NEW DELHI, July 13, 2023 /PRNewswire/ -- Azure Power Global
Limited (NYSE: AZRE) ("Azure" or the "Company") today announces
updates with respect to:
- the appointment of new auditors for the Company and the
resignation of the Company's former auditors;
- the status of the audit of the consolidated financial
statements of the Company and its subsidiaries (together, the
"Group") for the fiscal year ended March 31,
2022 ("Fiscal 2022") and status of filing the Company's
annual report on Form 20-F ("Form 20-F") for Fiscal 2022 with the
U.S. Securities and Exchange Commission (the "SEC");
- the status of the Company's listing on the New York Stock
Exchange ("NYSE");
- update on Company's management team, board of directors;
- remediation actions to improve internal controls;
- certain key unaudited operating and financial information for
the Group and certain of the Company's subsidiaries for the year
ended March 31, 2023 ("Fiscal 2023")
since the Company's press release dated January 25, 2023 on Form 6-K;
- progress on whistle blower and other investigations; and
- other projects under execution and legal matters.
Replacement of Auditors and updated timeline for financial
statements for Fiscal 2022
The Company announced today that it has appointed ASA &
Associates LLP ("ASA") as an independent public accounting firm for
the Company's US GAAP consolidated financial statements for Fiscal
2022 and accepted the proposal for appointment of MSKA &
Associates (member firm of BDO International), as statutory
auditors of subsidiary companies of the Group's Indian holding
company, Azure Power India Private Limited ("APIPL"), pursuant to
the resignation of S.R. Batliboi & Co. LLP, member firm of
Ernst and Young Global Limited. APIPL continues to be audited by
MSKA & Associates.
The Company will work expeditiously to file its Form 20-F for
Fiscal 2022 and expects that the audits of the financial statements
for Fiscal 2022 of the Company, the Group and its subsidiaries
should be completed within 14 weeks.
NYSE Listing
The Company has maintained a dialogue with the NYSE regarding
its listing status. As previously reported, the NYSE had set a
deadline of July 15, 2023 for the
Company to fulfil its reporting obligations for Fiscal 2022
(including filing its Form 20-F for Fiscal 2022 with the SEC). In
light of the change of the Group's auditors as disclosed today, the
Company expects that the audits of the financial statements for
Fiscal 2022 of the Company, the Group and its subsidiaries will
require an additional 14 weeks to complete. The NYSE, however, has
indicated that suspension of trading and delisting may occur on or
around the July 15, 2023 deadline.
However, the Company may appeal any such delisting decision by the
NYSE.
The Company's SEC reporting obligations under the US Securities
Exchange Act of 1934 (the "Exchange Act") will continue even if
delisted, however, and the Company will continue to be required to
provide periodic reports to the SEC. Further, in the event of
delisting of the Company's shares by the NYSE, the Company will
make every reasonable effort to maintain a trading alternative for
its shareholders. Initially, the Company expects that its shares
will be available to trade on the over-the-counter "expert" market,
where quotations will be directly available to broker dealers and
professional investors (not retail investors). Investors would need
to contact their respective broker dealers to trade their shares on
the over-the-counter "expert" market. Upon delisting, the Company
plans to make an application to permit the Company's shares to be
traded on the OTCQX market (which market provides for public
quotations) once it files its Form 20-F for Fiscal 2022 and Form
20-F for Fiscal 2023 with the SEC.
Strengthening of Management Team and the Board
The Company has been strengthening its management team in recent
months. Mr. Sunil Gupta has joined
as the CEO on July 10, 2023,
replacing the acting CEO, Mr. Rupesh
Agarwal. He will also become the Managing Director of the
Company's subsidiary, APIPL. Mr. Gupta has deep leadership
experience in the renewable sector and a strong track record of
building renewable energy businesses. He also brings years of
experience as a renewable energy banking specialist.
Mr. Sugata Sircar was appointed as the Group Chief Financial
Officer and Executive Director, Finance of APIPL in May 2023. Mr. Pawan
Agrawal continues as the CFO of APIPL and its group of
subsidiaries, reporting to Mr. Sircar.
Mr. Richard Payette has joined
the Company's Board on July 1, 2023
as an Independent Director and Head of the Audit & Risk
Committee, replacing Ms. Christine
McNamara, who resigned due to personal issues. Mr. Payette
is a business leader with over four decades of experience in
management of global companies and accounting and audit
matters.
