RATING RATIONALE
30Nov2022

Vimta Labs Ltd.

Brickwork Ratings reaffirms the ratings for the Bank Loan Facilities of Rs. 57.50 Crs. of Vimta Labs Ltd.

Particulars
Facilities** Amount (Rs.Crs.) Tenure Rating#@
Previous Present Previous
(04 Feb 2022)
Present
Fund Based 54.85 51.72 Long Term BWR A/Stable
Upgrade
BWR A /Stable
Reaffirmation
(15.00) (15.00)
(15.00) (15.00)
(10.00) (10.00)
Non Fund Based 5.78 5.78 Short Term BWR A1
Upgrade
BWR A1
Reaffirmation
(2.00) (2.00)
(2.00) (2.00)
Grand Total 60.63 57.50 (Rupees Fifty Seven 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
@This rating pertains to an existing assignment received prior to 6 October 2022


RATING ACTION / OUTLOOK

The reaffirmation of the bank loan ratings of Vimta Labs Ltd (Vimta or the company) continues to reflect the company’s established market position in testing and contract research in the areas of analytical testing of food and water, drugs, environment testing, clinical research and clinical reference testing (diagnostics), biopharmaceutical testing, pre-clinical studies and testing services for electronic and electrical products, its experienced management and long operational track record, long-standing relations with strong and diversified clientele, diversified revenue streams, consistent performance and a comfortable financial risk profile. The ratings also draw strength from the accreditations/certifications for its 18 geographically diversified testing laboratories across the country and the successful completion of regulatory audits. Brickwork Ratings (BWR) also takes note of the steady financial and operational performance of the company in H1FY23 (Unaudited). The rating strengths are partially offset by the exposure to foreign exchange fluctuation risks, increased competition, and regulatory and operational risks inherent in the fragmented research and testing industry.

BWR believes that Vimta’s business risk profile will be maintained over the medium term. The outlook may be revised to Positive if a sustained increase in the scale of operations, timely realisation of receivables, and higher-than-envisaged improvement in profitability result in an improved financial risk profile. The outlook may be revised to Negative if lower-than-expected revenue or profitability, a stretch in the working capital cycle due to the delayed realisation of receivables or sizeable or unanticipated capex adversely impacts the financial risk profile.

KEY RATING DRIVERS

Credit Strengths:


Credit Risks:

ANALYTICAL APPROACH - Standalone

M/s Emtac Laboratories Private Limited (Emtac), engaged in the electrical/electronic safety testing business, is the only subsidiary of Vimta Labs Ltd. Currently, the operations of Emtac are not meaningful in comparison with the holding company. Therefore, while assigning the ratings, BWR has adopted a standalone approach and applied its rating methodology as detailed in the Rating Criteria.

RATING SENSITIVITIES

Ability of the company to add new clients, increase the scope of existing contracts to ensure steady revenue growth while managing regulatory risks, and maintain its robust financial risk profile will remain the key rating sensitivities.

Upward

Downward

LIQUIDITY INDICATORS - Strong

Liquidity of the company continues to remain strong on the basis of low debt service obligations compared to annual operating profit and net cash accruals, nil short-term working capital borrowings in the past 6-7 months, moderate cash & cash equivalents and current ratio and contracting cash conversion cycle. Due to adequate cash & cash equivalents over the past 6-7 months, the company's cash credit accounts were in credit balance for most of the time, saving the company the associated interest cost. The term loan repayment obligations have remained low compared to the net cash accruals in the past three fiscals. The trend is expected to continue in FY23 and FY24. Growth in net profit and net cash inflow from operating activities net of outflows from investing and financing activities has resulted in an improvement of cash & cash equivalent position as on 31Mar2022 to Rs. 11.27 Crs., which further improved to Rs. 26.31 Crs. as on 30Sep2022 (unaudited). 

ABOUT THE ENTITY

Vimta Labs Ltd, incorporated in November 1990 in Hyderabad, is engaged in the business of testing and contract research in the areas of analytical testing of food and water, drugs, environment testing, clinical research and clinical reference testing (diagnostics), biopharmaceutical testing, pre-clinical studies and testing services for electronic and electrical products. The company is listed on the NSE and BSE. The company is cGMP, GLP and GCP - compliant and is an established market leader in contract testing and analytical R&D services. Vimta is reported to have India’s largest laboratory space of 400,000 sq.ft. It has a network of 18 own laboratories, 3 laboratories in alliance with other entities and 6 clinical diagnostics patient services centers across the country, including multiple branch laboratories for food testing and clinical diagnostics. Emtac Laboratories Pvt. Ltd (Emtac), engaged in the electrical/electronic safety testing business, is the wholly owned subsidiary of Vimta.

