Karvjya Ethnoxy Pvt. Ltd.

Brickwork Ratings assigns the ratings for the Bank Loan Facilities of Rs. 141.51 Crs. of Karvjya Ethnoxy Pvt. Ltd.

Particulars

Facilities**	Amount(Rs.Crs.)	Tenure	Rating#
Fund Based	130.51	Long Term	BWR BBB /Stable Assignment
	4.00	Short Term	BWR A3 + Assignment
Non Fund Based	7.00	Short Term	BWR A3 + Assignment
	(0.50)
Grand Total	141.51	(Rupees One Hundred Forty One Crores and Fifty One lakhs Only)

#Please refer to BWR website www.brickworkratings.com for definition of the ratings
**Details of Bank Loan facilities,consolidation or instruments are provided in Annexure RATING ACTION / OUTLOOK

Brickwork Ratings assigns the ratings of "BWR BBB/Stable/A3+" for the bank loan facilities of Rs 141.51 Crs of Karvjya Ethnoxy Pvt. Ltd.

The ratings for Karvjya Ethnoxy Private Limited are primarily driven by a highly predictable revenue stream and strategic operational advantages. By securing long-term offtake agreements with major Public Sector Oil Marketing Companies, the company ensures guaranteed product sales. This stability is anchored by its prime manufacturing location within an ethanol-deficit state, which provides an exclusive operating radius and stands close to prominent agricultural hubs, ensuring a steady grain supply and minimizing feedstock risks. The operations are further supported by an experienced leadership team possessing vast expertise in grain procurement and technical management of distillery divisions. Additionally, the ratings are bolstered by a steadily strengthening financial profile and adequate liquidity. 

The ratings are, however, constrained by the company's exposure to raw material price volatility, as sudden price spikes in agricultural inputs like rice and maize cannot be passed on to consumers due to fixed government selling prices, which can squeeze margins despite proactive procurement efforts. Furthermore, the company operates with a leveraged capital structure resulting from its recently commissioned greenfield project, leading to elevated initial debt utilization and tight debt service coverage metrics. Sustained financial stability and future capacity enhancement plans also remain highly dependent on the continuation of supportive government biofuel policies and the timely receipt of targeted interest subventions.

The ‘Stable’ outlook indicates a low likelihood of rating change over the medium term. BWR believes Karvjya Ethnoxy Pvt. Ltd's business risk profile will be maintained over the medium term. The outlook may be revised to Positive if a sustained increase in the scale of operations and higher than envisaged profitability result in an improved financial risk profile and better gearing and debt protection metrics. The outlook may be revised to Negative if lower-than-expected revenue or profitability, a stretch in the working capital cycle, unanticipated capex or weakening gearing impact the financial risk profile.

KEY RATING DRIVERS

Credit Strengths:

• Robust Management and Sector Expertise :

  The promoters of Karvjya Ethnoxy Private Limited bring formidable industry expertise that significantly bolsters the company's overall operational profile. The Baba Farid Group promoted by Mr. Shivji Ram Goyal, Mr. Pankaj Goyal and Mr Deepak Goyal possesses over 25 years of hands-on experience in grain procurement and agro-based products. As the largest producer of refined wheat flour in North India, the group commands an annual turnover exceeding Rs 700 crore and actively maintains around 70,000 metric tonnes of grain inventory, ensuring seamless feedstock management for the ethanol plant. This is complemented by Mr. Jitendra Singh, who brings 32 years of invaluable technical experience from Rajasthan State Ganganagar Sugar Mill, having previously headed its sugar and alcohol divisions. Furthermore, financial stability and strategic oversight are reinforced by Mr. Alok Choudhary’s 18-year tenure in banking and risk analysis, alongside Mr. Pankaj Goyal’s eight years of financial management expertise.

