Fitch affirms Arch Pharmalabs

Fitch Ratings said it affirmed the rating on Arch Pharmalabs Ltd.'s commercial paper/short-term debt program at F1(ind) following the increase of the program size to Rs.1,000 million from Rs.600 million.

The rating reflects the company's strong revenue growth with 2008 revenues increasing by 48%, mainly a result of the expansion of its active pharmaceutical ingredient portfolio and revenues from its contract manufacturing and co-marketing activities, Fitch said.

The rating also factors the company's stability in operating and net margins, reflecting its ability to manage costs despite pricing pressures, the agency said, and its demonstrated ability to turn around acquired entities and realize value from its acquisitions.

Concerns include its cash from operations, which is adversely affected by its high working capital levels and is reflected in the near-full utilization of its funded working capital limits, Fitch said.

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