| Satpura Transco Private Limited | ||
| Rating reaffirmed at 'CRISIL AA+/Stable' | ||
| Rating Action | ||
| ||
| 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’ rating on the non-convertible debentures (NCDs) of Satpura Transco Private Limited (STPL).
The rating continues to reflect the company’s stable revenue, proven track record of higher-than-normative line availability and timely receipt of payments from the sole counterparty, Madhya Pradesh Power Transmission Co Ltd (MPPTCL). These strengths are partially offset by dependence on single intrastate counterparty, exposure to operations and maintenance (O&M) and force majeure events risks. |
Analytical Approach For arriving at its rating, CRISIL Ratings has considered the business and financial risk profiles of STPL on a standalone basis, using CRISIL Ratings criteria for rating power transmission projects. |
Key Rating Drivers & Detailed Description Strengths:
STPL has a transmission service agreement (TSA) with MPPTCL wherein revenue is linked to availability of the transmission line with full recovery of revenue at a normative availability factor of 98%. Revenue is completely delinked from power demand-supply and volatility in the price of electricity. Moreover, factors affecting line availability, such as unchecked growth of vegetation, lightening, fog, or high ambient temperature, causing wear and tear of insulators and leading to flashovers, are routine in nature and do not involve significant costs. These are easily rectifiable, thereby minimising outage time. The company has maintained above-normative line availability since May 2015 (FY2023 100%, YTD FY2024 till Dec 2023 100%)
STPL is 100% held by Apraava Energy Private Limited (erstwhile CLP India Private Limited) AEPL is a 50:50 JV between CLP Holdings (rated 'A/Stable/A-1' by S&P Global Ratings as on July 27, 2023) and CDPQ (rated AAA by S&P Global Ratings as on September 30, 2023). While STPL’s operations are important given the AEPL’s long-term strategic focus on the Indian power transmission segment, STPL also benefits from CLP Holding’s extensive experience and technical expertise in power sector.
STPL has been receiving payments from MPPTCL within 15-20 days, on average, of raising the bill since commissioning. The entire revenue comes from MPPTCL, which has an average credit risk profile, and hence STPL faces higher counterparty risk than an inter-state transmission licensee where the counterparty risk is mitigated by the presence of a point-of-connection mechanism and strong collection efficiency. However, established track record of timely collection and presence of a robust payment security mechanism minimises the counterparty risk for STPL.
Weakness:
Maintenance of high line availability is critical to stability of revenue in the power transmission sector. Although the O&M expense forms a small portion of the revenue, improper line maintenance may lead to revenue loss and weaken loan repayment capability. However, these risks are mitigated by low technical complexity and routine nature of O&M activities. |
Liquidity: Strong Stable revenue and steady cash accrual should comfortably cover debt obligation over the medium term. Net cash accrual for FY2025 is expected to be around Rs 16 crores as against principal repayment of Rs 11 crore. Liquidity is supported by debt service reserve account (DSRA) in the form of bank guarantee equivalent to debt obligation for six months and additional cash balance of Rs 45 crore as on December 31, 2023. |
Outlook: Stable CRISIL Ratings believes the credit risk profile of STPL will remain healthy over the medium term, due to higher-than-normative line availability and timely collection from the counterparty. |
Rating Sensitivity factors Upward factors:
Downward factors:
|
About the Company STPL has set up a 400-kilovolt transmission line (240 kilometre) to transfer power from Satpura to Ashta, both in Madhya Pradesh. The line is used to transmit power from 2X250-megawatt (MW) extension units at the Satpura thermal power station. STPL entered into a 25-year TSA (can be extended by 10 years) with MPPTCL on June 6, 2013. The estimated project cost of Rs 337 crore was financed through debt of Rs 212 crore, subordinate loans of Rs 11.7 crore, equity contribution of Rs 56.5 crore from the promoters, and a grant of Rs 56.5 crore from the Government of India. The project was commissioned on April 7, 2015.
During November 2019, Apraava Energy Pvt Ltd (AEPL; erstwhile CLP India Pvt Ltd), a previously subsidiary of Hong Kong-based CLP Holdings Ltd (CLP Holdings: rated 'A/Stable/A-1' by S&P Global Ratings) acquired the entire equity stake in STPL from Kalpataru Power Transmission Ltd (KPTL: ‘CRISIL AA/Stable/CRISIL A1+’) for Rs 87 crore. The acquisition is an important part of the CLP group’s strategic plan to diversify its portfolio in the power transmission segment. |
About the Parent The CLP Holdings (rated 'A/Stable/A-1' by S&P Global Ratings as on July 27, 2023), headquartered in Hong Kong, is one of the largest power businesses in the Asia-Pacific region with a diversified portfolio of power generation assets with 17,979 MW capacity supplemented with an additional 5,098MW of long-term purchases and energy storage capacity. Their business also includes 17,000 kilometres of transmission and distribution lines, and energy retail activities that serve over 5.21 million electricity and gas customer accounts, along with a diversified portfolio of power generation assets which includes coal, gas, nuclear and renewables (wind, hydro and solar).
In India, CLP Holdings operates through its JV with CDPQ, Apraava Energy Private Limited (AEPL). AEPL earlier was a 100% subsidiary of CLP Holdings. In fiscal 2019, the CLP group sold 40% stake to Canadian pension fund, CDPQ. During FY2023, CLP Holdings sold down another 10% of stake in Apraava Energy to CDPQ India. Apraava is now a 50:50 JV between CLP group and CDPQ.
Over the years, AEPL’s investments have grown into a diversified generation portfolio of about 3,150 MW of installed capacity which includes 924 MW of wind, 250 MW of solar energy projects across seven states, a 1320 MW coal-fired super critical power plant, and two power transmission assets- Satpura Transco and Kohima-Mariani Transmission Ltd. A 250 MW wind power project at Sidhpur, Gujarat is under construction and is expected to be commissioned in FY 2025.
CDPQ (rated AAA by S&P Global Ratings as on September 30, 2023) is a global investment group that invests funds from Canadian Pension Funds and has assets worth CAD 424 billion as of June 30, 2023 via equity, fixed income and real estate investments in US, Canada, Europe, Asia Pacific. |
Key Financial Indicators
|
Any other information: Not applicable |
Note on complexity levels of the rated instrument: |
Annexure - Details of Instrument(s)
*Not yet issued |
| Annexure - Rating History for last 3 Years | |||||||||||||||||||||||||||||||||||||||
|
|||||||||||||||||||||||||||||||||||||||
| All amounts are in Rs.Cr. | |||||||||||||||||||||||||||||||||||||||
Criteria Details
|