Remediation actions to improve Internal Controls
The Group appointed external consultants to review its internal
controls and compliance framework. The Group is in the process of
implementing necessary remediation actions in accordance with the
recommendations included in the aforesaid review.
The following steps have recently been taken to strengthen the
Group's existing internal control environment, under the
supervision of the Company's Audit and Risk Committee:
- establishment of an internal Management Assurance Services
("MAS") function and hiring of Mr. Vijay
Kumar Wadhwani as MAS Head. Mr. Wadhwani brings over 22
years of experience in accounting, audit, financial management and
reporting;
- strengthening of the financial reporting function with the help
of external consultants and additional accounting personnel;
- monitoring of controls and mitigation actions for enterprise
risk management with the assistance of external consultants;
and
- monitoring the effectiveness of the remedial efforts and
overall reporting framework.
Estimated Operating and Financial Update
The Company is providing certain estimated unaudited
consolidated operating and financial information of the Group with
respect to the financial year ended March
31, 2023 ("Fiscal 2023"). The Company believes that the
estimated unaudited consolidated financial information for Fiscal
2023, includes all material adjustments necessary to fairly present
such information in accordance with accounting principles generally
accepted in the United States of
America ("US GAAP").
Readers are cautioned that the financial and operating
information that the Company will include in its Form 20-F for
Fiscal 2022 and its Form 20-F for Fiscal 2023, when filed with the
SEC, will be audited and consequently may differ from the unaudited
financial and operating information presented here, in ways that
could be material. Moreover, the Company will include in its Form
20-F for Fiscal 2022 and its Form 20-F for Fiscal 2023 more
information in respect of Fiscal 2022, Fiscal 2023 and for
subsequent periods than it is including in this press release.
Consequently, the Company cautions readers that the financial and
operating information provided in this press release is not
complete and should be read in conjunction with its Form 20-F for
Fiscal 2022 and its Form 20-F for Fiscal 2023 when available,
including the Group's audited consolidated financial statements, as
well as other information that the Company may furnish on Form
6-K.
The translation of Indian rupee amounts into U.S. dollars at
specified rates in this press release is solely for the convenience
of the reader. Unless otherwise stated, the Company has converted
Indian rupees into U.S. dollars for amounts pertaining to period
ended March 31, 2023 at INR 82.19 to
US$1.00, which is the noon buying
rate in New York City for cable
transfer in non-U.S. currencies as certified for customs purposes
by the Federal Reserve Bank of New
York on March 31, 2023. The
Company makes no representation that the Indian rupee or U.S.
dollar amounts referred in the press release could have been
converted into U.S. dollars or Indian rupees, as the case may be,
at any particular rate or at all.
Estimated Key Operating Information for Fiscal
2023
a) Megawatts (MWs) operating as of March 31, 2023 were 2,955 MWs (excluding rooftop
portfolio);
b) MWs Awarded and Contracted as of March 31, 2023 were 4,270 MWs. This includes the
4,000 MWs manufacturing linked projects, 150 MWs wind-solar hybrid
project and 120 MWs wind project.
4,270 MWs excludes the 200 MWs wind–solar hybrid project
earlier won by the Group with Maharashtra State Electricity
Distribution Co. Limited as this project was cancelled on
March 10, 2023, pursuant to
withdrawal of the Group's appeal before the Appellate Tribunal for
Electricity. Appeal was filed to challenge Maharashtra Electricity
Regulatory Commission's order, that rejected the adoption of the
auction discovered tariff of INR 2.62 per unit and instead gave the
Group an option to reduce the tariff to INR 2.49 per unit.
c) Electricity generation, including the rooftop
portfolio, for the year ended March 31,
2023, was 5,813 million kWh, an increase of 27.7% from 4,551
million kWh for the year ended March 31,
2022.
d) Plant Load Factor (PLF), including the rooftop
portfolio, for the year ended March 31,
2023, was 22.8%, compared to 21.6% for the year ended
March 31, 2022.
Estimated Unaudited Group Financial Information for Fiscal
2023
a) Operating revenues for Fiscal 2023, were INR 21,094
million (US$ 256.6 million), an
increase of 14.0% from INR 18,499 million in Fiscal 2022.
b) As of March 31, 2023,
cash and bank balance (including amounts for restricted cash of INR
8,048 million) were INR 20,968 million (US$
255.1 million).
c) Total Debt (external) was INR 131,401 million
(US$ 1,598.7 million) as of
March 31, 2023.
