October 20, 2022
Anuh Pharma Limited: Ratings reaffirmed
Summary of rating action
Previous Rated Amount Current Rated Amount
Instrument* Rating Action
(Rs. crore) (Rs. crore)
Long-term Fund based limits [ICRA]A-(stable); reaffirmed
(5.00)^ (5.00)^
(CC/WCDL), interchangeable
Short-term Fund based limits, [ICRA]A2+; reaffirmed
(60.00)^ (60.00)^
interchangeable
Short-term, Non-fund Based
90.00 90.00 [ICRA]A2+; reaffirmed
Limits
Long-term/ short term Non-fund [ICRA]A-(stable)/ [ICRA]A2+;
(90.00)^ (90.00)^
Based Limits, interchangeable reaffirmed
Total 90.00 90.00
*Instrument details are provided in Annexure-I
Rationale
The rating reaffirmation continues to factor in the established track record of Anuh Pharma Limited (APL) in manufacturing
active pharmaceutical ingredients (APIs), along with a diversified customer base across domestic as well as export markets.
The ratings derive strength from APL’s continued strong financial profile, as evinced by its limited dependence on debt and
robust debt protection metrics. The ratings also take into consideration the company’s endeavour towards gradual
diversification of product portfolio through its R&D efforts, which has led to reduction in product concentration over the years.
The company’s liquidity position is also strong, underpinned by healthy unencumbered cash and liquid investments of Rs. 54.1
crore and non-current investments of Rs. 26.8 crore as on July 31, 2022, against a total debt of Rs. 11.6 crore. ICRA notes that
the company is planning to expand its current manufacturing capacity from 1,500 MTPA to 2,100 MTPA, which is expected to
be commercialised in FY2024 and further aid in revenue growth and diversification. The planned capex is expected to be funded
by internal accrual and existing cash and liquid investments.
The rating, however, remains constrained by APL’s moderate scale of operations with a product profile of mature and
commoditised molecules, which exposes its profit margins to price-based competition. Furthermore, APL remains exposed to
regulatory and foreign exchange (forex) risks due to the nature of its operations.
The Stable outlook reflects ICRA’s opinion that APL will continue to benefit from its established market position in key product
segments while maintaining its credit profile, aided by its strong liquidity position.
Key rating drivers and their description
Credit strengths
Established track record in API manufacturing – APL has been manufacturing APIs since 1960 with a product portfolio of
erythromycin and salts, and higher macrolides like azithromycin, roxithromycin, pyrazinamide and chloramphenicol. As per
the company, it occupies a healthy share in the global market for its key products and is among the leaders in erythromycin
and its salts.
Healthy financial risk profile – Aided by adequate retained cash flows and unencumbered cash and liquid investments, APL’s
dependence on external debt has remained limited. As on March 31, 2022, APL did not have any long-term debt outstanding
(excluding lease liabilities) and its total debt decreased to Rs. 4.22 crore from Rs. 13.7 crore as of March 31, 2021, primarily on
account of lower utilisation of working capital facilities. Further, the company maintained its cash surplus status, with
unencumbered cash and liquid investments of Rs. 54.1 crore and non-current investments of Rs. 26.8 crore as on July 31, 2022.
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Its debt coverage indicators also remained robust, as evinced by an interest coverage of 31.1x, total debt/operating profit
before depreciation, interest and tax or TD/OPBDITA of 0.1x and net cash accruals/total debt or NCA/TD of 805% as on March
31, 2022
Gradual diversification of products along with introduction of new products every year – The company has been gradually
reducing its product concentration risk, through new product offering. Earlier, the company was exposed to product
concentration risk with erythromycin accounting for 46% of its FY2018 sales; however, the same was reduced to 26% in FY2022
as APL has been diversifying its product profile over the years. New products like Ambroxol HCL and Gliclazide witnessed
healthy sales growth in FY2022. Further, APL has filed certification of suitability (CEP) for Gliclazide, Azithromycin and World
Health Organization Pre-qualification (WHO PQ) for Isoniazide. With this approval, the opportunity for sales in European
market and institutional business is expected to open up. Also, new products such as Acebrophylline, Citicoline, Theophylline
and Caffeine are under the development stage, which is expected to further diversify APL’s product profile.
