| Balaxi Pharmaceuticals Limited | ||||
| 'CRISIL BBB+/Stable' assigned to 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 assigned its ‘CRISIL BBB+/Stable’ rating to the long-term bank facilities of Balaxi Pharmaceuticals Limited (BPL, part of Balaxi group).
The rating reflects BPL's established market position in Angola and Latin America, extensive experience of the promoters, and healthy financial profile. These strengths are partially offset by its working capital-intensive operations, revenue concentration risks and Risks related to the upcoming capex plans. |
Analytical Approach CRISIL Ratings has combined the business and financial risk profiles of BPL, along with its wholly owned subsidiary and step-down subsidiaries. This is because all these entities, collectively referred to as Balaxi group, are in the same line of business, have common promoters and strong business and financial linkages.
Please refer Annexure - List of Entities Consolidated, which captures the list of entities considered and their analytical treatment of consolidation. |
Key Rating Drivers & Detailed Description Strengths: Established market position in Angola and Latin America: The group has an established market position in the countries like Angola, Dominican Republic, and Guatemala. Benefits from the recognition of products and brand by doctors, pharmacists, and healthcare professionals across these markets should continue over the medium term. Supported by the same, the group has reported revenue of Rs.279.42 crore in Fiscal 2022.
Extensive experience of the promoters: The promoter Mr. Ashish Maheshwari has experience of around two decades in the pharmaceuticals industry, their strong understanding of market dynamics and healthy relationships with suppliers and customers should continue to support the business. The company will continue to benefit from the experience and expertise from its management team and leverage its customer relationships.
Healthy financial profile: BPL’s financial risk profile is healthy marked by a comfortable Net worth, healthy capital structure and robust debt protection metrics. Capital structure is healthy marked by gearing and total outside liabilities to total tangible net worth (TOL/TNW) of 0.04 time and 0.68 time, respectively, as on 31st March 2022 while net worth is comfortable at Rs.89.83 crore. Debt protection metrics are robust marked by Interest coverage ratio (ICR) of 73.30 times and Net cash accruals to adjusted debt ratio of 13.24 times in Fiscal 2022.
Weakness: Working capital intensive operations: Operations are working capital intensive as reflected in gross current assets (GCA) of 181 days as of March 2022 owing to inventory days of around 150 to 180 days. This is supported by moderate support from creditors of around 90 days.
Revenue concentration risks: More than 75% of revenue coming from Angola, the company remains vulnerable to economic uncertainties in the region and volatility in currency rates.
Risks related to the upcoming capex plans: The group is taking up a project to set up a New manufacturing unit in fiscal 2023 at an estimated cost of around Rs.95 crore, which will be partly funded via debt of Rs 40 crore. The balance requirement will be met through internal accruals and promoters’ contribution. Completion of the capex within budgeted costs, timely commencement of commercial operations and offtake from the same will remain key monitorables. |
Liquidity: Adequate Cash accruals are expected to be over Rs 48-52 crore which are sufficient against negligible debt obligation over the medium term. In addition, it will act as cushion to the liquidity of the company. Current ratio is healthy at 2.27 times on March31, 2022. Low gearing and comfortable net worth support its financial flexibility and provides the financial cushion available in case of any adverse conditions or downturn in the business. Newly availed working capital limit of Rs.30 crore will support the liquidity |
Outlook: Stable CRISIL Ratings believe BPL will continue to benefit from the extensive experience of its promoter, and established relationships with clients. |
Rating Sensitivity Factors Upward factor
Downward factor
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About the Group Balaxi group is an IPR based pharmaceuticals player supplying to Angola and Latin America market under the brand ‘Balaxi’. The group is also involved in branding and selling to FMCG products and Ancillary products. It is promoted by Mr. Ashish Maheshwari and family. |
Key Financial Indicators (Consolidated)
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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 - 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. | |||||||||||||||||||||||||||||||||||||||
| Annexure - Details of Bank Lenders & Facilities | ||||||||||||
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This Annexure has been updated on 07-Sep-2022 in line with the lender-wise facility details as on 07-Sep-2022 received from the rated entity.
Criteria Details
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