CARE Nepal assigns BB and A4 to long term and short term bank facilities of Balaji Cement Industries

CARE Ratings Nepal Limited (CRNL) has assigned Rating of ‘CARE-NP BB’ to the long term bank facilities and ‘CARE-NP A4’ to the short term bank facilities of Balaji Cement Industries Private Limited (BCPL). 

Detailed Rationale & Key Rating Drivers

The ratings assigned to the bank facilities of BCPL is constrained by project stabilization risk although low project implementation risk, financial closure not achieved for part of the total project cost, exposure to volatile interest rates, lack of backward integration and raw material price volatility risk. The ratings also factor in presence in highly fragmented and competitive nature of cement industry. 

The ratings, however, derive strength from experienced promoters in the manufacturing industries including cement, expected growth in demand for cement products in the country in the long term and locational advantage of the plant site.

Timely financial closure for the remaining debt portion, completion of the project within the cost estimates and satisfactory operations thereafter as envisaged are the key rating sensitivities.

About the Company

Balaji Cement Industries Private Limited (BCPL) is a private limited company, established in May 2016, promoted by the individuals involved in cement industry and other manufacturing industries, for setting up clinker grinding plant at Kapilvastu District of Nepal. The company is setting up a clinker grinding unit to manufacture cement with capacity of 1400 metric tons per day which is expected to come in operation during April 2019. BCPL will manufacture Portland Pozzolana Cement (PPC), Portland Slag Cement (PSC) and Ordinary Portland Cement (OPC).

(CARE Ratings Nepal)