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| Product | Quantum (Rs. Cr) | Long Term Rating | Short Term Rating |
| Bank Loan Ratings | 162.50 | ACUITE BBB- | Stable | Reaffirmed | - |
| Bank Loan Ratings | 26.50 | - | ACUITE A3 | Reaffirmed |
| Total Outstanding | 189.00 | - | - |
| Total Withdrawn | 0.00 | - | - |
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Rating Rationale |
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Acuité has reaffirmed its long-term rating of ‘ACUITE BBB-’ (read as ACUITE triple B minus) on the Rs.162.50 Cr bank facilities and the short-term rating of ‘ACUITE A3’ (read as ACUITE A three) on the Rs.26.50 Cr. bank facilities of BalPharma Limited (BPL). The outlook is ‘Stable’.
Rationale for rating The rating reaffirmation considers the long operational track record of the group with improving margins despite moderation in operating revenues in FY25. The revenue in FY25 moderated on account of decline in active pharmaceuticals ingredients (API) prices owing to excess domestic supply and competition from China, expected to recover in the current fiscal. Moreover, the simultaneous lowering of input chemical prices has led to marginal improvement in the margins. The rating also draws comfort from the moderate financial risk profile and adequate liquidity position. However, the rating is constrained by intensive working capital operations and risks associated with government’s regulations. |
| About the Company |
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Incorporated in 1987, BalPharma Limited (BPL) is a Bangalore based pharma company engaged in manufacturing of bulk drugs, APIs, generic formulations and ayurvedic products. The company has 5 operational production units spread across Bangalore, Sangli, Rudrapur and Udaipur. Presently the company is managed by Mr. Shailesh Siroya, Managing Director.
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| About the Group |
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Bal Pharma group consist of Bal Pharma Limited and its subsidiaries namely- Lifezen Healthcare Private Limited, Bal Research Foundation, Balance Clinic LLP, Golden Drugs Private Limited (merged with Bal Pharma Limited w.e.f. March 26, 2025) and Aurum Research and Analytical Solutions Private Limited. The group is primarily engaged in the manufacturing and selling of pharmaceutical products and related services.
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| Unsupported Rating |
| Not Applicable. |
| Analytical Approach |
| Extent of Consolidation |
| •Full Consolidation |
| Rationale for Consolidation or Parent / Group / Govt. Support |
| Acuité has consolidated the business and financial risk profiles of Balpharma Limited (BPL) and its subsidiaries namely, Lifezen Healthcare Private Limited(LHPL), Bal Research Foundation(BRF), Balance Clinic LLP(BCL), Golden drugs Private Limited (GDPL) (merged with Bal Pharma Limited w.e.f. March 26, 2025) and Aurum Research and Analytical Solutions Private Limited (ARASPL) together referred to as the BPL group to arrive at the rating. The consolidation is in view of the similarities in the lines of business and common management.
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| Key Rating Drivers |
| Strengths |
| Established track record of operations
The group has an established track record of more than 32 years in the business of manufacturing bulk drugs and formulations. Further, the group has a diversified product profile that includes 200 generic formulations in 20 different therapeutic segments and 22+ APIs. BPL generates 70 percent of its revenue from overseas markets and remaining 30 percent from domestic market. The APIs are being sold at domestic level and exported to Europe, Far East, Latin America, Africa, Japan, Australia, etc. and formulations being exported to other semi-regulated and non-regulated markets across the globe. Improved profitability albeit moderation in scale of operations The group has been able to maintain its leadership position in the market by the way of increased presence and other expansion metrics. While the revenue of the group moderated to Rs. 303.08 Cr. in FY25 as against Rs.339.84 Cr. in FY24 majorly due to downfall in prices of API, the margins stood improved at 9.75 percent in FY25 against 9.51 percent in FY24. This improvement is due to lowering of input chemical prices and efficient operation management. Further, the volatility in its input cost is passed to its customers which keeps the margins range bound at 9-10%. Going forward, with the recovery in the API prices and presence of an order book of ~Rs.76 Cr. to be executed in the next 2-3 months, the operating performance of the group is expected to ramp up in the near to medium term. |
| Weaknesses |
| Moderate financial risk profile
The group’s financial risk profile remains moderate, primarily marked by moderate net worth, high gearing level and moderate debt protection metrics. The net worth improved to Rs.61.58 Cr. as of 31st March 2025 from Rs. 54.66 Cr. as of 31st March, 2024 due to the accretion of profits to reserves. However, the elevated long term and working capital debt levels has kept the gearing high at 2.44 times as of 31st March, 2025 (2.55 times as of 31st March, 2024). Moreover, the debt protection metrics stood adequate with interest coverage ratio and debt service coverage ratio of 1.88 times and 1.39 times respectively, as of 31st March, 2025 (2.24 times and 1.42 times as of 31st March, 2024). Going forward, BPL is expected to raise debt of Rs.27.00 Cr. to fund its API unit capex in Karnataka, therefore, the financial risk profile is expected to remain at moderate levels over the medium term. Intensive working capital management The working capital operations of the group are intensive, as evident from the high gross current assets of 271 days in FY25 (235 days in FY24). This is largely driven by high inventory of (137 days in FY25, 104 days in FY24) and debtor days (111 days in FY25, 107 in FY24). Therefore, the intensive working capital cycle has led to increased reliance on the fund-based working capital limits, which were utilized at an average of ~87 percent in past 07 months ending April 30, 2025. Regulatory Risk Pharma industry is highly competitive and regulated in nature as government intervention is very high. Moreover, the manufacturing facilities of group have to be regularly monitored and approved by various regulatory authorities across the globe. Hence, any prohibitions or restriction imposed by regulatory authorities on the manufacturing facilities significantly affect operations of the group. |
| Rating Sensitivities |
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| Liquidity Position |
| Adequate |
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The liquidity position of the group is adequate as reflected from sufficient net cash accruals (NCA) of Rs.17.01 Cr in FY25 against maturing debt obligations of Rs.7.49 Cr. Besides, the group also had unencumbered cash and bank balances of Rs.1.75 Cr as on 31st March, 2025. Going forward, group is expected to generate cash accruals in the range of Rs.14.00-17.00 Cr. over the medium term, while repayment obligations are expected to be in the range of Rs.12.00 - Rs.17.00 Cr. for the same period.
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| Outlook: Stable |
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| Other Factors affecting Rating |
| None. |
| Particulars | Unit | FY 25 (Actual) | FY 24 (Actual) |
| Operating Income | Rs. Cr. | 303.08 | 339.84 |
| PAT | Rs. Cr. | 7.24 | 7.45 |
| PAT Margin | (%) | 2.39 | 2.19 |
| Total Debt/Tangible Net Worth | Times | 2.44 | 2.55 |
| PBDIT/Interest | Times | 1.88 | 2.24 |
| Status of non-cooperation with previous CRA (if applicable) |
| Not Applicable. |
| Interaction with Audit Committee anytime in the last 12 months (applicable for rated-listed / proposed to be listed debt securities being reviewed by Acuite) |
| Not applicable |
| Any Other Information |
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| Applicable Criteria |
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• Application Of Financial Ratios And Adjustments: https://www.acuite.in/view-rating-criteria-53.htm • Consolidation Of Companies: https://www.acuite.in/view-rating-criteria-60.htm • Default Recognition: https://www.acuite.in/view-rating-criteria-52.htm • Manufacturing Entities: https://www.acuite.in/view-rating-criteria-59.htm |
| Note on complexity levels of the rated instrument |
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| *Annexure 2 - List of Entities (applicable for Consolidation or Parent / Group / Govt. Support) | ||||||||||||||
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