| Immacule Lifesciences Private Limited | ||||||
| Ratings upgraded to 'CRISIL BBB- / Stable / CRISIL A3 ' | ||||||
| Rating Action | ||||||
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| 1 crore = 10 million | ||||||
| Refer to Annexure for Details of Instruments & Bank Facilities |
Detailed Rationale CRISIL Ratings has upgraded its ratings to the bank facilities of Immacule Lifesciences Private Limited (ILPL) to ‘CRISIL BBB-/Stable/CRISIL A3’ from ‘CRISIL BB/Stable/CRISIL A4+’.
The upgrade reflects improvement in the rating of the parent i.e. Acme Formulation Pvt Ltd (AFPL) and its strong operational and financial support to ILPL.
The upgrade also reflects improvement in business risk profile of the company as reflected by growth in revenue by around 145% in FY21 and is expected to grow further by around 8-10% in FY22 supported by healthy growth in export revenue as the company has received US Food and Drug Administration approvals last year. Operating profitability of the company has also increased sharply to over 45% in fy21 supported by ramp-up of scale of operations. Though it is expected to dip to around 35% in FY22 on account of higher input cost, the margins shall continue to remain at healthy levels over the medium term.
The rating also factors improvement in financial risk profile due to improving accretion to reserves and repayment of debt with networth and gearing ratio to remain healthy at an estimated 85 crores and 0.2 time, respectively, as at Mar 31, 2022. Improving operating performance has also aided the net cash accruals, which are expected at over Rs 40 Cr against repayment of Rs 8 Cr, during fiscal 2022. Working capital requirements will remain supported by excess net cash accruals over repayments, and estimated unencumbered cash reserves of Rs 5-7 crores expected over the medium term.
The rating reflects the strong operational, management and financial support from the parent and improvement in financial risk profile. These strengths are partially offset by its large working capital cycle and moderate scale of operations. |
Analytical Approach Earlier, standalone approach was applied. However, CRISIL Ratings has now changed its analytical approach, and have applied the parent notch-up framework (of AFPL) to arrive at the rating of ILPL. This is because, both the entities are in similar line of business, managed by same promoter group and enjoys a parent-subsidiary relationship, wherein the latter is fully owned subsidiary of the former. |
Key Rating Drivers & Detailed Description Strengths:
ILPL is a subsidiary of AFPL, and the parent has control over strategic and operational decisions and strong oversight over financial matters. ILPL benefits from the established and well renowned Acme brand in the pharmaceutical sector. The established position of the parent has has supported healthy revenue growth of over 100% observed in the last fiscal which is further expected to grow further by around 8-10% in FY22. AFPL has provided necessary funding support to its subsidiary towards commencement of operations and towards stabilization of operations as well. Need-based support from the parent will continue to aid financial flexibility and support overall credit profile of the company.
Weaknesses
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Liquidity: Adequate Cash accrual are expected to be over Rs 42 Cr which are sufficient against term debt obligation of Rs 8 Cr in FY22. It is further supported by pre-payment of term debt in FY22. Surplus accruals are expected to aid liquidity further. Current ratio is expected to operate at around 1.4 times on March 31, 2022. Low gearing and moderate net worth support its financial flexibility, and provides the financial cushion available in case of any adverse conditions or downturn in the business. |
Outlook Stable CRISIL Ratings believe the company will continue to benefit from the extensive experience of its promoter, and established relationships with clients. |
Rating Sensitivity factors Upward factor
Downward factor
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About the Company Incorporated on September 20, 2010, Nalagarh (Himachal Pradesh)-based ILPL is an exporter, manufacturer, and supplier of allopathic medicines, including tablets, capsules, and injections, and a drop trader of antibiotic, antifungal, diuretic, and cardiovascular formulations. It is is fully owned subsidiary of Acme Formulation Pvt Ltd.
Acme Formulation Pvt Ltd AFPL; was incorporated in 2004. AFPL is engaged in providing contract dosage which includes capsules and hormonal tablets. AFPL is promoted by Mr. Viral Shah and PAG. |
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. | ||||||||||||||||||||||||||||||||||||||||||||||||||||
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* - Issuer did not cooperate; based on best-available information
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| Annexure - Details of Bank Lenders & Facilities | ||||||||||||
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Criteria Details
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