clfi3~Ratings) f,$jPr<>f=ionalRiskOpinion '2 ••••.,

CARE/ORO/RR/2019-l0 13~'.1

Mr. Akash SharmaVice PreliidentBajaj Hlndusthan Sugar Umlted,Baja) Bhawan, 6-10, Sector-),Jamnalal Baja) Ma'g, Noida - 201301

August 08, 2019

Dear Sir,

Credit rating for bank facilities of Rs. 7556.17 (.ores

Please reler to our letters dated JulV25, 2019 on the above subject.

2, The rationale for the ratings is attached as an Annexure-I,

3. We request you 10 peruse the annexed document and offe' your comments, il any We aredoing this as a matter of courtesy to our clients and with a view to ensure that no factualinaccuracies have inadvertently crept in, Kindly reven as early i1Spossible. In any case, if wedo not hear from you by August 09 2019, we will proceed on the basis that you ha~e nocomments to offer,

II you hc~e any further clarifications, you are welcome to approach us,

Thcnking you,Yours faithfully,

[Omkar Mlshra]Analystomkar.mishra@careratlngs.com

Encl,: As abo~e

~.Managerra~leen.sethl@careratlngS.tom

CARERating. limitedIF~,m••"" '"0""" C,.d" "0,1,,;, 6. k•••• "h t'","ed)

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Annexure-1Bajaj Hindusthan Sugar Limited

Ratings

Facilities Amount Rating'(Rs.crore)

RatingAction

Long-term Bank CARE0 Reviled from CARE0;

Facilities 7227.13 {SingleOJ ISSUERNOTCOOPERATING

Short-term Bank CARE0 Revisedfrom CARE0:

Facilities329,04 (SingleOJ

ISSUERNOTCOOPERATING

7556.17

Total Facilities(Rupees seven thousand fivehundred and fifty six crore and

seventeen lakh only)Details of imtruments/focilities in Annexure-1

Oetailed Rationale & Key Rating Drivers

The ratings of Bajaj Hindusthan Sugar limited (BHSL)takes into account the ongoing delays

in the repayment of its debt obligations Going forward. company's ability to service its debt

obligations in a timely manner and improve its overall finandal profile together with itl

capital structure shall be the key rating sensitivities.

Detailed description of the key rating drivers

Key Ratinc:Weaknesses

Stretched liquidity & Delays in servicing of debt obligations

Weak financial performance on account of iow sugar realisations in the past due to excess

sugar supply in the market has ied to stress on the liquidity position of the wmpany and

eventually led to delays in servicing of some of its debt obligations. Based on the

information available and assessment made by the statutory auditors, the company has

delayed In repayments of dues to various financial institutions, bank and government during

FY19, BHSLis making continuous efforts to regularise its repayment obligations. BKSl is

carrying a large stock of sugar inventory on account of impositions by the government on

the monthly sales by the sugar wmpanies to protect the interest of the sector on account of

surplus production in the past sugar seasons. Further, BHSl is expecting claim amount &

'Complete definition of Ihe rating. os<igoedare oyo.loble at www.C9rero!inp<.comaodotherOlRfpublicalioo.CARERa.tlng' limited

(Fo,m.,'" 1<00••••• C'"Il.I:~n'b'i'fRo,•• ,,~ lIm;,.dl

H" 'I••••,!-l &1•• " "' ••••••• l.w ••. "" ••.•••1.,b"••"",~.w 0.,,,, . , '""",Tol,•• '_'1-4511l100•• ~, '91_11."llln ••••.••••,w.,,""'J'.'.m • C'N_"71"""'H'''''1~71.''

interest from UP government totalling to approximately f1.slS00 crore (after Allahabad high

court termed UP State's suspension of Incentives under policy in 2004 to attract

investments in Sugar sector UarbitraryU) which will be utilized for the operations of the

company.

Substantial investment in group companies

The group has implemented a power project under Bajaj Energy ltd (BEl) and

commissioned a 1,980 MW project under lalitpur Power Generation Company Limited

(lPGCL). BH5l has invested a substantial amount in its group companies by way of

investments or loans and advances. Inability of BH5l to recover these advances;n a timely

manner in the past has led to its stretched liquidity position. The management is however

planning to recoup the said advances by planning an IPO in Bajaj Energy limited (BEL) for

which a DRHP has already been filed with SEBIon April OS, 2019, The funds raised through

the said issue will partly be utilized by BEL to purchase the stake oflPGCl from BHSl. The

said fund infusion in BH5L will be entirely be utilized for de-leveraging its balance sheet

which shall aid in the improvement in its capital structure going ahead. The exact issue si~e

& funds infusion shall however depend on factors like market conditions, valuations, etc

