| Green Infra Wind Energy Limited | ||||||
| Rated amount enhanced for Bank Debt; NCD Withdrawn | ||||||
| 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 reaffirmed its ‘CRISIL AA+/Stable/CRISIL A1+’ ratings on the bank facilities of Green Infra Wind Energy Ltd (GIWEL; a part of the Sembcorp Green Infra (SGI) group). Further, CRISIL Ratings has withdrawn its ratings on Rs 1000 crore non-convertible debentures (NCDs) as they have been fully repaid. This is in line with CRISIL Ratings' withdrawal policy.
The ratings reflect the healthy debt service coverage ratio (DSCR) and ample liquidity driven by benefits from the scale and diversity of GIWEL’s assets, strong revenue visibility aided by track record of timely receipt of payments and long-term power purchase agreements (PPAs). The ratings remain constrained by exposure to risks inherent in operating renewable energy assets. Some of the underlying wind assets of the group have performed below expectation. However, the recently acquired solar portfolio, where generation is more stable than wind, and has a healthy operating track record, is expected to support the performance going forward.
The ratings continue to reflect the managerial and financial support that GIWEL derives from being strategically important to its ultimate parent, Sembcorp Industries (SCI). Post reverse merger with Sembcorp Green Infra Ltd (SGIL), GIWEL has become the holding entity for Indian renewable business of SCI. |
Analytical Approach CRISIL Ratings has combined the business and financial risk profiles of special purpose vehicles (SPVs) in the SGI group, including GIWEL. This is because all the entities, collectively referred to as the SGI group, are engaged in the renewable power generation business in India, have a common management and are critical to the group. The SGI group has a track record of supporting group entities, and excess cash flow after debt servicing in each SPV is largely available for use across the group. For 256 megawatt (MW) solar restricted group (RG), surplus cash flow after servicing of RG debt should be available to the SGI group. CRISIL Ratings has also factored in support from the ultimate parent, SCI, to arrive at the ratings of the SGI group.
Please refer Annexure - List of entities consolidated, which captures the list of entities considered and their analytical treatment of consolidation. |
Key Rating Drivers & Detailed Description Strengths: Diversified portfolio with healthy financial risk profile The group derives strength from its diverse portfolio of commissioned capacity of 2.3 GW across wind and solar assets. The portfolio is diversified in terms of location and counterparty, with assets primarily spread across Karnataka, Rajasthan, Gujarat, Maharashtra, Madhya Pradesh, Tamil Nadu and Andhra Pradesh. Majority of the assets have long-term PPAs at predetermined tariffs with state and central counterparties, leading to healthy revenue visibility.
The consolidated debt per MW at Rs 3.5 crore remains healthy. The financial risk profile should remain moderate over the medium term, given the diversified portfolio and revenue visibility through long-term PPAs.
The group has around 630 MW assets in the pipeline, though signing of PPAs is pending in some cases. Annual capital expenditure (capex) is expected in line with addition of 250-300 MW over the medium term. Any significant deviation would be a rating sensitivity factor.
Managerial and financial support from the ultimate parent SCI has a track record of supporting its assets globally and in India in case of adverse situations. SCI has extended corporate guarantees for more than 90% of the debt taken by the renewable business in India and has also financed majority of the acquisition cost of Vector Green Energy Private Limited (VGEPL), emphasizing the importance of the SGI group to the parent. Given the parent’s stated long-term strategy of transforming from brown to green, the SGI group is expected to remain critical to SCI.
Weakness: Exposure to risks inherent in operating renewable assets Cash flows of renewable power projects are sensitive to plant load factor (PLF), which depends entirely on wind and solar patterns that in turn are inherently unpredictable. This could impact cash flow generation, thereby affecting debt-servicing ability. The wind assets have shown higher volatility over the past several years. The addition of VGEPL’s solar portfolio, which has more stable generation than wind and has a healthy operating track record will benefit the SGI group’s performance going forward. Healthy operating cash flow amid demonstration of asset performance in line with P-90 estimates over the medium term will be a key monitorable.
Furthermore, renewable assets are exposed to counterparty risk because of the weak financial health of the state distribution companies (discoms), which could delay payments. For the SGI group, this risk is mitigated by diversity in counterparties and liquidity of around Rs 1,200 crore maintained at the group level as on March 31, 2023. Receivables amounted to Rs 271 crore as on August 31, 2023 (53 days of sales) has improved from Rs 411 crore as on March 31, 2022 due to healthy collection efficiency and recovery of past dues from Andhra Pradesh and Telangana discoms. |
Liquidity: Strong Cash accrual, expected at over Rs 1,300 crore in fiscal 2025, should comfortably cover yearly debt obligation of around Rs 900-1,000 crore. Consolidated cash and equivalents stood at around Rs 1,200 crore as on August 31, 2023, which is equivalent to over 14 months of debt servicing. Liquidity is further supported by need-based funds from SCI. |
Outlook: Stable The credit risk profile of GIWEL should remain healthy over the medium term with healthy DSCR and availability of need-based support from the parent. |
Rating Sensitivity Factors Upward Factors
Downward Factors
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About the Group GIWEL is the holding entity of SPVs in the SGI group, with a portfolio of 2.3 GW operational wind and solar power projects located across multiple states including Gujarat, Tamil Nadu, Karnataka, Rajasthan and Maharashtra. The company has signed long-term PPAs with several state and central counterparties.
In fiscal 2022, the group announced the reverse-merger of GIWEL with SGIL, which led to GIWEL being the holding entity of all renewable SPVs of the SGI group in India.
About SCI SCI, 49.5% owned by Temasek Holdings Pvt Ltd (rated ’AAA/Stable/A-1+’ by S&P Global Ratings), is a leading energy, water and urban development group operating across five continents. It has around 10 GW of renewable energy capacity of which around 6 GW is operaional. |
Key financial indicators (for the SGI group) (Consolidated; as reported by company)
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Any other information: Not Applicable |
Note on complexity levels of the rated instrument: |
Annexure - Details of instrument(s)
^Fully interchangeable with bank guarantee, letter of credit and overdraft facility
Annexure - Details of Rating Withdrawn
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Annexure – List of Entities Consolidated
*As on March 31, 2022 |
| 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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