Alpex Solar Pvt. Ltd.

Brickwork Ratings assigns the ratings for the Bank Loan Facilities of Rs.29.00 Crs. of Alpex Solar Pvt. Ltd.

Particulars

Facility**	Amount (Rs.Crs)	Tenure	Rating*
Fund Based
Cash Credit - Sanctioned Cash Credit - Sanctioned	06.00 06.00	Long Term	BWR BB - (Stable)
Sub Total	12.00
Non-Fund Based
Letter of Credit - Sanctioned Letter of Credit - Sanctioned Sub-Limit (Bank Guarantee) - Sanctioned Sub-Limit (Forward Contract Limit) - Sanctioned Sub-Limit (Guarantee to secure Trade Credit Facility) - Sanctioned	09.00 08.00 (02.00) (00.40) (08.00)	Short Term	BWR A4
Sub Total	17.00
Grand Total	29.00	(Rupees Twenty Nine Crores Only)

*Please refer to BWR website www.brickworkratings.com for definition of the ratings
**Details of Bank facilities are provided in Annexure-I RATING ACTION / OUTLOOK : Stable

BWR believes that Alpex Solar Pvt. Ltd. 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 revenues and profit show sustained improvement. The rating outlook may be revised to 'Negative' if the revenues go down and profit margins show lower than expected figures.

KEY RATING DRIVERS

Credit Strengths:

• Moderate Financial Risk Profile :

  The financial profile of the firm is moderate as the tangible net worth has improved due to retention of profit in FY19 and FY20. There is a satisfactory gearing ratio as it is decreasing from 1.13x in FY18 to 0.86x in FY19 and 0.63x in FY20. However, TOL/TNW is low as it is 1.20x in FY20 & decreased to 1.18x in FY21. Comfortable debt protection metrics as ISCR & DSCR stood at 1.69x & 1.18x in FY20 against 0.72x & 0.59x in FY19. Increasing operating profit margin and net profit margin in FY20 to 6.64% and 3.11% from 3.65% and -1.29% in FY 19. The current ratio is above average at 1.46x in FY20 as compared to 1.18x in FY 19. The company has a good orders from NTPC which shows revenue visibility in the medium term.

• Reputed clientele :

  Alpex Solar Private Limited (ASPL) supplies solar panels, solar water pumps and other trading items to the Public sector undertakings and private companies like NTPC Limited, TATA Power Solar System Limited, Hindustan Aeronautics Limited, Government of Rajasthan, Punjab, and Himachal Pradesh.

• Extensive experience of management: :

  The directors of the company are well qualified and hold decades of experience in the industry. Their knowledge and experience have helped them in maintaining long-term relationship with their clients.

• Locational Advantage :

  The company is located in the New Delhi cluster and thus has a competitive advantage in terms of skilled labor, logistics, production knowledge, and vendors making the company more efficient and cost effective.

Credit Risks:

• Supplier's Concentration Risk :

  The company is having a high supplier concentration risk as it is majorly dependent on one of its suppliers SFPV Solar(Solar Cell) with 45% of its purchases and any change in the policy of the supplier may adversely affect the business operation of the company.

• Large Working Capital Requirement :

  Operations are working capital intensive  and face a lot of technological challenges. The days' receivables stand at 95 days, though substantially compensated by days payable  at 87 days in FY20.

• Presence in a highly competitive industry and tender nature of the business :

  The renewal energy industry is highly fragmented with the presence of many organized and unorganized players. Further, the tender nature of business places pressures on the profitability of the company.

• Vulnerability of margins to foreign exchange fluctuation :

  The companies profitability margins are vulnerable to foreign exchange fluctuation risk as the company is importing its requirements. So, in the absence of a hedging mechanism, any adverse movement in exchange rates will put pressure on the profitability margins.

• Inherent Solar 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. However, the company mitigates the impact of variability in power generation by retaining cash surplus generated during the peak season to cover any deficit in the lean season.

ANALYTICAL APPROACH AND APPLICABLE RATING CRITERIA

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 ability of the company to further increase its scale of operations by improving its revenue, profitability margins, and financial risk profile, as usual maintaining its debt obligations and efficiently managing its working capital will be the key rating sensitivities.

