| Amplus Solar Solutions Private Limited | ||||
| Rating upgraded to 'CRISIL AA+/Stable' | ||||
| Rating Action | ||||
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| 1 crore = 10 million | ||||
| Refer to Annexure for Details of Instruments & Bank Facilities |
Detailed Rationale
The upgrade reflects healthy operational performance of the solar plant, with plant load factors (PLFs) consistently above P-90 levels and resultant improvement in liquidity. The rating continues to factor in strong managerial and financial support likely to be received from the ultimate parent -- Petroliam Nasional Berhad, Malaysia (PETRONAS; foreign currency rating of 'A-/Negative' and local currency rating of ‘A/Negative’ by S&P Global Ratings), low offtake and counterparty credit risk profile as the entire capacity is tied up with a strong counterparty, NTPC Vidyut Vyapar Nigam Ltd (NVVN; 'CRISIL AA+/Stable/CRISIL A1+'). The rating also considers healthy financial risk profile of ASSPL, driven by comfortable debt service coverage ratio (DSCR).
These strengths are partially offset by exposure to single asset concentration risk, technological risks associated with the thin-film technology that has limited track record in Indian conditions, and dependence on favourable solar irradiation for power generation. |
Analytical Approach CRISIL Ratings has considered the standalone business and financial risk profiles of ASSPL and used its criteria for rating solar power projects. Further, CRISIL Ratings has applied its parent notch-up framework to factor in the support available to ASSPL from the ultimate parent, PETRONAS.
Treatment of non-convertible debentures (NCDs) from the parent, Singapore-based Amplus Energy Solutions Pte Ltd (AESPL; a 100% subsidiary of PETRONAS) and inter corporate loans from an associate entity: CRISIL Ratings has not factored in payment of interest and principal repayment/redemptions in the DSCR calculations in line with the earlier approach, as these are subordinate to bank debt. These instruments carry an interest rate of around 14% and any redemption or interest payment shall be post meeting restrictive covenants and with lender approval. |
Key Rating Drivers & Detailed Description Strengths Strong financial, operational and managerial support from the ultimate parent ASSPL receives strong operational and managerial support from the PETRONAS group. In case of exigencies, the company will receive need-based financial support from the ultimate parent for timely servicing of debt. The propensity to support is high, given the strategic focus of the group towards renewable energy, budgeted capital outlay plans and economic incentive, as reflected in healthy DSCRs over the tenure of the loan.
Healthy operational track record of project ASSPL's 5-megawatt (MW) power project, since its commissioning in February 2012, has operated at a healthy PLF-AC of 18.5-22.5% over the past decade, and consistently above P-90 level. The plant is likely to continue operating at higher or near P-90 levels, given the strong operating track record, resulting in stable revenue. However, operational performance and variance in PLF will remain key rating sensitivity factors.
Low offtake and counterparty credit risks The company has entered into a 25-year PPA with NVVN at a flat tariff of Rs 12.49 per unit over the entire tenure of agreement. Further, the long tenure of debt (close to nine years) results in comfortable DSCR of around 1.35 times (over remaining debt tenure). Furthermore, NVVN has healthy track record of timely payments (generally received within 10-15 days), resulting in low counterparty risk.
Weaknesses Technological risks associated with solar power plants and dependence on favourable solar irradiation for power generation The company’s project is based on thin-film technology, the performance of which in the long term is yet to be seen in Indian conditions. Hence, there could be variations in PLFs over the life of the project. In fiscal 2018, the thin film-based modules had developed hot spots and cracks and were replaced with similar modules from First Solar (equipment supplier). Given that cash flow of a solar power project is highly sensitive to PLF variations, these risks could impair the debt-servicing capability of solar projects. The technological risks are partially offset by the 10-year track record of operations, association with a Tier-I equipment supplier (First Solar), and the performance guarantees given.
Dependence on favourable solar irradiation for power generation Solar power generation depends on irradiation levels around the plant's location. Also, changes in the average temperature around the location of plant or performance of modules may affect power generation and lead to higher-than-expected degradation in the solar panels. This could impact debt-servicing capability of the project.
Concentration risks on account of single asset operations The generating asset comprises a single 5-MW plant in Rajasthan, exposing the company to location concentration risk. The risk is, however, managed by maintaining sufficient liquidity through a debt service reserve account (DSRA) of about six months of debt servicing. |
Liquidity: Strong Cash accrual (available for debt servicing) is expected at Rs 7-8 crore per annum for fiscals 2022 and 2023, against yearly debt obligation of Rs 5-6 crore. Further, as on February 28, 2022, cash and equivalent were healthy at around Rs 12.6 crore including DSRA equivalent to two quarters of debt servicing (Rs 4.2 crore). CRISIL Ratings understands that a part of this liquidity will be repatriated to the parent post receiving lender approvals. The company does not have any working capital limit. Healthy accrual, financial flexibility of the PETRONAS group and DSRA of two quarters will ensure adequate liquidity to withstand any delay in payment from offtakers or any variation in PLF levels. |
Outlook: Stable ASSPL should continue to generate healthy cash accrual, backed by long-term PPAs and healthy PLFs. Furthermore, it will remain strategically important to, and receive strong management, operational and financial support from, PETRONAS. |
Rating Sensitivity Factors Upward Factors
Downward Factors
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About the Company ASSPL is a wholly owned subsidiary of AESPL (100% subsidiary of PETRONAS). It had acquired the 5-MW solar power plant based on Cadmium Telluride thin film modules, at Bikaner, Rajasthan, at total cost of Rs 52.81 crore (including stamp duty and other taxes) in 2017. The project has been set up under Batch-1 of Phase-1 of the Jawaharlal Nehru National Solar Mission. The project commenced commercial operations on February 21, 2012. The company has entered into a 25-year PPA with NVVN at a flat tariff of Rs 12.49 per unit over the entire tenure of the agreement. |
Key Financial Indicators – ASSPL – CRISIL Ratings-adjusted numbers
*Includes NCDs from the parent AESPL and inter corporate loans from an associate entity – Amplus Energy Solutions Pvt Ltd (100% subsidiary of AESPL) #adjusted networth is negative as it is net of intangible assets and goodwill ^company changed accounting year to December ending. Numbers for December 31, 2020, are for nine months and are not comparable with previous year |
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. The CRISIL Ratings' complexity levels are available on www.crisil.com/complexity-levels. Users are advised to refer to the CRISIL Ratings' 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. | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| Annexure - Details of Bank Lenders & Facilities | ||||||||||||
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This Annexure has been updated on 31-Mar-2022 in line with the lender-wise facility details as on 27-Aug-2021 received from the rated entity.
Criteria Details
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