| Citra Real Estate Limited | ||
| Rating reaffirmed | ||
| 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 rating on the non-convertible debentures (NCDs) of Citra Real Estate Ltd (CIREEL) at ‘CRISIL AAA/Stable’.
CIREEL is a part of Vector Green Restricted Group (VGRG), which comprises six special purpose vehicles (SPVs), including CIREEL, Yarrow Infrastructure Pvt Ltd (YIPL), Malwa Solar Power Generation Pvt Ltd (MSPGPL), Vector Green Prayagraj Solar Pvt Ltd (VGPSPL), Sepset Constructions Ltd (SCL) and Priapus Infrastructure Limited (PIL). The aggregate amount of these NCDs of VGRG is Rs 1,237 crore.
In January 2023, Green Infra Wind Energy Limited (GIWEL), holding entity for Indian renewable business of Singapore-based Sembcorp Industries (SCI), acquired 100% interest in Vector Green Energy Pvt Ltd (VGEPL), the ultimate holding company of VGRG. Consequently, all VGEPL entities became wholly owned subsidiaries of GIWEL. CIREEL continues to be analysed as part of co-obligor group of VGRG, which is in turn ring-fenced from sponsors.
The rating reflects strong revenue visibility and counterparty profile, co-obligor structure of the SPVs, providing diversity, and healthy financial risk profile. These strengths are partially offset by exposure to risks inherent in operating solar energy assets and those related to refinancing. |
Analytical Approach CRISIL Ratings has combined the business and financial risk profiles of the six SPVs of VGRG, in line with the criteria of CRISIL Ratings for rating entities in homogeneous groups and equated the rating of the individual SPVs to the group. The six entities consolidated as VGRG are MSPGPL, CIREEL, YIPL, VGPSPL, SCPL and PIL. These entities are in a homogeneous group as they are in the same line of business of operating solar power assets, have common management and treasury team and are critical to VGRG.
Each of the SPVs acts as a co-obligor to the other, with each providing a corporate guarantee to the debt obligation and cross-default (that is, default on any condition in one SPV leads to default in all other SPVs) of all other SPVs. Following debt servicing in each SPV, excess cash flow is largely available for use across the group. 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 long-term PPAs provide revenue visibility and stability to cash flow. Payment track record across the projects has been healthy, with payment cycle largely in line with the PPA terms in the past few years. Additionally, projects have been operational for five years (capacity weighted average) and have a satisfactory performance track record, with above P90 plant load factor (PLF) performance (on aggregate basis) over the past four fiscals. PLF of fiscal 2023 stood at 24.6% as against 23.9% in fiscal 2022.
Going forward, the payment cycle should remain stable while PLF may remain at P90 levels or better. However, any significant build-up of receivables or continuous underperformance in the PLF will remain a key rating sensitivity factor.
All projects within each SPV are co-obligors for projects in the other five SPVs. Diversity of the group is reflected in its presence in five states and PPAs with four counterparties. With the presence of this co-obligor structure, surplus cash flow after debt servicing in any SPV will be available to fund shortfall (if any) in other SPVs, thus supporting the consolidated debt service coverage ratios (DSCRs). Additionally, as part of structure conditions, SPVs have undertaken that distributable surplus amount in any SPV shall first be utilized to cover any shortfall in debt servicing or maintain reserve in other SPVs before distribution to the sponsors.
Financial risk profile is also supported by a cash sweep covenant. It specifies that if DSCR falls below 1.40 times in any year or 12-month period (depending upon the period of testing), then the entire surplus shall be swept and used for debt prepayment.
Weaknesses:
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Liquidity: Superior Liquidity in VGRG solar SPVs is driven by expected earnings before interest and depreciation of over Rs 208 crore and Rs 205 crore each in fiscals 2024 and 2025, respectively at P90 level of plant generation. The SPVs have yearly debt obligation of less than Rs 140 crore in both the fiscals. Additionally, no major capital expenditure has been planned in these years. The SPVs will have a DSRA of six months to cover any cash flow mismatch. |
Outlook: Stable The VGRG SPVs will continue to benefit from comfortable cash flow, backed by long-term PPAs and stable operational performance. |
Rating Sensitivity factors Downward factors
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About the Company CIREEL operates a 2-MW solar power plant in Maharashtra. The plant became operational in 2011. The company has signed a long-term PPA at a pre-determined tariff with MSEDCL. |
About the Group CIREEL is a part of GIWEL, which is the holding entity of all renewable SPVs of SCI in India. SCI is 49.5% owned by Temasek Holdings Pte Ltd (rated ’AAA/Stable/A-1+’ by S&P Global Ratings), and is a leading energy, water and urban development group operating across five continents. It has around 10 GW of renewable energy capacity of which around 6 GW is operational. |
Key Financial Indicators*
*Audited |
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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Criteria Details
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