Rating Rationale
January 07, 2022 | Mumbai
Vayu (Project 1) Private Limited
Rating Reaffirmed
 
Rating Action
Total Bank Loan Facilities RatedRs.352 Crore
Long Term RatingCRISIL A+/Stable (Reaffirmed)
1 crore = 10 million
Refer to Annexure for Details of Instruments & Bank Facilities

Detailed Rationale

CRISIL Ratings has reaffirmed its ‘CRISIL A+/Stable’ rating on the long-term bank facilities of Vayu (Project 1) Private Limited (Vayu; wholly owned subsidiary of Enel Green Power India Pvt Ltd [EGP India]). EGP India is a wholly owned indirect subsidiary of Enel SpA (Enel SpA; rated 'BBB+/Stable/A-2' by S&P).

 

The rating continues to reflect the revenue visibility and moderate operational track record of the wind asset for more than 12.5 years. It also factors in the company's experienced management team and the operational and financial support that the group’s India assets receive from Enel SpA. These strengths are partially offset by lower generation as compared to the P90 level in fiscal 2021. 

Analytical Approach

CRISIL Ratings has combined the business and financial risk profiles of EGP India and its subsidiaries, including Vayu, which are referred to as Enel Green Power India group. This is because all the entities within the group are critical and are in the renewable power generation business. Furthermore, CRISIL Ratings has also factored in support (operational, managerial and financial, if required) received from the ultimate parent, Enel SpA, to arrive at the ratings of the entities within the Enel Green Power India group since they are critical and strategic to Enel SpA.

 

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:

  • Healthy revenue visibility: Vayu has signed a long-term power purchase agreement (PPA) at a pre-determined tariff of Rs 3.37 per kilowatt hour (kWh) with Gujarat Urja Vikas Nigam Ltd (GUVNL), providing strong revenue visibility. Track record of more than 12 years supports the business further.

 

  • Managerial, operational and financial support from the ultimate parent, Enel SpA: Vayu, through the Enel Green Power India group, benefits from the financial, technical and operational support extended by Enel SpA. This is because Enel SpA is planning to expand its renewable energy operations in India and has been regularly bidding in recent tenders.

 

Furthermore, Enel SpA, through its indirect subsidiary, EGP India, has provided financial assistance to another Indian wind asset located at Amberi, Maharashtra, despite the asset’s receivable period exceeding one year at times, which provides confidence about the strength of debt servicing of the subsidiaries in the group.

 

  • Moderate financial risk profile: Debt service coverage ratio is expected to be moderate over the residual tenure of the debt, supported by fixed tariff of Rs 3.37 per kWh throughout its PPA of 20 years with GUVNL. Furthermore, the company has a debt service reserve account (DSRA) of six months, equivalent to Rs 27 crore, to support any liquidity mismatches.

 

Weaknesses:

  • Moderate operational track record and dependence on climatic conditions: The project’s operational performance has deteriorated in fiscal 2021 on account of various external factors, such as flooding, low wind intensity and labour disruptions caused due to the Covid-19 pandemic.

 

However, the plant load factor (PLF) levels during the first eight months of fiscal 2022 have improved to 22.3%, against 16.2% during the corresponding period of the previous fiscal.

 

In the past, the project performed at better-than-P90 PLF of 21.5% in 3 of the 5 fiscals up to 2020—22.2% in fiscal 2019, 22.9% in fiscal 2017, and 23.0% in fiscal 2016—thereby providing confidence on the operational strength of the project.

 

  • Exposure to execution risks for under-construction projects within Enel Green Power India: The Enel Green Power India group has exposure to implementation-related risks through its under-construction 285 megawatt (MW) wind power project and 300 MW solar power project.

Liquidity: Adequate

Liquidity is expected to remain adequate over the medium term. Net cash available for debt servicing is expected to be around Rs 60 crore in fiscal 2022, against debt obligation of around Rs 47 crore. Liquidity is expected to improve with expected cash flow of Rs 57 crore and Rs 55 crore in fiscals 2023 and 2024, respectively, with debt obligation of Rs 45 crore and Rs 43 crore, respectively. The available cash balance of more than Rs 55.5 crore (including DSRA of Rs 27 crore in the form of fixed deposits) as on November 30, 2021 is expected to support in any adverse situation.