The company is promoted by Dr. S. P. Vasireddi (Founder, Non-executive Chairman) and Mr. V. Harriman (Co-founder, Executive Director – Operations). Ms. Harita Vasireddi is the Managing Director.

KEY FINANCIAL INDICATORS (Standalone)
Key Parameters Units FY 21-22
(Audited)
FY 20-21
(Audited)
Operating Revenue Rs.Crs. 275.98 209.05
EBITDA Rs.Crs. 79.96 53.14
PAT Rs.Crs. 41.06 21.26
Tangible Net Worth Rs.Crs. 220.29 194.32
Total Debt/TNW Times 0.09 0.15
Current Ratio Times 2.64 2.09
KEY FINANCIAL INDICATORS (Consolidated)
Key Parameters Units FY 21-22
(Audited)
FY 20-21
(Audited)
Operating Revenue Rs.Crs. 278.28 210.68
EBITDA Rs.Crs. 80.48 53.40
PAT Rs.Crs. 41.33 21.40
Tangible Net Worth Rs.Crs. 215.05 188.80
Total Debt/TNW Times 0.09 0.16
Current Ratio Times 2.60 2.05
KEY COVENANTS OF THE FACILITY RATED

The terms of sanction include standard covenants normally stipulated for such facilities.


NON-COOPERATION WITH PREVIOUS CREDIT RATING AGENCY

NA

ANY OTHER INFORMATION

Nil

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 51.72
BWR A/Stable
(Reaffirmation)
04Feb2022
BWR AStable
(Upgrade)
04Aug2021
BWR A- Negative to Stable
(Reaffirmation and change in Outlook)
25Jun2020
BWR A- Stable to Negative
(Reaffirmation and change in Outlook)
09Oct2019
BWR A- Stable
(Reaffirmation)
0.00
NA
NA
NA
NA
NA
06Nov2020
BWR A- Negative
(Reaffirmation)
NA
NA
FB SubLimit LT (15.00)
BWR A/Stable
(Reaffirmation)
04Feb2022
BWR AStable
(Upgrade)
NA
NA
NA
NA
NA
NA
(15.00)
BWR A/Stable
(Reaffirmation)
NA
NA
NA
NA
NA
NA
NA
NA
(10.00)
BWR A/Stable
(Reaffirmation)
NA
NA
NA
NA
NA
NA
NA
NA
Non Fund Based ST 5.78
BWR A1
(Reaffirmation)
04Feb2022
BWR A1
(Upgrade)
04Aug2021
BWR A2+
(Reaffirmation)
25Jun2020
BWR A2+
(Reaffirmation)
09Oct2019
BWR A2+
(Reaffirmation)
0.00
NA
NA
NA
NA
NA
06Nov2020
BWR A2+
(Reaffirmation)
NA
NA
NFB SubLimit ST (2.00)
BWR A1
(Reaffirmation)
04Feb2022
BWR A1
(Upgrade)
NA
NA
NA
NA
NA
NA
NFB SubLimit ST (2.00)
BWR A1
(Reaffirmation)
NA
NA
NA
NA
NA
NA
NA
NA
Grand Total 57.50 (Rupees Fifty Seven 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

Swarn Saurabh

Senior Rating Analyst swarn.s@brickworkratings.com

Saakshi Kanwar

Senior Manager Ratings saakshi.k@brickworkratings.com
1-860-425-2742 | media@brickworkratings.com
Vimta Labs 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 Axis Bank Ltd. Term LoanOut-standing 16.72 _ 16.72
2 Axis Bank Ltd. Cash CreditSanctioned 15.00 _ 15.00
Sub-Limit (EPC/RPC/PCFC/RPCFC/FBD/ EBRD) Sanctioned (15.00)
3 Axis Bank Ltd. Loan Equivalent RiskSanctioned _ 0.98 0.98
4 Axis Bank Ltd. BG/LC/ILCSanctioned _ 4.00 4.00
5 HDFC Bank Pre Settlement RiskSanctioned _ 0.80 0.80
6 HDFC Bank Cash CreditSanctioned 15.00 _ 15.00
Sub-Limit (BG) Sanctioned (2.00)
Sub-Limit (LC) Sanctioned (2.00)
Sub-Limit (PCFC/POST SHIPMENT CREDIT) Sanctioned (15.00)
Sub-Limit (WCDL) Sanctioned (10.00)
7 HDFC Bank Term LoanSanctioned 5.00 _ 5.00
Total 51.72 5.78 57.50
TOTAL (Rupees Fifty Seven Crores and Fifty lakhs Only)
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