| Jodhpur Wind Farms 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 |
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CRISIL has upgraded its rating on the bank facilities of Jodhpur Wind Farms Private Limited (JWFPL) to 'CRISIL AA-/Stable' from 'CRISIL A+/Stable'. The upgrade is primarily driven by an improvement in credit profile of parent - Torrent Power Limited (TPL; rated CRISIL AA/Stable/CRISIL A1+), from which JWFPL receives strong operational, managerial and financial support. The rating also factors the, strong revenue visibility and low offtake risk for JWFPL. The rating also derives comfort from the comfortable debt service metrics and liquidity. These rating strengths are partially offset by limited track record and exposure to counterparty credit risk, and exposure to risks inherent in operating wind energy assets. |
| Analytical Approach |
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For arriving at its rating, CRISIL has applied its parent notch-up framework to factor in the extent of support available to JWFPL from TPL. |
| Key Rating Drivers & Detailed Description |
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Strengths: * Strong managerial and financial support derived from parent TPL: JWFPL is a 100% subsidiary of TPL, and the project cost was entirely funded by TPL initially. The parent exercises managerial control and provides technical inputs to the entity. The parent has also extended an unconditional and irrevocable guarantee to the lender for the entire facilities of JWFPL. * Strong revenue visibility and low offtake risk: JWFPL's 20 year power purchase agreement (PPA) with Gulbarga Electricity Supply Company (GESCOM), with an option to extend PPA to 25 years, provides revenue visibility due to an assured offtake for the entire power generated at Rs 3.74 per unit. This provides high predictability and stability of revenue with no demand risk. * Adequate debt service metrics and liquidity: CRISIL expects that company's DSCR, with P-90 PLF and tariff of Rs 3.74 per unit, will remain adequate. Additionally, cash DSRA equivalent to six months of debt servicing as also working capital limit of Rs 20 crore to fund any cash flow mismatch, mitigates partially the counterparty risk and lower cash accrual during the lean season. Weaknesses: * Limited track record and exposure to counterparty credit risk: Although the company has witnessed 21 months of operations, including the peak wind cycle, the limited operational track record constrains the credit risk profile. Furthermore, it is vulnerable to the risk of delayed payments by a moderate counterparty. GESCOM has made payments to the company with an average delay of about 5 months since commissioning. Poor health of state electricity distribution companies and lack of structural reforms in the sector continue to pose risk of increased delays in payments. However, the counterparty credit risk will be partially offset by the cash credit limit of Rs 20 crore and the presence of a DSRA equivalent to six months of debt servicing. * Exposure to risks inherent in operating wind energy assets: Variation in wind speed and pattern could reduce the operating PLF, thus impairing the project's debt servicing ability. However, this will be partially offset by the long tenure for debt repayment. |
| Liquidity Strong |
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JWFPL has strong liquidity driven by expected cash accruals of about Rs 60 -64 crore per annum in fiscal 2020 and 2021, against long term repayment / interest obligations of around Rs 45 crore each in fiscal 2020 and 2021. JWFPL also has access to fund based limits of Rs 20 crore, which are unutilized as on March 31, 2019. The company has cash DSRA of 6 months of debt servicing. |
| Outlook: Stable |
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CRISIL believes JWFPL should benefit over the medium term from its stable and adequate PLF, along with managerial, technical and financial support from parent, TPL. |
| Rating Sensitivity factors |
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Upward factors: * Improved credit risk profile of the TPL by one notch * Sustenance of higher-than-expected PLF over the medium term along with a track record of regular payment by the counterparty, leading to enhanced DSCRs and liquidity Downward factors: * Deterioration in the credit risk profile of TPL by one notch * Any significant deviation in the PLF or delay in payment by the counterparty, leading to deterioration in the DSCR and in liquidity |
| About the Company |
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JWFPL was incorporated in 2017 and is currently a 100% subsidiary of TPL. JWFPL has implemented a 60-megawatt (MW) wind power project in Zalki, Kalaburgi district of Karnataka. It has a 20 year PPA with GESCOM (renewable for further period of 5 years), at a fixed tariff of Rs 3.74 / unit. The project was commissioned on March 28, 2018, within the scheduled commercial operation. The operation and maintenance for the project is being carried out by Siemens Gamesa Renewable Power Pvt. Ltd. |
| Key Financial Indicators* | ||||||||||||||||||||||||
#considering finance cost on only bank loan |
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Any other information: Not applicable |
| Note on complexity levels of the rated instrument: CRISIL complexity levels are assigned to various types of financial instruments. The CRISIL complexity levels are available on www.crisil.com/complexity-levels. Users are advised to refer to the CRISIL 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 various bank facilities | ||||||||||||||||||||||||||||||
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| For further information contact: | ||||||
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