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CRISIL’s ratings on the bank facilities of Healthcaps India Ltd (HIL) continue to reflect HIL’s small scale of operations and exposure to risks inherent in the pharmaceutical industry. The ratings also factor in HIL’s working capital intensity, marked by long receivable cycles, leading to pressure on liquidity. These rating weaknesses are, however, partially offset by the company’s established presence in the domestic gelatine capsule industry, and moderate financial risk profile marked by moderate gearing and debt protection metrics.
Outlook: Stable
CRISIL believes that HIL will continue to benefit over the medium term from its established presence in the empty gelatine capsules industry, and healthy operating efficiencies. The outlook may be revised to ‘Positive’ if the company’s topline and profitability improve substantially leading to higher-than-expected cash accruals and improvement in its liquidity. Conversely, the outlook may be revised to ‘Negative’ in case there is an increased pressure on HIL’s liquidity because of large working capital requirements.
About the Company
Incorporated in 1983 by Mr. Chiranjiv Singh, HIL manufactures and sells empty hard-gelatin capsules. Its manufacturing unit at Fatepur (Punjab) has capacity to produce 5 billion capsules per annum, which is the second largest capacity in India. It sells its products to pharmaceutical companies such as Maxheal Pharmaceuticals Pvt Ltd, Cipla Ltd, and Wockhardt Ltd. The company has an in-house research and development department, and marketing offices at Baddi (Himachal Pradesh), Chandigarh, New Delhi, and Mumbai.
HIL reported a profit after tax (PAT) of Rs.5.1 million on net sales of Rs.246.6 million for 2009-10 (refers to financial year, April 1 to March 31), against a PAT of Rs.13.7 million on net sales of Rs.214.8 million for 2008-09.
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Media Contacts
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Analytical Contacts
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CRISIL Rating Desk
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Mitu Samar
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Tanuja Abhinandan
Market Development & Communications
CRISIL Limited
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Email: tabhinandan@crisil.com
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Gurpreet S Chhatwal
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Pradeep K Aggarwal
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Email: paggarwal@crisil.com
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Note:
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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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