CARE Ratings has downgraded the ratings of Deepak Kochhar-promoted NuPower Renewable Private Limited (NRPL) to junk rating following delay in servicing debt obligations by the firm.
Deepak Kochhar is husband of ICICI Bank's former Managing Director and CEO, Chanda Kochhar, who is facing investigation in the ICICI Bank-Videocon quid-pro-quo loan deal case.
The rating agency has cut the long term rating on Rs 180 crore bank loan facilities of NuPower Renewables to ‘CARE D’ reflecting a below investment grade rating or 'junk rating' from ‘CARE BB (CWN) (Double B) and removed the firm from under credit watch with negative Implications.
“The revision in long—term rating of Nupower Renewables Private Limited (NRPL) is on account of delay in servicing of debt obligations,” CARE said in a rating note on April 7.
Explaining the rating rationale, CARE said the RPL reported delay in serving of debt obligations (principal payments) on account of poor liquidity position due to delay in realization of receivables from counter party Maharashtra State Electricity Distribution Company Limited. As on April 3, 2021 the delay was regularized, CARE said.
The Case
The Videocon-ICICI Bank case refers to Deepak Kochhar’s NuPower getting equity investment from Videocon’s Venugopal Dhoot in return of a Rs 1,875-crore loan sanctioned by the ICICI Bank to Videocon Group as part of a consortium loan.
Bombay High Court on March 25 granted bail to Deepak Kochhar in the case. Kocchar had approached the high court after a special court in the city rejected his bail in December last year. Kochhar was arrested by Enforcement Directorate (ED) in September 2020 under the Prevention of Money Laundering Act (PMLA) in connection with the ICICI Bank-Videocon money laundering case.
The ED registered the money laundering case following an FIR registered by the Central Bureau of Investigation (CBI) against the Kochhar couple, Videocon Group promoter Venugopal Dhoot, and others for allegedly causing loss to the ICICI Bank by sanctioning loans worth Rs 1,875 crore to the Videocon Group of companies in contravention to the policies of the ICICI Bank.
CARE Action
According to CARE, NRPL, which has free cash and cash equivalent of Rs. 0.37 crore as on December 31, 2020 as against debt servicing of around Rs. 13.63 crore for FY22 exhibits poor liquidity position. Further, the company has been recently granted working capital term loan by its lenders (due to COVID-19) in order to meet cashflow mismatch, CARE said.
"However, the receivable position of company stood at Rs. 27.46 crore as on December 31, 2020. Timely realization of these receivables is a key rating monitorable," CARE said.
NRPL incorporated on December 24, 2008, is the promoter company of Nupower Group. The major shareholders of NRPL are DH Renewables Holding Limited (holds 54.99 per cent stake), Pinnacle Energy, a Private Discretionary Trust in India and where Deepak Kochhar is the managing trustee, holds 33.17 per cent stake while Supreme Energy Private Limited holds 10.10 per cent stake.
The company is engaged in generation of power through wind with operational capacity of 45.15 MW as on December 31, 2020 (2.05 MW is yet to be commissioned). Apart from NRPL, the group also has operational capacities in its subsidiaries i.e. Echanda Urja Private Limited (100.50 MW in Tamil Nadu) and NuPower Wind Farms Limited (34.25 MW in Tamil Nadu).
NuPower Windfarms Ltd
Also, CARE affirmed the rating of NuPower Windfarms Ltd, another company promoted by Deepak Kochhar, to CARE BB under credit watch with negative implications. This rating action is on account of continual uncertainty towards on-going investigation by ED under the Prevention of Money Laundering Act (PMLA) in connection with the ICICI Bank-Videocon money laundering case, the agency said.
In connection with this case, the assets of NRPL group had been provisionally and partially attached by ED and enquiry initiated by Central Bureau of Investigation (CBI) into the alleged links of the Videocon group with ICICI Bank and equity infused into NuPower Renewables, CARE said.
"Subsequently, the adjudicating authority gave an order dated 6th November 2020 that the Provisional Attachment Order is not confirmed and the Original Complaint (OC) is rejected. The ED has subsequently filed an appeal in the appellate tribunal against the order of the AA," CARE said.
Further, as per information in public domain, Income Tax Department had also initiated an enquiry on funding by an overseas Fund viz Accion Diversified Strategies Fund, SPC, Singapore through its SPV DH Renewables Holding Limited.
CARE continues to monitor the developments pertaining to the enquiries and will take appropriate rating action based on the outcome of the same, it said.
The reaffirmation of long-term rating to bank facilities of NWFL is on account of uncertainty towards outcome of the enquiry initiated by investigating agencies, counter party risk, moderate financial risk profile & debt coverage indicators, operations & maintenance risk and dependence on seasonal wind pattern, CARE said.
However, the rating continues to derive strength from firm offtake arrangement of operational capacities,” the agency said.
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