Brickwork Ratings reaffirms the ratings for the Bank Loan Facilities of Rs. 35.56 Crs. of Shri Dhanalakshmi Green Energy India Pvt. Ltd.
ParticularsFacilities** | Amount (Rs.Crs.) | Tenure | Rating# | ||
---|---|---|---|---|---|
Previous | Present | Previous (17 Aug 2021) |
Present | ||
Fund Based | 19.45 | 35.56 | Long Term |
BWR BB- /Stable
Upgrade |
BWR BB -
/Stable Reaffirmation |
Grand Total | 19.45 | 35.56 | (Rupees Thirty Five Crores and Fifty Six lakhs Only) |
The reaffirmation of the rating factors in the extensive experience of promoters in textile and wind energy businesses, established operational track record and locational advantage of the plant and improvement in revenues and profitability from Rs.1.85 Crs. in FY21 to Rs. 7.36 Crs in FY22 (Provisional). The ratings, however, continue to remain constrained by the renewal risk for the power purchase agreements, high counterparty risk, implementation risk for the proposed project and susceptibility of the company’s performance to adverse climatic conditions & technological changes.
The outlook has been kept as stable as there is a low likelihood of a rating change in the medium term. BWR expects that the company’s performance is likely to be maintained in the medium term with stable revenues and cash generation.
KEY RATING DRIVERSCredit Strengths:
The promoters of the company have more than three decades of experience in the textile industry and more than a decade experience in windmill operations.
The plant commenced commercial operations in June 2013 and has a demonstrated track record of a satisfactory level of generation. Average Plant Load Factor (PLF) has remained in the range of 18%-22% over the last four years lending stability to the revenue and profitability. Generation levels during FY20 and FY21 were relatively lesser due to the lower wind availability at the locations but the PLF was still >18%.
The company’s wind mills are strategically located in the state of Tamilnadu which has high wind density as compared to other states in India. Also due to south west and south east monsoon, the state has high wind speed patterns
TOI of the company has increased by ~223.59% in FY22. However this is primarily due to the increase in revenues from trading of cotton/yarn while the revenues from energy generation was marginally higher at Rs. 9.07 Crs. FY22. TNW has increased to Rs. 17.93 Crs. as on 31 March 2022 due to accumulations of profits. Overall gearing of the company has improved to 1.97x in FY22 as against 2.05x in FY21 on account of increase in the retained earnings.
Profit margins are at moderate level with OPM and NPM standing at 33.02% and 23.76% respectively in FY22. The debt protection metrics is at moderate level indicating the company's ability to service its debt.
The company is setting up a new solar power plant of 5 MW and the project is on the verge of completion and will be operational in the next 10 - 15 days. The company has entered into PPA with 10 companies for the period of 12 years.
The company is supplying power generated through windmills to various companies located in and around Coimbatore, which is a group captive arrangement with its customers for the sale of power. The power purchase agreements have been entered into for to years and several agreements are expiring in FY23 and FY24. The timely renewal of the PPAs at remunerative tariffs is a key monitorable
Any variation in the credit profile of customers or delays in payments by the off-takers is a potential risk factor and is to be monitored as any change will severely impact the performance of the company.
Wind power generation is exposed to the inherent risk of changing weather conditions which affect the Plant Load Factor (PLF) impacting the revenues of the company.
For arriving at its ratings, BWR has considered the standalone financials of the company. BWR has applied its rating methodology as detailed in the Rating Criteria.
RATING SENSITIVITIES
Going forward the ability of the company to maintain PLF of the plant, timely realization of payments from the off-takers, further improvement in the financial risk profile by generating sufficient net profits as well as cash profits shall remain key rating sensitivities.
Positive: The rating will be upgraded in case the wind power capacity exhibits a healthy increase in generation level along with a reduction in the receivables from the off-takers to less than 90 days on a sustainable basis and timely renewal of the PPAs at a remunerative tariff is a key monitorable.
Negative: Ligations or any major deterioration in the tariffs or generation as well as receivables realization which can be detrimental for the company’s liquidity as well as debt servicing ability are negative rating sensitivities.
