| Adani Renewable Energy Thirty Seven Limited | ||||
| 'Crisil AA- / Stable' assigned to Bank Debt | ||||
| 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 assigned its 'Crisil AA-/Stable’ rating to the long-term bank facilities of Adani Renewable Energy Thirty Seven Limited (ARE37).
Adani Renewable Energy Thirty Six Ltd (ARE36L), ARE37L and Adani Renewable Energy Forty Three Ltd (ARE43L), are hereafter referred to as the group.
The rating factors in strong revenue visibility for the group backed by power supply agreement (PSA) with Powerpulse Trading Solutions Ltd (PTSL) at a healthy operating margin. PTSL is a wholly owned subsidiary of Adani Energy Solutions Ltd (AESL, rated ‘Crisil AA+/Stable’). Furthermore, the rating also factors in the strong operational, financial and managerial linkages of the group with its parent, Adani Green Energy Ltd (AGEL, rated ‘Crisil AA/Stable’). AGEL’s strong credit risk profile is driven by robust business risk profile considering healthy growth in its operating portfolio over the past few years, strong execution track record, visibility in cash flow via long-term contracts, diversity of portfolio and counterparty mix, and healthy financial flexibility.
That said, these strengths are offset by susceptibility to risks inherent in under-construction projects and limited track record of battery energy storage systems (BESS) operations in India. |
Analytical Approach Crisil Ratings has combined the business and financial risk profiles of ARE36L, ARE37L and ARE43L, in line with its criteria for rating entities in homogeneous groups. This is because the three entities have same line of business, common lending arrangement and availability of cash pooling wherein surplus from one entity can be used to support any shortfall in the other entities.
The group has signed a credit enhancement agreement with a common banker, as per which all three entities are jointly responsible for debt servicing. As per the agreement, trust and retention account of the entities will be under control of the common lender and surplus cash flow of one special purpose vehicle (SPV) can be used for servicing debt and maintaining the debt service reserve account (DSRA) in case of shortfall in the other entity.
Moreover, Crisil Ratings has applied its parent notch-up framework to factor in the extent of support available to the group from its parent entity, AGEL. This is because of the common business between the parent and the group, and the importance of the group to AGEL from growth and economic perspectives.
Please refer Annexure - List of Entities Consolidated, which captures the list of entities considered and their analytical treatment of consolidation. |
Key Rating Drivers - Strengths Healthy revenue visibility with PSA and PPA in place The group has signed a 25-year PSA for the 3,098-megawatt hours (MWh) dispatchable capacity of BESS with PTSL, which minimises offtake risk. The PSA carries a fixed net realisable fixed tariff for the entire tenure of 25 years.
Furthermore, for input power into BESS, the group has signed 18-year power purchase agreement (PPA), with AGEL for the entire installed capacity of 3,531 MWh minimising power supply risk for the first cycle wherein power is to be dispatched during the evening peak hours. This PPA will be mutually extendable at the behest of both the entities. This structure minimises operational risk by securing power supply and offtake at predetermined tariffs.
For any subsequent cycles to be run by BESS, the offtaker PTSL will be responsible for securing the supply of power. Plus, the landed cost of power from AGEL will be entirely compensated by PTSL. AESL has provided a backstop guarantee for any delay in payments from PTSL. That said, timely realisation of monthly payments from PTSL will be monitorable.
Managerial and financial support from AGEL Given the strategic importance of the assets to AGEL and the management articulation, the group is likely to receive managerial and financial support (if required) from AGEL throughout the lifetime of the projects. Any change in support stance or change in credit risk profile of AGEL will be monitorable.
