BWI: Brickwork Ratings has Assigned “BWR A” to MSN Laboratories Limited for the Proposed Medium Term Debt Issue up to INR 200 Million

Press release from Business Wire India
Source: Brickwork Ratings
Thursday, May 28, 2009 05:42 PM IST (12:12 PM GMT)
Editors: General: Consumer interest, Economy; Business: Advertising, PR & marketing, Banking & financial services, Business services, Financial Analyst, Healthcare, biotechnology & pharmaceutical, Stock exchanges; Healthcare
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Brickwork Ratings has Assigned "BWR A" to MSN Laboratories Limited for the Proposed Medium Term Debt Issue up to INR 200 Million
MSN Laboratories Ltd: Issue Rating: BWR A

Bangalore, Karnataka, India, Thursday, May 28, 2009 -- (Business Wire India) -- Brickwork Ratings has assigned BWR A (Pronounced BWR A) to MSN Laboratories Limited for the proposed medium term debt issue up to INR 200 Million. Brickwork Ratings' 'BWR A' stands for an instrument which is considered to offer "Adequate credit quality" in terms of timely servicing of debt obligations.

Company profile

MSN Laboratories Limited (MSNL), belonging to MSN group promoted by Dr. M.S.N. Reddy, is engaged in the manufacture of high quality bulk drugs and formulations. The bulk drug manufacturing facilities of the company are located at Rudraram village, Patancheru, Medak district. In August 2003, Dr. Reddy acquired an existing sick unit by the name of Chandra Pharmaceuticals Limited. The unit was renamed MSN Laboratories Limited in October 2003. Later in 2006, MSNL acquired Armour Pharmaceuticals Limited.

Dr. MSN Reddy, a Doctorate in organic chemistry from Osmania University, is the chairperson of the Board and Managing Director of MSNL and has over 20 years of experience in pharmaceutical industry. The entire management team is well qualified in the field and has vast experience in pharmaceutical area. The team has deep knowledge in product development, patenting and compliance with regulatory requirements as well as in adopting suitable marketing strategies. Their professional knowledge and business acumen and quality consciousness has helped the company in expanding sales and revenue.

The company is mainly concentrating on high quality drugs. The company manufactures active pharmaceutical ingredients (APIs) for therapeutic segments, such as anti-depressants, anti-psychotic, anti-migraine, anti-histamine and others. MSNL possesses current Good Manufacturing practices (cGMP) certification as well as ISO 9001 certification. It launched over 30 molecules in the market in the last 3 years and has applied for patent rights for over 35 different molecules. The company has filed 18 European Drug Master Files (DMF's) and 14 DMFs with USFDA.

Financials:

MSNL total sales turnover for FY-2008 was INR 654.9 Million a saw an increase of 26% over FY-2007. Domestic sales for FY-2008 were INR 432.5 Million as compared to INR 362 Million in FY-2007, showing a growth of 19%. Export sales in FY-2008 experienced an increase of 40% at INR 222.4 Million as compared to INR 158.4 Million in FY-2007. The company has been experiencing growth in volumes as well as in client base. As of end of Jan 09, the turnover has reached INR 824 Million, showing a growth of 26%. For FY-2008 MSN Labs saw an increase in PAT (INR 62.95 Million) by 93% as compared to (INR 32.60 Million) 61% increase in FY-2007. As of 31st January 2009, MSN Labs has achieved 49% increase in PAT.

MSNL's key financial ratios are favorable and improving. In FY 2008, MSNL's debt equity ratio was just 0.71 and even as of 31st Jan 2009 it is about 0.40. Company's debt service coverage ratio improved from 0.25 in FY 2007 to 1.42 in FY2008, to 1.71 as of 31st Jan 2009. Interest coverage ratio improved to 5.64 as of 31st Jan 2009 from 3.86 in FY 2008. Net worth improved to INR 167.69 Million in FY 2008 from INR 102.89 Million in FY 2007, and further improved to INR 256.55 Million as of 31st Jan 2009.

Industry Scenario:

Indian Pharmaceutical Industry Touched a Turnover of INR 250 Billion at the end of the 10th five year plan (2002-07). Pharmaceutical industry has grown 1.5-1.6 times the growth of the economy over the past couple of years. The global outsourcing is expected to reach USD 31 Billion by 2010 from USD 20 Billion at present. Indian pharmaceutical industry witnessed growth rate of about 10% over the last few years, expected to touch USD 12 Billion by 2010. The industry has grown at a CAGR of 13% from 2002-07 and expected to grow at a CAGR of 16% over 2007-2011.

Rating Outlook:

The overall outlook for the industry is showing positive signs of growth. The BWR rating 'A' assigned to MSNL's issue of debt paper has factored the Company's consistent growth in business, management quality, its core competency and focus on manufacturing bulk API and intermediates, R&D process, increasing number of process patents, capacity to seize opportunities when patents expire, efficiency in manufacturing and meeting international standards and expanding client base. Brickwork feels that the current economic conditions are not likely to significantly affect the business of the company. Continuity of the aforementioned factors and good established practices will be the key drivers of MSNL's future business growth.

Copyright ©, 2009 Brickwork Ratings.

Brickwork Ratings (BWR) has assigned the rating based on the information obtained from issuer and other reliable sources, which are deemed to be accurate. BWR has taken considerable steps to avoid any data distortion; however, it does not examine the precision or completeness of the information obtained. And hence, the information in this report is presented "as is" without any express or implied warranty of any kind. BWR does not make any representation in respect to the truth or accuracy of any such information. The rating assigned by BWR should be treated as an opinion rather than a recommendation to buy, sell or hold the rated instrument and BWR shall not be liable for any losses incurred by users from any use of this report or its contents. BWR ratings are subject to a process of surveillance which may lead to revision in ratings. BWR has the right to change, suspend or withdraw the ratings at any time for any reasons.


CONTACT DETAILS
Mukesh Mahor, Analyst Contact, Brickwork Ratings, +91 (80) 40409940, mukesh.m@brickworkratings.com
Praveen Prakash, Analyst Contact, Brickwork Ratings, +91 (80) 40409940, praveen.prakash@brickworkratings.com
Anitha G, Media Contact, Brickwork Ratings, +91 (80) 40409940, media@brickworkratings.com
Ramaswamy Annam, Relationship Contact, Brickwork Ratings, +91 (11) 23412232, +91 (40) 23319630, ramaswamy@brickworkratings.com

KEYWORDS
CONSUMER, ECONOMY, MARKETING, BANKING, BUSINESS SERVICES, Financial Analyst, HEALTHCARE, STOCK EXCHANGES, HEALTHCARE

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