Plethico Pharma's debt downgraded to 'D'

Faces re-financing risk for FCCBs

Following delay in payment on loans, rating agency ICRA has downgraded Plethico Pharmaceuticals Ltd’s (PPL) loans to “D” category from “BB”.

The revised rating factors in recent instances of delay in servicing of debt obligations. The liquidity position of the condition is stretched
with high working capital intensity, ICRA said in a statement. The company faces significant refinancing risks arising from FCCBs
that are due for redemption in the near term.

BSE-listed PPL reported drop in profit after tax (consolidated) to Rs 61.6 crore for second quarter ended June 2012 as against Rs 74.3 crore in April-June 2011.

The total income from operation also dipped to Rs 432.9 crore  Q2 ended June 2012, from Rs 454.2 crore in Q2 of Fy11. The company follows January-December as financial year.

Its stock was trading on BSE at Rs 297.80, up by 2.07% over previous close.

The company began its business in 1963 as a small partnership firm was converted into private limited entity. It is currently engaged in the manufacturing and marketing a range of herbal, nutraceutical and pharmaceutical products with a presence across international markets.

PPL also had a presence in the domestic branded formulation market which was sold to Shreya Life Sciences for Rs. 105 crore in 2003 due to the largely commoditized nature of its product portfolio consisting primarily of anti-malarial, ant-TB and antibiotics.

Subsequently, PPL decided to shift focus towards nutraceutical and herbal products and aimed to expand their presence in the CIS markets by acquiring stake in six marketing and distribution companies operating under the name of Rezlov.

In October 2007, PPL acquired Natrol Inc, a Nasdaq-listed company, for US$ 80.8 million which provided PPL with a presence in the US
nutraceutical market.

Natrol manufactures and markets branded dietary supplements, herbal tea and sports nutrition products and accounted for 44.5% of total sales in CY 2009.