| Amoli Organics Private Limited | ||||||
| Rated amount enhanced | ||||||
| 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-/Negative/CRISIL A2+’ ratings on the bank facilities of Amoli Organics Private Limited (AOPL).
The ratings continue to reflect the promoters' extensive experience in the pharmaceuticals industry and their established customer relationships and the company’s healthy financial risk profile. These strengths are partially offset by exposure to risks related to volatility in raw material prices, regulatory changes, product concentration and large working capital requirement.
CRISIL Ratings has revised its outlook on the long-term bank loan facilities of AOPL to ‘Negative’ from ‘Stable’ while reaffirming the ratings at ‘CRISIL A-’. Short term rating has been reaffirmed at ‘CRISIL A2+’ on March 7, 2022 |
Analytical Approach CRISIL Ratings has treated unsecured loan from promoters of Rs 0.41 crore as on March 31, 2021 as debt. |
Key Rating Drivers & Detailed Description Strengths:
AOPL has been active in the active pharmaceutical ingredients (API) manufacturing segment since 1991, and its promoters have over three decades of industry experience during they have developed healthy understanding of market dynamics. Over the years, the company has built a clientele across geographies (over 50 countries) resulting in diversification in revenue profile (50-55% revenue from export). Constant upgrades in production facilities and research and development (R&D) have helped the company obtain approvals from various regulatory authorities which has strengthened customer relationships. The clients include major global players such as Aurobindo Pharma Ltd, Gsk Consumer Healthcare Sa, Olon SPA and Torrent Pharmaceuticals Ltd. AOPL plans to launch multiple new products over the medium term.
The financial risk profile has improved continuously over the years on account of rising networth. The gradual improvement in capital structure is reflected in total outside liabilities to adjusted networth ratio of 1.34 times as on March 31, 2021, compared with 1.82 times as on March 31, 2019. Debt protection metrics have also improved as indicated by healthy interest coverage and net cash accrual to adjusted debt ratio of 8.04 times and 0.45 time, respectively, for fiscal 2021. Debt protection is expected to moderate in fiscal 2022 on account of expected moderation in operating margin and increased debt resulting in incremental interest outlay.
Weaknesses:
Raw material costs account for 50-55% of total sales, and hence, any volatility in input prices has a direct bearing on the operating margin of the company as seen during YTD 9 months of fiscal 2022. Operating margin moderated to around 10% during this period. Furthermore, being in the pharmaceuticals industry, its operations remain susceptible to regulatory changes both in India and abroad. Improvement in operating margin to previous levels to remain key rating sensitivity.
AOPL derives 25-30% of its revenue from a single product variant, which exposes company to the product concentration risk. Any disruption in the demand-supply dynamics will have a major impact on the company’s performance.
AOPL had gross current assets (GCAs) of 222 days as on March 31, 2021, driven by receivables and inventory of 119 days and 107 days, respectively. Incremental working capital requirement arising from sharp growth, spontaneous operational requirements or capex remain key rating sensitivity factors. |
Liquidity: Adequate Liquidity should remain adequate driven by expected cash accrual of Rs 43.0 crore to Rs 63.5 crore in fiscals 2022 and 2023, respectively, against term debt obligation Rs 16.3 crore and Rs 19.7 crore respectively. Company had unencumbered cash and equivalents of Rs 0.72 crore as on March 31, 2021. The fund-based limits were utilised 88% on average over the 12 months through December 2021. Of the proposed capex of Rs 60-70 crore over the medium term, 60-70% is expected to be funded through debt and the balance through internal accrual. The company has enhanced its fund-based limits by Rs 10 crore for supporting incremental working capital requirement. It had availed of guaranteed emergency credit line loan of Rs 45 crore in fiscal 2022. Current ratio was 1.41 times as on March 31, 2021. |
Outlook: Negative CRISIL Ratings believes AOPL will continue to benefit over the medium term from its promoters' extensive industry experience and established relationships with customers. |
Rating Sensitivity factors Upward factors
Downward factors
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About the Company AOPL was incorporated by Mr Manish Doshi and Mr Umed Doshi in 1991. It manufactures bulk drugs/APIs, and caters primarily to the anti-inflammatory, anti-fungal and anti-depressant segments. Its manufacturing facilities are at Vapi and Vadodara in Gujarat. |
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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This Annexure has been updated on 15-Mar-22 in line with the lender-wise facility details as on 15-Mar-22 received from the rated entity.
Criteria Details
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