Anlon Healthcare Pvt. Ltd.

Brickwork Ratings reaffirms the long term ratings and simultaneously removes from Issuer Not Cooperating* category along with withdrawal of short term ratings for the Bank Loan Facilities of Rs. 27.36 Crs. of Anlon Healthcare Pvt. Ltd.

Particulars

Facilities**	Amount (Rs.Crs.)		Tenure	Rating#
Facilities**	Previous	Present	Tenure	Previous (11 Jan 2022)	Present
Fund Based	18.52	27.36	Long Term	BWR B /Stable Downgrade/ISSUER NOT COOPERATING*	BWR B /Stable Reaffirmation
Fund Based	9.00	0.00	Short Term	BWR A4 Reaffirmation/ISSUER NOT COOPERATING*	Withdrawal
Grand Total	27.52	27.36	(Rupees Twenty Seven Crores and Thirty Six 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
*** Conversion of Packing credit limit to WCTL of Rs 9 crs (One time restructuring of packing credit limit as per PNB sanction letter dated 15-9-21)
Note: *Issuer did not cooperate; based on best available information.

RATING ACTION / OUTLOOK

BWR believes that Anlon Healthcare Pvt Ltd 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.

BWR has essentially relied upon the audited financial statements of Anlon Healthcare Pvt. Ltd. of FY18, FY19, FY20, provisional management certified financial FY21-22, and projected financial statements of FY22-23, publicly available information, and information/clarifications provided by the entity’s management. The rating draws strength from the vast business experience of the director/s, established track of operations, timely promoters infusion in the form of USL and modest scale of operations. However, the rating is constrained by the impact of covid-19 disruptions on operations and high competition from other established players in the market, and the average financial risk profile.

Going forward, the ability of the entity to achieve projected revenue & profitability margins and manage liquidity would be key rating sensitivities.

KEY RATING DRIVERS

Credit Strengths:

Extensive industry experience of the promoters and promoters/shareholders support in the form of USL: :
The company has a successful track record of around 5 years in the Pharmaceutical business as the operations started in FY18. AHPL is spearheaded by Mr. Punit Rasadia-Managing director (Phd organic chemistry) has rich experience of more than 11 years, Mr. Meet Vachhani-Director (B. Sc. Biology) has experience of 15 years. The experience of the management and their understanding of industry dynamics will continue to support the business risk profile. The company has also various certifications by FDA, PMDA, KFDA, cGMP, and WHOGMP. Timely support of promoters/shareholders by fund infusion as stated above in liquidity indicators will provide additional cushion to liquidity. Promoters infused USL of Rs 3.8 crs in FY21 wherein shareholders USL amounts to Rs 19.67 crs.

Note: Below financial indicator table shows TNW as reported of Rs 1.58 crs considering USL from Promoters/Shareholder the TNW(Analysed) is Rs 25.20 crs in FY21, Considering the TNW(Analysed) the gearing (Analysed) stands at 1.19x in FY21.
The better prospect of Healthcare Industry in wake of growing healthcare market across the globe: :
The healthcare market in India is expected to reach US$372 billion by the end of FY22 driven by better health awareness, rising income etc. The government of India aims to increase healthcare spending of 3% of GDP by FY22. Company sales remain modest at Rs 15.98 crs in FY20-21 which improved to Rs 57.43 crs in FY21-22 as per management certified financial provisional numbers. The company reported a net loss of Rs 10.24 crs in FY20-21 which improved/reduced to net loss of (Rs 0.21 crs) in FY22 as per the provisional number. With the rising opportunity and government support, the pharma sector is likely to be better in future.

Credit Risks:

The average financial risk profile: :
Company's reported net worth in FY21 is Rs 1.58 against Rs.11 crs in FY20 as the losses in in FY21 were Rs 10.24 crs. Company OPM% is maintained in FY22 as ~10% against net losses% in FY22 of 0.36%. During FY21 due to covid- pandemic and the overall volume of surgical and post-surgical drugs reduced leading to less demand for API manufacturers like Anlon. During FY22 the company revived from the shocks of disruption due to covid however, on account of high interest & finance charges in FY22 the company incurred a loss of Rs 0.21 crs. Company has achieved sales of Rs 16 crs during first quarter of FY23.
Foreign exchange fluctuation risk and Intense competition in the market: :
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. Company is doing cross hedging and remaining is into merchant exporting hence it is less exposed to much fluctuated foreign currency fluctuation risk.