Information reported for the year ended March 31, 2022, corresponds to information
provided in Company's press release dated January 25, 2023.
Information for Bondholders
Set forth below is (1) the unaudited financial data of Azure
Power Solar Energy Private Limited and the other Restricted
Subsidiaries (as defined under the Indenture) under the indenture
governing the 5.65% Solar Green Bonds ("RG-II"), and (2) the
unaudited financial data of Azure Power Energy Limited and the
other Restricted Subsidiaries (as defined under the Indenture)
under the indenture governing the 3.575% Solar Green Bonds
("RG-III").
Readers are cautioned that the audited combined financial
statements of each of RG-II and RG-III, when filed with the
Singapore Stock Exchange may include differences, some of which
could be material, from the unaudited information presented below
and will include detailed notes and other disclosures not currently
available that will be important to evaluate. Consequently, readers
are cautioned that the financial information provided below is not
complete and should be read in conjunction with the audited
financial statements for Fiscal 2022 of RG-II and RG-III,
respectively, when they become available as well as the Fiscal 2022
Form 20-F, the Fiscal 2023 Form 20-F, when available, and other
filings that the Company makes with the SEC on Form 6-K from time
to time.
Estimated Unaudited RG-II Data
a) Electricity generation and PLF for the year ended
March 31, 2023, were 1,356 million
kWh and 25.2% respectively.
b) Total revenue (excluding other income) for Fiscal 2023,
was INR 4,465 million (US$ 54.3
million), compared to INR 5,121 million in Fiscal 2022
(which included INR 544 million income from carbon credits and
other income).
c) As of March 31, 2023,
cash and bank balance (including non-current) were INR 3,248
million (US$ 39.5 million).
d) Total External Debt (excluding loans from group
companies and minority shareholders) was INR 28,490 million
(US$ 346.6 million), excluding
adjustments for hedging gains/loss calculated as of March 31, 2023.
Estimated Unaudited RG-III Data
a) Electricity generation and PLF for the year ended
March 31, 2023 were 1,010 million kWh
and 18.9% respectively.
b) Operating revenues for Fiscal 2023, were INR 6,137
million (US$ 74.7 million) compared
to INR 6,451 million in the Fiscal 2022 (which included INR 140
million income from carbon credits and other income).
c) As of March 31, 2023,
cash and bank balance (including non-current) were INR 2,668
million (US$ 32.5 million).
d) Total External Debt (excluding loans from group
companies and minority shareholders) was INR 30,373 million
(US$ 369.5 million), excluding
adjustments for hedging gains/loss calculated as of March 31, 2023.
Information reported for the year ended March 31, 2022 corresponds to information
provided in Company's press release dated January 25, 2023.
Whistle-blower Allegations and Special Committee
Investigation
Since the Company's last disclosure made in our January 2023 press release with respect to the
May 2022 and September 2022 whistle-blower investigations
previously reported, Azure's Audit and Risk Committee, with the
assistance of legal counsel and forensic accounting support,
continued its investigation particularly with regard to (i) certain
alleged corrupt activities of third-parties in connection with one
of its projects and (ii) certain asset acquisition transactions.
The Company has also continued to cooperate with the SEC and the
U.S. Department of Justice ("DoJ") as part of its voluntary
disclosure to those agencies.
In respect of the Special Committee investigation previously
reported, as of the date of this release, the investigation remains
ongoing and substantially progressed. The Company continues to
cooperate with the SEC and the DoJ in respect to its voluntary
disclosure to those agencies.
Loan Covenants
The Group continues to service its payment obligations for all
its borrowings in accordance with its financing documents and has
maintained a dialogue with its bank lenders. The Group has received
time extensions from its lenders in respect of the covenants
related to filing of audited financial statements and is seeking
further extensions into calendar 2023 as required. As of the date
of this release, no lender has indicated that it intends to take
any action to cause the early repayment of any of the Group's
borrowings, given the operational and financial performance of the
operating projects and the ability of the members of the Group to
service their respective facilities.
Credit Rating Downgrades
CRISIL Ratings downgraded the long-term credit rating of APIPL
from CRISIL A+ to CRISIL A on May 29,
2023 and then from CRISIL A to CRISIL BBB+ on July 11, 2023. CRISIL Ratings downgraded the
long-term credit ratings of Azure Power Maple Private Limited,
Azure Power Forty Private Limited and Azure Power Forty-Three
Private Limited from CRISIL A+ to CRISIL A on May 29, 2023 and then from CRISIL A to CRISIL
BBB+ on July 11, 2023.
