Press Release

Press Release

January 16, 2025

SVARYU ENERGY LIMITED (ERSTWHILE REFEX ENERGY LIMITED) - ALPHA YIELD 023
Rating Assigned

Product	Quantum (Rs. Cr)	Long Term Rating	Short Term Rating
Securitised Debt Instruments (SDIs)	15.00	Provisional \| ACUITE A \| SO \| Assigned	-
Total Outstanding	15.00	-	-
Total Withdrawn	0.00	-	-

This Erratum publishes few additional points which were inadvertently missed in the Original PR dated November 1, 2023. The Points added in this Erratum are : 1) Standalone rating of the Originator 2) Terms of Servicer contract 3) Provision for appointment of back-up Servicer, if any and 4) Rating history of the Originator.

Rating Rationale

Acuité has assigned a rating of ‘ACUITE PROVISIONAL A (SO)’ (read as ACUITE Provisional A (Structured Obligation)) to the Securitised Debt Instrument (SDI) of Rs. 15.00 Cr. proposed to be issued by ALPHA YIELD 023 (Trust) under a securitisation transaction originated by SVARYU ENERGY LIMITED (ERSTWHILE REFEX ENERGY LIMITED) (The Originator).

The SDI is backed by O&M receivables from NLC India Limited aggregating around Rs 40.27 Cr. for a tenure of 4 years out of original contract period of 15 years. The receivables are from the contract entered between Svaryu Energy Limited and NLC India Limited (Acuite AAA) wherein the former will be providing O&M services for the solar plant.

The rating addresses the timely payment of principal on expected quarterly payment dates and interest on expected monthly payment dates in accordance with the transaction documentation. The transaction is structured at par.

The rating is based on the strength of cash flows from receivables from the corporate obligor, credit quality of the obligor as well as soundness of the transaction’s legal structure. The credit enhancement is available in the form of:

Cash collateral in the form of fixed deposit equivalent to 10.00 percent of the total value of the SDI to be issued.
Surplus cashflows in the form of receivables to the tune of 112.00 percent of the total dues including principal and interest to the SDI holders.

The rating of the SDI is provisional and shall be converted to final rating subject to the execution of the following documents:
1. Trust Deed
2. Deed of Assignment
3. Servicer Agreement
4. Legal Opinion
5. Final Term Sheet
6. Any other relevant documents to the transaction

About the Originator

Svaryu Energy Ltd (formerly known as Refex Energy Ltd) was incorporated in 2008 and is engaged into the turnkey solutions for Solar Photo Voltaic Power plants (EPC) and also provides O&M services for these power plants. SEL has obtained Power Trade (Category I trading inter-state electricity trading) license from CERC to Exchange Energy with various DESCOMs and Energy Producers & Aggregators. Mr. Arun Sumer Mehta, Mr. Rajeev Kumar Sharma, Mr. Bhaskar Devadasan Nair, Ms. Meghna Mahendra Savla and Mr. Santosh Ganpat Ambekar are the directors of the company.

Standalone Rating of the Originator

Originator not rated by Acuite

About the Obligor (NLC India Limited)

Incorporated in November 1956, NLC India Limited (NLC; erstwhile Neyveli Lignite Corporation Limited), is an integrated power company having captive lignite and coalmines and a consolidated generation capacity of 6,061 MW. The company was awarded the ‘Navratna’ status in the year 2011, and it acts as a Nodal Agency for lignite mining appointed by the Ministry of Coal (MoC), with majority market share in lignite mining in the country. NLCIL serves as an important source of power generation to the states of Tamil Nadu, Andhra Pradesh, Karnataka, Kerala, Telangana, Rajasthan, and Union Territory of Puducherry. It operates four open cast lignite mines with current capacity of 30.1 MTPA, namely Mine I, Mine IA, Mine II and Barsingsar Mine. It also operates an open cast coalmine, Talabira II & III having current capacity of 20.0 MTPA. NLC has lignite thermal power generation capacity of 3640 MW, with 4 pithead power plants at Neyveli, Tamil Nadu, 1 pithead power plant at Barsingsar, Rajasthan and a 1000 MW coal plant through JV (NTPL) in Tamil Nadu. The company also has solar energy capacity of 1370 MW and wind energy capacity of 51 MW. NLC operates on a cost-plus basis with electricity tariff determined by CERC and also the lignite transfer price is determined by CERC.

