Fitch Ratings has today assigned India's VHB Medisciences Ltd (VMSL) a National Long-term rating of 'BB+(ind)', with a Stable Outlook. The agency has also assigned the following ratings to VMSL's bank loan:
- INR766.8m long-term loans: 'BB+(ind)';
- INR400m fund-based cash credit limit: 'BB+(ind)' and
- INR100m non fund-based working limit: 'F4(ind)'
The rating reflects VMSL's strong operating, legal and strategic linkages with its group company, VHB Lifesciences Ltd (VLSL, rated at 'BBB-(ind)'/'F3(ind)'/Stable Outlook). However, in Fitch's opinion, the sponsor's plan to maintain this entity as a separate legal entity could result in a delay in terms of support, which has been factored into the rating.
Concerns to the rating emanate from the lack of performance track record, together with the completion risk of setting up Phase II of its operations. Thus, the completion of Phase II, together with a demonstration of sound performance, could act as a positive rating trigger.
VMSL is a formulation manufacturing company which undertakes work for both VLSL as well as external customers. The company is currently in the process of setting up Phase II of its operations and has seen a full year of operation for Phase I in FY09. During FY09, estimated revenues were INR1.1bn with a net profit of INR241m. The total estimated debt as of FY09 stood at INR858m, consisting of Phase I debt as well as working capital debt.
Note to editors: Fitch's National ratings provide a relative measure of creditworthiness for rated entities in countries with relatively low international sovereign ratings and where there is demand for such ratings. The best risk within a country is rated 'AAA' and other credits are rated only relative to this risk. National ratings are designed for use mainly by local investors in local markets and are signified by the addition of an identifier for the country concerned, such as 'AAA(ind)' for National ratings in India. Specific letter grades are not therefore internationally comparable.
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