Rating Rationale
January 02, 2025 | Mumbai
SEPL Energy Private Limited
Rating reaffirmed at 'CRISIL AA/Stable'
 
Rating Action
Corporate Credit RatingCRISIL AA/Stable (Reaffirmed)
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' corporate credit rating (CCR) on SEPL Energy Pvt Ltd (SEPL; formerly Sekura Energy Pvt Ltd [SEPL]).

 

The rating reflects the company’s healthy financial flexibility in the absence of any external debt and benefits derived from its investment in Solaire Surya Urja Pvt Ltd (SSUPL). SEPL is also the sponsor for Anzen India Energy Yield Plus Trust (Anzen; rated ‘CRISIL AAA/Stable’), a registered infrastructure investment trust (InvIT) with Securities and Exchange Board of India. SEPL holds ~15% equity stake in Anzen.

 

The rating also factors in the articulation provided by the company that it has no plans to raise any external borrowing over the medium term and that it will continue to function as an investment holding company and sponsor of Anzen. Any investment and other cash flow requirements shall be met by available cash balance and capital infusion from SEPL’s parent, Edelweiss Infrastructure Yield Plus (EIYP) and not through external debt.

 

These strengths are partially offset by subordination of the rights of SEPL over its investment’s cash flows to external senior lenders.

Analytical Approach

CRISIL Ratings has followed the holding company approach to assess the credit risk profile of SEPL based on investment in operating company which holds a solar power generation asset and 15% holding in Anzen.

Key Rating Drivers & Detailed Description

Strengths:

  • Strength of investments: SEPL receives steady cash flow from its stake in SSUPL given healthy debt service coverage ratio (DSCR) of the solar asset. The underlying special-vehicle purpose operates a 140-megawatt (MW) solar asset with 25-year power purchase agreement (PPA) with NTPC Ltd (CRISIL AAA/Stable/CRISIL A1+’). The entire capacity became operational in August 2017. The PPA has a fixed tariff of Rs 4.35 per kilowatt hour (kWh) throughout the tenure. The plant has a satisfactory operational track record of around five years and healthy annual plant load factor (PLF; 24.92% for fiscal 2024, ~25.54% for fiscal 2023 and 25.70% for fiscal 2022), higher than the P90 estimates.

 

Additionally, SEPL holds ~15% stake in Anzen and the strong operational profile and healthy DSCR of the two underlying transmission assets further lend stability to cash flow. The InvIT also has a right of first offer (ROFO) for SEPL’s stake in the operational solar asset, which it plans to acquire over the medium term. The rating is further strengthened by the strong ownership and management by the directors of EIYP.

 

  • No dependence on external debt: SEPL does not have any external borrowing and the company has confirmed that none of its stake in group companies is encumbered. The company has also confirmed that investment and other cash flow requirements, if any, will be met through funding from the parent company and not external debt. The loans from the parent company do not have any contractual debt servicing. Any deviation in this understanding will be a rating sensitivity factor.

 

Weakness:

  • Subordination of right over cash flow from Anzen as per the waterfall mechanism: SEPL’s right over the cash flow of SSUPL and Anzen will be subordinated to that of the external lenders of the respective companies and will be available for upstreaming only after meeting all the debt servicing and reserve requirements of these lenders. However, this is mitigated by the strong credit risk profile of the investments and adequate liquidity cushion.

Liquidity: Strong

Cash and cash equivalent stood at Rs 31 crore as on December 31, 2024. The company does not have any debt obligation and the cash generated will be sufficient to meet expenses.

Outlook: Stable

The credit risk profile of SEPL is supported by the absence of external borrowing and the high value of investment in its key operating entity, SSUPL. SEPL also enjoys strong financial flexibility through stable cash inflow from Anzen.

Rating sensitivity factors

Upward factors:

  • Significant and sustainable increase in cash flow upstreaming from existing and proposed investments
  • Higher than anticipated cash flow generation in Anzen over medium term (Anzen is expected to report healthy cash accrual of over Rs 150 crore in fiscal 2025)

 

Downward factors:

  • Any external debt-funded investments or encumbrance or stake sale in underlying assets
  • Weakening of the credit risk profile of the underlying investments

About the Company

SEPL (formerly Sekura Energy Pvt Ltd) is 100% owned by EIYP, whose investment manager is EAAA India Alternatives Ltd (formerly Edelweiss Alternative Asset Advisors Ltd).

About the EIYP

EIYP is an alternative investment fund trust with a strong capital commitment from a group of domestic and global investors. EIYP has large investments in power transmission, road and renewables and holds 16 operational assets comprising 12 in the energy sector and four in the roads sector.

Key Financial Indicators

As on / for the period ended March 31

Unit

2024

2023

Operating income

Rs crore

37

73

Reported profit after tax (PAT)

Rs crore

12

44

PAT margins

%

33.7

60.3

Adjusted debt/adjusted networth

Times

0.07

0.11

Interest Coverage

Times

3.48

1.93

Crisil Adjusted number

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 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 Instrument Date of Allotment Coupon Rate (%) Maturity Date Issue Size (Rs Cr) Complexity Levels Rating Assigned with Outlook
NA NA NA NA NA NA NA NA
Annexure - Rating History for last 3 Years
  Current 2025 (History) 2024  2023  2022  Start of 2022
Instrument Type Outstanding Amount Rating Date Rating Date Rating Date Rating Date Rating Rating
Corporate Credit Rating LT 0.0 CRISIL AA/Stable   -- 03-01-24 CRISIL AA/Stable 19-10-23 Withdrawn 12-12-22 CRISIL AA/Stable --
      --   --   --   -- 03-11-22 CCR AA/Stable --
All amounts are in Rs.Cr.
Criteria Details
Links to related criteria
Criteria for rating holding companies (including debt backed by pledge of shares)
The Infrastructure Sector Its Unique Rating Drivers
Criteria for rating solar power projects

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