Care Ratings assigns grade to bank facilities of BKOI Builders Private Limited; facilities worth Rs.4.72 Arba graded

CARE Ratings Nepal Limited (CRNL) has assigned rating of ‘CARE-NP BB’ to the long term bank facilities worth NPR 338.93 Million and ‘CARE-NP A4’ to the short term bank facilities worth NPR 4380 Million of BKOI Builders Private Limited (BBPL).

The ratings assigned to the bank facilities of BBPL are constrained by tender based nature of operations in highly competitive construction industry and working capital intensive nature of business. The rating is also constrained by leveraged capital structure, planned debt funded capital expenditure and exposure to volatile interest rates. The ratings, however, derive strength from experienced promoters in related field; established track record in executing construction projects; and healthy order book position with mid-term revenue visibility.

The ratings also factor in financial risk profile marked by increased revenue; healthy profitability margins and satisfactory debt service coverage indicators during FY19 (Provisional, refers to 12 months’ period ended mid-July 2019); moderate counter party risk; and escalation clause in majority of the contracts. Ability of the company to successfully execute projects in time and recover contract proceeds; and ability to manage healthy revenue growth and maintain profitability margins without deterioration in its financial risk profile will be key rating sensitivities.

BKOI Builders Private Limited, incorporated on December 21, 1997, is a mid-scale construction company based in Kathmandu, Nepal. The company is promoted by Mr. Humnath Koirala who holds 62% of total shares of the company. The company has been involved in construction of both small and large scale projects such as buildings works, irrigation works, water supply works, road works etc. across Nepal. BBPL also enters into JV with other companies in order to meet the eligibility criteria for different construction projects. BBPL is being promoted by 5 shareholders who have infused total paid-up equity of Rs.70 Million as on July 16, 2019.

Source: CARE Ratings Nepal