Rating Rationale

Brickwork Ratings (BWR) has assigned the long-term rating of BWR BBB+/Stable for Rs. 352.74 Crs. of bank loan facilities and short-term rating of BWR A2+ for Rs. 22.26 Crs. of bank loan facilities of Sirmour Small Hydro Power Private Limited (SSHPPL or the company).

The rating assignment factors in the long-term power purchase agreement (PPA) with Madhya Pradesh Power Management Company Limited (MPPMCL) for 24 MW capacity of small hydro power plants at Sirmour and 5.10 MW capacity solar power project at Lasoor, steady cash flow generation through the operational power plants, and healthy capacity utilization factor (CUF) of ~95% in past three fiscal years for the hydro power plants. BWR also notes the track record of realisation of power sale dues within stipulated timeline from MPPMCL after raising the bills. The rating is constrained by the dependence of CUF on water availability, common ecological and regulatory risks associated with any hydro power project, and concentration risk arising from the sole off taker for all operational assets.

Sirmour hydro power project of installed capacity 24 MW (2*12 MW) achieved COD in July 2022. The whole capacity has been tied up with a 35-year PPA with MPPMCL. The plants have generated power at a CUF of ~95% and the cash flow has been steady since the commencement of operations. The company was awarded a solar power project of 38.80 MW AC capacity under feeder solarization component of PM-KUSUM Component C scheme. The solar plants have to be installed at 6 places in Neemuch district of Madhya Pradesh. One plant of installed capacity 5.10 MW at Lasoor achieved COD in January 2026 and has a PPA or 25 years with MPPMCL. BWR notes the investments of Rs. 201.51 Crs. on 31 Mar 2026 made in the group SPVs through loans & advances. The company receives interest on the loans; however, return of principal is contingent upon the successful completion and operationalization of the SPVs, each of which is executing renewable energy projects, and repayment of external debt, if any.

The Stable outlook indicates a low likelihood of rating change over the medium term. BWR believes the company's overall risk profile will remain stable backed by steady operations and long-term PPAs from MPPMCL. The outlook may be revised to Positive if the company completes the remaining solar projects on time and within budget, while securing long-term PPAs for them. The outlook may be downgraded to Negative in the event of project execution delays or PPA signing delays.

The terms of sanction include standard covenants normally stipulated for such facilities. Some of the key covenants of the rated facilities are:

1. DSRA equivalent to debt service requirements of IREDA to cover principal and interest payments of the 2 quarters for all three term loans being rated.
2. The company shall open Trust & Retention Account (TRA) with a scheduled bank as per IREDA’s format for depositing project revenues and execute a suitable Trust and Retention Account agreement to the satisfaction of IREDA for all three term loans being rated.
3. Extension of pledge of 76% of equity shares/ CCDs/Preference shares of core promoters’ contribution/ Guarantors.

• High revenue visibility :

  The company has entered into long-term power purchase agreement (PPA) with Madhya Pradesh Power Management Company Limited (MPPMCL) for offtake of power generated from its 24 MW hydro power plant for 35 years and from 5.10 MW solar power plant for 25 years. The power will be sold at pre-determined tariffs during the entire term of the PPAs. Power tariff for the hydro power plants ranges between Rs. 3.03 - Rs. 6.78 per unit over the PPA tenure, while that from the solar power plant is fixed at Rs. 2.94 per unit. The company usually gets payment within 30 days of raising bills for power sold to MPPMCL against the upper limit of 45 days as per the terms of the PPAs.