Assessment of Adequacy of Credit Enhancement

Acuité has considered a default rate as base case to arrive at the expected loss for the receivables being securitised. Acuite has further applied appropriate stress factors to the base figures to arrive at the final estimates and consequently the extent of credit enhancement required. The final estimates also consider the risk profile of the lessee and further factored in economic risks. The SDI payouts will also be supported by credit enhancement in the form of fixed deposit equivalent to 10.00 percent of the total value of SDI to be issued and surplus cashflows in the form of receivables to the tune of 112.00 percent of the total dues including principal and interest to the SDI holders.

Assessment of the Pool

The receivables are not in the form of a pool. Hence, this section remains not applicable.

Transaction Structure

The rating addresses the timely payment of principal on expected quarterly payment dates and interest on expected monthly payment dates in accordance with the transaction documentation. The transaction is structured at par.

Legal Assessment

The provisional rating is based on a draft term sheet. The conversion of rating from provisional to final, shall include, besides other documents, the legal opinion to the satisfaction of Acuité.

Key Risks

Counter Party Risks

The payments to the SDI holders arise from receivables due through a single obligor. The counterparty risks in the transaction remain partly mitigated by the strong credit risk profile of NLC India Limited (ACUITE AAA).

Concentration Risks

The rating remains exposed to high concentration risks as the receivables i.e cashflow source are from a single obligor.

Servicing Risks

There is limited track record of servicing SDI, since this one of the initial SDI transactions for the originator. Therefore, the servicing risk for the transaction remains high.

Regulatory Risks

In the event of a regulatory stipulation impacting the bankruptcy remoteness of the structure, the payouts to the SDI holders may be impacted.

Prepayment Risks

Not applicable

Commingling Risk

While there is a time gap between the expected payout date and the due date for transfer to the payout account, this risk is mitigated by the existence of the trust with a designated escrow account overseen by the trustee.

Credit Enhancements (CE)

The credit enhancement is available in the form of:
1. Cash collateral in the form of fixed deposit equivalent to 10.00 percent of the total value of SDI to be issued.
2. Surplus cashflows in the form of receivables to the tune of 112.00 percent of the total dues including principal and interest to the SDI holders.

Rating Sensitivity

Any upward or downward movement in the overall credit profile of NLC India Limited
Timeliness of the payments by the obligor
Utilization of cash collateral

All Covenants

The following covenant is included in the transaction structure: On any given month during the tenure of the SDI, if the funds in the escrow account are insufficient to cover the interest and principal repayment to investors for any reason whatsoever, Svaryu will have an equal obligation to cover the difference and add such funds 10 days prior the SDI monthly distribution date. In case of any delay in repayment to SDI Holders, Svaryu will be liable to additionally pay an 18% p.a. delay penalty on the prorated number of days of delay.

Liquidity Position

Adequate

The liquidity position in the transaction is adequate. The cash collateral available in the transaction amounts to 10.00 percent of the SDI principal. The SDI payouts will also be supported by surplus cashflows in the form of receivables overcollaterized to the tune of 112.00 percent of the total dues including principal and interest due to the SDI holders.

Terms of the Servicer Contract

The SDI is backed by O&M receivables from NLC India Limited aggregating around Rs 40.27 Cr. for a tenure of 4 years out of original contract period of 15 years. The receivables are from the contract entered between Svaryu Energy Limited, appointed as the ‘Servicer’ under the Servicer Agreement and NLC India Limited (Acuite AAA) wherein the former will be providing O&M services for the solar plant. The terms of service contract are as follows:

1. The monthly receivables of the NLC India Limited will be routed through an Escrow Account. The client will be required to sign a tripartite agreement agreeing to remit the monthly payments to the Escrow Account. The Debenture Trustee will have the Escrow Account's operating rights to ensure complete transparency for the repayment to SDI holders.
2. All Monthly Receivables from the identified sub-tenants are first appropriated to the Interest and excess thereafter will be utilized for the repayment of the Principal Amount as per the repayment schedule. Any surplus funds after repaying the investors will be remitted by the Trustee from the Escrow Account to Svaryu.
3. The O&M charges in the Price break-up shall be paid on pro-rata quarterly basis on certification of work by the Project Manager at the end of every quarter.
4. The Servicer is required to transfer the amounts from the Escrow Account into the Collection and Pay-out Account to make the requisite Payouts to the Investors at least 5 (five) Business Days prior to the relevant Pay-out Date.

