Detailed Rationale

Crisil Ratings has revised its outlook on the long-term bank facilities of Aculife Healthcare Private Limited (Aculife) to ‘Stable’ from ‘Positive’ while reaffirmed the rating at ‘Crisil A’. The short-term rating has been reaffirmed at ‘Crisil A1’.

 

The outlook revision reflects the weaker than expected operating performance of the company in fiscal 2025, due to lower export revenues and higher expenses. The revision in the outlook also factors in the moderation in the financial risk profile owing to the onload of acquisition debt, as Aculife acquired a 100% stake in Stericon Pharma Pvt Ltd (SPPL) in fiscal 2025.

 

Revenue was flat on-year at Rs 639 crore in fiscal 2025 (Rs 614 crore in fiscal 2024) due to lower exports in the fourth quarter of fiscal 2025. In fiscal 2026, with new launches in Aculife as well as consolidation of SPPL, the revenue is expected to be ~Rs 850-900 crore. Over the medium term, revenue growth will be aided by new products, along with healthy traction for the existing product portfolio and steady revenue in SPPL. The company has completed capital expenditure (capex) and received regulatory approvals for a host of new products, which will fuel growth in revenue over the medium term.

 

In fiscal 2025, Ebitda margin moderated to 15.1% (21.3% in fiscal 2024) owing to commercialisation expenses for new lines and weaker absorption of fixed costs amid lower export revenue. Furthermore, employee costs were higher with higher-than-normal wage hikes, partly driven by increase in minimum wage in Gujarat. With the consolidation of SPPL, Ebitda for the combined entity is expected to be over 20% over the medium term, supported by new high-margin products in Aculife’s portfolio and benefits of operating leverage.

 

In Q4 fiscal 2025, Aculife completed the acquisition of 100% equity stake in SPPL for Rs 370 crore, which was fully funded through debt. SPPL is a well-established player in the niche space of ophthalmic and eye-care products, contact lens cleaning solutions, sterile eye/ear drops and Ayush-compliant herbal formulations. For fiscal 2025, the company reported revenue of Rs 170 crore and earnings before interest, tax, depreciation and amortisation (Ebitda) margin of ~40%. The acquisition of SPPL is aimed at strengthening Aculife’s presence in the ophthalmic segment while enabling the Nirma group to consolidate its pharmaceutical operations. Aculife intends to merge SPPL with itself, which is expected to take 4–5 months pending regulatory and legal approvals. The acquisition will strengthen Aculife’s business risk profile, given SPPL’s export-oriented business model and diversified revenue streams. Nearly 85% of Stericon’s revenue is export-driven, catering to markets in Europe, the Middle East and Southeast Asia. Its revenue mix includes own-brand sales (15-20%), exports under private label and contract manufacturing for large global retailers. High utilisation, flexible licensing capabilities and custom packaging services add to the operating efficiency and margin sustainability.

 

The financial risk profile has weakened with debt increasing to Rs 599 crore as on March 31, 2025 (Rs 290 crore as on March 31, 2024), owing to debt availed for acquisition of stake in SPPL. As a result, capital structure moderated, as reflected in gearing of 1.45 times as on that date (0.84 time a year earlier). With benefits of cash accrual from SPPL and debt repayment, the financial risk profile will likely improve over the medium term, with interest coverage and net cash accrual to adjusted debt (NCAAD) ratios expected at more than 3.4 times and above 0.20 time, respectively. Further moderation in the debt protection metrics will remain a monitorable.

Analytical Approach

• Crisil Ratings has combined the business and financial risk profiles of Aculife and its subsidiaries, considering common operations and management.
• Also, Crisil Ratings has applied its group notch-up framework to factor in support from the Nirma group.
• Redeemable preference shares in Aculife, subscribed by SPPL, have been treated as 75% equity and 25% debt. Post merger with SPPL in fiscal 2026, the preference shares will stand cancelled.

 

Please refer Annexure - List of Entities Consolidated, which captures the list of entities considered and their analytical treatment of consolidation.

Key Rating Drivers & Detailed Description

Strengths:

• Strong market position in the parenteral business: Aculife is one of the leading players in the parenteral business, supported by strong brands (FlexiVent and One Use) and presence in domestic and international markets. Increasing contribution from high value-added products, primarily parenteral and speciality divisions, led by fresh product launches should drive healthy growth in sales over the medium term. Furthermore, entry into new geographies will enhance the business risk profile.

