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| Product | Quantum (Rs. Cr) | Long Term Rating | Short Term Rating |
| Bank Loan Ratings | 50.00 | ACUITE A- | Stable | Reaffirmed | - |
| Total Outstanding | 50.00 | - | - |
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Rating Rationale |
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Acuité has reaffirmed its long-term rating of ‘ACUITE A-’ (read as ACUITE A minus) to the Rs. 50.00 Cr. bank facilities of Green Gene Recyclers Private Limited (GGRPL). The outlook is ‘Stable’.
Rationale for rating reaffirmation The reaffirmation in rating takes into account the stable operating performance of the group. The revenue from operations stood at Rs. 354.63 Cr. in FY24 (Prov.) as against Rs. 360.09 Cr. in FY23. The revenue of the group remain stagnant majorly on account of lower realizations however, the capacity utilizations stood higher year on year. Furthermore, the rating factors in the group's healthy financial risk profile, geographical diversification of its business, and strong liquidity position. The rating also draws comfort from the extensive experience of the promoters and reputed clientele of the group from various industries. However, the rating remained constrained on account of the sizeable amount of cash flow support provided to other group companies in form of loans and advances. Furthermore, the group operates in a regulated industry where any sort of regulatory change shall impact the performance. |
| About the Company |
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Chittorgarh based Green Gene Recyclers Private Limited (GGRPL) was incorporated in 2021 and commissioned in October 2023 with registered office in Mumbai. GGRPL is a subsidiary of GEPIPL. The company is planning to setup SAF plant at Chittorgarh with an installed capacity of 2000 MT per month. However currently, the capacity of the plant is 400 MT. The proposed facility shall receive RDF Incinerable Fraction generated post bio mining of legacy waste, which will be converted into fuel and supply generated Sustainable Alternate Fuel (SAF) to cement companies for blending with the main fuel. The company has entered into short term contracts with companies like Udaipur cements and Nuvoco Vistas to evaluate the response in the market with contract timelines contingent on the production timelines.
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| About the Group |
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The Luthra Group (LG) is a conglomerate of diversified independent businesses consisting of modern textile industrial park, infrastructure development companies and waste management companies. Founded in the year 1980 by Mr. Rameshchandra. M. Luthra, the LG started its operations in the textile industry at Surat by establishing dyeing and printing mills. Presently, the LG is led by Mr. Girish Luthra and his son Mr. Dhruv Luthra. Currently, services offered by the LG include hazardous waste management and disposal, textile park, waste water treatment, eco sustainable industrial park etc. The group diversified into the business of hazardous waste management in the year 1999.
Surat based Green Gene Enviro Protection and Infrastructure Private Limited (GGEPIPL), incorporated in 2005, is a private company with registered office in Mumbai. The company is a part of the Luthra Group and is engaged in operating and maintaining infrastructure facilities for integrated waste treatments, storage and disposal in major states across India. Further, the company by carrying out pre-processing of waste converts it into fuel which supplied to cement companies. The company has four active plants. The plants are located at DNH, Chittorgarh, Tamil Nadu and Telangana. Surat based Gujarat Enviro Protection and Infrastructure Haryana Private Limited (GEPIHPL) was incorporated in 2005 with registered office in Mumbai. GEPIHPL is a subsidiary of GGEPIPL and is engaged in operation and maintenance of environment infrastructure project for hazardous waste management. The company has its integrated common hazardous waste treatment, storage and disposal facility at Pali, Faridabad in Haryana, where they are the only waste management service provider. Surat based Recycling Solutions Private Limited (RSPL)was incorporated in 2012 with registered office in Mumbai, is also part of the Luthra Group (LG) and is also engaged in the business of operation and maintenance of infrastructure project for hazardous waste management. It has 2 operating pre-processing facility in Panoli, Gujarat; authorized by Gujarat Pollution Control Board. Surat based Envoy Carrier Private Limited (ECPL) was incorporated in 2012 with registered office in Mumbai. ECPL is a subsidiary of RSPL. Till 2022, the company operated as an intermediate for the transportation of waste materials. The company has closed down its existing business and has forayed into the EPC business. It has already booked revenues of Rs. 7.58 Cr in FY23. Sayan Utility And Common Infrastructure Private Limited (SUCOI) was incorporated in 2021. Engaged in setting up conveyance pipeline infrastructure for effluent collection and distribution of recycled water to the water jet industries in the Sayan-Olpad region. Mr. Mayank Satyanarayan Bhattad and Mr. Vinodbhai Lallubhai Surti are the directors of the company. Weave Water Enviro Private Limited (WWEPL) was incorporated in 2021. Company is in process of setting up Zero Liquid Discharge (ZLD) facility. Mr. Ashish Manubhai Mehta, Mr. Sitaram Agrawal, Ms. Sharda Rameshchandra Luthra and Mr. Saahil Vinay Dudhaiya are the directors of the company. |
| Unsupported Rating |
| Not Applicable |
| Analytical Approach |
| Extent of Consolidation |
| •Full Consolidation |
| Rationale for Consolidation or Parent / Group / Govt. Support |
| The team has consolidated the standalone business and financial risk profiles of GGEPIPL, RSPL, GEPIHPL, ECPL, GGRPL, SUCOI and WWEPL together referred to as the ‘Green Gene Group’ (GGG). The consolidation is in view of the common management and strong operational & financial linkages between the entities.