Regulated nature of sugar business

The industry is cyclical by nature and is vulnerable to the government policies for various

reasons like its importance in the Wholesale Price Index (WPI) as it classifies as an essential

commodity. The government on its part resorts to various regulations like fixing the raw

material prices in the form of State Advised Prices (SAP) and Fair & Remunerative Prices

(FRP). All these factors impact the cultivation patterns of sugarcane in the country and thus

affect the profitability of the sugar companies,

Key Rating Strengths

long track record of operations and experienced promoters

The company was incorporated in 1931 under the name - The Hindusthan Sugar Mills

limited (HSMLI by Mr Jamnalal Bajaj. Subsequently HSMl was renamed as Bajaj Hindusthan

limited in 1988 and changed to the present one in January 2015. The company gradually

CARERating. limited(Fo"".,ly MO,""" C, ;, An I , ~o•• ,,<hLl","od)

Ill', •••••••1.' _., v ••••••••, Tow." 'h""".w",., '",.,,,on, N •••. 0.1••• 110OS5,T.",.,_ '1.4S111100 • F.~ •••• 1,.4']"'" • ww"'.",o""'9"'." • C,N_lOll'lOMO+1,.mCO'1601

increased it, capa~ity over the years to become one of the largest sugar producers In the

~ountry.

Mr. Kushagra Nayan Bajaj has considerable experience In the sugar industry and is assisted

by a team of professionals having significant experience in the industry. The promoter &

management team of BHSLis resourceful and they have plans to deleverage its balan~e

sheet by undertaking a right issue in BELas detailed above.

Analyti~al approach: Standalone

Applicable Criteria

CARE'sPolicy on Default Recognition

CARE'sMethodology for manufacturing companies

Financial ratios - Non-Financial Sector

About the Company

BHSL, a part of the 'Shishir Bajaj Group', is one of the largest sugar manufacturing

companies in the country and also the largest industrial alcohol manufacturer in India. BHSL

has 14 sugar factories with an aggregate capa~ity of 1.36 lakh tonne of sugarcane crushed

per day (TeO). It has six distilleries with capacity to produce 800 kilo litre per day (KIPD) of

industrial alcohol and owns co-generation plants having power generating capacity of 449

MW. The company also has two Medium Density Fiber Board manufacturing plants with

capacity of 1.60 MtCu per annum and one particle board plant of 0.50 lac Mt Cu per annum.

Financial performance(RsCrgrel

For the period endedl os ot Mor.Jl, 2017 2018 2019(11m, Audited) (11m, Audited) (11m. Audited)

Working ResultsIncome from operation, 4618.64 6087.48 6952.15

pelLOT 1017,77 431.95 451.84

Inlerest 802-07 680,17 321,78

Depredation 214,12 196,91 211.33

'" 1,58 -427.30 .66.39

PATlaller deferred ta'i 7.40 .423.19 .64,08

Gro,s Cash A~cruals 221.52 -22053 144,94

Financial PositionEquityCapital 110.07 110.07 110-07

Networth 3943.51 3497.86 3405.05

Total Debt 5702.53 6790,77 6022.07CARERatings limited

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For the period ended / 05 at Mor.31, 2017 2018 2019(12m, Aud'ted) (12m, Audited) (12m, Audited)

Key RatiosProfitobilityPBILQT/Total Op. income l%) 21.04 7,10 6.49

PAT laner deferred tax)/ Total income0,16 "6.95 .0.92

1%1SolvencyOverall gearing 1.44 1.94 1.77Interest coverage(times) 1.27 0.64 1.PBIT/Interest(times) 100 0.35 0,75

TO{GCA 25.74 -30.79 41,55

LiquidityCurrent r.tio(timesi 1,26 1.32 1.33

Quick ratio(timesj 0.62 0.68 0.77

TurnoverAverage collection period ldays) 18 11 11

Aver.ge creditors (days) "" <0' <0,Average inventory ldays) ,eo 19' 158

Operating cycle (days] " 1 ~"Statu. of non-cooperalion with previous eRA: Not Applicoble

Any other in'o,,,,allon: NOIApplicable

RatinG lii.t0'Y 10' la,\ three years: Plea<e 'efer Ann"xu'e-2

Note on co",piujfy !tue" of the ,,,ted ins"ument; CAREhas classified instrllmenlS toted by 'Ion the bo.'s of

compiexity. Thi, class,ficatian is ovoilobie at www,co,etoUng,.cam. Inveswrs/morlcet 'ntermediaries/regulowrs

or orhers are welcome to write to core@coretotings.com/oronyciaro/i,otia"S

Contact us

Analyst Contact

N.me: M, RovleensethiTol: 011- 4S~33ns£m.oI:,.vlun,,.thi@lca""I;oi,,com

"-bout CAR!RatinS'

