Rating Rationale
June 18, 2024 | Mumbai
Bliss GVS Pharma Limited
Ratings reaffirmed at 'CRISIL BBB+/Stable/CRISIL A2'; Rated amount enhanced for Bank Debt
 
Rating Action
Total Bank Loan Facilities RatedRs.160 Crore (Enhanced from Rs.50 Crore)
Long Term RatingCRISIL BBB+/Stable (Reaffirmed)
Short Term RatingCRISIL A2 (Reaffirmed)
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 BBB+/Stable/CRISIL A2’ ratings to the bank facilities of Bliss GVS Pharma Limited (Bliss; part of the Bliss group).

 

CRISIL Ratings had assigned its ‘CRISIL BBB+/Stable/CRISIL A2’ ratings to the bank facilities of Blisson June 10, 2024.

 

The rating reflects the extensive experience of the promoters in the pharmaceuticals industry, the group’s established brand and healthy financial risk profile. These strengths are partially offset by its susceptibility to any adverse impact of regulatory changes, vulnerability of profitability to adverse changes in government regulations and forex fluctuation, working capital intensive operations, significant concentration in revenue and exposure to African region.

Analytical Approach

For arriving at the ratings, CRISIL Ratings has combined the business and financial risk profiles of Bliss and its subsidiaries, together referred to as the Bliss group. All the entities are in the same business, have the common promoters and strong operational 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:

  • Extensive experience of the promoters and established brand: The promoters’ experience of over three decades in the pharmaceuticals industry has helped them develop brands in Africa in various therapeutic segments, and establish healthy relationships with distributors, thereby improving business risk profile. The group’s operations are currently managed by Mr. Gagan Sharma along with support from the professionals. P-Alaxin, Lonart, Funbact, and Lofnac are some of the group’s established brands in the anti-malarial, antifungal, and anti-inflammatory segments. Also, the Bliss group is a leader in manufacturing suppositories and pessaries dosage forms. Group enjoys significant market share in African market. Group is in process of expanding in regulated markets which will remain monitorable.

 

  • Healthy financial risk profile: The group’s capital structure has been at healthy level due to lower reliance on external funds yielding gearing of 0.09 and low total outside liabilities to adj tangible networth (TOL/ANW) of O.21 for year ending on 31st March 2024. The debt protection measures have also been at a healthy level due to leverage and healthy profitability. The interest coverage and net cash accrual to total debt (NCATD) ratio are at 21.6 times and 1.22 times for fiscal 2024. The debt protection measures are expected to remain at similar level over medium term.

 

Unencumbered healthy cash and cash equivalents of Rs 150 crore as on March 31, 2024 provides financial flexibility

 

Weaknesses:

  • Vulnerability of profitability to adverse changes in government regulations and fluctuation in forex rates: The pharmaceutical industry is highly regulated by state governments and various government agencies such as Central Drugs Standard Control Organization and National Pharmaceutical Pricing Authority. These agencies approve new drugs and clinical trials, control the quality of imported drugs, and set prices for many critical drugs; while state authorities regulate manufacture, sales, and distribution. Exports contribute about 94% of the total sales while part of the requirements are imported and the group avails some of its debt in foreign currency. This provides natural hedge to an extent. Apart from natural hedge, the group enters into forward contracts to hedge open positions. Further, even in case of a natural hedge, the group is exposed to volatility in forex rates to the extent of timing differences between foreign currency receipts and payments.

 

  • Working capital intensive operations: Gross current assets were high at 358.0-392.7 days over the three fiscals ended March 31, 2024. Its intensive working capital management is reflected in its gross current assets (GCA) of 392.7 days as on March 31, 2024. Its large working capital requirements arise from its high debtor and inventory levels. It is required to extend long credit period. Furthermore, due to its business need, it holds large work in process & inventory. However, management has changed debtors’ policy which has resulted in moderation in debtors and better realization. Sustenance of same will remain monitorable.

 

  • Significant concentration in revenue and exposure to African region: Around 75% of revenue comes from African countries, with concentration in revenue from top 3 customers being at around 10%, which significantly exposes the group's performance to regulatory and other policy changes in the region. The exposure to the African region is expected to remain at similar levels.

Liquidity: Adequate

Bank limit utilisation is low at around 42.85 percent for the past twelve months ended March 2024. Cash accrual are expected to be over Rs 100 crore which are sufficient against term debt obligation of Rs 20-35 crore over the medium term. In addition, it will act as cushion to the liquidity of the group.

 

Current ratio was healthy at 4.89 times on March 31, 2024. High cash and bank balance of around Rs.150 crore as on March 31, 2024. Low gearing and moderate net worth support its financial flexibility and provides the financial cushion available in case of any adverse conditions or downturn in the business

Outlook: Stable

CRISIL Ratings believes the Bliss group will continue to benefit from the extensive experience of its promoter, and established relationships with clients.

Rating Sensitivity factors

Upward factors

  • Sustained improvement in scale of operation by over 20% and sustenance of operating margin, leading to higher cash accruals.
  • Improvement in working capital cycle, with gross current assets improve to 250 Days.

