Established track record of operation and experienced management
Being in the operations for more than four decades, ZLL has firmly established their position in the pharmaceutical industry, specialising in the manufacturing and distribution of small-dosage formulations, including tablets, powders, capsules, and pellets. Further, the company is promoted by Dr. Anwar Siraj Daud (Ph.D. in Pharmaceuticals and M. Pharm in Medicinal Chemistry), Mr. Zullfiquar Kamal among others who collectively possess industry experience of more three decades. The directors are supported by a team of qualified scientists and an experienced management team looking after key functions, including research and development (R&D), strategy and planning, business development, etc.

Stable scale of operations
The operating revenue of the company stood stable at Rs. 375.74 Cr. in FY25 (Rs. 365.57 Cr. in FY24), mainly on account of moderation in the domestic segment which declined from ~22 percent of revenue in FY24 to ~18 percent of revenue in FY25. However, owing to increased contribution from the exports, the operating margin marginally improved to 12.66 percent in FY25 (12.04 percent in FY24). Moreover, while H1FY26 operating performance stood weak with PAT losses due to decline in the contribution from the domestic markets, the company recouped partially in Q3FY26 and has recorded a stable revenue of Rs. 267.63 Cr. till Q3FY26 (Rs. 267.12 Cr. till Q3FY25). Going forward, the company focuses on increasing their product portfolio under the new innovative product (NIP) and oral thin films (OTF) segment.

Moderate financial risk profile
The financial risk profile of the company stood moderate marked by tangible net worth of Rs. 217.59 Cr. as on March 31, 2025 (Rs. 211.65 Cr. as on March 31, 2024), owing to accretion of profits to reserves. Further, the total debt stood at Rs. 117.68 Cr. as on March 31, 2025 (Rs. 111.63 Cr. as on March 31, 2024) and hence, the gearing (debt-equity) remained below unity at 0.54 times in FY25 (0.53 times in FY24). Moreover, the debt protection metrics stood comfortable with interest coverage ratio of 4.29 times in FY25 (6.47 times in FY24) and debt service coverage ratio of 1.46 times in FY25 (1.89 times in FY24). Going forward, company plans to avail debt for ongoing capex plans, however, it is in the process of raising of ~Rs. 35 Cr. via private placement, expected to flow by March 2026 and therefore, financial risk profile of the company is expected to remain in the similar levels.

Implementation risk for ongoing capex
The company, being engaged in the pharmaceutical industry, needs to continuously invest in developing and upgrading to newer technologies in order to sustain their operations and comply with the global regulatory guidelines. Hence, the company is currently undergoing multiple capex at a total budgeted cost of ~Rs. 100 Cr. of which ~Rs. 48 Cr. has already been incurred. These capex includes setting up of Dutasteride & Tamsulosin – pancreatin conversion plant, relocation of cephalosporin unit, remediation of the unit as per EU GMP standards. However, timely completion and stabilisation of operations of these capex plans, ramping up of operations from the same shall remain a key rating monitorable.

Intensive working capital operations
The working capital operations of the company remains intensive marked by gross current assets (GCA) of 210 days in FY25 (217 days in FY24), majorly driven by inventory, debtor levels and higher other current assets comprising majorly of balances with government and advance to suppliers. The company needs to maintain adequate levels of raw materials and finished goods to support diversified product portfolio leading to inventory levels of 96 days in FY25 (92 days in FY24). Further, the company extends and receives a similar credit period of 90-120 days to its customers and from its suppliers.

Regulatory Risk
Pharmaceutical industry is highly competitive and regulated in nature as government intervention is substantial. Moreover, the manufacturing facilities of company have to be regularly monitored and approved by various regulatory authorities across the globe. Hence, any prohibitions or restriction imposed by regulatory authorities on the manufacturing facilities significantly affect operations of the company.