for the long-term Credit Facilities aggregating Rs

Rating Rationale
Brickwork Ratings assigns ‘BWR BBB (SO)’ for the long-term Credit
Facilities aggregating ₹ 162 Cr for Indo Rama Renewables Jath Ltd.
Brickwork Ratings has assigned the following Rating1 for the long term Credit Facilities of
Indo Rama Renewables Jath Ltd (“IRRJL” or “the Company”). Details of the long term Credit
Facilities are given as under:
Company Ltd
(L& T Infra)
Tata Capital
Services Ltd
Capital Ltd
Total Rated Limits
(₹ Cr)
(₹ Cr)
(BWR Triple B,
(Outlook: Stable)
INR One Hundred and
Sixty Two Crores only
*Partial sell down of Loan by L&T Infrastructure Finance Company Ltd of ₹ 18 Cr to Tata Capital Financial services
and ₹ 12 Cr to Tata Cleantech Capital Ltd
BWR has principally relied upon the audited financial results of FY13 of Indo Rama Renewables
Jath Ltd, projections of FY14 and FY15, half yearly financial results up to 1HFY14 and
clarifications as provided by the Company’s management. The above rating recommendation is
based on the standalone project analysis of IRRJL.
The rating factors, inter alia, strong and experienced management, successful commissioning of
the 30 MW plant in Sangli, Maharashtra in July 2013, long term PPAs signed for 13 years with
Maharashtra State Electricity Distribution Company Ltd and O & M contract signed with
Gamesa wind Turbines Pvt Ltd (Gamesa) with ensured performance Guarantees. SO (Structured
Obligation) indicates the comfort the rating derives from establishment of complete escrow
mechanism for collection of sales proceeds which the bank can appropriate towards its dues,
and presence of DSRA account gives additional comfort.
Please refer to for definition of the Ratings
22 Jan 2014
The assigned rating, is, however, constrained on account of nascent stage of business operations
given that it has commenced operations in July 2013, exposure to generic operating risks faced
by all wind power projects such as inherent seasonality of wind generation based on possible
fluctuations in wind power density across various regions, moderate PLF inherent in the wind
power business, and any delay in receipt of payment from the DISCOM.
Incorporated in May 2012, Indo Rama Renewables Jath Ltd (IRRJL) is a 100% subsidiary of
Indo Rama Renewables Ltd (IRRL). IRRL’s first operational project is the 30 MW of operational
wind Power capacity under turnkey mode in Jath village in Sangli in the state of Maharashtra.
The plant was commissioned in July 2013 and is presently operational and generating revenues.
There are 15 new generation 2 MW Gamesa G-97 turbines with advanced control systems and
with transformer and the evacuation facilities with a hub height of 90 meters and rotor diameter
of 97 meters. The site is located in (MEDA) Zone 1 in the Sangli district, which is amongst the
regions with highest wind power density in Maharashtra.
Project Details
The total project cost of ₹ 224.90 Cr was funded by term loans of ₹ 162 Cr, and the residual ₹
62.90 Cr was by way of promoter’s contribution, with a D:E ratio of 2.58:1. According to
Technical Due diligence (wind study) conducted by AWS True power (a well known global wind
consultancy), the plant’s estimated capacity is at net P-75 Power Load Factor (PLF) of 27.7%.
The plant was commissioned on 24th July, 2013. The Company has signed O&M contract with
Gamesa wind Turbines Pvt Ltd (Gamesa), which ensures performance Guarantees for machine
availability and any unforeseen operational breakdown/ damages. The Company has already
signed PPA for 16 MW with Maharashtra State Electricity Distribution Company Ltd (MSEDCL)
at feed-in fixed tariff of Rs 5.81 KWH for next 13 years, and the balance 14 MW is expected to be
signed by the end of January 2013. As per the contract, Indo Rama would interconnect the
facility with the State Grid as advised by the MSEDCL from the date of commissioning and sell
and deliver to MSEDCL, at the point of delivery, 100% of the wind energy produced by the
facility from the date of commissioning of the wind project.
Management Profile
Mr. Vishal Lohia is the Chairman & Managing Director of the Company. He is Finance and
Economics graduate from USA and has over 12 years of experience in areas such as corporate
strategy, finance, cost management and expansion. He has made significant contribution in
execution of the business strategy for Indo Rama Group. Dr. Arvind Pandalai, former Chairman
and Managing Director of The State Trading Corporation of India Ltd. (STC), New Delhi and
Non-Executive Chairman of Clenergen India Private Limited, a subsidiary of Clenergen Corp, is
the other Director on Board. The company also has a well qualified and experienced secondlevel senior management team.
Financial Performance
22 Jan 2014
Since the plant was commissioned only in July 2013, we have analyzed last 6 months financial
performance and the future projections as shared by the Company.
As of Dec 2013, the Company has generated 267.73 Lakhs KWH units of power and registered a
turnover of ₹ 15.12 Cr. The Company is expecting to generate revenues of ₹ 31.70 Cr as of FY14,
& thereafter, fixed revenue of ₹ 42.30 Cr over 13 years as per the PPA agreement signed with
The Company’s net worth stood at ₹ 62.90 Cr in FY13. The Company’s long term borrowings
(Term Loan) were at ₹ 162 Cr in FY13. Repayment of the total amount is drawn in 144
structured monthly instalments post moratorium period of 6 months from scheduled date of
commissioning. All project cash flows will come in the Trust & Retention Account and any
expenditure would be only with the approval of the lenders. In effect, the net revenues expected
for FY14 is ₹ 31.70 Cr, and the amount of principal and interest to be paid to the lending
institution is ₹ 19.40 Cr and ₹ 7.30 Cr respectively, indicating the company’s ability to meet the
debt servicing obligations out of normal cash-in-flows. The estimated DSCR for FY14 is 1.13
times, and thereafter, 1.39 times.
Rating Outlook
The outlook of IRRJL is expected to be stable over the current financial year. Successful
commissioning of the 30 MW plant in Sangli, stable revenue visibility on account of long term
PPAs signed with MSEDCL at fixed tariffs for next 13 years and guarantees’ for machine
availability and any operational breakdown as per the O&M agreement signed with Gamesa are
the key positives for the project. The complete escrow mechanism for the loan repayment and
the presence of DSRA gives an additional comfort for loan servicing. However, the signing of the
PPA with state MSEDCL for balance 14MW is also a key rating sensitivity. The project is also
exposed to inherent risk of climatic changes, general operational risks and Moderate PLF
intrinsic to wind power business. Given that it has commenced operations in July 2013 and
limited operational track record of the power plant, rating will be sensitive to proper functioning
of the plant in future without any disruption and timely loan repayment out of the stable cashin-flows as estimated.
Analyst Contact
[email protected]
Relationship Contact
[email protected]
Media Contact
[email protected]
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
22 Jan 2014