| Saatvik Green Energy Private 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 to the long-term bank facilities of Saatvik Green Energy Private Limited (Saatvik) at ‘CRISIL BBB/Stable’.
The rating is driven by strong operating performance in fiscal 2022 reflected in revenue growth of 189% backed by volume growth of 150% and realization growth of 15%. The performance is anticipated to continue in current fiscal too with expectation of double-digit growth in scale. Company is also expected to enhance their capacity from 240 MW to 500 MW in fiscal 2023. The operating profitability in fiscal 2022 was at around 4% as against 6.5% in the previous fiscal due to rise in input prices, primarily polysilicon, however, the same is expected to improve over medium term. The financial profile too improved during last fiscal with debt protection metrics such as interest cover improving to around 3.1 times in 2022 from 2.8 times in 2021. Liquidity remained adequate in form of largely unutilized bank line of around Rs 25 crore. The company is expected to have cash accruals of Rs 15-30 crore per annum against a repayment obligation of around Rs 5 crore. Need based financial support from Shree Ganesh group further enhances liquidity position of the company.
The rating reflects healthy ramp-up of operations and established clientele. These rating strengths are partially offset by exposure to intense competition, regulatory risk, and average financial profile. |
Analytical Approach CRISIL Ratings has treated the unsecured loans from promoters of Rs 19.54 crore as neither debt nor equity as they carry low interest rate, have no fixed repayment schedule, are subordinated to external debt and are expected to remain in the business over the medium term. |
Key Rating Drivers & Detailed Description Strengths:
Saatvik demonstrated strong ramp up in operations with revenues of Rs. 505 crore in fiscal 2022 after starting operations in fiscal 2017. Saatvik is expected to expand its capacity from 240 MW to 500 MW in fiscal 2023, which is expected to drive growth over the medium term. Operating margin may remain range bound at 6-8% due to strong linkages of sales price with raw material prices.
Saatvik supplies to large EPC companies like BHEL, L&T, Avaada, Pennar Industries Ltd for solar power projects. It also supplies solar PV modules to established players like Microtek International Pvt. Ltd., Azure Power Roof Top Pvt. Ltd for widespread applications across rooftop applications and solar powered appliances. Association with these players is expected to help Saatvik grow at a healthy pace over medium term.
The company is exposed to competitive intensity given the large capacity additions being planned in domestic market with various levels of integration. Implementation of BCD (40% and 25% BCD on imported solar modules and solar cells respectively from April 2022) has made the Indian players cost-competitive, compared with Chinese players. However, the risk of significant reduction in selling prices by Chinese players to lessen the impact of BCD persists. Also, growth is vulnerable to changes in government policies and regulations, as it can impact demand.
Operating margin sharply dipped from 6.4% to 3.9% over the past two fiscals and is susceptible to sharp fluctuations in raw material prices (raw material cost accounts for 80-90% of the operating income). Prices of key inputs such as polysilicon, aluminum and copper have risen sharply in past fiscal and are likely to remain stable in the near term. Though Saatvik maintains sufficient cushion in margins to mitigate this risk, any sharp rise in input cost will need to be managed effectively. Moreover, Saatvik has focused on brand building which is expected to increase its market presence in the medium to long term.
Financial risk profile is constrained on account of low estimated networth of Rs. 26 crore and gearing of 3.2 times as on March 31, 2022. Gearing is expected to improve with gradual improvement in networth on account of stable accretion to reserves. However, increase in working capital requirement is expected to increase the short-term borrowings going forward. Further, as large percentage of raw material is imported, Saatvik shall remain exposed the forex risk. However, Saatvik is in process of localizing their supply chains, with several raw materials already being sourced domestically. |
Liquidity: Adequate Saatvik has adequate liquidity driven by expected sufficient cash accruals of about Rs 15-30 crore per annum against moderate capex and term debt repayment obligation of Rs 5 crore over the medium term. Bank limits of Rs. 64 crore had average utilisation of 48% for the 12 months ending August 31, 2022. Need based financial support from Shree Ganesh group further enhances liquidity position of the company. |
Outlook: Stable CRISIL Ratings believes Saatvik will continue to benefit from its resourceful promoters. The business risk profile is expected to improve over the medium term backed by increasing scale and track record of operations. |
Rating Sensitivity factors Upward Factors
Downward Factors
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About the Company Incorporated in 2015 and led by the promoters of Shree Ganesh group, Saatvik manufactures solar photovoltaic (PV) modules. These modules are for residential, commercial, and industrial off grid/on grid applications. It has an installed capacity of 240 MW as on Sep 30, 2022 in its manufacturing facilities in Ambala, Haryana.
In fiscal 2022, the company posted revenues of over Rs 505 crore as against Rs 154 crore in fiscal 2021. |
Key Financial Indicators
*CRISIL Ratings-adjusted figures |
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 | |||
| Facility | Amount (Rs.Crore) | Name of Lender | Rating |
| Cash Credit | 15 | HDFC Bank Limited | CRISIL BBB/Stable |
| Long Term Bank Facility | 14.5 | HDFC Bank Limited | CRISIL BBB/Stable |
This Annexure has been updated on 14-Mar-2023 in line with the lender-wise facility details as on 01-Mar-2023 received from the rated entity.
Criteria Details
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