Press Release January 03, 2025 SCOTT EDIL ADVANCE RESEARCH LABORATORIES AND EDUCATION LIMITED Rating Assigned and Upgraded

Product	Quantum (Rs. Cr)	Long Term Rating	Short Term Rating
Bank Loan Ratings	40.00	ACUITE A | Stable | Assigned	-
Bank Loan Ratings	27.50	ACUITE A | Stable | Upgraded	-
Bank Loan Ratings	20.00	-	ACUITE A1 | Assigned
Bank Loan Ratings	14.50	-	ACUITE A1 | Upgraded
Total Outstanding	102.00	-	-
Total Withdrawn	0.00	-	-

Rating Rationale

­A­cuité has upgraded the long-term rating from ‘ACUITE A-’ (read as ACUITE A minus) to 'ACUITE A' (read as ACUITE A) on the bank facilities of Rs.27.50 Crore and the short term rating from ‘ACUITE A2+’ (read as ACUITE A two plus) to 'ACUITE A1' (read as ACUITE A one) on the Rs.14.50 Crore bank facilities of Scott Edil Advance Research Laboratories And Education Limited. The outlook is 'Stable'. Acuite has assigned its the long-term rating of 'ACUITE A' (read as ACUITE A) on the bank facilities of Rs.40.00 Crore and the short-term rating to 'ACUITE A1' (read as ACUITE A one) on the Rs.20.00 Crore bank facilities of Scott Edil Advance Research Laboratories And Education Limited. The outlook is 'Stable'.  Rationale for Rating Action The upgrade in the ratings takes into account of the improved business and financial risk profile of the group marked by established & long track record of management, improving scale of operations & profitability, financial risk profile and adequate liquidity profile of the group. The rating further draws comfort from reputed clientele base customers & also caters to government institutions and having presence in more than 20 countries. However, the rating is constrained on the account of intensive working capital operations and higher utilization of working capital limits.

About the Company

­Himachal Pradesh based Scott Edil Advance Research Laboratories and Education Limited (SEARLE) was incorporated in 2009 by Mr. B. K. Agarwal, Mr. Sanjeev Agarwal and Mrs. Vaishali Agarwal. The company is engaged in the manufacturing of generic drugs, ophthalmic drops, syrups, injections and among other pharmaceutical products.

About the Group

­Scott Edil Group (SEG) comprises of Scott Edil Pharmacia Limited (SEPL) and Scott Edil Advance Research Laboratories and Education Limited (SEARLE). The group is promoted by Mr. B.K. Agarwal, Mr. Sanjeev Agarwal and Mrs. Vaishali Agarwal. The group is engaged in the manufacturing of generic drugs, eye drops, syrups, capsules, tablets and medicinal ointments with its manufacturing facilities at Baddi, Himachal Pradesh. The group markets its products under 485 brands through a pan-India distribution network of authorized distributors and stockiest. SEG also undertakes contract manufacturing for marquee players like Abbott Healthcare Limited, Alembic Pharmaceuticals Limited and Lupin Limited among others and also caters to central government institutions. Further, the group also caters to the export market to countries like Yemen, Turkey, Jordan, Afghanistan, Iran, and Panama, among others.

Unsupported Rating

­Not Applicable

Analytical Approach

Extent of Consolidation

•Full Consolidation

Rationale for Consolidation or Parent / Group / Govt. Support

­Acuité has taken a consolidated view of the financial and business risk profiles of Scott Edil Pharmacia Limited (SEPL) Scott Edil Advance Research Laboratories and Education Limited (SEARLE) together referred as Scott Edil Group (SEG). The consolidation is on account of the common management, similarities in the line of business and presence of significant operational and business synergies.

