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CRISIL has assigned its ‘BB-/Negative/P4’ ratings to TTK Healthcare TPA Pvt Ltd’s (TTK Healthcare’s) bank facilities. The ratings reflect the sharp decline in TTK Healthcare’s revenues and operating margin in 2009-10 (refers to financial year, April 1 to March 31) because of changes in the company’s senior management structure and loss of contracts. The ratings also reflect the company’s constrained liquidity, and its exposure to risks related to intense competition in the third-party administrator (TPA) services industry. These rating weaknesses are partially offset by TTK Healthcare’s established position as a leading TPA services provider with a reputed clientele.
Outlook: Negative
CRISIL believes that the frequent changes in TTK Healthcare’s senior management, and the expected change in the ownership structure could result in deterioration in the company’s credit risk profile. The rating may be downgraded in case of sustained decline in revenues and increased losses, or if TTK Healthcare contracts any long-term debt. Conversely, the outlook may be revised to ‘Stable’ if stabilisation in operations after the takeover by the new management significantly improves the company’s volumes and profitability.
About the Company
Set up in 2002, TTK Healthcare provides TPA services, and has a network of over 5300 hospitals. The company is part of the TTK group, and group companies currently hold 74 per cent stake in TTK Healthcare. In 2006-07, Swiss Reinsurance Company Ltd (Swiss Re; rated ‘A+/Stable/A-1’ by Standard & Poor’s), a Switzerland-based re-insurance company, acquired a 26-per-cent stake in TTK Healthcare. Though the TTK group holds a majority stake in company, the management and day-to-day affairs rest with Swiss Re. In June 2009, the then CEO Mr. S. Krishnamurthy was replaced by Mr. Shivakumar Belavadi, who was appointed by Swiss Re. With effect from July 1, 2010, Mr. Satish Raju, a senior executive of Swiss Re, has been appointed as the new CEO.
TTK Healthcare reported a net loss of Rs.63 million on net sales of Rs.264 million for 2009-10, against a net loss of Rs.13 million on net sales of Rs.361 million for 2008-09.
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Media Contacts
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Analytical Contact
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CRISIL Rating Desk
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Mitu Samar
Head, Market Development & Communications
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Email: msamar@crisil.com
Tanuja Abhinandan
Market Development & Communications
CRISIL Limited
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Email: tabhinandan@crisil.com
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Gurpreet S Chhatwal
Director - CRISIL Ratings
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Email: gchhatwal@crisil.com
Vasudevan R
Head - CRISIL Ratings
Tel: +91-44-6656 3106
Email: rvasudevan@crisil.com
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Email: CRISILratingdesk@crisil.com
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