Key Rating Drivers & Detailed Description

Strengths:

Healthy revenue visibility provided by power purchase agreements (PPAs)

The company has PPAs of 10 years at pre-determined tariff with various counterparties under open access system. The offtakers are 10 industrial customers with strong credit risk profiles such as Mylan Laboratories Ltd, Britannia Industries Ltd, Hewlett Packard India Software Operations Pvt Ltd, Tata Power Solar Systems Ltd, Aster DM Healthcare Ltd and Tata Hitachi Construction Machinery Company Pvt Ltd. The company is confident of finding another off-taker with similar tariff rates post the expiry of current PPA.  Average payment cycle has been less than 30 days since commissioning of the project.

Comfortable track record of operations

The company has been operational since February 2018. Its operational performance has been better than P-90 level from the commercial operations date. The project clocked average plant load factor (PLF) of around 23.8% in fiscal 2022 (22.7% in fiscal 2021), better than P90 PLF of 21.8%. The project’s performance is backed by performance guarantees from the supplier and its operations and maintenance (O&M) contractor, which will be maintained above P90 PLF over the medium term.

Moderate financial risk profile

The company has weighted average tariff of Rs 4.8 per unit under the PPAs, leading to a moderate average debt service coverage ratio (DSCR) over the tenure of debt (projected by CRISIL Ratings). The project cost of Rs 165 crore was partly funded through funds from the AMP group and compulsorily convertible debentures (CCDs). As interest are met post servicing of senior lenders, DSCR has been calculated excluding the CCD payments.

Support derived from the AMP group

The company benefits from an experienced management team in India and the expertise of the ultimate parent, AMP Group Inc. The group has been involved in the development and operation of solar projects of around 2 GW in India. The group has demonstrated financial flexibility by raising funds from multiple investors like CBRE Caledon Capital (a Canada-based infrastructure and private equity solutions provider), Colorado-based Zoma Capital and global investment firm, the Carlyle Group. The Indian holding company, AMP Energy India Private Limited, has secured an investment from LGT Lightstone (part of the LGT group; one of the largest family-owned private banking and asset management group in Europe) of USD 50 million to fund growth in India while another investment of USD 45 million has been committed at a sub-holding company from Core Infrastructure Investment Fund and SMBC Bank (Japan) along with AMP solar Technology Private Limited (Parent company of Ampsolar Clean Power Pvt. Ltd. ) under a joint venture. The group has also secured an investment from Copenhagen Infrastructure Partners (Denmark-based renewable energy focused fund manager) of USD 100 million. CRISIL Ratings understands that the group will continue to provide financial support to the rated entity in case of any exigencies.

Weaknesses:

Exposure to variability in solar irradiance levels

ASSPL is engaged in solar power generation, which is dependent on radiation levels. Changes in the average temperature around the plant's location or performance of polycrystalline modules may affect power generation and lead to higher-than-expected degradation in solar panels. Given that the sensitivity of cash flow of a solar power project is the highest for PLF, these risks may impair the debt servicing capability of solar projects.

High concentration risk

The company has a 30-MW (AC) power plant in Karnataka, and hence, remains exposed to concentration risk. The debt service reserve account (DSRA), covering debt obligation for around six months, mitigates this risk to some extent.

Key Financial Indicators

Annexure - Details of Instrument(s)

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