Detailed Rationale

Crisil Ratings has reaffirmed its ‘Crisil BBB+/Stable’ rating on the long-term bank facilities of Kamakhya Biofuels Pvt Ltd (KBPL; a part of Westwell group). Crisil Ratings has also assigned its ‘Crisil A2’ rating to the short-term bank facility.

 

The rating continues to reflect the extensive experience of the promoters, group’s established market position in liquor and ethanol segment supported by long term offtake agreement with leading oil marketing companies (OMCs) and moderate financial risk profile. These strengths are partially offset by presence in highly regulated alcoholic beverages industry and geographical concentration, presence in highly regulated ethanol industry and susceptibility to raw material prices in the ethanol segment and moderately intensive working capital operations.

Analytical Approach

Crisil Ratings has combined the business and financial risk profile of Westwell Biorefineries Pvt Ltd (WBPL), Pure Spiritss Pvt Ltd (PSPL), Herald Beverages Pvt Ltd (HBPL) and KBPL. This is because all these entities, together referred to as the Westwell group, operate under the same management and promoters and have significant business, operational, financial linkages and cashflow fungibilities. KBPL has been floated as a 51% subsidiary of WBPL with a 250 kilo litres per day (KLPD) ethanol plant being commissioned in the company which has become operational from February 2025 onwards.

 

Please refer Annexure - List of Entities Consolidated, which captures the list of entities considered and their analytical treatment of consolidation.

Key Rating Drivers - Strengths 

Healthy growth in scale stemming from extensive experience of promoters: Experience of over two decades in the country liquor industry has given the promoters an understanding of the market dynamics and helped establish relationships with suppliers and customers. Westwell group's business risk profile is marked by improvement in its revenue over the years; supported by steady scale of operations from liquor segment and healthy offtake from ethanol plant thus leading to improved ethanol sales. Strategic location of the plant in both the business segments thereby ensuring close proximity to raw materials critical to operating performance thereby support established market position of the group. The group has the capacity to manufacture 15.32 crore liquor bottles per annum and ethanol manufacturing capacity of around 575 kilo litres per day (KLPD). It has a well established market position in the liquor segment in West Bengal and long term contracts with oil marketing companies (OMC)s in the ethanol segment thereby ensuring steady scale of operations in both the business segments. The distillery can operate on dual feed i.e. rice and maize dependent on the season thereby ensuring utilization of the capacity throughout the fiscal, aiding profitability and scale of operations. PSPL and HBPL sell country liquor under the Bengal Tiger and Udaan brands, which together cater to various districts in West Bengal and command over 40% market share while WBPL and KBPL produce fuel grade ethanol and has assured offtake from oil marketing companies (OMCs) to meet the Government of India’s ambitious programme of 20% ethanol blending in petrol by 2025. As such, the group has recorded a turnover of Rs 790 crore in fiscal 2025 and about Rs 800 crore in the first half of fiscal 2026 backed by steady demand scenario in both the business segments. Robust demand scenario in both the business segments coupled with increase in ethanol manufacturing capacity shall further strengthen the market position and drive revenue growth with a turnover of around Rs 1800-2000 crore over the medium term.

 

Crisil Ratings believes that the company will continue to benefit from its dominant market position in the country liquor industry and healthy offtake of ethanol from OMCs will continue to offset the cyclicality in the business.

 

Moderate financial risk profile: Financial risk profile should remain supported by healthy accretion to reserves. Networth of the group continues to remain healthy at Rs 291.52 crore as on March 31st, 2025  backed by steady accretion to reserves. Capital structure stands levered in fiscal 2025 amid debt funded capital expenditure (capex) undertaken to enhance ethanol manufacturing capacity to around 325 KLPD from 167.50 KLPD in WBPL and setting up of new ethanol production unit in KBPL as well as setting up of captive power plants. As such, gearing stood around 2.78 times as on March 31st, 2025 and nil debt funded capex plans going forward amidst steady accretion to reserves shall keep gearing comfortable over the medium term. Total outside liabilities to tangible networth (TOL/TNW) ratio also stood at 3.17 times as on March 31st, 2025. Nevertheless, it is expected to improve over the medium term backed by steady accretion to reserves and shall remain a key monitorable. The group shall over the medium term, concentrate on undertaking full production from its existing capacity and does not have any debt funded capex plans over the medium term in both the business segments thereby reducing its reliance on external term debt. Debt protection metrics should also remain comfortable amidst steady profitability generation as well as lower interest rates due to interest subvention schemes in the ethanol segment, with interest coverage ratio expected around 2.50-3 times and net cash accrual to total debt (NCA/AD) ratio at 0.10-0.15 time going forward despite gradual increase in working capital debt in tandem with increase in scale of operations.

