Rating Rationale
July 30, 2024 | Mumbai
Juniper Green Field Private Limited
Rating reaffirmed at 'CRISIL A/Stable'
 
Rating Action
Total Bank Loan Facilities RatedRs.631.54 Crore
Long Term RatingCRISIL A/Stable (Reaffirmed)
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1 crore = 10 million
Refer to Annexure for Details of Instruments & Bank Facilities

Detailed Rationale

CRISIL Ratings has reaffirmed its rating on the long-term bank facilities of Juniper Green Field Pvt Ltd (JGFPL) at 'CRISIL A/Stable’.

 

The rating reflects adequate revenue visibility as the entire capacity is tied up with Maharashtra State Electricity Distribution Company Ltd (MSEDCL), and the above-average debt-servicing metrics expected for the company. These strengths are partially offset by susceptibility to risks related to the counterparty and those inherent in renewable energy assets.

Analytical Approach

To arrive at the rating, CRISIL Ratings has taken a standalone view on debt facilities of the 150 MW solar power project of JGFPL, due to a ring-fencing structure and the separate Trust and Retention account (TRA) for the project.

 

Optionally convertible debentures (OCDs) and working capital loans from promoters are subordinate to the loan from the Power Finance Corporation and hence, treated as quasi-equity instruments. The promoters will be paid the interest amount, only post approval from the lender. Further, the full redemption of OCDs will be carried out only when the entire term loan is paid.

Key Rating Drivers & Detailed Description

Strengths:

  • Revenue visibility through power purchase agreement (PPA): The 25-year PPA signed for the entire capacity of JGFPL with MSEDCL minimises offtake risk. The 80 MW capacity became operational in June 2022, and another 70 MW became operational in August 2022. The PPA has a fixed tariff of Rs 2.89 per kilowatt hour (kWh) throughout its tenure. Additionally, the company will continue to receive compensation for change in law event through additional tariffs of Rs 0.18-0.06 per kWh from MSEDCL during the tenure of the PPA. The project is also registered as Gold Standard and is eligible to sell voluntary emission reduction (VER) certificates. This will be an additional source of income for the company.

 

  • Above-average debt-servicing metrics: A fixed tariff PPA with MSEDCL, change in law compensation and income from sale of VER certificates should ensure an above-average debt service coverage ratio over the debt tenure. A separate TRA is maintained, which is in the control of the lenders. Also, a DSRA equivalent to six months of peak debt servicing will be maintained from the project cash flow surplus. In the interim, liquidity is supported by DSRA FD of Rs 4 crores and additional liquidity of around Rs 34 crores as of June 30, 2024.


Weaknesses:

  • Susceptibility to risks inherent in renewable power projects: Cash flow remains sensitive to plant load factor (PLF), which depends entirely on solar irradiance and weather patterns that are inherently unpredictable. This uncertainty may impact the debt-servicing capability of the company.

 

The operational performance has been in line with the P90 levels. In FY24 the generation was in line with P90. The generation in Malkapur (70 MW) is higher than Arni (80 MW) because of higher DC loading. At Malkapur DC loading factor of 1.42 has been applied while a factor of 1.35 has been applied at Arni. However, in terms of generation the plants are operating at similar performance ratios.

 

  • Exposure to counterparty risk: The long-term PPA with MSEDCL for the entire project capacity exposes JGFPL to risks related to credit and delay in payment from a single counterparty. The company has been receiving payments within 2-3 months of the date of invoice since the start of commercial operations. Any material change in the payment cycle will be a rating sensitivity factor.

Liquidity: Adequate

Liquidity should be adequate with DSRA FD of Rs 4 crores and additional liquidity of around Rs 34 crores in the TRA account as on June 30, 2024. Projected cash flow of Rs 90-95 crore per fiscal in 2025 and 2026 (at P90 PLF) should suffice to cover the yearly debt obligations of Rs 75-80 crore.

Outlook: Stable

The project is expected to outperform P90 levels, backed by operational improvements and the technical expertise of the group.

