| Amplus Green Power Private Limited | ||||
| Rating upgraded to 'CRISIL AA/Stable' | ||||
| 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 upgraded its rating on the long-term debt facilities of Amplus Green Power Pvt Ltd to ‘CRISIL AA/Stable’ from 'CRISIL AA-/Positive’.
The rating upgrade factors in receipt of pending regulatory approvals (for energy banking), which enables the project to sell power (including banked energy) at contracted tariffs to all its offtakers. The rating also factors in the healthy operational performance of the solar plant with plant load factor (PLF) above P-90 levels over the past three years. The rating continues to take into account the strong managerial and financial support likely to be received from the ultimate parent, Petroliam Nasional Berhad, Malaysia (PETRONAS; foreign currency rating of 'A-/Stable' and local currency rating of ‘A/Stable’ from S&P Global Ratings) and, low offtake and counterparty credit risk as the entire capacity is tied-up with commercial and industrial (C&I) consumers having healthy credit risk profiles under the group captive (GC) mode.
These strengths are partially offset by exposure to single asset concentration risk and technological risk associated with solar plants, and dependence on favourable solar irradiation for power generation. |
Key Rating Drivers & Detailed Description Strengths: Strong financial, operational and managerial support from the ultimate parent: Such support was demonstrated during the construction and stabilisation phase of the project. The project cost of Rs 260 crore was funded through a mix of promoter funds (Rs 34.7 crore as equity capital and Rs 66.9 crore as OCDs) and short-term debt. Subsequently, while the project awaited open access approvals for offtake, the PETRONAS group paid off the short-term debt by infusing additional funds of Rs 161 crore (as OCDs). A part of these OCDs have been paid back to promoter with disbursement of long-term debt. In case of any future exigencies, the company is likely to receive similar support for timely servicing of debt. Further, the propensity to support is high given the strategic focus of the PETRONAS group towards renewable energy, budgeted capital outlay plans and economic incentive as reflected in a healthy DSCR over the tenure of the loan.
Healthy operating performance with generation above P-90 levels The 75-megawatt peak (MWp) power project of AGPPL has been operational for around two years with average PLFs consistently above P-90 generation levels. The PLF was 16.7% and 17.4%, respectively, in fiscals 2021 and 2022. The plant should continue to operate at P90 level given the healthy operational track record and tie-up with a reputed operations and maintenance (O&M) player – Sterling and Wilson Solar Ltd. However, sustenance of operational performance, and fluctuation in PLF will remain key monitorables
Low offtake and counter party credit risks The company has entered into power-purchase agreements (PPAs) with eight GC customers. The PPAs have a tenure of 10-25 years and a competitive tariff of Rs 3.6-3.8 per unit, which is at a discount of Rs 2-3 per unit to the grid tariff rates of the respective distribution companies (discoms), thus mitigating demand risk significantly. This, coupled with the long tenure of debt (around 13.5 years), results in a comfortable DSCR.
The counterparties include C&I customers with healthy credit profiles such as ACC Ltd (CRISIL AAA/Stable/CRISIL A1+’), Ambuja Cements Ltd (‘CRISIL AAA/Stable/CRISIL A1+’), Moon Beverages Ltd (‘CRISIL A+/Positive’), HT Media Ltd (‘CRISIL AA-/Stable/CRISIL A1+’), the DS group, Adobe Systems India Pvt Ltd, Subros Ltd and Kanpur Plastipack Ltd. Hence, counterparty risk is expected to be low. Further, all GC customers have infused their equity contribution in September 2020 (for a 30% stake to meet GC norms), underpinning their commitment to the project. Also, the construction is modular, such that failure of one customer to offtake the required power will not impact the GC status of the entire plant, thereby lowering tariff risk to an extent.
Competitive tariff rate supported by favourable state solar policy The tariff for the tenure of the PPAs is primarily fixed with annual escalations and in some cases linked to grid tariffs. The solar policy of Uttar Pradesh (UP) remains favourable for GC projects with 50% of transmission and wheeling charges, and the entire cross-subsidy surcharge exempt for the lifetime of the project. Also, electricity duty is exempted for 10 years. However, annual renewal of the GC status remains critical for the competitiveness of the tariffs and viability of the project.
Weaknesses: Exposure to technological risks associated with solar power plants and dependence on favourable solar irradiation for power generation Solar power generation is dependent on irradiation levels around the location of the plant. Also, changes in the average temperature around the plant or performance of modules may affect power generation, and lead to higher-than-expected degrading of the solar panels. Given that the cash flow of solar power projects is highly sensitive to variation in PLFs, these inherent risks could impair the debt-servicing capability. The technology-related risks are partially offset by the fact that modules for the project have been supplied by reputed players, Mundra Solar Photovoltaic Pvt Ltd (Adani Solar) and Waaree Energies Ltd, offering product and performance guarantees.
Concentration risks on account of single asset operation The company`s generating assets consist of a single 75 MWp plant in Mirzapur, Uttar Pradesh exposing it to geographical concentration risk. The risk is however, managed by maintaining sufficient liquidity through DSRA equivalent to six months of debt servicing.
Liquidity: Strong Cash accrual (available for debt servicing) is expected at around Rs 32 crore against debt obligation of around Rs 26 crore each in fiscals 2023 and 2024. Further, as on February 28, 2023, cash and equivalent were healthy at around Rs 52.5 crore including DSRA equivalent to two quarters of debt servicing (Rs 13.1 crore). Further, the Rs 3 crore sanctioned working capital limit is currently unutilised. Healthy accrual, the financial flexibility of the PETRONAS group and DSRA of two quarters will ensure adequate liquidity to withstand any delay in payment from off-takers or any variation in PLF levels. |
Outlook: Stable AGPPL should continue to generate healthy cash accrual, backed by long-term PPAs and healthy PLFs. Furthermore, it will remain strategically important to, and receive strong management, operational and financial support from, PETRONAS. |
Rating Sensitivity factors Upward factors * Strategic focus of PETRONAS, along with an increase in proportion of capital employed towards the renewables space in India * Sustenance of healthy generation significantly above P90 level along with receipt of payment within 30 days
Downward factors * Change in stance of support from PETRONAS * Downgrade in the credit rating of PETRONAS by one or more notches * Deterioration of the credit profile of the special purpose vehicle (SPV) on account of sustained weak operational performance below P-90 levels or significant delays in payment from the counterparties |
About the Company Incorporated on March 20, 2017, AGPPL owns a 75 MWp ground-mounted solar power plant in Mirzapur, UP which was operationalised over multiple phases between December 2019 and June 2021. The company operates on a GC model and has entered into PPAs with eight C&I customers at a blended tariff of Rs 3.6-3.8 per unit for 10-25 years.
AGPPL is a subsidiary of AESPL, which holds 70% stake in the company, with the rest being held by GC customers. AESPL is a 100% step-down subsidiary of Gentari Sdn Bhd (Gentari). Incorporated in September 2022, Gentari is a 100% subsidiary of PETRONAS and operates across three segments, including renewable energy, hydrogen and green mobility. It has plans to grow its renewable asset portfolio to 30-40 gigawatt (GW) by 2030. |
Key Financial Indicators– AGPPL – CRISIL Ratings adjusted numbers
*Includes OCDs extended by parent AESPL |
Any other information: Not applicable |
Note on complexity levels of the rated instrument: |
Annexure - Details of Instrument(s)
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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 09-May-2023 in line with the lender-wise facility details as on 27-Aug-2021 received from the rated entity.
Criteria Details
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