Key Rating Drivers

Strengths

­Established track record of operation and established relationship with its reputed clientele Scott Edil Group (SEG) was promoted by Mr. B.K. Agarwal who has been associated with the pharmaceutical business for over four decades. Prior to the incorporation of SEG, Mr. B.K. Agarwal and his family was engaged in the retail chain of pharmacies in Punjab region. SEG is present across 24 states in India via a network of distributors and stockiest. The group has wide variety of around 700 generic drug brands in its product portfolio. SEG also caters to a wide range of reputed industrial clients. SEG undertakes contract-manufacturing of both generic and patented drugs for players. Further, the group also caters to state and central government to health departments, public dispensaries, government funded hospitals. and it supplies essential drugs and pharmaceutical combinations to these institutions – both to meet their day-to-day demand and under specific health schemes of the central and state governments. The group is in the process for capital expenditure in both companies for Rs. 70.22 Cr. for expansion of product portfolio. The proposed project is for setting up Ampoules, Pre-Filled Syringes and Vials with Propofol facilities using fully automated advanced technology. Acuité believes that the long operational track record of the group coupled with the extensive experience of the management will continue to benefit the group going forward, resulting in steady growth in the scale of operations. Business risk profile Scott Edil Group’s operation witnessed improvement which is apparent from growth in revenue from operations by ~24.55% in FY 2024 to Rs. 804.61 Cr. as against Rs. 646.02 Cr. for FY 2023. The operating profit margin of the company improved by 232 bps in FY 24. Operating Profit Margin of group stood at 8.38% in FY 2024 as against 6.06% in FY 2023 likewise the net profit margin of the group increased by 196 bps and stood at 4.03% in FY 2024 as against 2.07% in FY 2023. The increase in revenue & profitability is mainly due to increase in the average price realization per unit. The group has sold less number of units in FY 24, however, increase in the average price realization per unit offset the decline in the units sold which impacted the improvement in the overall revenue of the group. The group has achieved the operating income of Rs. 519.94 crore in H1 FY 24-25 with the net profits of Rs. 27.18 Cr. The group currently has Rs. 170.33 Cr. orders in hand.  Acuite believes that going forward, the group will able to improve scale of operations & profitability in near to medium term on the account of better price realizations. Financial Risk Profile –Healthy The group has healthy financial risk profile marked by strong net worth, moderate gearing and healthy coverage indicators. The Total Tangible net worth stood at Rs. 215.96 Cr. as on 31st March 2024 as against Rs. 183.26 Cr. a year earlier. The gearing ratio (debt to equity) is 1.12 times in FY 24 against 0.74 times in FY 23. The deterioration in the ratio is mainly due to additional loans taken for capital expenditure. The total outside liabilities to total debt improved and stood at 1.95 times for FY 24 against 2.07 times in FY 23. Debt protection Metrices i.e. ISCR & DSCR improved & stood at 5.70 & 2.37 times for FY 24 respectively against 3.62 & 1.70 times for FY 23 respectively. Improvement in coverage ratio is on account of improvement in operating margin and increase in operating income. Going forward coverage indicators are expected to improve in near medium term. ROCE of the group is 15.31% for FY 2024 against 9.76% for FY 23. Acuite believes that the financial risk profile of the group will remain healthy for near to medium term on the account of steady accruals.

Weaknesses

Intense competition and regulated pharmaceutical industry The group is exposed to intense competition from organized and unorganized players. However, SEG has more than a decade experience and has been able to establish itself in the Indian pharmaceutical industry. Further, SEG is exposed to regulatory risk in the domestic as well as overseas (Middle East, African and European countries) markets. However, the same is mitigated to an extent since the company has been dealing with these countries for more than five years. Working capital operations Group has improved yet high working capital requirements as evident from gross current assets (GCA) of 158 days in FY 2024 as compared to 211 days in FY 2023. Intensiveness of working capital is on account of high debtor days and other current assets. Debtor days stood at 85 days in FY 2024 as against 80 days in FY 2023. Inventory days stood same as in last year at 42 days in FY 24. Acuite believes that going forward the working capital operations of the group will be intensive due to nature of operations of the group.

Rating Sensitivities

Elongated Working capital operations Movement in Operating income and profitability  Timely execution of Capital Expenditure

Liquidity Position

Adequate

­The group has adequate liquidity marked by net cash accruals to its maturing debt obligations, current ratio, cash and bank balance. Group generated cash accruals of Rs. 40.68 crore for FY 2024 as against debt repayment obligations of Rs. 10.18 crores for the same period. Current Ratio stood at 1.18 times as on 31 March 2024 as against 1.15 times in the previous year. Working capital limits are utilized at ~ 90 per cent during the last six months ended November 2024. Cash and Bank Balances of company stood at Rs 0.62 crores coupled to this group maintains unencumbered fixed deposits of Rs 7.01 crore. The liquidity of the group is expected to improve with group expected to generate cash accruals in the range of Rs. 50-60 Cr. with debt obligation of Rs ~15-20 crore will also support the liquidity of the company.

