Bhilangana Hydro Power Limited

Transcription

1 Ratings Facilities/Instruments Non- (NCD) Non--I (NCD-I) Non--II (NCD-II) Bhilangana Hydro Power Limited March 26, Total (Rupees One Hundred Fifty Three crore and Eighty lakh only) Details of instruments/facilities in Annexure-1 Detailed Rationale & Key Rating Drivers Amount Ratings CARE A; (Single A; Outlook: ) Remarks Assigned - - Withdrawn - - Withdrawn The rating assigned to the NCD of Bhilangana Hydro Power Limited (BHPL) derive strength from the strong promoter group with their experience in operating hydro power projects and sustained operational performance of the plant. The rating also factors in the improvement in its financial risk profile during FY17 (refers to the period April 1 to March 31) and H1FY18 (refers to the period April 1 to September 30) characterized by improvement in overall gearing, debt coverage indicators and liquidity position. The rating also takes into account the stable demand for power in the current power-deficit scenario. However, the rating is constrained by BHPL s leveraged capital structure, exposure of selling power on short term basis, its operations restricted to a single site and inherent hydrological risk associated with run-of-the-river hydro power project. Going forward, the ability of the company to achieve the envisaged revenue and profitability while improving its capital structure and extending the PPA at adequate tariff shall be the key rating sensitivities. CARE has withdrawn the rating assigned to the NCD-I and NCD-II issue of the company with immediate effect as the company has repaid the aforementioned NCDs issue in full and there is no amount outstanding under the issue as on date. Detailed description of the key rating drivers Key Rating Strengths Strong promoter group with experience in operating hydel power projects BHPL is a SPV promoted by Mr Sanjiv Saraf & Associates (Polyplex group) promoter of Polyplex Corporation Ltd. Over the years, the group has successfully implemented various small hydro power projects namely Kotla Hydro Power Pvt. Ltd. (total installed capacity of 3.75 MW) and Abohar Power Generation Pvt. Ltd (total installed capacity of 5.3 MW). Improvement in financial risk profile and healthy liquidity position during FY17 and H1FY18 The company has reported improvement in its overall financial risk profile during FY17 characterized by improvement in overall gearing and debt coverage indicators. The company has generated healthy cash accruals of Rs crore during FY17. The overall gearing for the company improved to 7.49x as on March 31, 2017 as against 72.71x as on March 31, The improvement was largely on account of scheduled repayment and prepayment of debt obligations. Reduced debt levels and healthy profitability resulted in improved debt coverage indicators. The interest coverage and total debt 1 Complete definitions of the ratings assigned are available at and in other CARE publications. 1 CARE Ratings Limited

2 to gross cash accruals improved to 3.17x and 4.08x respectively as on March 31, 2017 (PY 2.64x and 4.67x respectively). Healthy cash generation resulted in improved liquidity position of the company with free cash and bank balance of Rs crore and liquid investments of Rs crore as on September 30, Sustained operational performance The operational performance of the company continued to remain satisfactory with company reporting a Capacity Utilization Factor (CUF) of ~67.51% during FY17 as against CUF of ~75.43% during FY16. The generation during the year is dependent on availability of water in Bhilangana river which was lower during FY17 resulting in lower CUF, however the same was higher during FY18 wherein company reported healthy CUF of % during H1FY18 (Provisional). The company reported a total operating income of Rs crore with PBILDT of Rs crore during H1FY18 (Provisional). Key Rating Weaknesses Leveraged capital structure The company has a leveraged capital structure as exhibited by high overall gearing of 7.49x as on March 31, Although, the same improved from 72.71x as on March 31, 2016, it remained high. The high gearing was largely on account of erosion of net worth due to losses at net level in the initial years. The company had net losses during initial years largely on account of aggressive depreciation policy followed by the company. Exposure of selling power on short term basis The company is selling power to Uttarakhand Power Corporation Limited (UPCL) through TPTCL over the past three years. The company sold power to UPCL at a rate of Rs.4.29 per unit during FY16 & FY17 which has now increased to Rs.4.42 per unit on ex-bus basis. The PPA for the same is short term in nature and has been secured three times and currently is valid till March 2018 exposing BHPL to the vagaries of merchant prices. Hydrological risks associated with run-of-the-river power generation Run-of-the-river power is considered an un-firm source of power, as a run-of-the-river project has little or no capacity for energy storage and therefore is dependent on the flow of river water for power generation. It thus generates much more power during times when seasonal river flows are high and much less during drier months. Furthermore, BHPL s operations are restricted to single plant which exposes it to risks arising out of single site nature of operations. Analytical Approach Standalone Applicable Criteria Criteria on assigning Outlook to Credit Ratings CARE s Policy on Default Recognition Rating Methodology - Infrastructure Sector Ratings CARE s methodology for private power producers CARE's rating methodology on financial ratios Non-financial sector About the Company BHPL is a Special Purpose Vehicle (SPV) promoted by Mr Sanjiv Saraf & Associates (promoter of Polyplex Corporation Ltd). The SPV was promoted for setting up of a 24 MW (3 X 8 MW) run-of-the-river small hydro project located on Bhilangana river in District Tehri, Uttarakhand. The project was originally awarded to Polyplex group on Build, Own, Operate and Transfer (BOOT) basis in September 2003 by the Government of Uttarakhand (GoU). Subsequently, the developer entered into a Project Development Agreement (PDA) with GoU on November 21, In January 2006, BHPL (an SPV), was created to implement the project. In April 2012, all the three units of 8MW had achieved commercial operations. 2 CARE Ratings Limited

