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| Product | Quantum (Rs. Cr) | Long Term Rating | Short Term Rating |
| Bank Loan Ratings | 10.00 | ACUITE D | Reaffirmed | - |
| Total Outstanding Quantum (Rs. Cr) | 10.00 | - | - |
| Rating Rationale |
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Acuité has reaffirmed its long term rating of ‘ACUITE D’ (read as ACUITE D) on the Rs.10.00 Cr bank facilities of Ransh Pharma Private Limited (RPPL).
Rationale for the rating The rating is reaffirmed due to delays by RPPL in servicing its term debt obligations by several days in the past 6 months ended September 10, 2023. The term debt repayments of the Company are due on 10th of every month. The delays are due to paucity of funds during stabilisation in initial stages of operations. |
| About the Company |
| Incorporated in 2018, Ransh Pharma Pvt. Ltd. (RPPL) is a Visakhapatnam based company promoted by Mr Radha Krishna Talam, Mr Karri Adi Krishna Rao, Mr V Nageswar Rao, Mr K Gowri Sankara Rao, Mr. K Poorna Chandra Rao and Mr. K. Narasinga Rao. RPPL is engaged in manufacturing of bulk drugs and pharmaceutical intermediates and has set up a manufacturing unit of 90 KL in Visakhapatnam, Andhra Pradesh. |
| Standalone (Unsupported) Rating |
| Not Applicable |
Key Rating Drivers
| Strengths |
| Experienced management and reputed clientele
The promoters Mr. Radha Krishna Talam and Mr. Adi Krishna Rao have extensive experience in pharmaceuticals industry over the past two decades. The company is expected to benefit from their expertise in the industry over the medium term. The company has already established relationships with some of it key customers like in Andhra Pradesh and Telangana. Acuité believes that promoter’s experience in the industry is expected to support their operations |
| Weaknesses |
| Delays in servicing term debt obligations
Due to the severe liquidity constraints in the stabilisation period of operations, there has been delays in servicing debt repayments in a timely manner by RPPL. Below average financial risk profile The financial risk profile of the company remained below average marked by low net worth, high gearing and moderate debt protection metrics. The net worth of the company stood at Rs.4.54 Cr as on March 31, 2023 (Provisional). The gearing stood high at 5.68 times as on March 31 March, as against 4.59 times as on March 31, 2022. The interest coverage ratio and Debt service coverage ratio (DSCR) stood moderate at 2.20 times and 1.29 times respectively for FY2023 as against (1.29) times and (0.43) times respectively for FY2022. The net cash accruals to total debt (NCATD) of the Company was tat 0.05 times as on March 31, 2023. Acuité believes that the financial risk profile of RPPL is expected to remain below average over the medium term. Competitive and fragmented Industry The pharmaceutical formulations industry has a large number of players, which makes this industry highly fragmented and intensely competitive. Acuite believes that RPPL being a newer entrant in the industry has limited bargaining power and faces pricing pressure compared to well-established and larger players. |
| Rating Sensitivities |
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| All Covenants |
| None |
| Liquidity Position |
| Stretched |
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The liquidity position of the company is stretched marked by full utilisation of its working capital limits owing to working capital intensive nature of operations. The average working capital utilisation of its limits remained at ~98% in last six months ended July 2023. The company reported net cash accruals of Rs.1.34 Cr in FY2023 as against matured debt obligation of Rs.2.70 Cr over the same period and has been unable to repay its debt obligations in a timely manner. The current ratio stood at 1.07 times in FY2023. The cash and bank balances stood at 0.01 in FY2023
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| Outlook: Not Applicable |
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| Other Factors affecting Rating |
| None |
| Particulars | Unit | FY 23 (Actual) | FY 22 (Actual) |
| Operating Income | Rs. Cr. | 15.71 | 3.94 |
| PAT | Rs. Cr. | 0.00 | (2.63) |
| PAT Margin | (%) | 0.01 | (66.89) |
| Total Debt/Tangible Net Worth | Times | 5.68 | 4.59 |
| PBDIT/Interest | Times | 2.20 | (1.29) |
| Status of non-cooperation with previous CRA (if applicable) |
| None |
| Any other information |
| None |
| Applicable Criteria |
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• 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 |
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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.
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