o.R! R"inll' ,,,,,,m,,,,," "p<r""'", In Apr>!1993 .nd pv", 1••0 d,,,d.,, ~ h•• e,lobli,bod ~,el/., ono pf tho I•• din!<rodit "tins .80n"" 'n Ind,o, CAR! I, "gi'terod wllil th, 5«""1'" .0" hohoogo 8por" of IndIO\~81) ,00 .100,",pgn'"od •• '" !xtomol e,edlt A"."monl '""rtution 1,0.'1 by tho Ro""o 8"., pf Ind" (RBI).CAR,R'linS' i,pmud ofn, rlsW"1 pl"o in Ihe 'n~i.n <'Plt.I mor,ot b";ll oround inv",IO' <on/id,ne<, o.R£ R.IIOIl'P'pv'''' the oot'" 'p«lrumof "odit """! lil.t holp, 1"0<orllO,.to' 10 r.i,. cop'''1 fo' tboir ''''ou' rOQulromoo".nd "ml, ,ho inve"o" to /0,," .ninfOrmed invo"ment decl,ion bosed on Ihe "edit ,I" ond 'bol, own ,"HOI",n ",p«tol'on. Our ro\l"S ond g,.ding

CARE Ralln9' limitedffo,m.rly '""W" •• c"a'u'!,~'t:rf Ro••••.'b lim" •• '

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,--------------------,,"'"""'.'m;;;.;'--------------------,CARE',"lmg' ," Opin.on.on llle 1,•.•lihooOof timely".ym.nl of lh. obl'l'tlo'. und" lhe rot.d inwument .,d oronolrecommend, lion<to ,an,Mn, •• n'''••.•d.,b"". or rer." lho 'oneer""d b.n.I",II"Io, or '0 "UV,•• IIor Mid .ny ,«urityCARt:',,aling' do not con", ,uibb,lity 0' p,,,e fo, tho Ir.•• ,tor. (ARE', ,a""!, "" no' con"",u," a" a"dit M til, ",edonlity.(AREIl•• bo•• d j!, ,alin~/oulloo •• OnInformal",nobt,in.d 1'010,ouroo, b.llo"d bv 1110~ ac,""" .nd "It.ble,(AREd","' not, howo.", guor.nl" t~e "'''''Y, .d'qu''V 0' <ompl.,"""" of lOy,nfO'm.tlOn.nd I, not "'PO",lolo fo',ny '''0'' or omi"ion. 0' 10<HI' rewl!, obl0iood Irom ,he use of suCIl Info,mOlion.Mo't ,nliti •• "Mm" ""nkf".llt,,,/i"l!rument> or, "led by CAREh, •• p,id • , •.•dit rOl;ng fee, b'''d 00 tM•• mounl .,d ty~ of b,n,f",ll>t,•• /,omu'""'1>. CAR.or itl 'ublldi," •• /o""<I,,.. moyal.o 11,.e othe<,omme<ciolt•• n",:lIon. with til, enl,ty, In•• ,. 01p;lrln."nip/orop'iel'"" co", •• n" Ill. "ling 10u,loo, '''il",d 0' (ARt:", int.r.oli., b••• d 00 tl><<'p'I.1 deplo,odby tne ""rtn",jpropri.tor .nd Ill, fiMn".1 "'e"gt!l 01,ile fi,'" at p,•• ent. TI><r•• ing/oUlloo. m•• undergo ,Il,nlO in•••• of w,tnd"".1 of <'olt.l Of ,n, un.","red lo.n. broug" in bj t~. POrlo,,,joropr'elor In 'ddilion '0 '"o fin.",i.1perlo,m,"" "nd Olll•••• I."nt lilctors, (AREI, no, ,",pomibl. fo'."'1 o"ors .nd ,t,te; thot ~ "', no li",,,,I,1 n,b,lIlywn,,,=-,er to tn. uw. of (ARE'S,.li"l,

Our ,.tlog' do not lotio' In.oy ••tiog rel'l.d I"U., ,I.u,", •• por tn. !erm. of t~ la<lIil./in<l<u,""",,wnkh m.v 10'01,.a<eel"'lion of 0"""01' in " •• of r""'ll downgrod., Ilo~-,"", If ,oy '"'~ <1'0,"' or. Introdo,"~ ,nd iftngg, •.•d, 'n,

"tinl' ""y '" .o,."lily ond ,~orP downll,'d".

(Thl. follow. ou' brlel ,ationale lor entity publi.hed on July 3<1,2(119)

N.me ofthe O<Iteof Coupon M'lurity Siu oft".I"ue R~t1nl ~•• lln,d

IM"um.nt I•• u.", R.te Oat. (Il•• <'0") .Iong wit" RatingFOutlookund.oa.ed -LT.rerm . . M•• ,n 2037 91£89 ""'"und.oa.ed-lT- . . . 310.24 FA~E 0

o,kinK «'pital Te,m

""~~n-fund.b ••• d - ST- . 29.04 pRED

G/lC

Ann•• ure.2: R~UngHistory of Ian thr •• yea"

". N.me of the Current Rating' Ratin~,to,

" Inmum.nt/Bank "~ ,Q,mOU"t Rating Dal'['} & O<It.(.) & Ratlng(.) Oate[.1 & Oate(.) &

Fa<ilitios Out.tandlng RoUng(.) ••• ilned in ZOlS. R~Ung(.) ~atine-l.)

