Rating Rationale
July 22, 2022 | Mumbai
Alex Astral Power Private Limited
Rating Reaffirmed
 
Rating Action
Total Bank Loan Facilities RatedRs.180 Crore
Long Term RatingCRISIL A/Stable (Reaffirmed)
1 crore = 10 million
Refer to Annexure for Details of Instruments & Bank Facilities

Detailed Rationale

CRISIL Ratings has reaffirmed its ‘CRISIL A/Stable’ rating on the long-term bank facilities of Alex Astral Power Private Limited (AAPPL).

 

The rating continues to reflect the company’s stable business risk profile, comfortable financial risk profile and improved liquidity. These strengths are partially offset by exposure to regulatory risks, dependence on climatic conditions for power generation and modest scale of operation.

Key Rating Drivers & Detailed Description

Strengths:

Stable business risk profile: The 25-MW solar power project was commissioned in March 2012, and a 25-year power purchase agreement (PPA) was signed with Gujarat Urja Vikas Nigam Ltd (GUVNL) at a fixed tariff of Rs 15 per unit for the first 12 years and Rs 5.0 per unit thereafter. The PPA and assured offtake lend stability to the company’s business risk profile.

 

Comfortable financial risk profile: The financial risk profile is enhanced on account of provisions for building a debt service reserve account (DSRA) for interest for one quarter and interest obligation. The company also maintains liquidity over and above the DSRA requirement (Rs 20 crore average). Debt service coverage ratio (DSCR) is moderate at about 1.6 times over the tenure of the loan. Debt protection metrics should remain comfortable driven by the long tenure of the loans, along with stability in revenue and healthy profitability.

 

Weakness:

Exposure to regulatory risks and dependence on favourable climatic conditions for power generation: Although AAPPL reported a healthy plant load factor (PLF) of over 19% in fiscal 2022, its sustenance will remain a key rating sensitivity factor. AAPPL remains exposed to regulatory risk such as change in tariff rates by regulators. Any adverse change in tariff rate will hit the company’s credit risk profile. Also, the successful track record of solar panel efficiency depends on exogenous factors, and hence, actual PLF over the medium term will remain a key sensitivity factor. Plus, changes in interest rates may also have a bearing on DSCR which will be key monitorable.

Liquidity: Strong

Liquidity is strong, backed by cash flow available for meeting debt obligation of ~Rs 40 crore each in fiscals 2023 and 2024, along with cash and equivalent of Rs 22.90 crore (unencumbered). The company has long-term debt obligation of Rs 6-22 crore annually over the medium term, which shall be met through internal cash accrual. The debt servicing ability is healthy with DSCR expected above 1.6 times for the remaining tenure of the debt. Furthermore, due to healthy DSRA and the absence of any significant capital expenditure plan, the company may build-up sizeable cash and equivalents over the next three years.

Outlook: Stable

CRISIL Ratings believes AAPPL will continue to generate adequate cash accrual, backed by healthy PLF and timely payment by GUVNL.

Rating Sensitivity Factors

Upward factors

  • Sustenance of operational performance resulting in higher liquidity build-up due to healthy DSCR of above 1.5 times along with a sustained track record of payment by GUVNL
  • PLF above 19% leading to better power generation

 

Downward factors

  • Lower-than-expected PLF or delay in receipt of payments by GUVNL, weakening liquidity
  • Any further investment in group companies leading to reduction in liquidity
  • Increase in exposure to group companies resulting in deterioration of liquidity to below Rs 20 crore.

About the Company

AAPPL, part of the Alex Group of companies, was incorporated in October 2009, to produce solar power in Gujarat under the Gujarat Solar Policy. The 25-MW photovoltaic solar plant in Charanka, was set up at a capital outlay of Rs 400 crore, funded through debt and equity in a ratio of 2.33:1. The unit was commissioned in March 2012.

Key financial indicators

As on/for the period ended March 31

Unit 

2021

2020

Operating income

Rs.Crore

63.93

60.86

Reported profit after tax (PAT)

Rs.Crore

20.84

9.68

PAT margin

%

27.03

14.13

Adjusted debt/Adjusted networth

Times

1.53

2.34

Interest coverage

Times

4.01

3.05

Status of non-cooperation with previous CRA:

 AAPPL has not cooperated with Brickwork Ratings India Pvt Ltd (Brickworks), India Ratings And Research Pvt Ltd (India Ratings) and Acuite Ratings and Research Ltd (Acuite), which have classified the company as non-cooperative through a release dated 02-May-2018, 23-Aug-2018 and 25-Mar-2019 respectively. The reason provided by Brickworks, India Ratings and Acuite is non-furnishing of information for monitoring of ratings.

Any other information: Not applicable

Note on complexity levels of the rated instrument:
CRISIL Ratings' complexity levels are assigned to various types of financial instruments. The CRISIL Ratings' complexity levels are available on www.crisil.com/complexity-levels. Users are advised to refer to the CRISIL Ratings' complexity levels for instruments that they consider for investment. Users may also call the Customer Service Helpdesk with queries on specific instruments.

Annexure - Details of instrument(s)

ISIN

Name of instrument

Date of allotment

Coupon

rate (%)

Maturity

date

Issue size

(Rs.Crore)

Complexity

levels

Rating assigned

with outlook

NA

Long Term Loan

NA

NA

Mar-32

121

NA

CRISIL A/Stable

NA

Proposed Long Term Bank Loan Facility

NA

NA

NA

59

NA

CRISIL A/Stable

Annexure - Rating History for last 3 Years
  Current 2022 (History) 2021  2020  2019  Start of 2019
Instrument Type Outstanding Amount Rating Date Rating Date Rating Date Rating Date Rating Rating
Fund Based Facilities LT 180.0 CRISIL A/Stable   -- 30-06-21 CRISIL A/Stable 26-03-20 CRISIL A-/Stable   -- CRISIL A-/Stable
All amounts are in Rs.Cr.
Annexure - Details of Bank Lenders & Facilities
Facility Amount (Rs.Crore) Name of Lender Rating
Long Term Loan 121 Power Finance Corporation Limited CRISIL A/Stable
Proposed Long Term Bank Loan Facility 59 Not Applicable CRISIL A/Stable

This Annexure has been updated on 22-Jul-2022 in line with the lender-wise facility details as on 03-Aug-2021 received from the rated entity. 

Criteria Details
Links to related criteria
CRISILs Approach to Financial Ratios
Rating criteria for manufaturing and service sector companies
CRISILs Bank Loan Ratings - process, scale and default recognition
Criteria for rating solar power projects
Understanding CRISILs Ratings and Rating Scales

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