Rating Sensitivity factors

Upward factors:

  • Faster-than-expected deleveraging leading to improvements in expected DSCRs on P90 basis
  • Generations outperforming P75 level on a sustained basis

 

Downward factors:

  • Weaker than P90 PLF levels on a sustained basis
  • Increase in receivables or higher than envisaged operations and maintenance (O&M) expenses

About the Company

JGFPL operates 150 MW (AC) capacity with 80 MW at Arni and 70 MW at Malkapur (both in Maharashtra). The 80 MW capacity became operational in June 2022 and 70 MW became operational in August 2022. The PPA has been signed with MSEDCL with a fixed tariff of Rs 2.89 per kilowatt hour (kWh) throughout its tenure.

Key Financial Indicators*

As on/for the period ended March 31

Unit

2023

2022

Operating income

Rs.Crs

59

NA

Reported profit after tax (PAT)

 Rs.Crs

(26)

NA

PAT margin

%

(44.2)

NA

Adjusted debt/adjusted net worth

Times

8.40

NA

Interest coverage

Times

0.92

NA

*The project became operational in August 2022

Any other information

The project is ring fenced with a separate TRA account, with agreement clauses as below:

 

  1. All the electricity sale proceeds will directly transfer to TRA, to the satisfaction of lender
  2. Proceeds, if any, received from the sale of CERs/VERs will be immediately informed to lenders and same will be deposited in the TRA

 

Key terms of debt:

Particulars

Comments

Restricted payment conditions

Restricted Payments means dividends or purchase, redemption, retirement or other acquisition of any share capital of the Borrower or any warrants or options thereof or any payment by the Borrower of interest, principal or other sum in relation to any CCDs, preference shares etc. from the Promoter or promoter group entities. Any such payment shall be made only after compliance with the following conditions:

  1. such payment is permitted by Applicable Law;
  2. After the project COD is achieved;
  3. Repayment of the Loan has started
  4. no Event of Default under the Loan Agreement is continuing;
  5. the Financial Covenants stipulated by Lender (s) are complied with;
  6. All securities has been created and perfected
  7. all reserves stipulated under the loan agreement, including the DSRA reserves as applicable, are maintained.
  8. Borrower should have submitted external credit rating Investment Grade (‘BBB-‘ or above) to lenders
  9. Availability of cash for distribution after meeting all outflows specified as per base case

TRA agreement cash flow sequence

The general priority for application of cash flows will be in the following order:

  1. Statutory Dues
  2. O&M expenses including employee cost, administrative and general overheads, repair expenses, if any including insurance cost
  3. Interest and Principal Dues
  4. Funding of DSRA
  5. Funding of any other reserve as stipulated by PFC
  6. Balance cash may be transferred to Surplus account into TRA

Note on complexity levels of the rated instrument:
CRISIL Ratings` complexity levels are assigned to various types of financial instruments and are included (where applicable) in the 'Annexure - Details of Instrument' in this Rating Rationale.

CRISIL Ratings will disclose complexity level for all securities - including those that are yet to be placed - based on available information. The complexity level for instruments may be updated, where required, in the rating rationale published subsequent to the issuance of the instrument when details on such features are available.

For more details on the CRISIL Ratings` complexity levels please visit www.crisilratings.com. Users may also call the Customer Service Helpdesk with queries on specific instruments.

Annexure - Details of Instrument(s)

ISIN Name of the
instrument		 Date of
Allotment		 Coupon
Rate (%)		 Maturity
Date		 Issue size
(Rs.Crore)		 Complexity
Level		 Rating assigned
with outlook
NA Rupee Term Loan NA NA Jul-2042 631.54 NA CRISIL A/Stable
Annexure - Rating History for last 3 Years
  Current 2024 (History) 2023  2022  2021  Start of 2021
Instrument Type Outstanding Amount Rating Date Rating Date Rating Date Rating Date Rating Rating
Fund Based Facilities LT 631.54 CRISIL A/Stable   -- 02-08-23 CRISIL A/Stable   --   -- --
All amounts are in Rs.Cr.
Annexure - Details of Bank Lenders & Facilities
Facility Amount (Rs.Crore) Name of Lender Rating
Rupee Term Loan 631.54 Power Finance Corporation Limited CRISIL A/Stable
Criteria Details
Links to related criteria
CRISILs Approach to Financial Ratios
The Rating Process
CRISILs Bank Loan Ratings - process, scale and default recognition
Criteria for rating solar power projects
Understanding CRISILs Ratings and Rating Scales

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