| Strong Group Support
The company benefits from its association with the diversified INOXGFL Group, which has an established presence across the renewable energy and specialty chemicals sectors. The group's key entities include Inox Wind Limited (rated Acuite AA-/Stable/A1+) and Gujarat Fluorochemicals Limited (GFL), a leading player in the specialty chemicals industry. The group is promoted by the Jain family, which maintains significant ownership across the group companies, either directly or through its investment holding company, Inox Leasing and Finance Limited (ILFL). Acuite derives comfort from the promoters' extensive industry experience, strong execution capabilities, and the group's demonstrated track record of managing large-scale businesses and investments. The promoter group's financial strength, operational expertise, and continued commitment are expected to provide adequate support to the company's renewable energy projects, thereby facilitating their smooth implementation and operations.
Low Off-take Risk with Reputed Clientele
RG has tied up its entire operational capacity under long-term Power Purchase Agreements (PPAs) with well established commercial and industrial (C&I) counterparties at fixed tariff rates, thereby mitigating revenue volatility and ensuring stable cash flows. The off-takers possess strong credit profiles, which significantly reduce counterparty credit risk and support timely realization of receivables. The PPAs have tenures ranging from 17 to 24 years, with lock-in periods of 13 to 20 years, providing strong demand visibility and ensuring long term revenue stability. Further, except for one SPV under RG, all off-takers hold a minimum 26% equity stake in their respective SPVs from which power is procured. This ownership structure demonstrates the long-term commitment of the off-takers and fosters alignment of interests among key stakeholders, thereby strengthening the overall credit profile of the projects. Acuite believes that the presence of reputed counterparties with strong credit profiles, coupled with long-term PPAs and significant equity participation by the off-takers, provides strong revenue visibility and reduces off take risk.
Strong Structural Features through Cash Flow Pooling Mechanism
The rating derives strength from the robust obligor-co-obligor pooled structure, wherein the SPVs within the RG portfolio have access to each other's surplus cash flows, post debt servicing and maintenance of stipulated reserves, to address any shortfall in debt servicing, replenish the Debt Service Reserve Account (DSRA), and meet other reserve requirements as specified under the financing documents. Under the Inter Creditor Agreement (ICA), surplus SPVs are required to extend support to entities facing cash flow mismatches prior to the respective debt servicing due dates. Acuite believes that the cash pooling mechanism enhances the overall credit profile of the transaction by allowing surplus cash flows from any SPV within the pool to support entities facing temporary cash flow constraints arising from factors such as seasonality, adverse climatic conditions, or force majeure events affecting power generation. The structural support, coupled with the diversified revenue base across multiple SPVs and counterparties, strengthens the resilience of the pool and supports timely debt servicing obligations.
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| Susceptibility of renewable energy generation to variations in weather conditions
The rating remains constrained by the inherent dependence of the renewable energy portfolio on climatic conditions, as power generation is linked to the availability of both solar irradiation and wind resources. Consequently, variations in weather patterns, lower-than-expected solar insolation, weak wind regimes, prolonged cloudy conditions, or other adverse climatic events may result in generation levels deviating from estimates, thereby impacting cash flow generation and debt servicing metrics. Acuite believes that while the hybrid nature of the portfolio provides diversification benefits by combining solar and wind generation profiles and reducing reliance on a single resource, the operational performance of the projects will continue to remain exposed to resource variability, which is an inherent risk associated with renewable energy assets.
Exposure to Regulatory and Policy Risks
The rating remains constrained by the regulatory risks inherent in the commercial and industrial (C&I) renewable energy segment. The operational and financial performance of the projects is subject to changes in regulatory frameworks governing open access power procurement, transmission and wheeling charges, banking provisions, cross-subsidy surcharge, additional surcharge, and other related regulations. Any adverse changes in these policies or the imposition of additional levies may affect the competitiveness of renewable power for C&I consumers and, consequently, the cash flow generation of the projects. Acuite believes that while the company's long-term PPAs with reputed counterparties provide revenue visibility, the portfolio remains exposed to evolving regulatory and policy developments that could impact the economics and operational dynamics of the C&I renewable energy business.
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