December 07, 2023
Adyah Solar Energy Private Limited: Ratings reaffirmed
Summary of rating action
Previous Rated Amount Current Rated Amount
Instrument* Rating Action
(Rs. crore) (Rs. crore)
Long term - Term loan 1,002.50 961.13 [ICRA]A+ (Stable); reaffirmed
Long term – Working capital 30.00 30.00 [ICRA]A+ (Stable); reaffirmed
Short term – Non-fund based
20.00 20.00 [ICRA]A1; reaffirmed
limits
Long term - Unallocated 91.50 132.87 [ICRA]A+ (Stable); reaffirmed
Total 1,144.00 1,144.00
*Instrument details are provided in Annexure-1
Rationale
The rating reaffirmation for Adyah Solar Energy Private Limited (ASEPL) factors in the managerial and financial support from a
strong parent – Ayana Renewable Power Private Limited (ARPPL; rated [ICRA]AA- (Stable)/[ICRA]A1+) – which had acquired
the entity from the Renew Group in March 2021. ARPPL’s credit profile is supported by its superior financial flexibility from
having strong sponsors and the large capital commitments made by the sponsors — National Investment and Infrastructure
Fund Limited (NIIF), British International Investment (BII; erstwhile CDC Group Plc; a UK Government-owned development
finance institution) and Green Growth Equity Fund (GGEF). The sponsors have made a capital commitment of $721 million in
the Ayana platform till date with NIIF holding 51% along with majority board representation.
The ratings continue to consider the operational track record of more than 48 months and the satisfactory generation
performance for the 300-MW solar asset of ASEPL, though remaining marginally below the P-90 estimate. The ratings also
favourably factor in the revenue visibility for ASEPL because of the long-term (25-year) power purchase agreements (PPA) with
the state distribution utilities (discoms) of Karnataka at a fixed tariff rate of Rs. 2.91 per unit. Further, the tariff offered by
ASEPL is highly competitive compared to the average power procurement cost (APPC) of the offtaking discoms. In October
2023, the company refinanced a part of its debt wherein the repayment terms remain similar to the earlier facility.
Consequently, the debt coverage metrics are expected to remain comfortable over the debt repayment tenure with a
cumulative DSCR of ~1.35x on the project debt, supported by the long tenure of the project debt and competitive interest
rates.
The ratings are, however, constrained by the vulnerability of ASEPL’s cash flows and debt protection metrics to its generation
performance. Any adverse variation in weather conditions and module performance may impact the PLF levels and
consequently affect the cash flows. This is amplified by the geographic concentration of the asset, with the entire capacity
located at a single site in Karnataka.
The ratings also factor in the counterparty credit risk on account of the exposure to Karnataka state discoms, with 200 MW
tied up with Bangalore Electricity Supply Company Limited [BESCOM; [ICRA]BBB+ (Stable)], 50 MW with Gulbarga Electricity
Supply Company Limited (GESCOM; [ICRA]BBB- (Stable)/[ICRA]A3) and 50 MW with Hubli Electricity Supply Company Limited
(HESCOM). The credit profiles of the Karnataka discoms are constrained by their high receivable position and the payment
cycle of these discoms remains a key monitorable. Nonetheless, post the implementation of the late payment surcharge (LPS)
rules by the Ministry of Power, Government of India, the receivables have reduced to 2-3 months from 4-8 months from the
three offtakers.
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ICRA also takes note of the exposure of the debt coverage metrics to interest rate movements, given the leveraged capital
structure of the asset and the fixed tariff in the PPAs. Further, ASEPL’s operations remain exposed to the regulatory risks of
scheduling and forecasting requirements applicable for solar energy projects.
The Stable outlook on the [ICRA]A+ rating reflects ICRA’s opinion that the company would benefit from the long-term PPAs,
satisfactory generation performance and the benefits derived as part of the Ayana Group.
Key rating drivers and their description
Credit strengths
ASEPL is part of Ayana platform that has large capital commitments from strong sponsors – The Ayana Group is backed by
strong sponsors such as NIIF, BII and GGEF. NIIF is anchored by the Government of India (GoI) in collaboration with leading
global and domestic institutional investors and is India’s first sovereign investment fund. The full ownership of BII belongs to
the Secretary of State for International Development, which is controlled by the UK Government. EverSource Capital, a joint
venture between Everstone Capital and Lightsource BP, is the fund manager of GGEF, a $700-million target private fund, which
has NIIF and the UK Government as anchor investors. All the three shareholders have committed a capital of $721 million with
NIIF holding 51% along with a majority board representation. ICRA notes that ARPPL is expected to remain strategically
important to NIIF, reflected in the largest equity commitment from its master fund. ASEPL enjoys strong managerial and
financial support, being part of the Ayana platform. ARPPL has developed a portfolio of 4.13 GW 1, comprising an operating
capacity of 1.29 GW and under-development capacity of 2.84 GW.
