Rating Rationale
November 13, 2018 | Mumbai
Fermenta Biotech Limited
Ratings Withdrawn
Rating Action
Total Bank Loan Facilities Rated Rs.48 Crore
Long Term Rating CRISIL BBB/Watch Developing (Withdrawn)
Long Term Rating CRISIL BBB (Continues on 'Rating Watch with Developing Implications'; Rating Withdrawn)
Short Term Rating CRISIL A3+ (Continues on 'Rating Watch with Developing Implications'; Rating Withdrawn)
1 crore = 10 million
Refer to annexure for Details of Instruments & Bank Facilities
Detailed Rationale

CRISIL has withdrawn its rating on Fermenta Biotech Limited (FBL) cash credit limit of Rs 5 crore at the company's request and on receipt of the no-dues certificate from the banker. Further, CRISIL has continued the 'Rating Watch with Developing Implications' and withdrawn its ratings on FBL's remaining bank facilities, at the company's request and on receipt of no objection certificate from the banker. The rating actions are in line with CRISIL's policy on withdrawal of bank loan ratings.
CRISIL had placed the ratings on watch on Dec 12, 2017 based on the announcement by FBL's parent, DIL Ltd (DIL) that it is considering amalgamation of FBL with itself and has authorized a committee of its directors to come out with a recommendation on the same. On March 06, 2018, CRISIL had revised the rating watch on FBL's bank facilities to 'Rating Watch with Developing Implications', from 'Rating Watch with Negative Implications'. This rating action factored in the significant improvement in the company's performance, particularly in the third quarter of fiscal 2018, which is likely to sustain over the medium term. It also factored in contracting of debt at favorable terms by DIL, to acquire stake in FBL from an outgoing private equity (PE) investor, thereby improving debt-servicing ability and easing pressure on FBL to support parent's debt servicing. Any deterioration in FBL's credit risk profile upon merger with DIL will be modest, against earlier expectation.

About the Company

Set up in 1986 as Fermenta Pharma Biodil Ltd as a subsidiary of DIL (holds 91.2% stake), FBL is a listed company and is promoted by Mr Krishna Datla. DIL derives income from investments and real estate. FBL has two manufacturing facilities, one each at Mandi (Himachal Pradesh; set up in 1987) and Dahej special economic zone (June 2011). The Mandi unit commenced commercial operations in 1988 and manufactures chemicals, bulk drugs, and enzymes. The company has two wholly owned subsidiaries, Fermenta Biotech (UK) Ltd and GI Biotech Ltd, which are currently non-operational.

Key Financial Indicators
Particulars Unit 2018* 2017
Revenue Rs. cr. 300 156
Profit after tax Rs. cr. 60 10
PAT margin % 20.0 6.2
Adjusted debt/Adjusted networth Times 0.17 0.44
Adjusted interest coverage Times 34.33 5.64
*estimated based on abridged financials of DIL

Any other information: Not applicable

Note on complexity levels of the rated instrument:
CRISIL complexity levels are assigned to various types of financial instruments. The CRISIL complexity levels are available on www.crisil.com/complexity-levels. Users are advised to refer to the CRISIL 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)
ISIN Name of Instrument Date of Allotment Coupon Rate (%) Maturity Date Issue Size (Rs cr.) Rating Assigned
with Outlook
NA Cash Credit# NA NA NA 17.0 Withdrawn
NA Cash Credit* NA NA NA 5.0 Withdrawn
NA Letter of Guarantee NA NA NA 0.25 Withdrawn
NA Letter of Credit NA NA NA 5.0 Withdrawn
NA Term Loan NA NA 31-Mar-2018 8.75 Withdrawn
NA Packing Credit in Foreign Currency@ NA NA NA 12.0 Withdrawn
#Interchangeable with buyer's credit to the extent of Rs 15 crore
*fully interchangeable with buyer's credit
@fully interchangeable with post-shipment credit
Annexure - Rating History for last 3 Years
  Current 2018 (History) 2017  2016  2015  Start of 2015
Instrument Type Outstanding Amount Rating Date Rating Date Rating Date Rating Date Rating Rating
Fund-based Bank Facilities  LT/ST  42.75  Withdrawn/ Withdrawn  14-08-18  CRISIL BBB/Watch Developing/ CRISIL A3+/Watch Developing  12-12-17  CRISIL BBB/Watch Negative/ CRISIL A3+/Watch Negative  01-12-16  CRISIL BBB/Positive/ CRISIL A3+  11-08-15  CRISIL BBB/Stable/ CRISIL A3+  CRISIL BBB/Stable/ CRISIL A3+ 
        31-05-18  CRISIL BBB/Watch Developing/ CRISIL A3+/Watch Developing               
        06-03-18  CRISIL BBB/Watch Developing/ CRISIL A3+/Watch Developing               
Non Fund-based Bank Facilities  LT/ST  5.25  Withdrawn  14-08-18  CRISIL A3+/Watch Developing  12-12-17  CRISIL A3+/Watch Negative  01-12-16  CRISIL A3+  11-08-15  CRISIL A3+  CRISIL A3+ 
        31-05-18  CRISIL A3+/Watch Developing               
        06-03-18  CRISIL A3+/Watch Developing               
All amounts are in Rs.Cr.
Annexure - Details of various bank facilities
Current facilities Previous facilities
Facility Amount (Rs.Crore) Rating Facility Amount (Rs.Crore) Rating
Cash Credit# 17 Withdrawn Cash Credit# 17 CRISIL BBB/Watch Developing
Cash Credit* 5 Withdrawn Cash Credit* 5 CRISIL BBB/Watch Developing
Letter Of Guarantee .25 Withdrawn Letter Of Guarantee .25 CRISIL A3+/Watch Developing
Letter of Credit 5 Withdrawn Letter of Credit 5 CRISIL A3+/Watch Developing
Long Term Loan 8.75 Withdrawn Long Term Loan 8.75 CRISIL BBB/Watch Developing
Packing Credit in Foreign Currency@ 12 Withdrawn Packing Credit in Foreign Currency@ 12 CRISIL A3+/Watch Developing
Total 48 -- Total 48 --
#Interchangeable with buyer's credit to the extent of Rs 15 crore
*fully interchangeable with buyer's credit
@fully interchangeable with post-shipment credit
Links to related criteria
CRISILs Approach to Financial Ratios
CRISILs Bank Loan Ratings - process, scale and default recognition
Rating criteria for manufaturing and service sector companies
Rating Criteria for the Pharmaceutical Industry
CRISILs Bank Loan Ratings

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