• Strategic Geographical Market Positioning :

  Karvjya Ethnoxy Private Limited benefits immensely from its strategic location in Suratgarh, Rajasthan, which establishes a formidable operational moat for the business. As one of the state's pioneering standalone grain-based ethanol facilities, and notably the only plant operating within a massive 100 to 200-kilometer radius, the company enjoys an unparalleled exclusivity advantage. This distinct lack of regional competition ensures unfettered access to raw materials while creating a highly captive market for its final product. The unit's close proximity to the major North Indian grain hub of Sri Ganganagar, alongside the robust rice milling industries of neighboring Punjab and Haryana, guarantees a highly reliable and continuous supply of crucial feedstock like broken rice. Furthermore, because Rajasthan structurally operates as an ethanol-deficit state, the company directly capitalizes on exceptionally strong local demand, enabling orders to consistently match its entire installed production capacity.

• Secured Long-Term Revenue Visibility :

  Karvjya Ethnoxy Private Limited enjoys exceptional revenue predictability and stability through its strategic partnerships with major Oil Marketing Companies. The company has successfully secured robust 10-year offtake agreements with industry leaders such as BPCL, HPCL, and IOCL. This long-term commitment directly aligns with the Government of India’s Ethanol Blending Programme (EBP), significantly minimizing market risk for the unit's core product. Consequently, this structural arrangement guarantees a steady and predictable cash flow over a decade, which is critical for servicing debt obligations and maintaining robust financial health. Furthermore, because the manufacturing plant is situated in Rajasthan—an ethanol-deficit state—these established linkages ensure that purchase orders consistently match the company's full production capacity. Ultimately, these guaranteed offtake agreements provide a significant protective buffer, solidifying the company’s financial foundation and ensuring sustained operational performance.

• Strong Government Policy Support :

  Karvjya Ethnoxy Private Limited's overall financial profile is significantly reinforced by substantial government subsidies and highly favorable policy frameworks. Crucially, the company actively benefits from a targeted interest subvention scheme administered by the Department of Food & Public Distribution (DFPD) under the Government of India. Through this national initiative, the company receives a vital subsidy equivalent to 50% of the interest rate on its substantial term loan of ?103.90 crore for a guaranteed duration of five years. Notably, this financial support is being consistently received on a timely quarterly basis, which directly bolsters operational liquidity and ensures sustained financial stability during the critical early years of production. Furthermore, to maximize its fiscal advantages, the company has proactively applied for state-level incentives under the Rajasthan Investment Promotion Scheme (RIPS). Together, these comprehensive policy incentives substantially lower the effective cost of capital and vastly improve overall debt serviceability metrics.

Credit Risks:

• Vulnerability to Input Price Volatility :

  While Karvjya Ethnoxy Private Limited benefits from long-term offtake agreements, its profitability remains structurally exposed to the inherent volatility of raw material prices. The company's primary feedstocks are agricultural commodities, specifically broken rice, surplus rice, and maize. The availability and pricing of these inputs are heavily dictated by unpredictable agro-climatic conditions, seasonal monsoons, and fluctuating crop yields. Furthermore, because these critical materials are primarily procured through the Food Corporation of India (FCI) and open agricultural markets, they are highly sensitive to broader government pricing policies. Although management attempts to mitigate this vulnerability by implementing hedging strategies and procuring raw materials in advance at competitive prices, a fundamental mismatch exists. Because final ethanol realization prices are rigidly fixed by the government, the company cannot easily pass on sudden spikes in raw material costs, potentially squeezing operating margins during poor harvest seasons.

• Leveraged Capital Structure Dynamics :

  Karvjya Ethnoxy Private Limited operates with a leveraged capital framework following the recent commissioning of its capital-intensive greenfield ethanol manufacturing facility. The company's financial profile incorporates a significant term loan to support these initial setup costs. Consequently, near-term financial metrics reflect this elevated debt utilization, resulting in a stretched debt-to-equity position and tight debt service coverage ratios in the immediate period. While cash accruals are expected to steadily improve as the manufacturing unit stabilizes at optimal efficiency, the current capital structure necessitates prudent financial management. Furthermore, the company maintains a positive growth outlook and is actively evaluating future capacity enhancement plans, subject to clarity regarding government policies. Any additional debt-funded capital expenditures for these prospective expansion initiatives could potentially influence the company's anticipated deleveraging timeline.

