Press Release

Press Release

April 10, 2026

AURO LABORATORIES LIMITED
Rating Assigned

Product	Quantum (Rs. Cr)	Long Term Rating	Short Term Rating
Bank Loan Ratings	64.20	ACUITE BB+ \| Stable \| Assigned	-
Bank Loan Ratings	15.60	-	ACUITE A4+ \| Assigned
Total Outstanding	79.80	-	-
Total Withdrawn	0.00	-	-

Rating Rationale

Acuite has assigned long-term rating of ‘ACUITE BB+’ (read as ACUITE double B plus) and short-term rating of 'ACUITE A4+' (read as ACUITE A four plus) on the Rs.79.80 crore bank facilities of Auro Laboratories Limited (ALL). The outlook is 'Stable'.

Rationale for Rating
The assigned rating factors in the extensive experience of the promoters along with long track record of operations of the company. The rating also factors in the moderate financial risk profile. However, the rating is constrained on account of modest scale of operations wherein the benefits of recently completed capex are yet to achieve fully. The rating is also constrained on account of intensive working capital operations and susceptibility of profitability to volatility in raw material prices in an intensely competitive pharmaceutical industry.

About the Company

Auro Laboratories Limited (ALL) incorporated in 1992, headquartered in Mumbai. ALL is an Indian manufacturer of Active Pharmaceutical Ingredients (APIs). The company focuses on the anti-diabetic therapeutic segment, identified as one of the major areas of growth in the pharmaceutical industry. Its current product portfolio includes Metformin Hydrochloride and Chlorzoxazone, with additional products under development within the same segment. The manufacturing facility operates as per cGMP (current Good Manufacturing Practices) and has product certifications and approval from EDQM (European Directorate for the Quality of Medicines). The current directors of the company are Mr. Sharat Deorah, Mr. Siddhartha Deorah, Mr. Kiran Suresh Kulkarni, Mr. Mahendra Kumar Daga, Ms. Kavita Vijayakant Sharma and Mr. Vishal Kailashchandra Jhunjhunwala.

Unsupported Rating

Not Applicable

Analytical Approach

Acuité has considered the standalone business and financial risk profiles of Auro Laboratories Limited (ALL) for arriving at the rating.

Key Rating Drivers

Strengths

Experienced promoters and established track record of the company
Auro Laboratories Limited (ALL) has an operational track record of over three decades in the pharmaceutical and API manufacturing segment. The company is promoted by Mr. Sharat Deorah & Mr. Siddhartha Deorah with a long-standing experience in the sector, particularly in export-oriented API production which is ably supported by the second line of management. The company’s operations are supported by established relationships with suppliers—primarily overseas vendors for key raw materials and customers across Europe and Southeast Asia. ALL has a generic product base which is an essential medicine and is in demand across the world throughout the year. The strong customer base in European markets and Southeast Asian countries is an added advantage for the company. Going forward, ALL is expected to continue drawing operational support from the experience of its promoters and the capabilities of its managerial team along with established customer base.

Improving scale of operations on account of completion of capex
The company has witnessed a decline in revenue to Rs.19.40 crore in FY2025 compared with Rs.53.64 crore in FY2024, primarily due to a nine-month brownfield expansion undertaken for its major integration of capacity expansion. With the commissioning of the new block in August 2025, the manufacturing capacity has increased from 1,260 MT to 2,100 MT per year. Further, revenue has improved to Rs.22.25 crore in 9MFY2026, which is lower than expected on account of the geo-political situation in the middle east. Exports account for about 85 per cent of the company’s revenue, with European countries being the major market. Profitability moderated in FY2025, with EBITDA margin at 20.52 per cent compared to 22.56 per cent in FY2024, largely due to lower absorption of fixed costs during the expansion period. PAT margin also declined to 9.48 per cent in FY2025 from 14.53 per cent in the previous year FY2024. In 9MFY2026, company reported operating margins of approx ~31 per cent. Acuite believes, with advancement of facilities the profitability is expected to remain healthy while scaling up of operations substantially would remain challenging given the current global and economic challenges.

Weaknesses

Moderate financial risk profile
The financial risk profile of the company is moderate, marked by a modest net worth position and leverage levels that have increased due to the ongoing debt-funded capex plan. The tangible net worth stood at Rs.42.97 crore March 31, 2025 as against Rs.41.96 Cr. as on March 31, 2024, while gearing rose to 1.05 times from 0.63 times in FY2024 on account of additional term loans availed for capacity expansion and forward-integration initiatives. Coverage indicators are comfortable with interest coverage ratio (ICR) at 3.75 times and debt service coverage ratio (DSCR) at 3.49 times in FY2025. The company completed its API expansion project, which increased installed capacity from 1,260 MT to 2,100 MT per month, addressing saturation at the existing facility. ALL is also undertaking another capex toward forward integration and manufacturing of formulation products, namely Tablets from their API’s. The unit is designed for an annual capacity of 750 million tablets, is supported by a proposed supply arrangement with a European customer. Notwithstanding the benefits of the capex, it is likely to increase debt levels, thereby leverage and coverage metrics may remain under pressure in the near to medium term.

