AP, T'gana discoms payment delay may weaken credit outlook
Mumbai, Oct 17 (PTI) Rating agency Crisil on Thursday
said the prolonged delay in resolution of payments by discoms
of states like Andhra Pradesh and Telangana to renewable
energy producers can weaken the credit outlook of the sector
and moderate investor sentiment.
According to the agency, few renewable energy
producers are managing the stress arising from payment delays
by these discoms because of their diversified operations and
Crisil has analysed 10 companies which have won around
half of the projects awarded in the past two years and account
for 32 per cent of installed renewable capacity in India.
Discoms of Andhra Pradesh have been delaying payments
for contracted renewables assets for around one year. This was
further compounded by the new state government's decision to
set up a committee to review and bring down the purchase cost
of wind and solar energy, it said.
For these renewables companies, the liquidity crunch
also got intensified because Telangana discoms stretched their
payments, and contributed to cash-flow mismatches.
According to the agency, aggregate cash flows from
Andhra Pradesh and Telangana discoms to these leading
renewables companies were 20 per cent of aggregate revenues as
of March 2019.
'While smaller companies with single-asset exposure to
the discoms were impacted the most, diversified renewable
companies have managed the stress better. On aggregate, these
may see their receivables days inch up by 35-45 days by the
end of the current fiscal, from around 115 days in fiscal
2019, despite Andhra Pradesh and Telangana stretching payments
by more than 240 days,' its senior director Manish Gupta said.
The agency noted that leading players with relatively
higher exposure to Andhra Pradesh demonstrated superior
financial flexibilities reflected in timely refinancing of
debt in the wake of building delays, attracting equity capital
and prioritizing cash for debt servicing above capex thereby
'These companies refinanced/ extended maturities of
debt repayments for impacted projects and attracted equity
flows of over Rs 5,500 crore during the first half of the
current fiscal,' it said.
Also slower pace of new capacity awards in the past 18
months as against in fiscal 2018, allowed these companies to
conserve cash and focus on consolidating capacities before
embarking on the next phase of growth, the agency noted. PTI