• Healthy operational performance :

  The hydro power plants get water from the regulated releases made from Bansagar multi-purpose project to meet the requirements of Teonthar irrigation scheme in Madhya Pradesh. Round the clock availability of water throughout the year has helped the company maintain a capacity utilization factor (CUF) of ~94-95% since inception in July 2022. The plants are shut down for ~15 days each year for scheduled maintenance. The plants generated ~196 million units (MU) of power in FY25 and ~198 MU in FY26. Auxiliary power consumption has been less than 0.50% and forced outage rate has varied between 4% - 7% over the past three fiscals. As per the Madhya Pradesh state policy for hydro power plants, the company is providing 10% of net power generated from the units to the Government of Madhya Pradesh (GoMP) free of cost. The 5.10 MW solar power plant at Lasoor, commissioned in January 2026, has also started generating power, with 1.8 MU generated in FY26 and 3.44 MU generated in 5MFY27. Two more solar plants of installed capacities ~7 MW and ~6 MW are expected to be commissioned in Antri Mala and Dudlai, respectively, in November 2026 and December 2026, respectively.

• Availability of subsidy :

  As per Ministry of New and Renewable Energy (MNRE) guidelines for feeder level solarization under KUSUM-C scheme, Government of India (GoI) shall provide subsidy at a rate 30% of estimated cost of Rs. 3.50 Crs./MWfor projects meant for feeder solarisation of agricultural feeders. Accordingly, the company has received a subsidy of Rs. 1.05 Crs./MW (30% of the estimated cost of installation of the project at Rs. 3.50 Crs./MW) for the 5.10 MW Lasoor solar power plant, with the total received amount of ~Rs. 5.20 Crs. used to reduce the outstanding debt. It will receive a subsidy for the remaining part of the solar project as per the regulations. There is no provision of any such subsidy for small hydro power plants.

• Moderate financial risk profile :

  The company has been generating steady cash flow since commissioning of hydro power plants in July 2022, backed by strong operational performance and track record of timely payment of power dues by MPPMCL. Lasoor solar power plant has increased and diversified the revenue stream since January 2026. Steady revenue generation and low operating expenses have resulted in an increase in EBITDA margin from ~42% in FY23 to ~80% in FY26 (Prov.). Similarly, PAT margin increased from ~11% to ~41% over the same period. The company availed new loans of aggregate sanctioned limit Rs. 190 Crs. in FY25 for the solar power project and for funding renewable energy  projects being executed by group entities. This led to an increase in debt level from ~Rs. 144 Crs. on 31 Mar 2024 to ~Rs. 236 Crs. on 31 Mar 2026 (Prov.). However, TNW also increased from ~Rs. 61 Crs. to ~Rs. 143 Crs. over the same period backed by equity infusion and accrual of retained earnings. Thus, gearing, which peaked at 2.44 times on 31 Mar 2025, came down to 1.65 times on 31 Mar 2026 (Prov.), and expected to decline further. Debt coverage metrics were at a comfortable level, represented by ISCR at 3.60 times and DSCR at 1.34 times on 31 Mar 2026 (Prov.).

• Hydrology and policy-related risks :

  Sirmour hydro power project is a run-of-the-river project with water availability ensured through a canal connected to the Bansagar Dam. The policy framework behind the availability of water is the “Policy for implementation of Small Hydro Power Projects in Madhya Pradesh-2011”. The company has to provide 10% of net power generated to GoMP free of cost for using the water from the canal. Despite the policy and regulations, ultimate availability of water is vulnerable to the risks like drought, flood, ecological damages and disasters, which may impact the CUF and power generation. Moreover, any diversion of water from the Bansagar Dam for any other purposes due to policy change of the GoMP may impact the availability and CUF.

• High investment in group entities :

  The company is the cash cow of the group, with stable net cash accruals backed by consistently high CUF for the hydro power plants and PPAs for the entire installed generation capacity. As the margins of such projects are high due to low operating expenses, the high surplus cash is generated each year which is being invested in group SPVs incorporated for executing small scale renewable power generation projects and related activities. Further, the company has taken ~Rs. 163.40 Crs. of securitisation loans against future cash flows, primarily to invest in the group SPVs. As of 31 Mar 2026 (Prov.), the company has invested Rs. 149.60 Crs. as interest-bearing loans & advances and Rs. 51.92 Crs. as non-interest-bearing loans & advances to the group entities. It has also provided short term advances of Rs. 19.49 Crs. to the group entities on 31 Mar 2026 (Prov.). The company receives market interest rates from the interest-bearing loans & advances. The total investment in these entities is higher than the company's net worth. Recovery of principal from these SPVs is largely dependent on successful completion and COD of projects and repayment of external debt, if any.

