| Suven Pharmaceuticals 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 CRISIL Ratings has reaffirmed its ratings on the bank facilities of Suven Pharmaceuticals Limited (SPL; Part of Suven group) at 'CRISIL A/Stable/CRISIL A1’.
The ratings continue to reflect experienced management, established market position and healthy financial profile. These strengths are partially offset by working capital intensive operations and exposure to customer concentration risk. |
Analytical Approach For arriving at the ratings, CRISIL Ratings has combined the business and financial risk profiles of SPL with its 100% subsidiary, Suven Pharma Inc. This is because these companies, collectively referred to as the Suven group, have a common management team, are in similar lines of business, and have operational linkages and fungible cash flow.
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: * Experienced management and established market position Mr. Venkateshwarlu Jasti is the Chairman and Managing Director of the company. He holds a dual postgraduate degree in pharmacy and specialized in industrial pharmacy. He has an experience of over three decades in contract research industry which helped the company to associate with 70 global companies. Suven group has established market position in the CRAMS segment and is among the top five players in India who supply high-end intermediaries to innovators.
* Healthy financial risk profile Financial risk profile is marked by strong networth, healthy capital structure and robust debt protection metrics.
Networth remains strong at Rs. 842 crore as on March 31, 2020. With healthy accretion to reserves, networth is expected to be around Rs. 1050 Cr as on March 31, 2020. Due to strong networth and low reliance on external debt, capital structure remains healthy with gearing and total outside liabilities to tangible networth of 0.22 times and 0.39 times, respectively, as on March 31, 2020. Debt protection metrics remain robust, with interest coverage of 19.51 times and net cash accrual to total debt of 1.43 times in fiscal 2020.
Weaknesses: * Working capital intensive operations: Operations remain moderately working capital intensive with gross current asset (GCA) of 157 days as on March 31, 2020.
* Exposure to customer concentration risk: Top ten customers contribute close to substantial share of the revenue exposing the company to customer concentration risk. |
Liquidity: Strong Liquidity profile of Suven group is marked by healthy cash accruals, high bank limit utilization and a healthy current ratio.
Cash accruals is expected to be over Rs. 200 Cr against repayment obligations of below Rs. 20 Cr over the medium term. Bank limit utilization remains high with average utilization of around 93 % for the past 15 months ending November 2020. Current ratio remains healthy at 1.95 times on March 31, 2020. |
Outlook Stable CRISIL Ratings believes that SPL will maintain its established market position in the CRAMS business over the medium term, backed by longstanding client relationship and promoters' extensive experience. |
Rating Sensitivity factors Upward factors
Downward factors
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About the Group Incorporated in November 2018, SPL, is a biopharmaceutical company specialized in New Chemical Entity (NCE)-based Contract Research and Manufacturing Services (CRAMS) for global life science companies. It is promoted by Mr. Venkateshwarlu Jasti and is based out of Hyderabad, Telangana. The company currently has around 120 active projects under CRAMS. SPL is among the top five players in India who supply high-end intermediaries to innovators. SPL got listed on Bombay Stock Exchange and National Stock Exchange on March 09, 2020.
Suven Pharma Inc. is a wholly owned subsidiary of SPL. It is an SPV created to invest in Rising Pharma Holdings Inc. Suven Pharma Inc. has 25 % holding in Rising Pharma Holdings Inc. Rising Pharma Holdings Inc. is a New Jersey, USA based pharmaceutical company focused on developing generic pharmaceuticals products in various therapeutic segments. |
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. The CRISIL complexity levels are available on www.crisil.com/complexity-levels. Users are advised to refer to the CRISIL 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 various bank facilities | ||||||||||||||||||||||||||||||||||||||||||||||||
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