| Makson Healthcare Private Limited | ||||
| 'CRISIL BBB+/Stable' assigned to Bank Debt | ||||
| Rating Action | ||||
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| 1 crore = 10 million | ||||
| Refer to Annexure for Details of Instruments & Bank Facilities |
Detailed Rationale CRISIL Ratings has assigned its ‘CRISIL BBB+/Stable’ rating to the long-term bank facilities of Makson Healthcare Pvt Ltd (MHPL; part of the Makson group).
The rating reflects the extensive industry experience of the promoters and healthy financial risk profile. These strengths are partially offset by moderate scale of operations, high customer concentration and moderately intensive working capital operations. |
Analytical Approach To arrive at its rating, CRISIL Ratings has combined the business and financial risk profiles of MHPL, Makson Nuvo LLP and Mapaex Remedies LLP since they have strong operational linkages and fungible funds. Preference shares of Rs 10 crore (as on March 31, 2021) are treated as equity as these are from the promoters and are non-convertible and redeemable.
Please refer Annexure - List of entities consolidated, which captures the list of entities considered and their analytical treatment of consolidation. |
Key Rating Drivers & Detailed Description Strengths Extensive industry experience of the promoters and long relationships with customers: The promoters have been contract manufacturing lozenges, confectionery, ointments and inhalers since 1986. This has enabled them to establish long relationships with large multinational corporations such as Procter and Gamble India Ltd, Haw Par India, Cipla Ltd, GlaxoSmithKline Pharmaceuticals Ltd, and Mondelez India Foods Ltd for around 3 decades. MHPL also exports these products to the South East Asian and Australian markets and its manufacturing facilities meet the quality standards of these countries. CRISIL Ratings believes that MHPL will continue to benefit over the medium term from its promoters' extensive industry experience.
Healthy financial risk profile: Gearing was strong at 0.15 time as on March 31, 2021, backed by networth of over Rs 220 crore (CRISIL Ratings-adjusted). Debt protection metrics were is healthy with net cash accrual to total debt and interest coverage ratios of 54% and 6.15 times, respectively, for fiscal 2021. Financial risk profile is expected to remain healthy over the medium term with healthy accrual and moderate debt level.
Weaknesses Moderate scale of operations and high customer concentration: MHPL is a moderate player in the ointments, lozenges and confectionary industry with an Ebitda of Rs 18 crore in fiscal 2021. Branded ointments, lozenges and confectionary have a very high demand in India. MHPL's moderate scale of operations limits its benefits derived from economies of scale that are available to players with larger volumes and limits its ability to bargain with suppliers and customers. Its customer concentration is high and derives over 90% of its revenue from its top 5 customers, however the risk of termination of contract is low. Besides, the resilience of a player with a larger scale of operations to external shocks is significantly higher than a player with a smaller scale of operations. Addition of products such as multivitamin gummies and new contracts expected to be signed are likely to help ramp up scale.
Moderately intensive working capital operations: Operations are moderately working capital intensive as characterized by gross current assets (GCAs; net off cash) of 164 days as on March 31, 2021 (receivables of 83 days and inventory of 51 days). This is due to 40-45% of its sales coming from export. Operations will continue to remain moderately working capital intensive. |
Liquidity: Adequate Bank limit utilisation was moderate at around 46% for the six months through August 2021. Cash accrual is expected to be Rs 20-25 crore per annum against yearly term debt obligation of Rs 0.5-3.6 crore, over the medium term. Liquid investments of around Rs 55 crore in shares, debentures and mutual funds (as on March 31, 2021) and cash and equivalents of Rs 4 crore also aid liquidity. |
Outlook: Stable CRISIL Ratings believes MHPL will continue to benefit from the extensive experience of its promoter, and established relationships with clients. |
Rating Sensitivity factors Upward factors
Downward factors
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About the Company Incorporated in 1994 and promoted by Mr Dhanjibhai A Makasana, Mr Rajendra Patel, Mr Mayur C Patel and Mr Kalpesh Makasana, MHPL manufactures medicated lozenges and confectionery products for large fast-moving consumer goods companies; and ointments and inhalers for pharmaceutical players. Part of the Makson group, the company sells products in the domestic and international (Singapore, Australia, Japan, the Philippines, Thailand and Malaysia) markets. |
Key Financial Indicators (CRISIL Ratings-adjusted financials)
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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 - List of Entities Consolidated
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| Annexure - Rating History for last 3 Years | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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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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This Annexure has been updated on 29-Oct-2021 in line with the lender-wise facility details as on 28-Oct-2021 received from the rated entity..
Criteria Details
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