On May 15, 2023, CARE Ratings
downgraded the long-term and short-term credit rating of APIPL to
CARE A (downgraded from CARE A+) and CARE A1 (downgraded from CARE
A1+) and on February 13, 2023,
downgraded the long-term credit rating of Azure Power Forty Private
Limited to CARE A- (downgraded from CARE A).
On June 26, 2023, Fitch Ratings
downgraded the rating of RG-II to B (downgraded from BB-) and
RG-III to B (downgraded from BB). On May 29, 2023, Moody's Investor Service downgraded
the rating of RG-II to Ba3, downgraded the rating of RG-III to
B1 and placed both ratings on review for downgrade. The ratings
continue to be on watch with negative implications by CRISIL
ratings, CARE ratings, Moody's Investor Service and Fitch
Ratings.
Few of our local currency loan agreements have a right to
increase the pricing in case of rating downgrade and also the right
to recall the facility(ies) in case of rating downgrade below BBB
or BBB-, except one agreement wherein the certain lenders have a
right to recall the facility in case of rating downgrade to A- or
below. The Company has submitted the request to such lenders to
modify the condition to BBB, and our request is currently under
review by the applicable lenders.
Other matters
Projects under execution
The Group's 300 MW Rajasthan 9 project has been fully
commissioned as of March 31, 2023,
and with this commissioning, the Group's total operating capacity
as on March 31, 2023 has reached
2,955 MW (excluding rooftop portfolio).
With respect to the Assam project (Region 4), which was affected
by floods since May 2022, the Group
has been able to successfully restore the capacity in the
project.
As previously reported, discussions with SECI regarding the
2,333 MWs projects, that were halted owing to the public interest
litigations, are still ongoing.
The Group continues to manage and develop all its projects under
execution in view of the developments, as reported earlier.
Legal updates
The Group has received a favorable order from Karnataka
Electricity Regulatory Commission for its 40 MW project against its
off-taker Hubli Electricity Supply Company Limited ("HESCOM"),
whereby HESCOM has been directed, among others, to pay the
differential outstanding amount, being the difference between
contracted tariff and the reduced tariff. The differential amount
due and outstanding as of the date of passing of the order was INR
219.50 million (including late payment surcharge). Since then, the
Group has received a sum of INR 163.60 million.
The Group has received several orders from various state and
central electricity regulatory commissions whereby its change in
law claims towards additional cost incurred on operation and
maintenance of projects due to promulgation of GST Laws and
increase in the rate of applicable Service Tax has been
allowed. The claim allowed by way of these orders amounted to
INR 433.30 million.
The Group has received a favorable award in an arbitration
proceeding initiated by it under the Arbitration and Conciliation
Act, 1996, for its 5 MW project in Maharashtra against the
off-taker, whereby the off-takers' claims against the Company
regarding open access charges and grid connectivity changes have
been disallowed.
The Group has received a favorable order for its (300x2) MW
projects in Rajasthan, whereby the Company's claims amounting to
INR 262.50 million on account of change in law due to imposition of
safeguard duty under the notification dated July 29, 2020 have been allowed. The Company has
also received in-principal approval from the power purchase
agreement counterparty for release of payments and has started
receiving payments in instalments and has received INR 6.47 million
as of the date of this press release. However, an end off-taker has
challenged the order by way of an appeal, which is presently
pending. No adverse order has been passed in the appeal.
The Group has received a favorable order for its 100 MW project
in Karnataka from the state commission for its claims amounting to
INR 182.20 million on account of change in law due to an increase
in the effective GST rate on composite EPC contracts to 8.9% from
5% under the notification dated December 31,
2018.
The Company has also received a favorable order for its 50 MW
project in Assam from the state commission on account of increase
in EPC cost due to increase in the rate of GST from 5% to 12% under
the notifications date September 30,
2021, whereby the claims of the Company amounting to INR
89.40 million have been allowed.
The Group and one of its module suppliers have amicably settled
their dispute under a module supply contract. The details of the
settlement are confidential.
The Group has received a favorable order for its 90 MW project
in Assam from the state commission in a petition filed seeking
extension of the scheduled commissioning date on account of delays
caused due to reasons beyond the control of the Company. The state
commission has extended the scheduled commissioning date of the
project thereby preventing reduction of tariff which is a
consequence of delay in commissioning as per the terms of the power
purchase agreement.