Crisil Ratings has taken note of the indictment and civil complaint against specific Adani group senior executives and key functionaries of AGEL by the US Department of Justice and the US Securities and Exchange Commission, and their likely impact on the financial flexibility of the group. While the matter is sub judice, the group (including AGEL) has demonstrated ability to raise the necessary funds from the market to meet its requirement, including the refinancing of debt undertaken by AGEL during the early part of this calendar year. That said, Crisil Ratings continues to monitor the developments with respect to the group. Any adverse regulatory or government action, emerging issues around corporate governance, or a sustained decline in the group’s resource raising capabilities from banks or capital markets will be monitorable. |
Key Rating Drivers - Weaknesses Susceptibility to risks inherent in under-construction projects Against a dispatchable capacity of 3,098 MWh, the group is expected to implement a battery capacity of 3,531 MWh, with the project’s scheduled commissioning in June 2026. Of this, 1,376 MWh capacity has already been installed. However, as compared to pure play solar or wind power projects, battery projects entail significant oversizing due to faster and higher degradation of the BESS in comparison and considerable project costs. For this, the financial closure has been achieved, and the debt has been tied up with State Bank of India. Though, the rating draws comfort from the execution track record of AGEL, any delay in the commissioning of the project, material cost escalation or both will be monitorable.
Limited track record of BESS operations in India Application of battery at such a large scale as an energy storage system is still at a nascent stage in India. BESS is being sourced from Tier 1 suppliers. That said, various challenges may arise post commissioning including impact of operating in harsh climatic conditions of Khavda, thermal management, excessive battery state of health degradation reducing project life and challenges with respect to grid integration. The batteries will be engaged in any subsequent cycles entirely upon request from the PSA counterparty PTSL, where PTSL has to arrange power for charging and offtake. The tariff realisation during the second cycle may be lower than the first cycle. Timely commissioning, with stabilisation of operational performance and realisation during the second cycle, will be monitorable. |
Liquidity Strong Since the project is under construction, the debt repayment is only expected to start six months from the project commissioning, with debt repayment moratorium during the interim period. Post commissioning, the operating cash flow is expected to be adequate for debt servicing and to meet any contingency. A DSRA of six months of debt servicing will be maintained as per the sanction letter. Also, the credit enhancement mechanism and expectation of timely support from the parent further enhances the liquidity. |
Outlook Stable The group will benefit from timely commissioning, stabilization of operating performance and healthy revenue visibility (with PSA and PPA in place). |
Rating sensitivity factors Upward factors
Downward factors
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About the Company AGEL is implementing a 1,126-megawatt/3,531-MWh BESS project at Khavda. The project is being implemented through wholly owned subsidiaries of AGEL—ARE36L, ARE37L and ARE43L—with an installed capacity of 642 MWh, 1,445 MWh and 1,445 MWh respectively. The power stored in the BESS project will be supplied to PTSL through a long-term PSA. Further, this PSA with PTSL will have backstop guarantee of AESL (Crisil AA+/Stable).
The project will use renewable energy generated from AGEL’s renewable energy plant in Khavda for charging power during the peak solar hours. For the same, the project SPVs have entered long-term PPAs for power procurement. Further, PTSL (the offtaker) will arrange for power for storage for any cycle of operation beyond the first cycle. The scheduled commissioning for these projects is June 2026. |
Key Financial Indicators*
* Not applicable since the project is under-construction |
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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Annexure: List of instruments and names of regulators of the instruments As required by SEBI CRA Circular dated Feb 10, 2026, a list of activities or instruments falling under the purview of various FSRs, along with the names of respective FSRs, is being disclosed below:
* Includes securitisation transactions involving assignee payout, acquirer's payout. ~ The rated instrument may involve issuance of different instruments such as debt securities (listed or otherwise), bank loans, commercial paper (listed or otherwise), etc. The regulator of the instrument may accordingly be SEBI, RBI or MCA and can only be determined upon issuance. In PRs subsequent to issuance(s), Crisil Ratings Limited shall separately capture the rated quantum details along with names of respective regulators. ^ Includes bank facilities such as liquidity facility, second loss facility that are part of securitisation transactions. # There is no instrument being rated and hence, Regulator of the Instrument is not applicable. The rating scale and definitions are being followed as stipulated in SEBI Master Circular for CRAs. @ These ratings were assigned during regulatory regime prior to introduction of SEBI CRA Circular dated Feb 10, 2026 and the investor side regulators have accordingly been included.
Note: Kindly note that for activities or instruments falling under the purview of FSRs other than SEBI, the grievance/dispute redressal mechanisms and investor protection mechanisms provided by SEBI shall not be available. |
Criteria Details
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