Unidrug Innovative Pharma Technologies Limited

Transcription

1 Ratings Unidrug Innovative Pharma Technologies Limited Facilities Amount (Rs. crore) Ratings 1 Remarks Long-term Bank Facilities 7.10 (reduced from 7.30) CARE BB (Double B) Revised from CARE BB- (Double B Minus) Short-term Bank Facilities 5.90 (enhanced from 5.20) CARE A4 (A Four) Reaffirmed Total (Rupees Thirteen crore only) Rating Rationale The revision in the long-term rating assigned to the bank facilities of Unidrug Innovative Pharma Technologies Limited (UIPTL) is primarily on account of healthy growth in total operating income (TOI), improvement in solvency position and debt coverage indicators coupled with improvement in liquidity profile during FY15 (refers to the period April 1 to March 31). The ratings continue to draw strength from the wide experience of the promoters in the pharmaceutical industry coupled with reputed and diversified customer base. The ratings, however, continue to be constrained by low PBILDT margin which is susceptibility to raw material price fluctuations and foreign exchange coupled with pending financial closure for ongoing capex. Going forward, UIPTL s ability to improve its scale of operations by completing ongoing project successfully within the envisaged time and cost parameters, thereby, increasing its product line and improvement in the overall financial risk profile with improvement in profit margins, capital structure and working capital management remains the key rating sensitivity. Background UIPTL was incorporated in March 1987 as Private Limited Company. UITPL promoted by Mr Jainesh Jain, is engaged in the business of manufacturing active pharmaceutical ingredients (APIs) for Antiprotozole segment. UIPTL supplies its APIs to variety of domestic formulators (mainly private pharmaceutical companies) and also sells its products internationally by exporting to less regulated markets such as Argentina, Bangladesh, and African Countries from its GMP certified manufacturing facility located in Indore (Madhya Pradesh) with an installed capacity of 300 MTPA of APIs. UITPL caters to the segment of Protozoan infection which leads to diseases such as malaria, amoebiasis (mild diarrhea to dysentery with blood and mucus), and Giardiasis (beaver fever). Key Updates Growth in total operating income (TOI) During FY15, TOI of UIPTL grew by 20.68% to Rs crore as against Rs crore during FY14. Increase in TOI was primarily on account of increase in the demand from existing customers and addition of new customers into its customer portfolio. Furthermore, during FY15, UIPTL modified its production process which led to increase in its operational efficiency thereby leading to increase in its production. Consequently, sales from manufacturing operations (net of excise) grew by 38.57% to Rs crore during FY15 as against Rs crore during FY14. Furthermore, during FY15, UIPTL did not carry out trading activity; hence, proportion of manufacturing sales (net of excise) to TOI remained at 99.25% as against 86.86% during FY14. During 9MFY16 (Provisional), UIPTL has achieved TOI of around Rs.20 crore. Improvement in capital structure, debt coverage indicators and liquidity position As on March 31, 2015; the capital structure of UIPTL improved over previous year marked by debt equity ratio of 0.33 times (0.47 times as on March 31, 2014) and overall gearing ratio of 1.20 times (2.06 times as on March 31, 2014). Improvement in capital structure was mainly due to repayment of buyers credit of Rs.2.23 crore which UIPTL availed for import of raw material. Furthermore, repayment of inter corporate loan of Rs.0.32 crore and low outstanding balance of working capital limits as on balance sheet date also led to improvement in capital structure. During FY15, debt coverage indicators of UIPTL improved over previous year marked by Total debt to GCA of times (25.68 times during) and interest coverage ratio of 1.28 times (1.14 times during FY14) owing to decline in the interest cost during FY15 1 Complete definitions of the ratings assigned are available at and other CARE publications 1

2 and lower total debt level as on balance sheet date. During FY15, working capital cycle of UIPTL improved substantially over the previous year to 94 days as against 138 days during FY14. Improvement in working capital cycle was primarily on account of decline in gross working capital days which reduced to 171 days during FY15 from 207 days during FY14 coupled with improved payment terms to suppliers from 69 days to 77 days during FY15. Furthermore, As on March 31, 2015; current ratio remained in line with previous year at 1.29 times (1.29 times as on March 31, 2014) and quick ratio remained at 0.76 times (0.85 times as on March 31,2014). However, overall operations of the company remained working capital intensive in nature marked by high proportion (69%) of net working capital as a percentage of total capital employed as on March 31, This led to high utilization of working capital facilities. During past 12-month period ended November 2015, average utilization of its working capital limits remained high at 87.25%. Low and fluctuating PBILDT margin During FY15, the PBILDT margin of UIPTL declined by 190 bps over the previous year to 4.18% (6.08% during FY14) on account of increase in the cost of imported raw material (import proportion remained at 48.30% of total raw material cost as against 45.57% during FY14) on the back of depreciation of rupee. However, on account of decline in depreciation charges and interest cost, PAT margin declined marginally by 5 bps over the previous year to 0.48% during FY15 (0.53% during FY14). Furthermore, gross cash accruals (GCA) remained at Rs.0.32 crore during FY15 as against Rs.0.39 crore during FY14. Pending financial closure for ongoing capex In order to improve its production efficiency, UIPTL had planned to invest Rs.2.40 crore towards upgradation of its existing plant and machinery by replacing 4 existing reactors and adding 2 new reactors. Total cost of the project was to be funded through term loan of Rs.1.80 crore and balance by way of unsecured loans and capital subsidy. UIPTL envisaged commencing commercial production from January However, due to pending financial closure the project could not be executed as per initial schedule. Consequently, scope of aforesaid capex was changed according to which UIPTL will invest Rs.1.46 crore towards upgradation of its existing plant and machinery by replacing 4 existing reactors. Total cost of the project will be funded through term loan of Rs.1.10 crore (proposed) and balance by way of unsecured loans and internal accrual. Till January 01, 2016, UIPTL has invested Rs.0.22 crore towards the said project and the same is funded through internal accruals. UIPTL has envisaged commencing commercial production from the end of March Furthermore, as on January 01, 2016, UIPTL has not achieved financial closure for the said project hence it is exposed to project implementation and subsequent stabilization of the project. Financial Performance (Rs. Cr.) For the period ended / as at March 31, (12m,A) (12m, A) (12m, A) Working Results Net Sales Total Income From Operations PBILDT Interest Depreciation PBT PAT (after deferred tax) Gross Cash Accruals Financial Position Equity Share Capital Tangible Net Worth Total capital employed Key Ratios Growth (%) Growth in Total income