The Group had filed a petition before Andhra Pradesh Electricity
Regulatory Commission ("APERC") challenging deductions made by
off-taker from the Company's monthly invoices on the alleged ground
of excess installation with respect to the Company's 50 MW project
in Andhra Pradesh. APERC disallowed the relief sought by the
Company. The deductions have amounted to INR 153.70 million as of
the date of this press release. The Company has challenged the
aforesaid order before the higher forum and has received a stay of
the APERC order.
U.S. Securities Litigation
An ongoing class action lawsuit that was filed in the U.S.
District Court for the Southern District of New York (the "Court"), case number
1:22-cv-07432 against the Company and certain current and former
directors and officers of the Company alleging violations of U.S.
securities laws. A First Amended Complaint was filed by the lead
plaintiff and the Court set a deadline of August 15, 2023 for the Company and the other
defendants to respond to the First Amended Complaint. The Court
also set a deadline of July 31, 2023
for the lead plaintiff to inform the Court of any plans to file a
Second Amended Complaint, and the Court's order expressly
contemplates that the August 15, 2023
date would be adjusted further if the lead plaintiff seeks to file
a Second Amended Complaint. The Company sees no merit in the claims
asserted in the lawsuit and intends to defend the case
vigorously.
Certain Risks
Investment in the Company's securities is subject to various
risks. Investors should consider carefully the risks (i) set forth
in our Form 6-K filed with the SEC on January 25, 2023 and (ii) set forth in "Item 3 —
Key Information — D. Risk Factors" in the Company's annual report
on Form 20-F for Fiscal 2021 filed with the SEC on July 28, 2021, as updated by its subsequent SEC
filings. Investors also should carefully consider the risk factors
that the Company will include in the Form 20-F for Fiscal 2022 and
Form 20-F for Fiscal 2023. The risks described are not the only
risks facing the Company. Additional risks and uncertainties not
currently known to the Company or those the Company currently
considers immaterial may also materially adversely affect the
Group's business, financial condition, results of operations and
cash flows.
Forward-Looking Statements
This press release contains forward-looking statements within
the meaning of Section 21E of the US Securities Exchange Act of
1934, as amended, and the U.S. Private Securities Litigation Reform
Act of 1995. In some cases, these forward looking statements can be
identified by words or phrases such as "estimate," "may," "will,"
"expect," "anticipate," "aim," "estimate," "intend," "plan,"
"believe," "potential," "continue," "is/are likely to" or other
similar expressions. These statements relate to events that involve
known and unknown risks, uncertainties and other factors, including
those listed under "Certain Risks" above, which may cause the
Group's actual results, performance or achievements to be
materially different from any future results, performance or
achievements expressed or implied by the forward-looking
statements. These forward-looking statements relate to various
matters, including completion of the audited financial statements
of the Group for Fiscal 2022 and Fiscal 2023 and the filing of the
Form 20-F for Fiscal 2022 and the Form 20-F for Fiscal 2023,
defaults under the Group's indebtedness, any actions that may be
taken by lenders in respect of such defaults, internal
investigations currently underway, current and future regulatory
actions and litigation the Group may face. The risks and
uncertainties that could cause the Group's results to differ
materially from those expressed or implied by such forward-looking
statements include: the timing of the completion of the Fiscal 2022
Audited Financial Statements; actions that may be taken by the
Group's lenders in respect of defaults under the Group's
indebtedness; the results of on-going investigations and
litigation; the availability of additional financing on acceptable
terms; changes in the commercial and retail prices of traditional
utility generated electricity; changes in tariffs at which long
term PPAs are entered into; changes in policies and regulations
including net metering and interconnection limits or caps; the
availability of rebates, tax credits and other incentives;
curtailment; the availability of solar panels and other raw
materials; its ability to attract and retain its relationships with
third parties, including its solar partners; its ability to meet
the covenants in its debt facilities; meteorological conditions and
such other risks identified in the registration statements and
reports that the Company files with the SEC. All forward-looking
statements in this press release are based on information available
to the Company as of the date hereof, and the Company assumes no
obligation to update these forward-looking statements.
About Azure
Azure is a leading independent sustainable energy solutions
provider and renewable power producer in India. Azure developed India's first utility scale solar project in
2009, and since then has grown rapidly to become a leader in
developing and operating large utility-scale renewable energy
projects in the country.
For more information about Azure, visit: www.azurepower.com.
For more information:
Investor Contact
ir@azurepower.com
Media Contact
pr@azurepower.com
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