| Vena Energy Solar India Power Resources Private Limited | ||||
| Rating upgraded to '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 upgraded its rating on the long-term bank loan and working capital facilities of Vena Energy Solar India Power Resources Private Limited (VESIPRPL) to ‘CRISIL A+/Stable’ from 'CRISIL A/Stable'.
The upgrade reflects improvement in the liquidity at VESIPRPL backed by higher-than-expected improvement in receivables days which reduced to 3 months by December 31, 2023, from 15-16 months at end of fiscal 22 (fiscal 23: 9 months). The reduction in receivable days follows VESIPRPL’s counterparty Telangana Southern Power Distribution Company Ltd (TSSPDCL), clearing the past dues as part of the implementation of the Late Payment Surcharge (LPS) scheme along with clearance of monthly billing within 2-3 months. This has resulted in improvement in the liquidity buffers of the company. Further, management’s articulation of maintenance of around 12-18 months of liquidity with the SPV provides comfort for any unexpected delays from the counterparty. Furthermore, the project operation parameters have improved as evidenced by sustained improvement of PLF’s above P-90 level for FY2023 and YTD FY24.
The ratings continue to reflect comfort that the company derives from the long-term power purchase agreement (PPA) with Telangana Southern Power Distribution Company Ltd (TSSPDCL), which ensures high revenue visibility; and healthy financial risk profile because of comfortable debt service coverage ratio (DSCR) and adequate liquidity. These strengths are partially offset by a weak counterparty risk profile and susceptibility in solar irradiation. |
Analytical Approach For arriving at its rating, CRISIL Ratings has considered the business and financial risk profiles of VESIPL on a standalone basis, using CRISIL Ratings criteria for rating solar power projects. |
Key Rating Drivers & Detailed Description Strengths:
Vena Energy group is a part of Global Infrastructure Partners’ (GIP) portfolio, a global independent infrastructure fund manager in the energy, transport, and water/waste management sectors. GIP owns majority stake in Vena Energy and China Investment Corporation & Public Sector Pension Investments holds remaining minority stake in the group.
The project is funded in a debt-equity mix of 73:27 with a remaining debt tenor of 12 years till FY2034. Equity contribution for the project has been funded through a mix of share capital, compulsory convertible debentures (CCDs) and non-convertible debentures (NCD) subscribed by the promoters. The coupon payment on the CCDs & NCDs is subordinate to bank debt. Upstreaming of any kind and require lender’s consent as per sanction terms.
Weaknesses:
Project has been performing above P-90 levels consistently till FY21. In FY22 PLF however dropped to 21.03% lower than P-90 level 21.20% due to lower-than-expected irradiance. However, PLF was above P-90 levels in FY23 at 21.92% (P-90 21.06%) and has remained above P-90 in YTD FY24 (Nov 2023) at 21.76% (P-90 20.09%). Vena has also changed the O&M contractor and implemented various O&M measure which shall result in better plant maintenance and lead to improvement in overall PLF. The operational performance remains a key monitorable.
Receivables increased to ~15-16 months in F Y22 from 12 months in FY21. However, Telangana has opted for LPS scheme post which the receivable cycle has started improving. The receivables of Mar 21 to Apr 22 have been received through LPS instalments with only May 22 dues pending realisation. Further, company has been receiving timely collections of its monthly dues within around 2-3 months for the past 14 months from June 2022 to September 2023. Timely realisation of monthly billing will be a key monitorable. Risk on account of weak counterparty risk profiles is partly offset by strong liquidity sufficient for around 18 months of debt servicing (DSRA and lien marked cash of 12 months and WC limits to ~6 months) |
Liquidity: Adequate Net cash accrual for fiscal 2024 is expected to be in the range of Rs 50 crore against principal repayment of ~Rs 33.1 crore in the same corresponding fiscal. Moreover, two quarters of ensuing DSRA, two quarters of additional reserves (both lien marked), unutilised working capital limits of Rs 30 crore and surplus cash of ~Rs 180 crore as of December 2023 is adequate to support liquidity requirements of the company against delayed payments form the counterparty. |
Outlook: Stable The company benefits from strong PLFs resulting in strong generation income, clearing of pending dues and timely payments by TSSPDCL under LPS scheme resulting in strong liquidity as of December 2023 in the cash balance of Rs 185 crore. Company further benefits from experienced promoter group. |
Rating Sensitivity factors Upward factors
Downward factors
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About the Company VESIPL was formed to set up two solar power projects of 50MW each with a total capacity of 100MW at Minpoor and Sadashivpet in the Sangareddy district, Telangana. VESIPL achieved COD in Feb 2017 and May 2017 for both Minpoor and Sadashivpet projects respectively. VESIPL is majorly owned by Vena Energy Solar India Renewables Pte Ltd which is a Singapore based company. The plants were developed at a total cost of Rs 660 crore. |
Key Financial Indicators
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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 - 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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