| Choudhary Power Projects Private Limited | ||||||
| 'CRISIL BB+ / Stable / CRISIL A4+ ' assigned to Bank Debt | ||||||
| Rating Action | ||||||
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| 1 crore = 10 million | ||||||
| Refer to Annexure for Details of Instruments & Bank Facilities |
Detailed Rationale CRISIL Ratings has assigned its ‘CRISIL BB+/Stable/CRISIL A4+’ ratings to the bank facilities of Choudhary Power Projects Private Limited (CPPPL).
The ratings reflect CPPPL's extensive industry experience of the promoter, diversified revenue stream, healthy financial profile. These strength are partially offset by large working capital requirements, susceptibility to hydrology risks, susceptibility to revenue-related risks associated with toll collections. |
Analytical Approach Unsecured loans from promoters of Rs 20.1 crore as on March 31, 2020 has been treated as debt as it may be withdrawn over the medium term. |
Key Rating Drivers & Detailed Description Strengths: Extensive industry experience of the promoter and diversified revenue stream CPPPL is promoted by Mr. Nagar Singh Choudhary. The promoter has extensive experience in operating various small hydro power projects, collection of toll and civil works. CPPPL operates 15 MW of hydro power project and also manages toll collections of various NHAI road. Further, it has also ventured in to road contract work through new work of four laning existing 2 lane road for NH-44 (Banihal – Ramban stretch). The hydro-electric power generation business is stable and adds to the overall profitability while the toll collection business is highly volatile.
Healthy financial profile CPPPL’s capital structure have been at healthy level due to lower reliance on external funds resulting in low gearing estimated at around 0.06 time as on March 31, 2021 (stood at 0.21 time as on March 31, 2020) and low total outside liabilities to adjusted tangible networth (TOL/ANW) estimated at 0.56 time as on March 31, 2021 (stood at 0.35 time as on 31st March 2020). CPPPL debt protection measures have also been at healthy level due to leverage and healthy profitability. The interest coverage and net cash accrual to adjusted debt (NCAAD) ratio are estimated at 71.6 times and 3.83 time for fiscal 2021. CPPPL’s financial risk profile is expected to remain healthy at similar level over medium term on account of expected low external debt.
Weakness: Large working capital requirements CPPPL’s working capital requirements are large as indicated by large other current assets of Rs 170 crore as on Dec 2020 which includes sizeable deposits given to Gammon Engineers and Contractors Private Limited, deposits given to National Highway Authority of India, deposits with Hindustan Construction Company Ltd. apart from other loans and advances. This is against company’s networth of around Rs 152 crore as on Dec 2020. Nevertheless external debt is limited at Rs 12 crore. Creditors as on Dec 2020 stood at around Rs 90 crore as on Dec 2020. CRISIL Ratings expects improvement in working capital cycle and the same will be monitored.
Susceptibility to revenue-related risks associated with toll collections CPPPL is exposed to revenue-related risks associated with toll collection projects because of volatility in traffic volumes as against its predominantly fixed costs. CPPPL bids for toll collection projects via the e-tendering process and the bidding criteria is based on the highest quote for annual remittances to the authority. Also, revenue remains susceptible to the tender-based nature of operations. The revenue has been on a declining trend from Rs 180 crore in fiscal 2018 to Rs 52 crore in fiscal 2020 because of lower toll collection. However, in the current year the same is expected to improve to more than Rs 200 crore.
Susceptibility to hydrology risks Despite a detailed hydrology analysis to mitigate future risk, power generation will continue to depend on availability of adequate water flow. Water level in river depends on annual yield of rainfall from monsoon. The key risk is 'spread of rainfall' across the monsoon: the more the even inflows into the river, the longer the peak power generation periods and vice versa. |
Liquidity - Adequate Bank limit utilization is high at around 84 percent for the past twelve months ended February 2021. The same includes temporary overdraft facility taken from the banks at regular intervals to manage liquidity. Cash accruals stood are expected to be around Rs 35-40 crore in fiscal 2021 against no term debt repayment obligations. The cash accruals are expected to remain healthy over Rs 25 crore against no term debt repayment obligations over the medium term. Current ratio was healthy and is expected to remain above 2 times over the medium term. Unsecured loans from promoters stood at around Rs 2 crore as on Dec 2020. |
Outlook Stable CRISIL Ratings believe CPPPL will continue to benefit from the extensive experience of its promoter, diversified revenue stream and established relationships with customers |
Rating Sensitivity factors Upward factor
Downward factor
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About the Company CPPPL was incorporated in 2009 by Mr. Choudhary Nagar Singh. The company operates in three business segments i.e. independent power producer, collection of toll road and civil works. CPPPL operates hydro power projects with installed capacity of 15 MW in Jammu and Kashmir. It also operates toll road plazas for toll collection. CPPPL also has entered into the business of construction of bridges, roads, highways. The company is headquartered in Jammu & Kashmir. |
Key Financial Indicators
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Any other information: Not applicable |
| Note on complexity levels of the rated instrument: CRISIL complexity levels are assigned to various types of financial instruments. The CRISIL complexity levels are available on www.crisil.com/complexity-levels. Users are advised to refer to the CRISIL 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)
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| Annexure - Rating History for last 3 Years | ||||||||||||||||||||||||||||||||||||||||||||||||||||
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| All amounts are in Rs.Cr. | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| Annexure - Details of various bank facilities | ||||||||||||||||||||||||||||||
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