Leading RE companies' receivables will decline by 20% this fiscal year, according to Crisil

7 Sep 2022 , 07:59 AM

According to Crisil Ratings, the leading renewable energy companies’ receivables will decline by 20% this fiscal year. Leading renewable energy (RE) companies may expect their receivables to fall by a fifth, from 180 days a year ago to 140 days in March 2023, the agency stated in a statement. This level was last noticeable before COVID.

The statement claims that the late payment surcharge (LPS) plan would be implemented by state discoms, and that two-thirds of the improvement will result from increased central counter-party offtake.

It predicted that the increased cash flow would enable RE companies to increase their potential for growth and lower their level of debt.

Payment cycles grew longer over the previous two fiscal years as a result of state discoms like Madhya Pradesh, Maharashtra, Telangana, and Andhra Pradesh (which together account for 23% of the total capacity exposure) delaying payments to RE developers due to a liquidity crisis or contractual disputes, it continued.

By March 2022, the cycle for the 10 examined RE firms had grown by more than 10%, reaching 180 days (compared with the March 2019 level).

Because of their size and flexibility, such as being a beneficiary of a tripartite agreement between state government, central government, and the Reserve Bank of India, central counterparties are expected to maintain their payment track record given the benefit of diversity, payment security funds, and higher bargaining power, it was stated.

Ankit Hakhu, Director, Crisil Ratings, stated in the statement to ET, “Andhra Pradesh, Madhya Pradesh, Karnataka, and Maharashtra, which have subscribed to this scheme, may potentially clear dues worth Rs2,000 crore in fiscal 2023, which will help improve the receivable level of key RE companies by another 15 days.

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