| Biorad Medisys Private Limited | ||||||
| Ratings Reaffirmed | ||||||
| Rating Action | ||||||
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| 1 crore = 10 million | ||||||
| Refer to annexure for Details of Instruments & Bank Facilities | ||||||
| Detailed Rationale |
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CRISIL has reaffirmed its 'CRISIL BB+/Stable/CRISIL A4+' ratings on the bank facilities of Biorad Medisys Pvt Ltd (BMPL). |
| Key Rating Drivers & Detailed Description |
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Strengths: * Promoter's extensive experience and established position in the medical devices industry: The key promoter, Mr Jitendra M Hegde, has around two decades of experience. This has helped him gain strong insights into the industry and establish healthy relationships with suppliers, customers and logistic providers, which should continue to support the business risk profile. * Healthy financial risk profile: The networth was Rs 50.50 crore as on March 31, 2020. Additionally, gearing was 0.80 time. CRISIL also believes the company's healthy and stable operating margin and controlled interest expenses will help retain healthy debt protection metrics over the medium term, despite capital expenditure (capex) for the current fiscal. Weaknesses: * Small scale in the fragmented and competitive medical devices industry: BMPL is a small player in the medical devices industry, despite increase in operating income to Rs 90.55 crore in fiscal 2020 (against Rs 77.49 crore in fiscal 2019). No major impact is expected in the current fiscal from the Covid-19 pandemic, which was offset by introducing a new product line. The disposable medical devices industry is highly fragmented with the presence of both domestic and international players. Furthermore, it is an intensely competitive industry, especially because of Chinese players. Despite a strong distribution network and diversified segmental revenue stream, scale is likely to remain subdued over the medium term, on account of exposure to intense competition and presence of large players in the industry. * Working capital-intensive operations: Gross current assets (GCAs) were high at 270-300 days over the four years ended March 31, 2020. GCAs were at 263 days as on March 31, 2020. There is limited cushion in working capital bank limits on account of large working capital requirement, thereby constraining liquidity. |
| Liquidity Adequate |
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BMPL is expected to generate cash accrual of Rs 8-10 crore over the medium term, which is sufficient to meet debt obligation of Rs 2-3 crore during the same period. The promoters have supported the liquidity of the company in the form of interest-free unsecured loans of Rs 3.4 crore as on March 31, 2020. The company's bank lines have remained highly utilised at 99% on average over the 12 months through September 2020. The high bank limit utilisation is on account of large working capital requirement. Current ratio was moderate as on March 31, 2020 at 1.14 times. |
| Outlook: Stable |
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CRISIL believes the financial risk profile, particularly liquidity, will remain comfortable over the medium term. |
| Rating Sensitivity factors |
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Upward factors: * Maintaining the operating margin at over 13%, leading to higher-than-expected net cash accrual * Revenue growth of above 15% in fiscal 2020 Downward factors: * Decline in the operating margin to below 10%, on account of volatility in forex fluctuations or raw material prices * Extent of capex and its funding * Deterioration in the financial risk profile, particularly interest coverage ratio * Higher-than-expected incremental investment in group companies, thereby constraining the liquidity profile |
| About the Company |
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Incorporated in 2000, BMPL is promoted by the Mumbai-based Mr Jitendra Hegde and his wife, Ms Suchitra J Hegde. The company started commercial operations in 2006 and manufactures disposable medical equipment catering to the gynaecology, urology and gastroenterology segments. It also manufactures orthopaedic implants which are used in knee and hip replacement surgeries. |
| Key Financial Indicators | ||||||||||||||||||||||||
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Any other information: Not applicable |
| Note on complexity levels of the rated instrument: CRISIL complexity levels are assigned to various types of financial instruments and are included (where applicable) in the Annexure -- Details of Instrument in this Rating Rationale. For more details on the CRISIL complexity levels, please visit www.crisil.com/complexity-levels. |
| 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 various bank facilities | ||||||||||||||||||||||||||||||||||||||||||
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| For further information contact: | ||||||
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