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Rating Rationale
Brickwork Ratings assigns ‘BWR BB+’ for the Proposed Bank Loan Facilities
aggregating ₹ 135.17 Cr of Inamdar Sugars Limited.
Brickwork Ratings (BWR) has assigned the following Rating1 for the Proposed Bank Loan
Facilities of Inamdar Sugars Limited (“ISL” or “the Company”):
Proposed Facility
Limits
(₹ Cr)
Fund Based:
Term Loans
135.17
Total
135.17
Tenure
Rating
Long Term
BWR BB+
(BWR Double B Plus)
Outlook : Stable
(INR One Hundred Thirty Five Crores and Seventeen Lakhs
only)
BWR has essentially relied upon the company’s audited financial results of FY13, certified
provisional financial statements of FY 14, projected financials up to FY2026, publicly available
information and the information/clarifications provided by the company.
The rating favourably factors the industry experience of the Company's promoters in the sugar
industry, proximity of the plant to the sugarcane cultivating region in Karnataka, established
relations with farmers for procurement of sugar, completion of land acquisition and obtaining
key legal clearances for the project. However, the rating strengths are partially offset by the
delay in achieving financial closure for the proposed sugar plant, nascent stage of project
execution, exposure to risks arising from project implementation, ISL’s susceptibility to
regulatory changes and inherent cyclicality of the sugar industry which would expose the
company to volatility in revenue and profitability and agro-climatic risks associated with the
industry.
As the rating is for ‘proposed’ bank loan facilities, BWR has assumed standard terms &
conditions that lenders stipulate for such loans, including, but not limited to, security &
margins, release linked to project construction progress and commencement of repayment after
reasonable moratorium period.
Background:
Inamdar Sugars Limited was incorporated in June 2007. The company proposes to set up an
integrated sugar plant for the manufacture of sulphurless sugar, with a sugarcane crushing
capacity of 3500 tons per day and a 12-megawatt co-generation power plant.
1
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Project Details:
The plant is proposed to be located at Hirekoppa Village, Belgaum District, Karnataka and
spread across 85.13 acres of land. The total cane availability for the proposed project is 4445
hectares land which is under existing sugar cultivation and most of the sugarcane is cultivated
on the banks of Malaprabha river, Karnataka. The Company estimates trial runs to start from
September 2015 and the plant to be commissioned by September 2016. Power purchase
agreement for sale of power is proposed to be done at the final stages of project implementation
. ISL has employed Shree Skill Consultancy Services as EPC Contractor for setting up the plant.
The project is reported to be technically feasible and financially viable as per the bankers’ recent
techno-economic viability study.
The total cost of the project is estimated at ₹ 200.37 Crores and proposed to be funded through
Equity of Rs 61.33 Crores, Term loans of Rs 135.17 Crores from banks and Sugar Development
Fund of Rs 3.87 Crores. Out of the total cost of Rs. 200.37 Crores, Sugar mill is estimated to cost
Rs. 81.21 Crores, and the 12 MW co-gen plant is proposed to be set up at a cost of around Rs.
53.96 Crores. The Company has incurred around Rs 9.85 Crores on the project as of December
31, 2014, funded by promoter’s contribution.
Shareholding Pattern and Management Profile:
The shares of the Company are held by Mr. D B Inamdar Chief Promoter (61%) and Pure Diets
India Limited (38%) and Others (1%). Mr. D B Inamdar is the Former Minister, IT, Karnataka
and present MLA, Karnataka. Presently, he is the Chairman of a co-operative sugar mill – Shri
Malaprabha Sahakari Sakkare Karkhane (Niyamit), Karnataka [rated BWR BB+ (stable)]. The
Company’s Directors are Mr. B D Inamdar (Mr D B Inamdar’s son), Mr. Vijaykumar Sonwalkar
and Mr. Sandeep Sinha (Pure Diets India Ltd nominee). Pure Diets India Limited, Delhi is
engaged in the business of trading of organic ingredients such as sugar, molasses, alcohol,
tapioca starch & fibre, mango puree, corn, soybean and desiccated coconut. All the Directors are
professionals having experience in other complementary fields of mechanical, fertilizers and
seeds industry.
Financial Performance:
The project is in the initial stages of implementation. As of 31st March 2014 (Provisional),
Authorized share capital stood at Rs 1.75 Cr of which Paid -up capital was Rs. 1.38 Crores.
However, the promoters have brought in Rs 9.85 Cr towards part funding the project.
Rs 50 Cr of Term Loan has been sanctioned by Bank of India out of the proposed term loan
amount of Rs 135.17 Cr.
Rating Outlook:
Currently, the rating outlook remains stable, given the fact that the project is at a nascent stage.
Sugar plants with co-gen facility are expected to break even within a reasonable time –frame
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and the company expects that the project would breakeven by FY 17. Further, the market
demand for sulphurless sugar is expected to be good, especially in the export markets. The
company proposes to enter into marketing tieup with Pure Diets India Ltd also. Going forward,
early financial closure, project implementation within the estimated costs and time schedules,
timely receipts of all required approvals, execution of PPA, firm tie- ups with farmers for supply
of sugar cane and commencement of crushing by SY17 as estimated will be the key rating
sensitivities.
Analyst Contact
Relationship Contact
analyst@brickworkratings.com425-24
bd@brickworkratings.com
Phone
Media Contact
1-860-425-2742
media@brickworkratings.com
Disclaimer: Brickwork Ratings (BWR) has assigned the rating based on the information obtained from the issuer and other reliable sources,
which are deemed to be accurate. BWR has taken considerable steps to avoid any data distortion; however, it does not examine the precision or
completeness of the information obtained. And hence, the information in this report is presented “as is” without any express or implied warranty
of any kind. BWR does not make any representation in respect to the truth or accuracy of any such information. The rating assigned by BWR
should be treated as an opinion rather than a recommendation to buy, sell or hold the rated instrument and BWR shall not be liable for any losses
incurred by users from any use of this report or its contents. BWR has the right to change, suspend or withdraw the ratings at any time for any
reasons.
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