Indian Solar Companies loosing Credit Ratings

Crisil has recently downgraded 5 Indian companies which have more than mere presence in the Indian Solar Industry.  These companies are Tata BP Solar, HHV Solar Technologies, Ajit Solar, Acme, and Surana Telecom and Power.

Rating on Tata BP Solar India Ltd’s (TBP’s) long-term bank facilities and non-convertible debentures were changed to ‘AA-’ from ‘AA’, following the  recent rating revision by Standard & Poor’s (S&P) on TBP’s major promoter BP Plc (BP). The ratings on TBP centrally factor in the benefits that the company derives from its linkages with BP, given its importance to BP’s solar energy business — TBP is expected to account for 35 to 40 per cent of BP’s global cell manufacturing capacity over the long term. These rating strengths are partially offset by TBP’s exposure to risks related to the nascent stage of solar energy market in India and to this sector’s dependence on fiscal incentives for growth, and the company’s moderate financial risk profile.

CRISIL has downgraded its rating on the bank facilities of HHV Solar Technologies Pvt Ltd (HHV Solar) to ‘D’ from ‘C’. The downgrade reflects instances of delay by HHV Solar in servicing its term debt; the delays have been caused by HHV Solar’s weak liquidity, on account of the delays in the stabilisation of the company’s amorphous silicon (a-Si) plant. HHV Solar is also exposed to risks related to the start-up nature of its operations, to large incremental working capital requirements, and to volatility in the prices of solar photovoltaic cells and solar modules. HHV Solar, however, benefits from the healthy growth prospects in the solar energy generation industry.

Ajit Solar saw its rating being downgraded to ‘D/P5’ from ‘BB-/Negative/P4’. The downgrade is on account of delay by Ajit Solar in servicing its recent debt obligations, following time overrun in the start of commercial operations at its photo-voltaic (PV) cell production line.

CRISIL has downgraded its ratings on the bank facilities of Surana Telecom and Power Ltd (Surana Telecom) to ‘BB+/Negative/P4+’from ‘BBB/Stable/P3+’. The downgrade reflects expected deterioration in Surana Telecom’s business risk profile with closure of the company’s jelly-filled telecom cable (JFTC) and optical fibre cable (OFC) business units and decline in revenue contribution from its power cable business. The rating downgrade also reflects deterioration in Surana Telecom’s financial risk profile because of its large, debt-funded capital expenditure (capex) toward setting up a 5-megawatt (MW) solar power plant. Moreover, the company is exposed to implementation-related risks associated with the solar power project, which has recently commenced and needs to be completed by December 2011.

CRISIL has downgraded its ratings on Acme Tele Power Ltd’s (ATPL’s; part of the Acme group) bank facilities and commercial paper programme to ‘ANegativeP1’ from ‘AA-NegativeP1+’. The downgrade reflects continued deterioration in the Acme group’s business risk profile.

The Indian Solar Industry is going through a low success phase of implementation success in terms of power plants. To add further, these drop in credit ratings can only create more worries.

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