Agog Pharma Ltd

Brickwork Ratings reaffirms the ratings for the Bank Loan Facilities of Rs.12.50 Crs. of Agog Pharma Ltd

Particulars

Facilities**	Amount (Rs.Crs.)		Tenure	Rating#
Facilities**	Previous	Present	Tenure	Previous (31 Dec 2020)	Present
Fund Based	2.50	2.50	Long Term	BWR BB+ Stable Reaffirmation ISSUER NOT COOPERATING*	BWR BB + /Stable Reaffirmation
Non Fund Based	10.00	10.00	Short Term	BWR A4+ Reaffirmation ISSUER NOT COOPERATING*	BWR A4 + Reaffirmation
Grand Total	12.50	12.50	(Rupees Twelve Crores and Fifty 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

Brickwork Ratings has reaffirmed the long term rating at BWR BB+/Stable and short-term rating at BWR A4+ for the Bank Loan Facilities of Rs.12.50 Crore of Agog Pharma Limited. BWR believes that Agog Pharma Limited business risk profile will be maintained over the medium term. The 'Stable' outlook indicates a low likelihood of rating change over the medium term..

BWR has essentially relied upon the audited financial statements of Agog Pharma Limited for FY19,FY20, Provisional of FY21 and projections of FY22 and FY23 and publicly available information and information/clarifications provided by the entity’s management.

The rating reaffirmations continue to take into account the Experienced management with long track record in the pharmaceutical industry, Healthy financial profile with adequate liquidity position. The rating is constrained by fluctuating scale of operations, high dependence on regulated markets for Pharmaceutical segment, intense competition from both MNCs and Indian companies in India and abroad, volatility in raw material price and foreign exchange fluctuation risk.

KEY RATING DRIVERS

Credit Strengths:

Experienced management with long track record in the pharmaceutical industry :
The company has a successful track record of around four decades in the Pharmaceutical business. APL is spearheaded by Mr.Aziz Abdul Hamid Damani, Mrs.Aziz Shehnaz Damani and Mr. Anil Kumar Pandey and the Board is ably supported by qualified and professional senior management team heading various verticals.
Healthy financial profile with adequate liquidity :
The company’s capital structure continues to remain healthy with total debt of Rs.1.43 crore as on March 31, 2021 (Rs.5.27 crore as on March 31, 2020). The decrease in the total debt was due to reduction in outstanding working capital limits as on March 31, 2021. The Total debt/TNW ratio remained comfortable at 0.00x as on March 31, 2021 as against 0.10x as on March 31, 2020. Furthermore, with low debt levels and increasing profit levels, the debt coverage indicators and interest coverage indicators have also improved.

Credit Risks:

Fluctuating Scale of operation :
The overall scale of operations continued to remain modest with total operating income (TOI) in the range of Rs.50.90 crore to Rs.69.69 crore during FY18 to FY20. During FY20, The TOI of company has increased by 37.72% and stood at Rs.69.69 crore as against Rs.50.90 crore in FY20. The said increase in the TOI was due to increase in the orders received from existing as well as new customers. Further, during FY21 (Prov.) the company has achieved TOI of Rs.66.56 crore with H1FY22 of Rs.33.70 Crore.
High dependence on regulated markets for Pharmaceutical segment :
APL has its presence in multiple countries across the world. Considering the nature of the product usage and application, and consequent impacts, APL is required to comply with various laws, rules and regulations and operate under a strict regulatory environment. Thus, infringement in any of the law, and any significant adverse change in the import/export policy environmental/regulatory policies in the area of operations of the company, can have an impact on the operations of the company. Nevertheless, the company is continuously taking adequate steps to address the regulatory risks.
Intense competition from both MNCs and Indian companies in India and abroad :
APL faces intense competition and pricing pressure in the global as well as domestic markets. Globally, the generic players are facing severe price erosion, significant government pressures to reduce prices along with intense increasing competition, increasing regulation and increased sensitivity towards product performance.
Volatility in raw material price :
With limited ability to pass on the increase in raw material costs, any substantial increase in raw material costs may affect the company’s profitability in the near term. Nevertheless, over the years the company’s EBITA margin has remained healthy and the company has been able to procure raw material at lower price as it is purchasing raw materials at lower credit period and availing better bargained prices for its raw materials. Company procures almost 80-85% of its raw material from the domestic market and the balance is imports mainly from China.
Foreign exchange fluctuation risk :
The company derived about 99% of its overall revenues from exports, thus it is exposed to foreign currency fluctuation risk.

ANALYTICAL APPROACH - Standalone

The ratings of APL are arrived at on a standalone basis after independent evaluation of its financial risk profile. For arriving at its ratings, BWR has applied its rating methodology as detailed in the rating criteria hyperlinks.