Provision for Appointment of Back-Up Servicer, if any

There is no provision made for a Back-up Servicer

Outlook: Not Applicable

Key Financials – NLC India Limited

Particulars	Unit	FY23 (Actual)	FY22 (Actual)
Operating Income	Rs. Cr.	17383.22	12589.72
PAT	Rs. Cr.	1425.13	1115.13
PAT Margin	(%)	8.20	8.86
Total Debt/Tangible Net Worth	Times	1.28	1.36
PBDIT/Interest	Times	4.81	3.21

Key Financials - SVARYU ENERGY LIMITED (ERSTWHILE REFEX ENERGY LIMITED)

Particulars	Unit	FY23 (Actual)	FY22 (Actual)
Operating Income	Rs. Cr.	322.12	308.94
PAT	Rs. Cr.	7.58	7.19
PAT Margin	(%)	2.35	2.33
Total Debt/Tangible Net Worth	Times	0.63	0.21
PBDIT/Interest	Times	4.31	4.79

Supplementary disclosures for Provisional Ratings

Risks associated with the provisional nature of the credit rating
In case there are material changes in the terms of the transaction after the initial assignment of the provisional rating and post the completion of the issuance (corresponding to the part that has been issued) Acuité will withdraw the existing provisional rating and concurrently assign a fresh final rating in the same press release, basis the revised terms of the transaction.

Rating that would have been assigned in absence of the pending steps/ documentation
In the absence of the pending steps/documents the SDI structure would have become null and void, and Acuité would not have assigned any rating.

Timeline for conversion to Final Rating for a debt instrument proposed to be issued
The provisional rating shall be converted into a final rating within 90 days from the date of issuance of the proposed debt instrument. Under no circumstance shall the provisional rating continue upon the expiry of 180 days from the date of issuance of the proposed debt instrument.

Status of disclosure of all relevant information about the Obligation being Rated

Non-public information

Note on complexity levels of the rated instrument

In order to inform the investors about complexity of instruments, Acuité has categorized such instruments in three levels: Simple, Complex and Highly Complex. Acuite’s categorisation of the instruments across the three categories is based on factors like variability of the returns to the investors, uncertainty in cash flow patterns, number of counterparties and general understanding of the instrument by the market. It has to be understood that complexity is different from credit risk and even an instrument categorized as 'Simple' can carry high levels of risk. For more details, please refer Rating Criteria “Complexity Level Of Financial Instruments” on www.acuite.in.

Applicable Criteria

• Default Recognition :- https://www.acuite.in/view-rating-criteria-52.htm
• Application Of Financial Ratios And Adjustments: https://www.acuite.in/view-rating-criteria-53.htm
• Securitized Transactions: https://www.acuite.in/view-rating-criteria-48.htm
• Explicit Credit Enhancements: https://www.acuite.in/view-rating-criteria-49.htm

Rating History - Originator :

Originator not rated by Acuite

Rating History
Not Applicable

Annexure - Details of instruments rated

Lender’s Name	ISIN	Facilities	Date Of Issuance	Coupon Rate	Maturity Date	Quantum (Rs. Cr.)	Complexity Level	Rating
Not Applicable	Not avl. / Not appl.	Securitised Debt Instrument	Not avl. / Not appl.	Not avl. / Not appl.	Not avl. / Not appl.	15.00	Highly Complex	Provisional \| ACUITE A \| SO \| Assigned

Contacts

Mohit Jain
Senior Vice President - Rating Operations

Nivedita Gokul
Associate Analyst - Rating Operations

Contact details exclusively for investors and lenders

Mob: +91 8591310146
Email ID: analyticalsupport@acuite.in

About Acuité Ratings & Research

Acuité is a full-service Credit Rating Agency registered with the Securities & Exchange Board of India (SEBI). The company received RBI Accreditation as an External Credit Assessment Institution (ECAI) for Bank Loan Ratings under BASEL-II norms in the year 2012. Acuité has assigned ratings to various securities, debt instruments and bank facilities of entities spread across the country and across a wide cross section of industries. It has its Registered and Head Office in Kanjurmarg, Mumbai.

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