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| Key Rating Drivers |
| Strengths |
| Extensive management experience and established track record of operations
The Luthra Group diversified into the waste management and alternate fuel processing business in the year 1999. The hazardous waste management business is operated under the GGG and the business operations are presently managed by Mr. Girish Luthra and his son Mr. Dhruv Luthra. The GGG caters to a number of sectors including pharmaceutical, automobile, chemical manufacturing, textile among others, thereby ensuring sectoral diversification. Also, the group has an established clientele and provides waste management services to SRF Limited, Hemani Industries Limited, Gurugram Metropolitan Development, Bharat Rasayan Limited, Gujarat Fluorochemicals Limited, Aarti Industries Limited, etc. About 40 percent of the total income is derived from customers with a strong credit profile. Going forward the revenue contribution from alternate fuel supplied to cement companies is expected to increase owing to the restrictions imposed on cement industry towards coal consumption, presently alternate fuel contributes only ~3 percent to the total revenue.
Moderate scale of operations The consolidated revenues of Green Gene Group stood at Rs. 354.63 Cr. in FY24 (Prov.) as against Rs. 360.09 Cr. in FY23. The stagnant revenue was majorly on account of lower realizations in orders towards waste management. The group initially collects waste from several industries such as pharmaceuticals, textiles, and agro processing, to name a few. The waste is subsequently transported to the Alternate Fuel Resource Facility and the Treatment and Safe Disposal Facility. Also, the group earns majority of its revenue i.e. 97% from collection of the waste from waste generator companies and the rest as tipping fees from the cement companies. However, the PAT margins of the group declined to 21.16% in FY24 (Prov.) as against 29.17% in FY23. Further, the EBITDA margins of the company also declined and stood at 26.92% in FY24 (Prov.) as against 35.94% in FY23. The decline in EBITDA was on account of higher manufacturing costs and administrative expenses of the group. Additionally, GGG signs long term contracts with its customers and has minimum volume commitment with annual price escalation clause and periodic revision in transportation cost in line with changing market prices. This ensures revenue visibility over the medium term. Acuité believes that the ability of the company to maintain its scale of operations and improvement in profitability will remain a key monitorable over the medium term. Healthy financial risk profile with comfortable debt protection metrics The financial risk profile of the group is marked healthy on account of high net worth, low gearing, and comfortable debt protection metrics. The tangible net worth of the group stood high at Rs. 512.45 Cr. in FY24 (Prov.) as compared to Rs. 421.57 Cr. in FY23. The improvement in net worth is majorly on account of accretion of profits to reserves. The total debt of the group stood at Rs. 290.03 Cr. in FY24 (Prov.) as against Rs. 244.43 Cr. in FY23. The gearing of the group remained low at 0.57 times in FY24 (Prov.) as against 0.58 times in FY23. The increase in debt levels of the group is majorly on account construction of new greenfield plants and capacity addition of existing units. GGEPIPL has set up 2 plants in Gujarat and Maharashtra. The Ahmedabad based plant is for the treatment and disposal of the municipal waste. It has received consent to operate and commenced its operations from November 2023. The construction of industrial waste plant at Sangli has also been completed. Recycling Solutions Private Limited has completed the capacity expansion at the Panoli site for which the company incurred at a capex of Rs. 97.84 Cr. which was funded through Rs. 48.25 Cr. is from bank loan and Rs. 49.59 Cr. from internal accruals. Further the capex at Green Gene Recyclers Private Limited is also completed and the facility has started its operations. The TOL/TNW stood at 0.92 times in FY24 (Prov.) as against 0.86 times in FY23. The debt protection metrics remained comfortable with DSCR at 2.53 times and ISCR at 7.88 times in FY24 (Prov.). Acuité believes that the financial risk profile of GGG is expected to remain healthy on account of steady margins and conservative financial policy. |
| Weaknesses |
| Sizeable investment in group companies
The advances given by GGG to other group companies of the Luthra Group to support their business operations, diversification and scalability remains high. The total loans and advances stood at Rs. 233 Cr. as on March 31, 2024 (Prov.) as against Rs.267.2 Cr. as on March 31, 2023. The management plans to further expand its operations, which is expected to be partially funded through the cashflows of GGG. Acuité believes, the financial risk profile of GGG over the medium term would remain stable subject to proper cash flow management with group companies. Strict Government regulations Waste management industry is subject to strict government regulations laid under the state and central pollution control board. Any change in regulations could negatively affect the industry and the performance of the company. Non-adherence to the same could result into levy of penalties, license cancellation and also plant shutdown. |
| ESG Factors Relevant for Rating |
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The Green Gene Group is in business to sustainably manage waste thereby generating value for shareholders and society. The group has embedded consideration of ESG factors throughout the operations of its business. The company is fundamentally committed to building a long-term business, which will sustainably manage waste and grow; provide employment and generate economic benefit in an environmentally and socially responsible manner.
