| Experienced management with established track record of operations and diversified revenue streams
Mr. Alfred E. Schiller, Chairman & Founder of the company possesses experience of over four decades in the medical care sector and is well supported by Mr. Vikram Sanghvi, Managing Director, who has an extensive experience of almost three decades in the industry. The extensive experience of the promoters has helped SHIPL to establish a strong brand ‘SCHILLER’ in Indian market as well as SAARC countries. SHIPL caters to government clients such as Tamil Nadu Medical Services Corporation Limited, Odisha State Medical Corporation Limited, All India Institute of Medical Sciences (AIIMS), etc. Further, SHIPL has diversified revenue streams which includes local manufacturing of equipment, co-branding and distribution of equipments in collaboration with technical partners, distribution of parent company products, agency sales and servicing of medical equipment. The wide variety of product mix has also enabled the diversification of risk.
Healthy financial risk profile
SHIPL’s financial risk profile is supported by healthy networth, low gearing and strong debt protection metrics. The tangible networth stood at Rs. 111.69 Cr. on March 31, 2024 as against Rs. 95.51 Cr. on March 31, 2023. This is mainly attributable towards accretion of reserves. The gearing has remained healthy as low as 0.01 times on March 31, 2024 (0.08 times as on March 31, 2023) as the company does not have any long-term borrowings and majorly utilises non-fund-based limits for working capital purposes. The debt protection metrics have also remained strong with Debt-EBITDA of 0.03 times in FY2024 (0.29 times in FY2023). Moreover, the company distributes its profits to its parent company in the form of dividends, Rs. 9.36 Cr. in FY2024 & Rs. 40.86 Cr. in FY2023.
The financial risk profile is expected to remain healthy in the absence of any debt fund capex and improving cash accruals.
Stable operating performance over the years
While the revenue of the company improved significantly from Rs 201.48 Cr. in FY2023 to Rs 274.43 Cr. in FY2024 supported by increase in orders, it moderated to ~Rs 250 Cr. in FY2025 due to slowdown in the government's orders and spends on medical infrastructure. However, the margins marginally improved to 12.71% in FY2024 as against 11.69% in FY2023, expected to remain in similar range over the medium term. Further, the ongoing development and launch of new products at sustainable margins is expected to improve the operating performance in the near to medium term, shall remain a key rating sensitivity.
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| Working Capital intensive Operations
The operations of the firm, though improved, continue to remain working capital intensive, which is evident from high GCA of 203 days on March 31, 2024 as against 271 days on March 31, 2023. These are primarily driven by high inventory and debtor days of 86 days and 80 days respectively as on March 31, 2024. Further, the creditor days declined to 49 days on March 31, 2024 from 96 days on March 31, 2023, which has led to an increase in the working capital cycle of SHIPL. Moreover, the company manages its working capital requirements from its strong liquidity and cash accruals which has kept the fund based limit utilisation to as low as 1.53 percent for the last 9 months ended December 2024. Further, it majorly requires bank guarantees to be furnished for government biddings.
Susceptibility of growth to government spends on medical infrastructure and competition
The company currently receives 60-65% of its orders from various state & central government. Therefore, any changes in government policies towards medical spending or inculcation of regulatory requirements shall affect the operations of the company. Further, bidding mechanism for orders exposes the company to intense competition from both domestic and international players.
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