CARE Nepal assigns A4 to the short term bank facilities of Janak Education Materials Centre

CARE Ratings Nepal Limited (CRNL) has assigned a rating of ‘CARE-NP A4’ to the short term bank facilities of Janak Education Materials Centre Limited (JEMC).

Key Rating Weaknesses

• Concentration of major cash flows from the operation of the company limited to few months
• Negative Networth due to losses in the past followed by high quantum of loans with respect to the size of the company and weak debt service coverage indicators
• Raw material price volatility risk with no authority to change the price of textbooks
• Exposure to volatile interest rates
• Presence in highly competitive nature of textbook industry

Key Rating Strengths

• GoN ownership with continuous financial support for business operations
• Long track record of operations and experienced board members from various offices of GoN
• Exclusive publishing rights with diversified product portfolio
• Diversified and adequate geographical coverage through offices and agents
• Financial risk profile marked by reduced cost of production and healthy profitability margins although overall decline in revenue during FY19
• Ownership of sizable machineries/ equipment to execute orders
• Moderate counter party risk
• Government support for education sector

About the Company

Janak Education Materials Centre Limited is a service oriented GoN entity, having registered office located at Madhyapur Thimi, Bhaktapur. The company was established in 1966 by GoN which was later on converted to government owned public limited company in September 14, 1978. The company is mainly involved in printing of textbooks for government schools where the company has authority to print, publish and sell textbooks of government schools for classes I to XII with sole right of printing textbooks for classes V to X. As on July 16, 2019, paid- up share capital of the company is Rs. 456.38 Mn which is fully owned by two ministries of GoN.

Brief financials of JEMC for last four years ending FY19 are given below:

*Not meaningful

Details of the Facilities rated