| Jbm Solar Power Maharashtra Private Limited | ||||
| Rating 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 reaffirmed its rating on long-term bank facilities of Jbm Solar Power Maharashtra Private Limited (JSPMPL) at ‘Crisil AA-/Stable’.
The rating continues to reflect the low technology risks of the project supported by healthy plant load factor (PLF), minimal offtake and counterparty risk due to a 25-year power purchase agreement (PPA) with Solar Energy Corporation of India (SECI) and healthy financial risk profile marked by comfortable debt service coverage ratio (DSCR). These strengths are partially offset by exposure to variability in solar irradiance levels.
Operating performance has remained healthy over the past five fiscals with actual plant load factor (PLF) levels remaining close to the degraded P90 levels. The PLFs are expected to remain in line with the degraded P90 levels over the medium term. The payments are being regularly received around 75 days from the date of the invoice and is expected to continue going forward. PLF levels and timely collection of dues from the counterparty will remain key monitorable going forward.
The financial risk profile is strong with actual DSCR of 1.72 times during fiscal 2024 (excluding prepayments). The DSCR is expected to remain around 1.70 times during the remaining tenor of the term loan. The company has already prepaid Rs. 26 crore over past four fiscals through from the surplus cash through cash sweep, Viability gap funding (VGF) and lumpsum Goods and Services Tax (GST) compensation. The liquidity also remains adequate, with company maintaining higher than the stipulated (by lender in its sanction) debt service reserve account (DSRA) requirements of three months’ of debt obligations. Further, the overall liquidity is supported by disbursement of GST compensation which is channelized for prepayment of debt. |
Analytical Approach The rating of JSPMPL has been considered on a standalone basis. |
Key Rating Drivers & Detailed Description Strengths: Low technology risks supported by healthy PLF The company has been operational since May 2018. The project has clocked a healthy PLF of 23.1% for fiscal 2024 (23.7%, 25.7% and 24.3% during fiscal 2023, fiscal 2022 and fiscal 2021 respectively), in line with the estimated degraded P-90 level . Performance is supported by solar modules operating on an established monocrystalline technology, sourced from a reputed supplier, Longi Solar Technology Company Ltd. The project is also backed by performance guarantees from the supplier and the operations and maintenance contractor.
Minimal offtake risks due to a strong counterparty The company has entered into a 25-year PPA with SECI at a tariff of Rs 4.43 per kilo watt hour for the entire tenure. SECI is a strong counterparty and the company has built up a DSRA higher than stipulated requirement of three months. On an average, the bill payments are being regularly received around 75 days from the date of the invoice.
Healthy financial risk profile because of adequate DSCR and comfortable liquidity Healthy fixed tariff of Rs 4.43 per unit for the entire term should result in a comfortable DSCR of around 1.7 times for the remaining tenure of the term loan.
The bidding of tender for projects was undertaken prior to GST implementation resulting to increase in project costs. Consequently, petition was filed by the company for the differential amount. Pursuant to the granted petition, the company received one-time lumpsum GST compensation and will be eligible to receive a substantial amount on monthly basis till April 2031 as part of GST compensation. The company has already prepaid Rs. 26 crore over past 4 fiscals from the surplus cash through cash sweep, VGF and lump sum GST compensation. The total external term debt has reduced from Rs.97 crore as on March 31, 2023 to Rs. 82 crore as on March 31, 2024 and this is expected to continue going further. However, any further increase in debt due to future capex in group company will remain a key monitorable.
JSPMPL has built up a DSRA higher than stipulated requirement of three months with cash accrued from its operations. Hence, the project should have adequate liquidity to withstand delays in payment or variation in PLF. Further, Crisil Ratings believes that there will not be sizeable withdrawals from the JSPMPL to support group companies. Any significant changes in the liquidity policy will be a key rating sensitivity factor.
Weakness: Exposure to variability in solar irradiance levels The solar power generation business depends on radiation levels at a given location. Changes in average temperature around the plant's location or performance of mono crystalline modules may constrain power generation and lead to considerable degradation in solar panels. Given that the sensitivity of cash flow of a solar power project is the highest for the PLF, these risks may impair the debt servicing capability of solar projects. |
Liquidity: Strong Debt servicing ability is healthy with the average DSCR expected to be around 1.7 times for remaining tenure of term loan. The company has long term debt obligations of around Rs 15-16 crore per fiscal (including interest and principal) over fiscals 2025-2027, which shall be met through internal cash accruals. The company has created a DSRA covering more than three months of debt servicing requirements, ensuring liquidity buffer. |
Outlook: Stable Crisil Ratings believes that JSPMPL will maintain stable cash flows over the medium term, backed by a healthy PLF and timely payments from SECI. |
Rating Sensitivity Factors Upward Factors
Downward Factors
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About the Company JSPMPL operates a 40-MW solar project, which was commissioned on May 18, 2018, in Maharashtra. The company is a stepdown subsidiary of Neel Metal Products Ltd, and the subsidiary of JBM Renewable Private Limited |
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)
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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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Criteria Details
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