RATING SENSITIVITIES

Positive: Significant growth in revenue, improved scale of operations and profitability.

Negative: Lower than expected revenues affecting the profitability margins, coverage ratios, liquidity and gearing ratios are the key negative sensitivities.

LIQUIDITY INDICATORS - Adequate

The liquidity profile of the company remained adequate with cash and liquid investments amounting to Rs.6.53 Crore as on FY21(Provisional) (vis-a-vis Rs.11.52 Crore as on March 2020) no term debt obligations. Its working capital utilization stood low at only ~3.48 in the last six months indicating sufficient liquidity cushion.

The current ratio stood moderate at 1.41 times as on March 31, 2021 as against 1.99 times as on March 31, 2020, whereas the conversion cycle stood negative owing to high level of creditors periods. Thus the collection period stood high at 121 days against 135 days in FY19 and creditors period stood at 166 days in FY20 against 190 days in FY19. Cash and cash balance stood at Rs.11.52 crore for FY20 (vis-a-vis Rs.16.26 Crore for FY19).

The company has strong net worth base of Rs.37.18 Crore as on 31, March 2020, furthermore the company has reported net worth of Rs.44.73 crore as on March 2021.

ABOUT THE ENTITY

The company was incorporated in 1990,Agog Pharma Ltd (APL) was set up by Mr. Aziz Abdul Hamid Damani and is based in Thane, Maharashtra. Agog Pharma Ltd manufactures and markets pharmaceutical formulations in the form of tablets, liquid orals, capsules, dry syrup etc. APL is WHO - GMP & ISO 9001:2000 certified. The company operates from its single manufacturing facility located at Vasai Dist. Thane, Maharashtra. The company employs around 150 employees. Almost 98 per cent of the revenue is attributed to export countries like uganda, Tanzania, Yemen, Srilanka & Rwanda etc.

The main raw material required are Paracetamol, Nitrofurantoin,Dexamethasone,,Chloramphenicol,Dexamethasone,Calcium Lactate,Metronidazole,Doxycycline Hyclate,& Griseofulvin etc are procured from china which contributes 20% of the purchases and 80% from domestic market

KEY FINANCIAL INDICATORS (Standalone)

Key Parameters	Units	FY 19-20 (Audited)	FY 18-19 (Audited)
Operating Revenue	Rs.Crs.	71.41	57.00
EBITDA	Rs.Crs.	7.32	7.17
PAT	Rs.Crs.	6.88	5.72
Tangible Net Worth	Rs.Crs.	37.14	30.26
Total Debt/Tangible Net Worth	Times	0.14	0.05
Current Ratio	Times	1.99	2.26

STATUS OF NON-COOPERATION WITH PREVIOUS CRA

Nil

RATING HISTORY FOR THE PREVIOUS THREE YEARS (including withdrawal and suspended)

Facilities	Current Rating (2021)			2020		2019		2018
Type	Tenure	Amount (Rs.Crs.)	Rating	Date	Rating	Date	Rating	Date	Rating
Fund Based	LT	2.50	BWR BB+/Stable (Reaffirmation)	31Dec2020	BWR BB+ Stable Reaffirmation (ISSUER NOT COOPERATING*)	19Dec2019	BWR BB+ (Stable) (Reaffirmed )	NA	NA
Non Fund Based	ST	10.00	BWR A4+ (Reaffirmation)	31Dec2020	BWR A4+ Reaffirmation (ISSUER NOT COOPERATING*)	19Dec2019	BWR A4+ (Reaffirmed )	NA	NA
Grand Total		12.50	(Rupees Twelve Crores and Fifty 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
Durga Lalit Purohit Ratings Analyst durga.lp@brickworkratings.com	Ajit S Jagnade Senior Manager - Ratings Board : +91 22 2831 1426, +91 22 2831 1439 ajit.j@brickworkratings.com
1-860-425-2742 \| media@brickworkratings.com

Agog Pharma Ltd

ANNEXURE-I

Details of Bank Facilities rated by BWR

SL.No.	Name of the Bank/Lender	Type Of Facilities	Long Term(Rs.Crs.)	Short Term(Rs.Crs.)	Total(Rs.Crs.)
1	ICICI Bank	Cash Credit - Sanctioned	2.50	_	2.50
2	ICICI Bank	Bank Guarantee - Sanctioned	_	3.00	3.00
3	ICICI Bank	Letter of Credit - Sanctioned	_	7.00	7.00
Total			2.50	10.00	12.50
TOTAL (Rupees Twelve Crores and Fifty lakhs Only)

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