 

• Healthy operating profitability: Along with the increase in the share of high-margin products, other factors such as cost optimisation and suspension of the loss-making medical devices division, have helped drive healthy operating profitability. The company undertook capex to semi-automate the packaging process and reduce labour cost. Nonetheless, fiscal 2025 saw moderation in operating margin to ~15% from 21.3% in fiscal 2024 owing to commercialisation expenses of new lines and weaker absorption of fixed cost owing to lower export revenue. The overheads increased with higher expenses towards testing and sampling of new products post commercialisation. Furthermore, employee costs were higher with higher-than-normal wage hikes, partly driven by increase in minimum wages in Gujarat. New product additions, rise in exports, and benefits from acquisition of SPPL should support improvement in the operating margin over the medium term.

 

• Support from the Nirma group: Over the years, key management personnel drawn from the Nirma group have provided oversight and are involved in strategy planning, given the criticality of the healthcare business for the Nirma group. Besides, the promoters have supported Aculife in the past by subscribing to preference shares through Nirma Ltd. Given the increasing scale of operations of Aculife and healthy prospects for the healthcare sector, support from the Nirma group should continue.

 

Weaknesses:

• Exposure to intense competition in the parenteral division: Aculife gets ~86% of its revenue from the high-volume, low-value parenteral division amid intense competition (both in the domestic and overseas markets). The company remains exposed to risks posed by tender-based operations and low bargaining power. However, focus on high-value specialty products, wherein the company has better negotiating power, and on building brand equity should lend stability to the operating margin over the medium term.

 

• Working capital-intensive operations: Inventory of 3-4 months and receivables of 1-2 months have led to significant dependence on short-term debt. The company caters to customers in emerging markets only against advance payments, which ensures relatively stable and less risky receivables.

Liquidity: Adequate

Liquidity is aided by moderate bank limit utilisation and adequate cash accrual. Expected cash accrual of Rs 120-140 crore per fiscal will adequately cover capex of Rs 25-30 crore and yearly term debt obligation of Rs 70-110 crore over the medium term. Fund-based bank limit of Rs 145 crore was utilised 71% on average during the 12 months through May 2025. Being part of the Nirma group, Aculife will receive need-based support, enhancing its financial flexibility. The group may undertake inorganic growth in the pharmaceuticals vertical, whose funding and impact on Aculife’s capital structure will be monitorable.

Outlook: Stable

Crisil Ratings believes Aculife will maintain its established position in the parenteral segment, aided by sustained growth in revenue and healthy operating margin. The company is likely to maintain its comfortable financial risk profile, supported by a healthy capital structure and debt protection metrics. The business risk profile will strengthen post the acquisition of SPPL amid expected need-based and timely support from the Nirma group.

Rating sensitivity factors

Upward factors

• Sustained healthy revenue growth and operating margin above 20% leading to higher cash accrual
• Diversification in the revenue profile across geographies and products
• Sustenance of healthy financial risk profile and debt protection metrics

 

Downward factors

• Sluggish revenue growth and decline in operating margin below 13-15% leading to lower cash accrual
• Any large, debt-funded acquisition or capex or further stretch in the working capital cycle weakening the debt protection metrics

About the Company

Aculife was incorporated in 2014 by demerging the healthcare division (Nirlife) of Nirma Ltd (‘Crisil AA/Stable/Crisil A1+’). Nirlife was founded by acquiring a parenteral manufacturing company with a track record of two decades.

 

Aculife offers over 600 products in multiple markets and therapeutic areas, including anesthesia, critical care, anti-infectives, renal care, infusion therapy and parenteral nutrition. It offers injectables in various forms such as glass and plastic bottles, vials, ampoules and prefilled syringes. Products are marketed under the FlexiVent and OneUse brands.

 

The clientele primarily comprises nursing homes, private and corporate hospitals and government institutions. Aculife has an established market position and a large product portfolio in India and markets such as Latin America, the Middle East, Commonwealth of Independent States (CIS), Africa and Asia.

Key Financial Indicators (Crisil Ratings-adjusted numbers)

Particulars	Unit	2025#	2024
Revenue	Rs crore	638	615
Profit after tax (PAT)	Rs crore	31	65
PAT margin	%	4.86	10.60
Adjusted debt / adjusted networth	Times	1.45	0.84
Interest coverage	Times	3.87	39.60

# 2025 numbers are provisional

Any other information: Not Applicable