Hygena Life Sciences Pvt. Ltd.

Brickwork Ratings assigns the ratings for the Bank Loan Facilities of Rs. 298.23 Crs. of Hygena Life Sciences Pvt. Ltd.

Particulars

Facilities**	Amount(Rs.Crs.)	Tenure	Rating#
Fund Based	293.23	Long Term	BWR BBB - /Stable Assignment
	(15.00)
Non Fund Based	5.00	Short Term	BWR A3 Assignment
Grand Total	298.23	(Rupees Two Hundred Ninety Eight Crores and Twenty Three 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 (BWR) assigns a long-term rating of BWR BBB-/Stable and a short-term rating of BWR A3 for the bank loan facilities of Rs. 298.23 crore of Hygena Life Sciences Pvt Ltd. (hereinafter referred to as 'HLSPL’ or the ‘Company’).

The assigned rating for Hygena Life Sciences Private Limited (HLSPL) considers the robust growth potential for ethanol, supported by government initiatives, and the company's revenue visibility, ensured by long-term offtake agreements with Oil Marketing Companies (OMCs), until  2032. The surplus ethanol generated will also be offered to OMCs via open tenders and a competitive bidding process.  Additionally, the recent Karnataka High Court ruling ordered OMCs to increase procurement, which could be reflected in Cycle 2 allocations for distilleries. The rating also factors in HLSPL’s ongoing capacity expansion, with a 290 KLPD maize-based ethanol plant under implementation. However, the rating is constrained by sectoral risks, including raw material price volatility, dependence on feedstock availability, competitive pressures within the ethanol industry, and exposure to regulatory changes under the Ethanol Blending Programme (EBP). 

The ratings continue to reflect a moderate financial risk profile; however, these strengths are partially offset by project risk associated with ongoing capex and working capital requirements. Going forward, the capital structure is expected to improve over the medium term despite capex plans, driven by healthy growth in the scale of operations and funds to be infused by the promoters.

The stable outlook reflects HLSPL’s strong operational practices, strategic location, advanced technologies, and long-term offtake agreements that provide revenue stability. Sustained operational performance, successful commissioning of the expansion project, and improvement in financial metrics would support the rating in the medium term.

KEY RATING DRIVERS

Credit Strengths:

• Strong Revenue Visibility Backed by Long-Term Offtake Infrastructure :

  The project declared COD (Commercial Operation date) in September 2024 and has secured a 10-year Long-Term Offtake Agreement with credit-strong public sector Oil Marketing Companies (OMCs) like IOCL, BPCL, and HPCL running until 2032. This ensures revenue visibility in the long term. While having an installed capacity of 200 KLPD, the plant has been operational at an average capacity of more than 130 kilo litres per day (KLPD) (65% of installed capacity) for fiscal 2026 and is expected to continue operating at healthy efficiency over the medium term, given the annual offtake of 3.75 crore litres of ethanol running through late 2026, representing 56% of its installed capacity. This has resulted in strong growth in revenue, with the topline surging multifold to Rs 332.75 crore in fiscal 2026 from Rs 26 crores in FY25 after the plant stabilisation. The company's revenues are likely to grow further, as balanced production is also expected to be purchased by OMCs through their regular tender process. Additionally, the firm has been generating stable revenue from the sale of by-products such as DDGS, constituting 15% of the Total Operating Income.

• Favorable Government Policies and Structural Macro Tailwinds :

  HLSPL benefits from regular interest subvention (covering 50% of term loan interest) from the DFPD disbursed through NABARD. The Ethanol Blending Programme (EBP) is a top national focus area aimed at reducing massive foreign exchange outflows as well as volatile prices triggered by West Asia war, insulating the industry from short-term crude fluctuations. Long-term demand channels are highly secure given the recent government targets moving towards 25% to 30% blending from the earlier 20%, the deployment of E85 flex-fuel passenger vehicles, and future blending mandates like Sustainable Aviation Fuel (1% to 5% SAF) and Isobutanol (5% in diesel). The long-term outlook for ethanol and biofuels remains favorable, supported by the prevailing demand-supply gap, and the government's policy incentives are expected to enhance the company’s credit profile over the medium to long term.

