July 03, 2015
Mumbai
Poly Medicure Limited
 
Rated amount enhanced
 
Total Bank Loan Facilities Rated Rs.1414.3 Million (Enhanced from Rs.1152.1 Million)
Long Term Rating CRISIL A+/Stable (Reaffirmed)
Short Term Rating CRISIL A1 (Reaffirmed)
(Refer to Annexure 1 for Facility-wise details)

CRISIL ratings continue reflect the Poly Medicure Ltd's (Poly Med; part of the Poly Med group) healthy financial risk profile, marked by a large net worth, low gearing, and strong debt protection metrics. The ratings also factor in the group's strong operating efficiencies, marked by a healthy operating margin and strong return on capital employed. The strong operating efficiencies are driven by in-house tool design and R&D facilities, automated facilities at the group's Unit I in Faridabad (Haryana), backward integration into manufacturing of needles and catheters, and labour-cost advantage over multinational competitors. These rating strengths are partially offset by the Poly Med group's susceptibility to fluctuation in raw material prices and foreign exchange (forex) rates, to changes in policies of the government and other regulatory authorities, and to intense competition from the unorganised segment in the domestic market.

CRISIL had earlier upgraded its rating on the long-term bank facilities of Poly Medicure Ltd (Poly Med; part of the Poly Med group) to 'CRISIL A+/Stable' from 'CRISIL A/Positive', while reaffirming its rating on the company's short-term facilities at 'CRISIL A1' via rating rationale dated 24th April 2015.

For arriving at its ratings, CRISIL has combined the business and financial risk profiles of Poly Med and its subsidiary, Poly Medicure (Laiyang) Co Ltd (PMLCL; based in China), together referred as Poly Med group.

Outlook: Stable

CRISIL believes that the Poly Med group's business risk profile will remain strong over the medium term, supported by its established market position in the medical devices industry, increasing production capacities, and continuous focus on upgrade and automation of machinery, and on new product development, leading to sustained healthy profitability. The outlook may be revised to 'Positive' if the group significantly diversifies its product profile leading to lower dependence on intravenous (IV) cannula and related products, thereby registering substantial growth, while sustaining its healthy operating profitability and capital structure. Conversely, the outlook may be revised to 'Negative' if the group's net cash accruals are low because of a decline in its profitability on account of significant fluctuations in forex rates or increase in raw material prices, or if its capital structure weakens, most likely because of large debt-funded capital expenditure or higher working capital requirements.

About the Group

Poly Med, incorporated in 1995, manufactures disposable medical items, such as IV cannula, blood bags, blood storage tubes, and infusion and transfusion sets.

PMLCL started commercial operations in April 2009, with a capacity to produce 20 to 25 million pieces per annum.US Safety Syringes Co, LLC (based in the US) in which Poly Med owned 75 per cent stake, was wound up in 2013-14. Poly Med caters to the African market through Ultra For Medical Products Company, its joint venture with the El-Agar group.

Poly Med reported PAT of Rs.600 million on net sales of Rs.3.7 billion for 2014-15, against a PAT of Rs.430 million on net sales of Rs.3.1 billion for 2013-14.
 

Annexure 1 - Details of various bank facilities
Current facilities Previous facilities
Facility Amount (Rs.Million) Rating Facility Amount (Rs.Million) Rating
Bank Guarantee 90 CRISIL A1 Bank Guarantee 60 CRISIL A1
Cash Credit 500 CRISIL A+/Stable Cash Credit 350 CRISIL A+/Stable
Letter of Credit 160 CRISIL A1 Letter of Credit 140 CRISIL A1
Rupee Term Loan 2.2 CRISIL A+/Stable Term Loan 602.1 CRISIL A+/Stable
Term Loan 602.1 CRISIL A+/Stable -- 0 --
Standby Line of Credit 60 CRISIL A+/Stable -- 0 --
Total 1414.3 -- Total 1152.1 --
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July 03, 2015

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