shivir organised by the Ministry of Power at Parwanoo, Himachal Pradesh, on Friday.
The report cautioned that the turnaround reflects accrual-based accounting improvements rather than a cash surplus, with delayed payments and high receivables continuing to strain the power distribution sector.
Despite the reported turnaround, average days payable to generation and transmission companies stood at 113 days in FY25, only marginally better than 132 days in FY24.
While 20 DISCOMs managed to restrict payments to within 60 days, as many as 23 utilities recorded days payable exceeding 90 days, resulting in nil scores on this key parameter. The data points to continued delays in settling power purchase bills despite policy interventions such as the Late Payment Surcharge (LPS) Rules.
On the revenue side, days receivable averaged 112 days in FY25, virtually unchanged from 113 days in FY24, indicating that DISCOMs continue to struggle to collect dues on time. Only 26 utilities were able to keep receivables within 60 days, while 19 DISCOMs reported receivables of more than 120 days, reflecting delayed payments from consumers, including government departments, and prolonged subsidy reimbursements in some states.
The report shows that the ACS–ARR gap on a tariff-subsidy-received basis narrowed sharply to Re 0.06 per unit in FY25, down from Rs 0.20 per unit in FY24. On a cash-adjusted basis, the ACS–ARR gap improved from Rs 0.32 per unit in FY24 to Rs 0.07 per unit in FY25, signalling better cost recovery on paper. However, the persistently high receivables and payables indicate that these gains have not translated into commensurate cash inflows.
Aggregate Technical and Commercial (AT&C) losses declined to 15.04 percent in FY25, from 15.97 percent in FY24. Billing efficiency improved to 87.59 percent from 86.99 percent, while collection efficiency edged up to 97.0 percent from 96.6 percent.
Even so, 27 utilities continued to report AT&C losses above 15 percent, and 10 utilities remained below the minimum billing efficiency threshold, underlining uneven reform outcomes across states.
Out of 65 utilities rated, 31 were graded A+ or A, while 11 utilities remained in the C or C- categories, down from 18 in the previous year. However, several large state-owned DISCOMs attracted ‘red card’ flags due to auditor adverse opinions, rising regulatory assets, or payment defaults to lenders and power suppliers — factors that restricted their final grades despite operational improvements.
Subsidy realisation improved to 98.9 percent in FY25, up from 97.45 percent in FY24, with multiple states clearing nearly all subsidy dues of the past three years. Yet the report makes clear that improved subsidy booking alone is insufficient to resolve liquidity stress unless accompanied by faster cash disbursal and tighter payment discipline across the supply chain.
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The CEA described the integrated rating exercise as a tool to track reform outcomes and financial sustainability. The FY25 results suggest that while losses have narrowed and profitability has improved on paper, the distribution segment continues to operate with high working-capital dependence, delayed payments and stretched cash cycles.
For generators, lenders and policymakers, the numbers point to a sector that has stabilised financially, but is yet to achieve a durable cash turnaround.
