Rating Rationale

Brickwork Ratings assigns the long-term ratings at "BWR BB-/Stable" for the Bank Loan Facilities of Rs. 24.68  Crs. of Goodwill Diagnostics    

The rating reflects extensive industry experience of the partners and the firm’s expanding scale of operations. The firm is currently executing an operational transition from trading business to an integrated manufacturing and trading model. This transition involves setting up a dedicated manufacturing facility to produce HPLC, Electrolyte and POCT Analyzers under its proprietary brand, INPROVAC. However, these rating strengths are tempered by the firm’s leveraged capital structure, constrained liquidity profile, and the  execution and capital expenditure (capex) risks associated with the commissioning and stabilization of the new manufacturing facility. The rating outlook has been assigned as "Stable" as BWR believes that  Goodwill Diagnostics business risk and financial 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 revenue and profitability margins show sustained improvement. The rating outlook may be revised to 'Negative' if the financial risk profile goes down.

An Unsecured loan of Rs.3.71 Cr to be considered as Quasi Equity should be maintained during the currency of the loan and cannot be withdrawn. The other terms of sanction include covenants normally stipulated for such facilities.

• Management Experience :

  Mr. Chamandeep Singh, Mr. Avneet Singh and Mr. Hemant Kumar are the partners of the firm. All the partners are having more than a decade of experience in the industry.

• Backward Integration Strategy :

  The firm is currently setting up its IVD manufacturing facility in Patiala, Punjab. Transitioning from a pure distribution model to in-house manufacturing primarily for its proprietary INPROVAC brand, allowing the firm to shift from low-margin reselling toward high-margin production

• Capital Expenditure and Execution Risk :

  With the Patiala manufacturing facility scheduled to open by the end of this year, the firm faces initial execution risks mainly due to the transition period related to final commissioning, CDSCO regulatory licensing, and commercial scale-up, alongside elevated debt-service obligations stemming from the upfront capital expenditure.

• Partnership Constitution :

  As a partnership firm, Goodwill Diagnostics is exposed to risks associated with capital withdrawal by partners. This could impair financial and operational stability. Additionally, the firm is vulnerable to risks stemming from dissolution or changes in the partnership.

Positive Factors

• An increase in revenue of more than Rs.50 Crs and Profitability growth of more than Rs. 1.75 Cr 

• Significant strengthening of debt protection metrics and capital structure

Negative Factors

• Fall in revenue of more than 5% from current level resulting in net cash accrual below Rs 3.50 crore.

• Any significant deterioration in debt protection metrics or liquidity buffers from the current level

• Any capital withdrawal by the promoters from existing levels, leading to a weakening of the firm's overall capital structure

The firm has stretched liquidity marked by its Total Debt / Tangible Net Worth which stands at 4.61 times and TOL/TNW which stands at 6.39 times. Meanwhile the cash and bank balance has slightly reduced from 0.47 Cr in FY25 to 0.32 Cr in Provisional FY26. The bank limit utilization stood at 73.16%, and the firm has a DSCR of 1.69 times and ISCR of 1.89 times in provisional for FY26. While liquidity metrics are projected to strengthen over the medium term, this improvement remains subject to the timely commercialization and cash-flow generation of the upcoming Patiala manufacturing unit.

The company demonstrates a Evolving ESG profile based on its environmental, social, and governance practices.

Environmental: Environmental risks in trading companies are primarily related to energy use, emissions from logistics and operations, waste generation, water consumption, and compliance with environmental regulations. Key disclosures include energy usage, waste handling and recycling practices and any past violations or penalties.

Social: Social factors focus on labour practices, workforce welfare, diversity and inclusion, training and development, and community engagement. Metrics include workforce composition, employee safety and training programs, adherence to labour laws and initiatives supporting social equity and employee growth.

Governance: Governance assessment emphasizes board structure, independence, and expertise, risk management and compliance frameworks ethical conduct and anti-corruption policies, stakeholder engagement practices, data security and cybersecurity measures and compliance with trading regulations.

Goodwill Diagnostics is a partnership firm established in 2013, headquartered in Delhi, with partners Mr. Hemant Kumar, Mr. Avneet Singh, and Mr. Chamandeep Singh. The firm serves as a provider of In-Vitro Diagnostic (IVD) solutions, connecting global diagnostic innovations with India's healthcare sector by supplying diagnostic laboratories, hospitals, and pathology centers with medical testing technology. To expand its operational footprint, the firm plans to commission a new manufacturing facility in Patiala, Punjab, targeted for launch in late 2026. Under its proprietary brand, Inprovac, the facility will manufacture HPLC, Electrolyte and POCT Analyser which will add up the revenue of the firm

The Complexity Indicator refers to the ease with which the returns associated with the rated instrument could be estimated. It does not indicate the risk related to the timely payments on the instrument, which is rather indicated by the instrument's credit rating. It also does not indicate the complexity associated with analysing an entity's financial, business, industry risks or complexity related to the structural,transactional or legal aspects. Details on the complexity levels of the instruments are available on BWR's website Complexity Levels.

Not Applicable

BWR Board of Directors have no influence over rating decisions, nor do they sit on the rating committee or review, discuss or evaluate any credit rating during the Board meetings.

Brickwork Ratings (BWR), a Securities and Exchange Board of India [SEBI] registered Credit Rating Agency and accredited by Reserve Bank of India [RBI]. BWR is the 5th agency to get a credit rating registration in India in 2009 and its corporate office in Bengaluru. It has a country-wide presence with representatives in 150+ locations. Canara bank is an institutional investor in Brickwork.

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