• Moderate Financial risk profile :

  HLSPL’s tangible net worth improved from Rs. 17.9 Cr in FY2025 to Rs. 42.5 Cr in FY2026 (provisional), supported by profit accretion and promoter equity infusion. On this reported basis, leverage moderated with Total Debt/TNW declining from 14.17x to 6.2x and TOL/TNW from 13.17x to 5.99x. While the overall gearing ratio is expected to improve to 3.3 by FY27, adjusted total debt/TNW remains moderate at 2.7 in FY26. The debt profile continues to comprise promoter unsecured loans, term borrowings, and working capital facilities. ISCR has improved to 3x, and DSCR is improving to 1.36x, reflecting stronger cash flow coverage following the commencement of operations. Looking ahead, scheduled term loan repayments, sustained profit accretion, and the proposed 290 KLPD expansion are expected to further strengthen the capital structure while improving scale, operational efficiency, and revenue visibility. The operating margins expanded from 8.47 % to 15.31% in FY26 and is projected to stabilise between 16-18% due to operational efficiencies and overhead dilution. However, working capital utilisation remains tight, with average cash credit utilisation of 80%.

Credit Risks:

• Customer Concentration and Susceptibility to Regulatory Changes :

  The business model carries extreme counterparty concentration risk since nearly 100% of fuel-grade ethanol sales are directed to state-owned OMCs like IOCL, BPCL, and HPCL.  Additionally, new capacities are being added at a rapid pace, which might lead to increased competition and impact margins, as well as the ability to sign offtake agreements with OMCs. As the ethanol industry is highly regulated, changes in the regulatory stance and continued government support, particularly for ethanol pricing, remain monitorable. The revenue visibility for ethanol plants depends on their ability to secure allocations at the beginning of the ESY or through subsequent allocations during the ESY, if any. 

• Raw Material Volatility and Sourcing Seasonality Risks :

  Feedstock price fluctuations, particularly in maize, rice, and wheat, can affect profitability. The company’s location near grain belts and long-term supplier relationships help reduce this risk, but sharp cost increases or supply disruptions could impact margins. The Food Corporation of India (FCI) determines the price of rice allocated for ethanol production in line with market dynamics. Although ethanol prices are set by the government and are linked to raw material prices, any delay in passing on raw material price increases can adversely affect the operating profitability.s. The key raw material (maize & rice), being an agricultural crop, is of a seasonal nature, the availability and pricing of which is affected by factors such as changes in weather conditions, including low or high rainfall, production levels, etc.

• Exposure to risks related to the ongoing capex :

  The company is undertaking capex for setting up enhanced capacity from 200 to 290 KLPD. The estimated cost of capex is around Rs.58 crore, to be debt-funded to the extent of around Rs. 40 crore, and expected to be completed in phases over the next year. The timely completion of the project with no major cost overruns and a subsequent increase in revenue will be a key monitorable.

ANALYTICAL APPROACH - Standalone

For arriving at its ratings, BWR used a standalone approach, based on the audited financials of the company up to FY25, CA-certified provisional financials for FY26, projected financials for FY27-FY29, clarification provided by the company, and publicly available information. BWR has applied its rating methodology as detailed in the Rating Criteria, as detailed below (hyperlinks provided at the end of this rationale)

RATING SENSITIVITIES

Positive 

• Sustained scale-up in the core operations (above Rs. 600 Crores), along with sustained improvement in the operating profitability margins of the company.
• Improvement in TOL/TNW (under 3x times), marked by an improvement in the net cash accruals

Negative

• Moderation in the scale of operation and/or moderation in profitability on a sustained basis.
• Significant debt-funded capex resulting in overall gearing above 4x and DSCR below 1.1x.

LIQUIDITY INDICATORS - Adequate

The company generated its first positive net cash accruals of Rs. 34.4 crores for FY2026 against long-term repayment obligations of Rs. 21 crores. Cash accruals are expected to rise significantly in the coming years, which will be sufficient to cover CPLTD between Rs. 20 and Rs. 30 crores. The unencumbered Cash and bank balances were Rs 6.77 crores as on March 31, 2026, and Rs 0.62 crores as of 31st March, 2025. Average fund-based working capital utilisation over the past 14 months ending 30th May 2026 stood at around 80%. Recently, the company has proposed to avail an additional bank loan of about Rs. 60 crores. The liquidity position remains adequate and dependent on the stabilisation and scaling up of operations. HLSPL has interest-bearing unsecured loans of around Rs. 37 crore from directors and other corporates at the rate of 3% charged yearly.  Liquidity is further supported by an anticipated equity/USLs infusion by promoters of approx. Rs. 18.5 crores for the expansion project.

