The Bangalore-based Biocon Limited has received a P1+ rating for the Rs.20 crore short-term debt programme according to the ratings by CRISIL.

CRISIL's rating continues to reflect Biocon's strong presence in the statins business and its leading position in industrial enzymes. R&D skills in fermentation technologies and its US FDA-approved facility for manufacturing Lovastatin also support the rating, notes an official release.

These business strengths are complemented by Biocon's favourable financial profile, which is characterized by sales growth (compound annual growth rate of 50 per cent since FY 98-99), healthy profit margins (24.9 per cent at the operating level and 14 per cent at the profit after tax in FY 02-03), comfortable gearing (0.56 times as on March 31, 2003) and healthy debt-servicing ratios.

The rating strengths are, however, tempered to some extent by the large ongoing capital expenditure programme, the market-related risks on some of its new product launches in the biologicals segment and the flattening growth in the industrial enzymes sector, the release adds.

CRISIL has further stated that Biocon has planned a capital expenditure of about Rs.500 crore over the next two years in order to expand its statins capacities and to set up new plants to manufacture biologicals like human insulin, monoclonal antibodies, erythropoietin etc.

While the proposed capex is relatively large in relation to its existing networth of Rs.180 crore as on Sept 30 2003, CRISIL does not expect it to pose any significant risks to Biocon's overall credit profile. The promising growth prospects of statins in the global market, especially in view of impending patent expiries and Biocon's established presence as a high-quality statin supplier should result in healthy cash accruals, which would reduce the pressure on profitability.

CRISIL also expects Biocon's capital structure and liquidity position to remain comfortable even though it will part debt-fund its capital expenditure.

Biocon manufactures pharmaceutical bulk actives of Rs.201 crore sales in FY 02-03 and enzymes worth Rs.53.2 cr. Its wholly-owned subsidiaries, Syngene International Pvt. Ltd. and Clinigene International Pvt. Ltd., are engaged in contract and clinical research.

For the year ended March 31 2003, Biocon reported net sales of Rs.254 crore as against Rs.161 crore in FY 01-02 and net profits of Rs.35.8 crore as against Rs.20.3 crore in FY01-02. For the half year ended September 30 2003, Biocon has reported net sales of Rs.242 crore and net profits of Rs.55.1 crore.