Brickwork Ratings assigns the ratings for the Bank Loan Facilities of Rs.25.16 Crs. of Murli Krishna Pharma Pvt. Ltd.
ParticularsFacility** | Amount (Rs.Crs) | Tenure | Rating* |
---|---|---|---|
Fund Based | |||
Cash Credit
Sanctioned
Term Loan Sanctioned Covid -19 Emergency Line Credit Sanctioned |
02.60
09.00 01.66 |
Long Term | BWR BB - (Stable) |
Export Packing Credit (EPC)
Sanctioned
Packing Credit (PC) Sanctioned |
05.90
03.00 |
Short Term | BWR A4 |
Sub Total | 22.16 | ||
Non-Fund Based | |||
Letter of Credit Sanctioned | 03.00 | Short Term | BWR A4 |
Sub Total | 03.00 | ||
Grand Total | 25.16 | (Rupees Twenty Five Crores and Sixteen lakhs Only) |
BWR has assigned the long term rating of BWR BB- with a Stable outlook and short term rating of BWR A4 to bank loan facilities of Murli Krishna Pharma Pvt. Ltd.BWR believes that the firm'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. The rating outlook may be revised to 'Negative' if the revenues go down and profit margins show lower than expected figures.
KEY RATING DRIVERS
BWR has essentially relied upon the audited financial statements of Murli Krishna Pharma 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. The rating draws strength from the vast business experience of the directors, established track of operations and above-average financial risk profile. However, the rating is constrained by the stretched working capital cycle and exposure to regulatory risks and intense competition.
Going forward, the ability of the entity to achieve projected revenue & profitability margins and manage liquidity would be key rating sensitivities.
Credit Strengths:
Mrs. Satyaramani Vadlamani ,an Electrical and Electronics Engineer by education, she carries with her more than 22 years of experience in Global marketing of pharmaceutical products.Also Dr. Vijay K Shastri who is one of the promoters, is working as a Technical Director with Murli Krishna Pharma Pvt. ltd has an experience of 25 years in the industry.The promoters have established healthy relationships with their customers.
The scale of operations has been increasing Y-O-Y. The Total operating income increased by 26 % to Rs 69.69 Cr in FY20 Vs Rs 55.23 Cr in FY19.
The Financial risk profile of the company is marked with moderate net worth of Rs.16.55 cr in FY20 which has resulted in low gearing of 0.76x in FY20.Profitability in FY20 and has increased compared to FY19 as reported through OPM of 11.37% and NPM of 6.79 % in FY20.Coverage ratios with DSCR and ISCR are adequate at 3.63x and 4.86x in FY20.The current ratio reported at 1.23x in FY20 is adequate.
Credit Risks:
The working capital is stretched with receivable + inventory days at 192 days in FY20.
The pharma companies face a strict regulatory environment due to increased inspections and governing actions by domestic and foreign authorities. Further, the Indian drugs industry has many organised and unorganised players. Larger manufacturers benefit from cheap skilled labour and low manufacturing cost because of economies of scale and plants approved by the US Food and Drug Administration.
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
Going forward the ability of the company to improve its scale of operations, overall financial risk profile, and maintain its liquidity position will be the key sensitivities.
Positive: The ratings may be upgraded with improvement in scale of operations, capital structure, profit margins, liquidity position and tangible net worth.
Negative: The ratings may be downgraded in case revenues of the company and profit substantially plunge from the current levels and gearing and debt service metrics deteriorate.