Intensive working capital nature of operations
The working capital operations of the company are intensive in nature marked by high Gross Current Assets (GCA) of 405 days in FY2025 and 199 days in FY2024. The receivables stood at 179 days in FY2025 and 93 days in FY2024. The high GCAs in FY2025 were on account of disruption in operations due to capex. With new capacity now operational, efficiency gains are expected in the current fiscal. Collections are set to normalize as operations stabilize. Inventory days remained moderate at 87 days in FY2025 as against 72 days in FY2024. With capacity utilization improving, working capital intensity is expected to ease, supporting augmentation of cash flows in FY2026. Acuite believes that the operations of the company would remain working capital intensive in near to medium term on account of high inventory requirements and nature of business.

Susceptibility of profitability to volatility in raw material prices, forex risk in an intensely competitive Industry
Auro Laboratories Limited (ALL), an API manufacturer focused on the anti-diabetic segment, operates in a highly fragmented and intensely competitive API industry, which limits pricing flexibility and bargaining power, particularly against larger domestic and global players. Although its long presence since 1992, adherence to cGMP and EDQM standards, and ongoing product development provide some competitive support, overall susceptibility to price-based competition remains elevated. Further, the company imports certain key inputs, exposing its profitability to volatility in global commodity prices and foreign exchange fluctuations. While ALL mitigates forex risk through natural hedging and forward contracts, residual exposure to currency movements continues to constrain margins.

Rating Sensitivities

Potential triggers (individual or collective) for an upward rating action:

Stabilisation of existing capex and successful completion of ongoing capex
Consistent improvement in operating income
EBITDA margins above 35 per cent on a sustained basis

Potential triggers (individual or collective) for a downward rating action:

Deterioration in operating performance with substantial decline in revenues and profitability
Higher than expected debt funded capex with gearing above 2.00 times and DSCR below 1.5 times

Liquidity Position

Adequate

ALL has an adequate liquidity position marked by net cash accruals (NCA) of Rs.2.94 Cr. against its maturing debt obligation of Rs.0.07 Cr. in FY2025. The company is further expected to generate cash accruals in the range of Rs.6.00-15.00 Cr. during FY2026 to FY2027 against repayment obligation in the range of Rs.2.00-6.00 crores during the same period. The working capital operations of the company are moderately intensive marked by its gross current asset (GCA) days of 405 days for FY2025 as against 199 days for FY2024 on account of its elongated receivables cycle. Current ratio stands at 0.99 times as on 31 March 2025. The average bank limit utilization for 6 months’ period ended February 2026 is moderate at ~81.37 percent.

Outlook: Stable

Other Factors affecting Rating

None

Key Financials

Particulars	Unit	FY 25 (Actual)	FY 24 (Actual)
Operating Income	Rs. Cr.	19.40	53.64
PAT	Rs. Cr.	1.84	7.79
PAT Margin	(%)	9.48	14.53
Total Debt/Tangible Net Worth	Times	1.05	0.63
PBDIT/Interest	Times	3.75	16.55

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
• Manufacturing Entities: https://www.acuite.in/view-rating-criteria-59.htm
• Application Of Financial Ratios And Adjustments: https://www.acuite.in/view-rating-criteria-53.htm

Note on complexity levels of the rated instrument

In order to inform the investors about complexity of instruments, Acuité has categorized such instruments in three levels: Simple, Complex and Highly Complex. Acuite’s categorisation of the instruments across the three categories is based on factors like variability of the returns to the investors, uncertainty in cash flow patterns, number of counterparties and general understanding of the instrument by the market. It has to be understood that complexity is different from credit risk and even an instrument categorized as 'Simple' can carry high levels of risk. For more details, please refer Rating Criteria “Complexity Level Of Financial Instruments” on www.acuite.in.

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
Indian Bank	Not avl. / Not appl.	Bank Guarantee (BLR)	Not avl. / Not appl.	Not avl. / Not appl.	Not avl. / Not appl.	0.60	Simple	ACUITE A4+ \| Assigned
Indian Bank	Not avl. / Not appl.	Cash Credit	Not avl. / Not appl.	Not avl. / Not appl.	Not avl. / Not appl.	20.00	Simple	ACUITE BB+ \| Stable \| Assigned
Indian Bank	Not avl. / Not appl.	Letter of Credit	Not avl. / Not appl.	Not avl. / Not appl.	Not avl. / Not appl.	10.00	Simple	ACUITE A4+ \| Assigned
Indian Bank	Not avl. / Not appl.	Packing Credit	Not avl. / Not appl.	Not avl. / Not appl.	Not avl. / Not appl.	5.00	Simple	ACUITE A4+ \| Assigned
Not Applicable	Not avl. / Not appl.	Proposed Long Term Bank Facility	Not avl. / Not appl.	Not avl. / Not appl.	Not avl. / Not appl.	0.30	Simple	ACUITE BB+ \| Stable \| Assigned
Indian Bank	Not avl. / Not appl.	Term Loan	22 Mar 2024	Not avl. / Not appl.	22 Jun 2030	31.90	Simple	ACUITE BB+ \| Stable \| Assigned
H D F C Bank Limited	Not avl. / Not appl.	Term Loan	19 Dec 2025	Not avl. / Not appl.	19 Dec 2035	12.00	Simple	ACUITE BB+ \| Stable \| Assigned

Contacts

Mohit Jain
Chief Analytical Officer - Rating Operations

Akshat Shah
Associate Analyst - Rating Operations

Contact details exclusively for investors and lenders

Mob: +91 8591310146
Email ID: analyticalsupport@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.

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