Morries Energy Ltd

Brickwork Ratings reaffirms the ratings for the Bank Loan Facilities of Rs. 4.46 Crs. of Morries Energy Ltd

Particulars

Facilities**	Amount (Rs.Crs.)		Tenure	Rating#
Facilities**	Previous	Present	Tenure	Previous (02 Jun 2021)	Present
Fund Based	5.35	4.37	Long Term	BWR BBB- /Stable Reaffirmation	BWR BBB - /Stable Reaffirmation
Non Fund Based	0.09	0.09	Short Term	BWR A3 Reaffirmation	BWR A3 Reaffirmation
Grand Total	5.44	4.46	(Rupees Four Crores and Forty Six lakhs Only)

#Please refer to BWR website www.brickworkratings.com for definition of the ratings
**Details of Bank Loan facilities,consolidation or instruments are provided in Annexure

RATING ACTION / OUTLOOK

Brickwork Ratings has reaffirmed the long term rating at 'BWR BBB-/Stable' and also reaffirmed the short term rating at 'BWR A3' for the bank loan facilities of Morries Energy Limited.

The Rating has factored, inter alia , the extensive business experience of management, long term PPAs and comfortable financial risk profile . However, the rating is constrained by moderate scale of operations, No escalation clause in PPA(Windmill) and Inherent power generation risk. Going forward, the ability of the company to increase revenues, improve its profitability margins, strengthen its financial risk profile and manage its working capital efficiently will remain the key rating sensitivities.

The rating outlook has been assigned as "Stable" as BWR believes that Morries Energy Limited. business risk profile will be maintained over the medium term. The 'Stable' outlook indicates a low likelihood of rating change over the medium term,. The rating outlook may be revised to 'Positive' in case the revenue and profitability margins show sustained improvement. The rating outlook may be revised to 'Negative' if the financial risk profile goes down.

KEY RATING DRIVERS

Credit Strengths:

Experienced management :
The promoters have an experience of more than a decade in renewable energy. Mr. Hemant Garg, Managing Director is well qualified and has more than two decades of business experience and is supported by a team of qualified and experienced personnel.
Long term PPAs :
The company has long term PPAs with Government organisations like, Jaipur Vidyut Vitran Nigam Ltd, Ajmer Vidyut Vitran Nigam Ltd, Jodhpur Vidyut Vitran Nigam Ltd, Tamil Nadu Generation & Distribution Corporation Ltd (Coimbatore), Tamil Nadu Generation & Distribution Corporation Ltd(Tirunelveli) and Maharashtra State Electricity Distribution Company Ltd , etc. Most of the PPAs are valid for more than 20 years, which showcases long term revenue visibility for the company. The company has few private customers like, ICICI Bank, Palm Grove Beach Hotels, Axiom Cordages Ltd and Unique Estate Development Co Ltd.
Comfortable financial risk profile :
Financial profile has been comfortable in the past marked by low Total Debt/TNW of less than 1 times in the last four financial years ended 31 March 2022. Total Debt/TNW has been improving over the years with the repayment of long term loans and accretion of profits to reserve. Tangible Net Worth (TNW) stood at Rs 27.30 Crs as on 31 March 2021 and Rs.31.34 crores as on 31 March 2022(Prov). Strong debt service coverage ratio, marked by ISCR and DSCR of 19.97 times and 4.97 times respectively in FY22(Prov). Operating profit margins were high at 62.99% and 68.05%, respectively in FY21 and FY22.

Credit Risks:

Moderate Scale of operation :
The scale of operation has been moderate, marked by total operating income of Rs 12.33 Crs, Rs. 8.84 crores and Rs 10.87 Crore respectively in FY 20, FY21 and FY22(Prov). Operating income declined to Rs 8.84 Crs in FY21 from Rs 12.33 Crs in FY20 on account of decrease in revenue from sale of wind energy due to low wind fall and lower REC income. However the operating income of the company stood at Rs.10.87 crore in FY22(Prov). MEL generated revenue of Rs 3.49 Crs from sale of wind power in FY21 as against Rs 4.13 Crs in FY20. However the revenue generated from sale of wind power declined to Rs. 1.96 crore in FY22(Prov). REC income declined from Rs 3.15 Crs in FY20 to Rs 0.29 Crs in FY21 as trading of REC has been suspended Since July 2020. However the REC income improved to Rs. 4.44 crore in FY22(Prov). The revenue from sale of solar energy increased from Rs 4.37 Crs in FY20 to Rs 4.49 Crs in FY21, however declined marginally to Rs.4.32 crore in FY22(Prov). The company has achieved Rs. 4.34 crore of operating revenue as on 31 August 2022. Power Load Factor ( PLF) was at 18.1% and 17.5%, in FY21 and FY22 respectively.
No Escalation Clause in PPA (wind Mills) :
As per PPA agreement, the company has no escalation clause benefit. Power tariff (Wind energy) is fixed and not to be revised during the tenure of agreement.
Inherent Power Generation Risk :
The solar power plants’ performances are susceptible to adverse climatic conditions. Solar radiation is seasonal and also varies from year to year. The lean season for solar power typically is 3-4 months. Low windfall and adverse climatic condition would result in lower revenue generation.