LIQUIDITY INDICATORS - Adequate
The company is generating adequate cash accruals to meet its debt obligations. The company has generated cash accruals of Rs. 8..81 Crs. as on 31 March 2022 as against the debt obligation of Rs. 7.76 Crs. for FY22 . The average working capital facility utilisation for the period December 2021 to 15 June 2022 is 82.55%. BWR expects that the company would be generating adequate cash accruals to meet the debt obligations in the medium term.
ABOUT THE ENTITYShri Dhanalakshmi Green Energy India Pvt. Ltd (SDGEIPL) was incorporated in 2013 at Tirunelveli, Tamil Nadu. The Company is operating nine windmills with a total capacity of 10.75 MW in Tirunelveli, Tamil Nadu. The company is supplying power to various captive companies located in and around Coimbatore. SDGEIPL is promoted by Mr. C. Natrajan and Mrs. N. Leelavathy (W/o Mr. C Natrajan)
KEY FINANCIAL INDICATORS (Standalone)Key Parameters | Units |
FY 21-22 (Provisional) |
FY 20-21 (Audited) |
---|---|---|---|
Operating Revenue | Rs.Crs. | 31.00 | 9.58 |
EBITDA | Rs.Crs. | 10.23 | 5.99 |
PAT | Rs.Crs. | 7.36 | 1.85 |
Tangible Net Worth | Rs.Crs. | 17.93 | 10.56 |
Total Debt/TNW | Times | 1.97 | 2.05 |
Current Ratio | Times | 1.31 | 1.11 |
The terms of sanction include standard covenants normally stipulated for bank loan facilities
Ratings for Shri Dhanalakshmi Green Energy India Private Limited have been withdrawn by CARE Ratings vide rationale dated 08 October 2021 with rating reaffirmed at CARE D; ISSUER NOT COOPERATING* for the bank loan facilities.
RATING HISTORY FOR THE PREVIOUS THREE YEARS (including withdrawal and suspended)Facilities | Current Rating (2022) | 2021 | 2020 | 2019 | |||||
---|---|---|---|---|---|---|---|---|---|
Type | Tenure | Amount (Rs.Crs.) |
Rating | Date | Rating | Date | Rating | Date | Rating |
Fund Based | LT | 35.56 |
BWR BB-/Stable
(Reaffirmation) |
17Aug2021 |
BWR BB- Stable
(Upgrade) |
26Jun2020 |
BWR B+ Stable
(Reaffirmation) |
01Aug2019 |
BWR B+ Stable
(Downgrade/ISSUER NOT COOPERATING*) |
Grand Total | 35.56 | (Rupees Thirty Five Crores and Fifty Six lakhs Only) |
BWR complexity levels are meant for educating investors. The BWR complexity levels are available at www.brickworkratings.com / download / ComplexityLevels.pdf. Investors queries can be sent to info@brickworkratings.com.
Hyperlink/Reference to applicable CriteriaAnalytical Contacts | |
---|---|
Mita Ghanshyam Gupta Ratings Analyst mitagupta.g@brickworkratings.com |
Vipula Sharma Director - Ratings Board : +91 80 4040 9940 vipula.s@brickworkratings.com |
1-860-425-2742 | media@brickworkratings.com |
SL.No. | Name of the Bank/Lender | Type Of Facilities | Long Term(Rs.Crs.) | Short Term(Rs.Crs.) | Total(Rs.Crs.) | |
---|---|---|---|---|---|---|
1 | Canara Bank | Term LoanOut-standing | 9.25 | _ | 9.25 | |
2 | Canara Bank | Term LoanOut-standing | 20.40 | _ | 20.40 | |
3 | Canara Bank | Overdraft against Book Debts (ODBD)Sanctioned | 2.00 | _ | 2.00 | |
4 | Canara Bank | GECLOut-standing | 1.74 | _ | 1.74 | |
5 | Canara Bank | GECLOut-standing | 2.17 | _ | 2.17 | |
Total | 35.56 | 0.00 | 35.56 | |||
TOTAL (Rupees Thirty Five Crores and Fifty Six lakhs Only) |
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