LIQUIDITY POSITION
Stretched
The liquidity position is stretched as the cash credit utilization is 95-100% for the period June to September 2020. However the liquidity is expected to improve in the medium term on account of the introduction of capital and enhancement in the cash credit facilities. The cash and cash equivalents as of 31st March 2020 are 1.76 Cr. and the current ratio is 1.23x in FY20 with NIL current investment. The cash accruals in FY20 are at Rs 6.33 Cr which are sufficient to meet the debt obligations. PROFILEMurli Krishna Pharma Private Limited (MKPPL) was incorporated in 2004 by Late Mr. Eshwar Rao Vadlamani, Mrs. Satyaramani Vadlamani and Dr. Vijay Shastri. The company is engaged in manufacturing of Pre-finished Formulation Intermediates for end products such as capsules and tablets.MKPPL has diversified its wings in terms of rendering services as a Contract Research and Manufacturing System (CRAMS).MKPPL has been accredited for Good Manufacturing Practices (GMP) by the World Health Organization (WHO), European Union (EU), Pharmaceutical Inspection Committee (PIC/s) and the Jordanian Food & Drug Administration (JFDA).As per MCA website the paid up capital is Rs 30.20 Cr. as on 4 Jan 2021(Documentary proof yet to be received from MKPPL)
KEY FINANCIAL INDICATORSKey Parameters | Units |
FY 19-20 (Audited) |
FY 18-19 (Audited) |
---|---|---|---|
Operating Revenue | Rs.Crs. | 69.82 | 55.31 |
EBITDA | Rs.Crs. | 7.94 | 5.27 |
PAT | Rs.Crs. | 4.74 | 3.11 |
Tangible Net Worth | Rs.Crs. | 16.55 | 11.79 |
Total Debt/Tangible Net Worth | Times | 0.76 | 0.99 |
Current Ratio | Times | 1.23 | 1.06 |
S.No | Current Rating (2021) | Rating History | ||||||||
---|---|---|---|---|---|---|---|---|---|---|
Facilities | Tenure | Amount (Rs.Crs) | Rating | 2020 | 2019 | 2018 | ||||
Fund Based | ||||||||||
1 | Cash Credit - SanctionedTerm Loan - SanctionedCovid -19 Emergency Line Credit - Sanctioned | Long Term | 02.6009.0001.66 | BWR BB-(Stable) | NA | NA | NA | |||
2 | Export Packing Credit (EPC) - SanctionedPacking Credit (PC) - Sanctioned | Short Term | 05.9003.00 | BWR A4 | NA | NA | NA | |||
Non-Fund Based | ||||||||||
3 | Letter of Credit - Sanctioned | Short Term | 03.00 | BWR A4 | NA | NA | NA | |||
Total | 25.16 | (Rupees Twenty Five Crores and Sixteen lakhs Only) |
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 : For More Information Contact:Analytical Contacts | |
---|---|
Nagesh Sudhir Kadu Rating Analyst B : 202267456 Ext : 619 nagesh.k@brickworkratings.com |
Sushil Kumar Chitkara Associate Director - Ratings B : +91 22 2831 1426, +91 22 2831 1439 sushilkumar.c@brickworkratings.com |
1-860-425-2742 | media@brickworkratings.com |
SL.No. | Type Of Facilities | Long Term(Rs.Crs.) | Short Term(Rs.Crs.) | Total(Rs.Crs.) |
---|---|---|---|---|
1 | Cash CreditSanctioned | 2.60 | _ | 2.60 |
2 | Term LoanSanctioned | 9.00 | _ | 9.00 |
3 | Covid -19 Emergency Line CreditSanctioned | 1.66 | _ | 1.66 |
4 | Export Packing Credit (EPC)Sanctioned | _ | 5.90 | 5.90 |
5 | Packing Credit (PC)Sanctioned | _ | 3.00 | 3.00 |
6 | Letter of CreditSanctioned | _ | 3.00 | 3.00 |
Total | 13.26 | 11.90 | 25.16 | |
TOTAL (Rupees Twenty Five Crores and Sixteen lakhs Only) |
Instrument | Issue Date | Amount (Rs.Crs) | Coupon Rate | Maturity Date | ISIN Particulars |
---|---|---|---|---|---|
NA | NA | NA | NA | NA | NA |
Name of Entity | % Ownership | Extent of consolidation | Rationale for consolidation |
---|---|---|---|
NA | NA | NA | NA |
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