9 lakh unit IPO of Sayapatri Hydropower assigned with Grade 5 rating; Care rating assigns poor fundamentals

Care Ratings Nepal Limited has assigned ‘CARE-NP IPO Grade 5’ to the proposed Initial Public Offering (IPO) of Sayapatri Hydropower Limited indicating poor fundamentals. The hydropower company is issuing 9 lakh unit shares at Rs 100 each.

The grading assigned to Sayapatri Hydropower Limited (SHL) is constrained by short track record of operations, weak operational performance with low Plant Load Factor (PLF), operating losses and cash losses over the period leading to stressed liquidity and delays in repayment of the loans. The grading also factors in SHL’s leveraged capital structure with high project cost, high accumulated losses and weak debt service coverage indicators, power evacuation risk and hydrology risk associated with run-of-the-river power generation.

The total cost of the project as per the Bank’s loan agreement was estimated at Rs. 463.34 Mn which was proposed to be funded through Debt: Equity ratio of 70:30. However, the project was completed with total cost of Rs 577.74 Mn (cost per Mw Rs. 231.09 Mn) funded through debt of Rs 364.5 Mn and rest by equity of Rs 213.24 Mn.

SHL is Public Company, incorporated on July 30, 2007, promoted by institutional as well as individual promoters from different background. It is currently operating 2.5 MW Daram Khola ‘A’ hydro power project in run –of –river scheme located at Baglung district, Nepal. The project is constructed under BOOT (Build, own, Operate and Transfer) mechanism. The commercial production and sale of power started from June 26, 2016.