ICRA Nepal assigns A4+ to short term fund-based limits of JGI Distribution; Find the instrument details of this alcoholic beverage distributor

Thu, Jan 16, 2020 11:12 AM on Credit Rating, Latest,

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ICRA Nepal has assigned the short-term rating of [ICRANP]A4+ (pronounced ICRA NP A four plus) to the NPR 4,400 million fund-based limits of J.G. I Distribution Private Limited (JGIPL).

Credit strengths

Group’s long track record in Nepalese liquor industry and experienced promoter
Established brands and diversified product range
Established sales channel

Credit challenges

Decline in sales in FY2019 on account of major decline in vodka segment
Moderate financial profile due to highly leveraged capital structure
Stretched liquidity profile
Moderate profitability profile with stretched coverage indicator
Regulatory risk

About the company

Incorporated in August 2016, J.G.I. Distribution Private Limited (JGIPL) is the sole distributor of alcoholic beverages produced by four distilleries (Vijay, Asian, Himalayan, Rolling River) and a brewery, Raj Brewery, all under Jawalakhel Group of Industries in Nepal. It is also the distributor of some varieties of imported wines & beers.

The company is solely promoted by Mr. Bijay K. Shah. JGIPL belongs to the Jawalakhel Group of Industries, which has over four decades of operations in production of alcoholic beverages in Nepal. JGIPL has presence across the country through four warehouses and over 200 number of dealers.

Key financial indicators

	FY2017 (Audited)	FY2018 (Audited)	FY2019 (Provisional)
Operating Income-OI (NPR Million)	11,455.6	15,265.8	13,219.6
OPBDITA/OI (%)	2.3%	2.5%	3.6%
PAT/OI (%)	0.7%	0.5%	0.2%
Total Debt/Tangible Net Worth TNW (times)	6.2	7.5	4.3
Total Outside Liabilities/ TNW (times)	6.4	8.1	5.3
Total Debt/OPBDITA (times)	7.1	8.1	6.6
Interest Coverage (times)	1.8	1.4	1.1