Azure Power Thirty Six Private Limited

October 15, 2018

Summary of rated instruments

Current Rated Amount
Instrument Rating Action
(Rs. crore)
Fund based-Term Loan 228.72 [ICRA]BBB (Stable); Assigned
Total 228.72

Rating action
ICRA has assigned a long -term rating of [ICRA]BBB (pronounced ICRA triple B) to the Rs. 228.72 crore1 bank loan facilities
of Azure Power Thirty Six Private Limited (APTSPL)2. The outlook on the long-term rating is ‘stable’.

Rationale
The assigned rating favourably factors in the long track record of the promoters in the renewable energy industry and
the support derived by virtue of being a part of the Azure Group. The Group has operational renewable capacity of more
than ~1011 MW with another ~2049 MW in various stages of development (till August 31, 2018). The rating is supported
by presence of a long-term power purchase agreement (PPA) for 25 years from commercial operation date (COD) with a
strong counter party i.e. Solar Energy Corporation of India Limited (SECI, rated [ICRA]AA+(positive),A1+) at an attractive
tariff of Rs 4.43/kWh along with viability gap funding (VGF) of Rs 37.25 crore which ensures project viability and timely
debt servicing. ICRA further the 50 MW (AC) solar power project has been commissioned on May 05, 2018, thereby
mitigating execution risk typically associated with under construction projects.

Nevertheless, the rating is constrained by limited track record of operations as the project has been operational for less
than one year. Moreover, the generation from the power plant has remained below the expected levels on account of
stabilisation phase of the plant and weather conditions. Moreover, the company’s profitability and debt-protection
metrics remain sensitive to its operational performance and any adverse variation in irradiation levels may impact PLF
levels and consequently affect cash flows.

Going forward, the ability of the company to report satisfactory operational parameters and receive timely payments
including VGF from counterparty would be the key rating sensitivities.

Outlook: Stable
ICRA believes APTSPL will continue to benefit from the extensive experience of its promoters and management in the
renewable energy space. The Stable outlook reflects ICRA’s expectation that generation performance of the plant will
remain in line with the designed levels and the payments from the counterparty shall be timely.

1 100 lakh = 1 crore = 10 million

2 For complete rating scale and definitions, please refer to ICRA’s website www.icra.in or other ICRA Rating Publications

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Key rating drivers

Credit strengths
Strong credit profile of the sponsor and extensive experience in the solar power market lends comfort – Azure Power
India Pvt. Ltd. (Azure India), the parent company of APTSPL, is the flagship company of Azure Group. Azure India was
incorporated in 2008 and is involved in the business of constructing, developing and operating solar power plants in
India. Azure India is amongst the leading solar developers in India and has an operational solar capacity of ~1011 MW
(under various SPV’s) and ~2049 MW of capacity under various stages of development (till August 31, 2018).

Long-term PPA with SECI mitigates off-take risk for the project – APTSPL has low off-take risk owing to the presence of a
25-year PPA from COD at a remunerative tariff of Rs.4.43/kWh for the 50 MW (AC) solar power project along with VGF of
Rs 37.25 crore which shall be received in six tranches (50% on COD and 10% each in subsequent 5 years from COD).
Presence of the PPA also provides long-term revenue visibility for the company.

Operational nature of project – The company has commissioned 50 MW (AC) capacity on May 05, 2018 thereby
eliminating execution risk typically associated with under construction projects.

Credit challenges
Limited track record of operations with actual generation being lower than P-90 estimates – The 50 MW (AC) solar
power plant commenced operations in May 2018 and has limited operational track record. Moreover, the generation
from the power plant has remained below the expected levels on account of stabilisation phase of the plant and weather
conditions.

Payments not received from SECI yet– Although the plant has been commissioned on May 05, 2018 and has submitted
bills to SECI, payments from SECI have not been received yet. Moreover, 50% of VGF which was scheduled to be received
at COD has not been received yet and it is in the process.

Vulnerability of cash flows to variation in solar irradiation levels – As tariffs are single part in nature, in the event of
non-generation of power due to variation in solar irradiation levels, the company may book lesser revenue. This in turn
would affect the debt servicing ability of the company.

Analytical approach: For arriving at the ratings, ICRA has applied its rating methodologies as indicated below.

Links to applicable criteria:

Corporate Credit Rating Methodology

Rating Methodology for Solar Power Producers

About the company:

APTSPL is a subsidiary of Azure Power India Pvt. Ltd. (APIPL) which was incorporated in 2008 and currently has an
operational and under construction capacity of ~1011 MW (under various SPV’s) and ~2049 MW of capacity under
various stages of development (till August 31, 2018). APTSPL has set up a solar power capacity of 50 MW (AC) at
Ananthapuramu solar park in Andhra Pradesh. The project was awarded through competitive bidding under Jawaharlal

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Nehru National Solar Mission Phase II, Batch III, Tranche IV. APTSPL has signed long term PPA for 25 years from COD with
SECI at a tariff of Rs 4.43/kWh along with VGF of Rs 37.25 crore. The total project cost is ~Rs 304.96 crore which has been
funded in a Debt: Equity ratio of 75:25.

Key financial indicators (audited)

The solar power project was commissioned in May 2018. Hence, past financials are not relevant.

Status of non-cooperation with previous CRA: Not applicable

Any other information: None

Rating history for last three years:

Chronology of Rating History for the
Current Rating (FY2018) past 3 years
Amount Date & Date & Date &
Outstanding Date & Rating in Rating in Rating in
(Rs Crore) Rating FY2017 FY2016 FY2015
Amount
Rated March 31, October
Instrument Type (Rs. crore) 2018 2018 - - -
1 Term Loan Long 228.72 203.15 [ICRA]BBB - - -
Term (Stable)

Complexity level of the rated instrument:

ICRA has classified various instruments based on their complexity as "Simple", "Complex" and "Highly Complex". The
classification of instruments according to their complexity levels is available on the website www.icra.in

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Annexure-1: Instrument Details
Date of Amount
Issuance / Coupon Maturity Rated Current Rating
ISIN No Instrument Name Sanction Rate Date (Rs. crore) and Outlook
NA Term Loan FY2017 - FY2035 228.72 [ICRA]BBB (Stable)
Source: APTSPL

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ANALYST CONTACTS
Sabyasachi Majumdar Jatin Arya
+91 124 4545 304 +91 124 4545 313
sabyasachi@icraindia.com jatin.arya@icraindia.com

Shailendra Singh Baghel

+91 124 4545 846
shailendra.baghel@icraindia.com

RELATIONSHIP CONTACT
Jayanta Chatterjee
+91 80 4332 6401
jayantac@icraindia.com

MEDIA AND PUBLIC RELATIONS CONTACT

Ms. Naznin Prodhani
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communications@icraindia.com

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+91-124-2866928 (open Monday to Friday, from 9:30 am to 6 pm)

info@icraindia.com

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Today, ICRA and its subsidiaries together form the ICRA Group of Companies (Group ICRA). ICRA is a Public Limited
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For more information, visit www.icra.in

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