| Greenergy Wind Corporation Private Limited | ||||
| 'CRISIL BBB+/Stable' 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 BBB+/Stable’ rating to the bank facilities of Greenergy Wind Corporation Private Limited (GWCPL, part of Greenergy Group).
The rating reflects the extensive industry experience of the promoters, diversification by way of wind and solar projects with established track record, healthy revenue visibility backed by long term power purchase agreements (PPA) with moderate counterparty risk, and healthy financial risk profile. These strengths are partially offset by exposure to regulatory risks, dependence on climatic conditions for power generation and risks related to timely renewal of PPA. |
Analytical Approach For arriving at the ratings, CRISIL Ratings has combined the business and financial risk profiles of GWCPL, with its wholly owned subsidiary i.e., Greenergy Solar Enterprises Pvt Ltd (GSEPL). This is because both these entities, collectively referred to as Greenergy Group, are in the same line of business, have common promoters and strong business and financial linkages. Besides, GWCPL has extended corporate guarantee on debt taken by GSEPL.
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 Extensive industry experience of the promoters and diversified projects with established track record: The promoters have an extensive business experience of over 30 years across diverse sectors such as renewable energy, poultry farming, food processing, industrial chemicals industry. Greenergy group owns and operates 26 MW of wind energy and 36 MW solar energy projects in the state of Karnataka. Projects have a healthy operational track record of around ten years for wind and around four years for solar, with healthy actual plant load factor (PLF). Average PLF for fiscal 2022 were about 24% and 17% for the wind and solar projects respectively.
Healthy revenue visibility backed by long term PPA with moderate counterparty risk: The group has entered into long term (10 years) PPA with various private players like Nxtra Data Limited (CRISIL AA+/Stable/CRISIL A1+), Metro Cash & Carry (CRISIL A/Stable/CRISIL A1), Sterling Mac Hotels, and Beary’s Real estate for its wind project. Solar project’s off-takers include Wistron Infocomm Manufacturing (India) Private Limited (Wistron), Dell India Limited, Columbia Asia Hospitals Pvt Ltd, Landmark Group and Sai Life Sciences Ltd. PPA for 8-15 years have been signed with them, except for the annually renewable PPA with Wistron which has a track record of yearly renewal. Backed by a strong counterparty, on an average, the group has received its payments within 30 days from the date of billing. The weighted average tariff of around Rs.6.25 / kwh and relevant escalation clauses ensure healthy revenue visibility for the group.
Healthy Financial risk profile: Financial risk profile is supported by a healthy networth estimated at Rs. 89 crore as on March 31, 2022. Moderate capital structure with gearing at 1.92 times and TOLTNW of 2.04 times as on March 31, 2022. The debt service coverage ratio (DSCR) is likely to be greater than 1.25 times in the next three years and improve over the repayment tenure. Sustenance of financial risk profile is expected in the absence of any major expansion plan.
Weaknesses Exposure to regulatory risks and dependence on favourable climatic conditions for power generation: PLF for wind and solar power projects are exposed to variability in climatic conditions, and equipment- and eviction-related risks. Although the group reported a healthy PLF in fiscal 2022, its sustenance will remain a key rating sensitivity factor, since the cash flow of a wind or solar power project is highly sensitive to fluctuations in PLF. The group also remains exposed to regulatory risks such as change in tariff rates or policies by regulators.
Exposure to risks related to timely renewal of PPA: Timely renewal of PPA which are less than tenure of the debt will be critical for ensuring stability in cash flow and debt servicing capability. |
Liquidity: Adequate The liquidity remains adequate, with debt service reserve account (DSRA) equivalent to three months’ repayment for GWCPL and around 2 months’ repayment for GSEPL, being maintained as per lender covenants. DSCR is likely to be greater than 1.25 times in the next three years and improve over the repayment tenure. Net cash available for debt servicing is projected over Rs 41-45 crore per annum during the debt tenure ending fiscal 2027, against the reducing annual debt repayment obligation of Rs 39-11 crore over the same period. Also, an escrow mechanism ensures priority of term loan repayment. Furthermore, unencumbered bank balance of around Rs 5 crore as on July 31, 2022, and funding support from promoters to cushion liquidity. |
Outlook: Stable CRISIL Ratings believes the group will maintain its DSCR stable over the medium term, backed by steady cash inflow. |
Rating Sensitivity Factors Upward factors:
Downward factors:
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About the Company GWCPL was incorporated in 2012, under group captive scheme. It is engaged in wind power generation with the total capacity of 26 MW. GWCPL has wind farms in Gadag and Belgaum in Karnataka. The company is part of Greenergy Group of companies and promoted by Mr. Syed Fahad and Mr. Naseem Kamal.
GSEPL was incorporated in 2015 as a wholly owned subsidiary of GWCPL and engaged in solar power generation with the capacity of 36 MW at Tumakuru- Karnataka. |
Key Financial Indicators (Consolidated)
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Status of noncooperation with previous CRA GWCPL has not cooperated with Credit Analysis & Research Ltd. (CARE) which has classified it as non-cooperative vide release dated 30th November 2021. The reason provided by CARE is non-furnishing of information for monitoring of ratings |
Any other information: Not applicable |
| Note on complexity levels of the rated instrument: CRISIL Ratings' complexity levels are assigned to various types of financial instruments. The CRISIL Ratings' complexity levels are available on www.crisil.com/complexity-levels. Users are advised to refer to the CRISIL Ratings' 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 - List of Entities Consolidated
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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 05-Sep-2022 in line with the lender-wise facility details as on 01-Sep-2022 received from the rated entity.
Criteria Details
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