Anlon Healthcare Pvt. Ltd.

Brickwork Ratings assigns the ratings for the Bank Loan Facilities of Rs.21.70 Crs. of Anlon Healthcare Pvt. Ltd.

Particulars

Facility**	Amount (Rs.Crs)	Tenure	Rating*
Fund Based
Cash Credit - Sanctioned Term Loan - Sanctioned Packing Credit (PC) - Proposed	03.00 11.70 04.50	Long Term	BWR B - (Stable)
Sub-Limit (Packing Credit) - Sanctioned Sub-Limit (FOBP) - Sanctioned	(01.00) (01.00)	Short Term	BWR A4
Sub Total	19.20
Non-Fund Based
Bank Guarantee - Proposed Letter of Credit - Proposed	00.50 02.00	Short Term	BWR A4
Sub Total	02.50
Grand Total	21.70	(Rupees Twenty One Crores and Seventy lakhs Only)

*Please refer to BWR website www.brickworkratings.com for definition of the ratings
**Details of Bank facilities are provided in Annexure-I
Note: Packing Credit and FBOP are sub limits of CC RATING ACTION / OUTLOOK : Stable

BWR has assigned the rating of BWR B- (Outlook: Stable) to Anlon Healthcare Pvt Ltd driving strength from the vast business experience of the promoters and moderate net worth. The Rating has been assigned a stable outlook as the business risk profile of the company i.e the growth in the business and profitability is expected to be maintained in the medium term.

KEY RATING DRIVERS

Credit Strengths:

• Experienced Promoters :

  The promoters have extensive industry experience for more than two decades in the field of pharmaceuticals which helps the company to maintain a healthy relationship with customers and suppliers.

• Moderate Net Worth :

  Due to the presence of USLs net worth (analyzed) is moderate at Rs. 20.69 Crs for FY19.

Credit Risks:

• Industry Risk :

  The pharmaceutical industry is highly regulated with several restrictions on production, sale, and distribution under various statutes. Any change in the regulatory environment can significantly impact the operations of the concern. Also in the industry, raw materials account for a high cost of sales, and the operating margin remains susceptible to any sharp change in input prices.

• Losses incurred by the company :

  Due to the nascent stage of operations, the company has incurred operating and net losses as marked by the OPM and NPM of (-0.51%) and (-15.44%) respectively for FY19.

• Below benchmark Current Ratio :

  Due to low liquidity, the current ratio is below benchmark at 0.99 times for FY19.

ANALYTICAL APPROACH AND APPLICABLE RATING CRITERIA

For ariving 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

Going forward the ability of the Company to improve its scale of operations and profitability margins, improve its overall credit risk profile and efficiently manage the liquidity risks would remain the key
rating sensitivities.

Positive: Rating may be upgraded in case of substantial improvement in the profit margins and liquidity.

Negative: Rating may be downgraded in case revenues of the company and profits substantially plunge from the current level. Rating may also be downgraded if the company is not able to manage the liquidity risk.

LIQUIDITY POSITION

The Company has negative net cash accruals of Rs. (-2.39Crs)  and has recorded operating losses for FY19. Also, the cash flow from operating activities is negative at Rs. (-1.93 Crs). Cash and Cash Equivalents are low at  Rs. 0.07 Crs for FY19. The conversion Cycle for FY19 is moderate at 53 days. CC Limit is fully utilized. Overall liquidity in the system is poor.

PROFILE

Anlon Healthcare Pvt Ltd was incorporated in 2015. The Company is engaged in the business of manufacturing of Active Pharmaceutical Ingredients (API), intermediates and formulations. The manufacturing facility is located at Rajkot, Gujrat. The Company stated its commercial operations in Q4FY18.

KEY FINANCIAL INDICATORS

Key Parameters	Units	FY 18-19	FY 17-18
Operating Revenue	Rs.Crs.	29.81	3.78
EBITDA	Rs.Crs.	-0.15	0.42
PAT	Rs.Crs.	-4.60	-0.74
Tangible Net Worth	Rs.Crs.	8.15	7.24
Total Debt/Tangible Net Worth	Times	3.83	4.38
Current Ratio	Times	0.99	1.07

NON-COOPERATION WITH PREVIOUS RATING AGENCY ,IF ANY

RATING HISTORY (INCLUDING WITHDRAWAL AND SUSPENSION)

S.No	Current Rating (2019)				Rating History
	Facilities	Tenure	Amount (Rs.Crs)	Rating	2018	2017	2016
Fund Based
1	Cash Credit - Sanctioned Term Loan - Sanctioned Packing Credit (PC) - Proposed	Long Term	3.00 11.70 4.50	BWR B- (Pronounced as BWR Single B minus) (Outlook: Stable)	NA	NA	NA
2	Sub-Limit (Packing Credit) - Sanctioned Sub-Limit (FOBP) - Sanctioned	Short Term	(1.00) (1.00)	BWR A4 (Pronounced as BWR A Four )	NA	NA	NA
Non-Fund Based
3	Bank Guarantee - Proposed Letter of Credit - Proposed	Short Term	0.50 2.00	BWR A4 (Pronounced as BWR A Four )	NA	NA	NA
Total			21.70	(Rupees Twenty One Crores and Seventy lakhs Only)

COMPLEXITY LEVELS OF THE INSTRUMENTS

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 :

• General Criteria
• Approach to Financial Ratios
• Manufacturing Companies
• Short Term Debt

For More Information Contact:

Analytical Contacts	Investor Contacts
Anshul Nagar Ratings Analyst B : +91 11 2341 2232 anshul.n@brickworkratings.com	Liena Thakur Assistant Vice President - Corporate Communications M : +91 84339 94686 liena.t@brickworkratings.com
Satvinder Kumar Gakhar Associate Director - Ratings B : +91 11 2341 2232 satvinder.g@brickworkratings.com
1-860-425-2742

SL.No.	Type Of Facilities	Long Term(Rs.Crs.)	Short Term(Rs.Crs.)	Total(Rs.Crs.)
1	Cash Credit - Sanctioned	3.00	_	3.00
Sub-Limit (FOBP) - Sanctioned		(1.00)
Sub-Limit (Packing Credit) - Sanctioned		(1.00)
2	Term Loan - Sanctioned	11.70	_	11.70
3	Packing Credit (PC) - Proposed	4.50	_	4.50
4	Bank Guarantee - Proposed	_	0.50	0.50
5	Letter of Credit - Proposed	_	2.00	2.00
Total				21.70
TOTAL (Rupees Twenty One Crores and Seventy lakhs Only)

Note: Packing Credit and FBOP are sub limits of CC