CARE rates Biomax Fuels bank lines at BB+/PR4

(ADPnews) - Dec 17, 2010 - CARE on Thursday set its BB+/PR4 ratings to the bank facilities of Biomax Fuels Ltd (BFL).

The agency issued the following press release:

Facilities Amount (Rs. crore) Ratings1 Remarks
Long-term Bank facilities 64.00 CARE BB+ (Double B Plus) Assigned
Short-term Bank facilities 73.00 PR4 (PR Four) Assigned
Total Facilities 137.00

Rating Rationale
The ratings are constrained by delay in implementation of first phase of the biodiesel project of BFL, implementation risks associated with Phase II, lack of any firm offtake arrangement even after the commencement of operation, BFL’s business being highly dependent on the Government policies abroad on import of biodiesel and susceptibility of the margins to volatile raw material prices. The ratings also factor in the experienced management team, low project debt equity, commencement of the operation of Phase I and indigenous technology for manufacturing biodiesel along with value added byproducts. Going forward, ability of the company to achieve its targeted sales with the fructification of Joint Venture agreements and timely completion of Phase II of the project will be key rating sensitivities.

Company Profile
BFL was incorporated in the year 2005 to manufacture biodiesel through feedstock of algae and vegetable oil. BFL is promoted by Mr.M.Ravinder, Mr.Kalyan Chakravarthy, Mr.N.S.Balamukundan and Dr.N.S.Venkatesh, professionals with vast experience in the pharmaceutical and allied industries. BFL proposed to setup a plant for manufacturing biodiesel with total capacity of 5,00,000 tonnes per annum (tpa) in two phases, along with value added byproducts at the Vishakhapatnam Special Economic Zone (VSEZ) at Duvvuda, Andhra Pradesh. BFL commenced first phase operations with an installed capacity of 250,000 tpa in Jun’10. The second phase of the project is proposed to be completed by Apr’11. The total cost of the project (for both phases) is an estimated Rs.184 cr to be funded through a debt equity ratio of 0.48x. As on Sep’10, the company had incurred Rs.151.75 cr towards the project funded by Rs.48.84 cr of term loan and Rs.103 cr of promoter’s contribution which includes Rs.74.00 cr of preference share capital.

(INR 100 = USD 2.205/EUR 1.656)
(crore = 10 million)

Rating agency website: www.careratings.com

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