The company commits to addressing the following social impacts and problems:
The company commits to addressing the following governance impacts and problems:
Code of Conduct is designed to deter wrongdoing & promotes honest & ethical conduct of various applicable laws, financial reporting, & accounting requirements and responsibilities to customers and suppliers |
| Rating Sensitivities |
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| Liquidity Position |
| Strong |
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The liquidity position of the group remains strong on account of sufficient net cash accruals against matured debt obligations. The net cash accruals of the group stood at Rs. 91.98 Cr. against matured debt obligations of Rs. 33.17 Cr. during the same period. The Gross Current Assets (GCA) remained high at 253 days for FY24 (Prov.) as against 422 days for FY23. The high GCA days is majorly on account of sizeable loans and advances to related parties. However, the working capital cycle of the company is negative owing to debtor days and inventory days of 63 days and 9 days respectively. The average bank limit utilisation by the group remained at 74.74% in FY24 on account of adequate net cash accruals. Also, the company maintains a cash balance of Rs. 6.66 Cr. as on 31st March 2024.
Acuité believes that the liquidity position of the company will continue to remain adequate on account of adequate cash accruals against matured debt obligations over the medium term. |
| Outlook : Stable |
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Acuité believes that GGG will maintain a 'Stable' outlook over the medium term due to experienced promoters, long-standing relationship with customers and sustained improvement in scale of operations. The outlook may be revised to ‘Positive’ in case the company registers substantial growth in revenues while achieving sustained improvement in operating margins thereby improving the financial risk profile and the liquidity profile. Conversely, the outlook may be revised to ‘Negative’ in case of lower-than expected revenues and profit margins and debt funded expansion or unsustainable advances made to other companies thereby adversely impacting the financial risk profile.
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| Other Factors affecting Rating |
| None |
| Particulars | Unit | FY 24 (Provisional) | FY 23 (Actual) |
| Operating Income | Rs. Cr. | 354.63 | 360.09 |
| PAT | Rs. Cr. | 75.03 | 105.03 |
| PAT Margin | (%) | 21.16 | 29.17 |
| Total Debt/Tangible Net Worth | Times | 0.57 | 0.58 |
| PBDIT/Interest | Times | 7.88 | 14.70 |
| Status of non-cooperation with previous CRA (if applicable) |
| Not Applicable |
| Any Other Information |
| None |
| Applicable Criteria |
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• Application Of Financial Ratios And Adjustments: https://www.acuite.in/view-rating-criteria-53.htm • Consolidation Of Companies: https://www.acuite.in/view-rating-criteria-60.htm • Rating Process and Timeline: https://www.acuite.in/view-rating-criteria-67.htm • Service Sector: https://www.acuite.in/view-rating-criteria-50.htm |
| Note on Complexity Levels of the Rated Instrument |
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In order to inform the investors about complexity of instruments, Acuité has categorized such instruments in three levels: Simple, Complex and Highly Complex. Acuite’ s categorisation of the instruments across the three categories is based on factors like variability of the returns to the investors, uncertainty in cash flow patterns, number of counterparties and general understanding of the instrument by the market. It has to be understood that complexity is different from credit risk and even an instrument categorized as 'Simple' can carry high levels of risk. For more details, please refer Rating Criteria “Complexity Level Of Financial Instruments” on www.acuite.in
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| *Annexure 2 - List of Entities (applicable for Consolidation or Parent / Group / Govt. Support) | ||||||||||||||||
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