Outlook: Stable

CRISIL Ratings believes Vayu will benefit over the near-to-medium term from its signed PPA at pre-determined fixed tariff with GUVNL and support of parent entity.

Rating Sensitivity factors

Upward factors:

  • Sustained track record of PLF performance closer to P75 levels along with faster-than-expected deleveraging
  • Improvement in the credit risk profile of Enel SpA (from current levels of S&P BBB+/Stable/A-2)

 

Downward factors:

  • Change in the support stance of Enel SpA or fall in its credit risk profile from current levels
  • Delays in resolution of operations and maintenance issues, as reflected in performance below P90 PLF of 21.5%

About the Company

Incorporated on June 26, 2012, Vayu is a subsidiary of EGP India, which is indirectly owned by Enel SpA, the Enel group’s ultimate holding company.

 

Enel SpA is a multinational power company and a leading integrated player in the world’s power and gas markets, especially in Europe and Latin America. The Enel group operates in 30 countries, owns net installed capacity of approximately 86 gigawatts, and distributes electricity and gas through a network of 2.2 million kilometre.

Key Financial Indicators

As on / for the period ended March 31

 

2021

2020

Revenue from operations

Rs crore

65

93

Profit after tax (PAT)

Rs crore

-34

-8

PAT margin

%

-52

-8

Adjusted debt/adjusted networth

Times

-6

-24

Interest coverage

Times

0.84

1.53

 

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)

ISIN Name of instrument Date of allotment Coupon rate (%) Maturity date Issue size (Rs crore) Complexity level Rating assigned with outlook
NA Rupee Term Loan 30-Sep-16 NA Dec-26 156 NA CRISIL A+/Stable
NA Rupee Term Loan 30-Sep-16 NA Dec-26 145 NA CRISIL A+/Stable
NA Proposed Long Term Bank Loan Facility NA NA NA 51 NA CRISIL A+/Stable

 

Annexure – List of entities consolidated

SN

Name of company

Type of consolidation

Rationale for Consolidation

1

Vayu (Project 1) Pvt Ltd

Full consolidation

All entities within the group are critical and are in the renewable power generation business.

2

Vayu (Project 2) Pvt Ltd

Full consolidation

3

Enel Wind Project (Amberi) Pvt Ltd

Full consolidation

4

Avikiran Solar India Pvt Ltd

Full consolidation

5

Avikiran Energy India Pvt Ltd

Full consolidation

6

Marudhar Wind Energy Pvt Ltd

Full consolidation

7

Avikiran Surya India Pvt Ltd

Full consolidation

8

Avikiran Vayu India Pvt Ltd

Full consolidation

9

Dwarka Vayu 1 Pvt Ltd

Full consolidation

10

Thar Surya 1 Pvt Ltd

Full consolidation

11

Aravalli Surya (Project 1) Pvt Ltd

Full consolidation

12

Shikhar Surya (One) Pvt Ltd

Full consolidation

 

Annexure - Rating History for last 3 Years
  Current 2022 (History) 2021  2020  2019  Start of 2019
Instrument Type Outstanding Amount Rating Date Rating Date Rating Date Rating Date Rating Rating
Fund Based Facilities LT 352.0 CRISIL A+/Stable   --   -- 20-10-20 CRISIL A+/Stable 24-07-19 CRISIL A+/Stable CRISIL A/Stable
All amounts are in Rs.Cr.
Annexure - Details of Bank Lenders & Facilities
Facility Amount (Rs.Crore) Rating
Proposed Long Term Bank Loan Facility 51 CRISIL A+/Stable
Rupee Term Loan 55 CRISIL A+/Stable
Rupee Term Loan 246 CRISIL A+/Stable
Criteria Details
Links to related criteria
CRISILs Approach to Financial Ratios
CRISILs Bank Loan Ratings - process, scale and default recognition
Rating Criteria for Power Generation Utilities
Criteria for rating wind power projects
Criteria for rating entities belonging to homogenous groups
Criteria for Notching up Stand Alone Ratings of Companies based on Parent Support

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