| Pulse Pharmaceuticals Private Limited | ||||||
| Ratings reaffirmed at 'CRISIL BBB- / Stable / CRISIL A3 '; rated amount enhanced for 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 reaffirmed its ‘CRISIL BBB-/Stable/CRISIL A3’ ratings on the bank facilities of Pulse Pharmaceuticals Private Limited (PPPL).
The ratings continue to reflect the company's differentiated product line, including its patented flagship product, Deksel, and the extensive experience of its promoter. These strengths are partially offset large working capital requirement and exposure to intense competition and regulatory risks. |
Key Rating Drivers & Detailed Description Strengths:
PPPL, as a strategy, focuses on differentiated products, which include Doloneuron, Xtracal, Deksel, Voltaneuron, MHR, and Zolsoma and around 150 other products. Differentiated product line, strong research and development capability and extensive distribution network coupled with the promoters’ experience is expected to support the business over the medium term
Mr. K V Raam Babu, the promoter of the company, has been involved in pharmaceutical business i.e., marketing, manufacturing and research and development, for over 35 years, and has developed deep insight into the nuances of the sector. His experience has helped the company scale up operations across multiple geographies in multiple product lines. PPPL will continue to benefit from the extensive experience of its promoter.
Weakness:
The working capital-intensive operations are reflected in gross current assets of 185 days as on March 31, 2021, driven by large inventory of 85 days and extensive credit offered to customers leading to receivables of 60 days. Given the nature of the business, operations are expected to remain working capital intensive over the medium term.
Although PPPL is one of the established players in pharmaceutical industry, it remains exposed to competitive pressures. Accordingly, sustenance of scale of operations and operating profitability would remain key rating sensitivity factors over the medium term. Regulatory changes in the domestic as well as international pharmaceutical market will continue to impact the business performance of the company. |
Liquidity: Adequate Bank limit utilization was high at around 92 percent for the past twelve months ended November 2021. Cash accruals are expected to be over Rs 66.8 million which are sufficient against term debt obligation of Rs 50.42 million over the medium term. Unencumbered cash of Rs 2-3 crore in the current accounts also supports its liquidity.
Current ratio was moderate at 1.24 times on March 31, 2021. The promoters are likely to extend support in the form of equity and unsecured loans to meet its working capital requirements and repayment obligations if required. |
Outlook Stable CRISIL Ratings believes that PPPL will maintain its established position in the pharmaceutical industry over the medium term, supported by its promoters' extensive industry experience and established relations with its customers. |
Rating Sensitivity factors Upward factors:
Downward factors:
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Incorporated in 1997 as a marketing organization, Pulse set up its own manufacturing unit in Roorkee (Uttarakhand) in 2007. It has established a research and development (R&D) center, Pulse Advanced Research Centre (PARC), in 2010 in Hyderabad, which focuses on chemical, analytical, and formulation R&D of novel drugs (nanotechnology-based pharmaceutical and nutraceutical products). The company sells its own formulations and also undertakes contract manufacturing for Abbott India Ltd, Glenmark Pharmaceuticals limited and Sanofi India Limited among others. |
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 14-Feb-2022 in line with the lender-wise facility details as on 14-Feb-2022 received from the rated entity.
Criteria Details
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