Rating Rationale

Rating Rationale
Brickwork Ratings assigns ‘BWR BBB-’ ratings for Bank Credit Facilities
aggregating Rs. 33.45 Crores of Essel Bagalkot Solar Energy Pvt Ltd
Brickwork Ratings (BWR) has assigned the Ratings1 of BWR BBB- (Pronounced BWR Triple
B minus) with a stable outlook for the long term Bank credit facilities of Rs. 33.45 Crores of
Essel Bagalkot Solar Energy Pvt Ltd (“EBSEPL” or “the Company”).
Facility
Amount
(Rs. Cr)
Term Loan
Rating
BWR BBBLong Term (Pronounced BWR
Triple B Minus)
INR Thirty Three Crores and
Forty Five Lakhs Only
33.45
Total Limits
Tenure
33.45
The rating reflects strong promoter group, experienced management team, assured off take of
power generated under the power purchase agreement with Hubli Electricity Supply Company
Limited (HESCOM), commissioning of plant limiting project execution risk and support in the
form of corporate guarantee from Essel Infraprojects Limited.
However the rating, inter alia, is constrained by small scale of project, project risk in terms of
achieving break even and streamlining of operations, and Capacity Utilization Factor (CUF)
being exposed to climatic conditions and moderate counter-party payment risk.
Background
Essel Bagalkot Solar Energy Pvt. Ltd (EBSEPL) is Special Purpose Vehicle of Essel Infraprojects
Ltd which intends to develop 5MW grid interactive Solar photovoltaic (PV) power plant at
Nimbal (BK) Village, Taluka- Indi in Bijapur District under Karnataka Renewable Energy
Development Agency (KREDL) solar policy 2011. The company has won the bids invited by
Karnataka Renewable Energy Development Agency (KREDL) to set up two solar power projects
in the state.
Promoters
EBSEPL is a 100% subsidiary of Essel Infraprojects Limited, an Essel group company. EIL has
many subsidiaries/SPVs in infrastructure segment, including Highways & Toll Roads, Power,
Urban Infrastructure and Municipal Solid Waste (MSW). Mr. Ashok Agarwal is the CEO and
Mr. Kaushik Pal COO of the company, and both are experienced professionals.
1
Please refer to www.brickworkratings.com for definition of the Ratings
www.brickworkratings.com
1
19 Nov 2014
Project Details
EBSEPL has been awarded 5 MW capacity of Solar Photo Voltaic Project under
Karnataka Renewable Energy Development Agency (KREDL) Solar Policy 2011.. The project
cost of the proposed power plant of 5 MW capacity is Rs.47.77 crores to be funded in the
ratio of 70:30 at a project DER of 2.33x. The said project cost is funded by way of debt to
the extent of Rs.33.45 crores and a balance of Rs.14.34 crores through equity. The tenure
of term loan is 14 years which includes a repayment period of 13 years h a v i n g 5 2
quarterly installments . The COD for the project was achieved as
envisaged without any cost escalation.
EBSEPL has entered into Power Purchase Agreement with Hubli Electricity Supply
Company Limited (HESCOM) at KERC applicable tariff with discount cost of Rs. 8.46
paise/KWH for 25 years. The project is located at Nimbal (BK) Village, Taluka- Indi in Bijapur
District, Karnataka. Solar Panels for the power project are imported from Nexpower
Technology Corporation, Taiwan. The project is based on on Photo Voltaic Thin Technology
Rating Outlook
Going ahead the company’s ability to achieve the envisaged CUF level & profitability and timely
receipt of payments pertaining to sale of power shall be key rating sensitivities.
Analyst Contact
Relationship Contact
analyst@brickworkratings.com425-24
bd@brickworkratings.com
Phone
Media Contact
1-860-425-2742
media@brickworkratings.com
Disclaimer: Brickwork Ratings (BWR) has assigned the rating based on the information obtained from the issuer and other reliable sources,
which are deemed to be accurate. BWR has taken considerable steps to avoid any data distortion; however, it does not examine the precision or
completeness of the information obtained. And hence, the information in this report is presented “as is” without any express or implied warranty
of any kind. BWR does not make any representation in respect to the truth or accuracy of any such information. The rating assigned by BWR
should be treated as an opinion rather than a recommendation to buy, sell or hold the rated instrument and BWR shall not be liable for any losses
incurred by users from any use of this report or its contents. BWR has the right to change, suspend or withdraw the ratings at any time for any
reasons.
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2
19 Nov 2014