| Zuventus Healthcare Limited | ||||||
| Rated amount enhanced for Bank Debt | ||||||
| Rating Action | ||||||
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| 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 ‘CRISIL A+/Stable/CRISIL A1’ ratings on the bank facilities of Zuventus Healthcare Limited (Zuventus).
The ratings continue to reflect the strong operational, managerial, technical, and financial support the company receives from its parent, Emcure Pharmaceuticals Ltd (Emcure; rated ‘CRISIL A+/ Stable/CRISIL A1’), and improvement in the parent’s credit risk profile. The ratings also reflect the established position of Zuventus in the domestic formulations market and its comfortable financial risk profile.
Though Zuventus’s revenue degrew by 5% in fiscal 2023 vis-à-vis previous fiscal on account of decline in sales of key therapies, the same has recovered over the first half of fiscal 2024 with recovery in sales in those segments. Operating profitability remained healthy at 19.7% in fiscal 2023 though a decline from 23.3% in fiscal 2022 driven by increase in marketing and advertising expenses. Financial risk profile remains comfortable with healthy networth of Rs 612 crore and nil debt as on March 31, 2023.
These strengths are partially offset by high revenue concentration in the acute therapeutic segment and exposure to intense competition and regulatory changes. |
Analytical Approach CRISIL Ratings has applied its parent notch-up criteria to factor in support from Emcure. |
Key Rating Drivers & Detailed Description Strengths: Strong support from the parent Zuventus is strategically important to Emcure in its domestic formulations business and, hence, derives operational, managerial, and technical support from the parent. The business of Zuventus complements the overall domestic formulations business of Emcure, thereby providing business synergies and operational efficiency. Furthermore, financial support from Emcure is expected to be forthcoming in case of any exigencies.
Established position in the domestic formulations market Zuventus has a healthy portfolio of more than 200 products sold through a wide distribution network in India. Operational performance remained healthy with revenues of Rs 999 crore in fiscal 2023, though degrowth by 5% from previous year driven by drop in sales of key acute therapy segments.
Comfortable financial risk profile Networth was healthy at Rs 612 crore as on March 31, 2023, Company was debt-free as on March 31, 2023 resulting in nil gearing and leverage. Debt metrices to remain comfortable over the medium term, due to healthy cash generation, prudent funding of capex, and judicious working capital management.
Weaknesses: Revenue concentration in the acute therapeutic segment Zuventus derives ~60-70% of its revenue from the acute therapeutic segment in the respiratory, anti-infective, vitamins, gastrointestinal and pain management sectors. Hence, the company’s operating performance is exposed to sales impact in the acute segment, as seen in the fiscal 2023. The company’s product profile is moderately diversified, with the top 10 brands accounting for about 50% of the revenue.
Exposure to intense competition and regulations The domestic formulations market has several organised and unorganised players, especially in mass therapy segments, such as anti-infectives and gastrointestinal. Additionally, regulatory policies, such as the ban on fixed-dose combinations in February 2016 and the Drug Price Control Order, 2013, have affected many large Indian and multinational companies. These impacted industry growth and profitability. Operating performance, thus, remains susceptible to regulatory changes. |
Liquidity: Adequate Cash accrual for fiscal 2023 was Rs 154 crore comfortably covered the capex requirements. Company remains debt-free and does not have any debt repayment obligation. Cash and equivalent were healthy at Rs 263 crore as on March 31, 2023 |
Outlook: Stable Zuventus will continue to benefit from its healthy position in the domestic formulations market and continued strong support from the parent, Emcure. The company is likely to maintain its comfortable financial risk profile over the medium term. |
Rating Sensitivity Factors Upward Factors
Downward Factors
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About the Company Zuventus, headquartered in Pune, Maharashtra, was incorporated in 2002. Zuventus is involved in the business of dealing in all types, descriptions, specifications, strengths and application of pharmaceutical medicaments in healthcare. It develops, manufactures and markets acute and semi-chronic therapy-related pharmaceutical products in India, with focus on vitamins and anti-infectives. Its facilities are in Jammu, Sikkim, and Bengaluru. Emcure holds 79.58% stake in Zuventus. |
About Emcure Emcure was incorporated by Mr Satish Mehta in 1981; the company commenced operations in 1983 in Pune, Maharashtra. It manufactures a range of formulations and APIs, and markets them in over 70 countries. It has 13 manufacturing facilities across India and 5 R&D centers. The manufacturing facilities are capable of producing pharmaceutical and biopharmaceutical products across a wide range of dosage forms, including oral solids, oral liquids, injectables, including liposomal and lyophilized injectables, biotherapeutics and complex APIs.
It has presence in domestic, regulated as well as emerging markets. It enjoys the alliance of multinational corporations and has established front-end presence in several countries through its subsidiaries. It has subsidiaries in UK, Canada, Dubai, Brazil, South Africa, Peru, Nigeria etc. and offices in Russia. It markets formulations in key chronic therapeutic segments such as anti-diabetic, cardiovascular, oncology, etc. Also, it has presence in acute segments such as anti-infectives, gastro-intestinal, pain and analgesics, etc. Key brands such as Orofer, Tenectase, Bevon, Maxtra, Metpure, Asomex and Ferium are well-established in the domestic market.
The promoters own 82.98% stake in Emcure, while Bain Capital holds 13.09% and remaining is held by key employees and directors. |
Key Financial Indicators
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Any other information: Not Applicable |
Note on complexity levels of the rated instrument: |
Annexure - Details of Instrument(s)
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Annexure - Rating History for last 3 Years
| Current | 2024 (History) | 2023 | 2022 | 2021 | Start of 2021 | |||||||
| Instrument | Type | Outstanding Amount | Rating | Date | Rating | Date | Rating | Date | Rating | Date | Rating | Rating |
| Fund Based Facilities | LT/ST | 57 | CRISIL A+/Stable / CRISIL A1 | -- | 13-02-23 | CRISIL A+/Stable | 31-03-22 | CRISIL A+/Stable | 09-04-21 | CRISIL A/Stable | -- | |
| -- | -- | -- | 28-01-22 | CRISIL A+/Stable | -- | -- | ||||||
| Non-Fund Based Facilities | ST | 5 | CRISIL A1 | -- | 13-02-23 | CRISIL A1 | 31-03-22 | CRISIL A1 | 09-04-21 | CRISIL A1 | -- | |
| -- | -- | -- | 28-01-22 | CRISIL A1 | -- | -- | ||||||
All amounts are in Rs.Cr
| Annexure - Details of Bank Lenders & Facilities | ||||||||||||||||||||
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Criteria Details
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