CARE Ratings Nepal provides rating of BB and A4 to long term and short term loans of Nepal Ultratech Cement; Factory located at Morang District, Hattimuda

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 Nepal Ultratech Cements Private Limited (NUCPL). 

Key Rating Weaknesses

• Moderate financial performance during FY19, first year of operation
• Highly leveraged capital structure on account of escalation in project cost and time overrun
• Lack of backward integration and raw material price volatility risk; presence only in clinker grinding
• Working capital intensive nature of operations
• Distribution channel of the company is currently in nascent stage and yet to fully
• Exposure to volatile interest rates
• Presence in highly fragmented &competitive market and cyclical nature of cement industry

Key Rating Strengths

• Experienced promoters in trading field related to construction items
• Fully automated and latest technology likely to provide better profitability and cost efficiencies in future
• Demand of cement products in the country expected to grow in the long term
• Product Diversification
• Locational advantage of the plant site

About the Company

Nepal Ultratech Cement Private Limited (NUCPL) was incorporated in August 27, 2015 and is promoted by individuals involved in various trading and manufacturing business. The clinker grinding plant is located in Hattimuda- 9, Morang District of Nepal with total grinding capacity of 300,000 MTPA. COD of the plant was achieved on December 5, 2018.

Brief Financial Performance during FY19 is as follows:

(Rs. In Million)

*Audited

Details of the Facilities rated

Source: https://careratingsnepal.com/

Read the full report here.