| Shakumbhari Solar Power Projects Private Limited | ||||
| Rating reaffirmed at 'CRISIL A/Stable' | ||||
| 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 ‘CRISIL A/Stable’ rating on the long-term bank facility of Shakumbhari Solar Power Projects Pvt Ltd (SSPPPL) and other five special-purpose vehicles (SPVs), which together form a co-obligor group.
The rating continues to reflect the healthy revenue visibility of the group in the form of long-term power purchase agreement (PPA) with Uttarakhand Power Corporation Ltd (UPCL) at a fixed tariff for the entire capacity, operational track record of more than five years with steady collections from UPCL, and adequate debt service coverage ratio (DSCR). The rating also factors in the strong financial flexibility of experienced sponsors. These strengths are partially offset by underperformance of projects against P-90 plant load factor (PLF), exposure to inherent risks in solar projects, resource variations, and technological risks, and susceptibility to interest rate fluctuations. |
Analytical Approach CRISIL Ratings has combined the business and financial risk profiles of the six SPVs of Eden Renewables, in line with its criteria for rating entities in homogeneous groups, and has equated the rating of the individual SPVs to the group. The six entities, consolidated and together referred as the Eden Renewables group, are Ballupur Solar Power Projects Pvt Ltd (BSPPPL), Chudiala Solar Power Projects Pvt Ltd (CSPPPL), Shakumbhari Solar Power Projects Pvt Ltd (SSPPPL), Bhagwanpur Solar Projects Pvt Ltd (BSPPL), Bindookhadak Solar Projects Pvt Ltd (BDSPPL), and HSPPL. The entities have common management, business undertakings and lenders.
All the six entities are under a co-obligor structure. As per the facility agreement, the cross guarantee is irrevocable, jointly and severally liable, unconditional, and continuing till the final settlement date. In the event of insufficiency of funds in debt servicing in any co-obligor, lender will utilise the surplus cash in the trust and retention account (TRA) of other co-obligors, prior to making any distribution to the sponsors. The fund flow from the cash-surplus SPV to the cash-deficit SPV will follow the TRA waterfall mechanism. Any deviation in this understanding shall be a key rating sensitivity factor.
Please refer Annexure - List of Entities Consolidated, which captures the list of entities considered and their analytical treatment of consolidation. |
Key Rating Drivers & Detailed Description Strengths:
The PPAs stipulate a guaranteed offtake corresponding to a PLF of 22% every year. Any generation above this level may be purchased by UPCL at a tariff of 50% of the original tariff for each project. As per the PPAs, the projects are obligated to generate a minimum PLF of 12% every year. Failure to meet this shall make them liable to pay compensation to UPCL for the amount equivalent to 10% of the project tariff for the shortfall units to UPCL. While each of the six projects has reported PLFs of 17-18% over the past five fiscals, significant moderation in performance below current levels will remain monitorable.
All six solar photovoltaic (PV) projects were commissioned between February and March 2017. The projects have an operational track record of more than five fiscals. Annual grid availability continued to remain above 99% in the past five fiscals.
Weaknesses:
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Liquidity: Adequate Overall liquidity is driven by expected Ebitda (earnings before interest, taxes, depreciation, and amortisation) of over Rs 40 crore per annum over the medium term, at current rate of generation. The group has annual debt service obligation of less than Rs 34 crore (including interest). There is no planned capital expenditure and the SPVs have DSRA of 6 months to cover any cash flow mismatches. Over and above the DSRA, the co-obligors had combined liquidity of around 4 months of debt servicing as on November 30, 2023. |
Outlook: Stable The group is expected to benefit from stable cash flows on the back of long-term PPAs and improving operational performance. |
Rating Sensitivity factors Upward factors
Downward factors
TRA waterfall mechanism: The receivables deposited or credited into the designated account shall be appropriated for the following purposes in the following order of priority: a) Statutory dues b) O&M expenses c) Debt service payment d) Debt service reserve e) Grid backdown reserve f) O&M reserve g) Additional O&M reserve h) In case of a shortfall in the account of any of the co-obligors or any such likelihood, the obligor’s agent shall issue a shortfall support notice to the escrow bank at least 5 days prior to the cash transfer date, requesting the escrow bank to transfer such amount/s (to the extent required) from such account or co-obligors’ sub-account, as the case may be, on a pro-rata basis, as per the withdrawal mechanism prescribed.
Surplus, if any, shall be allowed to overflow to the borrower. |
About the Group All the six solar power projects have a total capacity of 60 MW in Haridwar, Uttarakhand (BSPPPL, CSPPPL, SSPPPL [10 MW each], BSPPL [5 MW], BDSPPL [5 MW], and HSPPL [20 MW]). The 6 SPVs are directly owned by EDF EN India and EREN India SARL in a 50:50 JV. |
Key Financial Indicators - combined for all 6 SPVs
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Any other information: Not applicable |
Note on complexity levels of the rated instrument: |
Annexure - Details of Instrument(s)
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Annexure – List of entities consolidated
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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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