Credit challenges
Moderate scale of operations – The company reported moderate revenue growth of 13% in FY2022 to Rs. 486.6 crore over
Rs. 432.0 crore in FY2021 owing to subdued growth for its mature and commoditized molecule it deals into. Despite the
sustained growth in scale of operations over FY2022, the company remains a moderate-size player in the bulk drug industry.
Also, timely receipt of regulatory approvals for the new products will remain an important driver for revenues and profit
margins, going forward.
Product profile of mature and commoditised products expose APL to intense price-based competition – APL’s product profile
comprises mature and commoditised molecules, including erythromycin, pyrazinamide and corticosteroids, which expose it to
intense price-based competition. Given the commoditised nature, the margin remains susceptible to raw material movements,
which is also reflected by fluctuation of margins witnessed on a quarterly basis during FY2021 and FY2022.
Exposure to regulatory and forex risks owing to nature of operations – APL caters to regulated markets like Western Europe
and semi-regulated markets like West Asia, Latin America and Southern Europe. The company holds CEP, World Health
Organization Good Manufacturing Practices (WHO GMP1), COFEPRIS2 (Mexico) and the European Directorate for the Quality
of Medicines & Healthcare (EDQM) certifications for manufacturing various bulk drugs, which are reviewed on a periodic basis
by the respective regulatory agencies. Any suspension of these certifications can impact its exports to these regulated and
semi-regulated markets, as witnessed in FY2017. The profit margins of the company also remain vulnerable to forex
fluctuations on account of its foreign operations.
Environmental and Social Risks
Environmental considerations – APL does not face any major physical climate risk. The company has successfully
commissioned its new expansion project in December 2019 after receiving environmental clearance from the State
Government of Maharashtra. The company has adopted an environment, health and safety policy. Further, as per its FY2022
annual report, the company adopts relevant techniques and methods, such as safety audits and periodic assessments for
environmental, health and safety risks and takes all the required remedial measures as and when needed.
Social considerations – The industry faces social risks related to product safety and associated litigation risk, access to qualified
personnel for R&D and process engineering, and maintenance of high manufacturing compliance standards. Further,
Government intervention related to price caps/ control also remains a social risk faced by entities in the pharmaceutical
industry. However, the company takes all the required regulatory approvals/ certificates before introducing any new products
in the market. The company holds CEP, WHO GMP1, COFEPRIS2 (Mexico) and EDQM certifications for manufacturing various
bulk drugs, which are reviewed on a periodic basis by the respective regulatory agencies.
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Liquidity position: Strong
The company’s liquidity profile is strong, underpinned by healthy free cash and liquid investments of Rs. 54.1 crore, and
noncurrent investments of Rs. 26.8 crore as on July 31, 2022. Coupled with largely unutilised working capital limits, these
provide a strong liquidity cushion. Against this, the company does not have any long-term debt obligations, nor any plans to
incur debt-funded capital expenditure (capex) in the near term.
Rating sensitivities
Positive factors – APL’s ratings may be upgraded if it significantly improves its scale of operations and profitability along with
diversification of its product portfolios
Negative factors – Pressure on the ratings could arise in case the company’s operating margins fall below 7% on a sustained
basis. Any regulatory non-compliance issued to APL for its products and/or manufacturing facilities that could impact its
revenues and profitability, would also be a negative rating trigger. Further, any large debt-funded capex exerting pressure on
the company’s credit metrics or any significant weakening of the liquidity position would be negative triggers as well.
Analytical approach
Analytical Approach Comments
Corporate rating methodology
Applicable rating methodologies
Rating Methodology for Pharmaceutical Companies
Parent/Group support Not applicable
Consolidation/Standalone The ratings are based on the standalone financial profile of the company.
About the company
Anuh Pharma Limited, a part of the SK Group of companies, is a medium-sized player in the API/bulk drugs industry,
manufacturing products such as erythromycin and its salts, and higher macrolides like azithromycin, roxithromycin,
pyrazinamide and chloramphenicol. As per the company, it is the largest producer of erythromycin salts in India and among
the top five in the world. It is also the largest producer of pyrazinamide in the world. APL’s manufacturing facility, located at
Boisar, Thane (Maharashtra), has an annual production capacity of 1,500 MT (enhanced from 900 MT in December 2019). The
company also has an R&D centre at Mahape, Navi Mumbai.
In Q1 FY2023, APL reported a profit after tax (PAT) of Rs. 7.3 crore on an operating income (OI) of Rs. 116.4 crore, against a
PAT of Rs. 5.6 crore on an OI of Rs. 117.3 crore in Q1 FY2022.