ANALYTICAL APPROACH - Standalone

For arriving at its ratings, BWR has applied its rating methodology as detailed in the Rating Criteria detailed below (hyperlinks provided at the end of this rationale).

RATING SENSITIVITIES

Going forward the company’s ability to improve the receivables position, improve and maintain profitability, the debt servicing capability, & liquidity and manage its working capital efficiently will be the key rating sensitivities.

Positive:

The rating will be upgraded if the company is able to improve its receivables position and improvement in profit margins to improve its cash accruals and thereby the liquidity , with other metrics such as gearing, debt coverage ratios and working capital cycle.

Negative:

The rating may be downgraded if there is lower than expected profitability margins or deterioration in its financial risk profile from current level.

LIQUIDITY INDICATORS - Adequate

The liquidity of the company is adequate marked by Net cash accruals/Long term debt of 1.10 times and 2.08 times respectively in FY21 and FY22. The company generated net cash accruals of Rs. 5.44 crore vis-a-vis CPLDT of Rs. 1.24 cr in FY21. Further the company generated net cash accruals of Rs. 7.61 crore vis-a-vis CPLDT of Rs. 0.37 crore in FY22(Prov). The current ratio of the company stood comfortable at 2.46 times and 3.78 times as on 31 March 2021 and 31 March 2022(Prov) respectively. The cash and cash equivalents stood at Rs. 0.3 crore and Rs. 0.87 crore as on 31 March 2021 and 31 March 2022(Prov) respectively. The receivables days stood high at above six months as on 31 March 2021 and 31 March 2022. Going forward the company is expected to generate cash accruals of Rs. 6.69 cr which will be sufficient to meet its repayment obligations of Rs. 2.68 crore in FY23 and the net cash accruals/long term debt is expected to be high as on 31 March 2023.

ABOUT THE ENTITY

Morries Energy Limited (MEL) is an unlisted public company incorporated on 14th March, 2005 with its corporate office at Mahim (west), Mumbai. It is constituted by three directors namely, Mr. Hemant Kumar Garg, Managing Director, Mr. Tanuj H Garg, Director and Ms. Savita Gupta, Director. MEL is engaged in generating and selling solar energy and wind energy to various reputed list of clientele being government as well as private organizations like Maharashtra State Electricity Distribution Co. Ltd., Hubli Electricity Supply Co. Ltd., Jodhpur Vidyut Vitran Nigam Ltd, ICICI Bank, Palm Grove Beach Hotels, Jodhpur Vidyut Vitran Nigam Ltd etc. The company has installed nine windmills (Maharashtra-2 MW, Tamilnadu-3.35 MW, Karnataka- 3 MW, Rajasthan- 0.6 MW) with the capacity for FY22 at 9.95 MW and 9.3 MW DC for Solar energy. The management is engaged in various fields like Leasing, Property Trading, Renewable Energy - Solar energy and Wind energy services, Turnkey property services like location due diligence, acquisition of large properties and property associated services.

KEY FINANCIAL INDICATORS (Standalone)

Key Parameters	Units	FY 20-21 (Audited)	FY 19-20 (Audited)
Operating Revenue	Rs.Crs.	8.84	12.33
EBITDA	Rs.Crs.	5.57	8.82
PAT	Rs.Crs.	0.95	3.69
Tangible Net Worth	Rs.Crs.	27.30	26.35
Total Debt/TNW	Times	0.23	0.30
Current Ratio	Times	2.46	1.58

KEY COVENANTS OF THE FACILITY RATED

The terms of sanction include standard covenants normally stipulated for such facilities.

NON-COOPERATION WITH PREVIOUS CREDIT RATING AGENCY

ANY OTHER INFORMATION

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	4.37	BWR BBB-/Stable (Reaffirmation)	02Jun2021	BWR BBB- Stable (Reaffirmation)	02Apr2020	BWR BBB- Stable (Reaffirmation)	01Mar2019	BWR BBB-(SO)Stable (Reaffirmation)
Non Fund Based	ST	0.09	BWR A3 (Reaffirmation)	02Jun2021	BWR A3 (Reaffirmation)	02Apr2020	BWR A3 (Reaffirmation)	01Mar2019	BWR BWR A3 (Assignment)
Grand Total		4.46	(Rupees Four Crores and Forty Six lakhs Only)

Rating Advisory, as on 21Jun2022
Press Release, as on 21Jun2022
COMPLEXITY LEVELS OF THE INSTRUMENTS - Simple

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 Criteria

Analytical Contacts
Roshan Ranjan Ratings Analyst roshan.r@brickworkratings.com	Nagaraj K Associate Director - Ratings Board : +91 80 4040 9940 nagaraj.ks@brickworkratings.com
1-860-425-2742 \| media@brickworkratings.com

Morries Energy Ltd

ANNEXURE-I

Details of Bank Facilities rated by BWR

SL.No.	Name of the Bank/Lender	Type Of Facilities	Long Term(Rs.Crs.)	Short Term(Rs.Crs.)	Total(Rs.Crs.)
1	Central Bank of India	Term Loan - Out-standing	4.37	_	4.37
2	Central Bank of India	Bank Guarantee - Sanctioned	_	0.09	0.09
Total			4.37	0.09	4.46
TOTAL (Rupees Four Crores and Forty Six lakhs Only)

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