3 (Rs.Crore) Particulars FY16 (A) FY17 (A) Total operating income PBILDT PAT Overall gearing (times) Interest coverage (times) A: Audited Status of non-cooperation with previous CRA: Not Applicable Any other information: Not Applicable Rating History for last three years: Please refer Annexure-2 Note on complexity levels of the rated instrument: CARE has classified instruments rated by it on the basis of complexity. This classification is available at Investors/market intermediaries/regulators or others are welcome to write to for any clarifications. Analyst Contact: Name: Sudhir Kumar Tel: About CARE Ratings: **For detailed Rationale Report and subscription information, please contact us at CARE Ratings commenced operations in April 1993 and over two decades, it has established itself as one of the leading credit rating agencies in India. CARE is registered with the Securities and Exchange Board of India (SEBI) and also recognized as an External Credit Assessment Institution (ECAI) by the Reserve Bank of India (RBI). CARE Ratings is proud of its rightful place in the Indian capital market built around investor confidence. CARE Ratings provides the entire spectrum of credit rating that helps the corporates to raise capital for their various requirements and assists the investors to form an informed investment decision based on the credit risk and their own risk-return expectations. Our rating and grading service offerings leverage our domain and analytical expertise backed by the methodologies congruent with the international best practices. Disclaimer CARE s ratings are opinions on credit quality and are not recommendations to sanction, renew, disburse or recall the concerned bank facilities or to buy, sell or hold any security. CARE has based its ratings/outlooks on information obtained from sources believed by it to be accurate and reliable. CARE does not, however, guarantee the accuracy, adequacy or completeness of any information and is not responsible for any errors or omissions or for the results obtained from the use of such information. Most entities whose bank facilities/instruments are rated by CARE have paid a credit rating fee, based on the amount and type of bank facilities/instruments. In case of partnership/proprietary concerns, the rating /outlook assigned by CARE is based on the capital deployed by the partners/proprietor and the financial strength of the firm at present. The rating/outlook may undergo change in case of withdrawal of capital or the unsecured loans brought in by the partners/proprietor in addition to the financial performance and other relevant factors. 3 CARE Ratings Limited

4 Annexure-1: Details of Instruments/Facilities Name of the Instrument -I -II Date of Issuance Coupon Rate Maturity Date Size of the Issue Withdrawn Withdrawn Rating assigned along with Rating Outlook Feb 9, % Mar 31, CARE A; Annexure-2: Rating History of last three years Sr. No. Name of the Instrument/Bank Facilities 1. Debentures-Optionally Fully Convertible Debenture Type Current Ratings Amount Rating Outstanding Rating history LT )Withdrawn (12-Dec-16) Non-fund-based - LT- Bank Guarantees 3. Non-fund-based - LT- Letter of credit 4. (NCD-I) LT 5.00 CARE A; LT 1.00 CARE A; A; A-; (12-Dec-16) A; A-; (12-Dec-16) LT - - A; A-; (12-Dec-16) 5. (NCD-II) 6. LT - - A; A-; (12-Dec-16) 2)CARE (25-Jun-15) LT CARE A; - 4 CARE Ratings Limited

5 CONTACT Head Office Mumbai Ms. Meenal Sikchi Mr. Ankur Sachdeva Cell: Cell: meenal.sikchi@careratings.com ankur.sachdeva@careratings.com Ms. Rashmi Narvankar Mr. Saikat Roy Cell: Cell: rashmi.narvankar@careratings.com saikat.roy@careratings.com CARE Ratings Limited (Formerly known as Credit Analysis & Research Ltd.) Corporate Office: 4th Floor, Godrej Coliseum, Somaiya Hospital Road, Off Eastern Express Highway, Sion (East), Mumbai Tel: Fax: care@careratings.com AHMEDABAD Mr. Deepak Prajapati 32, Titanium, Prahaladnagar Corporate Road, Satellite, Ahmedabad Cell: Tel: deepak.prajapati@careratings.com BENGALURU Unit No , 11th Floor, Prestige Meridian II, No. 30, M.G. Road, Bangalore Cell: Tel: , CHANDIGARH Mr. Anand Jha SCF No , First Floor, Phase 11, Sector 65, Mohali Chandigarh Cell: / Tel: /01 anand.jha@careratings.com CHENNAI Unit No. O-509/C, Spencer Plaza, 5th Floor, No. 769, Anna Salai, Chennai Cell: Tel: / 0811 COIMBATORE T-3, 3rd Floor, Manchester Square Puliakulam Road, Coimbatore Tel: / JAIPUR Mr. Nikhil Soni 304, Pashupati Akshat Heights, Plot No. D-91, Madho Singh Road, Near Collectorate Circle, Bani Park, Jaipur Cell: Tel: / 14 nikhil.soni@careratings.com KOLKATA Ms. Priti Agarwal 3rd Floor, Prasad Chambers, (Shagun Mall Bldg.) 10A, Shakespeare Sarani, Kolkata Cell: Tel: priti.agarwal@careratings.com NEW DELHI Ms. Swati Agrawal 13th Floor, E-1 Block, Videocon Tower, Jhandewalan Extension, New Delhi Cell: Tel: swati.agrawal@careratings.com PUNE Mr.Pratim Banerjee 9th Floor, Pride Kumar Senate, Plot No. 970, Bhamburda, Senapati Bapat Road, Shivaji Nagar, Pune Cell: Tel: pratim.banerjee@careratings.com CIN - L67190MH1993PLC HYDERABAD Mr. Ramesh Bob 401, Ashoka Scintilla, , Himayat Nagar, Hyderabad Cell : Tel: ramesh.bob@careratings.com 5 CARE Ratings Limited