 

Downward factors

  • Decline in profitability or stretch in working capital cycle
  • Decline in scale of operations leading to fall in revenue by 25 percent and profitability margin below 10%, hence leading to net cash accrual
  • Large debt-funded capital expenditure weakens capital structure

About the Group

Incorporated in 1984, Bliss develops and manufactures pharmaceutical formulations mainly for sale in Africa. The company sells formulations in the form of suppositories, pessaries, capsules, tablets, and syrups. It manufactures more than 250 branded formulations in the anti-malarial, anti-fungal, anti-bacterial, anti-biotic, anti-inflammatory, contraceptive, and anti-diabetic segments. Bliss also contract-manufactures suppositories and pessaries for Sun Pharma and Mankind. However, these clients do not have rights for exporting the products. Bliss has seven manufacturing units, 5 units in Maharashtra (Palghar, Ambernath) and 2 units in Nigeria.

 

The company has 2 wholly-owned subsidiaries, Bliss GVS International Pte. Limited (Singapore) and Asterisk Lifesciences Limited (UK), 1 partly-owned subsidiary, Kremoint Pharma Private Limited (India) and 4 step-down subsidiaries.

 

Bliss is listed on the National Stock Exchange and Bombay Stock Exchange.

 

Bliss is promoted by Mr. Narsimha Shibroor Kamath, Dr. Vibha Gagan Sharma (Whole-time Director) and Mrs. Shruti Vishal Rao (Whole-time Director).

Key Financial Indicators: Consolidated

As on/for the period ended March 31

Unit

2024

2023

Operating income

Rs.Crore

770.24

751.59

Reported profit after tax

Rs.Crore

81.58

76.73

PAT margins

%

10.59

10.21

Adjusted Debt/Adjusted Networth

Times

0.09

0.11

Interest coverage

Times

21.79

11.32

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 and are included (where applicable) in the 'Annexure - Details of Instrument' in this Rating Rationale.

CRISIL Ratings will disclose complexity level for all securities - including those that are yet to be placed - based on available information. The complexity level for instruments may be updated, where required, in the rating rationale published subsequent to the issuance of the instrument when details on such features are available.

For more details on the CRISIL Ratings` complexity levels please visit www.crisilratings.com. Users may also call the Customer Service Helpdesk with queries on specific instruments.

Annexure - Details of Instrument(s)

ISIN Name of instrument Date of allotment Coupon rate (%) Maturity date Issue size (Rs.Crore) Complexity Levels Rating assigned with outlook
NA Foreign Currency Term Loan NA NA Oct-2026 35 NA CRISIL BBB+/Stable
NA Foreign Currency Term Loan NA NA Apr-2027 43.5 NA CRISIL BBB+/Stable
NA Foreign Usance Bills Purchase - Discounting NA NA NA 40 NA CRISIL A2
NA Letter of Credit NA NA NA 25 NA CRISIL A2
NA Packing Credit in Foreign Currency NA NA NA 10 NA CRISIL A2
NA Proposed Long Term Bank Loan Facility NA NA NA 6.5 NA CRISIL BBB+/Stable

Annexure - List of Entities Consolidated

Names of Entities Consolidated

Extent of Consolidation

Rationale for Consolidation

Bliss GVS Pharma Limited

Full

Parent company

Bliss GVS International Pte Limited

Full

100% Subsidiary

Kremoint Pharma Private Limited

Full

70% Subsidiary

Asterisk Lifesciences Limited

Full

100% Subsidiary

Asterisk Lifesciences (GH) Ltd.

Full

Step down Subsidiary

Greenlife Bliss Healthcare Ltd.

Full

Step down Subsidiary

EIPII Exports Pvt Ltd

Full

Step down Subsidiary
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 135.0 CRISIL BBB+/Stable / CRISIL A2 10-06-24 CRISIL BBB+/Stable / CRISIL A2   -- 15-06-22 Withdrawn (Issuer Not Cooperating)* 30-03-21 CRISIL BB /Stable(Issuer Not Cooperating)* CRISIL BB+/Negative
      --   --   -- 30-05-22 CRISIL B /Stable(Issuer Not Cooperating)*   -- --
Non-Fund Based Facilities ST 25.0 CRISIL A2   --   -- 15-06-22 Withdrawn (Issuer Not Cooperating)* 30-03-21 CRISIL A4+ (Issuer Not Cooperating)* CRISIL A4+
      --   --   -- 30-05-22 CRISIL A4 (Issuer Not Cooperating)*   -- --
All amounts are in Rs.Cr.
* - Issuer did not cooperate; based on best-available information
Annexure - Details of Bank Lenders & Facilities
Facility Amount (Rs.Crore) Name of Lender Rating
Foreign Currency Term Loan 35 The Federal Bank Limited CRISIL BBB+/Stable
Foreign Currency Term Loan 43.5 The Federal Bank Limited CRISIL BBB+/Stable
Foreign Usance Bills Purchase - Discounting 40 The Federal Bank Limited CRISIL A2
Letter of Credit 25 The Federal Bank Limited CRISIL A2
Packing Credit in Foreign Currency 10 The Federal Bank Limited CRISIL A2
Proposed Long Term Bank Loan Facility 6.5 Not Applicable CRISIL BBB+/Stable
Criteria Details
Links to related criteria
CRISILs Approach to Financial Ratios
Rating criteria for manufaturing and service sector companies
CRISILs Bank Loan Ratings - process, scale and default recognition
Assessing Information Adequacy Risk
CRISILs Criteria for Consolidation

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