The agency has also assigned CBIPL's INR540.0m term loan a Long-Term 'IND B+' rating.
Key Rating Drivers
The ratings reflect completion risks for the company given the project phase of its bio-products manufacturing plant. There are uncertainties regarding the time and receipt of requisite regulatory approvals.
However, the project is progressing on schedule. The ratings also reflect the execution risks given the regulated nature of the industry.
The ratings are supported by the project's locational advantage as it is set up at Krishna District where food grains are in abundance.
The ratings are also supported by the uninterrupted power supply the unit will receive as CBIPL is planning to set up a captive power plant.
Negative: Time and cost overruns due to delays in meeting deadlines and availing necessary approvals could lead to a negative rating action.
Positive: Scheduled completion of the project, and revenue and positive cash flow generation to service the term loan as projected by the management could lead to a positive rating action.
CBIPL was incorporated in May 2010 to manufacture bio-products relating to ethanol, extra neutral alcohol, rectified spirit, pharma grade alcohol, feeds and feed supplements and carbon-dioxide for human, animal, plant and other industrial and commercial purposes.
The company has an installed capacity of 60KL per day. The total cost of the project is INR944.1m with a debt:equity ratio of 1.34:1.
--IBNS (Posted on 02-10-2013)