Outlook: Stable

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Other Factors affecting Rating

­None.

Key Financials

Particulars	Unit	FY 24 (Actual)	FY 23 (Actual)
Operating Income	Rs. Cr.	804.61	646.02
PAT	Rs. Cr.	32.39	13.37
PAT Margin	(%)	4.03	2.07
Total Debt/Tangible Net Worth	Times	1.12	0.74
PBDIT/Interest	Times	5.70	3.62

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.

Rating History

Date Name of Instruments/Facilities Term Amount (Rs. Cr) Rating/Outlook 06 Oct 2023 Cash Credit Long Term 7.40 ACUITE A- | Stable (Reaffirmed) Term Loan Long Term 1.18 ACUITE A- | Stable (Reaffirmed) Cash Credit Long Term 12.60 ACUITE A- | Stable (Reaffirmed) Proposed Long Term Bank Facility Long Term 0.09 ACUITE A- | Stable (Reaffirmed) Working Capital Term Loan Long Term 1.64 ACUITE A- | Stable (Reaffirmed) Working Capital Term Loan Long Term 0.85 ACUITE A- | Stable (Reaffirmed) Working Capital Term Loan Long Term 2.24 ACUITE A- | Stable (Reaffirmed) Term Loan Long Term 2.00 ACUITE A- | Stable (Reaffirmed) Letter of Credit Short Term 3.50 ACUITE A2+ (Reaffirmed) Letter of Credit Short Term 10.30 ACUITE A2+ (Reaffirmed) Bank Guarantee (BLR) Short Term 0.20 ACUITE A2+ (Reaffirmed) 14 Jul 2022 Working Capital Term Loan Long Term 1.49 ACUITE A- | Negative (Reaffirmed) Working Capital Term Loan Long Term 2.24 ACUITE A- | Negative (Reaffirmed) Cash Credit Long Term 7.40 ACUITE A- | Negative (Reaffirmed) Term Loan Long Term 1.23 ACUITE A- | Negative (Reaffirmed) Cash Credit Long Term 12.60 ACUITE A- | Negative (Reaffirmed) Proposed Long Term Bank Facility Long Term 7.04 ACUITE A- | Negative (Reaffirmed) Working Capital Term Loan Long Term 1.90 ACUITE A- | Negative (Reaffirmed) Letter of Credit Short Term 2.30 ACUITE A2+ (Reaffirmed) Letter of Credit Short Term 5.80 ACUITE A2+ (Reaffirmed)

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Annexure - Details of instruments rated

