RATING RATIONALE
01Feb2021

Allchem Lifescience Pvt. Ltd.

Brickwork Ratings assigns the ratings for the Bank Loan Facilities of Rs.101.58 Crs. of Allchem Lifescience Pvt. Ltd.

Particulars
Facilities** Amount (Rs.Crs.) Tenure Rating#
Fund Based
Cash Credit Sanctioned 13.50 Long Term BWR BB /Stable Assignment
Cash Credit Proposed 06.20
Term Loan Sanctioned 07.68
Term Loan Proposed 74.20
Sub Total 101.58
Grand Total 101.58 (Rupees One Hundred One Crores and Fifty Eight lakhs Only)
#Please refer to BWR website www.brickworkratings.com for definition of the ratings
**Details of Bank Loan facilities,consolidation or instruments are provided in Annexure
RATING ACTION / OUTLOOK

BWR  has assigned rating of  BWR BB/Stable for bank loan facilities of Allchem Lifescience Pvt. Ltd.

The ratings assigned to the bank facilities of Allchem Lifescience Private Limited (ALPL) favorably take into consideration business experience of the promoters, reputed client base and moderate but improving revenue stream.
The ratings, however, are constrained on account of its moderate financial risk profile, susceptibility to fluctuations in raw material prices, intense competition, and regulatory risk and foreign exchange fluctuation risk.  The ratings are further constrained by project implementation and execution risks associated with ongoing significant debt-funded capital expenditure project which is at nascent stage.

KEY RATING DRIVERS

BWR has essentially relied upon the audited financial statements of Allchem Lifescience Pvt. Ltd. of FY18,FY19,FY20 and projected financial statements of FY21,FY22, publicly available information and information / clarifications provided by the entity’s management.

Credit Strengths:


Credit Risks:

ANALYTICAL APPROACH - Standalone

For arriving at its ratings, BWR has applied its rating methodology as detailed in the Rating Criteria detailed below (hyperlinks provided at the end of this rationale).

RATING SENSITIVITIES

Positive: . BWR could upgrade entity's ratings if there is an improvement in its revenue performance along with a significant improvement in its profitability margins, leading to an improvement in the credit profile on a consistent basis. 

Negative: Pressure on the ratings could arise in case there is significant decline in its turnover and/or profitability levels, leading to lower cash accruals, which will result in deterioration in its credit profile.  

Going forward, the ability of the company to complete the expansion project on time without any cost overruns, stabilize and scale up operations to the expected levels, diversify its customer as well as product profile, improvement in financial and business risk profile and manage working capital cycle efficiently would remain the key rating sensitivity.

LIQUIDITY INDICATORS - Adequate

ALPL’s liquidity position remains adequate, characterised by net cash accruals of ~Rs. 5.38 crs against debt repayment obligation of ~Rs. 3.15 Crs for FY20.  The Company’s  utilisation of working capital limits are moderate  (average utilisation of ~50-55%) of around ~Rs. 6.20 crore. Current Ratio is at 1.01 times in FY20.  

ABOUT THE ENTITY

Established in 2003 as  proprietorship firm namely Allchem Laboratories, subsequently got reconstituted into private limited company in January 2017 as  Allchem Lifescience Private Limited. The Company is promoted by Mr. Bipin patel, Mr. Kantilal Patel and Ms. Manisha Patel. It is engaged in manufacturing of drug Intermediates. At present the Company has 4 manufacturing plants with the total production capacity of 55.95 MT/Month (671.4MTPA). The Company is proposing an expansion to increase the production capacity to 180 MT/Month (2351.4MTPA). Expected COD is in 2022-23.

KEY FINANCIAL INDICATORS (Standalone)
Key Parameters Units FY 19-20
(Audited)
FY 18-19
(Audited)
Operating Revenue Rs.Crs. 49.24 40.12
EBITDA Rs.Crs. 8.53 8.46
PAT Rs.Crs. 2.18 2.17
Tangible Net Worth Rs.Crs. 8.23 5.05
Total Debt/Tangible Net Worth Times 3.15 7.13
Current Ratio Times 1.01 1.02
KEY COVENANTS OF THE FACILITY RATED

The terms of sanction are expected to include standard covenants normally stipulated for such facilities.


STATUS OF NON-COOPERATION WITH PREVIOUS CRA

Care Ratings vide press release dated 1April2020 moved the rating to Issuer Not Cooperating category.

Icra  vide press release dated 28July2020 continue the rating under Issuer Not Cooperating category.

ANY OTHER INFORMATION

NA

RATING HISTORY FOR LAST THREE YEARS (including withdrawal and suspended)
Facilities Current Rating (2021) Rating History
Facility Tenure Amount Rating 2020 2019 2018
Fund Based
Cash Credit - Sanctioned
Cash Credit - Proposed
Term Loan - Sanctioned
Term Loan - Proposed
Long Term 13.50
06.20
07.68
74.20
BWR BB/Stable NA NA NA
Grand Total 101.58 (Rupees One Hundred One Crores and Fifty Eight lakhs Only)

COMPLEXITY LEVELS OF THE INSTRUMENTS - Simple

BWR complexity levels are meant for educating investors. The BWR complexity levels are available at www.brickworkratings.com / download / ComplexityLevels.pdf. Investors queries can be sent to info@brickworkratings.com.

Hyperlink/Reference to applicable Criteria
Analytical Contacts

Priya Depala

Senior Rating Analyst priya.d@brickworkratings.com

Dileep Narayan Singh

Director Ratings dileep.s@brickworkratings.com
1-860-425-2742 | media@brickworkratings.com
Allchem Lifescience Pvt. Ltd.
ANNEXURE-I
Details of Bank Facilities rated by BWR
SL.No. Type Of Facilities Long Term(Rs.Crs.) Short Term(Rs.Crs.) Total(Rs.Crs.)
1 Cash CreditSanctioned 13.50 _ 13.50
2 Cash CreditProposed 6.20 _ 6.20
3 Term LoanSanctioned 7.68 _ 7.68
4 Term LoanProposed 74.20 _ 74.20
Total 101.58 0.00 101.58
TOTAL (Rupees One Hundred One Crores and Fifty Eight lakhs Only)
ANNEXURE-II
INSTRUMENT DETAILS

InstrumentIssue DateAmount (Rs.Crs)Coupon Rate (%)Maturity DateISIN Particulars
NANANANANANA

ANNEXURE-III
List of entities consolidated

Name of Entity% OwnershipExtent of consolidationRationale for consolidation
NANANANA

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Brickwork Ratings (BWR), a Securities and Exchange Board of India [SEBI] registered Credit Rating Agency and accredited by Reserve Bank of India [RBI], offers credit ratings of Bank Loan, Non- convertible / convertible / partially convertible debentures and other capital market instruments and bonds, Commercial Paper, perpetual bonds, asset-backed and mortgage-backed securities, partial guarantees and other structured / credit enhanced debt instruments, Security Receipts, Securitization Products, Municipal Bonds, etc. BWR has rated over 11,400 medium and large corporates and financial institutions’ instruments. BWR has also rated NGOs, Educational Institutions, Hospitals, Real Estate Developers, Urban Local Bodies and Municipal Corporations. BWR has Canara Bank, a leading public sector bank, as one of the promoters and strategic partner. BWR has its corporate office in Bengaluru and a country-wide presence with its offices in Ahmedabad, Chandigarh, Chennai, Hyderabad, Kolkata, Mumbai and New Delhi along with representatives in 150+ locations.

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