| Trivitron Healthcare Private Limited | ||||||
| Rated amount enhanced | ||||||
| Rating Action | ||||||
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| 1 crore = 10 million | ||||||
| Refer to annexure for Details of Instruments & Bank Facilities | ||||||
| Detailed Rationale |
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CRISIL has reaffirmed its ratings on the bank facilities of Trivitron Healthcare Private Limited (THPL; part of the Trivitron Group) at 'CRISIL BBB/Stable/CRISIL A3+.' |
| Analytical Approach |
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For arriving at the rating, CRISIL has combined the business and financial risk profiles of THPL with its subsidiaries, namely, Vision Medicaid Equipments Pvt. Ltd, Star Trivitron FZ LLC, Dubai, Imaging Products India (Private) Limited, Kiran IMD Medical Equipment Pvt. Ltd., BOME Trivitron Sanayi Urunleri Dis Ticaret A.S. and Labsystems Diagnostics OY. CRISIL has also proportionately combined the business and financial risk profiles of THPL's joint ventures (JVs), namely, Aloka Trivitron Medical Technologies Pvt. Ltd, Biosystems Diagnostics Private Limited, Trivitron Nawakarma Medical Technologies Pvt. Ltd. and Trivitron Healthcare Africa B.V. and its subsidiaries. This is because these entities are in the same lines of business, under a common management, and have financial linkages. All these companies are collectively referred to herein as the Trivitron group. |
| Key Rating Drivers & Detailed Description |
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Strengths: * Diversified product portfolio and healthy relationship with suppliers The Trivitron group is engaged in manufacturing and trading of a wide range of healthcare products including COVID diagnostics testing equipment and kits. The group has been associated with its principal suppliers and joint ventures such as Hitachi Healthcare Manufacturing Limited (Japan), BOME, Biosystems SA (Spain) and others for over a decade. The long term association has resulted into increase group's presence in the healthcare equipment market. * Extensive industry experience of promoter The group's business risk profile continues to benefit from the extensive industry experience of its promoter Dr. G S K Velu, who has been engaged in the healthcare industry for almost two decades. Apart from the Trivitron group, he is also associated with other prominent organizations in the healthcare sector such as Neuberg Diagnostics Pvt. Ltd., Apollo Dialysis Pvt. Ltd, Maxivision Laboratories Pvt. Ltd, Alliance Dental Care Ltd, Kauvery Group of Hospitals etc. * Comfortable financial risk profile Trivitron Group has comfortable financial risk profile as indicated by adjusted net worth estimated at over Rs. 170 crore and low gearing at around 0.5 time as on March 31, 2020, which showcases healthy capital structure. Debt protection metrics is comfortable with an estimated net cash accrual to total debt (NCATD) and interest coverage ratios at over 0.3 times and 4 times, respectively, in fiscal 2020. Any large debt funded capital expenditure would remain key rating sensitivity factor. Weaknesses: * Large working capital requirements The operations are expected to be working capital intensive in nature with an estimated gross current asset (GCA) days over 200 days over the medium term. High GCA days was mainly on account of large inventory holding and receivables of around three months each. Further, the GCA days is inclusive of high cash balance and marketable securities maintained by the group. The adjusted GCA is expected to be in the range of 160-170 days. Furthermore, the working capital requirements get comfort by its creditor's days at around 150 days. During current fiscal, the receivables cycle gets aided by the advances received for the COVID related orders which will result in shorten the receivable cycle. * Exposure to risks related to intense competition in healthcare industry The Trivitron group is predominantly engaged in manufacturing and trading in imported medical equipment, devices, and consumables. The domestic medical equipment market is dominated by players such as GE Healthcare (a division of General Electric Company USA), Philips Healthcare (a division of Koninklijke Philips Electronics NV), and Siemens Healthcare (a division of Siemens AG); these companies account for a considerable portion of the market. The Trivitron group does not supply any products manufactured by these players and, hence, operates in a relatively small market. Moreover, these players are very competitive and have aggressive pricing policies, resulting in reduced market share for other players. The group's revenues will be impacted by any reduction in the market share of its suppliers because of competition or by discontinuation of tie-ups with its suppliers. |
| Liquidity Adequate |
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Trivitron Group has adequate liquidity. The operations of the group is working capital intensive which results in the fund based lines of THPL being used at an average of nearly 80-90 percent. However, Trivitron Group's liquidity is supported by the high unencumbered cash and bank balances, mutual funds of more than Rs.80 Crore as on March 31, 2020. Current ratio remains healthy at about 1.4 times, as at March 31, 2020. Further, the group has availed the COVID moratorium for the first tenure, however due to healthy cash inflow during the recent months the group has not availed COVID moratorium for the second tenure. Furthermore, cushion in its bank lines, internal accruals and liquid investments should support any unforeseen events and aid its liquidity. |
| Outlook: Stable |
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CRISIL believes that Trivitron Group's credit risk profile will remain constrained over the medium term driven by its modest operating profitability and large working capital requirement. |
| Rating Sensitivity factors |
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Upward Factor * Substantial improvement in the revenue profile, with EBITDA margin of more than 10%. * Improvement in the working capital requirements. Downward Factor * Decline in the revenue profile and EBITDA margin of less than 7%. * Stretch in the working capital requirements. |
| About the Company |
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Promoted by Dr. G S K Velu, the Chennai-based Trivitron group trades in and manufactures medical equipment, medical devices, and medical consumables. THPL, incorporated in 1998, is the group's flagship company. The Trivitron group has also floated several JVs with leading global medical equipment manufacturers and healthcare service providers. |
| Key Financial Indicators | ||||||||||||||||||||||||
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Any other information: Not applicable |
| Note on complexity levels of the rated instrument: CRISIL complexity levels are assigned to various types of financial instruments and are included (where applicable) in the Annexure -- Details of Instrument in this Rating Rationale. For more details on the CRISIL complexity levels, please visit www.crisil.com/complexity-levels. |
| 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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| All amounts are in Rs.Cr. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| *Issuer did not cooperate; based on best-available information | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Annexure - Details of various bank facilities | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
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