CARE Nepal assigns BB rating to long term bank facilities of Mountain Glory Private Limited

CARE Ratings Nepal Limited (CRNL) has assigned rating of „CARE-NP BB‟ to the long term bank facilities of Mountain Glory Private Limited (MGPL). 

Key Rating Weaknesses

• Stabilization risk related to the operations of the hotel and long gestation period associated with hotel industry
• Time overrun of the hotel followed by project cost overrun and untied debt portion
• Expected losses and weak debt coverage indicators for the initial year of operations
• Exposure to volatile interest rates
• Susceptibility to cyclical, intense competition and geographic concentration risk in the hospitality sector

Key Rating Strengths

• Promoters having prior experience in tourism industry
• Strategic locational advantage of the hotel
• Hotel operations likely to benefit from strong marketing efforts and business linkages of promoters
• Government initiative and support for tourism
• Increasing trend of tourists in Nepal

About the Company

Mountain Glory Private Limited was incorporated on May 24, 2007 as a private limited company. MGPL has constructed a hotel property under the commercial name of Mountain Glory Forest Resort & Spa in Pokhara which is sprawled over 7.42 acres of land and a total of 64 room keys. Soft opening of the hotel was done in October 28, 2018. MGPL is being promoted by a group of eight individual shareholders who are all are directors of the company and have infused total paid-up equity of Rs. 453 Mn as on July 16, 2019.   

Details of the Facilities rated

 Source: CARE Ratings Nepal