| Medicamen Biotech Limited | ||||||
| Ratings Reaffirmed | ||||||
| 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 BBB-/Stable/CRISIL A3' ratings on the bank facilities of Medicamen Biotech Limited (MBL).
The ratings continue to reflect MBL’s strong track record in the pharmaceutical industry, and its comfortable financial risk profile. These strengths are partially offset by the modest scale of operations and large working capital requirement. |
Key Rating Drivers & Detailed Description Strengths:
The promoters have an experience of more than two decades in the pharmaceuticals industry, and has a diversified clientele, comprising the government sector and other customers across India and Africa. Though customers from Africa contributes around 70% of the sales, MBL is also planning to start sales in European countries and USA from next fiscal which will support the business risk profile over the medium term. Further, commercial production of oncology products has also started from January 2022 onwards and MBL has started supplying to customers in Africa. MBL is planning to add new customers in oncology segment over the medium term.
Capital structure is marked by an estimated total outside liabilities to adjusted networth ratio of less than one time and networth at Rs 140-145 crore as on March 31, 2022. Debt protection metrics are also strong, with interest coverage and net cash accrual to adjusted debt ratios of 14 times and 1-1.05 time, respectively, for fiscal 2022. Financial risk profile is expected to remain comfortable supported by absence of any major debt-funded capital expenditure and steady accretion to reserves along with minimal withdrawals.
Weaknesses:
Revenue remained moderate at Rs 110.17 crore in fiscal 2021 and hence, constraining cost efficiencies. Revenue is expected to remain moderate at Rs 110-120 crore for fiscal 2022 as MBL has booked revenue of Rs 94 crore till December 2021. Company has started commercial production of oncology products since January 2022 and has also started supplying in Africa and India. Further, company is also planning to add new customers in USA & Europe for the oncology products but sustained and significant contribution from this segment leading to improvement in the overall business risk profile will remain a key monitorable.
Gross current assets is high at 280 days as on March 31, 2021, driven by the sizeable receivables (168 days) offered to customers and moderate inventory (40-50 days). Payments are usually LC-backed or advance payments in case of exports while company gives credit period of 60-90 days to merchant exporters. Large credit of 120-130 days extended by suppliers (active pharmaceutical ingredient manufacturers) partly eases pressure on the working capital cycle. Prudent management of working capital cycle amid increasing scale of operations will be closely monitored. |
Liquidity: Adequate Bank limit utilisation is at around 46% percent for the past twelve months ended February 2022. Cash accruals are expected to be over Rs 14 crore which are sufficient against term debt obligation of Rs 1.5 crore over the medium term. In addition, it will be act as cushion to the liquidity of the company. Current ratio is healthy at 1.89 times on March 31, 2021. |
Outlook: Stable CRISIL Ratings believes MBL will continue to benefit from a strong track record in the pharmaceutical industry. |
Rating Sensitivity factors Upward factors:
Downward factors:
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About the Company MBL, incorporated in 1993, manufactures pharmaceutical formulations for the overseas and domestic markets. Formulations are based on betalactum, non-betalactum, and cephalosporin drugs. The company is listed on the Bombay Stock Exchange (BSE). In November 2015, Shivalik Rasayan Ltd, another BSE-listed company, along with five persons acting in concert, acquired 44.15% in MBL. MBL has manufacturing facilities in Bhiwadi (Rajasthan) and Haridwar (Uttarakhand). |
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 | ||||||||||||||||||||||||||||||||||||||||||||||||||||
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| All amounts are in Rs.Cr. | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| Annexure - Details of Bank Lenders & Facilities | |||
| Facility | Amount (Rs.Crore) | Name of Lender | Rating |
| Bank Guarantee | 1.5 | IndusInd Bank Limited | CRISIL A3 |
| Cash Credit | 23 | IndusInd Bank Limited | CRISIL BBB-/Stable |
| Letter of Credit | 7 | IndusInd Bank Limited | CRISIL A3 |
| Proposed Fund-Based Bank Limits | 10.5 | Not Applicable | CRISIL BBB-/Stable |
This Annexure has been updated on 22-Dec-2022 in line with the lender-wise facility details as on 23-Nov-2022 received from the rated entity.
Criteria Details
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