PR

Press Release
AMOGEN PHARMA PRIVATE LIMITED
July 24, 2023
Rating Assigned

Product	Quantum (Rs. Cr)	Long Term Rating	Short Term Rating
Bank Loan Ratings	72.00	ACUITE B+ \| Stable \| Assigned	-
Bank Loan Ratings	8.00	-	ACUITE A4 \| Assigned
Total Outstanding Quantum (Rs. Cr)	80.00	-	-

Rating Rationale

Acuité has assigned its long term rating of ‘ACUITE B+’ (read as ACUITE B plus) and short term rating of 'ACUITE A4' (read as ACUITE A four) to the Rs.80 Cr bank facilities of Amogen Pharma Private Limited(APPL). The Outlook is ‘Stable’.

Rationale for Rating assigned
Rating assigned considers high networth of the promotors, and proposed manufacturing of API drugs; however, rating is constrained by nascent stage of the project and intense competition in pharmaceutical industry.

About the Company

Amogen Pharma Private Limited, incorporated in 2020. The main objective of the Company is to undertake the business of Bio Pharma Active Pharmaceutical Ingredients manufacturing. At Present, APPL is constructing the factory as per its proposed 1200 KPA (Kgs per annum) Active Pharmaceutical Ingredients (API) manufacturing plant at Karkapatla village, Siddipet district, Telangana. Company has received all the necessary approvals for construction of the plant.

Analytical Approach

Acuite has considered standalone business and financial risk profile of Amogen Pharma Private Limited to arrive at the rating.

Key Rating Drivers

Strengths

High networth of the promotors
The main promoter of the company Mr. Poosapati Venkata Surya Narasimha Raju (PVSN Raju) have more than 2 decades of business experience in the construction activity, along with director Mr. Akhilesh Raju Poosapati, son of Mr. PVSN Raju. Mr. PVSN Raju's high net worth count helps bringing fund towards the project. The company will engage in manufacturing of various Bio Pharma related Active Pharmaceutical Ingredients (API’s) and Intermediates with high quality standards as per the Pharmacopeia referred standards specifications. Currently company is engaged in R&D and sample production of the proposed products LIRAGLUTIDE, TERIPARATIDE and CRM 197 and marketing to prominent players in pharma industry. The company is looking for regulatory approvals and arrangement of orders from reputed pharma players. Acuite believes that APPL will be benefitted by its promoter’s ability to infuse additional funds and rare & exclusive nature of proposed API drugs over medium term.

Weaknesses

Nascent stage of construction
The company is currently engaged in construction of its manufacturing facility. The total estimated cost of construction of project is Rs.113 Cr, which is proposed to be financed partially by proposed bank loan of Rs ~72 Cr and Rs.41 Cr of promotors contributions in form of equity infusion and unsecured loan. The project is expected to complete by March 2024. The total cost incurred as on date is around Rs 21.36 Cr which is met by promoter’s contribution of Rs 20 Cr in the form of equity share capital and unsecured loan. Completion of the project on time without any significant delay and cost overrun would remain key rating sensitivity.

Competitive and fragmented industry
The pharmaceutical formulations and chemical compounds industry has a large number of players which makes this industry highly fragmented and intensely competitive. APPL is a new player, thereby limiting its bargaining power and susceptibility to pricing pressure is also higher compared to well-established and larger players. However, the company's proposal to manufacture rare and exclusive API drugs can enable it to partially offset competitive pressures. Further, it undertakes regular research and development to improve its product offerings. This will help the company is improving its competitive position.

Rating Sensitivities

Timely completion of the ongoing project without any cost overruns.
Scale of operations after commencement of manufacturing.
Timely procurement of orders from other pharma companies

Material covenants

None

Liquidity Position: Adequate

Since the company is in the nascent scale of constructing its manufacturing plant, and is expected to commence its full operations by FY 2024. Liquidity remains stretched and will be aided after sanction and disbursement of the proposed bank loan, however they have financial flexibility support from the promoters, which adds advantage to the company

Outlook: Stable

Acuité believes that APPL will maintain a ‘Stable’ outlook in near to medium term on account of its experienced management and improving operating performance. The outlook may be revised to 'Positive' if the company is able to achieve higher than expected growth in revenue while effectively managing its working capital cycle and keeping the debt levels moderate. Conversely, the outlook may be revised to negative in case of moderation in liquidity profile and its profitability margins, and deterioration in debt protection indicators.

Other Factors affecting Rating

None

Key Financials

Particulars	Unit	FY 23 (Provisional)	FY 22 (Actual)
Operating Income	Rs. Cr.	0.00	0.00
PAT	Rs. Cr.	0.00	0.00
PAT Margin	(%)	0.00	0.00
Total Debt/Tangible Net Worth	Times	0.00	0.00
PBDIT/Interest	Times	0.00	0.00

Status of non-cooperation with previous CRA (if applicable)

None

Any other information

None

Applicable Criteria

• Default Recognition :- https://www.acuite.in/view-rating-criteria-52.htm
• Entities In Manufacturing Sector:- https://www.acuite.in/view-rating-criteria-59.htm
• Rating Process and Timeline: https://www.acuite.in/view-rating-criteria-67.htm
• Application Of Financial Ratios And Adjustments: https://www.acuite.in/view-rating-criteria-53.htm

Note on complexity levels of the rated instrument

Rating History :

Not Applicable

Annexure - Details of instruments rated

Lender’s Name	ISIN	Facilities	Date Of Issuance	Coupon Rate	Maturity Date	Quantum (Rs. Cr.)	Complexity Level	Rating
Not Applicable	Not Applicable	Proposed Long Term Loan	Not Applicable	Not Applicable	Not Applicable	72.00	Simple	ACUITE B+ \| Stable \| Assigned
Not Applicable	Not Applicable	Proposed Short Term Loan	Not Applicable	Not Applicable	Not Applicable	8.00	Simple	ACUITE A4 \| Assigned

Contacts

Analytical	Rating Desk
Aditya Gupta Vice President-Rating Operations Tel: 022-49294041 aditya.gupta@acuite.in Gnanreddy Rakesh Reddy Senior Analyst-Rating Operations Tel: 022-49294065 rakesh.reddy@acuite.in	Varsha Bist Senior Manager-Rating Operations Tel: 022-49294011 rating.desk@acuite.in

About Acuité Ratings & Research

Acuité is a full-service Credit Rating Agency registered with the Securities & Exchange Board of India (SEBI). The company received RBI Accreditation as an External Credit Assessment Institution (ECAI) for Bank Loan Ratings under BASEL-II norms in the year 2012. Acuité has assigned ratings to various securities, debt instruments and bank facilities of entities spread across the country and across a wide cross section of industries. It has its Registered and Head Office in Kanjurmarg, Mumbai.

Disclaimer: An Acuité rating does not constitute an audit of the rated entity and should not be treated as a recommendation or opinion that is intended to substitute for a financial adviser's or investor's independent assessment of whether to buy, sell or hold any security. Ratings assigned by Acuité are based on the data and information provided by the issuer and obtained from other reliable sources. Although reasonable care has been taken to ensure that the data and information is true, Acuité, in particular, makes no representation or warranty, expressed or implied with respect to the adequacy, accuracy or completeness of the information relied upon. Acuité is not responsible for any errors or omissions and especially states that it has no financial liability whatsoever for any direct, indirect or consequential loss of any kind, arising from the use of its ratings. Ratings assigned by Acuité are subject to a process of surveillance which may lead to a revision in ratings as and when the circumstances so warrant. Please visit our website (www.acuite.in) for the latest information on any instrument rated by Acuité.