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

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, strengthning capital structure, profit margins, liquidity position and tangible net worth, improvement in overall gearing below 1.40x.

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 INDICATORS - Stretched

The average cash credit limit utilization remains 95% marked by a moderate current ratio of 1.29 times in FY20-21. Net cash accrual in FY20-21 remains at negative balance of Rs 8.27 crs in FY20-21. As per the management certified provisional financial numbers the net cash accrual stands at 1.88 crs in FY22. Net cash accrual/total debt remained insufficient. Cash and cash equivalents remained at Rs 0.87 crs in FY20-21 which although increased to Rs 1.55 crs in FY21(as per provisional financial numbers). Timely infusion of funds by promoters/shareholders in the form of USL of Rs 23 crs in FY20-21 will provide additional cushion to liquidity.

ABOUT THE ENTITY

Anlon Healthcare Pvt Ltd (AHPL) was incorporated in 2013 to manufacture Active Pharmaceutical Ingredients (APIs), primarily for export purpose. The company has a state-of-theart plant in Kalawad road Rajkot, Gujarat. Anlon started commercial production in FY 2017-18. Since then, the company has added several new APIs and bulk drugs in its product list backed by its strong R&D capabilities. The promoters are all technically qualified and are Ph.D in chemistry and chemical processes. Promoters are Mr Punit Rasadia and Mr. Meet Vachhani.

KEY FINANCIAL INDICATORS (Standalone)

Key Parameters	Units	FY 20-21 (Audited)	FY 19-20 (Audited)
Operating Revenue	Rs.Crs.	15.98	29.46
EBITDA	Rs.Crs.	-5.21	6.82
PAT	Rs.Crs.	-10.24	2.37
Tangible Net Worth	Rs.Crs.	1.58	11.87
Total Debt/TNW	Times	34.01	2.93
Current Ratio	Times	1.29	1.12

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

Facilities	Current Rating (2022)			2022 (History)		2021		2020		2019
Type	Tenure	Amount (Rs.Crs.)	Rating	Date	Rating	Date	Rating	Date	Rating	Date	Rating
Fund Based	LT	27.36	BWR B/Stable (Reaffirmation)	11Jan2022	BWR B Stable (Downgrade/ISSUER NOT COOPERATING*)	NA	NA	12Oct2020	BWR B+ Stable (Upgrade)	09Oct2019	BWR B- Stable (Assignment)
Fund Based	ST	0.00	Withdrawal (0)	11Jan2022	BWR A4 (Reaffirmation/ISSUER NOT COOPERATING*)	NA	NA	12Oct2020	BWR A4 (Reaffirmation)	NA	NA
Non Fund Based	ST	0.00	Withdrawal (0)	NA	NA	NA	NA	NA	NA	09Oct2019	BWR A4 (Assignment)
Grand Total		27.36	(Rupees Twenty Seven Crores and Thirty Six lakhs Only)

*** Conversion of Packing credit limit to WCTL of Rs 9 crs (One time restructuring of packing credit limit as per PNB sanction letter dated 15-9-21) COMPLEXITY LEVELS OF THE INSTRUMENTS - NA

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
Tripti Sharma Ratings Analyst tripti.s@brickworkratings.com	Dileep Narayan Singh Director dileep.s@brickworkratings.com
1-860-425-2742 \| media@brickworkratings.com

Anlon Healthcare 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	Punjab National Bank	Term Loan - Out-standing	8.47	_	8.47
2	Punjab National Bank	Working Capital Term Loan - Sanctioned	9.00	_	9.00
3	Punjab National Bank	Cash Credit - Sanctioned	8.00	_	8.00
4	Punjab National Bank	Packing Credit (PC) - Sanctioned	_	_	0.00
5	Punjab National Bank	GECL - Out-standing	1.89	_	1.89
Total			27.36	0.00	27.36
TOTAL (Rupees Twenty Seven Crores and Thirty Six lakhs Only)

* Conversion of Packing credit limit to WCTL of Rs 9 crs (One time restructuring of packing credit limit as per PNB sanction letter dated 15-9-21)

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