Positive: The ratings may be upgraded if revenue, profitability, liquidity, gearing, and overall credit profile show substantial improvement.

Negative: The rating may be downgraded in case there is a significant deterioration in the business and financial risk profile of the company from its current level.

LIQUIDITY POSITION

Cash and cash equivalents are Rs. 7.71 Cr for FY20. The current ratio of the firm is maintained at 1.46 times and the gearing ratio of the firm is also moderate at 0.63 times as per FY 20. The debt protection metrics are satisfactory with an ISCR of 1.69x and DSCR of 1.18x as per FY20. The net profit margin and operating Profit Margin for FY20 are moderate at 3.11% and 6.64%. The expected net cash accruals of the company as per Proj. FY 21 is comfortable at Rs. 5.17 Cr as against the CPLTD of Rs. 0.98Cr as per FY 20. As per the Banker’s Feedback, the average cash credit utilization is approximately 90%. Considering the above-mentioned points, the liquidity position of the company is considered adequate.

PROFILE

Established in 1993 at Ludhiana, Alpex Solar Pvt Ltd(Formerly known as Alpex Exports Pvt Ltd) is engaged in the manufacturing of solar panels. The manufacturing unit with an installed capacity of 300 megawatts is located in Greater Noida (UP). Mr. Ashwani Sehgal is the Managing Director with 27 years of experience in this business. The working strength of the company is about 220 employees. The company has a major order from NTPC of Rs.250 crs for the supply of solar panels and the project starts from February 2021 and duration is one year. The company also supplies to Luminious power and domestic supplies on regular basis.

KEY FINANCIAL INDICATORS

Key Parameters	Units	FY 19-20 (Audited)	FY 18-19 (Audited)
Operating Revenue	Rs.Crs.	91.72	99.96
EBITDA	Rs.Crs.	6.09	3.65
PAT	Rs.Crs.	2.85	-1.29
Tangible Net Worth	Rs.Crs.	32.94	30.09
Total Debt/Tangible Net Worth	Times	0.63	0.86
Current Ratio	Times	1.46	1.18

NON-COOPERATION WITH PREVIOUS RATING AGENCY ,IF ANY

RATING HISTORY (INCLUDING WITHDRAWAL AND SUSPENSION)

S.No	Current Rating (2021)				Rating History
	Facilities	Tenure	Amount (Rs.Crs)	Rating	2020	2019	2018
Fund Based
1	Cash Credit - Sanctioned Cash Credit - Sanctioned	Long Term	06.00 06.00	BWR BB- (Stable)	NA	NA	NA
Non-Fund Based
2	Letter of Credit - Sanctioned Letter of Credit - Sanctioned Sub-Limit (Bank Guarantee) - Sanctioned Sub-Limit (Forward Contract Limit) - Sanctioned Sub-Limit (Guarantee to secure Trade Credit Facility) - Sanctioned	Short Term	09.00 08.00 02.00 00.40 08.00	BWR A4	NA	NA	NA
Total			29.00	(Rupees Twenty Nine Crores Only)

COMPLEXITY LEVELS OF THE INSTRUMENTS

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 :

• General Criteria
• Short Term Debt
• Manufacturing Companies

For More Information Contact:

Analytical Contacts
Kirti Agarwal Rating Analyst kirti.a@brickworkratings.com	Satvinder Kumar Gakhar Associate Director - Ratings B : +91 11 2341 2232 satvinder.g@brickworkratings.com
1-860-425-2742 | media@brickworkratings.com

SL.No.	Type Of Facilities	Long Term(Rs.Crs.)	Short Term(Rs.Crs.)	Total(Rs.Crs.)
1	Letter of Credit - Sanctioned	_	8.00	8.00
Sub-Limit (Bank Guarantee) - Sanctioned		(2.00)
Sub-Limit (Forward Contract Limit) - Sanctioned		(0.40)
Sub-Limit (Guarantee to secure Trade Credit Facility) - Sanctioned		(8.00)
2	Cash Credit - Sanctioned	6.00	_	6.00
3	Letter of Credit - Sanctioned	_	9.00	9.00
4	Cash Credit - Sanctioned	6.00	_	6.00
Total		12.00	17.00	29.00
TOTAL (Rupees Twenty Nine Crores Only)