| OMC Power Private Limited | ||
| Rating Reaffirmed | ||
| Rating Action | ||
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| 1 crore = 10 million | ||
| Refer to Annexure for Details of Instruments & Bank Facilities |
Detailed Rationale CRISIL Ratings has reaffirmed its ratings on the non-convertible debentures of OMC Power Private Limited (OMC) at 'CRISIL B-/Stable'.
The ratings take cognizance of the deferment of quarterly interest and principal repayment obligations by the NCDs lender. As per CRISIL's earlier understanding, interest and principal due on NCDs in March 2020 was deferred till Dec 20. Currently, dues pertaining to the same were first deferred till March 2021 and now have been deferred till Sep 2021, as per lenders' letter dated March 23, 2021.
The rating continues to reflect OMC's modest scale of operations, the ongoing operating losses, although reducing y-o-y and dependence on external funding to service debt obligations.
These rating weaknesses are partially offset by the benefits OMC derives from its experienced management, funding support of the shareholders and the availability of additional credit opportunities. |
Key Rating Drivers & Detailed Description Weaknesses: *Modest scale of operations: Though the operating income stood improved to estimate Rs. 17 crore in fiscal 2021 from around Rs 15.40 crore during Fiscal 2020, it remains modest. The increase is attributable to higher number of operational power plants (around 200 as on date as against around 100 power plants during beginning of fiscal 2020).
The ratings also take cognizance of limited impact of nationwide lockdown as a measure to curb spread of Covid-19
*Operating losses, although reducing: OMC continues to operate under losses, owing to the modest scale of operations vis-a-vis its sizeable administrative and corporate expenses. Operating losses were estimated at Rs. 4 crore during Fiscal 2021 (as against Rs 6.03 crore during fiscal 2020), despite having profitability at plant level (i.e. positive plant EBIDTA). The company also earned Rs 2-3 crore during each during fiscal 2021 and Fiscal 2020 from profit on sale of fixed assets, interest on bank deposits etc., which mitigated the losses to some extent. The management expects to turn profitable in fiscal 2022 with increase in scale to be aided by increase in number of operational plants, which shall remain a key monitorable.
*Dependence on external credit funding: OMC remains dependent on external borrowings and funding to meet its interest obligations. The company has outstanding debentures of Rs 25.22 crore as on March 31, 2020 in addition to other term loans and is expected to seek additional funding over the medium term. It received equity infusion of Rs 54 crore in fiscal 2020 from Mitsui & Co Ltd. and Illeros Limited. The company has availed moratorium on interest payments and principal redemption on the debentures till September 2021, while the other repayment obligations are timely met. Strengths*Benefits from the experienced management in the industry: The management and have extensive experience in diversified businesses, and have provided the company with strategic tie-ups, operational expertise, and raise equity funding and external borrowings.
*Funding support from the shareholders and availability of additional credit opportunities: The company receives funding support from the shareholders, in addition to additional borrowing opportunities available to cater to its expansion plans and for the servicing of its debt obligations amidst losses at its operating levels. |
Liquidity: Poor Liquidity is marked by operating losses and reliance on external funding to meet working capital and capital expenditures. Net cash accruals are expected to be negative in fiscal 2021 and 2022 which is expected to maintain pressure on liquidity. The current ratio is estimated to be healthy at around 10 times as on March 31, 2021 aided by free cash and bank balance of around Rs. 20 crore as on same date. Much of this cash balance is expected to be utilized towards upcoming capex palns for capacity enhancement critical to achieve breakeven level. |
Outlook: Stable CRISIL believes that OMC will continue to benefit over the medium term from the extensive experience of its management. |
Rating Sensitivity factors Upward factor*Sustained improvement in scale of operation by 20-25% and improvement in operating margins to positive levels, thereby leading to higher cash accruals *Completion of majority stake acquisition by Mitsui or equity investment by other investors.
Downward factor *Further widening in operating losses below 400-500 bps below the current level. *Inability to complete equity infusion plan with Mitsui or any other equity partner *Large debt-funded capital expenditure weakens capital structure |
In 2011, OMC Televentures Private Limited (formerly known as Artheon Televentures Private Limited) incorporated OMC Power Private Limited as the majority shareholder of the company. Mr. Anil Raj, Mr. Rohit Chandra and Mr. Sushil Jiwarajka jointly own majority interest in OMC Televentures Private Limited. OMC commenced commercial operations in July 2012.
As on date, the company operates around 200 solar minigrid plants (off-grid and on-grid photovoltaic hybrid solar diesel power systems) of 30-75 KW capacity in and across 9 districts in Uttar Pradesh that has little or no grid connectivity. End users include telecom companies, small and medium enterprises, small commercial establishments and rural households. |
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. | ||||||||||||||||||||||||||||||||||||||||||||||||||||
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* - Issuer did not cooperate; based on best-available information
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Criteria Details
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