ANALYTICAL APPROACH - Standalone

To arrive at its ratings, BWR has considered a standalone approach. Reference may be made to the Rating Criteria hyperlinked below.

RATING SENSITIVITIES

Moving ahead, the company's ability to expand its operational scale, boost profitability, and enhance liquidity and credit standing, along with the recent government policies affecting the sector, will be critical factors influencing its rating.

Positive Factors:-

• Growth in total revenue past Rs 300.00 Crores while successfully maintaining current profit margins.

• Improvement in the gearing ratio to 2.50x or below.

• Upholding a sound financial risk profile.

Negative factors:-

• Any decline in the company's TOI falling below Rs 200.00 Crs.

• Further deterioration of the gearing ratio to 4.00x or more.

• Shifts in government policy that negatively influence the company's operations.

LIQUIDITY INDICATORS - Adequate

Adequate liquidity characterized by sufficient cushion in accruals of Rs 16.50 vis-a-vis repayment obligations of Rs 7.20 Crs in FY 26 and moderate cash balance of Rs. 2.04 Crore. No new capex is envisaged for the medium term. Its bank limits are utilized to the extent of 38% and is supported by the above unity current ratio of 2.59x.

Liquidity is expected to remain adequate over the medium term, with projected net cash accruals of Rs 17.21 crore in FY27 and Rs 18.01 crore in FY28 comfortably covering the Rs 10.32 crore annual debt obligations. The current ratio is expected to stay above unity. Furthermore, unutilized bank limits and the management's ability to infuse funds provide robust support against any unforeseen financial distress.

ABOUT THE ENTITY

KARVJYA ETHNOXY PRIVATE LIMITED is a 100 KLPD grain-based ethanol manufacturing company located in Suratgarh, Rajasthan. Commissioned in February 2025 with commercial production starting in April 2025, the plant utilizes broken rice and maize to supply ethanol to major Oil Marketing Companies. The company is backed by the Baba Farid Group's extensive grain procurement expertise, alongside the diverse industry and financial leadership of visionaries like Mr. Shivji Ram Goyal, Mr. Jitendra Singh, Mr. Alok Choudhary, and Mr. Pankaj Goyal.

ESG Profile

The company demonstrates an Adequate ESG profile based on its environmental, social, and governance practices.

Environmental: Environmental risks in the manufacturing sector are driven by resource utilization, waste management, and emissions control. The company addresses water consumption and discharge by operating as a Zero Liquid Discharge (ZLD) facility, ensuring that 100% of wastewater generated is treated, recycled, and reused within the plant. This approach completely eliminates liquid effluent discharge and significantly conserves water resources. To manage pollution and stack emissions, the company utilizes a three-field Electrostatic Precipitator (ESP) in its boiler systems, which effectively controls particulate matter. This technology ensures emissions remain well within the regulatory limits set by the Central Pollution Control Board (CPCB) and the Rajasthan State Pollution Control Board (RSPCB). Furthermore, the company tracks its environmental footprint using a 24/7 Continuous Emission Monitoring System (CEMS) to enable proactive compliance and real-time transparency.

Social: Social practices focus heavily on worker health and safety, human capital development, and community impact. To protect employees, the company has established stringent safety protocols, continuous monitoring, and regular training programs to ensure a secure working environment. Human capital development is supported through comprehensive employee welfare policies that promote well-being, fair treatment, and professional development. In terms of workforce sustainability and diversity, the company maintains inclusive hiring practices that balance local talent from surrounding communities with professionals from various regions. Beyond the workforce, the company fulfills its Corporate Environmental Responsibility (CER) by investing in local infrastructure, including the construction of classrooms in nearby government schools, the installation of solar-powered street lighting, and extensive tree plantation drives under its Green Mission.

