Press Release

Press Release

December 06, 2024

INDO NUCLEAR ENERGY PRIVATE LIMITED
Rating Reaffirmed

Product	Quantum (Rs. Cr)	Long Term Rating	Short Term Rating
Bank Loan Ratings	85.00	ACUITE B+ \| Stable \| Reaffirmed	-
Total Outstanding	85.00	-	-
Total Withdrawn	0.00	-	-

Rating Rationale

Acuité has reaffirmed the long-term rating of ‘ACUITE B+’ (read as ACUITE B Plus) on the Rs. 85 Cr. bank facilities of Indo Nuclear Energy Private Limited (INEPL). The outlook is ‘Stable’.

Rationale for rating
The rating reflects the moderately experienced promoters, operationalisation of the plant since August 2024 along with easy availability of raw materials and Off-take agreements with BPCL, IOCL and HPCL. These strengths are offset by the expected leveraged capital structure due to high expected debts in initial phase of operations with expected low profits in initial stage of operation.

About the Company

Based in New Delhi, Indo Nuclear Energy Private Limited (INEPL) was incorporated in 2011. The company is a subsidiary of BIPS Systems Limited, an IT and Process Automation Company. INEPL has setup a 60-kilo litre per day, rain-based Distillery to produce Fuel Ethanol (AA) along with 2.5 MW captive power plant and up to 35 TPD DDGS Cattle Feed from Waste / Damaged Grains at Satna, Madhya Pradesh. The Ethanol is proposed to be manufactured from starch being extracted from broken rice, maize. The total cost of project is Rs.97.00 Cr. and the project became operational from August 2024 (with two delays).

Unsupported Rating

Not Applicable

Analytical Approach

Acuite has considered the standalone business and financial risk profile of INEPL to arrive at the rating.

Key Rating Drivers

Strengths

Moderately Experienced promoters
INEPL is backed by over a decade long experience of its director Mr. Nagendra Goel and others who have expertise in the field of construction of Sugar Mills and Power plants. The company is a group concern of BIPS system Limited, an IT and Automation company having experience of over 30 years managed by professional promoters and technical and management graduates. Apart from this, the company has also entered into an agreement with an EPC Contractor-KBK Chem-Engineering Private Limited who has expertise for timely supply of Industrial alcohol-based plants such as Fuel Ethanol, Ethyl Acetate, Portable Alcohol, Evaporation, ZLD, Sugar & Sugar Refinery with Co-generation plants with Efficient Management. The Company has existing off-take agreements with BPCL, IOCL and HPCL for off-takes for 9 years upto 2031.

Easy availability of raw materials
The plant is designed to operate with multiple grains which has starch content i.e. Rice, Broken Rice, Maize, spoiled grain which are unfit for human consumption, etc. The rice and maize will be used in the ratio of 80% and 20% as a raw material. Madhya Pradesh ranks among the top 10 rice producing states in the country. Given the availability of the Raw Material in the various districts of the state, it is expected that the Company will be able to procure the raw Material for the project. The company has also made provisions for procuring raw materials from FCI and other suppliers.

Weaknesses

Expected leveraged capital structure
The company’s capital structure is expected to remain average marked by low net worth base and high gearing over the medium term. The adjusted tangible net worth of the company improved to Rs.12.33 Cr. in FY2024 (Prov)as compared to Rs.9.75 Cr. in FY2023 due to accretion of reserves. The gearing stood at 6.75 times as on March 2024 (Prov) as against 2.48 times in FY23. Additionally, the company’s gearing is expected to increase and remain at high levels over the medium term due to the working capital requirements to support its operations. Acuité believes that going forward the financial risk profile of the company is expected to remain average due to leveraged capital structure and below average debt protection metrices due to lower expected profits in initial stages of business over the medium term.

Regulated industry
Raw materials required for grain-based ethanol unit (Bajra, Maize, Broken Rice) are regulated by government policies. Any change in government policies may result in difficulties in raw material procurement. This may result in loss of revenue or lower operating margins.

Rating Sensitivities

Timely stabilisation of operations
Movement in capital structure and debt protection metrices

Liquidity Position

Stretched

The company has stretched liquidity as reflected from low expected cash accruals in initial phase of operation, moderate current ratio and dependence on bank line for funding working capital cycle. However, the promoters have financial flexibility to infuse funds in business as reflected from unsecured loans of Rs. 6 Cr. in FY24. In case of any shortfall in meeting the debt obligations of Rs. 6.72 Cr. the Company would fund it through own funds. The Company has an escrow mechanism with bank wherein the proceeds received from customers are used towards meeting debt obligations and balance are utilised for working capital. The Company also maintains a DSRA with bank for 3 months interest and 1 quarterly instalment from date of COD. The company has also availed bank lines of Rs.15 Cr (enhanced from Rs.7.5 Cr in October 2024) and is being utilised at 70% for last 6 months ended October 2024. However, timely stabilisation of the project and generation of optimum cash accruals will remain key rating sensitivity factors.

Outlook: Stable

Other Factors affecting Rating

None

Key Financials

Particulars	Unit	FY 24 (Provisional)	FY 23 (Actual)
Operating Income	Rs. Cr.	0.22	0.32
PAT	Rs. Cr.	(2.63)	0.03
PAT Margin	(%)	(1182.93)	8.33
Total Debt/Tangible Net Worth	Times	6.75	2.48
PBDIT/Interest	Times	14.11	115.81

Status of non-cooperation with previous CRA (if applicable)

Not Applicable

Any other information

None

Applicable Criteria

• Default Recognition :- https://www.acuite.in/view-rating-criteria-52.htm
• Rating Process and Timeline: https://www.acuite.in/view-rating-criteria-67.htm
• Manufacturing Entities: https://www.acuite.in/view-rating-criteria-59.htm
• Application Of Financial Ratios And Adjustments: https://www.acuite.in/view-rating-criteria-53.htm

Note on complexity levels of the rated instrument

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.

Rating History

Date	Name of Instruments/Facilities	Term	Amount (Rs. Cr)	Rating/Outlook
08 Sep 2023	Term Loan	Long Term	77.50	ACUITE B+ \| Stable (Assigned)
08 Sep 2023	Cash Credit	Long Term	7.50	ACUITE B+ \| Stable (Assigned)

Annexure - Details of instruments rated

Lender’s Name	ISIN	Facilities	Date Of Issuance	Coupon Rate	Maturity Date	Quantum (Rs. Cr.)	Complexity Level	Rating
Indian Bank	Not avl. / Not appl.	Cash Credit	Not avl. / Not appl.	Not avl. / Not appl.	Not avl. / Not appl.	7.50	Simple	ACUITE B+ \| Stable \| Reaffirmed
Indian Bank	Not avl. / Not appl.	Term Loan	09 Sep 2022	Not avl. / Not appl.	30 Apr 2024	77.50	Simple	ACUITE B+ \| Stable \| Reaffirmed

Contacts

Mohit Jain
Senior Vice President - Rating Operations

Abhishek Singh
Analyst - Rating Operations

Contact details exclusively for investors and lenders

Mob: +91 8591310146
Email ID: analyticalsupport@acuite.in

About Acuité Ratings & Research

Acuité is a full-service Credit Rating Agency registered with the Securities & Exchange Board of India (SEBI). The company received RBI Accreditation as an External Credit Assessment Institution (ECAI) for Bank Loan Ratings under BASEL-II norms in the year 2012. Acuité has assigned ratings to various securities, debt instruments and bank facilities of entities spread across the country and across a wide cross section of industries. It has its Registered and Head Office in Kanjurmarg, Mumbai.

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