ICRA has assigned an IPO Grade 1 to the proposed initial public offering of Chemcel Biotech indicating poor fundamentals. ICRA assigns IPO gradings on a scale of IPO Grade 5 to IPO Grade 1, with Grade 5 indicating strong fundamentals and Grade 1 indicating poor fundamentals. The IPO Grade 1 assigned by ICRA reflects CBL's small scale of operations, the high intensity of competition in the fragmented agrochemicals industry, the company's extremely high working capital intensity, the vulnerability of its earnings to agro-climatic conditions and development of pest resistant GM crops, the uncertainty over the viability of the biodiesel venture because of issues relating to availability and price of the feedstock and it's below average corporate governance practices. However, ICRA also believes that CBL benefits from its proximity to the large pesticides market in AP and the considerable experience of its promoters in the agrochemicals business.

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