Key financial indicators (audited)
FY2021 FY2022
Operating income 432.0 486.6
PAT 28.4 30.6
OPBDIT/OI 10.5% 10.1%
PAT/OI 6.6% 6.3%
Total outside liabilities/Tangible net worth (times) 0.7 0.6
Total debt/OPBDIT (times) 0.3 0.1
Interest coverage (times) 22.2 31.1
PAT: Profit after tax; OPBDIT: Operating profit before depreciation, interest, taxes and amortisation; Amount in Rs crore; All ratios as per ICRA’s calculations
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Status of non-cooperation with previous CRA: Not applicable
Any other information: None
Rating history for past three years
Chronology of rating history
Current rating (FY2023)
for the past 3 years
Amount Date & rating in Date & rating Date & rating Date & rating
Instrument Amount FY2023 in FY2022 in FY2021 in FY2020
outstanding as of
Type rated
March 31, 2022
(Rs. crore) October 20, August 19, October 29, September
(Rs. crore)
2022 2021 2020 19, 2019
[ICRA]BBB+ [ICRA]BBB+
1 Cash Credit Long-term 0.0 - - -
(Positive) (Stable)
Cash Credit, [ICRA]A-
2 Long-term (5.0)* - [ICRA]A- (Stable) - -
interchangeable (Stable)
Bank
3 Guarantee, Short-term 0.0 - - - [ICRA]A2+ [ICRA]A2+
interchangeable
Bank [ICRA]A- [ICRA]A-
Long-term/
4 Guarantee, (90.0)* - (Stable)/ (Stable)/ - -
Short Term
interchangeable [ICRA]A2+ [ICRA]A2+
Export credit,
5 Short-term (60.0)* - [ICRA]A2+ [ICRA]A2+ - -
interchangeable
Letter of credit/
6 SBLC/ Buyers Short-term 90.0 - [ICRA]A2+ [ICRA]A2+ [ICRA]A2+ [ICRA]A2+
Credit
*Sublimit of Rs. 90 crore non fund based limits
Complexity level of the rated instruments
Instrument Complexity Indicator
Long-term Fund based limits, interchangeable Simple
Short-term Fund based limits, interchangeable Simple
Short-term, Non-fund Based Limits Very Simple
Long-term/ short term Non-fund Based Limits, interchangeable Very Simple
The Complexity Indicator refers to the ease with which the returns associated with the rated instrument could be estimated.
It does not indicate the risk related to the timely payments on the instrument, which is rather indicated by the instrument's
credit rating. It also does not indicate the complexity associated with analysing an entity's financial, business, industry risks or
complexity related to the structural, transactional or legal aspects. Details on the complexity levels of the instruments are
available on ICRA’s website: www.icra.in
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Annexure I: Instrument details
Coupon Amount Rated
ISIN Instrument Name Date of Issuance Maturity Current Rating and Outlook
Rate (Rs. crore)
Cash Credit, NA
NA NA NA (5.0)* [ICRA]A-(stable)
interchangeable
NA Export Credit, NA
NA NA (60.0)* [ICRA]A2+
interchangeable
NA Letter of credit/ NA
SBLC/ Buyers NA NA 90.0 [ICRA]A2+
Credit
NA Bank Guarantee, NA
NA NA (90.0)* [ICRA]A-(stable)/ [ICRA]A2+
interchangeable
Source: Company, *Sublimit of Rs. 90 crore non fund based limits
Please click here to view details of lender-wise facilities rated by ICRA
Annexure II: List of entities considered for consolidated analysis – Not applicable
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ANALYST CONTACTS
Shamsher Dewan Srikumar Krishnamurthy
+91 124 4545300 +91 44 45964318
shamsherd@icraindia.com ksrikumar@icraindia.com
Suprio Banerjee Karan Gupta
+91 22 6114 3443 +91 22 6114 3416
supriob@icraindia.com karan.gupta@icraindia.com
RELATIONSHIP CONTACT
Jayanta Chatterjee
+91 80 4332 6401
jayantac@icraindia.com
MEDIA AND PUBLIC RELATIONS CONTACT
Ms. Naznin Prodhani
Tel: +91 124 4545 860
communications@icraindia.com
Helpline for business queries
+91-9354738909 (open Monday to Friday, from 9:30 am to 6 pm)
info@icraindia.com
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