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CRISIL has assigned its ‘BB-/Stable’ rating to the bank facilities of Purple Medical Solutions Private Ltd (PMSPL, part of the Purple group). The rating reflects PMSPL’s average financial risk profile, which is expected to deteriorate on account of PMSPL’s proposed debt-funded acquisition of MIV Therapeutics India Ltd (MIVTI), and the risks associated with integration and turnaround of MIVTI’s operations. These weaknesses are partially offset by the benefits that PMSPL derives from the experience of the Purple group’s promoters in the healthcare industry, and from the group’s established presence in the coronary stent segment. For arriving at its ratings, CRISIL has consolidated the business and financial risk profiles of PMSPL and MIVTI, together referred to as the Purple group. This is because PMSPL is in the process of acquiring MIVTI, and the two entities will have a common management; MIVTI will operate as the manufacturing arm, and PMSPL as the distribution arm, for stents in India.
Outlook: Stable
CRISIL believes that the proposed acquisition of MIVTI will help PMSPL integrate backwards into manufacturing, and thus strengthen its business risk profile. However, the leveraged transaction will constrain PMSPL’s financial risk profile, and therefore, its credit risk profile, over the medium term. The outlook may be revised to ‘Positive’ if PMSPL benefits from the synergies of the acquisition as envisaged, and successfully turns around MIVTI’s operations. The outlook may be revised to ‘Negative’ if the group fails to derive benefits from the MIVTI acquisition, or if its profitability fails to pick up, thus adding to the pressure on the group’s financial risk profile.
About the Group
Established in August 2007, PMSPL distributes coronary stents and related accessories that are used in coronary angioplasty. PMSPL began operations in April 2008, as the nationwide distributor for MIVTI, and is the sole India distributor for the company. MIVTI is a subsidiary of MIV Therapeutics Inc, Canada (MIVTC), which is primarily a research and development company focused on biocompatible stent coatings for implantable devices and drug deliveries.
PMSPL was constituted by five friends-Mr. Brian Lancelot, Mr. Praneet Sharma, Mr. Mathew Thomas, Mr. Murli Bendele and Mr. Rajesh Shrivas, who, prior to setting up PMSPL, led business and operations for leading medical device manufacturers in India. PMSPL’s list of 80-90 customers has leading hospitals including Dr. Hiranandani Hospital, Jaslok Hospital, and Surana Hospital (Mumbai), Jahangir Hospital (Pune), and Apollo Hospital (Ahmedabad).
PMSPL, on a provisional basis, reported a profit after tax (PAT) of Rs.13.5 million on an operating income of Rs.288 million for 2010-11 (refers to financial year, April 1 to March 31), as against a PAT of Rs.6.8 million on an operating income of Rs.180 million for 2009-10.
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About CRISIL Limited
CRISIL is a global analytical company providing ratings, research, and risk and policy advisory services. We are India's leading ratings agency. We are also the foremost provider of high-end research to the world's largest banks and leading corporations.
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Last updated: March 31, 2011
Disclaimer: A CRISIL rating reflects CRISIL's current opinion on the likelihood of timely payment of the obligations under the rated instrument and does not constitute an audit of the rated entity by CRISIL. CRISIL ratings are based on information provided by the issuer or obtained by CRISIL from sources it considers reliable. CRISIL does not guarantee the completeness or accuracy of the information on which the rating is based. A CRISIL rating is not a recommendation to buy, sell, or hold the rated instrument; it does not comment on the market price or suitability for a particular investor. All CRISIL ratings are under surveillance. Ratings are revised as and when circumstances so warrant. CRISIL is not responsible for any errors and especially states that it has no financial liability whatsoever to the subscribers / users / transmitters / distributors of this product. CRISIL Ratings’ rating criteria are generally available without charge to the public on the CRISIL public web site, www.crisil.com. For the latest rating information on any instrument of any company rated by CRISIL, please contact CRISIL RATING DESK at CRISILratingdesk@crisil.com, or at (+91 22) 3342 3000.
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