Key Rating Drivers - Weaknesses 

Presence in the highly regulated alcoholic beverages industry as well as geographical concentration: Westwell Group via PSPL and HBPL operates in the Indian brewery and distillery industry. Various facets of the industry such as production, distribution, raw material availability and advertisements are highly regulated by the state and central governments. The industry operates based on licenses provided by state governments. Sale and distribution of liquor products in both the wholesale and retail sectors are controlled by each state. Thus, government regulations have a significant effect on profitability, particularly in states where the government controls the pricing and any significant change in excise policy of respective state and subsequently its impact on the company will be closely monitored. Any regulatory change in one state could alter the dynamics of the entire industry. Thus, cash flow is susceptible to changes in the regulatory landscape. Hence, any change in government policies related to the procurement of raw materials or pricing will impact operations and remain a key monitorable. As such, EBITDA Margins in the liquor segment have remained volatile over the past few fiscals basis volatility in the primary raw material, that is Extra Neutral Alcohol (ENA) with moderate time lag in country liquor price revision in tandem with ENA prices. EBITDA Margins in the liquor segment are expected to remain around 8-10% over the medium term on the back of stable demand and expectation of stable ENA prices. PSPL and HBPL generate its revenue through sale of liquor in West Bengal and is susceptible to regulatory actions by the state or state specific events, which can have a significant impact on revenue and profitability. Nevertheless, the management’s focus on diversifying presence and revenue streams (entry into ethanol) has lowered the geographical concentration in revenue and its sustenance through healthy contribution of the ethanol segment to revenue will remain a key monitorable.

 

Presence in highly regulated ethanol segment: The government’s thrust on increased ethanol blending with petrol has led to a firm offtake from oil marketing companies for WBPL in the group. Moreover, with recently commissioned ethanol capacity of 250 KLPD from February, 2025 onwards in KBPL amid long term offtake agreement with leading OMCs further supports the ethanol segment in the group. Government has preponed its 20% ethanol blending target to 2025 from 2030, which has led to healthy demand prospects for ethanol produced within the group and remunerative ethanol prices also incentivize players like WBPL and KBPL. Envisaging the healthy offtake in the ethanol segment, WBPL has enhanced its ethanol manufacturing capacity to 325 KLPD which has started operations from January 2025 onwards; full year benefit to flow in from fiscal 2026 onwards. Additionally, the group has floated a 51% subsidiary of WBPL namely, KBPL under which it has commissioned a 250 KLPD ethanol plant, which became operational from February, 2025 onwards. Nevertheless, the operating performance in the ethanol segment remains vulnerable to raw material availability and pricing as well as regulations set up by the central government regarding procurement and pricing of raw material for ethanol production as well as ethanol pricing which is subject to change on a regular basis driven by the grain promoted by the government for ethanol production dependent on the agricultural yield. Ethanol produced by the group remain extremely sensitive to fluctuations to commodity prices thereby impacting the overall revenue and profitability profile of the group from the ethanol segment. The availability and prices of key raw material, rice and maize, is seasonal and susceptible to agricultural yield. Any adverse climatic conditions detrimental to the production of maize and rice in the region can affect revenue and performance of the group. As such, EBITDA Margins from the ethanol segment have remained volatile over the past few fiscals. However, the government has made supplies profitable by raising ethanol prices every fiscal, in addition to differential pricing for maize based ethanol production as compared to rice based production and providing interest sops on loans for setting up ethanol-based distilleries. Any change in the regulatory stance and continuation of government support to the overall sector (distilleries and ethanol pricing) are key monitorables. Basis assured offtake from Oil Marketing Companies (OMCs) for ethanol on the back of government’s thrust on ethanol blending program, expectation of stable raw material prices such as biomass, maize and rice, favourable ethanol realisations set up by the central government as well as better economies of scale through enhanced operational capacity, EBITDA Margins from the ethanol segment are expected to be healthy around 11% over the medium term and shall remain a key monitorable amid stabilization of operations in recently setup capacities in KBPL.

 

Moderately intensive working capital operations: Gross current assets (GCAs) were moderately sizeable at around 213 days as on March 31, 2025, because of inventory holding of around 60 days primarily comprising raw material stock holding of maize and rice for ethanol production and moderate receivables of around 45-50 days. GCAs are expected to remain at similar levels over the medium term as well. Though inventory remains moderate during off season, the company requires to extend adequate credit to the distributors in the liquor segment while payment from OMCs in the ethanol segment is realised within 21-30 days. The group relies on working capital limits and moderate credit available on procurement to fund working capital. Any elongated stretch in the working capital cycle adversely impacting the liquidity risk profile shall remain a key monitorable.

