| Acme Solar Holdings Private Limited | ||||
| Rating Reaffirmed at 'CRISIL A1' | ||||
| Rating Action | ||||
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| Note: None of the Directors on CRISIL Ratings Limited’s Board are members of rating committee and thus do not participate in discussion or assignment of any ratings. The Board of Directors also does not discuss any ratings at its meetings. | ||||
| 1 crore = 10 million | ||||
| Refer to Annexure for Details of Instruments & Bank Facilities |
Detailed Rationale CRISIL Ratings has reaffirmed its ‘CRISIL A1' rating on the non-fund-based facilities of Acme Solar Holdings Private Limited (ASHPL; part of the Acme group).
The rating continues to reflect the track record of the Acme group in development and operation of solar power assets, healthy financial profile, supported by a large and diverse portfolio of assets, and adequate financial flexibility. These strengths are partially offset by implementation risk of under construction portfolio, significant amount of equity requirement in under construction solar projects and green ammonia vertical, and variability in operating margin of the engineering, procurement and construction (EPC) segment. |
Analytical Approach To arrive at the ratings, CRISIL Ratings has fully consolidated the business and financial risk profiles of ASHPL, Acme Cleantech Solutions Pvt Ltd (ACSPL; parent company of ASHPL) and Acme Solar Energy Pvt Ltd (ASEPL; entirely held by ASHPL). CRISIL Ratings has moderately combined the business and financial risk profiles of these three entities with their special purpose vehicles (SPVs).
In line with the moderate consolidation approach, equity requirement for under-construction SPVs, including cost overrun in projects under implementation, as estimated by CRISIL Ratings, have also been factored into the projections.
Please refer Annexure - List of Entities Consolidated, which captures the list of entities considered and their analytical treatment of consolidation. |
Key Rating Drivers & Detailed Description Strengths: Track record in development and operation of solar power assets Extensive experience of a decade in execution and operation of solar power projects in India has helped the Acme Group establish its market position and gain technical capabilities. This is reflected in commissioning of over 2 gigawatt (GW) of solar power projects without any material cost and time overruns, a part of which has been sold in the past. Currently, the group has an operational solar capacity of ~1.46 GWAC
The business profile is further supported by geographical diversity. The portfolio is spread over more than 10 states. Additionally, power generation at an overall portfolio level has been satisfactory for the past three years.
Healthy financial profile, supported by large and diverse portfolio of assets Given the operational asset base of 1.46 GWAC currently, the cash flow upstreaming to the holding company from surplus generation is expected to remain strong for FY23 and FY24. The proposed sale of operational solar projects in near to medium term will somewhat affect the cash flow upstreaming at the holding company level, however, the group has a strong pipeline of 1.45 GWAC of under-construction projects expected to be commissioned and stabilized over the next two years. Lower accrual at the holding company will constitute a rating sensitivity factor.
Adequate financial flexibility ASHPL has adequate financial flexibility as seen from its track record of fundraising. The company (directly or indirectly) has raised over Rs 3,000 crore of funds over fiscals 2021 and 2022, through divestment of ~1 GW of assets and partnerships in projects. Going forward, the total portfolio of around 2.9 GWAC of solar power assets provides it with the flexibility of raising funds through accrual, refinancing or stake sale. Additionally, the company has recently signed framework agreement with Norwegian investment fund, Norfund to co-invest in developing new greenfield renewable power projects.
Weaknesses: Implementation risk Around 50% of the total solar portfolio of the group is under construction, entailing implementation and stabilization risks. Additionally, the entire under-construction solar portfolio lies in the potential Great Indian Bustard (GIB) zone, for which the proceedings pertaining to the over-head transmission lines are currently ongoing in the Hon’ble Supreme Court. Any significant delays in the implementation of these projects and higher-than-projected investment requirement are rating sensitivity factors.
The group is also foraying into the green ammonia vertical which requires sizeable amount of equity investments over near to medium term. The manufacturing unit for the green ammonia plant is being set up in Oman (Duqm SEZ area). CRISIL Ratings will continue to closely monitor the developments happening around this vertical.
Variability in EPC margin The solar power industry is currently facing cost pressures on account of volatility in module prices, exchange rates, freight, and commodity prices. This may impact the EPC margin of ACSPL and ASHPL as they may not be able to pass on the cost increase to SPVs. |
Liquidity: Adequate Cash accrual (including upstreaming from operational SPVs) is expected at over Rs 150 crore during fiscal 2023. ASHPL and ASEPL have together availed long-term, fund-based borrowing of Rs 550 crore. Accrual generated at ACSPL and ASHPL together, should suffice to cover the interest/premium obligation. There is no redemption obligation in fiscals 2023 and 2024. However, there is a redemption obligation of 20% in FY2025. Additionally, there is no utilization of fund based working capital limits. ACSPL, ASHPL and ASEPL together hold unencumbered cash balance of ~Rs 425 crore as on March 31, 2023 through top up loans being availed in few SPVs and upstreaming of cash flows from operational SPVs. |
Rating Sensitivity factors Upward factors:
Downward factors:
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About the Company Established in 2003, ACSPL entered the renewable energy business, over a decade ago. It is promoted by Mr Manoj Kumar Upadhyay, a first-generation entrepreneur, having close to 25 years of experience in clean energy and telecom. As the flagship company of the group, ACSPL holds 100% stake in ASHPL. ACSPL primarily provides operations and maintenance (O&M) work for solar power plants and procurement and supply of solar modules. ASHPL manages the engineering and construction business and procurement of other equipment. However, the EPC and O&M business provides services to other group companies. The group has experience of setting up of over 2 GW of capacity across 54 SPVs. Currently, there are 37 operational SPVs with aggregate solar capacity of ~1.46 GW (AC capacity) spread across more than 10 states, with 1.45 GW capacity under construction. |
Key Financial Indicators
*Adjusted for inter-company sales and expenses between ACSPL and ASHPL as applicable |
Any other information: Not applicable |
Note on complexity levels of the rated instrument: |
Annexure - Details of Instrument(s)
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Annexure – List of entities consolidated
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| Annexure - Rating History for last 3 Years | |||||||||||||||||||||||||||||||||||||||
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| All amounts are in Rs.Cr. | |||||||||||||||||||||||||||||||||||||||
| Annexure - Details of Bank Lenders & Facilities | ||||||||
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This Annexure has been updated on 12-Apr-23 in line with the lender-wise facility details as on 07-Apr-22 received from the rated entity.
Criteria Details
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