Revenue visibility due to long-term PPAs with Karnataka discoms; superior tariff competitiveness – ASEPL operates a 300-
MW power plant at Pavagada Solar Park, Karnataka, wherein the counterparties are BESCOM (200 MW), GESCOM (50 MW)
and HESCOM (50 MW). The PPAs are valid for a period of 25 years from the commissioning of operations with an applicable
tariff rate of Rs. 2.91 per unit. The tariff offered by the project remains highly competitive against the APPC of the offtaking
discoms. The company has also been awarded an SGD refund of Rs. 170 crore which is being reimbursed in lumpsum by
BESCOM and in the form of incremental tariff by GESCOM and HESCOM. ICRA notes that these amounts are passed on to the
earlier sponsor, Renew Group, and would not impact the credit profile of ASEPL.
Satisfactory operational performance with track record of more than three years – The 300-MW capacity was commissioned
in March 2019 and has a generation track record of more than four years. The generation performance of the project remains
satisfactory, though remaining marginally lower than the P-90 estimate.
Comfortable debt coverage metrics – The company’s coverage metrics are expected to remain comfortable over the debt
repayment tenure with a cumulative DSCR on the project debt of ~1.35x, supported by the long-term PPAs, long tenure of the
project debt and competitive interest rates. A significant portion of the promoter contribution for the project is in the form of
debt, which remains subordinated to the project debt and subject to restricted payment conditions stipulated by the lenders.
Credit challenges
Counterparty credit risk owing to exposure to state utilities of Karnataka – As the state discoms in Karnataka offtake the
entire quantum of power generated, the company remains exposed to the credit risk profile of these discoms. The credit
profiles of the Karnataka discoms are constrained by their high receivable position and the payment cycle of these discoms
remains a key monitorable. Nonetheless, post the implementation of the LPS rules, the receivables from the three offtakers
have reduced to 2-3 months from 4-8 months.
1 NOTE: The portfolio stands at 4.89 GW if the capacity oversizing for a 300-MW RTC project is considered.
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Vulnerability of cash flows to variation in weather conditions – As the tariffs are one part in nature, the company may book
lesser revenues in case of non-generation of power due to the variation in weather conditions and/or equipment quality. This
in turn would affect the company’s cash flows and debt servicing ability. The geographic concentration of the asset amplifies
the generation risk. Nonetheless, comfort is derived from the sourcing of PV modules from tier-I suppliers and the presence
of an experienced O&M contractor.
Exposure to interest rate risk –The company’s debt coverage metrics remain exposed to the variation in interest rates because
of the leveraged capital structure, single-part fixed tariff in the PPAs and floating interest rates. Further, ICRA takes note that
the lenders have a put option on the outstanding loan along with the interest under this facility at the end of the 10th year
from the date of first disbursement.
Regulatory risk of implementing scheduling and forecasting framework for solar sector – The company’s operations remain
exposed to regulatory risks pertaining to scheduling and forecasting requirements applicable for solar energy projects.
Liquidity position: Adequate
The liquidity position of ASEPL is adequate with the cash flow from operations and the available liquidity expected to be
sufficient to meet the debt servicing obligations in FY2024 and FY2025. As on November 23, 2023, the company has
unencumbered cash balances of ~Rs. 41 crore and maintains a one-quarter DSRA of Rs. 30.43 crore in the form of a BG. While
ICRA takes note that the surplus cash can be upstreamed to ARPPL, subject to lenders’ approval, the company is expected to
always maintain adequate liquidity to meet its operational expenses and debt servicing obligations. Additionally, the company
has a Rs. 30-crore working capital limit which remains unutilised as of November 2023 and would support any liquidity gap
arising from delayed payments from the offtakers.
Rating sensitivities
Positive factors – ICRA could upgrade ASEPL’s ratings if its generation performance is in line or above the P-90 estimate along
with the continuation of timely payments from the offtakers, leading to healthy credit metrics and a comfortable liquidity
profile. Also, ASEPL’s ratings would remain sensitive to the credit profile of its parent, ARPPL.
Negative factors – The ratings could be downgraded in case of a significant underperformance in generation, adversely
impacting the cash flows. Specific credit metrics for downgrade include the cumulative DSCR on the project debt falling below
1.25 times. Further, any significant delays in receiving payments from the offtakers adversely impacting its liquidity profile
would be a negative trigger. Also, ASEPL’s ratings would remain sensitive to the credit profile of its parent, ARPPL.
