RATING RATIONALE
18Jan2022

Medico Remedies Ltd (Formerly known as Medico Remedies Pvt. Ltd)

Brickwork Ratings reaffirms the ratings for the Bank Loan Facilities of Rs. 17.55 Crs. of Medico Remedies Ltd (Formerly known as Medico Remedies Pvt. Ltd)

Particulars
Facilities** Amount (Rs.Crs.) Tenure Rating#
Previous Present Previous
(16 Sep 2020)
Present
Fund Based 3.52 1.55 Long Term BWR BBB-/Stable
Reaffirmation
BWR BBB - /Stable
Reaffirmation
(1.20) (0.00)
(0.78) (0.50)
(1.54) (1.05)
9.00 9.00 Short Term BWR A3
Reaffirmation
BWR A3
Reaffirmation
(9.00) (9.00)
(2.50) (2.50)
Non Fund Based 4.00 4.00 Long Term BWR BBB- /Stable
Reaffirmation
BWR BBB - /Stable
Reaffirmation
3.00 3.00 Short Term BWR A3
Reaffirmation
BWR A3
Reaffirmation
(3.00) (3.00)
Grand Total 19.52 17.55 (Rupees Seventeen Crores and Fifty Five 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 reaffirms the rating to BWR BBB- (Stable)/BWR A3 for the bank loan facilities amounting to Rs. 17.55 Crs. of Medico Remedies Ltd (Formerly known as Medico Remedies Pvt. Ltd). BWR believes that Medico Remedies Ltd (Formerly known as Medico Remedies Pvt. Ltd)'s business risk profile will be maintained over the medium term. The 'Stable' outlook indicates a low likelihood of rating change over the medium term. The rating outlook may be revised to 'Positive' in case the revenues and profit show sustained improvement backed by a favorable industry scenario. The rating outlook may be revised to 'Negative' if the revenues and profit margins show lower than expected figures.

BWR has essentially relied upon the audited financial statements of Medico Remedies Ltd (Formerly known as Medico Remedies Pvt. Ltd) for FY19, FY20 and FY21, and projections for FY22 and FY23, and publicly available information and information/clarifications provided by the entity’s management.

The rating draws strength from the experienced management and established market position, moderate scale of operations, and moderate financial risk profile. The rating is however constrained by margins susceptible to changes in the government policies and volatility in the raw material prices, customer concentration risk, and foreign exchange risk.

Going forward the ability of the company to maintain its overall financial risk profile would be its key rating sensitivity

KEY RATING DRIVERS

Credit Strengths:


Credit Risks:

ANALYTICAL APPROACH - Standalone

BWR has factored in the standalone business parameters and financial risk profile of the company to arrive at the rating. Reference may be made to the Rating Criteria hyperlinked detailed below (hyperlinks provided at the end of this rationale).

RATING SENSITIVITIES

The ability of the company to successfully scale up its operations, while maintaining a comfortable financial risk profile and adequate liquidity would be its key rating sensitivities.

Positive: The rating may be upgraded if the scale of operations, profitability and overall financial risk profile of the company shows significant improvement.

Negative: The rating may be downgraded if there is a significant deterioration in the scale of operations and financial risk profile affecting the debt servicing capacity of the company.

LIQUIDITY INDICATORS - Adequate

The liquidity profile of the company is adequate driven by a moderate current ratio of 1.54x during FY21. The liquidity is projected to remain at a moderate level at 1.59x in FY22 and 1.78x in FY23  The cash and cash equivalents stood at Rs 2.83 Crs. as on March 2021. The Net Cash accruals of the company are sufficient to discharge the matured debt obligations in FY22 and FY23.