Lender’s Name ISIN Facilities Date Of Issuance Coupon Rate Maturity Date Quantum (Rs. Cr.) Complexity Level Rating State Bank of India Not avl. / Not appl. Bank Guarantee (BLR) Not avl. / Not appl. Not avl. / Not appl. Not avl. / Not appl. 0.20 Simple ACUITE A1 | Upgraded ( from ACUITE A2+ ) State Bank of India Not avl. / Not appl. Bank Guarantee (BLR) Not avl. / Not appl. Not avl. / Not appl. Not avl. / Not appl. 20.00 Simple ACUITE A1 | Assigned State Bank of India Not avl. / Not appl. Cash Credit Not avl. / Not appl. Not avl. / Not appl. Not avl. / Not appl. 7.40 Simple ACUITE A | Stable | Upgraded ( from ACUITE A- ) Bank of Baroda Not avl. / Not appl. Cash Credit Not avl. / Not appl. Not avl. / Not appl. Not avl. / Not appl. 12.60 Simple ACUITE A | Stable | Upgraded ( from ACUITE A- ) Bank of Baroda Not avl. / Not appl. Cash Credit Not avl. / Not appl. Not avl. / Not appl. Not avl. / Not appl. 1.40 Simple ACUITE A | Stable | Assigned State Bank of India Not avl. / Not appl. Cash Credit Not avl. / Not appl. Not avl. / Not appl. Not avl. / Not appl. 2.60 Simple ACUITE A | Stable | Assigned State Bank of India Not avl. / Not appl. Derivative Exposure Not avl. / Not appl. Not avl. / Not appl. Not avl. / Not appl. 0.50 Simple ACUITE A1 | Upgraded ( from ACUITE A2+ ) State Bank of India Not avl. / Not appl. Letter of Credit Not avl. / Not appl. Not avl. / Not appl. Not avl. / Not appl. 3.50 Simple ACUITE A1 | Upgraded ( from ACUITE A2+ ) Bank of Baroda Not avl. / Not appl. Letter of Credit Not avl. / Not appl. Not avl. / Not appl. Not avl. / Not appl. 10.30 Simple ACUITE A1 | Upgraded ( from ACUITE A2+ ) Not Applicable Not avl. / Not appl. Proposed Long Term Bank Facility Not avl. / Not appl. Not avl. / Not appl. Not avl. / Not appl. 0.09 Simple ACUITE A | Stable | Upgraded ( from ACUITE A- ) Not Applicable Not avl. / Not appl. Proposed Long Term Bank Facility Not avl. / Not appl. Not avl. / Not appl. Not avl. / Not appl. 0.78 Simple ACUITE A | Stable | Assigned State Bank of India Not avl. / Not appl. Term Loan Not avl. / Not appl. Not avl. / Not appl. 25 Oct 2029 1.28 Simple ACUITE A | Stable | Upgraded ( from ACUITE A- ) Bank of Baroda Not avl. / Not appl. Term Loan Not avl. / Not appl. Not avl. / Not appl. 25 May 2027 2.00 Simple ACUITE A | Stable | Upgraded ( from ACUITE A- ) State Bank of India Not avl. / Not appl. Term Loan Not avl. / Not appl. Not avl. / Not appl. 25 Oct 2029 0.72 Simple ACUITE A | Stable | Assigned State Bank of India Not avl. / Not appl. Term Loan Not avl. / Not appl. Not avl. / Not appl. 01 Mar 2032 12.00 Simple ACUITE A | Stable | Assigned Bank of Baroda Not avl. / Not appl. Term Loan Not avl. / Not appl. Not avl. / Not appl. 01 Mar 2032 4.50 Simple ACUITE A | Stable | Assigned State Bank of India Not avl. / Not appl. Term Loan Not avl. / Not appl. Not avl. / Not appl. 01 Mar 2032 12.00 Simple ACUITE A | Stable | Assigned Bank of Baroda Not avl. / Not appl. Term Loan Not avl. / Not appl. Not avl. / Not appl. 01 Mar 2032 6.00 Simple ACUITE A | Stable | Assigned State Bank of India Not avl. / Not appl. Working Capital Term Loan Not avl. / Not appl. Not avl. / Not appl. 01 Dec 2026 0.92 Simple ACUITE A | Stable | Upgraded ( from ACUITE A- ) State Bank of India Not avl. / Not appl. Working Capital Term Loan Not avl. / Not appl. Not avl. / Not appl. 25 Apr 2026 0.69 Simple ACUITE A | Stable | Upgraded ( from ACUITE A- ) Bank of Baroda Not avl. / Not appl. Working Capital Term Loan Not avl. / Not appl. Not avl. / Not appl. 25 Feb 2025 0.47 Simple ACUITE A | Stable | Upgraded ( from ACUITE A- ) Bank of Baroda Not avl. / Not appl. Working Capital Term Loan Not avl. / Not appl. Not avl. / Not appl. 01 Dec 2026 2.05 Simple ACUITE A | Stable | Upgraded ( from ACUITE A- )

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*Annexure 2 - List of Entities (applicable for Consolidation or Parent / Group / Govt. Support)

Sr. No.  Company name 1 Scott Edil Advance Research Laboratories And Education Limited 2 Scott Edil Pharmacia Limited

Contacts

Mohit Jain Senior Vice President - Rating Operations Kartik Arora 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. 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. Please visit https://www.acuite.in/faqs.htm to refer FAQs on Credit Rating. Note: None of the Directors on the Board of Acuité Ratings & Research Limited are members of any rating committee and therefore do not participate in discussions regarding the rating of any entity.