Analytical approach
Analytical Approach Comments
Corporate Credit Rating Methodology
Applicable rating methodologies
Rating Methodology for Solar Energy Projects
ICRA expects ASEPL’s parent, ARPPL, to be willing to extend financial support to ASEPL, should
Parent/Group support
there be a need, given the high strategic importance that ASEPL has for ARPPL
Consolidation/Standalone The rating is based on the standalone financial profile of the rated entity
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About the company
ASEPL, an SPV of the Ayana Group, is operating a 300-MW solar power plant at Pavagada Solar Park, Karnataka. The project
was commissioned during February-March 2019. The company has signed 25-year PPAs for its entire capacity with Karnataka
discoms (BESCOM, GESCOM and HESCOM) at a fixed tariff for the entire tenor of the PPAs. This company was incorporated as
a part of the Renew Group and the Ayana Group acquired this asset in February 2021.
Key financial indicators (audited)
ASEPL Standalone FY2022 FY2023
Operating income (Rs. crore) 197.21 198.58
PAT (Rs. crore) -52.33 -20.52
OPBDIT/OI (%) 83.28% 84.98%
PAT/OI (%) -26.53% -10.33%
Total outside liabilities/Tangible net worth (times) -67.14 -36.96
Total debt/OPBDIT (times) 9.65 8.95
Interest coverage (times) 1.21 1.25
PAT: Profit after tax; OPBDIT: Operating profit before depreciation, interest, taxes and amortisation
NOTE: Debt includes promoter contribution in the form of subordinated debt
Status of non-cooperation with previous CRA: Not Applicable
Any other information: None
Rating history for past three years
Chronology of rating history
Current rating (FY2024)
for the past 3 years
Amount
Amount Date & rating Date & rating Date & rating Date & rating
Instrument outstanding
rated Date & rating
Type as on Oct in FY2024 in FY2023 in FY2022 in FY2021
(Rs.
31, 2023
crore) Dec 07, 2023 Aug 22, 2023 Sep 22, 2022 Jun 15, 2021 Nov 16, 2020
(Rs. crore)
[ICRA]A+ [ICRA]A+ [ICRA]A+ [ICRA]A+
1 Term loan Long-Term 961.13 954.53 [ICRA]A- &
(Stable) (Stable) (Stable) (Stable)
Working [ICRA]A+ [ICRA]A+ [ICRA]A+ [ICRA]A+
2 Long-Term 30.00 - [ICRA]A- &
capital limits (Stable) (Stable) (Stable) (Stable)
Non-fund
3 Short-Term 20.00 - [ICRA]A1 [ICRA]A1 [ICRA]A1 [ICRA]A1 -
based limits
[ICRA]A+ [ICRA]A+ [ICRA]A+
4 Unallocated Long-Term 132.87 - - -
(Stable) (Stable) (Stable)
& - rating watch with developing implications
Complexity level of the rated instruments
Instrument Complexity Indicator
Term loan Simple
Cash credit Simple
Non-fund based limits Very Simple
Unallocated NA
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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 ICRA’s website: Click Here
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Annexure I: Instrument details
Date of
Coupon Amount Rated Current Rating and
ISIN Instrument Name Issuance / Maturity
Rate (Rs. crore) Outlook
Sanction
NA Term loan - I Oct 2023 - FY2040 729.61 [ICRA]A+ (Stable)
NA Term loan – II Mar 2023 - FY2040 231.52 [ICRA]A+ (Stable)
NA Working capital - - - 30.00 [ICRA]A+ (Stable)
Non-fund based
NA - - - 20.00 [ICRA]A1
limits
NA Unallocated - - - 132.87 [ICRA]A+ (Stable)
Source: Company
Please click here to view details of lender-wise facilities rated by ICRA
Annexure II: List of entities considered for consolidated analysis
Not Applicable
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ANALYST CONTACTS
Sabyasachi Majumdar Girishkumar Kadam
+91 124 4545 304 +91 22 6114 3441
sabyasachi@icraindia.com girishkumar@icraindia.com
Vikram V Vinayak Ramesh
+91 40 4547 4829 +91 40 4547 4829
vikram.v@icraindia.com r.vinayak@icraindia.com
RELATIONSHIP CONTACT
L Shivakumar
+91 22 6114 3406
shivakumar@icraindia.com
MEDIA AND PUBLIC RELATIONS CONTACT
Ms. Naznin Prodhani
Tel: +91 124 4545 860
communications@icraindia.com
Helpline for business queries
+91-9354738909 (open Monday to Friday, from 9:30 am to 6 pm)
info@icraindia.com
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