ABOUT THE ENTITY

Medico Remedies Pvt Ltd was incorporated in the year 1994 and is primarily engaged in the manufacture of pharmaceuticals formulations. It manufactures tablets, dry syrups and capsules and supplies locally as well as in the international market. The registered office of the company is in Andheri East, Mumbai. The company has two independent WHO-GMP approved manufacturing units, one for General Formulations and other for Beta-Lactam Formulations in Palghar, Maharashtra. The company is setting up another unit for the manufacture of external formulations, which include ointments and creams. The unit is expected to be operational by next financial year. The founder promoter of the company is Mr. Haresh Mehta, and has more than 35 years of experience in the industry

KEY FINANCIAL INDICATORS (Standalone)
Key Parameters Units FY 20-21
(Audited)
FY 19-20
(Audited)
Operating Revenue Rs.Crs. 122.39 88.64
EBITDA Rs.Crs. 5.23 2.84
PAT Rs.Crs. 2.59 1.63
Tangible Net Worth Rs.Crs. 32.46 29.87
Total Debt/Tangible Net Worth Times 0.40 0.46
Current Ratio Times 1.54 1.40

RATING HISTORY FOR THE PREVIOUS THREE YEARS (including withdrawal and suspended)
Facilities Current Rating (2022) 2021 2020 2019
Type Tenure Amount
(Rs.Crs.)
Rating Date Rating Date Rating Date Rating
Fund Based LT 1.55
BWR BBB-/Stable
(Reaffirmation)
NA
NA
16Sep2020
BWR BBB-Stable
(Reaffirmation)
04Mar2019
BWR BBB-Stable
(Upgrade)
FB SubLimit LT (0.50)
BWR BBB-/Stable
(Reaffirmation)
NA
NA
NA
NA
NA
NA
(1.05)
BWR BBB-/Stable
(Reaffirmation)
NA
NA
NA
NA
NA
NA
Fund Based ST 9.00
BWR A3
(Reaffirmation)
NA
NA
16Sep2020
BWR A3
(Reaffirmation)
04Mar2019
BWR A3
(Upgrade)
FB SubLimit ST (9.00)
BWR A3
(Reaffirmation)
NA
NA
NA
NA
NA
NA
(2.50)
BWR A3
(Reaffirmation)
NA
NA
NA
NA
NA
NA
Non Fund Based LT 4.00
BWR BBB-/Stable
(Reaffirmation)
NA
NA
16Sep2020
BWR BBB- Stable
(Reaffirmation)
04Mar2019
BWR BBB-Stable
(Upgrade)
Non Fund Based ST 3.00
BWR A3
(Reaffirmation)
NA
NA
16Sep2020
BWR A3
(Reaffirmation)
04Mar2019
BWR A3
(Upgrade)
NFB SubLimit ST (3.00)
BWR A3
(Reaffirmation)
NA
NA
NA
NA
NA
NA
Grand Total 17.55 (Rupees Seventeen Crores and Fifty Five 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

Mita Ghanshyam Gupta

Ratings Analyst mita.g@brickworkratings.com

Sushil Kumar Chitkara

Director - Ratings Board : +91 22 2831 1426, +91 22 2831 1439 sushilkumar.c@brickworkratings.com
1-860-425-2742 | media@brickworkratings.com
Medico Remedies Ltd (Formerly known as Medico Remedies Pvt. 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 Kotak Mahindra Bank Term LoanOut-standing _ _ 0.00
Sub-Limit (FCTL 2) Out-standing (0.50)
Sub-Limit (FCTL 3) Out-standing (1.05)
Sub-Limit (FCTL-1) Out-standing (0.00)
2 Kotak Mahindra Bank Term LoanOut-standing 0.50 _ 0.50
3 Kotak Mahindra Bank Term LoanOut-standing 1.05 _ 1.05
4 Kotak Mahindra Bank Bank GuaranteeSanctioned 4.00 _ 4.00
5 Kotak Mahindra Bank Letter of CreditSanctioned _ 3.00 3.00
Sub-Limit (SBLC/BG for Buyer's Credit) Sanctioned (3.00)
6 Kotak Mahindra Bank FBD/FBPSanctioned _ 9.00 9.00
Sub-Limit (Cash Credit) Sanctioned (2.50)
Sub-Limit (EPC/PCFC) Sanctioned (9.00)
Total 5.55 12.00 17.55
TOTAL (Rupees Seventeen Crores and Fifty Five lakhs Only)
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