3 Growth in PAT (after D. Tax) Profitability (%) PBILDT/Total Op. income PAT/Total Op. income ROCE Average cost of borrowing Solvency (times) Long-term Debt Equity ratio Overall gearing ratio Interest coverage (PBILDT/Interest) Interest coverage (PBIT/Interest) Term debt/gross cash accruals (years) Total Debt/Gross cash accruals (years) Liquidity (times) Current ratio Quick ratio Turnover (days) Average collection period Average creditors period Average inventory period Operating cycle A: Audited Details of Rated Facilities 1.Long-term facilities 1. A. Long-term Rupee Term Loan Sr. No. Name of the Bank Rated Amount Sanctioned Amount 1. Proposed Total B. Fund-based Working Capital Limit Sr. No. Name of the Bank Fund-based limits Cash Credit Remarks 1. Punjab National Bank 6 - Total 6 (Rs. Crore) (Rs. Crore) Total Long-term facilities rated as at (1.A. +1.B.) Rs.7.10 crore 2.Short-term facilities 2. A. Non-fund-based Working Capital Limits Rs. Crore Sr. No. Name of the Bank Non-fund-based Limits Letter of Credit Letter of Guarantee Remarks 1 Punjab National Bank Letter of Guarantee is interchangeable with Letter of Credit Total Total Short-term facilities as at (2.A) Rs crore Total facilities (1 + 2): Rs.13 crore 3

4 Analyst Contact Name: Mr. Vishal Joshi Tel: (079) Cell: vishal.joshi@careratings.com (This follows our brief rationale for entity published on 25 January, 2016) Disclaimer: CARE s ratings are opinions on credit quality and are not recommendations to sanction, renew, disburse or recall the concerned bank facilities or to buy, sell or hold any security. CARE has based its ratings on information obtained from sources believed by it to be accurate and reliable. CARE does not, however, guarantee the accuracy, adequacy or completeness of any information and is not responsible for any errors or omissions or for the results obtained from the use of such information. Most entities whose bank facilities/instruments are rated by CARE have paid a credit rating fee, based on the amount and type of bank facilities/instruments. In case of partnership/proprietary concerns, the rating assigned by CARE is based on the capital deployed by the partners/proprietor and the financial strength of the firm at present. The rating may undergo change in case of withdrawal of capital or the unsecured loans brought in by the partners/proprietor in addition to the financial performance and other relevant factors. 4

5 CONTACT Head Office Mumbai Mr. Sanjay Kumar Agarwal Mr. Amod Khanorkar Mobile: Mobile: sanjay.agarwal@careratings.com amod.khanorkar@careratings.com CREDIT ANALYSIS & RESEARCH LIMITED Corporate Office: 4th Floor, Godrej Coliseum, Somaiya Hospital Road, Off Eastern Express Highway, Sion (East), Mumbai Tel: Fax: care@careratings.com Website: REGIONAL OFFICE AHMEDABAD Mr. Mehul Pandya 32, Titanium, Prahaladnagar Corporate Road, Satellite, Ahmedabad Cell: Tel: mehul.pandya@careratings.com BENGALURU Mr. Dinesh Sharma Unit No , 11th Floor, Prestige Meridian II, No. 30, M.G. Road, Bangalore Cell: Tel: , dinesh.sharma@careratings.com CHANDIGARH Mr. Sajan Goyal 2nd Floor, S.C.O , Sector 34-A, Chandigarh Cell: Tel: / 09 sajan.goyal@careratings.com CHENNAI Mr. V Pradeep Kumar Unit No. O-509/C, Spencer Plaza, 5th Floor, No. 769, Anna Salai, Chennai Cell: Tel: / pradeep.kumar@careratings.com COIMBATORE Mr. V Pradeep Kumar T-3, 3rd Floor, Manchester Square Puliakulam Road, Coimbatore Cell: Tel: / pradeep.kumar@careratings.com HYDERABAD Mr. Saikat Roy 401, Ashoka Scintilla, , Himayat Nagar, Hyderabad Cell : Tel: saikat.roy@careratings.com JAIPUR Mr. Rakesh Jayaraman 304, Pashupati Akshat Heights, Plot No. D-91, Madho Singh Road, Near Collectorate Circle, Bani Park, Jaipur Cell: Tel: / 14 rakesh.jayaraman@careratings.com KOLKATA Ms. Priti Agarwal 3rd Floor, Prasad Chambers, (Shagun Mall Bldg.) 10A, Shakespeare Sarani, Kolkata Cell: ; Tel: priti.agarwal@careratings.com NEW DELHI Ms. Swati Agrawal 13th Floor, E-1 Block, Videocon Tower, Jhandewalan Extension, New Delhi Cell: ; Tel: +9s swati.agrawal@careratings.com PUNE Mr. Rahul Patni 9th Floor, Pride Kumar Senate, Plot No. 970, Bhamburda, Senapati Bapat Road, Shivaji Nagar, Pune Cell: ; Tel: rahul.patni@careratings.com CIN - L67190MH1993PLC