| Albert David Limited | ||||||
| Ratings reaffirmed at 'CRISIL A-/Stable/CRISIL A1' | ||||||
| Rating Action | ||||||
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| 1 crore = 10 million | ||||||
| Refer to Annexure for Details of Instruments & Bank Facilities |
Detailed rationale CRISIL Ratings has reaffirmed its ‘CRISIL A-/Stable/CRISIL A1’ ratings on the bank facilities of Albert David Limited (ADL).
Also, CRISIL Ratings has withdrawn its rating on Rs 51.5 crore of proposed long-term bank loan facility at the company's request. This is in line with the CRISIL Ratings policy on withdrawal of bank loan ratings.
The ratings continue to reflect the adequate financial risk profile with ample liquidity, backed by steady accretion to reserve and no major debt-funded capital expenditure (capex) plan. The ratings also factor in the sound marketing and distribution network. These strengths are partially offset by a limited product profile, exposure to intense competition, and susceptibility to regulatory changes.
The topline of ADL has bounced back to pre-Covid-19 levels in fiscal 2022 with improvement in profitability despite an increase in input costs. Sustainability of revenue growth along with maintenance of improved profitability will be key rating drivers. |
Key rating drivers and detailed description Strengths:
A conservative financial policy and steady cash accrual have helped the company to maintain a strong capital structure and debt protection metrics. The adjusted gearing was 0.01 time as on March 31, 2021, while net cash accrual to adjusted debt and adjusted interest coverage ratios were 18.76 and 48.24 times, respectively, for fiscal 2021.
The company’s placental-based formulation, Placentrex, is the only human placenta-based product in India developed through indigenous research. The company is the market leader in this segment and has a process patent over Placentrex, which mitigates competition risk. It is among the top 100 pharmaceutical companies in India (ranked 57th) as per June 2016 rankings of the All-India Organisation of Chemists and Druggists, with a strong presence in the eastern and northern parts of the country.
Weaknesses:
The product portfolio is largely restricted to acute therapeutic segments such as anti-bacterials, anti-infectives, and placental extracts, where competition is intense.
Players in the pharmaceutical industry are exposed to regulatory changes. For instance, the ban on 344 fixed-dose combinations in fiscal 2016 and revision in drug price control order in 2013 that brought more drugs under price control, affected the industry adversely. ADL was also impacted by a ban (which was later lifted) on placental extract-based drugs in February 2011 because of safety concerns. |
Liquidity: Strong Bank limit utilisation was nil for the 13 months ended March 2021. Expected cash accrual of over Rs 30-35 crore per annum, which along with nil term debt obligation will cushion liquidity.
The company has more than Rs. 170 crores of cash & bank balances/ cash equivalents/ marketable securities as on 31st March 2022.
Current ratio was healthy at 2.64 times on March 31, 2021. |
Outlook: Stable CRISIL Ratings believes ADL should maintain its adequate financial risk profile, backed by healthy capital structure and debt protection metrics. The business risk profile is likely to remain supported by the established position of the company in the pharmaceutical industry, especially in the anti-inflammatory segment. |
Rating sensitivity factors Upward Factors:
Downward Factors:
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About the company Incorporated in 1938, the present promoter of ADL, the Kolkata-based Kothari group, acquired a controlling stake in 1965. The company’s first facility was set up in Kolkata to manufacture pharmaceutical formulations in the form of parenteral drugs, tablets and syrups. In 1981, it set up a unit in Ghaziabad, Uttar Pradesh, to manufacture intravenous fluids in glass bottles and in polyethylene bottles based on form-fill-seal technology. Capacity to manufacture capsules, ointments and ophthalmological products was added to this unit later. The company outsources production of traditional medicines (herbal products). Its facilities follow Good Manufacturing Practices guidelines and produce both parenteral and non-parenteral formulations. It has a well-connected distribution network. |
Key financial indicators
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Any other information: Not applicable |
| Note on complexity levels of the rated instrument: CRISIL Ratings' complexity levels are assigned to various types of financial instruments. The CRISIL Ratings' complexity levels are available on www.crisil.com/complexity-levels. Users are advised to refer to the CRISIL Ratings' complexity levels for instruments that they consider for investment. Users may also call the Customer Service Helpdesk with queries on specific instruments. |
Annexure - Details of instrument(s)
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| Annexure - Rating History for last 3 Years | ||||||||||||||||||||||||||||||||||||||||||||||||||||
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| All amounts are in Rs.Cr. | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| Annexure - Details of Bank Lenders & Facilities | ||||||||||||||||||
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Criteria Details
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