Governance: Governance assessments evaluate ethics, compliance, and risk management frameworks. The company operates on principles of integrity, accountability, and transparency, embedding ethical business conduct across all levels via a clearly defined code of conduct. To ensure legal and regulatory compliance, the company maintains zero tolerance for unethical practices, including corruption, conflicts of interest, or non-compliance. The organizational risk management structure includes strong oversight systems designed to identify, assess, and mitigate operational and compliance risks. Additionally, transparent decision-making is enforced through proper documentation, internal controls, and established audit mechanisms.

KEY FINANCIAL INDICATORS (Standalone)

Key Parameters	Units	FY 23 - 24 (Audited)	FY 24 - 25 (Audited)	FY 25 - 26 (Provisional)
Operating Revenue	Rs.Crs.	Not Available	Not Available	225.14
EBITDA	Rs.Crs.	Not Available	Not Available	24.39
PAT	Rs.Crs.	Not Available	-0.03	11.65
Tangible Net Worth	Rs.Crs.	30.00	29.97	41.62
Total Debt / Tangible Net Worth	Times	1.73	4.53	3.45
Current Ratio	Times	11.98	2.38	2.59

KEY COVENANTS OF THE FACILITY RATED

The key covenants are the standard terms as stipulated in the sanction letters of the rated facilities.

STATUS OF NON-COOPERATION WITH PREVIOUS CRA

Not Applicable

RATING HISTORY FOR LAST THREE YEARS (including withdrawal and suspended)

Facilities	Current Rating  (2026)			2025		2024		2023
Type	Tenure	Amount (Rs.Crs.)	Rating	Date	Rating	Date	Rating	Date	Rating
Fund Based	LT	130.51	BWR BBB/Stable (Assignment)	NA	NA	NA	NA	NA	NA
Fund Based	ST	4.00	BWR A3+ (Assignment)	NA	NA	NA	NA	NA	NA
Non Fund Based	ST	7.00	BWR A3+ (Assignment)	NA	NA	NA	NA	NA	NA
NFB SubLimit	ST	(0.50)	BWR A3+ (Assignment)	NA	NA	NA	NA	NA	NA
Grand Total		141.51	(Rupees One Hundred Forty One Crores and Fifty One lakhs Only)

Hyperlink/Reference to applicable Criteria

• General Criteria
• Approach to Financial Ratios
• Short Term Debt
• Manufacturing Company

Analytical Contacts
Varsha Jasmin Rating Analyst varsha.j@brickworkratings.com	Nagaraj K Director - Ratings Board : +91 80 4040 9940 nagaraj.ks@brickworkratings.com
Media Contact | media@brickworkratings.com	Client Support | clientsupport@brickworkratings.com

SL.No.	Name of the Bank/Lender	Type Of Facilities	Long Term(Rs.Crs.)	Short Term(Rs.Crs.)	Total(Rs.Crs.)	Complexity of the Instrument
1	State Bank Of India (SBI)	Term Loan - Out-standing	95.51	_	95.51	Simple##
2	State Bank Of India (SBI)	Cash Credit - Sanctioned	35.00	_	35.00	Simple##
	Sub-Limit (Derivative/Forward Contract/CEL) - Sanctioned		(0.50)
3	State Bank Of India (SBI)	Stand by Line of Credit - Sanctioned	_	4.00	4.00	Simple##
4	State Bank Of India (SBI)	Performance Guarantee - Sanctioned	_	7.00	7.00	Simple##
Total			130.51	11.00	141.51
TOTAL (Rupees One Hundred Forty One Crores and Fifty One lakhs Only)

## BWR complexity levels are meant for educating investors. The BWR complexity levels are available at www.brickworkratings.com / download / ComplexityLevels.pdf. Investors queries can be sent to info@brickworkratings.com.