Upward:

• Timely completion of solar power projects without any cost overrun accompanied by long-term PPAs.
• Improvement in credit risk profile of sole off taker, Madhya Pradesh Power Management Company Limited (MPPMCL), accompanied by track record of timely payment of power purchase charges
• Improvement in TOL/TNW to below 1.00 time on a sustained basis.

Downward:

• Decline in capacity utilisation factor (CUF) to below 50% on a sustained basis
• Time and/or cost overrun in the solar power projects under execution
• Any delay in the realisation of power dues from the off taker
• Any deterioration in the credit risk profile of the off taker
• Deterioration in TOL/TNW to above 2.25 times on a sustained basis
• Any adverse operational or regulatory event

The company's liquidity has been assessed as adequate, backed by EBITDA and net cash accruals covering the finance cost and repayment needs for the past three fiscals. The company is expected to generate net cash accruals of ~Rs. 50 Crs. in both FY27 and FY28 against the repayment obligations of ~Rs. 20-24 Crs. The liquidity is further supported by creation of DSRA equivalent to two quarters' debt servicing in the form of Rs. 16.25 Crs. of bank guarantee for Rs. 160 Crs. of loan and fixed deposit of Rs. 6.78 Crs. of Rs. 70 Crs. of loan. Since the commencement of operations of the hydro power units in July 2022, the company's cash flows have been steady, backed by ~95% CUF and timely payment of power dues by the offtaker of the PPA. The solar power plant of 5.10 MW capacity at Lasoor has also become operational in January 2026 and started generating steady cash. The remaining solar units under execution have achieved financial closure. The tenures of the company's PPA extend well beyond the service period of the existing debt. The company has been funding the power projects of other group companies by investing surplus cash in the form of primarily interest-bearing loans & advances. This is one of the primary reasons for low cash & cash equivalents of Rs. 0.28 Cr. on 31 Mar 2026 (Prov.). The return of principal on such investments will be a key monitorable.

The company demonstrates an evolving ESG profile based on its environmental, social, and governance practices. On the environmental front, SSHPPL has a structurally lower carbon footprint being a renewable energy producer. Socially, the company fulfils its obligations under law through mandatory corporate social responsibility (CSR) spendings. The company's Board has no Independent Director.

Sirmour Small Hydro Power Private Limited (SSHPPL or the company) was incorporated on 11 Feb 2016 in Gwalior as a special purpose vehicle (SPV) by Sangamam Power Projects Private Limited (SPPPL) for the execution of 24 MW (2*12 MW) small hydro power project at Sirmour, in Rewa district of Madhya Pradesh. The company is engaged in the business of generation and supply of electricity from renewable and conventional sources including hydro and solar. It is a wholly owned subsidiary of SPPPL.

SPPPL, incorporated in Gwalior on 16 Jun 2008, undertakes Engineering, Procurement and Construction (EPC) contracts for power, industrial and irrigation projects, and is involved in the installation, operation and maintenance of related infrastructure including substations, transmission lines and allied systems.

The Complexity Indicator refers to the ease with which the returns associated with the rated instrument could be estimated. It does not indicate the risk related to the timely payments on the instrument, which is rather indicated by the instrument's credit rating. It also does not indicate the complexity associated with analysing an entity's financial, business, industry risks or complexity related to the structural,transactional or legal aspects. Details on the complexity levels of the instruments are available on BWR's website Complexity Levels.

Creadit Rating Agency	Status and Reason for Non-Cooparation	Date of Press Release
CRISIL	The bank loan rating was continued in the ISSUER NOT COOPERATING category as the company did not provide the CRA any information for rating review.	30Jun2026
CARE	The bank loan rating was migrated to the ISSUER NOT COOPERATING category by the CRA considering non-availability of requisite information.	15Dec2025

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