| Rakshit Drugs Private Limited | ||||||
| Ratings Reaffirmed | ||||||
| Rating Action | ||||||
| ||||||
| Note: None of the Directors on CRISIL Ratings Limited’s Board are members of rating committee and thus do not participate in discussion or assignment of any ratings. The Board of Directors also does not discuss any ratings at its meetings. | ||||||
| 1 crore = 10 million | ||||||
| Refer to Annexure for Details of Instruments & Bank Facilities |
Detailed Rationale CRISIL Ratings has reaffirmed its ratings on bank facilities of Rakshit Drugs Private Limited (RDPL) at 'CRISIL BBB-/Stable/CRISIL A3'.
The ratings continue to reflect the extensive industry experience of the promoters, established relationships with the customers, and company's moderate financial risk profile. These strengths are partially offset by working capital extensive nature of operations and exposure to intense competition in the active pharmaceutical ingredients (APIs) manufacturing business, and volatility in raw material prices. |
Key Rating Drivers & Detailed Description Strengths:
Revenue grew significantly over the past few fiscals aided by healthy demand, addition of new products and geographical diversification. Benefits from the promoters' three decades of experience, established track record of operations and strong relationships with the customers and suppliers, should continue to support the growth going forward also.
Financial risk profile is comfortable marked by a networth of around Rs 71 crore and gearing of around 0.86 time as on March 31, 2022. Debt protection metrics are also adequate, with interest coverage and net cash accrual to total debt ratios of 3.2 times and 0.21 times, respectively, in fiscal 2022. In absence of debt funded capex, the financial risk profile is expected to improve over the medium term.
Weaknesses:
Gross current assets are high at 249 days as on March 31, 2022, owing to receivables and inventory of 139 and 74 days, respectively.
The pharmaceutical industry is highly regulated, and hence, any adverse change in government policies can weaken the credit profile. Moreover, intense competition in the generics business limits the pricing flexibility of players. Raw materials account for 75-80% of the cost of sales, and operating margin remains susceptible to any sharp change in input prices. |
Liquidity: Adequate Net cash accrual is projected to be in the range of Rs 15-20 crore per fiscal over the medium term against term debt obligation of Rs 8-12 crore. Bank limit utilisation was higher at around 89 percent for the twelve months ended May-22. Current ratio was however modest at around 1 time and is likely to remain at similar level over the medium term also. The promoters are likely to extend support in the form of equity and unsecured loans to meet the working capital requirements and repayment obligations if required. |
Outlook: Stable CRISIL Ratings believes RDPL will continue to benefit from the extensive experience of its promoters and established track record. |
Rating Sensitivity factors Upward Factors
Downward Factors
|
About the Company RDPL was established in 2000 by Mr Rameswara Rao and his family members. The company manufactures APIs, at its units in Gaddapotharam and Bonthapally villages (both in Telangana) and Visakhapatnam (Andhra Pradesh). |
Key Financial Indicators
|
Any other information: Not applicable |
Note on complexity levels of the rated instrument: |
Annexure - Details of Instrument(s)
|
| Annexure - Rating History for last 3 Years | ||||||||||||||||||||||||||||||||||||||||||||||||||||
|
||||||||||||||||||||||||||||||||||||||||||||||||||||
| All amounts are in Rs.Cr. | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| Annexure - Details of Bank Lenders & Facilities | |||
| Facility | Amount (Rs.Crore) | Name of Lender | Rating |
| Cash Credit | 14.7 | Union Bank of India | CRISIL BBB-/Stable |
| Inland/Import Letter of Credit | 9 | Union Bank of India | CRISIL A3 |
| Long Term Loan | 15 | Union Bank of India | CRISIL BBB-/Stable |
| Long Term Loan | 26.85 | Union Bank of India | CRISIL BBB-/Stable |
| Long Term Loan | 1.24 | Union Bank of India | CRISIL BBB-/Stable |
| Packing Credit | 2.5 | Union Bank of India | CRISIL A3 |
| Proposed Long Term Bank Loan Facility | 0.71 | Not Applicable | CRISIL BBB-/Stable |
This Annexure has been updated on 13-Mar-23 in line with the lender-wise facility details as on 21-Feb-23 received from the rated entity.
Criteria Details
|