Organic Recycling Systems approves ₹30 crore guarantee for subsidiary
- Board approved a ₹30.00 crore corporate guarantee for wholly owned subsidiary Solapur Bioenergy Systems Private Limited.
- Credit facilities include ₹20.00 crore fund-based and ₹10.00 crore non-fund-based instruments from Bank of Baroda.
- Deed of Indemnity approved for Insurance Surety Bonds supporting projects with aggregate contract value of ₹101.55 crore.
- Projects involve BPCL (Mysuru, Raipur) and IOCL (Gorakhpur), with EPC performance security totaling ₹10.80 crore.
*this image is generated using AI for illustrative purposes only.
Organic Recycling Systems Limited board has approved a corporate guarantee of ₹30.00 crore in favour of Bank of Baroda to support credit facilities for its wholly owned subsidiary, Solapur Bioenergy Systems Private Limited (SBESPL).
The approval, granted during the board meeting held on October 12, 2026, is intended to facilitate working capital and project execution requirements for SBESPL. The company also approved the execution of a Deed of Indemnity in favour of Kiwi General Insurance Limited. This indemnity relates to Insurance Surety Bonds issued or proposed to be issued on behalf of SBESPL to meet performance-security requirements for its project contracts.
Corporate Guarantee Details
The corporate guarantee secures credit facilities aggregating ₹30.00 crore sanctioned to SBESPL vide a sanction letter dated October 6, 2026. The facilities are split between fund-based and non-fund-based instruments to support specific projects and existing business operations.
| Facility Type | Project/Usage | Amount (₹) |
|---|---|---|
| Working Capital Demand Loan/Overdraft | Raipur BPCL project | 9.50 crore |
| Working Capital Demand Loan/Overdraft | Mysuru BPCL project | 9.50 crore |
| Overdraft | Existing business | 1.00 crore |
| Bank Guarantee facility | BPCL projects | 10.00 crore |
| Total Fund-based | 20.00 crore | |
| Total Non-fund-based | 10.00 crore | |
| Aggregate Sanctioned | 30.00 crore |
Indemnity Deed and Project Security
Concurrently, the board approved a Deed of Indemnity to secure the insurer's obligations regarding Insurance Surety Bonds. These bonds are critical for SBESPL’s participation in large-scale energy projects awarded by public sector undertakings.
The underlying projects include the Mysuru CBG and Raipur CBG projects awarded by Bharat Petroleum Corporation Limited (BPCL), and the Gorakhpur project for which a work order was received from Indian Oil Corporation Limited (IOCL). The aggregate contract value for these projects is approximately ₹101.55 crore, including GST. The total EPC performance security amount covered by these bonds stands at approximately ₹10.80 crore.
What the Numbers Show
The financial support structure reveals a concentrated exposure to two major state-owned enterprises, BPCL and IOCL. While the direct guarantee covers ₹30.00 crore, the indemnity deed supports performance securities for contracts worth ₹101.55 crore. This indicates that the subsidiary’s operational pipeline is heavily reliant on these specific government-linked tenders. The ratio of performance security (₹10.80 crore) to total contract value (₹101.55 crore) suggests a standard industry requirement, but the parent company’s contingent liability extends across both debt financing and contractual performance risks.
Historical Stock Returns for Organic Recycling Systems
| 1 Day | 5 Days | 1 Month | 6 Months | 1 Year | 5 Years |
|---|---|---|---|---|---|
| -1.65% | +0.45% | +13.03% | +30.11% | +16.60% | +34.29% |
How will the execution timeline for the BPCL and IOCL projects impact the release of the ₹30 crore credit facilities?
What is the current financial health and revenue visibility of Solapur Bioenergy Systems Private Limited given its reliance on public sector tenders?
Are there plans for Organic Recycling Systems Limited to diversify SBESPL's client base beyond BPCL and IOCL to mitigate concentration risk?
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