Liquidity Adequate

onsolidated bank limit utilization of fund based limits was around 77% during the past twelve months through September, 2025. Cash accruals of the group remain expected around Rs 120 crore in FY2026 which shall be adequate against term debt repayment obligation of around Rs 40 crore. Going forward, cash accruals are expected to be around Rs 120-130 crore per annum and shall remain adequate against term debt repayment obligations of around Rs 60-70 crore per annum over the medium term. In addition, it shall enhance financial flexibility to cushion any exigencies, incremental working capital requirement or capex plans of the group amid adequate cashflow fungibility amongst the group entities.  Unencumbered liquidity of around Rs 9.37 crore as on March 31st, 2025 further support liquidity. Healthy support from promoters in the form of unsecured loans or equity infusion shall be available if needed with unsecured loan from promoters of Rs 67 crore as on March 31st, 2025 which has been treated as debt. Current ratio stood moderate at 1.20 times as on March 31st, 2025.

Outlook Stable

Crisil Ratings believes the Westwell group will continue to benefit from the extensive experience of its promoters, established relationships with clients, healthy offtake from OMCs in the ethanol segment and healthy demand scenario for country liquor basis the healthy brand position in West Bengal.

Rating sensitivity factors

Upward factors

• Substantial growth in scale of operations to around Rs 2000 crore on a sustained basis driven by volumetric growth in ethanol segment and timely ramp up of operations in the recently commissioned ethanol capacities in WBPL and KBPL and improvement in operating profitability thereby leading to higher cash accruals.
• Improvement in capital structure with gearing below 2 times in the absence of any large debt funded capex.

 

Downward factors

• Deterioration in operating performance leading to significant decline in operating profitability, thereby reducing cash accruals below Rs 50 crore per fiscal
• Higher-than-expected debt-funded capital expenditure (capex), acquisition, stretch in the working capital cycle or any unanticipated change in the overall group structure resulting in material increase in leverage thereby significantly weakening the financial and liquidity risk profiles

About the Group

PSPL, incorporated in 1995 by Mr. Pradyut Sinha and Mr. Kamal Pandey, bottles country liquor at its plant in Nadia, West Bengal, with total capacity of 8.84 crore bottles. It is currently controlled by Mr. Manish Kumar Jaiswal and family members. The company sells its products under the Bengal Tiger and Udaan brands.

 

WBPL, incorporated in 2004, is promoted by Mr. Devendra Prasad Singh, Mr. Rakesh Kumar, Mr. Manish Kumar Jaiswal, Mr. Manoj Kumar and Mr. Ramashanker Prasad. The company earlier manufactured extra neutral alcohol and rectified spirit. Following the ban on liquor by the Bihar government, it started manufacturing ethanol in June 2016 with initial capacity of 45 kilolitre per day (KLPD). The company enhanced capacity to 75 KLPD in June 2019, 97.5 in December 2021,167.5 KLPD in October, 2023 and 330 KLPD operational from January, 2025 onwards. Its plant is in Bihar and it sells to all major OMCs under assured offtake agreements.

 

HBPL, incorporated in 2008, bottles country liquor and has capacity of 6.48 crore bottles. HBPL was acquired by current promoters in 2019. The company does jobwork for IFB Agro Industries Ltd and sells its own manufactured liquor through distributors.

 

KBPL, incorporated on September 14, 2021 is engaged in the manufacturing of grain base ethanol and its byproducts) under the Ethanol Blending Program scheme launched by GOI with an installed capacity of 250KLPD. The manufacturing facility is located in Darrang district in Assam. The company is promoted by Mr. Prashant Jaiswal, Mr. Karan Jaiswal, Mr. Vivek Jaiswal, Mr Umed Khaitan, Mr Prabhanu Keshan and Mr Umang Jhunjhunwala. The company also runs a 6.0 MW captive power plant. Currently, KBPL is elected by GOI for Ethanol Blending Program scheme and the company has entered into a Long-Term Offtake Agreement with OMCs. The total project cost was around Rs. 371 crore and the plant has started operations from February 2025 onwards. It is a 51% subsidiary of Westwell Biorefineries Pvt Ltd (WBPL) and all loans of Kamakhya Biofuels remain guaranteed by WBPL. It has already entered into offtake agreements with major OMCs.

Key Financial Indicators (Consolidated)

As on / for the period ended March 31*		2025	2024
Operating income	Rs crore	789.91	462.07
Reported profit after tax	Rs crore	40.67	12.51
PAT margin	%	5.15	2.71
Adjusted debt/adjusted networth	Times	2.78	1.61
Interest coverage	Times	2.44	1.68

*Crisil Ratings adjusted numbers

Any other information: Not applicable