| Siflon Drugs | ||||||
| Rated amount enhanced | ||||||
| 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 ratings on the bank facilities of Siflon Drugs (SFD) at ‘CRISIL BB+/Stable/CRISIL A4+’
The ratings also reflect the extensive experience of the partners in the veterinary bulk drugs segment and a diversified geographical presence of SFD. These strengths are partially offset by average financial risk profile and exposure to regulatory risk in the intensely competitive segment and large working capital requirement. |
Key Rating Drivers & Detailed Description Strengths: Extensive experience of the partners: The partners have experience of more than 20 years in the veterinary bulk drugs industry, which has resulted in gradual growth in the firm’s revenue and established relationships with customers and suppliers. SFD is the leader in its key products, Oxyclozanide, Rafoxanide, Closantel Base, Closantel Sodium, etc which contributes more than 50% to its total revenue.
Diversified geographical presence, leading to business growth: The firm derives nearly 60-70% of its revenue from exports, while domestic sales account for the remaining 30-4%. The firm exports to more than 20 countries and has close to 90 customers across Germany, Kenya, Nepal, Pakistan and United Kingdom. It has established relationships with buyers across the globe that enables it to grow its business while retaining profitability. This is reflected in the healthy revenue growth and operating margin of 15-18% in the past three years.
Weakness: Average financial risk profile: SFD’s financial risk profile is constrained by its modest netwoth of Rs 41.54 crore and leveraged capital structure with high gearing and total outside liabilities to tangible networth ratios of 1.29 times and 1.61 times respectively on March 31, 2021.
Large working capital requirement and exposure to intense competition and regulatory risk: The working capital cycle may remain stretched over the medium term and will be closely monitored. Gross current assets have been high at 136-185 days over the four fiscals ended March 31, 2021, owing to high receivables and inventory of 64-90 days and 38-72 days respectively. Moreover, the industry comprises numerous unorganised players on account of low entry barriers, resulting in increased competition and low pricing flexibility. Furthermore, the industry is highly regulated and hence any adverse change in government policies can also impact the credit risk profile. |
Liquidity: Stretched Bank limit utilisation is high at around 99 percent for the past twelve months ended March 2022. Cash accruals are expected to be over Rs 18-19 crores which are sufficient against term debt obligation of Rs 5-6 crores over the medium term. In addition, it will be act as cushion to the liquidity of the company. Current ratio is moderate at 1.39 times on March31, 2022. |
Outlook: Stable SFD will continue to benefit from its established market position and extensive experience of the partners. |
Rating Sensitivity Factors Upward Factors
Downward Factors
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About the Company SFD was established as a partnership firm by Mr Rallapalli Ananthaiah and his wife, Mrs R Parvathi, and daughter, Ms Rallapalli Swetha, in Andhra Pradesh in 1999. The firm has a facility for manufacturing veterinary bulk drugs in Ananthpur, Andhra Pradesh. |
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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This Annexure has been updated on 23-May-22 in line with the lender-wise facility details as on 23-May-22 received from the rated entity.
Criteria Details
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