(~s. cro,e) ~•• igned In Z019 •••• Ign.d In ."iKned inZ019-Z0Z0 Z017-Z0IS 20lli-JOll.,und-b.,O<! • IT.Te,m " 591£,89 CARED . \1)CARE0; 15SUE~ ICARf0 I)CARt:88.

''" OTCOOPERATING*llHul-17) 03'No.-l£106.Apr-18}

, und.b ••• d.lT. " 1310,24 CARED . ))CARt: 0; ISSUE~ ICARf0 l)CARE88.

~o,king capital Te''" OTCOOPERATING*10-lu'-17) OH.o •• 16)

0," ij6.Ap,-18)

; oo_fund.b •• ed .51. " 329,04 "" . )CARED; ISSUE~ lOIRE D )CAREM*

G/LC OTCOOPERA.TING*11)-Jul-17) ;iOHIOU-1606.Ao"18)

CARE Rating. limitedII",m~'1j~no"n., C''l!~::'"r.xff~•••.~r<~Li","od)

n••,,_.E.' ""'0, V'•• "•• n I•••", 1'••••_ ••_ E••••• ,no. N••• 0.1'" "0 OSST."•• ,_,•..•Slll>OO• ,.., .,,_,,_ ••n 'liS • ..-., ••" ••;""••••••• CIN.l."OC •••••' •••• l(O,,,.,

D~ ~D~__~__Annexure_]: D~.II, of raled 1.<llIti••

1. tenet"un f.dlllies:

- .n-Z Ti.~I WCn..~alitll.~Totll:8&"~, no> .,,"" Wcn.1

I.h.o.d ij,nk 181.91 . HO nos _ ISS7 I ,60,82 11991 71l,2

8ookollU",da 2S,S7 . 1.40 30.43 . 3.16 88,86 31.51 187.53

a.n~oll"~io 15,19 . Q.31 . . LaS S2,lO 18 51 IO!Ul

8.n.ol 181.17 4.0S 10,99 161-76 9<.85M.h~••,htra

. . . '51.44

c ••••• aank 123,94 . l,n . 1.42 177-98 ~3.14 315.11

Central Bank of • 10,50 3.10 4.(7 118,09 3682 10,70 ,87,15 IOB,OS SS9,S8,~,Cor!>Or.t"'. ".09 4.15 196 46,96 . 4.,7 138,99 ,19, Ul,"3B'nklOBI aa'nkLld 66.65 HE 9'1.44 . 9.7! 25,.46 93.~1 522,4S

Indian a •• " ••• 1.14 '>4.76 l,lS 79.01 nBS 16;.95.a.n.O,lental B.n~ 01 19.'1 2.03 '.M 78U 960 lSI,71 9J.42 5ll.45.(ammo".Pu"),b /lOI;on.1 . . 9,14 26,.21 61.10 18.46 546.70 ;1I6.5l 1,11S.21

""Sut. e.nkol 219.\8 0,47 lH7 313,11 ~178 860.70 ,]l,ll U77.()4.Indl.lJca llaol< . . 81,&9 . 4.96 n,.os 41,78 244.l1

So!.'[!f"elopment 8.S0 . ,.,Fundocrup . . 0,83 . 083

Tot.1 9,9-88 10,40 SM8 1.169.09 97.921)),6

9-6J),48H 1.l1P,Z 1.U7.U• , •

Repaymenlle,ml

o n.l. TL-3.WCTl-1. wm.z. ~ITl : Equal qua,terly 1n<laliment, till M."h 2024o Tl-Z SHASlJ: fullV ,~paid on June 03. 2019• 003: 13 equal annu.lln'tallment' f,om March 201, till M.rch 2037

TOllllong-te,m fa<llities are R•.nZ7.13 ero,e

the:a.n100.21160,6423.9744.22319.04

Total .horJ.term fadllli •• are R•. 319.04 ~1Ore,

CARE Ra.tlngs L;mlted(Fo.morly ,nown •• c, •• It"'" Iy'- Ro••• "hllmllodj

11'" ,_, 1.1tl••~Vodo_ T••••••'"""0._10" !•••_I." N_ D.I". "0"".'or. '11.' '.4Sll 1100• fo" .'1.'1.451111U • ~~".''';'''' ••Dm • C'N.l"''''MH''''''CQ'''''