CRISIL sets BBB-/P3 to Anu Solar Power's bank facilities

(ADPnews) - Dec 7, 2010 - India's rating agency CRISIL yesterday assigned BBB-/stable/P3 ratings to the bank facilities of Anu Solar Power Pvt Ltd.

The agency issued the following press release:

Rs.170.00 Million Cash Credit* BBB-/Stable (Assigned)
Rs.20.00 Million Letter of Credit P3 (Assigned)
Rs.10.00 Million Bank Guarantee P3 (Assigned)
*Includes a proposed Cash Credit of Rs.100.00 Million

CRISIL has assigned its ‘BBB-/Stable/P3’ ratings to the bank facilities of Anu Solar Power Pvt Ltd (ASPPL), which is part of the Anu Solar group.

The ratings reflect the Anu Solar group’s established market position in the solar water heating system (SWHS) segment, supported by buoyant demand for its products and fiscal-and credit-linked incentives available for renewable energy projects under the National Solar Mission (NSM) of the Government of India. The group also has a healthy financial risk profile marked by moderate gearing and above-average debt protection metrics. These rating strengths are partially offset by the susceptibility of the Anu Solar group’s margins to volatility in raw material prices, and exposure to implementation risks related to the ongoing project of group company Anu Solar Thermal Pvt Ltd (ASTPL) for the installation of SWHS under the pay-and-use model promoted by the NSM.

For arriving at its ratings, CRISIL has combined the business and financial risk profiles of ASPPL and ASTPL, together referred to as the Anu Solar group. This is because the two entities are under common ownership and management, with ASPPL owning 70 per cent of ASTPL’s equity capital, and have operational linkages and fungible cash flows.

Outlook: Stable
CRISIL believes that the Anu Solar group will continue to benefit over the medium term from its healthy operating efficiency and promoters’ experience in the SWHS sector. The outlook may be revised to ‘Positive’ if the Anu Solar group increases its revenues substantially while maintaining its profitability and capital structure. Conversely, the outlook may be revised to ‘Negative’ if the group undertakes a larger-than-expected debt-funded capital expenditure programme. The outlook may also be revised to ‘Negative’ in case of a significant decline in the number of SWHS projects undertaken by the group, or delay in their installations, or if there is any reduction in subsidies or incentives under NSM or delay in their receipt, resulting in a decline in the group’s revenues and profitability, and, consequently, adversely impacting its financial risk profile.

About the Group
ASPPL was established in 1979 as DD Alloys Pvt Ltd; its name was changed to Peenya Alloys Pvt Ltd in 1983, and to the current one in 2004. The company initially manufactured bakery ovens. In 2001, it shifted focus to manufacturing solar-power and solar-thermal-based products such as SWHS, and solar photovoltaic (SPV) systems. These products are sold under the brand Anu. Currently, the major portion of ASPPL’s revenues comes from manufacture of SWHS. It also manufactures solar lighting systems based on light-emitting diodes, and compact fluorescent lamps. The company is based in Bengaluru (Karnataka). It is promoted by Mr. T Joseph, and managed by Mr. Joseph and his family. ASPPL has 22 sales and marketing offices across 10 states in India.

ASTPL was incorporated in 2008. It is a 70 per cent subsidiary of ASPPL. ASTPL is an energy service company and is registered as a Renewable Energy Service Providing Company (RESCO) under the Ministry of New and Renewable Energy (MNRE). ASTPL has huge business plans for implementation of about 100,000 SWHS over the next three years at an investment of over Rs.2 billion, funded through a debt to capital subsidy and equity ratio of 50:50. It has submitted its business plans to MNRE for approval of the project.

The promoter group also operates a non-banking financial company, Nagarjuna Credits and Capitals Ltd, which supports the financing needs of ASTPL for purchase of SWHS units from ASPPL.

The Anu Solar group reported a profit after tax (PAT) of Rs.7 million on net sales of Rs.321 million for 2009-10 (refers to financial year, April 1 to March 31), against a PAT of Rs.7 million on net sales of Rs.255 million for 2008-09.

(INR 100 = USD 2.237/EUR 1.672)

Rating agency website: www.crisil.com

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