Care Ratings assigns grade to short term and long term bank facilities of Swaminarayan Nirman Sewa Private Limited worth Rs.1.10 Arba

CARE Ratings Nepal Limited (CRNL) has assigned rating of ‘CARE-NP BB’ to the long term bank facilities worth NPR 56.73 Million and ‘CARE-NP A4’ to the short term bank facilities worth NPR 1048.50 Million of Swaminarayan Nirman Sewa Private Limited (SNSPL).

The ratings assigned to the bank facilities of SNSPL are constrained by small scale of operations with geographically concentrated order book position and tender based nature of operations in highly competitive construction industry. The rating is also constrained by working capital intensive nature of business and high utilization of working capital limits, planned debt funded capital expenditure and exposure to volatile interest rates.

The ratings, however, derives strength from experienced promoters in related field, moderate track record in executing diverse construction projects and moderate order book position with mid-term revenue visibility. The ratings also factored in financial risk profile marked by growth in the revenue, profitability and satisfactory debt service coverage indicators during FY18 (refers to 12 months’ period ended mid-July 2018), comfortable capital structure, 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 of the company to manage healthy revenue growth and maintain profitability margins without deterioration in its financial risk profile will be key rating sensitivities.

Swaminarayan Nirman Sewa Private Limited incorporated in September 02, 2013, having registered office in Dharan-10, Sunsari, is a small-scale construction company in Nepal. The company is owned and promoted by Mr. Santosh Kumar Basnet and his family holding 100% of total shares. The company has been involved in construction projects such as building, road, water supply, irrigation etc. across Nepal. SNSPL also enters into JV with other companies in order to meet the eligibility criteria for the projects.

Source: Care Rating Nepal