| Aryan Energy Private Limited | ||||||
| Rating outlook revised to 'Stable'; Ratings reaffirmed | ||||||
| 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 revised its outlook on the long-term bank facilities of Aryan Energy Private Limited (AEPL; part of the Aryan group) to ‘Stable’ from ‘Negative’ while reaffirming the rating at 'CRISIL BB', the short term rating is reaffirmed at 'CRISIL A4+'.
The revision in outlook reflects better operating performance seen during the nine months ending December 31, 2022, and the subsequent improvement in the financial risk profile, especially liquidity. The rating also factors in the benefits likely from the receipt of letter of intent (LoI) from Andhra Pradesh Power Development Company Ltd (APPDCL) for coal washing of another 1 million tonnes per annum (MTPA).
During the nine months ending December 31, 2022, the company washed 0.8 million tonnes (MT) of coal vis-a-vis 0.5 MT for the corresponding period last fiscal. As a result, the earnings before interest, taxes, depreciation and amortisation (EBITDA) rose to nearly Rs 17 crore in fiscal 2023, as compared to Rs 0.2 crore during fiscal 2022. Liquidity too has improved with unencumbered cash and cash equivalents of Rs 7.6 crore (Rs 0.4 crore as of March 2022) and largely unutilised bank limit of Rs 6 crore as of December 2022 (around Rs 3 crore as of March 2022). The financial risk profile should also sustain with continued operating performance.
The ratings reflect the extensive experience of the management in the coal beneficiation industry and the healthy debt protection metrics of the company. These strengths are partially offset by the modest scale of operations and high concentration in revenue. |
Analytical Approach To arrive at its ratings, CRISIL Ratings has considered the standalone business and financial risk profiles of AEPL. |
Key Rating Drivers & Detailed Description Strengths: Extensive experience of the management AEPL, a part of the Aryan group, is mainly owned by ACB India Ltd (ACBIL). The two-decade-long experience of the parent, ACBIL, in the coal beneficiation business and significant business and managerial support provided to AEPL will continue to support the business.
Healthy debt protection metrics Financial risk profile is marked by a healthy networth of Rs 113 crore and low gearing of 0.04 time, aided by low debt of Rs 5 crore as on March 31, 2022. Despite lower cash accrual, interest coverage ratio was strong at 5.6 times in fiscal 2022. In the absence of any large debt-funded capital expenditure, debt protection metrics will remain healthy over the medium term.
Weakness: Modest scale of operations along with concentration in revenue With a single contract of 1 MTPA and lower offtake from APPDCL, the company posted modest revenue of Rs 46 crore in fiscal 2022. However, it has recently received a letter of intent from APPDCL for another 1 MTPA and hence, should see offtake improve going forward. In the absence of other washeries in the vicinity, the contract is likely to be renewed in a timely manner. Any change in terms or delays/non-renewal of the contract will be a key monitorable. |
Liquidity: Adequate Bank limit of Rs 6 crore was completely unutilized as on February 2023, while the unencumbered cash balance stood at Rs 7.6 crore as on December 31, 2022. The company has subscribed for compulsorily convertible preference shares worth Rs 48 crore issued by ACB (India) Power Ltd and has also extended loans worth nearly Rs 2 crore to group entities as on December 31, 2022. Expected cash accrual of over Rs 25 crore in fiscal 2024 will suffice to cover the minimal term debt obligation. Repatriation of funds to group entities may impact liquidity and financial risk profile, and hence, will be closely monitored. |
Outlook: Stable The business risk profile remains constrained by dependence on a single washing contract though increase in coal beneficiation volume and reject sales should aid growth in revenue over the medium term. The financial risk profile is supported by negligible long-term debt and the largely unutilised bank limit. |
Rating Sensitivity factors Upward factors
Downward factors
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About the Company Incorporated in 2001, AEPL is part of the Delhi-based Aryan group, which has interests in coal beneficiation and power generation. The company undertakes coal washing and beneficiation; it has washeries in Talcher (Odisha); RK1 (Telangana) and Gauri (Maharashtra). Currently, it has one washing contract with APPDCL. |
Key Financial Indicators (standalone)*
*as per analytical adjustments made by CRISIL Ratings |
Any other information: Not applicable |
Note on complexity levels of the rated instrument: |
Annexure - Details of Instrument(s)
*includes cash credit of Rs 1 crore as sub-limit |
| 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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Criteria Details
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