ABOUT THE ENTITY

Hygena Life Sciences is a dedicated grain-based ethanol manufacturing company located in Solan, Himachal Pradesh, which commissioned its 200 KLPD (Kilo Litres Per Day) facility along with a 5 MW captive power generation plant in September 2024. This project represents a greenfield venture for its promoter, Mr Harpreet Singh, who brings prior business experience from the petroleum and chemical sectors. The facility manufactures fuel-grade ethanol for petrol blending while utilising a flexible input mix of maize, market rice, and FCI rice. It also generates DDGS (Dry Distilled Grain Solubles) as a high-protein byproduct for the cattle and poultry feed markets. 

ESG Profile

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

Environmental Profile From an environmental perspective, Hygena Life Sciences plays a direct role in advancing India's green energy mandates by manufacturing fuel-grade ethanol, which significantly reduces automotive carbon emissions through petrol blending. Located in the eco-sensitive region of Solan, Himachal Pradesh, the company operates in strict compliance with national sustainability laws, having fully secured its statutory Environmental Clearances (EC) and Consent to Operate (CTO) before initiating construction. The plant features a dual-feedstock processing framework that allows it to dynamically shift production toward maize, a climate-resilient crop that consumes substantially less water than rice. This operational flexibility effectively shields regional water tables from depletion during periods of low monsoon rainfall.

Social - On the social front, the company's manufacturing model drives deep economic integration within the agricultural supply chain by engaging a vast network of local farmers, brokers, and grain traders. By maintaining a steady demand for both market-grade and damaged food grains, Hygena provides essential marketplace stability and revenue security to regional farming communities. Furthermore, the company creates a positive circular economy through the distribution of its primary byproduct, Dry Distilled Grain Solubles (DDGS). This nutrient-rich residual grain is sold back to domestic cattle and poultry farms as an affordable, high-protein animal feed, thereby supporting localized food security and livestock health.

Governance - In terms of corporate governance, the management demonstrates a conservative and supportive approach to financial risk and structural transparency. The company's board ensures high financial alignment by utilizing structured, low-interest corporate unsecured loans from group entities like Better Tomorrow to fund operational gaps. These promoter-backed funds are strictly subordinated to senior bank term loans, reinforcing the company's balance sheet integrity and protecting public credit lines. Additionally, management’s commitment to fulfilling its 10-year public sector offtake agreements highlights a transparent, long-term operational governance structure focused on nation-building targets.

KEY FINANCIAL INDICATORS (Standalone)

Key Parameters	Units	FY 23 - 24 (Audited - Annual)	FY 24 - 25 (Audited - Annual)	FY 25 - 26 (Provisional - Annual)
Operating Revenue	Rs.Crs.	Not Available	26.07	332.75
EBITDA	Rs.Crs.	Not Available	2.21	50.94
PAT	Rs.Crs.	-0.03	-10.02	22.59
Tangible Net Worth	Rs.Crs.	17.27	17.90	42.50
Total Debt / Tangible Net Worth	Times	5.71	14.17	6.20
Current Ratio	Times	7.50	1.19	1.18

KEY COVENANTS OF THE FACILITY RATED

The terms of the sanction include standard covenants typically required for such 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	293.23	BWR BBB-/Stable (Assignment)	NA	NA	NA	NA	NA	NA
FB SubLimit	LT	(15.00)	BWR BBB-/Stable (Assignment)	NA	NA	NA	NA	NA	NA
Non Fund Based	ST	5.00	BWR A3 (Assignment)	NA	NA	NA	NA	NA	NA
Grand Total		298.23	(Rupees Two Hundred Ninety Eight Crores and Twenty Three lakhs Only)

Hyperlink/Reference to applicable Criteria

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

Analytical Contacts
Muskan Jain Ratings Analyst muskan.j@brickworkratings.com	Niraj Kumar Rathi Senior Director Ratings niraj.r@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	Canara Bank	Cash Credit - Sanctioned	20.00	_	20.00	Simple##
2	Canara Bank		_	_	0.00	Simple##
	Sub-Limit (WCDL) - Sanctioned	(15.00)
3	HDFC Bank	Cash Credit (WHR) - Sanctioned	20.00	_	20.00	Simple##
4	State Bank Of India (SBI)	Term Loan - Out-standing	153.23	_	153.23	Simple##
5	State Bank Of India (SBI)	Term Loan - Proposed	40.00	_	40.00	Simple##
6	State Bank Of India (SBI)	Cash Credit - Sanctioned	40.00	_	40.00	Simple##
7	State Bank Of India (SBI)	Cash Credit - Proposed	20.00	_	20.00	Simple##
8	State Bank Of India (SBI)	Bank Guarantee - Sanctioned	_	5.00	5.00	Simple##
Total			293.23	5.00	298.23
TOTAL (Rupees Two Hundred Ninety Eight Crores and Twenty Three 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.