Product Quantum (Rs. Cr) Long Term Rating Short Term Rating
Non Convertible Debentures (NCD) 25.00 ACUITE D | Reaffirmed -
Total Outstanding 25.00 - -
 
Rating Rationale

­Acuité has reaffirmed the long-term rating of ‘ACUITE D’ (read as ACUITE D) on the Rs.25.00 Cr. Non-convertible debentures of Genlink Pharma Solutions Private Limited (GPSPL).

Rationale for rating reaffirmation
The rating reaffirmation of GPSPL is on account of negative cash accruals, poor debt protection matrix and default status of NCDs as per NSDL.

About the Company
­GPSPL is a Mumbai based company incorporated in 2016 by Mr. Anand Shah and Mr. Susheel Koul. The company is an associate company of Enaltec Labs Private Limited (ELPL) and has acquired 31.34 percent shareholding in ELPL by raising funds through issue of non-convertible debentures.
 
About the Group
­Enaltec Labs Private Limited (ELPL) incorporated in 2006 by its directors Mr. Anand Shah and Mr. Susheel Koul, is research driven Active Pharmaceutical Ingredients (API) manufacturer & supplier set up with the specific objective of providing generic formulators across the world. ELPL has its own manufacturing facilities in Ambernath and Indore. The funds infused by GPSPL are used to acquire majority shareholding stake of 31.34 percent in ELPL by the directors.
 
Unsupported Rating
­Not Applicable
 
Analytical Approach

Extent of Consolidation
•Full Consolidation
Rationale for Consolidation or Parent / Group / Govt. Support

­Acuité has considered the consolidated business and financial risk profiles of GPSPL and ELPL, hereinafter referred to as 'Enaltec Group' (EG), to arrive at the rating. The consolidated approach factors in dependence of GPSPL on the cash flows generated by ELPL for redemption of the NCDs.

Key Rating Drivers

Strengths
­Experienced management and established track record of operations
GPSPL was incorporated in 2016 and ELPL was incorporated in 2006. Thus, the group has an operational track record of over a decade in the pharmaceutical industry. The directors, Mr. Anand Shah and Mr. Susheel Koul possess an extensive experience of over two decades in the pharmaceutical industry. The extensive experience of the management has helped the group to establish a healthy relationship with its customers and suppliers.

Acuité believes that the group will continue to benefit from its experienced management and established track record of operations.

Weaknesses

Weak financial risk profile
Financial risk profile of EG is weak marked by low networth, high gearing and poor debt protection metrics.  The networth of the group stood at Rs.34.56 Cr. as on 31 March, 2024 (Provisional) as against Rs.23.09 Cr. as on 31 March, 2023. The gearing (debt-equity) stood high at 3.25 times as on 31 March, 2024 (Provisional) as against 4.89 times as on 31 March, 2023. The total debt of Rs.112.31 Cr. as on 31 March, 2024 (Provisional) consists of long term bank borrowings of Rs.12.64 Cr, unsecured loans from directors of Rs.27.02 Cr, short term bank borrowings of Rs.47.24 Cr. and current portion of long term debt of Rs.30.36 Cr.

Further the group had poor coverage indicators marked by low interest coverage and DSCR during FY2024 (Provisional) as against FY2023. The Net Cash Accruals to Total debt stood negative at (0.04). The Total outside liabilities to Tangible net worth stood high at 5.70 times for FY2024 (Provisional) as against 7.74 times for FY2023.

Acuité believes that ability of EG to improve its financial risk profile over the medium term will remain a key rating sensitivity factor.

Working capital intensive operations
The working capital operations of EG are intensive marked by its Gross Current Assets (GCA) of 303 days for FY2024 (Provisional) which stood high albeit improved as against 322 days for FY2023. The inventory cycle of the group stood improved at 83 days for FY2024 (Provisional) as against 88 days for FY2023 whereas the receivables cycle stood at 100 days for FY2024 (Provisional) as against 81 days for FY2023. Further, the creditors cycle of the group stood at 174 days in FY2024 (Provisional) as against 152 days in FY2023.

Acuité believes that the ability of EG to improve and maintain an efficient working capital cycle over the medium term will remain a key rating sensitivity factor.

­Delays in debt servicing obligations
GPSPL has been facing a severe liquidity crunch in the recent past since it has not been able to generate adequate cash flows to meet the NCD repayment on the maturity date. The NCDs continue to be in default as confirmed by its debenture trustee and other publicly available information.

Rating Sensitivities
  • Ability to improve overall business and financial risk profile
  • Ability to improve and maintain an efficient working capital cycle
  • Regularization of debt servicing track record
 
Liquidity Position
Poor
­EG has poor liquidity position marked by negative net cash accruals (NCA) to its maturing debt obligations. The group was unable to generate sufficient cash accruals due to heavy losses incurred during the year. The group generated cash accruals of Rs. (4.06) Cr. against its debt repayment obligation of Rs. 32.12 Cr. during FY2024 (Provisional). The working capital operations of the group are intensive marked by its gross current asset (GCA) days of 303 days for FY2024 (Provisional). Current ratio stands at 0.80 times as on 31 March 2024 (Provisional). The group has low cash & bank balance of Rs.0.23 Cr. in FY2024 (Provisional).
 
Outlook:
­Not Applicable
 
Other Factors affecting Rating
­None
 

Particulars Unit FY 24 (Provisional) FY 23 (Actual)
Operating Income Rs. Cr. 149.35 127.70
PAT Rs. Cr. (20.31) (23.98)
PAT Margin (%) (13.60) (18.78)
Total Debt/Tangible Net Worth Times 3.25 4.89
PBDIT/Interest Times 0.60 (0.57)
Status of non-cooperation with previous CRA (if applicable)
­Not Applicable
 
Any Other Information
­None
 
Applicable Criteria
• 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
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
 

Date Name of Instruments/Facilities Term Amount (Rs. Cr) Rating/Outlook
23 Aug 2023 Non-Covertible Debentures (NCD) Long Term 25.00 ACUITE D (Reaffirmed)
07 Sep 2022 Non-Covertible Debentures (NCD) Long Term 25.00 ACUITE D (Reaffirmed)
29 Sep 2021 Non-Covertible Debentures (NCD) Long Term 25.00 ACUITE D (Downgraded from ACUITE B- | Stable)
19 Feb 2021 Non-Covertible Debentures (NCD) Long Term 25.00 ACUITE B- | Stable (Downgraded from ACUITE B | Stable)
­

Lender’s Name ISIN Facilities Date Of Issuance Coupon Rate Maturity Date Quantum
(Rs. Cr.)		 Complexity Level Rating
Not Applicable INE988W07019 Non-Convertible Debentures (NCD) 27 Mar 2017 Not avl. / Not appl. 27 Sep 2021 25.00 Simple ACUITE D | Reaffirmed
*Annexure 2 - List of Entities (applicable for Consolidation or Parent / Group / Govt. Support)
Sr.No. Company Name
1 Genlink Pharma Solutions Private Limited
2 ­Enaltec Labs Private Limited 
­
 

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