RE Firms’ Receivables to Dwindle by 20% in FY23: CRISIL

In a significant revelation, as per a CRISIL ratings, the leading renewable energy companies’ receivables will shrink by 20% this fiscal year. Leading RE companies may anticipate their receivables to decline by a fifth, from 180 days a year ago to 140 days in March next year, CRISIL has said.

This trend was last seen at a time before COVID.

DISCOMs & Payment Cycle

State DISCOMs would execute the late payment surcharge plan and that two-thirds of the improvement will be a consequence of increased central counter-party offtake.

The agency has further estimated that the increase in cash flow would make it possible for RE firms to augment their growth potential while also bringing down their debt levels.

In the period spanning the last two fiscal years, the payment cycles grew longer since state DISCOMs such as Madhya Pradesh, Maharashtra, Telangana, and Andhra Pradesh (which in unison make up 23% of the total capacity exposure) delaying payments to RE developers owing to a liquidity crisis or contractual disputes, it further revealed.

In a telling trend, the cycle for the 10 RE firms that were examined, the cycle had grown by over 10% by March 20220 reaching 180 days (when pitted against the level as in March 2019).

On account of their size as well flexibility, including the fact that the central counterparties are a beneficiary of the tripartite agreement between state government, central government, and the Reserve Bank of India, they may be expected to continue their payment track record given the benefit of diversity, payment security funds, and higher bargaining power, CRISIL added.